Annual Report (ESEF) • Apr 27, 2023
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Download Source FileApril 2023 Vilnius
Hereby we confirm, that by our knowledge Consolidated Financial Statements for the year 2022 prepared in accordance with International Financial Reporting Standards as adopted by the EU are true and fairly present assets, liabilities, financial position, profit or loss and cash flows of APB Apranga, as well as of Apranga Group consolidated companies. As well we confirm that by our knowledge Consolidated Annual Report for the year 2022 includes a fair review of the development and performance of the business and the position of APB Apranga and Apranga Group in relation to the description of the main risks and contingencies faced thereby.
Apranga Group General Manager Rimantas Perveneckas
Apranga Group Chief Financial Officer Gabrielius Morkūnas
APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius
Translation note: This version of the accompanying documents is a translation from the original, which was prepared in the Lithuanian language. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of the accompanying documents takes precedence over this translation.
1 FINANCIAL STATEMENTS 4-7
1.1 Statements of comprehensive income 4
1.2 Statements of financial position 5
1.3 Statements of changes in equity 6
1.4 Statements of cash flows 7
2 NOTES TO THE FINANCIAL STATEMENTS 8-44
3 CONSOLIDATED ANNUAL REPORT 45-136
3.1 Consolidated Annual Report 45-57
Renumeration Report 53-55
3.2 Governance Report 58-84
3.3 Social Responsibility Report 85-136
FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated)
| GROUP | COMPANY | |
|---|---|---|
| Year ended | Year ended | |
| 31 December | 31 December | |
| 2022 | 2021 | |
| Revenue from contracts with customers 6 | 242 899 | 189 745 |
| Cost of sales 5 | (131 555) | (107 515) |
| GROSS PROFIT | 111 344 | 82 230 |
| Selling (costs) 5 | (73 462) | (56 575) |
| General and administrative (expenses) 5 | (18 803) | (14 156) |
| Other income 6 | 790 | 2 779 |
| OPERATING PROFIT | 19 869 | 14 278 |
| Finance income 7 | 37 | 32 |
| Finance (costs) 7 | (1 161) | (1 099) |
| PROFIT BEFORE INCOME TAX | 18 745 | 13 211 |
| Income tax (expense) 8 | (3 110) | (2 315) |
| PROFIT FOR THE YEAR | 15 635 | 10 896 |
| Other comprehensive income | - | - |
| TOTAL COMPREHENSIVE INCOME | 15 635 | 10 896 |
| Total comprehensive income attributable to: | 15 635 | 10 896 |
| Owners of the Company | 15 635 | 10 896 |
| Non-controlling interests | - | - |
| Basic and diluted earnings per share (in EUR) 11 | 0,28 | 0,20 |
The notes on pages 8 to 44 are an integral part of these financial statements.
These financial statements were approved by Management Board on 4 April 2023 and signed by:
Rimantas Perveneckas Gabrielius Morkūnas
General Director Chief Financial Officer
FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated)
| GROUP | COMPANY | |
|---|---|---|
| ASSETS | As at 31 December | As at 31 December |
| 2022 | 2021 | |
| NON-CURRENT ASSETS | ||
| Property, plant and equipment 12 | 20 992 | 24 900 |
| Intangible assets 13 | 1 072 | 636 |
| Investments in subsidiaries 14 | - | - |
| Prepayments 16 | 273 | 416 |
| Trade and other receivables 19 | 2 409 | 2 400 |
| Right-of-use assets 25 | 53 281 | 64 194 |
| Other financial assets 17 | 2 600 | 2 400 |
| Total non-current assets | 80 627 | 94 946 |
| CURRENT ASSETS | ||
| Inventories 15 | 41 386 | 35 909 |
| Other financial assets 17 | - | 735 |
| Prepayments 16 | 1 503 | 1 346 |
| Trade and other receivables 19 | 1 781 | 3 076 |
| Cash and cash equivalents 20 | 22 978 | 29 743 |
| Total current assets | 67 648 | 70 809 |
| TOTAL ASSETS | 148 275 | 165 755 |
| EQUITY AND LIABILITIES | ||
| GROUP | ||
| EQUITY | Note | 2022 |
| Ordinary shares 21 | 16 035 | |
| Legal reserve 22 | 1 604 | |
| Foreign currency translation reserve | (53) | |
| Retained earnings | 44 | 44 781 |
| Total equity | 62 367 | |
| NON-CURRENT LIABILITIES | ||
| Deferred tax liabilities 9 | 2 194 | |
| Non-current lease liabilities 25 | 43 465 | |
| Non-current employee benefits 2.18 | 132 | |
| Total non-current liabilities | 45 791 | |
| CURRENT LIABILITIES | ||
| Borrowings 23 | - | |
| Current lease liabilities 25 | 12 717 | |
| Current income tax liability | 701 | |
| Trade and other payables 24 | 26 699 | |
| Total current liabilities | 40 117 | |
| Total liabilities | 85 908 | |
| TOTAL EQUITY AND LIABILITIES | 148 275 |
The notes on pages 8 to 44 are an integral part of these financial statements.
These financial statements were approved by Management Board on 4 April 2023 and signed by:
Rimantas Perveneckas Gabrielius Morkūnas
General Director Chief Financial Officer
FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated)
| Share capital | Legal reserve | Translation reserve | Retained earnings | Total | |
|---|---|---|---|---|---|
| GROUP | |||||
| Balance at 1 January 2021 | 16 035 | 1 604 | (53) | 45 896 | 63 482 |
| Comprehensive income | |||||
| Profit for the year 2021 | - | - | - | 10 896 | 10 896 |
| Total comprehensive income | - | - | - | 10 896 | 10 896 |
| Balance at 31 December 2021 | 16 035 | 1 604 | (53) | 56 792 | 74 378 |
| Comprehensive income | |||||
| Profit for the year 2022 | - | - | - | 15 635 | 15 635 |
| Total comprehensive income | - | - | - | 15 635 | 15 635 |
| Dividends 10, 22 | - | - | - | (27 646) | (27 646) |
| Balance at 31 December 2022 | 16 035 | 1 604 | (53) | 44 781 | 62 367 |
| COMPANY | Share capital | Legal reserve | Retained earnings | Total | |
| Balance at 1 January 2021 | 16 035 | 1 604 | 35 262 | 52 901 | |
| Comprehensive income | |||||
| Profit for the year 2021 | - | - | 3 680 | 3 680 | |
| Total comprehensive income | - | - | 3 680 | 3 680 | |
| Balance at 31 December 2021 | 16 035 | 1 604 | 38 942 | 56 581 | |
| Comprehensive income | |||||
| Profit for the year 2022 | - | - | 20 708 | 20 708 | |
| Total comprehensive income | - | - | 20 708 | 20 708 | |
| Dividends 10, 22 | - | - | (27 646) | (27 646) | |
| Balance at 31 December 2022 | 16 035 | 1 604 | 32 004 | 49 643 |
The notes on pages 8 to 44 are an integral part of these financial statements.
These financial statements were approved by Management Board on 4 April 2023 and signed by:
Rimantas Perveneckas Gabrielius Morkūnas
General Director Chief Financial Officer
(all tabular amounts are in EUR thousands unless otherwise stated)
| OPERATING ACTIVITIES | Note | GROUP | COMPANY | ||
|---|---|---|---|---|---|
| Year ended 31 December | Year ended 31 December | Year ended 31 December | Year ended 31 December | ||
| 2022 | 2021 | 2022 | 2021 | ||
| Profit (loss) before income taxes | 18 | 745 | 13 211 | 21 595 | 4 383 |
| ADJUSTMENTS FOR: | |||||
| Depreciation and amortization | 5 | 19 037 | 19 798 | 7 545 | 7 682 |
| Impairment charge (reversal) | 12, 25 | ( 303) | ( 847) | ( 208) | ( 471) |
| Change in allowances for slow-moving inventories | 5 | ( 421) | ( 293) | ( 337) | ( 154) |
| (Gain) on disposal of property, plant and equipment | 6 | ( 466) | ( 38) | ( 466) | ( 39) |
| Write-off of property, plant and equipment | 188 | 17 | 75 | - | |
| Fair value change of financial assets | 17 | ( 79) | ( 3) | ( 79) | ( 3) |
| Dividend income | 6 | ( 103) | ( 103) | (15 503) | ( 103) |
| Interest expenses | 7 | 1 161 | 1 099 | 540 | 511 |
| Total | 37 759 | 32 841 | 13 162 | 11 806 | |
| CHANGES IN OPERATING ASSETS AND LIABILITIES: | |||||
| Decrease (increase) in inventories | 15 | (5 056) | ( 182) | (3 344) | 1 388 |
| Decrease (increase) in receivables | 16, 19 | 1 269 | (2 477) | 404 | (1 555) |
| Increase (decrease) in payables | 24, 26 | 4 541 | (8 259) | 1 571 | (4 368) |
| Cash generated from operations | 38 513 | 21 923 | 11 793 | 7 271 | |
| Income taxes paid | 8, 9 | (2 493) | (1 983) | ( 412) | ( 278) |
| Interest paid | 7 | (1 161) | (1 099) | ( 540) | ( 511) |
| Net cash from operating activities | 34 859 | 18 841 | 10 841 | 6 482 | |
| INVESTING ACTIVITIES | |||||
| Interest received | 37 | 32 | 50 | 58 | |
| Dividends received | 6 | 103 | 103 | 15 503 | 103 |
| Loans granted | (39 000) | - | (45 872) | (10 723) | |
| Loans repayments received | 39 000 | - | 46 972 | 11 653 | |
| Purchases of property, plant and equipment and intangible assets | 12, 13 | (4 458) | (7 953) | (2 127) | (4 147) |
| Proceeds on disposal of property, plant and equipment | 1 763 | 2 989 | 1 221 | 1 205 | |
| Proceeds on disposal of financial assets at fair value | 17 | 579 | - | 579 | - |
| Investment in subsidiaries | 14 | - | - | ( 132) | - |
| Net cash from investing activities | (1 976) | (4 829) | 16 194 | (1 851) | |
| FINANCING ACTIVITIES | |||||
| Dividends paid | 3 | (27 596) | - | (27 596) | - |
| Proceeds from borrowings | - | - | 20 405 | 60 | |
| Repayments of borrowings | 23 | ( 200) | ( 300) | (23 773) | (3 328) |
| Payment of principal portion of lease liabilities | 25 | (11 852) | (10 178) | (4 888) | (4 034) |
| Net cash from financing activities | (39 648) | (10 478) | (35 852) | (7 302) | |
| NET INCREASE (DECREASE) IN CASH AND BANK OVERDRAFTS | (6 765) | 3 534 | (8 817) | (2 671) | |
| CASH AND BANK OVERDRAFTS: | |||||
| AT THE BEGINNING OF THE PERIOD | 20 | 20 297 | 16 763 | 17 192 | 19 863 |
| AT THE END OF THE PERIOD | 20 | 13 532 | 20 297 | 8 375 | 17 192 |
The notes on pages 8 to 44 are an integral part of these financial statements.
These financial statements were approved by Management Board on 4 April 2023 and signed by:
Rimantas Perveneckas Gabrielius Morkūnas
General Director Chief Financial Officer
APB Apranga, (hereinafter “the Company”), was incorporated and commenced its operations in March 1993 in Lithuania. The Company’s main office is situated in Ukmerges str. 362, Vilnius, Lithuania. The Company has legal form of public limited liability company under the Law on Companies of Republic of Lithuania. The principal activity of the Company and its subsidiaries (hereinafter “the Group”) is retail trade of apparel in Baltic countries.
The share capital of APB Apranga is EUR 16,034,668.40 and it is divided into 55,291,960 ordinary registered shares with a nominal value of EUR 0.29 each, where each share grants to its owner 1 vote (in total 55,291,960 voting shares), all shares are paid in full and give the owners equal rights. All 55 291 960 ordinary shares of nominal value EUR 0.29 each (ISIN code LT0000102337) that comprise Company‘s share capital are listed on Baltic equity list of Nasdaq Vilnius Stock Exchange. At 31 December 2022, the Company had 6 172 shareholders (as per shareholders list prepared in accordance with SRD II directive).
At 31 December the Company‘s shareholders were:
| Shareholder | Number of shares 2022 | % of total ownership 2022 | Number of shares 2021 | % of total ownership 2021 |
|---|---|---|---|---|
| UAB MG Investment | 36 187 499 | 65,4 | 34 442 189 | 62,3 |
| UAB Minvista | 5 795 929 | 10,5 | 7 264 661 | 13,1 |
| Swedbank AS (Estonia) clients | - | 0,0 | 3 665 861 | 6,6 |
| Other | 13 308 532 | 24,1 | 9 919 249 | 17,9 |
| Total | 55 291 960 | 100,0 | 55 291 960 | 100,0 |
The ultimate parent company whose financial statements are available for public use is UAB MG Grupė. The ultimate controlling individual of the Group is Mr. D. J. Mockus.
At 31 December the Group consisted of the Company and the following its wholly owned subsidiaries:
| Name | Country | Ownership interest in % 31 12 2022 | Ownership interest in % 31 12 2021 |
|---|---|---|---|
| UAB Apranga LT | Lithuania | 100% | 100% |
| UAB Apranga BPB LT | Lithuania | 100% | 100% |
| UAB Apranga PLT | Lithuania | 100% | 100% |
| UAB Apranga SLT | Lithuania | 100% | 100% |
| UAB Apranga MLT | Lithuania | 100% | 100% |
| UAB Apranga HLT | Lithuania | 100% | 100% |
| UAB Apranga OLT | Lithuania | 100% | 100% |
| UAB Apranga Ecom LT | Lithuania | 100% | 100% |
| SIA Apranga Latvia | Latvia | 100% | 100% |
| SIA Apranga LV | Latvia | 100% | 100% |
| SIA Apranga BPB LV | Latvia | 100% | 100% |
| SIA Apranga PLV | Latvia | 100% | 100% |
| SIA Apranga SLV | Latvia | 100% | 100% |
| SIA Apranga MLV | Latvia | 100% | 100% |
| SIA Apranga HLV | Latvia | 100% | 100% |
| SIA Apranga OLV | Latvia | 100% | 100% |
| SIA Apranga Ecom LV | Latvia | 100% | 100% |
| OU Apranga* | Estonia | 100% | 100% |
| OU Apranga Estonia | Estonia | 100% | 100% |
| OU Apranga BEE | Estonia | 100% | 100% |
| OU Apranga PB Trade | Estonia | 100% | 100% |
| OU Apranga ST Retail | Estonia | 100% | 100% |
| OU Apranga MDE | Estonia | 100% | 100% |
| OU Apranga HEST | Estonia | 100% | 100% |
| OU Apranga Ecom EE | Estonia | 100% | 100% |
At 31 December the Group‘s number of stores was:
| Country | Total number of shops 2022 | Total number of shops 2021 | Shops, where premises are owned by Group 2022 | Shops, where premises are owned by Group 2021 |
|---|---|---|---|---|
| Lithuania | 100 | 102 | 5 | 5 |
| Latvia | 44 | 46 | - | - |
| Estonia | 24 | 21 | - | - |
| Total | 168 | 169 | 5 | 5 |
At 31 December 2022 the Group and the Company employed 2 139 and 740 people respectively (2021: 1 992 and 732 people respectively).
These financial statements were approved by Management Board on 4 April 2023. The shareholders of the Company have a statutory right to approve or not these financial statements and to require preparation of a new set of the financial statements.
The principle accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are presented in Euro and all values are rounded to the nearest thousand, except when otherwise indicated. The numbers in tables may not coincide due to rounding of particular amounts to EUR thousand. Such rounding differences are not material to these financial statements.
The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). These financial statements have been prepared under the historical cost convention, except for financial asset at fair value through profit (loss) or other comprehensive income as described in Note 18. These financial statements comprise the Group’s consolidated financial statements and the Company’s separate financial statements. The Group and Company has prepared the financial statements on the basis that it will continue to operate as a going concern.
International Financial Reporting Standards require that in preparing the financial statements, management of the Company and the Group make estimates and assumptions that affect the reported amounts of assets and liabilities and required disclosure at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. There are no areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, except for the following:
(a) Impact of COVID-19 and war in Ukraine
General information on the impact of COVID-19 on the Company’s and Group‘s operations
Due to epidemic coronavirus (COVID-19) infection, from 16 December 2020, all the Group’s stores in Lithuania were temporarily closed. Stores in Lithuania with a separate entrance from outside and a sales area not exceeding 300 square meters had been open since 15 February 2021. All stores with a separate entrance from outside had been open since 15 March 2021. All Group’s stores have been reopened in Lithuania from 19 April 2021, however, stores operating in shopping malls were not allowed to work on weekends, unless they had separate entrance from outside. Eventually, all Group’s stores have been open in Lithuania as of 29 May 2021. In Latvia, stores were temporarily closed from 19 December 2020. Stores with a separate entrance from outside and an area not exceeding 7,000 square meters have been open in Latvia from 7 April 2021.# NOTES TO THE FINANCIAL STATEMENTS
(b) Revenue recognition
Management judgment is needed to determine whether revenue for certain sales transactions should be recorded on a gross basis or on a net basis. Revenue is recognised on a gross basis where the role of the Group/Company is that of principal in a transaction. The gross (without VAT) basis represents sales price after discounts, with any related costs charged to expenses. The Group/Company has concluded that it is the principal in its revenue arrangements including all online sales, because:
- The entity controls the goods or services before transferring them to the customer;
- The entity is primarily responsible for the supply of goods and services and bears risk of non-performance, all custumers returns are accepted into stores/warehouse;
- The entity has latitude in establishing price either directly or indirectly.
(c) Estimates concerning useful lives of tangible and intangible assets
The useful lives of tangible and intangible assets are determined by management at the time the asset is acquired and reviewed on an annual basis for appropriateness. The lives are based on historical experiences with similar assets as well as anticipation of future events, which may impact their useful life.
(d) Impairment of property, plant and equipment and right-of-use assets
Each shop is considered to represent a separate cash generating unit for impairment test. Cash generating units, which had indications of impairment loss, i.e. suffered operational loss, are tested. The Group and the Company have tested its leasehold improvements, right-of-use assets and other property, plant and equipment, whether those posess impairment loss, in accordance with the accounting policies stated in Note 2.9. The Group and the Company have used “value in use” calculations to test for impairment as information on fair value less costs to sell was not available. These calculations require the use of estimates as described in Note 12. The management reviewed the main assumptions used for the measurement of the recoverable value of property, plant and equipment and right-of-use assets. COVID-19 and the Russian military invasion of the Republic of Ukraine have no material impact on the assumptions made for future cash flows. Results of impairment assessment are disclosed in Note 12 and Note 25.
(e) Inventory write-down to net realizable value
In accordance with the accounting policies stated in Note 2.12 the Group and the Company recognise inventory at the lower of cost and net realizable value less cost to sell. The Group and the Company evaluate whether the value of inventory recognised at cost is not lower that its net realisibale value based on the historical data and actual subsequent results of inventory items sold below costs. Net realisable values are disclosed in Note 15. Management has assessed the level of inventories and determined that the book value of inventories as of 31 December 2022 and 2021 does not exceed the net realisable value. Since all restrictions related to operations in physical stores were lifted, COVID-19 has no material impact on the assumptions made for net realisable value. Results of inventories write-down to net realizable value are disclosed in Note 15.
(f) Determining the lease term of contracts with renewal and termination options – Company/Group as lessee
The Company/Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Company/Group has lease contracts that include extension and termination options. The Company/Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or 10 N O T E S TO T H E F I N A N C I A L S T A T E M E N T S 2 APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated) termination. After the commencement date, the Company/Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate (e.g., construction of significant leasehold improvements or significant customization to the leased asset).
(g) Leases - Estimating the incremental borrowing rate
The Company/Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Company/Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of- use asset in a similar economic environment. The IBR therefore reflects what the Company/Group ‘would have to pay’, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease. The Company/Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific or country-specific adjustments. IBR used in 2022 varies from 1.0 to 4.0 per cent (from 1.0 to 2.5 per cent in 2021).
(h) Options granted
The Company/Group has options granted for non-financial assets and lease rights, which are not recognized as they do not meet the criteria of a financial instrument. Based on historical information and numerous extentions of the cooperation agreements and intensions of cooperation, the management of the Group believes that the agreement parties will not use any above options. In the unlikely event of happening, the selling price would be approximate fair value of the items/goods. For more details, refer to Note 28.
In the current year, the Company and the Group have adopted all of the new and revised Standards and Interpretations that are relevant to its operations and effective for accounting periods beginning on 1 January 2022.
(a) The following new standards, amendments and interpretations are mandatory for accounting periods beginning on or after 1 January 2022:
• 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):
o IFRS 3 Business Combinations (Amendments) update a reference in IFRS 3 to the previous version of the IASB’s Conceptual Framework for Financial Reporting to the current version issued in 2018 without significantly changing the accounting requirements for business combinations.
o IAS 16 Property, Plant and Equipment (Amendments) prohibit a company from deducting from the cost of property, plant and equipment any proceeds from the sale of items produced while bringing the asset to the location and condition necessary for it be capable of operating in the manner intended by management. Instead, a company recognizes such sales proceeds and related cost in profit or loss.
o 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. The amendments clarify, the costs that relate directly to a contract to provide goods or services include both incremental costs and an allocation of costs directly related to the contract activities.## NOTES TO THE FINANCIAL STATEMENTS
The following new standards, amendments to existing standards and interpretations have been issued and adopted by the European Union or are in the process of adoption by the European Union but are not yet effective and have not been early adopted by the Group and the Company:
IFRS 17: Insurance Contracts
The standard is effective for annual periods beginning on or after 1 January 2023 with earlier application permitted, provided the entity also applies IFRS 9 Financial Instruments on or before the date it first applies IFRS 17. This is a comprehensive new accounting standard for insurance contracts, covering recognition and measurement, presentation and disclosure. IFRS 17 applies to all types of insurance contracts issued, as well as to certain guarantees and financial instruments with discretional participation contracts. The Company and the Group do not issue contracts in scope of IFRS 17; therefore its application will not have an impact on the Company’s and the Group’s financial performance, financial position or cash flows.
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (Amendments)
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 Company and the Group have not yet evaluated the impact of the implementation of these amendments.
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (Amendments)
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 introduce a new definition of accounting estimates, defined as monetary amounts in financial statements that are subject to measurement uncertainty, if they do not result from a correction of prior period error. Also, the amendments clarify what changes in accounting estimates are and how these differ from changes in accounting policies and corrections of errors. The Company and the Group have not yet evaluated the impact of the implementation of these amendments.
IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments)
The amendments are effective for annual periods beginning on or after January 1, 2023 with earlier application permitted. The amendments narrow the scope of and provide further clarity on the initial recognition exception under IAS 12 and specify how companies should account for deferred tax related to assets and liabilities arising from a single transaction, such as leases and decommissioning obligations. The amendments clarify that where payments that settle a liability are deductible for tax purposes, it is a matter of judgement, having considered the applicable tax law, whether such deductions are attributable for tax purposes to the liability or to the related asset component. Under the amendments, the initial recognition exception does not apply to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. It only applies if the recognition of a lease asset and lease liability (or decommissioning liability and decommissioning asset component) give rise to taxable and deductible temporary differences that are not equal. The Company and the Group evaluated that net effect of the implementation of these amendments would not be bigger then EUR 200 thousand and the deferred income tax asset will be greater than the deffered income tax liability.
IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (Amendments)
The amendments are effective for annual reporting periods beginning on or after January 1, 2024, with earlier application permitted, and will need to be applied retrospectively in accordance with IAS 8. The objective of the amendments is to clarify the principles in IAS 1 for the classification of liabilities as either current or non-current. The amendments clarify the meaning of a right to defer settlement, the requirement for this right to exist at the end of the reporting period, that management intent does not affect current or non-current classification, that options by the counterparty that could result in settlement by the transfer of the entity’s own equity instruments do not affect current or non-current classification. Also, the amendments specify that only covenants with which an entity must comply on or before the reporting date will affect a liability’s classification. Additional disclosures are also required for non-current liabilities arising from loan arrangements that are subject to covenants to be complied with within twelve months after the reporting period. The amendments have not yet been endorsed by the EU. The Company and the Group have not yet evaluated the impact of the implementation of these amendments.
IFRS 16 Leases: Lease Liability in a Sale and Leaseback (amendments)
The amendments are effective for annual reporting periods beginning on or after January 1, 2024, with earlier application permitted. The amendments are intended to improve the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction in IFRS 16, while it does not change the accounting for leases unrelated to sale and leaseback transactions. In particular, the seller-lessee determines ‘lease payments’ or ‘revised lease payments’ in such a way that the seller-lessee would not recognise any amount of the gain or loss that relates to the right of use it retains. Applying these requirements does not prevent the seller-lessee from recognising, in profit or loss, any gain or loss relating to the partial or full termination of a lease. A seller-lessee applies the amendment retrospectively in accordance with IAS 8 to sale and leaseback transactions entered into after the date of initial application, being the beginning of the annual reporting period in which an entity first applied IFRS 16. The amendments have not yet been endorsed by the EU. The Company and the Group have not yet evaluated the impact of the implementation of these amendments.
Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. In December 2015 the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. The amendments have not yet been endorsed by the EU. The Company and the Group have not yet evaluated the impact of the implementation of these amendments.
The Group plans to adopt the above mentioned standards and interpretations on their effectiveness date provided they are endorsed by the EU.
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). The Group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income. Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as General Director and other 6 Directors who make strategic decisions.
(a) Functional and presentation currency
The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity and subsidiaries operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in euro, which is the functional currency of the Company and the Group, and the presentation currency for the consolidated financial statements.
(b) Transactions and balances
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period. Exchange differences arising on the settlements of monetary items, and on the retranslation of monetary items, are included in the statement of comprehensive income for the period.
(c) Group companies
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations (including comparatives) are expressed in euro using exchange rates prevailing at the end of the reporting period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as other comprehensive income and transferred to the Group’s translation reserve. Such translation differences are recognised in profit or loss in the period in which the foreign operation is disposed of.
Intangible assets expected to provide economic benefit to the Company and the Group in future periods are measured at cost less subsequent accumulated amortisation and impairment losses. Amortisation is calculated on a straight-line basis to write off the cost of each asset over the estimated useful life as follows:
Amortisation is accounted for as selling expense. The Group and the Company have no intangible assets with indefinite useful life.
Property, plant and equipment (hereinafter “PPE”) is stated at historical cost, less accumulated depreciation and impairment losses. Leasehold improvements, that meet definition of PPE, are capitalised in the statement of financial position and depreciated over the lease term. Compensation received from shopping malls in connection with the setting up of shops is related to the compensation of PPE, not to rent fees, and consequently the cost of acquisition of property, plant and equipment is reduced. Compensations that do meet the definition of lease incentive, are accounted for under IFRS 16, see Note 2.17. The Company and the Group did not receive such compensations in 2022 and 2021. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. Depreciation is charged so as to write-off the cost of PPE to their residual value over their estimated useful lives, using the straight-line method, on the following basis:
All depreciation of property, plant and equipment is recognised in the statement of comprehensive income and accounted for as selling expenses. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of the reporting period. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount (Note 2.9). Impairment of PPE as well as reversals of impairment during the year are included into selling costs caption in the statement of comprehensive income. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in other income caption in the statement of comprehensive income. The Group and the Company capitalise borrowing costs that relate to assets that take more than 12 months to get ready for use. Otherwise borrowing costs are recognised as expenses of the current reporting period.
At the end of the reporting period, the Company and the Group review of its tangible and intangible non current assets and right-of-use assets to determine whether there is any indication (e.g. loss of cash-generating unit) that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company and Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the greater of fair value less costs to sell and value in use. 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. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. Impairment losses are recognized as an expense immediately (under selling costs). Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognized as income immediately.
In the Company’s separate financial statements investments in subsidiaries are accounted for at cost less impairment. Cost also includes direct attributable costs of investment. Dividends received are credited to the Company’s statement of comprehensive income.
Inventories are stated at the lower of cost and net realizable value. Cost is determined by the first-in, first-out method. Net realizable value represents the estimated selling price less all estimated costs to be incurred in selling. Unrealisable inventory has been fully written-off. Impairment losses are recognized as an expense immediately (under cost of sales caption).
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.
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s/Company’s business model for managing them.# N O T E S TO T H E F I N A N C I A L S T A T E M E N T S
With the exception of trade receivables that do not contain a significant financing component, the Group/Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component are measured at the transaction price determined under IFRS 15. In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. The Group’s/Company’s business model for managing financial assets refers to how the Group/Company manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. A regular way purchases or sales of financial assets are recognised on the trade date, i.e., the date that the Group/Company commits to purchase or sell the asset.
After initial recognition, the Group/Company measures a financial asset at:
a) Amortised cost (debt instruments), see Note 17;
b) Fair value through other comprehensive income (OCI) with recycling of cumulative gains and losses upon derecognition (debt instruments), see Note 17;
c) Fair value through other comprehensive income (OCI) with no recycling of cumulative gains and losses upon derecognition (equity instruments). The Group/Company did not have such items as at 31 December 2022 and 2021;
d) Fair value through profit or loss, see Note 17.
The Group/Company measures financial assets at amortised cost if both of the following conditions are met:
i) The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in the statement of comprehensive income when the asset is derecognised, modified or impaired. The Group’s/Company’s financial assets at amortised cost includes cash and cash equivalents, trade, other current and non- current receivables/payables and loans granted.
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in other income caption in the statement of comprehensive income. The Group/Company in order to make efficient use of the available free cash, in 2018 acquired collective investment scheme (fund units), which fair value (level 3) as at 31 December 2022 is EUR 2 600 thousand (Note 17).
The Group/Company measures debt instruments at fair value through OCI if both of the following conditions are met:
• The financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling And
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial recognition, financial assets at fair value through OCI are carried in the statement of financial position at fair value with net changes in fair value recognised in OCI. For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognised in profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss. The Group/Company included these assets under other non-current financial assets, unless the maturity term is shorter than 12 months or management inteds to realize the asset within 12 months from the end of the reporting period.
Expected credit losses for debt instruments measured at FVOCI (fair value through other comprehensive income) do not reduce the carrying amount of these financial assets in the statement of financial position, which remain at fair value. Instead, an amount equal to the allowance that would arise if the assets were measured at amortised cost is recognised in OCI as an accumulated impairment amount, with a corresponding charge to profit or loss. The accumulated loss recognised in OCI is recycled to the profit and loss upon derecognition of the assets. According to management’s assessment this asset was not impaired as at 31 December 2022 and 2021.
Following IFRS 9, in common case scenario, the Group/Company recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). At the end of every reporting period it is assessed whether credit risk significantly increased from initial recognition taking into account change in probability of default during the maturity of the instrument.
During this process the Group/Company summarizes debt instruments into stages 1, 2 and 3:
In 2021 and 2022 there were no transfers between the different stages. In 2021 and 2022 there were no financial instruments which credit risk significantly increased.
For loans granted the Group/Company calculates ECLs based on an expected cash shortfalls, discounted at an approximation to the EIR. A cash shortfall is the difference between the cash flows that are due to the Group/Company in accordance with the contract and the cash flows that the Group/Company expects to receive. The Group/Company did not recognize allowance for loans granted because based on probability of default, loss given default, exposure at default and forward looking information the allowance is not material.
For trade receivables, the Group/Company applies a simplified approach in calculating ECLs. Therefore, the Group/Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. For that purpose the Group/Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.The Group/Company considers a financial asset in default when contractual payments are 90 days past due or when indications exist that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. The Group/Company did not recognize allowance for trade receivables, intercompany trade receivables, loans and other receivables because based on historical as well as forward looking information the allowance is not material.
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts held in banks with credit ratings disclosed in Note 20. Bank overdrafts are included into cash and cash equivalents on the statement of financial position.
N O T E S TO T H E F I N A N C I A L S T A T E M E N T S
2 APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius
FOR THE YEAR ENDED 31 DECEMBER 2022
(all tabular amounts are in EUR thousands unless otherwise stated)
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings and payables. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s/Company’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and finance lease liabilities.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below.
Loans, borrowings and other payables
After initial recognition, loans, borrowings and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of comprehensive income, when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of comprehensive income.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, i.e. to realise the assets and settle the liabilities simultaneously.
Derecognition of financial instruments
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s/Company’s statement of financial position) when:
i) The rights to receive cash flows from the asset have expired or
ii) The Group/Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either
(a) the Group/Company has transferred substantially all the risks and rewards of the asset, or
(b) the Group/Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Group/Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group/Company continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group/Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group/Company has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group/Company could be required to repay (amount of the guarantee).
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the statement of comprehensive income.
(a) Ordinary shares
Ordinary shares are stated at their par value. Consideration received for the shares sold in excess over their par value is shown as share premium. Incremental external costs directly attributable to the issue of new shares are accounted for as a deduction from share premium.
N O T E S TO T H E F I N A N C I A L S T A T E M E N T S
2 APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius
FOR THE YEAR ENDED 31 DECEMBER 2022
(all tabular amounts are in EUR thousands unless otherwise stated)
(a) Foreign currency translation reserve
The foreign currency translation reserve is used for translation differences arising on consolidation of financial statements of foreign subsidiaries. Exchange differences are classified as equity in the consolidated financial statements until disposal of the investment. Upon disposal of the corresponding assets, the cumulative revaluation of translation reserves is recognised as income or expenses in the same period when the gain or loss on disposal is recognised.
(b) Legal reserves
Legal reserve is included into other reserves. Legal reserve is compulsory under the Lithuanian regulatory legislation. Annual transfers of 5 per cent of net result are required until the reserve reaches 10 per cent of share capital. The legal reserve cannot be used for payment of dividends and it is established to cover future losses only.
(a) Current income tax
The Group companies are taxed individually irrespective of the overall results of the Group. The Group companies in Lithuania may transfer the estimated tax losses (or part thereof) to another Group company in Lithuania, which has a right to reduce the taxable profit with the respective amount of the tax looses transferred for the same taxable period. In 2021, the Group company UAB Apranga ECOM LT took advantage of this opportunity and transferred tax losses to another Group company. The charge for taxation included in these financial statements is based on the calculation made by the management in accordance with tax legislation of the respective country in which group entity operates. The tax currently payable is based on taxable profit for the reporting period. For companies operating in Lithuania tax losses can be carried forward for indefinite period, except for the losses incurred as a result of disposal of securities and/or derivative financial instruments not designated for hedging. Starting from 1 January 2014 the transferable tax loss cannot cover more than 70% of the taxable profit of the current year. Such carrying forward is disrupted if the company changes its activities due to which these losses were incurred except when the company does not continue its activities due to reasons which do not depend on the company itself. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s and the Company’s liability for current tax is calculated using tax rates that have been enacted at the end of the reporting period. The income tax rate applied for the Company and subsidiaries operating in Lithuania was 15 per cent in 2021 and in 2022. In Latvia and Estonia income tax rate on reporting period and prior taxable profits is nil. In Latvia and Estonia, the taxation of profit of operating subsidiaries is deferred until the profit appropriation moment, i.e. payment of dividends. The dividends paid by the Group’s companies in Latvia and Estonia are taxed at the withholding tax rate of 20% of their gross amounts as at 31 December 2022 (20% as at 31 December 2021). Amendments to the Estonian Income Tax Act that entered into force on 1 January 2018 enable companies to use a 14% reduced tax rate for regular dividend payments. The 14% reduced tax rate can be applied to dividends distributed on or after 1 January 2019 as follows: the 14% rate is applicable to the amount equal to a third of the last financial year's dividend distribution, while the portion of the distribution exceeding this threshold shall remain taxable at 20%. The reduced rate can be used on the share of the distribution equal to the company's last three years' average profit distributions.# NOTES TO THE FINANCIAL STATEMENTS
Deferred income tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit, and is accounted for using the statement of financial position liability method. Deferred income tax liabilities are generally recognised for all taxable temporary differences and deferred income tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill (or negative goodwill) or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit (an example of this is lease accounting under IFRS 16). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax is charged or credited in the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred income tax is also dealt with in equity. Deferred income tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group and the Company are able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred income tax assets is reviewed at the end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred income tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group and the Company intend to settle its current tax assets and liabilities on a net basis.
(all tabular amounts are in EUR thousands unless otherwise stated)
As the object of taxation in Latvia (from 1 January 2018) and Estonia is dividends, not profit, there are no differences between the carrying amounts and tax bases of assets and liabilities which could give rise to deferred tax assets or liabilities. The income tax payable on dividends is recognised as the income tax expense of the period in which the dividends are declared, except for Group’s deffered tax liability on total retained earnings of subsidiaires in Latvia and Estonia, as disclosed in Note 9.
The Company/Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company/Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company/Group recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The Company/Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
If ownership of the leased asset transfers to the Company/Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Refer to the accounting policies in Note 2.9, Impairment of non- financial assets.
At the commencement date of the lease, the Company/Group recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company/Group and payments of penalties for terminating the lease, if the lease term reflects the Company/Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Company/Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. The Company’s/Group’s lease liabilities are included in Non-current lease liabilities and Current lease liabilities (see Note 25).
The Company/Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value (below EUR 5 thousand). Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.
The Company and the Group pay social security contributions to the state Social Security Fund (the Fund) on behalf of its employees based on the defined contribution plan in accordance with the local legal requirements. A defined contribution plan is a plan under which the Group and the Company pay fixed contributions into the Fund and will have no legal or constructive obligations to pay further contributions if the Fund does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior period. Social security contributions are recognised as expenses on an accrual basis and included in payroll expenses.
(all tabular amounts are in EUR thousands unless otherwise stated)
According to the requirements of Lithuanian Labor Code, each employee leaving the Group at the age of retirement is entitled to a one-off payment in the amount of 2 months’ salary. The actuarial gains and losses are recognized in the statement of other comprehensive income. The past service costs are recognised as an expense on a straight line basis over the average period until the benefits become vested. Any gains or losses appearing as a result of curtailment and/or settlement are recognised in the statement of comprehensive income as incurred. The past service costs are recognised in the statement of comprehensive income as incurred. The above mentioned employee benefit obligation is calculated based on actuarial assumptions, using the projected unit credit method. Obligation is recognized in the statement of financial position and reflects the present value of these benefits on the date of the statement of financial position. Present value of the non-current obligation to employees is determined by discounting estimated future cash flows using the discount rate which reflects the interest rate of the Government bonds of the same currency and similar maturity as the employment benefits. Actuarial gains and losses are recognized in the statement of other comprehensive income as incurred. In 2022 and 2021 there were no material amounts.
Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company and the Group recognise termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.# NOTES TO THE FINANCIAL STATEMENTS
The Company and the Group recognise a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation.
Provisions are recognised when the Group and the Company have a present obligation (legal or constructive) as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The Group and the Company re-evaluate provisions at each reporting date and adjusts them in order to present the most reasonable current estimate. If the effect of the time value of money is material, the amount of provision is equal to the present value of the expenses, which are expected to be incurred to settle the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.
Provisions for restructuring costs and legal claims are recognised when: the Company or the Group have a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
Revenue from contracts with customers is recognised when control of the services or goods are transferred to the customer at an amount that reflects the consideration to which the Group/Company expects to be entitled in exchange for those services or goods.
The Group/Company has concluded that it is the principal in its revenue arrangements, because:
- The entity controls the goods or services before transferring them to the customer;
- The entity is primarily responsible for the supply of goods and services and bears risk of non-performance;
- The entity has latitude in establishing price either directly or indirectly.
Sales of goods are recognized when the Company or another Group entity sells a product to the customer. Retail sales are usually in cash or by credit card. The recorded revenue includes credit card fees payable for the transaction. Such fees are included in operating expenses. Online sales of goods are recognized when the Company or another Group entity sends a product to the customer. Every sale of goods that the Group/Company makes is a separate performance obligation with separately identifiable fixed price. The Group/Company does not have any customer loyalty progammes. The Company recognises revenue from management services provided to subsidaries over time, based on expenses incured to measure provision of the services, because the customer simultaneously receives and consumes the benefits provided by the Company.
Other occasional revenue from the sale of property, plant or equipment is recognised at a point in time, when sold items are delivered to client and control is transfered. Dividend income is recognised when the right to receive payment is established. In addition the management considers the effect of other matters to the revenue recognition such as the existence of significant financing components, non-cash consideration, consideration payable to the customer and warranties. None of these are present in the Group’s/Company‘s contracts with the customers.
A right-of-return asset is recognised for the right to recover the goods expected to be returned by customers. The asset is measured at the former carrying amount of the inventory, less any expected costs to recover the goods and any potential decreases in value. The Group/Company updates the measurement of the asset for any revisions to the expected level of returns and any additional decreases in the value of the returned products.
A refund liability is recognised for the obligation to refund some or all of the consideration received (or receivable) from a customer. The Group’s/Company’s refund liabilities arise from customers’ right of return. The liability is measured at the amount the Group/Company ultimately expects it will have to return to the customer. The Group/Company updates its estimates of refund liabilities (and the corresponding change in the transaction price) at the end of each reporting period. The Group/Company does not incur material costs to acquire or fulfill the contract.
A receivable represents the Group’s/Company’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
A contract liability is the obligation to transfer goods or services to a customer for which the Group/Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group/Company transfers goods or services to the customer, a contract liability is recognised when the payment is made. Contract liabilities are recognised as revenue when the Group/Company performs under the contract.
Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s and Group’s financial statements in the period in which the dividends are approved by the Company’s shareholders.
Basic earnings per share are calculated by dividing net profit attributed to the shareholders of the Company and the Group from average weighted number of ordinary registered shares in issue, excluding ordinary registered shares purchased by the Group and the Company and held as treasury shares, if any.
A related party is a person or entity that is related to the entity that is preparing its financial statements:
a) A person or a close member of that person’s family is related to a reporting entity if that person:
i. has control or joint control over the reporting entity;
ii. has significant influence over the reporting entity; or
iii. is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.
b) An entity is related to a reporting entity if any of the following conditions apply:
i. The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
ii. One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
iii. Both entities are joint ventures of the same third party.
iv. One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
v. The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.
vi. The entity is controlled or jointly controlled by a person identified in (a).
vii. A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
Subsidies received as a compensation for the expenses or unearned income of the current or previous reporting period, also, all the subsidies, which are not subsidies related to assets, are considered as subsidies related to income. The income-related subsidies are recognised as used in parts to the extent of the expenses incurred during the reporting period to be compensated by that subsidy. Subsidies for the financing of working capital are recognized in other income caption in the statement of comprehensive income. The balance of subsidies not received by the end of the reporting period is shown in the statements of financial position caption “Trade and other receivables”.
In 2021, the Company and the Group were included in the list of taxpayers who may be subject to fiscal aid measures due to the COVID-19, established by the State Tax Inspectorate. Additionally, under the Law on Employment, the Company received subsidies to employers during and after the downtime, and subsidies to employers affected by the COVID-19, which are accounted for by reducing wage costs. The impact of the subsidies is reflected in selling costs, and in general and administrative expenses (Note 5). The Company and the Group in 2021 also received subsidies for the financing of working capital, which are recognized in other income caption in the statement of comprehensive income (Note 6).
Contingent liabilities are not recognised in the financial statements, except for contingent liabilities associated with business combinations. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the financial statements but disclosed when an inflow of economic benefits is probable.## 2.25 SUBSEQUENT EVENTS
Subsequent events that provide additional information about the Company’s and Group’s position 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.
The risk management function within the Group and the Company are carried out in respect of financial risks (credit, market (which consist of currency, interest rate and price) and liquidity). The primary objectives of the financial risk management function are to establish risk limits, and then ensure that exposure to risks stays within these limits. The operational and legal risk management functions are intended to ensure proper functioning of internal policies and procedures to minimize operational and legal risks.
The financial risks relate to the following financial instruments: financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, trade receivables, cash and cash equivalents, trade and other payables and borrowings. The accounting policy with respect to these financial instruments is described in previous section.
Credit risk is managed by Group management. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, financial assets at fair value through other comprehensive income as well as credit exposures to wholesale and retail customers, including outstanding receivables and committed transactions.
For banks and financial institutions, only independently rated parties (or subsidiaries of such parties) with high credit ratings are accepted. Sales to wholesale customers are rare and immaterial, therefore risk control only assesses the credit quality of the customer, taking into account its financial position, past experience and future factors. Sales to retail customers are settled in cash or using major credit cards, therefore there is no credit risk.
Company’s credit risk arising from trade receivables from subsidiaries and loans to subsidiaries is managed by controlling financial performance of subsidiaries on a monthly basis. All the subsidiaries having Company’s loans have been profitable during the financial year, generated strong positive cash flows, historically none of them had liquidity issues. Management has also assessed the projected future information that will not have a material adverse effect on the Company’s subsidiaries. Therefore, in the management’s opinion, the credit risk is low.
As at 31 December 2021 financial assets at fair value through other comprehensive income are invested only to Lithuanian government bonds. In May 2022, these long-term bonds issued by Lithuanian government redeemed from the Company upon maturity.
The Company and the Group have no significant concentration of credit risk, except for cash which is held in two banks, which parent companies having high credit ratings, and loans granted to subsidiaries.
Liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, the Group and the Company treasury maintain flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Group’s and the Company’s liquidity reserve (comprises undrawn borrowing facility (Note 23) and cash and cash equivalents (Note 20) on the basis of expected cash flow. This is generally carried out at local level in the operating companies of the Group in accordance with practice set by the Group. In addition, the Group’s and the Company’s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these; and maintaining debt financing plans.
The table below analyses the Group’s and the Company’s financial liabilities into relevant maturity groupings based on the remaining period at the end of the reporting period to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
GROUP
| Less than 1 month | Between 1 and 12 months | Between 1 and 3 years | More than 3 years | Total | |
|---|---|---|---|---|---|
| As at 31 December 2022 | |||||
| Borrowings | - | - | - | - | - |
| Lease liabilities | 1 076 | 11 640 | 21 225 | 23 302 | 57 243 |
| Trade and other payables | 12 489 | 3 908 | - | - | 16 397 |
| Total | 13 565 | 15 548 | 21 225 | 23 302 | 73 640 |
| As at 31 December 2021 | |||||
| Borrowings | 25 | 51 | 126 | - | 202 |
| Lease liabilities | 1 132 | 12 119 | 23 639 | 31 179 | 68 069 |
| Trade and other payables | 10 554 | 2 369 | 183 | - | 13 106 |
| Total | 11 711 | 14 539 | 23 948 | 31 179 | 81 377 |
COMPANY
| Less than 1 month | Between 1 and 12 months | Between 1 and 3 years | More than 3 years | Total | |
|---|---|---|---|---|---|
| As at 31 December 2022 | |||||
| Borrowings | - | 2 032 | - | - | 2 032 |
| Lease liabilities | 423 | 4 595 | 8 709 | 11 349 | 25 076 |
| Trade and other payables | 3 537 | 1 650 | - | - | 5 187 |
| Total | 3 960 | 8 277 | 8 709 | 11 349 | 32 295 |
| As at 31 December 2021 | |||||
| Borrowings | 25 | 5 377 | - | - | 5 402 |
| Lease liabilities | 459 | 4 802 | 9 311 | 14 692 | 29 264 |
| Trade and other payables | 2 570 | 1 645 | - | - | 4 215 |
| Total | 3 054 | 11 824 | 9 311 | 14 692 | 38 881 |
Change in liabilities arising from financing activities:
GROUP
| As at 31 December 2021 | Dividends declared | Cash flow | As at 31 December 2022 | |
|---|---|---|---|---|
| Borrowings | 200 | - | (200) | - |
| Dividends payable | 116 | 27 646 | (27 596) | 166 |
| Total | 316 | 27 646 | (27 796) | 166 |
COMPANY
| As at 31 December 2021 | Dividends declared | Cash flow | As at 31 December 2022 | |
|---|---|---|---|---|
| Borrowings | 5 400 | - | (3 368) | 2 032 |
| Dividends payable | 116 | 27 646 | (27 596) | 166 |
| Total | 5 516 | 27 646 | (30 964) | 2 198 |
Changes in lease liabilities are disclosed in Note 25.
The Company has loans to subsidiaries with floating interest rates, but the cash flow risk is mitigated by applying the same variable element of interest rate on those loans as the banks are charging the Company. Loans granted and received at variable rates expose the Group to cash flow interest rate risk, which however has no material impact on profit or equity of the Group. Loans granted and received at fixed rates expose the Company to fair value interest rate risk, which however has no material impact on profit or equity of the Company.
The Company’s and Group’s borrowings consist of loans with floating interest rate, which are related to EURIBOR and EONIA. The Company and the Group did not use any derivative financial instruments in order to control the risk of interest rate changes. Trade and other receivables and payables are interest-free and have settlement dates within one year.
The Group’s and the Company’s cash flow and fair value interest rate risk is periodically monitored by the Group’s management. It analyses its interest rate exposure on a dynamic basis taking into consideration refinancing, renewal of existing positions, alternative financing. Based on these scenarios, the Group and the Company calculate the impact on profit and loss of a defined interest rate shift. The scenarios are run only for receivables and liabilities that represent the major interest-bearing positions. Based on the performed simulations, the Company's management believes that if the interest rate increases or decreases by 1 percent, the Group's profit or property for the period would not change in 2022 (in 2021 - 3 thousand euros), while the Company's would change by EUR 15 thousand (in 2021 – EUR 36 thousand).
The Company and the Group have a policy to synchronize the cash flows from expected sales in the future with the expected purchases and other expenses in each foreign currency. Substantially all the Group’s payables and receivables are short-term and in addition expenses in foreign currencies are insignificant (less than 10%) as compared to those in Euro. The Group operates in Lithuania, Latvia and Estonia, and during the reporting period used Euro currency. Since Estonia, Latvia and Lithuania introduced the Euro (respectively, since 1st January 2011, 1st January 2014 and 1st January 2015), so there is no exchange rate fluctuations.
The Group’s and the Company’s objectives when managing capital are to safeguard the Group’s and the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group and the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Group and the Company monitor capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated statement of financial position) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated statement of financial position plus net debt.# N O T E S TO T H E F I N A N C I A L S T A T E M E N T S
Pursuant to the Lithuanian Law on Companies the authorised share capital of a public limited liability company must be not less than EUR 40 thousand and of a private limited liability company must be not less than EUR 2.5 thousand. In addition, for all entities the shareholders’ equity should not be lower than 50 per cent of the company’s registered share capital. As at 31 December 2022 and at 31 December 2021 UAB Apranga Ecom LT did not comply with the requirements. Business activities of UAB Apranga Ecom LT are terminated.
Pursuant to the Latvian Commercial Law the authorised share capital of a private limited liability company must be not less than EUR 2.8 thousand. As at 31 December 2022 and 31 December 2021, all of the Company’s Latvian subsidiaries complied with these requirements.
Pursuant to the Estonian Commercial Code the authorised share capital of a private limited liability company must be not less than EUR 2.5 thousand. In addition, the shareholders’ equity should not be lower than 50 per cent of the company’s share capital. As at 31 December 2021 OU Apranga, OU Apranga PB Trade and OU Apranga Ecom EE did not comply with the requirements. During 2022 the Group management decided to increase the share capital of OU Apranga, OU Apranga PB Trade and OU Apranga Ecom EE in order to comply with the statutory requirements. As at 31 December 2022 all of the Company’s Estonian subsidiaries complied with these requirements.
In addition, the Group has to comply with the total equity over total assets covenant imposed in the agreement with Luminor Bank AS. As at 31 December 2022 and as at 31 December 2021, the Group complied with the covenant.
(c) Fair value estimation
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 measurement date. The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the Company determine whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. Fair value measurements are disclosed in Notes 12, 17, 25.
Management has determined the operating segments based on the reports reviewed by the General Director and other 6 Directors (responsible for managing, sales and marketing, human resources, purchases, development and finance) that are used to make strategic decisions. The Directors consider the business from both a geographic and product perspective to certain extent. From product perspective Directors review only sales volume and gross margin, as presented in the statment of the comprehensive income by brand name. Gross margins of different brands are not significantly different, therefore can be aggregated into one reportable segment. Geographically, Directors separately consider operations in Lithuania, Latvia and Estonia depending on where the stores are located. Different legislation, consumer habits and economic situation substantially affect the average sales and expenses in each country, therefore Directors believe that each country represents a separate reportable segment. All financial information, including the measure of profit and total assets, is analysed on a country basis. Liabilities are measured on a Group basis only and are not individually measured on a country basis.
The segment information provided to the Chief Operating Decision Makers for the reportable segments for the year ended 31 December is as follows:
| Lithuania | Latvia | Estonia | Total | Inter-company | Total consolidated | |
|---|---|---|---|---|---|---|
| 31 December 2022 | ||||||
| Total segment revenue | 164 405 | 59 280 | 37 634 | 261 319 | - | 261 319 |
| Inter-segment revenue* | (17 431) | ( 692) | ( 627) | (18 750) | - | - |
| Stores income from external customers | 146 974 | 58 588 | 37 007 | 242 569 | - | 242 569 |
| (note 6) | ||||||
| Gross margin | 45,5% | 46,0% | 46,6% | 45,8% | 45,8% | 45,8% |
| Other income (expenses): | ||||||
| Rent (Note 25) | (4 972) | (2 120) | ( 939) | (8 031) | ( 30) | (8 061) |
| Utilities | (2 445) | ( 660) | ( 581) | (3 686) | - | (3 686) |
| Renumeration and social security | (23 866) | (6 864) | (4 680) | (35 410) | - | (35 410) |
| contributions | ||||||
| Depreciation and amortisation | (11 273) | (4 716) | (3 048) | (19 037) | - | (19 037) |
| Impairment (charges) | 185 | 183 | ( 65) | 303 | - | 303 |
| Other income | 7 308 | 65 | 50 | 7 423 | (6 303) | 1 120 |
| Other (expenses) | (18 449) | (8 326) | (5 931) | (32 706) | 6 333 | (26 373) |
| Finance income | 57 | 11 | 3 | 71 | ( 34) | 37 |
| Finance (costs) | ( 760) | ( 208) | ( 227) | (1 195) | 34 | (1 161) |
| Income tax (expense) | (1 900) | ( 865) | ( 345) | (3 110) | - | (3 110) |
| Profit (loss) for the year | 10 700 | 3 446 | 1 489 | 15 635 | - | 15 635 |
| Total assets | 109 696 | 31 840 | 18 597 | 160 133 | (11 858) | 148 275 |
| Additions to non-current assets (except for leases) | 2 371 | 255 | 1 832 | 4 458 | - | 4 458 |
| 31 December 2021 | ||||||
| Total segment revenue | 133 403 | 39 766 | 30 705 | 203 874 | - | 203 874 |
| Inter-segment revenue | (12 371) | (1 368) | ( 601) | (14 340) | - | - |
| Stores income from external customers | 121 032 | 38 398 | 30 104 | 189 534 | - | 189 534 |
| (note 6) | ||||||
| Gross margin | 43,5% | 41,4% | 44,7% | 43,4% | 43,4% | 43,4% |
| Other income (expenses): | ||||||
| Rent (Note 25) | (1 550) | ( 91) | ( 197) | (1 838) | ( 23) | (1 861) |
| Utilities | (1 272) | ( 417) | ( 376) | (2 065) | - | (2 065) |
| Renumeration and social security | (18 104) | (3 811) | (3 797) | (25 712) | - | (25 712) |
| contributions | ||||||
| Depreciation and amortisation | (11 531) | (4 833) | (3 434) | (19 798) | - | (19 798) |
| Impairment (charges) | 473 | 106 | 268 | 847 | - | 847 |
| Other income | 5 642 | 1 998 | 187 | 7 827 | (4 837) | 2 990 |
| Other (expenses) | (15 981) | (6 003) | (5 018) | (27 002) | 4 860 | (22 142) |
| Finance income | 58 | - | - | 58 | ( 26) | 32 |
| Finance (costs) | ( 727) | ( 251) | ( 147) | (1 125) | 26 | (1 099) |
| Income tax (expense) | (1 513) | ( 650) | ( 152) | (2 315) | - | (2 315) |
| Profit (loss) for the year | 8 158 | 1 935 | 803 | 10 896 | - | 10 896 |
| Total assets | 128 784 | 34 192 | 19 304 | 182 280 | (16 525) | 165 755 |
| Additions to non-current assets (except for leases) | 6 989 | 755 | 214 | 7 958 | ( 5) | 7 953 |
*inter-segment revenue consists of sales of the Company's goods to subsidiaries Apranga SIA and Apranga OU and subsidiaries sale of remnants of goods to the Company. In 2022, the Group’s profitability before taxes increased to 7.7% (2021: 7.0%): in Lithuania increased to 8.6% (2021: 8.0%), in Latvia increased to 7.4% (2021: 6.7%), in Estonia increased to 5.0% (2021: 3.2%). The profitability before taxes is calculated as follows: profit (loss) for the year before income tax divided by store income from external customers. The total carrying value of non-current assets located in Lithuania is EUR 54 378 thousand (2021: EUR 63 220 thousand), and the total of these non-current assets located in other countries is EUR 26 049 thousand (2021: EUR 31 726 thousand).
For the year ended 31 December cost of sales consisted of the following:
| GROUP | COMPANY | |
|---|---|---|
| 2022 | 2021 | |
| Cost of goods sold | 131 976 | 107 808 |
| Write-down (reversal) | ( 421) | ( 293) |
| of inventories to net | ||
| realisable value | ||
| Total cost of sales | 131 555 | 107 515 |
For the year ended 31 December selling costs consisted of the following:
| GROUP | COMPANY | |
|---|---|---|
| 2022 | 2021 | |
| Rent | 8 061 | 1 861 |
| Utilities | 3 686 | 2 065 |
| Remuneration * | 24 603 | 18 168 |
| Social security contributions | 2 486 | 1 762 |
| Depreciation and amortization | 19 037 | 19 798 |
| Impairment charge (reversal) | ( 303) | ( 847) |
| Advertising and marketing | 2 722 | 2 173 |
| Franchise expenses | 7 884 | 4 501 |
| Bank commissions | 1 279 | 1 219 |
| Labelling, packing and repairing | 1 096 | 1 139 |
| Logistics and distribution | 2 466 | 4 528 |
| Business trips | 445 | 208 |
| Total selling costs | 73 462 | 56 575 |
For the year ended 31 December general and administrative expenses consisted of the following:
| GROUP | COMPANY | |
|---|---|---|
| 2022 | 2021 | |
| Remuneration * | 7 949 | 5 494 |
| Social security contributions | 372 | 288 |
| IT and communications | 1 430 | 1 186 |
| Repair and maintenance | 3 300 | 2 588 |
| Taxes (excluding income tax) | 231 | 192 |
| Consulting and audit expense | 400 | 367 |
| Other expenses | 5 121 | 4 041 |
| Total general and administrative expenses | 18 803 | 14 156 |
* In 2021, the Group in Lithuania, Latvia and Estonia received EUR 3 019 thousand of wage subsidies, which reduced wage costs, while in 2022 the Group did not# NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated)
For the year ended 31 December revenue from contracts with customers consisted of the following:
| GROUP | COMPANY | |
|---|---|---|
| 2022 | 2021 | |
| Stores income | 242 534 | 189 284 |
| Wholesale income | 35 250 | 16 610 |
| Management fees | - | - |
| Other income | 330 | 211 |
| Total revenue from contracts with customers | 242 899 | 189 745 |
For the year ended 31 December stores income consisted of the following:
| GROUP | COMPANY | |
|---|---|---|
| 2022 | 2021 | |
| Chain | ||
| Economy | 25 714 | 18 624 |
| Youth | 57 789 | 45 189 |
| Footwear | 3 870 | 2 648 |
| Business | 44 731 | 35 284 |
| Luxury | 24 229 | 21 522 |
| Zara | 74 366 | 57 490 |
| Outlets | 11 835 | 8 527 |
| Total | 242 534 | 189 284 |
For the year ended 31 December other income consisted of the following:
| GROUP | COMPANY | |
|---|---|---|
| 2022 | 2021 | |
| Rent income | 21 | 1 |
| Gain from disposal of PPE, net | 466 | 43 |
| Changes in fair value of financial assets, net | 200 | - |
| Dividends | 103 | 103 |
| Other income | - | 2 632 |
| Total other income | 790 | 2 779 |
Other income in 2021 includes the working capital subsidy of EUR 2 632 thousand received by the Group. The Company received the working capital subsidy of EUR 350 thousand in 2021. All subsidies for operating restrictions in 2021 in Latvia are recognized in other income in 2021. In 2022, the Group and the Company did not receive working capital subsidies, because there were no restrictions on activities related to Covid 19 in 2022.
For the year ended 31 December finance income consisted of the following:
| GROUP | COMPANY | |
|---|---|---|
| 2022 | 2021 | |
| Interest income | 37 | 32 |
| Total finance income | 37 | 32 |
FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated)
For the year ended 31 December finance costs consisted of the following:
| GROUP | COMPANY | |
|---|---|---|
| 2022 | 2021 | |
| Interest on bank borrowings | 100 | 105 |
| Interest expense on lease liabilities | 1 061 | 994 |
| Interest on borrowings from subsidiaries | - | - |
| Total finance costs | 1 161 | 1 099 |
Domestic income tax is calculated at 15 per cent of the estimated profit for the year. The total income tax charge can be reconciled to the accounting profit before tax as follows:
| GROUP | COMPANY | |
|---|---|---|
| 2022 | 2021 | |
| Profit before tax | 18 745 | 13 211 |
| Tax at the domestic income tax rate | 2 812 | 1 982 |
| Tax effect of income not subject to tax | ( 57) | ( 315) |
| Tax effect of expenses that are not deductible in determining taxable profit | 47 | 474 |
| Prior period income tax adjustment | - | - |
| Effect of different tax rates of foreign subsidiaries | 308 | 174 |
| Tax expense | 3 110 | 2 315 |
| Effective income tax rate | 16,6% | 17,5% |
For the year ended 31 December income tax expense consisted of the following:
| GROUP | COMPANY | |
|---|---|---|
| 2022 | 2021 | |
| Current income tax expense | 2 983 | 1 256 |
| Deferred tax | 127 | 1 059 |
| Total income tax expense | 3 110 | 2 315 |
The movement in deferred income tax liabilities account was as follows:
| GROUP | COMPANY | |
|---|---|---|
| 2022 | 2021 | |
| At beginning of year | (2 067) | (1 008) |
| Comprehensive income statement (charge) credit | ( 127) | (1 059) |
| At end of year | (2 194) | (2 067) |
In 2022 and 2021 deferred income tax asset and liability related to the entities operating in Lithuania were calculated at 15 per cent rate. Deferred income tax liability related to the entities operating in Latvia and Estonia were calculated at 20 per cent rate as at 31 December 2022 and as at 31 December 2021 for the accrued undistributed profit of these subsidiaries, since these undistributed profits are planned to be paid out as dividends during the coming years (Note 2.16). The 20 percent rate applies to gross dividends (25 per cent to net dividends).
FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated)
Deferred tax assets and liabilities recognised as follows:
| GROUP | COMPANY | |
|---|---|---|
| 2022 | 2021 | |
| Deferred tax assets: | ||
| Inventory write down | 387 | 433 |
| Accruals | 17 | 16 |
| Impairment of property, plant and equipment | 12 | 18 |
| Total deferred tax assets | 416 | 467 |
| Deferred tax liability: | ||
| Undistributed profits of subsidiaries | (1 936) | (1 815) |
| Depreciation of property, plant and equipment | ( 674) | ( 719) |
| Total deferred tax liabilities | (2 610) | (2 534) |
| Total deferred tax (liabilities) assets, net | (2 194) | (2 067) |
| 2022 | 2021 | |
|---|---|---|
| Approved dividends | - | 27 646 |
| Weighted average number of ordinary shares in thousand (Note 21) | 55 292 | 55 292 |
| Approved dividends per share, EUR | 0.00 | 0.50 |
In 2022, the Annual Shareholder’s Meeting approved to pay dividends 0.50 cent per share to the shareholders for 2021 year. In respect of the current 2022 year, the Board of Directors propose to pay 0.28 EUR dividend per share to the shareholders (Note 22). This dividend is subject to approval by the shareholders at the Annual Shareholder’s Meeting and has not been included as a liability in these financial statements.
| GROUP | COMPANY | |
|---|---|---|
| 2022 | 2021 | |
| Profit (loss) for the year | 15 635 | 10 896 |
| Weighted average number of ordinary shares in thousand (Note 21) | 55 292 | 55 292 |
| Basic and diluted earnings per share, EUR | 0.28 | 0.20 |
Company has no dilutive potential ordinary shares, therefore, the diluted earnings per share are the same as basic earnings per share.
FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated)
At 31 December property, plant and equipment consisted of the following:
GROUP
| Plant and Buildings | Leasehold improvements | Construction equipment | Other PPE | Construction in progress | Total | |
|---|---|---|---|---|---|---|
| Cost | ||||||
| At 31 December 2020 | 9 411 | 2 111 | 11 864 | 45 823 | 524 | 69 733 |
| Additions | 2 | 27 | 39 | 2 230 | 5 405 | 7 703 |
| Disposals and write-offs | - | ( 14) | (3 642) | (4 689) | (1 056) | (9 401) |
| Transfers | 394 | - | 3 367 | 925 | (4 686) | - |
| At 31 December 2021 | 9 807 | 2 124 | 11 628 | 44 289 | 187 | 68 035 |
| Additions | 423 | 42 | 645 | 631 | 2 080 | 3 821 |
| Disposals and write-offs | (1 267) | ( 40) | (3 283) | (2 745) | - | (7 335) |
| Transfers | - | - | 858 | 975 | (1 833) | - |
| At 31 December 2022 | 8 963 | 2 126 | 9 848 | 43 150 | 434 | 64 521 |
| Accumulated depreciation | ||||||
| At 31 December 2020 | 4 075 | 542 | 7 055 | 30 839 | - | 42 511 |
| Charge for the year | 248 | 135 | 1 637 | 4 512 | - | 6 532 |
| Disposals and write-offs | - | ( 14) | (2 005) | (4 416) | - | (6 435) |
| At 31 December 2021 | 4 323 | 663 | 6 687 | 30 935 | - | 42 608 |
| Charge for the year | 211 | 135 | 1 579 | 4 340 | - | 6 265 |
| Disposals and write-offs | ( 518) | ( 40) | (2 607) | (2 687) | - | (5 852) |
| At 31 December 2022 | 4 016 | 758 | 5 659 | 32 588 | - | 43 021 |
| Impairment charge | ||||||
| At 31 December 2020 | - | - | 628 | 595 | - | 1 223 |
| Charge for the year (reversal) | ( 335) | ( 362) | ( 696) | |||
| At 31 December 2021 | - | - | 294 | 234 | - | 527 |
| Charge for the year (reversal) | ( 95) | 76 | ( 19) | |||
| At 31 December 2022 | - | - | 199 | 310 | - | 508 |
| Carrying amount | ||||||
| At 31 December 2020 | 5 336 | 1 569 | 4 181 | 14 389 | 524 | 25 999 |
| At 31 December 2021 | 5 484 | 1 461 | 4 648 | 13 121 | 187 | 24 900 |
| At 31 December 2022 | 4 947 | 1 368 | 3 991 | 10 253 | 434 | 20 992 |
COMPANY
| Plant and Buildings | Leasehold improvements | Construction equipment | Other PPE | Construction in progress | Total | |
|---|---|---|---|---|---|---|
| Cost | ||||||
| At 31 December 2020 | 9 411 | 2 111 | 6 225 | 13 798 | 608 | 32 153 |
| Additions | 2 | 27 | 15 | 1 559 | 2 290 | 3 893 |
| Disposals and write-offs | - | ( 14) | (1 096) | (2 335) | (1 054) | (4 499) |
| Transfers | 394 | - | 1 474 | ( 24) | (1 844) | - |
| At 31 December 2021 | 9 807 | 2 124 | 6 618 | 12 998 | - | 31 547 |
| Additions | 423 | 42 | 7 466 | 567 | 1 505 | |
| Disposals and write-offs | (1 267) | ( 40) | (1 937) | (1 398) | - | (4 642) |
| Transfers | - | - | 432 | - | ( 432) | - |
| At 31 December 2022 | 8 963 | 2 126 | 5 120 | 12 066 | 135 | 28 410 |
| Accumulated depreciation | ||||||
| At 31 December 2020 | 4 075 | 542 | 3 957 | 10 584 | - | 19 158 |
| Charge for the year | 248 | 135 | 877 | 1 179 | - | 2 439 |
| Disposals and write-offs | - | ( 14) | (1 096) | (2 224) | - | (3 334) |
| At 31 December 2021 | 4 323 | 663 | 3 738 | 9 539 | - | 18 263 |
| Charge for the year | 211 | 135 | 872 | 1 070 | - | 2 288 |
| Disposals and write-offs | ( 518) | ( 40) | (1 862) | (1 391) | - | (3 811) |
| At 31 December 2022 | 4 016 | 758 | 2 748 | 9 218 | - | 16 740 |
| Impairment charge | ||||||
| At 31 December 2020 | - | - | 175 | 115 | - | 290 |
| Charge for the year (reversal) | ( 105) | ( 66) | ( 171) | |||
| At 31 December 2021 | - | - | 70 | 49 | - | 119 |
| Charge for the year (reversal) | ( 36) | ( 27) | ( 63) | |||
| At 31 December 2022 | - | - | 34 | 22 | - | 56 |
| Carrying amount | ||||||
| At 31 December 2020 | 5 336 | 1 569 | 2 093 | 3 099 | 608 | 12 705 |
| At 31 December 2021 | 5 484 | 1 461 | 2 810 | 3 410 | - | 13 165 |
| At 31 December 2022 | 4 947 | 1 368 | 2 338 | 2 826 | 135 | 11 614 |
The Group's and the Company's depreciation expense is recognized in the statements of comprehensive income under selling costs. At 31 December 2022 the Group’s and the Company’s buildings with the carrying amount of EUR 4 947 thousand (2020: EUR 4 735 thousand) have been pledged as security for outstanding loans from financial institutions (Note 23). As of December 31 2022, the Company has leased one premises to third parties. As of December 31 2021, the Company had no buildings or premises leased to third parties.
FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated)
33# N O T E S TO T H E F I N A N C I A L S T A T E M E N T S
(all tabular amounts are in EUR thousands unless otherwise stated)
34
At 31 December the acquisition cost of the fully depreciated property, plant and equipment still in use was as follows:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| Plant and equipment | 1 002 | 1 024 | 987 | 1 024 |
| Leasehold improvements | 42 | - | - | - |
| Other PPE | 15 891 | 14 552 | 4 941 | 4 499 |
| Total | 16 935 | 15 576 | 5 928 | 5 523 |
The main cash generating unit of the Group and the Company is a store. The Group and the Company have tested PPE used in stores operations for impairment in accordance with the accounting policies stated in Note 2.9.
Estimation of the value in use was based on the discounted post-tax cash flows (DCF) of the latest available business plan. DCF was estimated over remaining useful life of leasehold improvements (vast majority of premises are leased). For the calculation of future cash flows in 2023 and in later years, each cash generating unit was assessed individually. Net sales and personnel costs growth rates were established on brand or country level. The weighted average cost of capital (further – WACC) of 13 per cent post-tax (WACC of 10 per cent post-tax - in 2021) was used for value in use estimation.
Based on the calculations performed the management concluded that impairment in the amount of EUR 508 thousand for the Group (2021: EUR 527 thousand) and EUR 56 thousand for the Company (2021: EUR 119 thousand) should be recorded against PPE in the statement of financial position.
The Group and the Company in 2022 reversed impairment losses of EUR 19 thousand and EUR 63 thousand respectively (2021: reversed impairment losses of EUR 696 thousand and EUR 171 thousand for the Group and the Company respectively). Impairment losess reversed in the period were mostly related to non-current assets of CGUs, which were closed during the year, as well as to the decrease of carrying value of non-current assets associated to operating CGUs due to depreciation. However, an increase in WACC has offset some of the effect.
If future operating cash flows in 2023 and in later years were reduced by 5 per cent, the Group and the Company in 2022 would have recognized additional PPE impairment amounting to EUR 10 thousand and EUR 4 thousand, respectively. If the estimated post-tax discount rate applied to the discounted cash flows for cash generating units had been 1 per cent higher than management estimates (for example 14 per cent instead of 13 per cent), the Group and the Company in 2022 would have recognised by EUR 10 thousand and EUR 5 thousand higher impairment against PPE, respectively.
The Management does not expect material changes in estimations made in the near future, except those disclosed in Note 2.2 (a).
At 31 December intangible assets consisted of the following:
| GROUP | COMPANY | |||||
|---|---|---|---|---|---|---|
| Licenses | Software | Total | Licenses | Software | Total | |
| and rights | acquired | and rights | acquired | |||
| Cost | ||||||
| At 31 December 2020 | 436 | 1 157 | 1 593 | 317 | 1 137 | 1 454 |
| Additions | 71 | 179 | 250 | 75 | 179 | 254 |
| Write-offs | ( 5) | - | ( 5) | - | - | - |
| At 31 December 2021 | 502 | 1 336 | 1 838 | 392 | 1 316 | 1 708 |
| Additions | 123 | 514 | 637 | 108 | 514 | 622 |
| Write-offs | - | ( 42) | ( 42) | - | ( 42) | ( 42) |
| At 31 December 2022 | 625 | 1 808 | 2 433 | 500 | 1 788 | 2 288 |
| Accumulated amortisation | ||||||
| At 31 December 2020 | 206 | 853 | 1 059 | 124 | 833 | 957 |
| Charge for the year | 71 | 72 | 143 | 65 | 72 | 137 |
| Write-offs | - | - | - | - | - | - |
| At 31 December 2021 | 277 | 925 | 1 202 | 189 | 905 | 1 094 |
| Charge for the year | 92 | 109 | 201 | 83 | 109 | 192 |
| Write-offs | - | ( 42) | ( 42) | - | ( 42) | ( 42) |
| At 31 December 2022 | 369 | 992 | 1 361 | 272 | 972 | 1 244 |
| Carrying amount | ||||||
| At 31 December 2020 | 230 | 304 | 534 | 193 | 304 | 497 |
| At 31 December 2021 | 225 | 411 | 636 | 203 | 411 | 614 |
| At 31 December 2022 | 256 | 816 | 1 072 | 228 | 816 | 1 044 |
The Group's and the Company's amortisation expense is recognized in the statements of comprehensive income under selling costs.
(all tabular amounts are in EUR thousands unless otherwise stated)
35
At 31 December the acquisition cost of fully amortized intangible assets still in use was as follows:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| Licenses | 159 | 154 | 84 | 79 |
| Software | 781 | 821 | 764 | 804 |
| Total | 940 | 975 | 848 | 883 |
The Company’s investments in subsidiaries at 31 December are as follows:
| Name | Country of incorporation | Ownership, 2022 % | Cost 2022 | Ownership, 2021 % | Cost 2021 |
|---|---|---|---|---|---|
| UAB Apranga LT | Lithuania | 100 | 724 | 100 | 724 |
| UAB Apranga BPB LT | Lithuania | 100 | 145 | 100 | 145 |
| UAB Apranga PLT | Lithuania | 100 | 87 | 100 | 87 |
| UAB Apranga SLT | Lithuania | 100 | 87 | 100 | 87 |
| UAB Apranga MLT | Lithuania | 100 | 87 | 100 | 87 |
| UAB Apranga HLT | Lithuania | 100 | 75 | 100 | 75 |
| UAB Apranga OLT | Lithuania | 100 | 50 | 100 | 50 |
| UAB Apranga Ecom LT | Lithuania | 100 | 10 | 100 | 10 |
| SIA Apranga Latvia | Latvia | 100 | 2 175 | 100 | 2 175 |
| SIA Apranga LV | Latvia | 100 | 153 | 100 | 153 |
| SIA Apranga BPB LV | Latvia | 100 | 86 | 100 | 86 |
| SIA Apranga PLV | Latvia | 100 | 86 | 100 | 86 |
| SIA Apranga SLV | Latvia | 100 | 85 | 100 | 85 |
| SIA Apranga MLV | Latvia | 100 | 86 | 100 | 86 |
| SIA Apranga HLV | Latvia | 100 | 50 | 100 | 50 |
| SIA Apranga OLV | Latvia | 100 | 50 | 100 | 50 |
| SIA Apranga Ecom LV | Latvia | 100 | 3 | 100 | 3 |
| OU Apranga * | Estonia | 100 | 447 | 100 | 447 |
| OU Apranga Estonia | Estonia | 100 | 128 | 100 | 128 |
| OU Apranga BEE | Estonia | 100 | 96 | 100 | 96 |
| OU Apranga PB Trade | Estonia | 100 | 221 | 100 | 96 |
| OU Apranga ST Retail | Estonia | 100 | 96 | 100 | 96 |
| OU Apranga MDE | Estonia | 100 | 2 | 100 | 2 |
| OU Apranga HEST | Estonia | 100 | 50 | 100 | 50 |
| OU Apranga Ecom EE | Estonia | 100 | 17 | 100 | 10 |
| Total investments | 5 095 | 4 963 |
* At 31 December 2022 the Company directly owned 14.91% shares and indirectly through its subsidiary owned the rest 85.09% of shares (At 31 December 2021: 14.91% and 85.09%, respectively).
The changes in investments are as follows:
| 2022 | 2021 | |
|---|---|---|
| Beginning of the year | 4 963 | 4 963 |
| Increase in share capital of UO Apranga PB Trade | 125 | - |
| Increase in share capital of OU Apranga Ecom EE | 7 | - |
| At end of the year | 5 095 | 4 963 |
(all tabular amounts are in EUR thousands unless otherwise stated)
36
| Group | Company | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| Goods for resale | 43 844 | 38 850 | 23 220 | 19 834 |
| Write-down of goods for resale to net realisable value* | (3 613) | (4 034) | (1 637) | (1 974) |
| Return assets | 507 | 398 | 66 | 64 |
| Goods in transit | 135 | 43 | 135 | 43 |
| Materials and spare parts | 513 | 652 | 422 | 558 |
| Total | 41 386 | 35 909 | 22 206 | 18 525 |
| *Acquisition cost of write-down of goods for resale to net | 18 024 | 19 426 | 9 022 | 9 912 |
| realisable value |
At 31 December 2022 inventories of the Group and the Company have been pledged as security for outstanding loans from financial institutions (Note 23). The total carrying amount of Group’s pledged inventories as at 31 December 2022 was EUR 11 296 thousand, Company’s - EUR 7 896 thousand (EUR 11 296 thousand and EUR 7 896 thousand as at 31 December 2021, respectively).
At 31 December prepayments consisted of the following:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| Prepayments | 1 776 | 1 762 | 1 509 | 1 359 |
| Less non-current portion of prepayments | ( 273) | ( 416) | ( 134) | ( 188) |
| Current portion of prepayments | 1 503 | 1 346 | 1 375 | 1 171 |
The major share of prepayments are prepayments to suppliers for goods, which are subsequently used to settle amounts due.
The accounting policies for financial instruments have been applied to the line items at 31 December below:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| Category - Financial assets at amortised cost | Category - Financial assets at amortised cost | Category - Financial assets at amortised cost | Category - Financial assets at amortised cost | |
| Assets as per statement of financial position: | 2022 | 2021 | 2022 | 2021 |
| Trade and other receivables | 4 190 | 5 476 | 10 741 | 12 409 |
| Cash and cash equivalents | 22 978 | 29 743 | 8 375 | 17 192 |
| Total | 27 168 | 35 219 | 19 116 | 29 601 |
| Category - at fair value | Category - at fair value | Category - at fair value | Category - at fair value | |
| Shares of Verslo Trikampis UAB (level 3) | 2 600 | 2 400 | 2 600 | 2 400 |
| Long-term Government bonds (level 1) | - | 735 | - | 735 |
| Total | 2 600 | 3 135 | 2 600 | 3 135 |
| Total financial assets | 29 768 | 38 354 | 21 716 | 32 736 |
In 2014, the Company has acquired the long-term bonds issued by the Lithuanian Government, which were recorded as financial assets at fair value through other comprehensive income. In May 2022, upon maturity long-term bonds issued by the Lithuanian Government were redeemed from the Company for EUR 579 thousand, due to which the Company incurred a loss of EUR 121 thousand. The Group and the Company did not possess any state securities as at 31 December 2022.
`In June 2018, the Company acquired shares of the investment company UAB Verslo trikampis (formerly UAB LIM Verslo Trikampio NT Fondas), which are recognized as financial assets at fair value through profit or loss. Refer to the accounting policies in Note 2.13, Financial assets and liabilities.
(all tabular amounts are in EUR thousands unless otherwise stated)
37
In 2022, the Group and the Company recognized profit of EUR 200 thousand from increase in value of investments in shares of UAB Verslo Trikampis. In 2021, the management concluded that fair value of the investment in shares of UAB Verslo Trikampis corresponded to the book value, therefore the Group and the Company did not recognize income from change in value in 2021.## GROUP
| 2022 | 2021 | 2022 | 2021 | |
|---|---|---|---|---|
| Liabilities as per statement of financial position: | ||||
| Borrowings | - | 200 | 2 032 | 5 400 |
| Lease liabilities | 56182 | 67075 | 24657 | 28858 |
| Trade and other payables | 16395 | 13106 | 5187 | 4215 |
| Total | 72577 | 80381 | 31876 | 38473 |
The following methods and assumptions are used to estimate the fair value of each class of financial instruments:
a) The carrying amount of current trade and other accounts receivable, current trade and other accounts payable and current borrowings approximates their fair value due to short term maturities (Level 3);
b) The fair value of non-current debt is based on the quoted market price for the same or similar issues or on the current rates available for debt with the same maturity profile. The fair value of non-current borrowings with variable interest rates approximates their carrying amounts (Level 3);
c) The value of investment in Verslo trikampis UAB fund is calculated as the number of fund units held multiplied by the value of the fund unit as at reporting date (Level 3). The valuation of the fund is performed using DCF model.
Total credit risk exposure of the Group and the Company is provided below. Since there are no material overdue or with increased credit risk items, provision matrix is not provided in these financial statements.
| GROUP COMPANY | 2022 | 2021 | 2022 | 2021 |
|---|---|---|---|---|
| Financial assets at fair value | 2600 | 3135 | 2600 | 3135 |
| Trade and other receivables with no history of counterparty defaults | 4190 | 5476 | 956 | 1187 |
| Receivables from related parties (Note 27) | - | - | 9785 | 11222 |
| Cash at bank or their parent companies that have high credit ratings (cash on hand or in transit is excluded) | 19388 | 27152 | 7690 | 16642 |
| Total | 26178 | 35763 | 21031 | 32186 |
At 31 December trade and other receivables consisted of the following:
| GROUP COMPANY | 2022 | 2021 | 2022 | 2021 |
|---|---|---|---|---|
| Trade receivables from subsidiaries (Note 27) | - | - | 9575 | 9912 |
| Loans to subsidiaries (Note 27) | - | - | 210 | 1310 |
| Trade receivables from unrelated parties | 470 | 576 | 217 | 105 |
| Other receivables | 3720 | 4900 | 739 | 1082 |
| Total | 4190 | 5476 | 10741 | 12409 |
| Less non-current portion of other receivables | (2409) | (2400) | (40) | (46) |
| Current portion | 1781 | 3076 | 10701 | 12363 |
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
2 APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius
FOR THE YEAR ENDED 31 DECEMBER 2022
(all tabular amounts are in EUR thousands unless otherwise stated)
38
The major share of other receivable are deposits related to internet sales and receivables from suppliers for returned goods. At 31 December 2021 the Group accounted government subsidies of EUR 500 thousand under other receivables. There were no expected significant credit lossess identified and, consequently, no allowance was accounted for as at 31 December 2022 and 2021. There were no receivables past due in 2022 and 2021. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above, except of advance income tax. The Group and the Company do not hold any collateral as security. All the Company’s loans granted to subsidiaries are denominated in EUR currency. The interest rate at 31 December 2022 is 2.5 per cent (2021: 1.5 per cent), maturity date – 31 December 2023 (2021: 31 December 2022).
At 31 December cash and cash equivalents consisted of the following:
| GROUP COMPANY | 2022 | 2021 | 2022 | 2021 |
|---|---|---|---|---|
| Cash at bank | 19388 | 27152 | 7690 | 16642 |
| Cash on hand | 817 | 564 | 181 | 249 |
| Cash in transit | 2773 | 2027 | 504 | 301 |
| Total | 22978 | 29743 | 8375 | 17192 |
Cash in certain bank accounts and future cash inflows into these accounts were pledged to banks as security for credit facilities granted. At 31 December 2022, the cash balances of the Group and the Company in the pledged accounts amounted to EUR 7 686 thousand (2021: EUR 11 641 thousand) (Note 23).
Cash and cash equivalents include the following for the purposes of the cash flow statement:
| GROUP COMPANY | 2022 | 2021 | 2022 | 2021 |
|---|---|---|---|---|
| Cash and cash equivalents | 22978 | 29743 | 8375 | 17192 |
| Total | 22978 | 29743 | 8375 | 17192 |
Presented below is the analysis of the credit quality of balances of cash and cash equivalents, except cash on hand and cash in transit, based on ratings established by the rating agency S&P (parent banks of the banks in whose accounts the Group's revenues are collected):
| GROUP COMPANY | 2022 | 2021 | 2022 | 2021 |
|---|---|---|---|---|
| A+ | 19388 | 27152 | 7690 | 16642 |
| Total | 19388 | 27152 | 7690 | 16642 |
At 31 December 2022 issued share capital of the Company consisted of 55 291 960 (2020 and 2021: 55 291 960) ordinary shares at par value of EUR 0.29 each. All issued shares are fully paid. Subsidiaries did not hold any shares of the Company as of 31 December 2022 and 2021. The Company did not hold its own shares as of 31 December 2022 and 2021.
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
2 APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius
FOR THE YEAR ENDED 31 DECEMBER 2022
(all tabular amounts are in EUR thousands unless otherwise stated)
39
Under Lithuanian Law on Companies the Company has to allocate 1/20 of its net profit to the legal reserve until it reaches 1/10 of the Company’s authorised capital (up to EUR 1 604 thousand as at 31 December 2022 and 31 December 2021). Legal reserve is fully formed. On 28 April 2022 the Company’s shareholders’ meeting resolved to pay EUR 27 646 thousand in dividends (EUR 0.50 per one share) for 2021 year. On 29 April 2021 the Company’s shareholders’ meeting decided not to pay out dividends for 2020 year. In respect of the current year, the Board of directors propose a dividend of EUR 15 482 thousand to be paid to the shareholders. This dividend amount is subject to approval by shareholders at the Annual Shareholder’s Meeting.
At 31 December the carrying amounts of the borrowings consisted of the following:
| GROUP COMPANY | 2022 | 2021 | 2022 | 2021 |
|---|---|---|---|---|
| Long term borrowings | ||||
| Bank credit lines and loans | - | - | - | - |
| Total | - | - | - | - |
| Short term borrowings | ||||
| Bank credit lines and loans | - | 200 | - | 200 |
| Borrowings from subsidiaries | - | - | 2 032 | 5 200 |
| Total | - | 200 | 2 032 | 5 400 |
| Total borrowings | - | 200 | 2 032 | 5 400 |
The bank credit lines are secured by cash in certain of bank accounts (Note 20), some of buildings (Note 12) and part of inventories (Note 15). At 31 December all amounts of the borrowings are denominated in EUR currency.
The weighted average interest rates at the end of the reporting period were as follows:
| GROUP COMPANY | 2022 | 2021 | 2022 | 2021 |
|---|---|---|---|---|
| Bank credit lines and loans | 1.2% | 1.2% | 1.2% | 1.2% |
| Bank overdraft | 1.4% | 1.4% | 1.4% | 1.4% |
| Borrowings from subsidiaries | 0.0% | 0.0% | 0.0% | 0.0% |
Exposure of the Group’s and the Company’s borrowings to interest rate changes and the contractual repricing dates fall into period of 6 month or less. The Group’s and the Company’s borrowing facilities contracted but undrawn as at the end of the reporting period were EUR 16 705 thousand (2021: EUR 21 850 thousand), out of which EUR 5 000 thousand can be utilised until 30 June 2023 and EUR 11 705 thousand – until 30 November 2023. The Group has to comply with financial covenants imposed in the agreements with Luminor Bank AS and SEB bankas AB, such as equity to assets, financial debt to EBITDA as well as net financial debt to EBITDA. As at 31 December 2022 and as at 31 December 2021, the Group complied with all financial covenants.
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
2 APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius
FOR THE YEAR ENDED 31 DECEMBER 2022
(all tabular amounts are in EUR thousands unless otherwise stated)
40
At 31 December trade and other payables consisted of the following:
| GROUP COMPANY | 2022 | 2021 | 2022 | 2021 |
|---|---|---|---|---|
| Payables to other related parties | 113 | 106 | 113 | 106 |
| Trade payables | 10029 | 7181 | 2922 | 2124 |
| Employee benefits and related payables | 5571 | 4279 | 3022 | 2316 |
| Contract liabilities | 667 | 550 | 175 | 185 |
| Refund liabilities | 841 | 645 | 128 | 117 |
| Taxes, except income tax, payable | 4064 | 3798 | 1168 | 1253 |
| Accrued expenses and other payables | 5414 | 5174 | 2024 | 1868 |
| Total | 26699 | 21733 | 9552 | 7969 |
Set out below are the carrying amounts of right-of-use assets recognized and the movements during the period:
| Group Company | Premises | Vehicles | In total | Premises | Vehicles | In total |
|---|---|---|---|---|---|---|
| As at 1 January 2022 | 63 933 | 261 | 64 194 | 27 839 | 221 | 28 060 |
| Additions | 1 220 | 155 | 1 375 | 559 | 131 | 690 |
| Impairment (charge) reversal | 284 | - | 284 | 145 | - | 145 |
| Depreciation (expense) | (12 425) | (147) | (12 572) | (4 947) | (118) | (5 065) |
| As at 31 December 2022 | 53 012 | 269 | 53 281 | 23 596 | 234 | 23 830 |
| Group Company | Premises | Vehicles | In total | Premises | Vehicles | In total |
|---|---|---|---|---|---|---|
| As at 1 January 2021 | 63 936 | 267 | 64 203 | 24 748 | 203 | 24 951 |
| Additions | 12 831 | 129 | 12 960 | 7 793 | 122 | 7 915 |
| Impairment (charge) reversal | 151 | - | 151 | 300 | - | 300 |
| Depreciation (expense) | (12 985) | (135) | (13 120) | (5 002) | (104) | (5 106) |
| As at 31 December 2021 | 63 933 | 261 | 64 194 | 27 839 | 221 | 28 060 |
The Group and the Company have tested right-of-use assets for impairment in accordance with the accounting policies stated in Note 2.9. Estimation of the value in use was calculated using the same method and using the same indicators as in Note 12. Based on the calculations performed the management concluded that impairment in the amount of EUR 584 thousand for the Group (As at 31 December 2021: EUR 868 thousand) and EUR 83 thousand for the Company (As at 31 December 2021: EUR 228 thousand) should be recorded against right-of-use assets in the statement of financial position as at 31 December 2022.# N O T E S TO T H E F I N A N C I A L S T A T E M E N T S
The Group in 2022 have recognised the impairment reversal of right-of-use assets of EUR 284 thousand (impairment reversal of EUR 151 thousand was recognized in 2021), the Company have recognised the impairment reversal of right-of-use assets of EUR 145 thousand (impairment reversal of EUR 300 thousand was recognized in 2021). Impairment of right-of-use assets is recognized in the statement of comprehensive income under selling costs. Impairment losses reversed in the period were mostly related to non-current assets of CGUs, which were closed during the year, as well as to the decrease of carrying value of non-current assets associated to operating CGUs due to depreciation. However, an increase in WACC has offset some of the effect.
If future operating cash flows in 2023 and in later years were reduced by 5 per cent, the Group and the Company in 2022 would have recognized additional right-of-use assets impairment amounting to EUR 16 thousand and EUR 6 thousand, respectively. If the estimated post-tax discount rate applied to the discounted cash flows for cash generating units had been 1 per cent higher than management estimates (for example 14 per cent instead of 13 per cent), the Group and the Company in 2022 would have recognised by EUR 14 thousand and EUR 7 thousand higher impairment against right-of-use assets, respectively.
Set out below are the carrying amounts of lease liabilities (presented under “Current lease liabilities” and “Non-current lease liabilities”) and the movements during the period:
| Group Company | Company | |||
|---|---|---|---|---|
| As at 1 January 2022 | 67 075 | 28 858 | ||
| Additions | 1 375 | 690 | ||
| Accretion of interest | 1 061 | 419 | ||
| Payments | (12 913) | (5 307) | ||
| Rent discounts | ( 416) | ( 3) | ||
| As at 31 December 2022 | 56 182 | 24 657 | ||
| Current | 12 717 | 5 018 | ||
| Non-current | 43 465 | 19 639 | ||
| Group Company | Company | |||
| As at 1 January 2021 | 66 694 | 25 890 | ||
| Additions | 12 960 | 7 915 | ||
| Accretion of interest | 994 | 406 | ||
| Payments | (11 172) | (4 440) | ||
| Rent discounts | (2 401) | ( 913) | ||
| As at 31 December 2021 | 67 075 | 28 858 | ||
| Current | 13 251 | 5 261 | ||
| Non-current | 53 824 | 23 597 |
As at 31 December 2022 present value of payments for leases which are not yet commenced but to which the Group and the Company are committed amounted to EUR 10 113 thousand and EUR 1 670 thousand.
The following are the amounts recognized in profit or loss:
| Group Company | Company | |||
|---|---|---|---|---|
| 2022 | ||||
| Depreciation expense of right-of-use assets (included in selling costs) | 12 572 | 5 065 | ||
| Interest expense on lease liabilities (included in finance costs) | 1 061 | 419 | ||
| Expenses relating to short-term leases (included in selling costs) | 17 | 17 | ||
| Impairment charge (included in selling costs) | ( 284) | ( 145) | ||
| Variable lease payments (included in selling costs) | 8 460 | 2 254 | ||
| Rent discounts (included in selling costs) | ( 416) | ( 3) | ||
| Total amount recognized in profit or loss | 21 410 | 7 607 | ||
| Group Company | Company | |||
| 2021 | ||||
| Depreciation expense of right-of-use assets (included in selling costs) | 13 120 | 5 106 | ||
| Interest expense on lease liabilities (included in finance costs) | 994 | 406 | ||
| Expenses relating to short-term leases (included in selling costs) | - | - | ||
| Impairment charge (included in selling costs) | ( 151) | ( 300) | ||
| Variable lease payments (included in selling costs) | 4 262 | 1 304 | ||
| Rent discounts (included in selling costs) | (2 401) | ( 913) | ||
| Total amount recognized in profit or loss | 15 824 | 5 603 |
The Company/Group has lease contracts for Premises that contain variable payments based on the turnover of stores located in those Premises. Management’s objective is to align the lease expense with the revenue earned. The Company/Group accounted rent concessions obtained from lessors as negative variable lease payments (rent discounts) in accordance with practical expedient applied.
The following provides information on the Company’s/Group’s variable lease payments in 2022 and 2021, including the magnitude in relation to fixed payments:
| Group Company | Company | |||||
|---|---|---|---|---|---|---|
| Fixed | Variable | In total | Fixed | Variable | In total | |
| Year ended 31 December 2022 | payments | payments | payments | payments | ||
| Fixed payments | 1 969 | 1 969 | 1 650 | 1 650 | ||
| Variable rent with minimum payment | 11 346 | 5 558 | 16 904 | 2 015 | 1 963 | 3 978 |
| Variable rent only | - | 2 486 | 2 486 | - | 288 | 288 |
| Total | 13 315 | 8 044 | 21 359 | 3 665 | 2 251 | 5 916 |
| Group Company | Company | |||||
| Year ended 31 December 2021 | payments | payments | payments | payments | ||
| Fixed payments | 1 763 | 1 763 | 1 447 | 1 447 | ||
| Variable rent with minimum payment | 11 739 | 161 | 11 900 | 3 875 | 103 | 3 978 |
| Variable rent only | - | 1 700 | 1 700 | - | 288 | 288 |
| Total | 13 502 | 1 861 | 15 363 | 5 322 | 391 | 5 713 |
In 2021, the majority of the companies belonging to the Group exercised the right to conclude tax loan agreements (hereinafter - TLA) with the state’s tax inspectorates of the respective countries on preferential terms. Interests are not charged on concluded TLA. The terms of the concluded contracts are from 14 to 36 months. TLA for the total amount of EUR 3.7 million were concluded in 2021 for the Group and EUR 1.4 million for the Company. In December 2021, the Group companies repaid the full remaining amount of TLA ahead of schedule.
The parties are considered related when one party has the possibility to control the other or have significant influence over the other party in making financial and operating decisions. There is no allowance for intercompany receivables as expected credit losses are immaterial.
The Company’s and the Group’s transactions with related parties and balances arising from these transactions as of 31 December were as follows:
| Accounts payable | Accounts receivable | Income | Purchases | |||||
|---|---|---|---|---|---|---|---|---|
| Related parties and loans granted | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| UAB MG Grupė | 13 | 10 | - | - | - | - | 108 | 109 |
| (the ultimate parent company) | ||||||||
| As per ultimate parent company | ||||||||
| associated companies: | ||||||||
| UAB Mineraliniai vandenys | - | - | - | - | - | - | 36 | 20 |
| UAB Mediafon Technology | 8 | 3 | - | - | - | - | 75 | 24 |
| UAB MG Investment | 4 | 4 | - | 1 | - | - | 53 | 52 |
| LNK Group | 1 | 4 | - | - | 2 | 1 | - | 2 |
| UAB Eminta | 87 | 85 | - | - | - | - | 865 | 674 |
| UAB MV GROUP | - | - | - | - | - | - | - | - |
| Total | 113 | 106 | - | 1 | 2 | 1 | 1 137 | 881 |
Prevailing types of related party contracts are rent, management service fee, advertising, centralised services (telecommunications, utilities and etc.).
The Company’s transactions with subsidiaries and balances arising from these transactions as of 31 December were as follows:
| Borrowings and Loans and accounts | accounts payable | Income | Purchases | |||||
|---|---|---|---|---|---|---|---|---|
| Subsidiaries | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| UAB Apranga LT | 748 | 2 049 | 86 | 66 | 6 | 206 | 1 006 | 102 |
| UAB Apranga BPB LT | 250 | 920 | 24 | 18 | 1 | 544 | 20 | 15 |
| UAB Apranga PLT | 169 | 609 | 17 | 14 | 867 | 141 | 11 | 13 |
| UAB Apranga SLT | - | 305 | 19 | 11 | 1 097 | 166 | 20 | 63 |
| UAB Apranga MLT | 865 | 895 | 36 | 27 | 2 018 | 275 | 34 | 63 |
| UAB Apranga HLT | - | 315 | 22 | 19 | 1 030 | 109 | 2 | 3 |
| UAB Apranga OLT | - | 107 | 8 | 5 | 560 | 43 | 3 | 2 |
| UAB Apranga Ecom LT | - | - | - | - | - | - | - | - |
| SIA Apranga | - | - | 5 | 734 | 6 029 | 12537 | 7 558 | 101 |
| SIA Apranga LV | - | - | 47 | 35 | 1 837 | 459 | 61 | 20 |
| SIA Apranga BPB LV | - | - | 7 | 5 | 479 | 68 | 8 | 2 |
| SIA Apranga PLV | - | - | 8 | 6 | 328 | 52 | 5 | 1 |
| SIA Apranga SLV | - | - | 6 | 4 | 528 | 55 | 7 | 11 |
| SIA Apranga MLV | - | - | 18 | 117 | 802 | 148 | 16 | 5 |
| SIA Apranga HLV | - | - | 11 | 7 | 308 | 41 | 1 | - |
| SIA Apranga OLV | - | - | 8 | 114 | 49 | 30 | 2 | 1 |
| SIA Apranga Ecom LV | - | - | - | - | - | - | - | - |
| OU Apranga | - | - | 3 | 444 | 3 587 | 6 615 | 5 801 | 50 |
| OU Apranga Estonia | - | - | 39 | 332 | 987 | 411 | 40 | 16 |
| OU Apranga BEE | - | - | 6 | 139 | 56 | 42 | 5 | - |
| OU Apranga PB Trade | - | - | 197 | 584 | 60 | 45 | 2 | 1 |
| OU Apranga ST Retail | - | - | 4 | 87 | 44 | 35 | 4 | 11 |
| OU Apranga MDE | - | - | 35 | 9 | 266 | 100 | 7 | 4 |
| OU Apranga HEST | - | - | 9 | 7 | 305 | 49 | - | - |
| OU Apranga Ecom EE | - | - | - | - | - | - | - | - |
| Total | 2 032 | 5 200 | 9 785 | 11 222 | 38 523 | 16 834 | 504 | 496 |
Prevailing types of intra-group transactions are centralised supplies of goods for resale, management service fees, centralised purchasing of services (telecommunications, IT, utilities and etc.), financing, distribution of earnings. Dividend income received from the subsidiaries is presented in ‘Income received’ together with other income. In 2022, the Company received EUR 15 400 thousand dividend income from subsidiaries (in 2021 - EUR 0). This article also accounted for sales of goods to subsidiaries SIA Apranga and OU Apranga, which in 2022 amounted to EUR 10 755 thousand and EUR 5 820 thousand respectively (EUR 6 673 thousand and EUR 5 085 thousand in 2021, respectively). The debts of Group companies are offset each month, and the remaining portion of the debt is paid no later than in 30 days. The Company’s/Group’s and related parties debts are paid within 30 days. The Company has concluded short-term loan agreements with its subsidiaries, which, in case of need, are borrowed for 1 month Euribor plus margin interests (Note 23).
Guarantees provided on behalf of related parties are disclosed in Note 28.
The General Director and other Directors of the Company are considered to be the key management of the Group. There were 7 members of the key management as at 31 December 2022 (7 members of the key management as at 31 December 2021). 2 of them also belong to the Management Board, which consists of 6 members.
| GROUP | COMPANY | ||||
|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | ||
| Remuneration | 2 984 | 2 051 | 2 904 | 1 972 | |
| Social security | 52 | 36 | 51 | 35 | |
| Average number of key managers | 7 | 7 | 7 | 7 |
On 28 April 2022 and on 29 April 2021 the Company’s shareholders’ meetings decided not to pay out annual bonuses to the key management.# N O T E S TO T H E F I N A N C I A L S T A T E M E N T S
As of 31 December 2022 and 2021 the Company and the Group were not involved in any legal process, which in the opinion of management, could have a material impact on the financial statements.
As of 31 December 2022, guarantees issued by the credit institutions on behalf of the Company to secure the obligations of its subsidiaries to their suppliers totaled EUR 13 698 thousand (31 December 2021: EUR 13 734 thousand). The letters of credit and guarantees provided to suppliers by the credit institutions on behalf of the Group as of 31 December 2022 amounted to EUR 15 295 thousand (31 December 2021: EUR 15 150 thousand). As of 31 December 2022 and 2021 the Company had no guarantees to the credit institutions issued to secure the obligations of subsidiaries. As of 31 December 2022, the Company’s guarantees issued to secure the obligations of its subsidiaries to their suppliers totaled EUR 482 thousand (31 December 2021: EUR 499 thousand). The management of the Group believes that the subsidiaries on behalf of which guarantees were issued will meet their liabilities to the creditors, therefore, no provisions in respect of these guarantees were accounted for in the financial statements as at 31 December 2022 and 31 December 2021.
The Group issued irrevocable call options to INDITEX Group granting the right to purchase assets (leasehold improvements and PPE located in the premises of shops and inventory) of subsidiaries UAB Apranga LT, UAB Apranga BPB LT, UAB Apranga PLT, UAB Apranga SLT, UAB Apranga MLT, UAB Apranga HLT, UAB Apranga OLT, SIA Apranga LV, SIA Apranga BPB LV, SIA Apranga PLV, SIA Apranga SLV, SIA Apranga MLV, SIA Apranga OLV, SIA Apranga HLV, OU Apranga Estonia, OU Apranga BEE, OU Apranga PB Trade, OU Apranga ST Retail, OU Apranga MDE and OU Apranga HEST operating brands of INDITEX Group (ZARA, ZARA HOME, BERSHKA, PULL AND BEAR, STRADIVARIUS, MASSIMO DUTTI and OYSHO). The options are exercisable in 2024 and are firmly and irrevocably granted thus the Group cannot waive them. The Group also issued irrevocable call options to ALDO Group granting the right to purchase assets (PPE located in the premises of shops and inventory) of Company and subsidiaries SIA Apranga and OU Apranga operating the brand of ALDO. The options are exercisable in 2027 and are firmly and irrevocably granted thus the Group cannot waive them.
Subsidiaries UAB Apranga LT, UAB Apranga BPB LT, UAB Apranga PLT, UAB Apranga SLT, UAB Apranga MLT, UAB Apranga HLT, UAB Apranga OLT, SIA Apranga LV, SIA Apranga BPB LV, SIA Apranga PLV, SIA Apranga SLV, SIA Apranga MLV, SIA Apranga OLV, SIA Apranga HLV, OU Apranga Estonia, OU Apranga BEE, OU Apranga PB Trade, OU Apranga ST Retail, OU Apranga MDE and OU Apranga HEST operating brands of INDITEX Group (ZARA, ZARA HOME, BERSHKA, PULL AND BEAR, STRADIVARIUS, MASSIMO DUTTI and OYSHO) granted irrevocable options exercisable in 2024 by virtue of which INDITEX Group might acquire the lease rights and might become lessee in all or part of the lease agreements for the premises where ZARA, ZARA HOME, BERSHKA, PULL AND BEAR, STRADIVARIUS, MASSIMO DUTTI and OYSHO stores are located. Company and its subsidiaries SIA Apranga and OU Apranga operating brand ALDO granted irrevocable options exercisable in 2027 by virtue of which ALDO Group might acquire the lease rights and might become lessee in the lease agreements for the premises where ALDO stores are located. Based on historical information and numerous extentions of the cooperation agreements and terms of cooperation the management of the Group believes that the agreement parties will not use any above options.
After the end of the reporting period, there were no events that had a significant impact on the activities of the Company and the Group.
Consolidated annual report is prepared for the year ended 31 December 2022.
Name of the Issuer: public limited liability trade company “Apranga”
Legal form: public limited liability company
Date and place of registration: 1 st March 1993, Board of Vilnius City
Code of Enterprise: 121933274
Registered office: Ukmerges str. 362, Vilnius, LT-14311, Lithuania
Telephone number: +370 5 2390808
E-mail address: [email protected]
Internet address: www.aprangagroup.com
At 31 December 2022 Apranga Group (hereinafter the Group) consisted of the parent company APB Apranga (hereinafter the Company) and its 100 per cent owned 25 subsidiaries. The principal activity of the Company and its subsidiaries is retail trade of apparel in Baltic countries.
Structure of the Group at 31 December 2022:
For more information on subsidiaries refer to Note 1 and Note 14 to Consolidated financial statements.
In 2022, the Group’s priorities were influenced by the restrictive measures imposed as a response to Russia’s invasion to Ukraine, which led to significant fluctuations in energy prices and high inflation.
The retail turnover (including VAT) of Apranga Group reached EUR 293.3 million in 12 months 2022 and was by 28.4% higher than in 2021 and by 18.3% higher than in 2019. In 2022, the retail turnover of Apranga Group in Lithuania reached EUR 178.0 million and increased by 21.9% year-on-year. In 2022 the retail turnover of Apranga Group in Latvia was EUR 70.9 million and surged by 53.0% year-on-year, in Estonia was EUR 44.4 million and grew by 23.6% year-on-year.
Due to epidemic coronavirus (COVID-19) infection, from 16 December 2020, all the Group’s stores in Lithuania were temporarily closed. Stores with a separate entrance from the outside and sales area not exceeding 300 square meters were open from 15 February 2021. Stores with a separate entrance from the outside and a sales area exceeding 300 square meters were open from 15 March 2021. All Group’s stores have been reopened in Lithuania from 19 April 2021, however, stores operating in shopping malls were not allowed to work on weekends, unless they had separate entrance from outside. Eventually, all Group’s stores had been open in Lithuania as of 29 May 2021.
In Latvia, stores were temporarily closed from 19 December 2020. Group‘s stores that operate in shopping malls and have separate entrance from outside had been reopened in Latvia as of 22 May 2021. All Group’s stores had been open in Latvia as of 3 June 2021 until 14 October 2021, when the operation of stores in shopping malls on weekends were banned in Latvia, and from 21 October 2021 all Group’s stores in Latvia again were temporarily closed. All Group’s stores were reopened in Latvia from 15 November 2021, however, stores operating in shopping malls were not allowed to work on weekends, unless they had separate entrance from outside. Eventually, all Group’s stores were allowed to work also on weekends as of 25 December 2021.
In Estonia, all Group’s stores were temporarily closed from 11 March 2021 until 3 May 2021. These temporary closures had a significant impact on the Group's generated turnover in 2021.
| APB "APRANGA" | LITHUANIA | LATVIA | ESTONIA |
|---|---|---|---|
| UAB "Apranga LT" | SIA "Apranga" | OÜ "Apranga Estonia" | |
| UAB "Apranga BPB LT" | SIA "Apranga BPB LV" | OÜ "Apranga BEE" | |
| UAB "Apranga PLT" | SIA "Apranga PLV" | OÜ "Apranga PB Trade" | |
| UAB "Apranga SLT" | SIA "Apranga SLV" | OÜ "Apranga ST Retail" | |
| UAB "Apranga MLT" | SIA "Apranga MLV" | OÜ "Apranga MDE" | |
| UAB "Apranga HLT" | SIA "Apranga HLV" | OÜ "Apranga HEST" | |
| UAB "Apranga OLT" | SIA "Apranga OLV" | ||
| UAB "Apranga Ecom LT" | SIA "Apranga Ecom LV" | OÜ "Apranga Ecom EE" |
According to the data of the official statistics departments of Lithuania, Latvia and Estonia, the market of retail trade, except of motor vehicles and motorcycles, in the Baltic states generated a turnover of over EUR 39.0 billion (excluding VAT) at current prices in the year 2022, which is about 21% more compared to the same period in 2021. In the months of January-June the market grew by 24% and in July-December the growth had slightly slowed down to 18% compared to the same period last year.
In the year 2022 the average annual Harmonized Indices of Consumer Prices (HICP), index used in inflation measurement, reached 18.9% in Lithuania, 17.2% in Latvia and 19.4% in Estonia, thus averaging to around 18.5% in Baltic region. In the first half of the year, January-June, the Baltic region HICP averaged to around 15.2%, whereas in the second half of the year it reached 21.7%.
In December in Lithuania the consumer confidence index reached -8.1, while in Euro zone this index was -23,1. The worst confidence in economy Lithuanians had in September when it went down to -15.9, whereas the Euro zone consumer confidence also reached its lowest point in September with -28.7.
The companies participating in the textile, clothing and footwear market of the Baltic states generated a turnover of around EUR 1.82 billion (excluding VAT) in the year 2022. It is a 29% growth compared to 2021 and 22% growth compared to 2019. The first half of 2022 has experienced 53% growth year-on-year, while the period over July-December has grown 15% year-on-year.Lithuania remains the largest market of retail trade of textile, clothing and footwear in specialized stores in the Baltic states, generating around 50% of the Baltic states market turnover. In the year 2022 the average annual Harmonized Indices of Consumer Prices (HICP) in the clothing and footwear industry reached 3.4% in Lithuania, 4.6% in Latvia and 6.5% in Estonia.
Retail turnover of Group‘s stores by countries (EUR thousand, VAT included):
| Country | 12 months 2022 | 12 months 2021 | 12 months 2020 | 12 months 2019 | 2022/2021, % | 2022/2020, % | 2022/2019, % |
|---|---|---|---|---|---|---|---|
| Lithuania | 178 024 | 146 003 | 118 336 | 147 470 | 21,9% | 50,4% | 20,7% |
| Latvia | 70 900 | 46 409 | 52 377 | 59 363 | 52,8% | 35,4% | 19,4% |
| Estonia | 44 416 | 36 010 | 33 532 | 41 124 | 23,3% | 32,5% | 8,0% |
| Total: | 293 340 | 228 422 | 204 245 | 247 957 | 28,4% | 43,6% | 18,3% |
In 2022, the turnover of the retail chain operated by Apranga Group amounted to EUR 178 million in the main domestic market of Lithuania, or by 21.9% more than in 2021. The share of Lithuanian chain turnover comprised 60.7%, or by 3,2 percentage points less than in 2021. The retail turnover of the Apranga Group chain in foreign markets (Latvia and Estonia) reached EUR 115.3 million in 2022, or by 39.9% more, than in 2021. The foreign turnover share in total Group’s turnover has increased from 36.1% to 39.3% during the year. The retail turnover of the Group chain in Latvia has made EUR 70.9 million in 2022 and has increased by 52.8% during the year. The retail turnover of the Group chain in Estonia amounted to EUR 44.4 million and has increased by 23.3% in comparison to 2021.
The retail turnover of the Apranga Group by quarters:
| Q1 | Q2 | Q3 | Q4 | Year | |
|---|---|---|---|---|---|
| 2022 | 52 614 | 75 077 | 81 130 | 84 519 | 293 340 |
| 2021 | 25 547 | 55 692 | 76 929 | 70 253 | 228 422 |
| 2020 | 45 857 | 40 864 | 63 765 | 53 759 | 204 245 |
| 2019 | 49 800 | 58 861 | 66 834 | 72 462 | 247 957 |
| 2022/2021, % | 106,0% | 34,8% | 5,5% | 20,3% | 28,4% |
| 2022/2020, % | 14,7% | 83,7% | 27,2% | 57,2% | 43,6% |
| 2022/2019, % | 5,7% | 27,6% | 21,4% | 16,6% | 18,3% |
The online turnover of the Group was as follows (EUR thousand, VAT included):
| 12 months 2022 | 12 months 2021 | 12 months 2020 | 12 months 2019 | 2022/2021, % | 2022/2020, % | 2022/2019, % | |
|---|---|---|---|---|---|---|---|
| Online turnover | 33 672 | 48 256 | 24 950 | 9 579 | -30,2% | 35,0% | 3.5 times |
| Relative weight in total turnover | 11,5% | 21,1% | 12,2% | 3,9% |
The Group's online turnover decreased by 30,2% in the 12 months of the year, and its relative weight in total turnover decreased from 21.1% to 11.5% compared to the corresponding period of the previous year. In year 2021, online turnover was significantly higher due to the Covid-19 related temporary closure of physical stores. The Group's online turnover in 12 months 2022, compared to the corresponding period of 2019, increased 3.5 times.
C O N S O L I D A T E D A N N U A L R E P O R T
3.1 APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius
FOR THE YEAR ENDED 31 DECEMBER 2022
(all tabular amounts are in EUR thousands unless otherwise stated)
48
Retail turnover of Group‘s stores by chains (EUR thousand, VAT included) was as follows:
| Chain | 12 months 2022 | 12 months 2021 | 12 months 2020 | 12 months 2019 | 2022/2021, % | 2022/2020, % | 2022/2019, % |
|---|---|---|---|---|---|---|---|
| Economy | 1 31 102 | 22 524 | 23 240 | 31 991 | 38,1% | 33,8% | - 2,8% |
| Youth | 2 69 998 | 55 064 | 48 666 | 58 655 | 27,1% | 43,8% | 19,3% |
| Footwear | 4 679 | 3 201 | 3 893 | 6 660 | 46,2% | 20,2% | - 29,7% |
| Business | 3 54 100 | 42 545 | 38 216 | 44 802 | 27,2% | 41,6% | 20,8% |
| Luxury | 4 29 280 | 25 263 | 21 431 | 22 333 | 15,9% | 36,6% | 31,1% |
| Zara | 89 853 | 69 515 | 59 872 | 72 507 | 29,3% | 50,1% | 23,9% |
| Outlets | 14 328 | 10 310 | 8 926 | 11 010 | 39,0% | 60,5% | 30,1% |
| Total | 293 340 | 228 422 | 204 245 | 247 957 | 28,4% | 43,6% | 18,3% |
1 Apranga, Promod, s.Oliver, Tom Tailor, Orsay;
2 Aprangos galerija, Moskito, Mango, Bershka, Pull & Bear, Stradivarius, Desigual, Oysho, A|X Armani Exchange;
3 City, Massimo Dutti, Strellson, Marella, Pennyblack, Coccinelle, Tommy Hilfiger, Zara Home, Karen Millen, Calvin Klein Underwear, Liu Jo, MAX&Co.;
4 Burberry, Emporio Armani, Hugo Boss, Ermenegildo Zegna, MaxMara, Weekend MaxMara, Marina Rinaldi, Mados linija, Nude, Sandro, Maje, Hugo.
In 2018-2022 the dynamics of the number of stores and sales area was as follows:
| 31 12 2022 | 31 12 2021 | 31 12 2020 | 31 12 2019 | 31 12 2018 | |
|---|---|---|---|---|---|
| The number of stores | 168 | 169 | 179 | 186 | 182 |
| Stores area (thousand sq. m.) | 90,6 | 90,6 | 92,6 | 93,8 | 82,6 |
During the year 2022 Apranga Group opened 5 stores, enlarged and reconstructed 2 stores, partially renovated 4 stores and closed 6 stores. Currently Apranga Group operates the chain of 168 stores (100 in Lithuania, 44 in Latvia and 24 in Estonia) covering the gross area of 90.6 thousand sq. m., or by 0.1% less than a year ago.
The total area of stores by countries was as follows (thousand sq. m):
| Country | 31 12 2022 | 31 12 2021 | 31 12 2020 | 2022/2021, % | 2022/2020, % |
|---|---|---|---|---|---|
| Lithuania | 51,0 | 51,3 | 49,9 | - 0,6% | 2,1% |
| Latvia | 26,4 | 26,8 | 27,0 | - 1,3% | - 2,2% |
| Estonia | 13,2 | 12,6 | 15,6 | 5,2% | - 15,5% |
| Total: | 90,6 | 90,6 | 92,6 | - 0,1% | - 2,1% |
In 2022, the Goup opened 5 new stores – Tommy Hilfiger in Kaunas, Marella in Klaipeda, Aldo in Tartu, Sandro and Maje in Tallinn. The Group also enlarged and reconstructed Massimo Dutti and Mango stores in Tallinn and renovated 4 stores – Aldo in Vilnius and in Klaipeda, Apranga Isparduotuvė and Outlet space in Vilnius. The gross area of newly opened, reconstructed or renovated Groups stores in 2022 was 3,4 thousand sq. m.
The number of stores by countries was as follows:
| Country | 31 12 2022 | 31 12 2021 | 31 12 2020 | 2022/2021, % | 2022/2020, % |
|---|---|---|---|---|---|
| Lithuania | 100 | 102 | 104 | - 2,0% | - 3,8% |
| Latvia | 44 | 46 | 48 | - 4,3% | - 8,3% |
| Estonia | 24 | 21 | 27 | 14,3% | - 11,1% |
| Total: | 168 | 169 | 179 | -0,6% | -6,1% |
At 31 December the number of stores by chains was as follows:
| Chain | 31 12 2022 | 31 12 2021 | 31 12 2020 | 2022/2021, % | 2022/2020, % |
|---|---|---|---|---|---|
| Economy | 19 | 26 | 31 | - 26,9% | - 38,7% |
| Youth | 48 | 47 | 47 | 2,1% | 2,1% |
| Footwear | 11 | 10 | 13 | 10,0% | - 15,4% |
| Business | 41 | 39 | 41 | 5,1% | 0,0% |
| Luxury | 30 | 28 | 28 | 7,1% | 7,1% |
| Zara | 10 | 10 | 11 | 0,0% | - 9,1% |
| Outlets | 9 | 9 | 8 | 0,0% | 12,5% |
| Total | 168 | 169 | 179 | -0,6% | -6,1% |
C O N S O L I D A T E D A N N U A L R E P O R T
3.1 APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius
FOR THE YEAR ENDED 31 DECEMBER 2022
(all tabular amounts are in EUR thousands unless otherwise stated)
49
The number of economy chain stores has significantly decreased due to closure of Promod and Orsay brand stores in years 2021 and 2022. Net investments into retail chain expansion and modernization amounted to EUR 3.9 million in 2022. Investments (acquisitions) by assets type are presented in Note 12 (“Property, plant and equipment”) and Note 13 (“Intangible assets”) of Notes to consolidated and Company’s financial statements. Investments (acquisitions) by segments are disclosed in Note 4 (“Segment information”). The Group is not engaged in activities related to research and experimental development, except to the extent of process improvement.
From 1 January 2019, the Group implemented a new International Financial Reporting Standard (IFRS) 16 “Leases”. Due to the application of this standard, the Group’s and Company’s rent expenses decreased but depreciation and amortization charges and interest expenses increased. Accordingly, it also influenced the calculation of indicators. The impact of the new standard on the Statements of Comprehensive Income and Statements of Financial Position is disclosed in more detail in Note 25, IFRS 16 Leases. In addition to the key figures defined or specified in the applicable IFRS financial reporting framework, the Group also provides key financial ratios derived from or based on the prepared financial statements. These are known as Alternative Performance Measures (APM). Definitions of APM are provided in the section No. 11 “Alternative Performance Indicators” of this report and on the Group’s website.
The Group’s profit before income tax amounted to EUR 18.7 million in 12 months 2022, while profit before taxes was EUR 13.2 million in 12 months of 2021, i.e., 41.9% more than in the corresponding period of the previous year. EBITDA of the Group totalled EUR 38.7 million in 2022, and it was EUR 34.1 million in corresponding previous year period. EBITDA margin has decreased from 18.0% to 16.0% during the year. ROE and ROA ratios increased to 25.1% and 10.5%, respectively. The gross margin of the Group reached 45.8% in 12 months 2022, mainly driven by more effective inventory management. In addition, the Group saw an increase in royalty rates for some of the brands and reduction of cost of goods starting from fall- winter 2022 season.
Main Group Indicators
| 2022 | 2021 | 2020 | 2019 | 2018 | |
|---|---|---|---|---|---|
| Net sales, EUR thousand | 242 899 | 189 745 | 169 958 | 205 005 | 187 207 |
| Net sales in foreign markets, EUR thousand | 95 595 | 68 502 | 71 424 | 83 197 | 76 740 |
| Gross profit, EUR thousand | 111 344 | 82 230 | 71 146 | 89 210 | 81 010 |
| Gross margin, % | 45,8% | 43,3% | 41,9% | 43,5% | 43,3% |
| Operating profit, EUR thousand | 19 869 | 14 278 | 7 038 | 11 929 | 9 199 |
| Operating profit margin, % | 8,2% | 7,5% | 4,1% | 5,8% | 4,9% |
| Profit before income tax, EUR thousand | 18 745 | 13 211 | 5 961 | 10 994 | 9 266 |
| Profit before income tax margin, % | 7,7% | 7,0% | 3,5% | 5,4% | 4,9% |
| Profit (loss) for the period, EUR thousand | 15 635 | 10 896 | 4 936 | 9 240 | 7 565 |
| Profit (loss) for the period margin, % | 6,4% | 5,7% | 2,9% | 4,5% | 4,0% |
| EBITDA, EUR thousand | 38 906 | 34 076 | 27 340 | 31 006 | 15 563 |
| EBITDA margin, % | 16,0% | 18,0% | 16,1% | 15,1% | 8,3% |
| Earnings (losses) per share (EPS), EUR | 0,28 | 0,20 | 0,09 | 0,17 | 0,14 |
| Price - to - Earnings ratio (P/E), times | 7,6 | 10,7 | 23,6 | 12,6 | 11,7 |
| Dividend / Profit for the period*, % | 99,0% | 182,7% | 0,0% | 0,0% | 95,0% |
| Return on equity (end of the period), % | 25,1% | 14,6% | 7,8% | 15,8% | 13,3% |
| Return on assets (end of the period), % | 10,5% | 6,6% | 3,1% | 6,0% | 9,6% |
| Net debt to equity, % | - 36,8% | - 39,7% | - 28,5% | - 10,1% | - 10,4% |
| Current ratio, times | 1,7 | 2,0 | 1,9 | 1,4 | 2,7 |
The operating expenses of the Group totaled EUR 91.5 million in 12 months 2022 and increased by 34.6%, comparing to the same period 2021. Operating expenses increased more than sales, which grew by 28%.The growth of operating expenses outpaced sales growth due to soaring electricity bills, increased salaries and royalty rates as well as due to various subsidies and discounts received in year 2021 because of COVID-19 related temporary closures of physical stores.
C O N S O L I D A T E D A N N U A L R E P O R T 3 . 1 APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated)
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| 2022 | 2021 | Change | |
|---|---|---|---|
| Net sales, EUR thousand | 242 899 | 189 745 | 28.0% |
| Net sales in foreign markets, EUR thousand | 95 595 | 68 502 | 39.6% |
| Gross profit, EUR thousand | 111 344 | 82 230 | 35.4% |
| Operating expenses | (91 475) | (67 952) | 34.6% |
| Operating profit, EUR thousand | 19 869 | 14 278 | 39.2% |
| Profit before income tax, EUR thousand | 18 745 | 13 211 | 41.9% |
| Net profit (losses), EUR thousand | 15 635 | 10 896 | 43.5% |
| EBITDA, EUR thousand | 38 906 | 34 076 | 14.2% |
The Group’s level of inventories during the last 12 months increased by 15.3% to EUR 41.4 million. Company’s inventories increased by 19.9%. For additional information on the operations by countries of the Group refer to Note 4 to the Consolidated financial statements.
The number of employees on 31 December 2022 and average salary by categories in 2022 were as follows:
| Employee category | Group Number of employees | Company Number of employees | Group Average monthly salary, EUR | Company Average monthly salary, EUR |
|---|---|---|---|---|
| Administration | 183 | 120 | 3 789 | 4 307 |
| Stores' personnel | 1 891 | 555 | 1 193 | 1 306 |
| Logistics | 65 | 65 | 1 656 | 1 656 |
| Total | 2 139 | 740 | 1 439 | 1 832 |
In 2022 the number of employees in the Group and the Company has increased by 147 (7.4%) and increased by 8 (1.1%) people respectively. The number of employees increased less compared to the growth of sales, thanks to continuing optimization of the chain as well as some shorter store hours in major shopping malls.
The number of employees by education level on 31 December 2022 was as follows:
| Education level | Group | Company |
|---|---|---|
| Higher | 494 | 274 |
| Professional | 305 | 73 |
| Secondary | 575 | 179 |
| Primary | 13 | 7 |
| Student | 752 | 207 |
| Total: | 2 139 | 740 |
The price of the Company shares in 12 months 2022 increased by 6.4% from EUR 2.03 per share to EUR 2.16 per share. The maximum share price for the 12 months period was EUR 2.58 per share, minimum share price - EUR 1.64 per share. The market capitalization of the Company increased from EUR 112 million at the beginning of the year to EUR 119 million at the end of December 2022. The weighted average price of 1 share during the reporting period was EUR 2.10. Company’s share turnover was EUR 19.5 million in 12 months 2022.
C O N S O L I D A T E D A N N U A L R E P O R T 3 . 1 APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated)
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Company and OMX Baltic Benchmark GI index change for the period 2018-2022:
C O N S O L I D A T E D A N N U A L R E P O R T 3 . 1 APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated)
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Restrictive measures imposed after Russia‘s invasion of Ukraine on 24 February 2022 had no significant impact on the Company’s and Group‘s performance, no operations had been suspended and no significant direct losses related to the restrictive measures had been incurred, however, the uncertainty exists. In any case, the Company's management is ready to respond promptly to the changing situation by making the necessary decisions to ensure the stability of operations.
The Group plans to reach EUR 308 million turnover (including VAT) in 2023, or by 5% higher than actual year 2022 turnover. In 2023, the Group plans to renovate or open 12-18 stores. The net investment is planned to be about EUR 5-8 million.
Group uses the latest technology and the latest technology processes that meet environmental standards and help reduce the negative impact on the environment (for example, the Group uses the paper packaging materials instead of plastic in more than 90% of its stores), promote rational management and use of resources. It constantly seeks way to cut electricity costs at the stores, the headquarters and logistic warehouse. All stores use energy-efficient LED bulbs that not only have a longer service life but also use less electricity. Spaces in the administration building are segmented to use the lighting as efficiently as possible and to have it only in those areas where employees are present. The origin of electricity used in all stores is ensured by the green electricity certificate. The Group choose electricity suppliers based on the sustainable use of natural resources in the production of energy. When upgrading stores, we abide by the principle that, despite the decisions taken, we must introduce technologies that reduce or do not increase resource consumption.
More information about the Group’s environmental protection is presented in the Group’s 2022 Consolidated Social Responsibility Report.
In order to ensure the fairness of preparation consolidated financial statements and to reduce associated risks, the unified centralised accounting and business information management system has been implemented in all Group companies. All Group companies use the standard chart of accounts and apply unified accounting principles. More information on the principles of preparation of the consolidated financial statements is presented in Note 2.4 to the Consolidated financial statements.
The share capital of APB Apranga is EUR 16,034,668.40 and it is divided into 55,291,960 ordinary registered shares with a nominal value of EUR 0.29 each, where each share grants to its owner 1 vote (in total 55,291,960 voting shares), all shares are paid in full and give the owners equal rights. All 55 291 960 ordinary shares of nominal value EUR 0.29 each (ISIN code LT0000102337) that comprise Company‘s share capital are listed on Baltic equity list of Nasdaq Vilnius Stock Exchange. For more information on the share capital of the Company refer to Note 21 to Consolidated financial statements.
Neither Company, nor its subsidiaries directly or indirectly acquired own shares. By the knowledge of the Company’s management, there are no restrictions imposed on transfer of Company’s shares. All Company‘s shares give equal rights to shareholders and there are no shareholders with special control rights. By the knowledge of the Company’s management, there are no restrictions imposed on voting rights. By the knowledge of the Company’s management, there are no agreements among shareholders which may limit transfer of shares, or their voting rights.
Each owner of the ordinary registered share has the following property rights:
1) To receive part of the company‘s profit (dividend);
2) To receive a part of the assets of the company in liquidation;
C O N S O L I D A T E D A N N U A L R E P O R T 3 . 1 APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated)
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3) To receive shares without payment if the share capital is increased out of the company‘s funds, except the cases specified in the Law on Companies.
4) To have the pre-emption right to acquire the shares or convertible debenture issued by the company, except in cases when General Shareholder‘s Meeting pursuant to Law on Companies decides to withdraw the pre-emption right in acquiring the company‘s issued shares for all shareholders;
5) As provided by laws to lend to the company, however the company borrowing from its shareholders has no right to mortgage or pledge its assets to shareholders. When the company borrows from a shareholder, the interest may not be higher than the average interest rate offered by commercial banks of the locality where the lender has his/her place of residence or business, which was in effect on the day of conclusion of the loan agreement. In such a case the company and shareholders are prohibited from negotiating a higher interest rate;
6) To receive Company‘s funds in event the share capital is decreased on purpose to pay Company‘s funds to shareholders;
7) Shareholders have other property rights provided by laws of the Republic of Lithuania.
Each owner of the ordinary registered share has the following non-property rights:
1) To attend and vote in General Shareholder‘s Meetings. One ordinary registered share grants to its owner one vote at the General Shareholders‘ Meeting.The right to vote at the General Shareholder‘s Meeting may be withdrawn or restricted in cases established by laws of the Republic of Lithuania, also in cases when share ownership is contested; 2) To submit to the company in advance the questions related to the issues on the agenda of the general meeting of shareholders; 3) To receive information on the company as provided by Law on Companies; 4) To file a claim to the court requesting compensation of damage to company resulting from non-performance or improper performance of the duties of the Manager of the Company or members of the Board of the company which duties have been prescribed by law and these Articles of Association of the company as well as in other cases as may be prescribed by law; 5) Other non-property rights prescribed by law. At 31 December 2022, the Company had 6,172 shareholders. Company‘s shareholders which owned or had under management more than 5% of share capital were:
| Shareholder | Enterprise code | Address | Number of shares | % of total ownership |
|---|---|---|---|---|
| UAB MG Investment | 123249022 | Aukštaičių 7, Vilnius, Lithuania | 36,187,499 | 65.4% |
| UAB Minvista | 110685692 | Aukštaičių 7, Vilnius, Lithuania | 5,795,929 | 10.5% |
There are no material agreements where the Company is a counterparty and which may come into force, or may change, or may end with the change of control over the Company. Information about related party transactions is provided in the Note 27 to the Consolidated financial statements. At 24 July 2017 the Company concluded an open-ended agreement with SEB bankas AB (entity code: 112021238, address: Konstitucijos av. 24, LT-08105 Vilnius) on supervision of securities accounts.
For the Governance Report and the full text of Compliance Report with the Governance Code for the companies listed on the Nasdaq Vilnius stock exchange refer to Annex “Governance Report” to this annual report.
The Group’s Consolidated Social Responsibility Report is provided in Annex “Social Responsibility Report” to this annual report.
The Supervisory Board is not formed in the Company, therefore the Company’s Remuneration Policy applies to the Head of the Company and Members of the Management Board of the Company in accordance with the relevant requirements and essential principles on the basis of which the remuneration is paid. No agreements are concluded with the Members of the Management Board regarding their activities as Members of the Management Board in the Company. Only Independent Members of the Management Board of the Company are remunerated for their work at the Board. The Members of the Management Board of the Company, who are also employees of the Company, receive remuneration only for the direct duties they perform under the employment contract, i.e. their remuneration for direct functions in the Company and being a Member of the Board (performance of the duties of member of the Board) are not related in any way and are not dependent on each other. The Members of the Management Board of the Company, who are not employees of the Company or do not serve as Independent Members of the Management Board, are not additionally incentivised, they are not paid for their work in the Management Board of the Company, therefore, such members of the Board perform their duties of a member of the Management Board of the Company free of charge.
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The employment contract with the Head of the Company is concluded for an indefinite period. The Head of the Company, as provided by the Law on Companies, is elected and removed from office, his remuneration is determined, his job description is approved, he is promoted and penalized based on the Management Board decision. In his / her activities, the Head of the Company follows the laws, other legal acts, the Company's Articles of Association, decisions of the General Meeting of Shareholders, as well as decisions of the Management Board. The amounts of allowances, notice periods related to the termination of employment or term of office are determined taking into account the requirements established in the specific labour laws. Employment contracts with the Head of the Company are not normally subject to prior agreements on severance pay, supplementary pensions or early retirement arrangements. The remuneration of the Head of the Company consists of:
The ratio of variable to fixed part depends only on the Group's performance. The amount of variable remuneration (as a percentage of the Group's profit) for the Head of the Company is determined and approved by the Management Board of the Company so as to comply with the Company's and the Group's business strategy, long-term goals and operational interests, to ensure shareholders' interests, to promote sound and efficient management and risk management to the extent of decision making, would help to avoid conflicts of interest, ensure compliance with the code of ethics and conduct.
There are no agreements between the Company, members of its management bodies, or its employees regarding special compensations in case of their resignation, or dismiss without legitimate reason, or the end of their duties connected with the change of the Control over the Company.
Annual remuneration of the members of the Management Board - the Company's employees, EUR thousand (before taxes):
| Name, Surname | Position | Fixed part | Variable part | Total | Variable part, % |
|---|---|---|---|---|---|
| Darius Juozas Mockus | Chairman of the Board | - | - | - | - |
| Vidas Lazickas | Member of the Board | - | - | - | - |
| Rimantas Perveneckas | General Director | 272 | 495 | 767 | 65% |
| Ilona Simkuniene | Member of the Board, Purchasing Director | 156 | 309 | 465 | 67% |
| Ramunas Gaidamavicius | Member of the Board, Development Director | 107 | 248 | 355 | 70% |
| Jonas Jukštys | Member of the Board, independent | 12 | - | 12 | - |
| Gintaras Juškauskas | Member of the Board, independent | 12 | - | 12 | - |
Annual remuneration and Group’s performance in 2018-2022:
| 2022 | 2021 | 2020 | 2019* | 2018 | |
|---|---|---|---|---|---|
| Remuneration, EUR thousand | |||||
| Rimantas Perveneckas | 767 | 487 | 430 | 477 | 298 |
| Ilona Šimkūnienė | 465 | 307 | 265 | 298 | 201 |
| Ramūnas Gaidamavičius | 355 | 241 | 204 | 233 | 149 |
| Average Employee Total Remuneration Costs** | 15,2 | 11,8 | 9,9 | 11,8 | 9,4 |
| Group performance | |||||
| Net sales, EUR thousand | 242,899 | 189,745 | 169,958 | 205,005 | 187,207 |
| EBT, EUR thousand | 18,745 | 13,211 | 5,961 | 10,994 | 9,266 |
| EBITDA margin, % | 16.0% | 18.0% | 16.1% | 15.1% | 8.3% |
C O N S O L I D A T E D A N N U A L R E P O R T
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* Tax reform has been implemented at the beginning of 2019.
** Average employee total remuneration costs ratio is computed using a total headcount, including part-time employees. Part-time employees make up more than half of the total Group‘s employees.
The Management Board members and the Head of the Company do not receive any other parts of remuneration, bonuses, premiums, incentives other than those provided for in Remuneration Policy. The Management Board members and the Head of the Company have not received any remuneration from other companies belonging to the Group.
With regard to the requirements of the European Securities and Markets Authority (ESMA) Guidelines on Alternative Performance Measures, an overview of the Alternative Performance Measures (APM) used, their definition and calculation are provided below and also on Apranga APB website at: https://aprangagroup.lt/en/investors/investor-relations/alternative-performance-measures
| Performance measure | Formula and components used for the calculation | Interpretation |
|---|---|---|
| EBITDA | Profit before finance income and finance costs, income tax, depreciation and amortization | EBITDA is used as a relevant measure for investors to be able to understand profit generation before investments in fixed assets. It also shows the ability to repay loans and pay interests |
| Alternative calculation: EBITDA margin, % | EBIT before depreciation and amortization. EBITDA divided by net sales | Shows the efficiency of the company and is used to compare companies in the same business sector |
| EBIT | Profit before finance income and finance costs and income tax | A business performance indicator that shows the company's ability to make a profit, regardless of the method of financing (then determines the optimal use of debt vs. equity) |
| EBIT margin, % | EBIT divided by net sales | Shows the efficiency of the company and is used to compare companies in the same business sector |
| Net investment | Purchases of long-term assets – Disposal of long-term assets | In the activities of Apranga APB, part of the investment into installation of the store is often disposed to the owner of the premises. |
| Performance measure | Formula and components used for the calculation | Interpretation |
|---|---|---|
| Therefore, to reflect the real impact on cash flows and operating costs (depreciation), it is appropriate to use the net investment measure | # CFO of the Company is responsible for the preparation supervision and the final revision of the consolidated financial statements. He constantly reviews International Financial Reporting Standards (IFRS) in order to implement in time IFRS changes, analyses Company’s and group’s significant transactions, ensures collecting information from the Group’s companies and timely and fair preparation of this information for the financial statements. In order to ensure that the consolidated financial statements are prepared correctly and on time, the Group has established appropriate rules and the procedures which regulates the principles, methods, and rules of accounting and preparation and presentation of consolidated financial statements. More information on the principles of preparation of the consolidated financial statements is presented in Note 2.4 to the Consolidated financial statements and in part 7 to the Consolidated annual report. The types of financial risks that Group faces and risk management are described in Note 3 to the Consolidated Financial Statements. The latest information on the risks related to the Group is also provided in Note 2.2 and Note 29 to the Consolidated Financial Statements. |
The management bodies of the Company specified in the Articles of Association are as follows: General Shareholders' Meeting, a collegial management body – Board, and a single-person management body – Manager of the Company. The Law of the Republic of Lithuania on Companies provides that Lithuanian companies at their discretion could have only one collegial governing body. There is no Supervisory Council in the Company. The Board consists of six members who are elected for the term of four years, represents the shareholders, and performs supervision and control functions.
APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius
FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated)
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Competence of General Shareholders‘ Meeting additionally includes adoption of the resolutions on the composition of the Audit Committee of the Company, including the appointment and removal of individual members of the Audit Committee, and approving the charter of the Audit Committee. General Shareholders' Meeting has a right to amend the Articles of Association under the qualified majority of votes, which may not be less than 2/3 of all votes the shareholders attending at the Meeting, except for the exceptions specified by Law on Companies. For more information on the rights and restrictions granted to shareholders, see Note 7, Securities.
The Board, consisting of six members, is elected by General Shareholders' Meeting for a 4 year term. Company‘s Board members election and revocation procedure is the same as specified by Law on Companies. Company’s Board activity is conducted by chairman of the Board. The Board elects its chairman from among its members. The Board continues in office for the period established in the Articles of Association or until a new Board is elected and assumes the office but not longer than until the annual General Shareholders' Meeting during the final year of its term of office.
APB APRANGA, Company’s code 121933274, Ukmerges 362, Vilnius
FOR THE YEAR ENDED 31 DECEMBER 2022 (all tabular amounts are in EUR thousands unless otherwise stated)
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The Board elects and removes from office the Manager of the Company, fixes his/her remuneration and sets other terms of the employment agreement, approves his/her job description, provides incentives and imposes penalties. The Board analyses and assesses the Company's draft annual financial statement and draft of profit/loss distribution and submits them to the General Shareholders' Meeting together with the annual report of the Company. The Board is responsible for convening and arrangement of the General Shareholders' Meeting in due time. Each member of the Board is entitled to initiate convening of the Board meeting. The Board may adopt resolutions and its meeting shall be deemed to have taken place when the meeting is attended by 2/3 and more of the members of the Board. The resolution of the Board is adopted if more votes for it are received than the votes against it. In the event of a tie, the Chairman of the Board shall have the casting vote. The member of the Board is not entitled to vote when the meeting of the Board discusses the issue related to his/her activities on the Board or the issue of his/her responsibility.
The Manager of the Company – General Director - is a single-person management body of the Company. The Manager of the Company acts at his/her own discretion in relation of the Company with other persons. The Manager of the Company is elected and removed from office by the Board which also fixes his/her salary, approves his/her job description, provides incentives and imposes penalties. The employment agreement is concluded with the Manager of the Company and is signed on behalf of the Company by the Chairman of the Board or other person authorized by the Board. In his/her activities the Manager of the Company complies with laws and other legal acts, Articles of Association, General Shareholders' Meeting resolutions, Board resolutions, his/her job descriptions. The Manager of the Company acts on behalf of the Company and is entitled to enter into the transactions at his/her own discretion.The Manager of the Company may conclude the following transactions provided that there is a decision of the Board to enter into these transactions: to invest, dispose of or lease the tangible long-term assets the book value whereof exceeds 1/20 of the share capital of the Company (calculated individually for every type of transaction); to pledge or mortgage the tangible long-term assets the book value whereof exceeds 1/20 of the share capital of the Company (calculated for the total amount of transactions); to offer surety or guarantee for the discharge of obligations of third persons the amount whereof exceeds 1/20 of the share capital of the Company; to acquire the tangible long-term assets the price whereof exceeds 1/20 of the share capital of the Company as well as to conclude transactions with related parties as provided by Law on Companies. The Manager of the Company is responsible for: 1) The organization of the Company‘s activity and implementation of its objectives; 2) The drawing up of the set of annual financial statements and the drafting of the annual report of the Company; 3) The drawing up of a draft of procedure of the assessment and conditions for transactions with related parties that are concluded under normal market conditions in the course of normal economic activity; 4) The drawing up of a draft remuneration policy; 5) The drawing up of a draft remuneration report; 6) Public announcement of the remuneration policy and remuneration report on the Company's website; 7) Concluding an agreement with the auditor or firm of auditors; 8) Submission of information and documents to the shareholders, General Shareholders' Meeting and the Board in cases prescribed by Law on Companies or at their request; 9) Submission of the documents and data of the Company to manager of the Register of Legal Entities; 10) Submission of documents to the Bank of Lithuania and Central Securities Depository; 11) Public announcement of information prescribed by Law on Companies in a source indicated in Articles of Association; 12) Submission of information to shareholders; 13) Preparation of the draft decision of the distribution of dividends for the period, shorter than a financial year, composition of the set of the interim financial reports and the preparation of the interim report for the decision of the distribution of dividends for the period, shorter than a financial year; 14) Notification to the shareholders and the Board about the most important events that have a significance for the company's activities 15) Preparation of draft rules for granting shares; 16) The performance of other duties prescribed by laws as well as in the Articles of Association and the job descriptions of the Manager of the Company. The Manager of the Company organizes daily activities of the Company, hires and dismisses employees, concludes and terminates employment contracts with them, provides incentives and imposes penalties. The Manager of the Company is responsible for preparation of the draft share subscription agreement and its data correctness. The Manager of the Company issues authorizations and procuration within the scope of its competence. The Manager of the Company is accountable and regularly reports to the Board on the implementation of Company‘s activity strategy, the organization of the Company‘s activity, the financial standing of the Company, the results of economic activity, the income and cost estimates, the stocktaking data and other accounting data of changes in the assets.
On 28 April 2022 the Annual General Meeting of Company shareholders elected Company‘s members of the Board for new 4- year term. 27 th April 2026 is the end term for Company‘s Board. Company’s Board consist of six members, two of them are independent.
Chairman of the Board
Darius Mockus (born in 1965) - Chairman of the Board since 2 May 2002 (member of the Board since 23 March 1995). Education: Vilnius University, Faculty of Economics, Industrial Planning. He has no Company shares. With related companies Minvista UAB (Code of Enterprise: 110685692; Registered office: Aukštaičių g. 7, Vilnius) and MG Investment UAB (Code of Enterprise: 123249022; Registered office: Aukštaičių g. 7, Vilnius) he has 41 983 428 shares, representing 75.93% of the share capital and votes.
Information on current management positions in other companies:
| Company name | Company code | Registered office | Current position |
|---|---|---|---|
| UAB MG grupė | 125459336 | Aukštaičių g. 7, Vilnius, Lithuania | President - the main position |
| UAB MV GROUP | 125313192 | Aukštaičių g. 7, Vilnius, Lietuva | Chairman of the Board |
| APB Apranga | 121933274 | Ukmergės g. 362, Vilnius, Lithuania | Chairman of the Board |
| UAB DARNU GROUP | 123010339 | Aukštaičių g. 7, Vilnius, Lithuania | Chairman of the Board |
Information on shareholdings in other companies above 5%: MG Grupė UAB - 100% of the share capital; Minvista UAB – 100% of the share capital.
Information about participation in other organizations: President of Honour of the Lithuanian Tennis Union.
Member of the Board, Purchasing Director
Ilona Šimkūnienė (born in 1963) - Apranga group Purchasing Director, Member of the Board of APB Apranga since 27 March 1998, in the Company since 1985. Education: Vilnius University, Faculty of Trade, specialization in Trade Economics. She has no Company shares.
Information on positions in other companies:
| Company name | Company code | Registered office | Current position |
|---|---|---|---|
| UAB Apranga LT | 300021271 | Ukmergės 362, Vilnius, Lithuania | Chairman of the Board |
| UAB Apranga BPB LT | 300509648 | Ukmergės 362, Vilnius, Lithuania | Chairman of the Board |
| UAB Apranga PLT | 300551572 | Ukmergės 362, Vilnius, Lithuania | Chairman of the Board |
| UAB Apranga SLT | 301519684 | Ukmergės 362, Vilnius, Lithuania | Chairman of the Board |
| UAB Apranga MLT | 302627022 | Ukmergės 362, Vilnius, Lithuania | Chairman of the Board |
| UAB Apranga HLT | 304042131 | Ukmergės 362, Vilnius, Lithuania | Chairman of the Board |
| UAB Apranga OLT | 304757395 | Ukmergės 362, Vilnius, Lithuania | Chairman of the Board |
| UAB Apranga Ecom LT | 304184173 | Ukmergės 362, Vilnius, Lithuania | Chairman of the Board |
| Apranga LV SIA | 40003672631 | Elizabetes iela 51, Riga, Latvia | Chairman of the Board |
| Apranga BPB LV SIA | 40003887840 | Elizabetes iela 51, Riga, Latvia | Chairman of the Board |
| Apranga PLV SIA | 40003887747 | Elizabetes iela 51, Riga, Latvia | Chairman of the Board |
| Company name | Company code | Registered office | Current position |
|---|---|---|---|
| Apranga SLV SIA | 50103201281 | Elizabetes iela 51 - 1A, Riga, Latvia | Chairman of the Board |
| Apranga MLV SIA | 40103486301 | Elizabetes iela 51 - 1A, Riga, Latvia | Chairman of the Board |
| Apranga HLV SIA | 40203202205 | Elizabetes iela 51 - 1A, Riga, Latvia | Chairman of the Board |
| Apranga OLV SIA | 50203162031 | Elizabetes iela 51 - 1A, Riga, Latvia | Chairman of the Board |
| Apranga Ecom LV SIA | 40103972857 | Elizabetes iela 51 - 1A, Riga, Latvia | Chairman of the Board |
| Apranga Estonia OU | 11026132 | Rotermanni mnt 18/1, Tallinn, Estonia | Chairman of the Board |
| Apranga BEE OU | 11419148 | Rotermanni mnt 18/1, Tallinn, Estonia | Chairman of the Board |
| Apranga PB Trade OU | 11530250 | Rotermanni mnt 18/1, Tallinn, Estonia | Chairman of the Board |
| Apranga ST Retail OU | 11530037 | Rotermanni mnt 18/1, Tallinn, Estonia | Chairman of the Board |
| Apranga MDE OU | 12617929 | Rotermanni mnt 18/1, Tallinn, Estonia | Chairman of the Board |
| Apranga HEST OU | 14075697 | Rotermanni mnt 18/1, Tallinn, Estonia | Chairman of the Board |
| Apranga Ecom EE OU | 14004869 | Rotermanni mnt 18/1, Tallinn, Estonia | Chairman of the Board |
Has no shareholdings in other companies above 5%.
Member of the Board
Vidas Lazickas (born in 1965) - Member of the Board of APB Apranga since 29 April 2011. Education: Vilnius University, Faculty of Economics, specialization in Production Management and Organization. He has 265 138 shares of the Company, representing 0.48% of the share capital and votes.
Information on current management positions in other companies:
| Company name | Company code | Registered office | Current position |
|---|---|---|---|
| UAB MG Grupė | 125459336 | Aukštaičių g. 7, Vilnius, Lietuva | Economics and Finance Director - the main position |
| UAB MG Investment | 123249022 | Aukštaičių g. 7, Vilnius, Lietuva | General Director |
| UAB Eminta | 303140423 | Aukštaičių g. 7, Vilnius, Lietuva | Director |
| UAB Euvalda | 123248988 | Aukštaičių g. 7, Vilnius, Lietuva | Director |
| UAB MG Media | 211616910 | Aukštaičių g. 7, Vilnius, Lietuva | General Director |
| UAB Minvista | 110685692 | Aukštaičių g. 7, Vilnius, Lietuva | Director |
| UAB MV GROUP Distribution LT | 121702328 | Aukštaičių g. 7, Vilnius, Lietuva | Chairman of the Board |
| UAB Laisvas ir nepriklausomas kanalas | 123026090 | Šeškinės g. 20, Vilnius, Lietuva | Chairman of the Board |
| UAB Mediafon“ | 124424581 | Olimpiečių g. 1 - 31, Vilnius, Lietuva | Chairman of the Board |
| UAB Mediafon Carrier Services | 304065315 | Olimpiečių g. 1 - 31, Vilnius, Lietuva | Chairman of the Board |
| UAB Mediafon Datapro | 304065322 | Olimpiečių g. 1 - 31, Vilnius, Lietuva | Chairman of the Board |
| UAB MV GROUP | 125313192 | Aukštaičių g. 7, Vilnius, Lietuva | Member of the Board |
| UAB MV GROUP Asset Management | 304145213 | Aukštaičių g. 7, Vilnius, Lietuva | Member of the Board |
| Įmonių grupė Alita AB | 302444238 | Miškininkų g. 17, Alytus, Lietuva | Member of the Board |
| OU MV GROUP Distribution EE | 11021347 | Kalmari tee 10, Rae vald, Harjumaa, Estija | Member of the Board |
| SIA MV GROUP Distribution LV | 40003787568 | Medus iela 7, Ryga, Latvija | Member of the Board |
| MV Poland S.P.z.o.o. | 140330387 | Przasnyska 6b, 01-756 , Varšuva, Lenkija | Member of the Board |
| AB MV GROUP Production | 132082782 | Aukštaičių g. |
Ramūnas Gaidamavičius Member of the Board, Development Director
Ramūnas Gaidamavičius (born in 1968) - APB Apranga group Development Director, Member of the Board of APB Apranga since 30 April 2010, in the Company since 2002. Education: Vilniaus University of Technology, Faculty of Mechanics, specialization in Machine Building. He has 5 000 shares of the Company, representing 0.01% of the share capital and votes.
Information on positions in other companies:
| Company name | Company code | Registered office | Current position |
|---|---|---|---|
| UAB Apranga LT | 300021271 | Ukmergės 362, Vilnius, Lithuania | Member of the Board |
| Apranga SIA | 40003610082 | Elizabetes iela 51, Riga, Latvia | Chairman of the Board |
| Apranga LV SIA | 40003672631 | Elizabetes iela 51, Riga, Latvia | Member of the Board |
| Apranga BPB LV SIA | 40003887840 | Elizabetes iela 51, Riga, Latvia | Member of the Board |
| Apranga PLV SIA | 40003887747 | Elizabetes iela 51, Riga, Latvia | Member of the Board |
| Apranga SLV SIA | 50103201281 | Elizabetes iela 51 - 1A, Riga, Latvia | Member of the Board |
| Apranga MLV SIA | 40103486301 | Elizabetes iela 51 - 1A, Riga, Latvia | Member of the Board |
| Apranga HLV SIA | 40203202205 | Elizabetes iela 51 - 1A, Riga, Latvia | Member of the Board |
| Apranga OLV SIA | 50203162031 | Elizabetes iela 51 - 1A, Riga, Latvia | Member of the Board |
| Apranga Ecom LV SIA | 40103972857 | Elizabetes iela 51 - 1A, Riga, Latvia | Member of the Board |
| Apranga OU | 11274427 | Rotermanni mnt 18/1, Tallinn, Estonia | Chairman of the Board |
| Apranga Estonia OU | 11026132 | Rotermanni mnt 18/1, Tallinn, Estonia | Member of the Board |
| Apranga BEE OU | 11419148 | Rotermanni mnt 18/1, Tallinn, Estonia | Member of the Board |
| Apranga PB Trade OU | 11530250 | Rotermanni mnt 18/1, Tallinn, Estonia | Member of the Board |
| Apranga ST Retail OU | 11530037 | Rotermanni mnt 18/1, Tallinn, Estonia | Member of the Board |
| Apranga MDE OU | 12617929 | Rotermanni mnt 18/1, Tallinn, Estonia | Member of the Board |
| Apranga HEST OU | 14075697 | Rotermanni mnt 18/1, Tallinn, Estonia | Member of the Board |
| Apranga Ecom EE OU | 14004869 | Rotermanni mnt 18/1, Tallinn, Estonia | Member of the Board |
Has no shareholdings in other companies above 5%.
Jonas Jokštys Member of the Board, independent
Jonas Jokštys (born in 1982 m.) – Member of Board of APB Apranga since 29 th April 2021 m. Education: Stocholm School of Economics in Riga (2000-2003) Bachelor of Economics and Business Administration and London School of Economics and Political Science (2005-2006) Master of Philosophy and Political Science. He has no Company shares.
Information on positions in other companies:
| Company name | Company code | Registered office | Current position |
|---|---|---|---|
| UAB Elmoris VG | 305710509 | Titnago g. 13A, Vilnius, Lietuva | Member of the Board |
| UAB Vendos | 304472649 | S. Konarskio g. 2-29, Vilnius, Lietuva | Director |
| APB Imum | 305646914 | S. Konarskio g. 2-29, Vilnius, Lietuva | Director |
| UAB Žemaitijos žemė | 305704335 | Vaidilutės g. 61, Vilnius, Lietuva | Director |
Has no shareholdings in other companies above 5%.
Gintaras Juškauskas Member of the Board, independent
Gintaras Juškauskas (born in 1970 m.) - Member of Board of APB Apranga since 29th April 2021 m. Education: Vilnius University, Finance faculty (1998-2003), Master of Economics and Vilnius University, Law faculty (2010-2013), Master of Law. He has no Company shares.
Information on positions in other companies:
| Company name | Company code | Registered office | Current position |
|---|---|---|---|
| Gintaro Juškausko IĮ | 302720373 | Vanaginės g. 87, Vilnius, Lietuva | Director |
| UAB Merits | 301678932 | Gedimino pr. 54B-1, Vilnius, Lietuva | Associate Partner |
Has no shareholdings in other companies above 5%.
The key management members of the Company and the Group as of 31 December 2022:
| Name, Surname | Position | Number of shares owned* | Part in the share capital | Start at company |
|---|---|---|---|---|
| Rimantas Perveneckas | General Director | 800 770 | 1,45% | 1983 |
| Ilona Šimkūnienė | Purchasing Director | - | - | 1985 |
| Ramūnas Gaidamavičius | Development Director | 5 000 | 0,01% | 2002 |
| Gabrielius Morkūnas | Chief Financial Officer | - | - | 2021 |
| Aušra Tartilienė | Inditex chain Director | - | - | 1989 |
| Irma Marcinkienė | Sales and Marketing Director | 1 863 | 0,003% | 2000 |
| Audronė Martinkutė | Personnel Director | 360 | 0,001% | 2002 |
* with related parties
Information about General director of the Company and the Group:
Rimantas Perveneckas General Director
Rimantas Perveneckas (born in 1960) - APB Apranga group General Director, Member of the Board of APB Apranga since 23 February 1993, in the Company since 1983. Education: Vilnius University, Faculty of Trade, specialization in Trade Economics. He has 800 770 shares of the Company, representing 1.45% of the share capital and votes. Has no positions in other companies. Has no shareholdings in other companies above 5%.
Information about CFO of the Company and the Group:
Gabrielius Morkūnas Chief Financial Officer
Gabrielius Morkūnas (born in 1990) - Apranga Group Finance and Economics Director, in the Company since 2021. Education: Mykolo Romerio University, Bachelor of Economics and Finance.
Information on positions in other companies:
| Company name | Company code | Registered office | Current position |
|---|---|---|---|
| UAB Apranga BPB LT | 300509648 | Ukmergės 362, Vilnius, Lithuania | Member of the Board |
| UAB Apranga PLT | 300551572 | Ukmergės 362, Vilnius, Lithuania | Member of the Board |
| UAB Apranga SLT | 301519684 | Ukmergės 362, Vilnius, Lithuania | Member of the Board |
| UAB Apranga MLT | 302627022 | Ukmergės 362, Vilnius, Lithuania | Member of the Board |
| UAB Apranga HLT | 304042131 | Ukmergės 362, Vilnius, Lithuania | Member of the Board |
| UAB Apranga OLT | 304757395 | Ukmergės 362, Vilnius, Lithuania | Member of the Board |
| UAB Apranga Ecom LT | 304184173 | Ukmergės 362, Vilnius, Lithuania | Member of the Board |
| Apranga OU | 11274427 | Rotermanni mnt 18/1, Tallinn, Estonia | Member of the Board |
Has no shareholdings in other companies above 5%.
The Audit Committee consists of 3 members, 2 of them are independent. The Audit Committee is elected for a 4-year term. Members of the Audit Committee are elected and recalled by the Board of the Company, except the independent members of the Committee. The independent members of the Audit Committee is elected by the General Shareholders Meeting at the proposal of the Management Board.
The main functions of the Audit Committee are:
The General Shareholders Meeting hold on 27 April 2017 approved the new Charter of the Audit Committee. The General Shareholders Meeting hold on 27 April 2021 approved three members of the Audit Committee for the new 4-year term: Rita Zakalskienė (the independent member of the Committee, Chair of the committee), Justina Puškorė (the independent member of the Committee) and Rasa Rulevičiūtė (an employee of the Company).
In 2022, 4 Audit Committee meetings were held. Following issues were discussed during the meetings of the Committee: discussing the notes of the external auditors' to the financial statements for 2021; seeking approval for not audit services, which Ernst & Young Baltic UAB planned to provide to MG grupė UAB; also planned for 2022 the scope of the audit and the terms of the audit; and other issues.
Details of the shares are provided in Note 14 to the Consolidated financial statements, Investments In Subsidiaries.
No transactions with related parties as provided for in art. 37(2) of the Law on Companies of the Republic of Lithuania were concluded in 2022.
All shares of the Company are of one class ordinary registered shares granting their owners (shareholders) equal rights. Details of the shares are provided in Note 7 to the Consolidated financial statements, Securities .
In 2022, there were no amendments of the Company‘s Articles of Association.
The Company does not have any information on agreements between shareholders.
The Company does not have the variety policy applicable to the election of the chief manager and the members of governing and supervisory bodies.# CORPORATE GOVERNANCE REPORT
During the procedure of selection of candidates to the Company‘s board of directors, governing and supervisory boards, the candidates shall be subject to requirements that do not discriminate a candidate on grounds of age, sex, education, or professional experience. During the selection of a candidate, the Company does not set any restrictions for nomination of a candidature on grounds of sex or age. Considering the specificity of the Company‘s business activity and the status of a state-owned company, unbiased requirements which are only related to the functions and competences of the members of a governing boards and the professional experience and education proportionate to these functions and competences are set.
The public trade company APRANGA (hereinafter referred to as the “Company”), acting in compliance with Article 12(3) of the Law of the Republic of Lithuania on Securities and paragraph 24.5 of the Listing Rules of AB NASDAQ OMX Vilnius, hereby discloses how it complies with the Corporate Governance Code for the Companies listed on Nasdaq Vilnius as well as its specific provisions 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:
Apranga APB is the parent company of the Group, registered in the Republic of Lithuania. At the end of 2022, it managed 25 daughter companies established in the three Baltic States. The Group’s core business is the retail sale of clothing. Of the 26 companies that make up the Group, 23 represent specific brands (Zara, Bershka, Pull&Bear, Stradivarius, Massimo Dutti, Zara Home and Oysho) on the basis of franchise agreements concluded with Inditex, a leader in the global apparel retail market. Three companies (APB Apranga, SIA Apranga and OÜ Apranga) represent brands other than Inditex (single-brand stores) as well as their own retail chains (multi-brand stores): Apranga, Apranga Galerija, City and Mados Linija.
Corporate governance activities are concentrated in the Group’s parent company, APB Apranga, which coordinates finances, legal, strategic planning and control, human resources and training, business management and development, information technology, ordering and pricing, marketing and advertising, and other general areas within the Group’s companies. The Group uses a centralized management model, and practically all management functions are concentrated at the Group’s headquarters in Vilnius.
The Group’s main company, APB Apranga, has been listed on the Nasdaq Vilnius Stock Exchange since 1997. The company has been on the Baltic Main List since 2005. The share capital of APB Apranga is EUR 16,034,668.40 and it is divided into 55,291,960 ordinary registered shares (ISIN code LT0000102337) with a nominal value of EUR 0.29 each, where each share grants to its owner 1 vote (in total 55,291,960 voting shares), all shares are paid in full and give the owners equal rights. On 31 December 2022, APB Apranga had 4,119 shareholders.
The main parent company, whose financial statements are made public, is UAB MG grupė. The main person controlling the Group is Mr. D. J. Mockus, who, together with related companies, holds 41,983,428 APB Apranga shares, accounting for 75.93% of the authorized capital and total votes.
According to the Company’s articles of association, the bodies of the Company are the general meeting of shareholders, the collegial management body – the management board, and the sole management body – the manager of the Company. A supervisory board is not formed at the Company. Six members are elected to the management board by the general meeting of shareholders for a maximum period of four years. The management board was re-elected for a new 4-year term during the reporting period, two independent members were re-elected as well. The Company’s management board is made up of board chair D.J. Mockus and board members Ilona Šimkūnienė, Vidas Lazickas, Gintaras Juškauskas (independent), Jonas Jokštys (independent) and Ramūnas Gaidamavičius. The management board elects and removes the manager of the Company – the general director.
The Company has an audit committee consisting of three members, two of whom are independent. The audit committee is elected for a period of four years. The members of the committee are appointed and removed by the Company’s general meeting of shareholders on the recommendation of the Company’s management board. On 27 April 2017, the authority of the audit committee and the composition of the audit committee consisting of three (3) members were approved by the decision of the general meeting of shareholders.
Members of the audit committee: Rita Zakalskienė (the independent member of the Committee, Chair of the committee) and Justina Puškorė (the independent member of the Committee), Rasa Rulevičiūtė (an employee of the Company).
| PRINCIPLES/ RECOMMENDATIONS | YES / NO/ NOT APPLICABLE | COMMENTARY # GOVERNANCE REPORT 3.2
Shareholders are informed about upcoming general meetings of shareholders in accordance with the requirements of legislation and the Company’s articles of association – adhering to the notification deadlines and methods and means of announcement. The opportunity to participate in the meeting is supplemented by the option of voting by ballot or authorizing another person to represent the shareholder. All shareholders are also notified about upcoming general meetings of shareholders in advance on the Investor Calendar. The general meeting of shareholders is always held at the Company’s headquarters. A working day is always chosen for the date, and the time is always during the first half of the day or around lunchtime, so public transport can also be used to attend. In the notice of the general meeting of shareholders being convened, the Company does not restrict the right of shareholders to submit new draft decisions either before or during the meeting, and this is clearly stated in the notice of the general meeting of shareholders being convened in both Lithuanian and English.
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’s commercial secrets are not revealed.
Yes
The notice of the general meeting of shareholders being convened, draft decisions, the general voting ballot, and other related documents (for example, when amending the articles of association – the articles of association and the proposed amendments) are published/presented not only in Lithuanian, but in English as well (thus far, there has not been a need to prepare documents in other foreign languages). Minutes of the general meeting of shareholders (decisions taken during the meeting) are also published on the Company’s website in English (for example: https://aprangagroup.lt/en/investors/corporate-governance/shareholders-meetings/3755-resolutions-of-the-annual-general-meeting-of-apranga-apb-shareholders-9)
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 are furnished with these opportunities – information is provided about them in advance in the notice of the general meeting of shareholders being convened. The general voting ballot can also be completed in English.
1.8. With a view to increasing the shareholders’ opportunities to participate 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.
No
Shareholders are not yet provided with these conditions because the security of transmitted information and identification of the participating and voting person must first be ensured by necessary and proportionate means. The Company has not yet introduced such electronic means of communication. We believe that these opportunities to vote at the meeting:
- voting in person at the meeting;
- voting by proxy;
- voting upon concluding a voting trust agreement;
- voting in advance by completing the general voting ballot (in English as well), including its transmission to the Company via electronic means of communication;
are versatile and sufficient, and that shareholders’ rights to participate and vote at the meeting are properly implemented.
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. Remuneration of collegial body members is determined by the Remuneration Policy approved by the general meeting of shareholders. All candidates for members of the Company’s collegial body also inform the general meeting of shareholders what position they hold and where, and how their other activities are related to the Company and other legal entities related to the Company, as defined in Article 19(9) of the Law on Companies. All information about elected management board members is provided on the Company`s website.
Yes
If these issues are on the agenda of the general meeting of shareholders, new candidatures of members of the collegial body, information about his/her educational background, work experience and other managerial positions held and the proposed audit company are specified in the draft decisions of the general meeting of shareholders.
1.10. Members of the company’s collegial management body, heads of the administration 1 or other competent persons related to the company who can provide information related to the agenda of the general meeting of shareholders should take part in the general meeting of shareholders. Proposed candidates to member of the collegial body should also participate in the general meeting of shareholders in case the election of new members is included into the agenda of the general meeting of shareholders.
Yes
Members of the Company’s collegial body, heads of the administration, or other competent persons related to the Company take part in the general meeting of shareholders if they can provide information related to the agenda of the general meeting of shareholders. Proposed candidates for members of the collegial body also participate whenever possible.
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’s 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’s financial accounting and control system.
Not applicable
A supervisory board is not formed at the Company.
Not applicable
Not applicable
Not applicable
Not applicable
1 For the purposes of this Code, heads of the administration are the employees of the company who hold top level management positions.
2 For the purposes of this Code, the criteria of independence of members of the supervisory board are interpreted as the criteria of unrelated parties defined in Article 31(7) and (8) of the Law on Companies of the Republic of Lithuania.
Company’s code: 121933274, Ukmerges 362, Vilnius
FOR THE YEAR ENDED 31 DECEMBER 2022
(all tabular amounts are in EUR thousands unless otherwise stated)
The procedure of the formation of the supervisory board should ensure proper resolution of conflicts of interest and effective and fair corporate governance.
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
The management board should ensure the implementation of the company’s strategy and good corporate governance with due regard to the interests of its shareholders, employees and other interest groups.
Yes/No The Company does not prepare or approve a separate Company strategy. The Company prepares, approves and publishes the Company’s one-year operational plans. Company’s objectives are disclosed in the Company’s annual reports and notifications of material events, which are published in the same sources as provided in the answer to 1.1.
Yes
As a collegial management body of the Company, the management board performs the functions assigned to it by the Law and in the articles of association of the Company. In performing the functions assigned to it, the management board takes into account the needs of the Company, shareholders, employees and other interest groups; the objective of the management board is essentially to achieve sustainable business development. At the end of the year, the Company’s management board approves next year’s budget, considering not only expansion and planned investments, but also potential staff salary increases, allocation of investments for employee training and development, implementation of IT systems and security, etc.
Yes/No
Compliance with the provisions of laws and the Company’s internal policies is ensured by the management board, as well as by the person or persons delegated by the management board, and department heads and/or jurists, within the scope of activities of the laws/policies.
Yes/No
Some of the measures are applied. In 2019, the management board approved and published the Code of Ethics and Conduct, which contains, in addition to the OECD Good Practice Guidance, other rules relevant to the Company’s operations. In 2019, corruption prevention trainings were organized for the company’s employees and it is intended to repeat them in the future. The code of ethics will be reviewed by the management board regularly and updated as necessary.
Yes
When appointing the manager of the Company, the management board takes into account the appropriate balance between the candidate’s qualifications, experience and competence.
Yes/No (due to gender equality)
The management board is made up of persons of different professional experience and competences. The management board is composed of experts in corporate governance, economics and finance, taxes, procurement, expansion and development who possess the diverse knowledge, opinions and experience necessary for the proper and effective functioning of the management board and the interests of the Company. All members of the management board are closely acquainted with the activities of the Company, and two out of six members of the management board are employees of the Company – heads of administration. Even though only one of the six members of the management board is a woman, there are no requirements for the composition of the management board that may discriminate on the basis of sex in any way.
| PRINCIPLES/ RECOMMENDATIONS # GOVERNANCE REPORT
Company’s code 121933274, Ukmerges 362, Vilnius
FOR THE YEAR ENDED 31 DECEMBER 2022
(all tabular amounts are in EUR thousands unless otherwise stated)
| PRINCIPLES/ RECOMMENDATIONS | YES / NO/ NOT APPLICABLE | COMMENTARY |
| :---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 of the 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. | Not applicable | A supervisory board is not formed at the Company. |
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.
| PRINCIPLES/ RECOMMENDATIONS | YES / NO/ NOT APPLICABLE | COMMENTARY |
| :---# GOVERNANCE REPORT
(all tabular amounts are in EUR thousands unless otherwise stated)
| PRINCIPLES/ RECOMMENDATIONS | YES / NO/ NOT APPLICABLE | COMMENTARY |
|---|---|---|
| 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. |
Not applicable | See answer to 5.1.1. |
| 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. | Not applicable | See answer to 5.1.1. |
| 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 members of the collegial bodies and the heads of the administration in order to ensure that they would be consistent with the company’s remuneration policy and the evaluation of the performance of the persons concerned; 3) review, on a regular basis, the remuneration policy and its implementation. |
Not applicable | See answer to 5.1.1. The remuneration policy is drafted and approved as provided by the amendments to the Law on Companies. |
(all tabular amounts are in EUR thousands unless otherwise stated)
| PRINCIPLES/ RECOMMENDATIONS | YES / NO/ NOT APPLICABLE | COMMENTARY |
|---|---|---|
| 5.4. Audit committee | ||
| 5.4.1. The key functions of the audit committee are defined in the legal acts regulating the activities of the audit committee 6 . | 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 approved Audit Committee Charter provides for the following: “3.3. The Committee shall be entitled: 3.3.1. to obtain any information or documents when performing the Committee’s duties; 3.3.2. to obtain full information related to the specific features of the Company’s accounting, finances and operations. At the request of the members of the Committee or at its own initiative, the Company’s administration should inform the Committee about the methods of accounting for significant and unusual transactions where the accounting may be subject to different approaches, as well as about activities in preferential trade areas and/or activities carried out through special-purpose entities (companies, organizations) in order to determine whether these activities are justified. 3.4. The Committee shall submit requests for information or documents to the Company’s general director. The Company’s general director shall provide the Committee member(s) with access to the information or documents.” The Audit Committee Charter does not provide for any exceptions in which information may be withheld. The audit committee or its members may exercise these established rights without restriction. |
| 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 audit committee is free to choose who to invite to its meetings, or to meet without inviting anyone to the meeting. The participation of members of the management bodies is only possible at the direction of the audit committee. Since there is one employee of the Company on the audit committee, the committee may, if necessary, arrange a meeting with the necessary employee of the Company without members of the management bodies present. The committee is free to decide on meetings with other necessary persons (not employees) and acts independently. See also answer to 5.1.1. |
| 5.4.4. The audit committee should be informed about the internal 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. | Not applicable /Yes | The Company does not have any internal auditors. The audit committee is informed about the work program of external auditors and receives from the audit firm a report describing all relationships between the independent audit firm and the Company and its group. |
| 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. | No | The procedure for reporting suspicions of potential violations committed at the Company is established and posted on the Company’s website, as regulated by the Law on Whistleblower Protection. There is an internal channel for the proportionate and independent investigation of such issues and appropriate follow-up actions, and there are reporting rules in place (link below). In the rules, the audit committee is not designated as a supervisory body for compliance with the relevant provisions of the Company and has not done so thus far. More about reports: https://aprangagroup.lt/lt/investuotojams/bendroves-valdymas/apb-apranga-valdymo-principai |
| 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. | No | The committee is accountable to the Company’s general meeting of shareholders. The committee submits an activity report to the general meeting of shareholders together with the complete set of financial statements submitted by the management board for approval. |
The corporate governance framework should encourage members of the company’s supervisory and management bodies to avoid conflicts of interest and ensure a transparent and effective mechanism of disclosure of conflicts of interest related to members of the supervisory and management bodies. Any member of the company’s supervisory and management body should avoid a situation where his/her personal interests are or may be in conflict with the company’s interests. In case such a situation did occur, a member of the company’s 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’s shareholders of such situation of a conflict of interest, indicate the nature of interests and, where possible, their value.
| PRINCIPLES/ RECOMMENDATIONS | YES / NO/ NOT APPLICABLE | COMMENTARY |
|---|---|---|
| Yes | To the Company’s knowledge, the members of the Company’s management body avoid situations in which their personal interests are or may be in conflict with those of the Company. |
6 Issues related to the activities of audit committees are regulated by Regulation No. 537/2014 of the European Parliament and the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities, the Law on the Audit of Financial Statements of the Republic of Lithuania, and the Rules Regulating the Activities of Audit Committees approved by the Bank of Lithuania.The members of the Company’s management body are informed of their duty to report, within a reasonable period of time, such a conflict of interest to the other members of the same body, or to the body of the Company that elected them, or to the shareholders of the Company. This requirement, inter alia, is provided in the Company’s Code of Ethics and Conduct. More about avoiding conflict of interest: https://aprangagroup.lt/images/download/APRANGA_Etikos_ir_elgesio_kodeksas_2019.pdf
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’s remuneration 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.
Yes
https://aprangagroup.lt/en/investors/corporate-governance/principles-of-corporate-governance
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.
Yes/No
The remuneration policy is drafted and adopted in accordance with the requirements of the Law on Companies and actual situation in the Company. The remuneration policy does not cover factors that are not applied in the Company or for which there is no established practice or generally applicable principles in the Company.
FOR THE YEAR ENDED 31 DECEMBER 2022
(all tabular amounts are in EUR thousands unless otherwise stated)
| PRINCIPLES/ RECOMMENDATIONS | YES / NO/ NOT APPLICABLE | COMMENTARY |
|---|---|---|
| 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. | Yes | According to the Remuneration Policy, remuneration for work in the board is received only by independent members of the board and is fixed. |
| 7.4. The remuneration policy should provide sufficient 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 non-variable 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. | No | Severance pay policy is not established in the remuneration policy. The amount of severance pay would be decided on a case-by-case basis, taking into account the Company's interests, principles of reasonableness, proportionality, fairness and integrity as well as consensus reached between the parties, contribution to the Company's activities and reasons for dismissal. |
| 7.5. In the event that the financial incentive scheme is applied at the company, the remuneration policy should contain sufficient 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. | No | No financial incentive scheme, as defined by the Law on Markets in Financial Instruments, is applied at the Company. |
| 7.6. The company should publish information about 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’s remuneration policy, compared to the previous financial year. | Yes | The remuneration report is published together with the Company's annual report how the content requirements of such a report are provided by the Law on Corporate Financial Statements. |
| 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. | Yes | Approval of the remuneration policy or any major change of the policy is within the competence of the general meeting of shareholders. |
The corporate governance framework should recognize the rights of stakeholders entrenched in the laws or mutual agreements and encourage active cooperation between companies and stakeholders in creating 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 certain interests in the company concerned.
FOR THE YEAR ENDED 31 DECEMBER 2022
(all tabular amounts are in EUR thousands unless otherwise stated)
| PRINCIPLES/ RECOMMENDATIONS | YES / NO/ NOT APPLICABLE | COMMENTARY |
|---|---|---|
| 8.1. The corporate governance framework should ensure that the rights and lawful interests of stakeholders are protected. | Yes | The Company respects the rights of different stakeholders and their rights entrenched in the laws. |
| 8.2. The corporate governance framework 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’s authorized capital, involvement of creditors in corporate governance in the cases of the company’s insolvency, etc. | Yes | The Company has never prohibited or restricted the right, and always strives to create conditions for stakeholders to participate in corporate governance in the manner prescribed by law. For example, a work council has been formed at the Company which represents the interests of employees and participates in corporate governance within its competence. |
| 8.3. Where stakeholders participate in the corporate governance process, they should have access to relevant information. | Yes | |
| 8.4. Stakeholders should be provided with the possibility of reporting confidentially any illegal or unethical practices to the collegial body performing the supervisory function. | No | The company has a general procedure for reporting violations, see the answer to 5.4.5, as established by the Law on Whistleblower Protection. |
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’s 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:
_ The information referred to below in this recommendation is disclosed in notifications of material events published through the Nasdaq Vilnius Information Disclosure System, the Company’s website, and the Company’s annual and interim information documents, to the extent required by legislation and the International Financial Reporting Standards applicable in the European Union. The information is also disclosed in presentations to investors by the manager and senior management of the Company.
9.1.1. operating and financial results of the company;
Yes
9.1.2. objectives and non-financial information of the company;
Yes
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;
Yes
9.1.4. members of the company’s 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;
Yes
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;
Yes/No
See the answer given in 5.1.5.
9.1.6. potential key risk factors, the company’s risk management and supervision policy;
Yes
FOR THE YEAR ENDED 31 DECEMBER 2022
(all tabular amounts are in EUR thousands unless otherwise stated)
| PRINCIPLES/ RECOMMENDATIONS | YES / NO/ NOT APPLICABLE | COMMENTARY |
|---|---|---|
| 9.1.7. |
YES/NO: Yes
COMMENTARY: Most of this information is disclosed in the Company’s corporate social responsibility report (Annex 2).
YES/NO: Yes/No
COMMENTARY: The Company’s governance structure and management principles are published on the Company’s website and in its financial statements. One-year operational plans are publicly disclosed.
YES/NO: Yes
COMMENTARY: 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/NO: Yes
COMMENTARY: Information is disclosed about the Company and the consolidated results of its daughter companies.
YES/NO: Yes
COMMENTARY: All information is on the Company’s website; also see the answers to 3.2.2 and 7.1.
YES/NO: Yes
COMMENTARY: All information is disclosed as provided for in 9.1 and related answers; no shareholders or investors are discriminated in terms of the method of receipt and scope of information. Information is disclosed to all parties concerned at the same time. Information is disclosed in accordance with the applicable legislation of the Republic of Lithuania. The Company makes information publicly available through the Nasdaq Vilnius Information Disclosure System, thus ensuring simultaneous disclosure to investors. Information is also immediately placed in the Central Storage Facility. Notifications of material events are disclosed in Lithuanian and English, before or after the Nasdaq Vilnius Stock Exchange trading session. The Company also publishes the information published through the Nasdaq Vilnius Information Disclosure System and placed in the Central Storage Facility on the Company’s designated investor website http://apranga.lt/lt/investuotojams, where the information is presented in Lithuanian and English.
The company’s audit firm selection mechanism should ensure the independence of the report and opinion of the audit firm.
Company’s code 121933274, Ukmerges 362, Vilnius
FOR THE YEAR ENDED 31 DECEMBER 2022
(all tabular amounts are in EUR thousands unless otherwise stated)
| PRINCIPLES/ RECOMMENDATIONS | YES / NO/ NOT APPLICABLE | COMMENTARY However, the longer we work and consistently pursue our goals, the more we realise that only a prolonged period of time allows us to understand the true significance of our preceding actions. The sustainability journey is not a short one, however it requires decisive action, while change often takes time. Nevertheless, the Apranga Group, together with its employees, is already on this path. Each year we set ourselves new goals, each year we evaluate what we have done and what we can do better. Looking further back, we can assess how much we have already benefited from our previous actions. Similarly the future of sustainability looks unrealistic or difficult to achieve at times, but the lessons we have learnt tell us that difficult or small steps taken right now will become big leaps in the future. We have decided what kind of planet we want to live on, and what kind of planet we want to leave for our children. We are part of a large community where Apranga is not just a job place but also a way of life. We are a group of people who support each other, create an internal company culture that encourages excellence, and we value mutual respect. We respect our partners and competitors because we believe that only by acting transparently will we create a better business environment that contributes to the well-being of the whole society. CEO of Apranga Group Rimantas Perveneckas
Social Responsibility Report 2022
| 2021 | 2022 | |
|---|---|---|
| 169 STORES | 168 STORES | |
| ~200 BRANDS | ~200 BRANDS | |
| 3 COUNTRIES | 3 COUNTRIES | |
| 1992 EMPLOYEES | 2139 EMPLOYEES | |
| 190 MILLION EUR GROUP REVENUE* | 243 MILLION EUR GROUP REVENUE* |
*In order to provide a more accurate indication of the Group's performance and to enable comparisons from 2022 onwards, Social Responsibility Report uses a revenue figure excluding value added tax (VAT). Respectively, all the figures for 2021 and 2022 are presented without VAT.
ABOUT THE APRANGA GROUP
SUSTAINABILITY WITHIN THE GROUP
ENVIRONMENT
SOCIAL FACTORS
ECONOMIC (GOVERNANCE) AREA
GRI INDEX
CONTENTS
ABOUT SOCIAL RESPONSIBILITY REPORT
Social Responsibility Report 2022
The business model of Apranga Group (the Group) remained unchanged last year. The number of companies remained unchanged – the Group consists of the parent company APB (joint stock trading company) Apranga, established and operating in Lithuania, and 25 subsidiaries established in Lithuania, Latvia and Estonia. No new companies were established last year. The Group has no associates to co-manage. The core activity of all Group companies is clothing retailing. The parent company APB Apranga has been listed on the Nasdaq Vilnius Stock Exchange since 1997. It has been listed on the Baltic Main List since 2005. APB Apranga is a member of the Lithuanian Association of Trading Companies (LPĮA). No new associations or organisations were joined last year.
Subsidiaries are divided into two groups:
companies (Zara, Bershka, Pull&Bear, Stradivarius, Massimo Dutti and Zara Home operators in each of the three Baltic States and Oysho in Lithuania and Latvia, as well as e-commerce companies representing Inditex brands in the three Baltic States), which represent a specific brand and operate under franchise agreements with the world's largest clothing supplier, the Inditex Group (hereafter referred to as "franchisees").
companies (SIA Apranga, OÜ Apranga) which do not operate under franchise agreements or with a relatively small number of franchise agreements (hereafter referred to as "non-franchised companies").
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Franchisees are supplied by the Inditex Group. SIA Apranga and OÜ Apranga (non-franchised companies) operating on the Latvian and Estonian markets, are supplied by APB Apranga (except for rare exceptions where goods are delivered directly from suppliers). The non-franchised companies sell their goods in the Latvian and Estonian markets, while in Lithuania the goods are sold by APB Apranga itself. The pattern of subsidiaries has remained unchanged over the past year.
The Group's sales revenue consists of revenue from its retail chain (168 stores in Lithuania, Latvia and Estonia) and revenue from online sales. As in previous years, more than 95% of sales revenue comes from the clothing category (including online sales). The remaining sales revenue comes from sales of footwear and household goods in the respective specialised stores.
In 2022, the Group continued to successfully develop its multi-channel strategy based on the integration of bricks-and-mortar and online stores. In the past year, the Group's retail network has operated without significant restrictions related to the COVID-19 pandemic, which has led to a significant change in the ratio between online and bricks-and-mortar stores. While in 2021 the Group's sales share in the total turnover was 21.1%, this percentage has decreased to approximately 13% over the last period and is broadly in line with the long-term strategy defined when the Group started trading online.
The core business functions and management are concentrated in the parent company APB Apranga. Subsidiaries carry out only a small number of functions. Meanwhile, APB Apranga employs the vast majority of the Group's administrative staff, as well as all logistics and warehouse employees.
ABOUT THE APRANGA GROUP
SUSTAINABILITY WITHIN THE GROUP
ENVIRONMENT
SOCIAL FACTORS
ECONOMIC (GOVERNANCE) AREA
GRI INDEX
CONTENTS
ABOUT SOCIAL RESPONSIBILITY REPORT
Social Responsibility Report 2022
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |# GRI 2-23, GRI 2-24: Sustainability Principles and Commitments
Social Responsibility Report 2022
The governance of the Company is based on the provisions of the Civil Code of the Republic of Lithuania, the Company Law of the Republic of Lithuania and the Company Statute. The CEO of the company, together with the Board, also takes strategic decisions on sustainability management. The Board is composed of six members (1 woman, 5 men), two of whom are independent, to ensure that it represents the widest possible range of stakeholders. The CEO of the company is not the chairman of the Board. The Board is elected by the General Meeting of Shareholders for a term of four years, in accordance with the Company Law of the Republic of Lithuania and Company Statute.
During the reporting period, the company had no diversity policy for the election of its governance and supervisory bodies, but there is no discrimination on the basis of age, gender, education or professional experience. During the reporting period, the company had no job position for sustainability management, but it would consider the necessity for such a position in the future. The responsibility for setting and implementing the sustainability objectives currently lies with the management team in their respective areas of activity. Sustainability indicators are reviewed once per calendar year, normally after the end of the reporting period. The review and approval of the information provided, including material topics, is the responsibility of the company's CEO and designated designated staff.
The Chief Executive Officer is accountable and reports regularly to the Board on the implementation of the Company's business strategy. The Company's Annual Report (together with Social Responsibility Report) is presented by the Company's CEO to the Board and then submitted to the General Meeting of Shareholders for approval.
Potential conflicts of interest in the management of sustainability topics are governed by the organisation's Code of Ethics and Conduct, and each responsible person has an obligation to declare potential conflicts of interest if they are involved in the planning, implementation, or reporting on sustainability topics. In order to identify potential conflicts of interest, the Group's Code of Ethics and Conduct and internal documents provide for the obligation to complete a declaration of interests, which is updated at least once every 2 calendar years, or in the event of any changes that may give rise to a conflict of interest. Conflicts of interest are disclosed on the basis of declarations of interest submitted and internal Group documents, without an exhaustive list of specific criteria. It is envisaged that the development of a sustainability strategy will lead to a more detailed definition of conflicts of interest in sustainability management, including control measures.
There were no critical concerns related to sustainability topics during the reporting period. Each member of the Board shall have the right of initiative to convene a meeting of the Board, if necessary or if such concerns are received. During the reporting period, there were no measures in place to enhance the knowledge and experience of the highest governance body (Board and top management) in the field of sustainable development, nor was there an evaluation of their performance in this area.
Social Responsibility Report 2022
Stakeholders can submit concerns or reports related to sustainability management either directly to the responsible persons or through the anonymous Whistleblower channel at [email protected]. Alternatively, any communications can be made to the general email address [email protected]. Depending on the content of the reports received, they are dealt with by the responsible department, always involving the legal department, which ensures that the report is dealt with competently. The company is covered by operational and other insurances and, where necessary, the insurer is involved in compensation proceedings.
The development and approval of the organisation's sustainability strategy is intended to involve all those responsible (top management and the Board) and to be approved at the highest levels of the company's governance.
The General Meeting of Shareholders approves the Company's Remuneration Policy. The members of the Board are not remunerated for their service on the Board, except for the independent members of the Board. The remuneration of a company's CEO consists of:
The ratio between the variable and fixed components depends solely on the performance of the Group. The amount of the variable remuneration component (percentage of the Group's profit) for the Company's CEO is determined and approved by a decision of the Board in such a way as to be consistent with the business strategy, long-term objectives and operational interests of the Company and the Group, to safeguard the interests of shareholders, to promote sound and effective Company governance and risk management in the scope of the decisions taken, to avoid conflicts of interest, and to ensure adherence to the Code of Ethics and Conduct.
The Board and the CEO of the Company do not receive any other remuneration, bonuses, allowances or incentives.
Social Responsibility Report 2022
The identification and assessment of risks is carried out by the highest governance body of the organisation – the Board, together with the company's top managers who make up the Directorate. This assessment informs the organisation's planning and provides the means to manage risks or the potential consequences of unmanaged or inadequately managed risks.
After a relatively long period of uncertainty related to the epidemiological situation due to the COVID-19 pandemic – both in the operational markets and globally, – this factor, which had a direct impact on the operational model, has become less significant yet has not been entirely eliminated. Several years of unpredictable situations have made it necessary to take an even more responsible approach to potential risks and to anticipate both immediate actions and longer-term planning to deal with the possible consequences.
In 2022, the epidemiological risk factor has been pushed aside by another major risk factor – geopolitical security triggered on 24 February 2022 by Russia's war against Ukraine. The Organisation had no activities in Russia or Ukraine and had no partners in those countries to depend on, and therefore did not suffer any direct effects related to hostilities of the war. Nevertheless, it was undoubtedly a highly significant event, with far-reaching economic and geopolitical consequences in all operational markets of the Group. In response to the toll of the war, the Group has been actively involved in providing humanitarian aid to war refugees and victims in Ukraine, with the aim of providing essential clothing to NGOs assisting them.
Epidemiological risks remain monitored, but their significance is noticeably lower as they had little impact on the Group's business model during the reporting period. Nevertheless, monitoring, preparedness and proactive approach are among the priorities to manage the risks associated with this factor. The Group complies with the requirements and recommendations recommendations of the authorities in all operational markets, actively encourages employees to take care of their own health, and strives to ensure safe conditions for both employees and customers. Business planning includes a range of scenarios of the response that may be required to manage these risks, recognising that the most complex scenario could have a direct impact on the Group's business model.
The main risks are: the high costs of raw materials for producers, the unpredictable price of energy resources, rising supply chain costs and potential disruptions, and the overall economic situation. The inflation rate further remains of significant importance in the context of the European Union and the Baltic States as a whole, and its growth may have an impact on the purchasing power of customers and the Group's results. The overall economic trends in the European Union and the euro area suggest that the situation will remain relatively stable in the short term, however slower economic growth or a negative GDP figure could affect the Group's results.# Risks of climate change impacts.
Climate change is a persistent and increasingly significant risk in the Group's operations. The textile manufacturing industry has an impact on the environment and is exposed to environmental change, therefore we aim to make the impact of climate change one of our priority risk areas. The Group's business model does not include manufacturing processes, but it is dependent on textile production by third parties. The Group aims to implement the principles of sustainable operations while at the same time ensuring its partners' responsibility to reduce their impact on climate change. We understand our responsibilities and potential risks not only in our direct operations but also along the entire value chain. The Group is working to ensure that goods entering the market are sustainably collected at the end of their life cycle, thus contributing to waste reduction. Increasing regulation in the textile manufacturing sector may affect the Group's business model. However, this should not be seen as a risk but rather as an opportunity to invest time and effort to prepare in advance and anticipate changes in the business model to allow for adaptation.
Despite growing competition, especially in the e-commerce segment, the Group confidently maintains its position as the leading clothing retailer in the Baltic States. The Group's strategy is based on a multi-channel strategy and it is actively investing in both its online presence and in the renewal and efficiency of its bricks-and-mortar store network. We constantly monitor the market situation and make sure that competition is fair for all parties. Recent changes in the market have led to a more open market with more e-commerce players entering the market, but this change has had no significant impact as the Group further invests and competes actively in this segment. For the sector as a whole, we see our competitors as partners with whom we can achieve more by working together on regulatory, social or environmental issues than we can by working alone. We are open to cooperation and constructive dialogue, and strive for a relationship based on mutual respect.
After years of atypical activity under quarantine and partial closures, the situation on the labour markets stabilised in the reporting period. Changes in recruitment, placement and training as a result of the COVID-19 pandemic have enabled us to respond flexibly to changing circumstances and to effectively manage the processes of staff turnover and integration of new employees. The organisation places the well-being of its employees as one of its core values and strives to improve working conditions by providing additional benefits and career opportunities. The main long-term risks related to staff remain:
Strengthening our relationship with our employees and building a corporate culture remains our priority. As in previous periods, the risk assessment is carried out by listing extensive factors and ranking the most significant ones. The principle is not only to list priority risks and plan their possible management, but also to discuss other less likely factors to ensure a rapid response if needed.
The European Union’s Taxonomy (Taxonomy Regulation, 2021/2178) is a system for classifying sustainable economic activities, with the aim of directing private investment towards environmentally sustainable activities, contributing to the European Green Deal to become the first climate-neutral continent. The Taxonomy Regulation sets out criteria based on scientific evidence to assess the sustainability of activities. Only those company activities that are listed in the Taxonomy and meet the criteria set out in the Taxonomy can be classified as sustainable and attract green investments.
The main economic activity of the Apranga Group, from which the Group derives its income, according to the statistical classification of economic activities in the EU (NACE), is the Retail sale of clothing in specialised stores. Additional economic activities of the Group are Retail sale via mail order houses or via Internet; Retail sale of textiles in specialised stores; Retail sale of cosmetic and toilet articles in specialised stores. These activities are classified under NACE codes 4771 (principal activities), 4791, 4751, 4775 respectively.
Taxonomy-eligible economic activities are defined as the activities described in the delegated acts of the Taxonomy Regulation. The identification of a Taxonomy-eligible economic activity is the first step in assessing the conformity of an economic activity with the criteria for the technical analysis of the Taxonomy. Neither the Group's principal nor its additional economic activities are described in the delegated acts of the Taxonomy Regulation and therefore the Group is considered not to derive income from Taxonomy-eligible activities and no further analysis is required. Similarly, the Group's 5-year investment plan does not foresee any investment in Taxonomy-eligible activities from which the Group's companies would derive income.
| TURNOVER | NACE codes | ABSOLUTE TURNOVER, thousand Eur excl. VAT | PROPORTION OF TURNOVER, % |
|---|---|---|---|
| 2022 | 2021 | ||
| A. TAXONOMY- ELIGIBLE ACTIVITIES | No such activities | ||
| B. TAXONOMY NON-ELIGIBLE ACTIVITIES | 4771, 4791, 4751, 4775 | 242,899 | 189,745 |
The EU Taxonomy defines CAPEX as all additions to tangible and intangible assets during the financial year before depreciation, amortisation and any remeasurements, including those resulting from revaluations and impairments, for the relevant financial year and excluding fair value changes. The Group's CAPEX in 2022 amounted to 3,797 thousand Eur, and in 2021 it amounted to 5,001 thousand Eur. Part of our capital expenditure in 2022 related to individual measures included in the Taxonomy that enable our core activities to become low-carbon or to lead to greenhouse gas reductions. One such measure was the purchase of solar power plants (investment amounting to 417,340 Eur). The Taxonomy identifies these activities as installation, maintenance and repair of renewable energy technologies (point 7.6 in the Annex I to the Climate Delegated Act). In 2022, we have also invested in other measures included in the Taxonomy (e.g. purchase of new hybrid cars), but these are not included in this year's analysis, which we plan to include and disclose in the following year's report.
| CAPEX, 2022 | Absolute CAPEX | Proportion of CAPEX | Climate Change Mitigation | Climate Change Adaptation | Climate Change Mitigation | Climate Change Adaptation | Category of enabling activity | Taxonomy aligned proportion of CapEx |
|---|---|---|---|---|---|---|---|---|
| Thousand Eur | ||||||||
| A. TAXONOMY- ELIGIBLE ACTIVITIES | ||||||||
| Installation, maintenance and repair of renewable energy technologies, on-site | 417.3 | 11% | to be updated | to be updated | to be updated | to be updated | Y | |
| B. TAXONOMY NON-ELIGIBLE ACTIVITIES | ||||||||
| TOTAL: A + B, THOUSAND EUR | 3,797 | 100% |
Substantial contribution criteria 1
Do no significant harm criteria 2
1, 2 Technical screening criteria for assessing whether an activity meets the requirements of the Taxonomy and can be identified as sustainable in terms of environmental impacts.
The EU Taxonomy defines OPEX as all direct noncapitalised costs including supporting expenses that are not in CAPEX (relating to R&D, building renovation measures, short-term lease, and maintenance and repair). The definition of OPEX in the EU Taxonomy is narrower than the definition used by the Group in its financial statements. As our current financial reporting system is not designed to report in accordance with the Taxonomy definition, the information required for reporting is not readily available at this time.
According to the data disclosed in our financial statements, the Group's OPEX was 91,475 thousand Eur in 2022 and 67,952 thousand Eur in 2021. As a preliminary estimate, the Group did not incur any OPEX in 2022 related to the individual measures included in the Taxonomy, and therefore no further analysis is performed - this information will be further refined in our next reports.
To ensure that the Group's activities meet all stakeholders' expectations for a sustainable performance and to ensure continuous implementation of best possible sustainability practices, it is essential for us to regularly consult and engage with our stakeholders. We consider our stakeholders to be those groups that are significantly affected by our activities and/or find them highly relevant or those that have a significant impact on our Group. In 2022, to assess the relevance of the sustainability criteria to the Group's operations, we conducted a stakeholder survey at the end of the reporting period and an analysis of the retail sector on sustainability topics.# ABOUT THE APRANGA GROUP SUSTAINABILITY WITHIN THE GROUP ENVIRONMENT SOCIAL FACTORS ECONOMIC (GOVERNANCE) AREA GRI INDEX CONTENTS ABOUT SOCIAL RESPONSIBILITY REPORT
Once the stakeholders were identified, an electronic survey was sent out to respondents to indicate their priorities and offer their suggestions. The stakeholders were identified on the basis of their ability to collect replies and representativity. It is foreseen that their list will be expanded in the future to survey more stakeholders. The survey identified the following groups of stakeholders:
| STAKEHOLDER | DESCRIPTION | HOW WE ENGAGE AND COMMUNICATE | KEY SUSTAINABILITY TOPICS | HOW WE MEET EXPECTATIONS |
|---|---|---|---|---|
| Administrative and logistics staff and sales staff in the three Baltic countries | Email, HR management system, intranet, face-to-face conversations, meetings, information boards in common areas | Occupational health and safety, Employee training and development, Working conditions and employee well- being | Improved working conditions, supplementary health insurance, training, career opportunities (both horizontal and vertical), flexible working hours | |
| Consumers | Lithuanian, Latvian, Estonian residents, tourists | Newsletters, social networks, media | Organic products, sustainable packaging, product quality | Eliminating plastic bags, taxing a part of paper bags (with proceeds going to charity), expanding sustainable assortment, and responsible handling of defective products |
| Shareholders and the Board | Board members and shareholders or their representatives | Shareholders' meetings, board meetings | Occupational health and safety, Attracting talent, Working conditions and employee well- being, Innovation and technology | We invest in eco-friendly stores, reduce CO2 emissions, invest in renewable energy, reduce staff turnover by investing in training and improving working conditions |
| Business partners | Main partners in the markets in which the company operates, selected on the basis of turnover per calendar year | Email, meetings, teleconferencing, calls | Energy and climate, Occupational health and safety, Business ethics and compliance | We follow a code of ethics and conduct, comply with the law in the markets in which we operate, invest in renewable energy, and set sustainability targets for our partners |
| Regulators | Controlling authorities setting the rules of conduct in the markets for public limited companies | Email correspondence, meetings | Business ethics and compliance | We follow a code of ethics and conduct and comply with the law in the markets in which we operate |
| Future generations | Children of employees aged 12 and over | Media, direct communication to employees | Occupational health and safety, Diversity, equality and inclusion, Innovation and technology | Involving family members in the company's activities. Social campaign "when I grow up I will be", where children try out their parents' professions, giving them the opportunity to try out a career from the age of 17 in a job at the stores |
| Associations | Organisations participated by Group's companies | Meetings, email, remote meetings | Preventing corruption, Setting up eco-friendly stores, Sustainable assortment, Optimising packaging and reducing waste | Code of Ethics and Conduct, other procedures |
| Beneficiaries and social partners | Organisations with beneficiary status being granted support during the calendar year, Non- governmental organisations joined in joint activities | Email, calls, meetings, remote meetings | Eco-friendly store design, Sustainable assortment, Packaging optimisation and waste reduction, Working conditions and employee well- being, Climate change and energy consumption | Investing in eco-friendly stores, reducing CO2 emissions, investing in renewable energy, reducing staff turnover by investing in training and improving working conditions, running a second-hand clothing collection programme, setting priorities for the Group's sponsorship policy |
| Media | Media outlets in the Baltic States | Press releases, meetings, emails |
The survey included topics on the environment, social factors and good governance, respondents ranked them according to their priorities and could suggest their topics.
ENVIRONMENT
* Occupational health and safety
* Employee training and development
* Human rights
* Diversity, equality and inclusion
* Working conditions and employee wellbeing
* Talent attraction
* Product safety and quality
* Prevention of corruption
* Business ethics and compliance
* Responsibility in the supply chain (social and environmental)
* Data privacy
* Protection of consumer rights
* Management practices
* Marketing and labelling
* Sustainable assortment
* Innovation and technology
* Packaging optimisation and waste reduction
* Energy and climate
* Animal welfare
* Setting up eco-friendly stores
* Transport and logistics impact
SOCIAL FACTORS
* Working conditions and employee well- being, Preventing corruption, Eco- friendly products, Sustainable packaging, Product quality
We follow the Code of Ethics and Conduct, comply with the law, disclose information openly and clearly, strive to develop good practices in our communication with the media, so that all stakeholders have access to information on equal terms
GOOD GOVERNANCE
| MEDIUM | HIGH | IMPORTANT | MODERATELY IMPORTANT | VERY IMPORTANT | LOW IMPORTANCE FOR STAKEHOLDERS | IMPACT ON SOCIETY, ENVIRONMENT AND APRANGA GROUP'S PERFORMANCE | |
|---|---|---|---|---|---|---|---|
| Occupational health and safety | X | X | |||||
| Working conditions and employee wellbeing | X | X | |||||
| Packaging optimisation and waste reduction | X | X | |||||
| Employee training and development | X | X | |||||
| Community and society engagement | X | ||||||
| Diversity, equality and inclusion | X | ||||||
| Animal welfare | X | ||||||
| Human rights | X | ||||||
| Innovation and technology | X | X | |||||
| Attracting talent | X | X | |||||
| Setting up eco- friendly stores | X | X | |||||
| Energy and climate | X | X | |||||
| Business ethics and compliance | X | X | |||||
| Prevention of corruption | X | X | |||||
| Data privacy | X | X | |||||
| Protecting consumer rights | X | X | |||||
| Governance practices | X | ||||||
| Marketing and labelling | X | ||||||
| Transport and logistics impact | X | X | |||||
| Responsibility in the supply chain | X | X | |||||
| Sustainable assortment | X | X |
Based on the results of the survey, the sector analysis and the recommendations of the Bank of Lithuania as the supervisory authority, a materiality matrix was developed which took into account the views of all stakeholders. The management principles for all material sustainability topics are described in accordance with GRI requirements in this report, in chapters arranged by topic. A total of 10 material topics were identified in the areas of the environment, social factors and good governance.
– environmental
– social
– governance/economic
The Group's 10 key sustainability topics are:
Despite the fact that the organisation has no formal long-term sustainability strategy yet, it is working systematically to adopt it at the level of top management, so the strategy becomes a key document in planning long-term priorities of the organisation. All sustainability topics identified as material are considered strategic and their implementation is aligned with the United Nations Sustainable Development Goals framework.
| MATERIAL TOPIC | STRATEGIC (LONG-TERM) SUSTAINABILITY DIRECTIONS | SUSTAINABLE DEVELOPMENT GOALS |
|---|---|---|
| Energy and climate | Set science-based targets for reducing GHG emissions, achieve climate neutrality of activities, including those of suppliers. Ensure that the Group uses only green electricity. | |
| Transport and logistics impact | Upgrading the Group's car fleet to increase share of electric vehicles. Organising the transportation of goods to ensure the most efficient use of resources. | |
| Setting up eco- friendly stores | Continuing investments in energy-efficient technologies when building new or refurbishing stores. Obliging suppliers responsible for setting up or refurbishing shops to use sustainable materials and to comply with internationally recognised environmental standards. | |
| Packaging optimisation and waste reduction | Reducing the number of bags distributed to consumers, eliminating plastic bags. Directing all profits from the sale of the bags to support international organisations fighting climate change and its impacts. Replacing packaging with more eco- friendly alternatives: packaging from recycled and other sustainably sourced materials. Further developing and promoting projects that encourage consumers to return second-hand clothes to shops for reuse or recycling. | |
| Working conditions and employee wellbeing | Ensuring the mental and emotional well- being and satisfaction of staff, and improving work-life balance. Extending supplementary health insurance coverage to workers in all locations. Adding a Diversity Policy to Group's policies or expanding existing policies to address diversity issues more broadly. | |
| Occupational health and safety | Further ensuring occupational safety and promoting employee health. Implementing measures to improve occupational health, monitoring, staff safety and culture and to create a safe and clean working environment. |
Social Responsibility Report 2022
Continue to organise presentations of various types for company staff with external speakers. Developing the e-learning platform – including and updating specific learning topics.
Surveying suppliers and ensuring that not only does the organisation live up to its publicly declared commitments, but also demands it from its suppliers and partners.
Introducing supplier surveys for all existing and new suppliers to ensure that they are committed to environmental, social and good governance issues.
Ensuring that an increasing proportion of the assortment carries the sustainability labeling to show customers that products have been produced in compliance with not only the required legislation, but also with ESG standards. Ensuring transparency of the products sold and to the greatest possible extent disclosing the value chain to the end user.
Developing a detailed anti-corruption policy or expanding on it in the organisation's Code of Ethics and Conduct. Adopting an anti-corruption training programme for staff and updating the knowledge of Board members and top management on anti-corruption. Developed supplier questionnaire should be delivered to suppliers and partners together with the information on procedures and policies adopted by the organisation and with a consistent access to the content.
Social Responsibility Report 2022
23
A year ago, we published for the first time the Group's greenhouse gas (GHG) emission calculations and the factors included. While openly declaring that this is a calculated emission and it does not reflect the full CO2 equivalent emission associated with the Group's activities, at our calculations, we have always aimed to include as many relevant factors as possible to make our data more objective and accurate. The data presented in this report provides a much more detailed overview of the Group's activities and, therefore, it should not be compared the 2022 figures with the previous reporting period. We will further upgrade our reporting by continuously striving to improve our calculations including indicators that are as accurate and inclusive as possible. Regarding the factors calculated for this year, 2022 can be considered as a baseline for comparison with future reporting periods, unless new factors are added or the calculation methodology is changed. The Apranga Group's business is exclusively clothing retailing in brick-and-mortar and online stores. The Group is not involved in any processes related to the production, nevertheless it is aware that its activities are an integral part of the global textile industry. The Group emphasizes its adherence to high environmental standards and its commitment to reduce its ecological footprint. The environmental topics are selected on the basis of relevance and include Energy and climate, Setting up eco-friendly stores, Transport and logistics of goods, and Optimising packaging and waste management.
Social Responsibility Report 2022
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In this report, the Apranga Group publishes the estimated greenhouse gas (GHG) emissions of its activities in CO2 equivalent. This publication identifies emission sources and their calculation methodologies, indicating the Scopes assigned to the emission sources. When calculating GHG emissions we applied the knowledge and methodologies of market-based financial institutions and energy providers. The publication of the estimated emissions follows standards and recommendations of the Greenhouse Gas Protocol (GHG Protocol) and mmm
| DIRECT (SCOPE 1) GHG EMISSIONS | ENERGY INDIRECT (SCOPE 2) GHG EMISSIONS | OTHER INDIRECT (SCOPE 3) GHG EMISSIONS | |
|---|---|---|---|
| Fuel for energy | X | ||
| Transport | X | ||
| Gas leaks/freons | X | ||
| ENERGY | X | ||
| Purchased electricity | X | ||
| Purchased thermal energy | X | ||
| Waste | X | ||
| Raw materials purchased | X | ||
| Business travel | X | ||
| Energy losses and fuel recovery | X | ||
| Upstream transport services | X | ||
| Downstream transport services | X |
Due to its extremely low impact, the Group has not included water (a water borehole used in the administration and logistics centre using electricity accounted for in the total electricity) among the factors in the calculation of GHG emissions. Even though these indicators do not GRI 305-1 GRI 305-2 GRI 305-3 GRI 305-4 GRI 305-5 GRI 302-1 GRI 302-3 affect the final result, a culture of responsible consumption is being encouraged within the Group: reducing the amount of printed documents, reusing paper and making sure to alert those in charge of plumbing to possible plumbing faults.
| GHG EMISSIONS | MEASUREMENT UNITS | 2022 |
|---|---|---|
| Direct (Scope 1) GHG emissions | t CO2 ekv. | 397.4 |
| Energy indirect (Scope 2) GHG emissions | t CO2 ekv. | 15 |
| Other indirect (Scope 3) GHG emissions | t CO2 ekv. | 1,569.5 |
¹ Calculated using the market based method, based on actual electricity purchases.
² Calculated using the location based method, i.e. based on the country-specific nature of energy production in 2021. The company's indirect GHG emissions would be 3,500 t CO2 eq.
³ Sources of emission factors and global warming potential (GWP) indicators: IPCC, EEA/EMEP Guidebook 2019; AIB, emission factors provided by heat suppliers, DEFRA, IPCC, IEA, Cornell Hotel Sustainability Benchmarking (CHSB) index 2021
⁴
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We have assessed key intensity indicators for our operational emissions (Scopes 1+2+3), which will also allow us to more effectively compare our performance and the goals we are aiming at in the future.
| GHG EMISSIONS INTENSITY | 2022 | |
|---|---|---|
| t CO2 eq./EUR 1 million revenue | 8.17 | |
| t CO2 eq./thousand sq m of retail space | 17.32 |
In 2022, the Group introduced a new tool to measure electricity consumption, which would allow to compare energy consumption of all possessed and leased properties and to identify saving measures in the future. During the reporting period, the total energy consumption amounted to 16,017 MWh. All the electricity used by the organisation comes from renewable energy sources and is Green Energy Certified, so in line with the GHG Protocol guidelines, its emission is equivalent to 0 tCO2. Almost all of the heating and cooling is done with electricity, and only a small portion of private properties (in Vilnius, Kaunas and Riga) use district heating. Based on the market approach, estimating heat energy per square metre per year, the CO2 emission equivalent of this source is estimated at 15.1 t CO2 over the reporting period. In 2022, the organisation installed a 0.55 MW solar power plant on the roof of its administration and logistics centre in Vilnius, which will provide clean energy for a large part of the building's electricity needs. A total of 1,325 modules have been installed on the building complex, covering a total area of 2,732 square metres. The installation of the solar power plant was designed to maximise efficiency, and the most advanced solutions were chosen to ensure the plant's performance. It is estimated that the project will pay for itself in 4-5 years and make a significant contribution to reducing emissions over its planned 40-year lifetime. Each year, we invest in state-of-art technologies to reduce our consumption of natural resources and to contribute to their preservation.
In 2022, the Group did not use any fuel to generate energy in its own facilities. The Administration and Logistics Complex is equipped with back-up diesel-powered generators, which were not refuelled during the reporting period. The Group does not have stand-alone directly fuel-powered facilities at other sites where it operates. Vehicle emissions were calculated by taking an inventory of the car fleet owned and analysing the amount of fuel purchased and kilometres driven. The Group's car fleet totals 77 vehicles. Their average age at the end of the reporting period is 3.7 years (3.9 at the end of 2021). The Group owns only two vehicles with EURO4 standard, all other vehicles are EURO5 or EURO6. 7 of the vehicles operated are hybrids. During the year, the Group consumed a total of 145,950 litres of fuel (diesel and petrol) and drove 2,248,000 kilometres. (1,435 thousand kilometres in 2021, when operations were restricted due to the pandemic). On average, one car covered 29,000 kilometres per year. Total estimated car fleet emissions are 389.28 tonnes of CO2 equivalent. Gas leaks/freons are materials that boil and evaporate at low temperatures and are used for heat transfer. The Group uses them in the ventilation and air conditioning systems of its administrative and commercial premises.# SOCIAL RESPONSIBILITY REPORT 2022
To estimate the GHG emission equivalent, the annual amount of refill refrigerant was calculated in kilograms, with an emission factor assigned to the type of material. The totaled annual amount of R-407C refrigerant used for refill was 5 kg, with a CO2 emission equivalent of 8.1 t.
The total emissions of these factors are 1 569,5 tonnes of CO2 equivalent. Each of these factors is discussed in more detail in the following chapters of this report.
| Measurement unit | 2022 |
|---|---|
| TJ | 5.0 |
| TJ | 58.0 |
| TJ | 57.7 |
| TJ | 0.4 |
| TJ | 63.0 |
Note: Total energy consumption is calculated according to the GRI 302-1 formula. Conversion factors from convert-measurement-units.com are used to convert energy quantities to TJ.
| 2022 | |
|---|---|
| TJ / million EUR of revenue | 0.26 |
| TJ / thousand sq. m. of retail space | 0.70 |
The energy intensity index is calculated according to the GRI 302 Energy methodology.
In developing the Group's store network, we not only take into account technological solutions, but also educate our staff on the benefits and importance of saving resources. We use only state-of-art technologies in new and refurbished stores, in line with best practice environmental standards. We follow them not only when choosing the equipment for our retail spaces, but also during the installation process. All stores use energy-saving LED bulbs with higher efficiency and longer lifetime. In the Administration Building, the spaces are segmented to ensure that lighting is used as efficiently as possible and only in areas occupied by employees. The administration and logistics complex uses geothermal heating energy, the emissions of which are accounted for together with the total electricity consumed. When renovating our stores, we do our best to follow the principle that despite decisions already made we must implement technologies that reduce or do not increase our resource consumption. Last year, 5 new stores were opened, 2 stores were expanded and renovated, and 4 stores were partially renovated. The Group renovated ~5,000 square metres of retail space and 6 stores were closed.
NEW STORES WERE OPENED 5
STORES WERE PARTIALLY RENOVATED 4
STORES WERE EXPANDED AND RENOVATED 2
The Take Back Project is implemented in partnership with NGOs in Lithuania, Latvia and Estonia. 50 stores have collection points where customers can bring their used textiles. They are then diverted for recycle/upcycle, charity or energy recovery. In almost two years from the start of the project, more than 10 tonnes of textiles have been collected and kept out of landfill. 50 out of 168 stores have collection points where customers can bring their used textiles.
WASTE GENERATED FROM OPERATIONS AND SENT FOR RECYCLING
| 2022 (t) | |
|---|---|
| PET | 0.59 |
| Plastics | 89.23 |
| Paper and cardboard | 708.47 |
| Glass | 24.99 |
| Metal | 0.01 |
| Other | 3.58 |
| Total: | 826.88 |
Note: Waste is sent for recycling under contracts with waste handlers, but the Group cannot guarantee that all or part of the waste is actually recycled.
Setting up eco-friendly stores
The Group generates waste from various operational processes, from the use of materials for its own use to the giveaway of packaging to the end user. The Group accounts responsibly for the recyclables generated by its activities in accordance with national legislation and aims to ensure that all recyclables are properly managed. During the reporting period, the following treated waste was declared in all markets:
Last year, we made a commitment to reduce the number of outlets using plastic bags for customers. Overall, 93.5% of stores in the Group use only paper bags. Our goal is to eliminate plastic from all single-use bags by 2024. In addition, the Group has foreseen other complementary measures not only to reduce the use of plastic bags but also the release of customer bags in general.
93,5% of stores in the Group use only paper bags
As well as reducing waste, we aim to raise awareness by helping customers consider whether they really need another bag or they could use a reusable one instead.
TYPE OF BAGS
| | NUMBER OF STORES IN 2022 | NUMBER OF STORES IN 2021 | CHANGE 2022/2021 | SHARE OF STORES IN THE GROUP IN 2022 |
| :----------- | :----------------------- | :----------------------- | :--------------- | :----------------------------------- |
| Paper | 157 | 158 | -1 | 93.5% |
| Plastic | 0 | 4 | -4 | 2.4% |
| Both types | 0 | 7 | -7 | 5.1% |
| Total | 157 | 169 | -12 | 100% |
Packaging optimisation and waste reduction
The plastics put on the market by the Group are accurately accounted for, and we have set ourselves a target of zero kilograms of plastics per year in our Group's operations.
It is not easy to estimate all emissions related to logistics, so a cost accounting approach was applied in this case. It showed that these emissions are the main sources of emissions in our operations, amounting to 294.8 and 852.5 tonnes of CO2 equivalent respectively. Therefore, the Group has put in place measures to reduce emissions from these sources, including a supplier questionnaire that shall help to ensure partners' commitment in our value chain.
During the year, the Group's employees travelled 1,034 thousand kilometres by plane on business trips. The trips were about acquiring new collections, maintaining relationships with partners and coordinating work between different countries. A significant share of these trips are flights between Vilnius-Riga-Tallinn airports, necessary for the Group's daily operations in other countries. In all cases, the necessity of such trips is assessed and, where possible, alternative travel arrangements are made. The estimated CO2 emission equivalent of all trips is 158.85 tonnes. Travel by taxi amounted to 8,400 kilometres and added another 1.75 tonnes CO2 equivalent. In 2022, employees spent a total of 1,635 nights in hotels during their business trips (mostly in Lithuania, Latvia and Estonia), with a GHG Protocol based CO2 emission equivalent of 23.68 tonnes.
Transport of goods and logistics
The Group operates a car fleet of 77 vehicles. It is regularly maintained and updated to reduce its GHG emissions. The fleet consists of 6 trucks and 71 cars, 7 of which are hybrids. The Group's transport and logistics scope is not limited to the fleet of its cars. Many relative operations are carried out by third parties providing upstream and downstream services.
71 cars, 7 of which are hybrids
We aim to strengthen our relationships each year not only with our employees and their families but also with society at large. We are part of society and it is our responsibility to strengthen the segments of society that are relevant to our activities. We recruit a lot of young people, our staff is prevailed by women, and young professionals choose us at the start of their careers and then decide which career path to take. Our aim is to provide them with opportunities, choices and information and to do our best to encourage some of them to connect their future with a career at Apranga. Apranga Group does not tolerate any violation of human rights, advocates full equality and promotes the integration of the most vulnerable groups of people. We are constantly reviewing and improving our remuneration policy and aim to create a remuneration system that is transparent and fair, regardless of gender, nationality, race, religion or other beliefs. We comply with all local laws and respect and follow international agreements. We offer work opportunities to people of all ages, backgrounds and experience without prejudice.
During the last reporting period, the number of employees in the Group increased, mainly due to the end of the pandemic period and the fact that the physical stores were able to operate without significant restrictions. As at 31 December 2022, the Group had 2,139 employees, which includes both full-time and part-time employees. This indicator was built using the head count method at the end of the period.# GRI 2-7 GRI 2-8 GRI 2-19 GRI 2-20 GRI 2-30
| WOMEN | MEN | WOMEN | MEN | WOMEN | MEN | |
|---|---|---|---|---|---|---|
| 474 | 30–50 YEARS | OVER 50 YEARS | ||||
| 23 | 58 | 4 | 10 | 3 |
| Country | UP TO 30 YEARS | 30–50 YEARS | OVER 50 YEARS |
|---|---|---|---|
| WOMEN | MEN | WOMEN | |
| Lithuania | 527 | 49 | 26 |
| Latvia | 342 | 28 | 31 |
| Estonia | 100 | 115 | 7 |
| Total | 1,343 | 192 | 64 |
| MEN | WOMEN | MEN | WOMEN | MEN | |
|---|---|---|---|---|---|
| 2 | 2 | 0 | 2 | 0 | |
| 1 | 0 | 0 | 1 | 0 | |
| 12 | 3 |
In percentage terms, recruitment by gender remains similar in the first two age categories and differs slightly in the case of over-50s, but is not statistically significant due to the small sample size. The gender distribution of new recruits is broadly in line with the Group's long-term average.
| bb | 95% | 5% | 93% | 7% | 77% | 23% | 91% | 9% | 93% | 7% | 100% | 0% | 92% | 8% | 97% | 3% | 0% | 0% | 93% | 7% | 94% | 6% | 80% | 20% | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Employee Turnover Ratio is one of the most important factors in our business. We try to meet the needs of all our employees, but given the Group's position in society, we realise that many young people will choose us and only some of them will go on to have a career with our organisation. In this context, we monitor if Working conditions and employee wellbeing Last year, a total of 1,580 new workers were recruited, most of them under 30 years old. This confirms that we are often one of the first career stops for young people, and we strive to provide them with a supportive and comfortable working environment. the Employee Turnover Ratio is changing abnormally in terms of the long-term average and assess the reasons behind it. The Employee Turnover Ratio was 119% in 2022 – 26 percentage points higher than the 93% in 2021.
| WOMEN | MEN | WOMEN | MEN | WOMEN | MEN |
|---|---|---|---|---|---|
| Lithuania | |||||
| Latvia | |||||
| Estonia | |||||
| Total |
The 2021 Employee Turnover Ratio was close to the long-term average yet the lowest in the last few years, while the increase in 2022 may have been driven by the end of the pandemic period, leading to a greater choice of jobs and to higher labour migration in the markets in general. The highest employee turnover was recorded in the sales department (122%), while the administration and logistics departments saw a slight decrease to 28% and 60% respectively. It should be noted that the Employee Turnover Ratio also includes changes within the Group. The organisation encourages the development of staff competences and career progression through a variety of means, and always provides opportunities for its employees to advance their careers.
| ADMINISTRATION | LOGISTICS | RETAIL |
|---|---|---|
| 92% | 88% | +4% |
| 136% | 96% | +40% |
| 128% | 112% | +16% |
| 119% | 93% | +26% |
| Group: |
Note: Information on employee turnover by age group and sex cannot be provided because such information has not been recorded.
| 28% | 2022 | 2021 | 33% | 60% | 64% | 122% | 100% | |
|---|---|---|---|---|---|---|---|---|
The Group continues to invest consistently in improving its Employee Turnover Ratio performance. In the exit surveys, the main reason for leaving remains the needs of one of the largest groups of employees (students) for vocational training or exercising their profession. Changing of residence was also often cited as a reason. The organisation always tries to offer a job in another location if the employee requests it.
All employees in Lithuania who have completed the required 3 months of service are covered by supplementary health insurance at the employer's expense, and those who have worked for more than 5 years are given a higher amount of coverage to reward their loyalty to the company. In Latvia, supplementary health insurance is available for administrative staff in accordance with statutory requirements, while reimbursement in Estonia, employees are entitled to reimbursement of sports club fees. It is envisaged that the supplementary health insurance scheme will be extended across the Group.
Looking at the total number of employees in Lithuania, Latvia and Estonia at the end of the period, the biggest change occurs in the retail sales division. The expansion and optimisation of the retail network has had no significant impact on employee numbers or turnover. In all cases of store closing, relocating or refurbishing, their existing employees were offered alternative jobs. Their turnover ratio is also reflected in the Ratio, as is the number of employees who have changed their job positions within the organisation in all commercial, logistics and administrative departments.
If an employee's function becomes redundant for reasons related to the Group's activities, a notice period of 1 month applies (2 weeks notice if the employment relationship lasts up to 1 year). The duration doubles if the employee has less than 5 years to retire, triples if he or she has a child under 14 or a disabled child under 18 as well as for pregnant, disabled employees, employees with a sickness certificate and if the employee has less than 2 years to retire. The Group (the business transferor) must inform employees of the reorganisation, restructuring and transfer of the business or part of it at least 10 days in advance. In cases where employees choose a different career path, we always ask for feedback on their experience at Apranga. Based on the responses, we aim to improve our organisational culture and respond to the needs of our employees not only to retain staff but also to improve existing working conditions.
| Administration | 183 | 179 | +4 |
| Logistics | 65 | 61 | +4 |
| Retail | 1,891 | 1,752 | +139 |
| Total | 2,139 | 1,992 | +147 |
The number of employees in the administration and logistics departments increased slightly, to the extent necessary to cope with the increase in workload, taking into account the Group's growing turnover. The number of employees in the sales division increased by 139, also due to the increase in workload. In terms of efficiency in retail management, the number of employees per 100 square metres of retail space in 2022 is approximately 2.1 (1.9 in 2021). In this regard it can be said that the efficiency of the management of the retail chain has remained largely unchanged.
The gender distribution of the employees remained unchanged last year, with women still accounting for the majority of employees (91%). This ratio remains stable, with fluctuations of 1 to 2%, and is in line with the average for several years.
| LOCATION | RETAIL | ADMINISTRATION | LOGISTICS |
|---|---|---|---|
| WOMEN | MEN | WOMEN | |
| 1,948 | 191 | ||
| (91%) | (9%) | ||
| Lithuania, Latvia and Estonia together | 1,221 | 135 | |
| Lithuania | 423 | 42 | |
| Latvia | 304 | 14 | |
| Estonia |
| WOMEN | MEN | WOMEN | MEN | WOMEN | MEN | |
|---|---|---|---|---|---|---|
| 91% | 9% | 91% | 9% | 95% | 5% |
| WOMEN | MEN | WOMEN | MEN | WOMEN | MEN |
|---|---|---|---|---|---|
| 1,209 | 134 | 419 | 42 | 304 | 14 |
| | 12 | 1 | 4 | 0 | 0 | 0 |
| | 520 | 68 | 52 | 4 | 97 | 1 |
| | 701 | 67 | 371 | 38 | 205 | 15 |
| | 0 | 0 | 0 | 0 | 0 | 0 |
| | 0 | 0 | 0 | 0 | 0 | 0 |
A breakdown of the number of employees by location and gender shows that the majority of employees in all countries work on permanent contracts. The distribution of positions by contract types shows that a significant number of staff choose to work part-time to meet their needs.
| The gender distribution of the Directorate of Administration (Directors of the main divisions and the CEO) has remained stable and is close to balance, with four women and three men. The gender distribution of the highest governance body – the Board – is five men and one woman. Women are the CEOs of major companies in Latvia and Estonia. | Apranga highly values the importance of the family for the public good and is aware of its duty to do its best to help address the potential difficulties in the labour market after having children. We always secure their job positions for employees on maternity or paternity leave and try to offer flexible working conditions if needed. During the reporting year, 89 employees (88 women and 1 man) became entitled to parental leave. Of these, 86 workers exercised this right. During the same period, 12 women and 1 man returned to work after parental leave. We do not currently have detailed data on the subsequent careers of returnees 12 months after their return to work, but we will seek to disclose it in the future. |
| To involve family members and to introduce children to their parents' professions, we invited them to take part in a photo shoot in 2022, where they empathised with the work their mum or dad does every day. Over a period of years we keep a consistent line of communication inviting employees or their children to represent the Group. | The average age of employees in the Group has increased to 29 years and 10 months – an increase of more than one year compared to 2021. This shows that, despite the higher employee turnover among younger employees, those who have been with the Group for longer associate their future with the organisation and stay longer. |
| Higher education | 552 | 497 | +11% |
| Professional | 247 | 198 | +24% |
| Student | 752 | 887 | -15% |
| Total | 2,139 | 1,992 | +1.8% |
| 588 | 410 | +43% | | |
Over the past year, we have continued our Employee Ambassadorship project.# ABOUT THE APRANGA GROUP
We want to be represented by our employees themselves, so we not only tell their stories, share their experiences and career paths, but also encourage them to express themselves more on social media. With the Diverse but United (liet. “Skirtingi, bet vieningi”) campaign we want to emphasise that we value all our employees regardless of their age, gender or position. We want to be an organisation where the employee is the greatest value. We strive to maintain a good work/leisure balance by allowing employees to choose both their working hours and workload. We have always strived to ensure that all employees have equal opportunities to arrange work schedules that suit their personal or family needs, full-time study or vocational training, and administrative staff was further given the opportunity to choose their own individual start and end times in agreement with their line manager.
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Number of employees in the Group by education at 31 December 2022:
| Education Level | Number of Employees |
|---|---|
| Primary | 10 |
| Secondary | 284 |
| Vocational | 15 |
| Higher | 1683 |
| Total | 1992 |
Continuing our intensive training programme, we have continued to use a hybrid training model for staff, i.e. with both face-to-face and remote training. The total duration of training in the organisation, counting only training hours and excluding the number of participants, was 551 hours per year. This indicator is calculated by summing up the duration of all the training provided. In the future, it is planned to record the number of participants of each training session to show the total number of hours of training and the total amount of time that employees have had to improve their skills.
We also continued the Talent Academy's project Try a Career aiming to provide employees with the opportunity to grow and prepare for/sample their desired position in the store. On average, the project lasts about half a year and is carried out twice a year. The project selects talent who then learn on-the-job in- store and through in-house training and remote meetings with the HR manager. The project is based on the principle of 70% practice – learning by doing; 20% reflection and 10% knowledge. The project has a success rate of 65% meaning that more than half of those who participated and completed the project have acquired the necessary knowledge for the desired position. It is no coincidence that 90% of store managers started their careers with the Group, mostly as sales consultants, which shows that the organisation is creating the conditions for its employees to move up the ranks.
A virtual conference HR Week was organised to update the knowledge of store managers and responsible staff in HR management. Over three days, there were various online presentations on topics related to HR management (reward systems, conducting meetings, unlocking employee potential, burnout burnout, etc.). Employees could choose and register for topics of interest. 92 store managers and 67 managers in positions of responsibility in stores registered for the topics of interest.
GRI 404-2 Try a Career project
ABOUT THE APRANGA GROUP
SUSTAINABILITY WITHIN THE GROUP
ENVIRONMENT
SOCIAL FACTORS
ECONOMIC (GOVERNANCE) AREA
GRI INDEX
CONTENTS
ABOUT SOCIAL RESPONSIBILITY REPORT
Mentoring is another important element of the training programme. It is based on the induction of all new hires into the organisation and their familiarisation with the work culture. Each new hire is assigned a mentor to help him or her systematically acquire all the necessary knowledge and skills. To ensure a smooth
Another important tool that helps both the mentor and the new person is the E-learning system. It contains basic theoretical material that is important and interesting to learn. This mentoring programme allows you to train a new sales consultant within 2 months. New mentors receive periodic training on mentoring, how to train and how to use the tools developed by the company. The same logic is used to prepare for higher positions in the store. Each position has a specific form which is adapted to the situation and learning priorities.
Annual and mid-term in-store interviews are organised for employees. Annual interviews discuss and evaluate employees competences as well as the achievement of objectives and agree on further work and individual objectives. The mid-term interviews discuss the first half of the year – the challenges and achievements, and the objectives set. This training is organised by HR managers seeking to listen to each other, to share feedback and to improve together in a targeted way.
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E-learning system allows you to train a new sales consultant within 2 months
induction, special forms are used outlining the learning objectives, providing space to discuss the match between personal qualities and attitude towards work and the company's expectations, introducing the appraisal system, and setting further development objectives.
ABOUT THE APRANGA GROUP
SUSTAINABILITY WITHIN THE GROUP
ENVIRONMENT
SOCIAL FACTORS
ECONOMIC (GOVERNANCE) AREA
GRI INDEX
CONTENTS
ABOUT SOCIAL RESPONSIBILITY REPORT
Social Responsibility Report 2022
39
GRI 403-1
GRI 403-6
GRI 403-9
In 2022, the Group had no recorded workplace injuries. As in previous years, there were no occupational safety violations, even minor ones. We have a zero-tolerance approach to occupational safety violations and consider an employee's right to feel safe to be a fundamental value.
Ensuring safe working conditions and taking care of employees' health has always been a priority for the organisation. We start from day one with training, regular health checks and providing tools to take care of one's health. We have clear rules and responsibilities to create safe working conditions for everyone, because we believe it is everyone's right. All employees in Lithuania with 3 months of service are covered by supplementary health insurance at the employer's expense, and those with more than five years of service are given a higher amount of cover to reward their loyalty to the company. It is envisaged that the supplementary health insurance scheme will be extended across the Group. Employees are legally obliged to undergo periodic health checks and can only be present at the workplace with proof of this. No additional health and safety management system is in place. The COVID-19 pandemic has only confirmed the importance of timely information, education and maintenance of workplace rules that make both employees and customers feel safe. We have learned these lessons and put in place the principles of response, information and action to prevent a lax approach to employee safety and to provide the necessary information and safety measures in a timely manner.
In 2022, we renewed the essential first aid kits for all stores and administrative areas. We regularly monitor the technical condition of our car fleet to avoid any associated risks. The logistics department can be considered the most hazardous in terms of occupational safety in our operations, so we have very clear requirements and controls in place. It features a conveyor system that eliminates the need to lift inventory to higher heights, thus avoiding both potential injuries and the risk of tipping. Safety zones are marked in all areas where electric lifting equipment is used. Employees are provided with natural daylight and disinfection stations.
ABOUT THE APRANGA GROUP
SUSTAINABILITY WITHIN THE GROUP
ENVIRONMENT
SOCIAL FACTORS
ECONOMIC (GOVERNANCE) AREA
GRI INDEX
CONTENTS
ABOUT SOCIAL RESPONSIBILITY REPORT
Social Responsibility Report 2022
40
GRI 408-1
GRI 409-1
GRI 407-1
We consider human rights to be an unquestionable value and are committed to taking action to guarantee them throughout the whole value chain. In the markets in which we operate, we comply with all local laws and international agreements defining human rights and freedoms. We do not restrict employees' rights of expression, speech and other rights in any way. Our activities have no negative impact on the protection of human rights, and employees are encouraged to report and discuss any possible future threats. No such reports were received during the reporting period.
The Group does not discriminate against its employees or third parties on the basis of race, sex, nationality, political or religious beliefs, health or any other grounds. The organisation does not operate in countries or territories where there is a higher risk of child or forced labour, and many of its suppliers and overseas partners are registered in EU countries that are also outside the area of increased risk. Nevertheless, the organisation holds itself and its partners to the highest standards of human rights protection, and does not tolerate child labour, forced labour or other restrictions on employees rights. No such incidents were reported during the reporting year, either in the organisation's operations or among suppliers. The organisation believes that the principles of human rights enshrined in the European Union must be respected in all suppliers' activities. As part of its commitment to human rights, the organisation intends to introduce a supplier questionnaire to ensure the protection of fundamental human rights in the activities of all suppliers.# Human rights
In 2022, there were no material changes in the Board of APB Apranga, the Group's parent company. Six members of the Board, two of whom are independent, continued to govern the company in 2021. All Board members have received anti-corruption training, and all new employees are made aware of the organisation's Code of Ethics and Conduct, work rules and other binding documents. We advocate open and honest communication with shareholders and fairness in information provided to the market. We always strive to be an example of how the Group can shape good business practice through disclosure. In 2022, after implementing a decision not to pay dividends for two consecutive years, APB Apranga distributed profits and announced the share of profits to be paid to shareholders.
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100% Board members have received anti- corruption training
The Group is guided by a Code of Ethics and Conduct. Its provisions shall be reviewed and updated as necessary. Procedures are also in place for the Submission of Whistleblowing Information, which ensures that staff can safely submit material information relating to or helping to prevent possible irregularities. It should be noted that there were no confirmed reports in the previous year.
The structure of major shareholders remained unchanged last year. APB Apranga is majority- owned by investment holding MG investment, UAB. Shareholders of the company who control more than 5% of the votes at the shareholders' meeting:
The Group remains publicly and openly committed to complying with all laws and regulations and to behaving ethically both internally and with third parties. Our aim is to minimise, by all means, any damage that may arise from the intentional or unintentional actions of the persons involved. During the reporting period, the Group did not experience any significant instances of non-compliance with laws and regulations.
| SHARE OF OWNERSHIP, % | |
|---|---|
| 65,4% | UAB „MG investment“ |
| 10,5% | UAB „Minvista“ |
| SHAREHOLDER |
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During the reporting period, 11 specialised corruption prevention and compliance seminars were organised for administrative staff. The vast majority of top level and departmental managers are familiar with the training material and have acquired the competences to deal responsibly with any form of corruption. The Group's legal department regularly reviews and updates information on significant legislation to combat potential corruption. We are committed to transparent and ethical business and aim to prevent any potential corruption in our operations. The Group is strongly opposed to all forms of corruption and bribery, active or passive, including the promise, offer or consideration of a payment or gift to an intermediary, business partner, official, political party, foreign official in international business transactions, or other third party, with the intention of bribing the recipient or supplier to improperly perform functions, duties or decisions, and vice versa. The group advocates fair and transparent communication with public authorities. Within the company , fair business policies and transparent communication with customers, suppliers, contractors, subcontractors and other third parties are encouraged. The company always follows the "four eyes" principle when purchasing goods, thus preventing any appearance of unfair practices. In 2022, the Group recorded 5 cases related to the protection of tangible assets. In all cases, the zero tolerance principle was applied. There were no cases of any other form of corruption or bribery.
To protect the privacy of our customers and to ensure their legitimate expectations, we carefully comply with the European Union's General Data Protection Regulation (GDPR). We instruct the staff responsible for processing the data on how to use the information entrusted to us by our customers in a responsible and secure way. HR and IT professionals maintain and manage personal data related to target marketing and other functions used in retail and online commerce with the utmost care and responsibility, following strict procedures. The protection of personal data is also enshrined in our Code of Ethics and Conduct, which applies not only to employees, but also to related parties, further strengthening security. The Group has a Personal Data Protection Officer who not only ensures compliance with the rules, but also informs employees of changes in key legislation or preventive actions in the event of threats to personal data. In 2021, there were no incidents related to the protection of personal data or violations of our privacy.
11 specialised corruption prevention and compliance seminars
The Group recognises that its activities also have indirect impacts on nature, people and communities along the value chain and must take responsibility for reducing them. Although our core business is clothing retailing, the pathway starts with the growing, preparation and processing of raw materials, which are highly sensitive in an overall ESG context. In the downstream process of production environmental, social and economic sustainability indicators are equally important. Together with the whole logistics chain, we must recognise that our obligations go beyond our direct activities and we must therefore implement policies responsibly to manage the risks of this topic. One of the measures envisaged is a supplier questionnaire to be adopted as an integral part of the sustainability strategy, which will help to ensure that we not only make our own commitments, but also make efforts to make our values relevant to all the parties involved. To date, the Group's suppliers have not been screened based on environmental and/or social criteria. By working with the largest and most globally recognised fashion brands, we aim not only to meet their sustainability policy commitments, but also to serve as an example to others who have not yet embarked on this path, and we believe that our positive example of taking a non-coercive approach to partner selection, and educating and enlightening, will help to ensure that more and more of our partners, both in the local market and abroad, will take their sustainability commitments seriously.
An increasing proportion of the Group's assortment is made up of goods that are produced in line with environmental, social and good governance commitments. Such labelling is only possible for products that meet the requirements. Some examples are the Join Life collection in the Inditex-owned chain, or the Committed collection in Mango stores. Sustainable assortment is also a focus in online sales, where proprietary e-commerce platforms provide information on product features and sustainability compliance. The supplier questionnaire is expected to further raise the profile of this topic and increase the share of sustainable assortment in the Group's turnover. We want our customers to know that our partners meet environmental and social criteria, and that we can clearly and openly declare this information. We believe that that we need to work together with our customers on this issue and respond to their needs by offering them the right goods and all the information about their journey to the point of sale.
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Social Responsibility Report 2022
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The Group is guided by its own donor framework, which identifies the main areas and priorities for donor support. Each year is based on long-term priorities, but also takes into account the overall situation. The main focus of support in 2022 was to help victims of the war in Ukraine and refugees arriving in Lithuania. The team provided targeted assistance with essential clothing in cooperation with local and international organisations, which coordinated the distribution of the aid. The first shipment of aid to Ukraine, in cooperation with Blue Yellow, was organised within weeks of the outbreak of hostilities in Ukraine. Later, as international humanitarian organisations took over the distribution and provision of aid, the focus shifted to the provision of assistance to the affected Ukrainian population arriving in Lithuania and the other Baltic States. With the humanitarian crisis in Ukraine and the influx of war refugees to the Baltic States, the Group publicised vacancies for them. A total of 32 people from Ukraine were recruited during the year, 10 of whom were still working at the end of the reporting period. To promote an active lifestyle and health promotion activities, the Group continued its cooperation with the Lithuanian Basketball League, supported the Lithuanian Padel Federation and the Dalia Kutkaitė Artistic Gymnastics Academy. Last year, we supported homes for the elderly and children's charities to reduce social exclusion and help the most vulnerable in society.# ABOUT THE APRANGA GROUP SUSTAINABILITY WITHIN THE GROUP ENVIRONMENT SOCIAL FACTORS ECONOMIC (GOVERNANCE) AREA GRI INDEX CONTENTS ABOUT SOCIAL RESPONSIBILITY REPORT
Together with Children's Dreams, we made 100 children's dreams of warm clothes come true, and provided financial support to NGO "Gydytojai klounai" (Clown Doctors) and NGO "Gerų darbų dirbtuvės" (Good Deed Workshop), which aim to brighten the daily lives of sick children and help premature babies.
In 2022, the Group collaborated with and supported the international event "Mados infekcija", which has become a hotbed for fashion designers. It is a socially responsible event that annually draws attention to, highlights and seeks solutions to sensitive social and environmental issues. It has also become a sponsor of the Music Association of the Year Awards and has contributed to the Lithuanian Music Awards since the final event in 2011.
The total amount of support granted during the reporting period was €132,106. In 2020, the total amount of support was €75,030, and in 2021, the total amount of support was €76,491.
The Group's own employees have also contributed to the organisation's support. A cake day was organised, where staff donated to the NGO "Gydytojai klounai". In support of war-affected Ukrainians, staff members have also used their own funds to buy essential hygiene products, drawing materials and other supplies for children.
The Group's tax bill amounted to €59.7 million, 28% higher than the €44.9 million in 2021. The main reason for the increase in tax payable was the Group's growing turnover. Last year, the staff wage bill grew, with an average increase of 12% per staff member. Salary increases were granted to all staff, based on their current salary and seniority.
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | Change, % | |
|---|---|---|---|---|---|---|---|---|
| Tax payable | 42.7 | 45.7 | 44.7 | 48.4 | 39.2 | 44.9 | 59.7 | 28 |
| 7 | -2.2 | 8.2 | -19 | 14.5 | 28 |
GRI 1 used: Applicable GRI Sector Standards
Apranga Group, APB has reported in accordance with the GRI Standards for the period from 1 January to 31 December 2022.
| GRI 2: General Disclosures 2021 | Disclosure | Location |
|---|---|---|
| 2-1 | 3 p. | |
| 2-2 | 3 p., 52 p. | |
| 2-3 | 7 p. | |
| 2-4 | 4 p., 7 p., 8 p. | |
| 2-5 | 32 p., 34 p. | |
| 2-6 | 11 p. | |
| 2-7 | 3 p. | |
| 2-8 | 3 p. | |
| 2-9 | 11 p. | |
| 2-10 | 11 p. | |
| 2-11 | 11 p. | |
| 2-12 | 11 p. | |
| 2-13 | 11 p. | |
| 2-14 | 11 p. | |
| 2-15 | 11 p. | |
| 2-16 | 11 p. | |
| 2-17 | 11 p. | |
| 2-18 | 11 p. | |
| 2-22 | 11 p., 32 p. | |
| 2-23 | The Group is a member of the Lithuanian Association of Trading Companies (LPĮA). | |
| 2-24 | 5 p. | |
| 2-25 | 9 p., 10 p. | |
| 2-26 | 42 p. | |
| 2-27 | The Group has no a collective agreement with employees | |
| 2-28 | 17 p. | |
| 2-29 | 19 p. | |
| 2-30 | 23 p., 24 p., 26 p. | |
| 2-31 | 11 p. | |
| 2-32 | 9 p., 10 p. | |
| 2-33 | 11 p. | |
| 2-34 | 19 p. | |
| 2-35 | 19 p. | |
| 2-36 | 42 p., 43 p. |
| 23 p., 24 p. | 23 p., 24 p., 25 p. | 23 p., 27 p. |
| 44 p. | 32 p., 33 p. | 39 p. |
| 37 p. | 23 p., 24 p., 26 p. | 23 p., 24 p. |
| 23 p., 24 p. | 23 p., 24 p. | 23 p., 27 p. |
| 23 p., 27 p. | 23 p., 27 p. | 32 p. |
| 32 p. | 39 p. | 39 p. |
| 40 p. | 44 p. | 43 p. |
| 40 p. | 40 p. | Information on comments to the report |
The Sustainability (Social Responsibility Report) provides the Group's non-financial information to stakeholders. The report is produced once a year and is submitted together with the Annual report. The report is made publicly available on the company's website in both Lithuanian and English.
The report has been prepared in accordance with the requirements of the Law on Consolidated Financial Reporting by Groups of Undertakings of the Republic of Lithuania, the European Commission's Guidelines on Non-Financial Reporting, and the Bank of Lithuania's recommendations on non-financial reporting.
Comments and queries on the report can be submitted to [email protected]. No comments were received on the 2021 Social Responsibility Report.
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