Kodifikantus elektroninis parailas

RAIMONDAS RAJECKAS

2021-04-06 22:55:18 GMT+3

Paskirtio Parailas

Kodifikantus elektroninis parailas

DARIUS ŠULNIS

2021-04-06 22:57:29 GMT+3

Paskirtio Parailas

Darius Šulnis, the President of Invalda INVL, signs the Consolidated and Company's Financial Statements as well as the Consolidated Annual Report and Confirmation of Responsible Persons, with a qualified electronic signature.

Raimondas Rajeckas, the CFO of Invalda INVL, signs the Consolidated and Company's Financial Statements as well as the Confirmation of Responsible Persons, with a qualified electronic signature.

INVALDA

AB INVALDA INVL

Consolidated Annual Report,

Consolidated and Company's Financial

Statements for the year ended 31 December 2020

prepared in accordance to International Financial Reporting Standards as adopted by the European Union presented together with independent auditor's report

INVALDA

INVL

Public joint-stock company Invalda INVL

CONFIRMATION OF RESPONSIBLE PERSONS

8 April 2021

Following the Information Disclosure Rules of the Bank of Lithuania and the Law on Securities (Article 12) of the Republic of Lithuania, management of Invalda INVL, AB hereby confirms that, to the best our knowledge, the attached Consolidated and Company's Financial Statements for 2020 are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, give true and fair view of the assets, liabilities, financial position and profit or loss as well as cash flows of Invalda INVL, AB and Consolidated Group. Presented Consolidated Annual Report for 2020 includes a fair review of the development and performance of the business and position of the company and the consolidated group in relation to the description of the main risks and contingencies faced thereby.

ENCLOSED:

Consolidated and Company's Financial Statements for 2020.
Consolidated Annual Report for 2020.

President
Chief Financier

Darius Šulnis
Raimondas Rajeckas

AB „Invalda INVL“
Gynėjų g. 14, LT-01109 Vilnius
Tel. (8 5) 279 0601
El. p. [email protected]
www.invaldainvl.com
Įmonės kodas 121304349
PVM kodas LT213043414
A.s. LT25 4010 0424 0124 2013
Luminor bank AB
Registro tvarkytojas VĮ Registrų centras

Translation note:

This version of the financial statements has been prepared in Lithuanian and English languages. In all matters of interpretation of information, views or opinions, the Lithuanian language version of financial statements takes precedence over the English language version.

INDEPENDENT AUDITOR’S REPORT ... 4

CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS:

DETAILS OF THE COMPANY ... 11

CONSOLIDATED AND COMPANY’S INCOME STATEMENTS ... 12

CONSOLIDATED AND COMPANY’S STATEMENTS OF COMPREHENSIVE INCOME ... 13

CONSOLIDATED AND COMPANY’S STATEMENTS OF FINANCIAL POSITION ... 14

CONSOLIDATED AND COMPANY’S STATEMENTS OF CHANGES IN EQUITY ... 15

CONSOLIDATED AND COMPANY’S STATEMENTS OF CASH FLOWS ... 17

NOTES TO THE FINANCIAL STATEMENTS ... 19

GENERAL INFORMATION ... 19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ... 22
BUSINESS COMBINATIONS, INVESTMENTS INTO ASSOCIATES, DISPOSALS ... 44
SEGMENT INFORMATION ... 48
OTHER INCOME AND EXPENSES ... 52
5.1. Net changes in fair value on financial instruments ... 52
5.2. Employee benefits expenses ... 52
5.3. Other expenses ... 52
INCOME TAX ... 53
EARNINGS PER SHARE ... 57
DIVIDENDS PER SHARE ... 58
PROPERTY, PLANT AND EQUIPMENT ... 59
INTANGIBLE ASSETS AND COSTS TO OBTAIN CONTRACTS WITH CUSTOMERS ... 60
FINANCIAL INSTRUMENTS BY CATEGORY ... 62
FAIR VALUE ESTIMATION ... 64
FINANCIAL ASSETS, AT FAIR VALUE THROUGH PROFIT OR LOSS AND OTHER FINANCIAL ASSETS AT AMORTISED COST ... 74
LOANS GRANTED ... 75
TRADE, OTHER RECEIVABLES AND CONTRACT ASSETS ... 75
CASH AND CASH EQUIVALENTS ... 76
SHARE CAPITAL, SHARE PREMIUM AND OWN SHARES ... 77
RESERVES ... 77
BORROWINGS ... 79
TRADE PAYABLES ... 80
CONTRACT LIABILITIES ... 80
OTHER LIABILITIES ... 80
FINANCIAL RISK MANAGEMENT ... 80
23.1. Financial risk factors ... 80
23.2. Capital management ... 83
COMMITMENTS AND CONTINGENCIES ... 84
LEASE ... 84
RELATED PARTY TRANSACTIONS ... 86
IMPACT OF COVID-19 ... 91
EVENTS AFTER THE REPORTING PERIOD ... 91

CONSOLIDATED MANAGEMENT REPORT ... 92

KPMG

KPMG Baltics, UAB

Lvovo St. 101

LT-08104, Vilnius

Lithuania

Phone: +370 5 2102600

Fax: +370 5 2102659

E-mail: [email protected]

Website: kpmg.com/lt

Independent Auditor's Report

To the Shareholders of AB Invalda INVL

Report on the Audit of the Consolidated and Company's Financial Statements

Opinion

We have audited the separate financial statements of AB Invalda INVL ("the Company") and the consolidated financial statements of AB Invalda INVL and its subsidiaries ("the Group"). The consolidated and Company's financial statements comprise:

the consolidated and Company's statements of financial position as at 31 December 2020,
the consolidated and Company's income statements for the year then ended,
the consolidated and Company's statements of comprehensive income for the year then ended,
the consolidated and Company's statements of changes in equity for the year then ended,
the consolidated and Company's statements of cash flows for the year then ended, and
the notes to the consolidated and Company's financial statements, comprising significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated and Company's financial statements give a true and fair view of the non-consolidated financial position of the Company and the consolidated financial position of the Group as at 31 December 2020, and of their non-consolidated and consolidated financial performance and their non-consolidated and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the European Union.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated and Company's Financial Statements section of our report. We are independent of the Group and the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the Law on Audit of Financial Statements of the Republic of Lithuania and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

©2021 KPMG Baltics, UAB, a Lithuanian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Company code: 111494971

VAT code: LT114949716

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Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and Company's financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and Company's financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Each audit matter and our respective response are described below.

Valuation of unquoted investments carried at fair value

The carrying amount of the Group's and Company's unquoted investments measured at fair value: EUR 40,230 thousand and EUR 39,502 thousand, respectively, as at 31 December 2020 (EUR 36,263 thousand and EUR 36,053 thousand, respectively, as at 31 December 2019).

See Notes 2.8, 2.11 and 2.12 for the relevant accounting policy and Note 12 to the financial statements for financial disclosures.

Key audit matter	How the matter was addressed in our audit
The Group's and Company's investment portfolio comprises a number of unquoted investments carried at fair value. The fair value of the investments is determined by the Company's internal valuation team or external appraisers engaged by the Company, as considered appropriate. A number of valuation techniques are used, including market and income approach.

The application of the above-mentioned valuation techniques requires a significant degree of judgement and complex estimates, including, but not limited to, those in respect of discount rates, assumptions on investee future cash flows, terminal growth rate, equity and enterprise value multiples, liquidity and other discounts, as well as determination of comparable listed companies, and comparable transactions. | Our audit procedures in the area, performed with the assistance of our own valuation specialists, included, among others:

evaluating the design and implementation of the selected key internal controls over determining the fair value of unquoted investments, including the controls over the review and validation of valuation model assumptions and outcomes;
assessing the appropriateness of the valuation methods and models applied, against the requirements of the relevant financial reporting standards as well as against the methodologies commonly used in valuations of similar assets. As part of the above, we identified the relevant methods, assumptions and sources of data, and assessed whether such methods, assumptions, data and their application are appropriate in the context of the said requirements;
for valuations using the income approach, evaluating the mathematical accuracy and integrity of the discounted cash flow model used, and challenging the key assumptions therein, by reference to our understanding of the investee's current operations and industry, and external market data. The key assumptions included those in respect of: sales, expenses, capital expenditures, values of excess assets and changes in net working capital. |

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Due to the above factors, we determined valuation of the investment portfolio to be associated with a significant estimation uncertainty and risk of a material misstatement in respect of the carrying amounts of the investments in the Group's and the Company's statements of financial position, and also in respect of the net change in fair value of financial instruments at fair value through profit or loss in their income statements.

Accordingly, this area required our increased attention in the audit, and as such, we considered it to be our key audit matter.

For the above valuations, we also traced the forecast growth and discount rates, and the exit yield used, to publicly available market data and, where available, performed a retrospective review of budgeting forecasting accuracy;

for valuations using the market approach:
assessing the suitability of the comparable companies used in the calculation of the equity and enterprise value multiples;
challenging the applicability and appropriateness of the adjustments made to equity and enterprise value multiples – by making inquiries of the persons responsible and inspecting information in publicly available market reports;
challenging the applied value adjustment due to discount for lack of marketability – by reference to the observable market transaction data;
Evaluating the accuracy and completeness of the financial statement disclosures relating to the fair value determination of the investments against the relevant requirements of the financial reporting standards.

Revenue recognition

In the year ended 31 December 2020, the Group's revenue amounted to EUR 12,395 thousand (2019: EUR 11,326 thousand), including revenue from fund management, which also include success fees, in the amount of EUR 11,752 thousand (2019: EUR 10,710 thousand).

See Note 2.19 "Revenue recognition and costs to obtain contract with customers" and Note 4 "Segment information".

The key audit matter	How the matter was addressed in our audit
The Group’s primary revenue source relates to fees earned from funds under management. The fees include fund management fees as well as success (performance) fees.	Our audit procedures included, among others:
- updating our understanding of the Group’s process for recognition of management revenue, and evaluating the design and implementation of the selected key internal controls therein, including those over revenue recognition and calculation derived from fund management;
- critically assessing the Group’s revenue recognition policy for compliance with relevant provisions of the financial reporting standards;

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Management fees are calculated by applying the fee rates as set out in respective managed funds' rules to either the net assets value (NAV) of the managed fund or to the amount of the investors' commitment to invest into the fund. Success fees are generally calculated by applying the appropriate fee rate to the increase in the given fund's unit value, as set out in the respective rules of the managed fund.

Success fee revenue is recognised at a point in time. Revenue from management of funds is recognised over time as the services are being provided and the performance obligations satisfied. Significant judgement is required of the management when determining whether performance obligations are satisfied over a period of time or at a point in time.

Significant audit judgement and effort was required due to subjectivity of the main assumptions applied in the revenue recognition process (including the nature and timing of satisfaction of the underlying performance obligations) and the magnitude of the revenue amounts. Accordingly, we have determined this area to be associated with a significant risk of material misstatement and identified it as a key audit matter.

challenging the appropriateness of determination of performance obligations by reference to the rules of pension and investment funds as well as the terms of the contracts with clients;
assessing the accuracy of NAV used in management fees estimation by tracing NAV to historical financial information of the funds or by performing audit procedures on assets and liabilities that NAV is derived from;
evaluating the completeness and accuracy of the revenue recognized, as follows:
we assessed whether performance obligations are carried out at a point in time or over time by analysing the nature of the service and relevant contractual terms;
for fund management revenue - we traced the fee rates used to those prescribed in the funds' rules, and independently estimated annual revenue from fund management by applying those fee rates to the NAV of respective months or to the amounts of the investors' commitment to invest into the fund, as considered appropriate;
for fund management revenue – on a sample of revenue transactions we traced the amounts recognized to the payments received from the funds;
for success fee revenue – we assessed the appropriateness of the success fee calculation by reference to the funds' rules;
examining whether the Group's revenue recognition-related disclosures appropriately include and describe the relevant quantitative and qualitative information required by the applicable financial reporting framework.

Other Information

The other information comprises the information included in the consolidated annual management report, including Corporate Governance Statement and Remuneration report, and Corporate Social Responsibility Report, but does not include the consolidated and Company's financial statements and our auditor's report thereon. Management is responsible for the other information.

Our opinion on the consolidated and Company's financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

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In connection with our audit of the consolidated and Company's financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and Company's financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

In addition, our responsibility is to consider whether information included in the consolidated annual management report, including Corporate Governance Statement and Remuneration report, for the financial year for which the consolidated and Company's financial statements are prepared is consistent with the consolidated and Company's financial statements and whether consolidated annual management report, including Corporate Governance Statement and Remuneration report, has been prepared in compliance with applicable legal requirements. Based on the work carried out in the course of audit of the consolidated and Company's financial statements, in our opinion, in all material respects:

The information given in the consolidated annual management report, including Corporate Governance Statement and Remuneration report, for the financial year for which the consolidated and Company's financial statements are prepared is consistent with the consolidated and Company's financial statements; and
The consolidated annual management report, including Corporate Governance Statement and Remuneration report, has been prepared in accordance with the requirements of the Law on Consolidated Financial Reporting by Groups of Undertakings of the Republic of Lithuania.

We also need to check that the Corporate Social Responsibility Report has been provided. If we identify that Corporate Social Responsibility Report has not been provided, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated and Company's Financial Statements

Management is responsible for the preparation of the consolidated and Company's financial statements that give a true and fair view in accordance with International Financial Reporting Standards, as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of consolidated and Company's financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance are responsible for overseeing the Group's and the Company's financial reporting process.

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Auditor's Responsibilities for the Audit of the Consolidated and Company's Financial Statements

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

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated and Company's financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's and the Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's and the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated and Company's financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group and the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated and the Company's financial statements, including the disclosures, and whether the consolidated and Company's financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated and Company's financial statements of the current period and

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are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

Under decision of the general shareholders' meeting we were appointed on 14 October 2019 for the first time to audit the consolidated and Company's financial statements. Our appointment to audit the consolidated and Company's financial statements is 3 years.

We confirm that our audit opinion expressed in the Opinion section of our report is consistent with the audit report presented to the Group and the Company and their Audit Committee.

We confirm that to the best of our knowledge and belief, we have not provided to the Group and the Company any prohibited non-audit services referred to in Article 5(1) of the Regulation (EU) No 537/2014 of the European Parliament and of the Council.

In the course of audit, we have not provided any other services except for audit of consolidated and the Company's financial statements.

On behalf of KPMG Baltics, UAB

Toma Jensen
Partner pp
Certified Auditor

Vilnius, the Republic of Lithuania
8 April 2021

The electronic auditor's signature applies only to the Independent Auditor's Report on pages 4 to 10 of this document.

AB INVALDA INVL, company code 121304349, Gynėjų str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

DETAILS OF THE COMPANY

Board of Directors

Mr. Alvydas Banys (Chairman of the Board)
Ms. Indrė Mišeikytė
Mr. Darius Šulnis

Management

Mr. Darius Šulnis (President)
Mr. Raimondas Rajeckas (Chief Financial Officer)

Principal place of business and company code

Gynėjų str. 14,
Vilnius,
Lithuania

Company code 121304349

Banks

AB Šiaulių Bankas
AB SEB Bankas
Swedbank AS
Luminor Bank AS Lithuanian branch
Luminor Bank AS Latvian branch
Swedbank, AB

Auditor

KPMG Baltics, UAB
Lvovo str. 101,
Vilnius, Lithuania

The financial statements were approved and signed by the Management on 8 April 2021.

Mr. Darius Šulnis
President

Mr. Raimondas Rajeckas
Chief Financial Officer

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

Consolidated and Company's income statements

	Notes	Group		Company
		2020	2019	2020	2019
Revenue from contracts with customers	4	12,395	11,326	35	36
Dividend income		7,168	1,882	7,168	1,714
Other income		54	82	38	63
Net changes in fair value of financial instruments at fair value through profit or loss	5.1	(2,897)	18,714	(3,020)	17,797
Employee benefits expenses	5.2	(6,746)	(5,928)	(467)	(381)
Funds distribution fees		(75)	(249)	-	-
Amortisation of costs to obtain contracts with customers	10	(310)	(244)	-	-
Information technology maintenance expenses		(378)	(426)	(13)	(16)
Depreciation and amortisation	9, 10	(806)	(718)	(19)	(20)
Premises rent and utilities		(132)	(145)	(6)	(8)
Advertising and other promotion expenses		(359)	(465)	-	-
Impairment of financial and contract assets		-	139	-	139
Other expenses	5.3	(2,452)	(2,183)	(255)	(129)
Operating profit (loss)		5,462	21,785	3,461	19,195
Finance costs		(133)	(124)	(11)	(11)
Share of net (loss) profit of consolidated subsidiaries accounted for using the equity method	3	-	-	1,759	2,293
Profit (loss) before income tax		5,329	21,661	5,209	21,477
Income tax income (expenses)	6	44	(820)	120	(650)
NET PROFIT FOR THE YEAR		5,373	20,841	5,329	20,827
Attributable to:
Equity holders of the parent		5,329	20,827	5,329	20,827
Non-controlling interests		44	14	-	-
Basic earnings per share (in EUR)	7	0.46	1.80	0.46	1.80
Diluted earnings per share (in EUR)	7	0.45	1.77	0.45	1.77

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

Consolidated and Company's statements of comprehensive income

	Group		Company
	2020	2019	2020	2019
NET PROFIT FOR THE YEAR	5,373	20,841	5,329	20,827
Net other comprehensive income that may be subsequently reclassified to profit or loss	-	-	-	-
Net other comprehensive income not to be reclassified to profit or loss	-	-	-	-
Other comprehensive income for the year, net of tax	-	-	-	-
TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX	5,373	20,841	5,329	20,827
Attributable to:
Equity holders of the parent	5,329	20,827	5,329	20,827
Non-controlling interests	44	14	-	-

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

Consolidated and Company's statements of financial position

	Notes	Group		Company
		As at 31 December 2020	As at 31 December 2019	As at 31 December 2020	As at 31 December 2019
ASSETS
Non-current assets
Property, plant and equipment	9	1,524	1,795	95	107
Intangible assets and costs to obtain contracts	10	5,380	5,572	-	-
Investments into subsidiaries	1, 12, 3	13,564	13,166	27,479	26,732
Investments into associates	1, 12, 3	26,615	30,058	26,615	30,058
Financial assets at fair value through profit or loss	12, 13	32,945	32,317	29,548	29,484
Deferred tax asset	6	637	502	-	-
Total non-current assets		80,665	83,410	83,737	86,381
Current assets
Trade, other receivables and contract assets	15	2,734	2,349	882	78
Prepaid income tax		17	156	17	156
Prepayments and deferred charges		56	100	11	11
Financial assets at fair value through profit or loss	12, 13	1,167	1,883	-	1,506
Cash and cash equivalents	16	5,741	5,577	762	617
Total current assets		9,715	10,065	1,672	2,368
TOTAL ASSETS		90,380	93,475	85,409	88,749
EQUITY AND LIABILITIES
Equity
Share capital	1, 17	3,456	3,456	3,456	3,456
Own shares	17	(929)	(1,248)	(929)	(1,248)
Share premium		5,033	5,033	5,033	5,033
Reserves	18	13,293	13,162	13,147	13,126
Retained earnings		62,304	66,373	62,450	66,409
Equity attributable to equity holders of the parent		83,157	86,776	83,157	86,776
Non-controlling interests		200	232	-	-
Total equity		83,357	87,008	83,157	86,776
Liabilities
Non-current liabilities
Lease liabilities	25	1,160	1,359	81	96
Deferred tax liability	6	1,419	1,481	1,377	1,427
Contract liabilities	21	1,068	700	-	-
Other non-current liabilities	22	136	100	-	-
Total non-current liabilities		3,783	3,640	1,458	1,523
Current liabilities
Borrowings	19	28	-	28	-
Lease liabilities	25	278	250	17	14
Trade payables	20	229	369	3	7
Income tax payable		123	131	-	-
Provisions		100	100	-	-
Contract liabilities	21	138	85	-	-
Other current liabilities	22	2,344	1,892	746	429
Total current liabilities		3,240	2,827	794	450
Total liabilities		7,023	6,467	2,252	1,973
TOTAL EQUITY AND LIABILITIES		90,380	93,475	85,409	88,749

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

Consolidated and Company's statements of changes in equity

Group	Notes	Equity attributable to equity holders of the parent								Non-controlling interests
		Share capital	Own shares	Share premium	Reserves		Retained earnings	Subtotal
					Legal and other reserves	Reserve for acquisition of own shares
Balance as at 1 January 2019		3,441	(1,233)	4,996	1,627	11,121	45,552	65,504	-	65,504
Net profit for the year 2019		-	-	-	-	-	20,827	20,827	14	20,841
Total comprehensive income for the year		-	-	-	-	-	20,827	20,827	14	20,841
Non-controlling interests on acquisition of consolidated subsidiary		-	-	-	-	-	-	-	218	218
Increase of share capital (share options exercised)	17	15	-	37	-	-	-	52	-	52
Share-based payments	18	-	-	-	408	-	-	408	-	408
Acquired own shares	17	-	(15)	-	-	-	-	(15)	-	(15)
Changes in reserves	18	-	-	-	6	-	(6)	-	-	-
Total transactions with owners of the Company, recognised directly in equity		15	(15)	37	414	-	(6)	445	218	663
Balance as at 31 December 2019		3,456	(1,248)	5,033	2,041	11,121	66,373	86,776	232	87,008
Net profit for the year 2020		-	-	-	-	-	5,329	5,329	44	5,373
Total comprehensive income for the year		-	-	-	-	-	5,329	5,329	44	5,373
Changes in reserves	18	-	-	-	110	-	(110)	-	-	-
Disposals of own shares (share options exercised)	17	-	319	-	-	(304)	-	15	-	15
Share-based payments	18	-	-	-	325	-	-	325	-	325
Dividends approved	8	-	-	-	-	-	(9,288)	(9,288)	-	(9,288)
Dividends to non-controlling interests of subsidiaries		-	-	-	-	-	-	-	(76)	(76)
Total transactions with owners of the Company, recognised directly in equity		-	319	-	435	(304)	(9,398)	(8,948)	(76)	(9,024)
Balance as at 31 December 2020		3,456	(929)	5,033	2,476	10,817	62,304	83,157	200	83,357

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

Consolidated and Company's statements of changes in equity (cont'd)

Company	Notes	Share capital	Own shares	Share premium	Reserves		Retained earnings	Total
					Legal and other reserves	Reserve for acquisition of own shares
Balance as at 1 January 2019		3,441	(1,233)	4,996	1,597	11,121	45,582	65,504
Net profit for the year 2019		-	-	-	-	-	20,827	20,827
Total comprehensive income for the year		-	-	-	-	-	20,827	20,827
Share-based payments	18	-	-	-	408	-	-	408
Acquired own shares	17	-	(15)	-	-	-	-	(15)
Increase of share capital (share options exercised)	17	15	-	37	-	-	-	52
Total transactions with owners of the Company, recognised directly in equity		15	(15)	37	408	-	-	445
Balance as at 31 December 2019		3,456	(1,248)	5,003	2,005	11,121	66,409	86,776
Net profit for the year 2020		-	-	-	-	-	5,329	5,329
Total comprehensive income for the year		-	-	-	-	-	5,329	5,329
Share-based payments	18	-	-	-	325	-	-	325
Disposals of own shares (share options exercised)	17	-	319	-	-	(304)	-	15
Dividends approved	8	-	-	-	-	-	(9,288)	(9,288)
Total transactions with owners of the Company, recognised directly in equity		-	319	-	325	(304)	(9,288)	(8,948)
Balance as at 31 December 2020		3,456	(929)	5,033	2,330	10,817	62,450	83,157

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

Consolidated and Company's statements of cash flows

	Notes	Group		Company
		2020	2019	2020	2019
Cash flows from (to) operating activities
Net profit for the year		5,373	20,841	5,329	20,827
Adjustment to reconcile result after tax to net cash flows:
Non-cash:
Depreciation and amortisation including amortisation of costs to obtain contracts with customers	9, 10	1,116	962	19	20
(Gain) on disposal of property, plant and equipment		(3)	3	-	-
Realized and unrealized loss (gain) on investments	5.1	2,897	(18,714)	3,020	(17,797)
Share of net (loss) profit of consolidated subsidiaries accounted for using the equity method	3	-	-	(1,759)	(2,293)
Interest income		(26)	(56)	(25)	(52)
Interest expenses		133	124	11	11
Income tax (income) expenses	6	(44)	820	(120)	650
Provision for impairment of financial and contract assets		-	(139)	-	(139)
Other impairment		10	-	-	-
Change in provisions		-	100	-	-
Share-based payments	18	129	178	27	28
Dividend income		(7,168)	(1,882)	(7,168)	(1,714)
Other non-cash expenses		13	-	13	-
		2,430	2,237	(653)	(459)
Working capital adjustments:
Decrease (increase) in trade, other receivables and contract assets		416	(1,170)	66	14
Decrease (increase) in other current assets		44	(10)	-	(4)
Increase (decrease) in trade payables		(157)	(58)	(21)	(5)
Increase (decrease) in contract and other liabilities		1,009	1,040	223	35
Cash flows from (to) operating activities		3,742	2,039	(385)	(419)
Dividends received		-	-	-	-
Proceeds from sale of held-for-trading financial assets		-	-	-	-
Income tax paid		(158)	(1)	-	-
Net cash flows from (to) operating activities		3,584	2,038	(385)	(419)

(cont'd on the next page)

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

Consolidated and Company's statements of cash flows (cont'd)

	Notes	Group		Company
		2020	2019	2020	2019
Cash flows from (to) investing activities
Acquisition of non-current assets (intangible and property, plant and equipment)		(158)	(101)	(5)	-
Proceeds from sale of non-current assets (intangible and property, plant and equipment)		3	-	-	-
Costs to obtain contracts with customers		(426)	(929)	-	-
Acquisition and establishment of subsidiaries, net of cash acquired for consolidated subsidiaries	3	(15)	54	-	(913)
Proceeds from sales of unconsolidated subsidiaries and redeemed convertible bonds	3	-	2,036	-	2,036
Acquisition of associates	3	(25)	(52)	(25)	(52)
Proceeds from sales of associates	3	294	-	294	-
Acquisition of financial assets at fair value through profit or loss (except held-for-trading)		(7,038)	(3,533)	(5,166)	(3,533)
Sale of financial assets at fair value through profit or loss (except held-for-trading)		4,983	2,595	4,343	1,007
Dividends received		6,950	3,322	8,643	3,438
Loans granted		(40)	(1,935)	(40)	(1,935)
Repayment of granted loans		1,500	300	1,500	300
Interest received		19	22	19	9
Net cash flows from (to) investing activities		6,047	1,779	9,563	357
Cash flows from (to) financing activities
Cash flows related to company shareholders:
Issue of shares		-	52	-	52
Dividends paid to equity holders of the parent		(9,038)	(3)	(9,038)	(3)
Dividends paid to non-controlling interests		(76)	-	-	-
Acquisition of own shares	17	15	(15)	15	(15)
		(9,099)	34	(9,023)	34
Cash flows related to other sources of financing:
Proceeds from borrowings		27	-	27	-
Repayment of borrowings		-	-	-	-
Payments of lease liabilities		(250)	(198)	(14)	(14)
Interest paid		(132)	(124)	(10)	(11)
		(355)	(322)	3	(25)
Net cash flows to financing activities		(9,454)	(288)	(9,020)	9
Impact of currency exchange on cash and cash equivalents		(13)	-	(13)	-
Net increase (decrease) in cash and cash equivalents		164	3,529	145	(53)
Cash and cash equivalents at the beginning of the year	16	5,577	2,048	617	670
Cash and cash equivalents at the end of the year	16	5,741	5,577	762	617

(the end)

AB INVALDA INVL, company code 121304349, Gynėjų str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

Notes to the financial statements

1. General information

AB Invalda INVL (hereinafter the Company) is a public limited liability company registered in the Republic of Lithuania on 20 March 1992. The address of its registered office is:

Gynėjų str. 14,

Vilnius,

Lithuania.

The Company is incorporated and domiciled in Lithuania. AB Invalda INVL is one of the leading asset management groups and one of the major companies investing in other businesses in the Baltic whose primary objective is to steadily increase the investors equity value, solely for capital appreciation or investment income (in the form of dividends and interest). The Company's main investments are in asset management, agriculture, facility management, real estate, bank activities. Asset management segment provides investment-related services to investors and third parties. The entities of the asset management segment manage pension, bond and equity investments funds, alternative investments, individual portfolios, private equity and other financial instruments. Bond and equity investment funds, alternative and private equity funds and closed-ended investment companies are referred as collective investment undertakings.

In respect of each unconsolidated business the Company may also participate in the following investment-related activities, either directly or through a consolidated subsidiary, if these activities are undertaken to maximize the investment return (capital appreciation or investment income) from its investees and do not represent a separate substantial business activity or a separate substantial source of income to the investment entity. The Company does not earn any management fees from unconsolidated subsidiaries.

The Company's shares are traded on the Baltic Secondary List of Nasdaq Vilnius. As at 31 December 2020 and 31 December 2019 the shareholders of the Company were:

	2020		2019
	Number of shares held	Percentage (%)	Number of shares held	Percentage (%)
UAB LJB Investments	3,300,645	27.69	3,515,855	29.50
Mrs. Irena Ona Mišeikienė	3,182,595	26.70	3,369,435	28.27
UAB Lucrum Investicija	2,803,492	23.52	2,401,442	20.15
Mr. Alvydas Banys	910,875	7.64	910,875	7.64
Ms. Indrė Mišeikytė	236,867	1.99	236,867	1.99
The Company (own shares)	229,541	1.93	308,408	2.59
Other minor shareholders	1,254,884	10.53	1,176,017	9.86
Total	11,918,899	100.00	11,918,899	100.00

The shareholders of the Company – Mr. Alvydas Banys, UAB LJB Investments, Mrs. Irena Ona Mišeikienė, Ms. Indrė Mišeikytė, Mr. Darius Šulnis and UAB Lucrum Investicija – have signed the agreement on the implementation of a long-term corporate governance policy. For the purpose of developing and implementing the long-term corporate governance policy the above mentioned shareholders agreed to act in the interests of the Company. In order to implement this, the shareholders agreed in advance coordinate their opinion on the issues considered at the general meeting of shareholders of the Company. The agreement shall not be interpreted to mean an undertaking of the shareholders to vote unanimously on decisions taken at the general meetings of shareholders of the Company. The sole purpose of the agreement is for shareholders to make known their position and find out the position of the other shareholders in advance regarding the agenda items of the general meetings of shareholders of the Company related to the implementation of the long-term corporate governance strategy of the Company and for the aim of achieving the aims mentioned above to coordinate potential decisions in advance.

All the shares of the Company are ordinary shares with the par value of EUR 0.29 each and were fully paid as at 31 December 2020 and 2019. Subsidiaries and associates did not hold any shares of the Company as at 31 December 2020 and 2019.

As at 31 December 2020 the number of employees of the Group was 537 (as at 31 December 2019 – 561). As at 31 December 2020 the number of employees of the Company was 7 (as at 31 December 2019 – 7).

According to the Law on Companies of Republic of Lithuania, the annual financial statements prepared by the Management are authorised by the General Shareholders' meeting. The shareholders hold the power not to approve the annual financial statements and the right to request new financial statements to be prepared.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

1 General information (cont'd)

The Group consists of the Company and the following consolidated directly and indirectly owned subsidiaries (hereinafter the Group).

Name	Country of incorporation and place of business	Effective ownership directly/indirectly held by the Company/Group (%)		Nature of business
		As at 31 December 2020	As at 31 December 2019
Asset management segment:
UAB INVL Asset Management	Lithuania	100.00	100.00	Pension and investments funds, alternative investments, clients' portfolio management
IPAS INVL Asset Management	Latvia	100.00	100.00	Pension and investments funds, clients' portfolio management
AS INVL Atklātais Pensiju Fonds	Latvia	100.00	100.00	3rd pillar pension funds management
UAB FMJ INVL Finasta	Lithuania	100.00	100.00	Financial brokerage
UAB Mundus*	Lithuania	51.01	51.01	Private debt investments funds management
UAB INVL Farmland Management	Lithuania	100.00	100.00	Land administration services
UAB Invalda INVL Investments	Lithuania	100.00	100.00	Dormant
INVL LUX GP1 S.à r.l.**	Luxembourg	100	-	General partner of managed entity -fund

The entity is owned by the Company indirectly.
*Due to immaterial to the financial position, performance and cash flows of the Group, the subsidiary was not consolidated.

As at 31 December 2020 and 2019 the Group has also the following unconsolidated subsidiaries, which measured at fair value through profit or loss.

Name	Country of incorporation and place of business	Effective ownership directly/indirectly held by the Company/Group (%)		Nature of business
		As at 31 December 2020	As at 31 December 2019
Facility management activities:
UAB Inservis	Lithuania	100.00	100.00	Facilities management
UAB IPP Integracijos Projektai*	Lithuania	100.00	100.00	Dormant
UAB Priemiestis*	Lithuania	100.00	100.00	Facilities management
UAB Jurita*	Lithuania	100.00	100.00	Facilities management
UAB Informacinio Verslo Paslaugų Įmonė*	Lithuania	88.70	88.70	Payments administration for public utilities
SIA Inservis*	Latvia	100.00	100.00	Facilities management
UAB Įmonių Grupė Inservis	Lithuania	100.00	100.00	Investment into facilities management entities
Other activities:
UAB Kelio Ženklai	Lithuania	100.00	100.00	Road signs production, wood manufacturing
VŠĮ Iniciatvys Fondas	Lithuania	100.00	100.00	Social initiatives activities
UAB Aktyvo	Lithuania	54.55	54.55	Management of bad debt
UAB Aktyvus Valdymas	Lithuania	100.00	100.00	Dormant
UAB Cedus Invest	Lithuania	100.00	100.00	Investment into agriculture entity UAB Litagra (investment entity)
UAB MGK Invest	Lithuania	100.00	100.00	Dormant
UAB MBGK*	Lithuania	100.00	100.00	Dormant
UAB RPNG	Lithuania	100.00	100.00	Dormant
UAB Regenus	Lithuania	100.00	100.00	Dormant
UAB Consult Invalda	Lithuania	100.00	100.00	Dormant
UAB Cedus	Lithuania	100.00	100.00	Dormant
UAB MD Partners	Lithuania	51.37	51.37	Indirectly investment into MAIB bank (investment entity)

*These entities are owned indirectly by the Company as at 31 December 2020 and/or 2019.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

1 General information (cont'd)

The Group has not any significant restriction on ability to access or use its assets and settle its liabilities. The Company has not any significant restriction on the ability of an unconsolidated subsidiary to transfer funds to the Company.

If the unconsolidated subsidiary has liquidity difficulties, the Company grants loans to the subsidiary after analysis of its needs. The Company has not any contractual commitments to provide financial support to unconsolidated subsidiary. In 2020 and 2019 the Company has granted EUR 40 thousand and EUR 135 thousand of loans to maintain the activity of the unconsolidated subsidiaries, respectively.

As at 31 December 2020 the Group has the following associates, which measured at fair value through profit or loss:

Name	Country of incorporation and place of business	Effective ownership directly/indirectly held by the Company/Group (%)	Nature of business
Agriculture activities:
UAB Litagra*	Lithuania	48.81	The primary crop and livestock (milk) production and feed production
Real estate activities:
Special Closed-Ended Type Real Estate Investment Company INVL Baltic Real Estate**	Lithuania	32.49	Real estate owner and lessor

The entity is owned indirectly by the Company as at 31 December 2020.
*As at 31 December 2020 the Group/the Company owned indirectly 2.46% of shares of the entity.

As at 31 December 2019 the Group has the following associates, which measured at fair value through profit or loss:

Name	Country of incorporation and place of business	Effective ownership directly/indirectly held by the Company/Group (%)	Nature of business
Agriculture activities:
UAB Litagra*	Lithuania	48.81	The primary crop and livestock (milk) production and feed production
Real estate activities:
Special Closed-Ended Type Real Estate Investment Company INVL Baltic Real Estate	Lithuania	32.45	Real estate owner and lessor

*The entity is owned indirectly by the Company as at 31 December 2019.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

1 General information (cont'd)

As at 31 December 2019 the Company held 100% of voting rights of unconsolidated subsidiary UAB MD Partners (all shares of the entity are owned by the Company). Through unconsolidated subsidiary UAB MD Partners the Company/the Group has indirectly invested into the largest Moldovan bank Moldova-Agroindbank (MAIB). 41.09% shares of MAIB were acquired by entity Heim Partners Limited. UAB MD Partners owns 37.5% of Heim Partners Limited shares and has entered into shareholders agreement with other shareholders: the European Bank for Reconstruction and Development (37.5% of shares) and subsidiary of fund managed by Ukrainian private equity manager Horizon Capital (25% of shares). All these shareholders have obtained permission of the Moldovan central bank to indirectly acquire shares of MAIB. To finance the acquisition, UAB MD Partners issued convertible bonds. They were acquired by the Company and by INVL Special Opportunities Fund, managed by consolidated subsidiary UAB INVL Asset Management. Investors into INVL Special Opportunities Fund are independent from the Group. After obtaining the permission of the Moldovan central bank, those bonds were converted into shares of MD Partners (one unit of bond converts to one unit of share, nominal value is the same) in April 2020, after which the Company owns 51.37% and 48.63% is owned by INVL Special Opportunities Fund. Therefore, according to the bond terms, the Company effectively owns 51.37% of economic benefits from the investment into UAB MD Partners, 19.26% of economic benefits from the indirectly investments into Heim Partners Limited and 7.91% of economic benefits from the indirectly investment into MAIB.

UAB Litagra has to receive bank consent to pay dividends as at 31 December 2020 and 2019. Special Closed-Ended Type Real Estate Investment Company INVL Baltic Real Estate (hereinafter INVL Baltic Real Estate) has the right to pay dividends without bank consent only if the ratio of EBITDA (earnings before interest, tax, depreciation and amortization) divided by the sum of debt service costs (interest and principal repayments) and dividends would be higher than 1.1.

2. Summary of significant accounting policies

The principal accounting policies applied in preparing the Group's and the Company's financial statements for the year ended 31 December 2020 are as follows:

2.1. Basis of preparation

Statement of compliance

The financial statements of the Company and the consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (hereinafter the EU).

These financial statements have been prepared on a historical cost basis, except for financial assets and liabilities at fair value through profit or loss, investments to unconsolidated subsidiaries and associates measured at fair value through profit or loss. The financial statements are presented in thousands of euro (EUR) and all values are rounded to the nearest thousand except when otherwise indicated. From 1 January 2015 the euro became local currency of the Republic of Lithuania.

Adoption of new and/or changed IFRSs and IFRIC interpretations

The Group has adopted the new and amended IFRS and IFRIC interpretations as of 1 January 2020:

Amendments to the Conceptual Framework for Financial Reporting (effective for annual periods beginning on or after 1 January 2020);
Amendments to IAS 1 and IAS 8: Definition of materiality (effective for annual periods beginning on or after 1 January 2020);
Amendments to IFRS 9, IAS 39 and IFRS 7: Interest rate benchmark reform (effective for annual periods beginning on or after 1 January 2020);
Amendments to IFRS 3 Business Combination: Definition of a business (effective for annual periods beginning on or after 1 January 2020);
Amendments to IFRS 16: Covid-19-Related Rent Concessions (effective for annual periods beginning on or after 1 January 2020).

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020
(all amounts are in EUR thousand unless otherwise stated)

2 Summary of significant accounting policies (cont'd)

2.1 Basis of preparation (cont'd)

The principal effects of these changes are as follows:

Amendments to the Conceptual Framework for Financial Reporting

The revised Conceptual Framework includes a new chapter on measurement; guidance on reporting financial performance; improved definitions and guidance - in particular the definition of a liability; and clarifications in important areas, such as the roles of stewardship, prudence and measurement uncertainty in financial reporting. The amendments had no impact to the Group's and the Company's financial statements for the year ended 31 December 2020.

Amendments to IAS 1 and IAS 8: Definition of materiality

The amendments clarify the definition of material and how it should be applied by including in the definition guidance that until now has featured elsewhere in IFRS. In addition, the explanations accompanying the definition have been improved. Finally, the amendments ensure that the definition of material is consistent across all IFRS Standards. Information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. The amendments had no impact to the Group's and the Company's financial statements for the year ended 31 December 2020.

Amendments to IFRS 9, IAS 39 and IFRS 7: Interest rate benchmark reform

The amendments were triggered by replacement of benchmark interest rates such as LIBOR and other inter-bank offered rates ('IBORs'). The amendments provide temporary relief from applying specific hedge accounting requirements to hedging relationships directly affected by the IBOR reform. Cash flow hedge accounting under both IFRS 9 and IAS 39 requires the future hedged cash flows to be 'highly probable'. Where these cash flows depend on an IBOR, the relief provided by the amendments requires an entity to assume that the interest rate on which the hedged cash flows are based does not change as a result of the reform. Both IAS 39 and IFRS 9 require a forward-looking prospective assessment in order to apply hedge accounting. While cash flows under IBOR and IBOR replacement rates are currently expected to be broadly equivalent, which minimises any ineffectiveness, this might no longer be the case as the date of the reform gets closer. Under the amendments, an entity may assume that the interest rate benchmark on which the cash flows of the hedged item, hedging instrument or hedged risk are based, is not altered by IBOR reform. IBOR reform might also cause a hedge to fall outside the 80–125% range required by retrospective test under IAS 39. IAS 39 has therefore been amended to provide an exception to the retrospective effectiveness test such that a hedge is not discontinued during the period of IBOR-related uncertainty solely because the retrospective effectiveness falls outside this range. However, the other requirements for hedge accounting, including the prospective assessment, would still need to be met. In some hedges, the hedged item or hedged risk is a non-contractually specified IBOR risk component. In order for hedge accounting to be applied, both IFRS 9 and IAS 39 require the designated risk component to be separately identifiable and reliably measurable. Under the amendments, the risk component only needs to be separately identifiable at initial hedge designation and not on an ongoing basis. In the context of a macro hedge, where an entity frequently resets a hedging relationship, the relief applies from when a hedged item was initially designated within that hedging relationship. Any hedge ineffectiveness will continue to be recorded in profit or loss under both IAS 39 and IFRS 9. The amendments set out triggers for when the reliefs will end, which include the uncertainty arising from interest rate benchmark reform no longer being present. The amendments require entities to provide additional information to investors about their hedging relationships that are directly affected by these uncertainties, including the nominal amount of hedging instruments to which the reliefs are applied, any significant assumptions or judgements made in applying the reliefs, and qualitative disclosures about how the entity is impacted by IBOR reform and is managing the transition process. The amendments had no impact to the Group's and the Company's financial statements for the year ended 31 December 2020, as the Group and the Company have no financial instruments linked to IBOR and have no hedging.

2 Summary of significant accounting policies (cont'd)

2.1 Basis of preparation (cont'd)

Amendments to IFRS 3 Business Combination: Definition of a business

The amendments revise definition of a business. A business must have inputs and a substantive process that together significantly contribute to the ability to create outputs. The new guidance provides a framework to evaluate when an input and a substantive process are present, including for early stage companies that have not generated outputs. An organised workforce should be present as a condition for classification as a business if are no outputs. The definition of the term 'outputs' is narrowed to focus on goods and services provided to customers, generating investment income and other income, and it excludes returns in the form of lower costs and other economic benefits. It is also no longer necessary to assess whether market participants are capable of replacing missing elements or integrating the acquired activities and assets. An entity can apply a 'concentration test'. The assets acquired would not represent a business if substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets. The amendments had no impact to the Group's and the Company's financial statements for the year ended 31 December 2020.

Amendments to IFRS 16: Covid-19-Related Rent Concessions

The amendments provided lessees (but not lessors) with relief in the form of an optional exemption from assessing whether a rent concession related to COVID-19 is a lease modification. Lessees can elect to account for rent concessions in the same way as they would if they were not lease modifications. In many cases, this will result in accounting for the concession as a variable lease payment. The practical expedient only applies to rent concessions occurring as a direct consequence of the COVID-19 pandemic and only if all of the following conditions are met: the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; any reduction in lease payments affects only payments due on or before 30 June 2021; and there is no substantive change to other terms and conditions of the lease. If a lessee chooses to apply the practical expedient to a lease, it would apply the practical expedient consistently to all lease contracts with similar characteristics and in similar circumstances. The amendment is to be applied retrospectively in accordance with IAS 8, but lessees are not required to restate prior period figures or to provide the disclosure under paragraph 28(f) of IAS 8. The amendments had no impact to the Group's and the Company's financial statements for the year ended 31 December 2020.

Standards adopted by the EU but not yet effective

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest rate benchmark (IBOR) reform – phase 2 (effective for annual periods beginning on or after 1 January 2021).

The Phase 2 amendments address issues that arise from the implementation of the reforms, including the replacement of one benchmark with an alternative one. The amendments cover the following areas:

Accounting for changes in the basis for determining contractual cash flows as a result of IBOR reform: For instruments to which the amortised cost measurement applies, the amendments require entities, as a practical expedient, to account for a change in the basis for determining the contractual cash flows as a result of IBOR reform by updating the effective interest rate using the guidance in paragraph B5.4.5 of IFRS 9. As a result, no immediate gain or loss is recognised. This practical expedient applies only to such a change and only to the extent it is necessary as a direct consequence of IBOR reform, and the new basis is economically equivalent to the previous basis. Insurers applying the temporary exemption from IFRS 9 are also required to apply the same practical expedient. IFRS 16 was also amended to require lessees to use a similar practical expedient when accounting for lease modifications that change the basis for determining future lease payments as a result of IBOR reform.
End date for Phase 1 relief for non contractually specified risk components in hedging relationships: The Phase 2 amendments require an entity to prospectively cease to apply the Phase 1 reliefs to a non-contractually specified risk component at the earlier of when changes are made to the non-contractually specified risk component, or when the hedging relationship is discontinued. No end date was provided in the Phase 1 amendments for risk components.
Additional temporary exceptions from applying specific hedge accounting requirements: The Phase 2 amendments provide some additional temporary reliefs from applying specific IAS 39 and IFRS 9 hedge accounting requirements to hedging relationships directly affected by IBOR reform.
Additional IFRS 7 disclosures related to IBOR reform: The amendments require disclosure of: (i) how the entity is managing the transition to alternative benchmark rates, its progress and the risks arising from the transition; (ii) quantitative information about derivatives and non-derivatives that have yet to transition, disaggregated by significant interest rate benchmark; and (iii) a description of any changes to the risk management strategy as a result of IBOR reform.

The Group and the Company are expected that amendments would not impact their financial statements, as the Group and the Company have no financial instruments linked to IBOR and have no hedging.

Amendment to IFRS 4 Insurance Contracts – deferral of IFRS 9 (effective for annual periods beginning on or after 1 January 2021).

The fixed expiry date of the temporary exemption from applying IFRS 9 in IFRS 4 has been deferred to annual reporting periods beginning on or after 1 January 2023. The amendment is not relevant for the Group and the Company.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

2 Summary of significant accounting policies (cont'd)

2.1 Basis of preparation (cont'd)

Standards not yet adopted by the EU

Amendments to IAS 1: Classification of liabilities as current or non-current (effective for annual periods beginning on or after 1 January 2023 once adopted by the EU).

These narrow scope amendments clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Liabilities are non-current if the entity has a substantive right, at the end of the reporting period, to defer settlement for at least twelve months. The guidance no longer requires such a right to be unconditional. Management's expectations whether they will subsequently exercise the right to defer settlement do not affect classification of liabilities. The right to defer only exists if the entity complies with any relevant conditions as of the end of the reporting period. A liability is classified as current if a condition is breached at or before the reporting date even if a waiver of that condition is obtained from the lender after the end of the reporting period. Conversely, a loan is classified as non-current if a loan covenant is breached only after the reporting date. In addition, the amendments include clarifying the classification requirements for debt a company might settle by converting it into equity. 'Settlement' is defined as the extinguishment of a liability with cash, other resources embodying economic benefits or an entity's own equity instruments. There is an exception for convertible instruments that might be converted into equity, but only for those instruments where the conversion option is classified as an equity instrument as a separate component of a compound financial instrument. The amendments were issued in January 2020 with an original effective date 1 January 2022. However, in response to the Covid-19 pandemic, the effective date was deferred by one year to provide companies with more time to implement classification changes resulting from the amended guidance. The Group and the Company are currently assessing the impact of the amendments on their financial statements, but are not expecting that impact would be material.

Annual Improvements to IFRSs 2018-2020 cycle and narrow scope amendments to IAS 16 Property, Plant and Equipment, IAS 37 Provisions, Contingent Liabilities and Contingent Assets and IFRS 3 Business Combinations (effective for annual periods beginning on or after 1 January 2022 once adopted by the EU).

The amendment to IAS 16 prohibits an entity from deducting from the cost of an item of PPE any proceeds received from selling items produced while the entity is preparing the asset for its intended use. The proceeds from selling such items, together with the costs of producing them, are now recognised in profit or loss. An entity will use IAS 2 to measure the cost of those items. Cost will not include depreciation of the asset being tested because it is not ready for its intended use. The amendment to IAS 16 also clarifies that an entity is 'testing whether the asset is functioning properly' when it assesses the technical and physical performance of the asset. The financial performance of the asset is not relevant to this assessment. An asset might therefore be capable of operating as intended by management and subject to depreciation before it has achieved the level of operating performance expected by management.

The amendment to IAS 37 clarifies the meaning of 'costs to fulfil a contract'. The amendment explains that the direct cost of fulfilling a contract comprises the incremental costs of fulfilling that contract; and an allocation of other costs that relate directly to fulfilling. The amendment also clarifies that, before a separate provision for an onerous contract is established, an entity recognises any impairment loss that has occurred on assets used in fulfilling the contract, rather than on assets dedicated to that contract.

IFRS 3 was amended to refer to the 2018 Conceptual Framework for Financial Reporting, in order to determine what constitutes an asset or a liability in a business combination. Prior to the amendment, IFRS 3 referred to the 2001 Conceptual Framework for Financial Reporting. In addition, a new exception in IFRS 3 was added for liabilities and contingent liabilities. The exception specifies that, for some types of liabilities and contingent liabilities, an entity applying IFRS 3 should instead refer to IAS 37 or IFRIC 21, rather than the 2018 Conceptual Framework. Without this new exception, an entity would have recognised some liabilities in a business combination that it would not recognise under IAS 37. Therefore, immediately after the acquisition, the entity would have had to derecognise such liabilities and recognise a gain that did not depict an economic gain. It was also clarified that the acquirer should not recognise contingent assets, as defined in IAS 37, at the acquisition date.

The amendment to IFRS 9 addresses which fees should be included in the 10% test for derecognition of financial liabilities. Costs or fees could be paid to either third parties or the lender. Under the amendment, costs or fees paid to third parties will not be included in the 10% test.

Illustrative Example 13 that accompanies IFRS 16 was amended to remove the illustration of payments from the lessor relating to leasehold improvements. The reason for the amendment is to remove any potential confusion about the treatment of lease incentives.

IFRS 1 allows an exemption if a subsidiary adopts IFRS at a later date than its parent. The subsidiary can measure its assets and liabilities at the carrying amounts that would be included in its parent's consolidated financial statements, based on the parent's date of transition to IFRS, if no adjustments were made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary. IFRS 1 was amended to allow entities that have taken this IFRS 1 exemption to also measure cumulative translation differences using the amounts reported by the parent, based on the parent's date of transition to IFRS. The amendment to IFRS 1 extends the above exemption to cumulative translation differences, in order to reduce costs for first-time adopters. This amendment will also apply to associates and joint ventures that have taken the same IFRS 1 exemption.

The requirement for entities to exclude cash flows for taxation when measuring fair value under IAS 41 was removed. This amendment is intended to align with the requirement in the standard to discount cash flows on a post-tax basis.

The Group and the Company are currently assessing the impact of the amendments on their financial statements, but are not expecting that impact would be material.

2 Summary of significant accounting policies (cont'd)

2.1 Basis of preparation (cont'd)

Standards not yet adopted by the EU (cont'd)

Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies (effective for annual periods beginning on or after 1 January 2023 once adopted by the EU).

IAS 1 was amended to require companies to disclose their material accounting policy information rather than their significant accounting policies. The amendment provided the definition of material accounting policy information. The amendment also clarified that accounting policy information is expected to be material if, without it, the users of the financial statements would be unable to understand other material information in the financial statements. The amendment provided illustrative examples of accounting policy information that is likely to be considered material to the entity's financial statements. Further, the amendment to IAS 1 clarified that immaterial accounting policy information need not be disclosed. However, if it is disclosed, it should not obscure material accounting policy information. To support this amendment, IFRS Practice Statement 2, 'Making Materiality Judgements' was also amended to provide guidance on how to apply the concept of materiality to accounting policy disclosures. The Group and the Company are currently assessing the impact of the amendments on their financial statements.

Amendments to IAS 8: Definition of Accounting Estimates (effective for annual periods beginning on or after 1 January 2023 once adopted by the EU).

The amendments to IAS 8 clarified how companies should distinguish changes in accounting policies from changes in accounting estimates. The Group and the Company are currently assessing the impact of the amendments on their financial statements.

Amendment to IFRS 16 Leases: Covid-19-Related Rent Concessions beyond 30 June 2021 (effective for annual periods beginning on or after 1 April 2021 once adopted by the EU).

The amendment extended the relief in the form of an optional exemption from assessing whether a rent concession related to COVID-19 is a lease modification by one year to cover rent concessions that reduce only lease payments due on or before 30 June 2022. The amendment is to be applied retrospectively in accordance with IAS 8, but lessees are not required to restate prior period figures or to provide the disclosure under paragraph 28(f) of IAS 8. The Group and the Company are currently assessing the impact of the amendments on their financial statements, but are not expecting that impact would be material.

The following new standards not yet adopted by the EU are not relevant for the Group and the Company:

IFRS 17 Insurance Contracts and amendments to IFRS 17 (effective for annual periods beginning on or after 1 January 2023 once adopted by the EU)

The adoption of the following new standards and amendments are postponed by the EU indefinitely:

IFRS 14 Regulatory Deferral Accounts (effective for annual periods beginning on or after 1 January 2016 once adopted by the EU)
Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (effective for annual periods beginning on or after a date to be determined by the IASB once adopted by the EU)

The Group and the Company have not yet analysed impact of them to their financial statements.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

2 Summary of significant accounting policies (cont'd)

2.2. Investment entity and consolidated financial statements

Investment entity

The Company has multiple unrelated investors and holds multiple investments. Ownership interests in the Company are in the form of equity securities issued by the Company – ordinary registered shares. In the management's opinion, the Company meets the definition of an investment entity as the following conditions exist:

(i) funds are obtained from investors for the purpose of providing them with investment management services;
(ii) it is committed to investors that its business purpose in to invest funds solely for capital appreciation, investment income, or both; and
(iii) it is measured and evaluated the performance of substantially all of its investments on a fair value basis.

The Board of Directors approved exit strategies for the Company's investments, which has not definitely maturity terms. The Company and the Group also invest to the collective investment undertakings, which have limited life or is traded on exchange or is open-ended fund with right to redeem on daily basis.

Each Company's investments are fair valued and such fair value information is provided both to the Company's investors on reporting date and also for internal management reporting purposes.

In addition, management has assessed that the following characteristics further support investment entity categorization: Company holds several investments itself in the investment funds managed by management company owned by the Company (this management company is providing investment-related services and is consolidated), investments in the funds are held by several investors, the investors are not related parties and the investments are held mostly in form of equity.

An investment entity may provide investment-related services, either directly or through a subsidiary, to third parties as well as to its investors, even if those activities are substantial to the entity, subject to the entity continuing to meet the definition of an investment entity. An investment entity may also participate in the following investment-related activities, either directly or through a subsidiary, if these activities are undertaken to maximize the investment return (capital appreciation or investment income) from its investees and do not represent a separate substantial business activity or a separate substantial source of income to the investment entity:

(a) providing management services and strategic advice to an investee; and
(b) providing financial support to an investee, such as a loan, capital commitment or guarantee.

The management has assessed that investment-related services provided to third parties is ancillary to its core investing activities and therefore does not change its business purpose therefore the Company meets the definition of an investment entity.

Subsidiaries

The Company has two types of subsidiaries. One type of subsidiaries are controlled subsidiary investments (hereinafter unconsolidated subsidiary). They are measured at fair value through profit or loss and not consolidated, in accordance with IFRS 10. The fair value of controlled subsidiary investments is determined on a consistent basis to all other investments measured at fair value through profit or loss, and as described in the Note 2.12 below.

The other type of subsidiaries provide investment-related services (investment advisory services, investment management) to the investors and third parties (hereinafter consolidated subsidiary). They are not themselves investment entities. The Company considers whether providing services to third parties is ancillary to its core investing activities, when assesses whether it qualifies as an investment entity. These subsidiaries that provide services that are related to the entity's investment activities are consolidated.

Associates

An associate is an entity, over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. Investments that are held as part of the Company's investment portfolio are carried at fair value even though the Company may have significant influence over those companies. This treatment is permitted by IAS 28 'Investments in associates and joint ventures' as exception from applying the equity method.

2 Summary of significant accounting policies (cont'd)

2.3. Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its consolidated subsidiaries that provide services that are related to the entity's investment activities. The financial statements of the consolidated subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies.

Consolidated subsidiaries are all entities (including structured entities) over which the group has control and that provide services that are related to the entity's investment activities. The Group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidated subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. All intra-group balances, transactions, income and expenses, unrealised gains and losses and dividends resulting from intra-group transactions that are recognised in assets, are eliminated in full.

Some Group's consolidated subsidiaries managed collective investment undertakings and pension funds. The Group analyse whether it is acting primarily as a principal (therefore, controls entities or funds) or as an agent (therefore, do not control them) in exercising its power over the funds. Fund managers generally have power over the relevant activities of the funds that they manage through their exercise of delegated power, and exposure to variability of returns through incentive fees and/or co-investment. Therefore, the link between power and returns is usually key for fund managers assessing whether a fund manager has control over the fund. Aggregate economic interests and investors held rights, including kick-out rights, are assessed together to decide whether the Group have control over managed entities and funds.

Non-controlling interest is the equity in a consolidated subsidiary not attributable, directly or indirectly, to a parent and is presented separately in the consolidated income statement and within equity in the consolidated statement of financial position, separately from parent shareholders' equity. The group treats transactions with non-controlling interests as transactions with equity owners of the group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the consolidated subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Total comprehensive income (losses) within a consolidated subsidiary are attributed to the non-controlling interest even if that results in a deficit balance.

When the Group ceases to have control of a consolidated subsidiary any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss or retained earnings, as appropriate.

2.4. Functional and presentation currency

The financial statements are prepared in euro (EUR), which is local currency of the Republic of Lithuania, and presented in EUR thousand. Euro is also the local currency of the Republic of Latvia. Euro is the Company's functional currency and the Company's and the Group's presentation currency. The exchange rates in relation to other currencies are set daily by the European Central Bank and the Bank of Lithuania.

As these financial statements are presented in euro thousand, individual amounts were rounded. Due to the rounding, totals in the tables may not add up.

2.5. Property, plant and equipment

Property, plant and equipment is stated at cost, excluding the costs of day to day servicing, less accumulated depreciation and accumulated impairment losses. Such cost includes the cost of replacing part of the plant and equipment when the cost is incurred, if the recognition criteria are met. Replaced parts are written off. The Group and the Company have elected to present right-of-use assets as property, plant and equipment. The right-of-use assets comprise leased properties. The accounting policy of right-of-use assets is disclosed in Note 2.18.

The carrying values of property, plant and equipment are reviewed for impairment when events or change in circumstances indicate that the carrying value may not be recoverable.

Depreciation is calculated using the straight-line method over the following estimated useful lives.

Leased properties (right-of-use assets)	2-7 years
Vehicles	6 years
Other non-current assets	3-6 years

2 Summary of significant accounting policies (cont'd)

2.5 Property, plant and equipment (cont'd)

The asset residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year end to ensure that they are consistent with the expected pattern of economic benefits from items in property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement within "other income" in the year the asset is derecognised.

2.6. Intangible assets other than goodwill

Intangible assets are measured initially at cost. Intangible assets are recognised if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of asset can be measured reliably. After initial recognition, intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets other than goodwill are assessed to be finite. Intangible assets are amortised using the straight-line method over the best estimate of their useful lives.

Funds' management rights

Funds' management rights include investment, private debt investments, pension funds and portfolio of clients acquired during asset management entities acquisition. Funds' management rights acquired in a business combination are capitalised at the fair value at the acquisition date and treated as an intangible asset. Following initial recognition, funds' management rights are carried at cost less any accumulated impairment losses. Funds' management rights are amortised during 5 - 10 years.

Software

The costs of acquisition of new software are capitalised and treated as an intangible asset if these costs are not an integral part of the related hardware. Software is amortised during 3-5 years.

Costs incurred in order to restore or maintain the future economic benefits that the Group and the Company expect from the originally assessed standard of performance of existing software systems are recognised as an expense when the restoration or maintenance work is carried out.

2.7. Business combinations and goodwill

The Group applies the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a consolidated subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree 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, with limited exceptions, 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 recognised amounts of acquiree's identifiable net assets.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration, which is deemed to be an asset or liability, will be recognised in accordance with IFRS 9 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity. In instances where the contingent consideration does not fall within the scope of IFRS 9, it is measured in accordance with the appropriate IFRS.

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 the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the consolidated subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement.

2 Summary of significant accounting policies (cont'd)

2.7 Business combinations and goodwill (cont'd)

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of annual impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash generating units, or groups of cash generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is allocated:

represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and
is not larger than an operating segment determined in accordance with IFRS 8 Operating Segments.

Where goodwill forms part of a cash generating unit (group of cash generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash generating unit retained.

2.8 Investments in subsidiaries, associates (the Company)

Investments in unconsolidated subsidiaries, associates are measured at fair value through profit or loss. Loans granted to unconsolidated subsidiaries are considered as part of investments to subsidiaries. They are measured together with equity part of investments to unconsolidated subsidiaries at fair value through profit or loss.

Interest on loans granted at fair value through profit or loss is recognised in the income statement within 'other income' based on the effective interest rate.

When the fair value of investments into unconsolidated subsidiaries together with loans granted to unconsolidated subsidiaries is determined, the value is split into legal components, i.e. between debt and equity instruments. The amortised cost of loans granted is attributed to debt instruments. The remaining value is attributed to equity instruments of the unconsolidated subsidiary.

Investments in consolidated subsidiaries are accounted for using the equity method of accounting. Under the equity method, the investment in the consolidated subsidiary is carried in the statement of financial position at cost plus post acquisition changes in the Company's share of net assets of the consolidated subsidiary. Goodwill relating to a consolidated subsidiary is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. The statement of comprehensive income reflects the share of the results of operations of the consolidated subsidiary. Where there has been a change recognised in the other comprehensive income of the consolidated subsidiary, the Company recognises its share of any changes and discloses this, when applicable, in the other comprehensive income. Company's share in the changes in the net assets of the consolidated subsidiary that are not recognised in profit or loss or other comprehensive income (OCI) of the consolidated subsidiary, are recognised in equity. Unrealised gains and losses (unless the transaction provides evidence of the impairment of asset transferred) resulting from transactions between the Company and the consolidated subsidiary are eliminated to the extent of the interest in the consolidated subsidiary.

The reporting dates of the consolidated subsidiary and the Company are identical and the consolidated subsidiary's accounting policies conform to those used by the Company for like transactions and events in similar circumstances. After application of the equity method, the Company determines whether it is necessary to recognise an additional impairment loss of the Company's investment in its consolidated subsidiaries. The Company determines at each reporting date whether there is any objective evidence that the investment in consolidated subsidiary is impaired. If this is the case the Company calculates the amount of impairment as being the difference between the recoverable amount of the consolidated subsidiary and its carrying value and recognises the amount in the statement of comprehensive income. When the Company's share of losses in a consolidated subsidiary equals or exceeds its interest in the consolidated subsidiary, including any other unsecured receivables, the Company does not recognise further losses, unless it has incurred obligations or made payments on behalf of the consolidated subsidiary.

2.9 Non-current assets (or disposal groups) held-for-sale and discontinued operations

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell if their carrying amount is to be recovered principally through a sale transaction rather than through continuing use.

In the consolidated income statement of the reporting period, and of the comparable period of the previous year, income and expenses from discontinued operations are reported separately from income and expenses from continuing activities as a single amount as profit or loss after tax from discontinued operations in the income statement, even when the Group retains a non-controlling interest in the consolidated subsidiary after the sale, e.g. consolidated subsidiary becomes an associate.

Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.

2 Summary of significant accounting policies (cont'd)

2.9 Non-current assets (or disposal groups) held-for-sale and discontinued operations (cont'd)

When preparing the consolidated statement of income, all inter-company transactions between discontinued and continuing operations that the Group intends to conduct after the discontinuance, are presented in continuing operation without elimination, i.e. they are presented as if they were conducted with third parties. In this case the elimination entry is recorded in discontinued operations. All inter-company transactions between discontinued and continuing operations that the Group does not intend to conduct after the discontinuance, are eliminated from continuing operation.

2.10. Impairment of non-financial assets

The Group and the Company assess at each reporting date whether there is an indication that a non-financial asset (other than deferred taxes) may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group and the Company make an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. Where possible, these calculations may be corroborated by valuation multiples, quoted share prices for publicly traded consolidated subsidiaries or other available fair value indicators.

Impairment losses are recognised in the income statement.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group and the Company make an estimate of recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement. Impairment losses recognised in relation to goodwill are not reversed for subsequent increases in its recoverable amount.

The following criteria are also applied in assessing impairment of specific assets:

Goodwill

Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of the cash generating unit (or group of cash generating units), to which the goodwill relates. Where the recoverable amount of the cash generating unit (or group of cash-generating units) is less than the carrying amount of the cash-generating unit (group of cash-generating units) to which goodwill has been allocated, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods. The Group performs its annual impairment test of goodwill as at 31 December.

2.11. Financial assets

Financial assets within the scope of IFRS 9 are classified as either financial assets at fair value through profit or loss (either through other comprehensive income or through profit or loss) or financial assets measured at amortised cost. The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or in other comprehensive income. The Group and the Company reclassify debt instruments when and only when their business model for managing those assets changes.

Financial assets are recognised when the Group and the Company become parties to the contractual provisions of the instrument. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group and the Company have transferred substantially all the risks and rewards of ownership.

All regular way purchases and sales of financial assets are recognised on the settlement date. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

At initial recognition, the Group/the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

The Group and the Company classify their investments in debt and equity securities, and derivatives, as financial assets at fair value through profit or loss.

2 Summary of significant accounting policies (cont'd)

2.11 Financial assets (cont'd)

Debt instruments

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is calculated using the effective interest rate method and presented as "other income" in the income statement. Any gain or loss arising on derecognition is recognised directly in profit or loss. Impairment losses are presented as separate line item in the income statement. The Group's and the Company's financial assets at amortised cost comprised trade and other receivables, cash and cash equivalents.

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss and recognised in separate line item. Interest income from these financial assets is included in "other income" using the effective interest rate method. Foreign exchange gains and losses are presented in "other income" and impairment expenses are presented as separate line item in the income statement. The Group and the Company do not have financial assets attributed to this group of debt instruments.

Assets that do not meet the criteria for amortised cost or at fair value through other comprehensive income are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss is recognised in profit or loss and presented net within "Net changes in fair value of financial instruments at fair value through profit or loss" in the period in which it arises. As the Company is investment entity, which business model is to evaluate and manage investments at fair value, the debt securities, loans granted to the owned investments are measured at fair value through profit or loss.

Equity instruments

The Group and the Company subsequently measure all equity investments at fair value through profit or loss. Changes in the fair value of these financial assets are recognised within "Net changes in fair value of financial instruments at fair value through profit loss" in the income statement.

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

2.12. Fair value estimation

The fair value of investments traded in active markets is based on quoted market prices at the close of trading, which is the date closest to the reporting date. The fair value of investments that are not traded in active markets is determined by using valuation techniques. Such valuation techniques may include the most recent transactions in the market, the market price for similar transactions, discounted cash flow analysis or any other valuation models.

2.13. Impairment of financial and contract assets

From 1 January 2018, the Group and the Company assess on a forward-looking basis the expected credit losses associated with their financial assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

The Group/the Company follows a three-stage model for impairment for financial assets other than trade receivables:

Stage 1 – balances, for which the credit risk has not increased significantly since initial recognition, or that have low credit risk at the reporting date. For these assets, 12-month expected credit losses ('ECL') are recognised and interest revenue is calculated on the gross carrying amount of the asset (that is, without deduction for credit allowance). 12-month ECL are the expected credit losses that result from default events that are possible within 12 months after the reporting date. It is not the expected cash shortfalls over the 12-month period but the entire credit loss on an asset weighted by the probability that the loss will occur in the next 12 months;

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

2 Summary of significant accounting policies (cont'd)

2.13. Impairment of financial and contract assets (cont'd)

Stage 2 – comprises balances for which there have been a significant increase in credit risk since initial recognition (unless they have low credit risk at the reporting date) but that do not have objective evidence of impairment. For these assets, lifetime ECL are recognised, but interest revenue is still calculated on the gross carrying amount of the asset. Lifetime ECL are the expected credit losses that result from all possible default events over the expected life of the financial instrument. Expected credit losses are the weighted average credit losses with the probability of default ('PD') as the weight;
Stage 3 – comprises balances with objective evidence of impairment at the reporting date. For these assets, lifetime ECL are recognised and interest revenue is calculated on the net carrying amount (that is, net of credit allowance).

Loans granted are considered to be low credit risk when they have a low risk of default and the borrower has a strong capacity to meet its contractual cash flow obligations in the near term.

The financial asset is considered as credit-impaired, if objective evidence of impairment exists at the reporting date. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in payments, the probability that they will enter bankruptcy or other financial reorganisation.

Financial assets are written off, in whole or in part, when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, among others, the probability of insolvency or significant financial difficulties of the debtor. Impaired debts are derecognised when they are assessed as uncollectible.

For trade, other receivables and contract assets, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Trade receivables and contract assets are classified either to Stage 2 or Stage 3:

Stage 2 – comprises receivables for which there the simplified approach was applied to measure the expected lifetime credit losses, except for certain trade receivables classified in Stage 3;
Stage 3 – comprises trade receivables which are overdue more than 90 days (except is reasonable explanation for that) or individually identified as impaired.

The expected loss rates are based on the payment profiles of sales over a period of 36 months before reporting date and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivable. Such forward-looking information would include:

changes in economic, regulatory, technological and environmental factors, (such as industry outlook, GDP, employment and politics); and
external market indicators.

2.14. Trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Group and the Company hold the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. Details about the Group's and Company's impairment policies and the calculation of the loss allowance are provided in Note 2.13.

2.15. Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less.

For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand and in current bank account as well as deposit in bank with an original maturity of three months or less.

The cash or short-term deposits, which use is restricted, are presented in caption 'restricted cash' in the statement of financial position.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

2 Summary of significant accounting policies (cont'd)

2.16. Financial liabilities (cont'd)

The Group and the Company recognise a financial liability when they first become parties to the contractual rights and obligations in the contract.

All financial liabilities are initially recognised at fair value, minus (in the case of a financial liability that is not at fair value through profit or loss) transaction costs that are directly attributable to issuing the financial liability. Financial liabilities are measured at amortised cost using the effective interest method or at fair value through profit or loss. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). Financial liabilities included in trade payables are recognised initially at fair value and subsequently at amortised cost. The fair value of a non-interest bearing liability is its discounted repayment amount. If the due date of the liability is less than one year, discounting is omitted.

Borrowings

Borrowings are recognised initially at fair value less directly attributable transaction costs. After initial recognition, borrowings are subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group/Company has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

Financial liabilities at fair value through profit or loss

After initial recognition, financial liabilities at fair value through profit or loss are subsequently measured at fair value through profit or loss. To this group of financial liabilities is attributable contingent consideration and derivatives that are liabilities.

2.17. Derecognition of financial assets and liabilities

Financial assets

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:

the rights to receive cash flows from the asset have expired;
the Group and the Company retain the right to receive cash flows from the asset, but have assumed an obligation to pay them in full without material delay to a third party under a "pass through" arrangement; or
the Group or the Company have transferred their rights to receive cash flows from the asset and either (a) have transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but have transferred control of the asset.

Where the Group and the Company have transferred their rights to receive cash flows from an asset and have neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group's and the Company's continuing involvement in the asset.

In that case, the Group and the Company's also recognise an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group and the Company have retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

AB INVALDA INVL, company code 121304349, Gynéjy str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

2 Summary of significant accounting policies (cont'd)

2.18. Leases

At inception of a contract, the Group and the Company assess whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Group as a lessee

At commencement or on modification of a contract that contains a lease component, the Group and the Company allocate the consideration in the contract to each lease component on the basis of its relative stand-alone prices. The Group and the Company recognise a right-of-use asset and a lease liability at the lease commencement date.

Right-of-use assets

The right-of-use asset is initially measured at cost which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group/the Company by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses (Note 2.10), if any, and adjusted for certain remeasurements of the lease liability. As at 31 December 2019 and 2020 right-of-use assets of the Group/the Company relate to leased properties and are depreciated over 2-7 and 7 years, respectively.

The Group/the Company presents right-of-use assets in 'property, plant and equipment' in the statement of financial position.

Lease liability

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or if that rate cannot be readily determined, the Group's/the Company's incremental borrowing rate. The Group/the Company determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

fixed payments, including in-substance fixed payments, less any lease incentives receivable;
variable lease payments that depend on ar. index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable under a residual value guarantee; and
the exercise price under a purchase option that the Group/the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Group/the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group/the Company is reasonably certain not to terminate early.

After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, it is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's/the Company's estimate of the amount expected to be payable under a residual value guarantee, if the Group/the Company changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs.

The Group/the Company lease liabilities in separate line in the statement of financial position.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

2 Summary of significant accounting policies (cont'd)

2.18. Leases (cont'd)

Short-term leases and leases of low-value assets

The Group/the Company has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Group/the Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Lease modification

Lease modification is a change in the scope of a lease, or the consideration for a lease, that was not part of the original terms and conditions of the lease. The Group/the Company account for a lease modification as a separate lease if the modification increases the scope of the lease by adding the right to use one or more underlying assets and the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract. For a lease modification that is not accounted for as a separate lease, at the effective date of the lease modification the Group/the Company allocate the consideration in the modified contract to each lease component on the basis of its relative stand-alone prices, determine the lease term of the modified lease and remeasure the lease liability by discounting the revised lease payments using a revised discount rate. The revised discount rate is determined as the interest rate implicit in the lease for the remainder of the lease term, if that rate can be readily determined, or the lessee's incremental borrowing rate at the effective date of the modification, if the interest rate implicit in the lease cannot be readily determined. For a lease modification that is not accounted for as a separate lease, the Group/the Company account for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease and making a corresponding adjustment to the right-of-use asset for all other lease modifications, the Group/the Company recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

2.19. Revenue recognition and costs to obtain contract with customers

Revenue from contracts with customers includes asset management, brokerage and other services revenue.

Revenue from the asset management and brokerage services

Revenue from asset management services is recognized as a percentage from asset under management over the period in which the control of the asset management services is transferred to the client, i.e. when services are provided. Asset management services are provided as long as the client has the investment in funds managed by the Group. Revenue from brokerage services is recognized at point in time when the control of the brokerage services is transferred to the client, i.e. when services are actually provided. It is the date when securities are recorded on the client's account (transaction settlement date).

2 Summary of significant accounting policies (cont'd)

2.19 Revenue recognition and costs to obtain contract with customers (cont'd)

The Group assesses whether some asset management services are separate services provided to the customer (i.e. separate performance obligation). If the service is a separate service provided to the customer, its income is recognized when the service is actual provided. If it is not a separate service provided to the customer but part of the asset management service to manage funds, the recognition of the revenue is deferred and recognized over the average period of the client's contract. The Group earns fund distribution income from investors that invest into certain funds. The Group analysed whether distribution is a separate service provided to the clients or part of the asset management service to manage funds and concluded that the distribution of alternative funds for informed investors and the distribution of investment funds is separate service, as each fund is specialized, and the Group provides a separate identification service for the person or entity investing in such a fund, which includes elements of fund selection and application. Meanwhile, in the case of the distribution of Lithuanian pension funds, the Company assesses that the distribution is not a separate service, but a part of the asset management service, because pension funds are standardized products designed for a retail client. As a result, the revenue of the pension fund distribution fee is considered as a contractual obligation and recognized over the average term of the client contract - 10 years.

The Group earns variable remuneration - a success fee when the return of certain funds exceeds the expected return limit. Depending on the fund rules, the Group acquires the right to a success fee as soon as the fund's return exceeds the expected return limit or only at the end of the fund's life when the fund's assets are distributed. The Group recognizes the success fee as revenue when it acquires the right to a calculated success fee, but only to the extent that it is highly probable that a significant reversal in the amount of success fee recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Costs to obtain contracts with customers

Costs to obtain contracts with customers are commissions paid to external intermediaries for distribution of pension funds. They are capitalised and presented in the statement of financial position within 'Intangible and costs to obtain contracts with customers assets'. The amortization period used for Costs to obtain contracts with customers is 10 years and is based on the average expected duration of the client's stay with the Group.

Interest income

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For credit-impaired financial assets the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).

Disposal of investments

Gain (loss) from sale of investment is recognised when the significant risk and rewards of ownership of the investment have passed to the buyer and are recognised within operating activity, as the parent company treats the securities trading as its main activity.

Dividends income

Income is recognised when the Group's and the Company's right to receive the payment is established.

2.20. Cash and non-cash distribution to equity holders of the parent

The Company recognises a liability to make cash or non-cash distributions to equity holders of the parent when the distribution is authorised and the distribution is no longer at the discretion of the Company. In Lithuania a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity. The liability for non-cash distributions is measured at the fair value of the assets to be distributed with subsequent fair value re-measurement recognised directly in equity as adjustment to the amount of the distribution.

Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of the assets distributed is recognised in the statement of profit or loss.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

2 Summary of significant accounting policies (cont'd)

2.21. Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted by the end of the reporting period in the countries where the Company and its consolidated subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

The standard income tax rate in Lithuania was 15 % in 2020 and in 2019. Starting from 2010, tax losses can be transferred within Lithuania at no consideration or in exchange for certain consideration between the group companies if certain conditions are met.

Deferred income taxes are calculated using the liability method. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse based on tax rates enacted or substantially enacted at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
In respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

By Lithuanian Income Tax Law shall be not taxed sale of shares of an entity, registered or otherwise organised in a state of the European Economic Area or in a state with which a treaty for the avoidance of double taxation has been concluded and brought into effect and which is a payer of corporate income tax or an equivalent tax, to another entity or a natural person where the entity transferring the shares held more than 10% of voting shares in that entity for an uninterrupted period of at least two years. If mentioned condition is met or will be met by judgement of the management of the Company, there are not recognised any deferred tax liabilities or assets in respect of temporary differences associated with these investments. By Lithuanian Income Tax Law shall be not also taxed income from investments into collective investment undertakings.

Deferred tax asset has been recognised in the statement of financial position to the extent the management believes it will be realised in the foreseeable future, based on taxable profit forecasts. If it is believed that part of the deferred tax asset is not going to be realised, this part of the deferred tax asset is not recognised in the financial statements.

Deferred tax asset are not recognised:

Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
In respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

In Lithuania tax losses can be carried forward for indefinite period, except for the losses incurred as a result of disposal of securities and/or derivative financial instruments. In Lithuania such carrying forward is disrupted if the Company changes its activities due to which these losses incurred except when the Company does not continue its activities due to reasons which do not depend on the Company itself. In Lithuania the losses from disposal of securities and/or derivative financial instruments can be carried forward for 5 consecutive years and only be used to reduce the taxable income earned from the transactions of the same nature. From 1 January 2014 current year taxable profit could be decreased by previous year tax losses only up to 70% in Lithuania.

2 Summary of significant accounting policies (cont'd)

2.21 Current and deferred income tax (cont'd)

From 1 January 2018 according to the new Corporate Income Tax Act of Latvia the annual profit would be not taxed. Corporate income tax would be paid on distributed profit, including conditional distributed profit as for example: expenditure not related to economic activities, some loans granted to related parties, some provisions for doubtful debts. The tax rate on (net) distributed profit would be 20/80. From 1 January 2018 the tax base would be reduced by the gain on sale of shares, if the shares were held for an uninterrupted period of at least 36 months. The excess gain can be transferred and utilized in the future periods. The income tax payable on dividends from Latvian consolidated subsidiaries is recognised as the income tax expense of the period in which the dividends are declared, except for deferred tax liability from undistributed profit earned from 1 January 2018 recognised by the Group when it expected to be distributed in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.22 Provisions

Provisions are recognised when the Group and the Company have a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group and the Company expect some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Contingent liabilities recognised in a business combination

A contingent liability recognised in a business combination is initially measured at its fair value. Subsequently, it is measured at the higher of:

the amount that would be recognised in accordance with the general guidance for provisions above (IAS 37) or
the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the guidance for revenue recognition (IFRS 15).

2.23 Segments

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 Board of Directors that makes strategic decisions.

2.24 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are recognised in equity as a deduction, net of tax, from the retained earnings. Where any group company purchases the company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company's equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the company's equity holders.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

2 Summary of significant accounting policies (cont'd)

2.25. Employee benefits

Social security contributions

The Company and the Group pay social security contributions to the state Social Security Fund (the Fund) on behalf of its employees based on the defined contribution plan in accordance with the local legal requirements. A defined contribution plan is a plan under which the Group 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.

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 group recognises termination benefits at the earlier of the following dates: (a) when the group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after reporting date are discounted to their present value.

Bonus plans

The Company and the Group recognise a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation. The bonus plans that provides the employee with a choice of two settlement alternatives that are mutually exclusive, and in which one of the alternative is equity-settled share-based payment and other alternative is cash that is not share-based payment, accounted for as a share-based payment by applying the requirements in IFRS 2 for compound instruments by analogy. The liability for the cash alternative that is not share-based payment are measured and remeasured in accordance with IAS 19 for such arrangements with employees. Some part of bonuses payment is deferred from one to five years after end of reporting period and employment contract have to be not terminated until payment date to receive relevant part of bonus. The deferred amount of bonuses is recognised into profit or loss over the service vesting period. Any incremental fair value of the share-based payment over the initial value of the liability component is accounted for as an equity component. If and when the choice for a cash alternative is sacrificed, then the liability is reclassified to equity and further the Group/the Company recognise employee services received as equity-settled share-based payment transactions.

Pension obligations

If there is an individual arrangement with an employee the Company and the Group may make payments into defined contribution pension plans. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. The group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

2.26. Share-based payments

The Group operates a number of equity-settled, share-based compensation plans (including bonus plans with cash-alternative), under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of the options is recognised as an employee benefits expense. The total amount to be expensed as equity component of share based payments is determined by reference to the fair value of the options granted:

including any market performance conditions;
excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period); and
excluding the impact of any non-vesting conditions (for example, the requirement for employees to save).

Grant date is the date at which the Group/Company and the employee agree to a share-based payment arrangement, and requires that the entity and the employee have a shared understanding of the terms and conditions of the arrangement. If the agreement is subject to an approval process, then grant date is the date on which that approval is obtained. If the employee services is rendered before grant date, the Group/the Company estimating the fair value of the equity instruments is by assuming that grant date is at the reporting date. Once grant date has been established, the Group/the Company revises the earlier estimates so that the amounts recognised for services received are based on the grant-date fair value of the equity instruments.

2 Summary of significant accounting policies (cont'd)

2.26 Share-based payments (cont'd)

Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised into profit or loss over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-marketing vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

When the options are exercised, the Company issues new shares or sell own shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised by issuing of new shares.

In its separate financial statements the grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.

Share - based payments – modification and cancellation

If the terms of an equity-settled award are modified, at a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

If an equity award is cancelled by forfeiture, when the vesting conditions (other than market conditions) have not been met, any expense not yet recognised for that award, as at the date of forfeiture, is treated as if it had never been recognised. At the same time, any expense previously recognised on such cancelled equity awards are reversed from the accounts effective as at the date of forfeiture.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

Share - based payment – settlement choice of employee

If the counterparty has the right to choose whether a share-based payment transaction is settled in cash or by issuing equity instruments, the Group/the Company has granted a compound financial instrument, which includes a debt component and an equity component. The fair value of the compound financial instrument is the sum of the fair values of the two components. The Group/the Company measure the fair value of the debt component as the fair value of the liability under the cash alternative. If the liability for the cash alternative that is not share-based payment are measured and remeasured in accordance with IAS 19 for such arrangements with employees. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component, taking into account that the counterparty must forfeit the right to receive cash in order to receive the equity instrument. The Group/the Company account separately for employee services received in respect of each component of the compound financial instrument. For the debt component, the Group/the Company recognise employee services received, and a liability to pay for those services, as the counterparty renders service. For the equity component, the Group/the Company recognise employee services received, and an increase in equity, as the counterparty renders service as equity-settled share-based payment transactions. If and when the choice for a cash alternative is sacrificed, then the liability is reclassified to equity and further recognise employee services received as equity-settled share-based payment transactions. If the Group/the Company pays in cash on settlement rather than issuing equity instruments, that payment settled the liability in full. Any equity component previously recognised remain within equity.

2.27 Contingencies

Contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.

A contingent asset is not recognised in the financial statements but disclosed when an inflow or economic benefits is probable.

2 Summary of significant accounting policies (cont'd)

2.28. Events after the reporting period

Events after the reporting period that provide additional information about the Group's position as at the end of the reporting period (adjusting events) are reflected in the financial statements. Events after the reporting period that are not adjusting events are disclosed in the notes when material.

2.29. Significant accounting judgements and estimates

The preparation of financial statements requires management of the Group and the Company to make judgements and estimates that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities, at the end of reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Judgements

In the process of applying the Group accounting policies, management has made the following judgement, which has most significant effect on the amounts recognised in the consolidated financial statements:

Investment entity

According to the management, the Company meets all the defining criteria of an investment entity from the split-off in 2014 and henceforth investments in unconsolidated subsidiaries and associates are measured at fair value through profit or loss. The management is continually reviewing whether the Company meets all the defining criteria of an investment entity. In addition, the management assesses the Company's operation objective, investment strategy, origin of income and fair value models and whether investment-related services provided by the consolidated subsidiaries to third parties are ancillary to its core investing activities.

The identification of customer of asset management entities

When the Group starts to manage the new fund, it decides on who is the client of the Group: the fund itself or its participant. This decision affects the accounting for the cost of concluding contracts with fund participants in accordance with IFRS 15. The Group has made the following decisions about who is the client of the funds it manages:

In the case of Lithuanian pension funds, its client is each participant of the fund, because the Group manages the information of the fund participant and communicates directly with each participant of pension funds. As a result, incremental costs to obtain contract for these clients are capitalised by the Group;
In the case of investment funds, alternative funds and Latvian pension funds, the Group estimates that its client is a fund rather than a separate fund participant. This solution is based on the fact that these funds are distributed and relationships with fund investors are supported by intermediaries - usually financial brokerage firms or fund platforms. The Group usually has no contact with the investors of these funds and does not directly communicate with them. Often, the Group does not even have information about the end customers because it only accesses the compound account of the investors and not the individual accounts of the fund participants. As a result, incremental costs to sign-up new investors to these funds are expensed as incurred by the Group.

Success fee

The Group does not recognize the success fee, accrued in the managed funds, as revenue until the condition for non-returnable payment of it is not met. The Group is judged that until the condition for non-returnable payment is met, it is exist significant uncertainty about the possible amount, timing of payment and a significant reversal in received amount of success fee, if it applicable. As at 31 December 2020 the Group has not received any success fee, which could be returned to managed funds.

Control of managed entities/funds

The Group decides whether is control managed entities and funds. The main factors that the Group is assessed together are aggregate economic interests and investors held rights, including kick-out rights. A higher aggregate economic interest was identified for the closed-ended type investment companies INVL Technology and INVL Baltic Real Estate. Unlike other managed funds, the shareholders of these entities have full voting rights, as in any joint stock company. Investors can realize return from them first by selling shares on the stock exchange and receiving dividends. Decisions regarding dividends can only be made by shareholders and not by fund managers and the Group does not have sufficient power to alone decide regarding dividend. Both companies have at least two other major shareholders holding together larger shareholdings than the Group. These shareholders also jointly control the Group. Therefore, after assessment the Group decides that it do not have control over managed entities and funds.

2 Summary of significant accounting policies (cont'd)

2.29. Significant accounting judgements and estimates (cont'd)

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

The significant areas of estimation used in the preparation of these financial statements are discussed below.

Fair value of investments in unconsolidated subsidiaries and associates in financial statements

The fair values of investments in unconsolidated subsidiaries and associates are determined by using valuation techniques, primarily earnings multiples, discounted cash flows and recent comparable transactions. The models used to determine fair values are periodically reviewed and compared against historical results to ensure their reliability. Details of the inputs and valuation models used to determine Level 3 fair value, is provided in Note 12.

The fair value of the investments in unconsolidated subsidiaries and associates of the Group and the Company as at 31 December 2020 was EUR 13,564 thousand and EUR 26,615 thousand, respectively (as at 31 December 2019 - EUR 13,166 thousand and EUR 30,058 thousand, respectively) (described in more details in Note 12).

Useful lives of funds' management rights and amortisation period of costs to obtain contracts with customers

The useful lives of funds' management rights acquired through business combinations are disclosed in Note 2.6 and amortisation charge for the year is disclosed in Note 10. The useful lives 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. As at 31 December 2020 and 2019 the Group assessed that there is no impairment indication of funds' management rights. If the estimated useful lives of funds' management rights have been one year shorter, the amortisation charge for the year ended 31 December 2020 and 2019 would have increased by EUR 77 thousand and EUR 56 thousand, respectively.

Amortisation period of costs to obtain contracts with customers is 10 years, based on the average expected duration of the client's stay with the Group. If the estimated amortisation period of costs to obtain contracts with customers have been one year shorter, the amortisation charge for the year ended 31 December 2020 would have increased by EUR 34 thousand, the amortisation charge for the year ended 31 December 2019 would have increased by EUR 30 thousand.

Deferred tax assets

Deferred tax assets are recognised for tax losses carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised based upon the likely timing and amount of future taxable profits together with future tax planning strategies.

Deferred tax asset is recognized on individual company basis taking into account future performance plans of those companies. No deferred tax asset is recognized from Group's tax losses carry forward for indefinite period of time of EUR 2,333 thousand as 31 December 2020 (as at 31 December 2019 – EUR 4,182 thousand) due to future uncertainties related with the performance of those companies. As at 31 December 2020 and 2019 all above mentioned tax losses is related to consolidated subsidiary UAB INVL Asset Management. As at 31 December 2020 in the total deferred tax asset balance of the Group the amount of EUR 240 thousand (as at 31 December 2019 – EUR 240 thousand) relates to deferred tax asset recognized from the taxable losses of the Company and EUR 579 thousand (as at 31 December 2019 – EUR 564 thousand) was recognized from the taxable losses of other Group's entities (Note 6). As at 31 December 2020 recognition of deferred tax asset from the taxable losses of acquired asset management entities are supported on the estimation of these entities' profitability, which is based on the forecasted growth of managed funds and participants portfolio, on the level of management fees, on future funds return and number of participants. If the profitability estimation would be change by 5%, deferred tax asset would be recognised by EUR 29 thousand more/less (as at 31 December 2019 – EUR 28 thousand).

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

2 Summary of significant accounting policies (cont'd)

2.29 Significant accounting judgements and estimates (cont'd)

Estimates and assumptions (cont'd)

Bonuses

The Group have bonus plans, where employees have choice of two settlement alternatives that are mutually exclusive, and in which one of the alternative is equity-settled share-based payment (by granting share options of the Company) and other alternative is cash that is not share-based payment. As described in more details in Note 2.26, this arrangement with employees is accounted as a compound financial instrument, which includes a debt component and an equity component. The Group use estimates of employee service vesting period and recognise expenses proportionately over estimated vesting period. The equity component as equity-settled share-based payment are measured at the grant date fair value of share-options. The valuation method of fair value of share-options is a significant accounting estimate. The fair value of equity-settled share-based payment is calculated using the Black-Scholes option valuation method. All key inputs, with the exception of share price volatility, are directly observable in the market (the Company's share price and risk-free interest rate). For volatility input is used historical shares volatility on exchange. More details on inputs are disclosed in Note 18.

Other areas involving estimates include useful lives of property, plant and equipment, discount rate for lease liabilities and allowances for accounts receivable. According to the management, these estimates do not have significant risk of causing a material adjustment.

3. Business combinations, investments into associates, disposals

The movement of investments in associates was as follows:

	Group		Company
	2020	2019	2020	2019
At 1 January	30,058	22,745	30,058	22,499
Acquisition of additional shares in associate	25	52	25	52
Disposal of associate	(1,094)	-	(1,094)	-
Reclassification to subsidiaries as result of acquired control	-	(241)	-	-
Changes in fair value	(2,374)	7,502	(2,374)	7,507
At 31 December	26,615	30,058	26,615	30,058

The movement of investments in subsidiaries of the Company was as follows:

	Company
	2020	2019
At 1 January	26,732	20,391
Share of net profit (loss) of consolidated subsidiaries accounted for using equity method	1,759	2,293
Establishment of subsidiaries and increase of share capital	-	913
Disposals	-	(304)
Dividends from consolidated subsidiaries	(1,693)	(267)
Share-based payments of consolidated subsidiaries	298	380
Loans granted/repaid, net	40	135
Interest charged/repaid, net	13	37
Changes in fair value	330	4,886
Decreased share capital (free funds returned)	-	-
Redeemed convertible bonds	-	(1,732)
At 31 December	27,479	26,732
At equity method	13,930	13,566
At fair value – shares and convertible bonds	13,252	12,922
At fair value - loans granted	297	244

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

3 Business combinations, investments into associates, disposals (cont'd)

The movement of investments in unconsolidated subsidiaries of the Group was as follows:

	Group
	2020	2019
At 1 January	13,166	10,144
Loans granted/repaid, net	40	135
Interest charged/ paid, net	13	37
Establishment of unconsolidated subsidiaries and increase of share capital	15	-
Changes in fair value	330	4,886
Redeemed convertible bonds by UAB MD Partners	-	(1,732)
Disposals	-	(304)
At 31 December	13,564	13,166
Shares, convertible bonds	13,267	12,922
Loans granted	297	244

Acquisitions in 2020 and 2019

Analysis of cash flows on acquisition:

	2020	2019
Consideration paid in cash on acquisition of consolidated subsidiaries	-	-
Cash acquired with the consolidated subsidiary	-	54
Consideration paid in cash on acquisition or share capital increase of unconsolidated subsidiaries	-	-
Acquisition of subsidiaries, net of cash acquired	-	54

Acquired control of UAB Mundus

On 2 February 2018 the Group acquired 51% shares of UAB Mundus for EUR 265 thousand. During 2019 EUR 43 thousand was paid. The 49% shares of UAB Mundus are owned by two key management personnel of entity. With them was signed shareholders agreement in November 2017. According to the agreement it was required consent of one of other shareholder to direct the relevant activities of the entity. In the agreement is not specified with which of other shareholder have to be agreed decisions regarding the relevant activities of the entity. Therefore, the Group has neither control nor joint control over entity in 2018 and in 1st Half Year of 2019 and accounted the investment as associate at fair value, because the Company is investment entity.

On 22 July 2019 shareholder agreement of UAB Mundus was changed, as result the Group has acquired control over the entity and has consolidate the entity from 1 July 2019. The amendment of the agreement provided that in deadlock situation, the Group could right to demand the acquisition of shares of other shareholders at a price not lower than that stipulated in the agreement, other shareholders do not have such a unilateral right. The Group have the practical ability to exercise the right, and therefore, it gives the Group the ability to obtain the voting rights held by the other. Because business combination is achieved without the transfer of consideration, fair value of the Group's interest in UAB Mundus was used to measure purchase consideration, which are last fair value measurement of investment into associates as at 30 June 2019 – EUR 241 thousand.

The acquiree operates in Lithuania and has managed one investment fund, which invest into private debt investments of fast growing alternative finance companies. As of 30 June 2019 the entity managed EUR 22.3 million of assets. The goodwill of EUR 14 thousand arising from the acquisition is attributable to the economies of scale expected from combining the operations of the Group and acquired entities. None of the goodwill recognised is expected to be deductible for income tax purposes.

AB INVALDA INVL, company code 121304349, Gynėjų str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

3 Business combinations, investments into associates, disposals (cont'd)

Acquisitions in 2020 and 2019 (cont'd)

Acquired control of UAB Mundus (cont'd)

The fair values of the identifiable assets and liabilities of UAB Mundus were:

	Fair value recognised on acquisition
Assets
Intangible assets	402
Property, plant and equipment	1
Trade and other receivables	107
Prepayments and deferred charges	2
Cash and cash equivalents	54
Total assets	566
Liabilities
Deferred tax liabilities	(61)
Trade payables	(19)
Income tax payable	(13)
Other current liabilities	(28)
Total liabilities	(121)
Total identifiable net assets	445
Non-controlling interests (49% of net assets)	(218)
Goodwill arising on acquisition	14
Total consideration transferred	241

The gross contractual amount for trade receivable due is EUR 107 thousand and all amount is collected in July 2019; therefore, the fair value of trade receivables is approximated the carrying amount.

Acquired business contributed revenues of EUR 229 thousand and earned the net profit of EUR 29 thousand to the Group during the year of 2019.

If the acquisition of UAB Mundus in 2019 had occurred on 1 January 2019, the consolidated revenue would have been EUR 11,510 thousand and consolidated net profit would have been EUR 20,900 thousand for the year of 2019.

AB INVALDA INVL, company code 121304349, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020
(all amounts are in EUR thousand unless otherwise stated)

3 Business combinations, investments into associates, disposals (cont'd)

Acquisitions in 2020 and 2019 (cont'd)

Establishment of companies (increase or decrease of share capital) in 2020 and 2019

In October 2020 the Group has established INVL LUX GP1 S.à r.l. as general partner of entity INVL Alternative Assets Umbrella Fund, SCSp SICAV-RAIF, which serves as vehicle to raise funds for investment in sustainably managed forests and agricultural land in the Baltic Sea region and Central and Eastern Europe. The Group has invested EUR 15 thousand to general partner.

In April 2020 after obtaining the permission of the Moldovan central bank, convertible bonds of MD Partners UAB owned by the Company was converted into shares of MD Partners, after which the Company owns 51.37% of shares and 48.63% of shares is owned by INVL Special Opportunities Fund, managed by consolidated subsidiary UAB INVL Asset Management. For bonds with nominal value of EUR 2,990 thousand the Company received the shares with nominal value of EUR 2,990 thousand (ratio for one bond received one share).

In 1st Half Year of 2019 convertible bonds of UAB MD Partners owned by the Group were redeemed for EUR 1,732 thousand to transfer to the Group indirectly received dividends inflows from MAIB.

In December 2019 the Company has additional invested EUR 913 thousand into the share capital of consolidated subsidiaries IPAS INVL Asset Management.

In December 2019 the Company has additionally invested EUR 696 thousand at face value into share capital of UAB Kelio ženklai by converting loans granted (the carrying amount of converted loans was EUR 446 thousand).

Additional acquisition of UAB Informacinio Verslo Paslaugų Įmonė

Unconsolidated subsidiary UAB Įmonių Grupė Inservis acquired from the state 51.67% stake in UAB Informacinio Verslo Paslaugų Įmonė for EUR 352 thousand. The transaction with the state entity Turto Bankas was completed on 31 January 2019. After this transaction, the Group increased its shareholding in UAB Informacinio Verslo Paslaugų Įmonė from 37.03% (initial acquisition is occurred in 2016) up to 88.7% and the entity became indirectly owned unconsolidated subsidiary. UAB Informacinio Verslo Paslaugų Įmonė has a licence of payment institution issued by the Bank of Lithuania. The company administers taxes on energy and utilities provided to residents, provides services to companies and institutions. In 2019 the unconsolidated subsidiary UAB Įmonių Grupė Inservis has received dividends of EUR 478 thousand from UAB Informacinio Verslo Paslaugų Įmonė.

Acquisition of associates in 2020 and 2019

During 2020 the Company has additionally acquired shares of INVL Baltic Real Estate for EUR 25 thousand on the stock exchange.

During 2019 the Company has additionally acquired shares of INVL Baltic Real Estate for EUR 52 thousand on the stock exchange.

Change of effective ownership in UAB Litagra

In 2018 and 2019 associate UAB Litagra has acquired own shares from its other shareholders. It was executed by three tranches. In each 10% of own shares were acquired and after that own shares were annulled. Therefore, the Group's owned voting rights of UAB Litagra increased from 40.98% as at 31 December 2018 up to 48.81% as at 31 December 2019.

Disposals of subsidiaries in 2020 and 2019

In February 2019 the subsidiaries UAB BSGF Sanus and UAB BSGF Fortis were sold to a closed-end private equity fund INVL Baltic Sea Growth Fund for EUR 304 thousand. Entities were established for the benefit of this fund and, therefore, were sold for price equalled to investment amount.

Disposals of associates in 2020 and 2019

The Company sold 2.46% of shares of INVL Baltic Real Estate to unconsolidated subsidiary UAB Įmonių grupė Inservis for EUR 1,081 thousand. At 31 December 2020 receivable of EUR 800 thousand arising from disposal was remained not settled. It was settled in March 2021. The Company has additionally sold shares of INVL Baltic Real Estate for EUR 13 thousand on the stock exchange.

4. Segment information

The Board of Directors monitors the operating results of the business units of the Group separately for the purpose of making decisions about resource allocations and performance assessment. After becoming investment entity the performance of activities excluding asset management segment is evaluated based on changes in fair value of investments, including dividends and interest income received by the Company. Asset management segment's performance is evaluated based on net profit or loss. Group financing (including finance costs and finance income) and income taxes are allocated between segments as they are identified on basis of separate legal entities. Consolidation adjustments and eliminations are not allocated on a segment basis. Segment assets are measured in a manner consistent with that of the financial statements. All assets are allocated between segments, because segments are identified on a basis of separate legal entities. The granted loans by the Company are allocated to segment's, to which entities they are granted, assets. The impairment losses of these loans are allocated to a segment to which the loan was granted initially.

For management purposes, the Group is organised into following operating segments based on their products and services:

Asset management

The asset management segment includes pension, investment funds, private equity, alternative investments and portfolio management, financial brokerage and land administration services.

Investment activity

The investment activity segment includes the Company investment activities to the unconsolidated subsidiaries, associates and financial assets at fair value, administrative activities of the Companies. The main investment activities of the Company, which is presented to the management separately is disclosed below:

Agriculture

Agricultural activities include the primary crop and livestock (milk) production, feed production and grain processing and agricultural services.

Facility management

The facility management activities includes facility management of dwelling-houses, commercial and public real estate properties and administration of taxes on energy and utilities provided to residents.

Real estate

The real estate activities is investing in investment properties held for future development and in commercial real estate and its rent.

Bank activities

Bank activities represents indirectly investment into MAIB, bank operating in Moldova and investments into AB Šiaulių bankas, bank operating in Lithuania, held by the Company. Because both investments amounts are material and operate in different markets, they are analysed separately.

All other activities

All other activities comprise other investments held by the Company. There is also attributed unconsolidated subsidiary UAB Kelio Ženklai, that are involved in road signs production, wood manufacturing.

Segment revenue, segment expense and segment result include transfers between business segments. Those transfers are eliminated in column 'Inter-segment transactions and consolidation adjustments'. Capital expenditure consists of additions to property, plant and equipment, intangible assets, costs to obtain contract including assets from the acquisition of consolidated subsidiaries.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

4 Segment information (cont'd)

The following table presents revenues, profit (loss) and certain assets and liabilities information regarding the Group's business segments for the year ended 31 December 2020:

	Asset management	Investment activity	Inter-segment transactions and consolidation adjustments	Total
Year ended 31 December 2020
Revenue
Sales to external customers	12,361	34	-	12,395
Inter-segment sales	-	1	(1)	-
Total revenue	12,361	35	(1)	12,395
Results
Net changes in fair value of financial assets	123	(3,020)	-	(2,897)
Interest income	-	26	-	26
Other income	15	7,181	-	7,196
Employee benefits expense	(6,278)	(468)	-	(6,746)
Depreciation and amortization	(1,097)	(19)	-	(1,116)
Impairment	(10)	-	-	(10)
Interest expenses	(120)	(11)	-	(131)
Other expenses	(3,114)	(275)	1	(3,388)
Profit (loss) before income tax	1,880	3,449	-	5,329
Income tax credit (expenses)	(76)	120	-	44
Net profit (loss) for the year	1,804	3,569	-	5,373
Attributable to:
Equity holders of the parent	1,760	3,569	-	5,329
Non-controlling interest	44	-	-	44
As at 31 December 2020
Assets and liabilities
Segment assets	18,962	71,488	(70)	90,380
Segment liabilities	4,841	2,252	(70)	7,023
Other segment information
Capital expenditure:
• Property, plant and equipment	103	7	-	110
• Intangible assets	133	-	-	133
• Costs to obtain contract	426	-	-	426

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

4 Segment information (cont'd)

The following table presents revenues, profit (loss) and certain assets and liabilities information regarding the Group's business segments for the year ended 31 December 2019:

	Asset management	Investment activity	Inter-segment transactions and consolidation adjustments	Total
Year ended 31 December 2019
Revenue
Sales to external customers	11,291	35	-	11,326
Inter-segment sales	2	1	(3)	-
Total revenue	11,293	36	(3)	11,326
Results
Net changes in fair value of financial assets	917	17,797	-	18,714
Interest income	4	52	-	56
Other income	184	1,724	-	1,908
Employee benefits expense	(5,546)	(382)	-	(5,928)
Depreciation and amortization	(942)	(20)	-	(962)
Impairment	-	139	-	139
Interest expenses	(113)	(11)	-	(124)
Other expenses	(3,318)	(153)	3	(3,468)
Profit (loss) before income tax	2,479	19,182	-	21,661
Income tax credit (expenses)	(170)	(650)	-	(820)
Net profit (loss) for the year	2,309	18,532	-	20,841
Attributable to:
Equity holders of the parent	2,295	18,532	-	20,827
Non-controlling interest	14	-	-	14
As at 31 December 2019
Assets and liabilities
Segment assets	18,362	75,193	(80)	93,475
Segment liabilities	4,574	1,973	(80)	6,467
Other segment information
Capital expenditure:
• Property, plant and equipment	386	2	-	388
• Intangible assets	427	-	-	427
• Costs to obtain contract	929	-	-	929

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

4 Segment information (cont'd)

The following tables present measurement of investment activities results on the basis of changes in fair value, including dividend and interest income:

	Agriculture	Facility management	Real estate	Bank sector (MAIB)	Bank sector (AB Šiaulių bankas)	Other investments	Total
Year ended 31 December 2020
Net changes in fair value on financial assets	829	1,264	(3,203)	(670)	(263)	(977)	(3,020)
Dividend income	488	333	6,117	-	-	230	7,168
Interest income	-	-	13	-	-	13	26
Total income from investments	1,317	1,597	2,927	(670)	(263)	(734)	4,174
Investments fair value as at 31 December 2020	18,085	5,775	8,530	7,352	16,409	13,561	69,712

*include loans granted to associate.

The Group also have investments at fair value with carrying amount of EUR 4,579 thousand which attributed to asset management segment.

	Agriculture	Facility management	Real estate	Bank sector (MAIB)	Bank sector (AB Šiaulių bankas)	Other investments	Total
Year ended 31 December 2019
Net changes in fair value on financial assets	5,033	515	2,474	4,440	3,460	1,875	17,797
Dividend income	-	205	554	-	955	-	1,714
Interest income	-	9	6	-	-	37	52
Total income from investments	5,033	729	3,034	4,440	4,415	1,912	19,563
Investments fair value as at 31 December 2019	17,256	4,511	14,308*	8,022	16,672	13,445	74,214

*include loans granted to associate.

The Group also have investments at fair value with carrying amount of EUR 3,210 thousand which attributed to asset management segment.

Analysis of revenue by timing of revenue recognition:

	2020		2019
	Group	Company	Group	Company
Revenue recognised over time:	11,997	35	10,862	36
Management fee	10,010	-	9,199	-
Success fee	1,742	-	1,511	-
Other consideration	245	35	152	36
Revenue recognised at a point in time	398	-	464	-
Total revenue	12,395	35	11,326	36

The Company is domiciled in the Lithuania and the Group operates in Lithuania and Latvia. The result of Group's revenue from external customers in the Lithuania is EUR 11,520 thousand (2019: EUR 10,644 thousand), and the total of revenue from external customers from Latvia is EUR 875 thousand (2019: EUR 682 thousand).

The Group has not recognised as revenue success fee of EUR 4,032 thousand, accrued in the managed entities and funds, as the condition for non-returnable payment of it is not met.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

4 Segment information (cont'd)

The table below presents distribution of the Group non-current assets (other than financial instruments and deferred tax assets) by geographical area as at 31 December 2020 and 2019:

As at 31 December 2020

As at 31 December 2019

Lithuania	Latvia	Total
6,582	322	6,904
6,936	431	7,367

5. Other income and expenses

5.1. Net changes in fair value on financial instruments

	Group		Company
	2020	2019	2020	2019
Net gain (loss) from changes in fair value of unconsolidated subsidiaries and associates	(2,044)	12,388	(2,044)	12,393
Net gain (loss) from financial assets at fair value through profit or loss (except held for trading)	(853)	6,353	(976)	5,404
Net gain (loss) from financial assets held for trading	-	-	-	-
Net gain (loss) from financial liabilities at fair value through profit or loss	-	(27)	-	-
Net gain (loss) from financial instruments at fair value through profit or loss, total	(2,897)	18,714	(3,020)	17,797

5.2. Employee benefits expenses

	Group		Company
	2020	2019	2020	2019
Short-term employee benefits	5,881	5,130	441	353
Share-based payments (cash alternative)	736	620	-	-
Equity-settled share-based payments	129	178	26	28
	6,746	5,928	467	381

5.3. Other expenses

	Group		Company
	2020	2019	2020	2019
Vehicles maintenance costs	(173)	(201)	(1)	(2)
Repairs and maintenance cost of premises	(106)	(91)	(2)	(2)
Taxes	(479)	(487)	(22)	(18)
Professional services	(297)	(274)	(31)	(30)
Fees for securities	(450)	(390)	(26)	(26)
Other expenses	(947)	(740)	(173)	(51)
	(2,452)	(2,183)	(255)	(129)

In March 2020 the Company has granted donation of EUR 100 thousand to support health care sector in the fight with COVID19 pandemic.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

6. Income tax

	Group		Company
	2020	2019	2020	2019
Components of the income tax expense
Current year income tax	(151)	(126)	-	(1)
Prior year current income tax correction	(2)	(22)	-	-
Deferred income tax income (expense)	197	(672)	120	(649)
Income tax income (expense) charged to the income statement – total	44	(820)	120	(650)

There is no income tax expense recognised in other comprehensive income in 2020 and 2019.

Deferred tax asset and liability were estimated at 15% rate in Lithuania as at 31 December 2020.

The movement in deferred tax assets and liabilities of the Group during 2020 is as follows:

	Balance as at 31 December 2019	Recognised in the income statement	Balance as at 31 December 2020
Deferred tax asset
Tax loss carry forward for indefinite period of time	778	15	793
Tax loss carry forward till 2021	26	-	26
Receivables	1	-	1
Investments at fair value through profit or loss	-	-	-
Accruals	122	5	127
Lease liabilities	236	(24)	212
Contract liabilities	118	63	181
Recognised deferred tax asset	1,281	59	1,340
Asset netted with liability of the same legal entities	(779)	76	(703)
Deferred tax asset, net	502	135	637
Deferred tax liability
Property, plant and equipment (right of use assets)	(229)	31	(198)
Intangible assets	(196)	32	(164)
Investments at fair value through profit or loss	(1,695)	55	(1,640)
Undistributed profits of consolidated subsidiaries	-	-	-
Costs to obtain contacts with customers	(140)	20	(120)
Deferred tax liability	(2,260)	138	(2,122)
Liability netted with asset of the same legal entities	779	(76)	703
Deferred tax liability, net	(1,481)	62	(1,419)
Deferred tax, net	(979)	197	(782)

Deferred tax assets have not been recognised for tax losses carry forward for indefinite period of time of EUR 2,333 thousand (tax effect EUR 350 thousand) as at 31 December 2020.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

6 Income tax (cont'd)

Deferred tax asset and liability were estimated at 15% rate in Lithuania as at 31 December 2019.

The movement in deferred tax assets and liabilities of the Group during 2019 is as follows:

	Balance as at 31 December 2018	Recognised in the income statement	Impact of IFRS 16	Acquired subsidiary	Balance as at 31 December 2019
Deferred tax asset
Tax loss carry forward for indefinite period of time	976	(198)	-	-	778
Tax loss carry forward till 2020 – 2021	221	(195)	-	-	26
Receivables	1	-	-	-	1
Investments at fair value through profit or loss	6	(6)	-	-	-
Accruals	3	119	-	-	122
Lease liabilities	-	10	226	-	236
Contract liabilities	29	89	-	-	118
Recognised deferred tax asset	1,236	(181)	226	-	1,281
Asset netted with liability of the same legal entities	(760)	(19)	-	-	(779)
Deferred tax asset, net	476	(200)	226	-	502
Deferred tax liability
Property, plant and equipment (right of use assets)	-	(3)	(226)	-	(229)
Intangible assets	(163)	28	-	(61)	(196)
Investments at fair value through profit or loss	(1,149)	(546)	-	-	(1,695)
Undistributed profits of consolidated subsidiaries	(9)	9	-	-	-
Costs to obtain contacts with customers	(161)	21	-	-	(140)
Deferred tax liability	(1,482)	(491)	(226)	(61)	(2,260)
Liability netted with asset of the same legal entities	760	19	-	-	779
Deferred tax liability, net	(722)	(472)	(226)	(61)	(1,481)
Deferred tax, net	(246)	(672)	-	(61)	(979)

Deferred tax assets have not been recognised for tax losses carry forward for indefinite period of time of EUR 4,182 thousand (tax effect EUR 627 thousand) as at 31 December 2019.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

6 Income tax (cont'd)

The movement in deferred tax assets and liabilities of the Company during 2020 is as follows:

	Balance as at 31 December 2019	Recognised in the income statement	Transfer of tax losses	Balance as at 31 December 2020
Deferred tax asset
Tax loss carry forward for indefinite period of time	214	70	(70)	214
Tax loss carry forward till 2021	26	-	-	26
Lease liabilities	17	(2)	-	15
Recognised deferred tax asset	257	68	(70)	255
Asset netted with liability of the same legal entities	(257)	(68)	70	(255)
Deferred tax asset, net	-	-	-	-
Deferred tax liability
Property, plant and equipment (right of use assets)	(16)	3	-	(13)
Investments at fair value through profit or loss	(1,668)	49	-	(1,619)
Deferred tax liability	(1,684)	52	-	(1,632)
Liability netted with asset of the same legal entities	257	68	(70)	255
Deferred tax liability, net	(1,427)	120	(70)	(1,377)
Deferred tax, net	(1,427)	120	(70)	(1,377)

The movement in deferred tax assets and liabilities of the Company during 2019 is as follows:

	Balance as at 31 December 2018	Recognised in the income statement	Transfer of tax losses	Impact of IFRS 16	Balance as at 31 December 2019
Deferred tax asset
Tax loss carry forward for indefinite period of time	232	65	(83)	-	214
Tax loss carry forward till 2020 – 2021	221	(195)	-	-	26
Lease liabilities	-	(1)	-	18	17
Recognised deferred tax asset	453	(131)	(83)	18	257
Asset netted with liability of the same legal entities	(453)	131	83	(18)	(257)
Deferred tax asset, net	-	-	-	-	-
Deferred tax liability
Property, plant and equipment (right of use assets)	-	2	-	(18)	(16)
Investments at fair value through profit or loss	(1,148)	(520)	-	-	(1,668)
Deferred tax liability	(1,148)	(518)	-	(18)	(1,684)
Liability netted with asset of the same legal entities	453	(131)	(83)	18	257
Deferred tax liability, net	(695)	(649)	(83)	-	(1,427)
Deferred tax, net	(695)	(649)	(83)	-	(1,427)

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

6 Income tax (cont'd)

The reconciliation of the total income tax to the theoretical amount that would arise using the tax rate of the Group and the Company is as follows:

	Group		Company
	2020	2019	2020	2019
Profit before income tax	5,329	21,661	5,209	21,477
Tax calculated at the tax rate of 15 %	(799)	(3,249)	(781)	(3,222)
Non-taxable income - dividend income	1,075	282	1,075	257
Non-taxable income (expenses) – changes in fair value of financial assets	(384)	2,225	(403)	2,150
Non-taxable income (expenses) – impact of equity method	-	-	264	344
Other tax non-deductible (expenses) / non-taxable income	(124)	(48)	(35)	16
Deferred tax expenses arising from write-down, or reversal of a previous write-down, of deferred tax asset due to changes in probability to utilise it	15	(194)	-	(194)
Prior year current income tax correction	(2)	(22)	-	-
The amount of benefit arising from previously unrecognised tax loss of a prior period that is used to reduce current tax expense	263	161	-	-
The amount of benefit arising from temporary difference of a prior period that is used to reduce deferred tax expense	-	30	-	-
Other	-	(5)	-	(1)
Income tax credit (expenses) recorded in the income statement	44	(820)	120	(650)

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

7. Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

The weighted average number of shares for 2020 and 2019 was as follows:

Calculation of weighted average for the year 2020	Number of shares (thousand)	Par value (EUR)	Issued/366 (days)	Weighted average (thousand)
Shares issued as at 31 December 2019	11,610	0.29	366/366	11,610
Own shares disposed as at 3 June 2020	79	0.29	211/366	46
Shares issued as at 31 December 2020	11,689	0.29	-	11,656
Calculation of weighted average for the year 2019	Number of shares (thousand)	Par value (EUR)	Issued/365 (days)	Weighted average (thousand)
Shares issued as at 31 December 2018	11,560	0.29	365/365	11,560
Increase of share capital as at 23 May 2019	52	0.29	222/365	32
Own shares acquired as at 12 June 2019	(2)	0.29	202/365	(1)
Shares issued as at 31 December 2019	11,610	0.29	-	11,591

The following table reflects the income and share data used in the basic earnings per share computations:

	Group		Company
	2020	2019	2020	2019
Net profit, attributable to the equity holders of the parent	5,329	20,827	5,329	20,827
Weighted average number of ordinary shares (thousand)	11,656	11,591	11,656	11,591
Basic earnings per share (EUR)	0.46	1.80	0.46	1.80

The following table reflects the share data used in the diluted earnings per share computations in 2020:

	Number of shares (thousand)	Issued/366 (days)	Weighted average (thousand)
Weighted average number of ordinary shares for basic earnings per share	-	-	11,656
Potential dilutive shares from share-based payment (granted on 3 May 2017, on 3 June 2020 share options exercised by disposal of own shares)	14	154/366	6
Potential dilutive shares from share-based payment (granted on 16 May 2017, on 3 June 2020 share options exercised by disposal of own shares)	63	154/366	27
Potential dilutive shares from share-based payment (granted on 3 May 2018)	51	366/366	51
Potential dilutive shares from share-based payment (granted on 6 May 2019)	59	366/366	59
Potential dilutive shares from share-based payment (granted on 25 May 2020)	52	220/366	31
Potential dilutive shares from share-based payment (granted on 1 July 2020)	-	183/366	-
Weighted average number of ordinary shares for diluted earnings per share	-	-	11,830

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

7. Earnings per share (cont'd)

The following table reflects the share data used in the diluted earnings per share computations in 2019:

	Number of shares (thousand)	Issued/365 (days)	Weighted average (thousand)
Weighted average number of ordinary shares for basic earnings per share	-	-	11,591
Potential dilutive shares from share-based payment (granted on 2 May 2016 and news shares issued on 23 May 2019)	43	142/365	17
Potential dilutive shares from share-based payment (granted on 3 May 2017)	12	365/365	12
Potential dilutive shares from share-based payment (granted on 16 May 2017)	54	365/365	54
Potential dilutive shares from share-based payment (granted on 3 May 2018)	49	365/365	49
Potential dilutive shares from share-based payment (granted on 6 May 2019)	59	239/365	39
Weighted average number of ordinary shares for diluted earnings per share	-	-	11,762

The following table reflects the income data used in the diluted earnings per share computations in 2020 and 2019:

	Group		Company
	2020	2019	2020	2019
Net profit, attributable to the equity holders of the parent	5,329	20,827	5,329	20,827
Weighted average number of ordinary and potential shares (thousand)	11,830	11,762	11,830	11,762
Diluted earnings per share (EUR)	0.45	1.77	0.45	1.77

8. Dividends per share

A dividend in respect of the year ended 31 December 2019 of EUR 0.80 per share, amounting to a total dividend of EUR 9,288 thousand, was approved at the annual general meeting on 30 April 2020.

In 2019 dividends were not declared.

Changes in liabilities arising from financing activities (dividends) are presented in the table below:

	Group/Company Dividends payable
As at 31 December 2018	366
Dividends paid to equity holders of the parent	(3)
Approved dividends	-
As at 31 December 2019	363
Dividends paid to equity holders of the parent	(9,038)
Approved dividends	9,288
As at 31 December 2020	613

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

Property, plant and equipment

| Group | Right-of-use assets
(leased premises) | Vehicles | Other property, plant and equipment | Total |
| --- | --- | --- | --- | --- |
| Cost: | | | | |
| Balance as at 31 December 2018 | - | 4 | 414 | 418 |
| Impact of IFRS 16 | 1,510 | - | - | 1,510 |
| Additions | 297 | - | 90 | 387 |
| Acquisition of subsidiaries (Note 3) | - | - | 1 | 1 |
| Disposals and write-offs | - | - | (12) | (12) |
| Balance as at 31 December 2019 | 1,807 | 4 | 493 | 2,304 |
| Additions | 85 | - | 25 | 110 |
| Acquisition of subsidiaries (Note 3) | - | - | - | - |
| Disposals and write-offs | (6) | (4) | (2) | (12) |
| Balance as at 31 December 2020 | 1,886 | - | 516 | 2,402 |
| Accumulated depreciation: | | | | |
| Balance as at 31 December 2018 | - | 3 | 198 | 201 |
| Charge for the year | 245 | 1 | 72 | 318 |
| Disposals and write-offs | - | - | (10) | (10) |
| Balance as at 31 December 2019 | 245 | 4 | 260 | 509 |
| Charge for the year | 297 | - | 78 | 375 |
| Disposals and write-offs | - | (4) | (2) | (6) |
| Balance as at 31 December 2020 | 542 | - | 336 | 878 |
| Net book value as at 31 December 2019 | 1,562 | - | 233 | 1,795 |
| Net book value as at 31 December 2020 | 1,344 | - | 180 | 1,524 |
| Company | Right-of-use assets
(leased premises) | Other property, plant and equipment | Total |
| --- | --- | --- | --- |
| Cost: | | | |
| Balance as at 31 December 2018 | - | 94 | 94 |
| Impact of IFRS 16 | 121 | - | 121 |
| Additions | 3 | - | 3 |
| Disposals and write-offs | - | - | - |
| Balance as at 31 December 2019 | 124 | 94 | 218 |
| Additions | 2 | 5 | 7 |
| Disposals and write-offs | - | - | - |
| Balance as at 31 December 2020 | 126 | 99 | 225 |
| Accumulated depreciation: | | | |
| Balance as at 31 December 2018 | - | 92 | 92 |
| Charge for the year | 18 | 1 | 19 |
| Disposals and write-offs | - | - | - |
| Balance as at 31 December 2019 | 18 | 93 | 111 |
| Charge for the year | 18 | 1 | 19 |
| Disposals and write-offs | - | - | - |
| Balance as at 31 December 2020 | 36 | 94 | 130 |
| Net book value as at 31 December 2019 | 106 | 1 | 107 |
| Net book value as at 31 December 2020 | 90 | 5 | 95 |

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

9 Property, plant and equipment (cont'd)

The depreciation charge of the Group's and the Company's property, plant and equipment for the year 2020 amounts to EUR 375 thousand and EUR 19 thousand, respectively (in the year 2019 EUR 318 thousand and EUR 19 thousand, respectively). Any property, plant and equipment of the Group and the Company as at 31 December 2020 and 2019 was not have any encumbrance.

10. Intangible assets and costs to obtain contracts with customers

As at 31 December 2020 and 2019 this item of statement of financial position of the Group comprises:

Group	As at 31 December 2020	As at 31 December 2019
Intangible assets	2,933	3,241
Costs to obtain contracts with customers	2,447	2,331
Total	5,380	5,572

Intangible assets

Movement in the account of intangible assets is presented below:

Group	Funds' management		Software and other intangible assets	Total
	Goodwill	rights
Cost:
Balance as at 31 December 2018	90	4,320	73	4,483
Additions			11	11
Acquisition of consolidated subsidiaries (Note 3)	14	402	-	416
Disposals and write-offs	-	-	(1)	(1)
Balance as at 31 December 2019	104	4,722	83	4,909
Additions	-	-	133	133
Acquisition of consolidated subsidiaries (Note 3)	-	-	-	-
Disposals and write-offs	-	-	-	-
Balance as at 31 December 2020	104	4,722	216	5,042
Accumulated amortisation:
Balance as at 31 December 2018	-	1,210	57	1,267
Charge for the year	-	392	9	401
Disposals and write-offs	-	-	-	-
Balance as at 31 December 2019	-	1,602	66	1,668
Charge for the year	-	425	6	431
Impairment	-	-	10	10
Disposals and write-offs	-	-	-	-
Balance as at 31 December 2020	-	2,027	82	2,109
Net book value as at 31 December 2019	104	3,120	17	3,241
Net book value as at 31 December 2020	104	2,695	134	2,933

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

10 Intangible and costs to obtain contracts with customers assets (cont'd)

Company	Software	Total
Cost:
Balance as at 31 December 2018	29	29
Additions	-	-
Disposals and write-offs	-	-
Balance as at 31 December 2019	29	29
Additions	-	-
Disposals and write-offs	-	-
Balance as at 31 December 2020	29	29
Accumulated amortisation:
Balance as at 31 December 2018	28	28
Charge for the year	1	1
Disposals and write-offs	-	-
Balance as at 31 December 2019	29	29
Charge for the year	-	-
Disposals and write-offs	-	-
Balance as at 31 December 2020	29	29
Net book value as at 31 December 2019	-	-
Net book value as at 31 December 2020	-	-

The amortisation charge of the Group's and the Company's intangible assets for the year ended 31 December 2020 amounts to EUR 431 thousand and nil, respectively (in the year 2019 EUR 401 thousand and EUR 1 thousand, respectively).

After 2nd pillar pension funds reform in Lithuania, which are implemented from 1 January 2019, the previous funds were merged and split into new life-cycle pension funds. The Group also reviewed amortisation period for 2nd pillar pension funds right and determined it to be for all 2nd pillar pension funds rights ten years from 1 January 2019. Therefore, it was recognised additionally amortisation expenses of EUR 54 thousand.

Main intangible assets of the Group are as at 31 December 2020:

2nd pillar pension funds. The funds' with carrying amount of EUR 2,032 thousand remaining estimated useful live is 9 years. The funds' with carrying amount of EUR 301 thousand remaining estimated useful live is 4 years and is related to Latvian entity.
3rd pillar pension funds. The funds' with carrying amount of EUR 80 thousand remaining estimated useful live is 3.75 - 7 years.
Private debt investment fund (acquired control of subsidiary in 2019). Its carrying amount equals to EUR 282 thousand and remaining estimated useful live is 3.5 years.

Main intangible assets of the Group are as at 31 December 2019:

2nd pillar pension funds. The funds' with carrying amount of EUR 2,286 thousand remaining estimated useful live is 9 years. The funds' with carrying amount of EUR 376 thousand remaining estimated useful live is 5 years and is related to Latvian entity.
3rd pillar pension funds. The funds' with carrying amount of EUR 96 thousand remaining estimated useful live is 4.75 - 8 years.
Private debt investment fund (acquired control of subsidiary in 2019). Its carrying amount equals to EUR 362 thousand and remaining estimated useful live is 4.5 years.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

10 Intangible and costs to obtain contracts with customers assets (cont'd)

Costs to obtain contracts with customers

Movement in the account of costs to obtain with customers is presented below:

	Group
Balance as at 1 January 2019	1,646
Additions	929
Amortisation	(244)
Balance as at 31 December 2019	2,331
Additions	426
Amortisation	(310)
Balance as at 31 December 2020	2,447

11. Financial instruments by category

Group	Financial assets at amortised cost	Assets at fair value through the profit or loss	Total
31 December 2020
Assets as per statement of financial position
Investments into unconsolidated subsidiaries	-	13,564	13,564
Investments into associates	-	26,615	26,615
Trade and other receivables short term excluding tax receivables	2,422	-	2,422
Financial assets at fair value through profit and loss	-	34,112	34,112
Other financial assets at amortised cost	-	-	-
Cash and cash equivalents	5,741	-	5,741
Total	8,163	74,291	82,454
Group	Financial assets at amortised cost	Assets at fair value through the profit or loss	Total
31 December 2019
Assets as per statement of financial position
Investments into unconsolidated subsidiaries	-	13,166	13,166
Investments into associates	-	30,058	30,058
Trade and other receivables short term excluding tax receivables	2,246	-	2,246
Financial assets at fair value through profit and loss	-	34,200	34,200
Other financial assets at amortised cost	-	-	-
Cash and cash equivalents	5,577	-	5,577
Total	7,823	77,424	85,247

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

11 Financial instruments by category (cont'd)

Group	31 December 2020		31 December 2019
Liabilities as per statement of financial position	Financial liabilities at amortised cost	Financial liabilities through the profit or loss	Financial liabilities at amortised cost	Financial liabilities through the profit or loss
Trade payables	229	-	369	-
Lease liabilities	1,438	-	1,609	-
Other current payables excluding tax payables and employee benefit payables	882	18	688	36
Total	2,549	18	2,666	36
Company	Financial assets at amortised cost	Assets at fair value through the profit or loss	Total
31 December 2020
Assets as per statement of financial position
Investments into unconsolidated subsidiaries	-	13,549	13,549
Investments into associates	-	26,615	26,615
Trade and other receivables	882	-	882
Financial assets at fair value through profit or loss	-	29,548	29,548
Cash and cash equivalents	762	-	762
Total	1,644	69,712	71,356
Company	Financial assets at amortised cost	Assets at fair value through the profit or loss	Total
31 December 2019
Assets as per statement of financial position
Investments into unconsolidated subsidiaries	-	13,166	13,166
Investments into associates	-	30,058	30,058
Trade and other receivables	78	-	78
Financial assets at fair value through profit or loss	-	30,990	30,990
Cash and cash equivalents	617	-	617
Total	695	74,214	74,909
Company		31 December 2020	31 December 2019
Liabilities as per statement of financial position		Financial liabilities at amortised cost
Borrowings		28	-
Lease liabilities		98	110
Trade payables		3	7
Other current payables excluding tax payables and employee benefit payables		632	380
Total		761	497

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

12. Fair value estimation

Financial instruments that are not carried at fair value

The Group's and the Company's principal financial instruments that are not carried at fair value in the statement of financial position are cash and cash equivalents, trade and other receivables, trade and other payables.

The fair value represents the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date.

The carrying amount of the cash and cash equivalents, trade and other receivables, trade and other payables of the Group and the Company as at 31 December 2020 and 2019 approximated their fair value because they are short-term and the impact of discounting is immaterial.

Financial instruments carried at fair value

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;
Level 3: techniques which use inputs with a significant effect on the recorded fair value not based on observable market data.

Unconsolidated subsidiaries and associates are measured at fair value through profit or loss.

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange and those prices represent actual and regularly occurring market transactions on arm's length basis. The quoted market price used for financial assets held by the Group and Company is the measurement date exchange closing price.

The level 2 instruments are investments to collective investment undertakings and entities, where fair value is measured as fair value of net assets value, which is based only on observable inputs. Therefore, collective investment undertakings and these entities have invested only to securities which are measured as Level 1 instruments, and have only cash, current liabilities, which carrying amount approximate to fair value.

The valuation of Level 3 instruments is performed by the Company's employees, analysts, every quarter. The value is estimated as at the last day of quarter. The management of the Company review the valuations prepared by analysts.

In 2020 the Company has used only income approach for valuation of investments into facility management entities. In 2020 the Company has determined net assets value as difference between assets and liabilities, measured using combination of income and market approach, for valuation of investments into UAB Litagra (agriculture activity). Discounted cash flows technique was used for income approach. Value of land was determined by using market approach. In 2019 the Company has prepared additionally valuation only using market approach for investments into facility management entities and UAB Litagra. The main reason for discontinuing of market approach was the difficulty in applying the multiple technique due to application of IFRS 16 in the financial statements of peers. It was faced with lack of information to eliminate of impact of IFRS 16 in the financial statements of peers in second and later years after applying standard. EV/EBITDA multiple with applied IFRS 16 could very fluctuated depending on assumptions of lease term and the peers could be non-comparable due to this.

In 2020 UAB Litagra was valued by using the same discounted cash flows technique as in 2019 for valuation of subgroups. The final value of investments was determined by combining value of subgroups, land owned by group of UAB Litagra and other item of assets and liabilities of holding entity to determine net assets value. The cash flows were adjusted by rent costs of owned land. The value of land was determined by using market approach. Significant part of land was newly valued by external asset valuators in 2020. Valuation of other part of land was made at the end of 2019. It was prepared separate cash flows for each subgroup and used different discount rate. More detailed information of subgroup is disclosed below describing valuation in 2019.

Investment into shares of UAB Litagra was valued also under the market approach in 2019. Relative valuation (market multiples) was done using median EV/EBITDA (capitalization equals EBITDA multiplied by enterprise value and EBITDA multiple minus net debt) and P/BV (capitalization equals Price to book value multiple multiplied by company's book value) multiples. Although farming (first subgroup) is considered a relatively stable business, its results for a particular year may vary depending on weather and other one-off conditions. We partially smooth out such volatility by using weighted historical financials for the entity and for its peers. EBITDA is calculated using numbers for the last three years however giving a higher emphasis for the last trailing 12 months result. Additionally, it was added a value of land portfolio owned by Litagra group. It was valued by external asset valuators, accounted in the statement of financial position for the reporting period date; therefore, it was used for valuation purpose as well. The value of land portfolio is adjusted by rent costs, which would be payable in case of land sale, in EV/EBITDA multiplier technique.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

12 Fair value estimation (cont'd)

Financial instruments carried at fair value (cont'd)

Agricultural activities include the primary crop and livestock (milk) production, feed production and grain processing. UAB Litagra is holding company which directly and indirectly owned shares of multiple entities which for valuation are divided into two subgroups. One subgroup comprises the primary crop and livestock (milk) production. This segment is compared to 5 peers from Central Eastern Europe region including 2 entities from Lithuania. During 2019 the average market capitalization grew although financial results slightly worsened on average. This led to EV/EBITDA multiple increase from 11.0 to 17.4. It shows that market valuations grew in general. Also, it confirms the specifics of farming business, i.e. it is relatively sensitive to weather conditions and other short term effects leading to volatility of financial results but the business remains attractive long term and investors can maintain higher valuation in prospect of improving results. P/BV multiple remained stable.

Second subgroup comprises feed production and grain processing. It was compared to another 4 entities operating in grain processing business. Multiple of this valuation remained relatively stable.

In 2019 higher market multiples for the peers and improved financial results of UAB Litagra itself led to higher valuation. Another reason is increased stake as a buyout of minority shareholder was done by the entity itself with minority discount. During 2019 the effective ownership held by the Group is increased from 40.98% to 48.81%.

In 2019 the Company has also prepared valuation by using discounted cash flows method to check the valuation of multiplier technique. The valuation supported determined fair value by multiplier technique.

In 2020 facility management entities were measured by using the same discounted cash flows technique as in 2019.

Investment in facility management entities was measured in 2019 also using trailing twelve months EBITDA and applying a multiplier of comparable entity City Service SE, operating in Lithuania and listed on the on the Warsaw Exchange. It was decided not to use other foreign companies' multipliers, which were higher than the one used in the calculations due to the fact that facility management is local business dependent on varying Lithuanian legal and business environment. Other facility management entities operating in Lithuania are not public companies. In 2019, the Company was prepared also valuation by using discounted cash flows technique to check the valuation of multiplier technique. The valuation supported determined fair value by multiplier technique.

UAB Kelio Ženklai was measured according to fair value of its assets and liabilities. The main assets - buildings - of UAB Kelio Ženklai were valued using sales comparison method. On the assessment the value of UAB Kelio Ženklai reflects its net assets value.

Investments into UAB MD Partners are measured as fair value of net assets value of entity, where main indirectly owned assets - investment into MAIB bank - are measured using price to earnings (P/E) and P/BV multiplier technique of comparable banks from the Central and Eastern Europe (9 peers are selected) and applying discount at which investment was acquired. Structure of investments into MAIB is described in Note 1. The Company indirectly has 7.9% shares of MAIB. There were also some cash and liabilities at the level intermediate entities UAB MD Partners and HEIM Partners Limited. Because convertible bonds of UAB MD Partners have the same economic rights to the profit of UAB MD Partners as its shares, shares and convertible bonds are measured as one investment.

Dormant entities are measured according to its equity, because they have only cash and current liabilities.

The Group and the Company have also invested into collective investment undertakings, which main assets are Level 3 financial instruments. These investments are valued at net assets value of collective investment undertakings, which are measured at fair value and communicated to investor by the management entity of collective investment undertakings. Investments of collective investment undertakings are measured EBITDA and Revenue multiplier technique or by using discounted cash flows technique.

AB INVALDA INVL, company code 121304349, Gynėjų str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

12 Fair value estimation (cont'd)

Financial instruments carried at fair value (cont'd)

The following table represents inputs and fair value valuation techniques of unconsolidated subsidiaries and associates used by the Company and the Group as at 31 December 2020:

Profile of activities	Fair value	Valuation technique	Inputs	Values of inputs
Facility management (UAB Inservis, UAB Įmonių Grupė Inservis*) (Level 3)	5,775	Discounted cash flows	Yearly increase of sales	2%-4.5%
			Yearly increase of expenses	3.5%-5%
			Discount rate	10.1%
			Terminal growth rate	0.5%
Agriculture (UAB Litagra) (Level 3)	18,085	Fair value of net assets determined by using combination of discounted cash flows and sales comparison method	EBITDA margin	5%-6% and 17%
			Discount rate	7.35% and 7.76%
			Terminal growth rate	1%
			Average value of 1 ha of land, EUR	5,895
Road signs production, wood manufacturing (UAB Kelio Ženklai) (Level 3)	297	Fair value of net assets	-	-
Investment entity (UAB MD partners, investment into MAIB)** (Level 3)	7,352	Comparable companies in the market	P/BV	0.86
			P/E	9.47
			Net profit, EUR million	27
			Equity, EUR million	235
			Discount for lack of marketability and country and MAIB risk	60%
Investment entity (UAB Cedus Invest) (Level 2)	84	Fair value of net assets	-	-
Dormant SPEs (Level 2)	41	Fair value of net assets	-	-
BSGF (Level 3)	7,492	Fair value of net assets determined by using discounted cash flows	Discount rate	10.59%-11.59%
			Terminal growth rate	1%
			EBITDA margin	5.3-10.6%

Valuation of UAB Įmonių Grupė Inservis include indirectly owned unconsolidated subsidiaries - UAB Priemiestis, UAB Jurita, UAB Informacinio Verslo Paslaugų Įmonė, SIA Inservis and dormant UAB IPP Integracijos Projektai.
*The discount for lack of marketability and country and MAIB risk used for valuation of investment into MAIB has remained unchanged in 2020 because there were no new transactions in 2020 that would be suitable for recalibration of the discount rate and also there are no other market indications implying required change in this assumption.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

12 Fair value estimation (cont'd)

Financial instruments carried at fair value (cont'd)

The following table represents inputs and fair value valuation techniques of unconsolidated subsidiaries and associates used by the Company and the Group as at 31 December 2019:

Profile of activities	Fair value	Valuation technique	Inputs	Values of inputs
Facility management (UAB Inservis, UAB Įmonių Grupė Inservis*) (Level 3)	4,511	Comparable companies in the market	EBITDA multiple	10.8
			EBITDA, EUR thousand	403
		Discounted cash flows	Yearly increase of sales	4%-5%
			Yearly increase of expenses	3%-5%
			Discount rate	8.9%
Agriculture (UAB Litagra) (Level 3)	17,256	Comparable companies in the market	EBITDA multiple	9.03 and 17.37
			P/BV	0.65 and 0.86
			Equity, EUR thousand	36,537
			EBITDA, EUR thousand	3,120
			Discount for lack of marketability	10%
		Fair value of net assets determined by using combination of discounted cash flows and sales comparison method	EBITDA margin	6% and 16%-19%
			Discount rate	7.5% and 7.82%
			Terminal growth rate	1%
Road signs production, wood manufacturing (UAB Kelio Ženklai) (Level 3)	351	Fair value of net assets	-	-
Investment entity (UAB MD partners, investment into MAIB)** (Level 3)	8,022	Comparable companies in the market	P/BV	1.01
			P/E	7.42
			Net profit, EUR million	37
			Equity, EUR million	229
			Discount for lack of marketability and country and MAIB risk	60%
Investment entity (UAB Cedus Invest) (Level 2)	240	Fair value of net assets	-	-
Dormant SPEs (Level 2)	42	Fair value of net assets	-	-
BSGF (Level 3)	3,577	Fair value of net assets determined by using: Comparable companies in the market/discounted cash flows	EBITDA multiple	12.83
			Revenue (Sales) multiple	0.91
			Discount for lack of marketability	14%
			Discount rate	12.07%
			Terminal growth rate	1%
			EBITDA margin	5.1%-5.7%

*Valuation of UAB Įmonių Grupė Inservis include indirectly owned unconsolidated subsidiaries - UAB Priemiestis, UAB Jurita, UAB Informacinio Verslo Paslaugų Įmonė, SIA Inservis and dormant UAB IPP Integracijos Projektai.

**The Company has analysed acquisitions market of Moldavian banking institutions in 2019. Based on the data of 2019 transactions similar to MAIB bank acquisition transaction, the Company revised the discount rate applied in valuation of MAIB bank and decreased it from 69% (calculated when calibrating acquisition price to market peer data and applied as at 31 December 2018) to 60% (applied as at 31 December 2019).

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

12 Fair value estimation (cont'd)

Financial instruments carried at fair value (cont'd)

The table below presents the effect of changing one or more those assumptions behind the valuation techniques adopted based on reasonable possible alternative assumptions:

Profile of activities	Unobservable inputs	Reasonable possible shift +/- (absolute value/bps/%)	Change in Valuation +/-
			As at 31 December 2020	As at 31 December 2019
Facility management (Level 3)	EBITDA multiple	1	-	403/(403)
	EBITDA	5%	-	217/(217)
	Discount rate	100 bps	(468)/576	(481)/617
	Terminal growth rate	50 bps	172/(155)	196/(173)
Agriculture (UAB Litagra) (Level 3)	EBITDA multiple	1	-	494/(494)
	P/BV multiple	0.1	-	802/(802)
	EBITDA	10%	-	1,087/(1,087)
	Discount for lack of marketability	100 bps	-	(192)/192
	Change in average value of 1 ha of land	1%	223/(223)	-
	Discount rate	100 bps	(1,631)/2,198	(1,727)/2,323
	Terminal growth rate	50 bps	766/(659)	812/(699)
Investment entity (UAB MD partners, investment into MAIB) (Level 3)	P/BV	0.1	380/(380)	364/(364)
	P/E	0.5	222/(222)	290/(290)
	Net profit, EUR thousand	5%	230/(230)	245/(245)
	Discount for lack of marketability and country risk	100 bps	(182)/182	199/(199)
BSGF (Level 3)	EBITDA multiple	2	-	253/(253)
	Revenue (Sales) multiple	0.4	-	367/(367)
	Discount for lack of marketability	500 bps	-	(138)/138
	Discount rate	200 bps	(506)/1,324	(413)/600
	Terminal growth rate	100 bps	191/(167)	161/(138)
	EBITDA margin	100 bps	488/(493)	666/(666)
	Earnings per share	0.01	0.01	0.01

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

12 Fair value estimation (cont'd)

Financial instruments carried at fair value (cont'd)

The following table presents the Group's assets and liabilities that are measured at fair value at 31 December 2020:

	Level 1	Level 2	Level 3	Total balance
Assets
Unconsolidated subsidiaries
- Facilities management	-	-	5,775	5,775
- Bank sector	-	-	7,352	7,352
- Other activities	-	140	297	437
Associates
- Agriculture	-	-	18,085	18,085
- Real estate	8,530	-	-	8,530
Financial assets at fair value through profit or loss
- Information technology	4,272	-	-	4,272
- Bank sector	18,376	-	-	18,376
- Other ordinary shares	-	3	445	448
- Collective investment undertakings - funds	-	2,740	8,276	11,016
- Government bonds	-	-	-	-
- Real estate (loans granted)	-	-	-	-
Total Assets	31,178	2,883	40,230	74,291
Liabilities	-	-	18	18

The following table presents the Company's assets and liabilities that are measured at fair value at 31 December 2020:

	Level 1	Level 2	Level 3	Total balance
Assets
Unconsolidated subsidiaries
- Facilities management	-	-	5,775	5,775
- Bank sector	-	-	7,352	7,352
- Other activities	-	125	297	422
Associates
- Agriculture	-	-	18,085	18,085
- Real estate	8,530	-	-	8,530
Financial assets at fair value through profit or loss
- Information technology	3,808	-	-	3,808
- Bank sector	16,409	-	-	16,409
- Other ordinary shares	-	3	445	448
- Collective investment undertakings - funds	-	1,335	7,548	8,883
- Real estate (loans granted)	-	-	-	-
Total Assets	28,747	1,463	39,502	69,712
Liabilities	-	-	-	-

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

12 Fair value estimation (cont'd)

Financial instruments carried at fair value (cont'd)

The following table presents the Group's assets and liabilities that are measured at fair value at 31 December 2019:

	Level 1	Level 2	Level 3	Total balance
Assets
Unconsolidated subsidiaries
- Facilities management	-	-	4,511	4,511
- Bank sector	-	-	8,022	8,022
- Other activities	-	282	351	633
Associates
- Agriculture	-	-	17,256	17,256
- Real estate	12,802	-	-	12,802
Financial assets at fair value through profit or loss
- Information technology	3,522	-	-	3,522
- Bank sector	18,671	-	-	18,671
- Other ordinary shares	-	70	830	900
- Collective investment undertakings - funds	-	5,437	3,787	9,224
- Government bonds	377	-	-	377
- Real estate (loans granted)	-	-	1,506	1,506
Total Assets	35,372	5,789	36,263	77,424
Liabilities	-	-	36	36

The following table presents the Company's assets and liabilities that are measured at fair value at 31 December 2019:

	Level 1	Level 2	Level 3	Total balance
Assets
Unconsolidated subsidiaries
- Facilities management	-	-	4,511	4,511
- Bank sector	-	-	8,022	8,022
- Other activities	-	282	351	633
Associates
- Agriculture	-	-	17,256	17,256
- Real estate	12,802	-	-	12,802
Financial assets at fair value through profit or loss
- Information technology	3,130	-	-	3,130
- Bank sector	16,672	-	-	16,672
- Other ordinary shares	-	70	830	900
- Collective investment undertakings - funds	-	5,205	3,577	8,782
- Real estate (loans granted)	-	-	1,506	1,506
Total Assets	32,604	5,557	36,053	74,214
Liabilities	-	-	-	-

During 2020 and 2019, there were no transfers between Level 1 and Level 2 fair value measurements.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

12 Fair value estimation (cont'd)

Financial instruments carried at fair value (cont'd)

Financial instruments in Level 3 (cont'd)

The Group's policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer.

The following table presents the changes in Level 3 instruments of the Group for the period ended 31 December 2020:

	Facilities management	Agriculture	Bank sector (MAIB)	Other activities	Collective investment undertakings	Total
Balance at 31 December 2019	4,511	17,256	8,022	1,181	3,787	34,757
Gains and losses recognised in profit or loss (within ‘Net changes in fair value of financial assets at fair value through profit or loss’)	1,264	829	(670)	(492)	(782)	149
Loans granted	-	-	-	40	-	40
Interest charged	-	-	-	13	-	13
Acquisition	-	-	-	-	5,659	5,659
Disposal	-	-	-	-	(388)	(388)
Balance at 31 December 2020	5,775	18,085	7,352	742	8,276	40,230
Change in unrealised gains or losses for the period included in profit or loss for assets held at the end of the reporting period	1,264	829	(670)	(492)	(782)	149

The following table presents the changes in Level 3 instruments of the Company for the period ended 31 December 2020:

	Facilities management	Agriculture	Bank sector (MAIB)	Other activities	Collective investment undertakings	Total
Balance at 31 December 2019	4,511	17,256	8,022	1,181	3,577	34,547
Gains and losses recognised in profit or loss (within ‘Net changes in fair value of financial assets at fair value through profit or loss’)	1,264	829	(670)	(492)	(828)	103
Loans granted	-	-	-	40	-	40
Interest charged	-	-	-	13	-	13
Acquisition					5,187	5,187
Disposal					(388)	(388)
Balance at 31 December 2020	5,775	18,085	7,352	742	7,548	39,502
Change in unrealised gains or losses for the period included in profit or loss for assets held at the end of the reporting period	1,264	829	(670)	(492)	(828)	103

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

12 Fair value estimation (cont'd)

Financial instruments carried at fair value (cont'd)

Financial instruments in Level 3 (cont'd)

The following table presents the changes in Level 3 instruments of the Group for the period ended 31 December 2019:

	Facilities		Assets management*	Bank sector (MAIB)	Other activities	Collective investment undertakings	Total
	management	Agriculture
Balance at 31 December 2018	3,996	12,223	246	5,314	1,012	1,170	23,961
Gains and losses recognised in profit or loss (within ‘Net changes in fair value of financial assets at fair value through profit or loss’)	515	5,033	(5)	4,440	(3)	1,466	11,446
Loans granted	300	-	-	-	135	-	435
Interest charged	9	-	-	-	37	-	46
Loans and interest repaid	(309)	-	-	-	-	-	(309)
Acquired control of associates	-	-	(241)	-	-	-	(241)
Redeemed convertible bonds	-	-	-	(1,732)	-	-	(1,732)
Acquisition	-	-	-	-	-	3,444	3,444
Disposal	-	-	-	-	-	(2,293)	(2,293)
Balance at 31 December 2019	4,511	17,256	-	8,022	1,181	3,787	34,757
Change in unrealised gains or losses for the period included in profit or loss for assets held at the end of the reporting period	515	5,033	-	4,440	(3)	1,077	11,062

The following table presents the changes in Level 3 instruments of the Company for the period ended 31 December 2019:

	Facilities management	Agriculture	Bank sector (MAIB)	Other activities	Collective investment undertakings	Total
Balance at 31 December 2018	3,996	12,223	5,314	1,012	-	22,545
Gains and losses recognised in profit or loss (within ‘Net changes in fair value of financial assets at fair value through profit or loss’)	515	5,033	4,440	(3)	1,042	11,027
Loans granted	300	-	-	135	-	435
Interest charged	9	-	-	37	-	46
Loans and interest repaid	(309)	-	-	-	-	(309)
Acquired control of associates	-	-	-	-	-	-
Redeemed convertible bonds	-	-	(1,732)	-	-	(1,732)
Acquisition	-	-	-	-	3,444	3,444
Disposal	-	-	-	-	(909)	(909)
Balance at 31 December 2019	4,511	17,256	8,022	1,181	3,577	34,547
Change in unrealised gains or losses for the period included in profit or loss for assets held at the end of the reporting period	515	5,033	4,440	(3)	1,022	11,007

AB INVALDA INVL, company code 121304349, Gynėjų str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

12 Fair value estimation (cont'd)

Financial instruments carried at fair value (cont'd)

Financial instruments in Level 3 (cont'd)

The following table presents the changes in the contingent consideration (Level 3 financial liability measurement) of the Group for the period ended 31 December 2019 and 2020:

	2020	2019
Balance at 1 January	(36)	(52)
Gains and losses recognised in profit or loss (within ‘Net changes in fair value of financial assets at fair value through profit or loss’)	-	(27)
Paid	18	43
Balance at 31 December	(18)	(36)
Change in unrealised gains or losses for the period included in profit or loss for assets held at the end of the reporting period	-	(27)

AB INVALDA INVL, company code 121304349, Gynéjy str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

Financial assets, at fair value through profit or loss and other financial assets at amortised cost

	Group		Company
	2020	2019	2020	2019
Held-for-trading
Ordinary shares – quoted	-	-	-	-
	-	-	-	-
Financial assets at fair value through profit or loss (excluding held-for-trading)
Ordinary shares – quoted	22,648	22,193	20,217	19,802
Bonds	-	377	-	-
Investment units	11,016	9,224	8,883	8,782
Ordinary shares - unquoted	448	900	448	900
Loans granted	-	1,506	-	1,506
	34,112	34,200	29,548	30,990
Total financial assets at fair value through profit or loss	34,112	34,200	29,548	30,990
Non-current financial assets at fair value through profit or loss	32,945	32,317	29,548	29,484
Current financial assets at fair value through profit or loss	1,167	1,883	-	1,506

Investing into a closed-end private equity fund INVL Baltic Sea Growth Fund

The Management Board of the Company on 5 February 2019 approved entering into INVL Baltic Sea Growth Fund Partnership Agreement and a Subscription Agreement related to investment in the closed-end private equity fund INVL Baltic Sea Growth Fund (hereinafter – BSGF), which is managed by consolidated subsidiary UAB INVL Asset Management. The Company has committed to invest EUR 19.15 million in BSGF. It is provided that the capital committed to the fund will be called in stages, for the execution of specific transactions. After the investment in BSGF is made, the Company undertakes not to invest in private equity assets that comply with the fund's strategy and to conduct its main investment activity through this fund.

In February 2019 first closing of BSGF was completed at EUR 106 million of commitments. The Company will have to invest into BSGF pro-rata of its commitments. When new investors were attracted to BSGF, BSGF returned to old investors cash as equalisation amount that all investors into funds would transfer proportionally the same part of its commitments. During 2019 the Company has transferred EUR 3,444 thousand of cash into BSGF. In first closing the Company has owned 18.1% of funds units. In September the second closing was completed and the fund size reached a total amount of EUR 141,861 million of commitments. After that the Company has owned 13.5% of funds units. BSGF has redeemed funds unit for EUR 909 thousand as equalisation amount.

In February 2020 was completed third and last closing of BSGF. Fund's size reached EUR 164.7 million of commitments. The Company has additional committed EUR 974 thousand. After final closing the Company has owned 12.2% of fund units. As a consequence of equalisation to the Company was refunded EUR 265 thousand and EUR 123 thousand was set-off for new units' acquisition. During 2020 the Company has transferred EUR 5,008 thousand of cash into BSGF. The outstanding capital commitment to BSGF is EUR 12,778 thousand.

In 2020 the Group and the Company have additionally invested EUR 2,030 thousand and EUR 158 thousand by cash into other financial assets at fair value through profit or loss, respectively, and have sold them for EUR 4,718 and EUR 4,078 thousand by cash, respectively. The Group and the Company have acquired managed investment fund INVL Emerging Europe Bond Subfund from unconsolidated subsidiary for EUR 217 thousand by set-offing with dividend payable from unconsolidated subsidiary.

In 2019 the Group and the Company have additionally invested EUR 89 thousand by cash into other financial assets at fair value through profit or loss and have sold them for EUR 1,686 and EUR 99 thousand by cash, respectively. The Group and the Company have acquired managed investment fund INVL Emerging Europe Bond Subfund from unconsolidated subsidiary for EUR 5,175 thousand, amount of EUR 5,170 thousand was set-off with dividend payable from unconsolidated subsidiary.

The fair value of the quoted ordinary shares and listed bonds is determined by reference to published price quotations in the active market (Level 1). The credit quality of debt securities can be assessed by reference to external credit ratings of the issuer:

	Group
	2020	2019
Moody's ratings
From BA1 till BA3	-	377
	-	377

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

14. Loans granted

As at 31 December 2019 and 2020 the Group's and the Company's loans granted with nominal value of EUR 682 thousand and EUR 682 thousand, respectively, were impaired and fully provided for from the year of 2009. As impact of applying of IFRS 9 the loan granted is written-off, but are still subject to enforcement activity.

15. Trade, other receivables and contract assets

	Group		Company
	2020	2019	2020	2019
Trade and other receivables, gross	2,430	2,254	882	78
Dividends receivable (including receivable form share capital decrease)	-	-	-	-
Taxes receivable, gross	9	8	-	-
Contract assets	303	95	-	-
Less: allowance for doubtful trade and other receivables	(8)	(8)	-	-
	2,734	2,349	882	78

Changes in allowance for doubtful trade and other receivables for the year 2020 and 2019 have been included within 'Provision for impairment of financial and contract assets' expenses in the income statement.

Trade and other receivables are non-interest bearing and are generally on 10–30 days terms. Receivables from related parties are disclosed in more details in Note 26.

Movements in the allowance for accounts receivable of the Group and the Company were as follows:

	Group	Company
Balance as at 31 December 2018	148	139
Charge for the year	-	-
Write-off	(1)	-
Reversal of amounts previously impaired	(139)	(139)
Balance as at 31 December 2019	8	-
Charge for the year	-	-
Write-off	-	-
Reversal of amounts previously impaired	-	-
Balance as at 31 December 2020	8	-

The credit risk exposure of trade and other receivables and contract assets of the Group can be assessed on the ageing analysis disclosed below:

	Less than 30			More than 180
	Current	days	30–90 days	90–180 days	days	Total
As at 31 December 2020
Trade and other receivables, gross	2,422	-	-	-	8	2,430
Contract assets	303	-	-	-	-	303
Expected credit losses	-	-	-	-	(8)	(8)
Trade and other receivable and contact assets net of expected credit losses	2,725	-	-	-	-	2,725
As at 31 December 2019
Trade and other receivables, gross	2,244	-	2	-	8	2,254
Contract assets	95	-	-	-	-	95
Expected credit losses	-	-	-	-	(8)	(8)
Trade and other receivable and contract assets net of expected credit losses	2,339	-	2	-	-	2,341

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

15 Trade, other receivables and contract assets (cont'd)

The credit quality of trade and other receivables of the Company can be assessed on the ageing analysis disclosed below:

	Less than 30			More than 180
	Current	days	30–90 days	90–180 days	days	Total
As at 31 December 2020
Trade and other receivables, gross	882	-	-	-	-	882
Expected credit losses	-	-	-	-	-	-
Trade and other receivable net of expected credit losses	882	-	-	-	-	882
As at 31 December 2019
Trade and other receivables, gross	78	-	-	-	-	78
Expected credit losses	-	-	-	-	-	-
Trade and other receivable net of expected credit losses	78	-	-	-	-	78

16. Cash and cash equivalents

	Group		Company
	2020	2019	2020	2019
Cash at bank	5,741	5,577	762	617
	5,741	5,577	762	617

Cash at bank earns interest at floating rates based on daily bank deposit rates.

The Group's and the Company's cash and cash equivalents did not have any encumbrance.

As at 31 December 2020 and 2019, the Group and the Company had previous term deposits at insolvent AB Bankas Snoras with the maturity of more than 3 months, which are fully provided for and as impact of IFRS 9 is written-off as at 1 January 2018, but are still subject to enforcement activity (gross amount EUR 3,122 thousand).

All cash balances have a low credit risk at the reporting date and the impairment loss determined on 12-month expected credit losses is resulted in an immaterial amount.

The credit quality of cash can be assessed by reference to external credit ratings of the banks:

	Group		Company
	2020	2019	2020	2019
Moody's ratings
Prime-1	653	2,504	12	14
Prime-2	5,088	3,073	750	603
Prime-3	-	-	-	-
	5,741	5,577	762	617

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

17. Share capital, share premium and own shares

The total authorised number of ordinary shares is 11,918,899 (as of 31 December 2019: 11,918,899 shares) with a par value of EUR 0.29 per share. All issued shares are fully paid.

Changes during 2019

On 23 May 2019 the Register of Legal Entities has registered an increased authorised capital of the Company. Since that date the total number of issued shares is 11,918,899 with a par value of EUR 0.29 per share. Authorised share capital of the Company is amounted to EUR 3,456,480.71. It was issued 52,906 ordinary registered shares with an issue price of EUR 1. The shares were issued in order to realise the stock options granted in 2016 to the employees of the Group.

From 28 May 2019 until 10 June 2019 the Company implemented share buy-back through the tender offer market. Maximum number of shares to be acquired was 200,000. Share acquisition price established at EUR 5.67 per share. During buy-back 2,552 shares (0.02% of share capital) were acquired for EUR 14 thousand, including brokerage fees. The acquired shares were settled on 12 June 2019.

Changes during 2020

On 3 June 2020 78,867 units of the Company's own shares was sold for EUR 15 thousand to the Group employees exercising share options granted in 2017 (the selling price per share was EUR 0.20). The acquisition cost of the sold own shares amounted to EUR 319 thousand. The reserve for the acquisition of own shares was reduced by the loss on disposals of own shares (EUR 304 thousand).

18. Reserves

The movements in legal and other reserves are as follows:

Group	Legal reserve	Reserve for the acquisition of own shares	Reserve for the grant of shares	Share based payments reserve	Total
As at 31 December 2018	503	11,121	900	224	12,748
Transfer to reserves	6	-	-	-	6
Share-based payments	-	-	-	408	408
As at 31 December 2019	509	11,121	900	632	13,162
Transfer to reserves	110	-	-	-	110
Share-based payments	-	-	-	325	325
Disposals of own shares (share option exercised)	-	(304)	-	-	(304)
As at 31 December 2020	619	10,817	900	957	13,293

Reserves of the Company is the same as in the Group, except the legal reserve, which is amounted to EUR 473 thousand as at 31 December 2018, 2019 and 2020.

Legal reserve

Legal reserve is a compulsory reserve under Lithuanian legislation. Annual transfers of not less than 5% of net profit, calculated in accordance with the statutory financial statements, are compulsory until the reserve reaches 10% of the share capital. The reserve can be used only to cover the accumulated losses.

Reserve for the acquisition of own shares

Reserve for the acquisition of own shares is formed for the purpose of buying own shares in order to keep their liquidity and manage price fluctuations. It can be formed by shareholders' decision at the Annual Shareholders Meeting from the profit available for distribution. The reserve cannot be used to increase the share capital. The reserve does not change when Company acquires own shares, but is utilised when own shares are cancelled. The shareholders can decide to transfer unused amounts of the reserve back to retained earnings at the Annual Shareholders Meeting.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

18 Reserves (cont'd)

Reserve for the grant of shares

Reserve for the grant of shares is formed when shares are granted by issuing a new share emission. The amount of the reserve for the grant of shares shall not be less than the sum of the emission price of the shares issued when the shares are granted free of charge, and (or) difference between the sum of the emission price of the shares issued and the sums paid by the persons acquiring the shares, when the shares are granted partly in consideration.

Share-based payments reserve

The share-based payment transactions reserve is used to recognise the value of equity-settled share-based payment transactions provided to employee of the Group.

The Company every year offered to employees of the Group the share options transaction. With some key employees of the consolidated subsidiaries is signed formal agreement, which determined principle of bonus remuneration to them. In these agreements, except one, the employee have choice to receive fixed cash or share options. One agreement determined only right to share option. In two consolidated subsidiaries exist bonus plans, where employees could choose share options as alternative to fixed cash after issuing audited financial statements. The choice of employee is irrevocable. In all above mentioned cases, the quantity of share option is calculated as division fixed cash amount to share option value. Latter is calculated as difference between audited consolidated equity per share at year-end or share price at year-end, which is higher, and option exercise price. The main conditions of share options transactions were:

The employee has the right to acquire the shares after three years after conclusion of the share options agreements, early exercising is not allowed;
Option exercise price – EUR 1;
Some transactions have service vesting condition. The right to acquire share in the part of transactions come in to force in future in three years, if the employment contract is not terminated until mentioned dates.
When the time to exercise is matures the right to acquire the shares will be realized by selling of own shares of the Company or by offering to sign newly issued shares of the Company to employee;
The options could not be sold.

The value of share-based payments was calculated using the Black-Scholes formula. For volatility input is used historical shares volatility on exchange.

Set out below are summaries of options granted by the Company:

	Number of options, thousand
	2020	2019
Balance as at 1 January	242	201
Granted during year	317	70
Change in accrued number for rendered services at year-end	(33)	24
Forfeited	(1)	-
Exercised	(79)	(53)
Balance as at 31 December	446	242
Vested and exercisable at 31 December	161	166

On 3 June 2020 the Group employees exercised share options granted in 2017 by acquiring the own shares of the Company for EUR 0.20 per share. Exercise price was decreased from EUR 1 to EUR 0.20 to reflect approved and paid dividends of EUR 0.80 per share. The share price at the date of exercise of share options was EUR 6.9.

In May 2019 the Group employees exercised share options granted in 2016 by acquiring new issued shares of the Company for 1 EUR per share. The share price at the date of exercise of share options was EUR 5.75.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

18 Reserves (cont'd)

Share-based payments reserve (cont'd)

Share options outstanding at the end of the year have following expiry dates and inputs to measure fair value:

As at 31 December 2020	Share			Expected			Fair value of share option
	Expiry date	options, thousand	Share price	Volatility	dividend yield	Risk-free interest rate
Granted on 11 August 2016	30 April 2023	25	4.00	40.87%	0%	(0.422%)	3.06
Granted on 3 May 2018	3 May 2021	60	5.25	32.38%	0%	(0.423%)	4.24
Granted on 6 May 2019	6 May 2022	69	5.65	30.90%	0%	(0.566%)	4.63
Granted on 25 May 2020	25 May 2023	60	6.75	30.74%	0%	(0.675%)	5.73
Granted on 1 July 2020	15 July 2023	232	7.00	30.76%	0%	(0.667%)	0.71
Total	-	446	-	-	-	-	-
As at 31 December 2019	Share			Expected			Fair value of share option
	Expiry date	options, thousand	Share price	Volatility	dividend yield	Risk-free interest rate
Granted on 11 August 2016	30 April 2023	25	4.00	40.87%	0%	(0.422%)	3.06
Granted on 3 May 2017	3 May 2020	14	4.35	33.58%	0%	(0.641%)	3.33
Granted on 16 May 2017	3 May 2020	65	4.55	33.60%	0%	(0.578%)	3.53
Granted on 3 May 2018	3 May 2021	60	5.25	32.38%	0%	(0.423%)	4.24
Granted on 6 May 2019	6 May 2022	70	5.65	30.90%	0%	(0.566%)	4.63
Accrued on 31 December 2019	30 April 2023	8	6.80	29.95%	0%	(0.548%)	5.78
Total	-	242	-	-	-	-	-

In 2020 and 2019 the share-based payment expenses were recognised in the income statement of the Company and the Group within "Employee benefits expenses" as the fair value of share options. In 2020 and 2019 the Group recognized EUR 129 thousand and EUR 178 thousand of expenses from equity settled share-based payment transaction, respectively. On the Group level liability of EUR 196 thousand was reclassified to the share based payment reserve, when employees chose share option instead of cash alternative. In 2020 and 2019 the Group has recognised EUR 736 thousand and EUR 208 thousand from cash alternative of share based payment transaction. In 2020 the Company has recognised EUR 26 thousand of expenses and EUR 298 thousand as additional investment to consolidated subsidiaries. In 2019 the Company has recognised EUR 28 thousand of expenses and EUR 380 thousand as additional investment to consolidated subsidiaries. The unrecognised liability from cash alternative of share-based payment arrangement for unvested service condition is amounted to EUR 236 thousand. The unrecognised expenses from equity settled share-based payment transaction for unvested service condition is amounted to EUR 196 thousand.

19. Borrowings

As at 31 December 2019 the Company and the Group have not received any borrowings. In July 2020 the Company has received EUR 27 thousand borrowings from UAB Aktyvo. Weighted average effective interest rates of borrowings during the year:

	Group		Company
	2020	2019	2020	2019
Borrowings	3.00%	-	3.00%	-

Changes in liabilities arising from financing activities (borrowings) are presented in the table below (changes in lease liabilities is presented in Note 25):

	Company Borrowings
As at 31 December 2019	-
Borrowings received during year	27
Interest paid	-
Interest expenses	1
As at 31 December 2020	28

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

20. Trade payables

Trade payables are non-interest bearing and are normally settled on 14–60 day terms. For terms and conditions relating to related parties please refer to Note 26.

21. Contract liabilities

Movement in the account of contract liabilities is presented below:

Group	2020	2019
Balance as at 1 January	785	197
During period received cash for satisfying of performance obligation	532	633
Recognised revenue during period partly satisfied performance obligation	(111)	(45)
Balance as at 31 December	1,206	785
Non-current	1,068	700
Current	138	85

22. Other liabilities

The other current and non-current liabilities are presented in the table below:

	Group		Company
	2020	2019	2020	2019
Financial liabilities
Dividends payable	613	363	613	363
Contingent consideration – financial liabilities at fair value through profit or loss	18	36	-	-
Other amounts payable	269	325	19	17
	900	724	632	380
Non – financial liabilities
Salaries, bonus plans (excluding cash alternative of share-based payment arrangement) and social security payable	729	427	114	49
Cash alternative of share-based payment arrangement and social security payable	835	813	-	-
Tax payable	16	28	-	-
Other amounts payable	-	-	-	-
	1,580	1,268	114	49
Total other current and non-current liabilities	2,480	1,992	746	429
Non-current liabilities	136	100	-	-
Current liabilities	2,344	1,892	746	429

23. Financial risk management

23.1. Financial risk factors

The risk management function within the Group is carried out in respect of financial risks (credit, market and liquidity), operational risks and legal risks. On an overall Group level strategical risk management is executed by the Board of Directors. Operational risk management is carried out at each entity level by directors. 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 minimise operational and legal risks.

The Group's and the Company's principal financial liabilities comprise trade and other payables. The main purpose of these financial liabilities is to raise finance for the Group's and the Company's operations. The Group and the Company have various financial assets such as trade and other receivables, loans granted, investments in equity and debt securities, deposits held in banks and cash which arise directly from its operations. The Group and Company have not used any of derivative instruments so far, as management considered that there is no necessity for them.

The Group is being managed the way so its main businesses would be separated from each other. This is to diversify the operational risk and create conditions for selling any business avoiding any risk to the Company and the Group.

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

23 Financial risk management (cont'd)

23.1 Financial risk factors (cont'd)

The Company's policy is to not provide any guarantee or surety for the Group's companies. The Group's companies do not provide any guarantees one against another usually.

The main risks arising from the financial instruments are market risk (including currency risk, cash flow and fair value interest rate risk and price risk), liquidity risk and credit risk. The risks are identified and disclosed below.

Credit risk

Credit risk is the risk one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to outstanding trade receivables, loans granted and debt securities.

The Group estimates the credit risk separately by the segments.

The maximum exposure to credit risk and impairment of trade and other receivables and loans granted is disclosed in Notes 14 and 15. The maximum exposure to credit risk for loans granted classified as 'investments to unconsolidated subsidiaries and associate measured at fair value through profit or loss' are their carrying amounts (EUR 1,750 thousand as at 31 December 2019 and EUR 297 thousand as at 31 December 2020). In Note 15 is also disclosed credit risk exposure of trade receivable. There are no significant transactions of the Group or the Company that occur outside Lithuania and Latvia.

With respect to credit risk arising from other financial assets of the Group and the Company, which comprise deposits at banks and cash and cash equivalents, restricted cash and debt securities, the Group's and the Company's exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

The maximum exposure to credit risk from financial assets are:

	Group		Company
	2020	2019	2020	2019
Trade and other receivables	2,422	2,246	882	78
Loans granted	297	1,750	297	1,750
Bonds	-	377	-	-
Cash at bank	5,741	5,577	762	617
	8,460	9,950	1,941	2,445

Cash flow and fair value interest rate risk

The Group's and the Company's exposure to the risk of changes in market interest rates relates primarily to the debt obligations with floating interest rates and to the owned bonds.

The Group and the Company do not have any borrowing as at 31 December 2019. The Company and the Group have borrowings from unconsolidated subsidiary with fixed interest rates for one year. The Company and the Group have loans granted to their unconsolidated subsidiaries with fixed interest rates for one year. Therefore, the Group and the Company are not exposed to cash flow interest rate risk from loans granted.

In 2019 bonds at fixed rates expose the Group to fair value interest rate risk, but it was insignificant.

Share price risk

The Group and the Company are exposed to equity securities price risk because of investments held by the Group and the Company and classified on the statement of financial position at fair value through profit or loss. The Group and the Company are not exposed to commodity price risk. To manage their price risk arising from investments in equity securities, the Group and the Company diversify their portfolio.

The Group's and the Company's investments in equity of other entities that are publicly traded are included in the equity index: OMX Baltic Benchmark Gross Index (OMXBBGI).

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

23 Financial risk management (cont'd)

23.1 Financial risk factors (cont'd)

The table below summarises the impact of increases/decreases of the equity index on the Group's and the Company's profit before tax for the year. The analysis is based on the assumption that the equity index had increased/decreased by 20% with all other variables held constant and all the Group's and Company's equity instruments moved according to the historical correlation with the index:

Index	Group		Company
	2020	2019	2020	2019
OMXBBGI	4,480	3,806	3,994	3,420

Share price risk (cont'd)

Profit before tax for the year would increase/decrease as a result of gains/losses on equity securities classified at fair value through profit or loss.

Foreign exchange risk

As a result of operations the statement of financial position of the Group can be affected by movements in the reporting currencies' exchange rates. The Group's and the Company's policy is related to matching of money inflows from the most probable potential sales with purchases by each foreign currency. The Group and the Company do not apply any financial instruments allowing to hedge foreign currency risks, because these risks are considered insignificant.

The foreign currency risk at the Group and the Company is not large, taking into consideration that most monetary assets and obligations are denominated in euro. As at 31 December 2020 and 2019 the Group and Company have insignificant assets denominated in foreign currency.

Liquidity risk

The Group's and the Company's policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate amount of committed credit facilities to meet their commitments at a given date in accordance with strategic plans. The liquidity risk of the Group and the Company is controlled on a level of consolidated subsidiaries. The Group's and the Company's objective is to maintain a balance between continuity of funding and flexibility through the use of borrowings. The liquidity risk management is divided into long-term and short-term risk management.

The aim of the short-term liquidity management is to meet daily needs for funds. Each operating segment is independently planning its internal cash flows. Short-term liquidity for the Group and the Company is controlled through monthly monitoring of the liquidity status and needs of funds according to the Group's operating segments.

Long-term liquidity risk is managed by analysing the predicted future cash flows taking into account the possible financing sources. Before approving the new investment projects the Group and the Company evaluate the possibilities to attract needed funds. The general rule is applied in the Group to finance the Group companies or to take loans from them through the parent company in order to minimise the presence of direct borrowings between the companies of different operating segments.

The table below summarises the maturity profile of the Group's financial liabilities as at 31 December 2020 and 2019 based on contractual undiscounted payments.

	On demand	Less than 3 months	4 to 12 months	2 to 5 years	More than 5 years	Total
Lease liabilities	-	100	293	1,370	-	1,763
Trade and other payables	-	229	-	-	-	229
Financial liabilities at fair value	-	-	18	-	-	18
Other liabilities	613	268	1	-	-	882
Balance as at 31 December 2020	613	597	312	1,370	-	2,892
Lease liabilities	-	95	284	1,397	276	2,052
Trade and other payables	-	369	-	-	-	369
Financial liabilities at fair value	-	-	18	18	-	36
Other liabilities	363	324	1	-	-	688
Balance as at 31 December 2019	363	788	303	1,415	276	3,145

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

23 Financial risk management (cont'd)

23.1 Financial risk factors (cont'd)

Liquidity risk (cont'd)

The table below summarises the maturity profile of the Company's financial liabilities as at 31 December 2020 and 2019 based on contractual undiscounted payments.

	On demand	Less than 3 months	4 to 12 months	2 to 5 years	More than 5 years	Total
Financial lease liabilities	-	6	19	98	-	123
Trade and other payables	-	3	-	-	-	3
Other current liabilities	613	19	-	-	-	632
Balance as at 31 December 2020	613	28	19	98	-	758
Financial lease liabilities	-	6	19	99	23	147
Trade and other payables	-	7	-	-	-	7
Other current liabilities	363	17	-	-	-	380
Balance as at 31 December 2019	363	30	19	99	23	534

The Group's liquidity ratio (total current assets / total current liabilities) as at 31 December 2020 was approximately 3.00 (3.56 as at 31 December 2019). The Company's liquidity ratio as at 31 December 2020 was approximately 2.11 (5.26 as at 31 December 2019). The Group's and the Company's management considers the liquidity position of the Group and the Company based on the current market conditions and takes actions to keep the favourable situation.

23.2. Capital management

The primary objective of the capital management is to ensure that the Group and the Company maintain a strong credit health and healthy capital ratios in order to support their business and maximise shareholder value. The Company's management supervises the investments so that they are in compliance with requirements applied to the capital, specified in the appropriate legal acts and credit agreements, as well as provide the Group's management with necessary information.

The Group's and the Company's capital comprises share capital, share premium, reserves and retained earnings.

The Group and the Company manage their capital structure and make adjustments to it, in light of changes in economic conditions and specific risks of their activity. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the year 2020 and 2019.

The Company is obliged to keep its equity ratio at not less than 50 % of its share capital, as imposed by the Law on Companies of Republic of Lithuania. As at 31 December 2020 and 2019 all the Group consolidated subsidiaries comply with above mentioned requirement. Pursuant to the Law on State Funded Pensions of Republic of Latvia the authorised share capital of an investment management entity must be not less than EUR 500,000, if it managed pension funds of total assets up to EUR 50 million, and must be not less than EUR 1,000,000, if it managed pension funds of total assets up to EUR 100 million. As of 31 December 2020 and 2018 IPAS INVL Asset Management complied with this requirement.

The Company's consolidated subsidiaries UAB INVL Asset Management and UAB FMJ INVL Finasta are managing their capital and all relevant risks in accordance with requirements set by the Bank of Lithuania. The Company's consolidated subsidiary IPAS INVL Asset Management is managing their capital and all relevant risks in accordance with requirements set by the Financial and Capital Market Commission of Latvia. Internally there was approved a common risk level – to which extent the minimal capital adequacy requirement would not be violated and there would not be a real threat of its violation. UAB INVL Asset Management ensure that the capital adequacy ratio which is calculated dividing the entity's own funds by the required amount of capital according to the Bank of Lithuania requirements would be at least 1.0. UAB FMJ INVL Finasta ensures that the capital adequacy ratio which is calculated dividing the entity's own funds by the total risk exposure amount according to the Bank of Lithuania requirements would be at least 8%. IPAS INVL Asset Management own funds may never be lower than the higher of: 1) the sum total of the minimum initial capital and additional total own funds or 2) 25 per cent of the sum total amount of the fixed costs or fixed overheads of the previous full reporting year. As at 31 December 2020 and 2019 the above mentioned consolidated subsidiaries complied with these requirements.

AB INVALDA INVL, company code 121304349, Gynéjy str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

24. Commitments and contingencies

Funds and individual portfolios managed by the Group

The table below presents the net assets or commitments of the Group's managed funds (depends from what amount management fees is calculated) and individual portfolios and capitalisation of managed closed-end investment companies (cross-holding is not excluded):

	2020	2019
	unaudited	unaudited
2nd pillar pension funds	753,359	622,876
3rd pillar pension funds	56,232	41,084
Investment funds	52,015	55,661
Portfolios of clients	87,283	74,993
Alternative investments funds	241,700	183,738
Closed-end investment companies	53,512	60,879
Total	1,244,101	1,039,231

Assets of clients held as custody by the Group

As at 31 December 2020 consolidated subsidiary UAB FMJ „Finasta“ held as custody EUR 125,549 thousand of clients' assets (securities and cash; as at 31 December 2019 – EUR 119,325 thousand).

BSGF

As at 31 December 2020 the outstanding commitment to invest to BSGF is amounted to EUR 12,778 EUR. As at 31 December 2019 the outstanding commitment to invest to BSGF is amounted to EUR 16,569 EUR.

Tax legislation

Tax authorities have right to examine accounting records of the Company and its consolidated subsidiaries in Lithuania at any time during the current period and for 3 previous years before the reporting period, in some cases 5 or 10 years before the reporting period, and account for additional taxes and fines. In the opinion of the Company's management, currently there are no circumstances which would raise substantial tax liability in this respect to the Company and to the Group. Activity in the Republic of Latvia is not subject to corporate income tax. Instead of taxation on the profit of the current year, the tax is applied only upon profit distribution, i.e. upon payment of dividends.

25. Lease

The Company has lease contract for premises and parking spaces. The lease term is until 2025. The lease contract has not any termination and extension option. The Company could only sub-lease premises to the Group companies, but has not entered in any sublease agreements. The Group has several lease contracts for premises and parking spaces. The lease terms were until 2021 and 2025, except lease, which are less than 12 months as at 31 December 2019 and for which Group applies the 'short-term lease' recognition exemption. As at 31 December 2020 the lease term was between 2021 and 2025. The Group's lease agreements have not unilaterally extension options. Some agreements have termination options, but the Group does expect to use them. Generally, the Group is restricted from assigning and subleasing the leased assets, excluding that in some contracts is determined right to sub-lease premises to the Group companies. But the Group has not entered in any sublease agreements, most of leases has lease indexation clause based on customer price index change. The terms of lease do not include restrictions on the activities of the Group and the Company in connection with the dividends, additional borrowings or additional lease agreements.

Right- of-use assets are presented as property, plant and equipment and is disclosed in Note 9. The maturity analysis of leases liabilities is disclosed in Note 23.1 (section liquidity risk).

The following is the amounts recognised in profit or loss in 2020:

	Group	Company
Depreciation charge for right-of-use assets	(297)	(18)
Interest expenses (included in finance cost)	(130)	(10)
Expense relating to short-term lease	(12)	-

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

25 Lease (cont'd)

The following is the amounts recognised in profit or loss in 2019:

	Group	Company
Depreciation charge for right-of-use assets	(245)	(18)
Interest expenses (included in finance cost)	(124)	(11)
Expense relating to short-term lease	(25)	-

Changes in liabilities arising from financing activities (lease liabilities) are presented in the table below:

	Group	Company
As at 1 January 2019 (impact of IFRS 16)	1,510	121
Lease payments	(198)	(14)
Interest paid	(124)	(11)
Interest expenses	124	11
Addition	297	3
As at 31 December 2019	1,609	110
Lease payments	(250)	(14)
Interest paid	(130)	(10)
Interest expenses	130	10
Addition	85	2
Derecognition	(6)	-
As at 31 December 2020	1,438	98

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

26. Related party transactions

The parties are considered related when one party has the possibility to control the other one or have significant influence over the other party in making financial and operating decisions.

The related parties of the Group in 2020 and 2019 were unconsolidated subsidiaries, associates, the shareholders of the Company, who have joint control or significance influence (Note 1) and key management personnel, including companies under control or joint control of key management and shareholders having significant influence or joint control and including companies, where shareholders having joint control over the Company are key management personnel or having significant influence. To the other related parties are attributed entities left the Group during split-off occurred in 2014, because shareholders having joint control over the Company are key management personnel of these entities or having significant influence and managed funds.

Receivables from related parties are presented in carrying amount. They include loans granted to unconsolidated subsidiaries and associates, that are considered as part of investments to unconsolidated subsidiaries and associates. Interest income and expenses are presented in the 'revenue and other income' and 'purchases' columns, respectively.

Transactions of the Group with unconsolidated subsidiaries in 2020 and balances as at 31 December 2020 were as follows:

2020 Group	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties (including presented in carrying value of investments)	Payables to related parties
Loans and borrowings	13	1	297	28
Dividends	495	-	-	-
Accounting services	2	-	-	-
Donation	-	28	-	-
Acquisition or disposals of investments	1,081	217	800	-
Other services	1	4	-	4
	1,592	250	1,097	32

The maturity of loans granted is 2021, effective interest rate is fixed at 4.5 %. Loans hold no collateral. The Group classifies part of loans granted as long term, because has policy to prolong them on maturity date. The maturity of borrowings is 2021, effective interest rate is fixed at 3 %.

Transactions of the Group with associates in 2020 and balances as at 31 December 2020 were as follows:

2020 Group	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Loans and borrowings	13	-	-	-
Rent and utilities services	3	240	-	-
Dividends	6,605	-	-	-
Management and success fees	1,697	-	27	-
Accounting services	15	-	-	-
Other services	6	-	2	-
	8,339	240	29	-

Transactions of the Group with other related parties in 2020 and balances as at 31 December 2020 were as follows:

2020 Group	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Accounting services	16	-	-	-
The group of UTIB INVL Technology (information technology maintenance services)	-	137	-	13
The group of AB INVL Baltic Farmland (land administration services)	206	-	126	-
Management fee (for UTIB INVL Technology)	471	-	124	-
Managed funds	8,835	-	1,183	-
Other services	10	3	10	-
	9,538	140	1,443	13

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

26 Related party transactions (cont'd)

Transactions of the Group with unconsolidated subsidiaries in 2019 and balances as at 31 December 2019 were as follows:

2019 Group	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties (including presented in carrying value of investments)	Payables to related parties
Loans and borrowings	46	-	244	-
Dividends	205	-	-	-
Accounting services	2	-	-	-
Donation	-	50	-	-
Other services	2	-	-	-
	255	50	244	-

The maturity of loans granted is 2020, effective interest rate is fixed at 4.5 %. Loans hold no collateral. The Group classifies part of loans granted as long term, because has policy to prolong them on maturity date.

Transactions of the Group with associates in 2019 and balances as at 31 December 2019 were as follows:

2019 Group	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Loans and borrowings	6	-	1,506	-
Rent and utilities services	4	70	-	4
Dividends	607	-	-	-
Management and success fees	569	-	27	-
Services rendered to UAB Mundus	27	-	-	-
Accounting services	15	-	-	-
	1,228	70	1,533	4

The maturity of loans granted is 31 March 2020, effective interest rate is fixed at 4.5 %. Loans hold no collateral. The loan granted was repaid on 9 March 2020.

Transactions of the Group with other related parties in 2019 and balances as at 31 December 2019 were as follows:

2019 Group	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Accounting services	16	-	-	-
The group of UTIB INVL Technology (information technology maintenance services)	-	202	-	39
The group of AB INVL Baltic Farmland (land administration services)	40	-	49	84
Management fee (for UTIB INVL Technology)	394	-	101	-
Managed funds	9,795	-	1,796	-
Other services	10	1	-	-
	10,255	203	1,946	123

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

26 Related party transactions (cont'd)

The Company's related parties were the subsidiaries, associates, joint ventures, shareholders, who have joint control or significance influence (Note 1), key management personnel, companies under control or joint control of key management and shareholders with significant influence or joint control and companies, where shareholders having joint control over the Company are key management personnel or having significant influence. To the other related parties are also attributed entities left the Group during split-off occurred in 2014, because shareholders having joint control over the Company are key management personnel of these entities or having significant influence.

Transactions of the Company with subsidiaries in 2020 and balances as at 31 December 2020 were as follows:

2020 Company	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Loans and borrowings	13	1	297	28
Dividends	2,188	-	-	-
Transfer of tax losses	64	-	-	-
Accounting services	2	-	-	-
Acquisition or disposals of investments	1,081	217	800	-
	3,348	218	1,097	28

The maturity of loans granted is 2021, effective interest rate is fixed at 4.5%. Loans hold no collateral. The Company classifies part of loans granted as long term, because has policy to prolong them on maturity date. The maturity of borrowings is 2021, effective interest rate is fixed at 3%.

Transactions of the Company with associates in 2020 and balances as at 31 December 2020 were as follows:

2020 Company	Revenue and other income from related Parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Loans and borrowings	13	-	-	-
Rent and utilities services	-	22	-	-
Dividends	6,117	-	-	-
Accounting services	15	-	-	-
Other services	-	-	2	-
	6,145	22	2	-

Transactions of the Company with other related parties in 2020 and balances as at 31 December 2020 were as follows:

2020 Company	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
The group of UTIB INVL Technology (information technology maintenance services)	-	12	-	1
Accounting services	16	-	-	-
Other services	10	-	10	-
	26	12	10	1

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

26 Related party transactions (cont'd)

Transactions of the Company with subsidiaries in 2019 and balances as at 31 December 2019 were as follows:

2019 Company	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Loans and borrowings	46	-	244	-
Dividends	472	-	-	-
Transfer of tax losses	19	-	-	-
Accounting services	2	-	-	-
Other services	-	-	14	-
	539	-	258	-

The maturity of loans granted is 2020, effective interest rate is fixed at 4.5 %. Loans hold no collateral. The Company classifies part of loans granted as long term, because has policy to prolong them on maturity date.

Transactions of the Company with associates in 2019 and balances as at 31 December 2019 were as follows:

2019 Company	Revenue and other income from related Parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Loans and borrowings	6	-	1,506	-
Rent and utilities services	-	16	-	-
Dividends	554	-	-	-
Accounting services	15	-	-	-
	575	16	1,506	-

The maturity of loans granted is 31 March 2020, effective interest rate is fixed at 4.5 %. Loans hold no collateral. The loan granted was repaid on 9 March 2020.

Transactions of the Company with other related parties in 2019 and balances as at 31 December 2019 were as follows:

2019 Company	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
The group of UTIB INVL Technology (information technology maintenance services)	-	8	-	1
Accounting services	16	-	-	-
Other services	10	1	-	-
	26	9	-	1

The movements of loans granted to associates were:

	Group		Company
	2020	2019	2020	2019
At 1 January	1,506	-	1,506	-
Loans granted during year	-	1,500	-	1,500
Loans repayment received	(1,500)	-	(1,500)	-
Interest charged	13	6	13	6
Interest received	(19)	-	(19)	-
At 31 December	-	1,506	-	1,506

AB INVALDA INVL, company code 121304349, Gynéju str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

26 Related party transactions (cont'd)

The movements of loans granted to subsidiaries were:

	Group		Company
	2020	2019	2020	2019
At 1 January	244	518	244	518
Loans granted during year	40	435	40	435
Loans repayment received	-	(300)	-	(300)
Loans and interest converted to increased share capital	-	(446)	-	(446)
Changes in fair value of loans	-	-	-	-
Interest charged	13	46	13	46
Interest received	-	(9)	-	(9)
At 31 December	297	244	297	244

The movements of borrowings from subsidiaries were:

	Group		Company
	2020	2019	2020	2019
At 1 January	-	-	-	-
Borrowings received during year	27	-	27	-
Borrowings repaid during year	-	-	-	-
Interest charged	1	-	1	-
Interest paid	-	-	-	-
At 31 December	28	-	28	-

Key management compensation and other payments

The management remuneration contains short-term employees' benefits and share-based payments. In 2020 and 2019 key management of the Company and Group includes Board members and Chief financial officer of the Company.

	Group		Company
	2020	2019	2019	2019
Wages, salaries and bonuses	313	339	312	270
Social security contributions	6	6	6	5
Share-based payments	26	28	26	28
Total key management compensation	345	373	344	303

There were no loans granted during the reporting period or outstanding at the end of the reporting period. In 2020 and 2019 dividends were not paid.

In 2020 to the Board members, which are shareholders of the Company, were paid EUR 780 thousand of dividends, net of tax. To the entities, which are controlled by the Board members, were paid EUR 4,734 thousand of dividends, net of tax. To the natural persons related to the Board members the Company paid EUR 2,453 thousand of dividends, net of tax.

AB INVALDA INVL, company code 121304349, Gynéjų str. 14, Vilnius, Lithuania

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

(all amounts are in EUR thousand unless otherwise stated)

27. Impact of COVID-19

The COVID-19 virus pandemic resulted a decrease in the fair value of the Group's and the Company's financial assets at fair value through profit or loss due to a decrease in the market price of listed companies in 1st Quarter of 2020. In the subsequent periods, the share prices of most listed companies rose in the market. This directly contributed to the decline in the value of part of Level 1 and Level 2 financial assets and indirectly contributed to the decline in the value of Level 3 financial assets due to the decrease of the market value of comparable companies, when market approach for valuation was used. But operations of the Group and the Company were not significantly affected by the COVID-19 virus pandemic. Due to the quarantine announced in Lithuania, which lasted from 16 March 2020 to 16 June 2020, Group's and the Company's operations were not disrupted, as the Group can perform all the operations remotely. Consolidated and unconsolidated subsidiaries of the Group have received state financial support for staff downtime during the quarantine. The Company did not request or received any financial support due to the COVID-19 virus pandemic. In 2020 the Company incurred losses from the decline in the fair value of the Company's financial assets at fair value through profit or loss. This decline also reduced the Group's income generated from the management fee received for the managed investment products. During second quarantine in Lithuania, which is lasted from 7 November 2020, The Company and the Group continue to operate successfully remotely. The entities in which the Group has invested have not terminated or suspended their activities during quarantine. Due to the ongoing COVID-19 virus pandemic, the Group may face further uncertainty in equity markets, which may result in changes in the fair value of financial assets at fair value through profit or loss and result in lower management fee income for managed investment products, but the Group does not expect to face significant impact of the COVID-19 virus pandemic.

28. Events after the reporting period

INVL Baltic Real Estate

On 7 January 2021 the Company sold 15.67% of shares of INVL Baltic Real Estate to unconsolidated subsidiary UAB Cedus invest for EUR 4,553 thousand. In March unconsolidated subsidiaries UAB Cedus invest UAB and UAB Įmonių grupė Inservis have sold their holdings of 15.67% and 2.46%, respectively, of INVL Baltic Real Estate in the share redemption that INVL Baltic Real Estate is conducting. The Group/the Company directly and indirectly held stake in INVL Baltic Real Estate was decreased after disposal to 14.37% of issued shares. Because own shares do not have the property and non-property rights, the Group/the Company effective ownership is decreased to 23.43%.

INVALDA INVL

AB INVALDA INVL

Consolidated Annual Report for 2020

Prepared in accordance with the Disclosure Rules approved by the Bank of Lithuania and the Law on Consolidated Financial Statements of Groups of Companies of the Republic of Lithuania, taking into account the European Securities and Markets Authority (ESMA) Guidelines for Alternative Performance Indicators and European Commission Communication C / 2017/4234 - Non-financial Reporting guidelines.

INVALDA INN

CONSOLIDATED ANNUAL REPORT FOR 2020

Translation note:

This version of the Annual Report 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 takes precedence over this translation.

A WORD FROM THE PRESIDENT OF THE COMPANY 95

I. GENERAL INFORMATION 96

Reporting period for which the report is prepared 96
General information about the Issuer and other companies comprising the group 96

II. FINANCIAL INFORMATION AND SIGNIFICANT EVENTS 98

Operating environment 98
Performance results of the issuer and the group 101
Information on the group's activities 102

5.1. Asset Management business 102
5.2. Other major investments 105

Estimation of Issuer's and Group's activity last year and activity plans and forecasts 106

6.1. Evaluation of implementation of goals for 2020 106
6.2. COVID-19 PANDEMIC IMPACT ASSESSMENT 106
6.3. Activity plans and forecasts 107

III. INFORMATION ABOUT SECURITIES 107

Information about Issuer's authorised capital 107
The order of amendment of Issuer's Articles of Association 109
Shareholders 109
Dividends 111
Trading in Issuer's securities as well as securities of the group companies' 112

IV. ISSUER'S MANAGING BODIES 115

Structure, authorities, the procedure for appointment and replacement 115
Information about members of the Board, CFO and the Audit Committee of the Company 119
Information about the Audit Committee of the company 121
Information on the amounts calculated by the Issuer, other assets transferred and guarantees granted to the Members of the Board, the president and CFO 123

V. OTHER INFORMATION 123

Agreements with intermediaries on public trading in securities 123
Information on Issuer's branches and representative offices 123
Risk management 124
Issuer's and its group companies' non - financial results. Information related to social responsibility. environment and employees 125
Memberships in associations 126
Information on harmful transactions in which the issuer is a party 127
Information on the related parties' transactions 127
Information about significant agreements to which the issuer is a party, which would come into force, be amended or cease to be valid if there was a change in issuer's controlling shareholder, and their impact 129
Significant investments made during the reporting period 129
References to and additional explanations of the data presented in the financial statements and consolidated financial statements 129

INVALDA INIL
CONSOLIDATED ANNUAL REPORT FOR 2020 | 94

Data on the publicly disclosed information ... 129
Information on audit company ... 131
APPENDIX 1. INFORMATION ABOUT GROUP COMPANIES, THEIR CONTACT DETAILS ... 133
APPENDIX 2. DISCLOSURE CONCERNING THE COMPLIANCE WITH THE GOVERNANCE CODE ... 136
APPENDIX 3. COMPANY'S MANAGEMENT REPORT ... 149
APPENDIX 4. SOCIAL RESPONSIBILITY REPORT ... 152
APPENDIX 5. REMUNERATION REPORT ... 158

INVALDA INVL

CONSOLIDATED ANNUAL REPORT FOR 2020

A WORD FROM THE PRESIDENT OF THE COMPANY

Dear All,

The year 2020 was reasonably good for those investing with Invalda INVL despite the global and regional economy entering a period of challenges and uncertainty. That period continues, making a significant impact on the business climate in general as well as on specific areas, challenging the status quo and driving changes.

We have given and will continue to give great attention to ensuring that the investments and businesses we manage are fully resilient to the potential negative impact of the processes that are underway. Our main priority, however, is to assess and take advantage of the current circumstances and adapt to the ongoing

changes so that the investments of the people who have entrusted their money to us can continue to increase in value and so that our business can grow, become stronger, and fully meet the needs of our evolving world.

Investment return earned for the clients in 2020 totalled EUR 52.5 million and the group's client assets under management grew almost 20% to EUR 1.25 billion. Invalda INVL's net profit amounted to EUR 5.33 million, with net assets of EUR 83.16 million. The company's share price was EUR 7.6 at the end of the year, which is 6.8% higher than the net asset value. Invalda INVL paid dividends of EUR 9.3 million to its shareholders last year.

Last year's economic and market volatility did not significantly impact Invalda INVL's business or investments, though the total value of investments grew more slowly than in previous years and the expansion of the retail business was only moderate even though the Latvian part of the business stood out with rapid growth.

In asset management segment, we focused, above all, on safeguarding the existing investments, making new investments, and developing new products for our clients. The pension funds we manage increased their portfolios; the INVL Baltic Sea Growth Fund, which is the largest private equity fund in the Baltic region, acquired two large companies; and the INVL Sustainable Timberland and Farmland Fund II was successfully launched, as was the INVL Partner Global Distressed Debt Fund I – our first product investing in a distressed debt fund which was established by a world-class investment management firm (Oaktree Capital Management). The INVL Baltic Real Estate fund completed two successful exits, showing once more that the company is able to create a significant long-term return for its investors from real estate activities.

The value of Invalda INVL's strategic asset management business, accounted for in the financial statements using the equity method, was EUR 13.9 million at the end of 2020, while own investments, accounted for at market value, had a value of EUR 70.4 million.

The main factor contributing to Invalda INVL's results, as usual, was the change in the value of the investment portfolio and income from the portfolio, from which our earnings in 2020 were EUR 4.1 million. There were no major changes in the composition of Invalda INVL's investment portfolio last year. We continued purposefully increasing investments in INVL managed products available for group clients thus seeking to increase the alignment of the interests of the investors and the manager.

We manage and invest the assets entrusted to us in a consistent and disciplined manner, on the basis of our investors' needs and expectations. As always, we have numerous plans and ideas for further growth and improvement. We believe that we will be able to properly assess the processes and changes taking place in the markets and react to them proactively, preserving sustainability and prudently taking advantage of the opportunities that arise.

On behalf of the board of Invalda INVL, I thank our clients for the trust shown even amid unstable markets, our employees for their resilience and ability to work professionally in unprecedented conditions, our shareholders for their loyalty, and all of our stakeholders for their goodwill and collaboration. Together, we can grow, improve and, importantly, accomplish even more.

Darius Šulnis

President of Invalda INVL

INVALDA INVL
CONSOLIDATED ANNUAL REPORT FOR 2020 | 96

I. GENERAL INFORMATION

1. Reporting period for which the report is prepared

The report is prepared for 12 months of 2020 (January – December). The report also includes significant events of the company and the group that took place after the reporting period.

The report was reviewed by auditors.

2. General information about the Issuer and other companies comprising the group

INFORMATION ABOUT THE ISSUER

Name of the Issuer	The public joint-stock company Invalda INVL
Code	121304349
Address	Gynéjú str. 14, LT-01109 Vilnius, Lithuania
Telephone	+370 5 279 0601
E-mail	[email protected]
Website	www.invaldainvl.com
Legal form	The public joint-stock company
Date and place of registration	20 March 1992. Register of Enterprise of Vilnius
Register in which data about the Company are accumulated and stored	Register of Legal Entities

INFORMATION ON COMPANY'S GOALS, PHILOSOPHY AND OPERATING PRINCIPLES

Who are we?

Invalda INVL is an asset management group that is open, growing and investing, and its activities create wellbeing for people. Since the beginning of our activities, we have been working consistently and purposefully in the field of asset management and investments, prioritising the interests of our clients. We maintain the same values as we grow. Furthermore, we are open to new opportunities, new markets, new methods of operation. We believe that an open approach and careful consideration of new ideas contributes significantly to the success and quality of our solutions. We grow by investing in the organic development of the asset management business and, as opportunities arise, we make new acquisitions in this business. Asset management and investing is our core business. We believe we create value to all stakeholders by, first and foremost, doing our direct work well and performing our duties. We believe that the success of the business is inseparable from the contribution to advancing the processes of the society thus we invest in knowledge, team coherence, promotion of social activities, sustainability.

What do we seek?

The mission of Invalda INVL is to create well-being for people while contributing to the growth of the region we operate in. The priority of our group's day-to-day activities is to ensure the successful management of the entrusted assets. We aim to be the leading asset management investment group in the Baltic region whose managed products would meet the needs of investors and be the best choice in their categories, and the investments made would promote growth and have a positive impact.

We focus on long-term goals, but we understand that measurable shorter-term achievements and good annual financial results are an important part of the long-term success and sustainable growth. Priority will continue to be given to the qualitative and quantitative growth of the asset management business and the creation of long-term value for clients, employees and shareholders.

How do we operate?

Asset management and investing is our core business. The Group's companies operating in Lithuania and Latvia provide services to more than 240 thousand individual and institutional regional and international clients entrusting the Invalda INVL

INVALDA

INVL

CONSOLIDATED ANNUAL REPORT FOR 2020

group to manage EUR 1.2 billion worth of assets. At the group level, we manage different asset classes such as pension and investment funds, alternative investments (private equity, real assets and private debt), individual portfolios.

We also have our own investment portfolio. We invest in products managed by the group together with the clients of our companies (general partner investments) in order to have better aligned common interests. The remainder of the current portfolio consists of other historical investments.

The list of group companies as well as their contact information is presented in Annex 1 to this Annual Report.

The financial data of the businesses that make up the group are presented in sections 5.1 and 5.2 of this report.

What is our experience?

Invalida INVL was founded in 1991 by a group of people from the academic community with the aim of accumulating funds and carrying out investment activities. The company's shares have been traded on the Nasdaq Vilnius stock exchange since 1995. Since the start of the listing, the company has paid EUR 53.4 million to its shareholders (dividends and share repurchases).

Over its history Invalida INVL has implemented a few dozen corporate acquisitions and sales, capital raising transactions worth more than EUR 1.7 billion.

Since the end of the first closing of INVL Baltic Sea Growth Fund on February 2019 Invalida INVL undertakes not to invest in private equity assets that comply with the fund's strategy and to conduct its main investment activity through this fund.

Invalida INVL's experience in the private equity market

INVALDA

INVL

CONSOLIDATED ANNUAL REPORT FOR 2020

II. FINANCIAL INFORMATION AND SIGNIFICANT EVENTS

3. Operating environment

Taking into account the wide range of companies managed by Invalda INVL and investments in collective investment undertakings, the Baltic stock markets and economies are reviewed in order to describe the operating environment as most of our companies and investments in collective investment undertakings are concentrated there.

In 2020 the Baltic stock markets were volatile - at the beginning of the year, after the global Covid-19 pandemic hit, the markets suddenly lost a significant part of their value, but the decline was soon replaced by a sharp recovery and such growth trend remained largely until the end of the year. This allowed the Baltic stock markets not only recover the value lost during the first quarter but also earn additional returns compared to the end of 2019. Among the Baltic States, the Vilnius Stock Exchange index rose the most in 2020 (by $14.7\%$ ), the Riga Stock Exchange grew by $9.7\%$ , and the Tallinn Stock Exchange - by $5.0\%$ . Growth in the Baltics differed from the trend in Western Europe where stock markets recovered incompletely and fell slightly (according to the STOXX Europe 600 index). Meanwhile, the MSCI ACWI index (in U.S. dollars), which measures the global stock market, rose by $16.9\%$ in 2020.

All stock indices (OMX Tallinn, OMX Riga, OMX Vilnius) are calculated separately on each Baltic stock exchange. They include all companies listed on the Main and Secondary Lists of the Baltic stock exchanges except for those companies in which one shareholder owns $90\%$ or more of the issued shares. These indices reflect the current situation of the Baltic securities market or the common Baltic securities market and its changes.

INVALDA INN

CONSOLIDATED ANNUAL REPORT FOR 2020

GROWTH OF THE BALTIC STOCK MARKETS

Index	31.12.2019	31.12.2020	+/- Change
OMX Tallinn	1,279.70	1,343.72	+5.00%
OMX Riga	1,036.15	1,136.34	+9.67%
OMX Vilnius	712.14	816.64	+14.67%

Source: Nasdaq Baltic

Like the stock markets, global economic trends in 2020 were affected by the Covid-19 pandemic. The first wave of the pandemic limited activity in many sectors of the economy and caused a severe economic downturn that did not escape the Baltic States. However, balanced pre-crisis economic developments, relatively effective monetary and fiscal support measures and strong restraints on movement and activity that slowed the spread of the virus have helped to mitigate the effects of the negative shock in the Baltic States and return to growth trends. However, the intensified spread of the virus at the end of the year darkened various restrictions and negatively affected economic indicators. According to preliminary data, although the economies of all Baltic States were shrinking, their decline was lower than the EU average - the largest contraction in real GDP was in Latvia (-3.6%), Estonia's shrank less (-2.9%) while the Lithuanian economy contracted the least (-0.8%). Although different sectors of the economy were affected differently by the Covid-19 pandemic, the overall unemployment rate rose quite significantly (by about 2-2.5 percentage points). This negative effect was somewhat offset by the continued growth in average monthly earnings, having somewhat slowed down only in Estonia. However, weak pressure on prices and domestic consumption demand is evident by slight deflation.

Although vaccination is being used to help fight the Covid-19 pandemic which provides optimism in forecasting economic recovery in the upcoming year, high risks and uncertainties regarding the further spread of the virus and the potential impact on both the overall economy and individual industries remain.

MAIN ECONOMIC INDICATORS OF THE BALTIC STATES

Indicator	Lithuania			Latvia			Estonia
	2018	2019	2020	2018	2019	2020	2018	2019	2020
Annual change in real GDP	3.9%	4.3%	-0.8%	4.0%	2.0%	-3.6%	4.4%	5.0%	-2.9%
Nominal GDP (EUR billion)	45.5	48.8	48.8	29.1	30.4	29.3	25.9	28.1	27.2
Average annual unemployment rate	6.2%	6.3%	8.5%	7.4%	6.3%	8.1%	5.4%	4.4%	6.8%
Annual change in average monthly earnings	9.9%	8.8%	10.1%	8.4%	7.2%	6.2%	7.3%	7.4%	2.9%
Inflation (according to the HICP)	1.8%	2.7%	-0.1%	2.5%	2.1%	-0.5%	3.3%	1.8%	-0.9%

Source: Eurostat, Lithuanian, Latvian and Estonian statistical departments

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Other factors that may affect financial performance and non-financial activities

Other factors that may affect the financial results and non-financial activities of Invalda INVL and its strategic asset management business:

Factors	May affect the results of Invalda INVL	May affect the results of the asset management companies
Organisational / internal
Employee safety and health	✓	✓
Protection of personal data	✓	✓
Continuous development of competencies of employees, especially management	✓	✓
Confidentiality of information	✓	✓
Good reputation	✓	✓
Possibilities (both technological and employees) to provide services to customers remotely		✓
Economic
COVID-19 and associated socio-economic constraints	✓	✓
Other factors affecting the general economic conditions: purchasing power, interest rates, exchange rate and commodity price fluctuations	✓	✓
Trends in securities markets	✓	✓
Competition and other providers of the same service		✓
Legal
Changes in legal acts regulating listed companies	✓
Tax legislation related to investments, reinvestments, dividends	✓
Pension system reforms / changes		✓
Technological
Cyber security	✓	✓
Use of new digital technologies for data transmission and storage	✓	✓
Sustainability
Ability to understand and respond effectively to potential threats and emerging new opportunities related to climate change	✓	✓
Integrating sustainability issues into investment criteria	✓	✓
Demographic
Demographic changes in society, determining the ineffectiveness of social systems and the need for alternative saving measures		✓

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4. Performance results of the issuer and the group

MAIN ITEMS OF FINANCIAL STATEMENTS

EUR thousand	Company's			Group's
	2018	2019	2020	2018	2019	2020
Non-current assets	59,278	86,381	83,737	58,301	83,410	80,665
Current assets	7,395	2,368	1,672	10,315	10,065	9,715
Equity	65,504	86,776	83,157	65,504	87,008	83,357
Non-current liabilities	695	1,523	1,458	897	3,640	3,783
Current liabilities	474	450	794	2,215	2,827	3,240
Result before taxes	(303)	21,477	5,209	(296)	21,661	5,329
Net result	343	20,827	5,329	343	20,841	5,373
Net result attributable to holders of the parent Company	-		-	343	20,827	5,329

CALCULATION OF THE NET ASSET VALUE OF INVALDA INVL

EUR thousand	Evaluation criteria	2018	2019	2020
Investment into asset management	Equity method	10,247	13,566	13,930
Investments into INVL Baltic Sea Growth Fund (commitment to invest is excluded)	Fair value of net assets	-	3,577	7,492
Investments into INVL Baltic Real Estate (including loans granted)	Market price	10,276	14,308	9,228*
Investments into Moldova-Agroindbank	Comparative method of multipliers	5,314	8,022	7,352
Investments into INVL Technology	Market price	2,512	3,130	3,808
Investment into investment fund through subsidiary and directly	Fair value of net assets	6,399*	5,415*	1,335
Investments into Litagra, UAB	Combination of discounted cash flows and sales comparison method (in 2018 and 2019 comparative method of multipliers)	12,223	17,256	18,085
Investments into Šiauliai Bank	Market price	13,212	16,672	16,409
Investments into Inservis, UAB (including loans granted)	Discounted cash flows (in 2018 and 2019 comparative method of multipliers)	3,996	4,511	5,775
Investments into other subsidiary companies (including loans granted)	Fair value of net assets	834	633	422
Other assets, other investments	Book value	990	1,042	811
Cash and cash equivalents	Book value	670	617	762
Total assets	Book value	66,673	88,749	85,409
Liabilities	Book value	1,169	1,973	2,252
Net asset value	Book value	65,504	86,776	83,157
Net asset value per share	Book value	5.67	7.47	7.11

The value of investments in non-consolidated companies is included

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FINANCIAL RATIOS

	Company's			Group's
	2018	2019	2020	2018	2019	2020
Return on Equity (ROE), %	0.53	27.35	6.27	0.53	27.35	6.27
Debt ratio	0.02	0.02	0.03	0.05	0.07	0.08
Debt – Equity ratio	0.02	0.02	0.03	0.05	0.07	0.08
Liquidity ratio	15.60	5.26	2.11	4.66	3.56	3.00
Earnings per share (EPS), EUR	0.03	1.80	0.46	0.03	1.80	0.46
Price Earnings ratio (P/E)	158.43	3.78	16.62	158.43	3.78	16.62

The Company publishes Alternative performance measures (AVR) that are in use by the Company and the definitions of the indicators. All information is disclosed on the Company's website section „Investor relations“ → „Reports“ → „Formulas for performance indicators“.
https://invaldainvl.com/lit/en/investor-relations/reports/formulas-of-performance-indicators

Invalda INVL, AB is an asset management and investment company. The profit of the company is significantly impacted by the recalculation of investments based on fair value as well as acquisition and sale deals, therefore, not all company performance indicators are suitable for the evaluation of Invalda INVL, AB. Furthermore, investments into main asset management business are recorded using the equity method, therefore, the book value may be different from the market price. Accordingly, some ratios may not represent the real situation of the company.

5. Information on the group's activities

5.1. ASSET MANAGEMENT BUSINESS

Invalda INVL manages licensed asset management companies INVL Asset Management in Lithuania and Latvia, financial brokerage company INVL Finasta, land administration company INVL Farmland Management and 51 percent stake in Mundus through INVL Asset Management.

The asset management business environment and the impact of COVID-19 on the asset management business

2020 was an extraordinary year for investment fund participants. Although investment funds experienced a decline in unit values at the beginning of the reporting period, these values returned to pre-crisis levels in the second half of the year. The fluctuations in the values of investment fund units were mainly influenced by the COVID-19 pandemic in 2020. The market review of collective investment undertakings published by the Bank of Lithuania states that in 2020 all groups of collective investment undertakings grew. The total weighted growth amounted to 3.2% and mixed investment funds grew the most among the groups of investment funds – by 15.9% according to the Bank of Lithuania's 2020 Review of Collective Investment Undertakings.

In 2020, the assets of investment funds and the number of participants decreased during the reporting period. During the year, assets decreased by 14.79% (EUR 24.35 mln) and the number of participants decreased by 13.1%. As at 31 December 2020, most participants had invested in funds managed by UAB INVL Asset Management - 4,236 persons, or 88.16% of all participants.

Assessing the distribution of investment fund assets and participants by type, it can be seen that the largest in terms of assets under management was the real estate fund group. Its assets accounted for 42.7% of the market, or EUR 59.89 mln. The second group of funds in terms of assets under management and number of participants is debt securities funds, which managed 29.5% of the total assets of collective investment undertakings and held 12.67% of all investment fund participants. Assessing the group of equity funds, it can be seen that this group remains the most popular and managed 15.2% of the

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total assets of investment funds, and the participants of this group accounted for as much as 83.02% of the total number of participants in investment funds. Examining the most popular fund groups among small investors, it became clear that one equity fund participant invested an average of EUR 7.16 thousand, and a debt securities fund participant - EUR 66.6 thousand.

At the end of 2020, there were 40 II pillar pension funds in Lithuania. According to the Bank of Lithuania, these funds were managed by 5 pension accumulation companies and the total net asset value on 31 December 2020 amounted to EUR 4.496 billion. 1.372 million participants accumulated for pension in pension funds. Despite the market fluctuations caused by the COVID-19 pandemic, pension fund assets increased by 15.65% in 2020, i.e. EUR 608.55 mln. During 2020, contributions of EUR 416.99 mln were transferred to pension funds.

The values of pension fund units, which fell by double digits at the beginning of 2020, recovered in April and positive results prevailed at the end of the year. This reaffirms the statement that pension funds are a product of long-term savings and that it is difficult to correctly assess the performance of pension funds in the light of short-term changes in values. In 2020, changes in the unit value of all II pillar pension funds were positive. The total weighted change in unit value of II pillar pension funds was 5.2%.

III pillar pension funds are additional voluntary pension accumulation. These pension funds accumulate funds transferred independently (or by his / her employer) by the pension fund participant. In 2020, changes in the unit values of almost all III pillar pension funds were positive. The weighted average change in the unit value of III pillar pension funds was 4.63%. The highest returns were earned by equity pension funds (the weighted average change in unit value was 5.83%), while the lowest-risk bond pension funds earned a slightly lower return - 2.39%.

Significant events of the INVL asset management group during the reporting period

In February 2020 INVL Baltic Sea Growth Fund successfully completed its final close reaching a total of EUR 164.7 mln. The fund is managed by INVL Asset Management. The Fund seeks to assemble a diversified portfolio of Baltic Sea based companies, targeting deals with a ticket size of EUR 10 mln to EUR 30 mln that showcase high growth potential and the ability to compete on a truly global basis (the Fundwould also offer co-investment opportunities in case of larger transactions). The Fund focuses on growth capital, buyout, and "buy and build" investments. It is expected that the portfolio of the Fund will comprise of 8-12 investments in total. Since the first closing, the Fund has invested in four companies within healthcare, civil engineering, waste management and recycling sectors.

Upon receipt of the permission of the Central Bank of Moldova, INVL Special Opportunities Fund became a shareholder of MD Partners, UAB, a co-owner of the Moldovan commercial bank Moldova-Agroindbank (MAIB), and since April 2020, MD Partners, which has invested in MAIB, is managed by Invalda INVL together with INVL Special Opportunities Fund. The share of Invalda INVL in MD Partners is 51.37%, and INVL Special Opportunities Fund, in which investors who meet the requirements for informed investors have invested, is 48.63%.

In September 2020 the Bank of Lithuania approved the establishment documents of the INVL Partner Global Distressed Debt Fund I, a subfund founded by INVL Asset Management. The new subfund acts as a feeder fund for a distressed debt fund established by a world-class investment management firm (Oaktree Capital Management).

In November INVL Asset Management established the INVL Sustainable Timberland and Farmland Fund II. The initial offering of the fund raised EUR 32.45 mln from private investors. The target size is EUR 100 mln. The fund will invest in sustainably managed forests and agricultural land in the Baltic Sea region and Central and Eastern Europe. The new INVL fund is registered in Luxembourg and is administered by Apex Group, one of the biggest providers of fund services in Europe. The fund is intended for institutional and private investors from EU countries. At the beginning of its activities, INVL Sustainable Forest and Agricultural Land Fund II acquired 7 companies from the agricultural business group Linas Agro Group for EUR 13.6 million. The acquired companies indirectly own 2 thousand hectares of agricultural land located in central Lithuania which will be leased under a 25-year lease.

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INVL

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RESULTS OF THE ASSET MANAGEMENT

Structure of asset management business of Invalda INVL

EUR million (if not stated otherwise)	2019			2020
	Lithuania	Latvia	Total	Lithuania	Latvia	Total
Number of clients, units	179.8	53.1	232.9	189.8	57.2	247.0
Amount earned for clients	140.0			52.5
Asset under management*	939.8	99.7	1,039.5	1,095.0	151.9	1,246.9
2nd pillar pension funds	520.7	98.2	618.9	597.3	150.3	747.6
3rd pillar pension funds	37.7	1,5	39.2	52.8	1.6	54.4
Investment funds	55.7	-	55.7	52.0	-	52.0
Portfolios	70.0	-	70.0	81.4	-	81.4
Alternative assets	255.7	-	255.7	311.5	-	311.5
Revenues	10.61	0.68	11.29	11.49	0.87	12.36
Profit (loss) before tax, EUR thousand**	2,601	(122)	2,479	2,150	(270)	1,880

*eliminated investments into own products for which management fee is not charged
** according to accounting data of Invalda INVL

Number of employees

Number of employees	2018	2019	2020
-	119	130	132

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5.2. OTHER MAJOR INVESTMENTS

Company	Activity	Directly owned shares as of 31.12.2020, %	Value of the owned shares 31.12.2020, EUR million	Profit (loss) from investment, EUR million during 2020
GENERAL PARTNER INVESTMENTS
BALTIC SEA GROWTH FUND
bsgf.invl.com	The largest private equity investment fund in the Baltics. The fund is intended for professional investors.	12.22	7.49
+ 12.8 commitment to invest	(0.83)
BALTIC REAL ESTATE
www.invblaticrealestate.com	Investment in a commercial real estate company, acting as a closed-end investment company.	30.03	8.53	2.93
MAIB
Moldova Agroindbank
https://www.maib.md/	The largest commercial bank in Moldova providing a full range of financial services.	7.9	7.35	(0.67)
TECHNOLOGY
www.invltechnology.com	Investments in an information technology company, acting as a closed-end investment company.	15.04	3.81	0.58
INVESTAVIMAS
INVL Emerging Europe Bond Subfund
www.invl.com	The Sub-Fund's assets are invested in debt securities of Central and Eastern European governments and companies that appear to be the most attractive in terms of credit analysis.	4.4	1.34	(0.01)
OTHER HISTORICAL INVESTMENTS
LITAGRA
www.litagragroup.lt	Primary agricultural production company that concentrates on agriculture - the cultivation of grain, milk and feed production.	48.81	18.09	1.32
ŠIAULIŲ BANKAS
www.sb.lt	Lithuanian commercial bank providing financial services for business and private clients.	5.48	16.41	(0.26)
inservis
PASTATŲ PRIEŽIŪRA
www.inservis.lt	Facility management companies group.	100	5.78	1.60

Continued on the next page

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continued

Company	Activity	Directly owned shares as of 31.12.2020, %	Value of the owned shares 31.12.2020, EUR million	Profit (loss) from investment, EUR million during 2020
KELIO ŽENKLAI
(Official stock headings)
www.keliozenklai.lt	Manufacturing of road signs, supports and other metal products.	100	0.30	(0.11)
Vernitas
www.vernitas.lt	Preparation of textile fibres.	11.06	0.44	(0.39)

6. Estimation of Issuer's and Group's activity last year and activity plans and forecasts

6.1. EVALUATION OF IMPLEMENTATION OF GOALS FOR 2020

The long-term priority of the Invalda INVL group is successful management of the entrusted assets. Given the unfavorable and difficult to predict situation in the markets due to the impact of Covid-19 in the beginning of 2020, the main challenge of last year was ensuring the financial stability and long-term investment return of the people who have entrusted their funds for Invalda INVL group companies to manage. The total earned result for the customers amounted to EUR 52.5 million and the assets managed by the INVL group exceeded EUR 1.2 billion.

The goal was to further develop the asset management business by adapting to the ongoing changes, focusing on customer needs and the efficiency of internal processes.

As planned, the INVL Sustainable Timberland and Farmland Fund II was launched in 2020 and made its first investment acquiring 7 companies that manage 2,000 hectares of agricultural land in central Lithuania for EUR 13.6 million. INVL Sustainable Timberland and Farmland Fund II invests in sustainable forest and agricultural land in the Baltic Sea Region and Central and Eastern Europe and is intended for institutional and private investors from EU countries.

In addition, it was planned that the INVL Baltic Sea Growth Fund will make significant investments in 2020. During the reporting period, the fund supplemented its portfolio with two investments: at the end of June, it completed the acquisition of a controlling stake (52.81%) in Eco Baltia, the largest environmental management (plastic recycling and waste collection) group in the Baltic region, and in September, the fund completed the acquisition of a stake in MBL, a leading European manufacturer of medical mobility equipment, headquartered in Denmark. INVL Baltic Sea Growth Fund indirectly acquired 48% of MBL's shares.

In 2020, we had a slightly slower-than-planned development of the retail asset management business. We also hoped to make more investments through INVL Baltic Sea Growth Fund. However, looking at the past year, we rate it as moderately good as we have ensured a positive return on investment and strengthened our asset management business.

6.2. COVID-19 PANDEMIC IMPACT ASSESSMENT

2020 has been a year of challenges that have had a significant impact on the global and regional economy and are initiating a number of changes. We will work in such circumstances in the near future. The ability to clearly assess the current situation and adapt to change is an essential condition for business success and further development.

The impact of the Covid-19 pandemic on Invalda INVL is not significant. The negative impact of the pandemic was felt by the retail asset management business, which was growing less than planned, and also the value of our own investments decreased. In March last year, we forecast that Invalda INVL may incur losses, but we managed to end the year profitably. We earned a profit of EUR 5.3 million, the net asset value (NAV) per share is EUR 7.11 and the share price on the stock exchange exceeded the NAV per share by almost 7% at the end of the reporting period and amounted to EUR 7.6.

The situation is still unclear and unsolved. We monitor the situation, react to changes in the markets and try to make reasonable use of the opportunities that arise.

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6.3. ACTIVITY PLANS AND FORECASTS

We have paid and will continue to pay close attention to ensuring that our investments and businesses are as resilient as possible to the potential negative effects of the ongoing processes. However, the main priority is to assess and take advantage of the existing circumstances.

It is intended to further develop the asset management business. It is planned to offer investors the opportunity to invest additionally in existing funds, e.g. the INVL Sustainable Timberland and Farmland Fund II, which was launched last year. Moreover, ideas for new products - green energy and others - are being discussed and will be announced when the preparations are completed. We believe that it would be interesting and beneficial for our customers to invest in the best international products from the third parties. Therefore, there is also active work in this area.

Time dictates that customers need to be offered not only a wider range of services but also a smooth, high-quality and convenient service, either when they decide to contribute to pension funds or when interested in new products.

As always, we have many plans and ideas for further business growth and improvement. We believe that we will be able to properly assess the processes and changes taking place in the markets, react proactively to them, preserving sustainability and making reasonable use of the emerging opportunities.

III. INFORMATION ABOUT SECURITIES

7. Information about Issuer's authorised capital

ADJUSTMENTS OF THE AUTHORISED CAPITAL

Information concerning adjustments of Invalda INVL, AB authorised capital during past 10 years is presented below:

3 February 2010, the share capital of Invalda, AB was increased till EUR 14.96 million after conversion of EUR 14.48 million bonds.
30 March 2012 the share capital of Invalda, AB was increased by EUR 1.7 million till EUR 16.67 million after conversion of EUR 2.15 million and EUR 7.24 million convertible bonds.
On 6 August 2012 the share capital of Invalda, AB was decreased till EUR 15 million. The authorised capital of Invalda, AB decreased due to cancelling of own shares acquired by the company.
The amended Articles of Association of Invalda, AB were registered with the Register of Legal Entities on 31 May 2013. The Articles of Association were amended due to split-off of the company and stated a new name of the company – public joint-stock company Invalda LT as well as a reduced authorized capital due to the split-off procedure. The authorised capital of Invalda LT, AB was EUR 7.19 million.
The amended Articles of Association of Invalda LT, AB were registered with the Register of Legal Entities on 29 April 2014. The Articles of Association were amended due to split-off of the company. After the completion of the split-off of Invalda LT, the authorised capital was EUR 3.44 million and was divided into 11,865,993 ordinary registered shares.
The amended Articles of Association were registered with the Register of Legal Entities on 11 May 2015. According to amended Articles of Association the name of the company was changed into Invalda INVL, AB. The authorised capital was recounted into EUR and made EUR 3,441,137.97. It was divided into 11,865,993 ordinary registered shares with nominal value EUR 0.29 each.
On 23 May 2019 a new edition of the Articles of Association of Invalda INVL was registered in the Register of Legal Entities. The Articles of Association were amended by increasing the authorized capital up to EUR 3,456,480.71 in order to realize the stock options granted to the employees of Invalda INVL Group in 2016.

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STRUCTURE OF THE AUTHORIZED CAPITAL AS OF 31 DECEMBER 2020

Type of shares	Number of shares, units	Total number of votes granted by all issued shares, units	Number of votes calculating the quorum of the General Meeting of Shareholders *	Nominal value, EUR	Total nominal value, EUR	Portion of the authorised capital, %
Ordinary registered shares	11,918,899	11,918,899	11,689,358	0.29	3,456,480.71	100

according to Article 27 (4) of the Law on Companies' in determining the quorum of the General Meeting of Shareholders, it is considered that the acquired own shares do not grant voting rights.

All shares are fully paid-up, and no restrictions apply on their transfer.

Invalda INVL group manages asset management company INVL Asset Management (through it – asset management company Mundus) and financial brokerage company INVL Finasta. According to Lithuanian law, a natural or legal person (or persons acting in concert), indirectly willing to acquire or increase their shareholding in an asset management company (more than 20, 30 or 50 percent), have to obtain a decision from the Bank of Lithuania not to object this acquisition. This means that investors, willing to acquire more than 20 percent shareholding in Invalda INVL, AB, can do so only with a prior decision from the Bank of Lithuania.

Invalda INVL also owns asset management company INVL Asset Management in Latvia (through it – INVL atklatais pensiju fonds“, managing 3rd pillar pension funds in Latvia), therefore according to Latvian Financial and Capital Market Commission restrictions under acquisition of the shareholding in Invalda INVL might be fulfilled as well.

In addition, Invalda INVL group has indirectly invested in Moldova-Agroindbank, the largest commercial bank in Moldova, therefore the relevant requirements of the Central Bank of Moldova may also apply to the acquisition of block of shares in Invalda INVL.

INFORMATION ABOUT THE ISSUER'S TREASURY SHARES

Year of acquisition / loss of own shares	Acquired (transferred) amount, units	Price for one share, EUR	Comments
2015	143,645	3.82
2016	135,739	4.11
2017	23,076	4.55
2018	3,396	5.53
2019	2,552	5.67
2020	(78,867)	0.20	Own shares were transferred to the employees of the company and the group by exercising the share options granted in 2017
total	229,541

During the reporting period, the company did not repurchase its own shares. During the implementation of the share option agreements signed in 2017, 78,867 of the company's own shares were transferred to the employees. At the end of the reporting period, the number of treasury shares acquired by Invalda INVL amounted to 229,541. Pursuant to Article 27 (4) of the wording of the Law on Companies, when determining the quorum of the general meeting of shareholders, it is considered that the acquired own shares do not give votes at the shareholders' meeting.

INFORMATION ABOUT EMPLOYEES STOCK OPTIONS

Employees of Invalda INVL and companies where Invalda INVL owns more than 50% of shares may be offered to enter into stock option agreements on the basis of which, within 3 (three) years they are granted the stock options. Employees shall be entitled to acquire 0.29 EUR nominal value ordinary registered Invalda INVL shares at a price of EUR 1 (one) for each share acquired. If shareholders adopt a decision on the payment of dividends, the reduction of authorized capital paying

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CONSOLIDATED ANNUAL REPORT FOR 2020

out free funds to shareholders or other measures involving pay-outs to shareholders, then the General Meeting of Shareholders must consider the matter of changing the number of Shares which Employees are allowed to acquire and/or the price of the Shares in such a way as to maintain balance between the economic logic of the contract on entering into an agreement to acquire Shares and the interests of the parties.

There is no employee share incentive scheme in Invalda INVL. The shares are granted in accordance with the Rules for Granting Equity Incentives approved by the Company's General Meeting of Shareholders, which are published on the company's website http://invaldainvl.com/files/EN/Draft%20Rules%20for%20Granting%20Equity%20Incentives.pdf.

Option contracts concluded and stock options exercised:

Allocation of options		Exercise of options
The year when stock options contracts have been signed	Number of shares, units	The year when stock options are exercised	The number of shares (units) acquired by employees under option contracts	Method of granting shares
2016	52,906	2019	52,906	Newly issued shares have been subscribed
2017	80,571	2020	78,867	The company's own shares were transferred
2018	59,674	2021	N/A
2019	70,397	2022	N/A
2020	317,227	2023	N/A

8. The order of amendment of Issuer's Articles of Association

The Articles of Association of Invalda INVL, AB may be amended by resolution of the General Shareholders' Meeting, if the decision is passed by more than 2/3 of votes (except in cases provided for by the Law on Companies of the Republic of Lithuania).

On 23 May 2019 a new edition of the Articles of Association of Invalda INVL was registered in the Register of Legal Entities. The Articles of Association were amended by increasing the authorized capital in order to realize the stock options granted to the employees of Invalda INVL Group in 2016.

Actual wording of the Articles of Association is dated as of 23 May 2019. The document is published on the company's website http://invaldainvl.com/files/EN/Articles%20of%20Association%20of%20Invalda%20INVL_2019.pdf.

9. Shareholders

9.1. INFORMATION ABOUT SHAREHOLDERS OF THE COMPANY

At the end of 2020 the total number of shareholders was 3,457. There are no shareholders entitled to special rights of control. Invalda INVL shareholders Alvydas Banys, UAB LJB Investments, Irena Ona Mišeikienė, Indrė Mišeikytė, Darius Šulnis and UAB Lucrum Investicija have signed an Agreement with the purpose of agreeing on the long-term management policy of Invalda INVL. Therefore, in accordance with Article 16, Section 1, Point 2 of the Securities Law, their votes are counted together. Given that the said agreement does not contain provisions on the use of the parties' directly owned votes in other companies related to Invalda INVL, their votes are counted together only at the level of the issuer, i.e. only in Invalda INVL. Assessing the share of the company's authorized capital and / or votes owned by the company's shareholders as of the date of this report, as well as the purpose and provisions of the above-mentioned Invalda INVL group of shareholders the parties to the said Agreement control the company as a group, but not individually. Invalda INVL AB is not aware of any restrictions on voting rights or agreements between shareholders that may restrict the transfer of securities and / or voting rights. No agreements to which the issuer is a party that would enter into force, change or terminate upon a change in control of the issuer have been concluded during the twelve months of 2020.

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SHAREHOLDERS WHO HELD TITLE TO MORE THAN 5% OF INVALDA INVL AUTHORISED CAPITAL AND/OR VOTES 31 DECEMBER 2020

Name of the shareholder or company	Number of shares held by the right of ownership, units	Share of the authorised capital and votes held, %	Indirectly held votes^{1}, %	Total votes of the shareholders group^{2}, %
LJB Investments. UAB code 300822575, Juozapavičiaus str. 9A, Vilnius	3,300,645	27.69	59.85	87.54
Irena Ona Mišeikienė	3,182,595	26.70	60.84
Darius Šulnis^{2}	0	0.00	87.54
Lucrum Investicija, UAB code 300806471. Gynėjų str. 14, Vilnius	2,803,492	23.52	64.02
Alvydas Banys^{3}	910,875	7.64	79.90
Indrė Mišeikytė	236,867	1.99	85.55

Distributions of the share capital of the shareholders of Invalda INVL as of 31 December 2020

UAB LJB investments (a company controlled by A.Banys)
Irena Ona Mišeikienė
UAB Lucrum Investicija (a company controlled by D.Šulnis)
Alvydas Banys
Indrė Mišeikytė
Other shareholders (> 3400)

Shareholders by type
Legal entities
Natural persons

Shareholders by residence
Lithuanian investors
Foreign investors

1 Invalda INVL shareholders Alvydas Banys, UAB LJB Investments, Irena Ona Mišeikienė, Indrė Mišeikytė, Darius Ššulnis and UAB Lucrum Investicija have signed an Agreement with the purpose of agreeing on the long-term management policy of Invalda INVL. Therefore, in accordance with Article 16, Section 1, Point 2 of the Securities Law, their votes are counted together. Given that the said agreement does not contain provisions on the use of the parties' directly owned votes in other companies related to Invalda INVL, their votes are counted together only at the level of the issuer
2 It is considered that Darius Šulnis has the votes of the controlled company UAB Lucrum Investicija.
3 It is considered that Alvydas Banys has the votes of the controlled company UAB LJB investments.

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9.2. RIGHTS AND OBLIGATIONS CARRIED BY THE SHARES

9.2.1. Rights of the shareholders

The Company's shareholders have the following property and non-property rights:

1) to receive a part of the Company's profit (dividend);
2) to receive the company's funds when the authorised capital of the company is reduced with a view to paying out the company's funds to the shareholders;
3) to receive a part of assets of the company in liquidation;
4) to receive shares without payment if the authorised capital is increased out of the Company funds, except in cases provided by the laws of the Republic of Lithuania;
5) to have the pre-emption right in acquiring shares or convertible debentures issued by the Company, except in cases when the General Shareholders' Meeting in the manner prescribed in the Law on Companies of the Republic of Lithuania decides to withdraw the pre-emption right in acquiring the Company's newly issued shares or convertible debentures for all the shareholders;
6) to lend to the company in the manner prescribed by law; however, when borrowing from its shareholders, the company may not pledge its assets to the 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 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 shall be prohibited from negotiating a higher interest rate;
7) other property rights provided by laws;
8) to attend the General Shareholders' Meetings;
9) to submit to the Company in advance the questions connected with the issues on the agenda of the General Meeting of Shareholders;
10) to vote at the General Shareholders' Meetings according to voting rights carried by their shares;
11) to receive information on the Company specified in the Law on Companies of the Republic of Lithuania;
12) to appeal to the court for reparation of damage resulting from nonfeasance or malfeasance by the Company's manager and the Board members of their obligations prescribed by the Law on Companies of Republic of Lithuania and other laws of the Republic of Lithuania and the Company's Articles of Association as well as in other cases laid down by laws;
13) to receive information on a public company whose shares are admitted to trading on a regulated market as specified in the Law on Companies of Financial Instruments Markets in the Republic of Lithuania;
14) other non-property rights established by laws and the Company's Articles of Association.

9.2.2. Obligations of the shareholders

The shareholders have no property obligations to the Company, except for the obligation to pay up, in the established manner, all the shares subscribed for at their issue price.

If the General Shareholders' Meeting takes a decision to cover the losses of the Company from additional contributions made by the shareholders, the shareholders who voted "for" shall be obligated to pay the contributions. The shareholders who did not attend the General Shareholders' Meeting or voted against such a resolution shall have the right to refrain from paying additional contributions.

A person who has acquired all the shares of a company or has acquired a part of the shares of a public limited company from the shareholder of this company shall notify the company no later than 5 days after the conclusion of the transaction. The notice must include the number of shares acquired, including the number of shares by class, where the shares of the different classes are acquired, their nominal value and the identity of the person transferring and acquiring the shares (name, surname, personal identity number and place of residence or address of the natural person; name, legal form, code and registered office and name, surname, personal code, place of residence or address of the legal representative). The notice shall be accompanied by a document confirming the acquisition of the shares or an extract thereof. If a document is provided, it must include the parties to the transaction, the subject of the transaction and the date of acquisition of the shares.

Contracts between the company and holder of all its share shall be executed in a simple written form unless the Civil Code prescribes the mandatory notarised form.

A shareholder shall repay the Company any dividend paid out in violation of the mandatory norms of the Law on Companies, if the Company proves that the shareholder knew or should have known thereof.

Each shareholder shall be entitled to authorise a natural or legal person to represent him when maintaining contacts with the Company and other persons.

10. Dividends

The decision to pay dividends and the amount of dividends to be paid is determined by the company's general meeting of shareholders. The ordinary general meeting of shareholders of Invalda INVL held on 30 April 2020 decided to approve the distribution of EUR 0.80 dividends per share for 2019. The total amount of dividends is EUR 9.288 million. Persons who

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were shareholders of the company on the tenth working day after the decision of the general meeting of shareholders, i.e. 15 May 2020, were entitled to receive dividends.

Information on the procedure for payment of dividends and payment of dividends during the entire period of operation of Invalda INVL is provided on the company's website in the section dedicated to investors, in the section "Dividends and share buy backs".

RATIOS RELATED WITH SHARES

	2018	2019	2020
Net Asset Value per share, EUR	5.67	7.47	7.11
Price to book value (P/Bv)	0.83	0.91	1.07

The Company publishes Alternative performance measures (AVR), that are in use of the Company, provides indicators definitions. All the information is disclosed in the Company's web site section „Investor relations“ → „Reports“ → „Formulas for performance indicators.

https://invaldainvl.com/lit/en/investor-relations/reports/formulas-of-performance-indicators

11. Trading in Issuer's securities as well as securities of the group companies'

11.1. TRADING IN ISSUER'S SECURITIES

MAIN CHARACTERISTICS OF INVALDA INVL, AB SHARES ADMITTED TO TRADING

Shares issued, units	11,918,899
Nominal value	0.29 EUR
Total nominal value	3,456,480.71 EUR
ISIN code	LT0000102279
The Issuer Agent	AB Šiaulių bankas
Exchange	Nasdaq Vilnius
Ticker	IVL1L
List	Baltic Secondary list Baltic Main List (from 1 January 2008 until 20 July 2015)
Listing date	19 December 1995
LEI code	52990001IQUJ710GHH43

From 3 August 2020, Šiaulių bankas AB provides the company with a market making service.

TRADING IN INVALDA INVL, AB SHARES

	2018	2019	2020
Share price, EUR
- open	5.30	4.74	6.80
- high	5.70	6.85	8.95
- low	4.60	4.70	5.65
- medium	5.19	5.85	6.96
- last	4.70	6.80	7.60
Turnover, units	28,181	41,794	89,010
Turnover, EUR	146,295	244,594	619,336
Traded volume, units	210	303	1,212
Capitalisation, EUR mln.	54.33	78.95	88.84

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TRADING IN THE COMPANY'S SHARES DURING THE PERIOD OF 2018–2020 (QUARTERLY) ON NASDAQ VILNIUS STOCK EXCHANGE:

Reporting period	Price, €			Last trading date	Total turnover
	high	low	last		units	€
2018, 1^{st} Q	5.35	5.15	5.30	29.03.2018	4,369	22,814
2018, 2^{nd} Q	5.65	5.20	5.65	29.06.2018	4,436	23,963
2018, 3^{rd} Q	5.70	5.20	5.40	28.09.2018	7,985	43,462
2018, 4^{th} Q	5.40	4.60	4.70	28.12.2018	11,391	56,056
2019, 1^{st} Q	5.40	4.70	5.30	29.03.2019	6,629	34,017
2019, 2^{nd} Q	5.80	5.30	5.50	29.06.2019	11,457	63,836
2019, 3^{rd} Q	6.15	5.50	6.10	30.09.2019	9,555	55,966
2019, 4^{th} Q	6.85	5.95	6.80	30.12.2019	14,153	90,776
2020, 1^{st} Q	7.20	5.65	5.90	31.03.2020	21,925	146,005
2020, 2^{nd} Q	8.95	5.90	7.00	30.06.2020	31,449	219,194
2020, 3^{rd} Q	7.25	6.90	7.25	30.09.2020	18,314	129,657
2020, 4^{th} Q	8.40	7.00	7.60	30.12.2020	17,322	124,480

CAPITALISATION

Last trading date	Number of shares (company's own shares excluded), units	Last price, €	Capitalisation, €
29.03.2018	11,563,533	5.30	61,286,725
29.06.2018	11,560,137	5.65	65,314,774
28.09.2018	11,560,137	5.40	62,424,740
28.12.2018	11,560,137	4.70	54,332,644
29.03.2019	11,560,137	5.30	61,268,726
29.06.2019	11,610,491	5.50	63,857,701
30.09.2019	11,610,491	6.10	70,823,995
30.12.2019	11,610,491	6.80	78,951,339
31.03.2020	11,610,491	5.90	68,501,897
30.06.2020	11,689,358	7.00	81,825,506
30.09.2020	11,689,358	7.25	84,747,846
30.12.2020	11,689,358	7.60	88,839,121

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Turnover of Invalda INVL. AB shares and share price during the past 3 years

Changes in Invalda INVL share price and OMX Vilnius index over 10 years

Index/Shares	01.01.2010	01.01.2020	30.12.2020	Change (%) since 2010	Change (%) in 12 months of 2020
OMX Vilnius	261.77	712.14	816.64	211.97 ↑	14.67 ↑
Invalda INVL	0.5329 EUR	6.80 EUR	7.60 EUR	1,326.16 ↑	11.76 ↑

11.2. TRADING IN SECURITIES OF THE GROUP COMPANIES'

Shares of subsidiary companies of Invalda INVL, forming the group, are not traded on stock exchanges. INVL Baltic Real Estate, INVL Technology and Šiauliq Bankas, companies Invalda INVL invested in, are listed on Nasdaq Vilnius stock exchange.

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IV. ISSUER'S MANAGING BODIES

Structure, authorities, the procedure for appointment and replacement

General Shareholders' Meeting

The Board (3 members)

The President

The governing bodies of Invalda INVL, AB are the General Shareholders' Meeting. sole governing body – the President. and a collegial governing body – the Board. The Supervisory Board is not formed.

12.1. GENERAL SHAREHOLDERS' MEETING

Powers of the General Shareholders' Meeting

Persons who were shareholders of the Company at the close of the accounting day of the meeting (the 5th working day before the General Shareholders' Meeting) shall have the right to attend and vote at the General Shareholders' Meeting in person. unless otherwise provided for by laws. or may authorise other persons to vote for them as proxies or may conclude an agreement on the disposal of the voting right with third parties. The shareholder's right to attend the General Shareholders' Meeting shall also cover the right to speak and enquire.

The General Shareholders' Meeting may take decisions and shall be held valid if attended by the shareholders who hold the shares carrying not less than $\frac{1}{2}$ of all votes. After the presence of a quorum has been established, the quorum shall be deemed to be present throughout the General Shareholders' Meeting. If a quorum is not present, the General Shareholders' Meeting shall be considered invalid and a repeat General Shareholders' Meeting must be convened, which shall be authorised to take decisions only on the issues on the agenda of the General Shareholders' Meeting that has not been held and to which the quorum requirement shall not apply.

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An Annual General Shareholders' Meeting must be held every year at least within 4 months from the close of the financial year.

The General Shareholders' Meeting shall have the exclusive right to:

amend the Articles of Association of the Company, unless otherwise provided for by the Law on Companies of the Republic of Lithuania;
change registered office of the company;
elect members of the Board;
dismiss the Board or its members;
elect and dismiss the firm of auditors, set the conditions for auditor remuneration;
determine the class, number, nominal value and the minimum issue price of the shares issued by the Company;
take a decision regarding conversion of shares of one class into shares of another class, approve share conversion procedure;
take a decision to replace private limited liability company share certificates by shares;
approve the annual accounts and the report on company operations;
take a decision on profit/loss appropriation;
take a decision on the formation, use, reduction and liquidation of reserves;
to approve the set of interim financial statements for the purpose of making a decision on the allocation of dividends for a period shorter than the financial year;
decide on the allocation of dividends for a period shorter than the financial year;
take a decision on the issue of convertible debentures;
take a decision on withdrawal for all the shareholders the pre-emption right to acquire the Company's shares or convertible debentures of the specific issue;
take a decision to increase the authorised capital;
take a decision to reduce the authorised capital, except the cases provided for by the Law on Companies of the Republic of Lithuania;
take a decision for the Company to purchase its own shares;
take a decision to approve rules on giving stock options to employees and/or members of the bodies;
take a decision on the reorganisation or split-off of the Company and approve the terms of reorganisation or split-off, except the cases provided for in the Law on Companies of the Republic of Lithuania;
take a decision on transformation of the Company;
take decisions on company restructuring in the cases provided for in the Law on Restructuring of Enterprises;
take a decision to liquidate the Company, cancel the liquidation of the Company, except the cases provided by the Law on Companies of the Republic of Lithuania;
elect and dismiss the liquidator of the Company, except the cases provided by the Law on Companies of the Republic of Lithuania.

The General Shareholders' Meeting may also decide on other matters assigned within the scope of its powers by the Articles of Association of the Company, unless these have been assigned under the Law on Companies of the Republic of Lithuania within the scope of powers of other organs of the Company and provided that, in their essence, these are not the functions of the governing bodies.

Convocation of the General Shareholders' Meeting of Invalda INVL, AB

The documents related to the agenda, draft resolutions on every item of agenda, documents what have to be submitted to the General Shareholders Meeting and other information related to realization of shareholders rights are available at the registered office of the Company during working hours or on company's website www.invaldainvl.com.

The shareholders are entitled: (i) to propose to supplement the agenda of the General Shareholders Meeting submitting draft resolution on every additional item of agenda or, when there is no need to make a decision - explanation of the shareholder (this right is granted to shareholders who hold shares carrying at least 1/20 of all the votes). Proposal to supplement the agenda is submitted in writing sending the proposal by registered mail to the Company at Gyneju str. 14, Vilnius, Lithuania, or delivered in person to the representative of the Company or by sending proposal to the Company by email [email protected]. The agenda is supplemented if the proposal is received no later than 14 before the General Shareholders Meeting; (ii) to propose draft resolutions on the issues already included or to be included in the agenda of the General Shareholders Meeting at any time prior to the date of the General Shareholders meeting (in writing sending the proposal by registered mail to the Company at Gyneju str. 14, Vilnius, Lithuania, or delivered in person to the representative of the Company or by sending proposal to the Company by email [email protected]) or in writing during the General

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Shareholders Meeting (this right is granted to shareholders who hold shares carrying at least 1/20 of all the votes); (iii) to submit questions to the Company related to the issues of agenda of the General Shareholders Meeting in advance but no later than 3 business days prior to the General Shareholders Meeting in writing sending the proposal by registered mail to the Company at Gyneju str. 14, Vilnius, Lithuania, or delivered in person to the representative of the Company or by sending proposal to the Company by email [email protected]. The company reserves the right to answer to those shareholders of the Company who can be identified and whose questions are not related to the company's confidential information or commercial secrets.

Shareholder participating at the General Shareholders Meeting and having the right to vote must submit documents confirming personal identity. Each shareholder may authorize either a natural or a legal person to participate and to vote on the shareholder's behalf at the General Shareholders Meeting. A power of attorney issued by a natural person must be certified by a notary. The representative has the same rights as his represented shareholder at the General Shareholders Meeting. The authorized persons must have documents confirming their personal identity and power of attorney approved in the manner specified by law which must be submitted to the Company no later than before the commencement of registration for the General Shareholders Meeting. A power of attorney issued in a foreign state must be translated into Lithuanian and legalised in the manner established by law. The Company does not establish special form of power of attorney.

Shareholder is entitled to issue power of attorney by means of electronic communications for legal or natural persons to participate and to vote on its behalf at the General Shareholders Meeting. No notarisation of such authorization is required.

The power of attorney issued through electronic communication means must be confirmed by the shareholder with a safe electronic signature developed by safe signature equipment and approved by a qualified certificate effective in the Republic of Lithuania. The shareholder shall inform the Company on the power of attorney issued through the means of electronic communication by e-mail [email protected] not later than on the last business day before the General Shareholders Meeting. The power of attorney and notification must be issued in writing and could be sent to the Company by communication means if the transmitted information is secured and the shareholder's identity can be identified.

The Company is not providing the possibility to attend and vote at the General Shareholders Meeting through electronic means of communication.

Shareholder or its representative may vote in writing by filling general voting bulletin, in such a case the requirement to deliver a personal identity document does not apply. The form of general voting bulletin is presented at the Company's webpage www.invaldainvl.com section For Investors.

If shareholder requests, the Company shall send the general voting bulletin to the requesting shareholder by registered mail or shall deliver it in person against signature no later than 10 days prior to the General Shareholders Meeting free of charge. The filled general voting bulletin must be signed by the shareholder or its authorized representative. Document confirming the right to vote must be added to the general voting bulletin if authorized person is voting. The filled general voting bulletin must be sent by the registered mail to the Company at Gyneju str. 14, Vilnius, Lithuania, or delivered in person to the representative of the Company no later than the day before of the General Shareholders Meeting.

In 2020 2 (two) shareholders' meetings of Invalda INVL were held. The Ordinary General Meeting of Shareholders of Invalda INVL AB took place on 30 April 2020. The consolidated annual report of Invalda INVL and the auditor's report on the financial statements of Invalda INVL AB were reviewed at the meeting. The set of financial statements of Invalda INVL, profit distribution, conditions for repurchase of own shares and the issue of the number of ordinary registered shares of Invalda INVL for which employees are offered to enter into option agreements in 2020 and the share price were also approved. The Remuneration Policy was also approved at this shareholders' meeting. The shareholders' meeting held on 1 July 2020 approved the new wording of the Rules for Granting Equity Incentives and approved the issue of concluding option agreements.

12.2. THE BOARD

Powers of the Board

The Board shall continue in office for the 4-year period or until a new Board is elected and commences its activities, but not longer than until the date of the Annual General Shareholders' Meeting to be held during the final year of the term of office of the Board. If individual members of the Board are elected, they shall serve only until the expiry of the term of office of the current Board.

The Board or its members shall commence their activities after the close of the General Shareholders' Meeting which elected the Board or its members. Where the Articles of Association of the Company are amended due to the increase in the number of its members, newly elected members of the Board may commence their activities solely from the date of registration of the amended Articles of Association. The Board shall elect the chairman of the Board from among its members.

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The General Shareholders' Meeting may dismiss from the office the entire Board or its individual members (as well as the Chairman of the Board) before the expiry of their term of office. A member of the Board may resign from his post before the expiry of his term of office, notifying the Board in writing at least 14 calendar days in advance.

The Board shall have all authorities provided for in the Articles of Association of the Company as well as those assigned to the Board by the laws. The activities of the Board shall be based on collegial consideration of issues and decision-making as well as shared responsibility to the General Shareholders' Meeting for the consequences of the decisions made. Striving for as big benefit for the Company and shareholders as possible and in order to ensure the integrity and transparency of the control system, the Board closely cooperates with the manager of the Company. The working procedure of the Board shall be laid down in the rules of procedure of the Board adopted by it.

The Board discusses and approves the issues set forth in the Law on Companies of the Republic of Lithuania.

The Board shall analyse and assess a set of Company's and consolidated annual financial statements and draft of profit/loss appropriation and submit them to the General Shareholders' Meeting together with the annual management report.

The Board shall consider and approve the company's business strategy, analyse and evaluate information about the company's business strategy, the following information is provided to the Annual General Meeting.

It shall be the duty of the Board to convene and organise the General Shareholders' Meetings in due time.

Members of the Board must keep commercial secrets of the Company and confidential information which they obtained while holding the office of members of the Board.

Procedure of work of the Board

The order of the formation of the Board of the company should ensure objective, impartial and fair representation of minority shareholders of the company: names and surnames of the candidates to become members of the Board of the company, information about their education, qualification, professional background, positions taken in supervisory and management Boards of other companies, owned block of shares in other companies, larger than 1/20, potential conflicts of interest, information on whether the candidates are applied to administrative sanctions or punishment for violations / crimes against the economy, business policy, property, property rights and property interests, or do they have no obligations neither functions which would threaten the safe and reliable operations of the company, or whether candidates meet the legal requirements made for the Managers, are disclosed not later than 10 days prior the General Shareholders' Meeting in which the election of the Members of the Board is intended, so that the shareholders would have sufficient time to make an informed voting decision.

In order to maintain a proper balance in terms of the current qualifications possessed by its members, the desired composition of the Board of the company are determined with regard to the company's structure and activities and are periodically evaluated once a year.

Any Member of the Board of the company must confound company's property with its own property and do not use it or information which they received while holding position as the Members of the Board for personal benefit or for the benefit of third party on other way than the General Shareholders Meeting and the Board allows it.

Each Member of the Board actively participates in the Meetings of Board and devotes sufficient time and attention to perform his duties as the Member of the Board. Regulation of the work of the Board of the company settles the statements that if the Member of the Board attended the Meetings of the Board less than 2/3 times in the financial year, such information must be disclosed to shareholders in the General Shareholders' Meeting.

Alvydas Banys, Indrė Mišeikytė and Darius Šulnis were elected to the Board of Invalda INVL on 30 April 2018. The members of the Board elected by the General Meeting of Shareholders act separately and for the benefit of the Company and its shareholders, but do not meet the requirements of independence. The Supervisory Authority of the Bank of Lithuania recommends to disclose that the composition of the Board of the Company without independent members cannot ensure proper implementation of the provisions of the Law on Companies of the Republic of Lithuania in relation to related parties transactions. The Company makes every effort to ensure the proper implementation of the aforementioned provisions regarding related party transactions and publishes such information on the Company's website and in its annual reports, distributes information and recommendations to its related companies, and frequently consults with the Company's Audit Committee. The independence provisions of the board members will apply to the election of a new board within the company. The current Board of Invalda INVL will perform its functions until the end of the term for which it was elected, ie until 2022.

12.3. THE PRESIDENT

The manager of the Company (the President) shall be elected and dismissed from office by the Board which shall also fix his salary, approve his job description, provide incentives and impose penalties. An employment contract shall be concluded with the President. The President shall assume office after the election, unless otherwise provided for in the contract

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concluded with him. If the Board adopts a decision on his removal from office, the employment contract therewith shall be terminated.

In his activities, the President shall be guided by laws and other legal acts, the Articles of Association of the Company, decisions of the General Shareholders' Meeting and the Board, his job description. The President is accountable to the Board.

The President shall organise daily activities of the Company, hire and dismiss employees, conclude and terminate employment contracts therewith, provide incentives and impose penalties.

The President shall act on behalf of the Company and shall be entitled to enter into transactions at his own discretion. The President may conclude the transactions to invest, dispose of or lease the fixed assets for the book value which exceeds 1/20 of the authorised capital of the Company (calculated individually for every type of transaction), to pledge or mortgage the fixed assets for the book value which exceeds 1/20 of the authorised capital of the Company (calculated for the total amount of transactions), to offer surety or guarantee for the discharge of obligations of third parties for the amount which exceeds 1/20 of the authorised capital of the Company, to acquire the fixed assets for the price which exceeds 1/20 of the authorised capital of the Company, provided there is a decision of the Board to enter into these transactions.

The President shall be responsible for:

the organisation of activities and the implementation of objects of the company;
the drawing up of the annual financial statements and annual management report;
drafting a decision on the issuance of dividends for a period shorter than the financial year, drawing up an interim financial report and preparing an interim report for the adoption of a decision on the allocation of dividends for a period shorter than the financial year. The interim report shall apply mutatis mutandis the provisions of the Law on Company Financial Accountability for the preparation and publication of the annual management report.
Drafting rules on giving stock options;
the conclusion of the contract with the firm of auditors where the audit is mandatory or required under the Statutes of the company;
the submission of information and documents to the General Meeting, the Supervisory Board and the Board in cases laid down in this Law or at their request;
the submission of documents and particulars of the company to the administrator of the Register of Legal Persons;
the submission of the documents of a public limited liability company to the Bank of Lithuania and the Central Securities Depository;
the publication of information referred to in this Law in the daily indicated in the Statutes;
reporting to the shareholders and the board about the most important events that are relevant to the company's activities;
the submission of information to shareholders;
the fulfilment of other duties laid down in this Law and other laws and legal acts as well as in the Statutes and the staff regulations of the manager of the company.

The President must keep commercial secrets and confidential information of the Company which he learned while holding this office.

13. Information about members of the Board, CFO and the Audit Committee of the Company

The Board of Invalda INVL, AB was re-elected during the Extraordinary General Shareholders' Meeting on 30 April 2018. Mr. Banys was elected as the Chairman of the Board. Mr. Šulnis and Ms. Mišeikytė were elected as the Members of the Board. Mr. Šulnis was appointed as the President of the company on 22 May 2013.

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	Term of office	Educational background and qualifications
Alvydas Banys
Chairman of the Board	Since 2018 until 2022	Vilnius Gediminas Technical University.
Faculty of Civil Engineering.
Master in Engineering and Economics.
Junior Scientific co-worker.
Economics' Institute of Lithuania's Science Academy.	Personally: 910,875 units of shares, 7.64% of authorised capital and votes;
Together with controlled company LJB Investments: 4,211,520 units of shares. 35.33% of authorized capital and votes.
Total votes with others whose votes are counted together - 87.54%.	Invalda INVL, AB (code 121304349, Gynėjų g. 14, Vilnius, Lithuania) – Senior Adviser (main place of work)
INVL Baltic Sea Growth Fund, managed by INVL Asset Management (code 126263073, Gynėjų g. 14, Vilnius, Lithuania) - Investment Committee member
Litagra, UAB (code 304564478, Savanorių pr. 173, Vilnius, Lithuania) – Member of the Board
INVL Baltic Farmland, AB (code 303299781, Gynėjų g. 14, Vilnius, Lithuania) – Chairman of the Board
INVL Technology, SUTPKIB (code 300893533, Gynėjų g. 14, Vilnius, Lithuania) – Member of the Advisory Committee
Indrė Mišeikytė
Member of the Board	Since 2018 until 2022	Vilnius Gedimino Technical University.
Faculty of Architecture.
Master in Architecture.	Personally: 236,867 units of shares, 1.99% of authorised capital and votes.
Total votes with others whose votes are counted together - 87.54%.	Invalda INVL, AB (code 121304349, Gynėjų g. 14, Vilnius, Lithuania) – Adviser (main place of work)
INVL Baltic Farmland, AB (code 303299781, Gynėjų g. 14, Vilnius, Lithuania) – Member of the Board
INVL Technology, SUTPKIB (code 300893533, Gynėjų g. 14, Vilnius, Lithuania) – Member of the Advisory Committee
Darius Šulnis –
Member of the Board, the President of Invalda INVL	Since 2018 until 2022	Duke University (USA). Business Administration. Global Executive MBA.
Vilnius University.
Faculty of Economics.
Master in Accounting and Audit.
Financial broker's license (general) No. A109.	Personally: 0 units of shares, 0% of authorised capital and votes.
Together with controlled company Lucrum Investicija: 2,803,492 units of shares, 23.52% of authorised capital and votes.
Total votes with others whose votes are counted together - 87.54%.	Invalda INVL, AB (code 121304349, Gynėjų g. 14, Vilnius, Lithuania) – the President (main place of work)
INVL Baltic Sea Growth Fund, managed by INVL Asset Management (code 126263073, Gynėjų g. 14, Vilnius, Lithuania) - Investment Committee Member
INVL Asset Management, UAB (code 126263073, Gynėjų g. 14, Vilnius, Lithuania) – Chairman of the Board
Šiaulių Bankas AB (code 112025254, Tilžės g. 149, Šiauliai, Lithuania) – Member of the Supervisory Board
INVL Baltic Farmland, AB (code 303299781, Gynėjų g. 14, Vilnius, Lithuania) – Member of the Board
Litagra, UAB (code 304564478, Savanorių pr. 173, Vilnius, Lithuania) – Member of the Board

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	Term of office	Educational background and qualifications	Owned number of shares in Invalda INVL	Work experience
	-	Vilnius University, Faculty of Economics, Master of Science in Accounting and Auditing	Personally: 18,651 units of shares, 0.16% of authorised capital and votes. The right to acquire 137,453 shares of the company according to the concluded share option agreements.	Since 2006 CFO at Invalda INVL
2001 – 2006 CFO at Valmeda, AB
2000 – 2001 CFO at Galincius, AB
2000 – 2001 CFO at Invaldos Marketings, UAB (current name Inreal Valdymas. UAB)
2000 – 2002 Accountant at Gildeta, AB
1998 – 2000 Accountant at Invalda, AB

14. Information about the Audit Committee of the company

The Audit Committee consists of 2 independent members. The members of the Audit Committee are elected and dismissed by the General Shareholders' Meeting of Invalda INVL, AB for a term not exceeding 4 years. The main functions of the Audit Committee should be the following:

provide recommendations to the Board of the company with selection, appointment, reappointment and removal of an external audit company as well as the terms and conditions of engagement with the audit company;
monitor the process of external audit;
monitor how the external auditor and audit company follow the principles of independence and objectivity;
observe the process of preparation of financial reports of the company;
monitor the efficiency of the internal control and risk management systems of the company. Once a year review the need of the internal audit function.
monitor the implementation of the audit firm's recommendations and comments imposed by the Board and the manager of the company.

The Member of the Audit Committee of the company may resign from his post before the expiry of term of office. notifying the Board of the company in writing at least 14 calendar days in advance. When the Board of the Company receives the notice of resignation and estimates all circumstances related to it. the Board may pass the decision either to convene the Extraordinary General Shareholders Meeting to elect the new member of the Audit Committee or to postpone the question upon the election of the new member of the Audit Committee until the nearest General Shareholders Meeting. In any case the new member is elected till the end of term of office of the operating Audit Committee.

Procedure of work of the audit committee

The Audit Committee is a collegial body. taking decisions during meetings. The Audit Committee may take decisions and its meeting should be considered valid. when both members of the Committee participate in it. The decision should be passed when both members of the Audit Committee vote for it. The Member of the Audit Committee may express his will – for or against the decision in question. the draft of which he is familiar with – by voting in advance in writing. Voting in writing should be considered equal to voting by telecommunication end devices. provided text protection is ensured and it is possible to identify the signature. The right of initiative of convoking the meetings of the Audit Committee is held by both Members of the Audit Committee. The other Member of the Audit Committee should be informed about the convoked meeting. questions that will be discussed there and the suggested drafts of decisions not later than 3 (three) business days in advance in writing

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(by e-mail or fax). The meetings of the Audit Committee should not be recorded. and the taken decisions should be signed by both Members of the committee. When both Audit Committee Members vote in writing, the decision should be written down and signed by the secretary of the Audit Committee who should be appointed by the Board of the Company. The decision should be written down and signed within 7 (seven) days from the day of the meeting of the Audit Committee.

The Audit Committee should have the right to invite the Manager of the Company. Member(s) of the Board, the chief financier, and employees responsible for finance, accounting and treasury issues as well as external auditors to its meetings. Members of the Audit Committee may receive remuneration for their work in the committee at the maximum hourly rate approved by the General Shareholders' Meeting

On 28 April 2017 the General Shareholders meeting elected independent Audit Committee members: Danguté Pranckéniene, partner and auditor of Moore Stephens Vilnius, UAB and Tomas Bubinas, a Chief Operating Officer at Biotechpharma, UAB.

	Term of office	Educational background and qualifications
Danguté Pranckéniene
Independent
and committee member	Since 2017 until 2021	Vilnius Gediminas Technical University, Master of Business Administration.
Vilnius University, Master of Economics.
The International Coach Union (ICU), professional coucher name.
Lithuanian Ministry of Finance, the auditor's name.	-	Since 1997 the Partner at Moore Mackonis, UAB
1996 - 1997 Audit Manager, Deloitte & Touche
1995 - 1996 Lecturer, Vilnius Gediminas Technical University
1982 - 1983 Lecturer, Vilnius University
Tomas Bubinas
Independent audit committee member	Since 2017 until 2021	Baltic Management Institute (BMI), Executive MBA
Association of Chartered Certified Accountants.
ACCA. Fellow Member
Lithuanian Sworn Registered Auditor
Vilnius University, Msc. in Economics	-	Since 2013 Chief Operating Officer of Biotechpharma, UAB.
2010 – 2012 Senior Director of TEVA Biopharmaceuticals (USA).
2004-2010 – TEVA Pharmaceuticals, Chief Financial Officer for the Baltic States.
2001-2004 – Sicor Biotech, Chief Financial Officer
1999 – 2001 Senior Manager of PricewaterhouseCoopers.
1994 – 1999 Senior Auditor, Manager of Coopers & Lybrand.

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15. Information on the amounts calculated by the Issuer, other assets transferred and guarantees granted to the Members of the Board, the president and CFO

The Members of the Board and the president who are directly elected by the General Shareholders' Meeting and have concluded employment contracts with the company as well as CFO of the company are entitled only to a fixed salary. The company does not have a policy concerning payment of a variable part of remuneration to the Board members or management.

In 2020, the company paid dividends of EUR 780 thousand, net of taxes, to the members of the Board of the company as shareholders of the company. The company paid dividends of EUR 4,734 thousand, net of taxes, to companies controlled by the members of the company's Board. The company paid dividends of EUR 2,453 thousand, net of taxes, to natural persons related to the members of the Board of the company. During the reporting period, the members of the Board had not receive bonuses from the company. There were no assets transferred. no guarantees granted, no bonuses paid and no special pay-outs made by the company to its managers. The Members of the Board and the president of the Company were not granted with bonuses by other companies of Invalda INVL, AB group.

During the year 2020, the total remuneration for the members of the Audit Committee of the company amounted to EUR 1,341.

INFORMATION ABOUT CALCULATED REMUNERATION FOR INVALDA INVL, AB MANAGERS FOR 2020

	Calculated remuneration, thousand EUR
	2018	2019	2020
For members of the Board (according to employment contracts as employees of the company)4	218	285	251
For each member of the Board (average per month)	6	8	7
For members of administration (the President and CFO)4	144	195	168
For each member of administration (average per month)	6.0	8.1	7.0

With the change in a large part of tax legislation from 2019, wages in employment contracts are indexed to ensure that employees' after-tax wages do not decrease.

V. OTHER INFORMATION

16. Agreements with intermediaries on public trading in securities

Invalda INVL, AB has signed agreements with these intermediaries:

Šiaulių Bankas, AB (Tilzes str. 149, Siauliai, Lithuania; tel. +370 41 595 607) – the agreement on investment services, the agreement on management of securities accounting, the agreement on payment of dividends;
Luminor Bankas, AB (Konstitucijos av. 21A, Vilnius, Lithuania; tel. +370 5 239 3444) – the agreement on financial instruments account management, implementation of orders and offering recommendations;
SEB Bankas, AB (Gedimino ave. 12, Vilnius, Lithuania; tel. +370 5 268 2370) – the agreement on management of securities account;
FMI Orion Securities, UAB (A. Tumeno str. 4. (block B), Vilnius, Lithuania; tel. +370 5 231 3841) - the agreement on investment services;
AB SEB Pank (Tornimae str. 2., 15010, Tallin, Estonia; tel. +372 6657 772) - the agreement of intermediation.

17. Information on Issuer's branches and representative offices

Invalda INVL, AB has no branches or representative offices.

4 Remuneration by the company and group companies (including non-consolidated companies)

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18. Risk management

18.1. A DESCRIPTION OF THE PRINCIPAL RISKS AND UNCERTAINTIES

Economic, geopolitical risks

The activities of the Invalda INVL group of companies are influenced by the general economic, geopolitical and legal environment of the countries where businesses are developed and investments are made.

Economic recessions and downturns can affect the companies and assets that we have invested in, both directly and through collective investment undertakings, and reduce their value, while negatively impacting our performance.

There is a risk that, in the event of inflation, the value of a stock will grow more slowly than inflation, leading to lower-than-inflation returns. In this case, the real return on the increase in the value of the shares of the persons who sold the company's shares on the market may be lower than expected. In the event of deflation, there would be a risk that the value of the company's investments would decrease due to a decrease in the general price level.

Regulatory risk

The main activity of AB Invalda INVL Group is asset management. A significant part of the assets under management consists of the assets of the second pillar pension funds in Lithuania and Latvia, therefore the changing laws related to the pension system may negatively affect the results of this business line. We have opted for a regulated asset management business model, so an increase in the regulatory burden may increase our costs and adversely affect profitability. The asset management business must also meet capital adequacy ratios, which may result in additional contributions to the capital of asset management companies in the event of a loss.

Changes in the laws or regulations governing our operations may have a material effect on our business. Changing tax policy, as well as regulatory policy in sectors that depend on public funding, can have negative consequences for our business.

Tax risk

Invalda INVL AB has concluded a number of transactions with related parties and its portfolio companies. Information on transactions concluded by the company with related parties, as provided for in Article 37 (2) of the Law on Companies, is made public. Under current tax law, transactions with related parties must be formalized (i.e., independently and under the same conditions). Despite every effort made by management to ensure compliance with the above standard, the theoretical tax risk remains, i.e. the risk that the applicable charges will be calculated on the basis of market prices if it has been established that certain transactions have not been concluded in accordance with this principle, and the risk that appropriate fines and interest will be charged.

Payouts and liquidity risk

By purchasing the company's shares, the shareholders assume the liquidity risk of the securities - if the demand for the shares decreases or they are delisted from the stock exchange, investors would face difficulties in their realization. If the company's financial situation deteriorates, the demand for the company's shares may decrease, as well as the price.

Our investments may be illiquid - there is a risk that the planned transactions will not take place when the management of the issuer so requests. When investing in portfolio companies whose securities (shares, bonds and other financial instruments) are not traded on regulated markets, there is a risk that the sale of securities may take longer than planned or may not be due to lack of demand or other market conditions, or may not be as profitable as planned, or even unprofitable. Our investments in corporate shares and collective investment undertakings are risky and, in the worst case, it is possible to lose the entire amount invested.

We have not approved a dividend payment policy and have not set a minimum dividend, therefore the payment of funds to shareholders is not guaranteed. Decisions to pay dividends depend on the profitability of operations, cash flows, investment plans and the general financial situation and other circumstances.

Interest rate risk

Changes in interest rates can affect the cost of capital, profitability and the ability to attract additional financing. There is a risk that if inflation rises, central banks will raise interest rates and the servicing of loans related to the company's investments, which may reduce the value of the company's investments.

Credit risk

There is a risk that buyers of the products and services of direct portfolio companies, or businesses in which we have invested through collective investment undertakings, will not meet their obligations, which would adversely affect profits. A large part of the default on time may disrupt the issuer's normal operations and may require additional sources of funding, which may not always be available. The issuer also incurs risks by holding funds in bank accounts or investing in short-term financial instruments.

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Risk of false expectations and assessments

The profitability of Invalda INVL investments may be significantly lower than the average profitability historically achieved by the private equity industry, as past results do not reflect future profitability.

Invalda INVL may not be able to realize the profit from investments in shares of companies or collective investment undertakings. The companies and collective investment undertakings in which we invest may not create value or even destroy it by devaluing our investments.

The performance of the company and the group may fluctuate significantly and may not reflect future results.

The share price of Invalda INVL may fluctuate significantly. The price of the shares you have acquired as an investor may be higher or lower, depending on many factors, some of which are beyond our control.

The market may value the shares of Invalda INVL less than the fair value of the assets.

Technological risk

The company may face attempts by other persons to find illegal access to the information systems of the company and / or its group companies, which may pose a threat to the information security and system stability of the company and/or its portfolio companies. The company and/or its portfolio companies may not be able to detect and protect against such theft and attacks. Theft, unauthorized access and use of trade secrets and other confidential business information as a result of such an event may materially harm the company's business, results of operations or financial condition.

Human resources risk

Invalda INVL AB and its asset management business and other companies and collective investment undertakings in which we invest are also dependent on key executives - the loss of them could adversely affect the company's operations and we could lose business opportunities.

18.2. INFORMATION ABOUT THE EXTENT OF RISK AND ITS MANAGEMENT IN THE COMPANY

Information on the extent of risks and management of them is disclosed in explanatory notes of consolidated and company's financial statements for 2020.

18.3. THE MAIN INDICATIONS ABOUT INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS RELATED TO THE PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

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.

Chief financial officer of the company is responsible for the preparation supervision and the final revision of the consolidated financial statements. Moreover, he constantly reviews International Financial Reporting Standards (IFRS) in order to implement in time IFRS changes, analyses company's and group's significant deals. ensures collecting information from the group's companies and timely and fair preparation of this information for the financial statements. CFO of the company periodically informs the Board about the preparation process of financial statements.

Standardized data collection files prepared by Excel program are used for preparation of consolidated numbers. It also facilitates the automatic reconciliation and elimination of balances and transactions between subsidiaries in the preparation of consolidated accounts. Internal control of the financial numbers of the Group's entities and of the Group financial statements is provided by CFO of the Company.

18.4. INFORMATION ON FINANCIAL RISK MANAGEMENT OBJECTIVES USED FOR HEDGING MEASURES WHICH HEDGE ACCOUNTING

Information on financial risk management objectives used for hedging measures which hedge accounting and of price risk, credit risk, liquidity risk and cash flow risk where the company group uses financial instruments and is an important evaluation of the property, own capital, liabilities, revenue and expenses is disclosed in the consolidated and Company's financial statements for 2020 explanatory notes.

19. Issuer's and its group companies' non - financial results. Information related to social responsibility. environment and employees

For more information, see Social Responsibility Report, Annex 4 to this Annual Management Report.

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19.1. EMPLOYEES

Average number of employees in 2020 was 7 (in 2019 it was 7). All company's employees have higher university education.

Number of employees and average monthly salary

	Measuring units	2018	2019	2020
Total amount of employees as of the end of the period	person	7	7	7
- managers	person	4	4	4
- specialists	person	3	3	3
Average monthly salary (calculated for)	EUR	3,515	4,023	4,658
- managers	EUR	5,303	5,626	6,489
- specialists	EUR	1,118	1,871	2,195

With the change in a large part of tax legislation from 2019, wages in employment contracts are indexed to ensure that employees' after-tax wages do not decrease.

Number of employees in Invalda INVL Group was 537 on 31 December 2020 (561 on 31 December 2019).

19.2. INFORMATION ABOUT AGREEMENTS OF THE COMPANY AND THE MEMBERS OF THE BOARD, OR THE EMPLOYEES' AGREEMENTS PROVIDING FOR COMPENSATION IN CASE OF THE RESIGNATION OR IN CASE THEY ARE DISMISSED WITHOUT A DUE REASON OR THEIR EMPLOYMENT IS TERMINATED IN VIEW OF THE CHANGE OF THE CONTROL OF THE COMPANY.

There are no agreements of the company and the Members of the Board, or the employees' agreements providing for compensation in case of the resignation or in case they are dismissed without a due reason or their employment is terminated in view of the change of the control of the company.

20. Memberships in associations

Invalda INVL along with INVL Asset Management in Lithuania and Latvia is a full member of Invest Europe – the organisation that unites Europe's private equity and venture capital companies and investors.

Invalda INVL is also part of the Lithuanian Private Equity and Venture Capital Association, which brings together the participants of Lithuania's private equity and venture capital market. The organisation's main goal is, together with the competent Lithuanian institutions and partners, to take part in shaping and implementing a common policy for the PE/VC industry.

Invalda INVL together with its INVL Asset Management companies in Lithuania and Latvia, has joined the UN-supported Principles for Responsible Investment (PRI) in the middle of 2017. The PRI, founded in 2006, is a global network of over 1700 investors, aims to assess the investment implications of environmental, social and governance (ESG) factors. An economically efficient, sustainable global financial system is considered a necessity for long-term value creation. Investors who support the PRI voluntarily work to apply the principles in their investment activities.

Invalda INVL has joined the Investors' Association at the end of 2017. The main activities include the following areas: organization of meetings with business leaders and events on the financial markets of the members of the association, the minority investors' rights advocacy, development of centers of excellence, providing the scientific findings based on the recommendations of the Government and Parliament, drawing attention and warning about the opportunities and risks associated with investing.

Group company INVL Asset Management is a member of Lithuanian investment and pension funds (LIPFA) Association. LIPFA is an independent organisation that brings together the country's private investment management companies and branches of commercial banks engaged in investment activities. Members of the association actively participate in the activities of the association and contribute to the promotion of investment and the favourable environment for Lithuania.

Lithuanian Investment Managers Association (LIVA), one of whose founders is INVL Asset Management, aims to contribute to the development of investment, fund improvements in the legal environment and investor education.

INVL Asset Management is a member of Lithuanian financial markets institute. The activities of this organisation is focused on analysis of Lithuanian financial markets specific problems and research-based solutions delivery. The institute

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focuses on promotion of various business financing forms and public approach formation to the need for effective functioning of financial markets, the need for formation.

INVL Asset Management is an associate member of The Association of Lithuanian Banks. This association seeks to ensure a good environment for the banking sector and achieve direct dialogue with the public, supervisory authorities and legislators.

21. Information on harmful transactions in which the issuer is a party

There were no harmful transactions (those that are not in line with issuer's goals, not under usual market terms. harmful to the shareholders' or stakeholders' interests. etc.) made in the name of the issuer that had or potentially could have negative effects in the future on the issuer's activities or business results. There were also no transactions where a conflict of interest was present between issuer's management's. controlling shareholders' or other related parties' obligations to the issuer and their private interests.

22. Information on the related parties' transactions

During the reporting period, the largest share of the company and a group of transactions with related parties accounted for loans, computer services, rent and utility costs of purchases, land administration services and asset management services (only group). The detailed information on the related parties' transactions has been disclosed in the section 26 of the consolidated and Company's financial statements for 2020 explanatory notes.

In addition, information regarding Transactions with Related Parties, according to the Law on Companies article 37 (2), is published on the Company's web site - „For Investors“ $\rightarrow$ „Reports“ $\rightarrow$ "Related parties transactions". The link to the Company's web site: https://www.invaldainvl.com/lit/en/investor-relations/reports/related_parties_transactions.

Information on the Company's related party transactions published on the Company's website is provided in Annex 3, Part 5 to this Consolidated Annual Management Report.

Pursuant to paragraph 10 of Article 37 (2) of the Law on Companies of the Republic of Lithuania, the Company report the amounts of the Company's transactions with related parties, which were implemented in the ordinary course of business and with the same related party in the financial year.

Transaction value, EUR
Related party	Related party	Related party
UAB Cedus InvestCode 302576631, Gynėjų g. 14, Vilnius, LithuaniaRegister of Legal Entities	521	217,114
UAB Consult InvaldaCode 302575814, Gynėjų g. 14, Vilnius, LithuaniaRegister of Legal Entities	203
UAB AktyvoCode 301206846, Gynėjų g. 14, Vilnius, LithuaniaRegister of Legal Entities	348
UAB Įmonių grupė InservisCode 301673796, Gynėjų g. 14, Vilnius, LithuaniaRegister of Legal Entities	1,081,893
UAB MD PartnersCode 304842899, Gynėjų g. 14, Vilnius, LithuaniaRegister of Legal Entities	540
UAB INVL Farmland ManagementCode 303788352, Gynėjų g. 14, Vilnius, LithuaniaRegister of Legal Entities	720
SUTNTIB INVL Baltic Real EstateCode 152105644, Gynėjų g. 14, Vilnius, LithuaniaRegister of Legal Entities	8,736	18,564
UAB ProprietasCode 303252098, Gynėjų g. 14, Vilnius, LithuaniaRegister of Legal Entities	6,000	3,141
UAB RovelijaCode 302575846, Gynėjų g. 14, Vilnius, LithuaniaRegister of Legal Entities	1,738
UAB BAIPCode 301318539, Gynėjų g. 14, Vilnius, LithuaniaRegister of Legal Entities		10,560

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| UAB FINtime
Code 304192355, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 8,510 | |
| --- | --- | --- |
| UAB ACENA
Code 300935644, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | | 1,203 |
| UAB Avižėlė
Code 303113077, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Beržylė
Code 30112915, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Dirvolika
Code 303112954, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Duonis
Code 303112790, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Ekotra
Code 303112623, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Kvietukas
Code 303112687, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities" | 695 | |
| UAB Laukaitis
Code 303112694, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Lauknešys
Code 303112655, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Linažiedė
Code 303112922, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Pušaitis
Code 303113102, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Puškaitis
Code 303112769, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Sėja
Code 303113013, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Vasarojus
Code 303112776, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Žemgalė
Code 303112744, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Žemynėlė
Code 303112559, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Žiemkentys
Code 303112648, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Žalvė
Code 303113045, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 695 | |
| UAB Cooperor
Code 303252162, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 348 | |
| AB INVL Baltic Farmland
Code 303299781, Gynėjų g. 14, Vilnius, Lithuania
Register of Legal Entities | 5,041 | |

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Related party	Balance of loans granted 01.01.2020	Loans granted during 2020	Interest calculated during 2020	Loans returned during 2020	Interest paid during 2020	Balance of loans granted 31.12.2020
UAB Kello ženklai Code 185274242, Geležinkelio g. 28, Pilviškiai Register of Legal Entities	244,064	40,000	12,606			296,670
INVL Baltic Real Estate Code 152105644, Gynėjų g. 14, Vilnius, Lithuania Register of Legal Entities	1,506,473		12,760	1,500,000	19,233	0
UAB Aktyvo Code 301206846 Gynėjų g. 14, Vilnius, Lithuania Register of Legal Entities	0	27,276	389			27,665

Information about significant agreements to which the issuer is a party, which would come into force, be amended or cease to be valid if there was a change in issuer's controlling shareholder, and their impact

In 2020 there were no concluded significant agreements of the company which would come into force, be amended or cease to be valid if there was a change in issuer's controlling shareholder.

Significant investments made during the reporting period

There were no significant investments during the reporting period.

More information is provided in the section 3 of the consolidated and Company's financial statements for 2020 explanatory notes.

References to and additional explanations of the data presented in the financial statements and consolidated financial statements

All data is presented in consolidated and company's financial statements explanatory notes.

Data on the publicly disclosed information

The information publicly disclosed by Invalda INVL, AB during 2020 is presented on the company's website www.invaldainvl.com

SUMMARY OF PUBLICLY DISCLOSED INFORMATION

Published	Headline	Message Category
07 February 2020	INVL closes largest Baltic private equity fund at €165 million	Other information
20 March 2020	Impact of the coronavirus (COVID-19) on the activities of Invalda INVL group	Notification on material event
03 April 2020	Correction: Invalda INVL investor's calendar for 2020	Other information
03 April 2020	Regarding the publication of the audited consolidated annual financial statements of Invalda INVL AB	Notification on material event
08 April 2020	Draft resolutions prepared by the Board for the shareholders' meeting of Invalda INVL to be held on 30/04/2020	General meeting of shareholders
08 April 2020	Convocation of the ordinary general shareholders meeting of Invalda INVL	General meeting of shareholders
10 April 2020	MD Partners, co-owner of MAIB, will be managed by Invalda INVL and INVL Special Opportunities Fund	Other information
27 April 2020	Correction: Regarding the publication of the audited consolidated annual financial statements of Invalda INVL AB	Notification on material event

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29 April 2020	Regarding the General Shareholders Meeting of Invalda INVL during the quarantine declared by the Lithuanian government	General meeting of shareholders
29 April 2020	AB Invalda INVL audited annual financial statements for 2019 and allocation of dividends for the year 2019	Notification on material event
29 April 2020	Supplemented draft resolutions to the General Shareholders meeting of Invalda INVL to be held 30.04.2020	General meeting of shareholders
30 April 2020	Shareholders of Invalda INVL approved dividends allocation for the year 2019	Notification on material event
30 April 2020	Audited annual information of Invalda INVL for 2019	Annual information
30 April 2020	The resolutions of the Ordinary General Shareholders Meeting of Invalda INVL	General meeting of shareholders
26 May 2020	Invalda INVL dividend payment procedure for the year 2019	Notification on material event
29 May 2020	Unaudited information of Invalda INVL group for 3 months of 2020	Notification on material event
01 June 2020	Invalda INVL signed employee stock option contracts	Notification on material event
02 June 2020	Notification on transactions in the issuer's securities	Notifications on transactions concluded by managers of the companies
04 June 2020	Notification on transactions in the issuer's securities	Notifications on transactions concluded by managers of the companies
04 June 2020	Invalda INVL transferred its own shares to the employees by exercising the stock options granted in 2017	Acquisition or disposal of the issuer's own shares
09 June 2020	Draft resolutions for the shareholders' meeting of Invalda INVL to be held on 1 July 2020 prepared by the Board	General meeting of shareholders
09 June 2020	Convocation of the Extraordinary General Shareholders Meeting of Invalda INVL	General meeting of shareholders
30 June 2020	INVL Baltic Sea Growth Fund acquires majority stake in Eco Baltia	Other information
01 July 2020	The resolutions of the General Shareholders Meeting of Invalda INVL that was held on 01.07.2020	General meeting of shareholders
15 July 2020	Notification on transactions in the issuer's securities	Notifications on transactions concluded by managers of the companies
16 July 2020	Notification on transactions in the issuer's securities	Notifications on transactions concluded by managers of the companies
16 July 2020	Invalda INVL signed employee stock option contracts	Notification on material event
21 July 2020	Liquidity of Invalda INVL shares will be increased by Šiaulių Bankas	Notification on material event
31 August 2020	Unaudited information of Invalda INVL group for 6 months of 2020	Half-Yearly information
04 September 2020	INVL invests in leading medical mobility manufacturer	Other information
21 September 2020	INVL Asset Management, a subsidiary of Invalda INVL, establishes the INVL Partner Global Distressed Debt Fund I	Other information
11 November 2020	CORRECTION: New EUR 100 million INVL Asset Management fund targets sustainable investments in farmland and forests	Other information
11 November 2020	New EUR 100 million INVL Asset Management fund targets sustainable investments in farmland and forests	Other information
30 November 2020	Unaudited information of Invalda INVL group for 9 months of 2020	Notification on material event
11 December 2020	Invalda INVL investor's calendar for 2021	Other information

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Summary of reports about transactions concluded in 2020 by persons employed in management positions and persons closely associated with them

Announce ment date	Date of transaction	Person	Shares, units	Share price, EUR	Type of transaction	Place of transaction
02.06.2020	01.06.2020	UAB Lucrum investicija, legal entity related to D.Šulnis, the issuer's CEO	402,050	5.6152	Acquisition	Outside a trading venue
02.06.2020	01.06.2020	UAB LJB investment, legal entity related to A.Banys, the chairman of the Board of the issuer	215,210	5.6152	Sale	Outside a trading venue
04.06.2020	01.06.2020	R.Rajeckas, CFO of the issuer	3,954	1	Execution of stock option agreement to obtain issuer's shares in the future. Employee shall after 3 years (in 2023) be entitled to get from the issuer indicated amount of issuer shares	Outside a trading venue
04.06.2020	01.06.2020	R.Rajeckas, CFO of the issuer	6,057	0.20	Share subscription agreement exercising stock option agreement of 16.05.2017	Outside a trading venue
15.07.2020	10.07.2020	AB Šiaulių bankas, legal entity related to D.Šulnis, member of the Supervisory Board of Šiaulių bankas and CEO of the issuer	1,497	6.90	Acquisition	Nasdaq Vilnius, XLIT
16.07.2020	15.07.2020	R.Rajeckas, CFO of the issuer	116,105	Share purchase price will be calculated, as a starting point taking the net asset value per share of Invalda INVL as of 31.12.2019 (EUR 7.47), additionally calculating 12% annual interest rate and estimating the granted share payments, if there are any	Execution of option agreement to obtain issuer's shares in the future under Rules for Granting Equity Incentives approved by the General Shareholders meeting on 1 July 2020	Outside a trading venue

27. Information on audit company

The company have not approved criteria for selection of the audit company. Usually the big-four audit companies are attending the competition (Deloitte, KPMG, PricewaterhouseCoopers, Ernst and Young).

The Company's and the Consolidated Financial Statements for the year 2020 were audited by the audit firm KPMG Baltics, UAB (company code 111494971, registered address is Lvovo str. 101, Vilnius). It was elected by the shareholders for the audit of the annual financial statements for 2019-2021 at the Extraordinary General Meeting of Shareholders held on 14 October 2019. At the same meeting, the shareholders set a total remuneration of up to EUR 75 thousand for the audit of the

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sets of annual financial statements for the period 2019-2021 and the statement on the annual reports (value added tax is calculated and paid in accordance with the law).

Audit company	„KPMG Baltics“, UAB
Address of the registered office	Lvovo str. 101, Vilnius, Lithuania
Enterprise code	111494971
Telephone	+370 5210 2600
E-mail	[email protected]
Website	www.kpmg.com/LT

No internal audit is performed in the company.

ALL THE SERVICES GRANTED TO INVALDA INVL AND THE ITS GROUP BY THE AUDITOR KPMG BALTICS

EUR	Group 2020	Company 2020
Financial statement audit services under contracts (including audit services for funds financial statements)	135,671	26,990
Costs of collateral and other related services	-	-
Costs for tax advice issues	-	-
Costs for other services (including funds)	1,050	-
In total	136,721	26,990

President
Darius Šulnis

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APPENDIX 1. INFORMATION ABOUT GROUP COMPANIES, THEIR CONTACT DETAILS

Company	Registration information	Type of activity
ASSET MANAGEMENT BUSINESS
INVL Asset Management, UAB	Code 126263073
Address Gynéju str. 14, Vilnius
Legal form – private limited liability company
Registration date 21.07.2003	Pension and investment funds management, portfolio management services, real estate funds management	Telephone +370 700 55959
E-mail [email protected]
www.invl.com
INVL Asset Management, IPAS (Latvia)	Code 40003605043
Address Elizabetes iela 10B-1, Riga, Latvia
Legal form – private limited liability company
Registration date 02.10.2002	Pension and investment funds management, portfolio management services	Telephone +371 67 092 988
E-mail [email protected]
www.invl.com/lat/lv
AS INVL Atklātais pensiju fonds (Latvia)	Code 40003377918
Address Elizabetes iela 10B-1, Riga, Latvia
Legal form – limited liability company
Registration date 04.02.1998	Pension funds	Tel. +371)67 092 988
E-mail [email protected]
www.invl.com/lat/lv
INVL Farmland Management	Code 303788352
Address Gynéju str. 14, Vilnius
Legal form – private limited liability company
Registration date 26.02.2016	Administration of agricultural land	E-mail [email protected]
INVL Finasta, FMJ UAB	Code 304049332
Address Gynéju str. 14, Vilnius
Legal form – private limited liability company
Registration date 28.05.2015	Family office services	Tel. +370 700 55 959
E-mail [email protected]
www.invl.com
Mundus UAB, asset management company	Code 303305451
Address Vilnius str. 31, Vilnius
Legal form – private limited liability company
Registration date 07.05.2014	Management of investment funds	[email protected]
www.mundus.lt
Invalda INVL Investments, UAB	Code 303252237
Address Gynéju str. 14, Vilnius
Legal form – private limited liability company
Registration date 27.02.2014	carries no activity	Telephone +370 5 263 6129
OTHER INVESTMENTS
INVL Technology, SUTPKIB	Code 300893533
Address Gynéju str. 14, Vilnius
Legal form – joint stock company
Registration date 27.06.2007	Investments info information technology businesses	Telephone +370 5 279 0601
E-mail [email protected]
www.invltechnology.lt
INVL Baltic Real Estate, SUTNTIB	Code 152105644
Address Gynéju str. 14, Vilnius
Legal form – joint stock company
Registration date 28.01.1997	Investments into commercial real estate. Rent of commercial real estate.	Telephone +370 5 279 06 01
E-mail [email protected]
www.invblalticrealestate.com
Litagra, UAB	Code 123496364
Address Savanoriu pr. 173, Vilnius; Legal form – private limited liability company
Registration date 30.01.1996	investments into agriculture companies	Telephone +370 5 236 1600
Fax +370 5 236 1601
E-mail [email protected]
www.litagra.lt

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| Cedus Invest, UAB | Code 302576631
Address Gynėjų str. 14, Vilnius
Legal form – private limited liability company
Registration date 20.12.2010 | investments into agriculture companies | Telephone +370 5 263 6129 |
| --- | --- | --- | --- |
| Šiaulių bankas, AB | Code 112025254
Address Tilžės str.149, Šiauliai
Legal form – joint stock company
Registration date 04.02.1992 | Commercial banking | Telephone +370 41 595 607
Fax. +370 41 430 774
E-mail [email protected]
www.siauliubankas.lt |
| Inservis, UAB | Code 126180446
Address Juozapaviciaus str. 6. Vilnius
Legal form – private limited liability company
Registration date 25.03.2003 | facility management. engineering systems oversight and incidents management. multi-apartment house management | Telephone +370 5 273 6607
E-mail [email protected]
www.inservis.lt |
| Priemiestis, UAB | Code 221487620
Address Stepono Batoro str. 41. Vilnius
Legal form – private limited liability company
Registration date 09.07.1992 | facility management. engineering systems oversight and incidents management. multi-apartment house management | Telephone +370 5 267 0204
Fax +370 5 267 2941
E-mail [email protected]
www.priemiestis.lt |
| Jurita, UAB | Code 220152850
Address Justiniskiu str. 62. Vilnius
Legal form – private limited liability company
Registration date 28.12.1990 | Facility management. engineering systems oversight and incidents management. multi-apartment house management | Telephone +370 5 248 2088
E-mail [email protected]
www.jurita.lt |
| Imoniu Grupe Inservis, UAB | Code 301673796
Address Gynėjų str. 14, Vilnius
Legal form – private limited liability company
Registration date 07.04.2008 | investing in building maintenance companies | Telephone +370 5 263 6129 |
| Informacinio verslo paslaugų įmonė, AB | Code 123043773
Address Gedimino pr. 31, Vilnius
Legal form – joint stock company
Registration date 05.04.1995 | Software tools for computerized processing of economic information | Telephone +370 5 236 4808,
fax +370 5 262 3623
E-mail [email protected]
www.ivpi.lt |
| "IPP integracijos projektai", UAB | Code 302890482
Address Palangos str. 4, Vilnius
Legal form – private limited liability company
Registration date 12.10.2012 | Carries no activity | - |
| SIA „Inservis“ (Latvia) | Code 40203041770
Address - Olaines nov., Olaines pag., Stūniši, "Lapegles", Latvia
Legal form – private limited liability company
Registration date 02.01.2017 | Facilities management | - |
| Kelio Zenklai, UAB | Code 185274242
Address Gelezinkelio str. 28. Pilviskiai. Vilkaviskio r.
Legal form – private limited liability company
Registration date 06.09.1994 | metal and wood processing and wholesale trade | Telephone +370 342 67 756
Fax +370 342 67 644
E-mail [email protected]
www.keliozenklai.lt |
| Iniciatvos Fondas, Vsl | Code 300657209
Address Gynėjų str. 14. Vilnius
Legal form – public institution
Registration date 08.03.2007 | organising of social initiative programmes | Telephone +370 5 263 6129
Fax +370 5 279 0530
E-mail [email protected]
www.iniciatvosfondas.lt |

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| Aktyvo, UAB | Code 301206846
Address Gynėjų str. 14, Vilnius;
Legal form – private limited liability company
Registration date 31.10.2007 | carries no activity | Telephone +370 5 263 6129 |
| --- | --- | --- | --- |
| Aktyvus Valdymas, UAB | Code 301673764
Address Gynėjų str. 14, Vilnius
Legal form – private limited liability company
Registration date 07.04.2008 | carries no activity | Telephone +370 5 263 6129 |
| MBGK, UAB | Code 300083611
Address Gynėjų str. 14, Vilnius
Legal form – private limited liability company
Registration date 27.01.2005 | carries no activity | Telephone +370 5 263 6129 |
| MGK Invest, UAB | Code 302531757
Address Gynėjų str. 14, Vilnius
Legal form – private limited liability company
Registration date 27.07.2010 | carries no activity | Telephone +370 5 263 6129 |
| Consult Invalda, UAB | Code 302575814
Address Gynėjų str. 14, Vilnius
Legal form – private limited liability company
Registration date 20.12.2010 | carries no activity | Telephone +370 5 263 6129 |
| RPNG, UAB | Code 302575892
Address Gynėjų str. 14, Vilnius
Legal form – private limited liability company
Registration date 20.12.2010 | carries no activity | Telephone +370 5 263 6129 |
| Regenus, UAB | Code 302575821
Address Gynėjų str. 14, Vilnius
Legal form – private limited liability company
Registration date 20.12.2010 | carries no activity | Telephone +370 5 263 6129
Fax +370 5 279 0530 |
| Cedus, UAB | Code 302656796
Address Gynėjų str. 14, Vilnius
Legal form – private limited liability company
Registration date 18.08.2011 | carries no activity | Telephone +370 5 263 6129 |
| MD Partners UAB | Code 304842899
Address Gynėjų str. 14, Vilnius
Legal form – private limited liability company
Registration date 14.05.2018 | SPV for investment into Moldova-Agroindbank | Telephone +370 5 263 6129 |

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APPENDIX 2. DISCLOSURE CONCERNING THE COMPLIANCE WITH THE GOVERNANCE CODE

Invalda INVL, AB (hereinafter referred to as the "Company"), acting in compliance with Article 12 (3) of the Law on Securities of the Republic of Lithuania and paragraph 24.5 of the Listing Rules of AB Nasdaq Vilnius, hereby discloses how it complies with the Corporate Governance Code for the Companies listed on Nasdaq Vilnius as well as its specific provisions or recommendations. In case of non-compliance with this Code or some of its provisions or recommendations, the specific provisions or recommendations that are not complied with must be indicated and the reasons for such non-compliance must be specified. In addition, other explanatory information indicated in this form is provided.

1. Summary of the Corporate Governance Report:

Invalda INVL, AB has a General Meeting of Shareholders and a single-person managing body - the President of the Company. The Company has a collegial management body - the Board.

The President is elected, recalled and dismissed, his salary is fixed, his job description is approved, he is promoted and penalties are imposed by the Board of the Company. The Board of the Company is elected by the General Meeting of Shareholders for the term of 4 years. The Board shall have all the powers provided for in the Articles of Association of the Company as well as such powers as the Board may have by law. The activities of the Board are based on collegial deliberation and decision making, as well as joint responsibility to the shareholders' meeting for the consequences of the decisions made. In order to maximize the benefit for the company and its shareholders, and to ensure the integrity and transparency of the company's financial accounting and control system, the Board works closely with the Company's President.

The supervisory board is not formed in the Company. Nevertheless, the Company's Board and the President work closely together to maximize benefits for the Company and all its shareholders.

The Company has an Audit Committee consisting of 2 independent members. The members of the Audit Committee are elected and recalled by the General Meeting of Shareholders for the term of four years. The establishment of the Risk, Nomination and Compensation Committees is not expedient due to the size of the Company.

The Company's Remuneration Policy was approved by the General Meeting of Shareholders on 30 April 2020.

Although the form for filling in the Corporate Governance Code of Nasdaq Vilnius listed companies is based on the "comply or explain" principle, the company, taking into account the recommendations of the Bank of Lithuania, provides an explanation in the "Comment" section in all cases, even if it fully complies with the principle.

2. Structured table for disclosure:

PRINCIPLES/ RECOMMENDATIONS	YES/NO/ NOT APPLICABLE	COMMENTARY
Principle 1: General meeting of shareholders, equitable treatment of shareholders, and shareholders' rights
The corporate governance framework should ensure the equitable treatment of all shareholders. The corporate governance framework should protect the rights of shareholders.
1.1. All shareholders should be provided with access to the information and/or documents established in the legal acts on equal terms. All shareholders should be furnished with equal opportunity to participate in the decision-making process where significant corporate matters are discussed.	YES	The Company discloses all regulated information through the Nasdaq Vilnius news distribution platform. Information is provided simultaneously in both Lithuanian and English. The company publishes information before or after the Nasdaq Vilnius trading session. The Company periodically updates information in Lithuanian and English on its website. As the company has not issued preference or non-voting shares, all shareholders have equal rights to participate in the general meetings of shareholders of the company.

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1.2. 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 of their holders.	YES	Since the company did not issue any privileged or non-voting shares, the shares constituting the authorized capital of the company grant equal rights to all shareholders of the company.
1.3. It is recommended that investors should have access to the information concerning the rights attached to the shares of the new issue or those issued earlier in advance, i.e. before they purchase shares.	YES	The company informs about the rights granted by the newly issued shares. Information on the rights granted by the already issued shares of the company is provided in the Articles of Association of the company, in the annual report.
1.4. Exclusive transactions that are particularly important to the company, such as transfer of all or almost all assets of the company which in principle would mean the transfer of the company, should be subject to approval of the general meeting of shareholders.	YES	The Articles of Association of the company do not contain a provision specified in Article 34 (5) of the Law on Companies, i.e. decision-making on the sale of fixed assets with a book value higher than 1/20 of the authorized capital is not referred to the shareholders' meeting. However, the company's board is of the opinion and practice that all highly significant and exceptional strategic transactions must be made only with the approval of the shareholders' meeting.
1.5. Procedures for convening and conducting a general meeting of shareholders should provide shareholders with equal opportunities to participate in the general meeting of shareholders and should not prejudice the rights and interests of shareholders. The chosen venue, date and time of the general meeting of shareholders should not prevent active participation of shareholders at the general meeting. In the notice of the general meeting of shareholders being convened, the company should specify the last day on which the proposed draft decisions should be submitted at the latest.	YES	Shareholders shall be informed about the convened general meeting in accordance with the notice deadlines, methods of publication and means established by legal acts. The possibility to participate in the meeting is additionally implemented by providing an opportunity to vote by filling in a ballot paper or authorizing another person to represent the shareholder. The General Meeting of Shareholders is held at the address of the Company's registered office. The Company does not restrict the right of shareholders to submit new draft resolutions both before and during the meeting and this is clearly stated in the notice of the convened general meeting of shareholders in Lithuanian and English.
1.6. With a view to ensure the right of shareholders living abroad to access the information, it is recommended, where possible, that documents prepared for the general meeting of shareholders in advance should be announced publicly not only in Lithuanian language but also in English and/or other foreign languages in advance. It is recommended that the minutes of the general meeting of shareholders after the signing thereof and/or adopted decisions should be made available publicly not only in Lithuanian language but also in English and/or other foreign languages. It is recommended that this information should be placed on the website of the company. Such documents may be published to the	YES	All documents and information relevant to the company's general meetings of shareholders, including the notice of the convened meeting, draft resolutions of the meeting are public and simultaneously published in Lithuanian and English through the Nasdaq Vilnius news distribution system and additionally published on the

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extent that their public disclosure is not detrimental to the company or the company's commercial secrets are not revealed.		company's website. At the end of the shareholders' meeting, the company announces the adopted resolutions in the same manner as for the convening of the meeting.
1.7. Shareholders who are entitled to vote should be furnished with the opportunity to vote at the general meeting of shareholders both in person and in absentia. Shareholders should not be prevented from voting in writing in advance by completing the general voting ballot.	YES	The shareholders of the company may exercise the right to participate in the shareholders' meeting both in person and through a representative, if the person has a proper power of attorney or a contract for the transfer of voting rights concluded with him in accordance with the procedure established by legal acts. The company also enables shareholders to vote by filling in the general voting ballot, which is published together with all information about the convened meeting.
1.8. With a view to increasing the shareholders' opportunities to participate effectively at general meetings of shareholders, it is recommended that companies should apply modern technologies on a wider scale and thus provide shareholders with the conditions to participate and vote in general meetings of shareholders via electronic means of communication. In such cases the security of transmitted information must be ensured and it must be possible to identify the participating and voting person.	NO	Shareholders can vote via an attorney or by completing the general voting bulletin, as for now shareholders cannot participate and vote in General Shareholders' Meetings via electronic means of communication.
1.9. It is recommended that the notice on the draft decisions of the general meeting of shareholders being convened should specify new candidatures of members of the collegial body, their proposed remuneration and the proposed audit company if these issues are included into the agenda of the general meeting of shareholders. Where it is proposed to elect a new member of the collegial body, it is recommended that the information about his/her educational background, work experience and other managerial positions held (or proposed) should be provided.	YES	At least 10 days prior to the general meeting of shareholders at which the members (member) of the Board are to be elected, the shareholders shall be fully disclosed about the candidates for the members of the Board. The elected members of the Board shall inform the Chairman of the Board about the changed data. The information is disclosed in the company's annual reports. Data on the current members of the company's board, their education, qualifications, professional experience, participation in the activities of other companies are also disclosed on the company's website.
1.10. Members of the company's collegial management body, heads of the administration⁵ or other competent persons related to the company who can provide information related to the agenda of the general meeting of shareholders should take part in the general meeting of shareholders. Proposed candidates to member of the collegial body should also participate in the general meeting of shareholders in case the election of new members is included into the agenda of the general meeting of shareholders.	YES	Recently, all interested shareholders voted in advance by submitting completed ballot papers and meetings were not held live. However, the head of the company and the chief financier are ready to attend the shareholders' meeting. The proposed candidates for the members of the collegial body participate in the meeting if possible.

⁵ For the purposes of this Code, heads of the administration are the employees of the company who hold top level management positions.

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| Principle 2: Supervisory board
2.1. Functions and liability of the supervisory board
The supervisory board of the company should ensure representation of the interests of the company and its shareholders, accountability of this body to the shareholders and objective monitoring of the company's operations and its management bodies as well as constantly provide recommendations to the management bodies of the company.
The supervisory board should ensure the integrity and transparency of the company's financial accounting and control system. | | |
| --- | --- | --- |
| 2.1.1. Members of the supervisory board should act in good faith, with care and responsibility for the benefit and in the interests of the company and its shareholders and represent their interests, having regard to the interests of employees and public welfare. | NOT APPLICABLE | Due to its size, it is not expedient to form the Supervisory Board. Considering that only collegial management body - the Board is formed in the Company. It performs all essential management functions and ensures accountability and control of CEO of the Company. |
| 2.1.2. Where decisions of the supervisory board may have a different effect on the interests of the company's shareholders, the supervisory board should treat all shareholders impartially and fairly. It should ensure that shareholders are properly informed about the company's strategy, risk management and control, and resolution of conflicts of interest. | | |
| 2.1.3. The supervisory board should be impartial in passing decisions that are significant for the company's operations and strategy. Members of the supervisory board should act and pass decisions without an external influence from the persons who elected them. | | |
| 2.1.4. Members of the supervisory board should clearly voice their objections in case they believe that a decision of the supervisory board is against the interests of the company. Independent^{6} members of the supervisory board should: a) maintain independence of their analysis and decision-making; b) not seek or accept any unjustified privileges that might compromise their independence. | | |
| 2.1.5. The supervisory board should oversee that the company's tax planning strategies are designed and implemented in accordance with the legal acts in order to avoid faulty practice that is not related to the long-term interests of the company and its shareholders, which may give rise to reputational, legal or other risks. | | |
| 2.1.6. The company should ensure that the supervisory board is provided with sufficient resources (including financial ones) to discharge their duties, including the right to obtain all the necessary information or to seek independent professional advice from external legal, accounting or other experts on matters pertaining to the competence of the supervisory board and its committees. | | |
| 2.2. Formation of the supervisory board
The procedure of the formation of the supervisory board should ensure proper resolution of conflicts of interest and effective and fair corporate governance. | | |
| 2.2.1. The members of the supervisory board elected by the general meeting of shareholders should collectively ensure the diversity of qualifications, professional experience and competences and seek for gender equality. With a view to maintain a proper balance between the qualifications of the members of the supervisory board, it should be ensured that members of the supervisory board, as a whole, should have diverse knowledge, opinions and experience to duly perform their tasks. | NOT APPLICABLE | Due to its size, it is not expedient to form the Supervisory Board. Considering that only collegial management body - the Board is formed in the Company. It performs all essential management functions and ensures accountability and control of CEO of the Company. |
| 2.2.2. Members of the supervisory board should be appointed for a specific term, subject to individual re-election for a new term in office in order to ensure necessary development of professional experience. | | |

6 For the purposes of this Code, the criteria of independence of members of the supervisory board are interpreted as the criteria of unrelated parties defined in Article 31(7) and (8) of the Law on Companies of the Republic of Lithuania.

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2.2.3. Chair of the supervisory board should be a person whose current or past positions constituted no obstacle to carry out impartial activities. A former manager or management board member of the company should not be immediately appointed as chair of the supervisory board either. Where the company decides to depart from these recommendations, it should provide information on the measures taken to ensure impartiality of the supervision.
2.2.4. Each member should devote sufficient time and attention to perform his duties as a member of the supervisory board. Each member of the supervisory board should undertake to limit his other professional obligations (particularly the managing positions in other companies) so that they would not interfere with the proper performance of the duties of a member of the supervisory board. Should a member of the supervisory board attend less than a half of the meetings of the supervisory board throughout the financial year of the company, the shareholders of the company should be notified thereof.
2.2.5. When it is proposed to appoint a member of the supervisory board, it should be announced which members of the supervisory board are deemed to be independent. The supervisory board may decide that, despite the fact that a particular member meets all the criteria of independence, he/she cannot be considered independent due to special personal or company-related circumstances.
2.2.6. The amount of remuneration to members of the supervisory board for their activity and participation in meetings of the supervisory board should be approved by the general meeting of shareholders.
2.2.7. Every year the supervisory board should carry out an assessment of its activities. It should include evaluation of the structure of the supervisory board, its work organization and ability to act as a group, evaluation of the competence and work efficiency of each member of the supervisory board, and evaluation whether the supervisory board has achieved its objectives. The supervisory board should, at least once a year, make public respective information about its internal structure and working procedures.
Principle 3: Management Board
3.1. Functions and liability of the management board
The management board should ensure the implementation of the company's strategy and good corporate governance with due regard to the interests of its shareholders, employees and other interest groups.
3.1.1. The management board should ensure the implementation of the company's strategy approved by the supervisory board if the latter has been formed at the company. In such cases where the supervisory board is not formed, the management board is also responsible for the approval of the company's strategy.	YES/NO	The strategy of the company has not been approved by the Board, but the Board has set the company's business objectives, which are disclosed in the annual and semi-annual reports, reports on significant events.
3.1.2. As a collegial management body of the company, the management board performs the functions assigned to it by the Law and in the articles of association of the company, and in such cases where the supervisory board is not formed in the company, it performs inter alia the supervisory functions established in the Law. By performing the functions assigned to it, the management board should take into account the needs of the company's shareholders, employees and other interest groups by respectively striving to achieve sustainable business development.	YES/NO	The Board's functions are discussed in the Consolidated Annual Management Report 11.2. section.
No evaluation of the independence of the Board members has been carried out.
3.1.3. The management board should ensure compliance with the laws and the internal policy of the company applicable to the company or a group of companies to which this company belongs. It should also establish the respective risk management and control measures aimed at ensuring regular and direct liability of managers.	YES	The Board ensures that the company complies with the laws and the provisions of the company's internal policy, and in accordance with the established internal

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		management and control measures, also ensures the accountability of the manager.
3.1.4. Moreover, the management board should ensure that the measures included into the OECD Good Practice Guidance^{7} on Internal Controls, Ethics and Compliance are applied at the company in order to ensure adherence to the applicable laws, rules and standards.	YES	The Board ensures compliance with applicable laws, rules and standards.
3.1.5. When appointing the manager of the company, the management board should take into account the appropriate balance between the candidate’s qualifications, experience and competence.	YES	When appointing the head of the Company, the Board shall take into account the appropriate qualification, experience and competence of the candidate.
3.2. Formation of the management board
3.2.1. The members of the management board elected by the supervisory board or, if the supervisory board is not formed, by the general meeting of shareholders should collectively ensure the required diversity of qualifications, professional experience and competences and seek for gender equality. With a view to maintain a proper balance in terms of the current qualifications possessed by the members of the management board, it should be ensured that the members of the management board would have, as a whole, diverse knowledge, opinions and experience to duly perform their tasks.	YES	The members of the Board of the Company have the necessary diverse knowledge, opinions and experience to perform their tasks properly.
3.2.2. Names and surnames of the candidates to become members of the management board, information on their educational background, qualifications, professional experience, current positions, other important professional obligations and potential conflicts of interest should be disclosed without violating the requirements of the legal acts regulating the handling of personal data at the meeting of the supervisory board in which the management board or individual members of the management board are elected. In the event that the supervisory board is not formed, the information specified in this paragraph should be submitted to the general meeting of shareholders. The management board should, on yearly basis, collect data provided in this paragraph on its members and disclose it in the company’s annual report.	YES	All information shall be provided in accordance with the requirements set out in this point. Details of the members of the Board are provided on section 12 of this Annual Report.
3.2.3. All new members of the management board should be familiarized with their duties and the structure and operations of the company.	YES	After the election, all members of the Board are acquainted with the duties, structure and activities of the company.
3.2.4. Members of the management board should be appointed for a specific term, subject to individual re-election for a new term in office in order to ensure necessary development of professional experience and sufficiently frequent reconfirmation of their status.	YES	According to the company’s Articles of Association, the members of the Board are elected for four years, without limiting the number of their terms. The company’s Articles of Association provide for the possibility to re-elect the Board or an individual member of the Board.
3.2.5. Chair of the management board should be a person whose current or past positions constitute no obstacle to carry out impartial activity. Where the supervisory board is not formed, the former manager of the company should not be immediately appointed as chair of the management board. When a company decides to depart from these recommendations, it should furnish information on the measures it has taken to ensure the impartiality of supervision.	YES	The chairman of the board is a person who has never been the head of the company and acts impartially.

7 Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oecd.org/daf/anti-bribery/44884389.pdf

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3.2.6. Each member the management board should give sufficient time and attention to perform the duties of a member of the Board. If a member of the management Board participated in less than half of the board meetings during the financial year of the Company, the Company's Supervisory Board should be informed if the Supervisory Board is not formed in the Company - the General Shareholder Meeting.	YES	The members of the Board of the company devote sufficient time and attention to their duties. Due to the coronavirus pandemic in 2020 most of the company's board meetings were held remotely. Board members actively participated in all meetings.
3.2.7. In the event that the management board is elected in the cases established by the Law where the supervisory board is not formed at the company, and some of its members will be independent^{6}, it should be announced which members of the management board are deemed as independent. The management board may decide that, despite the fact that a particular member meets all the criteria of independence established by the Law, he/she cannot be considered independent due to special personal or company-related circumstances.	NO	No evaluation of the independence of the Board members has been carried out.
3.2.8. The general meeting of shareholders of the company should approve the amount of remuneration to the members of the management board for their activity and participation in the meetings of the management board.	NOT APPLICABLE	No remuneration is paid to the members of the Board for their activity in the management board.
3.2.9.The members of the management board should act in good faith, with care and responsibility for the benefit and the interests of the company and its shareholders with due regard to other stakeholders. When adopting decisions, they should not act in their personal interest; they should be subject to no-compete agreements and they should not use the business information or opportunities related to the company's operations in violation of the company's interests.	YES	The members of the Board act in good faith towards the company, follow the interests of the company and not their own or third parties, the principles of honesty, reasonableness, respect for confidentiality, sense of responsibility, thereby trying to maintain their independence in decision-making.
3.2.10. Every year the management board should carry out an assessment of its activities. It should include evaluation of the structure of the management board, its work organization and ability to act as a group, evaluation of the competence and work efficiency of each member of the management board, and evaluation whether the management board has achieved its objectives. The management board should, at least once a year, make public respective information about its internal structure and working procedures in observance of the legal acts regulating the processing of personal data.	YES	Once a year, the Board evaluates its activities, which includes an assessment of the board's structure, operational independence, and ability to work in a team. The structure of the Board is published by the company in annual reports and on the website.
Principle 4: Rules of procedure of the supervisory board and the management board of the company
The rules of procedure of the supervisory board, if it is formed at the company, and of the management board should ensure efficient operation and decision-making of these bodies and promote active cooperation between the company's management bodies.
4.1. The management board and the supervisory board, if the latter is formed at the company, should act in close cooperation in order to attain benefit for the company and its shareholders. Good corporate governance requires an open discussion between the management board and the supervisory board. The management board should regularly and, where necessary, immediately inform the supervisory board about any matters significant for the company that are related to planning, business development, risk management and control, and compliance with the obligations at the company. The management board should inform he supervisory board about any derogations in its business development from the previously formulated plans and objectives by specifying the reasons for this.	YES/NO	The Supervisory Board is not formed. Nevertheless, the Board and the CEO acts in close cooperation seeking to obtain the maximum benefit for the Company and its shareholders.
4.2. It is recommended that meetings of the company's collegial bodies should be held at the respective intervals, according to the pre-approved schedule. Each company is free to decide how often meetings of the collegial bodies should be convened but it is recommended that these meetings should be convened at such intervals that uninterruptable resolution of essential corporate	YES	Board meetings are held at least once a quarter.

6 For the purposes of this Code, the criteria of independence of the members of the board are interpreted as the criteria of unrelated persons defined in Article 33(7) of the Law on Companies of the Republic of Lithuania.

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governance issues would be ensured. Meetings of the company’s collegial bodies should be convened at least once per quarter.
4.3. Members of a collegial body should be notified of the meeting being convened in advance so that they would have sufficient time for proper preparation for the issues to be considered at the meeting and a fruitful discussion could be held and appropriate decisions could be adopted. Along with the notice of the meeting being convened all materials relevant to the issues on the agenda of the meeting should be submitted to the members of the collegial body. The agenda of the meeting should not be changed or supplemented during the meeting, unless all members of the collegial body present at the meeting agree with such change or supplement to the agenda, or certain issues that are important to the company require immediate resolution.	YES	Board meetings are convened in advance, usually by e-mail. The material shall be submitted at least one working day before the meeting of the Board so that the members can prepare properly.
4.4. In order to coordinate the activities of the company’s collegial bodies and ensure effective decision-making process, the chairs of the company’s collegial supervision and management bodies should mutually agree on the dates and agendas of the meetings and close cooperate in resolving other matters related to corporate governance. Meetings of the company’s supervisory board should be open to members of the management board, particularly in such cases where issues concerning the removal of the management board members, their responsibility or remuneration are discussed.	NO	The company cannot implement this recommendation as it only has a board.
Principle 5: Nomination, remuneration and audit committees
5.1. Purpose and formation of committees
The committees formed at the company should increase the work efficiency of the supervisory board or, where the supervisory board is not formed, of the management board which performs the supervisory functions by ensuring that decisions are based on due consideration and help organise its work in such a way that the decisions it takes would be free of material conflicts of interest.
Committees should exercise independent judgment and integrity when performing their functions and provide the collegial body with recommendations concerning the decisions of the collegial body. However, the final decision should be adopted by the collegial body.
5.1.1. Taking due account of the company-related circumstances and the chosen corporate governance structure, the supervisory board of the company or, in cases where the supervisory board is not formed, the management board which performs the supervisory functions, establishes committees. It is recommended that the collegial body should form the nomination, remuneration and audit committees^{9}.	YES/NO	Due to the simplicity of the company management structure and the small number of employees, the Nomination and Remuneration Committees are not formed.
Audit Committee members are elected by the General Shareholders Meeting.
5.1.2. Companies may decide to set up less than three committees. In such case companies should explain in detail why they have chosen the alternative approach, and how the chosen approach corresponds with the objectives set for the three different committees.
5.1.3. In the cases established by the legal acts the functions assigned to the committees formed at companies may be performed by the collegial body itself. In such case the provisions of this Code pertaining to the committees (particularly those related to their role, operation and transparency) should apply, where relevant, to the collegial body as a whole.
5.1.4. Committees established by the collegial body should normally be composed of at least three members. Subject to the requirements of the legal acts, committees could be comprised only of two members as well. Members of each committee should be selected on the basis of their competences by giving priority to independent members of the collegial body. The chair of the management board should not serve as the chair of committees.
5.1.5. The authority of each committee formed should be determined by the collegial body itself. Committees should perform their duties according to the authority delegated to them and regularly inform the collegial body about their activities and performance on a regular basis. The authority of each committee defining its role and specifying its rights and duties should be made public at least once a year (as part of the information disclosed by the company on its governance structure and practice on an annual basis). In compliance with the legal

9 The legal acts may provide for the obligation to form a respective committee. For example, the Law on the Audit of Financial Statements of the Republic of Lithuania provides that public-interest entities (including but not limited to public limited liability companies whose securities are traded on a regulated market of the Republic of Lithuania and/or of any other Member State) are under the obligation to set up an audit committee (the legal acts provide for the exemptions where the functions of the audit committee may be carried out by the collegial body performing the supervisory functions).

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acts regulating the processing of personal data, companies should also include in their annual reports the statements of the existing committees on their composition, the number of meetings and attendance over the year as well as the main directions of their activities and performance.
5.1.6. With a view to ensure the independence and impartiality of the committees, the members of the collegial body who are not members of the committees should normally have a right to participate in the meetings of the committee only if invited by the committee. A committee may invite or request that certain employees of the company or experts would participate in the meeting. Chair of each committee should have the possibility to maintain direct communication with the shareholders. Cases where such practice is to be applied should be specified in the rules regulating the activities of the committee.
5.2. Nomination committee
5.2.1. The key functions of the nomination committee should be the following:
1) to select candidates to fill vacancies in the membership of supervisory and management bodies and the administration and recommend the collegial body to approve them. The nomination committee should evaluate the balance of skills, knowledge and experience in the management body, prepare a description of the functions and capabilities required to assume a particular position and assess the time commitment expected;
2) assess, on a regular basis, the structure, size and composition of the supervisory and management bodies as well as the skills, knowledge and activity of its members, and provide the collegial body with recommendations on how the required changes should be sought;
3) devote the attention necessary to ensure succession planning.	NOT APPLICABLE	Due to simplicity of the Company's management structure and small number of employees, it is not expedient to form the Nomination and Remuneration committees.
5.2.2. When dealing with issues related to members of the collegial body who have employment relationships with the company and the heads of the administration, the manager of the company should be consulted by granting him/her the right to submit proposals to the Nomination Committee.
5.3. Remuneration committee
The main functions of the remuneration committee should be as follows:
1) submit to the collegial body proposals on the remuneration policy applied to members of the supervisory and management bodies and the heads of the administration for approval. Such policy should include all forms of remuneration, including the fixed-rate remuneration, performance-based remuneration, financial incentive schemes, pension arrangements and termination payments as well as conditions which would allow the company to recover the amounts or suspend the payments by specifying the circumstances under which it would be expedient to do so;
2) submit to the collegial body proposals regarding individual remuneration for members of the collegial bodies and the heads of the administration in order to ensure that they would be consistent with the company's remuneration policy and the evaluation of the performance of the persons concerned;
3) review, on a regular basis, the remuneration policy and its implementation.	NOT APPLICABLE	Due to simplicity of the Company's management structure and small number of employees, it is not expedient to form the Nomination and Remuneration committees.
5.4.Audit committee

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5.4.1. The key functions of the audit committee are defined in the legal acts regulating the activities of the audit committee^{10}.	YES	In its activities, the Audit Committee of the company follows the legal acts regulating the activities of the Audit Committee, as well as the regulations of the Audit Committee approved by the General Meeting of Shareholders of the company.
5.4.2. All members of the committee should be provided with detailed information on specific issues of the company's accounting system, finances and operations. The heads of the company's administration should inform the audit committee about the methods of accounting for significant and unusual transactions where the accounting may be subject to different approaches.	YES	The members of the Committee shall be provided with all the detailed information necessary for the performance of the Committee's functions.
5.4.3. The audit committee should decide whether the participation of the chair of the management board, the manager of the company, the chief finance officer (or senior employees responsible for finance and accounting), the internal and external auditors in its meetings is required (and, if required, when). The committee should be entitled, when needed, to meet the relevant persons without members of the management bodies present.	YES	The members of the Audit Committee have the opportunity to meet with the desired persons in the absence of the members of the management bodies.
5.4.4. The audit committee should be informed about the internal auditor's work program and should be furnished with internal audit reports or periodic summaries. The audit committee should also be informed about the work program of external auditors and should receive from the audit firm a report describing all relationships between the independent audit firm and the company and its group.	NOT APPLICABLE	Due to the size of the Company, the Company does not have an internal audit function
5.4.5. The audit committee should examine whether the company complies with the applicable provisions regulating the possibility of lodging a complaint or reporting anonymously his/her suspicions of potential violations committed at the company and should also ensure that there is a procedure in place for proportionate and independent investigation of such issues and appropriate follow-up actions.	NOT APPLICABLE	Due to the size of the Company, the provisions of this paragraph shall not be verified by the audit committee.
5.4.6. The audit committee should submit to the supervisory board or, where the supervisory board is not formed, to the management board its activity report at least once in every six months, at the time that annual and half-yearly reports are approved.	YES/NO	The activity report is submitted once a year, together with the annual ordinary shareholders meeting
Principle 6: Prevention and disclosure of conflicts of interest
The corporate governance framework should encourage members of the company's supervisory and management bodies to avoid conflicts of interest and ensure a transparent and effective mechanism of disclosure of conflicts of interest related to members of the supervisory and management bodies.
Any member of the company's supervisory and management body should avoid a situation where his/her personal interests are or may be in conflict with the company's interests. In case such a situation did occur, a member of the company's supervisory or management body should, within a reasonable period of time, notify other members of the same body or the body of the company which elected him/her or the company's shareholders of such situation of a conflict of interest, indicate the nature of interests and, where possible, their value.	YES	Board members avoid situations where their personal interests may conflict with the interests of the company.
Principle 7: Remuneration policy of the company
The remuneration policy and the procedure for review and disclosure of such policy established at the company should prevent potential conflicts of interest and abuse in determining remuneration of members of the collegial bodies and heads of the administration, in addition it should ensure the publicity and transparency of the company's remuneration policy and its long-term strategy.

10 Issues related to the activities of audit committees are regulated by Regulation No. 537/2014 of the European Parliament and the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities, the Law on the Audit of Financial Statements of the Republic of Lithuania, and the Rules Regulating the Activities of Audit Committees approved by the Bank of Lithuania.

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7.1. The company should approve and post the remuneration policy on the website of the company; such policy should be reviewed on a regular basis and be consistent with the company's long-term strategy.	YES	The remuneration policy is published on the company's website. Its review will take place in accordance with the requirements established by law.
7.2. The remuneration policy should include all forms of remuneration, including the fixed-rate remuneration, performance-based remuneration, financial incentive schemes, pension arrangements and termination payments as well as the conditions specifying the cases where the company can recover the disbursed amounts or suspend the payments.	YES / NO	The CEO of the company receives only a fixed salary.
7.3. With a view to avoid potential conflicts of interest, the remuneration policy should provide that members of the collegial bodies which perform the supervisory functions should not receive remuneration based on the company's performance.	YES	The members of the company's board do not receive remuneration that would depend on the company's performance.
7.4. The remuneration policy should provide sufficient information on the policy regarding termination payments. Termination payments should not exceed a fixed amount or a fixed number of annual wages and in general should not be higher than the non-variable component of remuneration for two years or the equivalent thereof. Termination payments should not be paid if the contract is terminated due to inadequate performance.	NOT APPLICABLE	The company's Remuneration Policy does not provide information regarding termination payments. The Company follows the legal acts requirements regarding termination payments.
7.5. In the event that the financial incentive scheme is applied at the company, the remuneration policy should contain sufficient information about the retention of shares after the award thereof. Where remuneration is based on the award of shares, shares should not be vested at least for three years after the award thereof. After vesting, members of the collegial bodies and heads of the administration should retain a certain number of shares until the end of their term in office, subject to the need to compensate for any costs related to the acquisition of shares.	NO	Stock options may be granted in the company, but the Remuneration Policy does not contain very detailed information on the retention of shares after the grant of rights. Share options may be granted in accordance with the rules for granting Shares, which are published on the company's website, not in accordance with the provisions of the Remuneration Policy.
7.6. The company should publish information about the implementation of the remuneration policy on its website, with a key focus on the remuneration policy in respect of the collegial bodies and managers in the next and, where relevant, subsequent financial years. It should also contain a review of how the remuneration policy was implemented during the previous financial year. The information of such nature should not include any details having a commercial value. Particular attention should be paid on the major changes in the company's remuneration policy, compared to the previous financial year.	YES / NO	The Remuneration Policy is published on the company's website. The company's Remuneration Policy was approved only in 2020. The company will present a remuneration report to the Ordinary General Meeting of Shareholders in 2021, which will review the remuneration of the company's executives for the financial year 2020.
7.7. It is recommended that the remuneration policy or any major change of the policy should be included on the agenda of the general meeting of shareholders. The schemes under which members and employees of a collegial body receive remuneration in shares or share options should be approved by the general meeting of shareholders.	YES	The company's Remuneration Policy and its amendments are approved by the General Meeting of Shareholders. The rules for granting the company's Shares are also approved by the General Meeting of Shareholders.
Principle 8: Role of stakeholders in corporate governance The corporate governance framework should recognize the rights of stakeholders entrenched in the laws or mutual agreements and encourage active cooperation between companies and stakeholders in creating the company value, jobs and financial sustainability. In the context of this principle the concept “stakeholders” includes investors, employees, creditors, suppliers, clients, local community and other persons having certain interests in the company concerned.

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8.1. The corporate governance framework should ensure that the rights and lawful interests of stakeholders are protected.	YES	The company respects the rights of stakeholders and their legitimate interests.
8.2. The corporate governance framework should create conditions for stakeholders to participate in corporate governance in the manner prescribed by law. Examples of participation by stakeholders in corporate governance include the participation of employees or their representatives in the adoption of decisions that are important for the company, consultations with employees or their representatives on corporate governance and other important matters, participation of employees in the company's authorized capital, involvement of creditors in corporate governance in the cases of the company's insolvency, etc.	YES	All stakeholders have the opportunity to participate in the management of the company in accordance with the procedure established by law.
8.3. Where stakeholders participate in the corporate governance process, they should have access to relevant information.	YES	Stakeholders participating in the management process of the company are provided with access to non-confidential information, as long as it does not infringe the interests of the company and other related persons.
8.4. Stakeholders should be provided with the possibility of reporting confidentially any illegal or unethical practices to the collegial body performing the supervisory function.	NO	The Company does not provide possibility of reporting confidentially any illegal or unethical practices
Principle 9: Disclosure of information
The corporate governance framework should ensure the timely and accurate disclosure of all material corporate issues, including the financial situation, operations and governance of the company.
9.1. In accordance with the company's procedure on confidential information and commercial secrets and the legal acts regulating the processing of personal data, the information publicly disclosed by the company should include but not be limited to the following:	YES	The below mentioned information is disclosed in notices of material events published through the information disclosure system of the Nasdaq Vilnius Stock Exchange, on the company's website, in the company's annual and semi-annual information documents to the extent required by law and International Financial Reporting Standards in the European Union.
9.1.1. operating and financial results of the company;	YES	Disclosed in annual and semi-annual information.
9.1.2. objectives and non-financial information of the company;	YES	Disclosed in annual information.
9.1.3. persons holding a stake in the company or controlling it directly and/or indirectly and/or together with related persons as well as the structure of the group of companies and their relationships by specifying the final beneficiary;	YES	Disclosed in annual and semi-annual information and on the company's website.
9.1.4. members of the company's supervisory and management bodies who are deemed independent, the manager of the company, the shares or votes held by them at the company, participation in corporate governance of other companies, their competence and remuneration;	YES	Disclosed in annual and semi-annual information and on the company's website.
9.1.5. reports of the existing committees on their composition, number of meetings and attendance of members during the last year as well as the main directions and results of their activities;	NOT APPLICABLE	The report of the Audit Committee is made public. There are no more committees in the company
9.1.6. potential key risk factors, the company's risk management and supervision policy;	YES	Disclosed in annual information.

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9.1.7. the company’s transactions with related parties;	YES	Disclosed in the annual information and on the company's website.
9.1.8. main issues related to employees and other stakeholders (for instance, human resource policy, participation of employees in corporate governance, award of the company’s shares or share options as incentives, relationships with creditors, suppliers, local community, etc.);	YES	Disclosed in the annual information and on the company's website.
9.1.9. structure and strategy of corporate governance;	YES	Disclosed in annual and semi-annual information.
9.1.10. initiatives and measures of social responsibility policy and anti-corruption fight, significant current or planned investment projects.
This list is deemed minimum and companies are encouraged not to restrict themselves to the disclosure of information included into this list.
This principle of the Code does not exempt companies from their obligation to disclose information as provided for in the applicable legal acts.	NOT APPLICABLE	Due to the size of the Company, minimum information related to the environment, employees, research and development is published.
9.2. When disclosing the information specified in paragraph 9.1.1 of recommendation 9.1, it is recommended that the company which is a parent company in respect of other companies should disclose information about the consolidated results of the whole group of companies.	YES	The company prepares the consolidated report and the consolidated financial statements
9.3. When disclosing the information specified in paragraph 9.1.4 of recommendation 9.1, it is recommended that the information on the professional experience and qualifications of members of the company’s supervisory and management bodies and the manager of the company as well as potential conflicts of interest which could affect their decisions should be provided. It is further recommended that the remuneration or other income of members of the company’s supervisory and management bodies and the manager of the company should be disclosed, as provided for in greater detail in Principle 7.	YES	Disclosed in annual and semi-annual information.
9.4. Information should be disclosed in such manner that no shareholders or investors are discriminated in terms of the method of receipt and scope of information. Information should be disclosed to all parties concerned at the same time.	YES	The company publishes all information through the information disclosure system of the Nasdaq Vilnius Stock Exchange and on the company's website so that it is accessible to everyone and at the same time.
Principle 10: Selection of the company’s audit firm
The company’s audit firm selection mechanism should ensure the independence of the report and opinion of the audit firm.
10.1. With a view to obtain an objective opinion on the company’s financial condition and financial results, the company’s annual financial statements and the financial information provided in its annual report should be audited by an independent audit firm.	YES	The company is audited by an independent audit company.
10.2. It is recommended that the audit firm would be proposed to the general meeting of shareholders by the supervisory board or, if the supervisory board is not formed at the company, by the management board of the company.	YES	The Board of the company nominates the audit company to the shareholders' meeting.
10.3. In the event that the audit firm has received remuneration from the company for the non-audit services provided, the company should disclose this publicly. This information should also be available to the supervisory board or, if the supervisory board is not formed at the company, by the management board of the company when considering which audit firm should be proposed to the general meeting of shareholders.	YES	2020 the audit firm did not provide non audit services

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APPENDIX 3. COMPANY'S MANAGEMENT REPORT

(Prepared in accordance with the Law of the Republic of Lithuania on Financial Reporting by Undertakings (IX-575) in force from 6 July 2019)

Reference to the applicable corporate governance code and the place of its publication, and (or) reference to the all necessary published information regarding management practices of the entity

The Company discloses the information regarding the compliance with the applicable Corporate Governance Code in Appendix 2 of the consolidated annual report for 2020. The Company publishes its annual reports on its website.

In case of derogation from the provisions of the applicable corporate governance code and (or) when the provisions are not complied with, such provisions and the reasons thereof shall be indicated

The Company discloses such information in sections "Yes/No/Irrelevant" and "Commentary" of Appendix 2 of the consolidated annual report for 2020 "Information regarding the compliance with Corporate Governance Code. The Company, taking into account the recommendations of the Bank of Lithuania, provides an explanation in the "Comment" section in all cases, even if it fully complies with the principle / recommendation.

Information regarding the level of risk and risk management – management of risks related to the financial reporting, risk mitigation measures, and internal control systems implemented at the entity shall be described

The Company provides information regarding the level of risk, risk management, and implemented internal control systems, as well as the measures, in Clause 18 of the consolidated annual report for 2020.

Information regarding significant directly or indirectly managed holdings

The Company provides information regarding the significant directly or indirectly managed holdings in Note 1 of the financial statements of 2020.

Information about related parties transactions in accordance with Article 37² of the Law on Companies of the Republic of Lithuania

Information on transactions concluded by the Company with related parties, as provided for in Article 37² of the Law on Companies, is published on the Company's website, "Investor Relations" section.

Pursuant to the provisions of Item 10 of Article 37² of the Law on Companies of the Republic of Lithuania, the amounts of the Company's transactions with related parties concluded in the ordinary course of business and concluded with the same related party during the financial year are presented in Item 21 of this Annual Management Report.

We provide information on the company's related party transactions in 2020 published on the company's website

Related party	Company's relationship with the other counterparty	Date and value of the transaction	Other information
UAB Kelio ženklai code 185274242, Geležinkelio str. 28, Pilviškiai, Vilkaviškis district Register of Legal Entities	100% controlled by Invalda INVL	12.02.2020 Loan agreement No. P/200212/01, EUR 40,000
UAB Įmonių grupė „Inservis“ code 301673796 Gynėjų str. 14, Vilnius Register of Legal Entities	100% controlled by Invalda INVL	On 30.03.2020 a share sale-purchase agreement was concluded for the sale of 323,000 INVL Baltic Real Estate shares for a total price of EUR 1,081,371.70. The selling price per share is set to be the last publicly announced, i.e. as of 31 December 2019, the net asset value per share and amounts to EUR 3.3479.

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MD PARTNERS UAB, code 304842899, Gynéju g. 14, Vilnius, Lithuania Register of Legal Entities	100% controlled by Invalda INVL till the transaction, 51.37% shares owned by Invalda INVL after the transaction.	On 9 April 2020, MD Partners UAB converted 1 euro nominal value bonds into the same number of 1 euro nominal value shares. Invalda INVL owned 2,990,287 bonds of this company. After registering the Articles of Association after the conversion of the bonds, Invalda INVL owns 51.37% of the shares of MD Partners UAB.
UAB Aktyvo, code 301206846, Gynéju g. 14, Vilnius, Lithuania Register of Legal Entities	A company in which Invalda INVL owns 54.55% of shares	10 July 2020 Loan agreement No. AKTYVO/200710/01, loan amount EUR 27,276.07 .
UAB Cedus Invest, Code 302576631, Gynéju str. 14, Vilnius Register of Legal Entities	100% controlled by Invalda INVL	On 28 December 2020, 4,999.9991 units of INVL Emerging Europe Bond Subfund were purchased from UAB Cedus Invest for EUR 217,114.46
UAB Kelio ženklai code 185274242, Geležinkelio str. 28, Pilviškiai, Vilkaviškis district Register of Legal Entities	100% controlled by Invalda INVL	31 December 2020 Loan agreement No P/201231/01, loan amount EUR 296,669.59 .

Information regarding the shareholders who have special rights of control and the description of such right

There are no shareholders having special rights of control in the Company.

Information regarding all current restrictions on voting rights (such as the restrictions on voting rights of persons having a certain percentage or number of the votes, the deadlines by which voting rights may be exercised or systems, according to which the property rights granted by the securities are to be separated from the holder of those securities)

No restrictions on voting rights are applied in the Company.

Information regarding the rules governing the appointment and dismissal of board members, as well as the amendment of the company's articles of association

The Board members of the Company act in accordance with the Law on Companies of the Republic of Lithuania, Articles of Association of the Company, Rules of Procedure of the Board, as well as other applicable legislation. The Board members of the Company always act for the benefit of the Company and its shareholders. The procedure for changing the Articles of Association is no different from stated in the Law on Companies of the Republic of Lithuania.

Information regarding the powers of the board members

The Board members of the Company act in accordance with the Law on Companies of the Republic of Lithuania, Articles of Association of the Company, Rules of Procedure of the Board, as well as other applicable legislation, and have no special powers. The Board members of the Company always act for the benefit of the Company and its shareholders. More information is disclosed in the Clause 12.2. of the Section IV of the consolidated annual report for 2020.

Information regarding the competence of the General Shareholders Meeting, the rights of shareholders and implementation thereof, if such information is not established in the applicable legislation

The company provides information regarding the competence of the General Shareholders Meeting, the rights of shareholders, and implementation thereof, as well as the procedure for convening such meetings, in Clause 12.1. of the consolidated annual report of 2020.

Information regarding the composition of the management, supervisory bodies, and the committees thereof, as well as the fields of activity of the aforesaid bodies and the manager of the company

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The Company provides information about Members of the Board of the Company as well as the manager of the Company, members of the Audit Committee in Clause 13 of the consolidated annual report for 2020.

Description of diversity policy applicable in appointing the manager of the company, management, and supervisory bodies, related to the aspects such as age, gender, education, professional experience; objectives of such policy, methods of implementation thereof, and results of the reference period. If the diversity policy is not applied, the reasons thereof shall be indicated

The Company organizes its activities in a way that employees, despite of their duties and the need to upgrade their qualifications, are secure about equal working conditions, opportunities to develop competence, etc. Equally, the same benefits are granted regardless of the gender, race, nationality, language, origin, social status, believes or convictions, age, sexual orientation, disability, ethnicity, religion, marital status, intention of having children's or membership of the political party or association. More information is disclosed in the Appendix 4 of the consolidated annual report for 2020.

Information about all agreements between shareholders (their essence, conditions).

Information is disclosed in Clause 9 of the consolidated annual report for 2020.

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APPENDIX 4. SOCIAL RESPONSIBILITY REPORT

About the report

This Social Responsibility Report was prepared for the period of January - December 2020 but it also includes important social responsibility events in Invalda INVL AB (hereinafter referred to as the Company) and the group in previous periods. The information on the Company's business model is provided in Chapter I, Section 2, Key Data on the Issuer and its Group of Companies of the Annual Management Report for 2020.

This Social Responsibility Report provides information needed to assess how important issues related to partners, community, and employees, are dealt with. The report provides information that is significant for assessing the economic, social and environmental impact of the company and group activities and/or influencing stakeholder decisions.

The basic principles we follow

The company adheres to the 10 Principles of the UN Global Compact defining business responsibilities in the areas of human rights, labor rights, environmental protection and anti-corruption, and aims to reduce the negative impact of its activities on the environment, community, other businesses, while joining efforts to engage in solving issues related to economic, social and environmental protection, and contribute to society's development and economic growth. The main task of the Global Compact initiative is to promote and foster the social justice of businesses and markets. These generally accepted and declared guidelines for responsible behavior are a clear and meaningful indication of the Company's development as a socially responsible business.

Principles that are accepted and applied by Invalda INVL:

Human rights:
- Support and respect human rights protection in the sphere of Company's influence.
- Ensure that the Company does not contribute to human rights violations.

Employee Rights:
- Recognize the freedom of employees' associations and the right to effective negotiations.
- Eliminating any form of forced and compulsory labor.
- Absence of discrimination related to employment and occupation.

Environmental Protection:
- Acceptance of initiatives to increase environmental responsibility.
- Promoting the development and diffusion of environmentally friendly technologies.
- Working against corruption.
- Combating all forms of corruption (including tampering and bribery).

EMPLOYEES

What are the general principles we follow in the group?

Invalda INVL seeks to operate as a company in which the rights, needs and contribution to the operations of the company of each employee are properly respected. In forming the team, Invalda INVL AB focuses on promoting people's creativity, qualification, positive thinking, willingness and ability to work and develop efficiently, to comply with high ethical standards.

The company respects employees' rights and advocates against any discrimination in the recruitment of new employees or existing employees.

Objective annual assessment of the employee's competencies by the employee themselves and their manager is the main method of employee evaluation. The company takes care of raising the competence of the employees. The company sets and pays salaries in a transparent manner, in accordance with clearly defined procedures. The company cares about the

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health of its employees, organizes informal events on its own initiative, inviting all employees of the group to take care of the organizational culture that is favorable to all employees.

The establishment of safe and healthy working conditions in the company is regulated by the Labor Code of the Republic of Lithuania and other legislation on occupational safety and health. The company strives to provide employees with healthy and safe working conditions, therefore, special attention is paid to the health protection of workers, prevention of occupational diseases and promotion of physical activity. The company organizes a free health check for employees. During the inspection, employees can not only check the compliance with necessary workplace risk factors but also consult with a specialist on health issues.

The company takes care not only of employees' rest breaks in the office but also organizes periodic events which promote physical activity and informal communication of employees.

The company has prepared and approved its Code of Ethics to ensure that all employees are well aware of the principles of activities that they are expected to adhere to. The fundamental basis of ethical norms is the compliance with legal acts and all employees without any exception respect laws and strictly adhere to them. Employees shall avoid situations that may potentially raise any doubts concerning their abilities to act for the benefit of the company or could lead to conflicts of interests. Also, employees of the company undertake not to disclose any confidential information and shall refrain from insider trading in securities in their own name or on behalf of their family members or other related persons.

How did we reorient ourselves during the pandemic?

When the pandemic broke out in March 2020, the first step was to respond extremely quickly and take care of the physical health of the group's employees and customers. Security partitions were installed in the customer service workplaces, premises were disinfected, and employees were provided with security measures. Employees whose nature of work allows them to work remotely were given the opportunity to work from home. Employees were provided with timely and very detailed information on changes in work rules, and assistance was provided in reorienting to remote work.

During the monthly remote meetings, in which the employees are very active, the company's news and financial results are shared, the best employee is selected, etc., i.e. working remotely maintains the same traditions as everyone working in the office which helps to maintain team motivation.

As quarantine is extended, more and more attention is being paid to the emotional well-being of workers. For emotional wellbeing, a virtual Advent calendar, a remote culinary lesson, and a staff brainstorming session were organised. Maintaining various tools and traditions (only by relocating them into the distance) allows to maintain the positive team spirit.

What do the numbers show about the group's employees?

The main goal of the Company's personnel policy is to attract and retain qualified employees as well as to develop long-term partnership relationships with them and the overall future of the Company as a principle of mutual value generation.

The company provides opportunities for employment and successful work for people of all ages and experiences.

Group employee information at the end of the reporting period:

By employment contract:

Total number of employees	Fixed-term employment contract				A contract for an indefinite period
		Women		Men		Women		Men
2019	2020	2019	2020	2019	2020	2019	2020	2019	2020
561	537	17	10	11	9	315	258	218	260

By type of employment:

Total number of employees	Working full time				Part time work
		Women		Men		Women		Men
2019	2020	2019	2020	2019	2020	2019	2020	2019	2020
561	537	245	209	195	233	87	59	34	36

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Group employees by the age

Age group	2019	2020
till 30 years	12%	14%
31-40 years	23%	23%
41-50 years	23%	22%
51-60 years	26%	26%
over 60 years	16%	15%

COVID-19 impact:

	During 2020	31.12.2020
Employees in full downtime	32	5
Employees in partial downtime	134	19
Fired due to the negative impact of Covid-19	0

Sustainability in the investment process

We believe that through our activities, investments and the value we create, we make a positive impact on people and society as a whole. Assessing and improving environmental, social and governance (ESG) factors is an integral part of the investment process. Gradually, the principles of the ESG are becoming mandatory, and Europe is a leader in this area. It makes sense to follow the principles of the ESG - they are important for the company's employees, customers and, ultimately, financiers. In addition, with rapid climate change and changes in people's lifestyles, ecology and sustainability are becoming an increasingly important issue for investors and consumers, especially for the younger generation (millennials), who would agree to give up additional returns in the name of a cleaner and more transparent environment.

In 2020, the Group's asset management company INVL Asset Management approved and publicly announced the Responsible Investment Policy which summarizes the complex process of sustainable investment.

INVL Asset Management distinguishes 4 layers of responsible investment:

Negative selection. We do not invest in company shares or bonds if a significant part of the company's income consists of the activities in a "controversial" sector: tobacco, distilled alcohol, weapons, gambling, pornography.
ESG principles. We prefer companies that follow the principles of ESG.
Involvement and active management. We aim to engage in dialogue with the companies in our portfolio, thus contributing to the improvement of corporate practices related to ESG factors. Of course, we can implement such activities most effectively in our "home" market, or where our voice is objectively strong.
Impact investment. We are constantly looking for companies that develop solutions that can make a significant contribution to achieving the United Nations Sustainable Development Goals (SDGs).

In the wake of the global wave of sustainable investments, in 2020 the Bank of Lithuania conducted a study on the amount of Lithuanian pension funds invested in exchange traded funds (ETFs) allocated to environmentally sustainable, socially responsible and transparent corporate governance investments. The research showed that when using the ETF product, only two pension accumulation companies operating in Lithuania choose sustainable investments, while others do not use this product to implement such opportunities. We are pleased that the group company INVL Asset Management is one of the two companies choosing an ETF product to increase sustainable investments.

ACTIVITY IN THE MARKET

Lithuanian Investment Index

In 2017, seeking to promote an investment culture, INVL Asset Management compiled the Lithuanian Investment Index for the first time. The Investment index is subsequently calculated every year.

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The Lithuanian Investment Index calculated by INVL Asset Management shows how the annual return on investment in the four main types of assets has been increasing since 1995. In the index, the return on short-term debt securities and money market instruments (deposits), long-term bonds, equities, housing investment (expenses estimated from 2016 onwards) were assessed, giving each of them the same weight.

On 2 March 2021 the Lithuanian Investment Index for 2020 was presented, which rose by $6\%$ despite the turbulent year. While the coronavirus pandemic caused turmoil in financial markets at the start of last year, in the end the Lithuanian Investment Index had a positive result once again. According to INVL Asset Management, which has compiled the investment index, last year the index increased for a ninth consecutive year and was up $6\%$ , while its average annual gain in 1996-2020 was $9.6\%$ . The investment index consists of the country's main asset classes weighted equally and assessed annually: stocks, bonds, rental housing, and deposit rates. For more information, see here https://www.invl.com/en/news/despite-a-turbulent-2020-the-lithuanian-investment-index-rose-6/

Memberships

Invalda INVL together with its INVL Asset Management companies in Lithuania and Latvia, has joined the UN-supported Principles for Responsible Investment (PRI) in the middle of 2017.

The PRI, founded in 2006, is a global network of over 1700 investors, aims to assess the investment implications of environmental, social and governance (ESG) factors. An economically efficient, sustainable global financial system is considered a necessity for long-term value creation. Investors who support the PRI voluntarily work to apply the principles in their investment activities.

Six specific responsible investment Principles are outlined by the PRI. They provide a menu of possible actions for incorporating ESG issues into investment practice – from investment analysis and decision-making to their incorporation into ownership policies and practices. Additionally, signatories to the Principles are encouraged to promote the Principles' acceptance in the investment industry and to work together for their effective implementation.

Invest Europe represents the private equity, venture capital and infrastructure sectors of European countries along with their investors. Its members take a long-term approach to investing in privately held companies, providing them not only with capital but also with innovation and expertise.

Invest Europe seeks to contribute constructively to policy affecting private capital investment in Europe.

Invest Europe acts as a guardian of professional standards, setting requirements for its members in the areas of accountability, good

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governance and transparency. Members commit to a code of conduct that sets out principles of behaviour in the private equity and venture capital industry.

LT VCA

Lithuanian Private Equity and Venture Capital Association

Invalda INVL is also part of the Lithuanian Private Equity and Venture Capital Association, which brings together the participants of Lithuania's private equity and venture capital market.

The organisation's main goal is, together with the competent Lithuanian institutions and partners, to take part in shaping and implementing a common policy for the PE/VC industry.

It pursues this by initiating and improving legislation and by coordinating members' efforts to expand operations, representing their economic and legal interests, promoting PE/VC investments in Lithuania, and highlighting the benefits of the growth of this market for the state, for companies and for other market participants and entities.

investuotoju

INVALDA INVL has joined the Investors' Association at the end of 2017. The main activities of this association include the following areas: organization of meetings with business leaders and events on the financial markets of the members of the association, the minority investors' rights advocacy, development of centers of excellence, providing the scientific findings based on the recommendations of the Government and Parliament, drawing attention and warning about the opportunities and risks associated with investing.

RELATIONSHIP WITH SOCIETY

In carrying out its activities and acting in different communities, the company adheres to the Code of Ethics, the Code of Shareholders' Rights and the general principles of protection of human rights. The company supports and respects the international protection of human rights in its sphere of influence and advocates any violation thereof.

Consumer information and transparency

The company publicly discloses information about the company's activities and objectives, financial results, members of the management bodies and shareholders, related party transactions, the company's management structure and strategy and other information relevant to investors on the company's constantly updated website, as well as in annual and periodic announcements that are publicly disclosed and placed on the company's website.

The information published by the company is simultaneously disclosed to all persons. The company shall not disclose information that may potentially affect the price of the securities issued by it in the comments, interviews or in any other manner until such information is publicly disclosed through the Nasdaq Vilnius Public Information System.

Objective treatment of shareholders and shareholder rights

The company has approved the Shareholder Rights Code, which defines the main obligations of the company to its shareholders.

The company has issued ordinary registered shares with a nominal value of EUR 0.29. Each share entitles its shareholders to the same rights provided for in the legislation of the Republic of Lithuania.

All shareholders of the company have equal opportunities to get acquainted and participate in making decisions that are important to the company. Procedures for convening and conducting General Shareholders' Meetings are in accordance with the applicable legal provisions and provide equal opportunities for shareholders to participate in the meeting, to get acquainted with draft decisions and materials necessary for decision making, as well as to ask questions to the members of the Board of the company whose contacts are publicly available on the company's website www.invaldainvl.com.

Social projects

In 2007 the company has established a public company Iniciatyvos fondas (Initiative Foundation), which aims to promote social initiative by organizing various programs for individual groups of society. The main idea of these programs is to give people the opportunity to seek relevant changes by supporting their initiative to act and encouraging self-initiative, actively

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contributing to the development of a responsible and harmonious society. Priorities of Iniciatyvos fondas may vary from year to year.

The mission of Iniciatyvos fondas is to promote the initiative, social responsibility and the current potential of an individual or society to pursue an active and cohesive society.

The latest initiative of the Iniciatyvos fondas is the Positive Diary. The aim of the project Positive Diary is to draw the attention of the Lithuanian population to the good changes in the society and the achievements of all of us, which often remain unnoticed in the general news flow. The goal was to shoot 1000 stories of positive messages that inspire people to see good. Devotion to another, belief that alone you can change the world - these are the fundamental values that inspire significant successes.

PROGRAMME 2016-2020

PROGRAMME 2015

PROGRAMME 2014

CONTEST 2013

PROGRAMME 2012

PROGRAMME 2011

PROGRAMME 2010

PROGRAMME 2009

Environmental protection

In its activities the company seeks to conserve the environment, use natural resources economically, and encourage the group companies to implement modern, efficient and environmentally safe technologies in their production activities. Environmental issues at the group's manufacturing plants include: safe operation of equipment, safe use of environmentally hazardous materials, management of waste generated.

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APPENDIX 5. REMUNERATION REPORT

The Company has prepared the first remuneration report (hereinafter - the Report). As this is the first Report, it does not indicate how the results of the vote on the remuneration report of the General Meeting of Shareholders of the previous reporting period were taken into account.

This report is designed to be read as a stand-alone document. The report has been prepared in accordance with the provisions of the Law on Financial Reporting of Enterprises of the Republic of Lithuania and the Remuneration Policy approved by the company's shareholders' meeting on 30 April 2020.

Introduction

Invalda INVl is an asset management group whose companies more than 240 thousand clients have entrusted over 1.2 billion euros of assets.

2020 was a moderately good year for investors with Invalda INVL, despite the fact that the global and regional economy has entered a period of challenges and uncertainty. This period continues, making a significant impact on the business environment and individual business areas, challenging and driving change.

At the end of 2020, Invalda INVL's equity was EUR 83.16 million or EUR 7.11 per share. Last year, Invalda INVL's net profit amounted to EUR 5.3 million. The value of the assets of more than 240 thousand clients managed by the Group companies in 2020 exceeded € 1.2 billion at the end of the year and increased by almost 20% over the year.

The main factor contributing to Invalda INVL's results, as usual, was the change in the value of the investment portfolio and income from the portfolio, from which our earnings in 2020 were EUR 4.1 million. Invalda INVL's income from the asset management business in 2020 amounted to 12.4 million euros and earned 1.8 million euros. euros.

In 2020, the average number of employees of AB Invalda INVL was 7, of which 4 employees were assigned to the management staff and the company also has 3 specialists.

Invalda INVL is a parent company whose operations are concentrated in subsidiaries, many of which are licensed and make their information public.

Executive remuneration

The report provides information on the remuneration of the company's manager and each member of the bodies elected by the shareholders' meeting. The head of the company is the President of Invalda INVL. The members of the bodies elected by the shareholders' meeting are a) members of the Board, who may be paid bonuses and who may receive remuneration from the company under employment, service or other contracts, b) members of the audit committee. Although not provided for in the Remuneration Policy, given that the Company provides information on the remuneration of the Chief Financier in the Annual Report, this information will also be disclosed in the Report.

The company's management did not change during the reporting period.

The members of the Board of the Company did not receive remuneration for their work on the Board but received remuneration under employment contracts.

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Table 1. Remuneration of the CEO, CFO and each member of the bodies elected by the specific shareholders' meeting for 2019 and 2020 (EUR, before taxes)

Name, position	Remuneration received from the group														In that number the remuneration received from any company in which Invalda INVL owns more than 50% of the shares
	Fixed part of remuneration1		Variable part of the remuneration2(for the year)		Variable part of the remuneration2(long term program)		Other monetary reward3		Other benefits4		Total		Ratio of fixed to variable and other remuneration
	2019	2020	2019	2020	2019	2020	2019	2020	2019	2020	2019	2020	2019	2020	2019	2020
Darius Šulnis, CEO, Board member	137,694	104,235	-	-	-	-	-	-	-	-	137,694	104,235	100%	100%	67,890	-
Alvydas Banys, Senior Advisor, Chairman of the Board	73,193	73,554	-	-	-	-	-	-	-	-	73,193	73,554	100%	100%	-	-
Indre Mišeikytė, Advisor, Board member	73,617	73,689	-	-	-	-	-	-	-	1,333	73,617	75,022	100%	98%	-	-
Tomas Bubinas, independent audit committee member	2,001	906	-	-	-	-	-	-	-	-	2,001	906	100%	100%	-	-
Danguolė Pranckėnienė, independent audit committee member	1,798	435	-	-	-	-	-	-	-	-	1,798	435	100%	100%	-	-
Raimondas Rajeckas, CFO	56,981	57,392	28,096	29,929	-	23,701	-	6,000	12,204	8,356	97,281	101,678	59%	56%	3,531	3,378

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The fixed part of the remuneration is the monthly salary specified in the employment contract, i.e. basic part of wages. Members of the elected bodies who have not concluded employment contracts with the company may receive remuneration in the form prescribed by legal acts and under service contracts.
Variable part of the Remuneration - annual bonuses or share options. This is an additional employee remuneration, which is granted and paid at the initiative of the company as a means of employee promotion and motivation. The value of share options is disclosed as it is recognized in the financial statements in accordance with applicable accounting standards.
Other monetary reward - bonus, other benefits that may be paid for additional work, performance of additional functions not provided for in their employment contract and / or job description, or performance of additional tasks.
Other benefits - other potential benefits provided to employees as incentives (for example, pension contributions may be paid to employee's pension funds managed by the group, reimbursement of part or all of the cost of training, gifts, taxes paid on behalf of the employee, etc.).

Invalda INVL's remuneration policy maintains a simple and transparent remuneration structure and reduces the risk of potential conflicts of interest. The Company believes that the publicly disclosed executive remuneration fully complies with the provisions of the remuneration policy. The remuneration policy does not provide for the amounts of remuneration for managers and the application of performance criteria.

Table 2. Annual changes in the company's results, remuneration disclosed in the report and average salary over 5 years

	2016	2017	2018	2019	2020
Šulnis Darius	-1.3%	-0.2%	4.6%	2.1%	-24.3%
Mišeikytė Indrė	0.0%	-0.5%	-0.3%	0.8%	1.9%
Banys Alvydas	-0.1%	0.2%	0.3%	-0.8%	0.5%
Rajeckas Raimondas	99.6%	-12.8%	-3.0%	15.3%	28.9%
Tomas Bubinas	-25.0%	-11.1%	37.5%	150.9%	-54.7%
Dangutė Pranckėnienė					-75.8%
Grynasis pelnas	13.9%	137.0%	-97.0%	5972.0%	-74.4%
Vidutinis atlyginimas	-12.3%	-41.9%	32.0%	29.8%	17.4%

As required by law, the company provides comparisons of annual results and earnings. For the sake of comparability, when calculating the changes, the remuneration for 2016-2018 has been recalculated by applying a coefficient of 1.289 due to the reform of transferring employer taxes to the employee that took place in Lithuania from 1 January 2019. Also, the remuneration that was not paid for a full year was converted to the full year equivalent.

As can be seen from the table, the company's results do not directly affect the salaries of either management or other employees. The results of Invalda INVL are determined by the successful activities of asset management companies, high share prices in the securities market, realized sales transactions, etc. Wages are determined taking into account the general market situation, the fulfilment of the employee's annual targets, and so on.

Share options

The decision on the specific number of shares of the company offered to employees and the method of granting shares (for free and / or partially remunerated), when shares are granted partially remunerated - the share price payable by employees, is decided by the general meeting of shareholders of at least 2/3 majority of the votes of all shareholders present at the meeting. Agreements for the acquisition of shares decided by the General Meeting of Shareholders are concluded and employees acquire ownership of shares not earlier than in the third financial year (excluding the financial year in which the decision of the General Meeting of the Company was adopted), provided that such right has not been revoked for the employee, the employee has not waived it or lost it on other grounds. The method of granting shares does not change depending on the performance of the company and / or other group companies or the price of the company's ordinary registered shares on the regulated market.

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Table 3. Share options

Option owners	the number of securities in 2020 approved by the shareholders' meeting for options	Securities for which option agreements were concluded in 2020			2020 exercised options (agreed in 2017)
		number	agreed purchase price	year of acquisition of shares	Number of securities purchased by employees	Method of granting of securities
Employees15	407,210	317,227	EUR 1	2023	78,867	Company's own shares transferred

$ Employee - any person who has a valid employment contract with a Group company on the day of the decision of the Board of the Company to allocate Shares, as well as a member of the Supervisory Board and / or Board of the Group company who is not a shareholder of the Company, owning 1/20 or more of the total votes of the Company.

Of the persons whose remuneration is disclosed in the remuneration report, stock options are granted only to the CFO of the company, therefore the details of the stock options granted only to the CFO are given below.

Table 4. Unexercised stock options for the company's CFO

Name	Performance period, years	Grant date	Expiry date	Exercise price, EUR 6	Opening balance at 1 January	Share options granted	Share options exercised 7	Closing balance at 31 December	Value of granted share option	Expenses recognized in the financial statements 8
Assigned in 2017	2016	03.05.2017	2020	1	6,057	-	6 057	-	-	-
Assigned in 2018	2017	03.05.2018	2021	1	8,308	-	-	8,308	-	-
Assigned in 2019	2018	06.05.2019	2022	1	9,086	-	-	9,086	-	-
Assigned in 2020	2019	25.05.2020	2023	1	-	3,954	-	3,954	22,655	2,655
2020 long-term program	2020-2022	01.07.2020 / 31.12.2022 vesting date	2023	Share purchase price will be calculated, as a starting point taking the net asset value per share of Invalda INVL as of 31.12.2019 (EUR 7.47), additionally calculating 12% annual interest rate and estimating the granted share payments, if there are any (EUR 0.8 till now)	-	116,105	-	116,105	82,953	23,701
Total					23,451	120,059	6,057	137,453	105,608	26,356

6 The exercise price of all share options of the company granted in the period from 2017 to 2019 will not exceed EUR 0.20 due to the payment of dividends of EUR 0.8 per share.
7 Value of exercised stock options is EUR 40,582. Share price on exercise date was EUR 6.90. Exercise price was EUR 0.2.
8 Amounts recognized in the financial statements in accordance with IFRS 2. For the current year, accruals are made at the end of the year, regardless of the legal grant of share options, so only an adjustment to the value of the options granted is recognized in the grant year. In the case of a long-term program, a value proportional to the period of operation is recognized during the current year.

AI assistant

Invalda INVL — Annual Report 2020

2247_rns_2021-04-30_d5228ae7-01b2-440f-8542-e0435a8b2ec1.pdf

INVALDA

Public joint-stock company Invalda INVL

CONFIRMATION OF RESPONSIBLE PERSONS

ENCLOSED:

CONTENTS

CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS:

NOTES TO THE FINANCIAL STATEMENTS ... 19

Independent Auditor's Report

Opinion

Basis for Opinion

Key Audit Matters

Valuation of unquoted investments carried at fair value

Revenue recognition

Other Information

Responsibilities of Management and Those Charged with Governance for the Consolidated and Company's Financial Statements

Auditor's Responsibilities for the Audit of the Consolidated and Company's Financial Statements

Report on Other Legal and Regulatory Requirements

DETAILS OF THE COMPANY

Board of Directors

Management

Principal place of business and company code

Banks

Auditor

Notes to the financial statements

1. General information

1 General information (cont'd)

1 General information (cont'd)

1 General information (cont'd)

2. Summary of significant accounting policies

2.1. Basis of preparation

Statement of compliance

Adoption of new and/or changed IFRSs and IFRIC interpretations

2 Summary of significant accounting policies (cont'd)

2.1 Basis of preparation (cont'd)

2 Summary of significant accounting policies (cont'd)

2.1 Basis of preparation (cont'd)

Standards adopted by the EU but not yet effective

2 Summary of significant accounting policies (cont'd)

2.1 Basis of preparation (cont'd)

2 Summary of significant accounting policies (cont'd)

2.1 Basis of preparation (cont'd)

2 Summary of significant accounting policies (cont'd)

2.2. Investment entity and consolidated financial statements

Investment entity

Subsidiaries

Associates

2 Summary of significant accounting policies (cont'd)

2.3. Basis of consolidation

2.4. Functional and presentation currency

2.5. Property, plant and equipment

2 Summary of significant accounting policies (cont'd)

2.5 Property, plant and equipment (cont'd)

2.6. Intangible assets other than goodwill

Funds' management rights

Software

2.7. Business combinations and goodwill

2 Summary of significant accounting policies (cont'd)

2.7 Business combinations and goodwill (cont'd)

2.8 Investments in subsidiaries, associates (the Company)

2.9 Non-current assets (or disposal groups) held-for-sale and discontinued operations

2 Summary of significant accounting policies (cont'd)

2.9 Non-current assets (or disposal groups) held-for-sale and discontinued operations (cont'd)

2.10. Impairment of non-financial assets

Goodwill

2.11. Financial assets

2 Summary of significant accounting policies (cont'd)

2.11 Financial assets (cont'd)

Debt instruments

Equity instruments

Offsetting financial instruments

2.12. Fair value estimation

2.13. Impairment of financial and contract assets

2 Summary of significant accounting policies (cont'd)

2.13. Impairment of financial and contract assets (cont'd)

2.14. Trade receivables

2.15. Cash and cash equivalents

2 Summary of significant accounting policies (cont'd)

Invalda INVL Annual Report 2020