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AB Akola Group

Annual Report Apr 9, 2018

2261_agm-r_2018-04-09_b9afb075-10ff-4a99-aaa5-7a95a7bb7bd3.pdf

Annual Report

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CONFIRMED at the meeting of the Board by the protocol No. 6 on 09 April, 2018

"LINAS" AB CONSOLIDATED ANNUAL REPORT FOR THE YEAR 2017

CONFIRMATION BY THE RESPONSIBLE PERSONS

Following Art.22 of the Law on Securities of the Republic of Lithuania and the Regulations for Drawing-up and Submission of the Periodic and the Additional Information issued by the Board of Lithuanian Bank, we, Daiva Minkeviciene, Director of Linas AB, and Gerda Zabarskiene, chief accountant of Linas AB, hereby confirm that to our best knowledge the annual consolidated financial statements of the Linas AB were drawn following the International Financial Reporting Standards adopted for use in the European Union, and present the fair and accurate status of the assets, liabilities, financial condition and profit or loss and money flows of the Linas AB and the Company Group, and that the review of activities and business development and the condition of the Linas AB and Company Group together with the description of the principle risks and uncertainties it faces has been described correctly.

Director Linas AB Daiva Minkeviciene March 21, 2018 A.V. Chief accountant Linas AB Gerda Zabarskienė March 21, 2018 A.V.

INDEX

1. Accounting period the annual report is covering 2
2. Companies comprising the Company Group and their contact data. 2
3. Principal nature of activity. 2
4. Contracts with intermediaries of public trading securities. 2
5. Data on trading in securities of the issuer in regulated markets 3
6. Fair review of entity's position, performance and development of the entity's business,
description of the principal risks and uncertainties that it faces. 3
8. References and additional explanatory notes regarding the date provided in the
consolidated financial statements. 5
9.Important events after the end of the preceding financial year. 5
10. Operating plans and forecasts of the Company Group 5
11. Information about research and development activities of the Company Group. 5
12. Environment control. 5
14. Main features of internal control and risk management systems of Group of companies in
relation with consolidated financial reports preparation. 6
15. Information about branches and representative offices of the Company. 6
16. Issuer's structure of authorised capital and encumbrances for transfer/disposal of said
securities. 6
17. Information about the own shares acquired and held by the Company and the Group and
the same acquired and transferred during the reporting period. 7
18. Shareholders. 7
19. Employees. 8
20. Procedure for amendment of the Articles of association of the Issuer. 9
21. Management bodies of the Issuer 9
22. Data about the Supervisory Council members, Board members, Audit committee members
and administration of the Company. 12
23. All material agreements to which the Issuer is a party and which would come into effect,
be amended or terminated in case of change in the issuer's control, also their impact except
the cases where the disclosure of the nature of the agreements would cause significant
damage to the Issuer 13
24. All agreements of the Issuer and the members of its management bodies or the employee
agreements providing for a compensation in case of the resignation or in case they are
dismissed without due reason or their employment is terminated in view of the change of
control of the Issuer. 14
25. Information on the significant transactions between related parties. 14
26. Information about signed bad contracts (which are not corresponding the goals, present
common market conditions, breaking the interest of shareholders or interest of other persons,
etc.) of the company in the name of inssuer during the accounting period, which had or in
future will have negative influence on the activity of issuer and (or) activity results, also the
information about the contracts which were signed during the conflicts between issuer
managers, controlling shareholders or other related parties obligations for issuer and their
private interest and (or) other obligations. 14
27. Information on the compliance with the corporate governance code. 14
28. Data about publicly disclosed information. 14

1. Accounting period the annual report is covering.

The AB "Linas" consolidated annual report has been prepared for the year 2017.

2. Companies comprising the Company Group and their contact data.

Principal Company data

Name AB "Linas" (hereinafter the Company)
Authorised (share) capital 6 971 307,10 Eur
Domicile address S. Kerbedžio g. 23, LT-35114 Panevėžys
Telephone (8-45) 506100
Fax (8-45) 506345
E-mail address [email protected]
Webpage www.linas.lt
Legal-organisational form Public Limited Liability Company
Date and place of registration 08-03-1993, Company Register/ City of Panevėžys
Company registration number 003429
Date and place of re-registration September 9, 2004, Register of Legal Persons,
Registration Certificate No. 003429.
Company code 1476 89083
VAT code LT476890811
Legal Entity Identifier
(LEI) code 52990054JBNAT4BLVY62
Principal subsidiary data
Name UAB "Lino apdaila"
Authorised (share) capital 2 896 Eur
Domicile address S. Kerbedžio g. 23, LT-35114 Panevėžys
Telephone (8-45) 506111
Fax (8-45) 506346
E-mail address [email protected]
Legal –organisational form Private Limited Liability Company
Date and place of registration May 23, 2008 Register of Legal Persons, Registration
Certificate No. 114552
Company code 3017 33421
VAT code LT100004113316

3. Principal nature of activity.

Principal nature of activity is production of textile products and sales.

On December 31, 2017 the Group of companies was comprised of AB "Linas" and its subsidiary company UAB "Lino apdaila". AB "Linas" holds 100% shares of the subsidiary company. The activity of AB "Linas" is sales of linen textile items; other activity of AB "Linas" management of financial asset (shares and granted loans), supply of the thermal energy, rental of property. The activity of the textile products production is carried out at the subsidiary company UAB "Lino apdaila".

4. Contracts with intermediaries of public trading securities.

On January 24, 2018 AB "Linas" has signed the service contract with the AB SEB Bank (company code 112021238, Gedimino avenue. 12, Vilnius) regarding the management of company's stock accounting.

5. Data on trading in securities of the issuer in regulated markets.

The total of 24 038 990 ordinary registered shares (ISIN code LT0000100661) the total nominal value of which is 6 971 307,10 Eur have been on the Baltic trading secondary list of the Vilnius Securities Exchange (VVPB symbol – LNS1).

6. Fair review of entity's position, performance and development of the entity's business, description of the principal risks and uncertainties that it faces.

Risk factors related to the activities of the issuer:

Credit:

  • Customers solvency.

The Group is seeking to control the influence of credit risk insuring the major of its customers at international insurance company, applying safe settlement forms, asking for property guarantees or the sponsorship of third parties.

Economic and political:

  • Increase in supply of Asian textile products and dumping.
  • Cyclicity of demand for linen products.
  • Seasonality: les demand in winter.
  • Rise of prices for energy resources.
  • Rise of prices for raw materials.
  • Passive policy of the Lithuanian state in regard of foreign investment and local exporters.

The Group is developing and improving marketing and production spheres, reacting to customers needs, searching for new markets, assortment possibilities, taking place in the projects witch are supplied by Lithuanian Republic or European Union.

Technical-technological:

  • Quite significant part of the technological equipment are old and wear-tear, requiring huge investment in to their repair and maintenance;
  • Lack of modern technological equipment for performance of modern and progressive processing/finishing of fabrics.

The Group is investing into the obtaining of progressive equipment, renewing of old equipment and proper maintenance in order to increase production efficiency and productivity.

During 2017 the AB "Linas" Company Group sold products and services for 12,83 million Eur. Compared to the results of 2016 the incomes of sales decreased 0,214 million Eur or by 1,64 %.

Item Unit 2017 2016
Sales Thou. Eur 12 831 13 045
Profit before taxes Thou. Eur 469 756

The main cause for significant production and sales volumes of the EU textile industry is the import of textile products from developing Eastern Asia countries, which especially has been growing following full liberalisation of trade in textile products and lifting all quantitative

restrictions on import of textile products. Large influence had also general and constant price increase for raw materials (linen and cotton). There is also a striking trend: small orders account for an increasing share of all sales, resulting in an increase in the cost of production.

The reconstruction of structure of Group of companies and the flexibility allowed the Group to keep current customers and to attract the new ones during year 2017. Further the Group orients to high value added production acc. to the individual orders of the customers, does sewing services.

Indicators Group Group
2017 2016
Net profitability (net profit/sales * 100) 3,03 4,98
Return on equity ROE (net profit/equity) 0,05 0,09
Debt ratio (liabilities/assets) 0,25 0,30
Turnability of assets (sales/assets) 1,24 1,24
Book value of shares (equity/number of shares) 0,32 0,31
Net profit (loss) (thou. Eur) 388 649
EBITDA (mln. Eur) 0,73 0,99
Profit per share 0,02 0,03
Lowest share price (Eur) 0,060 0,079
Highest share price (Eur) 0,098 0,105
Closing price (Eur) 0,084 0,098
Capitalisation (mln. Eur) 2,02 2,36
  1. Analysis of financial and non-financial performance.

The range pf the pure linen fabrics accounted for 72,1 % of the total products produced in 2017 (in 2016 – 70,4 %). In 2017 33,5 % of the total fabrics produced were used for sewing articles (in 2016 – 38,0 %).

In 2017 the Company Group had 469 thou. Eur profit before taxes, and taking into account the taxes the net profit of the Group was 388 thou. Eur. On 2016 the net profit of the Group was 649 thou. Eur.

Export (out of Lithuania borders) volumes during year 2017 made 82,5 % of all sold production. Geographically the export distribution is as follows: Spain – 17,9 %, Sweden –14,3 %, Japan – 6,6 %, Finland – 5,7 %, Latvia – 5,4 %, Great Britain – 5,4 %, Denmark – 4,5 %, other countries – 22,7 %. The products were sold in Estonia, France, USA, Belgium, South Korea, Germany, Holland, Australia, Poland, New Zealand, Italy, Norway, and other countries. 17,5 % of all sold production was sold in Lithuania during 2017.

We participated in 5 specialized textile exhibitions: in Germany and in France.

During 2017 it was bought 42 tons of cotton yarns from the Lithuanian and Poland suppliers. During 2017 it was purchased 248 tons on linen yarn, 62 % of which was purchased from the Lithuanian suppliers, 20 % from Chinese suppliers and 18 % from Italy, Poland and Belgium suppliers.

1 348 thousand m of raw fabric was bought in 2017, 99 % of it – from Belarus.

2017-12-31 Group had 663 thou. Eur debts to the banks. On 2017-12-31 the sum of AB "Linas" granted loans with interests made 1,28 mln. Eur.

8. References and additional explanatory notes regarding the date provided in the consolidated financial statements.

The financial statements have been prepared following the International Financial Accounting Standards. The data provided in the annual financial statements and in the explanatory note are sufficient and comprehensive.

9.Important events after the end of the preceding financial year.

The financial report of the Company and Consolidate financial statements were audited by the independent auditing company the UAB "Audito sprendimai" selected via the bidding procedure. The audit was performed by auditor Rita Matulienė (Auditor certificate No.000375). Gerda Zabarskiene is started to work as the Company's Chief accountant from 2018-03-01.

10. Operating plans and forecasts of the Company Group.

In 2018 the Group of Linas, AB plans to supply linen products to customers which put value upon combination of naturalness and modernity. Companies of the Group will vouch for reliable partnership with customers and suppliers, also will vouch for safe environment to employees as before. The main objectives of the Group are: to increase volume of sales, expanding market in foreign countries and Lithuania, and to decrease cost price of production, optimizing expenses of production and activity costs, buying cheaper raw materials.

It is planned to give about 0,3 mln Eur for the obtaining of technological equipment and renovations during year 2018.

11. Information about research and development activities of the Company Group.

The Company Group was not carrying out activities related to research and development.

12. Environment control.

The items, which are produced by AB "Linas" Group of companies, are ecological, nonwaste product which is not making harmful effect for nature and ecologic. The Group is working acc.to internationally acknowledged quality requirements corresponding to OEKO-TEX 100 standard.

AB "Linas" Group of the Companies is executing it's activity acc.to BAPM (the best accessible production methods) requirements. The Group constantly observe its indicators, executing water taking, sewage and air pollution monitoring, planning and implementing investments, which allow to decrease production and activity expenses and energetic costs and improve environmental control of the Group.

Pollution characteristic of year 2017:

1.Wastes (including composite communal) 97,87 tons
2.Outflow (production) 32 thousand m3

Expenses for environment control during year 2017:

1.Taxes for atmosphere pollution (mobile resources) -
84 Eur
2.Tax for outflow (production) -26 846 Eur
(for production outflow passing to AB "Aukštaitijos vandenys")

All secondary wastes which form in the company – glass, metal, packages of paper and carton, plastic packages and others – are being sorted and passed to the waste administering companies acc.to the signed contracts.

The possibility to limit company's activity or to stop it regarding the influence on the surrounding is very small.

  1. Information about financial risk management objectives, its measures for hedging major types of forecasted transactions for which hedge accounting is used, and the Company Group's exposure to the cope of price risk, credit risk, liquidity risk and cash flow risk where the Company Group uses financial instruments and where this is of importance for the evaluation of the Group's assets, equity capital, liabilities, financial position and performance results.

The Company Group was not using the financial instruments which are of importance for the evaluation of the Group's assets, equity capital, financial position and performance results.

14. Main features of internal control and risk management systems of Group of companies in relation with consolidated financial reports preparation.

The audit committee is supervising the preparation of consolidated financial reports, management systems of internal control and financial risk, observation law regulations which regulate preparation of consolidated financial reports.

The application of internal control measures of the Group are indicated by separate orders of the manager, other internal documents. The managers of the Group, through the long job experience, know very well the specific of the activity and risk fields. All this allows to implement sufficient level internal control system in the company.

Financial reports of the Group are prepared acc.to International financial accountability standards (TFAS) confirmed by EU. The same internal control organization and accounting principles are applied for all companies of the Group. When preparing these consolidated financial reports, all inter operation between the Group and balance remainders of the accounts and unrealized profit (losses) from the contracts between the Group of companies are being eliminated.

Responsible accounting employees constantly checking International financial accounting standards (TFAS), analyzing contracts which are significant for the activity of the company and the Group, ensuring timely and correct processing of collected information and its preparation for financial accountability.

15. Information about branches and representative offices of the Company.

The AB "Linas" does not have any branches or representative offices.

16. Issuer's structure of authorised capital and encumbrances for transfer/disposal of said securities.

The authorised capital registered in the company register of the Republic of Lithuania is equal to 6 971 307,10 Eur.

The structure of the authorised capital of the AB "Linas" according to types of shares is as below:

Type of shares Number of shares Nominal value
(Eur)
Total nominal
value
Percentage in the
authorised capital
Ordinary
registered shares
24 038 990 0,29 6 971 307,10 100,00
Total: 24 038 990 - 6 971 307,10 100,00

All shares of the AB "Linas" have been paid in full and they are not subject to any encumbrances for transfer/disposal of said securities.

The shares of the Company present the same property and non-property rights and liabilities according to the indications of Joint Stock Company's law.

17. Information about the own shares acquired and held by the Company and the Group and the same acquired and transferred during the reporting period.

The Company has not acquired any of its own shares. The subsidiary has also not acquired any of the Company's shares. Neither the Company nor its subsidiary has bought or sold its own shares.

18. Shareholders.

The total number of shareholder of the AB "Linas" as for December 31, 2017 was 938. The shareholders holding or in command of more than 5 per cent of the authorised capital of

the Company as for December 31, 2017 were:

Shareholder's name,
surname, company's name,
type, domicile address, code
in the Register of
Enterprises)
Number of
ordinary
registered
shares held on
property
ownership
right (pcs.)
Percenta
ge of
authorised
capital
held
Percentage of
votes granted by
the shares held on
property
ownership right
Percentage of
votes held
together with the
persons acting
together
Association "EEEE",
Savanoriu pr. 192, Kaunas,
code in the Register of
Enterprises 302572729
5 564 579 23,15% 23,15% 23,15%
Roocero Associated
Limited, 35 Barrack Road,
Belize City, Belize, code in
the Register of Enterprises
106446
5 406 533 22,49% 22,49% 22,49%
Danelika Services Limited,
3 Michael Koutsofta street,
Limassol, Cyprus, code in
the Register of Enterprises
HE289213
4 156 585 17,29% 17,29% 17,29%
"Rivena", UAB, P.Zadeikos
g. 13-35, Vilnius, code in
the Register of Enterprises
302521510
2 423 030 10,08% 10,08% 10,08%

None of the shareholders of the Company have any special control rights. All shareholders have equal rights, so the number of shares of the AB "Linas" carrying votes at the general meeting of shareholders is 24 038 990.

The Company has not been notified any agreements between the shareholders due to which the transfer of securities and/or voting rights could be encumbered.

19. Employees.

The average listed number of employees in AB "Linas" Group of companies was 157 employees on year 2017. On 2016 this average was 155. During the year the average number of employees increased by 2 or 1,3%. The number of employees has remained stable.

Employees 2017 2016
Average Average Average Average
conditional salary/wage, conditional salary/wage,
number of Eur number of Eur
employees employees
Management 9 1388,6 8 1236,0
personnel
Specialists and 37 890,6 37 828,7
clerks
Workers 98 581,1 90 561,9
Total 144 711,1 135 675,0

The salary for the group's employees was paid acc.to the regulations of Lithuanian Republic Labour codex and juridical acts implementing those regulations, to the confirmed labour payment regulations, to the employees' work and safety acts and other Lithuanian Republic juridical acts.. Average calculated wage in 2017 was 711,1 Eur and compared to 2016 increased by 5,35 % (in 2016 – 675,0 Eur).

AB "Linas" Group of companies employees acc.to the education on 2017-12-31:

Employees education Number of employees
Higher university education 42
Higher college education 10
Further education 25
Special secondary (professional) education 59
Secondary education 20
Totally: 156

The Collective Agreement in AB "Linas" Group of companies indicates:

1.One-off irretrievable pay is paid:

-when employee of the company dies and the family of employee grows children (adoptee) till 18 years old, also the oldest if they are studying at secondary schools at day shift, at professional or higher schools at day shift (including the period of academic holidays), but no longer till 24 – 6 base social pays;

-when spouse of company's employee dies and the family of employee grows children (adoptee) till 18 years old, also the oldest if they are studying at secondary schools at day shift, at professional or higher schools at day shift (including the period of academic holidays), but no longer till 24 – 6 base social pays.

2.Additional paid holidays:

up to 3 calendar days in case of death of a family member (parents, husband, wife, child, brother, sister);

-1 calendar day for the marriage.

  1. The employees who must undergo compulsory medical examination shall be paid average wage for the time spent for such medical check-up. The employer shall also cover all the costs related to such medical checkups.

20. Procedure for amendment of the Articles of association of the Issuer.

The Law on Companies of the Republic of Lithuania provides that the right to amend the Articles of Association shall be vested exclusively in the general meeting of shareholders. Adoption of amendment of the Articles of Association requires 2/3 majority vote of the shareholders attending the meeting.

21. Management bodies of the Issuer

As determined by the Articles of Association of the AB "Linas" the management bodies of the Company are:

  • General meeting of shareholders;
  • Supervisory Council of AB "Linas";
  • The Board of the AB "Linas";
  • Head (Director) of the AB "Linas".

The Supervisory Council shall not be formed.

General meeting of the shareholders is the highest body of the company.

Only General meeting of the shareholders has the right to:

-change the regulations of the company, except the exceptions indicated by Joint Stock Company's law of Lithuanian Republic;

-to elect and revoke members of the Supervisory Council;

-to elect and revoke a certified auditor or audit firm intended to carry out an audit of a set of annual financial statements, to establish terms and conditions of payment for audit services;

-to approve the set of annual financial statements;

-to confirm the set of intermediate financial reports which is done in order to achieve the decision regarding the pay of dividends for the period shorter than financial year;

-to make a resolution on allocation of dividends for a period of less than a financial year;

-to take the decision to increase the authorized capital;

-to indicate the shares class, number and nominal value of issued company's shares and the minimal price of the emission;

-to take the decision to cancel the priority right to all shareholders to obtain company's shares of concrete emission or convertible bonds;

-to take the decision to decrease authorized capital, except the exceptions indicated in Joint Stock Company's law of Lithuanian Republic;

-to take the decision to issue convertible bonds;

-to take the decision to convert company's one class shares into the other class, to confirm the order of shares convert;

-to take the decision to obtain own shares for the Company;

-to take the decision to liquidate the company, to cancel the liquidation of the company, except the cases indicated in Joint Stock Company's law of Lithuanian Republic;

-to elect and to cancel company's liquidator, except the cases indicated in Joint Stock Company's law of Lithuanian Republic;

-to take the decision regarding company's reorganization or separation and to confirm the conditions of reorganization or separation;

-to take the decision to reorganize the company;

-to take the decision to shake-up the company;

-to take the decision regarding the allotment of profit (loss);

-to take the decision regarding the reserves making, using, decreasing or cancelling.

General Meeting of shareholders can also solve other questions, which are not attributed to the competence of other company's bodies according to Joint Stock Company's law of Lithuanian Republic, and if they are not the function of other managing bodies.

The call order of General meeting of shareholders of the company doesn't differ from the order indicated in Joint Stock Company's law of Lithuanian Republic.

The Supervisory Council is a Collegial Body supervising company's activities. The Supervisory Council is headed by a chairman. The Supervisory Council shall be composed of 3 members. The Supervisory Council shall be elected and revoked by the general shareholders' meeting. The procedure of election and revocation of the Supervisory Council shall agree with provisions of the Law on Companies of the Republic of Lithuania.

The Supervisory Council shall be appointed for a four-year period. The Supervisory Council shall perform its functions within the period fixed in the Articles of Association or until a new Supervisory Council is elected, but not longer than until the ordinary general shareholders' meeting that is held in the year of expiry of cadence of the Supervisory Council. Number of cadences of a member of the Supervisory Council is not limited. The Supervisory Council shall elect a chairman of the Supervisory Council of its members.

The members of the Supervisory Council for their activity can get the bonuses acc.to the order indicated in the article No.59 of the law of Stock Companies. Competence and decisionmaking of the Supervisory Council shall agree with provisions of the Law on Companies of the Republic of Lithuania.

The order of call of the Supervisor's Meeting, voting in the Meeting of the Supervisor's Council and acceptance of decisions is not differ from the one which is indicated in the law of stock companies of Lithuania Republic. The meetings of the Supervisory Council should be recorded.

The procedure of work of the Supervisory Council shall be established by the rules of procedure adopted by the Supervisory Council.

The Board is the collegial management body of the company. The Board is elected by Supervisory Council according to the order indicated in Joint Stock Company's law of Lithuanian Republic. If single members of the Board are elected, so they are elected only up to the end of existing Board cadence. The Board consists of 3 members for 4 years. The chief of the Board is elected by the Board from its members. The working order of the Board is indicated in the accepted work regulation of the Board.

Supervisory Council can cancel all the Board or its single members if there cadence is still not over. The member of Board can resign from his post even if the cadence is still not over and to inform the company in written not later 14 days.

The competence of the Company's Board the procedure of it election and dismissal are not different from the same provided for in the Law on Companies of the Republic of Lithuania.

The Board shall consider and confirm:

  • Activity strategy of the Company;
  • Activity report of the Company;
  • Organisation/management structure of the Company and list of positions;
  • List of positions to which the employees are admitted following selection procedure;
  • Regulations of branches and representative offices of the Company.

The Board shall elect the head of the Company and fix his salary, other terms and conditions of the employment contract with him, confirm his job description, apply motivation and disciplinary measures.

The Board shall decide on the information to be treated as commercial (production) secret of the Company.

The Board shall adopt:

  • Decisions on becoming the founder or member of other legal persons;
  • Decisions on establishing branches and representative offices of the Company;
  • Decisions regarding the buying of long-term asset, investment, transfer, lease, mortgage and hypotec;
  • Decisions regarding the sponsion or guarantee of liabilities execution of other ;
  • Decisions regarding the support providing;
  • Decision to reorganise the Company in cases provided for in Law on Reorganisation of Companies;
  • Other decisions attributed to the competence of the Board by the Articles of Association or by resolutions of the General meeting of shareholders;

Before investing the funds or other assets into other legal persons the Board must notify the creditors with who the Company has not settled accounts in the event the total outstanding amount to such creditors is exceeding 1/20 of the authorised capital of the Company.

The Board shall analyse and assess the materials presented by the head of the Company concerning:

  • Implementation of the strategy of Company's activities;
  • Organisation of company's activities;
  • Financial condition of the Company;
  • Results of business activities, budgets for income and expenses, data of stocktaking and other changes related to assets of the Company;
  • A project of a set of company's annual and interim financial statements as well as a project of distribution of profit (losses) and submit them to the Supervisory Council and the general shareholders' meeting accompanied by comments, relevant offers, and the annual report of the company;
  • A project of allocation of dividends for the period of less than a financial year and a set of interim financial statements submitted for its approval, and submit them to the Supervisory Council and the general shareholders' meeting accompanied by comments, relevant offers, and the interim report of the company.

The competence of company's director, the order of his election or cancelation is not differ from the order indicated in Joint Stock Company's law of Lithuanian Republic.

Director of the company:

-organizes daily activity of the company, hires or fires employees, makes and terminates job contracts with them, motivates employees or signs penalties for them;

-acts in the name of the company and has the right to sign contracts autocratically;

-has to secure company's commercial (production) secrets which he knew being at this post;

-represents the company at the court, in relationships with other juridical and physical persons;

-presents the authorization to other persons to execute ions which are at his competence;

-perform other functions established by the laws, other regulations of the Republic of Lithuania as well as by company's Articles of Association and job descriptions.

Director of the company is responsible for:

-organization of company's activity and execution of its goals;

-preparation of the set of annual financial statements and the annual report of the company;

-preparation of a resolution on the project of allocation of dividends for the period of less than a financial year, preparation of the set of interim financial statements and the interim report intended to adopt the resolution on the project of allocation of dividends for the period of less than a financial year;

  • conclusion of an agreement with an auditor or an audit firm;

-presentation of information and documents for General Meeting of shareholders, for the Supervisory Council, for the Board, in the cases indicated in Joint Stock Company's law of Lithuanian Republic or according their request;

-presentation of company's documents and data to the manager of juridical persons register;

-presentation of company's documents to the Securities Commission and to Central Security Depository of Lithuania;

-public announcement of information, indicated in Joint Stock Company's law of Lithuanian Republic, in newspaper "Lietuvos rytas";

-presentation of information to shareholders;

-presentation of all necessary documents which are indicated in the contract with an auditor or an audit company for concrete inspection;

-other post execution indicated in Joint Stock Company's law of Lithuanian Republic and other laws and regulations, also in regulations of the company and in job description of company's manager.

According to the decision of General meeting of Shareholders the Audit committee is formed at AB "Linas". Company's Audit committee consists of three members, two of which should be independent. General Meeting of shareholders elect or cancel members of Audit committee according to the offer of company's Board. The cadence period of audit committee – four years. Continuous cadence period of the member of Audit committee could not be longer than twelve years.

Main duties of Audit committee:

-to present recommendations to company's Supervisory Council in relation with selection, nomination, repeated nomination and cancellation of external audit company and to present the contract conditions with audit company;

-to watch the execution process of external audit;

-to watch how external auditor keeps to the principles of objectivity and independence;

-to watch the preparation process of company's financial reports;

-to watch the system effectiveness of Company's internal control, risk management and internal audit, if it is working in the company;

-to execute other functions indicated in Lithuanian Republic laws and to keep to provided recommendations of management codex of companies listed at Vilnius NASDAQ OMX.

22. Data about the Supervisory Council members, Board members, Audit committee members and administration of the Company.

VILITA SKERSIENE – Chairman of the Supervisory Council. Head of the Marketing Division of the Company. UAB "Lino apdaila" director. Does not hold shares of the Company.

VIRGINIJUS KUNDROTAS – independent member of the Supervisory Council. Director of UAB "Integral Leadership Initiatives" (company code 302339130, M. Sederavičiaus St. 11, Kaunas). Head of Baltic Management Development Association (company code 135963288, E.Ožeškienės St. 18, Kaunas). Does not hold shares of the Company.

DARIUS KAZLAUSKAS – independent member of the Supervisory Council. Commercial Director of UAB "Parnidis" (company code 300080024, Kampo g. 25-40, Kaunas). Does not hold shares of the Company.

Members of the Supervisory Council were elected on May 16, 2017 by the General meeting of shareholders for four periods in office.

DAIVA MINKEVICIENE – Chairman of the Board and head of administration of the Company – The Director since 08-07-2016. Does not hold shares of the Company.

REGINA VAIGINIENĖ– member of the Board. The company's senior Accountant – Economist. Does not hold shares of the Company.

LILIJA POVILONIENĖ– member of the Board. Company accountant. Does not hold shares of the Company.

Members of the Board were elected on July 08, 2017 by the Supervisory Council for four periods in office.

AUSRA SILINYTE – chief of accountant of the Company from 01-08-2016 to 28-02-2018. Does not hold shares of the Company.

GERDA ZABARSKIENE – Since 01-03-2018 chief of accountant of the Company. Does not hold shares of the Company.

The members of the management bodies of the AB "Linas" have never been convicted for property, business or financial offences.

Information about total amounts and averages per person of the salaries and annual payments from profit paid during the reporting period to the members of the Supervisory Council, the Board and head of administration (head of administration of the Company and chief of accountant of the Company):

Indicator Salary for
2017 (Eur)
Payment
from profit
for 2017
(Eur)
Other
payments
from
profit
(Eur)
Total (Eur)
Average per member of the
Supervisory Council
- - - -
Total for all members of the
Supervisory Council
- - - -
Average per member of the Board - - - -
Total for all members of the Board - - - -
Average per member of administration 30 011 - - 30 011
Total for all members of
administration
60 023 - - 60 023

Members of Audit committee were elected for four years cadence during General meeting of shareholders on November 09, 2017. Authorizations are granted to the members of Audit committee and their executing functions are according to regulations of Audit committee.

LINA LIESYTE – member of Audit committee. Senior accountant of AB "Linas" since year 2008. Does not hold shares of the Company.

JUSTINA RYSKIENE – independent member of Audit committee, chief of accountant of company UAB "Skailita" since year 2013. Does not hold shares of the Company.

INGA MIKENIENE – independent member of Audit committee, chief of accountant of company UAB "Electric Box" since year 2005. Does not hold shares of the Company.

  1. All material agreements to which the Issuer is a party and which would come into effect, be amended or terminated in case of change in the issuer's control, also their impact except the cases where the disclosure of the nature of the agreements would cause significant damage to the Issuer

None.

  1. All agreements of the Issuer and the members of its management bodies or the employee agreements providing for a compensation in case of the resignation or in case they are dismissed without due reason or their employment is terminated in view of the change of control of the Issuer.

None.

25. Information on the significant transactions between related parties.

Information on the transactions between the related parties is provided in section 4.24 of the explanatory notes to the financial statements.

  1. Information about signed bad contracts (which are not corresponding the goals, present common market conditions, breaking the interest of shareholders or interest of other persons, etc.) of the company in the name of inssuer during the accounting period, which had or in future will have negative influence on the activity of issuer and (or) activity results, also the information about the contracts which were signed during the conflicts between issuer managers, controlling shareholders or other related parties obligations for issuer and their private interest and (or) other obligations.

None.

27. Information on the compliance with the corporate governance code.

The information regarding compliance with the corporate governance code is presented in Annex 1.

28. Data about publicly disclosed information.

During January – December of year 2017 the Company announced following essential events:

2017-02-03 Regarding the director's decision of Bank of the Republic of Lithuania Supervision office;

2017-02-28 Regarding the resignation of the Board Chairman from the ordinary General Meeting of shareholders;

2017-04-03 AB "Linas" the Ordinary General Meeting of Shareholders convocation;

2017-04-07 Draft Resolutions of the Annual General Meeting of Shareholders;

2017-04-28 AB "Linas" General Meeting of Shareholders didn't take place. Repeated General Meeting of Shareholders will be held on May 16, 2017;

2017-04-28 Draft Resolutions of the Repeated Annual General Meeting of Shareholders of AB "Linas";

2017-05-16 Resolutions of Repeated Annual General Meeting of Shareholders;

2017-06-16 A new wording of the By-Laws is registered;

2017-07-19 The Board and the Chairman of the Board of Linas have been elected;

2017-09-29 Activity results of six months of year 2017 of company AB "Linas" and Group of companies. AB "Linas" not audited consolidated interim information of six months of year 2017;

2017-09-27 Regarding the announcement of intermediate information;

2017-10-02 AB "Linas" the Extraordinary General Meeting of Shareholders convocation;

2017-10-11 Draft Resolutions of the Extraordinary General Meeting of Shareholders;

2017-10-24 AB "Linas" General Meeting of Shareholders didn't take place. Repeated General Meeting of Shareholders will be held on November 09, 2017;

2017-10-24 Draft Resolutions of the Repeated Extraordinary General Meeting of Shareholders;

2017-11-09 Resolutions of Repeated Extraordinary General Meeting of Shareholders; 2017-11-09 On 2017-11-09 AB "Linas" Audit Committee was elected;

2017-11-30 Activity results of nine months of year 2017 of company AB "Linas" and Group of companies. AB "Linas" not audited consolidated interim information of nine months of year 2017.

All information on material events made public during 2017 is available on the AB "Linas" webpage www.linas.lt.

Director Daiva Minkeviciene

Annex 1 To AB "Linas" annual report of year 2017

Corporate Governance Reporting Form

The public limited liability company "Linas"(hereinafter referred to as the "Company"), acting in compliance with Article 21 (3) of the Law of the Republic of Lithuania on Securities and paragraph 24.5 of the Listing Rules of AB NASDAQ OMX Vilnius, hereby discloses how it complies with the Corporate Governance Code for the listed NASDAQ OMX Vilnius as well as its specific provision or recommendations. In case of non-compliance with this Code or some of its provisions or recommendations the specific provisions or recommendations that are not complied with must be indicated and the reasons for such non-compliance must be specified. In addition, other explanatory information indicated in this form must be provided.

Summary of the Corporate Governance Report:

According to the By-Laws, the governing bodies of the Company are the General Shareholder's Meeting, the Supervisory Council, the Board and CEO. The Supervisory Council and the Board represents the shareholders, the Supervisory Council performs supervision functions and the Board performs control functions. The Supervisory Council consists of three members elected for the term of four year, the two of who is independent. The Board consists of three members elected for the term of four years Audit committee is formed in the company which is appointed and cancelled by general meeting of shareholders. Audit committee is formed from three members the two of who is independent. The cadence period of Audit committee is four years. The Board elects and recalls CEO of the Company, sets his/her remuneration and other conditions of the employment agreement.

Structured table for disclosure

PRINCIPLES/ RECOMMENDATIONS YES/NO
/NOT
APPLICABLE
COMMENTARY
Principle I: Basic Provisions
shareholder value. The overriding objective of a company should be to operate in common interests of all the shareholders by optimizing over time
1.1. A company should adopt and make public the
company's development strategy and objectives by
clearly declaring how the company intends to meet the
interests of its shareholders and optimize shareholder
value.
YES Company presents such kind of information in
company's web page www.linas.lt and in the reports of
NASDAQ OMX Vilnius.
1.2. All management bodies of a company should act
in furtherance of the declared strategic objectives in
view of the need to optimize shareholder value.
YES
1.3. A company's supervisory and management
bodies should act in close co-operation in order to
attain maximum benefit for the company and its
shareholders.
YES The Company governing bodies (the Supervisory
Council, the Board and the head of the Company) co
operate when dealing with issues of importance to the
activity of the Company, at same time, in view of
seeking the best benefit for Company and its
shareholders.
1.4. A company's supervisory and management
bodies should ensure that the rights and interests of
persons other than the company's shareholders (e.g.
employees, creditors, suppliers, clients, local
community), participating in or connected with the
company's operation, are duly respected.
YES
Principle II: The corporate governance framework

The corporate governance framework should ensure the strategic guidance of the company, the effective oversight of the company's management bodies, an appropriate balance and distribution of functions between the company's bodies, protection of the shareholders' interests.

2.1. Besides obligatory bodies provided for in the Law YES The Company fully complies with this recommendation,

on Companies of the Republic of Lithuania – a
general shareholders' meeting and the chief executive
officer, it is recommended that a company should set
up both a collegial supervisory body and a collegial
management body. The setting up of collegial bodies
for supervision and management facilitates clear
separation of management and supervisory functions
in the company, accountability and control on the part
of the chief executive officer, which, in its turn,
facilitate a more efficient and transparent management
process.
as its bodies consist of the single-person managing body
(the head of the Company), the collegial managing body
(the management board) and the supervisory body (the
council of observers).
2.2. A collegial management body is responsible for
the strategic management of the company and
performs other key functions of corporate governance.
A collegial supervisory body is responsible for the
effective supervision of the company's management
bodies.
YES The management board is responsible for strategic
management of the Company and parries out other
essential managerial functions in the Company. The
Supervisory Council is responsible for the efficient
supervision of the managing bodies of the Company.
2.3. Where a company chooses to form only one
collegial body, it is recommended that it should be a
supervisory body, i.e. the supervisory board. In such a
case, the supervisory board is responsible for the
effective monitoring of the functions performed by the
company's chief executive officer.
Not
applicable
Both the Supervisory Council and the Board are formed
in the Company.
2.4. The collegial supervisory body to be elected by
the general shareholders' meeting should be set up
and should act in the manner defined in Principles III
and IV. Where a company should decide not to set up
a collegial supervisory body but rather a collegial
management body, i.e. the board, Principles III and IV
should apply to the board as long as that does not
contradict the essence and purpose of this body.
YES
2.5. Company's management and supervisory bodies
should comprise such number of board (executive
directors) and supervisory (non-executive directors)
board members that no individual or small group of
individuals can dominate decision-making on the part
of these bodies.
YES Company's Board is made of 3 members. The
Supervisory Council of Company consists of 3
members, the two of who is independent. This is set
forth in the Articles of Association of the Company. The
Articles of Association shall be approved by the
supreme managing body of the Company, i.e., the
general meeting of shareholders.
2.6. Non-executive directors or members of the
supervisory board should be appointed for specified
terms subject to individual re-election, at maximum
intervals provided for in the Lithuanian legislation
with a view to ensuring necessary development of
professional experience and sufficiently frequent
reconfirmation of their status. A possibility to remove
them should also be stipulated however this procedure
should not be easier than the removal procedure for an
executive director or a member of the management
board.
YES In accordance with Articles of Association of the
Company, the Supervisory Council shall be elected by
the general meeting of shareholders for the maximum
period of 4 years. The general meeting of shareholders
is entitled to revoke all or individual members of the
Supervisory Council before expiration of their tenure.
2.7. Chairman of the collegial body elected by the
general shareholders' meeting may be a person whose
current or past office constitutes no obstacle to
conduct independent and impartial supervision. Where
a company should decide not to set up a supervisory
board but rather the board, it is recommended that the
chairman of the board and chief executive officer of
the company should be a different person. Former
company's chief executive officer should not be
immediately nominated as the chairman of the
collegial body elected by the general shareholders'
meeting. When a company chooses to departure from
these recommendations, it should furnish information
on the measures it has taken to ensure impartiality of
the supervision.
YES The chairperson of the Supervisory Council, as formed
in the Company, has not been the head of the Company.

Principle III: The order of the formation of a collegial body to be elected by a general shareholders' meeting

The order of the formation a collegial body to be elected by a general shareholders' meeting should ensure representation of minority shareholders, accountability of this body to the shareholders and objective monitoring of the company's operation and its management bodies.

3.1. The mechanism of the formation of a collegial
body to be elected by a general shareholders' meeting
(hereinafter in this Principle referred to as the
'collegial body') should ensure objective and fair
monitoring of the company's management bodies as
well as representation of minority shareholders.
YES The Company shall make information on candidates to
the Supervisory Council members publicly available;
voting mechanism shall be employed to implement
those references. Members of collegial body of the
Company not are remunerated off the funds of the
Company.
3.2. Names and surnames of the candidates to become
members of a collegial body, information about their
education, qualification, professional background,
positions taken and potential conflicts of interest
should be disclosed early enough before the general
shareholders' meeting so that the shareholders would
have sufficient time to make an informed voting
decision. All factors affecting the candidate's
independence, the sample list of which is set out in
Recommendation 3.7, should be also disclosed. The
collegial body should also be informed on any
subsequent changes in the provided information. The
collegial body should, on yearly basis, collect data
provided in this item on its members and disclose this
in the company's annual report.
YES The information above shall be provided and updated
regularly, in the annual and interim reports of the
company.
3.3. Should a person be nominated for members of a
collegial body, such nomination should be followed
by the disclosure of information on candidate's
particular competences relevant to his/her service on
the collegial body. In order shareholders and investors
are able to ascertain whether member's competence is
further relevant, the collegial body should, in its
annual report, disclose the information on its
composition and particular competences of individual
members which are relevant to their service on the
collegial body.
NO The Company shall not make any information publicly
available, unless the same is provided by the members
of collegial body; the information on the composition of
collegial body shall be included in the annual and
interim reports of the Company.
3.4 In order to maintain a proper balance in terms of
the current qualifications possessed by its members,
the desired composition of the collegial body shall be
determined with regard to the company's structure
and activities, and have this periodically evaluated.
The collegial body should ensure that it is composed
of members who, as a whole, have the required
diversity of knowledge, judgment and experience to
complete their tasks properly. The members of the
audit committee, collectively, should have a recent
knowledge and relevant experience in the fields of
finance, accounting and/or audit for the stock
exchange listed companies. At least one of the
members of the remuneration committee should have
knowledge of and experience in the field of
remuneration policy.
3.5. All new members of the collegial body should be
offered a tailored program focused on introducing a
member with his/her duties, corporate organization
and activities. The collegial body should conduct an
annual review to identify fields where its members
YES
YES/NO
Individual program is not foreseen, because it is not
required by any laws.
need to update their skills and knowledge.
3.6. In order to ensure that all material conflicts of
interest related with a member of the collegial body
are resolved properly, the collegial body should
comprise a sufficient number of independent
YES The Supervisory Council of Company consists of 3
members, the two of who is independent.
members.
7. A member of the collegial body should be
considered to be independent only if he is free of any
business, family or other relationship with the
company, its controlling shareholder or the
management of either, that creates a conflict of
interest such as to impair his judgment. Since all cases
when member of the collegial body is likely to
become dependant are impossible to list, moreover,
relationships and circumstances associated with the
determination of independence may vary amongst
companies and the best practices of solving this
problem are yet to evolve in the course of time,
assessment of independence of a member of the
collegial body should be based on the contents of the
relationship and circumstances rather than their form.
The key criteria for identifying whether a member of
the collegial body can be considered to be
independent are the following:
YES Independent members of the company's Supervisory Council
meet these independence criteria.
1)
He/she is not an executive director or
member of the board (if a collegial body elected by
the general shareholders' meeting is the supervisory
board) of the company or any associated company and
has not been such during the last five years;
2)
He/she is not an employee of the company or
some any company and has not been such during the
last three years, except for cases when a member of
the collegial body does not belong to the senior
management and was elected to the collegial body as
a representative of the employees;
3)
He/she is not receiving or has been not
receiving significant additional remuneration from the
company or associated company other than
remuneration for the office in the collegial body. Such
additional remuneration includes participation in share
options or some other performance based pay
systems; it does not include compensation payments
for the previous office in the company (provided that
such payment is no way related with later position) as
per pension plans (inclusive of deferred
compensations);
4)
He/she is not a controlling shareholder or
representative of such shareholder (control as defined
in the Council Directive 83/349/EEC Article 1 Part 1);
5)
He/she does not have and did not have any
material business relations with the company or
associated company within the past year directly or as
a partner, shareholder, director or superior employee
of the subject having such relationship. A subject is
considered to have business relations when it is a
major supplier or service provider (inclusive of
financial, legal, counseling and consulting services),
major client or organization receiving significant
payments from the company or its group;
6)
He/she is not and has not been, during the
last three years, partner or employee of the current or
former external audit company of the company or
associated company;
7)
He/she is not an executive director or
member of the board in some other company where
executive director of the company or member of the
board (if a collegial body elected by the general
shareholders' meeting is the supervisory board) is
non-executive director or member of the supervisory
board, he/she may not also have any other material
relationships with executive directors of the company
that arise from their participation in activities of other
companies or bodies;
8)
He/she has not been in the position of a
member of the collegial body for over than 12 years;
9)
He/she is not a close relative to an executive
director or member of the board (if a collegial body
elected by the general shareholders' meeting is the
supervisory board) or to any person listed in above
items 1 to 8. Close relative is considered to be a
spouse (common-law spouse), children and parents.
3.8. The determination of what constitutes NO The Company has not defined the concept of
independence is fundamentally an issue for the
collegial body itself to determine. The collegial body
may decide that, despite a particular member meets all
the criteria of independence laid down in this Code, he
cannot be considered independent due to special
personal or company-related circumstances.
independence
3.9. Necessary information on conclusions the NO The Company has not applied so far the practice of
collegial body has come to in its determination of
whether a particular member of the body should be
considered to be independent should be disclosed.
When a person is nominated to become a member of
the collegial body, the company should disclose
whether it considers the person to be independent.
When a particular member of the collegial body does
not meet one or more criteria of independence set out
in this Code, the company should disclose its reasons
for nevertheless considering the member to be
independent. In addition, the company should
annually disclose which members of the collegial
body it considers to be independent.
evaluation and announcement of independence of the
members of the Supervisory Council.
3.10. When one or more criteria of independence set
out in this Code has not been met throughout the year,
the company should disclose its reasons for
considering a particular member of the collegial body
to be independent. To ensure accuracy of the
information disclosed in relation with the
independence of the members of the collegial body,
the company should require independent members to
have their independence periodically re-confirmed.
NO The Company has not applied so far the practice of
evaluation and announcement of independence of the
members of the Supervisory Council.
3.11. In order to remunerate members of a collegial
body for their work and participation in the meetings
of the collegial body, they may be remunerated from
the company's funds. The general shareholders'
meeting should approve the amount of such
remuneration.
Not
applicable
Company is not remunerates the members of Board.

Principle IV: The duties and liabilities of a collegial body elected by the general shareholders' meeting

The corporate governance framework should ensure proper and effective functioning of the collegial body elected by the general shareholders' meeting, and the powers granted to the collegial body should ensure effective monitoring of the company's management bodies and protection of interests of all the company's shareholders.

4.1. The collegial body elected by the general YES The Supervisory Council makes recommendations to the
shareholders' meeting (hereinafter in this Principle managing bodies of the Company and monitors their
referred to as the 'collegial body') should ensure activities.
integrity and transparency of the company's financial
statements and the control system. The collegial body
should issue recommendations to the company's
management bodies and monitor and control the
company's management performance.
4.2. Members of the collegial body should act in good YES To the best knowledge of the Company, all members of
faith, with care and responsibility for the benefit and the Supervisory Council act in a good will in respect of
in the interests of the company and its shareholders the Company, comply with the interests of the Company
with due regard to the interests of employees and (not those of third parties) and takes efforts to maintain
public welfare. Independent members of the collegial independence in decision making.
body should (a) under all circumstances maintain
independence of their analysis, decision-making and
actions (b) do not seek and accept any unjustified
privileges that might compromise their independence,
and (c) clearly express their objections should a
member consider that decision of the collegial body is
against the interests of the company. Should a
collegial body have passed decisions independent
member has serious doubts about, the member should
make adequate conclusions. Should an independent
member resign from his office, he should explain the
reasons in a letter addressed to the collegial body or
audit committee and, if necessary, respective
company-not-pertaining body (institution).
4.3. Each member should devote sufficient time and YES Members of the collegial body properly perform the
attention to perform his duties as a member of the functions delegated to them: actively participate at the
collegial body. Each member of the collegial body sitting of the collegial body and devote sufficient time
should limit other professional obligations of his (in for the performance of their duties as the members of
particular any directorships held in other companies) the collegial body.
in such a manner they do not interfere with proper
performance of duties of a member of the collegial
body. In the event a member of the collegial body
should be present in less than a half of the meetings of
the collegial body throughout the financial year of the
company, shareholders of the company should be
notified.
4.4. Where decisions of a collegial body may have a YES The members of the collegial body of the Company
different effect on the company's shareholders, the follow legislative principles governing communication
collegial body should treat all shareholders impartially to the shareholders and make key information on the
and fairly. It should ensure that shareholders are activity of the Company available at the Company's
properly informed on the company's affairs, website at www.linas.lt, as well as in reports of
strategies, risk management and resolution of conflicts NASDAQ OMX Vilnius.
of interest. The company should have a clearly
established role of members of the collegial body
when communicating with and committing to
shareholders.
4.5. It is recommended that transactions (except YES
insignificant ones due to their low value or concluded
when carrying out routine operations in the company
under usual conditions), concluded between the
company and its shareholders, members of the
supervisory or managing bodies or other natural or
legal persons that exert or may exert influence on the
company's management should be subject to approval
of the collegial body. The decision concerning
approval of such transactions should be deemed
adopted only provided the majority of the independent
members of the collegial body voted for such a
decision.
4.6. The collegial body should be independent in YES The collegial body is independent in making decision
passing decisions that are significant for the important for the activities and strategy of the Company.
company's operations and strategy. Taken separately, Also, there are no restrictions for the collegial body to
the collegial body should be independent of the receive information of the Company's employees.
company's management bodies. Members of the
collegial body should act and pass decisions without
an outside influence from the persons who have
elected it. Companies should ensure that the collegial
body and its committees are provided with sufficient
administrative and financial resources to discharge
their duties, including the right to obtain, in particular
from employees of the company, all the necessary
information or to seek independent legal, accounting
or any other advice on issues pertaining to the
competence of the collegial body and its committees.
When using the services of a consultant with a view to
obtaining information on market standards for
remuneration systems, the remuneration committee
should ensure that the consultant concerned does not
at the same time advice the human resources
department, executive directors or collegial
management organs of the company concerned.
4.7. Activities of the collegial body should be YES/NO An Audit committee is formed in the Company and is
organized in a manner that independent members of responsible for issues related to the company's audit
the collegial body could have major influence in control and evaluation and is not responsible for issues
relevant areas where chances of occurrence of related to the company's directors and the nomination of
conflicts of interest are very high. Such areas to be director's remuneration determination. The functions of
considered as highly relevant are issues of nomination the recommended nomination and remuneration
of company's directors, determination of directors' committees are transferred to the Board of the
remuneration and control and assessment of Company.
company's audit. Therefore when the mentioned
issues are attributable to the competence of the
collegial body, it is recommended that the collegial
body should establish nomination, remuneration, and
audit committees. Companies should ensure that the
functions attributable to the nomination,
remuneration, and audit committees are carried out.
However they may decide to merge these functions
and set up less than three committees. In such case a
company should explain in detail reasons behind the
selection of alternative approach and how the selected
approach complies with the objectives set forth for the
three different committees. Should the collegial body
of the company comprise small number of members,
the functions assigned to the three committees may be
performed by the collegial body itself, provided that it
meets composition requirements advocated for the
committees and that adequate information is provided
in this respect. In such case provisions of this Code
relating to the committees of the collegial body (in
particular with respect to their role, operation, and
transparency) should apply, where relevant, to the
collegial body as a whole.
4.8. The key objective of the committees is to increase YES/NO Nomination and remuneration committees are not
efficiency of the activities of the collegial body by formed in the company. The execution of the mentioned
ensuring that decisions are based on due committees functions are discussed in comment 4.7. The
consideration, and to help organize its work with a audit committee is formed in the company.
view to ensuring that the decisions it takes are free of
material conflicts of interest. Committees should
exercise independent judgement and integrity when
exercising its functions as well as present the collegial
body with recommendations concerning the decisions
of the collegial body. Nevertheless the final decision
shall be adopted by the collegial body. The
recommendation on creation of committees is not
intended, in principle, to constrict the competence of
the collegial body or to remove the matters considered
from the purview of the collegial body itself, which
remains fully responsible for the decisions taken in its
field of competence.
4.9. Committees established by the collegial body
should normally be composed of at least three
members. In companies with small number of
members of the collegial body, they could
exceptionally be composed of two members. Majority
of the members of each committee should be
constituted from independent members of the collegial
body. In cases when the company chooses not to set
up a supervisory board, remuneration and audit
committees should be entirely comprised of non
executive directors. Chairmanship and membership of
the committees should be decided with due regard to
the need to ensure that committee membership is
refreshed and that undue reliance is not placed on
particular individuals. Chairmanship and membership
of the committees should be decided with due regard
to the need to ensure that committee membership is
refreshed and that undue reliance is not placed on
particular individuals.
YES/NO Nomination and remuneration committees are not
formed in the company. The execution of the mentioned
committees functions are discussed in comment 4.7.
Audit committee is formed from 3 members, the 2 of
who is independent.
4.10. Authority of each of the committees should be
determined by the collegial body. Committees should
perform their duties in line with authority delegated to
them and inform the collegial body on their activities
and performance on regular basis. Authority of every
committee stipulating the role and rights and duties of
the committee should be made public at least once a
year (as part of the information disclosed by the
company annually on its corporate governance
structures and practices). Companies should also
make public annually a statement by existing
committees on their composition, number of meetings
and attendance over the year, and their main activities.
Audit committee should confirm that it is satisfied
with the independence of the audit process and
describe briefly the actions it has taken to reach this
conclusion.
YES/NO Nomination and remuneration committees are not
formed in the company. The execution of the mentioned
committees functions are discussed in comment 4.7. The
General Meeting of Shareholders has established the
authority of the Audit Committee in the Audit
Committee's approved regulations.
4.11. In order to ensure independence and impartiality
of the committees, members of the collegial body that
are not members of the committee should commonly
have a right to participate in the meetings of the
committee only if invited by the committee. A
committee may invite or demand participation in the
meeting of particular officers or experts. Chairman of
each of the committees should have a possibility to
maintain direct communication with the shareholders.
Events when such are to be performed should be
specified in the regulations for committee activities.
YES/NO Nomination and salaries committees are not formed in
the company. The execution of the mentioned
committees functions are discussed in comment 4.7. The
audit committee is formed in the company.
4.12. Nomination Committee.
4.12.1. Key functions of the nomination committee
should be the following:
• Identify and recommend, for the approval of the
collegial body, candidates to fill board vacancies. The
nomination committee should evaluate the balance of
skills, knowledge and experience on the management
body, prepare a description of the roles and
capabilities required to assume a particular office, and
assess the time commitment expected. Nomination
committee can also consider candidates to members of
the collegial body delegated by the shareholders of the
company;
• Assess on regular basis the structure, size,
composition and performance of the supervisory and
management bodies, and make recommendations to
the collegial body regarding the means of achieving
NO Nomination and salaries committees are not formed in
the company. The execution of the mentioned
committees functions are discussed in comment 4.7.
necessary changes;
• Assess on regular basis the skills, knowledge and
experience of individual directors and report on this to
the collegial body;
• Properly consider issues related to succession
planning;
• Review the policy of the management bodies for
selection and appointment of senior management.
4.12.2. Nomination committee should consider
proposals by other parties, including management and
shareholders. When dealing with issues related to
executive directors or members of the board (if a
collegial body elected by the general shareholders'
meeting is the supervisory board) and senior
management, chief executive officer of the company
should be consulted by, and entitled to submit
proposals to the nomination committee.
4.13. Remuneration Committee. NO Nomination and salaries committees are not formed in
4.13.1. Key functions of the remuneration committee the company. The execution of the mentioned
should be the following: committees functions are discussed in comment 4.7.
• Make proposals, for the approval of the collegial
body, on the remuneration policy for members of
management bodies and executive directors. Such
policy should address all forms of compensation,
including the fixed remuneration, performance-based
remuneration schemes, pension arrangements, and
termination payments. Proposals considering
performance-based remuneration schemes should be
accompanied with recommendations on the related
objectives and evaluation criteria, with a view to
properly aligning the pay of executive director and
members of the management bodies with the long
term interests of the shareholders and the objectives
set by the collegial body;
• Make proposals to the collegial body on the
individual remuneration for executive directors and
member of management bodies in order their
remunerations are consistent with company's
remuneration policy and the evaluation of the
performance of these persons concerned. In doing so,
the committee should be properly informed on the
total compensation obtained by executive directors
and members of the management bodies from the
affiliated companies;
• Ensure that remuneration of individual executive
directors or members of management body is
proportionate to the remuneration of other executive
directors or members of management body and other
staff members of the company;
• Periodically review the remuneration policy for
executive directors or members of management body,
including the policy regarding share-based
remuneration, and its implementation;
• Make proposals to the collegial body on suitable
forms of contracts for executive directors and
members of the management bodies;
• Assist the collegial body in overseeing how the
company complies with applicable provisions
regarding the remuneration-related information
disclosure (in particular the remuneration policy
applied and individual remuneration of directors);
• Make general recommendations to the executive
directors and members of the management bodies on
the level and structure of remuneration for senior
management (as defined by the collegial body) with
regard to the respective information provided by the
executive directors and members of the management
bodies.
4.13.2. With respect to stock options and other share
based incentives which may be granted to directors or
other employees, the committee should:
• Consider general policy regarding the granting of the
above mentioned schemes, in particular stock options,
and make any related proposals to the collegial body;
• Examine the related information that is given in the
company's annual report and documents intended for
the use during the shareholders meeting;
• Make proposals to the collegial body regarding the
choice between granting options to subscribe shares or
granting options to purchase shares, specifying the
reasons for its choice as well as the consequences that
this choice has.
4.13.3. Upon resolution of the issues attributable to
the competence of the remuneration committee, the
committee should at least address the chairman of the
collegial body and/or chief executive officer of the
company for their opinion on the remuneration of
other executive directors or members of the
management bodies.
4.13.4. The remuneration committee should report on
the exercise of its functions to the shareholders and be
present at the annual general meeting for this purpose.
4.14. Audit Committee. YES The Company has formed an audit committee whose
main functions are in line with these recommendations.
4.14.1. Key functions of the audit committee should
be the following:
• Observe the integrity of the financial information
provided by the company, in particular by reviewing
the relevance and consistency of the accounting
methods used by the company and its group
(including the criteria for the consolidation of the
accounts of companies in the group);
• At least once a year review the systems of internal
control and risk management to ensure that the key
risks (inclusive of the risks in relation with
compliance with existing laws and regulations) are
properly identified, managed and reflected in the
information provided;
• Ensure the efficiency of the internal audit function,
among other things, by making recommendations on
the selection, appointment, reappointment and
removal of the head of the internal audit department
and on the budget of the department, and by
monitoring the responsiveness of the management to
its findings and recommendations. Should there be no
internal audit authority in the company, the need for
one should be reviewed at least annually;
• Make recommendations to the collegial body related
with selection, appointment, reappointment and
removal of the external auditor (to be done by the
general shareholders' meeting) and with the terms and
conditions of his engagement. The committee should
investigate situations that lead to a resignation of the
audit company or auditor and make recommendations
on required actions in such situations;
• Monitor independence and impartiality of the

external auditor, in particular by reviewing the audit company's compliance with applicable guidance relating to the rotation of audit partners, the level of fees paid by the company, and similar issues. In order to prevent occurrence of material conflicts of interest, the committee, based on the auditor's disclosed inter alia data on all remunerations paid by the company to the auditor and network, should at all times monitor nature and extent of the non-audit services. Having regard to the principals and guidelines established in the 16 May 2002 Commission Recommendation 2002/590/EC, the committee should determine and apply a formal policy establishing types of non-audit services that are (a) excluded, (b) permissible only after review by the committee, and (c) permissible without referral to the committee;

• Review efficiency of the external audit process and responsiveness of management to recommendations made in the external auditor's management letter.

4.14.2. All members of the committee should be furnished with complete information on particulars of accounting, financial and other operations of the company. Company's management should inform the audit committee of the methods used to account for significant and unusual transactions where the accounting treatment may be open to different approaches. In such case a special consideration should be given to company's operations in offshore centers and/or activities carried out through special purpose vehicles (organizations) and justification of such operations.

4.14.3. The audit committee should decide whether participation of the chairman of the collegial body, chief executive officer of the company, chief financial officer (or superior employees in charge of finances, treasury and accounting), or internal and external auditors in the meetings of the committee is required (if required, when). The committee should be entitled, when needed, to meet with any relevant person without executive directors and members of the management bodies present.

4.14.4. Internal and external auditors should be secured with not only effective working relationship with management, but also with free access to the collegial body. For this purpose the audit committee should act as the principal contact person for the internal and external auditors.

4.14.5. The audit committee should be informed of the internal auditor's work program, and should be furnished with internal audit's reports or periodic summaries. The audit committee should also be informed of the work program of the external auditor and should be furnished with report disclosing all relationships between the independent auditor and the company and its group. The committee should be timely furnished information on all issues arising from the audit.

4.14.6. The audit committee should examine whether the company is following applicable provisions regarding the possibility for employees to report

alleged significant irregularities in the company, by
way of complaints or through anonymous submissions
(normally to an independent member of the collegial
body), and should ensure that there is a procedure
established for proportionate and independent
investigation of these issues and for appropriate
follow-up action.
4.14.7. The audit committee should report on its
activities to the collegial body at least once in every
six months, at the time the yearly and half-yearly
statements are approved.
4.15. Every year the collegial body should conduct the
assessment of its activities. The assessment should
include evaluation of collegial body's structure, work
organization and ability to act as a group, evaluation
of each of the collegial body member's and
committee's competence and work efficiency and
assessment whether the collegial body has achieved
its objectives. The collegial body should, at least once
a year, make public (as part of the information the
company annually discloses on its management
structures and practices) respective information on its
internal organization and working procedures, and
specify what material changes were made as a result
of the assessment of the collegial body of its own
activities.
NO Such practice has not been applied in the Company.

Principle V: The working procedure of the company's collegial bodies

The working procedure of supervisory and management bodies established in the company should ensure efficient operation of these bodies and decision-making and encourage active co-operation between the company's bodies.

5.1. The company's supervisory and management YES
bodies (hereinafter in this Principle the concept
'collegial bodies' covers both the collegial bodies of
supervision and the collegial bodies of management)
should be chaired by chairpersons of these bodies.
The chairperson of a collegial body is responsible for
proper convocation of the collegial body meetings.
The chairperson should ensure that information about
the meeting being convened and its agenda are
communicated to all members of the body. The
chairperson of a collegial body should ensure
appropriate conducting of the meetings of the
collegial body. The chairperson should ensure order
and working atmosphere during the meeting.
5.2. It is recommended that meetings of the YES Meetings of the collegial bodies of the Company are
company's collegial bodies should be carried out held at such intervals as are necessary to ensure
according to the schedule approved in advance at uninterrupted tackling of essential issues relating to the
certain intervals of time. Each company is free to management and supervisory of activity of the
decide how often to convene meetings of the collegial Company.
bodies, but it is recommended that these meetings
should be convened at such intervals, which would
guarantee an interrupted resolution of the essential
corporate governance issues. Meetings of the
company's supervisory board should be convened at
least once in a quarter, and the company's board
should meet at least once a month.
5.3. Members of a collegial body should be notified YES
about the meeting being convened in advance in order
to allow sufficient time for proper preparation for the
issues on the agenda of the meeting and to ensure
fruitful discussion and adoption of appropriate
decisions. Alongside with the notice about the
meeting being convened, all the documents relevant to
the issues on the agenda of the meeting should be
submitted to the members of the collegial body. The
agenda of the meeting should not be changed or
supplemented during the meeting, unless all members
of the collegial body are present or certain issues of
great importance to the company require immediate
resolution.
5.4. In order to co-ordinate operation of the YES
company's collegial bodies and ensure effective
decision-making process, chairpersons of the
company's collegial bodies of supervision and
management should closely co-operate by co
coordinating dates of the meetings, their agendas and
resolving other issues of corporate governance.
Members of the company's board should be free to
attend meetings of the company's supervisory board,
especially where issues concerning removal of the
board members, their liability or remuneration are
discussed.

Principle VI: The equitable treatment of shareholders and shareholder rights

The corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. The corporate governance framework should protect the rights of the shareholders.

6.1. It is recommended that the company's capital
should consist only of the shares that grant the same
rights to voting, ownership, dividend and other rights
YES
to all their holders.
6.2. It is recommended that investors should have YES
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.
6.3. Transactions that are important to the company
and its shareholders, such as transfer, investment, and
pledge of the company's assets or any other type of
encumbrance should be subject to approval of the
general shareholders' meeting. All shareholders
should be furnished with equal opportunity to
familiarize with and participate in the decision
making process when significant corporate issues,
including approval of transactions referred to above,
are discussed.
YES/NO Shareholders of the company presented the right to the
Board to solve regarding company's property transfer,
investment, mortgage or other difficulty.
6.4. Procedures of convening and conducting a
general shareholders' meeting should ensure equal
opportunities for the shareholders to effectively
participate at the meetings and should not prejudice
the rights and interests of the shareholders. The venue,
date, and time of the shareholders' meeting should not
hinder wide attendance of the shareholders.
YES
6.5. If is possible, in order to ensure shareholders YES All information for the shareholders is announced acting
living abroad the right to access to the information, it acc.to AB Law and company's regulations.
is recommended that documents on the course of the
general shareholders' meeting should be placed on the
publicly accessible website of the company not only
in Lithuanian language, but in English and /or other
foreign languages in advance. It is recommended that
the minutes of the general shareholders' meeting after
signing them and/or adopted resolutions should be
also placed on the publicly accessible website of the
company. Seeking to ensure the right of foreigners to
familiarize with the information, whenever feasible,
documents referred to in this recommendation should
be published in Lithuanian, English and/or other
foreign languages. Documents referred to in this
recommendation may be published on the publicly
accessible website of the company to the extent that
publishing of these documents is not detrimental to
the company or the company's commercial secrets are
not revealed.
6.6. Shareholders should be furnished with the YES
opportunity to vote in the general shareholders'
meeting in person and in absentia. Shareholders
should not be prevented from voting in writing in
advance by completing the general voting ballot.
6.7. With a view to increasing the shareholders' NO Shareholders did not present the requests to use modern
opportunities to participate effectively at technologies during the voting.
shareholders' meetings, the companies are
recommended to expand use of modern technologies
by allowing the shareholders to participate and vote in
general meetings via electronic means of
communication. In such cases security of transmitted
information and a possibility to identify the identity of
the participating and voting person should be
guaranteed. Moreover, companies could furnish its
shareholders, especially shareholders living abroad,
with the opportunity to watch shareholder meetings by
means of modern technologies.

Principle VII: The avoidance of conflicts of interest and their disclosure

The corporate governance framework should encourage members of the corporate bodies to avoid conflicts of interest and assure transparent and effective mechanism of disclosure of conflicts of interest regarding members of the corporate bodies.

7.1. Any member of the company's supervisory and YES
management body should avoid a situation, in which
his/her personal interests are in conflict or may be in
conflict with the company's interests. In case such a
situation did occur, a member of the company's
supervisory and management body should, within
reasonable time, inform other members of the same
collegial body or the company's body that has elected
him/her, or to the company's shareholders about a
situation of a conflict of interest, indicate the nature of
the conflict and value, where possible.
7.2. Any member of the company's supervisory and YES
management body may not mix the company's assets,
the use of which has not been mutually agreed upon,
with his/her personal assets or use them or the
information which he/she learns by virtue of his/her
position as a member of a corporate body for his/her
personal benefit or for the benefit of any third person
without a prior agreement of the general shareholders'
meeting or any other corporate body authorized by the
meeting.
7.3. Any member of the company's supervisory and YES
management body may conclude a transaction with
the company, a member of a corporate body of which
he/she is. Such a transaction (except insignificant ones
due to their low value or concluded when carrying out
routine operations in the company under usual
conditions) must be immediately reported in writing
or orally, by recording this in the minutes of the
meeting, to other members of the same corporate body
or to the corporate body that has elected him/her or to
the company's shareholders. Transactions specified in
this recommendation are also subject to
recommendation 4.5.
7.4. Any member of the company's supervisory and YES
management body should abstain from voting when
decisions concerning transactions or other issues of
personal or business interest are voted on.

Principle VIII: Company's remuneration policy

Remuneration policy and procedure for approval, revision and disclosure of directors' remuneration established in the company should prevent potential conflicts of interest and abuse in determining remuneration of directors, in addition it should ensure publicity and transparency both of company's remuneration policy and remuneration of directors.

8.1. A company should make a public statement of the
company's remuneration policy (hereinafter the
remuneration statement) which should be clear and
easily understandable. This remuneration statement
should be published as a part of the company's annual
statement as well as posted on the company's website.
NO The company, acc.to the order indicated by the law,
announces in the periodical statements only the total
salary sum of the company's head and board. The
company keeps to the principle that payments related to
job is not public announced and confidential
information.
8.2. Remuneration statement should mainly focus on
directors' remuneration policy for the following year
and, if appropriate, the subsequent years. The
statement should contain a summary of the
implementation of the remuneration policy in the
previous financial year. Special attention should be
given to any significant changes in company's
remuneration policy as compared to the previous
financial year.
Not
applicable
See comment 8.1.
8.3. Remuneration statement should leastwise include Not See comment 8.1.
the following information: applicable
• Explanation of the relative importance of the
variable and non-variable components of directors'
remuneration;
• Sufficient information on performance criteria that
entitles directors to share options, shares or variable
components of remuneration;
• An explanation how the choice of performance
criteria contributes to the long-term interests of the
company;
• An explanation of the methods, applied in order to
determine whether performance criteria have been
fulfilled;
• Sufficient information on deferment periods with
regard to variable components of remuneration;
• Sufficient information on the linkage between the
remuneration and performance;
• The main parameters and rationale for any annual
bonus scheme and any other non-cash benefits;
• Sufficient information on the policy regarding
termination payments;
• Sufficient information with regard to vesting periods
for share-based remuneration, as referred to in point
8.13 of this Code;
• Sufficient information on the policy regarding
retention of shares after vesting, as referred to in point
8.15 of this Code;
• Sufficient information on the composition of peer
groups of companies the remuneration policy of
which has been examined in relation to the
establishment of the remuneration policy of the
company concerned;
• A description of the main characteristics of
supplementary pension or early retirement schemes
for directors;
• Remuneration statement should not include
commercially sensitive information.
8.4. Remuneration statement should also summarize Not See comment 8.1.
and explain company's policy regarding the terms of applicable
the contracts executed with executive directors and
members of the management bodies. It should
include, inter alia, information on the duration of
contracts with executive directors and members of the
management bodies, the applicable notice periods and
details of provisions for termination payments linked
to early termination under contracts for executive
directors and members of the management bodies.
8.5. Remuneration statement should also contain Not See comment 8.1.
detailed information on the entire amount of applicable
remuneration, inclusive of other benefits, that was
paid to individual directors over the relevant financial
year. This document should list at least the
information set out in items 8.5.1 to 8.5.4 for each
person who has served as a director of the company at
any time during the relevant financial year.
8.5.1. The following remuneration and/or
emoluments-related information should be disclosed:
• The total amount of remuneration paid or due to the
director for services performed during the relevant
financial year, inclusive of, where relevant, attendance
fees fixed by the annual general shareholders meeting;
• The remuneration and advantages received from any
undertaking belonging to the same group;
• The remuneration paid in the form of profit sharing
and/or bonus payments and the reasons why such
bonus payments and/or profit sharing were granted;
• If permissible by the law, any significant additional
remuneration paid to directors for special services
outside the scope of the usual functions of a director;
• Compensation receivable or paid to each former
executive director or member of the management
body as a result of his resignation from the office
during the previous financial year;
• Total estimated value of non-cash benefits
considered as remuneration, other than the items
covered in the above points.
8.5.2. As regards shares and/or rights to acquire share
options and/or all other share-incentive schemes, the
following information should be disclosed:
• The number of share options offered or shares
granted by the company during the relevant financial
year and their conditions of application;
• The number of shares options exercised during the
relevant financial year and, for each of them, the
number of shares involved and the exercise price or
the value of the interest in the share incentive scheme
at the end of the financial year;
• The number of share options unexercised at the end
of the financial year; their exercise price, the exercise
date and the main conditions for the exercise of the
rights;
• All changes in the terms and conditions of existing
share options occurring during the financial year.
8.5.3. The following supplementary pension schemes
related information should be disclosed:
• When the pension scheme is a defined-benefit
scheme, changes in the directors' accrued benefits
under that scheme during the relevant financial year;
• When the pension scheme is defined-contribution
scheme, detailed information on contributions paid or
payable by the company in respect of that director
during the relevant financial year.
8.5.4. The statement should also state amounts that the
company or any subsidiary company or entity
included in the consolidated annual financial report of
the company has paid to each person who has served
as a director in the company at any time during the
relevant financial year in the form of loans, advance
payments or guarantees, including the amount
outstanding and the interest rate.
components of remuneration, companies should set
applicable
limits on the variable component(s). The non-variable
component of remuneration should be sufficient to
allow the company to withhold variable components
of remuneration when performance criteria are not
met.
8.7. Award of variable components of remuneration
Not
See comment 8.1.
should be subject to predetermined and measurable
applicable
performance criteria.
8.8. Where a variable component of remuneration is
Not
See comment 8.1.
awarded, a major part of the variable component
applicable
should be deferred for a minimum period of time. The
part of the variable component subject to deferment
should be determined in relation to the relative weight
of the variable component compared to the non
variable component of remuneration.
8.9. Contractual arrangements with executive or
Not
See comment 8.1.
managing directors should include provisions that
applicable
permit the company to reclaim variable components
of remuneration that were awarded on the basis of
data which subsequently proved to be manifestly
misstated.
8.10. Termination payments should not exceed a fixed
Not
See comment 8.1.
amount or fixed number of years of annual
applicable
remuneration, which should, in general, not be higher
than two years of the non-variable component of
remuneration or the equivalent thereof.
8.11. Termination payments should not be paid if the
Not
See comment 8.1.
termination is due to inadequate performance.
applicable
8.12. The information on preparatory and decision
Not
See comment 8.1.
making processes, during which a policy of
applicable
remuneration of directors is being established, should
also be disclosed. Information should include data, if
applicable, on authorities and composition of the
remuneration committee, names and surnames of
external consultants whose services have been used in
determination of the remuneration policy as well as
the role of shareholders' annual general meeting.
8.13. Shares should not vest for at least three years
Not
See comment 8.1.
after their award.
applicable
8.14. Share options or any other right to acquire
Not
See comment 8.1.
shares or to be remunerated on the basis of share price
applicable
movements should not be exercisable for at least three
years after their award. Vesting of shares and the right
to exercise share options or any other right to acquire
shares or to be remunerated on the basis of share price
movements, should be subject to predetermined and
measurable performance criteria.
8.15. After vesting, directors should retain a number
Not
See comment 8.1.
of shares, until the end of their mandate, subject to the
applicable
need to finance any costs related to acquisition of the
shares. The number of shares to be retained should be
fixed, for example, twice the value of total annual
remuneration (the non-variable plus the variable
components).
8.16. Remuneration of non
-executive or supervisory
Not
See comment 8.1.
directors should not include share options.
applicable
8.17. Shareholders, in particular institutional
Not
See comment 8.1.
shareholders, should be encouraged to attend general
applicable
meetings where appropriate and make considered use
of their votes regarding directors' remuneration.
8.6. Where the remuneration policy includes variable Not See comment 8.1.
8.18. Without prejudice to the role and organization of
the relevant bodies responsible for setting directors'
remunerations, the remuneration policy or any other
significant change in remuneration policy should be
included into the agenda of the shareholders' annual
general meeting. Remuneration statement should be
put for voting in shareholders' annual general
meeting. The vote may be either mandatory or
advisory.
Not
applicable
See comment 8.1.
8.19. Schemes anticipating remuneration of directors
in shares, share options or any other right to purchase
shares or be remunerated on the basis of share price
movements should be subject to the prior approval of
shareholders' annual general meeting by way of a
resolution prior to their adoption. The approval of
scheme should be related with the scheme itself and
not to the grant of such share-based benefits under
that scheme to individual directors. All significant
changes in scheme provisions should also be subject
to shareholders' approval prior to their adoption; the
approval decision should be made in shareholders'
annual general meeting. In such case shareholders
should be notified on all terms of suggested changes
and get an explanation on the impact of the suggested
changes.
Not
applicable
Such schemes are not applied in the company.
8.20. The following issues should be subject to
approval by the shareholders' annual general meeting:
• Grant of share-based schemes, including share
options, to directors;
• Determination of maximum number of shares and
main conditions of share granting;
• The term within which options can be exercised;
• The conditions for any subsequent change in the
exercise of the options, if permissible by law;
• All other long-term incentive schemes for which
directors are eligible and which are not available to
other employees of the company under similar terms.
Annual general meeting should also set the deadline
within which the body responsible for remuneration of
directors may award compensations listed in this
article to individual directors.
Not
applicable
Such schemes are not applied in the company.
8.21. Should national law or company's Articles of
Association allow, any discounted option arrangement
under which any rights are granted to subscribe to
shares at a price lower than the market value of the
share prevailing on the day of the price determination,
or the average of the market values over a number of
days preceding the date when the exercise price is
determined, should also be subject to the
shareholders' approval.
Not
applicable
Such schemes are not applied in the company.
8.22. Provisions of Articles 8.19 and 8.20 should not
be applicable to schemes allowing for participation
under similar conditions to company's employees or
employees of any subsidiary company whose
employees are eligible to participate in the scheme
and which has been approved in the shareholders'
annual general meeting.
Not
applicable
Such schemes are not applied in the company.
8.23. Prior to the annual general meeting that is Not Such schemes are not applied in the company.
intended to consider decision stipulated in Article applicable
8.19, the shareholders must be provided an
opportunity to familiarize with draft resolution and
project-related notice (the documents should be posted
on the company's website). The notice should contain
the full text of the share-based remuneration schemes
or a description of their key terms, as well as full
names of the participants in the schemes. Notice
should also specify the relationship of the schemes
and the overall remuneration policy of the directors.
Draft resolution must have a clear reference to the
scheme itself or to the summary of its key terms.
Shareholders must also be presented with information
on how the company intends to provide for the shares
required to meet its obligations under incentive
schemes. It should be clearly stated whether the
company intends to buy shares in the market, hold the
shares in reserve or issue new ones. There should also
be a summary on scheme-related expenses the
company will suffer due to the anticipated application
of the scheme. All information given in this article
must be posted on the company's website.

Principle IX: The role of stakeholders in corporate governance

The corporate governance framework should recognize the rights of stakeholders as established by law and encourage active cooperation between companies and stakeholders in creating the company value, jobs and financial sustainability. For the purposes of this Principle, the concept "stakeholders" includes investors, employees, creditors, suppliers, clients, local community and other persons having certain interest in the company concerned.

9.1. The corporate governance framework should YES
assure that the rights of stakeholders that are protected
by law are respected.
9.2. The corporate governance framework should YES
create conditions for the stakeholders to participate in
corporate governance in the manner prescribed by
law. Examples of mechanisms of stakeholder
participation in corporate governance include:
employee participation in adoption of certain key
decisions for the company; consulting the employees
on corporate governance and other important issues;
employee participation in the company's share capital;
creditor involvement in governance in the context of
the company's insolvency, etc.
9.3. Where stakeholders participate in the corporate YES It is requested to sign confidential contract in order to be
governance process, they should have access to able to get acquainted with proper information.
relevant information.

Principle X: Information disclosure and transparency

The corporate governance framework should ensure that timely and accurate disclosure is made on all material information regarding the company, including the financial situation, performance and governance of the company.

10.1. The company should disclose information on:
• The financial and operating results of the company;
• Company objectives;
• Persons holding by the right of ownership or in
control of a block of shares in the company;
• Members of the company's supervisory and
management bodies, chief executive officer of the
company and their remuneration;
YES/NO Company discloses the information which is not confidential.
Company keeps to the principle that the payments related to
job are not public announced and confidential information and
it is impossible to announce some information without the
allowance of persons.
• Material foreseeable risk factors;
• Transactions between the company and connected
persons, as well as transactions concluded outside the
course of the company's regular operations;
• Material issues regarding employees and other
stakeholders;
• Governance structures and strategy.
This list should be deemed as a minimum
recommendation, while the companies are encouraged
not to limit themselves to disclosure of the
information specified in this list.
10.2. It is recommended that consolidated results of YES
the whole group to which the company belongs
should be disclosed when information specified in
item 1 of Recommendation 10.1 is under disclosure.
10.3. It is recommended that information on the YES/NO See comment 10.1.
professional background, qualifications of the
members of supervisory and management bodies,
chief executive officer of the company should be
disclosed as well as potential conflicts of interest that
may have an effect on their decisions when
information specified in item 4 of Recommendation
10.1 about the members of the company's supervisory
and management bodies is under disclosure. It is also
recommended that information about the amount of
remuneration received from the company and other
income should be disclosed with regard to members of
the company's supervisory and management bodies
and chief executive officer as per Principle VIII.
10.4. It is recommended that information about the YES/NO See comment 10.1.
links between the company and its stakeholders,
including employees, creditors, suppliers, local
community, as well as the company's policy with
regard to human resources, employee participation
schemes in the company's share capital, etc. should be
disclosed when information specified in item 7 of
Recommendation 10.1 is under disclosure.
10.5. Information should be disclosed in such a way YES
that neither shareholders nor investors are
discriminated with regard to the manner or scope of
access to information. Information should be
disclosed to all simultaneously. It is recommended
that notices about material events should be
announced before or after a trading session on the
Vilnius Stock Exchange, so that all the company's
shareholders and investors should have equal access
to the information and make informed investing
decisions.
10.6. Channels for disseminating information should YES Information is announced in the web page of the
provide for fair, timely and cost-efficient or in cases company www.linas.lt in Lithuanian and English
provided by the legal acts free of charge access to languages.
relevant information by users. It is recommended that
information technologies should be employed for
wider dissemination of information, for instance, by
placing the information on the company's website. It
is recommended that information should be published
and placed on the company's website not only in
Lithuanian, but also in English, and, whenever
possible and necessary, in other languages as well.
10.7. It is recommended that the company's annual YES/NO In company's web page www.linas.lt it is announced:
reports and other periodical accounts prepared by the company's annual and interim reports, presentations of
company should be placed on the company's website. the activity results, audited financial reports, notices
It is recommended that the company should announce about essential events, regulations of the company.
information about material events and changes in the
price of the company's shares on the Stock Exchange
on the company's website too.

Principle XI: The selection of the company's auditor

11.1. An annual audit of the company's financial YES The Company complies with this recommendation,
reports and interim reports should be conducted by an except for audit of interim financial statement.
independent firm of auditors in order to provide an
external and objective opinion on the company's
financial statements.
11.2. It is recommended that the company's YES
supervisory board and, where it is not set up, the
company's board should propose a candidate firm of
auditors to the general shareholders' meeting.
11.3. It is recommended that the company should Not Audit company receives only the pay for presented audit
disclose to its shareholders the level of fees paid to the applicable services from the company which is know for the
firm of auditors for non-audit services rendered to the shareholders.
company. This information should be also known to
the company's supervisory board and, where it is not
formed, the company's board upon their consideration
which firm of auditors to propose for the general
shareholders' meeting.

AB LINAS CONSOLIDATED AND COMPANY'S ANNUAL FINANCIAL STATEMENTS

YEAR 2017

SUMMARY

Independent auditor's report 3
Statement of Financial Position 7
Statement of Profit or Loss and Other Comprehensive Income 9
Statement of Changes in Equity 10
Statement of Cash Flows 12
Explanatory Memorandum 13
Notes of Explanatory Memorandum 33

S. Kerbedzio 23, Panevezys of

Linas, AB CONFIRMED by Company Code 147689083 General shareholders' meeting Act No. Financial statements formation date - 21 03 2018

STATEMENT OF FINANCIAL POSITION 31/12/2017

Formulated according to TFAS

Reporting cycle 01 01 2017 - 31 12 2017 EUR
GROUP COMPANY
Previous Previous
No. ASSETS Note No. Financial financial Financial financial
year year year year
A. Long-term assets 3.522.170 3.254.560 3.302.473 3.012.977
1. Intangible assets 2.2.;4.1.;4.3. 57.420 31.173 57.420 31.173
1.1. Developmental works 0 0 0
1.2. Prestige 0 0 0
1.3. Software 57.420 31.173 57.420 31.173
1.4. Concessions, patents, licenses, brands and other rights 0 0 0
1.5. Other intangible assets 0 0 0 0
1.6. Paid advance 0 0 0 0
2. Tangible assets 2.3.;4.2.;4.3. 2.148.992 1.907.085 1.926.438 1.662.804
2.1. Land 0 0 0
2.2. Buildings and structures 1.301.100 1.395.166 1.299.840 1.393.241
2.3. Machinery and equipment 404.798 341.963 194.453 104.806
2.4. Means of transport 44.813 53.932 41.255 51.426
2.5. Other equipment, appliances and instruments 18.185 12.524 16.989 9.831
2.6. Investment property 373.901 0 373.901 0
2.6.1. Land 373.901 0 373.901 0
2.6.2. Buildings 0 0 0
2.7. Paid advance and executed tangible property building 6.195 103.500 103.500
(production) works
3. Financial assets 2.4.;4.4.;4.9. 1.315.704 1.316.049 1.318.600 1.318.945
3.1. Companies' shares of Group of companies 0 0 2.896 2.896
3.2. Loans for the companies' of Group of companies 0 0 0
3.3. Companies' receivable sums from Group of companies 0 0 0
3.4. Shares of associated companies 0 0 0
3.5. Loans for associated companies 1.281.283 1.284.099 1.281.283 1.284.099
3.6. Receivable sums from associated companies 34.131 31.581 34.131 31.581
3.7. Long-term investments 290 290 290 290
3.8. Amounts received after one year 0 79 79
3.9. Other financial assets 0 0 0
4. Other long-term assets 54 253 15 55
4.1. Deferred corporation tax assets 2.16.3.;4.24. 54 253 15 55
4.2. Biological property 0 0 0
4.3. Other assets 0 0 0
B. Short-term assets 6.817.742 7.259.916 6.822.603 7.058.108
1. Stocks 2.5.;4.5. 4.484.437 3.974.070 4.511.805 3.987.876
1.1. Raw materials, materials and spare parts 2.582.300 2.292.200 2.570.702 2.286.611
1.2. Unfinished production and executed jobs 21.513 17.826 0
1.3. Production 1.789.291 1.522.539 1.855.454 1.561.671
1.4. Goods, purchased for resell 1.537 821 1.537 821
1.5. Biological property 0 0 0
1.6. Long-term tangible property for sale 0 0 0
1.7. Paid advance 4.6. 89.796 140.684 84.112 138.773
2. Amounts, receivable during one year 2.6.;4.7.;4.8. 1.678.647 3.057.565 1.671.305 2.845.461
2.1. Customers' debts 1.440.849 2.218.823 1.440.820 2.218.823
2.2. Companies' debts of Group of companies 0 0 0
2.3. Debts of associated companies 60.653 615.097 60.653 410.100
2.4. Other receivable amounts 177.145 223.645 169.832 216.538
3. Short-term investments 2.7. 0 0 0 0
3.1. Companies' shares of Group of companies 0 0 0
3.2. Other investment 0 0 0
4. Currency and its equivalents 2.7. 654.658 228.281 639.493 224.771
C. Transfer accounts 2.8.;4.10. 47.181 38.713 45.447 37.407
Total assets 10.387.093 10.553.189 10.170.523 10.108.492
GROUP
COMPANY
Previous
Previous
Financial
financial
financial
year
year
year
7.355.651
6.941.848
6.775.444
6.971.307
6.971.307
6.971.307
6.971.307
6.971.307
6.971.307
0
0
0
0
0
0
0
0
170.290
0
0
290
0
0
0
0
170.000
0
214.054
(29.459)
(195.863)
649.114
166.405
442.399
(435.060)
(195.864)
(638.262)
0
0
0
0
737
0
249
0
0
0
0
0
0
0
0
0
3.188.591
3.218.120
3.326.732
663.158
486.316
663.158
0
0
663.158
486.316
663.158
0
0
0
0
0
0
0
0
0
0
0
0
2.525.433
2.731.804
2.663.574
0
0
0
176.842
176.842
176.842
45.780
31.918
45.780
No. PRIVATE ASSETS AND OBLIGATIONS Financial
Note No. year
D. Private assets 2.9. 7.743.902
1. Capital 4.11. 6.971.307
1.1. Authorized (signed) capital 6.971.307
1.2. Signed unpaid capital (-) 0
1.3. Private shares(-) 0
2. Shares premiums 0
3. Revaluation reserve 0
4. Reserves 4.12. 170.290
4.1. Obligatory reserve 290
4.2. For purchase of proprietary shares 0
4.3. Other reserves 170.000
5. Retained profit (losses) 4.13.;4.26.;4.1. 602.305
5.1. Profit of reporting year (losses) 388.251
5.2. Profit (loss) of previous year 214.054
6. Change influence of exchange rate 0
7. Non-controlled part 0
E. Grants, subsidies 2.10.;4.14. 0
F. Provisions 4.10. 0
1. Provisions of pensions and similar obligations 0
2. Taxes postponements 0
3. Other provisions 0
G. Payable amounts and other obligations 2.11.;4.15. 2.630.134
Amounts payable after one year and other long-term
1. obligations 486.316
1.1. Liabilities of debts 0
1.2. Debts for credit institutions 4.16. 486.316
1.3. Received advance 0
1.4. Debts to suppliers 0
1.5. Payable sums acc.to bills and cheque 0
1.6. Payable sums for companies of Group of companies 0
1.7. Payable sums for associated companies 0
1.8. Other payable amounts and long-term obligations 0
Amounts payable within one year and other short-term
2. obligations 2.143.818
2.1. Liabilities of debts 0
2.2. Debts for credit institutions 4.16. 176.842
2.3. Received advance 31.918
2.4. Debts to suppliers 847.926 687.762 837.028 646.277
2.5. Payable sums acc.to bills and cheque 0 0 0
2.6. Payable sums for companies of Group of companies 0 0 915.039 421.699
2.7. Payable sums for associated companies 733.687 1.205.064 584.319 1.205.064
2.8. Profit tax payment obligations 23.621 25.681 0
2.9. Obligations related to work relations 4.17. 259.739 261.329 140.830 123.068
2.10. Other payable amounts and short-term obligations 70.085 122.975 45.828 44.844
H. Accrued charges and deferred income 2.13. 13.057 8.210 10.555 6.067
Total proprietary capital and obligations 10.387.093 10.553.189 10.170.523 10.108.492

Director Daiva Minkevičienė

Chief accountant Gerda Zabarskienė

S. Kerbedzio 23, Panevezys of

Linas, AB CONFIRMED by Company Code 147689083 General shareholders' meeting Act No. Financial statements formation date - 21 03 2018

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 31/12/2017

Formulated according to TFAS

Reporting cycle 01 01 2017 - 31 12 2017 EUR
GROUP COMPANY
Financial year Previous Previous
No. ARTICLES Note No. financial year Financial year financial year
1. Sale income 2.14.2.;4.18. 12.831.287 13.044.609 12.826.310 13.040.235
1.1. Income for sold goods 12.522.282 12.494.908 12.522.321 12.495.095
1.2. Income for sold services 309.005 549.701 303.989 545.140
2. Sale cost price 2.15.3.;4.18. (10.388.052) (10.535.793) (11.066.110) (11.222.541)
2.1. Cost price of sold production (10.211.196) (10.201.438) (10.893.413) (10.891.977)
2.2. Cost price of sold services (176.856) (334.355) (172.697) (330.564)
Real value change of biological
3. property 0 0 0 0
4. GROSS PROFIT (LOSS) 4.18. 2.443.235 2.508.816 1.760.200 1.817.694
5. Selling expenses 2.15.4.;4.19. (753.871) (679.183) (1.792.012) (679.183)
6. General and administrative expenses 2.15.4.;4.19. (1.424.110) (1.350.998) (753.871) (922.256)
7. Results of other activity 222.642 238.257 253.956 261.849
7.1. Income 2.14.6.;4.20. 991.257 1.068.606 994.840 1.060.898
7.2. Expenses 2.15.5.;4.20. (768.615) (830.349) (740.884) (799.049)
Investments incomes into the shares of
8. patronise, patronized and associated 0 0 0 0
companies
Incomes of other long-term 2.14.7.;4.21.;
9. investments and loans 4.25. 38.168 38.444 38.168 38.444
Incomes of other interest or similar
10. incomes 2.14.7.;4.21. 5 4 5 4
Value decrease of financial property
11. and short-term investments 2.15.6.;4.21. 4.000 11.741 4.000 11.741
12. Costs of interest and other similar costs 2.15.6.;4.21. (60.946) (10.934) (60.852) (10.875)
PROFIT (LOSS) BEFORE
13. TAXATION 469.123 756.147 203.465 517.418
14. Profit tax 2.16.;4.23. (80.872) (107.033) (37.060) (75.019)
PROFIT (LOSS) BEFORE NON
15. CONTROLLED PART 388.251 649.114 166.405 442.399
16. Non-controlled part 0 0 0
17. NET PROFIT (LOSS) 388.251 649.114 166.405 442.399
OTHER COMPREHENSIVE
18. INCOME 0 0
19. Earnings (loss) per share 0,02 0,03 0,01 0,02

Director Daiva Minkevičienė

Chief accountant Gerda Zabarskienė

S. Kerbedzio 23, Panevezys of

Linas, AB CONFIRMED by Company Code 147689083 General shareholders' meeting Act No. Financial statements formation date - 21 03 2018

STATEMENT OF LINAS, LLC ENTERPRISE GROUP CHANGES IN EQUITY 31/12/2017

Reporting cycle 01 01 2017 - 31 12 2017 EUR Remarks No. Paid-up authorized capital Additions to shares Private shares (-) Revaluation reserve (results) Law covered reserves Other reserves Unappropriated profit (loss) The influence of currency rate change Not controlled part Total Long-term tangible assets Financial assets Obligatory Private shares procurement 1 2 3 4 5 6 7 8 9 10 11 12 Remainder on 31 December, 2015 6.971.307 0 0 0 0 290 0 173.772 (441.761) 0 0 6.703.608 Correction result of major errors 3.3 2.929 2.929 Recalculated remainder on 31 December, 2015 6.971.307 0 0 0 0 290 0 173.772 (438.832) 0 0 6.706.537 Profit/loss not acknowledged in statement of profit or loss and other comprehensive income 0 Net profit / loss of the current period 649.114 649.114 Formed reserves 2.9.;4.12. 170.000 (170.000) 0 Liquidates reserves 2.9.;4.12. (173.772) 173.772 0 Remainder on 31 December, 2016 6.971.307 0 0 0 0 290 0 170.000 214.054 0 0 7.355.651 Profit/loss not acknowledged in statement of profit or loss and other comprehensive income 0 Net profit / loss of the current period 2.9.;4.13. 388.251 388.251 Formed reserves 2.9.;4.12. 170.000 (170.000) 0 Liquidates reserves 2.9.;4.12. (170.000) 170.000 0 Remainder on 31 December, 2017 6.971.307 0 0 0 0 290 0 170.000 602.305 0 0 7.743.902

Director Daiva Minkevičienė

Chief accountant Gerda Zabarskienė

S. Kerbedzio 23, Panevezys of

Linas, AB CONFIRMED by Company Code 147689083 General shareholders' meeting Act No. Financial statements formation date - 21 03 2018

STATEMENT OF CHANGES IN EQUITY 31/12/2017

Reporting cycle 01 01 2017 - 31 12 2017 EUR

Revaluation Law covered The
reserve (results) reserves
Unappro influence Not
Remarks Paid-up Addi Private Long-term Financial Obligatory Private priated of controlled Total
No. authorized tions shares tangible assets shares profit currency part
capital to (-) assets procu Other (loss) rate
shares rement reserves change
1 2 3 4 5 6 7 8 9 10 11 12
Remainder
on 31
December, 6.971.307 0 0 0 0 0 0 0 (641.191) 0 0 6.330.116
2015
Correction
result of major 3.3. 2.929 2.929
errors
Recalculated
remainder on
31 December, 6.971.307 0 0 0 0 0 0 0 (638.262) 0 0 6.333.045
2015
Profit/loss not
acknowledged
in statement of
profit or loss 0
and other
comprehensive
income
Net profit /
loss of the 2.9.;4.13. 442.399 442.399
current period
Formed
reserves 2.9.;4.12. 0
Liquidates
reserves 2.9.;4.12. 0
Remainder
on 31
December, 6.971.307 0 0 0 0 0 0 0 (195.864) 0 0 6.775.443
2016
Profit/loss not
acknowledged
in statement of
profit or loss
and other
comprehensive
income
Net profit /
loss of the 166.405 166.405
current period
Formed
reserves 2.9.;4.12. 0
Liquidates
reserves 2.9.;4.12. 0
Remainder
on 31 6.971.307 0 0 0 0 0 0 0 (29.459) 0 0 6.941.848
December,
2017

Director Daiva Minkevičienė

Chief accountant Gerda Zabarskienė

Company Code 147689083 CONFIRMED by

Linas, AB Formed in direct pattern S. Kerbedzio 23, Panevezys General shareholders' meeting of Act No. Financial statements formation date - 21 03 2018

STATEMENT OF CASH FLOWS

31/12/2017

Reporting cycle 01 01 2017 - 31 12 2017
EUR
No. Articles GROUP COMPANY
Note Financial Previous Financial Previous
No. year financial year year financial year
I. Primary activity currency circulation
I.1. Earnings of report period (including VAT) 14.941.806 13.912.341 14.745.142 13.881.642
I.1.1. Earnings from clients 14.552.533 13.300.426 14.372.514 13.291.150
I.1.2. Other earnings 389.273 611.915 372.628 590.492
I.2. Report period payouts (14.265.572) (13.138.174) (14.107.784) (13.113.383)
I.2.1. Payouts to suppliers of products, raw materials and services(including
VAT)
(12.474.611) (11.478.568) (13.271.854) (12.407.084)
I.2.2. Monetary payouts related to work relations (1.555.921) (1.485.349) (631.531) (543.778)
I.2.3. Taxes paid to budget (78.930) (35.265) (53.863) (31.925)
I.2.4. Other payouts (156.110) (138.992) (150.536) (130.596)
Cash circulation of primary activity 676.234 774.167 637.358 768.259
II. Currency circulation of investment activity
II.1. Procurement of long-term assets (excluding investments) (63.999) (1.715.291) (36.790) (1.700.710)
II.2. Transfer of long-term assets (excluding investments) 0 0 0 0
II.3. Procurement of long-term investments 0 0 0 0
II.4. Procurement of short-term investments 0 0 0 0
II.5. Transfer of short-term investments 0 0 0 0
II.6. Transfer of long-term investments 0 0 0 0
II.7. Provision of loans 0 0 0 0
II.8. Return of loans 38.433 0 38.433 0
II.9. Received dividends 0 0 0 0
II.10. Interest received for loans granted and investment 0 0 0 0
II.11. Other currency circulation increases of investment activities 170 0 170 0
II.12. Other currency circulation decreases of investment activities 0 0 0 0
Cash circulation of investment activity (25.396) (1.715.291) 1.813 (1.700.710)
III. Currency circulation of financial activity
III.1. Currency circulation related to company owners 0 0 0 0
III.1.1. Emission of shares 0 0 0 0
III.1.2. Owners' contributions to loss reimbursements 0 0 0 0
III.1.3. Procurement of own shares 0 0 0 0
III.1.4. Payout of dividends 0 0 0 0
III.2. Currency circulation related to other financial sources (206.148) 833.223 (206.148) 833.223
III.2.1. Increase of financial debts 418.065 875.536 418.065 875.536
III.2.1.1. Receipt of loans from credit institutions 418.065 875.536 418.065 875.536
III.2.1.2. Receipt of loans from associated and third parties 0 0 0 0
III.2.1.3. Emission of bonds 0 0 0 0
III.2.2. Reduction of financial debts (624.213) (42.313) (624.213) (42.313)
III.2.2.1. Return of loans to credit institutions (594.907) (35.536) (594.907) (35.536)
III.2.2.2. Return of loans to associated and third parties 0 0 0 0
III.2.2.3. Procurement of bonds 0 0 0 0
III.2.2.4. Interest paid (29.306) (6.777) (29.306) (6.777)
III.2.2.5. Leasing (financial rent) payments 0 0 0 0
III.2.3. Interests received for bank accounts 0 0 0 0
III.2.4. Increase of company's other liabilities 0 0 0 0
III.2.5. Reduction of company's other liabilities 0 0 0 0
III.3. Other increases of currency circulation of financial activity 0 841 0 840
III.4. Other reductions of currency circulation of financial activity (1.181) (1.114) (1.169) (1.113)
Cash circulation of financial activity (207.329) 832.950 (207.317) 832.950
IV. Impact of currency exchange rates to cash and equivalent currency
remainder
(17.132) (531) (17.132) (531)
V. Net currency circulation increase (reduction) 426.377 (108.705) 414.722 (100.032)
VI. Currency and currency equivalents at the beginning of the period 2.7. 228.281 336.986 224.771 324.803
VII. Currency and currency equivalents at the end of the period 2.7. 654.658 228.281 639.493 224.771

Director Daiva Minkevičienė

Chief accountant Gerda Zabarskienė

Limited Liability Company Linas

Corporate identification 147689083 S. Kerbedzio Street 23, Panevezys

CONFIRMED by General shareholders' meeting Of 19 May, 2018 Act no. 2

Financial statements formation date – 21 03 2018

EXPLANATORY MEMORANDUM TO THE YEAR 2017 FINANCIAL STATEMENTS 31 December, 2017

Beginning of accounting period 2017 01 01 End of accounting period 2017 12 31

I. GENERAL

  1. The Linas company was launched in 1957. A public limited company Linas (further called the Company) was registered on 8 March, 1993, the number of registration is 003429, registration code 147689083, the data are stored with the Register of Legal Entities. Address: S.Kerbedzio Street 23, Panevezys; LT-35114. Telephone (370-45) 506100, fax (370-45) 506345. E-mail address: [email protected]; web page: www.linas.lt . The Company carries on it's activity in accordance with the Law on Limited Companies of Lithuania, and other relevant legislation active in the Republic of Lithuania.

As of 31st of December, 2016, the Linas AB group of companies (further called as the Group) consisted of holding company Linas AB and it's affiliated company UAB Lino apdaila. UAB Lino apdaila was registered on May 23, 2008 at Legal entity register, registration No.114552, company code 301733421. Affiliated company is registered at address S. Kerbedzio Street 23, Panevėzys. AB Linas own 100 % of affiliated company shares. The activities of Lino Apdaila UAB are provision of textile production services

Copies of the Group's consolidated financial statements may be found in the Register of Legal Entities of the Republic of Lithuania at State Enterprise Centre of Registers, as well as on the website of the stock exchange AB NASDAQ OMX Vilnius.

When drawing up the set of financial statements for 2017, large company requirements were applied to the Group.

  1. The Group's financial year starts on January 1st, and ends on December 31st.

  2. The Company and its affiliated company do not have subsidiaries and representatives.

The companies, related with the Group:

  • Verslo Dizainas UAB, enterprise registration number: 302529076, the address of the headquarters: J. Janonio str. 30, Panevėžys, the character of activities: rent of movable and immovable property;
  • Lino Dizainas UAB, enterprise registration number: 304093122, the address of the headquarters: J. Janonio str. 30, Panevėžys, the character of activities: provision of textile production services, i.e. textile products weaving, finishing, dyeing services services; Rivena UAB, enterprise registration number: 302521510, the address of the headquarters: P.Žadeikos

  • g. 13-35, Vilnius, the character of activities: rent of movable and immovable property and real estate project development;

  • Bankrupt UAB "Nordic investicija", company code 135442762, registered office address Savanorių pr. 192, LT-44151 Kaunas, was removed from the Register of Legal Entities on 14 March 2017 ;
  • Lino Linija UAB, enterprise registration number: 303185361, the address of the headquarters: Veiverių str. 9B-62, Vilnius, the character of activities: retail and wholesale of textile products;
  • NI Žalesa UAB, enterprise registration number: 301166743, the address of the headquarters: Savanorių Ave. 192, Kaunas, the character of activities: real estate project development, sales and rent of real estate;
  • Kuprionis UAB, enterprise registration number: 301166750, the address of the headquarters: Savanorių Ave. 192, Kaunas, the character of activities: real estate project development, sales and rent of real estate;
  • R.Lenčiausko IĮ, company code 126064655, has acquired the status of a bankrupt company since 3 November 2017.

  • Since January 1, 2015 the currency of financial statements of AB "Linas" group of companies is EUR.

  • According to Lithuanian Republic law of Eur establishment in Lithuanian Republic and acc.to Lithuanian Republic joint stock companies and closed joint stock companies authorized capital, and securities nominal value expression in Eur, and these companies regulations change order law, during the repeated ordinary general meeting of shareholders dated May 19, 2015, the shareholders of the Company confirmed that the Company's nominal value of one share is equal to 0,29 Eur, the Company's authorized capital is equal to 6.971.307,10 Eur. Changed regulations of the Company dated June 6, 2017 are registered in the juridical person register.

  • Authorized capital of AB "Linas" is 6.971.307,10 Eur. It is divided into 24.038.990 denominative equity shares the nominal value of which is 0,29 Eur, there are no issued and not paid shares. The Company's authorized capital article sum was expressed in Lt and recalculated into Eur, the nominal value of shares was recalculated. The appeared differences are recognized as financial and investment activity expenditures of accounting period which includes the date of EUR establishment.

The shares of Linas AB are included into the current sales list of AB NASDAQ OMX Vilnius.

  1. The average listed number of employees in the Group and in the Company against the categories:
Group of personnel Average listed
number of
employees in the
Group
Average listed
number of
employees in the
Company
2017 y. 2016 y. 2017 y. 2016 y.
Principal managing employees 3 4 2 3
Heads of divisions 10 8 5 3
Specialists 39 40 29 27
Workers 105 103 19 18
Total 157 155 55 51

Note. The following positions are attributed to the principal managing employees of the Group and the Company: Director, Deputy Director.

  1. The Group's main activity is the production and sale of textiles. The main activities of the public limited liability company "Linas" are trading in linen textiles and provision of services; other activities carried out by the Company are the management of financial assets (shares and granted loans), heat supply, rental of property, revenues from accounting and administration services. The activities of UAB "Lino apdaila" are the provision of textile production services, i.e. textile production sewing services.

  2. The production services, performed within the Group during 2017: 1,226 thousand sewing items (1.268 thousand sewing items in 2016), for which 744 thousand meters of ready fabric were used (838 thousand meters in 2016).

Lino Dizainas UAB (the address of headquarters: J. Janonio str. 30, Panevėžys, LT-35289, enterprise registration number: 304093122) performs fabric production services, i.e. textile products weaving and decoration, as well as flax yarn painting services. During 2017 Lino Dizainas UAB performed the following production services for the Group: painted yarn – 74 t (86 t in 2016); weaved raw fabrics – 793 thousand m (832 thousand m in 2016) and decorated 2.299 thousand m. of fabric (2311 thousand m in 2016).

Linen textile items are ecological. It is the product does not make harm to nature and ecology. Group has been working according to universally accepted quality requirements which correspond to OEKO-TEX 100 standards.

  1. During year 2016 Group export (outside Lithuania) volumes made 82,5 % of the total product sales. The breakdown of the sales by country is as follows: Spain – 17,9 %, Lithuania – 17,5 %, Sweden – 14,3 %, Japan – 6,6 %, Finland – 5,7 %, Great Britain – 5,4 %, Latvia – 5,4 %, Denmark – 4,5 %, Estonia – 3,5 %, France – 3 %, USA – 2,8 %, Belgium – 2,4 %, South Korea – 2,4 %, Germany – 2,0, Netherland – 1,0 %, Australia – 1,0 %, other countries – 4,6 %.

  2. On 2017 the main incomes of group of companies were received from the activity of textile goods production and sales. During 2017 Linas, AB group of companies sold linen textile goods and services for 12,831 thousand Eur. Comparing to 2015 the volume of sales decreased by 213 thousand Eur or 1,6 percent.

New linen textile items or their collections of AB "Linas" Group of companies are created in regard of tendencies of coming season, stylistic trends, innovations of fashion and technologies. AB "Linas" Group of companies produces and supplies linen textile items for the customers who evaluate natural and modern combination, high quality of products, flexibility, production acc.to the individual orders, execution speed of orders.

The Group has branded textile products shops: shop "Gija", address S.Kerbedzio str.23, Panevezys and online shop www.linodovanos.lt .

During 2017 the Group's main activity result was 265 thousand Eur profit and the result of year 2016 was 479 thousand Eur profit.

  1. UAB "Audito sprendimai", company code 220258280 performed the audit of financial statements of the company of year 2017 and the audit of consolidated financial statements and annual report of Group of companies of year 2017. During 2017 it was calculated 5.180 Eur costs for the supplied services of company UAB "Audito sprendimai". During the financial year it was calculated 2.460 Eur costs for the audit of financial statements of year 2016 and for the audit of annual report of year 2017 of company UAB "Lino apdaila". In the financial position statement shown in the accrued costs and earnings of the coming periods.

  2. The data provided in the annual financial statements is based on the listing of the assets held by the Group, and the Group's liabilities inventory.

  3. The data presented in the annual financial statements and in the notes to the financial statements comply with the provisions of the International Financial Reporting Standards (IFRS) adopted for application by the European Union (there are no deviations from international standards), legislation of the Republic of Lithuania regulating accounting and financial reporting as well as other legal acts.

15. Management of risk

Following risks are typical for companies' activities in the economical markets: market risk, credit risk and liquidity risk.

The management of the Group gives a lot of attention to manage those risks. Below there is presented information about the management of typical risks of AB "Linas" Group.

Credit risk

Credit risk is connected with the factors that Group of companies and the Company will incur financial losses if the customer or other party will not execute liabilities and which is mostly related to receivable sums from the customers.

Group of companies and the Company is controlling credit risk applying credit conditions and doing the analyses procedures of the market. All the buyers of textile items and services, except small Lithuanian buyers, are insured in order to avoid higher losses because of the customer's insolvency. Safe payment settlement forms are used for not insured customers: L/C, prepayments and so on. The sales are allotted for different customers.

The analysis of the amounts, receivable by the Group and the Company from the buyers, Group companies and associated companies during one year's period as of 31 December 2017 and 31 December 2016:

Sums, which are delayed, Eur
Sums, which are
not delayed, Eur
Less than
30-90 days
30 days
90-180 days More than
180 days
Totally, Eur
Group
2017
y.
1.362.154 89.442 40.331 2.642 6.932 1.501.501
2016
y.
2.084.477 89.306 50.475 37.324 162.238 2.423.820
Company
2017 y. 1.362.125 89.442 40.331 2.642 6.932 1.501.473
2016 y. 2.075.996 83.340 37.505 18.125 3.857 2.218.823

Acc.to the data of December 31, 2017, 127 customers were in debt to the Group, 89,51 % of debt sums are insured with credit insurance (85,1 % acc.to the data of December 31, 2016). Maximum available losses of balance value because of the risk in relation with the received sums from the customers, associated companies are insignificant 0,1 %. On the accounting day there are no signs from the received sums the payable terms of which are delayed that the customers, associated companies will not execute their financial liabilities.

Possible credit risk, which appears between the financial property (made of amounts received after one year, loans for associated companies) of the Group and the Company, is raised because of customer's liabilities noncompliance and is equal to balance value. Companies guarantee for presented loans by property mortgage, guarantees and sponsorship to manage this risk. By preparing the financial statements Group's companies determine whether there is any objective assumptions that value of financial assets may be impaired. The value of the guarantees given as of 31 December 2017 is sufficient to cover the debts.

In the note 4.25 of Explanatory letter it is presented information about Group's and Company's rights and obligations, not stated in the statement of financial position of December 31, 2017 and December 31, 2016.

Liquidity risk

Liquidity risk is related to the factors that Group or Company will not be able to execute its financial liabilities on terms. Liquidity management aim of Group of companies and Company's is to ensure as well as possible enough liquidity of Group of companies during common and complicated conditions, not having losses and to risking to loose own good name.

Data of relative financial indicators of AB "Linas" Group of companies:

The overall solvency ratio of AB "Linas" Group of Companies is good, it had positive (increasing) trend compared to 2016. In 2017, this ratio was 3.18, in 2016 it was 2.87 (the recommended value is 1.2-2), therefore, it can be assumed that the Group will not have solvency problems in the near future.

The overall debt ratio is at a good level and has a negative trend of change. As of 31 December 2017, the ratio was 0.25 (compared to 0.30 in 2016). The indicator does not exceed the recommended value (recommended up to 0.5). The indicator shows that the ratio of the company's total liabilities and amounts payable to its total assets in the reporting year was 0.25 (i.e. this part of the Group's assets was acquired for borrowed funds).

During the accounting year the indicator of Capital/liabilities are of good level and had positive (increasing) tendencies in comparison with year 2016. The rate of indicator of year 2017 reaches 2.94 (the indicator reached 2.31 at year 2016). It shows how many equity is given for 1 eur of liabilities (recommended is from 0.7).

On 2017 activity of the Company, Group of companies is profitable, financial state is quite stable, changes of the solvency indicators even if there were not significant negative (worsen) tendencies, the general solvency indicator remains of good level, the working capital indicator is positive. So it is possible to make assumption that Group of companies would not meet serious activity succession problem in nearest future.

In the note 4.15 of Explanatory letter it is presented information about Group's and Company's financial liabilities of December 31, 2017 and December 31, 2016 acc.to the refund terms.

AB "Linas" has entered into the overdraft agreement with the bank, under which the credit in the amount of EUR 145 thousand was granted to the Company. Under the financial liabilities limit agreement between the bank and AB "Linas", the credit in the amount of EUR 290 thousand has been granted to the Company, and under the credit agreement the amount of EUR 840 thousand has been granted. The total amount of financial debts to credit institutions accounted in the statement of financial position of the Group and the Company 2017 is EUR 663 thousand. There are no leasing (financial lease) or factoring obligations. The terms for repayment of debts to credit institutions as of 31 December 2017 and 31 December 2016 have disclosed in Note 4.16 of the Notes.

Risk norm of interest

The Group and the Company have financial obligations, so the fluctuation of risk norm makes influence on the size of executed short-term and long-term obligations and on the financial status. Acc.to the obligation contracts for the credit companies of the Group and the Company, the changeable interest norm is calculated as EURIBOR of the particular period adding the margin of creditor. During year 2017 it was calculated 29,3 thousand Eur (on year 2016 – 6,8 thousand Eur) interest for financial obligations. Interest rate risk is considered insignificant for the operation of the group of companies

Risk of foreign exchange

For international transactions the Group faces the risk of foreign exchange range because of sales and buying sums which are accounting in different currency than EUR. The foreign currency exchange risk is considered insignificant for the operation of the group of companies, since the main currency is euro

Economical and political risk

  • the increase of Asian countries textile items supply and damping.
  • market supply periodic of linen products.
  • seasonally: smaller demand in winter.
  • price increase for raw materials, materials, complement details.
  • price increase for energetic resources and transport.

Geographical situation of Lithuania gives the advantage against the producers of the third countries – geographical and cultural closeness to EU market. Group of companies and the Company quickly reacting to seasonal customers requirements and changeable fashion tendencies. Group is trying to apply produced items to individual customers requirements, to use advantages of export

possibilities offering customers small shipment lots and quicker delivery. The Group is successfully developing long-lived textile traditions. Production of the Group is acknowledged as distinctive, attractive with the creativity and quality. Group of companies and the Company is developing and improving marketing and production spheres, constantly projects are implemented to create new assortment, improve quality and decrease costs.

Technical-technological risk

  • not inconsiderable part of used equipment are old, require investment to repair and maintenance;
  • there is a lack of modern technological equipment.

To increase production efficiency and productivity, the Group and the Company invest their own funds within their capacity in the acquisition and renewal of state-of-the-art technological equipment.

II. ACCOUNTING POLICY

1. Regulations the financial statements have been based upon

The Group executes accounting and prepares financial statements in accordance with the legal provisions of bookkeeping and accounting, and financial reporting of the Republic of Lithuania, as well as other relevant provisions, including International Financial Reporting Standards (IFRS) which are accepted to apply in European Union (EU).

The Group and the Company have applied the amendments to these International Financial Reporting Standards relevant for the Group and the Company:

Amendments to IAS 19 Employee Benefits – Defined Benefit Plans: Employee Contributions.

Amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture entitled Agriculture: Bearer Plants.

Amendments to IFRS 11 Joint Arrangements entitled Accounting for Acquisitions of Interests in Joint Operations.

Amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets entitled Clarification of Acceptable Methods of Depreciation and Amortisation.

Amendments to IAS 27 Separate Financial Statements entitled Equity Method in Separate Financial Statements.

Amendments to IAS 1 Presentation of Financial Statements entitled Disclosure Initiative.

Amendments to IFRS 10, IFRS 12 and IAS 28 - Investment Entities: Applying the consolidation exception.

Annual Improvements to IFRS – various standards.

The amendments did not have any material effect on the Group's and Company's financial statements.

The Group and the Company haven't applied these standards and interpretations that have been issued but are not yet effective:

IFRS 9 Financial Instruments: Classification and Measurement (effective for annual periods beginning on or after 1 January 2018).

Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (approval was postponed indefinitely).

IFRS 14 Regulatory Deferral Accounts (effective for annual periods beginning on or after 1 January 2016; not yet adopted by the EU).

IFRS 15 Revenue from Contracts with Customers including amendments to IFRS 15 Effective date of IFRS 15 (effective for annual periods beginning on or after 1 January 2018).

IFRS 16 Leases (effective for annual periods beginning on or after 1 January 2019; not yet adopted by the EU).

Amendments to IAS 12 Income Taxes - Recognition of Deferred Tax Assets for Unrealised Losses (effective for annual periods beginning on or after 1 January 2017; not yet adopted by the EU).

Amendments to IAS 7 Cash-flow Statements - Disclosure Initiative (effective for annual periods beginning on or after 1 January 2017; not yet adopted by the EU).

Clarifications to IFRS 15 Revenue from Contracts with Customers (effective for annual periods beginning on or after 1 January 2018; not yet adopted by the EU).

Amendments to IFRS 2 Share-based Payment - Classification and Measurement of Sharebased Payment Transactions (effective for annual periods beginning on or after 1 January 2018; not yet adopted by the EU).

Amendments to IFRS 4 Insurance Contracts - Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (effective for annual periods beginning on or after 1 January 2018 or when IFRS 9 is applied first time; not yet adopted by the EU).

Annual Improvements to IFRS Standards 2014–2016 Cycle (effective for annual periods beginning on or after 1 January 2017 (changes to IFRS 12) or 2018 (changes to IFRS 1 and IAS 28)); not yet adopted by the EU).

IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration (effective for annual periods beginning on or after 1 January 2018; not yet adopted by the EU).

Amendments to IAS 40 Investment Property - Transfers of Investmenty Property (effective for annual periods beginning on or after 1 January 2018; not yet adopted by the EU).

The Group and the Company don't expect these standards and interpretations that have been issued but are not yet effective to have any material effect on the financial statements of the Group and the Company.

In the Group and the Company these standards and interpretations that have been issued but are not yet effective, will be adopted on the date they become effective and adopted by the EU.

2. Accounting policy

The Company, the Group of companies has accounting policy, confirmed by the administration head and corresponding to the regulations of International Financial accounting standards, in which there are indicated rules of company profit, own capital and liabilities evaluation, incomes and cost acknowledge and registration in the accounting, acc.to which the financial reports are prepared.

2.1. Group's accounting

2.1.1. For the purpose of financial reporting, a subsidiary company is an enterprise in which the Group, either directly, or indirectly has a control, in a form of private ownership or otherwise, of a block of shares representing more than a half of the total votes in that enterprise.

2.1.2. The subsidiary companies are included in the consolidated financial reporting since the date the Group acquires control over the daughter company, while consolidation in respect of a daughter company ceases since it is no longer controlled by the Group. Any deals between the Group's companies, outstanding balances and any outstanding profit (loss) resulting from the deals between the Group's companies, is to be eliminated.

2.1.3. AB "Linas" Group of companies applies the equal accounting policy to all significant events. There are no significant differences of accounting policy regarding which the financial report of the Group of companies should be reorganized.

2.2. Long-term intangible assets accounting

2.2.1. Any non-tangible asset which is employed in the activity of the Group's enterprises for longer than a year, shall be recorded as intangible property in the financial accounts provided it meets the following recognition criteria: a) the Group's enterprises are reasonably expected to generate future economic benefits on the basis of the said asset; b) the acquisition (production) cost of the asset is readily identifiable and separable from the value of the remaining assets; c) the Group's enterprises have control of the asset or are in a position to restrict other persons' access to disposal of the asset.

2.2.2. The Group has set across it's companies a threshold of minimum acquisition (production) cost for intangible assets 900 euro, upon surpassing of which the asset is to be classified as long-term intangible property.

2.2.3. Long-term intangible assets are shown on the financial statements at their residual value to be estimated by subtracting accrued depreciation form the acquisition value.

2.2.4. Depreciation of long-term intangible assets is performed by applying a depreciation rate set by the Group. The linear depreciation technique is applied. Depreciation of intangible assets starts counting since the first day of the next calendar month since the commencement of the use of the asset in the company's business. Depreciation ceases counting since the first day of the next month since the writing-off of the asset, or since the date of the sale, as the case may be.

2.2.5. The liquidation value of long-term intangible assets is set at 0,29 euro.

2.2.6. The cost of operation of long-term intangible assets is attributed to the cost falling within the reporting period during which the cost was incurred.

2.2.7. The Group's companies have no long-term intangible assets subject to legal or contractual restrictions for it's disposal.

2.2.8. The Group has no mortgages of long-term intangible assets to secure it's liabilities.

2.2.9. All the advance payments for long-term intangible assets have been recorded on a paid advance account.

2.2.10. Additional information concerning long-term intangible assets of the Group and the Company has been disclosed in notes 4.1. and 4.3. of the Memorandum.

2.3. Long-term tangibles accounting

2.3.1. Tangible assets purchased by the Group's companies are classified as long-term assets subject to meeting all the following criteria: a) the asset is to be used for more than one year; b) the asset is reasonably expected to serve as a basis for generating economic benefits over future accounting periods; c) it is possible to reliably identify the cost of acquisition (production) of the asset; d) the cost of acquisition (production) of the asset is at least equal to the minimum acquisition cost for long-term assets, i.e. of 900 euro, applied across the company; e) the company has taken all the risks related to the subject tangible asset.

2.3.2. Long-term tangible assets are recorded for accounting purposes at their actual acquisition (production) cost.

2.3.3. Advance payments for long-term tangible assets shall be recorded on a paid advance and executed tangible property building (production) works account.

2.3.4. The Group's companies apply acquisition cost technique for accounting of all the longterm tangible assets. In accordance with the acquisition cost technique, the assets, either acquired or produced, are recorded in the accounting at the cost of acquisition, and shown in the financial statements at residual value, to be estimated by subtracting from the acquisition cost the accrued depreciation and any reduction in value due to discounting in price.

2.3.5. Depreciation of long-term tangible assets is calculated on a yearly basis by applying a depreciation rate, which are indicated paying attention to the useful time of property's servicing, to the planned intensity of property's usage, to the surrounding of it's usage, foreseen property's liquidity value and other factors. It is indicated the liquidity (retain) value of long-term tangible asset 0,29 euro.

2.3.6. Depreciation of long-term tangible assets is calculated in the Group using linear depreciation technique. Depreciation of tangible assets starts counting since the first day of the next calendar month since the commencement of the use of the asset in the business. Depreciation ceases counting since the first day of the next month since the writing-off of the asset, or it's disposal, when the property is not used any more or since the entire value of the asset (minus liquidation value) is assigned to the cost.

2.3.7. Any disposal of long-term tangible assets by the Group's companies shall be registered showing the profit or loss occurring from such transaction. The outcome is obtained by subtracting from the sale revenues of the asset it's liquidation value and the cost related to the transaction. Transfer profit or loss of long-term asset, except financial, is attributed to other activity incomes or costs.

2.3.8. Mortgages of long-term tangible assets and long-term tangible assets rented from third parties are accounted using class 0 bookkeeping accounts.

2.3.9. The Group's companies have no long-term tangible assets subject to depreciation over a more than 20 years period, or any tangible assets subject to legal or contractual restrictions for it's disposal.

2.3.10. The Group has mortgages of long-term tangible assets to secure it's liabilities - Real estate – the buildings and structures, located at the address S. Kerbedžio str. 23, Panevėžys.

2.3.11. More information on long-term tangible assets has been disclosed in notes 4.2.; 4.3. to the Memorandum.

2.4. Accounting of financial assets

2.4.1. The Group classifies it's financial assets as long-term and short-term assets.

2.4.2. Financial assets are divided into four groups: financial assets, valuated at the real value in the profit/loss statement; investments, kept till their deadline; loans and receivables; financial assets, which may be sold.

2.4.3. When recognizing financial assets for the first time, the Group companies valuate them at the real value, without subtracting any deal expenses, incurred when selling or otherwise transferring the assets. Exceptions are made when evaluating the following: loans and receivables – non-derivative financial assets with fixed or otherwise established payments, not quoted on the active market, are valuated at depreciated cost price, using the method of factual interest; the investments, kept till their deadline, are valuated at depreciated cost price, using the method of factual interest; the investments into ownership measures, which have no quoted market price and whose actual value cannot be reliably evaluated, as well as derivative financial measures, related with non-quated ownership measures, when such measures are used for payment, are valuated at their cost price.

2.4.4. Profits or losses are recognized in the profit/loss and other general revenues statement when the financial assets are written off or depreciated.

2.4.5. When drawing financial statements, the Group companies establish whether there is any objective evidence as regards depreciation of financial assets' value. If there is evidence that the value of loans, receivables or investments, kept till the deadline and accounted at depreciated cost price, has reduced, the amount of loss shall be evaluated as the difference of the current value of the assets' book value and evaluated future cash flows (without including the future credit loss till it is incurred), by applying the discounted initial factual financial assets interest rate. The amount of loss is recognized in the profit/loss and general revenues statement. If there is objective evidence that the value of nonquoted ownership measures, not accounted at the real value (since the real value is impossible to identify reliably) or the value of the derivative assets, related with such non-quoted ownership measure (for which payment must be made by delivering such measure) has reduced, the amount of loss shall be evaluated as the difference between the current value of the financial asset's book value and the evaluated future cash flows, discounted at the current market rate of the refunded payments for similar financial assets. Such losses, resulting from depreciation, may not be annulled (as regards financial assets, accounted at the cost price). In case the reduction of the real value of financial assets, which may be sold, can be directly attributed to ownership and there is objective evidence of reduction of the asset's value, the accrued loss, which has been directly attributed to ownership, must be deleted from ownership and recognized in the profit/loss statement, even if the financial asset still remains recognized (as regards financial assets, which can be sold).

2.4.6. More information related to financial assets is disclosed in notes 4.4. of the Memorandum.

2.5. Stocks accounting

2.5.1 Stocks comprise short-term assets, such as raw materials, materials and spare parts, unfinished production and executed jobs, finished products, and purchased commodities intended for resale, which are consumed by the Company for earning revenues over one year. Any tangible assets, used in the activities of the Group's companies, with a unit value under the minimum threshold value set by the Group for long-term tangible assets is classified as a short-term stocks asset.

2.5.2. The Group performs valuation of stocks in accordance with FIFO technique, i.e. those stocks that were acquired earliest are assumed to be the ones sold or consumed first (first in first out).

2.5.3. The stocks of the Group (except of production in progress) are accounted in accordance with continued stocks accounting method, each occasion of acquisition (production) and sale (consumption) of stocks being recorded in the accounting. Unfinished production is accounted on monthly basis.

2.5.4. Stocks are recorded in the accounting on the basis of valuation at acquisition cost, while in financial statements stocks are reported at the lower of acquisition (production) cost and net potential sale value.

2.5.5. The Group has chosen to calculate cost price with the method of rest losses and the cost price is not calculated for secondary cost price.

2.5.6. Direct and indirect expenses make production cost price in the Group. Direct production costs – expenses for main raw materials (materials), complemented items, technology energy and direct wage. Indirect production expenses – not related directly with production but making the conditions to work production, expenses, which impossible to attribute directly to concrete items of their groups.

2.5.7. The cost price of semi manufactures and produced production pieces is indicated by attributing raw material expenses for items in proportion to the raw materials usage norms indicated by the Group, attributing other direct and indirect production expenses for items in proportion to indicated normative by the Group.

2.5.8. The stocks are discounted to the potential net sale value by individually valuing each item of the stocks or each group of similar stocks. Assessing the net potential sale value takes account of the purpose for which the subject stock is being stored. Raw materials and other supplies stored for the purpose of product manufacturing shall not be discounted below their cost of acquisition, provided the products to be produced using the subject stocks are expected to sell at the cost of manufacturing at least, or a higher price, except when there is surplus of raw materials or other supplies in the Group. The loss incurred by discounting all the stocks to net potential sale value as well as any other loss of stock shall be recognised as an item of general and administrative expenses incurred during the period such loss occurred. Any reversion to the discounting of the stocks, undertaken due to the growth in the net potential sale value shall be accounted by making a relevant reduction of the general and administrative expenses of the period.

2.5.9. The information on the stocks of the Group and the Company is disclosed in note 4.5. of the Memorandum.

2.5.10. Advance payments for inventories and services are accounted in the advance payments for non-current assets. Comment No. 4.6. to the Explanatory Note reveals the information on the advance payments, paid by the Company and the Group for non-current assets and services.

2. 6. Accounting of receivable amounts

2.6.1. One year receivables comprise the entitlements to receive amounts of moneys or equivalent financial assets from third parties. Specifically, this is due amounts for products sold, services rendered or short-term loans issued, interests receivable for granted loans, advance payments for financial assets due, as well as other kinds of debt contracted to the Company.

2.6.2. Advance payments for non-financial assets (such as long-term tangible assets, intangible assets, inventories, etc.) are not considered receivable amounts.

2.6.3. One year receivables are recorded for accounting purpose at the acquisition cost representing the value of the remuneration due.

2.6.4. Receivable amounts are shown at net value in the annual financial statements, i.e. by subtracting the share of bad debt. The cost of bad debt is registered as an item general and administrative expenses and is included in the statement of profit or loss and other comprehensive income of the reporting period.

2.6.5. The Group applies direct assessment technique for evaluation of bad debt costs. Any debt due those debts which repayment becomes doubted is moved to the bookkeeping account of supervised debt. Any receivable amount becomes a bad debt on the basis of receipt of reliable information concerning it's repayment insecurity.

2.6.6. Notes 4.7.; 4.8. of the Memorandum reveal the information on the one year receivables and bad debts of the Group and the Company and long-term and short-term loans, granted to the companies, stating the currency, interest and payback periods.

2.7. Accounting of short-term investments and monetary assets

2.7.1. Financial assets of the Group comprise moneys in euro and foreign currency in cash desk and on current bank accounts, and financial assets equivalent to moneys. The Group had no moneysequivalent financial assets as of the end of the financial year.

2.7.2. Short-term investments into stock and other securities, as well as short-term deposits and other investments are included into the short-term investments article.

2.8. The costs and accrued revenues for the coming periods

2.8.1. The costs and accrued revenues for the coming periods are not classified into long-term and short-term.

2.8.2. The costs for the coming periods emerge when the Company, during the reporting period and the previous reporting periods, has paid for continuing services, receivable during the coming periods, and the amounts, paid for such services shall be respectively recognized as costs in the coming reporting periods, when they are actually incurred.

2.8.3. Accrued revenues are the amounts, recognized as revenues, earned by the Company during the reporting period and the previous reporting periods, with regard to which the debtor undertakes the liability to pay, during the coming reporting periods, for continuing services, provided by the Company during a certain period, for which the earned revenues are accrued gradually or in accordance with the degree of provision of services.

2.8.4. The information on the Group' and the Company's costs during the coming periods is provided in Comment No. 4.10 to the Explanatory Note.

2.9. Accounting of own capital stock

2.9.1. Own capital stock comprises the share of the authorised capital which has been subscribed, the mandatory reserve stock, and undistributed profit (loss). The information on the authorised capital of the Company is disclosed in note 4.11.

2.9.2. The Company has no it's own shares purchased by itself. AB "Linas" subsidiary company doesn't have shares of the Company.

2.9.3. The information on the reserves is provided in note 4.12. of the Memorandum.

2.9.4. Draft profit (loss) distribution prepared by the AB Linas management is provided in note 4.13. of the Memorandum.

2.9.5. The profit distribution approved by the shareholders meeting is included in the financial statements of the period during which the shareholders' approving decision was passed concerning the profit distribution, irrespective of the time when the profit was actually earned.

2.10. Accounting of grants and subsidies

2.10.1. The grant (subsidy) is accepted if it is reasonable guaranteed that the Group corresponds to the grant (subsidy) providing conditions and when there are evidences that grant (subsidy) will be provided.

2.10.2. The accounting of grants (subsidies) is managed acc.to accumulation principle, i.e. the subsidy (grant) or it's part is recognised as having been spent in the accounting period during which the costs related to the subsidy (grant) are incurred. The balance of the amount of the subsidy (grant) is shown on the statement of financial position.

2.10.3. Grants (subsidies) are shown as an incomes method in the accounting. Grants, in the connection with incomes, are provided to compensate expenditures and non-receivable incomes; also all other grants which are not attributed to the grants in connection with property.

2.10.4. Grants (subsidies), received in the Group to compensate incurred expenditures, are accepted of such used part in the accounting, of how many expenditures were incurred to compensate

it and with the same part decreasing the sum of recoverable expenditures article of statement of profit or loss and other comprehensive income.

2.10.5. Note 4.14. of the Memorandum to the financial statements provides information on the subsidies (grants) received (receivable) by the Group / the Company.

2.11. Liabilities accounting

2.11.1. Financial accounting of the Group records current liabilities, i.e. those liabilities acquired by the Group's companies, subject to fulfilment by the Group.

2.11.2. The liabilities are classified on the basis of their fulfilment requirements, i.e. long-term liabilities representing such liabilities which are due to be fulfilled by the Group's companies within a period exceeding one year, and short-term liabilities, representing those liabilities to be fulfilled within an ordinary cycle of business activity, i.e. twelve months.

2.11.3. During the initial recognition the financial liabilities are evaluated at the real value, i.e. the price of the deal (the real value of the payable remuneration), later – at the depreciated cost price by using the factual interest method.

2.11.4. Liabilities shall accrue on account of the paid leave earned by the employees of the Group's companies. The cost of paid leave shall accrue on a monthly basis. At the end of the current financial year, the amount of accrued leave payments shall be adjusted, by precisely calculating the amount of leave payments (including social insurance) earned by each employee over the financial year and not exhausted so far, as well as the balance of duration of leave not yet exhausted by each employee. The sum is not calculated because of sums triviality to Guarantee fund from the pays of accumulative holiday pays. The information on the amounts of paid leave payments, accrued as liabilities to the Group and it's companies, is provided in note 4.17. of the Memorandum.

2.11.5. AB "Linas" group of companies has no financial year debts which are guaranteed by the government or third persons with bonded property.

2.11.6. When making annual financial statements the sums paid by the customers as prepayment are transferred to the contrary liabilities account, which are longer than a year or when the signs appeare that they (or their part) could not be requested. Accordingly the decrease of liabilities is shown in the account of disputed debts in the expenditure of contrary account.

2.11.7. The information on short-term and long-term liabilities of the Group and the Company is provided in note 4.15. to the Memorandum.

2.11.8. The information on the state of the Group's and the Company's debts to credit institutions is revealed in Comment No. 4.16. to the Explanatory Note.

2.12. Provisions

2.12.1.Provisions are accepted if they are determined by the past events and if they are existing at the end date of financial statements accounting period.

2.12.2.The provisions sum shows what size of financial statements accounting period end date credibly evaluated expenses should cover legal liability or irrevocable commitment.

2.12.3. In group of companies the provisions are looked through when making financial statements and correcting their value paying attention to the new events and circumstances.

2.13. Accrued costs and revenues for the coming periods

2.13.1. The accrued costs and revenues for the coming periods are not classified into long-term and short-term.

2.13.2. The accrued costs include the amounts, recognized as the Company's costs for the continuing services, received during the reporting period and the previous reporting periods, which the Company has undertaken to pay during the coming reporting periods.

2.13.3. The revenues for the coming periods include the amounts, not earned by the Company, but already paid by the buyers (customers) for the provided continuing services, which shall be gradually recognized as revenues during the coming reporting periods, when they are actually earned after the respective services are provided.

2.14. Income accounting

2.14.1. Incomes are recognised in line with the accruals principle, i.e. an income is recorded in the accounting at the moment it is earned, irrespective of when the money is actually received. Upfront or similar advance payments are not recognised as income. Any revenues which are received over the reporting period, and are not recognised as income, are shown on the statement of financial position as liabilities. Income is assessed at it's true value.

2.14.2. Usual business income of the Group comprises the revenues generated by the sale of the products, i.e. fabrics, sewn items, yarn, combed-away remnants of yarn; by provision of production manufacturing services.

2.14.3. Income from usual business is recognised as earned income, is recorded in the accounting and shown in the financial statements at the moment the sales when production or production related services occurs, subject to availability of a reliable assessment of the amount of income.

2.14.4. Such incomes and expenses are attributed to incomes and expenses which could be attributed to this segment directly or by indicated attribution criteria. The Group companies distribute the revenues, received from the customers, to individual parties on the basis of the customers' locations. Expenses are not attributed to separate segments and are shown as general expenses of the company if it is impossible to attribute them to separate segments. Note 4.18. to the Memorandum provides information on the income and expenditure of the Group related to usual business, on the basis of division by geographical areas and branches of business.

2.14.5. It is impossible to attribute property and liabilities of the Group and AB "Linas" to abstracted segments. All property and liabilities of the Group and the Company are not allotted in values acc.to business and geographical segments.

2.14.6. Unusual income represents income generated by miscellaneous activities, i.e. income from sale of goods intended for resale, income from sale of surplus inventories, income from sale of unusual products or provision of unusual services, the profit from disposal of long-term assets (except of financial assets), as well as income from other kinds of atypical business activity and / or singular business transactions. Note 4.20. to the Memorandum provides information on the income and cost of unusual business undertakings.

2.14.7. Financial and investment business income comprises the interest on the moneys deposited with banks, any profits resulting from a change in foreign exchange rate, recognised forfeiture for delay of payments and other fines, the revenues of interests from provided loans, profit of investment transfer and other revenues related with financial property management. Note 4.21. to the Memorandum provides the information on the income and cost of financial and investment undertakings of the Group and the Company.

2.15. Costs accounting

2.15.1 Costs are defined as any decrease in economic benefits manifesting as a reduction in value of assets, or liabilities assumed during the reporting period. For the purpose of financial accounting, only that part of expenditure which is incurred in earning the income of the reporting period, or alternatively that part of expenditure which might not be related to earning of income of any of the forthcoming reporting periods, is recognised as the costs. Any expenditures falling within different accounting periods, are distributed to such accounting periods during which they generate economic benefits to the enterprise.

2.15.2. For the purpose of recording cost in the accounting, costs are recognised in line with accruals and comparison principles, within the reporting period during which the income, related to the subject expenditure, is earned, irrespective of the time when the moneys were actually expended.

2.15.3. Sales cost comprises the cost of products sold and the costs of provided production services.

2.15.4. The costs, which are impossible to relate to the cost price of specific sold goods or provided services and which are related with the Company's principal activities, are registered in the accounting as the sales costs or general and administrative costs. The information on the sales costs, general and administrative costs is provided in Comment No. 4.19 to the Explanatory Note.

2.15.6. Financial and investment business costs comprise costs of bank interest, any fines and forfeitures due to delay in payment, the cost resulting from a negative change in foreign currency rate, investment transfer (deprivation) loss, costs of granted loans reappraisal, costs of financial services supply, other financial – investment activity costs.

2.16. Profit tax accounting

2.16.1. Payable profit tax of the reporting year is shown in the financial accounting at the moment the profit of the reporting year is calculated upon the end of the accounting period, not at the moment a liability is incurred on the basis of the outstanding tax on profit amount. The profit, in accordance with the provisions of calculation of the tax on profit, is adjusted with any costs which incur no reduction to the tax on profit, and any incomes which are not taxable or are taxable in addition to regular taxation procedure. The rate of the tax on profit is 15 per cent.

2.16.2. Advance profit tax is calculated in the Group according to the activity results of last year. Advance profit tax is declared according to the confirmed order of National Taxing Inspection by Finance Ministry and is paid according to the order indicated in the law of Profit tax.

2.16.3. The cost of the profit tax of the reporting year is calculated by adjusting the profit tax of the reporting year with the amount of any deferred profit taxes. Deferred tax on profit reflects the net taxation effect due to provisional differences between the value of assets and liabilities in the financial statements and the taxation statements. Deferred taxes, as an asset or a liability, are valued applying the taxation rate, which is expected to apply in respect of the period during which the subject property would be disposed of, or the liability discharged. The deferred profit tax, as an asset, is recognised on the financial statements to the extent it is expected to be discharged in the near future, based on the forecast of taxable profit. In case there is a part of deferred profit tax which is not going to be discharged, it is then not recognised in the financial statements.

2.16.4. The Group's profit tax costs and deferred profit taxes are shown in detail in notes 4.23.; 4.24. of the Memorandum.

2.17. Earnings per share

2.17.1.Usually the profit for one share is calculated dividing net profit (loss) of period in average of simple shares issued during the period. The Group hasn't potentially converting simple shares, so the decreased profit attributed to one share correspond the profit which is given for one simple share.

2.17.2.The information about the profit which is given for one share is presented in explanatory memorandum note 4.26.

2.18. Foreign exchange

Any transactions executed in a foreign currency are converted into euro at the official exchange rate set by the Bank of Lithuania at the transaction date. Monetary assets and liabilities are converted into euro at the exchange rate of the date of the financial statements. The financial statements as of 31 December, 2017, and 2016, is based on the following currency exchange rates:

2017 y. 2016 y.
1 EUR = 1,1993 USD 1 Eur = 1,0453 USD

Any profit / loss related to monetary transactions is recognised in the profit and loss statement covering the period during which the subject profit / loss occurred. Any profit / loss subject to converting, is accounted on the basis of the conversion rate valid at the end of the reporting period.

2.19. Financial connections with heads of the company and other related persons

The number of heads of the Group and the Company, contracts format made with related persons, accountable sums and not paid remainders at the end of the periods calculated to the company

heads and related persons during accountable period and during previous accountable period are explained acc.to its attribution in the note No.4.22 of the Explanatory letter. Other information in relation with contacts made with related persons are indicated in the note No.4.9 of the Explanatory letter.

3. Revisions to the accounting policy and corrections of essential mistakes

3.1. The Group executes accounting and prepares financial statements in accordance with the legal provisions of bookkeeping and accounting, and financial reporting of the Republic of Lithuania, as well as other relevant provisions, including International Financial Reporting Standards (IFRS) which are accepted to apply in the European Union (EU).

Accounting policy did not change during the reporting period. The accounting policy of the group of companies has been described in more detail in the Notes to the financial statements 2016.

3.2. Mistake is meant as essential, if: 1) it's sum is larger than 10% of appropriate balance part or the clause of statement of comprehensive income and 2)if it makes 2,5% of all property balance value or 0,5% of sales revenues sum indicated in financial accounting. If mistake is not reaching these indicators, then it is meant nonessential.

3.3. Preparing the financial statements for year 2017 not significant and substantial mistakes of previous year are corrected in perspective way. No substantial mistakes were noted.

4. Notes of Explanatory Memorandum

The notes regarding the significant financial indicators are presented in the tables of Explanatory letter:

4.1. The status of the long-term intangible assets of the Group and the Company, and their change over the reporting period (Tables 4.1. 'AB Linas Group of companies and AB Linas long-term intangible assets change').

4.2. The status of the long-term tangible assets of the Group and the Company, and their change over the reporting period (Tables 4.2.1 'AB Linas long-term tangible assets change'; 4.2.2 'AB Linas Group of companies long-term tangible assets change').

4.3. Additional information on the long-term tangible and the long-term intangible assets of the Group and the Company, i.e. adopted average rates of depreciation and amortisation of long-term assets according to the class of assets (Table 4.3.1 'Long-term tangible and intangible assets average economic life'); the obtaining (production) cost price of the assets which is amortized or deteriorated but still used in the activity (Table 4.3.2. 'Totally amortized or deteriorated long-term tangible and intangible assets which is still used') information about rented long-term tangible asset (table 4.3.3. 'The rent of long-term tangible asset').

The Company's and the Group's long-term property deterioration difference influence on the financial indicators is not significant, so it doesn't require indicators recalculation of long-term property and deterioration cost.

AB "Linas" leases to UAB "Lino dizainas" (company code 304093122) 18,8 thousand. sq. m premises located at S. Kerbedžio g. 23, Panevėžys for an unlimited period. During the financial year, EUR 34 thousand premises rental income was counted (in 2016 – EUR 34 thousand). Acc.to the contract of premises renting, for the improvement of UAB "Lino dizainas" premises and the ensuring of hygienic norms, there were losses of 27 thousands eur which AB "Linas" is not compensating.

Linas AB rents the facilities at the address S. Kerbedžio str. 23, Panevėžys to Lino Apdaila UAB (enterprise registration number 301733421) without a definite term. During the financial year the facilities rent revenues, amounting to EUR 7 thousand, were calculated (EUR 7 thousand in 2016).

In 2017 the Company leased administrative facilities in Vinius. The amount of general and administrative costs, calculated during the financial year – EUR 21 thousand (EUR 19 thousand in 2016).

Linas AB rents production machinery, equipment, mechanisms, devices and tools, the total value of which is EUR 233 thousand, to Lino Dizainas UAB (enterprise registration number 304093122)

Lino Apdaila UAB rents production machinery, equipment, mechanisms, devices and tools, the total value of which is EUR 399 thousand, to Lino Dizainas UAB (enterprise registration number 304093122) without a definite term. The amount of revenues from lease of the assets, calculated during the financial year, is EUR 48 thousand (EUR 48 thousand in 2016).

Verslo Dizainas UAB (enterprise registration number 302529076) rents production machinery, equipment, devices, tools and inventory to Lino Apdaila UAB (enterprise registration number 301733421) without a definite term. The amount of costs of rent of the assets, calculated during the financial year, is EUR 90 thousand (EUR 96 thousand in 2016).

4.4. Long-term financial assets and their change over the reporting period (Tables 4.4.1 'AB Linas Group of companies long-term financial assets change', and 4.4.2 'AB Linas long-term financial assets change').

Under the debt repayment agreement of 21 June 2017, the land plot owned by UAB "NI Žalesa" (company code 301166743), which was mortgaged to AB "Linas" under mortgage bonds for the loans granted to BUAB "Nordic investicija", was transferred to UAB "Linas" for EUR 110 thousand (the value of the land plot was assessed by the property valuator). The acquisition amount of the land plot transferred by UAB "NI Žalesa" to AB "Linas" is used to cover part of the loan amount of BUAB "Nordic investicija".

Under the agreement of 4 July 2017, AB "Linas" took over into its ownership from Ramūnas Lenčiauskas the land plot for EUR 304 thousand. This land plot has been mortgaged to AB "Linas" under the mortgage bond for the loan granted to BUAB "Nordic investicija", therefore the acquisition amount of the land plot covers part of the loan of BUAB "Nordic investicija".

These land plots are classified as investment property and valued as held for the purpose of increasing their value rather than for selling quickly during normal operations

The Letter of 30 August 2017 of the Authority of Audit, Accounting, Property Valuation and Insolvency Management under the Ministry of Finance of the Republic of Lithuania concluded, that during the inspection it was established, that the reports on the valuation of the pledged land plots did not comply with the requirements of Article 22 of the Law on the Bases of Property and Business Valuation of the Republic of Lithuania. AB "Linas" has contacted property valuation company and requested to correct property valuation reports and to re-evaluate the plot taken from UAB "NI Zalesa" acc.to the requirements of property valuation regulations of juridical acts. The property valuation company revaluated the land plot and submitted the property valuation report, in which the market value of the land plot on the date of the property valuation (23 October 2017) was EUR 68 thousand, i.e., decreased by EUR 42 thousand compared to the original valuation. Adjustments were made to the accounts and EUR 42 thousand loss was recognized due to reduction of value.

On October 20, 2017 the Audit, accounting property valuation and insolvency management office by Lithuanian Republic Finance ministry gave the answer that the Hohour court of this institution decided that valuation actions, preparing the valuation report of immovable property (of the plot taken from Ramunas Lenciauskas), corresponded to the requirements indicated by property valuation juridical acts.. The book value of this land plot is 304 thousand. euro. The market value specified in the property valuation report on the property valuation date (26 January 2017) was 288 thousand euro. The difference in the value of the land plot, EUR 17 thousand, is insignificant, so the value of this land plot has not been reduced.

On 27 January 2017, the Kaunas Regional Court ruled on the winding up of BUAB "Nordic investicija" (company code 135442762), as a result of which the Group and the Company made bookkeeping records related to the loans granted to BUAB "Nordic investicija" in earlier periods and their depreciation (Table 4.9 of the Notes).

4.5. Financial reports accounting period date gross value of the Group's and the Company's stocks, their value by type of stock, the value of the stocks recorded in the accounting at their net potential sale value, the amount of discounting to the net potential sale value, the amount of reversion

of the discounting, the value of mortgaged stocks, and the stocks held with third parties (Tables 4.5.1 'AB Linas Group of companies stocks' and 4.5.2 'AB Linas stocks').

4.6. Paid advance by the Group and the Company to suppliers for short term assets and services (Table 'Paid advance for short term assets and services').

4.7. The Group's and the Company's one year receivable amounts by major groups of receivable amounts, their change compared to the previous financial year (Table 'One year receivable amounts').

4.8. The Group's and the Company's one year receivable amounts recognised as bad debt in the accounting, the cost of bad debt over the financial year, and recovered bad debt (Table 'Bad debt').

4.9. Long-term and short-term loans granted by the Group and the Company, as well as the amounts receivable after one year, their value, recovery deadlines, interest, repaid loan amounts, written off amounts depreciated in prior periods (Table 4.11. Loans of AB "Linas" Group of Companies and AB "Linas" to affiliated companies and receivables from affiliated companies"):

4.9.1. Nordic Investicija UAB covered to the Company the loans in the amount of EUR 38 thousand in 2017.

4.9.2. As of 31 December 2017 the amount of debt by Rivena UAB, enterprise registration number: 302521510, the address of the headquarters: P. Žadeikos str. 13-35, LT-06324 Vilnius, according to Financing Agreement of 19 November 2014, was EUR 1.171 thousand with the interest, amounting to EUR 110 thousand (EUR 75 thousand in 2016). The amounts are recognized as longterm receivables. In exchange for the paid project funding amount a plot of land was mortgaged to Linas AB. Starting from 10 May 2016 the title of ownership to the plot is vested in Kuprionis UAB, enterprise registration number: 301166750. The value of the plot according to mortgage sheets is EUR 1.593 thousand. The market value of the plot, established in the independent property valuators' report, is EUR 1.341 thousand. The plot was mortgaged during the valuation (on 14-11-2014). The buildings, existing on the plot, are in poor condition and require capital repairs. The detailed plan of the plot is commenced to be prepared.

The interest, stated in the agreement, as of the date of the deal, is similar to the market interest. At the end of each reporting year it is verified whether there are any significant deviations from the market interest rate. Interest revenue is accrued and will be paid together with the loan.

On 1 September 2015 a loans subordination agreement was concluded between the bank, Linas AB and Rivena UAB (enterprise registration number: 302521510, the address of the headquarters: P. Žadeikos str. 13-35, Vilnius), according to which the rights of Linas AB and obligations of Rivena UAB according to the loan agreement are subordinated with regard to the rights of the bank, stemming from the credit agreement between the bank and Rivena UAB. The time period of the loans subordination agreement is till 6 August 2022. The deadline for returning of the loan, granted by the Company to Rivena UAB, established in the subordination agreement, is 1 September 2022.

By the right of claim transfer agreement of 4 December 2014, Linas AB transferred to Lino Linija UAB (enterprise registration number: 303185361, the address of the headquarters: Veiverių str. 9B-62, Vilnius) the right of claim to Rivena UAB (enterprise registration number: 302521510, the address of the headquarters: P. Žadeikos str. 13-35, Vilnius), the amount of which is EUR 45 thousand. The right of claim transfer agreement states that Lino Linija UAB shall pay the amount of transferred right of claim within the time period of five years, starting the payment from March 2018. Since no interest is stated in the agreement, the receivables are discounted in accordance with the average market interest rate. In the financial position statement, the financial assets are shown at the depreciated cost price.

4.10. The Group's and the Company's coming periods' costs and accrued revenues according to the largest cost groups for the coming periods (the table "Costs and accrued revenues for the coming periods")

4.11. The structure of the authorised capital stock of the Company, the number of shares and their par value; the numbers of shares held by the state, the municipality, the company (redeemed shares), and the number of Company shares and sums which belongs to subsidiary company, also Company's shareholders who have more than 5% shares. (Table 'AB Linas authorised capital structure and the main shareholders').

Average price of sale per share of the Company on the market in 2017 was 0,09 euro, and in 2016 average market sale price per share was 0,1 euro.

4.12. The information on the reserves of the Group and Company (Table 'Reserves of Linas, LLC enterprise group and Linas, LLC').

4.13. Draft distribution of the Company's profit (loss) (Table 'AB Linas draft profit (losses) distribution').

4.14. The subsidies (grants) received (or receivable) by the Group and the Company (Table 'Subsidies and grants').

The sum of 2 thousand EUR (2016 year - 4 thousand EUR) used for the Group's grants (subsidies) for the wages was received from Lithuanian Labour Exchange.

4.15. Short-term and long-term liabilities of the Group and the Company in accordance with the term of maturity, showing specifically those debt liabilities which are secured with company's assets (Table 'Short-term and long-term liabilities').

4.16. The state of the Group's and the Company's debts to credit institutions (the table "The state of debts of Linas AB Group and Linas AB Company to credit institutions")

145 thousand Eur credit sum is granted to the Company acc.to the account lending contract which was signed between the bank and AB "Linas" on 2012 04 10. Company's reserves, the balancing value of which are 1.448 thousand Eur acc.to the mortgage sheets, are mortgaged for the credit sum. UAB "Lino apdaila" is guarantee for all credit sum and term to ensure credit sum. The validation term of account credit contract is till March 31, 2018. Alternate interests are paid for used credit, which are accounted as three months term euro EURIBOR plus bank margin.

Acc.to the financial obligations limit contract signed between the bank and AB "Linas" on 07 10 2013, the credit sum of 290 thousand Eur is granted to the Company, for which company resources are mortgaged with the latest mortgage, the balance value of which acc.to the mortgage sheets are 1.448 thousand Eur. For the insurance of credit sum the warranty for all credit sum and term is received from UAB "Lino apdaila". The validation term of the financial obligations limit contract is till September 30, 2022. Alternate interests are paid for used credit, which are accounted as six months term euro EURIBOR plus bank margin.

According to the credit agreement, concluded on 26-09-2016 between the bank and Linas AB, the credit, amounting to EUR 840 thousand, was granted to the Company. In order to ensure the performance of the Company's obligations to the bank the maximum mortgage agreement was concluded, according to which the immovable property of Linas AB is mortgaged and suretyship of Lino Apdaila UAB is granted for the entire amount and period of credit. The time period of the credit agreement is till 15 September 2021.

4.17. The Group's and the Company's accruals for employee vacations (Table 'Vacation accruals').

4.18. Main business of the Group and Company.

The main activity of the Group of companies is production of textile products and selling of it. Information about the sales of textile items, i.e. the segment of textile items production business and geographical segment, is indicated in tables 4.18.1. "Information of Linas, LLC enterprise group about segments of textile items production business", 4.18.2 "Information of Linas, LLC enterprise group about geographical segments of textile items production business", 4.18.3. "Information of Linas, LLC about segments of textile products business", 4.18.4. "Information of Linas, LLC about segments of textile products of geographical business".

The Group companies attribute the revenues, received from the customers, to individual parties, basing on the customers' location. During the reporting year the Group's revenues from the deals with the largest customer amounted to 17,9 per cent of its total revenues (20 per cent in 2015). The revenues are calculated in the sewed products business segment and in the European countries' geographic segment.

In 2017 the incomes of UAB "Lino apdaila" for AB "Linas" production services were 2.118 thousand Eur (2016 y. - 2.179 thousand Eur), the cost price of presented services is 1.418 thousand Eur (2016 y. – 1.506 thousand Eur). As of 31 December 2017 the amount, payable by Linas AB to its

subsidiary, was EUR 915 thousand (EUR 422 thousand as of 31-12-2016). In 2016 the incomes of UAB "Lino apdaila" for the presented production services to the third parties made 5 thousand Eur (2016 y. - 5 thousand Eur), the cost price for presented services is 4 thousand Eur (2016 y. - 4 thousand Eur)..

It is impossible to attribute property and liabilities of the Group and AB "Linas" to abstracted segments. All property and liabilities of the Group and the Company are not allotted in values acc.to business and geographical segments.

4.19. The information on the selling expenses, general and administrative expenses of the Group and the Company (Table 'Selling expenses, general and administrative expenses').

4.20. The information on the cost and revenues of other activities of the Group and the Company (Table 'Other activities').

4.21. Financial and investment undertakings of the Group and the Company, revenues and costs shown by material items (Table 'Financial and investment undertakings').

4.22. Information about financial connections with the heads of the Group and the Company and with the other related persons. (Table 'Financial relations to corporate executives and other related persons').

Linas AB rents the facilities at the address S. Kerbedžio str. 23 in Panevėžys to Lino Dizainas UAB (enterprise registration number: 304093122) and to Lino Apdaila UAB (enterprise registration number: 301733421) without a definite term. Linas AB rents production machinery, equipment, devices and tools to Lino Dizainas UAB (enterprise registration number: 304093122) without a definite term.

In 2017 the Company rented administrative facilities in Vilnius according to a rent contract.

Production machinery, equipment, devices, tools and inventory, used in the activities of the Linas AB Group, are rented from Verslo Dizainas UAB (enterprise registration number: 302529076).

Lino Apdaila UAB, rents its machinery, equipment, devices and tools, used for performing flax textile products' yarn painting, weaving and decoration, to Lino Dizainas UAB (enterprise registration number: 304093122).

Paragraphs 1-5 of this Comment are described in Comment 4.5 in more detail.

Linas AB provides heating, necessary in order to heat the facilities at the address S. Kerbedžio str. 23 in Panevėžys and to boil water, as well as the steam, necessary in order to perform the production processes, to Lino Dizainas UAB (enterprise registration number: 304093122) without a definite term. The amount of revenues from provision of thermal energy, calculated during the financial year, is EUR 648 thousand (EUR 759 thousand in 2016).

The amount of revenues, received during the reporting year by Linas AB for the accounting services, provided to Lino Dizainas UAB, was EUR 41 thousand (EUR 41 thousand in 2016).

Lino Dizainas UAB (enterprise registration number: 304093122) provided the textile production decoration services to the Group: to Linas AB – for EUR 3.977 thousand (EUR 4.262 thousand in 2016), to Lino Apdaila UAB – for EUR 79 thousand (EUR 77 thousand in 2016). The amount, payable at the end of the financial year by the Group to Lino Dizainas UAB for the provided production services, was EUR 572 thousand (EUR 1.202 thousand in 2016). At the end of the financial year the debt of Lino Dizainas UAB to the Group for different services, provided by the Group, was EUR 5 thousand (EUR 205 thousand in 2016).

By the financing agreement of 19 November 2014 Rivena UAB, enterprise registration number: 302521510, the address of the headquarters: P. Žadeikos str. 13-35, LT-06324 Vilnius, and Linas AB agreed that Linas AB shall finance a real estate project on behalf of Rivena UAB. As of 31 December 2017 the amount of debt of Rivena UAB for project funding (EUR 1.171 thousand) and the interest, amounting to EUR 110 thousand (EUR 75 thousand in 2016) are recognized as long-term receivables. A plot of land was mortgaged to Linas AB for the paid project funding amount. The plot is owned by Kuprionis UAB, enterprise registration number: 301166750, since 10 May 2016. The value of the plot according to the mortgage sheets is EUR 1.593 thousand. The market value of the plot, established in the independent property valuator's report, is EUR 1.341 thousand. The plot was mortgaged during the

valuation (on 14-11-2014). The buildings, existing on the plot are in poor condition and require capital repairs. The detailed plan of the plot is commenced to be prepared.

The interest, stated in the agreement, as of the date of the deal, is similar to the market interest. At the end of each reporting year it is verified whether there are any significant deviations from the market interest rate. The interest revenues correspond to the actually received cash flows.

On September 1, 2015 the loans subordinate contract is signed between the bank, AB "Linas' and UAB "Rivena (company code 302521510, address P.Zadeikos str. 13-35, Vilnius). According to this contract the rights of AB "Linas" and liabilities of UAB "Rivena" acc.to the loan contract are subordinated by bank rights, arising from the bank and UAB "Rivena" credit contract. The loans subordination contract is valid up to August 6, 2022.

On September 1, 2015 AB "Linas" presented the guarantee with the guarantee contact of 200 thousand EUR sum for the debtor UAB "Rivena", company code 302521510, address P.Zadeikos str. 13-35, Vilnius up to August 18, 2017.

By the right of claim transfer agreement of 4 December 2014, Linas AB transferred to Lino Linija UAB (enterprise registration number: 303185361, the address of the headquarters: Veiverių str. 9B-62, Vilnius) the right of claim to Rivena UAB (enterprise registration number: 302521510, the address of the headquarters: P. Žadeikos str. 13-35, Vilnius), the amount of which is EUR 45 thousand. The right of claim transfer agreement states that Lino Linija UAB shall pay the amount of transferred right of claim within the time period of five years, starting the payment from March 2018. Since no interest is stated in the agreement, the receivables are discounted in accordance with the average market interest rate. In the financial position statement, the financial assets are shown at the depreciated cost price, EUR 34 thousand at the end of the financial year.

4.23. The tax on profit due to be paid (Tables 4.23.1 'Specification of expenses of profit tax', 4.23.2 'Recalculation of expenses of profit taxes, according to regular and temporary difference of accounting and taxable profit').

4.24. Deferred profit taxes of the Group and the Company (Table 'Extended profit tax').

4.25. Material out-of-balance-sheet amounts, i.e. mortgages, guarantees, securities (Table 'Rights and obligations, not stated in the statement of financial position').

4.26. The profit (loss) which belongs to one share (table "Earnings (loss) per share").

The inessential errors were corrected by applying the long-run approach.

There were no significant events after the reporting period in the Group and the Company.

LINAS, AB consolidated and Company's annual financial statements for the year 2017 33 4.1. LONG-TERM INTANGIBLE ASSETS

EUR
Indicators Develop
mental
works
Prestige Software Concessions,
patents,
licenses, brands
and other rights
Other
intangible
assets
Paid
advance
Total
Residual value at the end of 31.173 0 0 31.173
previous financial year
a) Procurement cost price of
long-term intangible assets
At the end of previous financial 105.236 0 1.296 106.532
year
Changes of financial year 33.799 0 0 33.799
· Procurement of assets 33.799 0 0 33.799
· Written-off property because
of the accounting evaluation 0 0 0 0
change (-)
· Assets, transferred to other
individuals and discarded (-) 0 0 0 0
· Transcription from one
article to another +/(-) 0 0 0 0
At the end of financial year 139.035 0 1.296 140.331
b) Amortization
At the end of previous financial 74.063 0 1.296 75.359
year
Changes of financial year 7.552 0 0 7.552
· Written-off property because
of the accounting evaluation 0 0 0 0
change (-)
· Financial year amortization 7.552 0 0 7.552
· Restorational records (-) 0 0 0 0
· Assets, transferred to other 0 0 0 0
individuals and discarded (-)
· Transcription from one 0 0 0
article to another +/(-) 0
At the end of financial year 81.615 0 1.296 82.911
e) Residual value at the end of
financial year (a) - (b)
57.420 0 0 57.420

4.1.1. Changes of Linas, LLC enterprise group and Linas, LLC long-term intangible assets

EUR

4.2.1. Changes of Linas, AB long-term tangible assets

Indicators Land Buildings and structures Machinery and equipment Means of transport Other equipment, appliances and instruments Investmen t property Paid advance and executed tangible property building (production) works Total Residual value at the end of previous financial year 1.393.241 104.806 51.426 9.831 0 103.500 1.662.804 a) Procurement of cost price long-term tangible assets 0 At the end of previous financial year 1.401.025 762.967 154.156 38.281 0 103.500 2.459.929 Changes of financial year 0 120.251 1.300 10.246 415.901 (103.500) 444.198 · Procurement of assets 0 16.751 1.300 12.907 415.901 0 446.859 · Written-off property because of the accounting evaluation change (-) 0 0 0 0 0 0 0 · Assets, transferred to other individuals and discarded (-) 0 0 0 (2.661) 0 0 (2.661) · Transcription to short-time assets+/(-) 0 0 0 0 0 0 0 · Transcription from one article to another +/(-) 0 103.500 0 0 0 (103.500) 0 At the end of financial year 1.401.025 883.218 155.456 48.527 415.901 0 2.904.127 b) Revaluation 0 At the end of previous financial year 0 0 0 0 0 0 0 Changes of financial year 0 0 0 0 0 0 0 · Increase (decrease) of value +/(-) 0 0 0 0 0 0 0 · Assets, transferred to other individuals and discarded (-) 0 0 0 0 0 0 0 · Transcription from one article to another +/(-) 0 0 0 0 0 0 0 At the end of financial year 0 0 0 0 0 0 0 c) Depreciation (-) 0 At the end of previous financial year 7.784 658.161 102.730 28.450 0 0 797.125 Changes of financial year 93.401 30.604 11.471 3.088 0 0 138.564 · Written-off property because of the accounting evaluation change (-) 0 0 0 0 0 0 0 · Financial year depreciation 93.401 30.604 11.471 5.748 0 0 141.224 · Restorational records (-) 0 0 0 0 0 0 0 · Assets, transferred to other individuals and discarded (-) 0 0 0 (2.660) 0 0 (2.660) · Transcription from one article to another +/(-) 0 0 0 0 0 0 0 At the end of financial year 101.185 688.765 114.201 31.538 0 0 935.689 d) Decrease of value 0 At the end of previous financial year 0 0 0 0 0 0 0 Changes of financial year 0 0 0 0 42.000 0 42.000 · Decrease of value of financial year 0 0 0 0 42.000 0 42.000 · Restorational records (-) 0 0 0 0 0 0 0 · Assets, transferred to other individuals and discarded (-) 0 0 0 0 0 0 0 · Transcription from one article to another +/(-) 0 0 0 0 0 0 0 At the end of financial year 0 0 0 0 0 0 0 e) Residual value at the end of financial year (a) + (b) - (c) - (d) 1.299.840 194.453 41.255 16.989 373.901 0 1.926.438

EUR
Indicators Land Buildings
and
structures
Machinery
and
equipment
Means of
transport
Other
equipment,
appliances
and
instruments
Investmen
t property
Paid advance and
executed tangible
property
building
(production)
works
Total
Residual value at the end of previous 1.395.166 341.963 53.932 12.524 0 103.500 1.907.085
financial year
a) Procurement of cost price long-term 0
tangible assets
At the end of previous financial year 1.406.342 1.177.468 168.605 45.767 0 103.500 2.901.682
Changes of financial year 0 136.631 3.618 10.246 415.901 (97.305) 469.091
· Procurement of assets 0 34.131 3.618 12.907 415.901 6.195 472.752
· Written-off property because of the 0 0 0 0 0 0 0
accounting evaluation change (-)
· Assets, transferred to other individuals 0 (1.000) 0 (2.661) 0 0 (3.661)
and discarded (-)
· Transcription to short-time assets +/(-) 0 0 0 0 0 0 0
· Transcription from one article to
another +/(-) 0 103.500 0 0 0 (103.500) 0
At the end of financial year 1.406.342 1.314.099 172.223 56.013 415.901 6.195 3.370.773
b) Revaluation 0
At the end of previous financial year 0 0 0 0 0 0 0
Changes of financial year 0 0 0 0 0 0 0
· Increase (decrease) of value +/(-) 0 0 0 0 0 0 0
· Assets, transferred to other individuals 0 0 0 0 0 0 0
and discarded (-)
· Transcription from one article to
another +/(-)
0 0 0 0 0 0 0
At the end of financial year 0 0 0 0 0 0 0
c) Depreciation (-) 0
At the end of previous financial year 11.176 835.505 114.673 33.243 0 0 994.597
Changes of financial year 94.066 73.796 12.737 4.585 0 0 185.184
· Written-off property because of the
accounting evaluation change (-) 0 0 0 0 0 0 0
· Depreciation of financial year 94.066 74.796 12.737 7.245 0 0 188.844
· Restorational records (-) 0 0 0 0 0 0 0
· Assets, transferred to other individuals
and discarded (-) 0 (1.000) 0 (2.660) 0 0 (3.660)
· Transcription from one article to
another +/(-) 0 0 0 0 0 0 0
At the end of financial year 105.242 909.301 127.410 37.828 0 0 1.179.781
d) Decrease of value 0
At the end of previous financial year 0 0 0 0 0 0 0
Changes of financial year 0 0 0 0 42.000 0 42.000
· Decrease of value of financial year 0 0 0 0 42.000 0 42.000
· Restoration records (-) 0 0 0 0 0 0 0
· Assets, transferred to other individuals
and discarded (-) 0 0 0 0 0 0 0
· Transcription from one article to
another +/(-) 0 0 0 0 0 0 0
At the end of financial year 0 0 0 0 0 0 0
e) Residual value at the end of financial
year (a) + (b) - (c) - (d) 1.301.100 404.798 44.813 18.185 373.901 6.195 2.148.992

4.3.1. Average useful service period of long-term intangible and tangible assets

No. Long-term asset groups GROUP COMPANY
1. Long-term intangible asset groups
1.1. Concessions, patents, licenses, brands and
other rights - -
1.2. Software 4 4
1.3. Other intangible assets 4 4
2. Long-term tangible asset groups
2.1. Buildings and structures 15 15
2.2. Machines and equipment 6 6
2.3. Means of transport 6 6
Other equipment, appliances and
2.4. instruments 5 5

4.3.2. Totally amortized or deteriorated long-term intangible and tangible assets which is still used

GROUP COMPANY
No. Title of asset group Number of
exploited
inventory
units
Purchase cost
price (Eur)
Number of
exploited
inventory
units
Purchase
cost price
(Eur)
1. Long-term intangible asset groups
1.1. Concessions, patents, licenses, brands
and other rights
1.2. Software 4 71.170 4 71.170
1.3. Other intangible assets 1 1.296 1 1.296
Total 5 72.466 5 72.466
2. Long-term tangible asset groups
2.1. Buildings and structures
2.2. Machinery and equipment 8 649.416 2 626.820
2.3. Means of transport 2 97.718 1 86.947
2.4. Other equipment, appliances and
instruments
7 13.839 7 13.839
Total 17 760.973 10 727.606

4.3.3. Rent of long-term tangible assets

GROUP COMPANY
Rent tax during Rent tax during
Leasehold long-term tangible assets financial year financial year
No. group Rent period (Eur) Rent period (Eur)
1. Buildings and structures, totally 21.177 21.177
1.2. Administrative premises in Vilnius until 2020-12-31 21.177 until 2020-12-31 21.177
2. Means of transport termless 16.731 termless 16.731
Machinery and equipment, other
3. equipment, appliances and termless 90.000 - -
instruments
4. Other tangible assets - - - -
1. Buildings and structures, totally 21.177 21.177
1.2. Administrative premises in Vilnius until 2020-12-31 21.177 until 2020-12-31 21.177
EUR
Other amounts
Associated companies receivable after one
Run.
No.
Indicators Value of
loans,
granted to
associated
companies
Accrued
interest
revenues
from the
loans to
associated
companies
Reduction of
value of the
loans, granted
to associated
companies (-)
Value of the
amounts,
receivable
from
associated
companies
Reduction of
value of the
amounts,
receivable
from
associated
companies
(-)
The value
of
receivables
year
Reduction
of value of
receivables
(-)
Other
companies'
securities
acquisition
price
Total
1. Remainder in
the beginning of
financial year
3.102.725 509.856 (2.328.482) 2.224.758 (2.193.177) 18.035 (17.957) 290 1.316.049
2. Changes of
financial year
(1.931.734) (399.564) 2.328.482 (2.190.626) 2.193.177 (264) 186 0 (343)
2.1. Other
investments
2.2. Acquisitions,
calculated
interest, granting
of loans
35.618 2.551 38.169
2.3. Transfer from
the sums
receivable after
one year
2.4. Sales, return of
loans and other
receivable
amounts (-)
(452.534) 414.100 (264) 186 (38.512)
2.5. Transfer to short
term financial
assets (-)
0
2.6. BUAB "Nordic
investicija"
(company code
135442762) 4-
03-2017 - signed
out from the
Register of Legal
Entities. Debts
which are
eliminated from
accounting
(1.303.980) (388.908) 1.692.888 (2.190.995) 2.190.995
2.7. UAB "Domus
Palanga" 10-02-
2016 – signed
out from the
Register of Legal
Entities . Debts
which are
eliminated from
accounting
(175.220) (46.274) 221.494 (2.182) 2.182
2.8. Decrease of
value (-)
Remainder in
3. the end of
financial year (1
+ 2)
1.170.991 110.292 0 34.132 0 17.771 (17.771) 290 1.315.706

4.4.1. Changes of long-term financial assets of Linas, AB enterprise group

LINAS, AB consolidated and Company's annual financial statements for the year 2017 38 4.4.2. Changes of long-term financial assets of Linas, AB

EUR
Company of Group of
companies
Associated companies Other amounts
receivable after one
year
Run.
No.
Indicators Subsidiaries'
shares
acquisition
cost price
The value
of loans,
granted to
subsidiaries
Value of
loans,
granted to
associated
companies
Accrued
interest
revenues
from the
loans to
associated
companies
Reduction
of value of
the loans,
granted to
associated
companies
(-)
Value of
the
amounts,
receivable
from
associated
companies
Reduction
of value of
the
amounts,
receivable
from
associated
companies
(-)
The value
of
receivables
Reduction
of value of
receivables
(-)
Other
companies'
securities
acquisition
price
Total
1. Remainder in
the beginning
of financial
2.896 3.102.725 509.856 (2.328.482) 2.224.758 (2.193.177) 18.035 (17.957) 290 1.318.944
year
Changes of
2. financial year (1.931.734) (399.564) 2.328.482 (2.190.626) 2.193.177 (264) 186 0 (343)
2.1. Investments in
subsidiaries
0
2.2. Other
investments
0
2.3. Acquisitions,
calculated
interest,
granting of
loans
35.618 2.551 38.169
2.4. Transfer from
the sums
receivable
after one year
0
2.5. Sales, return
of loans and
other
receivable
amounts (-)
(452.534) 414.100 (264) 186 (38.512)
2.6. Transfer to
short-term
financial
assets (-)
0
2.7. BUAB
"Nordic
investicija"
(company
code
135442762) 4-
03-2017 -
signed out
from the
Register of
Legal Entities.
Skolos
eliminuojamos
iš apskaitos.
(1.303.980) (388.908) 1.692.888 (2.190.995) 2.190.995 0
2.8. UAB "Domus
Palanga" 10-
02-2016 –
signed out
from the
Register of
Legal Entities
. Skolos
eliminuojamos
iš apskaitos.
(175.220) (46.274) 221.494 (2.182) 2.182 0
2.9. Decrease of 0
3. value (-)
Remainder in
the end of
financial year
2.896 0 1.170.991 110.292 0 34.132 0 17.771 (17.771) 290 1.318.601
(1 + 2)
EUR
Run.
No.
Indicators Raw
materials,
materials and
spare parts
Unfinished
production
and executed
jobs
Production Goods,
purchased
for resell
Total
1. Cost price of purchased stocks
1.1. At the end of last financial year 2.292.200 17.826 1.522.539 821 3.833.386
1.2. At the end of financial year (incl. stocks en route
and by the third parties)
2.582.300 21.513 1.789.291 1.537 4.394.641
2. Depreciation until net possible selling value
(restitution)
2.1. At the end of last financial year 0 0 0 0 0
2.2. At the end of financial year 0 0 0 0 0
3. Net value possible sales at the end of financial
year (1-2)
3.1. At the end of last financial year (1.1.-2.1.) 2.292.200 17.826 1.522.539 821 3.833.386
3.2. At the end of financial year (incl. stocks en route
and by the third parties) (1.2-2.2)
2.582.300 21.513 1.789.291 1.537 4.394.641
4. Balance value of mortgage stocks at the end of
previous financial year (31/12/2016)
900.760 1.671.090 2.571.850
5. Value of mortgage stocks according to mortgage
papers (31/12/2016)
289.620 1.158.480 1.448.100
6. Balance value of mortgage stocks at the end of
financial year (31/12/2017)
1.242.024 1.817.262 3.059.286
7. Value of mortgage stocks according to mortgage
papers (31/12/2017)
289.620 1.158.480 1.448.100

4.5.1. Stocks of enterprise group of Linas, AB

4.5.2. Stocks of Linas, AB

EUR
Run.
No.
Indicators Raw
materials,
materials
and spare
parts
Raw
materials,
materials and
spare parts
are at the
third parties
Unfinished
production
and executed
jobs
Production Goods,
purchased
for resell
Total
1. Cost price of purchased stocks
1.1. At the end of last financial year 1.035.238 1.251.373 0 1.561.671 821 3.849.103
1.2. At the end of financial year (incl.
stocks en route and by the third parties)
1.467.247 1.103.455 0 1.855.454 1.537 4.427.693
2. Depreciation until net possible selling
value (restitution)
2.1. At the end of last financial year 0 0 0 0 0 0
2.2. At the end of financial year 0 0 0 0 0 0
3. Net value possible sales at the end of
financial year (1-2)
3.1. At the end of last financial year (1.1.-
2.1.)
1.035.238 1.251.373 0 1.561.671 821 3.849.103
3.2. At the end of financial year (incl.
stocks en route and by the third parties)
(1.2-2.2)
1.467.247 1.103.455 0 1.855.454 1.537 4.427.693
4. Balance value of mortgage stocks at the
end of previous financial year
(31/12/2016)
573.653 327.107 1.671.090 2.571.850
5. Value of mortgage stocks according to
mortgage papers (31/12/2016)
289.620 1.158.480 1.448.100
6. Balance value of mortgage stocks at the
end of financial year (31/12/2017)
995.233 245.790 1.817.262 3.058.285
7. Value of mortgage stocks according to
mortgage papers (31/12/2017)
289.620 1.158.480 1.448.100

LINAS, AB consolidated and Company's annual financial statements for the year 2017 40 4.6. PAID ADVANCE FOR CURRENT ASSETS AND SERVICES

EUR
GROUP COMPANY
Run. No. Biggest paid advance groups Financial
year
Last
financial
year
Financial
year
Last
financial
year
1 Paid advance to the reserve providers 80.984 134.100 75.763 132.867
2 Paid advance to the service providers 8.812 6.584 8.349 5.906
3 Balance value of uncertain paid advance 0 0 0 0
3.1. Uncertain paid advance 192 192 160 160
3.2. Part of uncertain paid advance written-off to
the expenses (-)
(192) (192) (160) (160)
4. Paid advance 89.796 140.684 84.112 138.773

4.7. AMOUNTS RECEIVABLE WITHIN ONE YEAR

EUR
GROUP COMPANY
Run.
No.
Largest groups of receivable amounts Financial year Last financial
year
Financial year Last financial
year
1. Customers' debts 1.440.849 2.218.823 1.440.820 2.218.823
2. Companies' debts of Group of companies 0 0 0 0
3. Debts of associated companies 60.653 615.097 60.653 410.100
4. Other receivable amounts 177.145 223.645 169.832 216.538
.1. Receivable VAT 90.961 197.010 90.961 197.010
2.2. Budget debt to the enterprise 58 58 58 58
2.3. Debt of social insurance to the enterprise 0 0
2.4. Amounts receivable from accountable persons 1.884 788 1.884 788
2.5. Part of current year of long term loans provided
for third parties
0 0 0 0
2.6. Other accumulated receivable interests for
provided long-term loans of part of current year
0 0 0 0
2.7. Amounts receivable from employees for loans
provided
0 0 0 0
2.8. Advance payment for employees 11.477 10.148 4.164 3.529
2.9. Receivable sums from requisition rights transfer 0 0 0 0
2.10. Receivable grants in coming periods 0 737 0 249
2.11. Profit tax paid in advance 72.823 14.904 72.823 14.904
2.14. Other amounts receivable (amounts receivable
from var. debtors)
0 0 0 0
Amount receivable within one year, total 1.678.647 3.057.565 1.671.305 2.845.461

LINAS, AB consolidated and Company's annual financial statements for the year 2017 41 4.8. UNCERTAIN DEBTS

EUR
GROUP COMPANY
Financial year
Last financial year
Financial year Last financial year
Run.
No.
Uncertain debts by
groups
Uncertain
debts
Expenses
of
uncertain
debts
Uncertain
debts
Expenses
of
uncertain
debts
Uncertain
debts
Expenses
of
uncertain
debts
Uncertain
debts
Expenses
of
uncertain
debts
1. Uncertain debts at the
beginning of the
financial year
3.240.216 3.351.741 3.237.633 3.349.158
2. Part of uncertain debts
written-off to the
expenses at the
beginning of the
financial year (-)
(3.240.216) (3.351.741) (3.237.633) (3.349.158)
3. Balance value of
uncertain debts at the
beginning of the
financial year
0 0 0 0
4. Debts acknowledge as
uncertain within
financial year
4.480 6.405 4.480 6.405
5. Part of uncertain debt
written-off to expenses
within financial year
(4.480) (6.405) (4.480) (6.405)
6. Uncertain debts
acknowledge as
expenses within
financial year
4.476 6.236 4.476 6.236
7. Written-off to
expenses without
transfering debt into
uncertain debts of
foreign consumer
account
0 0 0 0
8. Uncertain debts
recovered within
financial year
(restoring of written
off debts (-))
0 0 0 0
9. Impact of currency
exchange rates to
advance payment
0 0 0 0 0 0 0 0
10. Impact of currency
exchange rates to debts
of foreign consumer
0 0 0 0 0 0 0 0
11. Uncertain debts
written-off from
financial accounting (-)
(117.930) (117.930)
12. Uncertain debt at the
end of financial year
3.244.696 3.240.216 3.242.113 3.237.633
13. Part of uncertain debt
written-off to expenses
at the end of financial
year (-)
(3.244.696) (3.240.216) (3.242.113) (3.237.633)
14. Balance value of
uncertain debts at the
end of the financial
year
0 0 0 0

4.9. LINAS, AB ENTERPRISE'S GROUP AND LINAS, AB LOANS FOR ASSOCIATED COMPANIES AND RECEIVABLE SUMS FROM ASSOCIATED COMPANIES

Financial year
Last financial year
Run.
No.
Loans provided
and receivable
amounts
Currency
of loan
Term of
recovery
Value of
financial
assets
31 12 2017,
Eur
Interest
payble for
loan
provided
31 12 2017
Eur
During
2017 y.
calculated
interest
income,
Eur
Value of
financial
assets
31 12 2016,
Eur
Interest
payble for
loan
provided
31 12 2016
Eur
During
2016 y.
calculated
interest
income,
Eur
Notes
1. Loans provided
for associated
companies and
receivable sums
from associated
companies
4.877.499 545.475 38.265 5.327.483 509.857 38.444
BUAB "Nordic
investicija"
(company code
135442762)
EUR 3.494.974 388.908 3.947.508 388.908 4-03-2017 - signed out from
the Register of Legal Entities.
Debts which are eliminated
from accounting.
BUAB "Domus
Palanga"
(company code
126234417)
EUR 177.402 46.275 177.402 46.275 10-02-2016 – signed out from
the Register of Legal Entities.
Debts which are eliminated
from accounting.
UAB "Rivena"
(company code
302521510)
EUR iki 2022-
09-01
1.170.992 110.292 35.715 1.170.992 74.674 35.715
UAB "Lino
linija"
(company code
303185361)
EUR iki 2023-
02-28
34.131 2.550 31.581 2.729
2. Long-term loans
to associated
companies,
recognized as
bad debts and
receivable sums
from associated
companies
(3.672.376) (435.183) 0 (4.086.477) (435.183) 0
BUAB "Nordic
investicija"
(company code
135442762)
EUR (3.494.974) (388.908) (3.909.075) (388.908) 4-03-2017 - signed out from
the Register of Legal Entities.
Debts which are eliminated
from accounting.
BUAB "Domus
Palanga"
(company code
126234417)
EUR (177.402) (46.275) (177.402) (46.275) 10-02-2016 – signed out from
the Register of Legal Entities.
Debts which are eliminated
from accounting
3. Total 1.205.123 110.292 38.265 1.241.006 74.674 38.444

LINAS, AB consolidated and Company's annual financial statements for the year 2017 43 4.10. COSTS AND ACCRUED REVENUES OVER THE COMING PERIODS

EUR
Run.
No.
The large cost groups for the coming GROUP COMPANY
periods Financial
year
Last
financial
year
Financial
year
Last
financial
year
1 Advance payments for media and
information publications
357 658 357 658
2 Insurance fees 15.704 12.234 13.970 11.726
3 Fairs' costs for the coming periods 4.926 23.932 4.926 23.134
4 Other costs for the coming periods 26.194 1.889 26.194 1.889
5 Costs and accrued revenues over the
coming periods
47.181 38.713 45.447 37.407
Run.
No.
Indicators Number of
shares
% Amount
(Eur)
1 Joint-stock capital structure at the end of financial
year
According to type of shares
1.1. Ordinary shares 24.038.990 6.971.307
1.2. Preference shares 0 0
1.3. Shares of employees 0 0
1.4. Special shares 0 0
1.5. Other shares 0 0
TOTAL: 24.038.990 100,00% 6.971.307
2 State or municipal capital 0 0
3 Own shares, owned by the enterprise itself 0 0
4 Shares which hold subsidiary companies. 0 0
5 Shareholders who have more than 5% of
enterprise's shares (2016-12-31)
5.1. Association "EEEE" (company code 302572729,
address: Savanorių pr. 192, Kaunas)
5.564.579 23,15% 1.613.728
5.2. Company "Roocero Associates Limited"
(company code 106446, address: 35 Barrack Road,
Belize, Belize)
5.406.533 22,49% 1.567.895
5.3. Company "Danelika Services Limited" (company
code HE289213, address: 3 Michael Koutsofta Street,
Limassol, Cyprus)
4.156.585 17,29% 1.205.410
5.4. UAB "Rivena" (company code 302521510,
address: P.Žadeikos g. 13-35, Vilnius)
2.423.030 10,08% 702.679

4.12. RESERVES OF LINAS, AB ENTERPRISE GROUP AND LINAS, AB

EUR
GROUP COMPANY
Run.
No.
Indicators At the end
of financial
year
At the end
of last
financial
year
At the end
of financial
year
At the end
of last
financial
year
1 Compulsory reserve 290 290 0 0
2 Other reserves 170.000 170.000 0 0
2.1. Unappropriated reserve for investment
2.2. Reserve for support and benefits in line with
collective agreement
2.3. Reserve for development of business projects 170.000 170.000
3 Total reserves 170.290 170.290 0 0

4.13. PROFIT (LOSS) ASSIGNMENTPROJECT

EUR
Run.
No.
Articles Amount
1. Retained earnings (loss) of the previous financial year at the
end of the current year
(195.864)
2. Net profit (loss) for the current year 166.405
3. Unadmitted profit (loss) of accounting financial year in
statement of profit or loss and other comprehensive income
0
4. Transfers from reserves, total 0
4.1. - from obligatory reserve 0
4.2. - from reserve for business projects development 0
4.3. - from reserve for support 0
5. Contributions by shareholders to cover losses 0
6. Appropriated profit (loss), total (29.459)
7. Appropriation of profit 0
7.1. part of profit admitted to compulsory reserve 0
7.2. part of profit admitted to reserve to obtain own shares 0
7.3. part of profit admitted to other reserves: 0
7.3.1. to reserve for support 0
7.3.2. to reserve for project of business development 0
7.4. part of profit admitted to pay the dividends 0
7.5. part of profit admitted for annual payoffs (bonuses) to
members of Board, employees bonuses and other aims;
0
8. Retained earnings (loss) at the end of the current year to be
carried forward to the following financial year
(29.459)

LINAS, AB consolidated and Company's annual financial statements for the year 2017 46 4.14. GRANTS AND SUBVENTIONS

EUR
Run.
NO.
Type of grants
(subventions)
Remainder at
the beginning
of period
Received
amounts of
grants
(subventions)
Receivable
amounts of
grants
(subventions)
Used amounts
of grants
(subventions)
Returned
amounts of
grants
(subventions)
Remainder at
the end of
period
1. GROUP
1.1. Grants related to
income
(compensation of
expenses)
737 1.339 2.076 0 0
1.2. Grants related to
assets
1.3. Subventions
2. COMPANY
2.1. Grants related to
income
(compensation of
expenses)
249 90 339 0 0
2.2. Grants related to
assets
2.3. Subventions

LINAS, AB consolidated and Company's annual financial statements for the year 2017 47 4.15. LONG-TERM AND SHORT-TERM OBLIGATIONS

EUR
GROUP COMPANY
Run.
No.
Indicators Debts payable or
parts thereof
Total
debts at
Total
debts at
Debts payable or
parts thereof
Total
debts at
Total
debts at
Splitting of amounts payable by types within one
financial
year
after one
year
the end of
financial
year
the end of
last
financial
year
within one
financial
year
after one
year
the end of
financial
year
the end of
last
financial
year
1. Financial debts: 176.842 486.316 176.842 663.158 176.842 486.316 176.842 663.158
1.1. For leasing (financial lease) or similar
obligations
0 0 0 0 0 0
1.2. For credit institutions 176.842 486.316 176.842 663.158 176.842 486.316 176.842 663.158
1.3. Other financial debts 0 0 0 0 0 0 0 0
2. Other debts 1.966.977 0 2.348.591 0 2.554.962 0 2.486.732 0
2.1. Debts for suppliers 847.926 0 687.762 0 837.028 0 646.277 0
2.2. Payable sums for companies of Group
of companies
0 0 0 0 915.039 0 421.699 0
2.3. Payable sums for associated companies 733.687 0 1.205.064 0 584.319 0 1.205.064 0
2.4. Received advance 31.918 0 45.780 0 31.918 0 45.780 0
2.5. Obligations related to industrial
relations
259.739 0 261.329 0 140.829 0 123.068 0
2.5.1 wage payable 121.793 0 113.652 0 74.616 0 56.088 0
2.5.2 social insurance payable 53.925 0 57.472 0 30.905 0 27.731 0
2.5.3 Compulsory health insurance
contributions
6.584 0 7.344 0 2.753 0 2.975 0
2.5.4 payable RIT from wage 9.561 0 17.506 0 3.879 0 10.130 0
2.5.5 leave accumulation 67.680 0 65.140 0 28.593 0 26.055 0
2.5.6 payable contributions to the
Guarantee Foundation
196 0 215 0 83 0 89 0
2.6. VAT payable 23.575 0 76.584 0 0 0 0 0
2.7. Other taxes payable 6.204 0 11.146 0 6.204 0 9.867 0
2.8. Profit tax payment obligations 23.621 0 25.681 0 0 0 0 0
2.9. Payable amounts for sales services 31.817 0 29.827 0 31.817 0 29.827 0
2.10. Various other payable amounts 8.490 0 5.418 0 7.808 0 5.150 0
Total 2.143.819 486.316 2.525.433 663.158 2.731.804 486.316 2.663.574 663.158

Guarantee debts of Linas, LLC enterprise group

Financial year debts
guaranteed by
Last year financial debts
guaranteed by
Run.
No.
Government Group of
enterprises by
mortgaged
assets
Government Group of
enterprises by
mortgaged
assets
1. Financial debts: 0 3.914.100 3.914.100
1.1. Leasing (financial lease) or similar
obligations
0 0
1.2. For credit institution 3.914.100 3.914.100
1.3. Other financial debts 0 0
2. Other debts 0 0 0 0
Run. At the end of the financial
year
At the end of the last financial
year
No. Debts for credit institutions Amount of
loan
Date of loan
return
Amount of
loan
Date of loan
return
1. Enterprise leasing liabilities (financial
lease), payable in Eur
2. Enterprise debts for credit institutions,
payable in Eur
663.158 EUR 840.000 EUR
2.1. Long-term liabilities in accordance with
the loan agreements of 26-09-2016
486.316 EUR 2021-09-15 663.158 EUR 2021-09-15
2.2. The share of debts to credit institutions
during the current year (the loan
agreement of 26-09-2016)
176.842 EUR 2018-12-31 176.842 EUR 2017-12-31
Total 663.158 EUR 840.000 EUR

LINAS, AB consolidated and Company's annual financial statements for the year 2017 49 4.17. ACCUMULATIONS OF LEAVES

EUR
GROUP COMPANY
Run. No. Indicators Financial year Last financial Financial year Last financial
year year
1. Remainder of accumulative leaves at the
beginning of the year
65.140 68.928 26.055 25.107
1.1. Accumulative leaves at the beginning of the
year
49.733 52.577 19.892 19.168
1.2. Social insurance of accumulative leaves at
the beginning of the year
15.407 16.351 6.163 5.939
2. Accumulated leaves within a year (leaves
with social insurance directed to expenses)
141.052 126.383 58.811 52.300
2.1. Accumulated leaves 107.682 96.539 44.897 39.930
2.2. Accumulated social insurance from
accumulated leaves
33.370 29.844 13.914 12.370
3. Accumulated leaves amount covered by
accumulated leavess (within a financial
year for employees practically counted
leaves with social insurance)
(138.513) (130.171) (56.273) (51.352)
3.1. Leaves expenses covered by accumulated
leaves
(105.745) (99.383) (42.959) (39.206)
3.2. Leaves with social insurance expenses
covered by accumulated leaves
(32.768) (30.788) (13.314) (12.146)
4. Remainder of accumulative leaves at the
end of the year
67.679 65.140 28.593 26.055
4.1. Accumulated leaves at the end of the year 51.670 49.733 21.830 19.892
4.2. Social insurance from accumulated leaves
at the end of the year
16.009 15.407 6.763 6.163
5. Change of accumulated leave remainder
within a year (4 - 1)
2.539 (3.788) 2.538 948
5.1. Change of accumulated leave remainder 1.937 (2.844) 1.938 724
5.2. Change of social insurance from
accumulated leave remainder
602 (944) 600 224
4.18. PRODUCTION OF TEXTILE PRODUCTS
478.635 265.254 215.346 132.149 1.395 930 898.926 769.453 1.540.703 1.393.149 activity
Profit (losses) of main
expenses
2.177.981 2.030.181 and administrative
Selling expenses, general
1.395 132.149 215.346 2.443.235 2.508.816 930 898.926 1.540.703 1.393.149 769.453 Gross profit (losses)
59.339 176.856 334.355 10.388.052 10.535.793 39.026 065 4.885.153 4.866.105 5.256.946 Cost price 5.306.0
549.701 12.831.287 13.044.609 309.005 60.734 39.956 6.846.768 6.278.302 5.635.558 6.155.872 Income
$2017 y.$ 2016 y. 2017 y. 2016 y. 2017 y. 2016 y. $2017 y.$ 2016 y. 2016 y. $\frac{2017 y}{201}$
Production services Yarns Sewn products Fabrics Indicators
Group's Total Segments (production, goods, types of activity)
Segments (production, goods, types of activity) EUR
Production services Group's Total
2017 y.
2016 y.
2016 y. 2017 y. 2016 y.
309.005
60.734
549.701 12.831.287 13.044.609
176.856
59.339
334.355 10.388.052 10.535.793
132.149
1.395
215.346 2.443.235 2.508.816
2.177.981 2.030.181
132.149
1.395
215.346 265.254 478.635
EUR
Segments (regions)
2017 y.
2016 y.
2016 y. 2017 y. 2016 y. 2017 y. 2016 y.
2.244.609
542.309
1.718.957 1.423.266 1.413.110 12.831.287 13.044.609
1.737.226
336.795
1.337.788 1.177.406 1.211.807 10.388.052 10.535.793
507.383
205.514
381.169 245.860 201.303 2.443.235 2.508.816
2.177.981 2.030.181
507.383
205.514
381.169 245.860 201.303 265.254 478.635
Lithuania Other countries Group's Total
4.18.2. Information of Linas, LLC enterprise group about segments of textile products of geographical production business
Segments (production, goods, types of activity) EUR
Indicators Fabrics Sewn products Yarns Production services Company's Total
2017 y. 2016 y. 2017 y. 2016 y. 2017 y. 2016 y. 2017 y. 2016 y. 2017 y. 2016 y.
Income 6.846.768 6.278.302 5.635.558 6.155.872 39.995 60.921 303.989 545.140 12.826.310 13.040.235
Cost price 5.661.927 5.217.675 5.192.460 5.614.776 39.026 59.526 172.697 330.564 11.066.110 11.222.541
Gross profit (losses) 1.540.703 1.060.627 769.453 541.096 930 1.395 132.149 214.576 1.760.200 1.817.694
Selling expenses, general
and administrative
expenses
1.792.012 1.601.439
Profit (losses) of main
activity
1.540.703 1.060.627 769.453 541.096 930 1.395 132.149 214.576 (31.812) 216.255
4.18.4. Information of Linas, LLC about segments of textile products of geographical business
Segments (regions) EUR
Indicators Scandinavian countries European countries USA Lithuania Other countries Company's Total
2017 y. 2016 y. 2017 y. 2016 y. 2017 y. 2016 y. 2017 y. 2016 y. 2017 y. 2016 y. 2017 y. 2016 y.
Income 2.618.111 2.878.752 6.191.772 6.491.481 353.529 542.309 2.239.632 1.714.583 1.423.266 1.413.110 12.826.310 13.040.235
Cost price 2.117.978 2.327.387 5.602.890 5.823.411 243.552 358.871 1.846.929 1.421.635 1.254.761 1.291.237 11.066.110 11.222.541
Gross profit (losses) 500.133 551.365 588.882 668.070 109.977 183.438 392.703 292.948 168.505 121.873 1.760.200 1.817.694
Selling expenses, general
and administrative
expenses
1.792.012 1.601.439
Profit (losses) of main
activity
500.133 551.365 588.882 668.070 109.977 183.438 392.703 292.948 168.505 121.873 (31.812) 216.255
$\frac{1}{2}$
Segments (production, goods, types of activity) Company's Total
Indicators Fabrics Sewn products Yarns Production services
$2017 y.$ 2016 y. $2017 y.$ 2016 y. $2017 y.$ $2016 y.$ $2017 y.$ 2016 y. 2017 y. 2016 y.
Income 846.768 6.278.302 5.635.558 6.155.872 39.995 60.921 303.989 $545.140$ 12.826.310 13.040.23:
Cost price 5.661.927 5.217.675 5.192.460 5.614.776 39.026 59.526 172.697 330.564 11.066.110 11.222.54
Gross profit (losses) $.540.703$ 1.060.627 769.453 541.096 930 1.395 132.149 214.576 1.760.200 1.817.69
and administrative
Selling expenses, general
$1.792.012$ $1.601.43$
expenses
Profit (losses) of main
activity
$540.703$ 1.060.627 769.453 541.096 930 1.395 132.149 214.576 (31.812) 216.255

LINAS, AB consolidated and Company's annual financial statements for the year 2017 52 4.19. SELLING EXPENSES, GENERAL AND ADMINISTRATIVE EXPENSES

EUR
Run.
No.
Indicators GROUP
Financial
year
Last
financial
year
COMPANY
Financial
year
Last
financial
year
1 Expenses of sales 753.871 679.183 753.871 679.183
1.1 Expenses of commissions 261.199 223.609 261.199 223.609
1.2 Expenses of transporting of sold production 74.279 108.411 74.279 108.411
1.3 Expenses of production advertising and fair 98.767 96.868 98.767 96.868
1.4 Expenses of sales number employees wage
and other with employees related expenses
262.626 204.415 262.626 204.415
1.5 Evaluate of customers creditworthiness and
insurance costs of marketabble credits
21.633 19.569 21.633 19.569
1.6 Other sales expenses 35.367 26.311 35.367 26.311
2 General and administration expenses 1.424.110 1.350.998 1.038.140 922.256
2.1 Expenses related with employees wage and
other with employees related
670.976 651.403 455.055 401.252
2.2 Training costs of administration employees 7.439 16.378 6.910 12.185
2.3 Rent, exploitation and repairing expenses 317.076 359.734 188.684 227.793
2.4 Expenses of security services 32.583 32.582 21.721 21.721
2.5 Expenses of deterioration and amortization of
non-current asset
77.872 30.516 68.919 22.803
2.6 Expenses of info technologies 30.635 30.718 27.736 25.785
2.7 Connection expenses 12.427 10.882 9.245 8.698
2.8 Expenses of bank services 19.177 15.378 18.799 15.076
2.9 Legal services expenses 13.337 20.067 13.337 20.067
2.10 Expenses of activity tax 37.085 18.519 35.676 15.103
2.11 Expenses of support provided 26.985 32.653 26.985 32.653
2.12 Expenses of social guarantees, stated in
collective agreement
1.976 1.422 1.976 1.422
2.13 Representation expenses 16.110 14.322 16.098 14.125
2.14 Uncertain debts expenses 0 6.236 0 6.236
2.15 Low-value assets acquisition expenses 16.976 23.141 15.794 19.280
2.16 Expenses of property value decrease 46.476 0 46.476 0
2.17 Various other general and administration
expenses
96.980 87.047 84.729 78.057
3 TOTAL SELLING EXPENSES,
GENERAL AND ADMINISTRATIVE
EXPENSES
2.177.981 2.030.181 1.792.011 1.601.439

LINAS, AB consolidated and Company's annual financial statements for the year 2017 53 4.20. OTHER ACTIVITY

EUR
GROUP COMPANY
Run. Indicators Financial Last Financial Last
No. year financial year financial
year year
1. INCOME OF OTHER ACTIVITY - TOTAL 1.068.606 509.546 1.060.898 981.257
Specification of significant amount:
1.1. Profit of non-current asset transferring 0 7.000 0 7.000
1.2. Income of various storages selling 69.302 92.553 73.451 92.973
1.3. Income of rent 214.007 165.054 172.787 117.054
1.4. Income of accounting and administration services 40.800 40.800 62.400 62.400
1.5. Incomes of thermal energy supply 648.407 759.439 667.460 777.711
1.6. Various other non-typical activity income 2.486 3.760 2.486 3.760
Incomes of customers' in advance payments which
1.7. are written in the financial accounting 16.255 0 16.255 0
2. EXPENSES OF OTHER ACTIVITY - TOTAL 768.616 830.349 740.886 799.049
Specification of significant amount:
2.1. Loss of non-current asset transferring 0 0 0 0
2.2. Net cost of sold various storages 42.489 54.129 37.548 48.082
2.3. Net cost of rent 117.897 75.889 79.230 35.410
2.4. Expenses of accounting and administration services 57.588 57.422 57.588 57.422
2.5. Expenditures of thermal energy supply 550.497 642.719 566.375 657.945
2.6. Various other non-typical activity expenses 145 190 145 190
3. RESULT OF OTHER ACTIVITY (1-2) 222.641 238.257 253.953 261.849

4.21. FINANCIAL AND INVESTMENT ACTIVITY

EUR

GROUP COMPANY
Run. Indicators Financial Last Financial Last
No. year financial year financial
year year
1. FINANCIAL AND INVESTMENT ACTIVITY
INCOME - TOTAL 38.173 38.448 38.173 38.448
Specification of significant amount:
1.1. Positive result of changes of currency exchange 0 0 0 0
1.2. Income of bank interests 0 0 0 0
1.3. Income of other interests 38.168 38.444 38.168 38.444
1.4. Fines and penalties for the drawn debts 0 0 0 0
1.5. Profit of incorporated activity 0 0 0 0
1.6. Income of loans provided by the revaluation 0 0 0 0
1.7. Income of currency buying-selling 0 0 0 0
1.8. Discrepancy sum appeared from the recalculating
into EUR
0 0 0 0
1.9. Income of other financial-investment activity 5 4 5 4
2. FINANCIAL AND INVESTMENT ACTIVITY
EXPENSE S- TOTAL 56.946 (807) 56.852 (866)
Specification of significant amount:
2.1. Expenses of interests 29.306 6.777 29.306 6.777
2.2. Fines and delay fees 87 45 20 18
2.3. Negative result of changes of currency exchange 31.232 1.607 31.205 1.575
2.4. Expenses of currency buying-selling 0 0 0 0
2.5. Expenses of loans provided by the revaluation 0 0 0 0
2.6. Financial assets depreciation amounts (BUAB
"Nordic investicija" and BUAB "Domus Palanga"
financial debts)
(4.185) (11.741) (4.185) (11.741)
2.7. Discrepancy sum appeared from the recalculating
into EUR
0 0 0 0
2.8. Expenses of other financial-investment activity 506 2.505 506 2.505
3. FINANCIAL AND INVESTMENT
ACTIVITY RESULT (1-2) (18.773) 39.255 (18.679) 39.314

LINAS, AB consolidated and Company's annual financial statements for the year 2017 54 4.22. FINANCIAL CONNECTIONS WITH MANAGERS AND OTHER RELATED PERSONS

EUR
Financial GROUP
Remainder
Last Remainder Financial COMPANY
Remainder
Last Remainder
No. Indicators year at the end
of financial
year
financial
year
at the end
of last
financial
year
year at the end
of financial
year
financial
year
at the end
of last
financial
year
Amount, related with industrial
A. relations, calculated within a year: 89.146 5.692 101.860 6.021 69.089 4.877 69.870 3.966
1. For managers
2. For other related persons
73.462
15.684
4.417
1.275
95.125
6.735
5.502
519
53.405
15.684
3.602
1.275
63.135
6.735
3.447
519
B. Loans granted by Group (Company): 0 1.170.992 0 3.102.725 0 1.170.992 0 3.102.725
1. For managers 0 0 0 0 0 0 0 0
2. For other related persons 0 1.170.992 0 3.102.725 0 1.170.992 0 3.102.725
C. Receivable loans: 0 0 0 0 0 0 0 0
1. From managers 0 0 0 0 0 0 0 0
2. From other related persons 0 0 0 0 0 0 0 0
D. Repaid the loan for Group (Company):
1. From managers
0
0
452.533
0
0
0
0
0
0
0
452.533
0
0
0
0
0
2. From other related persons 0 452.533 0 0 0 452.533 0 0
E. Gratuitously transfered asset and gifts: 0 0 0 0 0 0 0 0
1. For managers 0 0 0 0 0 0 0 0
2. For other related persons 0 0 0 0 0 0 0 0
F. Various guarantees provided by name
of Group (Company):
0 0 0 200.000 0 0 0 200.000
1. For managers 0 0 0 0 0 0 0 0
2. For other related persons 0 0 0 200.000 0 0 200.000
G. Received various guarantees:
1. From managers
0
0
6.159.403
0
0
0
7.819.737
0
0
0
7.433.833
0
840.000
0
9.094.167
0
2. From other related persons 0 6.159.403 0 7.819.737 0 7.433.833 840.000 9.094.167
Other significant amounts, calculated
within a year (obligations of Group
H. (Company) to related persons): 4.199.978 733.747 5.964.744 1.205.065 6.138.384 1.499.388 7.957.621 1.626.764
1. For managers 12.131 1.622 9.731 811 12.131 1.622 9.731 811
2. For members of the Board 0 0 0 0 0 0 0 0
3. For other related persons
Other significant obligations for Group
4.187.847 732.125 5.955.013 1.204.254 6.126.253 1.497.766 7.947.890 1.625.953
I. (Company): 823.649 205.076 1.325.190 3.400.803 823.082 205.076 1.318.162 3.195.806
1. Of managers 0 0 0 0 0 0 0
2. Of other related persons
J. Sold asset:
823.649
65.748
205.076
0
1.325.190
74.099
3.400.803
0
823.082
70.093
205.076
0
1.318.162
74.804
3.195.806
0
1. For managers 319 0 261 0 319 0 94 0
2. For other related persons 65.429 0 73.838 0 69.774 0 74.710 0
Provisions of liabilities and requisition
K. cover: 0 0 0 0 0 0 0 0
1. For managers 0 0 0 0 0 0 0 0
2. For other related persons 0 0 0 0 0 0 0 0
L. Accepted as doubtful debts
(Financial assets depreciation amounts):
0 0 (409.704) (4.521.660) 0 0 (409.704) (4.521.660)
1. Of managers 0 0 0 0 0 0 0 0
2. Of other related persons 0 0 (409.704) (4.521.660) 0 0 (409.704) (4.521.660)
The asset of the third parties in the
M. enterprise
1. Of managers
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2. Of other related persons 0 0 0 0 0 0 0 0
The assest of enterprise at the third
N. parties 0 2.096.212 0 2.009.817 0 1.887.392 0 1.915.059
1. Of managers 0 0 0 0 0 0 0 0
2. Of other related persons 0 2.096.212 0 2.009.817 0 1.887.392 0 1.915.059
Average number of administration
managers within a year
4 X 4 X 3 X 3 X
EUR
GROUP COMPANY
Run.
No.
Expenses of profit tax Financial
year
Last
financial
year
Financial
year
Last
financial
year
1. Expenses of profit tax 80.673 106.670 37.020 74.905
1.1. Reporting year profit tax according to Profit tax
declaration
80.673 106.670 37.020 74.905
1.2. Corrections of profit tax of last year in perspective
way
0 0 0 0
2. Expenses (incomes) of delayed taxes 199 363 40 114
2.1. Expenses (incomes) of delayed taxes, determined by
appearance and (or) disappearance of temporary
differences
199 363 40 114
3. Expenses of profit tax , stated in statement of
profit or loss and other comprehensive income
80.872 107.033 37.060 75.019

4.23.1. Specification of expenses of profit tax

4.23.2. Recalculation of expenses of profit taxes, according to regular and temporary difference of accounting and taxable profit

EUR
GROUP COMPANY
Run.
No.
Expenses of profit tax Financial
year
Last
financial
year
Financial
year
Last
financial
year
1. Accountable profit (loss) before taxing (according
to statement profit or loss and other of
comprehensive income)
466.573 753.418 200.915 514.689
2. The profit/loss, which emerged as the result of
calculation of interest in the financial accounting by
applying the depreciated cost price, using the
factual interest method
2.550 2.729 2.550 2.729
3. Profit tax before correction cause of regular and
temporary differences
73.932 109.192 30.137 77.203
4. Correction of expenses of profit tax 6.900 (2.159) 7.483 (2.184)
4.1. Correction of profit tax expenses cause of regular
differences
6.744 (2.495) 7.327 (2.520)
4.2. Correction
of
profit
tax
expenses
cause
of
temporary differences (from profit declaration)
(199) (363) (40) (114)
4.3. Correction
of
profit
tax
expenses
regarding
temporal
differences
(profit
tax
property
(obligations) decrease (increase))
199 363 40 114
4.4. Correction of profit tax of last period in perspective
way
4.5. Profit tax expenditures correction regarding
investment project implementation
0 0 0 0
4.6. Correction of the profit tax costs as the result of
increase of the revenues over the taxable period
(reduction of costs) in accordance with Paragraph 2
of Article 40 of the Law on Profit Tax
156 336 156 336
5. Expenses of profit tax, stated in statement of
profit or loss and other comprehensive income
80.832 107.033 37.620 75.019
EUR
GROUP COMPANY
Run.
No.
Reasons of originated
extended tax
Statement of
financial position
Statement of profit or
loss and other
comprehensive
income
Statement of
financial position
Statement of profit or
loss and other
comprehensive
income
Finan
cial year
Last
financial
year
Financial
year
Last
financial
year
Finan
cial year
Last
financial
year
Financial
year
Last
financial
year
1. Obligation of extended
tax at the beginning of
financial year
0 0 0 0 0 0
2. Asset of extended tax at
the beginning of
financial year
253 616 55 169
Changes of asset of
extended tax (increase +,
decrease -)
3.1. Income tax on long-term
assets depreciation costs,
which are recognized in
the taxation accounting as
allowed deductions
0 0 0 0
3.2. Income tax on long-term
assets depreciation costs,
which are not recognized
in the taxation accounting
as allowed deductions
0 0 0 0
3.Changes of asset of
extended tax, total
(199) (363) (40) (114)
4.Expenses (incomes) of
extended tax
199 363 40 114
5. Obligation of extended
tax at the end of
financial year
0 0 0 0
6.Asset of extended tax at
the end of financial year
54 253 15 55

LINAS, AB consolidated and Company's annual financial statements for the year 2017 57 4.25. RIGHTS AND OBLIGATIONS, NOT STATED IN THE STATEMENT OF FINANCIAL POSITION

EUR
Run.
No.
Indicators GROUP COMPANY
Financial
year
Previous
financial
year
Financial
year
Previous
financial
year
1 The value of deposit for the loans granted by
bank
3.914.100 3.914.100 3.914.100 3.914.100
2 Sponsions of third parties for the loans received
by the enterprise
0 0 1.274.430 1.274.430
3 Received guarantess, sponsions 4.566.493 4.980.592 4.566.493 4.980.592
4 Tangible valuables of enterprise trusted to the
third parties
29.194 28.615 29.194 28.615
5 Property sublease for third persons 1.108.424 975.742 783.938 663.686
6 Sponsions for the third parties 0 200.000 200.000
7 Confirmed notes in circulation 0 0 0 0
8 The asset of the third parties in the enterprise 0 0 0 0
9 Property of third parties mortgaged for the
company
1.592.910 2.839.145 1.592.910 2.839.145
4.26. EARNINGS (LOSS) PER SHARE
--------------------------------- -- -- --
Run.
No.
Indicators GROUP COMPANY
Financial year Last financial
year
Financial year Last financial
year
1. Average number of shares 24.038.990 24.038.990 24.038.990 24.038.990
2. Net profit (loss), in EUR 388.251 649.114 166.405 442.339
3. Earnings per share, in EUR 0,02 0,03 0,01 0,02

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