Apranga Group — Annual Report 2013

Jun 2, 2014

APB APRANGA

Consolidated and Company's Financial Statements, Consolidated Annual Report and Independent Auditor's Report

for the year ended 31 December 2013

APB APRANGA Company's code 121933274, Kirtimu 51, Vilnius

TABLE OF CONTENTS

Translation note:

This version of the accompanying documents is a translation from the original, which was prepared in 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.

	PAGE
INDEPENDENT AUDITOR'S REPORT	3 - 4
FINANCIAL STATEMENTS:
STATEMENT OF COMPREHENSIVE INCOME	5
BALANCE SHEET	6
STATEMENTS OF CHANGES IN EQUITY	7
STATEMENTS OF CASH FLOWS	8
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS	9 – 37
CONSOLIDATED ANNUAL REPORT	38 –76

		Group		Company
		Year ended 31 December		Year ended 31 December
	Note	2013	2012	2013	2012
Revenue	4	466 673	423 441	201 484	180 002
Cost of sales	5	(247702)	(224960)	(122928)	(107035)
Gross profit		218 971	198 481	78 556	72967
Selling costs	5	(147110)	(131 377)	(56064)	(53 388)
General and administrative expenses	5	(28 322)	(24719)	(21585)	(19341)
Other income	6	1963	1 608	38 975	31 197
Net foreign exchange gain (loss)		(29)	90	(26)	84
Operating profit (loss)		45 473	44 083	39 856	31 519
Finance costs	7	(127)	(64)	(198)	(212)
Profit (loss) before income tax		45 346	44 019	39 658	31 307
Income tax credit (expense)	8	(7218)	(7122)	(1859)	(1774)
Profit (loss) for the year	11	38 1 28	36897	37799	29 533
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Currency translation difference		(165)	66
TOTAL COMPREHENSIVE INCOME		37963	36 963	37799	29 533
Basic and diluted earnings (losses) per share (in LTL)	11	0.69	0,67	0,68	0,53

		Group As at 31 December		Company As at 31 December
	Note	2013	2012	2013	2012
ASSETS
Non-current assets
Property, plant and equipment	12	80 852	78 356	51 363	50 376
Intangible assets	13	1507	330	238	244
Investments in subsidiaries	14			16 101	16 101
Prepayments	17	1 201	899	296	202
Trade and other receivables	20	104	113	104	113
		83 664	79 698	68 102	67036
Current assets
Inventories	15	88 652	75 232	48 573	40 846
Available for sale financial assets	18	16 271	16 239	16 27 1	16 239
Non-current assets held for sale	16	1 1 1 8	1 1 1 8	1 1 1 8	1 1 1 8
Prepayments	17	3 0 1 0	3 3 1 9	2 6 6 5	1929
Trade and other receivables	20	2799	10 447	27 533	29 697
Cash and cash equivalents	21	8 2 7 5	8 8 0 4	1 2 9 3	1999
		120 125	115 159	97 453	91828
TOTAL ASSETS		203 789	194 857	165 555	158 864
EQUITY AND LIABILITIES
Equity
Ordinary shares	22	55 292	55 292	55 292	55 292
Legal reserve	23	5 5 2 9	4612	5 5 2 9	4 6 1 2
Translation difference		(188)	(45)	$\omega$
Retained earnings		86 526	79 748	57 688	51 216
		147 159	139 607	118 509	111 120
Non-current liabilities
Deferred tax liabilities	9	3 3 6 4	3 5 4 0	1 0 4 4	1 2 0 5
Other liabilities		503	339	503	339
		3867	3879	1547	1 5 4 4
Current liabilities
Borrowings	24	4 9 9 4		23 624	23 639
Current income tax liability		2830	4727	1 5 8 6	1910
Trade and other payables	25	44 939	46 644	20 289	20 651
		52 763	51 371	45 499	46 200
Total liabilities		56 630	55 250	47 046	47 744
TOTAL EQUITY AND LIABILITIES		203 789	194 857	165 555	158 864

GROUP

	Note	Share capital	Legal reserve	Translation reserve	Retained earnings	Total
Balance at 1 January 2012		55 29 2	3 2 6 2	92	64 45 6	123 102
Comprehensive income Profit for the year 2012 Other comprehensive income					36 897	36 897
Currency translation difference Total comprehensive income				(137) (137)	203 37 100	66 36 963
Transactions with owners Transfer to legal reserve	23		1 3 5 0
Dividends paid	10, 23				(1350) (20, 458)	(20, 458)
Balance at 31 December 2012		55 29 2	4612	(45)	79 748	139 607
Comprehensive income Profit for the year 2013 Other comprehensive income					38 128	38 1 28
Currency translation difference				(143)	(22)	(165)
Total comprehensive income Transactions with owners				143)	38 106	37 963
Transfer to legal reserve Dividends paid	23 10, 23		917		(917) (30411)	(30 411)
Balance at 31 December 2013		55 29 2	5 5 2 9	188)	86 526	147 159
COMPANY		Share	Legal	Retained

Balance at 1 January 2012 55 29 2 3 2 6 2 43 492 Comprehensive income Profit for the year 2012 29 533 Transactions with owners Transfer to legal reserve 23 1 3 5 0 (1350) Dividends paid 10, 23 (20, 458) Balance at 31 December 2012 55 292	102 046
	29 533
	(20, 458)
4612 51 217	111 121
Comprehensive income Profit for the year 2013 37 799	37 799
Transactions with owners Transfer to legal reserve 23 917 (917) Dividends paid 10, 23 (30, 411)	(30 411)
Balance at 31 December 2013 55 292 5 5 2 9 57 688	118 509

		Group Year ended 31 December		Company
				Year ended 31 December
	Note	2013	2012	2013	2012
OPERATING ACTIVITIES
Profit (loss) before income taxes Adjustments for:		45 346	44 019	39 658	31 307
Depreciation and amortization	5	18 620	17 329	8 1 3 0	8823
Impairment charge	12	302	297	47	296
Change in allowances for slow-moving inventories	5	662	(57)	619	(89)
Gain on disposal of property, plant and equipment		4	(28)	4	(28)
Write-off of property, plant and equipment		177	209	117	208
Dividends income	6			(27532)	(20325)
Interest expenses, net of interest income	6, 7	(555)	(527)	(538)	(409)
		64 556	61 242	20 505	19783
Changes in operating assets and liabilities:
Decrease (increase) in inventories		(14082)	(11141)	(8346)	(3722)
Decrease (increase) in receivables		(675)	(1.467)	(2130)	(8093)
Unrealized foreign exchange loss (gain)		(165)	66
Increase (decrease) in payables		(1587)	14 663	(230)	5 0 4 5
Cash generated from operations		48 047	63 363	9799	13 013
Income taxes paid		(9 291)	(3590)	(2358)	(87)
Interest paid	7	(127)	(64)	(198)	(212)
Net cash from operating activities		38 629	59 709	7 243	12714
INVESTING ACTIVITIES
Interest received		907	564	967	594
Dividends received	6			27 532	20 325
Loans granted	26	(49500)	(98 500)	(91067)	(123 754)
Loans repayments received	26	57 500	90 500	94 195	115 150
Purchases of property, plant and equipment and intangible assets		(23563)	(25769)	(9300)	(10491)
Proceeds on disposal of property, plant and equipment		787	1 4 3 9	21	995
Purchases of available-for-sale financial assets	18	(5679)	(5729)	(5679)	(5729)
Proceeds on disposal of available-for-sale financial assets	18	5761		5 7 6 1
Investment in subsidiaries					(148)
Net cash used in investing activities		(13787)	(37495)	22 430	(3058)
FINANCING ACTIVITIES
Dividends paid		(30365)	(20 285)	(30365)	(20 285)
Proceeds from borrowings		35 501		162 184	131 640
Repayments of borrowings		(35 501)		(167192)	(120 875)
Repayments of obligations under finance leases			(3)
Net cash from financing activities		(30365)	(20 288)	(35373)	(9520)
NET INCREASE (DECREASE) IN CASH AND BANK OVERDRAFTS		(5523)	1926	(5700)	136
CASH AND BANK OVERDRAFTS:
AT THE BEGINNING OF THE PERIOD	21	8804	6878	1999	1863
AT THE END OF THE PERIOD	21	3 2 8 1	8804	(3701)	1999

1. GENERAL INFORMATION

APB Apranga, (hereinafter "the Company"), was incorporated and commenced its operations in March 1993 in Lithuania. The Company's main office is situated in Kirtimų str. 51, 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.

At 31 December the Company's shareholders were:

	2013		2012
	Number of shares	% of total ownership	Number of shares	% of total ownership
UAB MG Baltic investment	29 677 397	53,7	29 677 397	53,7
Swedbank AS (Estonia) clients	6 794 270	12,3	7 606 400	13,8
UAB Minvista	5 522 729	10,0	4 314 604	7,8
Other	13 297 564	24,0	13 693 559	24,8
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 Koncernas MG Baltic. The ultimate controlling individual of the Group is Mr. D. J. Mockus.

The Company is listed on NASDAQ OMX Vilnius Stock Exchange.

At 31 December 2013 the Group consisted of the Company and the following its wholly owned subsidiaries:

Name	Country	Headquarters	Principal activity
UAB Apranga LT	Lithuania	Kirtimu 51, Vilnius	Retail trade of apparel
UAB Apranga BPB LT	Lithuania	Kirtimu 51, Vilnius	Retail trade of apparel
UAB Apranga PLT	Lithuania	Kirtimu 51, Vilnius	Retail trade of apparel
UAB Apranga SLT	Lithuania	Kirtimu 51, Vilnius	Retail trade of apparel
UAB Apranga MLT	Lithuania	Kirtimu 51, Vilnius	Retail trade of apparel
SIA Apranga	Latvia	Elizabetes 51, Riga	Retail trade of apparel
SIA Apranga LV	Latvia	Elizabetes 51, Riga	Retail trade of apparel
SIA Apranga BPB LV	Latvia	Elizabetes 51, Riga	Retail trade of apparel
SIA Apranga PLV	Latvia	Elizabetes 51, Riga	Retail trade of apparel
SIA Apranga SLV	Latvia	Terbatas 30, Riga	Retail trade of apparel
SIA Apranga MLV	Latvia	Terbatas 30, Riga	Retail trade of apparel
OU Apranga1	Estonia	Pärnu mnt 10/Väike-Karja 12 Tallinn	Retail trade of apparel
OU Apranga Estonia	Estonia	Pärnu mnt 10/Väike-Karja 12 Tallinn	Retail trade of apparel
OU Apranga BEE	Estonia	Pärnu mnt 10/Väike-Karja 12 Tallinn	Retail trade of apparel
OU Apranga PB Trade	Estonia	Pärnu mnt 10/Väike-Karja 12 Tallinn	Retail trade of apparel
OU Apranga ST Retail	Estonia	Pärnu mnt 10/Väike-Karja 12 Tallinn	Retail trade of apparel

¹ The Company directly owns 33.33% shares and indirectly through its subsidiary owns the rest 66.67% of shares (Note 14)

At 31 December the Group's number of stores was:

		Total number of shops	Shops, where premises are owned by Group
Country	2013	2012	2013	2012
Lithuania	92	89	7	7
Latvia	41	33	-	-
Estonia	15	12	-	-
Total	148	134	7	7

At 31 December 2013 the Group and the Company employed 1 725 and 722 people respectively (2012: 1 567 and 693 people respectively).

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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

2.1 BASIS OF PREPARATION

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 available for sale financial assets stated at fair value.

These financial statements comprise the Group's consolidated financial statements and the Company's separate financial statements.

2.2 CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

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) Income taxes

Tax authorities have right to examine accounting records of the Company and its Lithuanian subsidiaries at anytime during the 5 year period after the current tax year (the Latvian and Estonian subsidiaries - 3 and 7 year period after the current year respectively) and account for additional taxes and fines. In the opinion of the Company's management, currently there are no circumstances which would raise substantial liability in this respect to the Company and to the Group.

(b) Related party transactions

In the normal course of business the Company and the Group enters into transactions with its related parties. These transactions, except for the Company's transactions with its subsidiaries, are priced predominantly at market rates. Judgement is applied in determining if transactions are priced at market or non-market rates, where there is no active market for such transactions. The basis for judgement is pricing for similar types of transactions with unrelated parties.

The Company's transactions with its subsidiaries are priced predominantly at cost. Annual management fees are charged to the subsidiaries for an estimated amount which adjusts pricing of all transactions carried out with subsidiaries during the year to the market rates.

(c) 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 is that of principal in a transaction. The gross basis represents the sales price after discounts, with any related costs charged to expenses. Where the Company or the Group would act on a consignment basis in a transaction, revenue would be recognised on the net basis and inventory held on consignment is not recognised in the balance sheet.

(d) 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 life. If useful lives of tangible and intangible assets determined by management are longer by one year, then depreciation and amortization expenses of the Company and the Group would be lower by LTL 397 thousand and LTL 350 thousand respectively for the year ended 31 December 2013 (LTL 625 thousand and LTL 984 thousand in 2012).

(e) Impairment of property, plant and equipment

Each shop is considered to represent a separate cash generating unit for impairment test. The Group and Company has tested its leasehold improvements and other fixed assets whether those have suffered any impairment, in accordance with the accounting policies stated in note 2.9. The Group and Company has 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 (note 12).

2.3 ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

In the current year, the Company and the Group has 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 2013.

(a) The following new standards, amendments and interpretations are mandatory for accounting periods beginning on or after 1 January 2013:

• IFRS 13, Fair value measurement, (issued in May 2011 and effective for annual periods beginning on or after 1 January 2013), aims to improve consistency and reduce complexity by providing a revised definition of fair value, and a single source of fair value measurement and disclosure requirements for use across IFRSs. The price within the bid-ask spread that is most representative of fair value in the circumstances is used to measure fair value, which management considers is the last trading price on the reporting date. Prior to 1 January 2013, the quoted market price used for financial assets was the current bid price; the quoted market price for financial liabilities was the current asking price. The effect of these changes was recorded as a change in estimate in profit or loss for 2013. With application of this standart the Group and Company presented additional disclosure in Note 3 to Consolidated financial statements.
• Amendments to IAS 1, Presentation of Financial Statements (issued June 2011, effective for annual periods beginning on or after 1 July 2012), changes the disclosure of items presented in other comprehensive income. The amendments require entities to separate items presented in other comprehensive income into two groups, based on whether or not they may be reclassified to profit or loss in the future. The suggested title used by IAS 1 has changed to 'statement of profit or loss and other comprehensive income'. The amended standard resulted in changed presentation of financial statements, but did not have any impact on measurement of transactions and balances.
• Amended IAS 19, Employee Benefits (issued in June 2011, effective for periods beginning on or after 1 January 2013), makes significant changes to the recognition and measurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits. The standard requires recognition of all changes in the net defined benefit liability (asset) when they occur, as follows: (i) service cost and net interest in profit or loss; and (ii) remeasurements in other comprehensive income. This amendment had no significant impact on the Group's and Company's financial statements.
• Disclosures—Offsetting Financial Assets and Financial Liabilities Amendments to IFRS 7 (issued in December 2011 and effective for annual periods beginning on or after 1 January 2013). The amendment requires disclosures that will enable users of an entity's financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off. This amendment had no significant impact on the Group's and Company's financial statements.
• Improvements to International Financial Reporting Standards (issued in May 2012 and effective for annual periods beginning 1 January 2013). The improvements consist of changes to five standards. IFRS 1 was amended to (i) clarify that an entity that resumes preparing its IFRS financial statements may either repeatedly apply IFRS 1 or apply all IFRSs retrospectively as if it had never stopped applying them, and (ii) to add an exemption from applying IAS 23, Borrowing costs, retrospectively by first-time adopters. IAS 1 was amended to clarify that explanatory notes are not required to support the third balance sheet presented at the beginning of the preceding period when it is provided because it was materially impacted by a retrospective restatement, changes in accounting policies or reclassifications for presentation purposes, while explanatory notes will be required when an entity voluntarily decides to provide additional comparative statements. IAS 16 was amended to clarify that servicing equipment that is used for more than one period is classified as property, plant and equipment rather than inventory. IAS 32 was amended to clarify that certain tax consequences of distributions to owners should be accounted for in the income statement as was always required by IAS 12. IAS 34 was amended to bring its requirements in line with IFRS 8. IAS 34 will require disclosure of a measure of total assets and liabilities for an operating segment only if such information is regularly provided to chief operating decision maker and there has been a material change in those measures since the last annual financial statements. This amendment had no significant impact on the Group's and Company's financial statements.

(b) The following new standards, amendments to existing standards and interpretations have been issued and adopted by the European Union but are not yet effective and have not been early adopted by the Group and the Company:

• IFRS 10, Consolidated Financial Statements (issued in May 2011 and effective for annual periods beginning on or after 1 January 2013), replaces all of the guidance on control and consolidation in IAS 27 "Consolidated and separate financial statements" and SIC-12 "Consolidation - special purpose entities". IFRS 10 changes the definition of control so that the same criteria are applied to all entities to determine control. This definition is supported by extensive application guidance. The Group and Company is currently assessing the impact of the new standard on its financial statements.
• IFRS 12, Disclosure of Interest in Other Entities, (issued in May 2011 and effective for annual periods beginning on or after 1 January 2013), applies to entities that have an interest in a subsidiary, a joint arrangement, an

(all tabular amounts are in LTL thousands unless otherwise stated)

associate or an unconsolidated structured entity. IFRS 12 sets out the required disclosures for entities reporting under the two new standards: IFRS 10, Consolidated financial statements, and IFRS 11, Joint arrangements, and replaces the disclosure requirements currently found in IAS 28, Investments in associates. IFRS 12 requires entities to disclose information that helps financial statement readers to evaluate the nature, risks and financial effects associated with the entity's interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities. To meet these objectives, the new standard requires disclosures in a number of areas, including significant judgments and assumptions made in determining whether an entity controls, jointly controls, or significantly influences its interests in other entities, extended disclosures on share of noncontrolling interests in group activities and cash flows, summarised financial information of subsidiaries with material non-controlling interests, and detailed disclosures of interests in unconsolidated structured entities. The Group and Company is currently assessing the impact of the new standard on its financial statements.

• IAS 27, Separate Financial Statements, (revised in May 2011 and effective for annual periods beginning on or after 1 January 2013), was changed and its objective is now to prescribe the accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. The guidance on control and consolidated financial statements was replaced by IFRS 10, Consolidated Financial Statements. The Group and Company is currently assessing the impact of the amended standard on its financial statements.
• Offsetting Financial Assets and Financial Liabilities Amendments to IAS 32 (issued in December 2011 and effective for annual periods beginning on or after 1 January 2014). The amendment added application guidance to IAS 32 to address inconsistencies identified in applying some of the offsetting criteria. This includes clarifying the meaning of 'currently has a legally enforceable right of set-off' and that some gross settlement systems may be considered equivalent to net settlement. The Group and Company is considering the implications of the amendment on its financial statements.
• IFRIC 21 Levies (issued on 20 May 2013 and effective for annual periods beginning 1 January 2014). The interpretation clarifies the accounting for an obligation to pay a levy that is not income tax. The obligating event that gives rise to a liability is the event identified by the legislation that triggers the obligation to pay the levy. The fact that an entity is economically compelled to continue operating in a future period, or prepares its financial statements under the going concern assumption, does not create an obligation. The same recognition principles apply in interim and annual financial statements. The application of the interpretation to liabilities arising from emissions trading schemes is optional. The Group and Company is currently assessing the impact of the amendments on its financial statements.
• Amendments to IAS 36 Recoverable amount disclosures for non-financial assets (issued on 29 May 2013 and effective for annual periods beginning 1 January 2014; earlier application is permitted if IFRS 13 is applied for the same accounting and comparative period). The amendments remove the requirement to disclose the recoverable amount when a CGU contains goodwill or indefinite lived intangible assets but there has been no impairment. The Group and Company is currently assessing the impact of the amendments on the disclosures in its financial statements.

2.4 CONSOLIDATION

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

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.

2.5 SEGMENT REPORTING

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.

2.6 FOREIGN CURRENCY TRANSLATION

(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 operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in Lithuanian Litas, which is the functional currency of the Company, 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 each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. 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 Lithuanian Litas using exchange rates prevailing on the balance sheet date. 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.

The applicable rates used for the principal currencies as of 31 December 2013 and 2012 were as follows:

2013		2012
1 EUR	=	3.4528 LTL	1 EUR	=	3.4528 LTL
1 LVL	=	4.9184 LTL	1 LVL	=	4.9520 LTL

2.7 INTANGIBLE ASSETS

Intangible assets expected to provide economic benefit to the Company and the Group in future periods are valued at acquisition cost less subsequent accumulated amortisation.

Amortisation is calculated on a straight-line basis to write off the cost of each asset over the estimated useful life as follows:

Software	3-5 years
Licences and rights acquired	5-9 years

Amortisation is accounted for as selling expense.

2.8 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at historical cost, less accumulated depreciation and impairment losses.

(all tabular amounts are in LTL thousands unless otherwise stated)

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 fixed assets to their residual value over their estimated useful lives, using the straight-line method, on the following basis:

Buildings	15-50 years
Plant and equipment	5-20 years
Leasehold improvements	4-10 years
Other fixed assets	3-6 years

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 each balance sheet date.

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 property, plant and equipment 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 the statement of comprehensive income within operating profit.

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. The policy is applied from 1 January 2009 prospectively.

2.9 IMPAIRMENT OF NON-FINANCIAL ASSETS

At each balance sheet date, the Company and the Group reviews the carrying amounts of its tangible and intangible fixed assets to determine whether there is any indication 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.

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.

2.10 INVESTMENTS IN SUBSIDIARIES

In the separate Company's financial statements investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of investment.

Dividends received are credited to the Company's statement of comprehensive income.

2.11 NON-CURRENT ASSETS HELD FOR SALE

Non-current assets are classified as held for sale if their carrying amount will be recovered through a disposal rather than through continuing use. This condition is regarded as met only when the disposal is highly probable and the asset is available for immediate disposal sale in its present condition.

Non-current assets classified as held for sale are measured at the lower of the carrying value of assets and fair value less costs to sell.

2.12 INVENTORIES

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.

2.13 FINANCIAL ASSETS AND LIABILITIES

Financial assets and financial liabilities are recognized on the Company's and Group's balance sheet when the Company or the Group becomes a party to the contractual provisions of the instrument.

The Group and the Company classifies all its financial assets into the category of loans and receivables and available for sale financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. The Group's and the Company's loans and receivables comprise 'trade and other receivables' and 'cash and cash equivalents' in the balance sheet. All "regular way" purchases and sales of financial assets are recognised using settlement date accounting.

(a) Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group and the Company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the statement of comprehensive income within 'general and administrative expenses'. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against 'general and administrative expenses' in the statement of comprehensive income.

(b) Available for sale financial assets

Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or are not classified in any of the other financial assets categories.

After initial recognition available-for-sale financial assets are measured at fair value based on available market prices or quotes of brokers. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm's length market transactions, reference to the current market value of another instrument, which is substantially the same, and discounted cash flow analysis. The result of revaluation of available-for-sale securities is recognised in revaluation reserve of financial assets, reported under equity.

Revaluation of available-for-sale debt securities is calculated as difference between market value and amortised cost calculated using the original effective interest rate. When the securities are disposed of, the related accumulated fair value revaluation is included in the statement of comprehensive income as gain (loss) from sale of available-for-sale securities. If there is objective evidence that the value of an investment has been impaired, the cumulative net loss that has been recognised directly in equity is charged to profit (loss) for the year. Interest earned while holding available-for-sale financial assets is reported as interest income.

The Group and the Company assess at each date of preparation of the statement of financial position whether there is objective evidence that a financial asset or a group of financial assets is impaired.

Available for sale financial assets are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.

(c) Cash and cash equivalents

Cash and cash equivalents are carried at nominal value.

(all tabular amounts are in LTL thousands unless otherwise stated)

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. Bank overdrafts are included in borrowings in current liabilities on the balance sheet.

(d) Bank and subsidiaries borrowings

Interest-bearing bank and subsidiaries loans and overdrafts are initially measured at fair value. Bank and subsidiaries borrowings are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the statement of comprehensive income.

Borrowings are classified as current liabilities unless the Company or the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

(e) Trade and other payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

2.14 SHARE CAPITAL

(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.

2.15 RESERVE

(a) Translation reserve

The 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) Other reserves

Other reserves are established upon the decision of annual general meeting of shareholders on profit appropriation. These reserves can be used only for the purposes approved by annual general meeting of shareholders.

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.

2.16 INCOME TAX

(a) Current income tax

The Group companies are taxed individually irrespective of the overall results of the Group. Since 1st January 2010 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. Such a procedure in 2012 and 2013 was in force for Latvian companies too. The Group companies have not used this option in 2012 and 2013, as the companies both in Lithuania and Latvia has earned a taxable profit (except, SIA Apranga SLV, which is planning to transfer tax losses to another Group company in 2014).

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. 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 by the balance sheet date.

(all tabular amounts are in LTL thousands unless otherwise stated)

The income tax rate applied for the Company and subsidiaries operating in Lithuania was 15 per cent in 2012 and in 2013. Income tax rate on reporting period taxable profits in Latvia is 15 per cent and in Estonia nil. However, in Estonia profit tax is payable in the year of distribution of earnings at a rate of 21 per cent in 2012 and after.

(b) Deferred income tax

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 balance sheet 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.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date 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 is 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 each balance sheet date 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 intends to settle its current tax assets and liabilities on a net basis.

2.17 LEASES

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

(a) the Company or the Group as lessor

Payments received under operating leases (net of any incentives given to the lessee) are credited to the statement of comprehensive income on a straight-line basis over the period of the lease (Note 12).

(b) the Company or the Group as lessee

Finance leases are capitalised at the lease's commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in long-term payables except for instalments due within 12 months which are included in current liabilities. The property, plant and equipment acquired under finance leases (when the ownership is not transferred to the Group at the end of the lease period) is depreciated over the shorter of the asset's useful life and the lease term.

If sale and leaseback transaction results in a finance lease, any excess or shortfall of sales proceeds over the carrying amount is not recognised immediately and is deferred and amortised over the lease term.

Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the term of the lease.

If a sale and leaseback transaction results in an operating lease, and it is clear that the transaction was established at fair value, any profit or loss is recognised immediately, except that if loss is compensated for by future lease payments over the period for which the asset is expected to be used. If the sale price is above fair value, the excess over fair value is deferred and amortised over the period for which the asset is expected to be used.

2.18 EMPLOYEE BENEFITS

(a) Social security contributions

The Company and the Group pays 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 pays 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.

(b) Termination benefits

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 and the Company recognises 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 balance sheet date are discounted to present value.

(c) Bonus plans

The Company and the Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation.

2.19 PROVISIONS

Provisions for restructuring costs and legal claims are recognised when: the Company or the Group has 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.

2.20 REVENUE RECOGNITION AND RELATED EXPENSES

Revenues are recognized as income on an accrual basis when earned. Expenses are charged to operations as incurred.

Revenue is measured at the fair value of the consideration received or receivable and represents amounts received of receivable for goods and services provided net of value-added tax, rebates and discounts.

Revenue is recognized as follows:

(a) Sales of goods – retail

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. Revenue received under consignment where the Group and the Company is a consignee is recognised on a net basis.

(b) Sales of services

Revenue from services is recognised on performance of the services.

(c) Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

(d) Dividend income

Dividend income is recognised when the right to receive payment is established.

(e) Rental income

Payments received under operating leases (net of any incentives given to the lessee) are credited to the statement of comprehensive income on a straight-line basis over the period of the lease.

(all tabular amounts are in LTL thousands unless otherwise stated)

2.21 DIVIDEND DISTRIBUTION

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.

2.22 EARNINGS PER SHARE

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.

2.23 RELATED PARTIES

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 applies:
• 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).

3. FINANCIAL RISK MANAGEMENT

(a) Financial risk factors

The risk management function within the Group and the Company is carried out in respect of financial risks (credit, market (which consist of currency, interest rate and price) and liquidity), operational risks and legal risks. 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: available for sale financial assets, 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

Credit risk is managed on group basis. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, available for sale financial assets 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 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 other factors. Sales to retail customers are settled in cash or using major credit cards.

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 have been profitable during the financial year (except, SIA Apranga SLV), therefore, in the management's opinion, the credit risk is not related to the aforementioned amounts. The loans granted to SIA Apranga SLV has changed little during the reporting period, the debt to the Company is relatively small, so this subsidiary, in the management's opinion, as well is avoiding the credit risk.

Available for sale financial assets is invested only to Lithuanian government bonds.

The Company and Group have no significant concentration of credit risk.

Liquidity risk

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 maintains 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 24) and cash and cash equivalents (Note 21) 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 balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Trade and other payables due within 12 months equal their carrying balances as the impact of discounting is not significant.

GROUP As at 31 December 2013	Less than 1 month	Between 1 and 3 months	Between 3 and 12 months	Between 1 and 2 years	Total
Borrowings	-	-	5 058	-	5 058
Trade and other payables	21 510	4 399	114	-	26 023
Total	21 510	4 399	5 172	-	31 081
As at 31 December 2012
Trade and other payables	25 481	3 498	155	-	29 134
Total	25 481	3 498	155	-	29 134

COMPANY As at 31 December 2013	Less than 1 month	Between 1 and 3 months	Between 3 and 12 months	Between 1 and 2 years	Total
Borrowings	5	11	23 737	-	23 753
Trade and other payables	6 806	3 938	63	-	10 807
Total	6 811	3 949	23 800	-	34 560
As at 31 December 2012
Borrowings	15	30	23 772	-	23 817
Trade and other payables	7 916	3 268	79	-	11 263
Total	7 931	3 298	23 851	-	35 080

Market risk

Cash flow and fair value interest rate risk

As the Group and the Company most significant interest-bearing assets are available for sale financial assets, however, its income and operating cash flows are substantially independent of changes in market interest rates. 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.

Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Company to fair value interest rate risk, but this is not included in sensitivity analysis as the change in interest rates has no impact on profit or equity of the Group.

The Company's and Group's borrowings consist of loans with floating interest rate, which are related to VILIBOR 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.

(all tabular amounts are in LTL thousands unless otherwise stated)

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 calculates 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 simulations performed, the impact on post tax profit of a 1per cent shift in interest rates would be a maximum increase or decrease of LTL 39 thousand (2012: would not be incurred) for the Group and the maximum increase or decrease of LTL 147 thousand (2012: LTL 124 thousand) would be for the Company.

Foreign exchange risk

The Company and the Group has 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 revenues and expenses in foreign currencies are insignificant (less than 10%) as compared to those in Litas and Euro (the exchange rate of Litas is pegged to the Euro at a rate of Litas 3.4528 = Euro 1). At the moment the Company and the Group doesn't use any derivative financial instruments in order to control foreign currencies exchange risk.

The Group operates in Lithuania, Latvia and Estonia and accordingly has three functional currencies that all are pegged with EUR (Estonia since 1st January 2011 has adopted the euro; Latvia – since 1st January 2014) and do not fluctuate significantly.

Price risk

The Group and Company is not exposed to the market risk with respect to financial instruments as it does not hold any equity securities.

(b) Capital risk management

The Group's and Company's objectives when managing capital are to safeguard the Group's and 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 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 Company monitors 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 balance sheet) less cash and cash equivalents. Total capital is calculated as 'equity' as shown in the consolidated balance sheet plus net debt.

Pursuant to the Lithuanian Law on Companies the authorised share capital of a public limited liability company must be not less than LTL 150 thousand and of a private limited liability company must be not less than LTL 10 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 2012 and 31 December 2013, the Company and all its Lithuanian subsidiaries complied with these requirements.

Pursuant to the Latvian Commercial Law the authorised share capital of a private limited liability company must be not less than LVL 25 thousand. In addition, the losses of the company should not exceed 50 per cent of the company's share capital. As at 31 December 2012 and 31 December 2013, 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 2012 and 31 December 2013, all of the Company's Estonian subsidiaries complied with these requirements.

In addition, the Group and Company has to comply with the financial covenants imposed in the agreement with SEB Bank. The Group and Company was in compliance with the covenants as at 31 December 2012 and 2013.

(c) Fair value estimation

Fair value represents the amount at which an asset could be exchanged or liability settled on an arm's length basis. Fair value measurement is determined in following 3 levels:

Level 1. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The fair values of available for sale financial assets are estimated with reference to average of bid and ask quoted market prices.

(all tabular amounts are in LTL thousands unless otherwise stated)

Level 2. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. The Group and Company does not have financial assets or liabilities assigned to this level.

Level 3. Fair value determined by such valuation methods which use one or more of the significant inputs is not based on observable market data. Fair value of all receivables and payables as well as borrowings are assigned to this level.

Where, in the opinion of the management, the fair value of financial assets and liabilities differs materially from their book value, such fair values are separately disclosed in the notes to the financial statements.

4. SEGMENT INFORMATION

Management has determined the operating segments based on the reports reviewed by the General Director and other 6 Directors (responsible for managing, 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 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.

The segment information provided to the Directors for the reportable segments for the year ended 31 December is as follows:

31 December 2013	Lithuania	Latvia	Estonia	Total	Inter company elimina tions	Total in consolidated financial statements
Total segment revenue	327 230	121 078	59 816	508 124	-
Inter-segment revenue	(35 869)	(4 147)	(1 435)	(41 451)	-
Revenue from external customers	291 361	116 931	58 381	466 673	-	466 673
Gross margin	46,4%	47,9%	47,5%	46,9%		46,9%
Other income and expenses:
Rent and utilities	34 088	13 285	6 076	53 449		53 449
Renumeration and social security contributions	43 584	13 182	5 614	62 380		62 380
Depreciation and amortisation	10 525	5 996	2 099	18 620		18 620
PPE impairment charges	66	138	98	302		302
Other income and expenses	18 866	13 156	7 407	39 429		39 429
Finance income	783	14	16	813	( 131)	682
Finance costs	( 231)	( 15)	( 12)	( 258)	131	( 127)
Income tax expense	4 332	1 606	1 280	7 218		7 218
Profit (loss) for the year	24 339	8 605	5 184	38 128	-	38 128
Total assets	182 668	44 098	21 413	248 179	(44 390)	203 789
Additions to non-current assets (other than financial instruments and prepayments for leases)	14 485	5 805	3 273	23 563	( 787)	22 776

(all tabular amounts are in LTL thousands unless otherwise stated)

31 December 2012	Lithuania	Latvia	Estonia	Total	Inter company elimina tions	Total in consolidated financial statements
Total segment revenue	293 548	104 855	55 459	453 862	-
Inter-segment revenue	(25 733)	(3 443)	(1 245)	(30 421)	-
Revenue from external customers	267 815	101 412	54 214	423 441	-	423 441
Gross margin	46,8%	46,8%	47,5%	46,9%		46,9%
Other income and expenses:
Rent and utilities	32 149	11 198	5 466	48 813		48 813
Renumeration and social security contributions	39 582	10 741	5 100	55 423		55 423
Depreciation and amortisation	11 253	4 520	1 556	17 329		17 329
PPE impairment charges	296	1	-	297		297
Other income and expenses	15 609	10 578	6 940	33 127		33 127
Finance income	701	32	36	769	( 178)	591
Finance costs	( 229)	( 11)	( 2)	( 242)	178	( 64)
Income tax expense	4 158	1 644	1 320	7 122		7 122
Profit for the year	22 661	8 826	5 410	36 897	-	36 897
Total assets	177 583	42 534	18 634	238 751	(43 894)	194 857
Additions to non-current assets (other than financial instruments and prepayments for leases)	12 223	9 520	2 632	24 375	( 46)	24 329

In 2013 and in 2012, the Group managed to operate profitably in all three countries. Gross profitability of the Group was around 47% in 2013 and remained at the same level as in 2012. In 2013, Lithuanian gross margin decreased slightly, but operating expenses grew not so rapidly as sales. Therefore profitability before taxes, compared with the previous period, has remained at the same level. Latvian gross margin increased during the reporting period (which was mostly due to closed outlet store at the beginning of 2013 and opened new stores during non-sales period). Estonia's gross margin in 2013 compared to the 2012, has not changed (comparing to other countries, Estonian higher gross profitability is influenced by outlet stores absent in this country). Operating profitability in 2013 in all countries amounted to 9-11%.

The total non-current assets other than financial instruments and deferred tax assets located in Lithuania is LTL 60 529 thousand (2012: LTL 57 403 thousand), and the total of these non-current assets located in other countries is LTL 23 135 thousand (2011: LTL 22 295 thousand).

5. EXPENSES BY NATURE

For the year ended 31 December cost of sales consisted of the following:

	Group		Company
	2013	2012	2013	2012
Cost of goods sold Write-down of inventories to net realisable	247 040	225 017	122 314	107 124
value	3 462	2 800	2 717	2 103
Reversal of prior year write-down of inventories to net realisable value	(2 800)	(2 857)	(2 103)	(2 192)
Total cost of sales	247 702	224 960	122 928	107 035

A positive impact on inventory write-down to net realizable value was influenced by the sales of goods, which value was earlier wrote-down.

(all tabular amounts are in LTL thousands unless otherwise stated)

For the year ended 31 December selling costs consisted of the following:

	Group		Company
	2013	2012	2013	2012
Rent and utilities	53 449	48 813	21 218	20 016
Remuneration	38 306	33 412	14 971	13 540
Social security contributions	10 955	9 388	4 367	3 862
Depreciation and amortization (Note 12, 13)	18 620	17 329	8 130	8 823
Impairment charge (Note 12)	302	297	47	296
Advertising and marketing	5 668	5 097	2 773	2 621
Franchise expenses	10 444	9 086	356	210
Bank commissions	4 414	3 501	1 552	1 482
Labelling, packing and repairing	2 567	2 422	1 162	1 230
Logistics and distribution	664	496	306	225
Business trips	1 721	1 535	1 182	1 083
Total selling costs	147 110	131 376	56 064	53 388

For the year ended 31 December general and administrative expenses consisted of the following:

	Group		Company
	2013	2012	2013	2012
Remuneration	9 972	9 609	9 853	9 488
Social security contributions	3 147	3 014	3 107	2 975
IT and communications	1 713	1 286	907	641
Repair and maintenance	5 715	4 741	2 493	2 508
Taxes (excluding income tax)	463	357	389	313
Consulting and audit expense	1 871	1 523	1 591	1 237
Other expenses	5 441	4 189	3 245	2 179
Total general and administrative expenses	28 322	24 719	21 585	19 341

6. OTHER INCOME

For the year ended 31 December other income consisted of the following:

	Group		Company
	2013	2012	2013	2012
Rent income	464	424	491	450
Management fees	-	-	9 463	9 177
Gain from disposal of fixed assets, net	8	45	8	45
Interest income	682	591	736	621
Dividends	-	-	27 532	20 325
Other income	809	548	745	579
Total other income	1 963	1 608	38 975	31 197

(all tabular amounts are in LTL thousands unless otherwise stated)

7. FINANCE COSTS

For the year ended 31 December finance costs consisted of the following:

	Group		Company
	2013	2012	2013	2012
Interest on bank borrowings	127	64	127	64
Interest on borrowings from subsidiaries	-	-	71	148
Total finance costs	127	64	198	212

8. INCOME TAX EXPENSE

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
	2013	2012	2013	2012
Profit (loss) before tax	45 346	44 019	39 658	31 307
Tax at the domestic income tax rate	6 802	6 603	5 949	4 696
Tax effect of income not subject to tax	( 38)	( 33)	(4 169)	(3 082)
Tax effect of expenses that are not deductible in determining taxable profit	90	162	79	160
Effect of different tax rates of foreign subsidiaries	364	390	-	-
Tax expense	7 218	7 122	1 859	1 774
Effective income tax rate	15,9%	16,2%	4,7%	5,7%

For the year ended 31 December income tax expense consisted of the following:

	Group		Company
	2013	2012	2013	2012
Current income tax expense	7 393	7 345	2 020	1 904
Deferred tax	( 175)	( 223)	( 161)	( 130)
Total income tax expense	7 218	7 122	1 859	1 774

9. DEFERRED INCOME TAX

The movement in deferred income tax account was as follows:

	Group		Company
	2013	2012	2013	2012
At beginning of year	(3 540)	(3 763)	(1 205)	(1 335)
Income statement (charge) credit	176	223	161	130
At end of year	(3 364)	(3 540)	(1 044)	(1 205)

In 2012 and 2013 deferred income tax asset and liability related to the entities operating in Lithuania and Latvia were calculated at 15 per cent rate, deferred income tax asset and liability related to the entities operating in Estonia – at 21 per cent rate.

(all tabular amounts are in LTL thousands unless otherwise stated)

Deferred tax assets and liabilities recognised as follows:

	Group		Company
	2013	2012	2013	2012
Deferred tax assets:
Inventory write down	519	420	408	315
Accruals	403	405	309	351
Taxable losses	-	-	-	-
Total deferred tax assets	922	825	717	666
Deferred tax liability:
Undistributed profits of subsidiaries	(1 581)	(1 627)	-	-
Depreciation of property, plant and equipment	(2 705)	(2 738)	(1 761)	(1 871)
Total deferred tax liabilities	(4 286)	(4 365)	(1 761)	(1 871)
Total deferred tax (liabilities) assets, net	(3 364)	(3 540)	(1 044)	(1 205)

Deferred income tax assets are recognised only to the extent that realization of the related tax benefit is probable in the foreseeable future.

	Group		Company
	2013	2012	2013	2012
Deferred tax assets:
Deferred tax asset to be recovered after more than 12 months	75	51	75	51
Deferred tax asset to be recovered within 12 months	847	774	642	615
	922	825	717	666
Deferred tax liabilities:
Deferred tax liability to be recovered after more than 12 months	(2 709)	(2 281)	(1 576)	(1 192)
Deferred tax liability to be recovered within 12 months	(1 577)	(2 084)	( 185)	( 679)
	(4 286)	(4 365)	(1 761)	(1 871)
Deferred tax (liabilities) assets, net	(3 364)	(3 540)	(1 044)	(1 205)

In 2012 and 2013 the Group and the Company did not have tax losses for which no deferred income tax asset should be recognised.

10. DIVIDENDS PER SHARE

	2013	2012
Approved dividends	30 411	20 458
Weighted average number of ordinary shares in thousand (Note 22)	55 292	55 292
Approved dividends per share, LTL	0.55	0.37

In 2013 dividends of LTL 0.55 per share was paid to the shareholders (LTL 0.37 per share in 2012).

In respect of the current year, the Board of Directors propose a dividend of LTL 0.50 per share to be paid to the shareholders (Note 23). 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.

11. EARNINGS PER SHARE

	Group		Company
	2013	2012	2013	2012
Profit (loss) for the year	38 128	36 897	37 799	29 533
Weighted average number of ordinary shares in thousand (Note 22)	55 292	55 292	55 292	55 292
Basic and diluted earnings (losses) per share, LTL	0.69	0.67	0.68	0.53

Company has no dilutive potential ordinary shares, therefore, the diluted earnings per share are the same as basic earnings per share.

12. PROPERTY, PLANT AND EQUIPMENT

At 31 December property, plant and equipment consisted of the following:

			Leasehold	Other	Construc
		Plant and	improve	fixed	tion in
GROUP	Buildings	equipment	ments	assets	progress	Total
Cost
At 31 December 2011	39 651	1 512	38 360	96 995	266	176 784
Additions	-	68	1 542	9 323	14 780	25 713
Exchange differences	-	-	18	( 12)	-	6
Disposals and write-offs	-	-	(1 991)	(5 981)	( 900)	(8 872)
Transfers	-	-	7 539	5 997	(13 537)	( 1)
At 31 December 2012	39 651	1 580	45 468	106 322	609	193 630
Additions	320	31	858	9 407	11 583	22 199
Exchange differences	-	( 1)	( 87)	( 303)	-	( 391)
Disposals and write-offs	-	( 6)	(2 746)	(6 453)	-	(9 205)
Transfers	-	-	7 159	4 858	(12 017)	-
At 31 December 2013	39 971	1 604	50 652	113 831	175	206 233
Accumulated depreciation
At 31 December 2011	8 869	1 322	24 645	69 019	-	103 855
Charge for period	1 029	56	5 012	10 898	-	16 995
Disposals and write-offs	-	-	(1 104)	(5 832)	-	(6 936)
Exchange differences	-	-	12	33	-	45
At 31 December 2012	9 898	1 378	28 565	74 118	-	113 959
Charge for period	1 027	65	5 752	11 589	-	18 433
Disposals and write-offs	-	( 6)	(1 778)	(6 155)	-	(7 939)
Exchange differences	-	( 1)	( 53)	( 182)	-	( 236)
At 31 December 2013	10 925	1 436	32 486	79 370	-	124 217
Impairment charge
At 31 December 2011	-	-	196	1 178	-	1 374
Charge for period			296	1		297
Write-offs			( 110)	( 246)		( 356)
At 31 December 2012	-	-	382	933	-	1 315
Charge for period			37	273		310
Write-offs			( 382)	( 79)		( 461)
At 31 December 2013	-	-	37	1 127	-	1 164
Carrying amount At 31 December 2011	30 782	190	13 519	26 798	266	71 555
At 31 December 2012	29 753	202	16 521	31 271	609	78 356
At 31 December 2013	29 046	168	18 129	33 334	175	80 852

(all tabular amounts are in LTL thousands unless otherwise stated)

		Plant and	Leasehold improve	Other fixed	Construc tion in
COMPANY	Buildings	equipment	ments	assets	progress	Total
Cost At 31 December 2011	39 651	1 513	19 342	38 482	266	99 254
Additions	-	67	11	5 836	4 527	10 441
Disposals and write-offs	-	-	(1 339)	(3 639)	( 900)	(5 878)
Transfers	-	-	3 143	674	(3 817)	-
At 31 December 2012	39 651	1 580	21 157	41 353	76	103 817
Additions	320	31	54	5 236	3 540	9 181
Disposals and write-offs	-	( 6)	(2 144)	(5 298)	-	(7 448)
Transfers	-	-	3 311	160	(3 471)	-
At 31 December 2013	39 971	1 605	22 378	41 451	145	105 550
Accumulated depreciation
At 31 December 2011	8 869	1 323	11 413	26 493	-	48 098
Charge for period	1 029	55	2 888	4 601	-	8 573
Disposals and write-offs	-	-	(1 104)	(3 298)	-	(4 402)
At 31 December 2012	9 898	1 378	13 197	27 796	-	52 269
Charge for period	1 027	65	2 661	4 257	-	8 010
Disposals and write-offs	-	( 6)	(1 652)	(5 214)	-	(6 872)
At 31 December 2013	10 925	1 437	14 206	26 839	-	53 407
Impairment charge
At 31 December 2011 Charge for period	-	-	196 296	982 -	-	1 178 296
Write-offs			( 110)	( 192)		( 302)
At 31 December 2012	-	-	382	790	-	1 172
Charge for period			19	37		56
Write-offs			( 382)	( 66)		( 448)
At 31 December 2013	-	-	19	761	-	780
Carrying amount
At 31 December 2011	30 782	190	7 733	11 007	266	49 978
At 31 December 2012	29 753	202	7 578	12 767	76	50 376
At 31 December 2013	29 046	168	8 153	13 851	145	51 363

At 31 December 2013 the Group's and the Company's buildings with the carrying amount of LTL 23 600 thousand (2012: LTL 29 517 thousand) have been pledged as security for outstanding loans from financial institutions (Note 24).

The Company's buildings with the total carrying amount of LTL 1 158 thousand as of 31 December 2013 (2012: LTL 1 168 thousand) was leased to third parties.

At 31 December the acquisition cost of the fully depreciated property, plant and equipment still in use was as follows:

	Group		Company
	2013	2012	2013	2012
Plant and equipment	1 184	1 167	1 184	1 167
Leasehold improvements	11 396	6 402	-	-
Other fixed assets	33 371	26 697	10 548	12 495
Total	45 951	34 266	11 732	13 662

At 31 December 2013 the Group did not have the property, plant and equipment acquired under finance lease contracts (did not have at 31 December 2012).

The Group and the Company has tested its leasehold improvements and other fixed assets for impairment in accordance with the accounting policies stated in note 2.9.

(all tabular amounts are in LTL thousands unless otherwise stated)

Estimation of the value in use was based on the discounted pre-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). The weighted average cost of capital (further – WACC) of 10 per cent (2012: 10 per cent) was used for value in use estimation.

Based on the calculations performed the Management concluded that impairment charges of LTL 1 164 thousand for the Group (2012: LTL 1 315 thousand) and LTL 779 thousand for the Company (2012: LTL 1 172 thousand) should be recorded against the leasehold improvements and other fixed assets.

If the estimated pre-tax discount rate applied to the discounted cash flows for cash generating units had been 1% higher than management estimates (for example 11 per cent instead of 10 per cent), the Group and the Company would not have recognised higher impairment loss against leasehold improvements and other fixed assets nor in 2012, nor in 2013.

13. INTANGIBLE ASSETS

At 31 December intangible assets consisted of the following:

		Group			Company
	Licenses and rights acquired	Software	Total	Licenses and rights acquired	Software	Total
Cost
At 31 December 2011	895	1 926	2 821	568	1 626	2 194
Additions	-	56	56	-	50	50
Write-offs	-	( 395)	( 395)	-	( 342)	( 342)
At 31 December 2012	895	1 587	2 482	568	1 334	1 902
Additions	1 259	105	1 364	8	105	113
Write-offs	-	( 3)	( 3)	-	( 2)	( 2)
At 31 December 2013	2 154	1 689	3 843	576	1 437	2 013
Accumulated amortisation
At 31 December 2011	492	1 721	2 213	293	1 456	1 749
Charge for period	162	172	334	96	155	251
Write-offs	-	( 395)	( 395)	-	( 342)	( 342)
At 31 December 2012	654	1 498	2 152	389	1 269	1 658
Charge for period	141	46	187	84	35	119
Write-offs	-	( 3)	( 3)	-	( 2)	( 2)
At 31 December 2013	795	1 541	2 336	473	1 302	1 775
Carrying amount
At 31 December 2011	403	205	608	275	170	445
At 31 December 2012	241	89	330	179	65	244
At 31 December 2013	1 359	148	1 507	103	135	238

At 31 December the acquisition cost of fully amortized intangible assets still in use was as follows:

	Group		Company
	2013	2012	2013	2012
Licenses	482	50	309	50
Software	1 468	1 371	1 261	1 174
Total	1 950	1 421	1 570	1 224

14. INVESTMENTS IN SUBSIDIARIES

The Company's investments in subsidiaries at 31 December are as follows:

	Ownership Country of		Cost
Name	incorporation	%	2013	2012
UAB Apranga LT	Lithuania	100	2 500	2 500
UAB Apranga BPB LT	Lithuania	100	500	500
UAB Apranga PLT	Lithuania	100	300	300
UAB Apranga SLT	Lithuania	100	300	300
UAB Apranga MLT	Lithuania	100	300	300
SIA Apranga	Latvia	100	7 511	7 511
SIA Apranga LV	Latvia	100	529	529
SIA Apranga BPB LV	Latvia	100	297	297
SIA Apranga PLV	Latvia	100	297	297
SIA Apranga SLV	Latvia	100	292	292
SIA Apranga MLV	Latvia	100	297	297
OU Apranga1	Estonia	100	1 545	1 545
OU Apranga Estonia	Estonia	100	441	441
OU Apranga BEE	Estonia	100	330	330
OU Apranga PB Trade	Estonia	100	331	331
OU Apranga ST Retail	Estonia	100	331	331
Total investments			16 101	16 101

¹ The Company directly owns 33.33% shares and indirectly through its subsidiary owns the rest 66.67% of shares.

There were no changes in investments in 2013 as well as in 2012:

	2013	2012
Beginning of the year	16 101	16 101
At end of the year	16 101	16 101

15. INVENTORIES

	Group		Company
	2013	2012	2013	2012
Goods for resale	89 504	75 791	48 779	40 747
Write-down of goods for resale to net realisable
value	(3 462)	(2 800)	(2 717)	(2 103)
Goods in transit	1 327	1 366	1 228	1 327
Materials and spare parts	1 283	875	1 283	875
Total	88 652	75 232	48 573	40 846

During the year ended 31 December 2013 the Group and the Company recognised as cost of sales write-down of book value of the goods for resale to their net realizable value of LTL 3 462 thousand and LTL 2 717 thousand respectively (31 December 2012 - LTL 2 800 thousand and LTL 2 103 thousand respectively). The reversal of writedown of book value of the goods for resale to net realizable value of LTL 2 800 thousand and LTL 2 103 thousand made during the year ended 31 December 2012 was credited to cost of sales of the Group and the Company in 2012 (LTL 2 857 thousand and LTL 2 192 thousand in 2011).

At 31 December 2013 inventories of the Group and the Company have been pledged as security for outstanding loans from financial institutions (Note 24). The total carrying amount of Group's pledged inventories as at 31 December 2012 and 2013 was LTL 27 264 thousand, Company's - LTL 19 664 thousand.

(all tabular amounts are in LTL thousands unless otherwise stated)

16. NON-CURRENT ASSETS HELD FOR SALE

At 31 December 2013 and 2012 non-current assets held for sale consisted of the 91 per cent ownership in UAB Palangos Varuna. Purchase of shares in the entity was not considered to be a business combination as the entity did not constitute a business. In substance it was the purchase of the long term assets. There were no impairment charge on non-current assets held for sale in 2013 and 2012, as the cost of investments did not exceed their fair value as of 31 December 2013 and 2012.

17. PREPAYMENTS

At 31 December prepayments consisted of the following:

	Group		Company
	2013	2012	2013	2012
Prepayments	4 211	4 218	2 961	2 131
Less non-current portion of prepayments	(1 201)	( 899)	( 296)	( 202)
Current portion of prepayments	3 010	3 319	2 665	1 929

18. FINANCIAL INSTRUMENTS BY CATEGORY

The accounting policies for financial instruments have been applied to the line items below:

	Group Category - Loans and receivables		Company Category - Loans and receivables
Assets as per balance sheet:	2013	2012	2013	2012
Trade and other receivables	2 903	10 560	27 637	29 810
Cash and cash equivalents	8 275	8 804	1 293	1 999
Total	11 178	19 364	28 930	31 809
	Category - Available for sale		Category - Available for sale
Available for sale financial assets	16 271	16 239	16 271	16 239
Total	16 271	16 239	16 271	16 239
Total assets	27 449	35 603	45 201	48 048

In 2011-2013, the Company has acquired the Lithuanian Government issued the long-term bonds (redemption years various from 2016 to 2019) denominated in Litas and in Euros, which are recorded as Available for sale financial assets. During the year 2013 the Company for LTL 5.8 million sold and for the same amount acquired the Lithuanian Government issued long-term bonds (redemption years - 2015 and 2016) denominated in Litas.

	Group		Company
	Category - Financial liabilities measured at amortised cost		Category - Financial liabilities measured at amortised cost
Liabilities as per balance sheet:	2013	2012	2013	2012
Borrowings	4 994	-	23 624	23 639
Trade and other payables	26 023	29 135	10 807	11 263
Total	31 017	29 135	34 431	34 902

19. CREDIT QUALITY OF FINANCIAL ASSETS

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to historical information about counterparty default rates:

	Group		Company
	2013	2012	2013	2012
Available for sale financial assets	16 271	16 239	16 271	16 239
Trade and other receivables with no history of counterparty defaults	2 307	2 010	1 419	1 351
Receivables from related parties (note 26)	596	8 550	26 218	28 459
Cash at bank that have high credit ratings (cash on hand is excluded)	3 362	2 758	9	620
Total	22 536	29 557	43 917	46 669

20. TRADE AND OTHER RECEIVABLES

At 31 December trade and other receivables consisted of the following:

	Group		Company
	2013	2012	2013	2012
Trade receivables from subsidiaries	-	-	19 671	18 830
Loans to subsidiaries	-	-	5 951	1 079
Loans and other receivables from related parties	596	8 550	596	8 550
Trade receivables from unrelated parties	387	671	192	459
Other receivables	1 920	1 366	1 227	892
Less: allowance for impairment of receivables	-	( 27)	-	-
Total	2 903	10 560	27 637	29 810
Less non-current portion of other receivables	( 104)	( 113)	( 104)	( 113)
Current portion	2 799	10 447	27 533	29 697

Trade receivables that are less than three months past due are not considered impaired. There were no receivables past due but not impaired as at 31 December 2013 and 2012.

As of 31 December 2013, none of trade receivables were impaired and provided for by the Group (LTL 27 thousand at 31 December 2012). The other classes within trade and other receivables do not contain impaired assets.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group and the Company does not hold any collateral as security.

The carrying amounts of the Company's loans to subsidiaries are denominated in the following currencies:

	2013	2012
LTL	2 000	580
EUR	3 951	499
Total	5 951	1 079

The interest rate at 31 December 2013 is 1.8 per cent (2012: 2.0 per cent), maturity date – 31 December 2014 (2012: 31 December 2013).

In the opinion of management, the carrying amount of the receivables approximates their fair value.

21. CASH AND CASH EQUIVALENTS

At 31 December cash and cash equivalents consisted of the following:

		Group		Company
	2013	2012	2013	2012
Cash at bank	3 362	2 758	9	620
Cash on hand	1 172	1 261	317	362
Cash in transit	3 741	4 785	967	1 017
Total	8 275	8 804	1 293	1 999

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 2013, the cash balances of the Group and the Company in the pledged accounts amounted to LTL 9 thousand (2012: LTL 620 thousand) (Note 24).

Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:

	Group		Company
	2013	2012	2013	2012
Cash and cash equivalents	8 275	8 804	1 293	1 999
Bank overdrafts	(4 994)	-	(4 994)	-
Total	3 281	8 804	(3 701)	1 999

22. SHARE CAPITAL

At 31 December 2013 issued share capital of the Company consisted of 55 291 960 (2012: 55 291 960) ordinary shares at par value of LTL 1 each. All issued shares are fully paid.

Subsidiaries did not hold any shares of the Company as of 31 December 2013 and 2012. The Company did not hold its own shares as of 31 December 2013 and 2012.

23. PROFIT DISTRIBUTION

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 LTL 5 529 thousand as at 31 December 2013).

On 30 April 2013 the Company's shareholders' meeting decided to pay out LTL 30 411 thousand in dividends, LTL 720 thousand annual bonuses and allocate LTL 917 thousand to legal reserve (On 27 April 2012 the Company's shareholders' meeting decided to pay out LTL 20 458 thousand in dividends, LTL 720 thousand annual bonuses and allocate LTL 1 350 thousand to legal reserve).

In respect of the current year, the Board of directors propose a dividend of LTL 27 646 thousand to be paid to the shareholders and also LTL 720 thousand annual bonuses. This dividend and annual bonuses are subject to approval by shareholders at the Annual Shareholder's Meeting.

24. BORROWINGS

At 31 December the carrying amounts of the borrowings consisted of the following:

		Group		Company
	2013	2012	2013	2012
Bank overdrafts	4 994	-	4 994	-
Borrowings from subsidiaries	-	-	18 630	23 639
Total	4 994	-	23 624	23 639

The bank credit lines are secured by cash in certain of bank accounts (Note 21), some of buildings (Note 12) and part of inventories (Note 15).

At 31 December the carrying amounts of the borrowings are denominated in the following currencies:

		Group		Company
	2013	2012	2013	2012
LTL	4 994	-	4 994	15 109
EUR	-	-	18 630	8 530
Total	4 994	-	23 624	23 639

The weighted average interest rates at the balance sheet date were as follows:

		Group		Company
	2013	2012	2013	2012
Bank overdraft	1.4%	1.6%	1.4%	1.6%
Borrowings from subsidiaries	-	-	0.3%	0.7%

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.

Interest rate of majority of the borrowings is based on market interest rate, therefore, in the opinion of the management, carrying amount of borrowings approximates to their fair value.

Group's and Company's borrowing facilities contracted but undrawn as at the date of the balance sheet were LTL 44 800 thousand (2012: LTL 57 867 thousand).

25. TRADE AND OTHER PAYABLES

At 31 December trade and other payables consisted of the following:

	Group		Company
	2013	2012	2013	2012
Payables to subsidiaries	-	-	14	25
Payables to other related parties	127	223	123	223
Trade payables	16 627	19 897	5 814	6 849
Employee benefits and related payables	10 661	10 433	6 493	6 807
Advances received	378	288	184	133
Taxes payable	7 877	6 789	2 805	2 448
Accrued expenses and other payables	9 269	9 014	4 856	4 166
Total	44 939	46 644	20 289	20 651

26. RELATED PARTY TRANSACTIONS

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
	Accounts		receivable and
	payable		loans granted		Income received		Purchases
Related parties	2013	2012	2013	2012	2013	2012	2013	2012
UAB Koncernas MG Baltic	44	46	-	-	-	-	440	442
UAB Minvista	-	-	-	8 000	17	47	-	-
UAB Mineraliniai vandenys	16	25	-	-	-	-	46	65
UAB MG Baltic Investment	50	50	1	1	-	-	592	591
UAB MG Valda	17	17	-	-	-	-	168	164
UAB Palangos Varūna	-	-	596	550	-	-	-	-
UAB Laisvas Nepriklausomas Kanalas	-	89	1	1	47	25	99	183
UAB UPG Baltic	-	-	-	-	-	-	-	3
UAB Alfa Media	-	-	-	-	-	-	-	4
Total	127	227	598	8 552	64	72	1 345	1 452

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		receivable		Income received		Purchases
Subsidiaries	2013	2012	2013	2012	2013	2012	2013	2012
UAB Apranga LT	10 019	12 679	27	135	10 136	7 098	261	238
UAB Apranga BPB LT	715	1 245	7	29	2 020	1 962	117	101
UAB Apranga PLT	-	1 185	1 251	32	2 015	1 441	33	38
UAB Apranga SLT	-	-	768	114	1 433	1 386	74	69
UAB Apranga MLT	1 595	-	46	534	2 747	472	81	15
SIA Apranga	-	-	15 904	14 395	26 894	19 318	77	1
SIA Apranga LV	2 166	4 200	-	90	6 708	5 934	108	110
SIA Apranga BPB LV	1	-	24	105	807	737	29	32
SIA Apranga PLV	304	468	11	21	1 131	1 264	6	12
SIA Apranga SLV	-	-	77	47	44	47	2	-
SIA Apranga MLV	59	22	26	121	1 537	240	52	44
OU Apranga	-	-	7 456	4 166	8 992	6 526	48	1
OU Apranga Estonia	2 210	2 590	19	86	4 726	5 799	69	88
OU Apranga BEE	698	370	1	13	626	543	46	36
OU Apranga PB Trade	570	490	2	10	568	557	17	19
OU Apranga ST Retail	311	415	-	8	399	470	16	22
Total	18 648	23 664	25 619	19 906	70 783	53 794	1 036	826

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 in amount of LTL 27 532 thousand received from the subsidiaries in 2013 is presented in 'Income received' together with other income (2012: LTL 20 325 thousand).

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 and the Group's and related parties debts are paid within 30 days.

Guarantees provided on behalf of related parties

Guarantees provided on behalf of related parties are disclosed in Note 27.

(all tabular amounts are in LTL thousands unless otherwise stated)

Compensation of key management personnel

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 2013 (7 members of the key management as at 31 December 2012). 3 of them also belong to the Management Board, which consists of 6 members.

	Group		Company
	2013	2012	2013	2012
Short-term employee benefits	4 645	4 578	4 526	4 457
Social security	1 459	1 431	1 419	1 392
Average number of key managers	7	7	7	7

On 30 April 2013 the Company's shareholders' meeting decided to pay out annual bonuses of LTL 360 thousand to the key management (LTL 360 thousand paid in 2012).

27. COMMITMENTS AND CONTINGENCIES

Legal proceedings

As of 31 December 2013 and 2012 the Company and the Group were not involved in any legal process, which in the opinion of management, would have a material impact on the financial statements.

Guarantees

As of 31 December 2013 guarantees issued by the credit institutions on behalf of the Company to secure the obligations of its subsidiaries to their suppliers amounted LTL 34 891 thousand (31 December 2012: LTL 29 332 thousand). The letters of credit and guarantees provided to suppliers by the credit institutions on behalf of the Group as of 31 December 2013 amounted to LTL 41 281 thousand (31 December 2012: LTL 36 661 thousand).

As of 31 December 2013 and 2012 the Company's had no guarantees to the credit institutions issued to secure the obligations of subsidiaries. As of 31 December 2013 the Company's guarantees issued to secure the obligations of its subsidiaries to their suppliers totalled LTL 2 356 thousand (31 December 2012: LTL 1 725 thousand).

Lease commitments

The Company and the Group has entered into 65 and 141 rental agreements of stores respectively (2012: 63 and 127). The agreements' termination period differs from 1 to 6 months.

At 31 December the future aggregate minimum lease payments under operating leases in connection with the rent of premises where the Group and the Company is a lessee were as follows:

	Group		Company
	2014	2013	2014	2013
Lease payable within:
One year	62 928	53 490	23 546	21 394
From second to fifth year	192 834	157 191	74 138	62 361
Thereafter	53 898	49 721	23 537	17 692
Total	309 660	260 402	121 221	101 447

Minimum lease payments may be dependent on the turnover of goods in leased premises, or indexed at appropriate inflation rate.

Options granted

Options for assets

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, SIA Apranga LV, SIA Apranga BPB LV, SIA Apranga PLV, SIA Apranga SLV, SIA Apranga MLV, OU Apranga Estonia, OU Apranga BEE, OU Apranga PB Trade and OU Apranga ST Retail operating brands of INDITEX Group (ZARA, BERSHKA, PULL AND BEAR, STRADIVARIUS and MASSIMO DUTTI). The options are exercisable in 2016 and are firmly and irrevocably granted so that the Group waived the right that it might have to revoke them.

The Group issued irrevocable call options to company PROMOD SAS 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 PROMOD. The options are exercisable in 2015 and are firmly and irrevocably granted so that the Group waived the right that it might have to revoke 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 2017 and are firmly and irrevocably granted so that the Group waived the right that it might have to revoke them.

Options for lease rights

Subsidiaries UAB Apranga LT, UAB Apranga BPB LT, UAB Apranga PLT, UAB Apranga SLT, UAB Apranga MLT, SIA Apranga LV, SIA Apranga BPB LV, SIA Apranga PLV, SIA Apranga SLV, SIA Apranga MLV, OU Apranga Estonia, OU Apranga BEE, OU Apranga PB Trade and OU Apranga ST Retail operating brands of INDITEX Group (ZARA, BERSHKA, PULL AND BEAR, STRADIVARIUS and MASSIMO DUTTI) granted irrevocable options exercisable in 2016 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, BERSHKA, PULL AND BEAR, STRADIVARIUS and MASSIMO DUTTI stores are located.

Company and its subsidiaries SIA Apranga and OU Apranga operating brand PROMOD granted irrevocable options exercisable in 2015 by virtue of which PROMOD SAS might acquire the lease rights and might become lessee in the lease agreements for the premises where PROMOD stores are located.

Company and its subsidiaries SIA Apranga and OU Apranga operating brand ALDO granted irrevocable options exercisable in 2017 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.

At 31 December, the future aggregate minimum lease payments under operating leases in connection with the rent of premises where the Group and the Company issued options to purchase lease rights were as follows:

	Group		Company
	2014	2013	2014	2013
Lease payable within:
One year	31 293	28 393	2 016	1 955
From second to fifth year	85 681	79 890	5 715	6 613
Thereafter	20 557	27 698	2 632	3 510
Total	137 531	135 981	10 363	12 078

It is not anticipated that any material liabilities will arise from the contingent liabilities.

28. EVENTS AFTER THER REPORTING PERIOD

In February 2014, the Company established a subsidiary OU Apranga MDE, which will operate Massimo Dutti stores in Estonia. The share capital of subsidiary is EUR 2.5 thousand (equivalent to LTL 8.6 thousand). All shares have been fully paid in cash.

* * * * * *

APB APRANGA

Consolidated Annual Report

for the year ended 31 December 2013

1. GENERAL INFORMATION

Consolidated annual report is prepared for the year ended 31 December 2013.

Name of the Issuer: trade company "Apranga" Legal form: public limited liability company Code of Enterprise: 121933274 Telephone number: +370 5 2390808 Fax number: +370 5 2390800 E-mail address: info@apranga.lt Internet address: www.apranga.lt

Date and place of registration: 1993 03 01 Board of Vilnius City Registered office: Kirtimu str. 51, Vilnius, LT-02244, Lithuania

At 31 December 2013 Apranga Group (hereinafter the Group) consisted of the parent company APB Apranga (hereinafter the Company) and its 100 per cent owned subsidiaries listed below. The principal activity of the Company and its subsidiaries is retail trade of apparel.

		Date and place of	Enterprise	Register	Telephone,
Title	Legal form	registration	code	ed office	fax, e-mail, www
UAB Apranga LT	Private limited	27 04 2004 State	300021271	Kirtimų 51,	Tel. 370 5 2390808
	liability	enterprise Centre of		Vilnius,	Fax. 370 5 2390808
	company	Registers of the		Lithuania	info@apranga.lt www.apranga.lt
		Republic of Lithuania
UAB Apranga BPB LT	Private limited	29 11 2005 State	300509648	Kirtimų 51,	Tel. 370 5 2390808
	liability	enterprise Centre of		Vilnius,	Fax. 370 5 2390808 info@apranga.lt
	company	Registers of the		Lithuania	www.apranga.lt
		Republic of Lithuania			Tel. 370 5 2390808
UAB Apranga PLT	Private limited	21 03 2007 State	300551572	Kirtimų 51,	Fax. 370 5 2390808
	liability company	enterprise Centre of Registers of the		Vilnius, Lithuania	info@apranga.lt
		Republic of Lithuania			www.apranga.lt
UAB Apranga SLT	Private limited	14 01 2008 State		Kirtimų 51,	Tel. 370 5 2390808
	liability	enterprise Centre of	301519684	Vilnius,	Fax. 370 5 2390808
	company	Registers of the		Lithuania	info@apranga.lt
		Republic of Lithuania			www.apranga.lt
UAB Apranga MLT	Private limited	13 05 2011 State		Kirtimų 51,	Tel. 370 5 2390808
	liability	enterprise Centre of	302627022	Vilnius,	Fax. 370 5 2390808
	company	Registers of the		Lithuania	info@apranga.lt www.apranga.lt
		Republic of Lithuania
SIA Apranga	Private limited	20 11 2002	40003610082	Elizabetes	Tel. 371 6 7240020
	liability	Enterprise Register of		51, Riga,	Fax. 371 6 7240019 info@apranga.lt
	company	the Republic of Latvia		Latvia	www.apranga.lt
SIA Apranga LV	Private limited	30 03 2004	40003672631	Elizabetes	Tel. 371 6 7240020
	liability	Enterprise Register of		51, Riga,	Fax. 371 6 7240019
	company	the Republic of Latvia		Latvia	info@apranga.lt www.apranga.lt
SIA Apranga BPB LV	Private limited	10 01 2007	40003887840	Elizabetes	Tel. 371 6 7240020
	liability	Enterprise Register of		51, Riga,	Fax. 371 6 7240019
	company	the Republic of Latvia		Latvia	info@apranga.lt
					www.apranga.lt Tel. 371 6 7240020
SIA Apranga PLV	Private limited liability	10 01 2007 Enterprise Register of	40003887747	Elizabetes 51, Riga,	Fax. 371 6 7240019
	company	the Republic of Latvia		Latvia	info@apranga.lt
					www.apranga.lt
SIA Apranga SLV	Private limited	19 11 2008	50103201281	Terbatas	Tel. 371 6 7240020
	liability	Enterprise Register of		30, Riga,	Fax. 371 6 7240019 info@apranga.lt
	company	the Republic of Latvia		Latvia	www.apranga.lt
SIA Apranga MLV	Private limited	30 11 2011	40103486301	Terbatas	Tel. 371 6 7240020
	liability	Enterprise Register of		30, Riga,	Fax. 371 6 7240019
	company	the Republic of Latvia		Latvia	info@apranga.lt www.apranga.lt
OU Apranga	Private limited	19 07 2006 Tallinn	11274427	Pärnu 10,	Tel. 372 6663444
	liability	City Court Register		Tallinn,	Fax. 372 6663445
	company	department		Estonia	info@apranga.lt
					www.apranga.lt
OU Apranga Estonia	Private limited	12 04 2004 Tallinn	11026132	Pärnu 10,	Tel. 372 6663444 Fax. 372 6663445
	liability	City Court Register		Tallinn,	info@apranga.lt
	company	department		Estonia	www.apranga.lt
OU Apranga BEE	Private limited	04 09 2007 Tallinn	11419148	Pärnu 10,	Tel. 372 6663444
	liability	City Court Register		Tallinn,	Fax. 372 6663445 info@apranga.lt
	company	department		Estonia	www.apranga.lt

(all tabular amounts are in LTL thousands unless otherwise stated)

Title	Legal form	Date and place of registration	Enterprise code	Register ed office	Telephone, fax, e-mail, www
OU Apranga PB Trade	Private limited liability company	21 08 2008 Tallinn City Court Register department	11530250	Pärnu 10, Tallinn, Estonia	Tel. 372 6663444 Fax. 372 6663445 info@apranga.lt www.apranga.lt
OU Apranga ST Retail	Private limited liability company	21 08 2008 Tallinn City Court Register department	11530037	Pärnu 10, Tallinn, Estonia	Tel. 372 6663444 Fax. 372 6663445 info@apranga.lt www.apranga.lt

At the end of 2013, the Group consisted of 17 companies.

Structure of the Group at 31 December 2013:

For more information on subsidiaries refer to Note 14 to Consolidated financial statements.

2. OPERATING HIGHLIGHTS

In 2013, facing a significant increase in competition, Apranga group focused on maintenance of record results achieved last year, further development and modernization of the retail chain, increase in sales, strengthening the competitiveness of the Group.

The Group has managed not only to increase sales and profits in 2013, but also to accelerate the pace of development and modernization of the retail chain.

2.1 RETAIL MARKET OVERVIEW

The turnover of the retail chain operated by Apranga Group has made LTL 583.9 million (incl. VAT) in 2013, and increased by 10.2% comparing to the year 2012. Only because of the unusually adverse weather conditions (cold spring, warm autumn-winter season) the Group was just by 0.9% short of the planned volumes of retail trade turnover.

Over the past two years, the Group has achieved an impressive for the market leader 36% turnover growth.

Although during last year the total retail turnover of the Baltic countries has not yet reached year 2008 pre-crisis levels, the Group in 2013 exceeded the pre-crisis level of retail trade turnover by almost 15% (in 2008, turnover of the Group amounted to LTL 509.2 million).

Chain	2013	2012	2011	2013/2012, %	2013/2011, %
Lithuania	366 613	337 744	273 388	8,5%	34,1%
Latvia	145 165	125 737	100 501	15,5%	44,4%
Estonia	72 146	66 176	55 340	9,0%	30,4%
Total:	583 924	529 657	429 229	10,2%	36,0%

Retail turnover of Group's stores by countries (LTL thousand, VAT included):

The turnover of the retail chain operated by Apranga Group amounted to LTL 366.6 million in the main domestic market of Lithuania, or by 8.5% more than in 2012. The share of Lithuanian chain turnover comprised 62.8%, or by 1.0 point less than in 2012.

The retail turnover of the Apranga Group chain in foreign markets (Latvia and Estonia) reached LTL 217.3 million in 2013, or by 13.2% more, than in 2012. The foreign turnover share in total Group's turnover has increased from 36.2% to 37.2% during the year.

The retail turnover of the Apranga Group chain in Latvia has made LTL 145.2 million in 2013 and has increased by 15.5% during the year.

The retail turnover of the Apranga Group chain in Estonia amounted to LTL 72.1 million and has increased by 9.0% in comparison to 2012.

The highest growth rates in 2013 was in Latvia (+15.5%). High growth rates in Latvia were mainly influenced by the relatively high number of stores opened in this country in 2013 - there were opened six new stores in 2013 (closed 1 Outlet store) and took over 3 "Mango" stores.

The retail turnover of Apranga Group in all quarters of 2013 maintained steady high growth rate:

	Q1	Q2	Q3	Q4	Year
2013	118 240	133 830	167 840	164 014	583 924
2012	108 262	118 188	153 532	149 675	529 657
Total change, %	9,2%	13,2%	9,3%	9,6%	10,2%

In 2013 the Group consistently developed 5 different store chains:

• Economy clothes to whole family (Apranga)
• Business wear (City, Massimo Dutti, Strellson, Marella, Pennyblack, Coccinelle)
• Youth clothes (Aprangos galerija, Moskito, Mango, Bershka, Pull & Bear, Stradivarius, ALDO, Mexx, Promod, Desigual, Tom Tailor, s.Oliver)
• Prestige luxury fashion (Burberry, Emporio Armani, Hugo Boss, Ermenegildo Zegna, MaxMara, Marina Rinaldi, Tommy Hilfiger, Mados linija, Nude)
• Zara franchise stores

The Group also run 7 outlets as at 31 December 2013.

Retail turnover of Group's stores by chains (LTL thousand, VAT included) was as follows:

Chain	2013	2012	2011	2013/2012, %	2013/2011, %
Economy	57 642	55 838	48 241	3,2%	19,5%
Youth	197 361	178 959	153 014	10,3%	29,0%
Business	84 910	61 262	36 950	38,6%	129,8%
Luxury	69 788	57 544	50 156	21,3%	39,1%
Zara	152 799	154 481	123 664	-1,1%	23,6%
Outlets	21 424	21 573	17 204	-0,7%	24,5%
Total	583 924	529 657	429 229	10,2%	36,0%

In 2013 as in 2012, the turnover of Business and Luxury chains increased mostly. Over the last two years the common turnover of Business and Luxury chains increased by almost 78%. This was mostly influenced by main direction of new investments towards these segments and overall strategy of the Group.

During 2011-2013 period the Group managed to achieve not less than one-fifth higher sales in all of its segments.

2.2 DEVELOPMENT AND MODERNIZATION OF THE RETAIL CHAIN

In order to strengthen the company's competitiveness and to exploit the favourable growth trends in clothing sector in 2013, the Group sought to speed up the process of development and modernization of the chain.

In 2010-2013 the dynamics of the number of stores and sales area was as follows:

	2011 01 01	2012 01 01	2013 01 01	2014 01 01
The number of stores	114	121	134	148
Stores area (thousand sq. m.)	63,0	64,7	66,3	69,7

During the year 2013 the Group opened 11, took over 5 "Mango" stores, reconstructed 11 and closed 2 stores. The total sales area operated by the Group during the year 2013 increased by 5.1%.

The total area of stores by countries was as follows (thousand sq. m):

Country	31 12 2013	31 12 2012	Change
Lithuania	43,2	42,5	1,4%
Latvia	19,7	17,9	10,3%
Estonia	6,9	5,9	15,7%
Total:	69,7	66,3	5,1%

In 2013, the Group opened 11 new stores, including three Desigual, two Massimo Dutti, two ALDO, one of each Ermenegildo Zegna, Nude, Mexx and Marella stores. Most of the new projects realized in Latvia (6 new stores).

In the spring of 2013, the Group started to develop a new chain in Latvia and Lithuania - another very successful Spanish brand Desigual stores.

In August 2013, the Group opened 335 sq.m. size Nude store, which introduced the famous luxury brands Gucci, Dolce & Gabbana, DSquared2, Ralph Lauren, and has entered into a so-called "first-line" clothes business.

In October 2013, the Group finalised the transaction of taking over 5 Mango stores in Estonia and Latvia. Within this transaction the overall area of stores increased by 1.4 thousand sq.m.. Mango chain in the Baltic countries has grown to 13 stores.

In order to maintain a high level of technology and the competitiveness of the chain, the Group has continued the program of retail chains' modernization. In 2013, 4 stores were completely reconstructed in the most successful in the Baltics trade center – Vilnius Akropolis (Zara, Pull&Bear, Bershka, Mexx), as well as 3 luxury stores in Vilnius Old Town (Emporio Armani, Ermenegildo Zegna, Mados linija), 2 stores in Klaipeda Akropolis (Apranga, City). The Group concentrated resources on the renovation of most important and most successful stores. In 2013, only to reconstruction of the stores LTL 12 million were invested.

The number of stores by countries was as follows:

Country	31 12 2013	31 12 2012	Change
Lithuania	92	89	3,4%
Latvia	41	33	24,2%
Estonia	15	12	25,0%
Total	148	134	10,4%

At 31 December the number of stores by chains was as follows:

Chain	31 12 2013	31 12 2012	Change
Economy	12	12	0,0%
Youth	79	68	16,2%
Business	21	18	16,7%
Luxury	19	18	5,6%
Zara	10	10	0,0%
Outlets	7	8	-12,5%
Total	148	134	10,4%

Total investments into development of the chain amounted to LTL 22.8 million in 2013 (i.e., investments were about the same amount as in 2012). 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.

2.3 MAIN INDICATORS

Despite last year's high comparative base, unfavorable weather conditions and increased competition, the Group managed to maintain a general level of Gross profitability and the same volumes of Earnings before taxes.

The Group has earned LTL 45.3 million of profit before income tax in 2013, while profit before taxes was LTL 44.0 million during 2012, an increase of 3.0%.

EBITDA of the Group totalled LTL 64.1 million during 2013, and it was LTL 61.4 million in corresponding previous year period. EBITDA margin has decreased from 14.5% to 13.7% during the year. ROE and ROA ratios reached 25.9% and 18.7% correspondently.

Main Group Indicators	2013	2012	2011	2010	2009
Net sales, LTL thousand	466 673	423 441	340 781	301 319	314 912
Net sales in foreign markets, LTL thousand	175 312	155 626	125 598	109 608	106 964
Like-to-like sales, %	1,7%	17,0%	10,7%	-2,4%	-30,3%
Gross profit, LTL thousand	218 971	198 481	159 961	133 804	129 506
Gross margin, %	46,9%	46,9%	46,9%	44,4%	41,1%
Operating profit, LTL thousand	45 473	44 083	29 968	16 908	(16 607)
Operating profit margin, %	9,7%	10,4%	8,8%	5,6%	-5,3%
EBT, LTL thousand	45 346	44 019	29 749	16 043	(19 734)
EBT margin, %	9,7%	10,4%	8,7%	5,3%	-6,3%
Profit (loss) for the period, LTL thousand	38 128	36 897	24 814	13 337	(16 905)
Profit (loss) for the period margin, %	8,2%	8,7%	7,3%	4,4%	-5,4%
EBITDA, LTL thousand	64 093	61 412	47 612	36 815	6 158
EBITDA margin, %	13,7%	14,5%	14,0%	12,2%	2,0%
Earnings (losses) per share (EPS), LTL	0,69	0,67	0,45	0,24	(0,36)
Price-to-Earnings ratio (P/E), times	12,8	11,0	11,2	29,6	(7,6)
Dividend / Profit for the period*, %	72,5%	82,4%	82,4%	103,6%	-
Return on equity (end of the period), %	25,9%	26,4%	20,2%	11,9%	-17,2%
Return on assets (end of the period), %	18,7%	18,9%	15,4%	9,3%	-9,7%
Net debt to equity**, %	-2,2%	-6,3%	-5,6%	0,0%	37,7%
Current ratio, times	2,3	2,2	2,6	2,1	1,0

* The year 2013 dividends not aproved

** (Interest bearing liabilities less cash) / Equity

The operating expenses of the Group totalled LTL 173.5 million during 2013 and increased by 12.4%, comparing to the same period 2012 (while sales increased by 10.2% during this period).

Main Group Indicators	2013	2012	Change
Net sales, LTL thousand	466 673	423 441	10,2%
Net sales in foreign markets, LTL thousand	175 312	155 626	12,6%
Gross profit, LTL thousand	218 971	198 481	10,3%
Operating expenses	(173 498)	(154 398)	12,4%
Operating profit, LTL thousand	45 473	44 083	3,2%
EBT, LTL thousand	45 346	44 019	3,0%
Net profit (losses), LTL thousand	38 128	36 897	3,3%
EBITDA, LTL thousand	64 093	61 412	4,4%

The finance costs of the Group totalled LTL 127 thousand during 2013 and increased 2 times, comparing to the same period 2012. Despite the increase of finance costs they still account for less than 0.1% of the total cost of the Group. Total finance debts of the Group totaled LTL 5.0 million at 31 December 2013 (no financial debts at 31 December 2012).

The Group's level of inventories during the year grew by 17.8% (the increase from LTL 75.2 million to LTL 88.7 million). Company's inventories grew by 18.9%. Slightly more significant growth of inventories was driven by new stores opening. It was also influenced by increased quantity of winter season items due to unusually warm weather.

For additional information on the operations by countries of the Group refer to Note 4 to the Consolidated financial statements.

2.4 PERSONNEL

Average number of employees and average salary by categories in 2013 were as follows:

		Number of employees	Average monthly salary, LTL
Employee category	Group	Company	Group	Company
Administration	140	91	6 979	8 813
Stores' personnel	1 531	577	1 768	1 881
Logistics	54	54	2 244	2 244
Total	1 725	722	2 479	2 774

The average monthly salary in the Group has increased by 1.3% during the year.

During the 2013 the number of employees in the Group and the Company has increased by 158 (+10.1%) and 29 (+4.2%) people, respectively. The main reasons of the increase, as in yearlier years, were opening of the new stores and the increase of turnover.

Average number of employees by education level in 2013 was as follows:

Education level	Group	Company
High	492	269
Professional	216	110
Secondary	221	76
Basic	10	1
Student	786	266
Total:	1 725	722

2.5 TRADING INFORMATION

The price of the Company share during the year 2013 increased by 22% from LTL 7.35 per share (the minimum share price during the year was LTL 7.28 per share) to LTL 8.98 per share (the maximum share price during the year was LTL 9.39 per share). In this way, the market capitalization of the Company increased from LTL 407 million at the beginning of the year to LTL 496 million at the end of December 2013. The weighted average price of share during the year 2013 was LTL 8.67 per 1 share. Company's share turnover was over LTL 83 million during the year.

Company share price and share turnover during the period 2011-2013:

(all tabular amounts are in LTL thousands unless otherwise stated)

Company and OMX Baltic Benchmark GI index change for the period 2009-2013:

3. OPERATING PLANS

Group plans to reach LTL 628 million retail chain turnover (including VAT) in 2014 or by 7.5% more, than actual the year 2013 turnover (LTL 584 million).

Group plans to open or reconstruct 25-30 stores during 2014. The investments are planned to amount to about LTL 22-25 million.

4. BUSINESS PHILOSOPHY

• We work and strive to work only with the fastest-growing, commercially the most successful global brands and chains operating in different markets and acceptable to our market;
• We never make compromises in the selection of the best locations for stores ("Location more important than money", "We have to be where we can not not to be";
• We aim to install stores according to the highest European design and technology requirements;
• We strive to use in best the power of the obvious market leader, as well as rapid development opportunities in competitive environment.

5. RISKS

In its activities the Group is exposed to various risks (regulatory, operational, investment, market, competition, economic cycle, macroeconomic factors, etc.), but only some of which may significantly affect the Group's results.

The Group's activities are significantly influenced by overall economic situation (and especially by the economic cycles) in countries where the Group operates. In recent years, the Baltic economies are rapidly recovering from the economic crisis, but there is still uncertainty in the European Union and the global economy development trends. It is difficult to reliably assess the impact on the financial position of any further global macro-economic developments. However, management believes that even the minimum economic growth of the Baltic countries forms the basis for the Group's normal activity and steady growth.

The competition-related risk. In its activities the Group is exposed to increasingly intense competition in the clothing market. The Group, in order to manage this risk and to meet the customer service quality standard requirements, continuously carries out chain expansion and modernization, improves its sales and marketing strategies, carries out market research, improves customer service and implements a consistent business process optimization and cost reduction program. In its activities, the Group consistently follows the principles of transparency and fair competition.

Weather conditions influences the Group's activity and results to some extent as well. The Group's operating results are planned assuming that the weather conditions will be normal, i.e., usual for the Baltic region. Unfavorable weather conditions may negatively affect the Group's turnover, at the same time, financial performance and inventories level.

The main features of the Group's internal control and risk management systems related to preparation of consolidated financial statements.

The Group's consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union. Chief financial officer (CFO) of the Company and the Audit Committee supervises preparation of the consolidated financial statements, systems of internal control and financial risk management and how the Company follows legal acts that regulate preparation of consolidated financial statements. 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.

6. ENVIRONMENTAL PROTECTION

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 most of its stores). In 2013 the Group decreased the water consumption by almost 5 percent, when the number of employees increased. The usage of electricity and heat energy increased proportionally to increasy of store area.

7. CONSOLIDATION

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.

8. SECURITIES

All 55 291 960 ordinary shares of nominal value LTL 1 each (ISIN code LT0000102337) that comprise Company's share capital are listed on Baltic equity list of NASDAQ OMX Vilnius Stock Exchange. For more information on the share capital of the Company refer to Note 22 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;
• 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;

(all tabular amounts are in LTL thousands unless otherwise stated)

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 receive information on the company as provided by Law on Companies;
• 3) 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;
• 4) Other non-property rights prescribed by law.

At 31 December 2013 the Company had 3 041 shareholders. Company's shareholders which owned or had under management more than 5% of share capital were as follows:

Shareholder	Enterprise code	Address	Number of shares	% of total ownership
UAB MG Baltic Investment	123249022	Jasinskio 16B, Vilnius, Lithuania	29 677 397	53,7%
Swedbank AS (Estonia) clients	10060701	Liivalaia 8 Tallinn, Estonia	6 794 270	12,3%
UAB Minvista	110685692	Jasinskio 16, Vilnius, Lithuania	5 522 729	10,0%

Distribution of holdings according to holder groups at 31 December 2013:

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 26 to the Consolidated financial statements.

At 23 January 2012 the Company concluded an open-ended agreement with Swedbank AB (entity code: 112029651, address: Konstitucijos 20A, 03502 Vilnius) on supervision of securities accounts.

9. CORPORATE GOVERNANCE

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.

General Meeting
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Management Board: 6 members
. .
The CEO of the Company

(all tabular amounts are in LTL thousands unless otherwise stated)

Competence of General Shareholders' Meeting is the same as specified by the Law on Companies. The General Meeting shall have the exclusive right to:

• 1) Amend the Articles of Association of the Company;
• 2) Elect the members of the Board;
• 3) Remove the Board or its members;
• 4) Select and remove the firm of auditors, set the conditions for auditor remuneration;
• 5) To determine the class, number, nominal value and the minimum issue price of the shares issued by the Company;
• 6) Take a decision regarding conversion of shares of one class into shares of another class, approve share conversion procedure;
• 7) Approve the annual accounts;
• 8) Take a decision on profit/loss appropriation;
• 9) Take a decision on the formation, use, reduction and liquidation of reserves;
• 10) Take a decision to issue convertible debentures;
• 11) Take a decision to withdraw for all the shareholders the right of pre-emption in acquiring the shares or convertible debentures of a specific issue of the Company;
• 12) Take a decision to increase the authorised capital;
• 13) Take a decision to reduce the authorised capital;
• 14) Take a decision for the Company to purchase own shares;
• 15) Take a decision on the reorganisation or division of the Company and approve the terms of reorganisation or division;
• 16) Take a decision to transform the Company;
• 17) Take a decision to restructure the Company;
• 18) Take a decision to liquidate the Company, cancel the liquidation of the Company, except where otherwise provided by the Law on Companies;
• 19) Elect and remove the liquidator of the Company, except where otherwise provided by the Law on Companies.

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.

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.

Board of Company considers and approves:

• 1) The activity strategy of the Company;
• 2) The annual report of the Company;
• 3) The management structure of the Company and the positions of the employees;
• 4) The positions to which employees are recruited by competition;
• 5) Regulations of branches and representative offices of the Company.

The Board adopts the following resolutions:

• 1) Resolutions for the Company to become an incorporator or a member of other legal entities;
• 2) Resolutions to establish branches and representative offices of the Company;
• 3) Resolutions 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);
• 4) Resolutions 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);
• 5) Resolutions 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;
• 6) Resolutions to acquire the tangible long-term assets the price whereof exceeds 1/20 of the share capital of the Company;
• 7) Resolutions to restructure the Company in the cases laid down in the Law on Restructuring of Enterprises;
• 8) Resolutions regarding issuance of debenture of the Company (except issuance of convertible debenture);
• 9) Other resolutions within the competence of the Board as prescribed by the Articles of Association or the resolutions of the General Shareholders' Meeting.

The Board analyses and assesses the documents submitted by the Manager of the Company on:

• 1) The implementation of the activity strategy of the Company;
• 2) The organisation of the activities of the Company;
• 3) Financial standing of the Company;
• 4) The results of economic activities, income and cost estimates, the stocktaking data and other accounting data of changes in the assets.

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.

(all tabular amounts are in LTL thousands unless otherwise stated)

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 more than 2/3 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.

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 annual financial statements and the drafting of the annual report of the Company;
• 3) Concluding an agreement with the firm of auditors;
• 4) Submission of information and documents to the General Shareholders' Meeting and the Board in cases prescribed by Law on Companies or at their request;
• 5) Submission of the documents and data of the Company to manager of the Register of Legal Entities;
• 6) Submission of documents to the Securities Commission and Lithuanian Central Securities Depository;
• 7) Public announcement of information prescribed by Law on Companies in a daily newspaper indicated in Articles of Association;
• 8) Submission of information to shareholders;
• 9) 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 organises 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 procurations 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.

10. MANAGEMENT OF THE COMPANY

On 30 April 2010 the Annual General Meeting of Company shareholders elected Company's members of the Board for new 4-year term. On 29th April 2011 Vidas Lazickas was elected to Company's Board instead of Raimondas Paškevičius, who resigned on 21st October 2010. 30th April 2014 is the end term of all Company's members of the Board.

BOARD OF THE COMPANY

Darius Mockus 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

(all tabular amounts are in LTL thousands unless otherwise stated)

related companies Minvista UAB (Code of Enterprise: 110685692; Registered office: Jasinskio 16, Vilnius), MG Baltic Investment UAB (Code of Enterprise: 123249022; Registered office: Jasinskio 16B, Vilnius) and family members he has 35 205 992 shares, representing 63.67% of the share capital and votes.

Information on positions in other companies: President and Chairman of the Board of concern MG Baltic UAB; General Director and Chairman of the Board of holding MG Baltic Trade UAB; Member of the Board of Laisvas ir nepriklausomas kanalas UAB; Chairman of the Board of Mitnija UAB; Chairman of the Board of Stumbras AB; Member of the Board of MG Valda AB.

Information on shareholdings in other companies above 5%: Concern MG Baltic UAB - 100% of the share capital; Minvista UAB – 99.99% of the share capital. Information about participation in other organizations: President of Honour of the Lithuanian Tennis Union.

Rimantas Perveneckas Member of the Board, 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%.

Ilona Šimkūnienė 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: Chairman of the Board of Apranga LT UAB; Chairman of the Board of Apranga BPB LT UAB; Chairman of the Board of Apranga PLT UAB; Chairman of the Board of Apranga SLT UAB; Chairman of the Board of Apranga MLT UAB; Chairman of the Board of Apranga LV SIA; Chairman of the Board of Apranga BPB LV SIA; Chairman of the Board of Apranga PLV SIA; Chairman of the Board of Apranga SLV; Chairman of the Board of Apranga MLV; Chairman of the Board of Apranga Estonia OU; Chairman of the Board of Apranga BEE OU; Chairman of the Board of Apranga PB Trade OU; Chairman of the Board of Apranga ST Retail OU.

Has no shareholdings in other companies above 5%.

Vidas Lazickas 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 no Company shares. With related parties he has 4 287 shares of the Company, representing 0.01% of the share capital and votes.

Information on positions in other companies: Director of Economy and Finances, and Member of Board of concern MG Baltic UAB; General Director and Member of the Board of holding MG Baltic Investment; Director and Member of the Board of Minvista UAB; Member of the Board of MG Valda UAB; Member of the Board of MG Baltic Trade UAB; Member of the Board of Mitnija UAB.

Has no shareholdings in other companies above 5%.

Marijus Strončikas Member of the Board

Marijus Strončikas (born in 1974) - Member of the Board of APB Apranga since 30 April 2010. Education: Kaunas Technical University, Faculty of Informatics, master of IT Science. He has no Company shares.

Information on positions in other companies: IT and Purchasing Director of concern MG Baltic UAB; Member of the Board of Stumbras AB; Member of the Board of Mineraliniai vandenys UAB.

Has no shareholdings in other companies above 5%.

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: Chairman of the Board of Apranga SIA; Chairman of the Board of Apranga OU; Member of the Board of UAB "Apranga LT UAB; Member of the Board of SIA "Apranga LV SIA. Member of the Board of SIA "Apranga BPB LV SIA; Member of the Board of SIA "Apranga PLV SIA; Member of the Board of SIA "Apranga SLV SIA; Member of the Board of SIA "Apranga MLV SIA; Member of the Board of OÜ "Apranga Estonia OU; Member of the Board of OÜ "Apranga BEE OU; Member of the Board of OÜ "Apranga PB Trade OU; Member of the Board of OÜ "Apranga ST Retail OU.

Has no shareholdings in other companies above 5%.

MANAGEMENT OF THE COMPANY AND THE GROUP

The key management members of the Company and the Group as of 31 December 2013:

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
Saulius Bačauskas	Chief Financial Officer	16 000	0,03%	2003
Aušra Tartilienė	Inditex chain Director	31 665	0,06%	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 CFO of the Company and the Group:

Saulius Bačauskas Chief Financial Officer

Saulius Bačauskas (born in 1974) - Apranga Group Finance and Economics Director, in the Company since 2003. Education: Vytauto Didžiojo University, Business management faculty, MA of finance and banking. He has 16 000 shares of the Company, representing 0.03% of the share capital and votes.

Information on positions in other companies: Member of the board of Apranga LT UAB; Member of the board of Apranga BPB LT UAB; Member of the board of Apranga PLT UAB; Member of the board of Apranga SLT UAB; Member of the board of Apranga MLT UAB; Member of the board of Apranga OU.

Has no shareholdings in other companies above 5%.

Information about members of the management bodies on 31 December 2013 was as follows:

Name, Surname	Position	Number of shares owned and part in the share capital	Election date	End of term	Amounts received from the Company in 2013, LTL
Darius Juozas Mockus	Chairman of the Board	- -	30 04 2010	30 04 2014	Receives no remuneration
Rimantas Perveneckas	Member of the Board, General Director	800 770 1.45%	30 04 2010	30 04 2014	-
Ilona Simkuniene	Member of the Board, Purchasing Director	- -	30 04 2010	30 04 2014	-
Ramunas Gaidamavicius	Member of the Board, Development Director	5 000 0.01%	30 04 2010	30 04 2014	-
Vidas Lazickas	Member of the Board	- -	29 04 2011	30 04 2014	Receives no remuneration
Marijus Strončikas	Member of the Board	- -	30 04 2010	30 04 2014	Receives no remuneration
Saulius Bačauskas	Chief Financial Officer	16 000 0.03%	-	-	-
		Dividends and bonuses to members of the board and management, in total (6)			1862 081
		Dividends and bonuses to members of the board and management, on average (6)			310 347
		Remuneration to members of the board and management, in total (4)			3 158 911
Remuneration to members of the board and management, on average (4)					789 728

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.

11. AUDIT COMMITTEE

The Audit Committee exceptionally (The Security commission of the Republic of Lithuania, No. 1K-18, 21 August 2008, article 4) consists of 2 members, 1 of them is independent. The Audit Committee is elected for a 4-year term. The term of office of the Audit Committee coincides with the term of office of the Management Board. Members of the Audit Committee are elected and recalled by the Board of the Company, except the independent member of the Committee. The independent member 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:

• To observe the process of preparation of financial reports;
• To observe the efficiency of systems of internal control, risk management and internal audit, if such functions exist in the Company;
• To observe the process of carrying out an external audit;
• To observe how the external auditor and audit company follow the principles of independence and objectivity;
• To provide the Management Board of the Company in written with recommendations related to selection of an external audit company;
• To inform The Manager of the Company about the information provided by the audit company and audit-related issues under consideration, particularly when significant internal controls weaknesses relating to the Financial Reports are set.

The General Shareholders Meeting hold on 30 April 2010 approved the members of the Audit Committee for the new 4-year term: Rasa Rulevičiūtė (Company management personnel, the deputy of chief financial officer) and Asta Krušnauskaitė (the independent member the Committee). On 27 April 2012, Daiva Paulavičienė was elected as the independent member of the Audit Committee till the end of term of current Audit Committee. She was elected instead of resigned independent Committee member Asta Krušnauskaitė. None of the members of the Audit Committee has Company's shares.

12. COMPLIANCE WITH THE GOVERNANCE CODE

Company essentially follows a recommendatory Corporate Governance Code for the Companies Listed on the NASDAQ OMX Vilnius stock exchange adopted and valid as on 31 December 2013. According to the By-Laws of the Company the governing bodies of the Company are the General Shareholder's Meeting, the Board and the General Manager. 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.

For the full text of Compliance Report with the Governance Code for the companies listed on the NASDAQ OMX Vilnius stock exchange refer to Annex 1.

13. PUBLICLY ANNOUNCED INFORMATION

The Company in 2013 publicly announced and broadcasted through NASDAQ OMX Vilnius Globe Newswire and own webpage the following information:

		Lang
Title	Category of announcement	uage	Date
Turnover of Apranga Group in December 2012 and total year 2012	Investor News	En, Lt	2013-01-02
Notification on Apranga APB manager's related party transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-01-04
Notification on Apranga APB manager's related parties transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-01-04
Apranga Group investor's calendar for the 1st half of 2013	Investor News	En, Lt	2013-01-08
Turnover of Apranga Group in January 2013	Investor News	En, Lt	2013-02-01
Regarding Apranga Group funds in AB Ukio Bankas	Notification on material event	En, Lt	2013-02-13
Apranga Group interim report for twelve months of 2012	Interim information	En, Lt	2013-02-28
CORRECTION: "Aprangos" grupės 2012 m. 12 mėnesių tarpinė informacija	Interim information	Lt	2013-02-28

(all tabular amounts are in LTL thousands unless otherwise stated)

Turnover of Apranga Group in February 2013	Investor News	En, Lt	2013-03-01
Turnover of Apranga Group in March 2013 and 1st quarter 2013	Investor News	En, Lt	2013-04-02
Apranga Group develops new chain in Lithuania and Latvia	Press release	En, Lt	2013-04-04
Notice of the Annual General Meeting of APB "APRANGA" shareholders	Notification on material event	En, Lt	2013-04-05
Draft resolutions of the Annual General Meeting of APB APRANGA shareholders to be held on April 30th, 2013	Notification on material event	En, Lt	2013-04-05
Resolutions of the Annual General Meeting of Apranga APB shareholders	Notification on material event	En, Lt	2013-04-30
Apranga APB annual information 2012	Annual information	En, Lt	2013-04-30
Turnover of Apranga Group in April 2013	Investor News	En, Lt	2013-05-02
Apranga Group interim report for three months of 2013	Interim information	En, Lt	2013-05-03
Notification on Apranga APB manager's related party transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-05-08
Notification on Apranga APB manager's related party transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-05-17
Notification on Apranga APB manager's related party transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-05-27
Turnover of Apranga Group in May 2013	Investor News	En, Lt	2013-06-03
Apranga Group investor's calendar for the 2nd half of 2013	Investor News	En, Lt	2013-06-14
Notification on Apranga APB manager's related party transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-06-27
Turnover of Apranga Group in June 2013	Investor News	En, Lt	2013-07-01
Apranga Group extends successful collaboration with Inditex	Notification on material event	En, Lt	2013-07-17
Turnover of Apranga Group in July 2013	Investor News	En, Lt	2013-08-01
Apranga Group interim information for the six months of 2013	Interim information	En, Lt	2013-08-05
Notification on Apranga APB manager's related party transactions	Investor News	En, Lt	2013-08-13
Notification on Apranga APB manager's related party transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-08-13
Apranga group invests to the luxury segment more than LTL 20 million	Press release	En, Lt	2013-08-16
Notification on Apranga APB manager's related party transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-08-22
Notification on Apranga APB manager's related party transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-08-22
Notification on APB Apranga manager's transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-08-22
Notification on Apranga APB manager's related party transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-08-27
Notification on APB Apranga manager's transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-08-27
Notification on Apranga APB manager's related party transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-08-28
Notification on APB Apranga manager's transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-08-28
Turnover of Apranga Group in August 2013	Investor News	En, Lt	2013-09-02
Notification on Apranga APB manager's related party transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-09-03
Notification on Apranga APB manager's related party transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-09-06
Notification on Apranga APB manager's related party transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-09-10
Notification on APB Apranga manager's transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-09-10
Notification on Apranga APB manager's related party transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-09-10
Notification on Apranga APB manager's related party transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-09-16
Notification on Apranga APB manager's related party transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-09-17
Notification on Apranga APB manager's related party transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-09-23
Notification on APB Apranga manager's transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-09-23
Notification on Apranga APB manager's related party transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-09-26
Notification on APB Apranga manager's transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-09-26
Notification on Apranga APB manager's related party transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-09-30
Notification on APB Apranga manager's transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-09-30
Turnover of Apranga Group in September 2013	Investor News	En, Lt	2013-10-01
Notification on Apranga APB manager's related party transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-10-01
On expansion of APRANGA Group in the Baltic states	Notification on material event	En, Lt	2013-10-02
Turnover of Apranga Group in October 2013	Investor News	En, Lt	2013-11-04
Apranga Group interim information for the nine months of 2013	Interim information	En, Lt	2013-11-05
Notification on Apranga APB manager's related party transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-11-13
Notification on Apranga APB manager's related party transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-11-18
Notification on Apranga APB manager's related party transaction	Notifications on transactions concluded by managers of the companies	En, Lt	2013-11-18
Notification on Apranga APB manager's related party transactions	Notifications on transactions concluded by managers of the companies	En, Lt	2013-11-22
Turnover of Apranga Group in November 2013	Investor News	En, Lt	2013-12-02

Notifications on transactions concluded by managers of the companies	En.Lt	2013-12-05
Notifications on transactions concluded by managers of the companies	En, Lt	2013-12-11
Notifications on transactions concluded by managers of the companies	En. Lt	2013-12-17
Notifications on transactions concluded by managers of the companies	En. Lt	2013-12-17
Notifications on transactions concluded by managers of the companies	En. Lt	2013-12-18
Notifications on transactions concluded by managers of the companies	En, Lt	2013-12-18
Notification on material event	En. Lt	2013-12-20
Notifications on transactions concluded by managers of the companies	En, Lt	2013-12-20
Notifications on transactions concluded by managers of the companies	En. Lt	2013-12-23
Notifications on transactions concluded by managers of the companies	En. Lt	2013-12-30
Investor News	$Fn$ It	2013-12-31

APB APRANGA report concerning the compliance with the Governance Code for the companies listed on NASDAQ OMX Vilnius stock exchange

The public trade company APRANGA (hereinafter Company), following Article 21 paragraph 3 of the Law on Securities of the Republic of Lithuania and item 24.5 of the Listing Rules of the AB NASDAQ OMX Vilnius, discloses its compliance with the Governance Codefor the companies listed on NASDAQ OMX Vilnius, and its specific provisions:

	YES/NO
PRINCIPLES/ RECOMMENDATIONS	/NOT APPLI	COMMENTARY
	CABLE
Principle I: Basic Provisions The overriding objective of a company should be to operate in common interests of all the shareholders by optimizing over time shareholder value.
1.1. A company should adopt and make public the company's development strategy and objectives by clearly declaring how the company intends to meet the interests of its shareholders and optimize shareholder value.	Yes	Affirmed Company's development strategy and objectives are published in Company's annual report, in announcements on material events which are published in Company's website www.apranga.lt/investuotojams, in NASDAQ OMX Vilnius Stock Exchange information disclosure system, in Central Storage Facility, as well as in presentations to investors by chief executive officer and senior management.
1.2. All management bodies of a company should act in furtherance of the declared strategic objectives in view of the need to optimize shareholder value.	Yes
1.3. A company's supervisory and management bodies should act in close co-operation in order to attain maximum benefit for the company and its shareholders.	Yes	The Company implements this recommendation insofar as it is concerned with the close cooperation of Company's management board and chief executive officer and senior management.
1.4. A company's supervisory and management bodies should ensure that the rights and interests of persons other than the company's shareholders (e.g. employees, creditors, suppliers, clients, local community), participating in or connected with the company's operation, are duly respected.	Yes
Principle II: The corporate governance framework The corporate governance framework should ensure the strategic guidance of the company, the effective oversight of the company's management bodies, an appropriate balance and distribution of functions between the company's bodies, protection of the shareholders' interests.
2.1. Besides obligatory bodies provided for in the Law on Companies of the Republic of Lithuania – a general shareholders' meeting and the chief executive officer, it is recommended that a company should set up both a collegial supervisory body and a collegial management body. The setting up of collegial bodies for supervision and management facilitates clear separation of management and supervisory functions in the company, accountability and control on the part of the chief executive officer, which, in its turn, facilitate a more efficient and transparent management process.	No	The bodies of the Company are general shareholders' meeting, management board and chief executive officer. Supervisory board is not constituted in the Company, whereas the accountability and control of the single management body - the chief executive officer – is ensured by Company's management board.
2.2. A collegial management body is responsible for the strategic management of the company and performs other key functions of corporate governance. A collegial supervisory body is responsible for the effective supervision of the company's management bodies.	Yes	Company's collegial management body – management board – is responsible for strategic management of the Company and performs other key functions of corporate governance. The management board is responsible for the effective supervision of the Company's management bodies insofar as it is concerned with the supervision of the activity of chief executive officer.
2.3. Where a company chooses to form only one collegial body, it is recommended that it should be a supervisory body, i.e. the supervisory board. In such a case, the supervisory board is responsible for the effective monitoring of the functions performed by the company's chief executive officer. 2.4. The collegial supervisory body to be elected by	No Yes/No	The Company has one collegial body and that is management board. See commentary of 2.1. recommendation. Recommendations defined in Principles III and

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT APPLI CABLE	COMMENTARY
the general shareholders' meeting should be set up and should act in the manner defined in Principles III and IV. Where a company should decide not to set up a collegial supervisory body but rather a collegial management body, i.e. the board, Principles III and IV should apply to the board as long as that does not contradict the essence and purpose of this body.		IV are not implemented in full extent, however the Company complies with all requirements prescribed by legal acts for formation of collegial management body, i.e. board. See commentaries of III and IV principles' recommendations.
2.5. Company's management and supervisory bodies should comprise such number of board (executive directors) and supervisory (non-executive directors) board members that no individual or small group of individuals can dominate decision-making on the part of these bodies.	Yes	Company's management board consists of 6 (six) members, 3 (three) of whom are representatives of shareholders and the other 3 (three) are chief executive officer and senior managers. In Company's opinion, the number of the management board members is sufficient considering Company's activity extent and number of shareholders.
2.6. Non-executive directors or members of the supervisory board should be appointed for specified terms subject to individual re-election, at maximum intervals provided for in the Lithuanian legislation with a view to ensuring necessary development of professional experience and sufficiently frequent reconfirmation of their status. A possibility to remove them should also be stipulated however this procedure should not be easier than the removal procedure for an executive director or a member of the management board.	Not applicable	Supervisory board is not constituted in the Company. See commentaries of 2.1. recommendation.
2.7. Chairman of the collegial body elected by the general shareholders' meeting may be a person whose current or past office constitutes no obstacle to conduct independent and impartial supervision. Where a company should decide not to set up a supervisory board but rather the board, it is recommended that the chairman of the board and chief executive officer of the company should be a different person. Former company's chief executive officer should not be immediately nominated as the chairman of the collegial body elected by the general shareholders' meeting. When a company chooses to departure from these recommendations, it should furnish information on the measures it has taken to ensure impartiality of the supervision.	Yes	The chairman of the management board and chief executive officer of the Company are different persons. The chairman of the management board has never been appointed as chief executive officer of the Company.
Principle III: The order of the formation of a collegial body to be elected by a general shareholders' meeting The order of the formation a collegial body to be elected by a general shareholders' meeting should ensure representation of minority shareholders, accountability of this body to the shareholders and
objective monitoring of the company's operation and its management bodies.
3.1. The mechanism of the formation of a collegial body to be elected by a general shareholders' meeting (hereinafter in this Principle referred to as the 'collegial body') should ensure objective and fair monitoring of the company's management bodies as well as representation of minority shareholders.	Yes	The mechanism of the formation of Company's management board ensures objective and fair supervision of the Company's single management body, chief executive officer, and senior management as well as representation of minority shareholder's interests.
3.2. Names and surnames of the candidates to become members of a collegial body, information about their education, qualification, professional background, positions taken and potential conflicts of interest should be disclosed early enough before the general shareholders' meeting so that the shareholders would have sufficient time to make an informed voting decision. All factors affecting the candidate's independence, the sample list of which is set out in Recommendation 3.7, should be also disclosed. The collegial body should also be informed on any subsequent changes in the provided information. The collegial body should, on yearly	Yes/No	The information about management board members positions taken or participation in other companies activities is continually collected and on the expiration of each year this information is specified and renewed by querying each board member, and such information is disclosed in Company's annual and interim reports and Company's website. However this information was not submitted exclusively to general shareholder's meeting before their election. There was no necessity in the Company to disclose factors affecting candidate's

	YES/NO
PRINCIPLES/ RECOMMENDATIONS	/NOT APPLI CABLE	COMMENTARY
basis, collect data provided in this item on its members and disclose this in the company's annual report.		independence.
3.3. Should a person be nominated for members of a collegial body, such nomination should be followed by the disclosure of information on candidate's particular competences relevant to his/her service on the collegial body. In order shareholders and investors are able to ascertain whether member's competence is further relevant, the collegial body should, in its annual report, disclose the information on its composition and particular competences of individual members which are relevant to their service on the collegial body.	No	See commentary of 3.2 recommendation
3.4 In order to maintain a proper balance in terms of the current qualifications possessed by its members, the desired composition of the collegial body shall be determined with regard to the company's structure and activities, and have this periodically evaluated. The collegial body should ensure that it is composed of members who, as a whole, have the required diversity of knowledge, judgment and experience to complete their tasks properly. The members of the audit committee, collectively, should have a recent knowledge and relevant experience in the fields of finance, accounting and/or audit for the stock exchange listed companies. At least one of the members of the remuneration committee should have knowledge of and experience in the field of remuneration policy.	Yes/No	See commentary of 4.7. recommendation.
3.5. All new members of the collegial body should be offered a tailored program focused on introducing a member with his/her duties, corporate organization and activities. The collegial body should conduct an annual review to identify fields where its members need to update their skills and knowledge.	No	There was no demand in Company to offer tailored programs to new board members focused on introducing a member with his/her duties, corporation organization and activities. Annual review of management board members' knowledge is not conducted whereas the management board members, i.e. chief executive officer and senior managers, are professionals and improve their skills and knowledge by conducting their duties in the Company. The skills and knowledge of management board members representing shareholders is reviewed by shareholders themselves before proposing candidates to Company's board.
3.6. In order to ensure that all material conflicts of interest related with a member of the collegial body are resolved properly, the collegial body should comprise a sufficient number of independent members.	No	The issue of election of independent management board members never been topical in the Company and the "sufficient" number of independent management board members was never assessed either.
3.7. A member of the collegial body should be considered to be independent only if he is free of any business, family or other relationship with the company, its controlling shareholder or the management of either, that creates a conflict of interest such as to impair his judgment. Since all cases when member of the collegial body is likely to become dependent are impossible to list, moreover, relationships and circumstances associated with the determination of independence may vary amongst companies and the best practices of solving this problem are yet to evolve in the course of time, assessment of independence of a member of the collegial body should be based on the contents of the relationship and circumstances rather than their form. The key criteria for identifying whether a	Not applicable	See commentary of 3.6 recommendation

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT APPLI CABLE	COMMENTARY
member of the collegial body can be considered to
be independent are the following:
1) He/she is not an executive director or member of
the board (if a collegial body elected by the general
shareholders' meeting is the supervisory board) of the company or any associated company and has
not been such during the last five years;
2) He/she is not an employee of the company or
some any company and has not been such during
the last three years, except for cases when a
member of the collegial body does not belong to the
senior management and was elected to the collegial
body as a representative of the employees;
3) He/she is not receiving or has been not receiving significant additional remuneration from the
company or associated company other than
remuneration for the office in the collegial body.
Such additional remuneration includes participation
in share options or some other performance based
pay systems; it does not include compensation
payments for the previous office in the company
(provided that such payment is no way related with
later position) as per pension plans (inclusive of
deferred compensations); 4) He/she is not a controlling shareholder or
representative of such shareholder (control as
defined in the Council Directive 83/349/EEC Article 1
Part 1);
5) He/she does not have and did not have any
material business relations with the company or
associated company within the past year directly or
as a partner, shareholder, director or superior employee of the subject having such relationship. A
subject is considered to have business relations
when it is a major supplier or service provider
(inclusive of financial, legal, counselling and
consulting services), major client or organization
receiving significant payments from the company or
its group;
6) He/she is not and has not been, during the last three years, partner or employee of the current or
former external audit company of the company or
associated company;
7) He/she is not an executive director or member of
the board in some other company where executive
director of the company or member of the board (if
a collegial body elected by the general shareholders'
meeting is the supervisory board) is non-executive director or member of the supervisory board, he/she
may not also have any other material relationships
with executive directors of the company that arise
from their participation in activities of other
companies or bodies;
8) He/she has not been in the position of a member
of the collegial body for over than 12 years;
9) He/she is not a close relative to an executive
director or member of the board (if a collegial body elected by the general shareholders' meeting is the
supervisory board) or to any person listed in above
items 1 to 8. Close relative is considered to be a
spouse (common-law spouse), children and parents.
3.8. The determination of what constitutes
independence is fundamentally an issue for the
collegial body itself to determine. The collegial body
may decide that, despite a particular member meets
all the criteria of independence laid down in this Code, he cannot be considered independent due to

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT APPLI CABLE	COMMENTARY
special personal or company-related circumstances. 3.9. Necessary information on conclusions the collegial body has come to in its determination of whether a particular member of the body should be considered to be independent should be disclosed. When a person is nominated to become a member of the collegial body, the company should disclose whether it considers the person to be independent. When a particular member of the collegial body does not meet one or more criteria of independence set out in this Code, the company should disclose its reasons for nevertheless considering the member to be independent. In addition, the company should	Not applicable	See commentary of 3.6. recommendation. Moreover, thus far the assessment and disclosure of the independence of management board members, in accordance with the criteria established by this Code, was not applicable in Company.
annually disclose which members of the collegial body it considers to be independent. 3.10. When one or more criteria of independence set out in this Code has not been met throughout the year, the company should disclose its reasons for considering a particular member of the collegial body to be independent. To ensure accuracy of the information disclosed in relation with the independence of the members of the collegial body, the company should require independent members to have their independence periodically re confirmed.	Not applicable	See commentary of 3.6. recommendation
3.11. In order to remunerate members of a collegial body for their work and participation in the meetings of the collegial body, they may be remunerated from the company's funds. The general shareholders' meeting should approve the amount of such remuneration.	Not applicable	See commentary of 3.6. recommendation.
Principle IV: The duties and liabilities of a collegial body elected by the general shareholders' meeting The corporate governance framework should ensure proper and effective functioning of the collegial body elected by the general shareholders' meeting, and the powers granted to the collegial body should ensure effective monitoring of the company's management bodies and protection of interests of all the company's shareholders.
4.1. The collegial body elected by the general shareholders' meeting (hereinafter in this Principle referred to as the 'collegial body') should ensure integrity and transparency of the company's financial statements and the control system. The collegial body should issue recommendations to the company's management bodies and monitor and control the company's management performance.	Yes	This recommendation is implemented by Company's management board insofar as the management board issues recommendations to chief executive officer and to senior management and monitors and controls their activity.
4.2. Members of the collegial body should act in good faith, with care and responsibility for the benefit and in the interests of the company and its shareholders with due regard to the interests of employees and public welfare. Independent members of the collegial body should (a) under all circumstances maintain independence of their analysis, decision-making and actions (b) do not seek and accept any unjustified privileges that might compromise their independence, and (c) clearly express their objections should a member consider that decision of the collegial body is against the interests of the company. Should a collegial body have passed decisions independent member has serious doubts about, the member should make adequate conclusions. Should an independent member resign from his office, he should explain the reasons in a letter addressed to the collegial body or audit committee and, if necessary, respective	Yes	According to the Company's available data, management board members act in good will in respect of Company, in the interests of the Company and its shareholders, thus maintaining independence of their decision making.
company-not-pertaining body (institution). 4.3. Each member should devote sufficient time and	Yes/No	According to the Company's data, all

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT APPLI CABLE	COMMENTARY
attention to perform his duties as a member of the collegial body. Each member of the collegial body should limit other professional obligations of his (in particular any directorships held in other companies) in such a manner they do not interfere with proper performance of duties of a member of the collegial body. In the event a member of the collegial body should be present in less than a half of the meetings of the collegial body throughout the financial year of the company, shareholders of the company should be notified.		management board members attended board meetings and devoted sufficient time to perform their duties as members of the board.
4.4. Where decisions of a collegial body may have a different effect on the company's shareholders, the collegial body should treat all shareholders impartially and fairly. It should ensure that shareholders are properly informed on the company's affairs, strategies, risk management and resolution of conflicts of interest. The company should have a clearly established role of members of the collegial body when communicating with and committing to shareholders.	Yes	Company's shareholders are informed about the Company's affairs, strategies, risk management and resolution of conflicts of interest in a manner prescribed by legal acts.
4.5. It is recommended that transactions (except insignificant ones due to their low value or concluded when carrying out routine operations in the company under usual conditions), concluded between the company and its shareholders, members of the supervisory or managing bodies or other natural or legal persons that exert or may exert influence on the company's management should be subject to approval of the collegial body. The decision concerning approval of such transactions should be deemed adopted only provided the majority of the independent members of the collegial body voted for such a decision.	Yes/No	The transactions are concluded in standard terms in pursuance of regular Company's activities. See commentary of 3.6. recommendation.
4.6. The collegial body should be independent in passing decisions that are significant for the company's operations and strategy. Taken separately, the collegial body should be independent of the company's management bodies. Members of the collegial body should act and pass decisions without an outside influence from the persons who have elected it. Companies should ensure that the collegial body and its committees are provided with sufficient administrative and financial resources to discharge their duties, including the right to obtain, in particular from employees of the company, all the necessary information or to seek independent legal, accounting or any other advice on issues pertaining to the competence of the collegial body and its committees. When using the services of a consultant with a view to obtaining information on market standards for remuneration systems, the remuneration committee should ensure that the consultant concerned does not at the same time advice the human resources department, executive directors or collegial management organs of the company concerned.	Yes/No	The Company does not implement this recommendation in so far as it is related with formation of Remuneration committee. See commentary of 4.7. recommendation.
4.7. Activities of the collegial body should be organized in a manner that independent members of the collegial body could have major influence in relevant areas where chances of occurrence of conflicts of interest are very high. Such areas to be considered as highly relevant are issues of nomination of company's directors, determination of directors' remuneration and control and assessment of company's audit. Therefore when the mentioned	Yes/No	Nomination and Remuneration committees indicated in 4.12-4.13 recommendations are not established in the Company, whereas, in Company's opinion, the management board by performing its functions partially performs functions of Nomination and Remuneration committees. Company's management board selects a candidate for chief executive officer position and appoints chief executive officer,

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT APPLI CABLE	COMMENTARY
issues are attributable to the competence of the collegial body, it is recommended that the collegial body should establish nomination, remuneration, and audit committees. Companies should ensure that the functions attributable to the nomination, remuneration, and audit committees are carried out. However they may decide to merge these functions and set up less than three committees. In such case a company should explain in detail reasons behind the selection of alternative approach and how the selected approach complies with the objectives set forth for the three different committees. Should the collegial body of the company comprise small number of members, the functions assigned to the three committees may be performed by the collegial body itself, provided that it meets composition requirements advocated for the committees and that adequate information is provided in this respect. In such case provisions of this Code relating to the committees of the collegial body (in particular with respect to their role, operation, and transparency) should apply, where relevant, to the collegial body as a whole.		provides recommendations to chief executive officer regarding appointment of senior managers and their remuneration policy. Company's management board affirms Company's strategic plans and objectives and controls their implementation. Moreover, Company's management board affirms Company's budget plans and analyse and assess chief executive officer's and senior management's reports on budget plans' implementation and fund utilization. In pursuance of requirements of Law on Audit (Official Gazette, 2008, No. 82-53233) the Audit committee composed of two members is established in Company.
4.8. The key objective of the committees is to increase efficiency of the activities of the collegial body by ensuring that decisions are based on due consideration, and to help organize its work with a view to ensuring that the decisions it takes are free of material conflicts of interest. Committees should exercise independent judgement and integrity when exercising its functions as well as present the collegial body with recommendations concerning the decisions of the collegial body. Nevertheless the final decision shall be adopted by the collegial body. The recommendation on creation of committees is not intended, in principle, to constrict the competence of the collegial body or to remove the matters considered from the purview of the collegial body itself, which remains fully responsible for the decisions taken in its field of competence.	Yes/No	See commentary of 4.7. recommendation. The recommendation is implemented insofar as it is related with Audit committee activity in Company.
4.9. Committees established by the collegial body should normally be composed of at least three members. In companies with small number of members of the collegial body, they could exceptionally be composed of two members. Majority of the members of each committee should be constituted from independent members of the collegial body. In cases when the company chooses not to set up a supervisory board, remuneration and audit committees should be entirely comprised of non-executive directors. Chairmanship and membership of the committees should be decided with due regard to the need to ensure that committee membership is refreshed and that undue reliance is not placed on particular individuals. Chairmanship and membership of the committees should be decided with due regard to the need to ensure that committee membership is refreshed and that undue reliance is not placed on particular individuals.	Yes/No	See commentary of 4.7. recommendation. Audit committee is exceptionally composed of two members.
4.10. Authority of each of the committees should be determined by the collegial body. Committees should perform their duties in line with authority delegated to them and inform the collegial body on their activities and performance on regular basis.	No	See commentary of 4.7. recommendation. Audit committee's authority, rights and obligations are stipulated in Internal rules of Audit committed pursuant to applicable legal acts and Audit committee's authority, rights

	YES/NO /NOT
PRINCIPLES/ RECOMMENDATIONS	APPLI CABLE	COMMENTARY
Authority of every committee stipulating the role and rights and duties of the committee should be made public at least once a year (as part of the information disclosed by the company annually on its corporate governance structures and practices). Companies should also make public annually a statement by existing committees on their composition, number of meetings and attendance over the year, and their main activities. Audit committee should confirm that it is satisfied with the independence of the audit process and describe briefly the actions it has taken to reach this conclusion.		and obligations are approved by general shareholders' meeting. Audit committee's authority, rights and obligations stipulated in Internal rules of Audit committee do not differ from those stipulated in legal acts.
4.11. In order to ensure independence and impartiality of the committees, members of the collegial body that are not members of the committee should commonly have a right to participate in the meetings of the committee only if invited by the committee. A committee may invite or demand participation in the meeting of particular officers or experts. Chairman of each of the committees should have a possibility to maintain direct communication with the shareholders. Events when such are to be performed should be specified in the regulations for committee activities.	Yes/No	See commentary of 4.7. recommendation. It is stipulated in Internal rules of Audit committed that Company's board members, chief executive officer, chief financial officer, employees of the Company, auditors may be invited to meetings of committee.
4.12. Nomination Committee. 4.12.1. Key functions of the nomination committee should be the following: • Identify and recommend, for the approval of the collegial body, candidates to fill board vacancies. The nomination committee should evaluate the balance of skills, knowledge and experience on the management body, prepare a description of the roles and capabilities required to assume a particular office, and assess the time commitment expected. Nomination committee can also consider candidates to members of the collegial body delegated by the shareholders of the company; • Assess on regular basis the structure, size, composition and performance of the supervisory and management bodies, and make recommendations to the collegial body regarding the means of achieving necessary changes; • Assess on regular basis the skills, knowledge and experience of individual directors and report on this to the collegial body; • Properly consider issues related to succession planning; • Review the policy of the management bodies for selection and appointment of senior management. 4.12.2. Nomination committee should consider proposals by other parties, including management and shareholders. When dealing with issues related to executive directors or members of the board (if a collegial body elected by the general shareholders' meeting is the supervisory board) and senior management, chief executive officer of the company should be consulted by, and entitled to submit proposals to the nomination committee.	No	Nomination Committee is not established in Company. (See commentary of 4.7. recommendation).
4.13. Remuneration Committee. 4.13.1. Key functions of the remuneration committee should be the following: • Make proposals, for the approval of the collegial body, on the remuneration policy for members of management bodies and executive directors. Such policy should address all forms of compensation,	No	Remuneration Committee is not established in Company. (See commentary of 4.7. recommendation).

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT APPLI CABLE	COMMENTARY
including the fixed remuneration, performance based remuneration schemes, pension arrangements, and termination payments. Proposals
considering performance-based remuneration schemes should be accompanied with recommendations on the related objectives and
evaluation criteria, with a view to properly aligning the pay of executive director and members of the management bodies with the long-term interests of
the shareholders and the objectives set by the collegial body; • Make proposals to the collegial body on the
individual remuneration for executive directors and member of management bodies in order their remunerations are consistent with company's
remuneration policy and the evaluation of the performance of these persons concerned. In doing so, the committee should be properly informed on the total compensation obtained by executive
directors and members of the management bodies from the affiliated companies; • Ensure that remuneration of individual executive
directors or members of management body is proportionate to the remuneration of other executive directors or members of management body and
other staff members of the company; • Periodically review the remuneration policy for executive directors or members of management
body, including the policy regarding share-based remuneration, and its implementation; • Make proposals to the collegial body on suitable
forms of contracts for executive directors and members of the management bodies; • Assist the collegial body in overseeing how the
company complies with applicable provisions regarding the remuneration-related information disclosure (in particular the remuneration policy applied and individual remuneration of directors);
• Make general recommendations to the executive directors and members of the management bodies on the level and structure of remuneration for senior
management (as defined by the collegial body) with regard to the respective information provided by the executive directors and members of the
management bodies. 4.13.2. With respect to stock options and other share-based incentives which may be granted to
directors or other employees, the committee should: • Consider general policy regarding the granting of the above mentioned schemes, in particular stock options, and make any related proposals to the
collegial body; • Examine the related information that is given in the company's annual report and documents
intended for the use during the shareholders meeting; • Make proposals to the collegial body regarding the
choice between granting options to subscribe shares or granting options to purchase shares, specifying the reasons for its choice as well as the
consequences that this choice has. 4.13.3. Upon resolution of the issues attributable to the competence of the remuneration committee, the
committee should at least address the chairman of the collegial body and/or chief executive officer of the company for their opinion on the remuneration of other executive directors or members of the

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT APPLI CABLE	COMMENTARY
management bodies.
4.13.4. The remuneration committee should report
on the exercise of its functions to the shareholders
and be present at the annual general meeting for
this purpose.
4.14. Audit Committee.	Yes/No	Audit committee's rights and obligations
4.14.1. Key functions of the audit committee should		stipulated in Internal rules of Audit committee
be the following: 1) Observe the integrity of the financial information		do not differ from those stipulated in legal acts (Law on Audit, Official Gazette, 2008, No. 82-
provided by the company, in particular by reviewing		3233).
the relevance and consistency of the accounting
methods used by the company and its group
(including the criteria for the consolidation of the
accounts of companies in the group);
2) At least once a year review the systems of
internal control and risk management to ensure that
the key risks (inclusive of the risks in relation with
compliance with existing laws and regulations) are properly identified, managed and reflected in the
information provided;
3) Ensure the efficiency of the internal audit
function, among other things, by making
recommendations on the selection, appointment,
reappointment and removal of the head of the
internal audit department and on the budget of the
department, and by monitoring the responsiveness
of the management to its findings and
recommendations. Should there be no internal audit authority in the company, the need for one should
be reviewed at least annually;
4) Make recommendations to the collegial body
related with selection, appointment, reappointment
and removal of the external auditor (to be done by
the general shareholders' meeting) and with the
terms and conditions of his engagement. The
committee should investigate situations that lead to a resignation of the audit company or auditor and
make recommendations on required actions in such
situations;
5) Monitor independence and impartiality of the
external auditor, in particular by reviewing the audit
company's compliance with applicable guidance
relating to the rotation of audit partners, the level of
fees paid by the company, and similar issues. In order to prevent occurrence of material conflicts of
interest, the committee, based on the auditor's
disclosed inter alia data on all remunerations paid by
the company to the auditor and network, should at
all times monitor nature and extent of the non-audit
services. Having regard to the principals and
guidelines established in the 16 May 2002
Commission Recommendation 2002/590/EC, the
committee should determine and apply a formal policy establishing types of non-audit services that
are (a) excluded, (b) permissible only after review
by the committee, and (c) permissible without
referral to the committee;
6) Review efficiency of the external audit process
and responsiveness of management to
recommendations made in the external auditor's
management letter. 4.14.2. All members of the committee should be
furnished with complete information on particulars of
accounting, financial and other operations of the
company. Company's management should inform
the audit committee of the methods used to account

YES/NO /NOT PRINCIPLES/ RECOMMENDATIONS COMMENTARY APPLI CABLE for significant and unusual transactions where the accounting treatment may be open to different approaches. In such case a special consideration should be given to company's operations in offshore centers and/or activities carried out through special purpose vehicles (organizations) and justification of such operations. 4.14.3. The audit committee should decide whether participation of the chairman of the collegial body, chief executive officer of the company, chief financial officer (or superior employees in charge of finances, treasury and accounting), or internal and external auditors in the meetings of the committee is required (if required, when). The committee should be entitled, when needed, to meet with any relevant person without executive directors and members of the management bodies present. 4.14.4. Internal and external auditors should be secured with not only effective working relationship with management, but also with free access to the collegial body. For this purpose the audit committee should act as the principal contact person for the internal and external auditors. 4.14.5. The audit committee should be informed of the internal auditor's work program, and should be furnished with internal audit's reports or periodic summaries. The audit committee should also be informed of the work program of the external auditor and should be furnished with report disclosing all relationships between the independent auditor and the company and its group. The committee should be timely furnished information on all issues arising from the audit. 4.14.6. The audit committee should examine whether the company is following applicable provisions regarding the possibility for employees to report alleged significant irregularities in the company, by way of complaints or through anonymous submissions (normally to an independent member of the collegial body), and should ensure that there is a procedure established
for proportionate and independent investigation of
these issues and for appropriate follow-up action.
4.14.7. The audit committee should report on its
activities to the collegial body at least once in every
six months, at the time the yearly and half-yearly
statements are approved.
4.15. Every year the collegial body should conduct No There is no practice in Company on internal
the assessment of its activities. The assessment assessments of management board activities
should include evaluation of collegial body's and notification on it.
structure, work organization and ability to act as a
group, evaluation of each of the collegial body
member's and committee's competence and work
efficiency and assessment whether the collegial body
has achieved its objectives. The collegial body
should, at least once a year, make public (as part of
the information the company annually discloses on
its management structures and practices) respective
information on its internal organization and working
procedures, and specify what material changes were
made as a result of the assessment of the collegial
body of its own activities.
Principle V: The working procedure of the company's collegial bodies The working procedure of supervisory and management bodies established in the company should

ensure efficient operation of these bodies and decision-making and encourage active co-operation

	YES/NO
PRINCIPLES/ RECOMMENDATIONS	/NOT APPLI CABLE	COMMENTARY
between the company's bodies.
5.1. The company's supervisory and management bodies (hereinafter in this Principle the concept 'collegial bodies' covers both the collegial bodies of supervision and the collegial bodies of management) should be chaired by chairpersons of these bodies. The chairperson of a collegial body is responsible for proper convocation of the collegial body meetings. The chairperson should ensure that information about the meeting being convened and its agenda are communicated to all members of the body. The chairperson of a collegial body should ensure appropriate conducting of the meetings of the collegial body. The chairperson should ensure order	Yes	Company's management board is conducted by chairman of the management board.
and working atmosphere during the meeting. 5.2. It is recommended that meetings of the	Yes/No	Company's management board meetings are
company's collegial bodies should be carried out according to the schedule approved in advance at certain intervals of time. Each company is free to decide how often to convene meetings of the collegial bodies, but it is recommended that these meetings should be convened at such intervals, which would guarantee an interrupted resolution of the essential corporate governance issues. Meetings of the company's supervisory board should be convened at least once in a quarter, and the company's board should meet at least once a month.		convened depending on the necessity.
5.3. Members of a collegial body should be notified about the meeting being convened in advance in	Yes
order to allow sufficient time for proper preparation for the issues on the agenda of the meeting and to ensure fruitful discussion and adoption of appropriate decisions. Alongside with the notice about the meeting being convened, all the documents relevant to the issues on the agenda of the meeting should be submitted to the members of the collegial body. The agenda of the meeting should not be changed or supplemented during the meeting, unless all members of the collegial body are present or certain issues of great importance to the company require immediate resolution.
5.4. In order to co-ordinate operation of the company's collegial bodies and ensure effective decision-making process, chairpersons of the company's collegial bodies of supervision and management should closely co-operate by co coordinating dates of the meetings, their agendas and resolving other issues of corporate governance. Members of the company's board should be free to attend meetings of the company's supervisory board, especially where issues concerning removal of the board members, their liability or remuneration are discussed.	No	The Company does not implement this recommendation whereas only management board is constituted in the Company.
Principle VI: The equitable treatment of shareholders and shareholder rights The corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. The corporate governance framework should protect the rights of the shareholders.
6.1. It is recommended that the company's capital should consist only of the shares that grant the same rights to voting, ownership, dividend and other rights to all their holders.	Yes	The Company's capital consists of ordinary registered shares which grant equal rights to their owners.
6.2. It is recommended that investors should have access to the information concerning the rights attached to the shares of the new issue or those issued earlier in advance, i.e. before they purchase	Yes	The Company informs about the rights attached to the shares of the new issue or those issued earlier in prospects of the shares of new issue, in annual and interim reports and

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT	COMMENTARY
	APPLI CABLE
shares.		in Company's website. See commentaries of X principle's recommendations.
6.3. Transactions that are important to the company and its shareholders, such as transfer, investment, and pledge of the company's assets or any other type of encumbrance should be subject to approval of the general shareholders' meeting. All shareholders should be furnished with equal opportunity to familiarize with and participate in the decision-making process when significant corporate issues, including approval of transactions referred to above, are discussed.	No	The management board of the Company adopts resolutions for transactions regarding transferring, investment, pledge or other type of the encumbrance of the tangible long-term assets the book value whereof exceeds 1/20 of the share capital of the Company.
6.4. Procedures of convening and conducting a general shareholders' meeting should ensure equal opportunities for the shareholders to effectively participate at the meetings and should not prejudice the rights and interests of the shareholders. The venue, date, and time of the shareholders' meeting should not hinder wide attendance of the shareholders.	Yes
6.5. If is possible, in order to ensure shareholders living abroad the right to access to the information, it is recommended that documents on the course of the general shareholders' meeting should be placed on the publicly accessible website of the company not only in Lithuanian language, but in English and /or other foreign languages in advance. It is recommended that the minutes of the general shareholders' meeting after signing them and/or adopted resolutions should be also placed on the publicly accessible website of the company. Seeking to ensure the right of foreigners to familiarize with the information, whenever feasible, documents referred to in this recommendation should be published in Lithuanian, English and/or other foreign languages. Documents referred to in this recommendation may be published on the publicly accessible website of the company to the extent that publishing of these documents is not detrimental to the company or the company's commercial secrets are not revealed.	Yes	Company's general shareholders' meeting draft resolutions are published in pursuance of applicable legal acts, i.e. not later than 21 (twenty one) days before shareholders' meeting. General shareholders' meeting draft resolutions and its adopted resolutions are published throughout NASDAQ OMX Vilnius Stock Exchange information disclosure system and are placed on publicly accessible Company's website, in Lithuanian and English. General shareholders' meeting draft resolutions are also placed in Central Storage Facility.
6.6. Shareholders should be furnished with the opportunity to vote in the general shareholders' meeting in person and in absentia. Shareholders should not be prevented from voting in writing in advance by completing the general voting ballot.	Yes	The Company's shareholders are furnished with the opportunity to vote in general shareholders' meeting both personally and throughout duly authorized representatives. On demand of shareholders, the Company may furnish the opportunity to vote in general shareholders' meeting in writing in advance, pursuant to the Article 30 of the Law on Companies.
6.7. With a view to increasing the shareholders' opportunities to participate effectively at shareholders' meetings, the companies are recommended to expand use of modern technologies by allowing the shareholders to participate and vote in general meetings via electronic means of communication. In such cases security of transmitted information and a possibility to identify the identity of the participating and voting person should be guaranteed. Moreover, companies could furnish its shareholders, especially shareholders living abroad, with the opportunity to watch shareholder meetings by means of modern technologies. Principle VII: The avoidance of conflicts of interest and their disclosure	No	In Company's opinion, thus far there was no necessity to use modern technologies in general shareholders' meeting participation and voting process via electronic means of communication.

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT APPLI CABLE	COMMENTARY
The corporate governance framework should encourage members of the corporate bodies to avoid conflicts of interest and assure transparent and effective mechanism of disclosure of conflicts of interest regarding members of the corporate bodies.
7.1. Any member of the company's supervisory and management body should avoid a situation, in which his/her personal interests are in conflict or may be in conflict with the company's interests. In case such a situation did occur, a member of the company's supervisory and management body should, within reasonable time, inform other members of the same collegial body or the company's body that has elected him/her, or to the company's shareholders about a situation of a conflict of interest, indicate the nature of the conflict and value, where possible. 7.2. Any member of the company's supervisory and management body may not mix the company's	Yes Yes
assets, the use of which has not been mutually agreed upon, with his/her personal assets or use them or the information which he/she learns by virtue of his/her position as a member of a corporate body for his/her personal benefit or for the benefit of any third person without a prior agreement of the general shareholders' meeting or any other corporate body authorized by the meeting.
7.3. Any member of the company's supervisory and management body may conclude a transaction with the company, a member of a corporate body of which he/she is. Such a transaction (except insignificant ones due to their low value or concluded when carrying out routine operations in the company under usual conditions) must be immediately reported in writing or orally, by recording this in the minutes of the meeting, to other members of the same corporate body or to the corporate body that has elected him/her or to the company's shareholders. Transactions specified in this recommendation are also subject to recommendation 4.5.	Yes
7.4. Any member of the company's supervisory and management body should abstain from voting when decisions concerning transactions or other issues of personal or business interest are voted on.	Yes
Principle VIII: Company's remuneration policy Remuneration policy and procedure for approval, revision and disclosure of directors' remuneration established in the company should prevent potential conflicts of interest and abuse in determining remuneration of directors, in addition it should ensure publicity and transparency both of company's remuneration policy and remuneration of directors.
8.1. A company should make a public statement of the company's remuneration policy (hereinafter the remuneration statement) which should be clear and easily understandable. This remuneration statement should be published as a part of the company's annual statement as well as posted on the company's website.	No	The Company does not prepare and publish remuneration statement. In Company's opinion, such information commercially is not published. Pursuant to law requirements, the Company publishes in Company's annual report information regarding total sums counted to management board members, chief executive officer and chief financial officer during reporting period.
8.2. Remuneration statement should mainly focus on directors' remuneration policy for the following year and, if appropriate, the subsequent years. The statement should contain a summary of the implementation of the remuneration policy in the previous financial year. Special attention should be given to any significant changes in company's remuneration policy as compared to the previous financial year.	No	See commentary of 8.1. recommendation.

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT APPLI	COMMENTARY
8.3. Remuneration statement should leastwise include the following information: • Explanation of the relative importance of the variable and non-variable components of directors' remuneration; • Sufficient information on performance criteria that entitles directors to share options, shares or variable components of remuneration; • An explanation how the choice of performance criteria contributes to the long-term interests of the company; • An explanation of the methods, applied in order to determine whether performance criteria have been fulfilled; • Sufficient information on deferment periods with regard to variable components of remuneration; • Sufficient information on the linkage between the remuneration and performance; • The main parameters and rationale for any annual bonus scheme and any other non-cash benefits; • Sufficient information on the policy regarding termination payments; • Sufficient information with regard to vesting periods for share-based remuneration, as referred to in point 8.13 of this Code; • Sufficient information on the policy regarding retention of shares after vesting, as referred to in point 8.15 of this Code;	CABLE No	See commentary of 8.1. recommendation.
• Sufficient information on the composition of peer groups of companies the remuneration policy of which has been examined in relation to the establishment of the remuneration policy of the company concerned; • A description of the main characteristics of supplementary pension or early retirement schemes for directors; • Remuneration statement should not include commercially sensitive information.
8.4. Remuneration statement should also summarize and explain company's policy regarding the terms of the contracts executed with executive directors and members of the management bodies. It should include, inter alia, information on the duration of contracts with executive directors and members of the management bodies, the applicable notice periods and details of provisions for termination payments linked to early termination under contracts for executive directors and members of the management bodies.	No	See commentary of 8.1. recommendation.
8.5. Remuneration statement should also contain detailed information on the entire amount of remuneration, inclusive of other benefits, that was paid to individual directors over the relevant financial year. This document should list at least the information set out in items 8.5.1 to 8.5.4 for each person who has served as a director of the company at any time during the relevant financial year. 8.5.1. The following remuneration and/or emoluments-related information should be disclosed: • The total amount of remuneration paid or due to the director for services performed during the relevant financial year, inclusive of, where relevant, attendance fees fixed by the annual general shareholders meeting; • The remuneration and advantages received from any undertaking belonging to the same group;	No	See commentary of 8.1. recommendation.

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT APPLI	COMMENTARY
• The remuneration paid in the form of profit sharing and/or bonus payments and the reasons why such bonus payments and/or profit sharing were granted; • If permissible by the law, any significant additional remuneration paid to directors for special services outside the scope of the usual functions of a director; • Compensation receivable or paid to each former executive director or member of the management body as a result of his resignation from the office during the previous financial year; • Total estimated value of non-cash benefits considered as remuneration, other than the items covered in the above points. 8.5.2. As regards shares and/or rights to acquire share options and/or all other share-incentive schemes, the following information should be disclosed: • The number of share options offered or shares granted by the company during the relevant financial year and their conditions of application; • The number of shares options exercised during the relevant financial year and, for each of them, the number of shares involved and the exercise price or the value of the interest in the share incentive scheme at the end of the financial year; • The number of share options unexercised at the end of the financial year; their exercise price, the exercise date and the main conditions for the exercise of the rights; • All changes in the terms and conditions of existing share options occurring during the financial year. 8.5.3. The following supplementary pension schemes-related information should be disclosed: • When the pension scheme is a defined-benefit scheme, changes in the directors' accrued benefits under that scheme during the relevant financial year; • When the pension scheme is defined-contribution scheme, detailed information on contributions paid or payable by the company in respect of that	CABLE
director during the relevant financial year. 8.5.4. The statement should also state amounts that the company or any subsidiary company or entity included in the consolidated annual financial report of the company has paid to each person who has served as a director in the company at any time during the relevant financial year in the form of loans, advance payments or guarantees, including the amount outstanding and the interest rate.
8.6. Where the remuneration policy includes variable components of remuneration, companies should set limits on the variable component(s). The non variable component of remuneration should be sufficient to allow the company to withhold variable components of remuneration when performance criteria are not met.	Not applicable	See commentary of 8.1. recommendation.
8.7. Award of variable components of remuneration should be subject to predetermined and measurable performance criteria.	Not applicable	See commentary of 8.1. recommendation.
8.8. Where a variable component of remuneration is awarded, a major part of the variable component should be deferred for a minimum period of time. The part of the variable component subject to deferment should be determined in relation to the relative weight of the variable component compared	Not applicable	See commentary of 8.1. recommendation.

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT	COMMENTARY
	APPLI CABLE
to the non-variable component of remuneration. 8.9. Contractual arrangements with executive or managing directors should include provisions that permit the company to reclaim variable components of remuneration that were awarded on the basis of data which subsequently proved to be manifestly misstated.	Not applicable	See commentary of 8.1. recommendation.
8.10. Termination payments should not exceed a fixed amount or fixed number of years of annual remuneration, which should, in general, not be higher than two years of the non-variable component of remuneration or the equivalent thereof.	Not applicable	See commentary of 8.1. recommendation.
8.11. Termination payments should not be paid if the termination is due to inadequate performance.	Not applicable	See commentary of 8.1. recommendation.
8.12. The information on preparatory and decision making processes, during which a policy of remuneration of directors is being established, should also be disclosed. Information should include data, if applicable, on authorities and composition of the remuneration committee, names and surnames of external consultants whose services have been used in determination of the remuneration policy as well as the role of shareholders' annual general meeting.	Not applicable	See commentary of 8.1. recommendation.
8.13. Shares should not vest for at least three years after their award.	Not applicable	See commentary of 8.1. recommendation. Company's directors are not remunerated in shares.
8.14. Share options or any other right to acquire shares or to be remunerated on the basis of share price movements should not be exercisable for at least three years after their award. Vesting of shares and the right to exercise share options or any other right to acquire shares or to be remunerated on the basis of share price movements, should be subject to predetermined and measurable performance criteria.	Not applicable	See commentary of 8.1. recommendation. Company's directors are not remunerated in shares, share options or any other right to purchase Company's shares.
8.15. After vesting, directors should retain a number of shares, until the end of their mandate, subject to the need to finance any costs related to acquisition of the shares. The number of shares to be retained should be fixed, for example, twice the value of total annual remuneration (the non-variable plus the variable components).	Not applicable	See commentaries of 8.1. and 8.14 recommendations.
8.16. Remuneration of non-executive or supervisory directors should not include share options.	Not applicable	See commentaries of 8.1. and 8.14 recommendations.
8.17. Shareholders, in particular institutional shareholders, should be encouraged to attend general meetings where appropriate and make considered use of their votes regarding directors' remuneration.	Not applicable	See commentary of 8.1. recommendation.
8.18. Without prejudice to the role and organization of the relevant bodies responsible for setting directors' remunerations, the remuneration policy or any other significant change in remuneration policy should be included into the agenda of the shareholders' annual general meeting. Remuneration statement should be put for voting in shareholders' annual general meeting. The vote may be either mandatory or advisory.	Not applicable	See commentary of 8.1. recommendation.
8.19. Schemes anticipating remuneration of directors in shares, share options or any other right to purchase shares or be remunerated on the basis of share price movements should be subject to the	Not applicable	See commentaries of 8.1. and 8.14 recommendations.

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT APPLI CABLE	COMMENTARY
prior approval of shareholders' annual general meeting by way of a resolution prior to their adoption. The approval of scheme should be related with the scheme itself and not to the grant of such share-based benefits under that scheme to individual directors. All significant changes in scheme provisions should also be subject to shareholders' approval prior to their adoption; the approval decision should be made in shareholders' annual general meeting. In such case shareholders should be notified on all terms of suggested changes and get an explanation on the impact of the suggested changes.
8.20. The following issues should be subject to approval by the shareholders' annual general meeting:	Not applicable
• Grant of share-based schemes, including share options, to directors;
• Determination of maximum number of shares and main conditions of share granting;
• The term within which options can be exercised;
• The conditions for any subsequent change in the exercise of the options, if permissible by law;
• All other long-term incentive schemes for which directors are eligible and which are not available to other employees of the company under similar terms. Annual general meeting should also set the deadline within which the body responsible for remuneration of directors may award compensations listed in this article to individual directors.
8.21. Should national law or company's Articles of Association allow, any discounted option arrangement under which any rights are granted to subscribe to shares at a price lower than the market value of the share prevailing on the day of the price determination, or the average of the market values over a number of days preceding the date when the exercise price is determined, should also be subject to the shareholders' approval.	Not applicable
8.22. Provisions of Articles 8.19 and 8.20 should not be applicable to schemes allowing for participation under similar conditions to company's employees or employees of any subsidiary company whose employees are eligible to participate in the scheme and which has been approved in the shareholders' annual general meeting.	Not applicable
8.23. Prior to the annual general meeting that is intended to consider decision stipulated in Article 8.19, the shareholders must be provided an opportunity to familiarize with draft resolution and project-related notice (the documents should be posted on the company's website). The notice should contain the full text of the share-based remuneration schemes or a description of their key terms, as well as full names of the participants in the schemes. Notice should also specify the relationship of the schemes and the overall remuneration policy of the directors. Draft resolution must have a clear reference to the scheme itself or to the summary of its key terms. Shareholders must also be presented with information on how the company intends to provide for the shares required to meet its obligations under incentive schemes. It should be	Not applicable

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT APPLI CABLE	COMMENTARY
clearly stated whether the company intends to buy shares in the market, hold the shares in reserve or issue new ones. There should also be a summary on scheme-related expenses the company will suffer due to the anticipated application of the scheme. All information given in this article must be posted on the company's website.
Principle IX: The role of stakeholders in corporate governance The corporate governance framework should recognize the rights of stakeholders as established by law and encourage active co-operation between companies and stakeholders in creating the company value, jobs and financial sustainability. For the purposes of this Principle, the concept "stakeholders" includes investors, employees, creditors, suppliers, clients, local community and other persons having certain interest in the company concerned.
9.1. The corporate governance framework should assure that the rights of stakeholders that are protected by law are respected.	Yes	The Company respects the rights of interest holders, and the interest holders may participate in the management of the Company in the manner prescribed by legal acts.
9.2. The corporate governance framework should create conditions for the stakeholders to participate in corporate governance in the manner prescribed by law. Examples of mechanisms of stakeholder participation in corporate governance include: employee participation in adoption of certain key decisions for the company; consulting the employees on corporate governance and other important issues; employee participation in the company's share capital; creditor involvement in governance in the context of the company's insolvency, etc.	Yes
9.3. Where stakeholders participate in the corporate governance process, they should have access to relevant information.	Yes
Principle X: Information disclosure and transparency
The corporate governance framework should ensure that timely and accurate disclosure is made on all material information regarding the company, including the financial situation, performance and governance of the company.
10.1. The company should disclose information on: 1) The financial and operating results of the company; 2) Company objectives; 3) Persons holding by the right of ownership or in control of a block of shares in the company; 4) Members of the company's supervisory and management bodies, chief executive officer of the company and their remuneration; 5) Material foreseeable risk factors; 6) Transactions between the company and connected persons, as well as transactions concluded outside the course of the company's regular operations; 7) Material issues regarding employees and other stakeholders; 8) Governance structures and strategy. This list should be deemed as a minimum recommendation, while the companies are encouraged not to limit themselves to disclosure of the information specified in this list. 10.2. It is recommended that consolidated results of	Yes Yes	The information mentioned in this recommendation is disclosed in announcements on material events published throughout NASDAQ OMX Vilnius Stock Exchange information disclosure system, in Company's website, and in Company's documents of annual and interim information in such scope as it is required by law as well as by International Financial Reporting Standards applicable in European Union. The information is also disclosed by chief executive officer and senior management in presentations to investors. The Company provides information about
the whole group to which the company belongs should be disclosed when information specified in item 1 of Recommendation 10.1 is under disclosure.		consolidated results of the Company and its subsidiary companies.
10.3. It is recommended that information on the professional background, qualifications of the members of supervisory and management bodies, chief executive officer of the company should be	Yes/No	See commentary of 3.2 recommendation of III principle. The Company does not prepare and publish remuneration statement, See commentary of

	YES/NO
PRINCIPLES/ RECOMMENDATIONS	/NOT APPLI CABLE	COMMENTARY
disclosed as well as potential conflicts of interest that may have an effect on their decisions when information specified in item 4 of Recommendation 10.1 about the members of the company's supervisory and management bodies is under disclosure. It is also recommended that information about the amount of remuneration received from the company and other income should be disclosed with regard to members of the company's supervisory and management bodies and chief executive officer as per Principle VIII.		8.1. recommendation of VIII principle.
10.4. It is recommended that information about the links between the company and its stakeholders, including employees, creditors, suppliers, local community, as well as the company's policy with regard to human resources, employee participation schemes in the company's share capital, etc. should be disclosed when information specified in item 7 of Recommendation 10.1 is under disclosure.	Yes	Information is disclosed in Company's documents of annual and interim information in such scope as it is required by law as well as by International Financial Reporting Standards applicable in European Union. As well this information is disclosed by chief executive officer and senior management in presentations to investors.
10.5. Information should be disclosed in such a way that neither shareholders nor investors are discriminated with regard to the manner or scope of access to information. Information should be disclosed to all simultaneously. It is recommended that notices about material events should be announced before or after a trading session on the Vilnius Stock Exchange, so that all the company's shareholders and investors should have equal access to the information and make informed investing decisions.	Yes	The information is disclosed pursuant to the requirements of the laws of the Republic of Lithuania. The information is disclosed throughout NASDAQ OMX Vilnius Stock Exchange information disclosure system, thus ensuring simultaneous disclosure of information to investors. The information is straight away placed in Central Storage Facility. The information is disclosed in Lithuanian and English, before or after a trading session on the NASDAQ OMX Vilnius Stock Exchange.
10.6. Channels for disseminating information should provide for fair, timely and cost-efficient access to relevant information by users. It is recommended that information technologies should be employed for wider dissemination of information, for instance, by placing the information on the company's website. It is recommended that information should be published and placed on the company's website not only in Lithuanian, but also in English, and, whenever possible and necessary, in other languages as well.	Yes	See commentary of 10.5 recommendation. All the information disclosed throughout NASDAQ OMX Vilnius Stock Exchange information disclosure system and posted in Central Storage Facility is placed on Company's website especially intended for the investors www.apranga.lt/investuotojams, in Lithuanian and English.
10.7. It is recommended that the company's annual reports and other periodical accounts prepared by the company should be placed on the company's website. It is recommended that the company should announce information about material events and changes in the price of the company's shares on the Stock Exchange on the company's website too.	Yes	See commentary of 10.5 recommendation.
Principle XI: The selection of the company's auditor The mechanism of the selection of the company's auditor should ensure independence of the firm of auditor's conclusion and opinion.
11.1. An annual audit of the company's financial statements and report should be conducted by an independent firm of auditors in order to provide an external and objective opinion on the company's financial statements.	Yes	The audit of annual Company's and its company group consolidated financial statements is performed by independent audit company according to International Financial Reporting Standards applicable in European Union. Audit company also performs the review of the annual report.
11.2. It is recommended that the company's supervisory board and, where it is not set up, the company's board should propose a candidate firm of auditors to the general shareholders' meeting.	Yes	The candidacy of audit company is proposed by Company's board to general shareholders meeting.
11.3. It is recommended that the company should disclose to its shareholders the level of fees paid to	Yes	There were rendered non-audit services to Company by audit company and audit company

PRINCIPLES/ RECOMMENDATIONS	YES/NO /NOT APPLI- CABLE	COMMENTARY
the firm of auditors for non-audit services rendered to the company. This information should be also known to the company's supervisory board and, where it is not formed, the company's board upon their consideration which firm of auditors to propose for the general shareholders' meeting.		has received remuneration for it from the Company during the reporting period. The information about rendered non-audit services to Company by audit company will be disclosed to shareholders during general shareholders meeting if for the performance of audit for the financial year starting from January 1st 2014 the same audit company will be proposed for election. The Company's board is informed about the non-audit services rendered to Company by audit company.