Consolidated Annual Report, Consolidated and Company’s Financial
Statements for the year ended 31 December 2021 prepared in accordance with
International Financial Reporting Standards as adopted by European Union
presented together with independent auditor’s report
Special Closed-End Type Real Estate
Investment Company‘s
„INVL Baltic Real Estate“
INVL Baltic Real Estate
Gynėjų str. 14 LT-01109 Vilnius, Lithuania
Tel. (+370 5) 279 0601,
Faks. (+370 5) 279 0530
Email breinfo@invl.com
Code 152105644
VAT code LT521056415
Account LT18 7180 3000 2046 7625
AB Šiaulių bankas, Vilniaus filialas
Registered at VĮ Registrų centras
Vytautas Bakšinskas,
Real estate fund manager of the
Management Company of INVL Baltic Real
Estate, signs the Consolidated and the
Company‘s financial statments for the year
2021, also Consolidated Annual Report for
the year 2021 and Confirmation of
responsible persons with a qualified
electronic signature.
Agnė Vainauskienė,
Chief financier of the Management
Company of INVL Baltic Real Estate, signs
the Consolidated and the Company‘s
financial statments for the year 2021 and
Confirmation of responsible persons with a
qualified electronic signature.
CONFIRMATION OF RESPONSIBLE PERSONS
18 March 2022
Following on Information Disclosure Rules of the Bank of Lithuania and the Law on Securities (article
12) of the Republic of Lithuania, management of INVL Baltic Real Estate hereby confirms that, to the
best our knowledge, the attached Consolidated and Company‘s Financial Statements for 2021 are
prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the
European Union, give true and fair view of the assets, liabilities, financial position and profit or loss
of INVL Baltic Real Estate and Consolidated Group.
Presented Consolidated Annual Report for 2021 includes a fair review of the development and
performance of the business and position of the company and the consolidated group in relation to
the description of the main risks and contingencies faced thereby.
ENCLOSURE:
1. Consolidated and Company‘s Financial Statements for 2021.
2. Consolidated Annual Report for 2021.
Real estate fund manager of the Management Company
INVL Asset Management
Vytautas Bakšinskas
(The document is signed with a qualified
electronic signature)
Chief financier of the Management Company
INVL Asset Management
Agnė Vainauskienė
(The document is signed with a qualified
electronic signature)
3
Translation note:
This version of the financial statements has been prepared in Lithuanian and English languages.
In all matters of interpretation of information, views or opinions, the Lithuanian language version
of the financial statements takes precedence over the English language version.
CONTENTS
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS:
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS: .......................................................... 3
DETAILS OF THE COMPANY ..................................................................................................................... 4
CONSOLIDATED AND COMPANY’S STATEMENTS OF COMPREHENSIVE INCOME ......................... 5
CONSOLIDATED AND COMPANY’S STATEMENTS OF FINANCIAL POSITION ................................... 6
CONSOLIDATED AND COMPANY’S STATEMENTS OF CHANGES IN EQUITY ................................... 8
CONSOLIDATED AND COMPANY’S STATEMENTS OF CASH FLOWS .............................................. 10
NOTES TO THE FINANCIAL STATEMENTS ........................................................................................... 12
1 GENERAL INFORMATION ................................................................................................................... 12
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ............................................................................. 14
3 FINANCIAL RISK MANAGEMENT .......................................................................................................... 25
3.1. Financial risk factors ............................................................................................................................ 25
3.2. Capital management ........................................................................................................................... 28
4 FAIR VALUE ESTIMATION ................................................................................................................... 28
5 INVESTMENTS INTO SUBSIDIARIES AND SHORT-TERM LOANS GRANTED TO SUBSIDIARIES....................... 29
6 SEGMENT INFORMATION ................................................................................................................... 32
7 REVENUE, LEASE EXPENSES, LEASE COMMITMENTS, PROVISIONS ....................................................... 35
8 FINANCE COSTS ............................................................................................................................... 39
9 INCOME TAX ..................................................................................................................................... 40
10 EARNINGS PER SHARE ...................................................................................................................... 42
11 INVESTMENT PROPERTIES ................................................................................................................. 43
12 FINANCIAL INSTRUMENTS BY CATEGORY ............................................................................................ 48
13 TRADE AND OTHER RECEIVABLES ...................................................................................................... 50
14 SHARE CAPITAL AND RESERVES ........................................................................................................ 52
15 DIVIDENDS ....................................................................................................................................... 52
16 BORROWINGS .................................................................................................................................. 53
17 OTHER CURRENT LIABILITIES............................................................................................................. 55
18 RELATED PARTY TRANSACTIONS ....................................................................................................... 55
19 IMPACT OF COVID-19 ..................................................................................................................... 59
20 EVENTS AFTER THE REPORTING PERIOD ............................................................................................ 59
CONSOLIDATED ANNUAL REPORT ....................................................................................................... 60
INDEPENDENT AUDITOR’S REPORT ................................................................................................... 139
company code 152105644, Gynėjų str. 14, Vilnius , Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
(all amounts are in EUR thousand unless otherwise stated)
4
DETAILS OF THE COMPANY
Management
Supervisory Board
Mrs. Eglė Surplienė
Mr. Raimondas Rajeckas
Mr. Audrius Matikiūnas
Management Company
UAB INVL Asset Management
Investment Committee
Mr. Vytautas Bakšinskas
Mr. Andrius Daukšas
Address of registered office and company code
Gynėjų str. 14,
Vilnius,
Company code 152105644
Banks
AB Šiaulių Bankas
AB SEB Bankas
AS “SEB banka”
Auditor
UAB PricewaterhouseCoopers
J. Jasinskio str. 16B,
Vilnius, Lithuania
The financial statements were authorised for issue by the Management Company on 18 March 2022.
Mr. Vytautas Bakšinskas
Agnė Vainauskienė
Real estate fund manager at
UAB INVL Asset Management
Chief financier at UAB INVL
Asset Management
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
(all amounts are in EUR thousand unless otherwise stated)
5
Consolidated and Company’s statements of comprehensive income
Group
Company
Notes
2021
2020
2021
2020
Revenue
7
Interest income
Other income
Net changes in fair value of investments into
subsidiaries designated at fair value through profit
or loss
5
Net gains from fair value adjustments on
investment property
11
Premises rent costs
6, 7
(78 )
(112 )
(75 )
(113 )
Utilities
6
(321 )
(386 )
(34 )
(36 )
Repair and maintenance of premises
6
(500 )
(908 )
(226 )
(523 )
Management and Performance Fee
7, 18
(388 )
(767 )
(388 )
(767 )
Property management and brokerage costs
6
(30 )
(29 )
(150 )
(292 )
Taxes on property
6
(109 )
(162 )
(95 )
(154 )
Employee benefits expenses
(154 )
(202 )
Provision for impairment of trade receivables
13
(5 )
(2 )
Depreciation and amortisation
(104 )
(103 )
(27 )
(36 )
Other expenses
(254 )
(359 )
(135 )
(213 )
Operating profit
Finance costs
8
(278 )
(481 )
(278 )
(465 )
Profit before income tax
Income tax credit (expense)
9
NET PROFIT FOR THE YEAR
Other comprehensive income for the year, net
of tax
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
Attributable to:
Equity holders of the parent
Basic and diluted earnings per share (in EUR)
10
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
(all amounts are in EUR thousand unless otherwise stated)
6
Consolidated and Company’s statements of financial position
Group
Company
Notes
As at 31
December
2021
As at 31
December
2020
As at 31
December
2021
As at 31
December
2020
ASSETS
Non-current assets
Property, plant and equipment
Investment properties
11
Intangible assets
Investments into subsidiaries designated at fair
value through profit or loss
5
Finance lease receivables-long term
Deferred tax asset
Total non-current assets
Current assets
Inventories, prepayments and deferred charges
Short term loans granted
Trade and other receivables
13
Finance lease receivables -short term
Other receivables, related to ABLV Bank, AS
16
Cash and cash equivalents
3.1
Total current assets
TOTAL ASSETS
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
(all amounts are in EUR thousand unless otherwise stated)
7
Consolidated and Company’s statements of financial position (cont’d)
Group
Company
Notes
As at 31
December 2021
As at 31
December 2020
As at 31
December 2021
As at 31
December 2020
EQUITY AND LIABILITIES
Equity
Equity attributable to equity holders of
the parent
Share capital
14
Own shares
14
(187 )
(187 )
Share premium
14
Reserves
14
Retained earnings
14
Total equity
Liabilities
Non-current liabilities
Non-current borrowings
16
Non-current lease liabilities
Provisions
7
Advances received
Total non-current liabilities
Current liabilities
Current portion of non-current borrowings
16
Current portion of lease liabilities
Trade payables
Income tax payable
Provisions
7
Advances received
Other current liabilities
17
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
(the end)
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
(all amounts are in EUR thousand unless otherwise stated)
8
Consolidated and Company’s statements of changes in equity
Reserves
Group
Notes
Share capital
Share
premium
Own shares
Legal
reserve
Reserve for
purchase of
own shares
Retained
earnings
Total
Balance as at 31 December 2019
-
Net profit for the year
-
-
-
-
-
Total comprehensive income for the year
-
-
-
-
-
Purchase of own shares
14
-
-
(187 )
-
-
-
(187 )
Dividends approved
15
-
-
-
-
-
(20,382 )
(20,382 )
Transfer to reserves
14
-
-
-
(3,093 )
Total transactions with owners of the Company,
recognised directly in equity
-
-
(187 )
(3,093 )
(17,821 )
(20,569 )
Balance as at 31 December 2020
(187 )
Net profit for the year
-
-
-
-
-
Total comprehensive income for the year
-
-
-
-
-
Purchase of own shares
14
-
-
(11,017 )
-
-
-
(11,017 )
Decrease of share capital
14
(7,379 )
-
-
(3,825 )
-
Dividends approved
15
-
-
-
-
-
(967 )
(967 )
Transfer to reserves
14
-
-
-
(4,549 )
Total transactions with owners of the Company,
recognised directly in equity
(7,379 )
-
(5,516 )
(11,984 )
Balance as at 31 December 2021
-
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
(all amounts are in EUR thousand unless otherwise stated)
9
Consolidated and Company’s statements of changes in equity (cont’d)
Reserves
Company
Notes
Share capital
Share
premium
Own shares
Legal
reserve
Reserve for
purchase of
own shares
Retained
earnings
Total
Balance as at 31 December 2019
-
Net profit for the year
-
-
-
-
-
Total comprehensive income for the year
-
-
-
-
-
Purchase of own shares
14
-
-
(187 )
-
-
-
(187 )
Dividends approved
15
-
-
-
-
-
(20,382 )
(20,382 )
Transfer to reserves
14
-
-
-
(3,093 )
Total transactions with owners of the Company,
recognised directly in equity
-
-
(187 )
(3,093 )
(17,821 )
(20,569 )
Balance as at 31 December 2020
(187 )
Net profit for the year
-
-
-
-
-
Total comprehensive income for the year
-
-
-
-
-
Purchase of own shares
14
-
-
(11,017 )
-
-
-
(11,017 )
Decrease of share capital
14
(7,379 )
-
-
(3,825 )
-
Dividends approved
15
-
-
-
-
-
(967 )
(967 )
Transfer to reserves
14
-
-
-
(4,549 )
Total transactions with owners of the Company,
recognised directly in equity
(7,379 )
-
(5,516 )
(11,984 )
Balance as at 31 December 2021
-
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
10
Consolidated and Company’s statements of cash flows
Group
Company
Notes
2021
2020
2021
2020
Cash flows from (to) operating activities
Net profit for the year
Adjustments for non-cash items and non-
operating activities:
Net gains from fair value adjustments on
investment property
11
(2,854 )
(4,961 )
(2,395 )
(5,004 )
Depreciation and amortization
Net loss from sale of non-current assets
Net changes in fair value of investments into
subsidiaries designated at fair value through
profit or loss
5
(885 )
(306 )
Interest income
(17 )
(26 )
(17 )
(26 )
Interest expenses
8
Deferred taxes
9
(8 )
(32 )
Current income tax expenses
9
Provisions
7
Gains/losses on financial liabilities at amortised
cost
(5 )
Loss from lease liabilities remeasurement due
to indexation
Provision for impairment of trade receivables
13
(1 )
(2 )
Changes in working capital:
Decrease (increase) in inventories
Decrease (increase) in trade and other
receivables
(365 )
Decrease (increase) in other current assets
(23 )
(28 )
(Decrease) increase in trade payables
(1,540 )
(54 )
(1,334 )
(Decrease) increase in other current liabilities
(2 )
(257 )
(52 )
(276 )
Cash flows from (to) operating activities
(667 )
Income tax paid
(4 )
Net cash flows from (to) operating activities
(667 )
(cont’d on the next page)
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
11
Consolidated and Company’s statements of cash flows (cont’d)
Group
Company
Notes
2021
2020
2021
2020
Cash flows from (to) investing activities
Acquisition of non-current assets (except
investment properties)
(31 )
(209 )
(6 )
Sale of non-current assets (except investment
properties)
Acquisition of (investment in existing) investment
properties
11
(2,629 )
(393 )
(2,628 )
(390 )
Proceeds from sale of investment properties
11
Increase in share capital of subsidiaries
Loans granted
(7,510 )
(18,375 )
Repayment of loans granted
Interest received
Proceeds from settlement of finance lease
receivables
Net cash flows from (to) investing activities
(2,456 )
Cash flows from (to) financing activities
Cash flows related to Group owners
Purchase of treasury shares
14
(11,017 )
(187 )
(11,017 )
(187 )
Dividends paid to equity holders of the parents
(981 )
(20,046 )
(981 )
(20,046 )
(11,998 )
(20,233 )
(11,998 )
(20,233 )
Cash flows related to other sources of financing
Proceeds from loans
16
Repayment of loans
16
(343 )
(16,706 )
(343 )
(14,870 )
Lease payments
(220 )
(203 )
(220 )
(203 )
Interest paid
16
(279 )
(505 )
(279 )
(487 )
(842 )
(17,414 )
(842 )
(15,560 )
Net cash flows from (to) financing activities
(12,840 )
(37,647 )
(12,840 )
(35,793 )
Net increase (decrease) in cash and cash
equivalents
(14,133 )
(9,187 )
Cash and cash equivalents at the beginning
of the period
Cash and cash equivalents at the end of the
period
(the end)
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
12
Notes to the financial statements
1 General information
Special Closed-Ended Type Real Estate Investment Company INVL Baltic Real Estate (hereinafter ‘the Company’, previous name
AB Invaldos Nekilnojamojo Turto Fondas, code 152105644) is a joint stock company registered in the Republic of Lithuania. It
was established on 28 January 1997.
On 22 December 2016 the Company was issued a closed-end investment company (UTIB) licence by the Bank of Lithuania.
Under the Company’s Articles of Association, the Company will operate until 22 December 2046, with an extension possibility for
additional term of twenty years.
As the Company obtained the status of a closed-ended investment company, its management was thereafter undertaken by UAB
INVL Asset Management (‘the Management Company’), which is entitled to the Management Fee (Note 2.12) and the
Performance Fee (Note 2.12).
Based on the Articles of Association, for the sake of efficiency of the Company’s activities and control over its investments, an
Investment Committee was formed by a decision of the Board of the Management Company. The Investment Committee consists
of 3 (three) members, to the positions of which the representatives of the Management Company (employees, members of
management bodies of the Management Company, other persons appointed by a decision of the Board of the Management
Company) were appointed. Members of the Investment Committee shall be appointed and removed from office by the Board of
the Management Company. An approval of the Investment Committee must be obtained for all investments of the Company and
for their sale. At the moment of the release of the financial statements two 2 (members) of the Investment Committee was
operating, the third member is not nominated.
On 29 April 2021, the Ordinary General Meeting of Shareholders of the Company approved the establishment of the Supervisory
Board of the Company. The Supervisory Board is a collegial body supervising the activities of the Company. The Supervisory
Board ensures the representation of the interests of the Company’s and the company's shareholders, the accountability of this
body to the shareholders and the objective and impartial supervision of Company’s activities. At the moment of the release of the
financial statements three members of the Supervisory Board was operating.
The Company also signed an agreement on depository services with AB SEB Bankas, which acts as a depository of the
Company’s assets.
In 2021 and 2020 the group consisted of the Company and its directly and indirectly owned subsidiaries (hereinafter ‘the Group’,
Note 5).
The address of the office is Gynėjų str. 14, Vilnius, Lithuania.
The Group was established on 29 April 2014 by spinning-off from AB Invalda INVL (code 121304349) the investments into entities,
which business is investment into investment properties held for future development, into commercial real estate and renting
thereof. On 17 August 2015 the parent entity AB INVL Baltic Real Estate (hereinafter ‘the Former Parent Company’, code
30329973) was merged to the Company, which continues its operations under the name INVL Baltic Real Estate and became the
parent of the Group.
properties generate leasing income and most of them offer prospects for further development.
The Group seeks to earn profit from investments in commercial real estate by ensuring the growth of leasing income. When it
makes business sense, the Company also considers investments in the reorganisation of its existing portfolio of properties, taking
advantage of their good location.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
13
1 General information (cont’d)
The Management Company shall manage the Company’s portfolio of investment instruments following the principles of
diversification (the conformity of the Company’s portfolio of investment instruments to the diversification principles shall be
achieved within four years after the Bank of Lithuania has issued a permission to certify the Company’s incorporation documents
and to choose the Depository) as set forth in the Articles of Association. The Company cannot invest directly or indirectly more
than 30% of its net asset value into a single real estate object. The total amount of investments into real estate objects under
construction cannot exceed 20% of net asset value of the Company. The total amount of investments into a real estate object and
movable property and/or equipment necessary for its use cannot exceed 40% of net asset value of the Company. The Company
cannot invest more than 30% of its net asset value into any single issuer of the instruments. More detailed requirements are set
out in the Articles of Association of the Company.
As at 31 December 2021 and 31 December 2020 the shareholders of the Company were:
2021
2020
Number of
shares held
Percentage
Number of
shares held
Percentage
AB Invalda INVL
1,889,123
23.43
3,949,123
30.03
Mrs. Irena Ona Mišeikienė
1,308,596
16.23
2,498,596
19.00
UAB LJB property (controlling shareholder Mr.
Alvydas Banys)
1,251,695
15.53
-
-
UAB LJB Investments (controlling shareholder Mr.
Alvydas Banys)
-
-
2,631,695
20.01
Mrs. Šulnienė Ilona
664,710
8.25
664,710
5.05
Mr. Alvydas Banys
663,640
8.23
663,640
5.05
The Company (own shares)
-
-
100,431
0.76
Other minor shareholders
2,283,650
28.33
2,641,805
20.10
Total
8,061,414
100.00
13,150,000
100.00
All the shares of the Company are ordinary shares with the par value of EUR 1.45, and were fully paid as at 31 December 2021
and 2020. Subsidiaries did not hold any shares of the Company as at 31 December 2021 and 2020.
The Company’s shares are traded on the Baltic Secondary List of NASDAQ Vilnius from 16 September 2015. Before the merger
the shares of the Former Parent Company were traded on the Baltic Secondary List of NASDAQ Vilnius from 4 June 2014 until
17 August 2015.
As at 31 December 2021 the number of employees of the Group and the Company was 10 and nil, respectively. As at 31
December 2020 the number of employees of the Group and the Company was 9 and nil, respectively.
According to the Law on Companies of Republic of Lithuania, the annual financial statements prepared by the Management are
authorised by the General Shareholders’ meeting. The shareholders hold the power not to approve the annual financial statements
and the right to request new financial statements to be prepared.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
14
2 Summary of significant accounting policies
The principal accounting policies applied in preparing the Group’s and the Company’s financial statements for the year ended
31 December 2021 are as follows:
2.1. Basis of preparation
Statement of compliance
The financial statements of the Company and the consolidated financial statements of the Group have been prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (hereinafter the EU).
These financial statements have been prepared on a historical cost basis, except for investment properties and investments in
subsidiaries that have been measured at fair value. The financial statements are presented in thousands of euro (EUR) and all
values are rounded to the nearest thousand except when otherwise indicated. Since 1 January 2015 the euro became local
currency of the Republic of Lithuania.
Adoption of new and/or changed IFRSs and IFRIC interpretations
The Group/Company has adopted the new and amended IFRS and IFRIC interpretations as of 1 January 2021:
− Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest rate benchmark (IBOR) reform – phase 2 (effective
for annual periods beginning on or after 1 January 2021);
− Amendment to IFRS 4 Insurance Contracts – deferral of IFRS 9 (effective for annual periods beginning on or after 1
January 2021);
− Amendments to IFRS 16 Covid-19-Related Rent Concessions – (effective for annual periods beginning on or after 1
January 2021).
All amendments adopted as of 1 January 2021 had no impact on the Group’s and Company’s financial statements for the year
ended 31 December 2021.
IBOR reform had no impact for the Group, as all borrowings are EURIBOR linked, therefore there was no need to transition to
alternative benchmark interest rates. Changes in how EURIBOR is determined (determination has shifted from a quotes-based to
a transactions-based methodology) had no impact on interest rates applied, as for all EURIBOR linked borrowings three months
EURIBOR is subject to a 0% floor. Before and after the changes in how EURIBOR is determined EURIBOR was negative,
therefore 0% floor was applicable to arrive at interest rate and therefore those changes had no impact on interest rate itself and
no effect on future cash flows. The financial liabilities denominated at EURIBOR based interest rate are disclosed in Note 16.
Standards adopted by the EU but not yet effective and have not been early adopted.
The Group/the Company is currently assessing the impact of the amendments, described below and adopted by the EU, on its
financial statements:
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies (effective for annual periods beginning
on or after 1 January 2023).
IAS 1 was amended to require companies to disclose their material accounting policy information rather than their significant
accounting policies. The amendment provided the definition of material accounting policy information. The amendment also
clarified that accounting policy information is expected to be material if, without it, the users of the financial statements would be
unable to understand other material information in the financial statements. The amendment provided illustrative examples of
accounting policy information that is likely to be considered material to the entity’s financial statements. Further, the amendment
to IAS 1 clarified that immaterial accounting policy information need not be disclosed. However, if it is disclosed, it should not
obscure material accounting policy information. To support this amendment, IFRS Practice Statement 2, ‘Making Materiality
Judgements’ was also amended to provide guidance on how to apply the concept of materiality to accounting policy disclosures.
Amendments to IAS 8: Definition of Accounting Estimates (effective for annual periods beginning on or after 1 January 2023).
The amendments to IAS 8 clarified how companies should distinguish changes in accounting policies from changes in accounting
estimates.
Other amendments to existing standards and new standards, which are adopted by the EU, but not yet effective, are not relevant
to the Group and the Company.
Standards not yet adopted by the EU.
Amendments to existing standards and new standards, which are not yet adopted by the EU, are not relevant to the Group and
the Company.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
15
2 Summary of significant accounting policies (cont’d)
2.2. Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries. The financial
statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting
policies.
Subsidiaries are all entities (including structured entities) over which the group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the
Group obtains control, and continue to be consolidated until the date that such control ceases. All intra-group balances,
transactions, income and expenses, unrealised gains and losses and dividends resulting from intra-group transactions that are
recognised in assets, are eliminated in full.
When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value, with the change in
carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently
accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised
in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related
assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit
or loss or retained earnings, as appropriate.
2.3. Functional and presentation currency
From 1 January 2015 the euro became local currency of the Republic of Lithuania. The financial statements are prepared in euro
(EUR), which is local currency of the Republic of Lithuania, and presented in EUR thousand. Euro is also the local currency of the
Republic of Latvia. Euro is the Company’s and the Group’s functional and presentation currency. The exchange rates in relation
to other currencies are set daily by the European Central Bank and the Bank of Lithuania.
As these financial statements are presented in EUR thousand, individual amounts were rounded. Due to the rounding, totals in
the tables may not add up.
2.4. Business combinations and goodwill
The Group applies the acquisition method of accounting to account for business combinations. The consideration transferred for
the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree
and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their
fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the
acquiree either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s
identifiable net assets.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances, and pertinent conditions as at the acquisition date.
If the business combination is achieved in stages, the acquirer’s previously held equity interest in the acquiree is remeasured to
fair value at the acquisition date through profit or loss.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date
fair value of any previous equity interest in the acquiree over the fair value of the group’s share of the identifiable net assets
acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held
interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the
difference is recognised directly in profit or loss.
The Group and the acquiree may have a pre-existing relationship or other arrangement before negotiations for the business
combination began, or they may enter into an arrangement during the negotiations that is separate from the business combination.
In either situation, the Group identifies any amounts that are not part of what the Group and the acquiree (or its former owners)
exchanged in the business combination. The Group recognises as part of applying the acquisition method only the consideration
transferred for the acquiree, and the assets acquired, and liabilities assumed in the exchange for the acquiree.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
16
2 Summary of significant accounting policies (cont’d)
2.4 Business combinations and goodwill (cont’d)
The Group identifies any pre-existing relationships to determine which ones have been effectively settled. Typically, a pre-existing
relationship will be effectively settled, since such a relationship becomes an “intercompany” relationship upon the acquisition and
is eliminated in the post-combination financial statements. If the pre-existing relationship effectively settled is a debt financing
issued by the acquiree to the Group, the Group effectively is settling a receivable. The Group recognises a gain or loss if there is
an effective settlement of a pre-existing relationship. When there is more than one contract or agreement between the parties with
a pre-existing relationship or more than one pre-existing relationship, the settlement of each contract and each pre-existing
relationship is assessed separately. Settlement gains and losses from noncontractual relationships are measured at fair value on
the acquisition date.
2.5. Property, plant and equipment
Property, plant and equipment is stated at cost, excluding the costs of day to day servicing, less accumulated depreciation and
accumulated impairment losses. The carrying values of property, plant and equipment are reviewed for impairment when events
or change in circumstances indicate that the carrying value may not be recoverable. Depreciation is calculated using the straight-
line method over the estimated useful lives of 3 to 6 years.
The asset residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year
end to ensure that they are consistent with the expected pattern of economic benefits from items in property, plant, and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from
its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the statement of comprehensive income within “other income” in the
year the asset is derecognised.
2.6. Investment properties
Properties that are held for long-term rental yields and for capital appreciation are classified as investment properties. Where the
Group/Company owns the buildings, but not the land on which they are built, land is leased from the municipality under operating
lease. Land held under operating leases is classified and accounted for by the Group/Company as investment property when the
rest of the definition of investment property is met.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment
properties are carried at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in
the fair values of investment properties are included in profit or loss in the year in which they arise. The fair value of investment
property is determined annually by qualified independent valuers (Note 11).
Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits
associated with the expenditure will flow to the Group/Company and the cost of the item can be measured reliably. All other repairs
and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the
replaced part is derecognised.
Investment properties are derecognised when either they have been disposed of or when the investment property is permanently
withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal
of an investment property are recognised in the statement of comprehensive income within “Net gains (losses) from fair value
adjustments on investment property” in the year of retirement or disposal.
2.7. Intangible assets other than goodwill
Intangible assets are measured initially at cost. Intangible assets are recognised if it is probable that future economic benefits that
are attributable to the asset will flow to the enterprise and the cost of asset can be measured reliably. After initial recognition,
intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses. The useful lives
of intangible assets other than goodwill are assessed to be finite. Intangible assets are amortised using the straight-line method
over their expected useful lives 3 years.
Intangible assets not yet available for use, such as technical development projects where the related property is not built, are
tested annually for impairment and whenever there is an indication that the intangible asset may be impaired.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
17
2 Summary of significant accounting policies (cont’d)
2.8. Investments into subsidiaries (the Company)
The business model of the Company is to manage investment into subsidiaries together with loans granted to subsidiaries as one
portfolio and evaluate their performance on a combined fair value basis. On this basis information on portfolio is provided to the
Management Company and the Investment Committee. Therefore, the portfolio is neither held to collect contractual cash flows
nor held both to collect contractual cash flows and to sell financial assets. Consequently, such portfolio of financial assets is
measured at fair value through profit or loss. If the Company grant short-term loans to subsidiaries for purpose not related with
investment activities they are classified as financial assets measured at amortised cost, because they are solely payments of
principal and interest and are held to collect contractual cash flows.
At initial recognition, the Group/the Company measures portfolio of investment into subsidiaries at its fair value. Transaction costs
of financial assets carried at fair value through profit or loss are expensed in profit or loss.
If the fair value of the financial asset at initial recognition differs from the transaction price, it is recognised at fair value and ‘1 day
gain’ is recognised only if that fair value is evidenced by a quoted price in an active market for an identical asset or based on a
valuation technique that uses only data from observable markets. In all other cases the difference between the fair value at initial
recognition and the transaction price is deferred. For loans granted measured at fair value through profit or loss this difference is
recognised using the straight-line method over the estimated maturity of financial asset.
2.9. Financial assets
Financial assets within the scope of IFRS 9 are classified as either financial assets at fair value through profit or loss (either
through other comprehensive income or through profit or loss) or financial assets measured at amortised cost. The classification
depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.
As the business model for the Group‘s and the Company‘s other financial assets (except financial assets described in Note 2.8)
is held to collect contractual cash flows and they are solely payments of principal and interest, other financial assets are measured
at amortised cost. They comprised short-term loans granted, trade and other receivables, cash and cash equivalents. The Group
and the Company reclassifies debt instruments when and only when its business model for managing those assets changes.
Financial assets are recognised when the Group/the Company becomes party to the contractual provisions of the instrument.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been
transferred and the Group/the Company has transferred substantially all the risks and rewards of ownership.
At initial recognition, the Group/the Company measures a financial asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction
costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and
interest are measured at amortised cost. Interest income from these financial assets is calculated using the effective interest rate
method and presented as “other income” in the statement of comprehensive income. Any gain or loss arising on derecognition is
recognised directly in profit or loss. Impairment losses are presented as separate line item in the statement of comprehensive
income.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
18
2 Summary of significant accounting policies (cont’d)
2.10. Impairment of financial assets
From 1 January 2018, the Group/the Company assesses on a forward-looking basis the expected credit losses associated with
its financial assets carried at amortised cost. The impairment methodology applied depends on whether there has been a
significant increase in credit risk.
The Group/the Company follows a three-stage model for impairment for financial assets other than trade receivables:
− Stage 1 – balances, for which the credit risk has not increased significantly since initial recognition, or that have low credit
risk at the reporting date. For these assets, 12-month expected credit losses (‘ECL’) are recognised and interest revenue
is calculated on the gross carrying amount of the asset (that is, without deduction for credit allowance). 12-month ECL
are the expected credit losses that result from default events that are possible within 12 months after the reporting date.
It is not the expected cash shortfalls over the 12-month period but the entire credit loss on an asset weighted by the
probability that the loss will occur in the next 12 months;
− Stage 2 – comprises balances for which there have been a significant increase in credit risk since initial recognition
(unless they have low credit risk at the reporting date) but that do not have objective evidence of impairment. For these
assets, lifetime ECL are recognised, but interest revenue is still calculated on the gross carrying amount of the asset.
Lifetime ECL are the expected credit losses that result from all possible default events over the expected life of the
financial instrument. Expected credit losses are the weighted average credit losses with the probability of default (‘PD’)
as the weight;
− Stage 3 – comprises balances with objective evidence of impairment at the reporting date. For these assets, lifetime ECL
are recognised and interest revenue is calculated on the net carrying amount (that is, net of credit allowance).
The financial assets is considered as credit-impaired, if objective evidence of impairment exist at the reporting date. Evidence of
impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or
delinquency in payments, the probability that they will enter bankruptcy or other financial reorganisation.
Financial assets are written off, in whole or in part, when there is no reasonable expectation of recovery. Indicators that there is
no reasonable expectation of recovery include, among others, the probability of insolvency or significant financial difficulties of the
debtor. Impaired debts are derecognised when they are assessed as uncollectible.
For trade and other receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime
losses to be recognised from initial recognition of the receivables. Trade receivables are classified either to Stage 2 or Stage 3:
− Stage 2 – comprises receivables for which there the simplified approach was applied to measure the expected lifetime
credit losses, except for certain trade receivables classified in Stage 3;
− Stage 3 – comprises trade receivables which are overdue more than 90 days (except is reasonable explanation for that)
or individually identified as impaired.
The expected loss rates are based on the payment profiles of sales over a period of 36 months before the balance sheet date and
the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current
and forward-looking information on macroeconomic factors affecting the ability of the tenants to settle the receivable. Such
forward-looking information would include:
− changes in economic, regulatory, technological and environmental factors, (such as industry outlook, GDP, employment
and politics);
− external market indicators; and
− tenant base.
2.11. Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand and short-term deposits
with an original maturity of three months or less. Deposits with original maturity of more than three months are classified as
deposits on the statement of financial position.
For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand and in current bank account as
well as deposit in bank with an original maturity of three months or less.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
19
2 Summary of significant accounting policies (cont’d)
2.12. Performance Fee and Management Fee
The Management Fee is remuneration paid to the Management Company for management of the assets of the Company, which
is payable for each quarter of a calendar year and is 0.375% of the quarterly weighted average capitalisation of the Company,
calculated according to the Articles of Association. From 1 January 2018 the rate of the Management Fee was changed to 0.25%
of the quarterly weighted average capitalisation of the Company.
The quarterly payable Management Fee is recorded as financial liability and is accounted for at amortised cost.
The Performance Fee depends on the return earned by the Company, which is calculated for the whole Company rather than for
an individual shareholder and is based on internal rate of return. The Performance Fee amounts to 20% of return in excess of the
annual internal rate return of 8% (a high water-mark principle is applied). The Performance Fee is paid to the Management
Company on a quarterly basis if both conditions are met - the internal rate of return and the stock price growth (including dividends)
exceed 8% annually.
The Performance Fee is accounted as a provision on a quarterly basis until the conditions, as described above, for the payment
of the Performance Fee are satisfied, when payable part of the Performance Fee is recorded as financial liability and is further
accounted for at amortised cost.
The first period for the calculation of the Performance Fee started from 30 November 2016 according to the Articles of Association
of the Company, where initial amount for calculation of internal rate of return is net assets value of the Company as at 30 November
2016 (it is amounted to the equity of the Group as at 30 November 2016). If, after that date, the capitalisation of the Company
(market value of the issued shares of the Company) is more than net assets value of the Company and internal rate of return
calculated on the basis of net assets value is more than 8%, then payable Performance Fee is calculated based on net assets
value of the Company. If the capitalisation of the Company is less than net assets value of the Company and internal rate of return
calculated on the basis of capitalisation is more than 8%, then payable Performance Fee is calculated based on the capitalisation
of the Company. After the Performance Fee becomes payable, the new period for calculating of the Performance Fee starts,
where initial amount for calculation of internal rate of return is the capitalisation of the Company or net asset value of the Company
as at the end of previous period - depends on which based on these amounts payable part of the Performance Fee is calculated.
More detailed requirements are set out in the Articles of Association of the Company.
2.13. Financial liabilities
The Group/ Company recognises a financial liability when it first becomes a party to the contractual rights and obligations in the
contract.
All financial liabilities are initially recognised at fair value, minus (in the case of a financial liability that is not at fair value through
profit or loss) transaction costs that are directly attributable to issuing the financial liability. Financial liabilities are measured at
amortised cost using the effective interest method. A financial liability is derecognised when the obligation under the liability is
discharged or cancelled or expires.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating
cycle of the business if longer). Financial liabilities included in trade payables are recognised initially at fair value and subsequently
at amortised cost. The fair value of a non-interest bearing liability is its discounted repayment amount. If the due date of the liability
is less than one year, discounting is omitted.
Borrowings
Borrowings are recognised initially at fair value less directly attributable transaction costs. After initial recognition, borrowings are
subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless
the Group/Company has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting
period.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
20
2 Summary of significant accounting policies (cont’d)
2.14. Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be
made of the amount of the obligation. The expense relating to any provision is presented in the profit or loss. If the effect of the
time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks
specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a
finance cost.
Provisions for onerous contracts
An onerous contract is a contract in which the unavoidable costs of meeting the obligations under the contract exceed the
economic benefits expected to be received under it. A provision for onerous lease contracts is recognised when the expected
benefits to be derived by the Group/Company from a contract are lower than the unavoidable cost of meeting its obligations under
the contract.
Provisions for the Performance Fee
The Company is obliged to pay the Performance Fee to the Management Company (Note 2.12). There is an obligation to pay the
Performance Fee, which becomes payable only in the event of outperformance of the benchmark when both conditions are met
as described in Note 2.12 and the Company’s Articles of Association.
As services are provided over time, the obligating past event arises and a provision for the Company’s management services
needs to be recognised. The amount recognised as a provision is the best estimate of the expenditure required to settle the
present obligation at the end of the reporting period.
2.15. Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
recognised in equity as a deduction, net of tax, from the retained earnings. Where any group company purchases the company’s
equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income
taxes) is deducted from equity attributable to the company’s equity holders until the shares are cancelled or reissued. Where such
shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and
the related income tax effects, is included in equity attributable to the company’s equity holders.
2.16. Leases
Group and Company are the lessor in an operating lease
Leases in which a significant portion of the risks and rewards of ownership are retained by the Group and the Company as the
lessor are classified as operating leases. Payments, including pre-payments, received under operating leases (net of any
incentives granted to the lessee) are credited to the statement of comprehensive income on a straight-line basis over the period
of the lease.
Any changes in the scope or the consideration for a lease, that was not part of the original terms and conditions of the lease, for
example, rent concessions given which were not contemplated as part of the original terms and conditions of the lease, are
accounted for as lease modifications.
The Group/the Company accounts for a modification to an operating lease as a new lease from the effective date of the
modification, recognising the remaining lease payments, including any amounts recorded as prepaid or accrued lease payments
at the time of the modification, as income on a straight-line basis over the remaining lease term.
Property leased out under operating leases is included in investment property in the statement of financial position (Note 11). See
Note 2.17 for the recognition of rental income.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
21
2 Summary of significant accounting policies (cont’d)
2.16 Leases (cont’d)
Group and Company are the lessees
From 1 January 2019, leases where the Group and/or the Company are lessees, are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is available for use by the Company/the Group.
The right-of-use asset is measured at its cost which includes the amount of the initial measurement of the lease liability, any lease
payments made at or before the commencement date (less any lease incentives received), any initial direct costs incurred by the
Group and/or the Company. The lease liabilities are measured at the net present value of the lease payments.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is
generally the case for leases in the Company/ the Group, the lessee’s incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in
a similar economic environment with similar terms, security, and conditions.
The Company and the Group are exposed to potential future increases in variable lease payments based on an index or rate,
which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate
take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease
period to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The Group/the Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have
a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease
of low-value assets recognition exemption to leases of equipment that are considered to be low value. Lease payments on short-
term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
2.17. Revenue recognition
Lease income
Operating lease income is recognised on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an
operating lease are added to the carrying amount of the underlying asset and recognised as expense over the lease term on the
same basis as lease income. The Group and the Company elected to recognise lease income for variable payment that depends
on an index or a rate in the periods in which changes of index or rate occur. Variable lease payments that do not depend on an
index or a rate are recognised as lease income in the periods in which the event or condition that triggers those payments occurs.
When the Group and the Company provides incentives to its tenants, the cost of the incentives is recognised over the lease term,
on a straight-line basis, as a reduction of lease income.
Utilities and other services income
Revenue from utilities and other services from is recognised in the accounting period in which control of the services are passed
to the customer, which is when the service is rendered.
Revenue is measured at the transaction price agreed under the contract. Amounts disclosed as revenue are net of variable
consideration and payments to customers, which are not for distinct services, this consideration may include discounts, trade
allowances, rebates.
A receivable is recognised when services are provided as this is the point in time that the consideration is unconditional because
only the passage of time is required before the payment is due.
Interest income
Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for
financial assets that subsequently become credit-impaired. For credit-impaired financial assets the effective interest rate is applied
to the net carrying amount of the financial asset (after deduction of the loss allowance).
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
22
2 Summary of significant accounting policies (cont’d)
2.18. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the Management Company and the Investment Committee that makes strategic decisions.
2.19. Borrowing costs
Borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in
connection with the borrowing of funds.
2.20. Current and deferred income tax
From 1 January 2018 all income of Collective Investment Undertakings is not subject to taxation.
The tax expense for the period comprises current and deferred tax. Tax is recognised in the statement of comprehensive income,
except to the extent that it relates to items recognised directly in equity. In this case, the tax is also recognised directly in equity.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted by the end of the
reporting period in the countries where the Company and its subsidiaries operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
The standard income tax rate in Lithuania was 15 % in 2020 and 2021. Starting from 2010, tax losses can be transferred within
Lithuania at no consideration or in exchange for certain consideration between the group companies if certain conditions are met.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from
the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability
in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit
or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax
liability is settled.
The deferred tax liability in relation to investment property that is measured at fair value is determined assuming the property will
be recovered entirely through sale.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against
which the temporary differences can be utilised.
In Lithuania tax losses can be carried forward for indefinite period, except for the losses incurred as a result of disposal of securities
and/or derivative financial instruments. In Lithuania such carrying forward is disrupted if entity changes its activities due to which
these losses incurred except when entity does not continue its activities due to reasons which do not depend on entity itself. In
Lithuania the losses from disposal of securities and/or derivative financial instruments can be carried forward for 5 consecutive
years and only be used to reduce the taxable income earned from the transactions of the same nature. From 1 January 2014
current year taxable profit could be decreased by previous year tax losses only up to 70% in Lithuania.
From 1 January 2018 according to the new Corporate Income Tax Act of Latvia the annual profit is not taxed. Corporate income
tax would be paid on distributed profit, including conditional distributed profit as for example: expenditure not related to economic
activities, some loans granted to related parties, some provisions for doubtful debts. The tax rate on (net) distributed profit would
be 20/80. From 1 January 2018 tax losses incurred before 31 December 2017 can be carried forward for 5 consecutive years to
reduce up to 50% of tax base of distributed profit in Latvia. From 1 January 2018 the tax base would be reduced by the gain on
sale of shares, if the shares were held for an uninterrupted period of at least 36 months. The excess gain can be transferred and
utilized in the future periods.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net
basis.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
23
2 Summary of significant accounting policies (cont’d)
2.21. Employee benefits
Social security contributions
The Company and the Group pay social security contributions to the state Social Security Fund (the Fund) on behalf of its
employees based on the defined contribution plan in accordance with the local legal requirements. A defined contribution plan is
a plan under which the Group/Company pays fixed contributions into the Fund and will have no legal or constructive obligations
to pay further contributions if the Fund does not hold sufficient assets to pay all employees benefits relating to employee service
in the current and prior period. Social security contributions are recognised as expenses on an accrual basis and included in
payroll expenses.
Bonus plans
The Company and the Group recognises a liability and an expense for bonuses where contractually obliged or where there is a
past practice that has created a constructive obligation.
2.22. Significant accounting judgements and estimates
The preparation of financial statements requires management of the Group and the Company to make judgements and estimates
that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities, at the end of
reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a
material adjustment to the carrying amount of the asset or liability affected in the future periods.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
Judgements
In the process of applying the accounting policies, management has made the following judgements, which had the most
significant effect on the amounts recognised in these financial statements:
The Group acts as principal in relation to utility and other services
The management has concluded that the Group acts as a principal in relation to utility and other services. Although the most of
services rendered to the tenants is performed by other parties, the Group has a right to a service to be performed by the other
party, which gives the Group the ability to direct that party to provide the service to the customer on the entity’s behalf. From
tenant perspective the Group combines the services provided by other parties in providing the specified service to them. According
to the management the Group is primarily responsible for fulfilling the promise to provide services and has discretion in establishing
the price for the services.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are
described below. The Group/Company based its assumptions and estimates on parameters available when the consolidated
financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change
due to market changes or circumstances arising beyond the control of the Group/Company. Such changes are reflected in the
assumptions when they occur.
The significant areas of estimation used in the preparation of these financial statements are discussed below.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
24
2 Summary of significant accounting policies (cont’d)
2.22.Significant accounting judgements and estimates (cont’d)
Fair value of investment properties
Fair value of investment properties was based either on the market approach by reference to sales in the market of comparable
properties or the income approach by reference to rentals obtained from the subject property or similar properties. Market
approach refers to the prices of the analogues transactions in the market. These values are adjusted for differences in key
attributes such as property size, location. Discounted cash flow projections in the income approach are based on estimates of
future cash flows, supported by the terms of any existing lease and other contracts and by external evidence such as current (at
the date of the statement of financial position) market rents for similar properties in the same location and condition, and using
discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows. The future
rental rates were estimated depending on the actual location, type, and quality of the properties, and taking into account market
data and projections at the valuation date.
The Company’s investment properties located in Lithuania have to be valued twice a year by qualified independent valuer in
accordance with the Lithuanian Law on Collective Investment Undertakings. In the process of valuation, the Management has
discussions with the qualified independent valuer about significant unobservable inputs
The fair value of the investment properties of the Group and the Company as at 31 December 2021 was EUR 29,616 thousand
and EUR 20,797 thousand, respectively (as at 31 December 2020 – EUR 24,133 thousand and EUR 15,774 thousand,
respectively) (described in more details in Note 11).
Fair value of investments into subsidiaries in stand-alone financial statements
The fair values of investments into subsidiaries together with loans granted to subsidiaries are determined by using valuation
techniques, primarily discounted cash flows. The fair value of these investments was measured at the fair value of their net assets,
including loans granted by the Company. The main assets of subsidiaries are investment properties, which are measured at fair
value using the income or market approach. The main liabilities of subsidiaries are borrowings from external financial institutions,
which are measured using an income approach, such as a present value technique. The models used to determine fair values
are periodically reviewed and compared against historical results to ensure their reliability.
The fair value of the investments in subsidiaries as at 31 December 2021 was EUR 9,801 thousand (as at 31 December 2020 –
EUR 9,026 thousand) (described in more details in Note 5).
The provision for the Performance Fee
The amount of provision for the Performance Fee represents the best estimate of the expenditure required to settle the present
obligation at the end of the reporting period. The provision is calculated on the basis of the net assets value of the Company,
which equals to the equity of the Group. The Performance Fee would become payable only if the stock price growth (including
dividends) exceeded 8% annually. As described in Note 2.12, the payable Performance Fee could be based on net assets value
or on the capitalisation of the Company. The Company cannot control stock price of the Company shares, therefore the timing
and the amount of the Performance Fee payable in future are uncertain.
As at 31 December 2021 provision was calculated as an amount equal to 20% of return in excess of the annual internal rate of
return of 8% for period from 30 June 2021 till 31 December 2021. For this period internal rate of return based on net assets value
of the Company amounted to 20.38%. Initial amount for calculation of internal rate of return for this period was capitalisation of
the Company as at 30 June 2021, as internal rate of return for period from 31 March 2020 till 30 June 2021 based on the
capitalisation of the Company amounted to 36.33% and exceeded 8%, but the capitalisation was less than net assets value of the
Company as at 30 June 2021.
As at 31 December 2020 provision was calculated as an amount equal to 20% of return in excess of the annual internal rate of
return of 8% for period from 31 March 2020 till 31 December 2020. For this period internal rate of return based on net assets value
of the Company amounted to 55.19%. Initial amount for calculation of internal rate of return for this period was capitalisation of
the Company as at 31 March 2020, as internal rate of return for period from 30 September 2019 till 31 March 2020 based on the
capitalisation of the Company amounted to 55.09% and exceeded 8%, but the capitalisation was less than net assets value of the
Company as at 31 March 2020.
As at 31 December 2021 the Company recognised non-current provision for the Performance Fee of EUR 219 thousand (as at
31 December 2020 - EUR 1,556 thousand) (Note 7).
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
25
3 Financial risk management
3.1. Financial risk factors
The risk management function within the Group is carried out in respect of financial risks, operational risks, and legal risks. On an
overall Group level strategical risk management was executed by the Management Company. Operational risk management is
carried out at each entity level by directors. The primary objectives of the financial risk management function are to establish risk
limits, and then ensure that exposure to risks stays within these limits. The operational and legal risk management functions are
intended to ensure proper functioning of internal policies and procedures to minimise operational and legal risks.
The Group’s and the Company’s principal financial liabilities comprise borrowings, trade, and other payables. The main purpose
of the borrowings is to raise finance for the Group’s and the Company’s operations. The Group and the Company have various
financial assets such as trade and other receivables, loans granted and cash which arise directly from its operations. The Company
and the Group have not used any derivative instruments so far, as management considered that there is no necessity for them.
The main risks arising from the financial instruments are market risk (including currency risk, cash flow and fair value interest rate
risk and price risk), liquidity risk and credit risk. The risks are identified and disclosed below.
Credit risk
Credit risk is the risk one party to a financial instrument will cause a financial loss for the other party by failing to discharge an
obligation. Credit risk arises from cash and cash equivalents, deposits, credit exposures to outstanding trade receivables and
loans granted. The Group/Company seeks to ensure that rental contracts are entered into only with lessees with an appropriate
credit history, from some of lessees advance lease payments are required.
The maximum exposure to credit risk and impairment of trade and other receivables is disclosed in Note 13. The maximum
exposure to credit risk for loans granted to subsidiaries measured at fair value through profit or loss are their carrying amounts
(Note 5). In Note 13 is also disclosed credit quality of trade receivable. There are no transactions of the Group or the Company
that occur outside Lithuania and Latvia.
As at 31 December 2021 the Group and the Company had no significant concentrations of credit risk.
With respect to credit risk arising from cash and cash equivalents and deposits the Group’s and the Company’s exposure to credit
risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.
According to the European deposit insurance scheme, cash, cash equivalents and deposits of up to EUR 100 thousand of every
legal entity in each bank are covered with insurance. All the Group’s balance of cash and cash equivalents are covered with the
insurance, except for the Company’s cash and cash equivalents, because the Company is a collective investment undertaking.
The insured amounts of cash placed on AS “SEB banka” accounts were exceeded by EUR 113 thousand and insured amounts
of cash placed on AB Šiaulių bankas accounts were exceeded by EUR 188 thousand as at 31 December 2021 (by EUR 13
thousand and by EUR 5,257 thousand, respectively, as at 31 December 2020).
All cash balances have a low credit risk at the reporting date and the impairment loss determined on 12-month expected credit
losses is resulted in an immaterial amount.
The credit quality of cash and cash equivalents can be assessed by reference to external credit ratings of the banks:
Group
Company
2021
2020
2021
2020
Moody’s short-term ratings
Prime-1
1,354
1,330
946
1,045
Prime-2
547
14,704
259
9,347
Not rated
-
-
-
-
1,901
16,034
1,205
10,392
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
26
3 Financial risk management (cont’d)
3.1 Financial risk factors (cont’d)
Market risk
Cash flow and fair value interest rate risk
The Group’s/Company’s exposure to the risk of changes in market interest rates relates primarily to the debt obligations with
floating interest rates. The borrowings from related party AB Invalda INVL were with fixed interest rates for one year.
The following table demonstrates the sensitivity to a reasonably possible change in floating interest rates (EURIBOR), with all
other variables held constant, of the Group’s and the Company’s profit before tax (through the impact on floating rate borrowings).
There is no impact on the Group’s and the Company’s equity other than current year profit impact.
Increase
in basis
points
Group
Company
2021
EUR
+50 bps
(46)
(46)
2020
EUR
+50 bps
(47)
(47)
As at 31 December 2021 and 2020 EURIBOR were negative and according to borrowings agreements was equalled to zero.
Foreign exchange risk
The Group and the Company holds assets and liabilities denominated only in the Euro, which is functional and presentation
currency of the Group. Therefore, the Group and the Company are not exposed to foreign exchange risk.
Liquidity risk
The Group’s and the Company’s policy is to maintain sufficient cash and cash equivalents or have available funding through an
adequate amount of committed credit facilities to meet their commitments at a given date in accordance with strategic plans. The
liquidity risk of the Group’s operation in Lithuania and the Company is controlled on an overall Group level. The liquidity risk of the
Group’s operation in Latvia is controlled on an entity level. The Group’s and the Company’s objective is to maintain a balance
between continuity of funding and flexibility through the use of bank loans. The liquidity risk management is divided into long-term
and short-term risk management.
The aim of the short-term liquidity management is to meet daily needs for funds. Short-term liquidity for the Group and the
Company is controlled through monthly monitoring of the liquidity status and needs of funds.
Long-term liquidity risk is managed by analysing the predicted future cash flows taking into account the possible financing sources.
Before approving the new investment projects the Group and the Company evaluate the possibilities to attract needed funds.
The Group’s liquidity ratio (total current assets / total current liabilities) as at 31 December 2021 and 2020 was approximately 0.79
and 12.23, respectively. The Company’s liquidity ratio as at 31 December 2021 and 2020 was approximately 0.56 and 12.32.
As at 31 December 2021 the current assets were lower than current liabilities by EUR 623 thousand in the Group and EUR 1,229
thousand in the Company. The management of the Group and the Company forecasted the cash flows of the Group and the
Company for 2022 and the forecast indicates that the Group and the Company will have sufficient funds to cover liabilities, which
fall due in 2022. The Group and the Company could use additional liquidity source - overdraft up to EUR 1,000 thousand available
according to borrowing agreement with AB Šiaulių bankas to meet its liabilities. Additionally, the Group and the Company has
initiate negotiation with the bank regarding additional borrowing to refinance additional investments.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
27
3 Financial risk management (cont’d)
3.1 Financial risk factors (cont’d)
Liquidity risk (cont’d)
The table below summarises the maturity profile of the Group’s financial liabilities as at 31 December 2021 and 2020 based on
contractual undiscounted payments.
On
demand
Less than 3
months
4 to 12
2 to 5
years
More than 5
years
Total
months
Interest bearing borrowings
-
148
444
8,801
-
9,393
Leasing liabilities
-
60
181
622
-
863
Trade and other payables
-
1,675
-
-
-
1,675
Provision for onerous contract
-
16
18
40
-
74
Other liabilities
437
22
-
-
-
459
Balance as at 31 December 2021
437
1,921
643
9,463
-
12,464
Interest bearing borrowings
-
150
451
9,393
-
9,994
Leasing liabilities
-
59
178
845
-
1,082
Trade and other payables
-
83
-
-
-
83
Provision for onerous contract
-
5
17
62
-
84
Other liabilities
451
24
-
-
-
475
Balance as at 31 December 2020
451
321
646
10,300
-
11,718
The table below summarises the maturity profile of the Company’s financial liabilities as at 31 December 2021 and 2020 based
on contractual undiscounted payments.
On
demand
Less than 3
months
4 to 12
2 to 5
years
More than 5
years
Total
months
Interest bearing borrowings
-
148
444
8,801
-
9,393
Leasing liabilities
-
60
181
622
-
863
Trade and other payables
-
1,579
-
-
-
1,579
Provision for onerous contract
-
16
18
40
-
74
Other liabilities
437
17
-
-
-
454
Balance as at 31 December 2021
437
1,820
643
9,463
-
12,363
Interest bearing borrowings
-
150
451
9,393
-
9,994
Leasing liabilities
-
59
178
845
-
1,082
Trade and other payables
-
117
-
-
-
117
Provision for onerous contract
-
5
17
62
-
84
Other liabilities
451
20
-
-
-
471
Balance as at 31 December 2020
451
351
646
10,300
-
11,748
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
28
3 Financial risk management (cont’d)
Liquidity risk (cont’d)
Provision for onerous contract is disclosed in the tables above because it is a financial liability arising from the unavoidable cost
of meeting the obligation of contract. The amounts disclosed are undiscounted future loss amounts used to calculate provision.
3.2. Capital management
The primary objective of the capital management is to ensure that the Group and the Company maintain a strong credit health
and healthy capital ratios in order to support their business and maximise shareholder value. The Company‘s management
supervises the investments so that they are in compliance with requirements applied to the capital, specified in the appropriate
legal acts, as well as provide the Group’s management with necessary information.
The Group‘s and the Company‘s capital comprises share capital, share premium, reserves and retained earnings.
The Group and the Company manage their capital structure and make adjustments to it, in light of changes in economic conditions
and specific risks of their activity. To maintain or adjust the capital structure, the Company may adjust the dividend payment to
shareholders, return capital to shareholders or issue new shares.
The Company is obliged to keep its equity ratio at not less than 50 % of its share capital, as imposed by the Law on Companies
of Republic of Lithuania. The Company and the Group complied with this requirement as at 31 December 2021 and 2020, except
for two subsidiaries in 2021 and three subsidiaries in 2020. There are no plans yet to rectify the situation in Lithuania. Pursuant to
the Latvian Commercial Law the authorised share capital of a private limited liability company must be not less than EUR 2,800.
As of 31 December 2021 and 2020, all Latvian subsidiaries complied with this requirement.
Starting from 2020 the Company has the right to pay dividends without bank consent if the ratio of EBITDA (earnings before
interest, tax, depreciation and amortization) plus inflows from subsidiaries (dividends or repayment of granted loan) divided by the
sum of debt service costs (interest and principal repayments) and dividends would be higher than 1.1. In addition, on 9 April 2020
the Ordinary General Meeting of the Company changed dividend payment policy by setting the minimum amount of dividends at
EUR 0.09, if the legal and contractual requirements do not restrict the payment of dividends.
4 Fair value estimation
Assets carried at fair value
The fair value hierarchy has the following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is,
as prices) or indirectly (that is, derived from prices);
Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
The following table provides the fair value measurement hierarchy of the Group’s and the Company’s assets measured at fair
value in the statement of financial position as at 31 December 2021.
Level 1
Level 2
Level 3
Total
balance
Assets of the Group
Investment properties (Note 11)
-
6,626
22,990
29,616
Assets of the Company
Investment properties (Note 11)
-
2,630
18,167
20,797
Investment into subsidiaries (Note 5)
-
-
9,801
9,801
There were no transfers of assets between the Level 1 and Level 2 and between Level 2 and Level 3 of the fair value hierarchy
during 2021.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
29
4 Fair value estimation (cont’d)
Assets carried at fair value (cont’d)
The following table provides the fair value measurement hierarchy of the Group’s and the Company’s assets measured at fair
value in the statement of financial position as at 31 December 2020.
Level 1
Level 2
Level 3
Total
balance
Assets of the Group
Investment properties (Note 11)
-
3,629
20,504
24,133
Assets of the Company
Investment properties (Note 11)
-
-
15,774
15,774
Investment into subsidiaries (Note 5)
-
-
9,026
9,026
There were no transfers of assets between the Level 1 and Level 2 and between Level 2 and Level 3 of the fair value hierarchy
during 2020.
There were no liabilities measured at fair value in the Group’s and the Company’s statements of financial position.
Financial instruments that are not carried at fair value
The Group’s and the Company’s principal financial instruments that are not carried at fair value in the statement of financial
position are cash and cash equivalents, deposits, trade and other receivables, trade and other payables, non-current and current
borrowings, provision for onerous contract.
The carrying amount of the cash and cash equivalents, deposits, trade and other receivables, trade and other payables of the
Group and the Company as at 31 December 2021 and 2020 approximated their fair value because they are short-term and the
impact of discounting is immaterial.
The carrying amount of borrowings of the Group and the Company and provision for onerous contract as at 31 December 2021
and 2020 approximated their fair value. Bank borrowings have floating interest rate and were renegotiated recently, therefore
their interest rate represents the current market rate. The interest rates of borrowings from related party are reviewed at the end
of each financial year and adjusted in line with market rates changes, therefore it was concluded that their fair value approximates
carrying amount. The fair values of non-current borrowings are based on discounted cash flows using a current interest rate.
They are classified as level 3 fair values in the fair value hierarchy due to use of unobservable inputs, including own credit risk.
5 Investments into subsidiaries and short-term loans granted to subsidiaries
The Group had the following subsidiaries directly or indirectly owned by the Company as at 31 December 2021:
Name
Country of incorporation
and place of business
Proportion of shares (voting
rights) directly/indirectly held by
the Company/Group (%)
Nature of business
UAB Rovelija*
Lithuania
100.00
Real estate owner and lessor
(from March 2020 dormant)
UAB Perspektyvi veikla
Lithuania
100.00
Dormant
UAB Proprietas*
Lithuania
100.00
Real estate owner and lessor
SIA Dommo Grupa*
Latvia
100.00
Real estate owner and lessor
SIA Dommo Biznesa Parks
Latvia
100.00
Real estate owner and lessor
*These subsidiaries are directly owned by the Company.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
30
5 Investments into subsidiaries and short term loans granted to subsidiaries (cont’d)
The Group had the following subsidiaries directly or indirectly owned by the Company as at 31 December 2020:
Name
Country of incorporation
and place of business
Proportion of shares (voting
rights) directly/indirectly held by
the Company/Group (%)
Nature of business
UAB Rovelija*
Lithuania
100.00
Real estate owner and lessor
(from March 2020 dormant)
UAB Perspektyvi veikla
Lithuania
100.00
Dormant
UAB Proprietas*
Lithuania
100.00
Real estate owner and lessor
SIA Dommo Grupa*
Latvia
100.00
Real estate owner and lessor
SIA Dommo Biznesa Parks
Latvia
100.00
Real estate owner and lessor
SIA Dommo
Latvia
100.00
Real estate management
SIA DBP Invest
Latvia
100.00
Dormant
*These subsidiaries are directly owned by the Company.
All subsidiary undertakings listed in the tables above are included in the consolidation.
In 2021 the company has increased the share capital of its subsidiary UAB “Proprietas” by EUR 116 thousand. The capital increase
was made by setting off part of the loan granted to the subsidiary. In addition, two of the subsidiaries in Latvia SIA “Dommo” and
SIA “DBP Invest” were merged with SIA “Dommo Grupa”.
In 2020 the Company has not invested into or sold any subsidiaries.
The Company has not any significant restriction on the ability of an unconsolidated subsidiary to transfer funds to the Company.
Fair value of investments into subsidiaries
Investments into subsidiaries together with loans granted to subsidiaries are measured at fair value through profit or loss in the
Company’s stand-alone financial statements in 2021 and 2020. It is Level 3 fair value measurement. The fair value of investments
is measured at the fair value of their net assets including loans granted by the Company. The main assets of dormant entities are
cash. The main assets of active subsidiaries are investment properties, which are measured at fair value using the income
approach. The main liabilities of subsidiaries are borrowings from external financial institutions, which are measured using an
income approach, such as a present value technique.
The split of carrying amounts of the investment into subsidiaries by legal components is as follows:
2021
2020
Shares
221
142
Loans granted
9,580
8,884
9,801
9,026
Key inputs to valuation on subsidiaries as at 31 December 2021 and 2020:
Significant unobservable inputs
Value of input or
range, 2021
Value of input
or range, 2020
Discount rate (%)
10
10
Capitalisation rate for terminal value (%)
9
9
Vacancy rate (%)
2
2-3
Increase of rents per year (%)
1.3-1.5
0-1.5
Inflation (%)
1.3-1.4
1.4-1.6
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
31
5 Investments into subsidiaries and short-term loans granted to subsidiaries (cont’d)
Fair value of investments into subsidiaries (cont’d)
The sensitivity analysis of fair value of subsidiaries as at 31 December 2021 is as follows:
Reasonable possible shift +/- (%)
Increase of
estimates
Decrease of
estimates
Change in Increase of rents per year by 100 bps
95
(93)
Change in expected vacancy rates by 20%
(26)
27
Change in discount and capitalization rate by 50 bps
(274)
307
The sensitivity analysis of fair value of subsidiaries as at 31 December 2020 is as follows:
Reasonable possible shift +/- (%)
Increase of
estimates
Decrease of
estimates
Change in Increase of rents per year by 100 bps
166
(162)
Change in expected vacancy rates by 20%
(31)
31
Change in discount and capitalization rate by 50 bps
(267)
298
The following table presents the movement in Level 3 instruments for the year ended 31 December 2021 and 2020:
Fair value as at 31 December 2019
7,894
Gains and losses recognised in profit or loss (within ‘Net changes in fair value of investment into
subsidiaries designated at fair value through profit or loss ’)
306
Investment into share capital
-
Loan granted during a year (Note 18)
2,525
Loan repaid during a year (Note 18)
(1,699)
Fair value as at 31 December 2020
9,026
Gains and losses recognised in profit or loss (within ‘Net changes in fair value of investment into
subsidiaries designated at fair value through profit or loss ’)
885
Investment into share capital (set off with loans granted)
116
Loan granted during a year (Note 18)
200
Loan repaid during a year (Note 18)
(426)
Fair value as at 31 December 2021
9,801
Change in unrealised gains or losses for the period included in profit or loss for assets held
at the end of 2021
885
Change in unrealised gains or losses for the period included in profit or loss for assets held
at the end of 2020
306
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
32
5 Investments into subsidiaries and short-term loans granted to subsidiaries (cont’d)
Fair value of investments into subsidiaries (cont’d)
The main part of investments into subsidiaries together with loans granted are loans granted to Latvian entities. In 2015 50% of
these loans were acquired by the Former Parent Company at a price below their estimated fair value, which was measured as
50% of fair value of net assets of subsidiaries, over which control was obtained by the Former Parent Company. On the acquisition
day, the difference amounted to EUR 1,014 thousand. As the fair value was not determined based on observable inputs, this ‘1
day profit’ was not recognised immediately but is deferred and is recognised during the estimated maturity of the loans. During
2021 and 2020 the Company has recognised nil and EUR 101 thousand of this ‘1 day profit’ within ‘Net changes in fair value of
investments in subsidiaries measured at fair value through profit or loss’ in the statement of comprehensive income, respectively.
As at 30 June 2020 all ‘1 day profit’ was recognised. Therefore, the total fair value of loans granted by the Company was EUR
9,580 thousand and EUR 8,884 thousand as at 31 December 2021 and as at 31 December 2020, respectively (their carrying
amount – EUR 9,580 thousand and EUR 8.884 thousand, respectively). It is Level 3 measurement.
Short-term loans granted to subsidiaries
In 2020 the Company has received cash from disposed investment properties and cash amount exceeded the banks limits from
which negative interests are applied. The Company has transferred cash to subsidiaries’ bank accounts to mitigate expenses of
negative interests by granting interest-free short-term loans.
The movements of short-term loans granted to subsidiaries of the Company were:
Company
2021
2020
At 1 January
5,000
-
Loans granted during year
7,310
15,850
Loans repayment received
(12,310)
(10,850)
At 31 December
-
5,000
6 Segment information
Management of the Company has determined the operating segments based on the reports reviewed by the Investment
Committee of the Management Company that are used to make strategic decisions. The Investment Committee analyses
performance of the Group on property-by-property basis of owned premises. Performance is evaluated based on net operating
income. Net operating income is calculated by deducting from revenue premises rent costs (excluding provision for onerous
contract), utilities expenses, repair and maintenance expenses, property management and brokerage costs, taxes on property
and insurance costs. Segment assets and liabilities are not reported to the Investment Committee. Management of the Company
has determined the following reportable segments:
- Owned property in Lithuania. The reportable segment comprises three operating segments on a property-by-property
basis, which are aggregated (in 2020 there were 2 such segments). The operating segments have similar economic
characteristics because all owned premises are located in Vilnius, Lithuania. These are office buildings. Most of them
have further development opportunities. All properties are multi-tenant. Corporate tenants dominate, but some premises
are also leased to governmental and retail tenants.
- Owned property in Latvia. Revenue is earned from warehouse located in Riga, Latvia.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
33
6 Segment information (cont’d)
The following table presents performance of reportable segments of the Group for the year ended 31 December 2021:
Owned
property in
Lithuania
Owned
property in
Latvia
Total
Year ended 31 December 2021
Rent income
1,130
557
1,687
Other revenue (utilities and other service)
1,036
-
1,036
Revenue
2,166
557
2,723
Expenses
Premises rent costs
(71)
(3)
(74)
Utilities
(319)
(2)
(321)
Repair and maintenance of premises
(542)
(24)
(566)
Property management and brokerage costs
(1)
(29)
(30)
Taxes on property
(95)
(14)
(109)
Insurance costs
(5)
(3)
(8)
Net operating income for the period
1,133
482
1,615
The following table presents performance of reportable segments of the Group for the year ended 31 December 2020:
Owned
property in
Lithuania
Owned
property in
Latvia
Total
Year ended 31 December 2020
Rent income
2,221
564
2,785
Other revenue (utilities and other service)
1,065
-
1,065
Revenue
3,286
564
3,850
Expenses
Premises rent costs
(73)
(3)
(76)
Utilities
(386)
-
(386)
Repair and maintenance of premises
(909)
(70)
(979)
Property management and brokerage costs
(7)
(22)
(29)
Taxes on property
(155)
(7)
(162)
Insurance costs
(10)
(3)
(13)
Net operating income for the period
1,746
459
2,205
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
34
6 Segment information (cont’d)
The following table presents reconciliation of the Group’s operating profits to net operating income, rent costs and revenue.
2021
2020
Net
operating
income to
operating
profit
Premises
rent costs
Repair and
maintenance
of premises
Revenue
Net
operating
income to
operating
profit
Premises
rent costs
Repair and
maintenance
of premises
Revenue
From reportable
segment
1,615
(74)
(566)
2,723
2,205
(76)
(979)
3,850
Provision for onerous
contracts and lease
liabilities recalculation
impact
(4)
(4)
-
-
(36)
(36)
-
-
Other revenue not
included in reportable
segments
3
-
-
3
4
-
-
4
Rent revenue not
included in reportable
segment due to
application of IFRS 16
7
-
-
7
47
-
-
47
Add back insurance
and other costs
(included within ‘other
expenses’)
74
-
66
-
84
-
71
-
Brokerage cost on sale
of investment property
-
-
-
-
-
-
-
-
Management and
Performance Fee
(388)
-
-
-
(767)
-
-
-
Impairment of trade
receivables
(5)
-
-
-
(2)
-
-
-
Employee benefits
expenses
(154)
-
-
-
(202)
-
-
-
Depreciation and
amortisation
(104)
-
-
-
(103)
-
-
-
Other expenses
(254)
-
-
-
(359)
-
-
-
Other income
25
-
-
-
40
-
-
-
Net gains from fair
value adjustments on
investment property
2,854
-
-
-
4,961
-
-
-
Total
3,669
(78)
(500)
2,733
5,872
(112)
(908)
3,901
The table below presents distribution of the Group non-current assets (other than financial instruments and deferred tax assets)
by geographical area as at 31 December 2021 and 2020:
Lithuania
Latvia
Total
As at 31 December 2021
21,225
8,819
30,044
As at 31 December 2020
16,271
8,359
24,630
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
35
7 Revenue, lease expenses, lease commitments, provisions
Revenue
The Group being the lessor has entered into commercial property leases of the Group’s investment properties under operating
lease agreements. The majority of the agreements have remaining terms of between 1 and 6 years.
Analysis of revenue by category:
Group
Company
2021
2020
2021
2020
Rent income
1,694
2,832
1,500
2,580
Utilities revenue
222
327
1
10
Other services revenue
817
742
8
181
Total revenue
2,733
3,901
1,509
2,771
From 1 January 2018 subsidiary UAB Proprietas provide property management services for the Company and utilities and other
services to the tenants of the Company. Therefore, from 1 January 2018 most of utilities and other services revenue is earned by
the subsidiary, not by the Company.
Analysis of revenue of the Group by geographical areas:
Group
2021
2020
Lithuania
2,173
3,333
Latvia
560
568
Total
2,733
3,901
In 2020 there was one customer in Latvia, from which the group received 12.9% of its revenue, in 2021 the Group has one
customer in Latvia, from which was received 16% of revenue.
In 2021 there were three customers, from which the Company received more than 10% of its revenue: 27% was received from
two non-related parties and 24% from one of the subsidiaries. 2020 there was customers, from which the Company had received
more than 10% of its revenue.
The Group’s future rentals receivable under non-cancellable and cancellable operating leases as at 31 December 2020 and
2019 are as follows:
2021
2020
Within one year
- non-cancellable lease
404
556
- non-cancellable amount of cancellable lease
1,031
986
- minimum lease payments, total
1,435
1,542
- cancellable amount of cancellable lease
152
62
1,587
1,604
Within two years
- non-cancellable lease
349
389
- non-cancellable amount of cancellable lease
560
562
- minimum lease payments, total
909
951
- cancellable amount of cancellable lease
322
426
1,231
1,377
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
36
7 Revenue, lease expenses, lease commitments, provisions (cont’d)
Revenue (cont’d)
Within three years
- non-cancellable lease
261
340
- non-cancellable amount of cancellable lease
118
487
- minimum lease payments, total
379
827
- cancellable amount of cancellable lease
572
240
951
1,067
Within four years
- non-cancellable lease
215
253
- non-cancellable amount of cancellable lease
-
66
- minimum lease payments, total
215
319
- cancellable amount of cancellable lease
629
530
844
849
Within five years
- non-cancellable lease
107
208
- non-cancellable amount of cancellable lease
-
-
- minimum lease payments, total
107
208
- cancellable amount of cancellable lease
277
556
384
764
After five years
- non-cancellable lease
-
104
- non-cancellable amount of cancellable lease
-
-
- minimum lease payments, total
-
104
- cancellable amount of cancellable lease
194
453
194
557
Total
5,191
6,218
- non-cancellable lease
1,336
1,850
- non-cancellable of cancellable lease
1,709
2,101
- minimum lease payments, total
3,045
3,951
- cancellable amount of cancellable lease
2,146
2,267
5,191
6,218
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
37
7 Revenue, lease expenses, lease commitments, provisions (cont’d)
Revenue (cont’d)
The Company’s future rentals receivable under non-cancellable and cancellable operating leases as at 31 December 2021
and 2020 are as follows:
2021
2020
Within one year
- non-cancellable lease
798
932
- non-cancellable amount of cancellable lease
498
493
- minimum lease payments, total
1,296
1,425
- cancellable amount of cancellable lease
113
4
1,409
1,429
Within two years
- non-cancellable lease
743
766
- non-cancellable amount of cancellable lease
183
127
- minimum lease payments, total
926
893
- cancellable amount of cancellable lease
126
310
1,052
1,203
Within three years
- non-cancellable lease
655
716
- non-cancellable amount of cancellable lease
118
125
- minimum lease payments, total
773
841
- cancellable amount of cancellable lease
78
51
851
892
Within four years
- non-cancellable lease
609
630
- non-cancellable amount of cancellable lease
-
66
- minimum lease payments, total
609
696
- cancellable amount of cancellable lease
176
56
785
752
Within five years
- non-cancellable lease
304
584
- non-cancellable amount of cancellable lease
-
-
- minimum lease payments, total
304
584
- cancellable amount of cancellable lease
126
121
430
705
After five years
- non-cancellable lease
-
292
- non-cancellable amount of cancellable lease
-
-
- minimum lease payments, total
-
292
- cancellable amount of cancellable lease
194
308
194
600
Total
4,721
5,581
- non-cancellable lease
3,109
3,920
- non-cancellable of cancellable lease
799
811
- minimum lease payments, total
3,908
4,731
- cancellable amount of cancellable lease
813
850
4,721
5,581
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
38
7 Revenue, lease expenses, lease commitments, provisions (cont’d)
Revenue (cont’d)
The Company’s and the Group’s future rentals receivable under finance lease as at 31 December 2021 and 2020 are as
follows:
2021
2020
Year 1
202
202
Year 2
202
202
Year 3
202
202
Year 4
202
202
Year 5
-
202
After 5 years
-
-
Total
808
1,010
Unearned interest
(30)
(46)
778
964
For the cancellable lease agreements, tenants must notify the administrator 1–6 months in advance if they wish to cancel the
rent agreement. One agreement has 9 months notification and tenant has to pay for the cancellation 2 months’ rent fee penalty
and penalty based on initial repair cost incurred to prepare premises to rent proportionally to remaining term of rent. According
to some agreements, the tenants have the right to cancel the rent agreement within 6–30 months of the start of lease term.
According to non-cancellable lease agreements tenants must pay the penalty equal to rentals receivable during the whole
remaining lease period.
Most of lease agreements have a clause enabling upward revision of the rental charges on an annual basis according to
prevailing market conditions.
Expenses and provisions
The Company was leasing premises from an external party until August 2017 under the lease agreement of 10 August 2007,
except for one property, which is leased until the expiry of the current sublease agreement (31 December 2025). The Company
had paid a one-off deposit in the amount of EUR 825 thousand corresponding to the 6 months rental fee amount, which will be
set-off against the last part of lease payment at the termination of the lease. The rent payments are subject to an indexation at
the end of August each year based on harmonised consumer price index, if the latter is more than 1%, but there is a cap for
annual indexation of 3.8%. In November of 2016 the amendment to the lease agreement was signed. According to the amendment,
EUR 275 thousand of prepayments was set off against lease payables in 2016, EUR 450 thousand of prepayments was set off in
2017, and EUR 100 thousand of prepayments have to be set off in 2025.
The lease expenses of the Group from short term agreements amounted to EUR 79 thousand and EUR 84 during the year ended
31 December 2021 and 2020, respectively. The lease expenses of the Company from short-term agreements amounted to EUR
72 thousand and EUR 77 thousand during the year ended 31 December 2021 and 2020, respectively.
The lease agreement of 10 August 2007 is an onerous contract, therefore there is a provision of EUR 48 thousand and EUR 35
thousand to cover the loss anticipated in connection with this contract recognised in the statement of financial position as at 31
December 2021 and 2020, respectively. In addition, after the sale of investment property located at Gyneju 14, Vilnius, the
Company/the Group is committed to further ensure to rent the parking places for one of previous tenant of Gyneju 14. The
commitment is onerous contract, therefore, additional provision of onerous contract amounting for 49 thousand EUR was formed
as at 31 December 2020, therefore there is a provision of EUR 26 thousand as at 31 December 2021.These amounts represent
the present value of future cash flows related to the lease contracts. Future cash flows projections are based on the estimates of
future rent income from subleased premises, contractual lease payments.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
39
7 Revenue, lease expenses, lease commitments, provisions (cont’d)
Expenses and provisions (cont’d)
The changes in the provision for onerous contract is presented below:
2021
2020
As at 1 January
84
62
Re-estimation of provision at the end of the year
13
23
Amount used (recognised as a reduction of ‘Premises rent costs’)
(23)
(1)
Unwinding of the discount and changes in the discount rate
-
-
As at 31 December
74
84
Non-current
40
61
Current
34
23
As at 31 December 2021 the Company recognised non-current provision for the Performance Fee of EUR 219 thousand (as at
31 December 2020: EUR 1,556 thousand) (Notes 2.12 and 2.22).
The changes in the provision for the Performance Fee is presented below:
2021
2020
As at 1 January
1,556
2,486
Re-estimation of provision at the end of the year
179
452
Reclassification of payable part to ‘other current liabilities’
(1,516)
(1,382)
As at 31 December
219
1,556
8 Finance costs
Group
Company
2021
2020
2021
2020
Interest expenses of bank borrowings
(260)
(448)
(260)
(432)
Interest expenses of borrowings from related parties
-
(13)
-
(13)
Unwinding of the discount of provision for onerous contract
-
-
-
-
Lease interest
(18)
(20)
(18)
(20)
Other financial expenses
-
-
-
-
(278)
(481)
(278)
(465)
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
40
9 Income tax
Group
Company
2021
2020
2021
2020
Components of the income tax (expenses)/credit
Current income tax (expense)/credit
-
(4)
-
-
Prior year current income tax correction
-
(3)
-
-
Deferred income tax (expense)/credit
8
32
-
-
Income tax (expense)/credit charged to profit or loss – total
8
25
-
-
There is no income tax expense (credit) recognised in other comprehensive income. Deferred income tax asset and liability
were estimated at 15% rates as at 31 December 2021 and 2020.
The movement in deferred income tax assets and liabilities of the Group during 2021 is as follows:
Balance as
at 31
December
2020
Recognised
in profit or
loss during
the year
Transfer of
tax losses
within
group
Balance as
at 31
December
2021
Deferred tax asset
Tax loss carry forward
1,142
-
(3)
1,139
Investment properties
-
-
-
-
Deferred tax asset available for recognition
1,142
-
(3)
1,139
Less: unrecognised deferred tax asset from tax losses carried forward
(1,105)
8
-
(1,097)
Less: unrecognised deferred tax asset due to future uncertainties
-
-
-
-
Recognised deferred income tax asset
37
8
(3)
42
Asset netted with liability of the same legal entities
-
-
-
-
Deferred income tax asset, net
37
8
(3)
42
1
Deferred tax liability
Investment properties
-
-
-
-
Deferred income tax liability
-
-
-
-
Liability netted with asset of the same legal entities
-
-
-
-
Deferred income tax liability, net
-
-
-
-
Deferred income tax, net
37
8
(3)
42
After changes in Latvian Income Tax Law the tax losses from Latvian entities could be carried forward not for indefinite period of
time, but for 5 consecutive years. Deferred tax asset arising from the tax losses from Latvian entities amounted to EUR 1,048
thousand and 1,054 thousand (all amount is unrecognised, expiry date 31 December 2022)) as at 31 December 2021 and 2020,
respectively.
The Group’s deferred tax assets will be recovered within than 12 months as of 31 December 2021.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
41
9 Income tax (cont’d)
The movement in deferred income tax assets and liabilities of the Group during 2020 is as follows:
Balance
as at 31
December
2019
Recognised
in profit or
loss during
the year
Balance as
at 31
December
2020
Deferred tax asset
Tax loss carry forward
1,108
34
1,142
Investment properties
9
(9)
-
Deferred tax asset available for recognition
1,117
25
1,142
Less: unrecognised deferred tax asset from tax losses carried forward
(1,095)
(10)
(1,105)
Less: unrecognised deferred tax asset due to future uncertainties
(9)
9
-
Recognised deferred income tax asset
13
24
37
Asset netted with liability of the same legal entities
(8)
8
-
Deferred income tax asset, net
5
32
37
1
Deferred tax liability
Investment properties
(8)
8
-
Deferred income tax liability
(8)
8
-
Liability netted with asset of the same legal entities
8
(8)
-
Deferred income tax liability, net
-
-
-
Deferred income tax, net
5
32
37
Following the provisions of the Lithuanian Law on Corporate Income Tax, all income of closed-end investment companies
operating in accordance with the Lithuanian Law on Collective Investment Undertakings are not subject to taxation. Therefore, the
Company has not any taxable temporary differences in 2021 and 2020 and has not recognised any deferred tax assets or liabilities.
The reconciliation of the total income tax to the theoretical amount that would arise using the tax rate of the Group and
the Company is as follows:
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
42
9 Income tax (cont’d)
Group
Company
2021
2020
2021
2020
Profit before income tax
3,391
5,391
3,399
5,516
Tax calculated at the tax rate of 0 %
-
-
-
-
Tax effect of non-deductible expenses and non-taxable income
(1)
5
-
-
Deferred tax expenses arising from write-down, or reversal of a
previous write-down, of deferred tax asset due to changes in probability
to utilise it
2
(1)
-
-
Prior year current income tax correction
-
(3)
-
-
Differences in tax rates in subsidiaries (15% instead of 0%)
7
24
-
-
Income tax (expense)/credit recorded in the statement of
comprehensive income
8
25
-
-
Following the provisions of the Lithuanian Law on Corporate Income Tax, all income of closed-end investment companies
operating in accordance with the Lithuanian Law on Collective Investment Undertakings are not subject to taxation.
10 Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares outstanding during the year.
The weighted average number of shares for the year ended 31 December 2021 was as follows:
Calculation of weighted average for the year
2021
Number of shares
(thousand)
Par value
(EUR)
Issued/365
(days)
Weighted average
(thousand)
Shares issued as at 31 December 2020
13,050
1.45
365/365
13,050
Own shares acquired as at 9 February 2021
-
1.45
325/365
-
Own shares acquired as at 23 February 2021
(1,191)
1.45
311/365
(1,015)
Own shares acquired as at 9 March 2021
(10)
1.45
297/365
(8)
Own shares acquired as at 28 March 2021
(3,788)
1.45
278/365
(2,885)
Shares issued as at 31 December 2021
8,061
1.45
-
9,142
The weighted average number of shares for the year ended 31 December 2020 was as follows:
Calculation of weighted average for the year
2020
Number of shares
(thousand)
Par value
(EUR)
Issued/365
(days)
Weighted average
(thousand)
Shares issued as at 31 December 2019
13,150
1.45
366/366
13,150
Own shares acquired as at 9 November 2020
(100)
1.45
52/366
(14)
Shares issued as at 31 December 2020
13,050
1.45
-
13,136
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
43
10 Earnings per share (cont’d)
Group
2021
2020
Net profit (loss), attributable to the equity holders of the parent
3,399
5,416
Weighted average number of ordinary shares (thousand)
9,142
13,136
Basic earnings (deficit) per share (EUR)
0.37
0.41
For 2021 and 2020 diluted earnings per share of the Group are the same as basic earnings per share.
11 Investment properties
The movements of investment properties of the Group were:
Other investment
properties
valued using
transaction price
Other investment
properties valued
using sales
comparison method
Properties
leased out by
the entity
Investment
properties held
for future
redevelopment
Total
Fair value hierarchy
Level 1
Level 2
Level 3
Level 3
Balance as at 31 December 2019
32,904
4,894
34,086
-
71,884
Subsequent expenditure
-
-
38
-
38
Disposal
(32,908)
(1,414)
(18,428)
-
(52,750)
Gain from fair value adjustment
4
149
4,808
-
4,961
Loss from fair value adjustment
-
-
-
-
-
Balance as at 31 December 2020
-
3,629
20,504
-
24,133
Additions
-
2,628
1
-
2,629
Subsequent expenditure
-
-
-
-
-
Disposal
-
-
-
-
-
Gain from fair value adjustment
-
369
2,485
-
2,854
Loss from fair value adjustment
-
-
-
-
-
Balance as at 31 December 2021
-
6,626
22,990
-
29,616
Unrealized gains or losses for the
period, included within ‘Net gain
(losses) on fair value adjustments of
investment property’ in profit or loss
-
369
2,485
-
2,854
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
44
11 Investment properties (cont’d)
The movements of investment properties of the Company were:
Other investment
properties
valued using
transaction price
Other investment
properties valued
using sales
comparison method
Properties
leased out by
the entity
Investment
properties held
for future
redevelopment
Total
Fair value hierarchy
Level 1
Level 2
Level 3
Level 3
Balance as at 31 December 2019
32,498
1,293
29,204
-
62,995
Subsequent expenditure
-
-
35
-
35
Transfer to other valuation level
-
-
-
-
-
Disposal
(32,502)
(1,330)
(18,428)
-
(52,260)
Gain from fair value adjustment
4
37
4,963
-
5,004
Loss from fair value adjustment
-
-
-
-
-
Balance as at 31 December 2020
-
-
15,774
-
15,774
Additions
-
2,628
-
-
2,628
Subsequent expenditure
-
-
-
-
-
Disposal
-
-
-
-
-
Gain from fair value adjustment
-
2
2,393
-
2,395
Loss from fair value adjustment
-
-
-
-
-
Balance as at 31 December 2021
-
2,630
18,167
-
20,797
Unrealized gains or losses for the
period, included within ‘Net gain
(losses) on fair value adjustments of
investment property’ in profit or loss
-
2
2,393
-
2,395
Investment properties of the Group are office buildings warehouses and properties held for future development. The majority of
buildings and warehouses are leased out under the operating lease agreements and generate rental income.
The direct operating expenses arising from investment properties can be allocated as follows:
Group
Company
2021
2020
2021
2020
To properties that generated rental income
631
1,077
531
1,046
To properties that did not generate rental income
106
66
49
33
737
1,143
580
1,079
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
45
11 Investment properties (cont’d)
During 2021 The Company acquired the real estate located at Vilniaus Street 37-4 in Vilnius from state enterprise Turto Bankas
and private individuals for EUR 2,628 thousand (including the costs directly related to the purchase of the investment property) The
total area of the acquired facilities is 1,653.49 sq. m. while the area of the land plot is 0.1185 ha.
On 6 March 2020 the IBC Business Centre on A. Juozapavičiaus and Šeimyniškių streets in Vilnius were sold to the closed-end
investment fund for informed investors Lords LB Baltic Green Fund (V), which is managed by Lords LB Asset Management UAB.
The real estate at the address Kalvarijų Street 11a belonging to the INVL Baltic Real Estate company Rovelija was also sold. The
value of the transaction was EUR 33 million, EUR 32,908 thousand of transaction value were assigned to the value of investment
property. The remaining amount was attributed to sold tangible fixed assets together with investment property and accrued rental
income.
On 30 September 2020 the investment property on Gynėjų street in Vilnius was sold to the Tvarus projektas UAB. The value of
the transaction was EUR 20 million, 18,842 thousand of transaction value were assigned to the value of investment property. The
remaining amount was attributed to sold tangible and intangible fixed assets together with investment property and accrued rental
income.
During 2020 the reconstruction expenses of EUR 35 thousand were incurred additionally for the investment properties, located at
Palangos 4, Vilnius. Also during 2020 the Group incurred EUR 3 thousand expenses related to investment property in Latvia,
which was recognized in the value of the property. During 2020 the Group/the Company have paid outstanding payables from
2019 for subsequent expenditure for investment properties of EUR 355 thousand and the Group and the Company have paid
EUR 38 thousand and 35 thousand, respectively, for subsequent expenditures during 2020.
Investment properties are measured at fair value. During 2021, properties leased out by the entity in Lithuania were valued as at
31 October 2021 and 30 April 2021, respectively, by an accredited valuer UAB OBER-HAUS Nekilnojamasis Turtas (hereinafter
together with SIA OBER-HAUS Vertešanas Serviss referred to as ‘Oberhaus’) using the income approach. During 2021 investment
properties located in Latvia were valued as at 31 October 2021 and 30 April 2021, respectively, by an accredited valuer SIA
OBER-HAUS Vertešanas Serviss using a market approach for land and using an income approach for warehouse.
Investment properties were measured at fair value. During 2020, properties leased out by the entity in Lithuania were valued as
at 31 October 2020 and 30 April 2020, respectively, by an accredited valuer UAB OBER-HAUS Nekilnojamasis Turtas (hereinafter
together with SIA OBER-HAUS Vertešanas Serviss referred to as ‘Oberhaus’) using the income approach. During 2020 investment
properties located in Latvia were valued as at 31 October 2020 and 30 April 2020, respectively, by an accredited valuer SIA
OBER-HAUS Vertešanas Serviss using a market approach for land and using an income approach for warehouse.
There were no significant changes in the market during period from valuation date till end of reporting period that could have an
effect on the value of investment properties, therefore the updated valuation was not performed as at 31 December 2021 and 31
December 2020.
The Group's policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in
circumstances that caused the transfer.
The fair value represents the price that would be received selling an asset in an orderly transaction between market participants
at the measurement date, in compliance with the International Valuation Standards set out by the International Valuation
Standards Committee. An investment property’s fair value was based either on the market approach by reference to sales in the
market of comparable properties or the income approach by reference to rentals obtained from the subject property or similar
properties. Market approach refers to the prices of the analogue’s transactions in the market. These values are adjusted for
differences in key attributes such as property size, location, and quality of interior fittings. The most significant input into this
valuation approach is price per square metre.
Income approach is based on the assumption that defined correlation between net activity future income and fair value of the
objects exists. For properties leased out by the entity main inputs include:
- Future rental cash inflows based on the actual location, type and quality of the properties and supported by the terms of
any - existing lease, other contracts or external evidence such as current market rents for similar properties;
- Discount rates reflecting current market assessments of the uncertainty in the amount and timing of cash flows;
- Estimated vacancy rates based on current and expected future market conditions after expiry of any current lease;
- Maintenance costs including necessary investments to maintain functionality of the property for its expected useful life;
- Capitalisation rates based on actual location, size and quality of the properties and taking into account market data at
the valuation date;
- Terminal value taking into account assumptions regarding maintenance costs, vacancy rates and market rents.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
46
11 Investment properties (cont’d)
Investment properties held for future redevelopment were estimated taking into account the following estimates (in addition to the
inputs noted above):
- Sales prices based on the valuers’ experience and knowledge of market conditions of residential and commercial
properties;
- Costs to complete that are based on the valuers’ experience and knowledge of market conditions and term sheets
outlined in approved detailed plans. Costs to complete also include a reasonable profit margin;
- Completion dates, as properties under construction require approval or permits from oversight bodies at various points
in the development process, including approval or permits in respect of initial design, zoning, commissioning, and
compliance with environmental regulations. Based on management’s experience with similar developments, all relevant
permits and approvals are expected to be obtained. However, the completion date of the development may vary
depending on, among other factors, the were no changes to the valuation techniques during the period;
- Profit on cost ratio reflecting current market assessment of profitability margin of developments projects. It is based on
the internal rate of returns for similar projects.
The split of carrying amounts of the properties leased out by the entity by type:
Group
Company
2021
2020
2021
2020
Offices premises in city centre – Lithuania
18,167
15,774
18,167
15,774
Warehouse – Latvia
4,823
4,730
-
-
22,990
20,504
18,167
15,774
Description of valuation techniques used and key inputs to valuation on investment properties located in Lithuania as at 31
December 2021:
Valuation technique
Significant unobservable inputs
Range (weighted average)
Oberhaus
Properties leased out by the entity
Discounted cash flows
Discount rate (%)
9
Capitalisation rate for terminal
value (%)
7.5
Vacancy rate (%)
0-25
Office premises in city centre - Rent
price EUR per sq. m. (without VAT)
4.93-20 (13.88)
All inputs in the Company are the same as in the Group.
Description of valuation techniques used and key inputs to valuation on investment properties located in Lithuania as at 31
December 2020:
Valuation technique
Significant unobservable inputs
Range (weighted average)
Oberhaus
Properties leased out by the entity
Discounted cash flows
Discount rate (%)
9
Capitalisation rate for terminal
value (%)
7.5
Vacancy rate (%)
0-30
Office premises in city centre - Rent
price EUR per sq. m. (without VAT)
5-16 (12.46)
All inputs in the Company are the same as in the Group.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
47
11 Investment properties (cont’d)
Description of valuation techniques used and key inputs to valuation on investment properties located in Latvia as at 31 December
2021:
Valuation technique
Significant unobservable inputs
Value of input or range
Oberhaus
Properties leased out by the entity
Discounted cash flows
(five year estimated)
Discount rate (%)
10
Capitalisation rate for terminal
value (%)
9
Vacancy rate (%)
2
Increase of rents per year (%)
1.3 – 1.5
Inflation (%)
1.3-1.4
Description of valuation techniques used and key inputs to valuation on investment properties located in Latvia as at 31 December
2020:
Valuation technique
Significant unobservable inputs
Value of input or range
Oberhaus
Properties leased out by the entity
Discounted cash flows
(five year estimated)
Discount rate (%)
10
Capitalisation rate for terminal
value (%)
9
Vacancy rate (%)
2 – 3
Increase of rents per year (%)
0 – 1.5
Inflation (%)
1.4-1.6
Oberhaus is used for valuation of current contractual rent prices and has indexed these prices by input of increase of rents per
year.
The sensitivity analysis of investment properties located in Lithuania valued using income approach as at 31 December 2021 is
as follows:
Group/Company
Increase of estimates
Decrease of estimates
Reasonable possible shift +/- (%)
Properties leased out by
the entity
Properties leased out
by the entity
Change in future rental rates by 10 %
1,800
(2,000)
Change in construction costs by 10%
-
-
Change in expected vacancy rates by 20%
(500)
300
Change in discount and capitalization rate by 50 bps
(1,300)
1,200
The sensitivity analysis of investment properties located in Latvia valued using income approach as at 31 December 2021 is as
follows:
Reasonable possible shift +/- (%)
Increase of estimates
Decrease of estimates
Change in Increase of rents per year by 100 bps or change in future
rental rates by 1%
95
(93)
Change in expected vacancy rates by 20%
(26)
27
Change in discount and capitalization rate by 50 bps
(274)
307
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
48
11 Investment properties (cont’d)
The sensitivity analysis of investment properties located in Lithuania valued using income approach as at 31 December 2020 is
as follows:
Group/Company
Increase of estimates
Decrease of estimates
Reasonable possible shift +/- (%)
Properties leased out by
the entity
Properties leased out
by the entity
Change in future rental rates by 10 %
1,600
(1,700)
Change in construction costs by 10%
-
-
Change in expected vacancy rates by 20%
(400)
200
Change in discount and capitalization rate by 50 bps
(1,100)
1,100
The sensitivity analysis of investment properties located in Latvia valued using income approach as at 31 December 2020 is as
follows:
Reasonable possible shift +/- (%)
Increase of estimates
Decrease of estimates
Change in Increase of rents per year by 100 bps or change in future
rental rates by 1%
166
(162)
Change in expected vacancy rates by 20%
(31)
31
Change in discount and capitalization rate by 50 bps
(267)
298
As at 31 December 2021 the Group’s investment properties with carrying amount of EUR 18,137 thousand (EUR 15,744 thousand
as at 31 December 2020) were pledged to the banks as collateral for the loans (Note 16).
As at 31 December 2021 the Company’s investment properties with carrying amount of EUR 18,137 thousand (EUR 15,744
thousand as at 31 December 2020) were pledged to the banks as collateral for the loans (Note 16).
As of 31 December 2016, a written consent was required for sale of investment property from AB SEB bankas as a depository
service provider. According to the Lithuanian Law on Collective Investment Undertakings, the sale price of investment properties
may not be lower by more than 15% of the value determined by the independent qualified valuer. Having concluded a contract on
sale of investment properties, when the above-described condition is not satisfied, the Management Company must, in exceptional
cases and provided that interests of participants of the Company are not harmed, notify the supervisory authority thereof
immediately.
There were no other restrictions on the realisation of investment properties or the remittance of income and proceeds of disposals
in 2021 and 2020.
No contractual obligations to purchase, construct, repair or enhance investment properties existed at the end of the period.
12 Financial instruments by category
Group
Financial assets at amortised cost
2021
2020
Assets as per statement of financial position
Financial lease receivables
778
964
Other receivables
-
5
Trade and other receivables excluding tax prepayments
173
145
Cash and cash equivalents
1,901
16,034
Total
2,852
17,148
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
49
12 Financial instruments by category (cont’d)
Company
Financial assets at
amortised cost
Assets at fair value
through the profit
and loss
Total
31 December 2021
Assets as per statement of financial position
Financial lease receivables
778
-
778
Investments into subsidiaries designated at fair value through profit or loss
-
9,801
9,801
Trade and other receivables excluding tax prepayments
94
-
94
Cash and cash equivalents
1,205
-
1,205
Total
2,077
9,801
11,878
Company
Financial assets at
amortised cost
Assets at fair
value through the
profit and loss
Total
31 December 2020
Assets as per statement of financial position
Financial lease receivables
964
-
964
Investments into subsidiaries designated at fair value through profit or loss
-
9,026
9,026
Short term granted loan
5,000
-
5,000
Trade and other receivables excluding tax prepayments
606
-
606
Cash and cash equivalents
10,392
-
10,392
Total
16,962
9,026
25,988
Group
Financial liabilities at amortised cost
2021
2020
Liabilities as per statement of financial position
Borrowings
9,142
9,486
Lease liabilities
834
1,036
Provision for onerous lease contract
74
84
Trade payables
1,675
83
Other current liabilities excluding taxes and employee benefits
459
475
Total
12,184
11,164
Company
Financial liabilities at amortised cost
2021
2020
Liabilities as per statement of financial position
Borrowings
9,142
9,486
Lease liabilities
834
1,036
Provision for onerous lease contract
74
84
Trade payables
1,579
117
Other current liabilities excluding taxes and employee benefits
454
471
Total
12,083
11,194
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
50
13 Trade and other receivables
Group
Company
2021
2020
2021
2020
Trade receivables, gross
189
164
93
613
Accrued lease income, gross
33
26
33
26
Taxes receivable, gross
23
83
-
-
Total trade and other receivable, gross
245
273
126
639
Less: provision for impairment of trade and other receivables
(49)
(44)
(32)
(32)
Less: Write off still subject to enforcement activity
-
(1)
-
(1)
Trade and other receivable net of expected credit losses
196
228
94
606
Changes in provision for impairment of trade and other receivables for the year 2021 and 2020 have been included within
‘Provision for impairment of trade receivables’ in the statement of comprehensive income.
Trade and other receivables are non-interest bearing and are generally with a credit term of 30 days.
Movements in the accumulated impairment losses on credit impaired accounts receivable of the Group and in the write-off were
as follows:
Group
Impairment losses
Write off still subject
to enforcement
activity
Total
Balance as at 31 December 2019
37
33
70
Charge for the year
12
-
12
Write-offs charged against the provision
-
-
-
Enforcement activity ended
-
(27)
(27)
Recoveries of amounts previously impaired or written off
(5)
(5)
(10)
Balance as at 31 December 2020
44
1
45
Charge for the year
6
-
6
Write-offs charged against the provision
-
-
-
Enforcement activity ended
-
(1)
(1)
Recoveries of amounts previously impaired or written off
(1)
-
(1)
Balance as at 31 December 2021
49
-
49
Movements in the accumulated impairment losses on credit impaired accounts receivable of the Company and in the write-off
were as follows:
Company
Impairment losses
Write off still subject
to enforcement
activity
Total
Balance as at 31 December 2019
32
18
50
Charge for the year
5
-
5
Write-offs charged against the provision
-
-
-
Enforcement activity ended
-
(15)
(15)
Recoveries of amounts previously impaired or written off
(5)
(2)
(7)
Balance as at 31 December 2020
32
1
33
Charge for the year
-
-
-
Write-offs charged against the provision
-
-
-
Enforcement activity ended
-
-
-
Recoveries of amounts previously impaired or written off
-
(1)
(1)
Balance as at 31 December 2021
32
-
32
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
51
13 Trade and other receivables (cont’d)
The credit quality of trade receivables of the Group can be assessed on the ageing analysis disclosed below:
Group
Current
Less than
30 days
30–60
days
61–90
days
More than
90 days
Credit
impaired
Total
As at 31 December 2021
Trade receivables net of write off
87
38
4
3
3
54
189
Accrued lease income
33
-
-
-
-
-
33
Expected credit losses
-
-
-
-
-
(49)
(49)
Trade and other receivable net of expected
credit losses
120
38
4
3
3
5
173
As at 31 December 2020
Trade receivables net of write off
52
46
7
-
7
51
163
Accrued lease income
26
-
-
-
-
-
26
Expected credit losses
-
-
-
-
-
(44)
(44)
Trade and other receivable net of expected
credit losses
78
46
7
-
7
7
145
The credit quality of trade receivables of the Company can be assessed on the ageing analysis disclosed below:
Company
Current
Less than
30 days
30–60
days
61–90
days
More
than 90
days
Credit
impaired
Total
As at 31 December 2021
Trade receivables net of write off
33
23
-
1
-
36
93
Accrued lease income
33
-
-
-
-
-
33
Expected credit losses
-
-
-
-
-
(32)
(32)
Trade and other receivable net of expected
credit losses
66
23
-
1
-
4
94
As at 31 December 2020
Trade receivables net of write off
520
44
7
-
4
37
612
Accrued lease income
26
-
-
-
-
-
26
Expected credit losses
-
-
-
-
-
(32)
(32)
Trade and other receivable net of expected
credit losses
546
44
7
-
4
5
606
The impairment losses for not credit impaired trade receivables is not recognised, because it is immaterial. As at 31 December
2021 and 2020 most of trade receivables were secured by advances received from tenants.
The ageing analysis of the credit impaired trade receivables of Group disclosed below:
Current
Less than
30 days
30–90
days
90–180
days
More than
180 days
Total
Trade receivables net of write off as at 31 December 2021
1
-
1
1
51
54
Trade receivables net of write off as at 31December 2020
5
1
2
2
41
51
The ageing analysis of the credit impaired trade receivables of the Company disclosed below
Current
Less than
30 days
30–90
days
90–180
days
More than
180 days
Total
Trade receivables net of write off as at 31 December 2021
-
-
-
-
36
36
Trade receivables net of write off as at 31 December 2020
1
1
-
-
35
37
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
52
14 Share capital and reserves
As at 31 December 2021 and 31 December 2020 the Company’s and the Group’s share capital was divided into 8,061,414 and
13,150,000 ordinary registered shares respectively with the nominal value of EUR 1.45 each. All the shares of the Company
were fully paid. As at 31 December 2021 and 31 December 2020 The Company held nil and 100,431 own shares (0.76% of
share capital) respectively
Changes during 2021
On 29 April 2021 EUR the annual general meeting has decided to transfer from retained earnings EUR 276 thousand to the legal
reserve and 4,274 thousand from retained earnings to reserves for purchase of own shares.
Due to resolution of the General Shareholders Meeting of the Company that was held on 14 January 2021 on material changes
in the incorporation documents of the Company an obligation has arisen for the Company to buy back the shares of the Company
of shareholders opposing the decisions or not participating in the meeting or abstaining from voting. The Company’s shares buy-
back began on 25 January 2021 and lasted till 25 March 2021. The share buy-back price per share was EUR 2.2103, according
to net assets value as at 30 November 2020. The total number of shares that could be submitted for buy-back was 8,988,051.
During buyback 4,988,155 shares (37.93% of share capital) were acquired for EUR 11.047 thousand, including brokerage fees.
29 April 2021, it was determined that in 30 November 2020 the value of the net assets was overestimated. The recalculated share
buy-back price per share was EUR 2.2043. EUR 30 thousand were paid to the redeemed shareholders in excess. The losses
incurred by the Company due to the excessive redemption price of the unit were covered by the Management Company. Losses
covered by the Management Company reduce the acquisition cost of own shares.
According to the decision of shareholders 5,088,586 of acquired own shares were cancelled, and the reserve for the acquisition
of own shares was decreased by EUR 3,825 thousand, the value of own shares cancelled amounted for EUR 11,204 thousand
and share capital was decreased by EUR 7,379 thousand. The changes in share capital were registered in the Register of Legal
entities on 26 July 2021. From 26 July 2021 the total authorised number of ordinary shares is 8,061,414 with the par value of EUR
1.45 per share, the Company’s authorized share capital is equal to EUR 11,689,050,30.
Changes during 2020
On 26 April 2020 EUR the annual general meeting has decided to transfer from retained earnings EUR 532 thousand to the legal
reserve and 3,093 thousand from reserves for purchase of own shares to retained earnings.
Due to resolution of the General Shareholders Meeting of the Company that was held on 9 April 2020 on material changes in the
incorporation documents of the Company and change of depository an obligation has arisen for the Company to buy back the
shares of the Company of shareholders opposing the decisions or not participating in the meeting or abstaining from voting. The
Company’s shares buy-back began on 7 July 2020 and lasted till 9 November 2020. The share buy-back price per share is EUR
1.8526, according to net assets value as at 30 April 2020. The total number of shares that could be submitted for buy-back is
2,551,838. During buy-back 100,431 shares (0.76% of share capital) were acquired for EUR 187 thousand, including brokerage
fees. The acquired shares were settled on 11 November 2020.
Legal reserve
Legal reserve is a compulsory reserve under Lithuanian legislation. Annual transfers of not less than 5 % of net profit, calculated
in accordance with the statutory financial statements, are compulsory until the reserve reaches 10 % of the share capital. The
reserve can be used only to cover the accumulated losses.
Reserve for the acquisition of own shares
Reserve for the acquisition of own shares is formed for the purpose of buying own shares in order to keep their liquidity and
manage price fluctuations. It can be formed by shareholders’ decision at the Annual Shareholders Meeting from the profit available
for distribution. The reserve cannot be used to increase the share capital. The reserve does not change when Company acquires
own shares, but is utilised when own shares are cancelled. The shareholders can decide to transfer unused amounts of the
reserve back to retained earnings at the Annual Shareholders Meeting.
15 Dividends
Payment of dividends of EUR 0.12 per share and total dividends of EUR 967 thousand in respect of the year ended 31 December
2020 was approved at the Annual General Meeting of Shareholders on 29 April 2021.
Payment of dividends of EUR 1.55 per share and total dividends of EUR 20,382 thousand in respect of the year ended 31
December 2019 was approved at the Annual General Meeting of Shareholders on 9 April 2020.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
53
16 Borrowings
Group
Company
2021
2020
2021
2020
Non-current:
Non-current bank borrowings
8,777
9,121
8,777
9,121
Non-current other borrowings
-
-
-
-
8,777
9,121
8,777
9,121
Current:
Current portion of non-current borrowings
365
365
365
365
Borrowings from related parties
-
-
-
-
365
365
365
365
Total borrowings
9,142
9,486
9,142
9,486
All borrowings are expressed in EUR.
Borrowings with fixed or floating interest rate (with changes in 3 and 6 months period) were as follows:
Interest rate type:
Group
Company
2021
2020
2021
2020
Fixed
-
-
-
-
Floating
9,142
9,486
9,142
9,486
9,142
9,486
9,142
9,486
The carrying amounts of assets pledged to the banks to secure the repayment of borrowings are as follows:
Group
Company
2021
2020
2021
2020
Investment properties (Note 11)
18,137
15,744
18,137
15,744
Cash
259
9,347
259
9,347
Weighted average effective interest rates of borrowings for the period:
Group
Company
2021
2020
2021
2020
Borrowings
2.77%
2.65%
2.77%
2.67%
As at 31 December 2021 and 2020 all Group entities have complied with bank loan covenants.
In 2020 the Group /the Company returned the used part of the credit line to AB Šiaulių bankas and EUR 4,750 thousand of the
first part of the borrowing using the funds from the sale of IBC business centre, additionally EUR 7,150 thousand of the borrowing
was returned using the funds from the sale of investment properties located at Gynėjų 14, Vilnius. Additional amendment to the
borrowing agreement with AB Šiaulių bankas was signed in October 2020, the monthly credit instalment was reduced to EUR
28.6 thousand from previous EUR 50 thousand.
In November 2019 AB Invalda INVL has granted loan of EUR 1,500 thousand to the Company. The initially maturity of borrowings
was 31 January 2020, which was extended until 31 March 2020. The loan was repaid on 9 March 2020 together with interest, in
total EUR 1,519 thousand.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
54
16 Borrowings (cont‘d)
In May 2020 the Group repaid the borrowing to ABLV Bank, AS (during 2020 EUR 1,880 thousand was paid out of which EUR
1,835 thousand was paid by the Group’s owned funds and EUR 45 thousand set of with the ABLV Bank, AS (restored amount of
deposits).
23 February 2018 the Board of the Financial and Capital Market Commission in Latvia adopted a decision on the unavailability of
deposits at ABLV Bank AS. On 12 June 2018 it was announced that the Financial and Capital Market Commission has approved
ABLV Bank AS voluntary liquidation. Because ABLV Bank, AS ceased to be bank after voluntary liquidation process was approved,
the previous deposit became as other receivables from ABLV Bank, AS. They comprise legally from three part as at 31 December
2019:
- the Group claim of EUR 5 thousand from ABLV Bank, AS in liquidation process, which was paid at the beginning of
October 2021.
- blocked guaranteed compensation of EUR 100 thousand according to Latvian deposit insurance systems, which was
paid at the beginning of July 2020.
- the Group owned funds of EUR 45 thousand in possession of the ABLV Bank, AS (restored amount of deposits). This
amount was set off upon repayment of the borrowing.
-
Changes in liabilities arising from financing activities are presented in the table below:
Group
Company
Borrowings
and lease
liabilities
Dividends payable
(Note 15, 17)
Borrowings and
lease liabilities
Dividends
payable (Note
15, 17)
As at 31 December 2019
27,419
115
25,531
115
Cash flows from (to) financing activities
(17,414)
(20,046)
(15,560)
(20,046)
Impact of IFRS 16 (recognition of lease liabilities)
72
-
72
-
Interest expenses (Note 8)
481
-
465
-
Increase of lease liabilities recalculation due to
indexation
14
-
14
-
Set-off of amount in possession of ABLV Bank, AS
(45)
-
-
-
Derecognition of borrowings
(5)
-
-
-
Approved dividends
-
20,382
-
20,382
As at 31 December 2020
10,522
451
10,522
451
Cash flows from (to) financing activities
(842)
(981)
(842)
(981)
Interest expenses (Note 8)
278
-
278
-
Increase of lease liabilities recalculation due to
indexation and modification
18
-
18
-
Approved dividends
-
967
-
967
As at 31 December 2021
9,976
437
9,975
437
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
55
17 Other current liabilities
Other current liabilities are presented in the table below:
Group
Company
2021
2020
2021
2020
Financial liabilities
Dividends payable
437
451
437
451
Performance Fee (Note 7, 2.22)
-
-
-
-
Other amounts payable
22
24
17
20
459
475
454
471
Non – financial liabilities
Salaries and social security contributions payable
31
17
-
-
Tax payable
52
118
41
109
83
135
41
109
Total other current liabilities
542
610
495
580
18 Related party transactions
The related parties of the Group were the shareholders of the Company, who have significance influence (note 1), key
management personnel, including companies under control or joint control of key management and shareholders having
significant influence. AB Invalda INVL and the entities controlled by AB Invalda INVL (hereinafter the Other related parties) are
also considered to be related parties, because the shareholders of the Company, having significance influence, also have a joint
control over AB Invalda INVL group through shareholders’ agreement.
The Group’s transactions with related parties during 2021 and related balances as at 31 December 2021 were as follows:
2021
Revenue and
other income
from related
parties
Purchases
(including
provision) and
interest from
related parties
Receivables
from related
parties
Payables to
related parties
(excluding
provision)
Group
AB Invalda INVL (accounting services)
-
25
-
-
Other related parties (maintenance and repair
services)
-
118
-
11
Other related parties (rent, utilities and other)
8
16
1
-
Other related parties (management services
provided by the Management Company)
-
388
-
1,533
8
547
1
1,544
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
56
18 Related party transactions (cont’d)
The Group’s transactions with related parties during 2020 and related balances as at 31 December 2020 were as follows:
2020
Revenue and
other income
from related
parties
Purchases
(including
provision) and
interest from
related parties
Receivables
from related
parties
Payables to
related parties
(excluding
provision)
Group
AB Invalda INVL (accounting services)
-
15
-
-
Other related parties (borrowings)
-
13
-
-
Other related parties (maintenance and repair
services)
-
213
-
9
Other related parties (rent, utilities and other)
257
12
-
7
Other related parties (management services
provided by the Management Company)
-
766
-
22
257
1,019
-
38
In November 2019 AB Invalda INVL has granted loan of EUR 1,500 thousand to the Company. The initially maturity of borrowings
was 31 January 2020, which was extended until 31 March 2020. The borrowing was repaid on 9 March 2020. Effective interest
rate – 4.5%.
The Company’s related parties are the subsidiaries, shareholders (Note 1), which have significance influence, key management
personnel and companies under control or joint control of key management and shareholders with significant influence. AB Invalda
INVL and the entities controlled by AB Invalda INVL (hereinafter the Other related parties) are also considered to be related
parties, because the shareholders of the Company, having significance influence, also have a joint control over AB Invalda INVL
group through shareholders’ agreement.
Transactions of the Company with subsidiaries in 2021 and balances as at 31 December 2021 were as follows:
2021
Revenue and
other income
from related
parties
Purchases and
interest from
related parties
Receivables
from related
parties
Payables to
related parties
Company
Loans to subsidiaries
-
-
9,580
-
Rent
362
-
23
-
Other
-
182
-
28
362
182
9,603
28
The repayment date of the loans granted to subsidiaries in Lithuania is 31 December 2022. As described in Note 2.8, the Company
measured the loans granted to subsidiaries at fair value and did not recognise interest income separately.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
57
18 Related party transactions (cont’d)
Transactions of the Company with subsidiaries in 2020 and balances as at 31 December 2020 were as follows:
2020
Revenue and
other income
from related
parties
Purchases and
interest from
related parties
Receivables
from related
parties
Payables to
related parties
Company
Loans to subsidiaries
-
-
13,884
-
Rent
312
-
378
-
Other
2
320
113
71
314
320
14,375
71
The repayment date of the loans granted to subsidiaries in Lithuania is 31 December 2021, except for interest-free short-term
loan – 30 June 2021. As described in Note 2.8, the Company measured the loans granted to subsidiaries at fair value and did not
recognise interest income separately.
The Company’s transactions with other related parties during 2021 and related balances as at 31 December 2021 were as follows:
2021
Revenue and
other income
from related
parties
Purchases
(including
provision) and
interest from
related parties
Receivables
from related
parties
Payables to
related parties
(excluding
provision)
Company
AB Invalda INVL (accounting services)
-
13
-
-
Other related parties (maintenance and repair
services)
-
51
-
2
Other related parties (rent, utilities and other)
-
9
-
-
Other related parties (management services
provided by the Management Company)
-
388
-
1,533
-
461
-
1,535
The Company’s transactions with other related parties during 2020 and related balances as at 31 December 2020 were as follows:
2020
Revenue and
other income
from related
parties
Purchases
(including
provision) and
interest from
related parties
Receivables
from related
parties
Payables to
related parties
(excluding
provision)
Company
AB Invalda INVL (accounting services)
-
7
-
-
Other related parties (borrowings)
-
13
-
-
Other related parties (maintenance and repair
services)
-
48
-
3
Other related parties (rent, utilities and other)
220
7
-
7
Other related parties (management services
provided by the Management Company )
-
766
-
22
220
841
-
32
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
58
18 Related party transactions (cont’d)
In November 2019 AB Invalda INVL has granted loan of EUR 1,500 thousand to the Company. The initially maturity of borrowings
was 31 January 2020, which was extended until 31 March 2020. The borrowing was repaid on 9 March 2020. Effective interest
rate – 4.5%.
The movements of borrowings from AB Invalda INVL and its subsidiaries were:
Group
Company
2021
2020
2021
2020
At 1 January
-
1,506
-
1,506
Borrowings received during the year
-
-
-
-
Borrowings repaid during the year
-
(1,500)
-
(1,500)
Interest charged
-
13
-
13
Interest paid
-
(19)
-
(19)
At 31 December
-
-
-
-
The movements of loans granted to subsidiaries of the Group were:
Company
2021
2020
At 1 January
13,884
7,591
Loans granted during year
7,510
18,375
Loans repayment received
(12,734)
(12,531)
Changes in fair value of loans granted
922
467
Interest received
(2)
(18)
At 31 December
9,580
13,884
The management remuneration contains short-term employee benefits. Key management of the Company and the Group includes
the Management Company and member of Investment Committee.
Group
Company
2021
2020
2021
2020
Wages, salaries and bonuses
1
1
-
-
Social security contributions
-
-
-
-
Management Fee (Note 2.12)
209
315
209
315
Performance Fee (Note 2.12) (change in provision)
179
452
179
452
Total key management compensation
389
768
388
767
There were no loans granted to key management during the reporting period or outstanding at the end of the reporting period.
During 2021 the Company paid to AB Invalda INVL EUR 216 thousand of dividends, net of tax, and paid to other shareholders,
who have significance influence, EUR 329 thousand of dividends, net of tax.
During 2020 the Company paid to AB Invalda INVL EUR 6,117 thousand of dividends, net of tax, and paid to other shareholders,
who have significance influence, EUR 8,245 thousand of dividends, net of tax.
Special Closed-Ended Type Real Estate Investment Company INVL BALTIC REAL ESTATE
company code 152105644, Gynėjų str. 14, Vilnius, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2021
(all amounts are in EUR thousand unless otherwise stated)
59
19 Impact of COVID-19
The Group was not significantly affected by the COVID-19 virus pandemic. Due to the quarantine announced in Lithuania, Group's
operations were not disrupted, as the Group can perform all the operations remotely. However, some of the Company's tenants
in Lithuania operate in the field of catering, retail and their activities were banned or restricted during quarantine. In 2020 these
tenants were entitled to state support (up to 50% of the rent from the start of quarantine until August 2020) if the lessor provides
the tenant with at least 30% discount. The Company granted 30% discount to these tenants. Therefore, during the 2020 the
Group/Company have provided with EUR 78 thousand of discount. During the of 2021 the Group/Company have provided with
EUR 58 thousand of discount on its own initiative (there are not any state support to tenants in 2021). In addition, in the 2020 the
Company/Group deferred rent payment to part of the tenants until the beginning of 2021. Interest are being accrued on deferred
payments (EUR 5 thousand was recognized in 2020). At the Group level the impairment of trade receivables was not significantly
affected by the COVID-19 virus pandemic. Prior to the issuance of these reports, tenants that had received discounts or deferred
payments covered their overdue rent payments. The Group did not request or received any financial support directly due to the
COVID-19 virus pandemic. Considering the tenant structure and the impact of the coronavirus pandemic at the beginning of this
year on the tenants' activities and the Group results, it can be predicted that pandemic will not have a significant impact on this
year's results.
20 Events after the reporting period
The Group/Company together with the design firm Viltekta has submitted for consideration by the Vilnius City municipality design
proposals for reconstruction of the administrative building at Palangos Street 4 / Vilniaus Street 33 which the Company owns. The
reconstruction is expected to increase the complex’s above-ground area by approximately 3600 square metres.
On 18 February 2022 a real estate sale and purchase agreement was concluded on the purchase of two garages with part of the
land plot at Vilniaus Street 37 in Vilnius. The Company acquired the real estate from private individuals for a total price of EUR
425 thousand.
On 14 January the Company received a notification on the acquisition and on the disposal of voting rights. AB Invalda INVL
controlling 23.43% of the Company’s share capital transferred the Company’s shares to its subsidiary INVL Life UAB. INVL Life
UAB directly controls 23.43% issued share, AB Invalda INVL directly controls nil and indirectly – 23.43% of Company’s shares
Dividends
A dividend in respect of the year ended 31 December 2020 of EUR 0.12 per share, amounting to a total dividend of EUR 967
thousand, is to be proposed at the annual general meeting for the year of 2021. These financial statements do not reflect this
dividend payable
CONSOLIDATED ANNUAL REPORT FOR THE YEAR OF 2021
THE SPECIAL CLOSED-ENDED TYPE REAL ESTATE INVESTMENT COMPANY
INVL BALTIC REAL ESTATE
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 61
CONTENT
I. GENERAL INFORMATION ........................................................................................................................ 63
1. Legal basis for preparation of the Annual Consolidated Report and content of information ............................................... 63
2. Reporting period for which the report is prepared ...................................................................................................... 63
3. General information about the Issuer and other companies comprising the Issuer‘s group .............................................. 63
3.1. INFORMATION ABOUT THE ISSUER .................................................................................................................... 63
3.2. INFORMATION ON COMPANY’S GOALS AND STRATEGY ......................................................................................... 64
3.3. INFORMATION ABOUT THE ISSUER‘S GROUP OF COMPANIES ................................................................................ 64
II. FINANCIAL INFORMATION AND SIGNIFICANT EVENTS .............................................................................. 70
4. Overview of the Issuer and its group activity ............................................................................................................. 70
4.1. Comment made by INVL Asset Management real estate fund manager Vytautas Bakšinskas ..................................... 70
4.2. Operational environment .................................................................................................................................. 70
4.3. Results of INVL Baltic Real Estate ....................................................................................................................... 71
4.4. Financial ratios*............................................................................................................................................... 72
4.5. Key figures of INVL Baltic Real Estate ................................................................................................................. 72
4.6. Net Asset value of INVL Baltic Real Estate ........................................................................................................... 73
4.7. Significant Issuer’s and its group events during the reporting period, effect on the financial statement ....................... 74
5. Significant events of the Issuer and its group since the end of the financial year ........................................................... 75
6. Estimation of Issuer’s and Group’s activity last year and activity plans and forecasts...................................................... 76
7. Disclosure of the impact of the COVID-19 pandemic ................................................................................................... 76
III. INFORMATION ABOUT SECURITIES ....................................................................................................... 77
8. The order of amendment of Issuer’s Articles of Association ......................................................................................... 77
9. Structure of the authorized capital ........................................................................................................................... 77
9.1. Share capital changes ....................................................................................................................................... 77
9.2. Information about the Issuer’s treasury shares .................................................................................................... 77
10. Trading in Issuer’s securities as well as securities, which are deemed to be a significant financial investment to the Issuer on a
regulated market ....................................................................................................................................................... 78
11. Shareholders ....................................................................................................................................................... 82
11.1. Information about company‘s shareholders ....................................................................................................... 82
11.2. Rights and obligations carried by the shares ...................................................................................................... 84
12. Dividends ............................................................................................................................................................ 84
IV. ISSUER’S MANAGING BODIES ............................................................................................................... 86
13. Structure, authorities, the procedure for appointment and replacement ...................................................................... 86
13.1. General Shareholders’ Meeting ......................................................................................................................... 86
13.2. Management company, the Investment Committee and the Supervisory Board ...................................................... 88
14. Information about members of the Board of the Management Company, general manager, members of the Investment
Committee and member of the Supervisory Board of the Company .................................................................................. 90
14.1. The issuer's management bodies ...................................................................................................................... 90
15. Information about the Audit Committee of the company ........................................................................................... 96
15.1. Procedure of work of the audit committee ......................................................................................................... 96
15.2. Members of the Audit Committee ..................................................................................................................... 97
16. Information on the Issuer’s payable management fee, the amounts calculated by the Issuer, other assets transferred and
guarantees granted to the Company’s bodies and company providing accounting services ........................................................ 98
V. OTHER INFORMATION ......................................................................................................................... 100
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 62
17. Agreements with intermediaries on public trading in securities ................................................................................ 100
18. Information on Issuer’s branches and representative offices .................................................................................... 100
19. A description of the principal risks and uncertainties ............................................................................................... 100
19.1. General Risk Factors in the Business Field Where the Group Operates ................................................................. 100
19.2. Risk Factors Characteristic of the Group .......................................................................................................... 101
19.3. Risk Factors Related to the Company’s Shares (investments thereto) ................................................................. 102
19.4. The most Important risk factors during the reporting period .............................................................................. 103
19.5. The main indications about internal control and risk management systems related to the preparation of consolidated
financial statements .............................................................................................................................................. 103
19.6. Information on financial risk management objectives used for hedging measures which hedge accounting and of price
risk, credit risk, liquidity risk and cash flow risk where the company group uses financial instruments and is an important
evaluation of the property, own capital, liabilities, revenue and expenses. ................................................................... 103
20. Issuer’s and its group companies’ non – financial results. Information related to social responsibility. environment and
employees .............................................................................................................................................................. 103
20.1. Responsible business actions in the company ................................................................................................... 103
20.2. Employees .................................................................................................................................................. 104
20.3. Environmental Protection .............................................................................................................................. 104
20.4. Information about activities of the issuer and companies comprising the issuer’s group in the field of research and
development ........................................................................................................................................................ 104
20.5. Additional non - financial information .............................................................................................................. 104
21. Information about agreements of the Company and its managing bodies, members of the formed committees, or the
employees’ agreements providing for compensation in case of the resignation or in case they are dismissed without a due reason
or their employment is terminated in view of the change of the control (official offering) of the Company. ......................... 104
22. Significant investments made during the reporting period ....................................................................................... 104
23. Information about significant agreements to which the issuer is a party, which would come into force, be amended or cease to
be valid if there was a change in issuer‘s controlling shareholder, and their effect, unless, the nature of the arrangements and
their disclosure would cause serious harm to the issuer ................................................................................................ 104
24. Information about any control systems in the employee share plan that are not exercised directly by employees........... 105
25. Information on the related parties’ transactions ..................................................................................................... 105
26. Information on harmful transactions in which the issuer is a party ........................................................................... 106
27. References to and additional explanations of the data presented in the annual financial statements and consolidated financial
statements ............................................................................................................................................................. 106
28. Information on Audit Company ............................................................................................................................ 106
29. Data on the publicly disclosed information ............................................................................................................. 107
APPENDIX 1. INFORMATION ABOUT GROUP COMPANIES, THEIR CONTACT DETAILS ....................................... 110
APPENDIX 2. CORPORATE GOVERNANCE CODE .......................................................................................... 111
APPENDIX 3. COMPANY'S MANAGEMENT REPORT ....................................................................................... 126
APPENDIX 4. COMPANY'S OPERATING AND FINANCIAL INDICATOR FORMULAS AND DEFINITIONS ................... 130
APPENDIX 5. REMUNERATION REPORT ...................................................................................................... 134
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 63
I. GENERAL INFORMATION
1. Legal basis for preparation of the Annual Consolidated Report and content of information
The Annual Consolidated Report of the public joint-stock company Special closed-ended type real estate investment company „INVL
Baltic Real Estate“ (hereinafter – “the Company” or “INVL Baltic Real Estate”) has been prepared by the Company in accordance
with the Lithuanian Law on Securities of the Republic of Lithuania, the Law on Companies of the Republic of Lithuania, the Rules on
the Disclosure of Information and the Guidelines on the Disclosure of Information approved by the Board of the Bank of Lithuania.
The content of the consolidated annual report is disclosed according to Law on Consolidated Financial Statements of Enterprises of
the Republic of Lithuania and Law on Corporate Financial Reporting of the Republic of Lithuania.
The Company informs that the information disclosed in this Annual Consolidated Report is divided into five (V) sections. These
sections disclose General information about the Issuer, information on Company's securities, the Management of the Company, the
Company's and the Group's activities and other information, that Company’s Management values as important to disclose. The
Company notes that the information presented in the Annual Report is relevant for understanding the Company's performance,
condition, and impact of operations.
2. Reporting period for which the report is prepared
The report covers the financial period of INVL Baltic Real Estate, starting from 1 January 2021 and ending on 31 December 2021.
The report also discloses information from the end of the reporting period to the release of the report.
3. General information about the Issuer and other companies comprising the Issuer‘s group
3.1. INFORMATION ABOUT THE ISSUER
Name
Special closed-ended type real estate investment company „INVL Baltic Real Estate“
Code
152105644
Registration address
Gynėjų str. 14, 01109, Vilnius, Lithuania
Telephone
+370 5 279 0601
Fax
+370 5 279 0530
E-mail
breinfo@invl.com
Website
www.invlbalticrealestate.lt
LEI code
529900GSTEOHKA0R1M59
Legal form
joint-stock company
Company type
special closed-ended type real estate investment company
Date and place of registration
28 January 1997; Register of Legal Entities
Date of the Supervisory authority
approval of collective investment
entity formation documents
22 December 2016
Register in which data about the
Company are accumulated and stored
Register of Legal Entities
Management company
INVL Asset Management, UAB, code 126263073, licence No. VĮK-005
Depository
SEB bankas, AB, code 112021238, bank licence No. 2*
* On 9 April 2020 April the General Meeting of Shareholders of the Company decided
on the change of the Company's depository from AB SEB bankas (code 112021238)
to AB Šiaulių bankas (code 112025254).
On 6 January 2021 the Supervisory Authority of the Bank of Lithuania has issued a
permit to the Company to change the depository to AB Šiaulių bankas (code
112025254). At the time of the release of the Annual Report the change of the
depository has not been implemented yet.
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INVL BALTIC REAL ESTATE
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3.2. INFORMATION ON COMPANY’S GOALS AND STRATEGY
INVL Baltic Real Estate – real estate investment company that was founded on 28 January 1997, former name – Invaldos
Nekilnojamo Turto Fondas, AB. On 17 August 2015 the Company was merged with its parent company; therefore, the Company
took over all its rights and obligations. From 26 July 2021, the Company has a collegial supervisory body – the Supervisory Board.
The Company’s management bodies are not formed.
On 22 December 2016 the Bank of Lithuania issued the closed-ended type investment company operating license enabling INVL
Baltic Real Estate to engage in the closed-ended type investment company's activities under the Law of the Republic of Lithuania
Collective Investment Undertakings. The special closed-ended type real estate investment company will operate 30 years from
receiving the special closed-ended real estate investment company license, the term of company's activity may be further extended
for a period of no longer than 20 years. Upon receipt of the license, the company's management was transferred to the Management
company INVL Asset Management (hereinafter – the Management company). The rights and duties of the Board and the head of
the Company were also transferred to the Management company.
According to the Articles of Association of the Company, the Management company formed an Investment Committee, which based
on powers vested by the Management company, also participates in the management of the Company.
INVL Baltic Real Estate seeks to ensure the growth of rental income and earn from investments in commercial real estate. The
companies owned by INVL Baltic Real Estate have invested in commercial real estate: business centers and warehouse properties
at strategically attractive locations in Lithuania and Latvia. All the properties are characterized by high occupancy rates and generate
stable financial flows. In addition, most of them has further development potential.
INVL Baltic Real Estate shares have been listed on Nasdaq Vilnius Baltic Secondary trading list since 4 June 2014. The company has
approved a Dividend Payment policy on 9 April 2019 which stipulates the annual payment of dividend per share of no less than EUR
0.09. It is noted that in accordance with the provisions of the dividend payment policy, the Company may allocate both lower and
higher dividends per share than it is expected in the policy.
3.3. INFORMATION ABOUT THE ISSUER‘S GROUP OF COMPANIES
Companies of INVL Baltic Real Estate - the structure of the group companies is disclosed below – during the reporting period the
group owned real estate properties in Vilnius and Riga. The number of real estate properties managed by the Company increased
compared to the reporting period of 2020 due to completed purchase transactions - during 2021, the Company has acquired real
estate located at Vilniaus st. 37, Vilnius and later after the reporting period – on 18 February 2022 the Company acquired two
garages and the part of the plot of the land that is also located at Vilniaus st. 37, Vilnius.
Fig. 3.3.1. Simplified group structure of INVL Baltic Real Estate as of 31 December 2021
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
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2021 ANNUAL REPORT | 65
3.3.1. Real estate objects owned by group companies in Vilnius (Lithuania)
Fig. 3.3.2. Real estate objects owned by group companies of INVL Baltic Real Estate in Vilnius (Lithuania)
OFFICE BUILDING IN THE CENTRE OF VILNIUS, PALANGOS STR. 4/ VILNIAUS STR. 33
AREA 10,000 SQ.M.
Business centre is in one of the busiest places in the Old Town of
Vilnius, between Vilnius, Pamenkalnio, Islandijos and Palangos
streets.
Vilnius Old Town - one of the most important components of the
city and its centre, the oldest part of the city of Vilnius, situated on
the left bank of the Neris River. Old Town area - protected and
managed in accordance with the special heritage protection well,
small business and residential function are being supported. There
is a closed, guarded parking and underground garage in the area,
convenient public transport access.
In the business center operates more than 2,000 square meters
Talent Garden Vilnius cooperation space. In total, the space has
more than 230 workplaces, more than half of which are in private
offices, as well as a modern conference hall with 150 seats.
Radvilų Palace, Teacher's House, Lithuanian Technical Library, St.
Catherine's Church and other cultural attractions, cafes, restaurants
are located near the building.
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Block A basic information
Total area
5,100 sq. m
Leased area
4,000 sq. m
Land area
0.49 ha (total area of the complex)
Property market value at the end
of 2021
EUR 8.1 million
Occupancy at the end of 2021
98 percent (total complex occupancy)
Block B basic information
Total area
4,900 sq. m
Leased area
2.900 sq. m
Land area
0,49 ha (total area of the complex)
Property market value at the end
of 2021
EUR 6.4 million
Occupancy at the end of 2021
98 percent (total complex occupancy)
Address
Palangos str. 4/ Vilniaus str. 33, Vilnius.
Main tenants
Talent Garden Vilnius, TransferGo,
Telia LT, Uncle Sam's.
Talent Garden Vilnius’ opened on 12th December 2019 and was established on a campus of more than 2,000 sq. m. on Vilniaus
Street (Vilniaus g. 33). The space is also host to the first Startup Museum in the country, a creation of Vilnius’s tourism and
development agency Go Vilnius. The campus features a total of over 230 workplaces, more than half of which are in private offices,
as well as a 150-seat modern conference hall.
More about the project: http://talentgardenvilnius.lt/
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ŽYGIS BUSSINESS CENTRE
AREA 3,300 SQ.M.
Žygis business centre – the yellow brick, authentic
nineteenth century architecture, renovated office
building, perfectly adapted to modern office activities.
The building stands in the Northern Town – in a
strategically attractive, busy part of Vilnius, easily
accessible by car and public transport.
Other commercial and business centres, banks, the State
Tax Inspectorate, Social Insurance, Employment
Exchange, medical clinics and various business services
companies, attracting large flows of people, are located
nearby.
Also, even four large shopping centres – Domus Gallery,
Ogmios miestas, Hyper Rimi, Banginis-Senukai, are
located near the business centre. Distance to the centre
of Vilnius is about 3.5 km. 70 spots covered parking lot
is installed next to the building.
Basic information
Total area
3,300 sq. m
Leased area
2,900 sq. m
Land area
0.4 ha
Property market value at the end
of 2021
EUR 3.7 million
Occupancy at the end of 2021
100 percent
Address
Zygio str. 97A, Vilnius.
Main tenants
School “Žiniukas”, Innoforce, UAB
BUILDING IN THE CENTRE OF VILNIUS, VILNIAUS STR. 33-4
AREA 1,700 SQ.M.
The building is located in a prestigious part of Vilnius, in
Old Town. It is one of the most important components of
the city and its centre, located on the left bank of the
Neris river. The property is positioned near Gediminas
Avenue, which is considered the most prestigious street
in Vilnius. The building’s environment is dominated by
older buildings of city centre-specific architecture, with
various commercial premises, hotels, numerous cafes,
restaurants, and other attractions.
Currently, the building is not being rented and a
reconstruction project is in the process of being prepared
for it. Once this project is implemented, the building will
be adapted to commercial and catering activities.
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Basic information
Total area
1,700 sq. m.
Land area
0.12 ha
Property market value at the end
of 2021
2.6 mln. EUR
Address:
Vilniaus str. 37-4, Vilnius.
3.3.2. Real estate objects owned by group companies in Riga (Latvia)
Fig. 3.3.3. Real estate objects owned by group companies of INVL Baltic Real Estate in Riga (Latvia)
DOMMO BUSINESS PARK WAREHOUSE AND OFFICE COMPLEX
AREA 12,800 SQ.M.
Dommo Business Park warehouse and office premises complex in Latvia.
The area is strategically well-located, to the right of Jelgava Road, in
front of the intersection with Jurmala - Tallinn bypass. Distance to the
centre of Riga and the airport is 13 km, the port - 16 km.
The area is suitable for the development of logistics centres.
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
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Basic information
Total area and lease area
12,800 sq. m
Leased area
12,800 sq. m
Land area
58.21 ha
Property market value at the end
of 2021
EUR 8.8 million
Occupancy at the end of 2021
100 percent
Address
Stūnyši, Olaines region.
Main tenants
Bohnenkamp, Tente, Rewico Baltikum,
Inservis.
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II. FINANCIAL INFORMATION AND SIGNIFICANT EVENTS
4. Overview of the Issuer and its group activity
4.1. COMMENT MADE BY INVL ASSET MANAGEMENT REAL ESTATE FUND MANAGER VYTAUTAS BAKŠINSKAS
Recent years have been particularly successful in achieving long-term results for the company.
The net operating income of INVL Baltic Real Estate from its own objects in 2021 amounted to EUR
1.6 million, or 27% less than in 2020 (EUR 2.2 million), however 25% more than in 2020 (EUR 1.3
million) from own unsold objects. The operating income of INVL Baltic Real Estate in 2021 amounted
to EUR 2.7 million or 30% less than in 2020 (EUR 3.9 million), of which consolidated rental income
from its own objects decreased by 40% to EUR 1.7 million. The decline in both consolidated rental
income and consolidated income is due to the IBC and Vilniaus vartai sale transactions carried out
in 2020.
Last year was the second year of operation of the company-managed collaboration space Talent
Garden Vilnius, which, despite the challenges posed by the pandemic, was extremely successful
and allowed significantly improving the company’s results. We are pleased that Talent Garden
Vilnius has managed to maintain a high level of occupancy and continuously improves its financial
performance throughout the two-year period of the pandemic. Thanks to the successful operation
of Talent Garden Vilnius and other lease agreements signed in previous periods, in 2021 the net rental income of the object located
at Palangos g. 4/Vilniaus g. 33 increased by 44% and amounted to EUR 1.1 million year on year.
The group’s net profit in 2021 amounted to EUR 3.4 million, the value of the assets under management increased by EUR 5.5 million
in 2021 and amounted to EUR 29.6 million at the end of the year. The equity value at the end of the year was EUR 20.3 million.
The equity value per share was EUR 2.52 and increased by 19% over the year (after assessing dividends paid in 2021).
Last year, the company acquired for €2.4 million assets located at Vilniaus g. 37 — administrative premises with an area of
1,552 sq. m and 0.1185 ha of land − at the auction organised by the State Enterprise Turto bankas. In subsequent additional
transactions, the company acquired from private individuals part of a 101 sq. m undeveloped roofed area and two garages on the
same plot. Additional transactions will ensure smoother implementation of the company’s planned restructuring and repair plans.
After completion of the design and overhaul of the building, at the end of 2023, the Company will offer about 1,600 sq. m of rented
space of the highest-class offices on the second and third floors of building and commercial premises on the first floor.
Last year, we paid great attention to the preparation of project proposals for the reconstruction of property owned by the company
at Palanga g. 4/Vilniaus g. 33, which were presented to the public in January 2022. We are glad that together with the architects
who prepared the project proposals, we found the best solutions for the renewal of Ryšių rūmai. Our plan is that after the
reconstruction, the complex’s surface area should increase by about 3,600 sq. m.
The objects managed by INVL Baltic Real Estate in 2021 were marked by high occupancy rates and improved performance. The
global pandemic did not have a significant impact on the company’s performance. We are glad that our customers remain loyal and
trust INVL Baltic Real Estate as a reliable and long-term partner. In the coming years, we will continue to meet our clients’
expectations and increase value for investors.
4.2. OPERATIONAL ENVIRONMENT
The impact of the pandemic on the real estate market created the “roller coaster” effect − a sharp drop, a relatively short period of
stabilisation, and a rise to unprecedented heights – this is how the market looked in the two years of fighting the devastating
pandemic.
In 2021, the market supply of commercial offices was supplemented by over 100,000 sq. m. Further expansion is also not slowing
down: in the new centre of Vilnius alone, over the next few years, about 100,000 sq. m of offices will open its doors, excluding the
new projects currently under preparation in Krokuvos and Lvivo streets. The development of new offices is not limited to the
neighbourhood of Šnipiškės; new projects are also planned in Naujamiestis, Pilaitė, Pašilaičiai and Lazdyniai. It is likely that the
pandemic will cut off part of the rented space of companies, although it is too early to decide on a further business model.
Despite the pandemic, we managed to avoid major changes in business centres. If a number of subletting transactions took place
in the second half of 2020, then quite a few tenants dealt with the development of the rented area this year. The relatively small
price difference between Class B and A business centres means that older, unmodernised offices are most under pressure. On the
other hand, migration between different classes of business centres is also limited by rental conditions − not all available areas
meet the needs of tenants. Currently, the number of available premises is around 4.5% in Class A business centres and around 5%
in Class B1 and B2 business centres.
Office rental prices in Vilnius can be considered constant, with indexation rates linked to existing contracts being the main
contributors to their change. Long-term discounts have a much greater impact on the annual income flow, which is why short-term
discounts are used more often, exempting tenants from taxation in the first months and securing a higher income stream in the
future. The price of Class A office space is €14−17/ sq. m, Class B1 − €11−14/sq. m., Class B2 − €7−10/ sq. m.
Kaunas is actually transforming the supply of both commercial and residential assets over the last year and next few years. Located
in the country’s centre, the city is at the confluence of two rivers and has a truly unique and attractive geographical location and
the potential to become one of the regional hubs. The new Rail Baltica track connecting Lithuania and Western Europe to Kaunas
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 71
adds to its attractiveness. During 2021, no significant expansion of new business centres took place in Kaunas, and project openings
are planned for 2022 or 2023.
The number of business centres in the so-called “temporary capital” decreased slightly in 2021. The most striking changes occurred
in Class A buildings, where available premises stand at 8%. In B1 and B2, vacancy fell to 9%. Although these indicators are higher
than currently in the capital, they are sufficient to ensure the desire of developers for further development. As in the case of Vilnius,
office rental prices can be considered as settled down, with Class A centres ranging from €12−13/sq. m, to B1 − €9−11/sq. m, and
B2 − €6−9/sq. m.
The development of Klaipėda business centres lives on quiet promises. There are many projects in the desk drawers of developers,
and some of them should certainly see the light of day. The new supply would provide an answer to the question whether the port
city really has no need for the development of business centres or whether simply the existing supply does not meet the needs of
the market. Among the three major cities, the demographic situation in Klaipėda is the worst, so there is a chance that the first
version is more reasoned. On the other hand, even in this case, new developments could accelerate the city’s recovery. The most
significant projects of the future include a business centre in the complex Mėmel City, Tech Zity, and reconstruction of PC Mega
with the construction of a business centre.
The number of available premises in Klaipeda is gradually decreasing and currently reaches about 25% in the Class A segment, 7%
− B1, and 6% in B2 business centres. Given the relatively small total area of the business centres, new projects can significantly
increase the vacancy or modern offices can attract more activities to the port city. Price changes have been avoided this year. Class
A premises can still be rented for €9−12/sq. m, B1 for €7−11/sq. m, and B2 − €5−7/sq. m.
In 2021, the Covid-19 pandemic had a smaller impact on the logistics sector in Latvia than on other real estate sectors. Rental
prices remain stable: €4.2−4.7/sq. m in Riga city and €3.5−4.2/sq. m in the area surrounding Riga.
Sources:
https://www.inreal.lt/file/1/9/3/7/Ekonomikos-ir-NT-rinkos-apzvalga-2021-H1_INREAL-Siauliu-bankas-COBALT-CityNow_2021-
08-10_compressed.pdf
4.3. RESULTS OF INVL BALTIC REAL ESTATE
EUR million
Group
Company
01.01.2019 –
31.12.2019
01.01.2020 –
31.12.2020
01.01.2021 –
31.12.2021
01.01.2019 –
31.12.2019
01.01.2020 –
31.12.2020
01.01.2021 –
31.12.2021
Income (revenue)
5.90
3.90
2.73
4.21
2.77
1.51
rental income from owned
premises
4.6
2.83
1.69
4.1
2.58
1.50
other revenue
1.3
1.07
1.04
0.1
0.19
0.01
Investment property
revaluation**
11.50
4.96
2.85
11.21
5.00
2.40
Net operating income from
owned properties*
2.03
2.20
1.61
-
-
-
Profit before tax**
10.40
5.39
3.39
10.62
5.52
3.40
Net profit**
10.42
5.42
3.40
10.63
5.52
3.40
Earnings per share**
EUR 0.79
EUR 0.41
EUR 0.37
EUR 0.81
EUR 0.42
EUR 0.37
*The Company publishes Alternative performance measures (AVR), that are in use of the Company, provides indicators definitions and calculation
formulas. All the information is disclosed in the Company‘s web site section „For Investors“ → „Financial information and reports“. The link is provided
https://bre.invl.com/en/for-investors/financial-information-and-reports/. Also, for the convenience of investors, the Company provides AVR in Annex
4 to the Annual Report.
** The increase of the results in 2019 was mainly influenced by the revaluation of the assets of IBC Business Center at its actual sale price dated 06-
03-2020. Financial results of 2020 have influenced by sale transaction of Business Centre Vilniaus Vartai completed on 30-09-2020.
The consolidated income (revenue) of INVL Baltic Real Estate in 2021 amounted to EUR 2.7 million or 31 percent less than in 2020
(EUR 3.9 million), while consolidated operating income from own objects decreased by 40 percent to EUR 1.7 million.
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 72
4.4. FINANCIAL RATIOS*
EUR million
Group
Company
2019**
2020**
2021
2019**
2020**
2021
Return on Equity (ROE), %
26.27
14.86
13.83
26.92
15.15
13.83
Return on Assets (ROA), %
15.41
9.23
9.07
16.29
9.59
9.10
Debt ratio
0.42
0.31
0.39
0.40
0.31
0.38
Debt – Equity ratio
0.71
0.45
0.63
0.66
0.45
0.62
Gearing ratio
0.36
-0.29
0.26
0.35
-0.03
0.28
Liquidity ratio
0.38
12.23
0.79
0.34
12.32
0.56
Pre-tax profit margin, %
176.39
138.20
124.08
252.08
199.06
225.25
Normalized operating profit, thousand EUR
1,280
1,323
969
945
1,091
559
Normalized operating profit margin, %
21.71
33.91
35.45
22.44
39.37
37.03
Borrowings to value of investment properties, %
36.5
39.3
30.9
-
-
-
Interest coverage ratio
2.72
2.87
3.73
-
-
-
Bank’s debt service coverage ratio
0.99
0.08
1.61
-
-
-
Net profit margin, %
176.75
138.84
124.37
252.36
199.06
225.25
Earnings per share (EPS), EUR
0.79
0.41
0.37
0.81
0.42
0.37
Price to earnings ratio (P/E)
3.80
5.27
6.30
3.70
5.14
6.30
*The Company publishes Alternative performance measures (AVR), that are in use of the Company, provides indicators definitions and calculation
formulas. All the information is disclosed in the Company‘s web site section „For Investors“ → „Financial information and reports“. The link is provided
https://bre.invl.com/en/for-investors/financial-information-and-reports/. Also, for the convenience of investors, the Company provides AVR in Annex
4 to the Consolidated Annual Report.
** The increase of the results in 2019 was mainly influenced by the revaluation of the assets of IBC Business Center at its actual sale price dated 06-
03-2020. The financial results of 2020 have influenced by the sale transaction of Business Centre Vilniaus Vartai completed on 30-09-2020.
4.5. KEY FIGURES OF INVL BALTIC REAL ESTATE
EUR million
Group
Company
31.12.2019
31.12.2020
31.12.2021
31.12.2019
31.12.2020
31.12.2021
Managed common area
56,876 sq. m
26,000 sq. m
27,700 sq. m
43,800 sq. m
13,200 sq. m
14,900 sq. m
Managed rental area
47,176 sq. m
22,600 sq. m
24,200 sq. m
34,100 sq. m
9,800 sq. m
11,400 sq. m
The real estate value
71.88
24.13
29.62
63.0
15.77
20.80
Investments into subsidiaries
(including loans granted to
subsidiaries)
-
-
-
7.89
9.03
9.80
Long-term prepayment under the
sublease agreement
-
-
-
-
-
-
Cash
1.04
16.03
1.90
0.46
10.39
1.21
Other assets
2.46
1.78
1.51
1.77
6.71*
1.01
Assets
75.38
41.94
33.03
73.12
41.90
32.82
Equity
44.02
28.87
20.29
43.92
28.87
20.29
Borrowings from credit institutions
24.76
9.49
9.14
22.87
9.49
9.14
Borrowings from Invalda INVL
group
1.51
-
-
1.51
-
-
Other payables
5.09
3.58
3.6
4.82
3.54
3.39
Total equity and liabilities
75.38
41.94
33.03
73.12
41.90
32.82
Total equity for one share
EUR 3.35
EUR 2.21
EUR 2.52
-
-
-
* In 2020, the Company granted EUR 5 mln. loan to a its‘ subsidiary to avoid negative interest on bank balances. The loan in shown in Other assets.
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 73
4.6. NET ASSET VALUE OF INVL BALTIC REAL ESTATE
The Net Asset Value (hereinafter - “NAV”) is calculated by deducting liabilities from the Company's assets, including Management
Fee Liabilities and Success Fee Liabilities. This amount is used to calculate the value of the Company's share, which is equal to the
Company's NAV divided by the number of shares issued and paid by the Company. The number of shares issued and paid does not
include:
1.1. The shares acquired by the Company.
1.2. The Company's shares, which the Company acquires based on the submitted but not executed order, in connection with the
redemption of shares, in respect of which a liability to purchase these shares has been recognized in the Company's financial
statements in accordance with IAS requirements.
The value of a share is determined to four decimal places and rounded according to mathematical rules.
The Company's NAV is calculated and published on a quarterly basis, with the exceptions provided for in the Company's Articles of
Association.
Information about the company's net asset value is updated every quarter: data for the first and third quarters are provided within
a month of the end of the period, while half-year data is provided within two months and full-year data within four months of the
end of the period.
Date
Net asset value per
share, EUR
Net asset
value, EUR
Recalculated net asset
value per share, EUR*
Allocated dividends
per share, EUR*
30 11 2016**
0.4203
27,633,382
2.1014
31 12 2016
0.4726
31,072,202
2.3629
31 03 2017
0.4781
31,431,866
2.3903
30 06 2017
0.4838
31,811,344
2.4191
0.06
30 09 2017
0.4924
32,374,388
2.4619
31 12 2017
0.5150
33,860,074
2.5749
31 03 2018
2.4984
32,853,366
2.4984
0.13
30 06 2018
2.5900
34,058,027
2.5900
30 09 2018
2.6147
34,382,903
2.6147
31 12 2018
2.6859
35,319,397
2.6859
31 03 2019
2.7033
35,548,100
2.7033
30 06 2019
2.6850
35,307,971
2.6850
0.13
30 09 2019
2.7185
35,748,715
2.7185
31 12 2019
3.3479
44,024,833
3.3479
31 03 2020
3.3786
44,428,162
3.3786
30 04 2020***
1.8526
24,361,588
1.8526
1.55
30 06 2020
1.8678
24,561,436
1.8678
30 09 2020****
2.2270
23,602,043
2.2270
30 11 2020*****!
2.2103 (reviewed
2.2043)
28,843,807
(reviewed
28,765,348)
2.2103 (reviewed 2.2043)
31 12 2020!
2.2124 (reviewed
2.2095)
28,870,287
(reviewed
28,832,682)
2.2124 (reviewed 2.2095)
31 03 2021
2.2295
17,972,963
2.2295
30 06 2021
2.1874
17,633,254
2.1874
0.12
30 09 2021
2.2362
18,027,324
2.2362
31 12 2021
2.5164
20,285,578
2.5164
* Net asset value per share and allocated dividends are recalculated considering the changed nominal value per share (EUR 1.45).
** Initial net asset value per share: EUR 2.1014, revaluated by the nominal value per share being EUR 1.45.
*** Considering resolution of the General Shareholders Meeting of the Company that was held on 9 April 2020 on repurchase of own shares of the
Company due to material changes in the incorporation documents of the Company, the net asset value as of 30 April 2020 is announced. According
to the published net asset value, the shares of the Company were repurchased from the shareholders of the Company who did not vote at the Meeting
regarding material changes in the incorporation documents of the Company and express their wish to do so.
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**** If the Company's net asset value on 30 September 2020 were calculated using the redeemable share liability calculated on the basis of the
number of shares actually redeemed and not on the total number of redemption shares submitted, the net asset value would be EUR 28,143,520 or
EUR 2.1567 per share.
***** According to the 23 December 2020 Company’s announcement of the convocation of the General Extraordinary Shareholders Meeting, which
was hold on 14 January 2021, if the shareholders of the Company make the decisions provided in the agenda of the Meeting, the process of buy-back
of shares of Company due to material changes in the incorporation documents of the Company should take place. Therefore, the Company announced
the Company's 30 November 2020 net asset value, according to which, the shares of the Company are repurchased from the shareholders of the
Company who wish so and who did not vote at the Meeting regarding the material changes in the incorporation documents of the Company.
! The Company’s management company INVL Asset Management, UAB, performing the usual operational control measures, determined that in
determining the value of the Company’s net assets of 30 November 2020 and 31 December 2020, the error occurred. Accordingly, the adjusted values
of the Company’s net assets are presented: (i) the Company’s net asset value as of 30 November 2020 was EUR 28,765,348, or EUR 2.2043 per
share. The difference from the previously announced net asset value is 0.27 percent.(ii) the Company’s net asset value as of 31 December 2020 was
EUR 28,832,682, or EUR 2.2095 per share. The difference from the previously announced net asset value is 0.13 percent. This discrepancy in the
value of the Company’s net assets did not have any negative consequences for the Company’s shareholders. The Company’s share buy-back, which
ran from 25 January 2021 to 25 March 2021 (inclusive), was carried out based on a net asset value of 30 November 2020, that value was 0.27 percent
higher than the above revised net asset value of 30 November 2020. The difference between the incorrect and the net asset value applied during the
share buy-back process will be compensated by the Management Company.
4.7. SIGNIFICANT ISSUER’S AND ITS GROUP EVENTS DURING THE REPORTING PERIOD, EFFECT ON THE
FINANCIAL STATEMENT
4.7.1. Significant Issuer’s events
INVESTMENT ACTIVITY
In 2021, INVL Baltic Real Estate acquired the real estate located at Vilniaus str. 37, Vilnius*:
Date of the purchase
deals
24 September 2021
11 November 2021
Object
Part of the building and land plot at Vilniaus Street
37-4 in Vilnius and the roof
Seller
The state enterprise Turto Bankas / Private
individuals
Acquisition cost of the
property
EUR 2.6 million
* In 2022, INVL Baltic Real Estate additionally purchased from private individuals two garages with a part of the land plot for a total price of EUR
425,000. These real estate objects are also located at Vilniaus str. 37, Vilnius.
MANAGEMENT OF THE COMPANY
• Taking into account resolution of the General Shareholders Meeting that was held on 14 January 2021 on repurchase of own
shares of the Company due to material changes in the incorporation documents (Articles of Association) of the Company and
taking into account that an obligation has arisen for the Company to buy back the shares of the Company of shareholders
opposing the decisions or not participating in the meeting or abstaining from voting, on 15 January 2021 the Management
Company INVL Asset Management, UAB provided an approved detailed procedure for the buy-back of the Company’s shares,
according to which the buy-back of the Company’s shares was carried out. The buy-back of the Company’s shares lasted from
25 January 2021 until 25 March 2021 (inclusive). The buy-back price per share was EUR 2.2103, according to NAV as of 30
November 2020. During the share buy-back process, 11 shareholders submitted applications to the Company for the buy-
back of the shares of the Company. During the redemption process of the Company's shares, the Company acquired 4,988,155
Company’s shares for EUR 11 mln.
• The General Shareholders meeting of INVL Baltic Real Estate held on 29 April 2021 approved the reduction of the authorized
capital of the Company to cancel 5,088,586 units of ordinary registered own shares acquired by INVL Baltic Real Estate during
the buy-back of shares process and approved the formation of a supervisory board of the Company. To implement these
changes, the General Shareholders Meeting of the Company approved the amendments of the Articles of Association of the
Company as well as approved the new wording of the Articles of Association. On 26 July 2021, after the registration of the
new wording of the Articles of Association of INVL Baltic Real Estate in the Register of Legal Entities, the procedure of the
reduction of the authorized capital of the Company ended, during which the 5,088,586 units of the ordinary registered shares,
acquired by the Company through the share redemption processes, were cancelled. In addition, on 3 August 2021 the
Company received the permission of the Bank of Lithuania to amend the Articles of Association of the Company and the
members of the Supervisory Board took up their duties in the Company.
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INFORMATION RELATED TO THE ALLOCATION AND DISTRIBUTION OF DIVIDENDS
• The General Shareholders' Meeting of INVL Baltic Real Estate, held on 29 April 2021, decided to allocate a dividend of EUR
0.12 per share for the year 2020. Dividends were paid to the shareholders who on 13 May 2021 were shareholders of the
Company. The dividends were allocated from 27 May 2021.
OTHER SIGNIFICANT EVENTS
• On 11 January 2021 the Company received a notification from the Bank of Lithuania informing that the Company was allowed
to change the depository service provider. The decision of the Company‘s shareholders to change the Company's depository
from AB SEB bankas to AB Šiaulių bankas has been taken at the shareholders' meeting on 9 April 2020. At the time of the
release of the Annual Report the change of the depository has not been implemented yet.
• On 2 February 2021 the Company received a notification from the Bank of Lithuania informing that the Company was allowed
to change the Articles of Association of the Company. On 31 December 2020, a new wording of the Articles of Association of
Company was registered in the Register of Legal Entities. The new wording of the Articles of Association was approved on 9
April 2020 during the General Shareholders Meeting. Amendments to the Articles of Association were made to increase the
maximum level of borrowed capital allowed in the Company's activities to the level established by the Law on Collective
Investment Undertakings of the Republic of Lithuania.
• On 27 April 2021 INVL Baltic Real Estate received a notification from the Bank of Lithuania informing that the Company was
allowed to change the Articles of Association of the Company. On 6 April 2021, a new wording of the Articles of Association
of Company was registered in the Register of Legal Entities. The new wording of the Articles of Association was approved on
14 January 2021 during the General Shareholders Meeting. Amendments to the Articles of Association were made (i) to
indicate the right of the Company to acquire its own shares in order to reduce the difference between their price and the net
asset value of the Company, which arises (or may arise) at the trading venue where the Company's shares are traded, and
(ii) to ensure that the rules for calculating and paying the performance fee paid by the Company comply with good
international practice.
• On 29 April 2021 INVL Baltic Real Estate received a notification from Invalda INVL by which the Company was informed about
the Board decision of Invalda INVL from 29 April to suspend permanently the execution of the guidelines for the trading in
the Company’s shares. The Board of Invalda INVL made the above-mentioned decision, considering (i) the decision of the
General Meeting of Shareholders of the Company of 14 January 2021, to approve the new wording of the Articles of the
Association where the right of the Issuer to acquire its own shares is indicated and (ii) the decision of the General Meeting of
Shareholders of the Company of 29 April 2021, to approve the procedure of the Issuer’s own shares acquisition.
• On 30 April 2021 the Company announced that the Company's management company INVL Asset Management, UAB,
performing the usual operational control measures, determined that during the determination process of the value of the
Company's net assets of 30 November 2020 and 31 December 2020, the error occurred. Accordingly, the adjusted values of
the Company's net assets were presented.
• On 3 August 2021, the Company received a notification from the Bank of Lithuania informing that the Company was allowed
to change the Articles of Association of the Company. On 26 July 2021, a new wording of the Articles of Association of
Company was registered in the Register of Legal Entities. The new wording of the Articles of Association was approved on 29
April 2021, during the General Shareholders Meeting. The Articles of Association of the Company are amended to comply with
the legal requirements applicable to the Company, i. y. to form the Company's supervisory body - the Supervisory Board.
The Articles of Association are also amended due to the reduction of the authorized capital, which was reduced to cancel
5,088,586 units of ordinary registered own shares acquired by the Company during the buy-back of shares process.
The Company publishes all publicly available information on the Nasdaq Vilnius website (link), on the Central Regulatory Information
Base (link), as well as on the Company's website (For investors → Regulated information). Link: https://bre.invl.com/en/news/).
4.7.2. Significant group’s events
No significant another group events than are indicated above by the Issuer, were recorded during the reporting period. The Group
companies carried on their normal activities.
5. Significant events of the Issuer and its group since the end of the financial year
• On 3 January 2022 the Company announced, that the Company together with the design firm Viltekta has submitted for
consideration by the Vilnius City municipality design proposals for reconstruction of the administrative building at Palangos
Street 4 / Vilniaus Street 33 which the Company owns. The reconstruction is expected to increase the complex’s above-
ground area by approximately 3600 square metres.
• On 14 January 2022 the Company received the notifications of the Company’s managers and shareholders on the acquisition
and disposal of voting rights. Respectively, the structure of shareholders holding or controlling more than 5% of the
Company’s share capital and/or voting rights has changed.
• On 18 February 2022 a real estate sale and purchase agreement was concluded on the purchase of two garages with part of
the land plot at Vilniaus Street 37 in Vilnius. The Company acquired the real estate from private individuals for a total price
of EUR 425,000.
The Company publishes all publicly available information on the Nasdaq Vilnius website (link), on the Central Regulatory Information
Base (link), as well as on the Company's website (For investors → Regulated information). Link: https://bre.invl.com/en/news/ ).
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6. Estimation of Issuer’s and Group’s activity last year and activity plans and forecasts
6.1. Evaluation of implementation of goals for 2021
In 2021, INVL Baltic Real Estate succeeded in achieving its key goals - the successful restructuring of assets under management,
which allowed to achieve extremely successful results and earn significant returns for the company's shareholders.
6.2. Activity plans and forecasts
INVL Baltic Real Estate will continue to earn from investments in commercial real estate, ensuring the growth of rental income and
cost optimisation. Features of the managed assets of INVL Baltic Real Estate make it reasonable to expect continuous growth in the
value of assets.
7. Disclosure of the impact of the COVID-19 pandemic
The Group was not significantly affected by the COVID-19 virus pandemic in 2021. Due the COVID-19 virus pandemic in 2021,
Group's operations were not disrupted, as the Group can perform all the operations remotely. However, the pandemic affected the
Company's tenants, whose activities were partially restricted during the quarantine. Due to these reasons, it was more difficult to
find new tenants for the vacated premises and to rent them out at higher prices. In total, the Company provided a EUR 58,000
rental rebate to tenants.
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III. INFORMATION ABOUT SECURITIES
8. The order of amendment of Issuer’s Articles of Association
According to the Articles of Association of the Company, the Articles of Association of INVL Baltic Real Estate may be amended by
the decision of the General Shareholders’ Meeting, passed by more than 3/4 of votes (except in cases stated in the Law on
Companies of the Republic of Lithuania and in cases stated in Company’s Articles of Association).
During the reporting period, Company’s Articles of Association was amended three times:
• On 2 February 2021 the Company received a notification from the Bank of Lithuania informing that the Company was allowed
to change the Articles of Association of the Company. On 31 December 2020, a new wording of the Articles of Association of
Company was registered in the Register of Legal Entities. The new wording of the Articles of Association was approved on 9
April 2020 during the General Shareholders Meeting. Amendments to the Articles of Association were made to increase the
maximum level of borrowed capital allowed in the Company's activities to the level established by the Law on Collective
Investment Undertakings of the Republic of Lithuania.
• On 27 April 2021 INVL Baltic Real Estate received a notification from the Bank of Lithuania informing that the Company was
allowed to change the Articles of Association of the Company. On 6 April 2021, a new wording of the Articles of Association
of Company was registered in the Register of Legal Entities. The new wording of the Articles of Association was approved on
14 January 2021 during the General Shareholders Meeting. Amendments to the Articles of Association were made (i) to
indicate the right of the Company to acquire its own shares in order to reduce the difference between their price and the net
asset value of the Company, which arises (or may arise) at the trading venue where the Company's shares are traded, and
(ii) to ensure that the rules for calculating and paying the performance fee paid by the Company comply with good
international practice.
• On 3 August 2021, the Company received a notification from the Bank of Lithuania informing that the Company was allowed
to change the Articles of Association of the Company. On 26 July 2021, a new wording of the Articles of Association of
Company was registered in the Register of Legal Entities. The new wording of the Articles of Association was approved on 29
April 2021, during the General Shareholders Meeting. The Articles of Association of the Company are amended to comply with
the legal requirements applicable to the Company, i. y. to form the Company's supervisory body - the Supervisory Board.
The Articles of Association are also amended due to the reduction of the authorized capital, which was reduced to cancel
5,088,586 units of ordinary registered own shares acquired by the Company during the buy-back of shares process.
Currently actual wording of the Articles of Association of INVL Baltic Real Estate is dated as of 26 July 2021. The Articles of
Association is available on the Company’s website (Section in the website For investors → Legal documents. Link:
https://bre.invl.com/en/for-investors/legal-documents/)
9. Structure of the authorized capital
9.1. SHARE CAPITAL CHANGES
Table 9.1.1. Structure of INVL Baltic Real Estate authorized capital as of 31 December 2021.
Type of shares
Number of shares and total
voting rights granted by
the issued shares, units
Nominal
value, EUR
Total nominal Value
and authorised
capital, EUR
Portion of the authorised capital, %
Ordinary registered
shares
8,061,414
1.45
11,689,050.30
100
All shares are fully paid-up, and no restrictions apply on their transfer.
9.2. INFORMATION ABOUT THE ISSUER’S TREASURY SHARES
9.2.1. Share redemption
During the share redemption process, which took place between 25 January 2021 and 25 March 2021 (inclusive), the Company
acquired 4,988,155 units of own shares from the Company’s shareholders. The Company’s share redemption process was carried
out in compliance with the resolution adopted by the Company’s General Meeting of Shareholders on 14 January 2021 to amend
the material provisions of the Company’s incorporation documents and, if such duty of the Company arises, to redeem the
Company’s shares from the shareholders who object to the Company’s decisions, or who were absent from the General Meeting, or
who have abstained from voting at the General Meeting. On 15 January 2021, UAB INVL Asset Management, the Management
Company, approved and announced the Procedure for Redemption of the Company’s Shares which was followed during the
Company’s share redemption process.
After the share redemption process has ended, the number of own shares held by the Company increased to 5,088,586 shares
(calculating together with the Company’s shares redeemed from the Company’s shareholders during the Company’s share
redemption process in 2020, when the Company acquired 100,431 units of own shares).
On 29 April 2021, the ordinary general meeting of shareholders adopted the decision to reduce the authorised capital of the Company
in order to annul 5,088,586 units of own ordinary registered shares acquired by the Company during the share redemption
processes. On 26 July 2021, a new wording of the Company’s Articles of Association was registered with the Register of Legal
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
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Entities, the Company’s authorised capital reduction procedure was completed, and the shares acquired by the Company during the
share redemption processed were annulled.
Based on the data as of 31 December 2021, the Company’s authorised capital amounts to EUR 11,689,050.30. The
authorised capital of the Company is divided into 8,061,414 units of ordinary registered shares with the par value of
EUR 1.45 each. The Company has not acquired any of its shares.
9.2.2. Purchase of own shares
The General Shareholders Meeting of the Company that was held on 29 April 2021 made decision to purchase its own shares. The
period during which the company may acquire its own shares - 18 months from the day of this resolution. The maximum one share
acquisition price – the last announced net asset value per share, the minimal one share acquisition price – EUR 1.45.
Company not initiated acquisition of own shares in 2021.
10. Trading in Issuer’s securities as well as securities, which are deemed to be a significant financial
investment to the Issuer on a regulated market
Table 10.1. Main characteristics of INVL Baltic Real Estate shares admitted to trading
Shares issued, units
8,061,414
Shares with voting rights, units
8,061,414
Number of votes for the quorum of the General
Shareholders Meeting, units
8,061,414
Nominal value, EUR
1.45
Total nominal value, EUR
11,689,050,30
ISIN code
LT0000127151
LEI code
529900GSTEOHKA0R1M59
Ticker
INR1L
Exchange
Nasdaq Vilnius
List
Baltic Secondary list
Listing date
04.06.2014
Included into indexes
OMX VILNIUS INDEX (VILSE)
STOXX Global Total Market Price Index (TW1P)
STOXX All Europe Total Market Price Index (TE1P)
OMX Baltic Benchmark Gross Index (OMXBBGI)
STOXX EU Enlarged TMI (Price) EUR (EUETMP)
OMX Baltic Benchmark Price Index (OMXBBPI)
OMX Baltic Benchmark Capped Price Index (OMXBBCPP)
OMX Baltic All Share Gross Index (OMXBGI)
OMX Baltic All Share Price Index (OMXBPI)
OMX Baltic Real Estate PI (B8600PI)
OMX Baltic Real Estate GI (B8600GI)
OMX Baltic Benchmark Capped Gross Index (OMXBBCPG)
Company has signed a market-making agreement with Šiaulių bankas, AB on 1 March 2016.
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
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Table 10.2. Trading in the company’s shares on Nasdaq Vilnius*
Reporting period
Price, EUR
Turnover, EUR
Last trading
date
Total turnover
high
low
last
high
low
last
units
EUR
2017 1st Q
0.399
0.375
0.397
9,985.26
2.35
0
31.03.2017
175,498
67,609,54
2017 2nd Q
0.449
0.386
0.424
16,547.66
7.02
338.95
30.06.2017
366,537
151,781.03
2017 3rd Q
0.480
0.415
0.471
63,552.70
27.53
0
29.09.2017
457,150
196,305.46
2017 4th Q
0.485
0.465
0.475
10,304.66
11.75
687.80
29.12.2017
201,801
95,575.01
2018 1st Q
2.42
0.476
2.26
41,834.75
2.36
41,834.75
03.29.2018
108,793
228,569.82
2018 2nd Q
2.36
2.12
2.30
49,996.02
61.02
2,001.14
06.29.2018
94,034
213,477.10
2018 3rd Q
2.56
2.28
2.48
31,417.80
111.56
999.44
28.09.2018
60,284
144,223.46
2018 4th Q
2.52
2.32
2.42
12,226.06
59.52
433.18
28.12.2018
32,269
77,646.76
2019 1st Q
2.54
2.10
2.50
26,646.30
2.52
1,604.00
2019.03.29
58,518
143,881.60
2019 2nd Q
2.54
2.40
2.44
12,057.50
15
1,185.84
2019.06.28
38,723
95,869.40
2019 3rd Q
2.58
2.42
2.58
84,949.22
9.84
278.64
2019.09.30
50,954
129,517.18
2019 4th Q
3.20
2.46
3.00
39,175.68
33.28
3,536.76
2019.12.30
45,810
118,648.98
2020 1st Q
3.88
2.80
3.34
22,598.62
62
11,780.96
31.03.2020
52,930
167,651.88
2020 2nd Q
3.84
1.89
1.90
35,325.84
478
1,263.46
30.06.2020
186,197
469,201.83
2020 3rd Q
2.14
1.82
2.08
32,519.47
27.9
11,526.96
30.09.2020
80,497
152,693.78
2020 4th Q
2.20
1.88
2.16
17,695.54
41.48
15,268.92
30.12.2020
150,755
302,313.21
2021 1st Q
2.32
2.18
2.24
308,35.24
100.7
657.98
31.03.2021
80,538
264,296.22
2021 2nd Q
2.47
2.22
2.34
28,996.17
23.4
386.8
30.06.2021
154,950
270,999.82
2021 3rd Q
2.42
2.24
2.31
13,509.77
2.31
2.31
30.09.2021
48,870
113,758.93
2021 4th Q
2.35
2.25
2.33
12,083.66
2.29
3,476.06
30.12.2021
25,208
57,815.25
* Taking in account the change in the nominal value per share to EUR 1.45, after the Articles of the Association was registered on 15th January 2018.
Table 10.3. Trading in INVL Baltic Real Estate shares 2017 – 2021
2017
2018*
2019
2020
2021
Share price, EUR:
open
0.39
0.475
2.42
3.00
2.22
high
0.485
2.56
3.20
3.88
2.45
low
0.375
0.48
2.10
1.82
2.2
medium
0.43
2.25
2.51
2.32
2.28
last
0.475
2.42
3.00
2.16
2.33
Turnover, units
1,200,986
295,380
194,005
470,379
309,566
Turnover, EUR
511,271.04
663,917.14
487,917.16
1,091,860.70
706,870.22
Traded volume, units
565
612
396
2,691
2451
* Taking in account the change in the nominal value per share to EUR 1.45, after the Articles of the Association was registered on 15th January 2018
Table 10.4. Capitalisation 2017 - 2021
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 80
Last trading date
Number of shares having
voting rights, units
Last price, EUR
Capitalisation, EUR
31.03.2017
65,750,000
0.397
26,102,750
30.06.2017
65,750,000
0.424
27,878,000
29.09.2017
65,750,000
0.471
30,968,250
29.12.2017
65,750,000
0.475
31,231,250
31.03.2018*
13,150,000
2.26
29,719,000
30.06.2018
13,150,000
2.30
30,245,000
29.09.2018
13,150,000
2.48
32,612,000
29.12.2018
13,150,000
2.42
31,823,000
29.03.2019
13,150,000
2.50
32,875,000
28.06.2019
13,150,000
2.44
32,086,000
30.09.2019
13,150,000
2.58
33,927,000
30.12.2019
13,150,000
3.00
39,450,000
31.03.2020
13,150,000
3.34
43,921,000
30.06.2020
13,150,000
1.90
24,985,000
30.09.2020
13,150,000
2.08
27,352,000
30.12.2020
13,049,569
2.16
28,187,069
31.03.2021
8,061,414
2.24
18,057,567.36
30.06.2021
8,061,414
2.34
18,863,708.76
30.09.2021
8,061,414
2.31
18,621,866.34
30.12.2021
8,061,414
2.33
18,783,094.62
* The Articles of the Association was registered on 15th January 2018, after the nominal value per share was changed to EUR 1.45
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 81
Fig. 10.1. INVL Baltic Real Estate change of share price and indexes
1
(resource: Nasdaq Baltic, Baltic market indexes)
Fig. 10.2. Change of share price of INVL Baltic Real Estate and turnover
1
The OMX Baltic Benchmark index (OMXBB – PI, GI, CAP) tracks the largest and most traded shares from all the industry sectors represented on the Nasdaq Baltic Market. The
OMX Baltic Real Estate GI index is available at the Baltic level. Based on the FTSE Group’s Industry Classification Benchmark (ICB), each shows the trend in a specific industry
and enables the comparison of companies in that industry. Indexes for each ICB industry and super sector are calculated in euros for the stocks on the Main and Secondary lists
of the Nasdaq Baltic exchanges. is based on the Industry Classification Benchmark (ICB) developed by FTSE Group (FTSE).
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11. Shareholders
11.1. INFORMATION ABOUT COMPANY‘S SHAREHOLDERS
The total number of shareholders in INVL Baltic Real Estate was 4,022 on 31 December 2021. There are no shareholders entitled
to special rights of control.
Table 11.1.1. Shareholders who held title to more than 5% of INVL Baltic Real Estate authorised capital and/or votes as of 31
December 2021.
Name of the shareholder
or company
Number of shares
held by the right
of ownership,
units
Share of the
authorised capital
held and share of
votes given by the
shares held by the
right of ownership,
%
Indirectly held votes,
%
Balsų dalis iš viso, proc.
LJB property, UAB,
code 300822529
1,251,695
15.53
0
15.53
Alvydas Banys
663,640
8.23
15.53
2
23.76
Irena Ona Mišeikienė
1,308,596
16.23
0
16.23
Invalda INVL, AB,
code 121304349,
1,889,123
23.43
0
23.43
Ilona Šulnienė
664,710
8.25
0
8.25
11.1.1. Fig. Votes as of 31 December 2021
2
According to section 1 of article 16 of the Law on Securities of the Republic of Lithuania, Alvydas Banys is considered to hold the voting rights of the controlled company UAB
LJB property
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Table 11.1.2. Shareholders who held title to more than 5% of INVL Baltic Real Estate authorised capital and/or votes as of 14
January 2022.
Name of the shareholder
or company
Number of shares
held by the right
of ownership,
units
Share of the
authorised capital
held and share of
votes given by the
shares held by the
right of ownership,
%
Indirectly held votes,
%
Balsų dalis iš viso, proc.
LJB property, UAB,
code 300822529
1,251,695
15.53
0
15.53
Alvydas Banys
663,640
8.23
15.53
3
23.76
Irena Ona Mišeikienė
1,308,596
16.23
0
16.23
INVL Life, UAB,
code 305859887
4
1,889,123
23.43
0
23.43
Invalda INVL, AB,
code 121304349,
0
0
23.43
4
23.43
4
Ilona Šulnienė
664,710
8.25
0
8.25
11.1.2. Fig. Votes as of 14 January 2022
3
According to section 1 of article 16 of the Law on Securities of the Republic of Lithuania, Alvydas Banys is considered to hold the voting rights of the controlled company UAB
LJB property
4
100% of shares of INVL Life, UAB are hold by Invalda INVL, AB, code 121304349
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11.2. RIGHTS AND OBLIGATIONS CARRIED BY THE SHARES
11.2.1. Rights of the shareholders
The Company’s shareholders have the following property and non-property rights:
1. to receive a part of the Company's profit (dividend).
2. to receive the company’s funds when the authorised capital of the company is reduced with a view to paying out the company’s
funds to the shareholders.
3. to receive a part of assets of the company in liquidation.
4. to receive shares without payment if the authorised capital is increased out of the Company funds, except in cases provided by
the laws of the Republic of Lithuania.
5. to have the pre-emption right in acquiring shares or convertible debentures issued by the Company, except in cases when the
General Shareholders’ Meeting in the manner prescribed in the Law on Companies of the Republic of Lithuania decides to
withdraw the pre-emption right in acquiring the Company’s newly issued shares or convertible debentures for all the
shareholders.
6. to lend to the company in the manner prescribed by law; however, when borrowing from its shareholders, the company may
not pledge its assets to the shareholders. When the company borrows from a shareholder, the interest may not be higher than
the average interest rate offered by commercial banks of the locality where the lender has his place of residence or business,
which was in effect on the day of conclusion of the loan agreement. In such a case the company and shareholders shall be
prohibited from negotiating a higher interest rate.
7. other property rights provided by laws.
8. to attend the General Shareholders’ Meetings.
9. to submit to the Company in advance the questions connected with the issues on the agenda of the General Meeting of
Shareholders.
10. to vote at the General Shareholders’ Meetings according to voting rights carried by their shares.
11. to receive information on the Company specified in the Law on Companies of the Republic of Lithuania.
12. to appeal to the court for reparation of damage resulting from nonfeasance or malfeasance by the Company’s manager and the
Board members of their obligations prescribed by the Law on Companies of Republic of Lithuania and other laws of the Republic
of Lithuania and the Company’s Articles of Association as well as in other cases laid down by laws.
13. to receive information on a public company whose shares are admitted to trading on a regulated market as specified in the Law
on Companies of Financial Instruments Markets in the Republic of Lithuania.
14. other non-property rights established by laws and the Company’s Articles of Association.
11.2.2. Obligations of the shareholders
The shareholders have no property obligations to the Company, except for the obligation to pay up, in the established manner, all
the shares subscribed for at their issue price.
If the General Shareholders’ Meeting takes a decision to cover the losses of the Company from additional contributions made by
the shareholders, the shareholders who voted "for" shall be obligated to pay the contributions. The shareholders who did not attend
the General Shareholders’ Meeting or voted against such a resolution shall have the right to refrain from paying additional
contributions.
The person who acquired all shares or part of shares in the company from the Company’s sole shareholder must notify the company
of the acquisition or transfer of shares within 5 days from the conclusion of the transaction. The notice shall indicate the number of
acquired or transferred shares, including share number per class, when the different share class is acquired, the nominal share
price and the particulars of the person who acquired or transferred the shares (the natural person's full name, personal number,
personal code, and address; the name, legal form it has taken, registration number, address of the registered office of the legal
person.). A document confirming the acquisition of the shares, or an acquisition extract must be added to the notice. If an acquisition
extract is provided, it must include the parties to the transaction, the subject of the transaction and the date of acquisition of the
shares.
Contracts between the company and holder of all its share shall be executed in a simple written form unless the Civil Code prescribes
the mandatory notarised form.
A shareholder shall repay the Company any dividend paid out in violation of the mandatory norms of the Law on Companies, if the
Company proves that the shareholder knew or should have known thereof.
Each shareholder shall be entitled to authorise a natural or legal person to represent him when maintaining contacts with the
Company and other persons.
12. Dividends
The General Shareholders’ Meeting decides upon dividend payment and sets the amount of dividends. The company pays out the
dividends within 1 month after the day of adoption of the resolution on profit distribution.
Persons have the right to receive dividends if they were shareholders of the company at the end of the tenth working day after the
day of the General Shareholders’ Meeting which issued the resolution to pay dividends.
The General Shareholders Meeting of the Company held on 9 April 2020 approved the new wording of the Dividend payment policy
which stipulates the yearly payment of dividends per share of no less than EUR 0.09 (when the nominal value per share is EUR
1.45). It is noted that in accordance with the provisions of the dividend payment policy, the Company may allocate both lower and
higher dividends per share than it is expected in the policy.
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According to the Lithuanian Law on Personal Income Tax and the Lithuanian Law on Corporate Income Tax, 15 % tax is applied to
the dividends since 2014. The company is responsible for calculation, withdrawn and transfer (to the benefit of the State) of
applicable taxes
5
.
On 29 April 2021, the General Shareholders Meeting of INVL Baltic Real Estate decided to allocate EUR 0.12 dividend per share.
Dividends were allocated to the shareholders, who at the end of the tenth business day following the day of the General Shareholders
Meeting that adopted a decision on dividend payment, i. e. on 13 May 2021 were shareholders of the Company.
The Company started to allocate dividends for the year 2020 from 27 May 2021. Dividends were allocated to those shareholders of
the company, who have provided existing bank accounts.
Information relevant to the dividends paid by the Company, as well as matter of dividend payments and valid Dividend payment
policy is published on Company’s web page.
12.1. Table. Indexes related with shares*
Company’s
2017
2018
2019
2020
2021
Net Asset Value per share**, EUR
2.57
2.69
3.35
2.21
2.52
Price to book value (P/Bv)
0.92
0.90
0.90
0.98
0.93
Dividend yield
2.5
5.4
4.3
71.80
5.20
Dividends/ Net profit
0.22
0.54
0.16
3.76
0,28
*The Company publishes Alternative performance measures (AVR), that are in use of the Company, provides indicators definitions and calculation
formulas. All the information is disclosed in the Company‘s web site section „For Investors“ → „Financial information and reports“ . The link is provided
https://bre.invl.com/en/for-investors/financial-information-and-reports/. Also, for the convenience of investors, the Company provides AVR in Annex
4 to the Consolidated Annual Report.
**Nominal value per share – EUR 1.45
12.1.1. Fig. Growth of net asset value, EUR/share and dividend allocation
5
This information should not be treated as a tax consultation.
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IV. ISSUER’S MANAGING BODIES
13. Structure, authorities, the procedure for appointment and replacement
The management of INVL Baltic Real Estate was transferred to the Management company INVL Asset Management on 22 December
2016 as the Bank of the Republic of Lithuania granted INVL Baltic Real Estate with the license of the closed-ended type investment
company. The rights and duties of the Board and the Manager of the Company were also transferred to the Management Company.
From 26 July 2021, the Company has a collegial supervisory body - the supervisory board. The Company's management bodies are
not formed.
To ensure management efficiency and control of investments, the Management company formed an Investment Committee of INVL
Baltic Real Estate.
The Management company is responsible for convening and organizing the highest management body of the Company - the General
Shareholders Meeting.
13.1 fig. Structure of the Management of the Company
Detailed information on the structure of the management of the Company before the CEF license was granted is published in the
consolidated annual report for the year 2016 of INVL Baltic Real Estate. The report is published on the Company's website section
For Investors.
13.1. GENERAL SHAREHOLDERS’ MEETING
13.1.1. Powers of the General Shareholders’ Meeting
Persons who were shareholders of the Company at the close of the accounting day of the General Shareholders Meeting or at a
repeat General Shareholders Meeting (the 5th working day before the General Shareholders’ Meeting) shall have the right to attend
and vote at the General Shareholders’ Meeting in person, unless otherwise provided for by laws, or may authorise other persons to
vote for them as proxies or may conclude an agreement on the disposal of the voting right with third parties. The shareholder’s
right to attend the General Shareholders’ Meeting shall also cover the right to speak and enquire.
The general meeting of Shareholders can take decisions and shall be deemed quorate irrespective of the number of votes carried
by Shares held by the Shareholders present thereat. An Annual General Shareholders’ Meeting must be held every year at least
within 4 months from the close of the financial year.
All decisions of the general meeting of Shareholders of the Company shall be taken by a 3/4 majority of votes carried by Shares of
the Shareholders present in the meeting, except for the decisions indicated below, which shall be taken by a 2/3 majority of votes
carried by Shares of the Shareholders present in the meeting, i.e., decisions:
• to elect and remove a certified auditor or audit firm and establish terms of payment for audit services.
• to approve sets of annual and interim financial statements.
• on extension of the Term of Activities of the Company and making related amendments to the Articles of Association.
The below-indicated decisions of the general meeting of Shareholders of the Company can be taken only after taking into account
the recommendations given by the Board of the Management Company and/or the Investment Committee of the Company and with
regard to specified consequences of a relevant decision, i.e., decisions regarding:
• amending the Articles of Association of the Company.
• redemption of Shares.
• formation, use, reduction and cancellation of reserves.
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• increase or reduction of the authorised capital.
• reorganisation, spin-off or transformation of the Company.
• merger of the Company with other collective investment undertakings.
• approval of the agreement with the Depository, appointment of the person authorised to sign the approved agreement with
the Depository on behalf of the Company, change of the Depository.
• liquidation of the Company or extension of the Term of Activities of the Company.
• restructuring of the Company.
In case draft decisions are proposed not by the Management Company but by Shareholders, the Management Company must, no
later than within 5 (five) Business Days after presentation of such a draft decision to the Company, prepare a relevant
recommendation and announce it in the way draft decisions are announced. In any case recommendations of the Management
Company regarding all draft decisions on relevant issues of the agenda must be announced no later than 3 (three) Business Days
until the date of the general meeting of Shareholders.
In case the general meeting of Shareholders takes a decision not following the recommendations given by the Management
Company, the Management Company shall not be responsible if such decisions violate requirements for management of the
Company or there are other negative consequences.
13.1.2. Convocation of the General Shareholders’ Meeting of INVL Baltic Real Estate
The right to initiate convocation of the meeting is vested in the Management Company, the Supervisory Board of the Company and
Shareholders, owning at least 1/10 of all the votes in the General Shareholder Meeting.
The convocation of a General Shareholders’ Meeting is organised by the Management Company.
The shareholders are entitled:
(i) to propose to supplement the agenda of the General Shareholders Meeting submitting draft resolution on every additional
item of agenda or, then there is no need to decide - explanation of the shareholder (this right is granted to shareholders who
hold shares carrying at least 1/20 of all the votes). Proposal to supplement the agenda is submitted in writing sending the
proposal by registered mail to the Company at Gyneju str. 14, Vilnius, Lithuania, or delivered in person to the representative
of the Company on business hours or by sending proposal to the Company by email breinfo@invl.com. The agenda is
supplemented if the proposal is received no later than 14 days before the General Shareholders Meeting. In case the agenda
of the Meeting is supplemented, the Company will report on it no later than 10 days before the Meeting in the same way as
on convening of the Meeting.
(ii) to propose draft resolutions on the issues already included or to be included in the agenda of the General Shareholders
Meeting at any time prior to the date of the General Shareholders meeting (in writing, sending the proposal by registered
mail to the Company at Gyneju str. 14, Vilnius, Lithuania, or delivered in person to the representative of the Company on
business hours or by sending proposal to the Company by email breinfo@invl.com) or in writing during the General
Shareholders Meeting (this right is granted to shareholders who hold shares carrying at least 1/20 of all the votes).
(iii) to submit questions to the Company related to the issues of agenda of the General Shareholders Meeting in advance but no
later than 3 business days prior to the General Shareholders Meeting in writing sending the proposal by registered mail to the
Company at Gyneju str. 14, Vilnius, Lithuania, or delivered in person to the representative of the Company on business hours
or by sending proposal to the Company by email breinfo@invl.com. All answers related to the agenda of the General
Shareholders Meeting to questions submitted to the Company by the shareholders in advance, are submitted in the General
Shareholders Meeting or simultaneously to all shareholders of the Company prior to the General Shareholders Meeting. The
company reserves the right to answer to those shareholders of the Company who can be identified and whose questions are
not related to the company's confidential information or commercial secrets.
The shareholder participating at the Meeting and having the right to vote, must submit the documents confirming personal identity.
A person who is not a shareholder shall, in addition to this document, submit a document confirming the right to vote at the Meeting.
The requirement to provide the documents confirming personal identity does not apply when voting in writing by filling in a general
ballot paper.
Each shareholder may authorize either a natural or a legal person to participate and to vote on the shareholder's behalf at the
Meeting. An authorised person has the same rights as his represented shareholder at the Meeting unless the authorized person's
rights are limited by the power of attorney or by the law. The authorized persons must have the document confirming their personal
identity and power of attorney approved in the manner specified by law which must be submitted to the Company no later than
before the commencement of registration for the Meeting. The Company does not establish special form of the power of attorney.
A power of attorney issued by a natural person must be certified by a notary. A power of attorney issued in a foreign state must be
translated into Lithuanian and legalised in the manner established by law. The persons with whom shareholders concluded the
agreements on the disposal of voting right, also have the right to attend and vote at the Meeting.
Shareholder is entitled to issue power of attorney by means of electronic communications for legal or natural persons to participate
and to vote on its behalf at the Meeting. No notarisation of such authorization is required. The power of attorney issued through
electronic communication means must be confirmed by the shareholder with a safe electronic signature developed by safe signature
equipment and approved by a qualified certificate effective in the Republic of Lithuania. The shareholder shall inform the Company
on the power of attorney issued through the means of electronic communication by e-mail breinfo@invl.com not later than on the
last business day before the Meeting. The power of attorney and notification must be issued in writing and could be sent to the
Company by electronic communication means if the transmitted information is secured and the shareholder's identity can be
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identified. By submitting the notification to the Company, the shareholder shall include the internet address from which it would be
possible to download software to verify an electronic signature of the shareholder free of charge.
The Company is not providing the possibility to attend and vote at the Meeting through electronic means of communication.
Shareholder or its representative may vote in writing by filling general voting bulletin. The form of general voting bulletin is
presented at the Company's webpage www.invlbalticrealestate.com section For Investors. If shareholder requests, the Company
shall send the general voting bulletin to the requesting shareholder by registered mail or shall deliver it in person against signature
no later than 10 days prior to the General Shareholders Meeting free of charge. The filled general voting bulletin must be signed by
the shareholder or its authorized representative. Document confirming the right to vote must be added to the general voting bulletin
if an authorized person is voting. The filled general voting bulletin must be sent by the registered mail to the Company at Gyneju
str. 14, Vilnius, Lithuania, or delivered in person to the representative of the Company no later than the day before of the General
Shareholders Meeting. Ballots will be considered as valid if they are properly filled-in and received by the Company prior the Meeting.
For the convenience of the shareholders of INVL Baltic Real Estate the company provides notifications about convocation of General
Shareholders Meeting, draft resolutions as well as general voting bulletins and resolutions adopted in the Meetings on the company‘s
website section For Investors (Shareholders' Meetings).
There were 2 (two) General Shareholders Meetings of INVL Baltic Real Estate during the 2021.
On 14 January 2021, during the General Extraordinary Shareholders Meeting of the Company, the shareholders of the Company
decided on: (i) the amendment of the Articles of Association of Company and approval of new wording of the Articles; (ii) the
approval of the application of the principles of setting the Performance Fee; (iii) the buy-back of shares of Company due to the
material change of the Articles of Association; (iv) the main principles of the procedure for buy-back of shares of the Company.
On 29 April 2021, during the General Ordinary Shareholders Meeting of the Company, the shareholders of the Company were
introduced with the consolidated annual report for 2020, independent auditor's report on the financial statements and consolidated
annual report of the Company, the competence of the Management Company of the Company to approve the remuneration policy
of INVL Baltic Real Estate and the activity report of the Audit Committee. Moreover, the shareholder of the Company decided on:
(i) the assent to the remuneration report of the Company, as a part of the consolidated annual report of the Company for the year
2020; (ii) approval of the consolidated and stand-alone financial statements for 2020 of the Company; (iii) distribution of profit of
the Company; (iv) the reduction of the authorised capital of the Company; (v) purchase of own shares of the Company; (vi) the
formation of the Supervisory Board of the Company and the election of members of the Supervisory Board; (vii) the approval of
the Company’s Supervisory Board remuneration policy and the determination of the remuneration of the independent member of
the Supervisory Board of the Company; (viii) the amendment of the Articles of Association of the Company and the approval of the
new version of the Articles of Association; (ix) the approval of the new wording of the Policy for the Company’s Transactions with
Related Parties; and (x) the election of members of the Audit Committee of the Company.
13.2. MANAGEMENT COMPANY, THE INVESTMENT COMMITTEE AND THE SUPERVISORY BOARD
Since the Central Bank of the Republic of Lithuania granted the license of closed-ended type investment company to INVL Real
Estate, the management of the Company has been transferred to the Management Company, therefore, following the Law of the
Republic of Lithuania on Collective Investment Undertakings, and the rights and duties of the Board and the head of the Company,
as set in the Law of the Republic of Lithuania on Companies, have been transferred to the Management Company.
The Management Company is responsible for convocation and organisation of the General Shareholders Meeting of the Company,
giving notices about publicly not disclosed information under the procedure set by legal acts, organisation of activities of the
Company, proper management of information about activities of the Company and performance of other functions assigned to the
Management Company.
The Management Company has the right:
• to perform all actions of management bodies of the Company and other actions assigned to the competence of the
Management Company according to effective legal acts and/or defined in the Articles of Association.
• to get the Management Fee and the Performance Fee, as they are defined in the Articles of Association.
• to conduct and perform transactions in connection with management of the assets of the Company at the expense and in the
interests of the Company.
• to make deductions from assets of the Company provided for in the Articles of Association.
• subject to approval of the general meeting of Shareholders, to instruct a company, having the right to provide relevant
services, to perform some of its management functions.
• other rights established in the Articles of Association and legal acts of the Republic of Lithuania.
The Management Company must:
• act in a fair, correct and professional manner on the terms best for the Company and its Shareholders and in their interests
and ensure integrity of the market.
• act carefully, professionally, and prudently.
• have and use means and procedures necessary for its activities.
• have reliable administration and accounting procedures, electronic data processing control and security measures and a
proper mechanism of internal control, including the rules on personal transactions in financial instruments conducted by
employees of the Management Company and transactions in financial instruments conducted at the expense of the
Management Company.
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• ensure that documents of and information about taken investment decisions, conducted transactions would be kept for at
least 10 years after the date of taking an investment decision, conduction of a transaction or performance of an operation,
unless legal acts set a longer term of keeping documents.
• have such an organisational structure that would help to avoid conflicts of interest. When it is impossible to avoid conflicts of
interest, the Management Company must ensure that Shareholders are treated fairly.
• ensure that persons taking decisions on management of the Company would have qualification and experience established
by the Supervisory Authority, be of sufficiently good repute.
• ensure that assets of the Company would be invested according to the investment strategy set in the Articles of Association
and requirements set in legal acts of the Republic of Lithuania.
• prepare the Prospectus, the key investor information document, annual and semi-annual reports under the procedure set by
legal acts.
• perform other duties set in the Articles of Association and legal acts of the Republic of Lithuania.
The Company’s management agreement with the Management Company must be approved by the General Shareholders Meeting.
The currently valid Management agreement between the Management company and INVL Baltic Real Estate was signed on 5 January
2018, the wording of the Management agreement was approved during the General Shareholders Meeting held on 29 December
2017.
The Management Company can be replaced by a decision of the General Shareholders Meeting of the Company.
The Management Company can be replaced by a decision of the General Shareholders Meeting in cases mentioned below:
• the Management Company is liquidated.
• the Management Company undergoes restructuring.
• bankruptcy proceedings are initiated against the Management Company.
• the Supervisory Authority takes a decision to restrict or cancel the rights provided for in the license of the Management
Company related to management of investment companies.
• the Management Company commits a material breach of the agreement, Articles of Association or legal acts;
• in other circumstances in compliance with applicable legislation.
The Management Company could be replaced after receipt of a prior permission of the Bank of Lithuania.
The Management company ensuring the management of INVL Baltic Real Estate has the General manager, the Board of the Company
and the Investment Committee, formed by the decision of the Board.
The General Manager of the Management company is Laura Križinauskienė (from 2nd October 2017).
The Board of the Management Company operates following the Civil Code of the Republic of Lithuania, the Law of the Republic of
Lithuania on Companies, other legal acts, Articles of Association of the Company, the resolutions of the General Shareholders
Meetings, decisions of the Board and Regulations of the Board.
The Board acts in furtherance of the declared strategic objectives in view of the need to optimize shareholder value and to 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.
The procedure of work, rights, and responsibilities of the members of the Board of the Management Company are set in the
Regulations of the Board.
Darius Šulnis (the Chairman), Nerijus Drobavičius and Vytautas Plunksnis are the members of the Board of the Management
Company since 19 January 2015. On 14th January 2019 the Board of Management Company was re-elected for the new 4 years of
office, after the Bank of Lithuania granted their permission. The composition of the Board remained unchanged: Darius Šulnis (the
Chairman), Nerijus Drobavičius and Vytautas Plunksnis
For the sake of efficiency of the Company’s activities and control over its investments, an Investment Committee is being formed
by a decision of the Board of the Management company. At the end of the reporting period there were 2 (two) members of the
Investment Committee: Vytautas Bakšinskas and Andrius Daukšas.
The Investment Committee of the Management company is the collegial investment and management decision-making body
responsible for adopting decisions regarding the management of the Managed company’s assets and representing and protecting
the Managed Company’s interests. According to Company’s Articles of Association Investment Committee shall consist of 3 (three)
members, representatives of the Management Company (employees, members of management bodies of the Management
Company, other persons appointed by a decision of the Board of the Management Company) shall be appointed to their positions.
Members of the Investment Committee shall be appointed by a decision of the Management Company. Members of the Investment
Committee shall be appointed and removed from office by the Board of the Management Company. An approval of the Investment
Committee must be obtained for all investments of the Company and for their sale.
The procedure of formation, responsibilities, functions of the Investment Committee, decision-making procedure and other
procedures of the Investment Committee is set in the Regulations of the Investment Committee of INVL Baltic Real Estate.
Currently there are 2 (two) members in the Investment Committee, appointed from the representatives of the Management
Company: Vytautas Bakšinskas and Andrius Daukšas. Egidijus Damulis was withdrawn from the position of the member of the
Investment Committee from 13 February 2017, by the decision of the Board of the Management company.
During the reporting period 23 Investment Committee meetings were held.
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From 26 July 2021, the Company has a collegial supervisory body – the Supervisory Board. The members of the Supervisory Board
– Raimondas Rajeckas, Audrius Matikiūnas and Eglė Surplienė – took office in the Company. The nominations latter were approved
at the Company’s shareholders’ meeting held on 29th April 2021.
Supervisory Board is a collegial body supervising the activities of the Company. The Supervisory Board shall be elected by the
General Meeting of Shareholders for a term of 4 years. The Supervisory Board shall elect the Chairperson of the Supervisory Board
from among its members. The competence of the Supervisory Board is determined by laws. The responsibilities, functions, decision-
making practices, and procedures of the Supervisory Board shall be laid down in the Rules of Procedure adopted by the Supervisory
Board.
During the reporting period 1 meeting of the Supervisory Board of the Company was held.
14. Information about members of the Board of the Management Company, general manager, members
of the Investment Committee and member of the Supervisory Board of the Company
14.1. THE ISSUER'S MANAGEMENT BODIES
The management of INVL Baltic Real Estate was transferred to the management company INVL Asset Management on 22 December
2016 as soon as the Central Bank of the Republic of Lithuania INVL Baltic Real Estate the license of closed-ended type investment
company. The rights and duties of the Board and the head of the Company were also transferred to the Management Company.
The Company has a collegial supervisory body – the Supervisory Board. The Company’s management bodies are not formed.
The General Manager of the Management company is Laura Križinauskienė.
Darius Šulnis (the chairman), Nerijus Drobavičius and Vytautas Plunksnis are members of the Board of the Management company
since 19 January 2015. On 14th January 2019 the Board of Management Company was re-elected for the new 4 years of office,
after the Bank of Lithuania granted their permission. The composition of the Board remained unchanged: Darius Šulnis (the
Chairman), Nerijus Drobavičius and Vytautas Plunksnis. During the reporting period the Board of the Management company
remained unchanged.
Currently there are 2 (two) members in the Investment Committee: Vytautas Bakšinskas and Andrius Daukšas.
There are 3 (three) members in the Supervisory Board of the Company: Raimondas Rajeckas, Audrius Matikiūnas and Eglė Surplienė
(the Chairman of the Board of the Supervisory Board and an Independent member).
Darius Šulnis –
Chairman of the Board of the Management company
Main workplace – Invalda INVL, AB (code 121304349, Gynėjų str. 14, Vilnius) – president
Educational background
and qualifications
Duke University (USA). Business Administration. Global Executive MBA.
Vilnius University. Faculty of Economics. Master in Accounting and Audit.
Financial broker‘s license (General) No. A109.
Work experience
2015 – October 2017 General manager of INVL Asset Management, UAB
2006 – 2011 Invalda, AB – President. 2011 – 2013 Invalda, AB – Advisor. Since May 2013
Invalda INVL, AB – President
2002 – 2006 Invalda Real Estate, UAB (current name Inreal Valdymas) – Director
1994 – 2002 FBC Finasta, AB – Director
Owned number of
shares in INVL Baltic
Real Estate
-
Participation in other
companies
Invalda INVL, AB (code 121304349, Gynėjų str. 14, Vilnius) – Member of the Board, the
President
Šiaulių bankas, AB (code 112025254, Tilžės str. 149, Šiauliai) – Member of the Supervisory
Board
INVL Baltic Farmland, AB (code 303299781, Gynėjų str. 14, Vilnius ) – Member of the Board
Litagra, UAB (code 304564478, Savanorių ave. 173, Vilnius) – Member of the Board
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INVL Asset Management, UAB (code 126263073, Gynėjų str. 14, Vilnius) – Chairman of the
Board
INVL Asset Management, UAB (code 126263073, Gynėjų str. 14, Vilnius) managed fund INVL
Baltic Sea Growth Fund – Investment Committee Member
Nerijus Drobavičius –
Member of the Board
Main workplace – INVL Asset Management, UAB (code 126263073, Gynėjų str. 14, Vilnius)
Private Equity Partner
Educational background
and qualifications
In 1998 graduated Vytautas Magnus University and gained his Bachelor‘s degree in Business
management. Graduated Vytautas Magnus University in 2000 and gained his Master's degree
in banking and finance.
Work experience
Since 2014 works at Invalda INVL, AB group
Since 2015 till August 2018 Head of Finance unit of INVL Asset Management, UAB. From
August 2018 – Private Equity Partner of INVL Asset Management, UAB
2012 – 2014 Independent financial expert
2007 – 2011 CFO in Sanitas Group
2001 – 2007 Sampo Bank. Head of Accounting and Reporting unit, later – CFO of the bank
Owned number of shares
in INVL Baltic Real Estate
8,000 units of shares
Participation in other
companies
INVL Technology, CEF (code 300893533, Gynėjų str. 14, Vilnius) – Member of the
Investment Committee
Inservis, UAB (code 126180446 , A. Juozapavičiaus str. 6, Vilnius) – The Chairman of the
Board
Imoniu grupe Inservis, UAB (code 301673796, Gynėjų str. 14, Vilnius) – The Chairman of the
Board
Jurita, UAB (code 220152850, Justiniškių str. 64, Vilnius) – The Chairman of the Board
BSGF Sanus, UAB (code 304924481, Gynėjų str. 14, Vilnius) – Director
UAB „InMedica“ (codas 300011170, L. Asanavičiūtės str. 20-201, Vilnius) – The Chairman of
the Board
INVL Asset Management, UAB (code 126263073, Gynėjų str. 14, Vilnius) managed fund INVL
Baltic Sea Growth Fund – Investment Committee Member
MBL A/S (CVR-no 12825242) – Member of the Board
MBL Poland Sp. z.o.o. (ul. Sulejowskiej 45d, 97-300 Piotrków Trybunalski, Polska, KRS
0000065219) – Member of the Supervisory Board
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Vytautas Plunksnis –
Member of the Board
Main workplace – INVL Asset Management, UAB (code 126263073, Gynėjų str. 14, Vilnius)
Head of Private Equity
Educational background
and qualifications
Graduated the studies in economics at Kaunas University of Technology in 2001, gained
Bachelor‘s degree in Management.
Financial broker‘s licence (General) No. G091.
Work experience
Since 2016 - INVL Asset Management, UAB, Head of Private Equity Funds
2009 – 2015 Fund Manager at Invalda INVL, AB
2006 – 2009 Finasta Asset Management, UAB – analyst, fund manager, strategic analyst
2004 ELTA redactor (business news)
2002 – 2004 Baltic News Service business journalist
Owned number of shares
in INVL Baltic Real Estate
Personally: 1,000 units of shares; 0.01% of authorised capital and votes.
Participation in other
companies
INVL Asset Management, UAB (code 126263073, Gynėjų str. 14, Vilnius) managed fund INVL
Baltic Sea Growth Fund – Investment Committee Member
Eco Baltia AS (Maskavas str. 240-3,Rīga, Latvia, 40103435432) – Chairman of the
Supervisory Board
SIA Eco Baltia vide (Ropažu nov., Stopiņu pag., Rumbula, Getliņu iela 5, Latvia,
40003309841) – member of the Supervisory Board
Ecoservice, UAB (Minsko pl. 26A, LT-13278, Vilnius, code 123044722) – member of the Board
BSGF Salvus UAB (Gynėjų str. 14, Vilnius, Lithuania 305160086) - Consultant
Montuotojas, UAB (code 121520069, Granito g. 3-10, Vilnius) – member of the Board
SIA B2Y (Maskavas iela 322A, Rīga, Latvia 40103243404) – member of the Board
INVL Technology (code 300893533, Gynėjų str. 14, Vilnius) – Member of the Investment
Committee
Novian Systems, UAB (code 125774645, Gynėjų str. 14, Vilnius) – Chairman of the Board
NRD Systems, UAB (code 111647812, Gynėjų str. 14, Vilnius) – Member of the Board
NRD CS, UAB (code 303115085, Gynėjų str. 14, Vilnius) – Member of the Board
NRD Companies AS (code NO 921 985 290 MVA, Lokketangen 20 B, 1337 Sandvika, Norway)
– Member of the Board (from January 2019)
Norway Registers Development AS (code NO 985 221 405 MVA, Lokketangen 20 B, 1337
Sandvika, Norway) – Member of the Board
BC „MAIB“ SA (Constantin Tănase str. 9/1, Kišiniovas, Moldova 1002600003778) – Chairman
of the Supervisory Board
Investuotoju Asociacija (code 302351517, Konstitucijos pr. 23, Vilnius) – Chairman of the
Board
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Laura Križinauskienė –
General Manager of the Management company
Main workplace – INVL Asset Management, UAB (code 126263073, Gynėjų str. 14, Vilnius)
General manager
Educational background
and qualifications
Vilnius Gediminas Technical University, Master‘s degree in Management and Business
Administration
Work experience
2016-2017 Danske Bank A/S Lithuanian branch – Operational manager, Head of Global
Function
2012-2016 Baltpool UAB – general manager, member of the Board
2010-2012 Finasta bank AB – Director of the Capital market department
2005-2012 held various positions in Finasta FMĮ AB, Finasta bank AB, Finasta investiciju
valdymas (currently INVL Asset Management)
Owned number of shares
in INVL Baltic Real Estate
-
Participation in other
companies
FMI Finasta, UAB (code 304049332, Gynėjų str. 14, Vilnius) – Member of the Board
IPAS INVL Asset Management (code 40003605043, Smilšu iela 7-1, Riga, Latvia) – Member of
the Supervisory Board
AS INVL atklātajs pensiju fonds (code 40003377918, Smilšu iela 7-1, Riga, Latvia) – Member
of the Supervisory Board
Vytautas Bakšinskas –
Member of the Investment Committee
Main workplace – INVL Asset Management, UAB (code 126263073, Gynėjų str. 14, Vilnius)
Real estate fund manager
Work experience
Since 2 January 2017 – Real Estate Fund Manager at INVL Asset Management
2016 – 31.12.2016 – director at Dizaino institutas, UAB, Variagis, UAB, Riešės investicija,
UAB, Dipolio valda, UAB, Tripolio valda, UAB, Paralelių valda, UAB, Etanija, UAB
2013 – 31.12.2016 – director at Etanija, UAB
2012 – 31.12.2016 – director at Justiniškių valda, UAB
2011 – 31.12.2016- – head of Lease department at Inreal valdymas, UAB
2015-06 – 2016-01 – director at Elniakampio namai, UAB
2014-03 – 2016-06 – director at Akvilas, UAB
2014-03 – 2015-07 – director at Aikstentis, UAB
2014-03 – 2015-07 – director at Trakų kelias, UAB
2013-01 – 2013-02 – project manager at Naujoji švara, UAB
2010-04 – 2013-02 – project manager at Sago, UAB
2008-11 – 2011-08 – project manager at Inreal valdymas, UAB
Owned number of shares
in INVL Baltic Real Estate
-
Participation in other
companies
Proprietas, UAB (code 303252098, Gynėjų str. 14, Vilnius) - Director
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Andrius Daukšas –
Member of the Investment Committee
Main workplace – INVL Asset Management, UAB (code 126263073, Gynėjų str. 14, Vilnius)
Investment manager
Educational background
and qualifications
Master's degree in banking at the Faculty of Economics of Vilnius University.
Financial broker's license (general) No. G311.
Work experience
Since 22 December 2016 – Investment Manager at INVL Asset Management
3 January 2016 – 21 December 2016 – deputy director at INVL Baltic Real Estate
December 2014 - January 2016 – director at INVL Baltic Real Estate
March 2010 – 21 December 2016 - investment manager at Invalda INVL
2008-2010 - director of the Treasury Department of the bank Finasta
2004-2008 - an accountant, later - the department manager of securities accounting at FBC
Finasta
Owned number of shares
in INVL Baltic Real Estate
Personally: 5,000 units of shares, 0.04% of authorised capital and votes.
Participation in other
companies
Imoniu Grupe Inservis, UAB (code 301673796, Gynėjų str. 14, Vilnius) - Member of the
Board, director
Inservis, UAB (code 301673796, Gynėjų str. 14, Vilnius) - Member of the Board
Jurita, UAB (code 220152850, Justiniškių str. 64, Vilnius) - Member of the Board
Vernitas, AB (code 193052526, Stoties str. 16, Marijampolė) - Member of the Supervisory
Board
Eglė Surplienė –
Chairman of the Supervisory Boar and Independent member of the Supervisory Board
Main workplace - Gerovės valdymas, UAB FPĮ (code 302445450, Gedimino pr. 20-27, Vilnius)
– Director
The term of office
Since 2021 till 2025
Educational background
and qualifications
Vilnius University, Faculty of Economic Cybernetics and Finance, Economic Cybernetics
studies, Economics – mathematics diploma (equivalent of Master's degree)
2009 – Award in Financial Planning (CII program and exam) certificate.
2005 – OMX Vilnius dealer certificate
1996 – General financial broker license
Work experience
Since 2018 general partner at limited partnership Gerovės partneriai
Since 2015 director INVL Baltic Farmalnd, UAB
Since 2014 Chariman of the Board at Atelier Investment management, UAB
Since 2009 wealth manager at UAB FPI Geroves Valdymas
2006 - 2009 wealth manager, VIP Clients manager at AB FBC Finasta, AB bank Finasta
2005 - 2006 project manager at Zabolis ir partneriai, UAB
1999 – 2005 member, Deputy Director of the Commission at Securities Commission of
Lithuania
1995 - 1999 Head of Issuer Division at UAB FMI Vilfima
1993 - 1995 member of Market Regulation Division at Securities Commission of Lithuania
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Owned number of shares
in INVL Baltic Real Estate
-
Participation in other
companies
Atelier Investment Management, UAB (code 303335430, Žemaitijos str. 8-20, Vilnius) –
Chairman
of the Board
Gerovės valdymas, UAB FPĮ (code 302445450, Jogailos str. 3-103, LT-01116) – Director
Gerovės partneriai, KŪB (code 304746185, Jogailos str. 3-103, LT-01116) – Full member
DIM investment, UAB (code 301145749, Pasakų str. 5, Vilnius ) – Director
Raimondas Rajeckas –
Member of the Supervisory Board
Main workplace – Invalda INVL, AB (code 121304349, Gynėjų 14, Vilnius, Lithuania)
CFO
The term of office
Since 2021 till 2025
Educational background
and qualifications
2001 Vilnius University, Faculty of Economics, Master of Science in Accounting and Auditing
1999 Vilnius University, Faculty of Economics, Bachelor of Science in Business Administration
and Management
Work experience
Since 2006 CFO at Invalda INVL
2001 – 2006 CFO at Valmeda, AB
2000 – 2001 CFO at Galincius, AB
2000 – 2001 CFO at Invaldos Marketingas, UAB (current name Inreal Valdymas. UAB)
2000 – 2002 Accountant at Gildeta, AB
1998 – 2000 Accountant at Invalda, AB
Owned number of shares
in INVL Baltic Real Estate
-
Participation in other
companies
Raimondas Rajeckas holds management positions in companies controlled by Invalda INVL:
− member of the Board at Įmonių grupė Inservis, UAB
− director at MD PARTNERS, UAB
− director at Invalda INVL Investments, UAB
− director at Cedus, UAB
− director at Cedus Invest, UAB
− director at Regenus, UAB
− director at Consult Invalda, UAB
− director at RPNG, UAB
− director at MGK invest, UAB
− director at MBGK, UAB
− director at Aktyvo, UAB
− director at Aktyvus valdymas, UAB
− director at public institution Iniciatyvos Fondas
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Audrius Matikiūnas –
Member of the Supervisory Boad
Main workplace – INVL Asset Management, UAB (code 126263073, Gynėjų str. 14, Vilnius)
Head of Legal and Product Management team in Private Equity unit at INVL Asset
Management, UAB
The term of office
2021 – 2025 m.
Educational background
and qualifications
2010 Mykolas Romeris university, Master of Laws
2008 Mykolas Romeris university, Bachelor of Laws
Work experience
Since 2021 Alternative Investment Selection Team Leader at INVL Asset Management, UAB
Since 2018 member of the Board at investment manager Mundus, UAB
Since 2016 Head of Legal and Product Management team in Private Equity unit at INVL Asset
Management, UAB
2012 – 2016 compliance officer at SEB bankas, AB
2010 – 2012 lawyer bankas Finasta, AB
2007 – 2010 lawyer at SEB bankas, AB
Owned number of shares
in INVL Baltic Real Estate
-
Participation in other
companies
Audrius Matikiūnas is an employee of INVL Baltic Real Estate Management company UAB INVL
Asset Management
Member of the Board at investment manager Mundus, UAB
Member of the Supervisory Board at INVL Technology
15. Information about the Audit Committee of the company
The Audit Committee consists of 2 (two) independent members. The members of the Audit Committee are elected by the decision
of the General Shareholders’ Meeting. The members of the Audit Committee are proposed by the Management company and the
shareholders of the company. The Audit Committee is elected for a four-year term of office.
The main functions of the Audit Committee are the following:
• provide recommendations to the Management company with selection, appointment, reappointment and removal of an
external audit company of the Company as well as the terms and conditions of engagement with the audit company.
• monitor the process of external audit of the Company.
• monitor how the external auditor and audit company follow the principles of independence and objectivity.
• observe the process of preparation of financial reports of the Company.
• monitor the efficiency of the internal control and risk management systems of the Management company directly related to
the management of the Company. Once a year review the need of the dedicated internal audit function for the Company
within the Management company.
• monitor if the Management company gives due consideration to the recommendations or comments provided by the audit
company regarding management of the Company.
• The Audit Committee reports its activities to the Company's ordinary General Shareholders Meeting by submitting a written
report on Audit Committee activities during the last financial year.
Any member of the Audit Committee should have the right to resign upon submitting 14 (fourteen) days written notice to the
Management company. When the Management company receives the notice of resignation of a member of the Audit Committee
and considers all circumstances related to the resignation, it may decide - either to convene an Extraordinary General Shareholders
Meeting to elect new member of the Audit Committee, or to postpone the question on the election of the new member of the Audit
Committee till the next General Shareholders Meeting of the Company. The new member is elected till the end of term of office of
the operating Audit Committee.
15.1. PROCEDURE OF WORK OF THE AUDIT COMMITTEE
The Audit Committee informs about its activities to the Company's ordinary General Shareholders Meeting by submitting a written
report.
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The Audit Committee is a collegial body, taking decisions during meetings. The Audit Committee may take decisions and its meeting
should be considered valid when both members of the Committee participate in it. The decision should be passed when both
members of the Audit Committee vote for it. The member of the Audit Committee may express his will – for or against the decision
in question, with the draft of which he is familiar with – by voting in advance in writing. Voting in writing should be considered equal
to voting by telecommunication end devices, provided text protection is ensured and it is possible to identify the signature.
The right of initiative of convoking the meetings of the Audit Committee is held by both members of the Audit Committee. The other
member of the Audit Committee should be informed about the convoked meeting, questions that will be discussed there and the
suggested drafts of decisions not later than 3 (three) business days in advance in writing (by e-mail or fax). The meetings of the
Audit Committee should not be formed as a written protocol, if the taken decisions are signed by both members of the Committee.
When both Audit Committee members vote in writing, the decision should be written down and signed by the secretary of the Audit
Committee who should be appointed by the Management company. The decision should be written down and signed within 7 (seven)
days from the day of the meeting of the Audit Committee.
The Audit Committee should have the right to invite the head of the Management company, member(s) of the Board, the chief
financier, employees responsible for finance, accounting, and treasury issues of the managed Company as well as external auditors
of the Company to its meetings. Members of the Audit Committee may receive remuneration for their work in the committee. The
remuneration for the Audit Committee members is approved by the General Shareholders Meeting fixing the maximum hourly rate.
The Company's Audit Committee is guided by the Regulations of the Audit Committee (hereinafter referred to as the Regulations)
approved by the General Shareholders Meeting of the Company held on 11 April 2017. The Regulations are published on the
Company's website in the section For investors.
15.2. MEMBERS OF THE AUDIT COMMITTEE
During the General Shareholders Meeting of the Company held on 29 April 2021 Dangutė Pranckėnienė, partner and auditor of
Moore Stephens Vilnius, UAB and Tomas Bubinas, director of Biotechpharma, UAB were elected for the Audit Committee of the
Company for the 4 (four) years of office term. Both members of the Audit Committee are independent, having submitted a notice
certifying their independence.
Tomas Bubinas –
Independent Member of the Audit Committee
The term of office
Since 2021 till 2025
Educational background
and qualifications
2004 - 2005 Baltic Management Institute (BMI), Executive MBA
1997 - 2000 Association of Chartered Certified Accountants. ACCA. Fellow Member
1997 Lithuanian Sworn Registered Auditor
1988 - 1993 Vilnius University, Msc. in Economics
Work experience
Since 2013 Chief Operating Officer at Biotechpharma, UAB
2010 - 2012 Senior Director, Operations. TEVA Biopharmaceuticals (USA)
2004 - 2010 CFO for Baltic countries, Teva Pharmaceuticals
2001 - 2004 m. CFO, Sicor Biotech
1999 - 2001 Senior Manager, PricewaterhouseCoopers
1994 - 1999 Senior Auditor, Manager, Coopers & Lybrand.
Owned number of shares
in INVL Baltic Real Estate
-
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Dangutė Pranckėnienė –
Independent Member of the Audit Committee
The term of office
Since 2021 till 2025
Educational background
and qualifications
1995 - 1996 Vilnius Gediminas Technical University, Master of Business Administration.
1976 - 1981 Vilnius University, Master of Economics.
The International Coach Union (ICU), professional coucher name, license No. E-51.
Lithuanian Ministry of Finance, the auditor's name, license No. 000345.
Work experience
since 1997 the Partner at Moore Mackonis, UAB
1996 - 1997 Audit Manager, Deloitte & Touche
1995 - 1996 Lecturer, Vilnius Gediminas Technical University
1982 - 1983 Lecturer, Vilnius University
Owned number of
shares in INVL Baltic
Real Estate
-
16. Information on the Issuer’s payable management fee, the amounts calculated by the Issuer, other assets
transferred and guarantees granted to the Company’s bodies and company providing accounting services
After the Bank of Lithuania issued the closed-ended type investment company operating license for INVL Baltic Real Estate on 22
December 2016, the rights and duties of the Board and the head of the Company are implemented by the Management company
INVL Asset Management.
The management fee payable to the Management Company (hereinafter – Management Fee) is the remuneration for management
of the assets of the Company, which shall be payable for each quarter of a calendar year. By the decision of the General
Shareholders’ Meeting of the Company held on 29th December 2017, the Management Fee was reduced from 1.5% to 1.0%, the
Management Fee for a calendar year shall be 0.25% for the quarter of the year of the weighted average capitalization of the
Company. The Performance Fee shall be additionally paid to the Management Company under the procedure set in the Articles of
Association. During the reporting period the Management fee payable to the Management Company was EUR 209 thousand and
EUR 1 516 thousand success fee payable (in 2020 the Management fee to the Management Company amounted to EUR 315
thousand and EUR 1 382 thousand success fee payable, in 2019 the Management fee to the Management Company amounted to
331 thousand EUR and 238 thousand EUR success fee, in 2018 the Management fee to the Management Company amounted to
EUR 307 thousand and EUR 50 thousand success fee payable, whereas in 2017 - the Management fee payable to the Management
Company amounted to EUR 296 thousand and EUR 386 thousand success fee payable).
The Members of the Board and the Members of the Investment Committee of the Management Company do not receive remuneration
for these duties. They are paid the salary according to the employment contract with the Management Company. According to
Article 23 (3) of the Law on Financial Statements of Enterprises of the Republic of Lithuania, the Company must publish the
Remuneration Report from the year 2020. As the Company does not have any employees, in the appendix no. 5 the Company
discloses the remuneration of the General Manager of the Management Company, members of Board of the Management Company
and members of the UTIB Investment Committee appointed by the Management Company (hereinafter - the Management). The
remunerations of the General manager and Board members of the Management Company are calculated on the basis of the
proportion of the Management Company's management income (including management and success fee revenues) received from
the Company within the total income of the Management Company. The remunerations of the members of the Investment
Committee of the Company are calculated in accordance with the part of the time actually allocated to the Company's management
(for more details see Appendix 5 to the Annual Report).
According to the decision of the General Meeting of the Shareholders of the Company hold on 29 April 2021 it was set the hourly
remuneration of the elected independent member of the Supervisory Board at EUR 145 per hour. The other Members of the
Supervisory Board do not receive remuneration for these duties.
During the reporting period the Members of the Board of the Management Company and the Members of the Investment Committee
were paid EUR 612 of dividends, net of tax. There were no assets transferred, no guarantees granted, no bonuses paid and no
special payouts made by the company to its managing bodies. The managing bodies were not granted with bonuses by other
companies of INVL Baltic Real Estate group.
During the reporting period INVL Baltic Real Estate Group and the Company for Invalda INVL, AB - the company providing accounting
services – respectively paid EUR 25 thousand and EUR 13 thousand during the reporting period (in 2020 respectively EUR 15
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thousand and EUR 7 thousand during the reporting period, in 2019 – respectively paid EUR 15 thousand and EUR 7 thousand, in
2018 – respectively paid EUR 15 thousand and EUR 8 thousand, in 2017 – respectively paid EUR 12 thousand and EUR 10 thousand,
in 2016 – respectively paid EUR 12 thousand and EUR 10 thousand).
Invalda INVL, AB and INVL Asset Management, UAB provide accounting services and preparation of the documents related with
bookkeeping for INVL Baltic Real Estate according to an accounting services agreement.
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V. OTHER INFORMATION
17. Agreements with intermediaries on public trading in securities
INVL Baltic Real Estate has signed these agreements with the following intermediaries:
• AB Siauliu bankas (Seimyniskiu str. 1A, Vilnius, Lithuania. tel. +370 5 203 2233) – the agreement on management of
securities accounting, the market maker services agreement and service agreement on the payment of dividends.
• AB SEB bankas (Gedimino pr. 12, Vilnius, Lithuania tel. +370 5 268 2800) – agreement on depository services*.
* On 9 April 2020 April the General Meeting of Shareholders of the Company made a decision on the change of the Company's depository from AB
SEB bankas (code 112021238) to AB Šiaulių bankas (code 112025254). On 6 January 2021 the Supervisory Authority of the Bank of Lithuania has
issued a permit to the Company to change the depository to AB Šiaulių bankas (code 112025254). At the time of the release of the Annual Report the
change of the depository has not been implemented yet.
18. Information on Issuer’s branches and representative offices
INVL Baltic Real Estate has no branches or representative offices.
19. A description of the principal risks and uncertainties
Information, provided in this document, should not be considered complete and covering all aspects of the risk factors associated
with public company's INVL Baltic Real Estate activity and securities. There are only basic risks and their descriptions provided in
this report. Detailed descriptions of the risks are published on the Company's website.
19.1. GENERAL RISK FACTORS IN THE BUSINESS FIELD WHERE THE GROUP OPERATES
General risk
The value of an investment into real estate can fluctuate in the short-term depending on the general economic situation, real estate
lease and sale prices, demand and supply fluctuations. Investments into real estate should be made for a medium or long period in
order that the investor could avoid the risk of short-term price fluctuations. Investments into real estate are related to higher-than-
average risk. If investments are not profitable or in case of other unfavourable circumstances (inability to pay creditors in time),
bankruptcy proceedings can be instituted against the Company. Redemption of the Shares is limited, i.e., a shareholder cannot
demand that the Company or the Management Company, which took over its management, would redeem the Shares. But a
shareholder will have a possibility to sell Shares in the secondary market.
Real estate development risk
Real estate projects developed by the Company can take longer than planned or cost more than planned and return on investments
of the Company may decrease for this reason. Managing this risk, the Company will assign sufficient resources for control over the
budgets and performance terms of real estate development projects.
Risk of inflation and deflation
There is a risk that in case of inflation the value of a Share will grow slower than the inflation, which would result in the return lower
than inflation. In such a case, the real return earned by persons who sold the Shares of the Company in the market from increase
in the value of the Shares can be smaller than expected. In case of deflation, there would be a risk that the value of the Company’s
investments will decrease by reason of the drop of the general price level.
Macroeconomic environment
Real estate development tends to follow the general developments in the macroeconomic environment. Interest rates,
unemployment, inflation, private consumption, capital expenditure and other macroeconomic indicators have significant influence
on real estate developments and hence the operations and the potential profitability of the Group.
Favourable developments in the macroeconomic environment increase demand for real properties, allow the real estate companies
to increase rent rates of properties and other prices related to activities of the Group. Adverse developments increase pressure on
real estate prices, rent rates and yields. Hence the Group’s results are dependent on general macroeconomic environment and
adverse developments in the environment might lead to reconsideration of some of the Group’s development plans, negative
pressure on prices and rents of the Group’s properties or other changes in relation to the Group’s properties that might have a
material adverse effect on the Group’s business, results of operations, financial condition and profitability.
Cyclicality of the real estate sector
Real estate development is a cyclical sector. The number of real estate related transactions fluctuates significantly depending on
the stage of the real estate cycle. In the Baltic countries has been relatively high lately as a fast growth in prices fuelled by
availability of cheap financing was followed by a steep decline as a result of financial crisis. In the future the Baltic real estate
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market might regain the lost momentum, again inflating the price levels, which might be followed by overheating of the market and
downward pressure on the prices, thus, starting the next real estate cycle.
19.2. RISK FACTORS CHARACTERISTIC OF THE GROUP
Risk of the management and human resources
The success of the Company’s investments will largely depend on decisions taken by persons in the Management Company who are
responsible for management of the Company and on experience and capabilities of the said persons. There is no guarantee that the
same persons will always remain responsible for management of the Company, however efforts will be used that activities of the
Company would always be taken care of by properly qualified persons.
Dependence on external financing
The Group’s cash inflows currently are sufficient to finance operating cash outflows and to pay monthly instalments of repayments
and interests’ payments of bank borrowings. However, further development of the Group’s activities will require substantial amounts
of capital to fund capital expenditures. For this reason, failure to secure adequate levels of external financing might limit the Group’s
growth plans and place it at competitive disadvantage as compared to well-capitalized peers. Failure to obtain external financing
may lead to forced sale of assets at unfavourable prices or even cause insolvency which may have a material adverse effect on the
Group’s business, results of operation or financial condition and may destroy the shareholders’ value.
Risk related to lease agreements
The Group’s lease agreements may be divided into two categories: non-cancellable fixed-term lease agreements and cancellable
lease agreements entered for an unspecified term. For the cancellable lease agreements, tenants must notify the administrator 1-
6 months in advance if they wish to cancel the rent agreement.
The Group seeks to use both types of agreements, depending on the market situation and the properties in question. Lease
agreements entered for an unspecified term involve nevertheless a risk that many such agreements may be terminated within a
short period of time. The Group aims at renewing the fixed term lease agreements flexibly in cooperation with its tenants. There
are, however, no guarantees that the Group will be successful in this. To prevent tenants from terminating the lease agreements,
the Group may also be forced to agree on the reduction of rent fees. The reduction of rent fees payable to the Group under a large
number of lease agreements and/or concurrent termination of a large number of lease agreements could have a material adverse
effect on the Group’s business, results of operations and financial condition.
Reliance on the administrator of the Company’s property
On 2 January 2013 the Company has entered into an agreement with a third party for property management and administration
services on part of Company’s asset portfolio. An agreement was terminated on 1 January 2018, after the Company’s subsidiary
Proprietas, UAB and the Company signed a property management and administration agreement. The detailed list of buildings,
administered, based on this agreement is provided in Section 2.3. of the Company’s consolidated annual report “Information about
the Issuer‘s group of companies”. Under this agreement the third party, as an administrator of the property, is committed to
increase Company’s value and maintain high quality of service for buildings’ tenants and employees. In case of change in
administrative prices in the market, new contracts under less favourable conditions can be entered into with administrator, which
may directly influence the increase in Company’s costs.
Interest rate risk
There is a risk that in case of fast recovery of the global economy or increase in inflation, central banks will increase interest rates
and it will be more expensive to service loans in connection with the Company’s investments, therefore, the value of the Company’s
investments can decrease. To avoid this risk, the Management Company shall seek that the Company would get most of its loans
at fixed interest rates. If it seems necessary, the Company shall hedge against interest rate risk when entering relevant transactions.
Rising interest rates will increase the Group’s debt service costs, which will reduce the return on investment. If considered necessary,
the Group will manage interest rate risk by entering financial derivatives’ contracts.
Leverage risk
Leverage risk is related to possible depreciation of real estate objects acquired with borrowed money. The bigger the leverage, the
higher probability of this risk is.
Credit risk
The Company has given and may have given loans to other companies, therefore, in case of deterioration of the financial condition
of those companies, there is a risk that the Company will not get back all the loans granted by it.
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Liquidity risk
This is a risk to incur losses due to low liquidity of the market when it becomes difficult to sell assets at the desired time at the
desired price. In management of this risk, the Company will regularly monitor the real estate market, will get ready for the property
sale process in advance, in this way reducing the liquidity risk. Acquiring Shares, the shareholders also assume the risk of securities
liquidity – in case of a drop in demand for Shares or delisting them from the stock exchange, investors would find it difficult to sell
them. In case of deterioration of the Company’s financial situation, the demand for Shares, as well as their price may decrease.
Liquidity risk also covers the cash flow disruption risk incurred by the Company due to late payments and/or full default on monetary
obligations by insolvent tenants.
Total investment risk
The value of the investment in real estate can vary in the short term, depending on the general economic conditions, rent and
purchase prices of real estate, demand and supply fluctuations, etc. Investment in real estate should be carried out in the medium
and long term, so that the investor could avoid short-term price fluctuations. Investing in real estate is related to higher than
medium risks. Failure of investments of the Group or under other ill-affected circumstances (having been unable to pay for the
creditors) can have a significant adverse effect on the Group’s performance and financial situation or in the worst-case scenario
bankruptcy proceedings may be initiated.
Investment diversification risk
This is a risk that one bad investment can have a significant effect on the results of the Company. To reduce this risk, the Company
will have a sufficient number of different real estate objects in its portfolio, in this way maintaining the proper diversification level.
Tenants’ risk
The Company will seek to let real estate objects at as high prices as possible. Though currently the rent is paid in time (overdue
obligations of tenants are very small and are not significant for activities of the Company), there is a risk that upon change
(deterioration) of the economic situation the tenants will default on their obligations – this would have a negative impact on the
profit and cash flows of the Company. In case of late performance of a large part of obligations, the ordinary business of the
Company may be disrupted, it may be necessary to search for additional sources of financing, which may be not always available.
The Company, in case of failure to earn planned income from lease or to maintain a high percentage of occupation of the buildings,
can face the problem of costs that are not compensated by permanent tenants. This risk may manifest itself in case of big increase
in the supply of rented premises and reduction in demand, drop-in rental fees. In case of a failure to let the premises at planned
prices or in planned scopes, also in case current tenants terminate their lease agreements, the income of the Company could
decrease, whereas fixed costs would remain the same. Accordingly, the profit of the Company would decrease.
Risk of valuation of the Company’s assets
The assets of the Company will be evaluated according to the main rules set in the Articles of Association and the Accounting Policy
of the Management Company. Valuation of individual assets held by the Company shall be performed by the independent appraiser,
however such valuation of assets shall be only determining the value of the assets, which does not automatically mean the exact
sale price of an investment held by the Company, which depends on many circumstances, for example, economic and other
conditions, which cannot be controlled. Thus, the sale price of investments held by the Company can be higher or lower than the
value of assets determined by a property appraiser.
Competition risk
The Company, investing into investment objects, will compete with other investors, including, without limitation, with other
investment companies or real estate investment funds. Thus, there is a risk that competition with other investors will demand that
the Company would conduct transactions at less favourable conditions than it would be possible in other cases.
19.3. RISK FACTORS RELATED TO THE COMPANY’S SHARES (INVESTMENTS THERETO)
Market risk
Acquisition of Shares entails the risk to incur losses due to unfavourable changes in the Share price in the market. A drop in the
price of the Shares can be caused by negative changes in the value of assets and profitability of the Company, general share market
trends in the region and in the world. Trade in Shares can depend on comments of financial brokers and analysts and announced
independent analyses about the Company and its activities. If the analysts give an adverse opinion about prospects of the Shares,
this can also have a negative effect on the price of Shares in the market. In assessing Shares, non-professional investors are
advised to address intermediaries of public trading or other specialists in this field for help.
Dividend payment risk
Though the Company has approved its dividend payment policy, payment of dividend to Shareholders is not guaranteed and will
depend on profitability of activities, investments plans and the general financial situation.
Liquidity of the Issuer’s Shares is not guaranteed
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It may be possible that in case an investor wants to urgently sell the Issuer’s securities (especially a large number of them), demand
for them on the exchange will not be sufficient. Therefore, sale of shares can take some more time, or the investor may be forced
to sell shares at a lower price. Analogous consequences could appear after the exclusion of the Company’s Shares from the
Secondary List of Nasdaq. Besides, in case of deterioration of the Company’s financial situation, demand for the Shares of the
Company and, at the same time, their price may decrease.
19.4. THE MOST IMPORTANT RISK FACTORS DURING THE REPORTING PERIOD
In 2021 the most important risk factor was Tenants’ risk. A description of the risk factor and a brief commentary:
In the year 2021 the company was operating in the face of the Covid-19 pandemic. Evaluating the effects of coronavirus of 2021,
the impact of the pandemic on the Company was minor, but the pandemic affected the Company's tenants, whose activities were
partially restricted during the quarantine. Due to these reasons, it was more difficult to find new tenants for the vacated premises
and to rent them out at higher prices.
Tenants’ risk
The Company will seek to let real estate objects at as high prices as possible. Though currently the rent is paid in time (overdue
obligations of tenants are very small and are not significant for activities of the Company), there is a risk that upon change
(deterioration) of the economic situation the tenants will default on their obligations – this would have a negative impact on the
profit and cash flows of the Company. In case of late performance of a large part of obligations, the ordinary business of the
Company may be disrupted, it may be necessary to search for additional sources of financing, which may be not always available.
The Company, in case of failure to earn planned income from lease or to maintain a high percentage of occupation of the buildings,
can face the problem of costs that are not compensated by permanent tenants. This risk may manifest itself in case of big increase
in the supply of rented premises and reduction in demand, drop in rental fees. In case of a failure to let the premises at planned
prices or in planned scopes, also in case current tenants terminate their lease agreements, the income of the Company could
decrease, whereas fixed costs would remain the same. Accordingly, the profit of the Company would decrease.
19.5. THE MAIN INDICATIONS ABOUT INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS RELATED TO THE
PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
The Audit Committee supervises preparation of the consolidated financial statements. systems of internal control and financial risk
management and how the company follows legal acts that regulate preparation of consolidated financial statements.
The Management company of INVL Baltic Real Estate is responsible for the supervision and final review of the consolidated financial
statements. To order to manage these functions properly, the Management company is using an external provider of relevant
services. Management company, together with the accounting service provider constantly reviews International Financial Reporting
Standards (IFRS) in order to implement in time IFRS changes, analyses company’s and group’s significant deals, ensures collecting
information from the group’s companies and timely and fair preparation of this information for the financial statements, periodically
informs the Board of the Management company about the preparation process of financial statements.
Accounting of all the Company Group‘s entities is provided by the same external accounting service provider (Invalda INVL AB) by
using the unified accounting system, the standard chart of accounts and by applying unified accounting principles. Standardized
data collection files prepared by Excel program are used for preparation of consolidated numbers. It also facilitates the automatic
reconciliation and elimination of balances and transactions between subsidiaries in the preparation of consolidated accounts. Internal
control of the financial numbers of the Group’s entities and of the Group financial statements during the reporting period was
provided by chief financier of the Management Company.
19.6. INFORMATION ON FINANCIAL RISK MANAGEMENT OBJECTIVES USED FOR HEDGING MEASURES WHICH
HEDGE ACCOUNTING AND OF PRICE RISK, CREDIT RISK, LIQUIDITY RISK AND CASH FLOW RISK WHERE THE
COMPANY GROUP USES FINANCIAL INSTRUMENTS AND IS AN IMPORTANT EVALUATION OF THE PROPERTY, OWN
CAPITAL, LIABILITIES, REVENUE AND EXPENSES.
The information is disclosed in Note 3 to the consolidated and the company's 2021 financial statements.
20. Issuer’s and its group companies’ non – financial results. Information related to social responsibility.
environment and employees
20.1. RESPONSIBLE BUSINESS ACTIONS IN THE COMPANY
The management of the Company is transferred to the asset management company INVL Asset Management, which applies the
Policy of Equal Opportunities in its activities. The Policy specifies that the Company organizes its activities in a way that employees,
despite of their duties and the need to upgrade their qualifications, are secure about equal working conditions, opportunities to
develop competence, etc. Equally, the same benefits are granted regardless of the gender, race, nationality, language, origin, social
status, believes or convictions, age, sexual orientation, disability, ethnicity, religion, marital status, intention of having children's
or membership of the political party or association.
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INVL Asset Management has joined the UN-supported Principles for Responsible Investment (PRI) in the middle of 2017.
The PRI, founded in 2006, is a global network of over 1700 investors, aims to assess the investment implications of environmental,
social and governance (ESG) factors. An economically efficient, sustainable global financial system is considered a necessity for
long-term value creation. Investors who support the PRI voluntarily work to apply the principles in their investment activities.
Six specific responsible investment Principles are outlined by the PRI. They provide a menu of possible actions for incorporating
ESG issues into investment practice – from investment analysis and decision-making to their incorporation into ownership policies
and practices. Additionally, signatories to the Principles are encouraged to promote the Principles’ acceptance in the investment
industry and to work together for their effective implementation.
20.2. EMPLOYEES
At the end of 2021, as well as in 2020, 2019, 2018, 2017 and in 2016 INVL Baltic Real Estate did not have any employees. The
management of the company were transferred to the Management Company.
There were 10 employees working at INVL Baltic Real Estate portfolio companies on 31 December 2021, 9 – in 2020, 11- in 2019,
8 - employees – in 2018, 6 employees – in 2017, 4 employees – in 2016 and 2015. Number of employees in the portfolio Companies
has changed in 2018 due to the concluded administrative agreement between the Company's portfolio company UAB Proprietas and
the Company itself, also because of the need to perform administrative services.
20.3. ENVIRONMENTAL PROTECTION
Talent Garden Vilnius among Company's real estate portfolio pays special attention to environmental protection. Talent Garden
Vilnius is a coworking space located at Vilniaus str 33 and managed by the Company. Opened in 2019, the coworking space
incorporates the latest in ventilation, air conditioning, heating and indoor lighting technologies to save energy. The facility actively
collects waste, uses smart water and electrical appliances that conserve natural resources.
20.4. INFORMATION ABOUT ACTIVITIES OF THE ISSUER AND COMPANIES COMPRISING THE ISSUER’S GROUP IN
THE FIELD OF RESEARCH AND DEVELOPMENT
INVL Baltic Real Estate did not deliver major research and expansion projects in 2021.
20.5. ADDITIONAL NON - FINANCIAL INFORMATION
As the management of the Company has been transferred to the Management Company, the number of employees of which does
not exceed 500 (the number of employees of the Management Company as of 31 December 2021 was 132), and the Company itself
has no employees, the Company is not subject to the requirements for the preparation of a non-financial statement.
According to the Regulation (EU) 2019/2088 of the European Parliament and Council of 27 November 2019 on sustainability
disclosure in the financial services sector, information related to the integration of sustainability requirements in the Company’s
investment decisions and identification of risks related to sustainability is disclosed in the Prospectus (prepared in accordance with
the provisions of the Law on Collective Investment Undertakings of the Republic of Lithuania) of the Company.
21. Information about agreements of the Company and its managing bodies, members of the formed
committees, or the employees’ agreements providing for compensation in case of the resignation or in
case they are dismissed without a due reason or their employment is terminated in view of the change
of the control (official offering) of the Company.
There are no agreements of the Members of the Supervisory Board, the Company and the Members of the Board, Members of the
Investment Committee or the employees’ agreements providing for compensation in case of the resignation or in case they are
dismissed without a due reason or their employment is terminated in view of the change of the control of the company.
22. Significant investments made during the reporting period
Last year, the company acquired for EUR 2.4 million assets located at Vilniaus g. 37 — administrative premises with an area of
1,552 sq.m. and 0.1185 ha of land − at the auction organised by the State Enterprise Turto bankas. In subsequent additional
transaction, the Company acquired from private individuals part of a 101 sq. m. undeveloped roofed area. Transactions will ensure
smoother implementation of the company’s planned restructuring and repair plans.
23. Information about significant agreements to which the issuer is a party, which would come into force,
be amended or cease to be valid if there was a change in issuer‘s controlling shareholder, and their effect,
unless, the nature of the arrangements and their disclosure would cause serious harm to the issuer
There are no significant agreements of the company which would come into force, be amended or cease to be valid if there was a
change in issuer‘s controlling shareholder.
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24. Information about any control systems in the employee share plan that are not exercised directly by
employees
The company has no employees; therefore, the application of the matter is not relevant.
25. Information on the related parties’ transactions
Information on the related parties’ transactions is disclosed in consolidated annual financial statements’ 18 note of explanatory
notes for the year of 2021.
In addition, information regarding Transactions with Related Parties, according to the Law on Companies article 37 (2) , is published
on the Company‘s web site – „For Investors“ → „Legal documents“. The link to the Company‘s web site: https://bre.invl.com/en/for-
investors/legal-documents/
At the time the report was published, the Company provides information about Company‘s Transactions with Related Parties in the
Annex 3 part 5 of the consolidated annual report.
Pursuant to paragraph 10 of Article 37 (2) of the Law on Companies of the Republic of Lithuania, the Company report the amounts
of the Company's transactions with related parties, which were implemented in the ordinary course of business and with the same
related party in the financial year.
Transaction value, Eur
Related party*
Sale income from related party
(excluding interest income)
Purchase costs from related
party (excluding interest expenses)
AB Invalda INVL
Code 121304349
Gynėjų str. 14, Vilnius, Lithuania
Register of Legal Entities
-
14,813
UAB Inservis
Code 126180446
Juozapaviciaus str. 6, Vilnius, Lithuania
Register of Legal Entities
-
51,369
UAB INVL Asset Management
Code 126263073
Gynėjų str. 14, Vilnius, Lithuania
Register of Legal Entities
-
1,732,564
UAB Proprietas
Code 303252098
Gynėjų str. 14, Vilnius, Lithuania
Register of Legal Entities
362,474
181,575
Related party*
Balance of
loans
granted 01-
01-2021, Eur
Loans
granted
during 2021,
Eur
Loans taken
over in
2021, Eur
Accrued
interest
taken over in
2021, Eur
Interest
accrued
during 2021,
Eur
Loans
recovered
during 2021,
Eur
Interest paid
during 2021,
Eur
Balance of
granted
loans on 31-
12-2021, Eur
SIA DBP Invest
Code 40103463830
Lapegles“, Stuniši, Olaines dist.,
Latvia
Register of Enterprises of the
Republic of Latvia
10,229
-
-
-
99
8,000
2,327
-
SIA Dommo Grupa
Code 40003733866
Lapegles“, Stuniši, Olaines dist.,
Latvia
Register of Enterprises of the
Republic of Latvia
305,000
-
-
-
-
-
-
305,000
SIA Dommo Biznesa
Parks
Code 40003865398
Lapegles“, Stuniši, Olaines dist.,
Latvia
975,000
-
-
-
-
300,000
-
675,000
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
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Register of Enterprises of the
Republic of Latvia
UAB Rovelija
Code 302575846
Gynėjų str. 14, Vilnius,
Lithuania
Register of Legal Entities
-
900,000
-
-
-
900,000
-
-
UAB Perspektyvi Veikla
Code 302607087
Gynėjų str. 14, Vilnius,
Lithuania
Register of Legal Entities
-
910,000
-
-
-
910,000
-
-
UAB Proprietas
Code 303252098
Gynėjų str. 14, Vilnius,
Lithuania
Register of Legal Entities
5,387,338
5,700,000
-
21,836
10,616,000
-
493,174
Note. Loans with Latvian subsidiaries are interest-free. The loan movement with the Latvian subsidiaries reveals new loans granted
or loans acquired during 2020 and 2021. In 2015 during the reorganization, the Company has taken over from the former parent
company merged with the Company the claim rights to the Latvian subsidiaries arising from acquired loans and other accounts
receivable, which are carried at fair value and whose acquisition value in the Company differs from the value of accounts receivable
in Latvian subsidiaries. These accounts payable are not subject to interest. Also the former parent company on 28 July 2015 was
granted an additional loan of EUR 150,000 to SIA Dommo Biznesa Parks. 2020 SIA Dommo Biznesa Parks repaid this loan. Also,
the Company did not apply interest on loans during 2021 granted to subsidiaries when their purpose was to transfer cash balances
from the Company to avoid negative interest rates charged by the banks on account balances.
The part of the loan of EUR 116,000 granted to UAB Proprietas was set off against the increase of the authorized capital of UAB
Proprietas.
In April 2021, after the reorganization, SIA DBP Invest was merged with SIA Dommo Grupa. Thus, the loan granted to SIA DBP
Invest was taken over by SIA Dommo Grupa and repaid to the Company, together with the accrued interest.
* The relation between the Company and the Related party is described in Part 5 of Annex 3 of the Consolidated Annual Report. Invalda INVL, AB
owns 30 percent of shares in UTIB INVL Baltic Real Estate. Transactions amounts are disclosed for one year period, regardless of whether the
transactions were concluded before or after the entry into force of Article 37 (2) of the Law on Companies.
26. Information on harmful transactions in which the issuer is a party
There were no harmful transactions (those that are not in line with issuer‘s goals, not under usual market terms, harmful to the
shareholders‘ or stakeholders‘ interests, etc.) made in the name of the issuer that had or potentially could have negative effects in
the future on the issuer‘s activities or business results. There were also no transactions where a conflict of interest was present
between the managing bodies of the Management company, members of the Investment Committee, controlling shareholders‘ or
other related parties‘ obligations to the issuer and their private interests.
27. References to and additional explanations of the data presented in the annual financial statements
and consolidated financial statements
All data is presented in consolidated and company’s financial statements of explanatory notes for the year of 2021.
28. Information on Audit Company
The company have not approved criteria for selection of the audit company. The audit of the annual financial statements of the
company for the financial year of 2020 was provided by the audit company PricewaterhouseCoopers. On 27 October 2020, the
Extraordinary Shareholders Meeting of the Company decided to conclude an agreement with UAB PricewaterhouseCoopers to carry
out of the audit of the annual financial statements of the INVL Baltic Real Estate for 2020, 2021, and 2022 years and establish the
payment in the amount of EUR 17,400 per year (VAT will be calculated and paid additionally in accordance with the order established
in legal acts). The amount of remuneration for audit services will be recalculated (increased) every year according to the average
annual inflation of April month of the current year published by the Department of Statistics under the Government of the Republic
of Lithuania, calculated according to the harmonized index of consumer prices (HICP). The Management Company of the Company
reserves the right to increase the remuneration of the audit company by no more than 20 percent annually from the remuneration
paid to the audit firm in the previous year in accordance with the terms of the audit services agreement. In 2021 the actual cost of
audit services was EUR 17,540 after inflation indexation.
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
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Audit Company
PricewaterhouseCoopers, UAB
Address of the registered office
J. Jasinskio str. 16B, LT-03163, Vilnius
Code
111473315
Telephone
(+370 5) 239 2300
E-mail
vilnius@lt.pwc.com
Website
www.pwc.com/lt
No internal audit is performed in the company.
29. Data on the publicly disclosed information
The information publicly disclosed by INVL Baltic Real Estate during 2021 is presented on the company’s website Company's
website (For investors → Related information). Link: https://bre.invl.com/en/news/).
Table 29.1. Summary of publicly disclosed information
Headline
Message Category
Published
INVL Baltic Real Estate announcement on planned
transactions of the managers of the company
Notification on material event
4 January 2021
The new wording of the Articles of Association of
INVL Baltic Real Estate was registered
Other information
6 January 2021
INVL Baltic Real Estate received permission to
change the depository
Other information
11 January 2021
Notification on transactions on the Issuer's securities
Notifications on transactions concluded by
managers of the companies
11 January 2021
Notifications about acquisition and disposal of voting
rights (together with the Company's shareholder
structure after the change of voting rights)
Acquisition or disposal of a block of shares
11 January 2021
Resolutions of the General Extraordinary
Shareholders Meeting of INVL Baltic Real Estate
General meeting of shareholders
14 January 2021
Announcement of share buy-back procedure and
beginning of share buy-back of INVL Baltic Real
Estate
Notification on material event
15 January 2021
INVL Baltic Real Estate received permission to
change the Articles of Association
Notification on material event
2 February 2021
INVL Baltic Real Estate will redeem its own shares
Acquisition or disposal of the issuer's own
shares
23 February 2021
Notice on the acquisition of own shares
Acquisition or disposal of the issuer's own
shares
24 February 2021
Notifications about the disposal of voting rights
(together with the Company's shareholder structure
after the change of voting rights)
Acquisition or disposal of a block of shares
25 February 2021
Announcement of net asset value of INVL Baltic Real
Estate as of 31 December 2020
Notification on material event
26 February 2021
Audited results of INVL Baltic Real Estate group of
2020
Notification on material event
26 February 2021
INVL Baltic Real Estate will buy-back its own shares
Acquisition or disposal of the issuer's own
shares
9 March 2021
Audited results of INVL Baltic Farmland group of
2020
Notification on material event
18 March 2021
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Headline
Message Category
Published
Error correction : Audited results of INVL Baltic
Farmland group of 2020
Notification on material event
18 March 2021
Regarding the approval of INVL Baltic Real Estate
document
Other information
25 March 2021
Announcement on the end of the buy-back of INVL
Baltic Real Estate shares
Notification on material event
26 March 2021
Notice on the acquisition of own shares
Acquisition or disposal of the issuer's own
shares
29 March 2021
Notifications about disposal of voting rights (together
with the Company's shareholder structure after the
change of voting rights)
Acquisition or disposal of a block of shares
29 March 2021
The new wording of the Articles of Association of
INVL Baltic Real Estate was registered
Other information
7 April 2021
Convocation of the General Ordinary Shareholders
Meeting of INVL Baltic Real Estate and draft
resolutions on agenda issue
General meeting of shareholders
7 April 2021
Regarding amendments to incorporation documents
of INVL Baltic Real Estate, formation of supervisory
board, reduction of authorized capital and dividend
allocation for the year 2020
Notification on material event
7 April 2021
INVL Baltic Real Estate received permission to
change the Articles of Association
Notification on material event
27 April 2021
Resolutions of the General Ordinary Shareholders
Meeting of INVL Baltic Real Estate
General meeting of shareholders
29 April 2021
Audited annual information of INVL Baltic Real Estate
for 2020
Annual information
29 April 2021
Shareholders of INVL Baltic Real Estate approved
dividends allocation for the year 2020, approved
amendments to incorporation documents, formation
of the supervisory board as well as reduction of
authorized capital
Notification on material event
29 April 2021
INVL Baltic Real Estate announces the permanent
suspension of planned transactions of the managers
of the company
Notification on material event
29 April 2021
Announcement of INVL Baltic Real Estate’s net asset
value as at 31 March 2021 and revision of net asset
values for the end of 2020
Notification on material event
30 April 2021
INVL Baltic Real Estate Interim information for 3
months of 2021
Notification on material event
30 April 2021
Notice on the reduction of the authorised capital
Notification on material event
13 May 2021
Regarding the approval of the candidates for the
members of the Supervisory Board
Other information
19 May 2021
Procedure for the payout of dividends for the year
2020
Notification on material event
26 May 2021
Notification on transactions on the Issuer's securities
Notifications on transactions concluded by
managers of the companies
15 June 2021
The new wording of the Articles of Association of
INVL Baltic Real Estate was registered
Other information
26 July 2021
Notice on the cancellation of own shares
Acquisition or disposal of the issuer's own
shares
26 July 2021
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 109
Headline
Message Category
Published
INVL Baltic Real Estate announces an updated
authorized capital structure
Total number of voting rights and capital
26 July 2021
Notifications about acquisition of voting rights
(together with the Company's shareholder structure
after the change of voting rights)
Acquisition or disposal of a block of shares
30 July 2021
INVL Baltic Real Estate received permission to
change the Articles of Association
Notification on material event
3 August 2021
Announcement of net asset value of INVL Baltic Real
Estate on 30 June 2021
Notification on material event
23 August 2021
INVL Baltic Real Estate Interim unaudited information
for 6 months of 2021
Interim information
23 August 2021
INVL Baltic Real Estate won the auction organized by
Turto bankas
Notification on material event
26 August 2021
INVL Baltic Real Estate acquires building at Vilniaus
Street 37-4, Vilnius
Notification on material event
24 September 2021
INVL Baltic Real Estate has signed a deed of
assignment for the building at Vilniaus Street 37-4,
Vilnius
Notification on material event
29 September 2021
INVL Baltic Real Estate Unaudited Interim
information for 9 months of 2021
Notification on material event
29 October 2021
Announcement of net asset value of INVL Baltic Real
Estate on 30 September 2021
Notification on material event
29 October 2021
INVL Baltic Real Estate investor's calendar for 2022
Other information
10 December 2021
Table 29.2. Summary of the notifications on transactions in INVL Baltic Real Estate shares concluded by managers of the Company
during 2021.
Date
Person
Number of
securities
Security
price
(EUR)
Total Value
Of trans-
action (EUR)
Form of
transaction
Type of
transaction
Place of
transaction
Form of
settlement
7 January 2021
Invalda INVL,
AB
2,060,000
2.2103
4,553,218
sale
share sale-
purchase
XOFF
money
10 June 2021
Nerijus
Drobavičius
8,000
2.328675
18,629.4
acquisition
share sale-
purchase
AUTO
money
Explanations:
AUTO – automated trade concluded on a regulated market.
XOFF – trade concluded outside the regulated market
Real estate fund manager of the Management Company
INVL Asset Management Vytautas Bakšinskas
(The document is signed with a qualified electronic signature)
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 110
APPENDIX 1. INFORMATION ABOUT GROUP COMPANIES, THEIR CONTACT
DETAILS
Company
Registration information
Type of activity
Contact details
Rovelija, UAB
Code 302575846
Address – Gynėjų str. 14, Vilnius
Legal form – private limited liability
company
Registration date 20.12.2010
investments into commercial
rental real estate (until March
2020).
From March 2020, carries no
activity after completion of IBC
business centre sale transaction
Tel. +370 5 2790601
breinfo@invl.com
Perspektyvi Veikla, UAB
Code 302607087
Address – Gynėjų str. 14, Vilnius
Legal form – private limited liability
company
Registration date 25.03.2011
carries no activity
Tel. +370 5 2790601
breinfo@invl.com
Proprietas, UAB
Code 303252098
Address – Gynėjų str. 14, Vilnius
Legal form – private limited liability
company
Registration date 27.02.2014
investments into commercial
rental real estate
Tel. +370 5 2790601
proprietas@invl.com
DOMMO grupa SIA
Code 40003733866
Address – Lapegles, Stūnīši, Olaines
pag., Olaines nov., LV-2127 Latvia
Legal form – private limited liability
company
Registration date 17.03.2005
investments into commercial
rental real estate
Tel. +370 5 2790601
breinfo@invl.com
DOMMO biznesa parks SIA
Code 40003865398
Address – Lapegles, Stūnīši, Olaines
pag., Olaines nov., LV-2127 Latvia
Legal form – private limited liability
company
Registration date 13.10.2006
investments into commercial
rental real estate
Tel. +370 5 2790601
breinfo@invl.com
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 111
APPENDIX 2. CORPORATE GOVERNANCE CODE
UTIB INVL Baltic Real Estate (hereinafter referred to as the “Company”), acting in compliance with Article 12 (3) of the Law of the
Republic of Lithuania on Securities and paragraph 24.5 of the Listing Rules of AB Nasdaq Vilnius, hereby discloses how it complies
with the Corporate Governance Code for the Companies listed on Nasdaq Vilnius as well as its specific provisions or
recommendations. In case of non-compliance with this Code or some of its provisions or recommendations, the specific provisions
or recommendations that are not complied with must be indicated and the reasons for such non-compliance must be specified. In
addition, other explanatory information indicated in this form is provided.
1. Summary of the Corporate Governance Report:
The management of INVL Baltic Real Estate was transferred to the management company INVL Asset Management on 22 December
2016 as soon as the Central Bank of the Republic of Lithuania granted special closed-ended type real estate investment company
INVL Baltic Real Estate the license of closed-ended type investment company. The rights and duties of the Board and the head of
the Company were also transferred to the Management company. From 26 July 2021, the Company has a collegial supervisory body
– the Supervisory Board. The Company’s management body is not formed.
The Management Company is responsible for convocation and organisation of the general meeting of Shareholders of the Company,
giving notices about publicly not disclosed information under the procedure set by legal acts, organisation of activities of the
Company, proper management of information about activities of the Company and performance of other functions assigned to the
Management company.
The CEO, the Board, the Investment committee formed by a decision of the Board and the Supervisory Board of the Company
formed by the decision of the General Meeting of the Shareholders of the Company are acting to ensure the management of INVL
Baltic Real Estate in the Management company (more about the competencies of the management bodies, formation and procedure
of work is set in the IV section “Issuer’s Managing Bodies” of the report).
The information concerning the compliance with the Governance code after INVL Baltic Real Estate received the license of closed-
ended type investment company is provided below.
The information concerning the compliance with the Governance code before the issue of the license of closed-ended type
investment company corresponds the information submitted in the Appendix 2 of the annual report for the year 2015 and is available
on Company‘s website.
2. Structured table for disclosure:
PRINCIPLES/ RECOMMENDATIONS
YES/NO/
NOT APPLICABLE
COMMENTARY
Principle 1: General meeting of shareholders, equitable treatment of shareholders, and shareholders’ rights
The corporate governance framework should ensure the equitable treatment of all shareholders. The corporate governance
framework should protect the rights of shareholders.
1.1. All shareholders should be provided with access
to the information and/or documents established
in the legal acts on equal terms. All shareholders
should be furnished with equal opportunity to
participate in the decision-making process where
significant corporate matters are discussed.
YES
The Company discloses all regulated information
(including notices on convening shareholders'
meetings) through the news distribution platform of
AB Nasdaq Vilnius. This ensures that this information
is available to the widest possible audience in the
Republic of Lithuania and other EU countries.
Information is provided simultaneously in both
Lithuanian and English. The Company publishes
information before or after the trading session of
Nasdaq Vilnius AB.
The Company timely updates the information on its
website and complies with the requirements of Part 5
of the Information Disclosure Guidelines “On the
Publication of Regulated and Other Information on the
Issuer's Website” approved by the decision of the
Supervisory Authority of the Bank of Lithuania.
All shareholders have equal rights to participate in the
general meetings of shareholders of the Company.
1.2. It is recommended that the company’s capital
should consist only of the shares that grant the
same rights to voting, ownership, dividend and
other rights to all of their holders.
YES
The shares constituting the authorized capital of the
Company grant equal rights to all shareholders of the
Company.
1.3. It is recommended that investors should have
access to the information concerning the rights
attached to the shares of the new issue or those
issued earlier in advance, i.e. before they
purchase shares.
YES
The rights of the shareholders are described in the
Articles of Association of the Company, which are
publicly announced on the Company's website and in
the section “Rights and obligations granted by the
Shares” of the Company's annual report.
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1.4. Exclusive transactions that are particularly
important to the company, such as transfer of all
or almost all assets of the company which in
principle would mean the transfer of the
company, should be subject to approval of the
general meeting of shareholders.
YES
All shareholders of the Company have equal
opportunities to get acquainted and participate in
making decisions that are important for the Company.
The approval of the General Meeting of Shareholders
is obtained in the cases specified in Section V of the
Law on Companies falling within the competence of
the General Meeting of Shareholders.
1.5. Procedures for convening and conducting a
general meeting of shareholders should provide
shareholders with equal opportunities to
participate in the general meeting of
shareholders and should not prejudice the rights
and interests of shareholders. The chosen
venue, date and time of the general meeting of
shareholders should not prevent active
participation of shareholders at the general
meeting. In the notice of the general meeting of
shareholders being convened, the company
should specify the last day on which the
proposed draft decisions should be submitted at
the latest.
YES
Shareholders are informed about convening of the
General Meetings of Shareholders in accordance with
the requirements of legislation and the Company’s
articles of association – adhering to the notification
deadlines and methods and means of announcement.
The opportunity to participate in the Meeting is
supplemented by the option of voting by ballot or
authorizing another person to represent the
shareholder. The General Meeting of Shareholders is
always held at the Company’s headquarters. In the
notice of the General Meeting of Shareholders being
convened, the Company does not restrict the right of
shareholders to submit new draft decisions either
before or during the meeting, and this is clearly
stated in the notice of the General Meeting of
Shareholders being convened in both Lithuanian and
English.
1.6. With a view to ensure the right of shareholders
living abroad to access the information, it is
recommended, where possible, that documents
prepared for the general meeting of
shareholders in advance should be announced
publicly not only in Lithuanian language but also
in English and/or other foreign languages in
advance. It is recommended that the minutes of
the general meeting of shareholders after the
signing thereof and/or adopted decisions should
be made available publicly not only in Lithuanian
language but also in English and/or other foreign
languages. It is recommended that this
information should be placed on the website of
the company. Such documents may be
published to the extent that their public
disclosure is not detrimental to the company or
the company’s commercial secrets are not
revealed.
YES
All documents and information relevant to the
Company's general meetings of shareholders,
including the notice of the convened meeting, draft
resolutions, draft resolutions of the meeting are public
and simultaneously published in Lithuanian and
English through the Nasdaq Vilnius regulated notice
distribution system and additionally published on the
Company's website in the Regulated Information
sections. and Shareholders' Meetings.
1.7. Shareholders who are entitled to vote should be
furnished with the opportunity to vote at the
general meeting of shareholders both in person
and in absentia. Shareholders should not be
prevented from voting in writing in advance by
completing the general voting ballot.
YES
Shareholders of the Company may exercise their right
to vote in the General Meeting in person or through a
representative upon issuance of proper proxy or
having concluded an agreement on the transfer of
their voting rights in the manner compliant with the
legal regulations, also the shareholder may vote by
completing the General Voting Ballot in the manner
provided by the Law on Companies.
1.8. With a view to increasing the shareholders’
opportunities to participate effectively at general
meetings of shareholders, it is recommended
that companies should apply modern
technologies on a wider scale and thus provide
shareholders with the conditions to participate
and vote in general meetings of shareholders via
electronic means of communication. In such
cases the security of transmitted information
must be ensured and it must be possible to
identify the participating and voting person.
NO
Shareholders can vote via an attorney or by
completing the general voting bulletin, as for now
shareholders cannot participate and vote in General
Shareholders’ Meetings via electronic means of
communication.
1.9. It is recommended that the notice on the draft
decisions of the general meeting of shareholders
being convened should specify new candidatures
of members of the collegial body, their proposed
remuneration and the proposed audit company if
YES
If these issues are on the agenda of the general
meeting of shareholders, all required information on
the proposed collegial body, audit company are
specified in the draft decisions of the general meeting
of shareholders.
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
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2021 ANNUAL REPORT | 113
these issues are included into the agenda of the
general meeting of shareholders. Where it is
proposed to elect a new member of the collegial
body, it is recommended that the information
about his/her educational background, work
experience and other managerial positions held
(or proposed) should be provided.
1.10. Members of the company’s collegial
management body, heads of the administration
6
or other competent persons related to the
company who can provide information related to
the agenda of the general meeting of
shareholders should take part in the general
meeting of shareholders. Proposed candidates to
member of the collegial body should also
participate in the general meeting of
shareholders in case the election of new
members is included into the agenda of the
general meeting of shareholders.
YES
Representatives of the Company's Management
Company always attend the Company's shareholders'
meetings, i.e. a member of the Board or a member of
the Investment Committee or a representative
responsible for the Company's financial statements
Principle 2: Supervisory board
2.1. Functions and liability of the supervisory board
The supervisory board of the company should ensure representation of the interests of the company and its shareholders,
accountability of this body to the shareholders and objective monitoring of the company’s operations and its management bodies
as well as constantly provide recommendations to the management bodies of the company.
The supervisory board should ensure the integrity and transparency of the company’s financial accounting and control system.
2.1.1. Members of the supervisory board should act in
good faith, with care and responsibility for the benefit
and in the interests of the company and its
shareholders and represent their interests, having
regard to the interests of employees and public
welfare.
YES
The Supervisory Board acts in good faith for the
benefit of the Company and its shareholders
2.1.2. Where decisions of the supervisory board may
have a different effect on the interests of the
company’s shareholders, the supervisory board should
treat all shareholders impartially and fairly. It should
ensure that shareholders are properly informed about
the company’s strategy, risk management and control,
and resolution of conflicts of interest.
YES
The Supervisory Board treats all shareholders fairly
and impartially
2.1.3. The supervisory board should be impartial in
passing decisions that are significant for the
company’s operations and strategy. Members of the
supervisory board should act and pass decisions
without an external influence from the persons who
elected them.
YES
The Supervisory Board is independent in passing
decisions.
2.1.4. Members of the supervisory board should
clearly voice their objections in case they believe that
a decision of the supervisory board is against the
interests of the company. Independent
7
members of
the supervisory board should: a) maintain
independence of their analysis and decision-making;
b) not seek or accept any unjustified privileges that
might compromise their independence.
YES
The Supervisory Board members are impartial in
passing decisions and clearly voice their will
regarding the decisions passed.
2.1.5. The supervisory board should oversee that the
company’s tax planning strategies are designed and
implemented in accordance with the legal acts in order
to avoid faulty practice that is not related to the long-
term interests of the company and its shareholders,
which may give rise to reputational, legal or other
risks.
NOT APPLICABLE
The Company is a non-taxable entity
6
For the purposes of this Code, heads of the administration are the employees of the company who hold top level management positions.
7
For the purposes of this Code, the criteria of independence of members of the supervisory board are interpreted as the criteria of unrelated parties defined in Article 31(7)
and (8) of the Law on Companies of the Republic of Lithuania.
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2.1.6. The company should ensure that the
supervisory board is provided with sufficient resources
(including financial ones) to discharge their duties,
including the right to obtain all the necessary
information or to seek independent professional advice
from external legal, accounting or other experts on
matters pertaining to the competence of the
supervisory board and its committees.
YES
The supervisory board is provided with all necessary
information.
2.2. Formation of the supervisory board
The procedure of the formation of the supervisory board should ensure proper resolution of conflicts of interest and effective and
fair corporate governance.
2.2.1. The members of the supervisory board elected
by the general meeting of shareholders should
collectively ensure the diversity of qualifications,
professional experience and competences and seek for
gender equality. With a view to maintain a proper
balance between the qualifications of the members of
the supervisory board, it should be ensured that
members of the supervisory board, as a whole, should
have diverse knowledge, opinions and experience to
duly perform their tasks.
YES
The members of the supervisory board elected by
the general meeting of shareholders of the Company
ensure the diversity of qualifications, professional
experience and competences, and the supervisory
board consists of members with appropriate
implementation of gender equality
2.2.2. Members of the supervisory board should be
appointed for a specific term, subject to individual re-
election for a new term in office in order to ensure
necessary development of professional experience.
YES
According to the Articles of Association of the
Company, the supervisory board is elected by the
general meeting of shareholders for a period of 4
years, i.e., the maximum period permitted by the
legislation of the Republic of Lithuania.
2.2.3. Chair of the supervisory board should be a
person whose current or past positions constituted no
obstacle to carry out impartial activities. A former
manager or management board member of the
company should not be immediately appointed as
chair of the supervisory board either. Where the
company decides to depart from these
recommendations, it should provide information on
the measures taken to ensure impartiality of the
supervision.
YES
Chair of the supervisory board is a person whose
current or past positions constitute no obstacles to
carry out impartial activities.
2.2.4. Each member should devote sufficient time and
attention to perform his duties as a member of the
supervisory board. Each member of the supervisory
board should undertake to limit his other professional
obligations (particularly the managing positions in
other companies) so that they would not interfere with
the proper performance of the duties of a member of
the supervisory board. Should a member of the
supervisory board attend less than a half of the
meetings of the supervisory board throughout the
financial year of the company, the shareholders of the
company should be notified thereof.
YES
Each member devotes sufficient time and attention
to perform their duties as a member of the
supervisory board and their other professional
obligations do not interfere with the proper
performance of the duties of a member of the
supervisory board.
2.2.5. When it is proposed to appoint a member of the
supervisory board, it should be announced which
members of the supervisory board are deemed to be
independent. The supervisory board may decide that,
despite the fact that a particular member meets all the
criteria of independence, he/she cannot be considered
independent due to special personal or company-
related circumstances.
YES
The Company submitted to the shareholders
received proposals concerning the candidates for
the members of the supervisory board with
additional references to their independence.
2.2.6. The amount of remuneration to members of the
supervisory board for their activity and participation in
meetings of the supervisory board should be approved
by the general meeting of shareholders.
YES
According to the decision of the General Meeting of
the Shareholders of the Company hold on 29 April
2021 it was set the hourly remuneration of the
elected independent member of the Supervisory
Board at EUR 145 per hour. The other Members of the
Supervisory Board do not receive remuneration for
these duties.
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INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 115
2.2.7. Every year the supervisory board should carry
out an assessment of its activities. It should include
evaluation of the structure of the supervisory board,
its work organization and ability to act as a group,
evaluation of the competence and work efficiency of
each member of the supervisory board, and evaluation
whether the supervisory board has achieved its
objectives. The supervisory board should, at least
once a year, make public respective information about
its internal structure and working procedures.
NO
The supervisory board has not carried out an
assessment of its activities because the supervisory
board of the acts less than one year.
Principle 3: Management Board
3.1. Functions and liability of the management board
The management board should ensure the implementation of the company’s strategy and good corporate governance with due
regard to the interests of its shareholders, employees and other interest groups.
3.1.1. The management board should ensure the
implementation of the company’s strategy approved
by the supervisory board if the latter has been formed
at the company. In such cases where the supervisory
board is not formed, the management board is also
responsible for the approval of the company’s
strategy.
NOT APPLICABLE
Due to the nature of the Company's activities,
collegial management body is not formed in the
Company. Its management is transferred to the
Management Company, which performs the functions
of the Board and the Chief Executive Officer of the
Company. The company has a supervisory board.
The Company's investment strategy is provided for in
the Company's Articles of Association. The
Management Company of the Company is responsible
for the implementation of the investment strategy.
3.1.2. As a collegial management body of the
company, the management board performs the
functions assigned to it by the Law and in the articles
of association of the company, and in such cases
where the supervisory board is not formed in the
company, it performs inter alia the supervisory
functions established in the Law. By performing the
functions assigned to it, the management board
should take into account the needs of the company’s
shareholders, employees and other interest groups by
respectively striving to achieve sustainable business
development.
Due to the nature of the Company's activities,
collegial management body is not formed in the
Company. Its management is transferred to the
Management Company, which performs the functions
of the Board and the Chief Executive Officer of the
Company. The company has a supervisory board.
The Management Company of the Company is
responsible for convocation and organisation of the
general meeting of Shareholders, giving notices about
publicly not disclosed information under the
procedure set by legal acts, organisation of activities
of the Company, proper management of information
about activities of the Company and performance of
other functions assigned to the Management
Company.
3.1.3. The management board should ensure
compliance with the laws and the internal policy of the
company applicable to the company or a group of
companies to which this company belongs. It should
also establish the respective risk management and
control measures aimed at ensuring regular and direct
liability of managers.
Due to the nature of the Company's activities,
collegial management body is not formed in the
Company. Its management is transferred to the
Management Company, which performs the functions
of the Board and the Chief Executive Officer of the
Company. The company has a supervisory board.
The compliance with the laws and the provisions of
the Company's internal policies is ensured by the
Management Company and its employees. Supervised
by the Supervisory Board.
3.1.4. Moreover, the management board should
ensure that the measures included into the OECD
Good Practice Guidance
8
on Internal Controls, Ethics
and Compliance are applied at the company in order
to ensure adherence to the applicable laws, rules and
standards.
Due to the nature of the Company's activities,
collegial management body is not formed in the
Company. Its management is transferred to the
Management Company, which performs the functions
of the Board and the Chief Executive Officer of the
Company. The company has a supervisory board..
The Management Company of the Company has
approved the Code of Ethics, which establishes the
ethical standards relevant to the activities of the
Company.
8
Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance:
https://www.oecd.org/daf/anti-bribery/44884389.pdf
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3.1.5. When appointing the manager of the company,
the management board should take into account the
appropriate balance between the candidate’s
qualifications, experience and competence.
Due to the nature of the Company's activities,
collegial management body is not formed in the
Company. Its management is transferred to the
Management Company, which performs the functions
of the Board and the Chief Executive Officer of the
Company. The company has a supervisory board.
The managers and investment decision-makers of a
Management Company must be of sufficiently good
repute and have sufficient work experience to ensure
sound and transparent management.
The candidatures of all managers and investment
decision-makers of the Company's Management
Company have been approved by the Bank of
Lithuania.
3.2. Formation of the management board
3.2.1.The members of the management board elected
by the supervisory board or, if the supervisory board
is not formed, by the general meeting of shareholders
should collectively ensure the required diversity of
qualifications, professional experience and
competences and seek for gender equality. With a
view to maintain a proper balance in terms of the
current qualifications possessed by the members of
the management board, it should be ensured that the
members of the management board would have, as a
whole, diverse knowledge, opinions and experience to
duly perform their tasks.
NOT APPLICABLE
Due to the specifics of the Company's activities, the
General Shareholders Meeting of the Company does
not elect the members of the Board of the
Management Company.
The managers and investment decision-makers of a
Management Company must be of sufficiently good
repute and have sufficient work experience to ensure
sound and transparent management.
The candidatures of all managers and investment
decision-makers of the Company's Management
Company should be approved by the Bank of
Lithuania.
3.2.2.Names and surnames of the candidates to
become members of the management board,
information on their educational background,
qualifications, professional experience, current
positions, other important professional obligations and
potential conflicts of interest should be disclosed
without violating the requirements of the legal acts
regulating the handling of personal data at the
meeting of the supervisory board in which the
management board or individual members of the
management board are elected. In the event that the
supervisory board is not formed, the information
specified in this paragraph should be submitted to the
general meeting of shareholders. The management
board should, on yearly basis, collect data provided in
this paragraph on its members and disclose it in the
company’s annual report.
Due to the specifics of the Company's activities, the
General Shareholders Meeting of the Company does
not elect the members of the Board of the
Management Company.
Information about the education, qualification,
professional experience and participation in the
management of other companies of the managers of
the Management Company and members of the
Investment Committee of the Company is presented
in the annual report of the Company.
3.2.3.All new members of the management board
should be familiarized with their duties and the
structure and operations of the company.
Due to the nature of the Company's activities,
collegial management body is not formed in the
Company. Its management is transferred to the
Management Company, which performs the functions
of the Board and the Chief Executive Officer of the
Company.
3.2.4.Members of the management board should be
appointed for a specific term, subject to individual re-
election for a new term in office in order to ensure
necessary development of professional experience and
sufficiently frequent reconfirmation of their status.
Due to the nature of the Company's activities,
collegial management body is not formed in the
Company. Its management is transferred to the
Management Company, which performs the functions
of the Board and the Chief Executive Officer of the
Company.
3.2.5.Chair of the management board should be a
person whose current or past positions constitute no
obstacle to carry out impartial activity. Where the
supervisory board is not formed, the former manager
of the company should not be immediately appointed
as chair of the management board. When a company
decides to depart from these recommendations, it
should furnish information on the measures it has
taken to ensure the impartiality of supervision.
Due to the specifics of the Company's activities, the
General Shareholders Meeting of the Company does
not elect the members of the Board of the
Management Company, whose elect the Chairman of
the Board of the Management Company.
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3.2.6. Each member the management board should
give sufficient time and attention to perform the duties
of a member of the Board. If a member of the
management Board participated in less than half of
the board meetings during the financial year of the
Company, the Company's Supervisory Board should be
informed if the Supervisory Board is not formed in the
Company - the General Shareholder Meeting.
Due to the specifics of the Company's activities,
attendance of the Management Company's Board
meetings is not recorded in the Annual report of the
Company.
The Company discloses information on the number of
the Company’s Investment Committee meetings.
3.2.7. In the event that the management board is
elected in the cases established by the Law where the
supervisory board is not formed at the company, and
some of its members will be independent
9
, it should be
announced which members of the management board
are deemed as independent. The management board
may decide that, despite the fact that a particular
member meets all the criteria of independence
established by the Law, he/she cannot be considered
independent due to special personal or company-
related circumstances.
Due to Company‘s management specifics,
independency criteria is not applicable to the
managers of the Management Company.
3.2.8. The general meeting of shareholders of the
company should approve the amount of remuneration
to the members of the management board for their
activity and participation in the meetings of the
management board.
The management fee, payable to the Management
Company is disclosed in the Annual Report of the
Company, according to the valid management
agreement between the Company and the
Management Company.
The managers of the Management Company and
appointed members of the Investment Committee
receive renumeration according to the employment
contract signed between them and the Management
Company.
3.2.9.The members of the management board should
act in good faith, with care and responsibility for the
benefit and the interests of the company and its
shareholders with due regard to other stakeholders.
When adopting decisions, they should not act in their
personal interest; they should be subject to no-
compete agreements and they should not use the
business information or opportunities related to the
company’s operations in violation of the company’s
interests.
The duty of the Company's Management Company to
act honestly, fairly and professionally on the best
terms and conditions for the Company and its
shareholders and to ensure market integrity is
enshrined in the Company's Articles of Association.
3.2.10. Every year the management board should
carry out an assessment of its activities. It should
include evaluation of the structure of the management
board, its work organization and ability to act as a
group, evaluation of the competence and work
efficiency of each member of the management board,
and evaluation whether the management board has
achieved its objectives. The management board
should, at least once a year, make public respective
information about its internal structure and working
procedures in observance of the legal acts regulating
the processing of personal data.
Due to Company‘s management specifics, the
managers of the Management Company do not carry
out assessment of its activities.
Principle 4: Rules of procedure of the supervisory board and the management board of the company
The rules of procedure of the supervisory board, if it is formed at the company, and of the management board should ensure
efficient operation and decision-making of these bodies and promote active cooperation between the company’s management
bodies.
4.1. The management board and the supervisory
board, if the latter is formed at the company, should
act in close cooperation in order to attain benefit for
the company and its shareholders. Good corporate
governance requires an open discussion between the
management board and the supervisory board. The
management board should regularly and, where
YES/NO
Due to the nature of the Company's activities,
collegial management body is not formed in the
Company. Its management is transferred to the
Management Company, which performs the functions
of the Board and the Chief Executive Officer of the
Company. The company has a supervisory board.
9
For the purposes of this Code, the criteria of independence of the members of the board are interpreted as the criteria of unrelated persons defined in Article 33(7) of the Law on
Companies of the Republic of Lithuania.
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necessary, immediately inform the supervisory board
about any matters significant for the company that are
related to planning, business development, risk
management and control, and compliance with the
obligations at the company. The management board
should inform he supervisory board about any
derogations in its business development from the
previously formulated plans and objectives by
specifying the reasons for this.
The Board of the Management Company closely
cooperates with the members of the Supervisory
Board of the Company.
4.2. It is recommended that meetings of the
company’s collegial bodies should be held at the
respective intervals, according to the pre-approved
schedule. Each company is free to decide how often
meetings of the collegial bodies should be convened
but it is recommended that these meetings should be
convened at such intervals that uninterruptable
resolution of essential corporate governance issues
would be ensured. Meetings of the company’s collegial
bodies should be convened at least once per quarter.
YES/NO
Due to the nature of the Company's activities,
collegial management body is not formed in the
Company. Its management is transferred to the
Management Company, which performs the functions
of the Board and the Chief Executive Officer of the
Company. The company has a supervisory board.
Meetings of the Management Company's Board and
the Company's Supervisory Board are held at such
intervals as to ensure uninterrupted resolution of
essential issues of the Company's management and
supervision.
4.3. Members of a collegial body should be notified of
the meeting being convened in advance so that they
would have sufficient time for proper preparation for
the issues to be considered at the meeting and a
fruitful discussion could be held and appropriate
decisions could be adopted. Along with the notice of
the meeting being convened all materials relevant to
the issues on the agenda of the meeting should be
submitted to the members of the collegial body. The
agenda of the meeting should not be changed or
supplemented during the meeting, unless all members
of the collegial body present at the meeting agree with
such change or supplement to the agenda, or certain
issues that are important to the company require
immediate resolution.
YES/NO
Due to the nature of the Company's activities,
collegial management body is not formed in the
Company. Its management is transferred to the
Management Company, which performs the functions
of the Board and the Chief Executive Officer of the
Company. The company has a supervisory board.
The Board of the Management Company and the
Supervisory Board of the Company are notified of the
meeting being convened and all materials relevant to
the issues on the agenda of the meeting are
submitted to them.
4.4. In order to coordinate the activities of the
company’s collegial bodies and ensure effective
decision-making process, the chairs of the company’s
collegial supervision and management bodies should
mutually agree on the dates and agendas of the
meetings and close cooperate in resolving other
matters related to corporate governance. Meetings of
the company’s supervisory board should be open to
members of the management board, particularly in
such cases where issues concerning the removal of the
management board members, their responsibility or
remuneration are discussed.
YES/NO
Due to the nature of the Company's activities,
collegial management body is not formed in the
Company. Its management is transferred to the
Management Company, which performs the functions
of the Board and the Chief Executive Officer of the
Company. The company has a supervisory board.
When the Board of the Management Company and
the Supervisory Board of the Company have to speak
on the same issue, their meetings are coordinated.
Principle 5: Nomination, remuneration and audit committees
5.1. Purpose and formation of committees
The committees formed at the company should increase the work efficiency of the supervisory board or, where the supervisory
board is not formed, of the management board which performs the supervisory functions by ensuring that decisions are based on
due consideration and help organise its work in such a way that the decisions it takes would be free of material conflicts of
interest.
Committees should exercise independent judgment and integrity when performing their functions and provide the collegial body
with recommendations concerning the decisions of the collegial body. However, the final decision should be adopted by the
collegial body.
5.1.1. Taking due account of the company-related
circumstances and the chosen corporate governance
structure, the supervisory board of the company or, in
cases where the supervisory board is not formed, the
management board which performs the supervisory
functions, establishes committees. It is recommended
NOT APPLICABLE
Due to the Company’s management type and an
absence of employees, the Nomination and
Remuneration Committees are not formed. Audit
Committee members are elected by the General
Shareholders Meeting.
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that the collegial body should form the nomination,
remuneration and audit committees
10
.
5.1.2. Companies may decide to set up less than three
committees. In such case companies should explain in
detail why they have chosen the alternative approach,
and how the chosen approach corresponds with the
objectives set for the three different committees.
5.1.3. In the cases established by the legal acts the
functions assigned to the committees formed at
companies may be performed by the collegial body
itself. In such case the provisions of this Code
pertaining to the committees (particularly those
related to their role, operation and transparency)
should apply, where relevant, to the collegial body as
a whole.
5.1.4. Committees established by the collegial body
should normally be composed of at least three
members. Subject to the requirements of the legal
acts, committees could be comprised only of two
members as well. Members of each committee should
be selected on the basis of their competences by
giving priority to independent members of the collegial
body. The chair of the management board should not
serve as the chair of committees.
5.1.5. The authority of each committee formed should
be determined by the collegial body itself. Committees
should perform their duties according to the authority
delegated to them and regularly inform the collegial
body about their activities and performance on a
regular basis. The authority of each committee
defining its role and specifying its rights and duties
should be made public at least once a year (as part of
the information disclosed by the company on its
governance structure and practice on an annual
basis). In compliance with the legal acts regulating the
processing of personal data, companies should also
include in their annual reports the statements of the
existing committees on their composition, the number
of meetings and attendance over the year as well as
the main directions of their activities and performance.
5.1.6. With a view to ensure the independence and
impartiality of the committees, the members of the
collegial body who are not members of the committees
should normally have a right to participate in the
meetings of the committee only if invited by the
committee. A committee may invite or request that
certain employees of the company or experts would
participate in the meeting. Chair of each committee
should have the possibility to maintain direct
communication with the shareholders. Cases where
such practice is to be applied should be specified in
the rules regulating the activities of the committee.
5.2. Nomination committee
10
The legal acts may provide for the obligation to form a respective committee. For example, the Law on the Audit of Financial Statements of the Republic of Lithuania provides
that public-interest entities (including but not limited to public limited liability companies whose securities are traded on a regulated market of the Republic of Lithuania and/or
of any other Member State) are under the obligation to set up an audit committee (the legal acts provide for the exemptions where the functions of the audit committee may
be carried out by the collegial body performing the supervisory functions).
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5.2.1. The key functions of the nomination committee
should be the following:
1) to select candidates to fill vacancies in the
membership of supervisory and management bodies
and the administration and recommend the collegial
body to approve them. The nomination committee
should evaluate the balance of skills, knowledge and
experience in the management body, prepare a
description of the functions and capabilities required
to assume a particular position and assess the time
commitment expected;
2) assess, on a regular basis, the structure, size and
composition of the supervisory and management
bodies as well as the skills, knowledge and activity
of its members, and provide the collegial body with
recommendations on how the required changes
should be sought;
3) devote the attention necessary to ensure succession
planning.
NOT APPLICABLE
Due to the Company’s management type and an
absence of employees, the Nomination Committee is
not formed.
5.2.2. When dealing with issues related to members of
the collegial body who have employment relationships
with the company and the heads of the administration,
the manager of the company should be consulted by
granting him/her the right to submit proposals to the
Nomination Committee.
5.3. Remuneration committee
The main functions of the remuneration committee
should be as follows:
1) submit to the collegial body proposals on the
remuneration policy applied to members of the
supervisory and management bodies and the heads
of the administration for approval. Such policy
should include all forms of remuneration, including
the fixed-rate remuneration, performance-based
remuneration, financial incentive schemes, pension
arrangements and termination payments as well as
conditions which would allow the company to
recover the amounts or suspend the payments by
specifying the circumstances under which it would
be expedient to do so;
2) submit to the collegial body proposals regarding
individual remuneration for members of the collegial
bodies and the heads of the administration in order
to ensure that they would be consistent with the
company’s remuneration policy and the evaluation
of the performance of the persons concerned;
3) review, on a regular basis, the remuneration policy
and its implementation.
NOT APPLICABLE
Due to the Company’s management type, the
Renumeration Committee is not formed.
5.4. Audit committee
5.4.1.The key functions of the audit committee are
defined in the legal acts regulating the activities of the
audit committee
11
.
YES
In its activities, the Audit Committee of the Company
follows the legal acts regulating the activities of the
Audit Committee, as well as the regulations of the
Audit Committee approved by the General Meeting of
Shareholders of the Company.
11
Issues related to the activities of audit committees are regulated by Regulation No. 537/2014 of the European Parliament and the Council of 16 April 2014 on specific
requirements regarding statutory audit of public-interest entities, the Law on the Audit of Financial Statements of the Republic of Lithuania, and the Rules Regulating the
Activities of Audit Committees approved by the Bank of Lithuania.
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5.4.2.All members of the committee should be
provided with detailed information on specific issues of
the company’s accounting system, finances and
operations. The heads of the company’s administration
should inform the audit committee about the methods
of accounting for significant and unusual transactions
where the accounting may be subject to different
approaches.
YES
The Management Company of the Company ensures
that:
1) the members of the Audit committee are properly
introduced to the activities of the Company, are
provided with complete information relating to the
Company’s specific accounting, financial and other
operational features;
2) the Audit committee is informed of the methods
used to account for significant and unusual
transactions where the accounting treatment may
be open to different approaches. The Audit
committee is furnished with complete information
on particulars of accounting, financial and other
operations of the Company;
3) The Audit committee is informed of the work
programme of internal and external auditors, and
should receive internal and external audit report.
4) etc.
5.4.3.The audit committee should decide whether the
participation of the chair of the management board,
the manager of the company, the chief finance officer
(or senior employees responsible for finance and
accounting), the internal and external auditors in its
meetings is required (and, if required, when). The
committee should be entitled, when needed, to meet
the relevant persons without members of the
management bodies present.
YES
The Audit committee has the right to invite to its
meetings the manager and members (member) of the
Board of the Management Company, the chief
financier, employees responsible for finance,
accounting and treasury issues, external auditors and
other persons, whose presence is admitted necessary
considering questions scheduled for the Audit
committee meeting.
5.4.4.The audit committee should be informed about
the internal auditor’s work program and should be
furnished with internal audit reports or periodic
summaries. The audit committee should also be
informed about the work program of external auditors
and should receive from the audit firm a report
describing all relationships between the independent
audit firm and the company and its group.
YES
The Management Company of the Company ensures
that the audit committee is informed of the work
programme of internal and external auditors, and
should receive internal and external audit report
5.4.5.The audit committee should examine whether
the company complies with the applicable provisions
regulating the possibility of lodging a complaint or
reporting anonymously his/her suspicions of potential
violations committed at the company and should also
ensure that there is a procedure in place for
proportionate and independent investigation of such
issues and appropriate follow-up actions.
NO
The Audit Committee of the Company does not
examine if the Company complies the functions stated
in 5.4.5.
5.4.6.The audit committee should submit to the
supervisory board or, where the supervisory board is
not formed, to the management board its activity
report at least once in every six months, at the time
that annual and half-yearly reports are approved.
YES / NO
In accordance with the provisions of the Audit
Committee, the Audit Committee submits its activity
reports to the Annual General Meeting of
Shareholders.
Principle 6: Prevention and disclosure of conflicts of interest
The corporate governance framework should encourage members of the company’s supervisory and management bodies to avoid
conflicts of interest and ensure a transparent and effective mechanism of disclosure of conflicts of interest related to members of
the supervisory and management bodies.
Any member of the company’s supervisory and
management body should avoid a situation where
his/her personal interests are or may be in conflict
with the company’s interests. In case such a situation
did occur, a member of the company’s supervisory or
management body should, within a reasonable period
of time, notify other members of the same body or the
body of the company which elected him/her or the
company’s shareholders of such situation of a conflict
of interest, indicate the nature of interests and, where
possible, their value.
YES / NO
Due to the nature of the Company's activities,
collegial management body is not formed in the
Company. Its management is transferred to the
Management Company, which performs the functions
of the Board and the Chief Executive Officer of the
Company. The company has a supervisory board.
The Management Company must have such an
organisational structure that would help to avoid
conflicts of interest. When it is impossible to avoid
conflicts of interest, the Management Company must
ensure that Shareholders are treated fairly.
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Principle 7: Remuneration policy of the company
The remuneration policy and the procedure for review and disclosure of such policy established at the company should prevent
potential conflicts of interest and abuse in determining remuneration of members of the collegial bodies and heads of the
administration, in addition it should ensure the publicity and transparency of the company’s remuneration policy and its long-term
strategy.
7.1. The company should approve and post the
remuneration policy on the website of the company;
such policy should be reviewed on a regular basis and
be consistent with the company’s long-term strategy.
YES
The Company is subject to the remuneration policy of
the Management Company, which is approved by the
Board of the Management Company. The Company's
Supervisory Board has a separate remuneration
policy, which is approved by the Company's General
Meeting of Shareholders.
Remuneration policies are reviewed in accordance
with legal requirements.
7.2. The remuneration policy should include all forms
of remuneration, including the fixed-rate
remuneration, performance-based remuneration,
financial incentive schemes, pension arrangements
and termination payments as well as the conditions
specifying the cases where the company can recover
the disbursed amounts or suspend the payments.
YES
The Management Company’s remuneration policy
covers all forms of remuneration that may be paid, i.
ie: fixed part of remuneration, variable part of
remuneration (allocated based on the Company's and
/ or employee's performance). The Company may pay
pension contributions to the third pillar pension funds
for the benefit of employees, as well as non-monetary
benefits may be provided to the Company's
employees.
7.3. With a view to avoid potential conflicts of interest,
the remuneration policy should provide that members
of the collegial bodies which perform the supervisory
functions should not receive remuneration based on
the company’s performance.
YES/NO
The Company is subject to the remuneration policy of
the Management Company, which is approved by the
Board of the Management Company. The Company's
Supervisory Board has a separate remuneration
policy, which is approved by the Company's General
Meeting of Shareholders.
The remuneration of the members of the Supervisory
Board does not depend on the performance of the
company.
7.4. The remuneration policy should provide sufficient
information on the policy regarding termination
payments. Termination payments should not exceed a
fixed amount or a fixed number of annual wages and
in general should not be higher than the non-variable
component of remuneration for two years or the
equivalent thereof. Termination payments should not
be paid if the contract is terminated due to inadequate
performance.
NOT APPLICABLE
The Company is subject to the remuneration policy of
the Management Company, which is approved by the
Board of the Management Company. The Company's
Supervisory Board has a separate remuneration
policy, which is approved by the Company's General
Meeting of Shareholders.
According to the policies, the Company does not have
the policy of termination payments.
7.5. In the event that the financial incentive scheme is
applied at the company, the remuneration policy
should contain sufficient information about the
retention of shares after the award thereof. Where
remuneration is based on the award of shares, shares
should not be vested at least for three years after the
award thereof. After vesting, members of the collegial
bodies and heads of the administration should retain a
certain number of shares until the end of their term in
office, subject to the need to compensate for any costs
related to the acquisition of shares.
YES / NO
The Company is subject to the remuneration policy of
the Management Company, which is approved by the
Board of the Management Company. The Company's
Supervisory Board has a separate remuneration
policy, which is approved by the Company's General
Meeting of Shareholders.
According to the remuneration policy of the
Management Company, which applies for the
Company as well, the part of the variable
remuneration assigned to the employee of the
Management Company (in whole or in part) may be
allocated as the option of Invalda INVL AB at his
choice. Their payment on a pro rata basis is realized
through the attribution of shares (i.e. the granting or
acquisition of the right to acquire the respective
amounts of shares at different terms), in accordance
with the procedure and conditions established in the
option agreements.
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7.6. The company should publish information about
the implementation of the remuneration policy on its
website, with a key focus on the remuneration policy
in respect of the collegial bodies and managers in the
next and, where relevant, subsequent financial years.
It should also contain a review of how the
remuneration policy was implemented during the
previous financial year. The information of such nature
should not include any details having a commercial
value. Particular attention should be paid on the major
changes in the company’s remuneration policy,
compared to the previous financial year.
YES
The Company publishes a remuneration report on its
website
7.7. It is recommended that the remuneration policy
or any major change of the policy should be included
on the agenda of the general meeting of shareholders.
The schemes under which members and employees of
a collegial body receive remuneration in shares or
share options should be approved by the general
meeting of shareholders.
YES/NO
The Company is subject to the remuneration policy of
the Management Company, which is approved by the
Board of the Management Company. The Company's
Supervisory Board has a separate remuneration
policy, This policy and its amendments are approved
by the Company's General Meeting of Shareholders.
Principle 8: Role of stakeholders in corporate governance
The corporate governance framework should recognize the rights of stakeholders entrenched in the laws or mutual agreements
and encourage active cooperation between companies and stakeholders in creating the company value, jobs and financial
sustainability. In the context of this principle the concept “stakeholders” includes investors, employees, creditors, suppliers,
clients, local community and other persons having certain interests in the company concerned.
8.1. The corporate governance framework should
ensure that the rights and lawful interests of
stakeholders are protected.
YES
The Company respects the rights of stakeholders and
their legitimate interests.
8.2. The corporate governance framework should
create conditions for stakeholders to participate in
corporate governance in the manner prescribed by
law. Examples of participation by stakeholders in
corporate governance include the participation of
employees or their representatives in the adoption of
decisions that are important for the company,
consultations with employees or their representatives
on corporate governance and other important matters,
participation of employees in the company’s
authorized capital, involvement of creditors in
corporate governance in the cases of the company’s
insolvency, etc.
YES / NO
The Company has no employees.
The Company provides opportunities for the
Company's investors (shareholders) to participate in
the management of the Company in accordance with
the procedure established by the Company's Articles
of Association and legal acts.
8.3. Where stakeholders participate in the corporate
governance process, they should have access to
relevant information.
YES
The Company's investors (shareholders) are provided
with information that is required to be provided by
applicable legislation and other information relevant
to the Shareholders at the discretion of the
Management Company.
8.4. Stakeholders should be provided with the
possibility of reporting confidentially any illegal or
unethical practices to the collegial body performing the
supervisory function.
NO
The Company does not provide possibility of reporting
confidentially any illegal or unethical practices
Principle 9: Disclosure of information
The corporate governance framework should ensure the timely and accurate disclosure of all material corporate issues, including
the financial situation, operations and governance of the company.
9.1. In accordance with the company’s procedure on
confidential information and commercial secrets and
the legal acts regulating the processing of personal
data, the information publicly disclosed by the
company should include but not be limited to the
following:
YES
The information referred to below in this
recommendation is disclosed in notifications of
material events published through the Nasdaq Vilnius
Information Disclosure System, the Company’s
website, and the Company’s annual and interim
information documents, to the extent required by
legislation and the International Financial Reporting
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Standards applicable in the European Union. The
information is also disclosed in presentations to
investors of the Company.
9.1.1. operating and financial results of the company;
YES
Company publishes interim and annual reports.
9.1.2. objectives and non-financial information of the
company;
YES
Company publishes interim and annual reports.
9.1.3. persons holding a stake in the company or
controlling it directly and/or indirectly and/or together
with related persons as well as the structure of the
group of companies and their relationships by
specifying the final beneficiary;
YES
Published on the Company's website.
9.1.4. members of the company’s supervisory and
management bodies who are deemed independent,
the manager of the company, the shares or votes held
by them at the company, participation in corporate
governance of other companies, their competence and
remuneration;
YES / NO
Due to the nature of the Company's activities,
collegial management body is not formed in the
Company. Its management is transferred to the
Management Company, which performs the functions
of the Board and the Chief Executive Officer of the
Company. The company has a supervisory board.
The Company's website provides information on the
members of the Board of the Company's Management
Company, the General Director, Company’s
investment committee members and the Supervisory
Board members.
9.1.5. reports of the existing committees on their
composition, number of meetings and attendance of
members during the last year as well as the main
directions and results of their activities;
YES / NO
The management of the Company is transferred to
the Management Company, which carries the
functions of the Board and the Manager of the
Company.
The Company's website provides information on the
members of the Company's Investment Committee.
9.1.6. potential key risk factors, the company’s risk
management and supervision policy;
YES
The Company publishes on its website the general
risk factors of the business area in which the Group
operates; group-specific risk factors; risk factors
related to the Company's shares.
9.1.7. the company’s transactions with related parties;
YES
The Company publishes the Company's transactions
with related parties on its website.
9.1.8. main issues related to employees and other
stakeholders (for instance, human resource policy,
participation of employees in corporate governance,
award of the company’s shares or share options as
incentives, relationships with creditors, suppliers, local
community, etc.);
NO
Due to the Company’s management type - transfer of
the Company’s management to the Management
Company – the Company itself does not have any
employees.
9.1.9. structure and strategy of corporate governance;
YES
The Company's strategy is provided for in the
Company's Articles of Association, which are
published on the Company's website.
9.1.10. initiatives and measures of social responsibility
policy and anti-corruption fight, significant current or
planned investment projects.
This list is deemed minimum and companies are
encouraged not to restrict themselves to the
disclosure of information included into this list. This
principle of the Code does not exempt companies from
their obligation to disclose information as provided for
in the applicable legal acts.
NO
The company is not required to prepare and publish a
non-financial statement.
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9.2. When disclosing the information specified in
paragraph 9.1.1 of recommendation 9.1, it is
recommended that the company which is a parent
company in respect of other companies should
disclose information about the consolidated results of
the whole group of companies.
YES
The Company prepares a consolidated report and
consolidated financial statements
9.3. When disclosing the information specified in
paragraph 9.1.4 of recommendation 9.1, it is
recommended that the information on the professional
experience and qualifications of members of the
company’s supervisory and management bodies and
the manager of the company as well as potential
conflicts of interest which could affect their decisions
should be provided. It is further recommended that
the remuneration or other income of members of the
company’s supervisory and management bodies and
the manager of the company should be disclosed, as
provided for in greater detail in Principle 7.
YES
Information about the education, qualification,
professional experience and participation in the
management of other companies of the managers of
the Management Company, members of the
Investment Committee and the Supervisory Board of
the Company is presented in the annual report of the
Company.
The Company also publishes a remuneration report.
9.4. Information should be disclosed in such manner
that no shareholders or investors are discriminated in
terms of the method of receipt and scope of
information. Information should be disclosed to all
parties concerned at the same time.
YES
The Company publishes all information through the
information disclosure system of the Nasdaq Vilnius
Stock Exchange and on the Company's website so
that it is accessible to everyone and at the same time.
Principle 10: Selection of the company’s audit firm
The company’s audit firm selection mechanism should ensure the independence of the report and opinion of the audit firm.
10.1. With a view to obtain an objective opinion on the
company’s financial condition and financial results, the
company’s annual financial statements and the
financial information provided in its annual report
should be audited by an independent audit firm.
YES
The Company is audited by an independent audit
company UAB PricewaterhouseCoopers
10.2. It is recommended that the audit firm would be
proposed to the general meeting of shareholders by
the supervisory board or, if the supervisory board is
not formed at the company, by the management
board of the company.
YES/NO
In 2020, the Management Company of the Company
proposed to the General Meeting of the Shareholders
the audit firm, which will audit annual financial
statements of the Company for 2020, 2021, and 2022
years, as the Supervisory Board of the Company was
formed only in 2021.
10.3. In the event that the audit firm has received
remuneration from the company for the non-audit
services provided, the company should disclose this
publicly. This information should also be available to
the supervisory board or, if the supervisory board is
not formed at the company, by the management
board of the company when considering which audit
firm should be proposed to the general meeting of
shareholders.
YES
The Company undertakes to disclose if the audit
company would have received payment from the
Company for non-audit services provided.
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APPENDIX 3. COMPANY'S MANAGEMENT REPORT
(Prepared in accordance with the Law of the Republic of Lithuania on Financial Reporting by Undertakings (IX-575) in force from 1
January 2021)
1. reference to the applicable corporate governance code and the place of its publication, and (or) reference to the
all necessary published information regarding management practices of the entity
The Company discloses the information regarding the compliance with the applicable Corporate Governance Code in Appendix
2 of the consolidated report of 2021. The Company publishes its annual reports in the website of the Company (Company’s
web site section “For investors” → “Financial information and reports”. The link https://bre.invl.com/en/for-investors/financial-
information-and-reports/).
2. in case of derogation from the provisions of the applicable corporate governance code and (or) when the
provisions are not complied with, such provisions and the reasons thereof shall be indicated
The Company discloses such information in sections “Yes/No/Irrelevant” and “Commentary” of Appendix 2 of the consolidated
report of 2021 “Corporate Governance Code”.
3. information regarding the level of risk and risk management – management of risks related to the financial
reporting, risk mitigation measures, and internal control systems implemented at the entity shall be described
The Company provides information regarding the level of risk, risk management, and implemented internal control systems,
as well as the measures, in Clause 18.6 of the consolidated report of 2021.
4. information regarding significant directly or indirectly managed holdings
The Company provides information regarding the significant directly or indirectly managed holdings in Clause 5 of the financial
statement of 2021.
5. Information regarding transactions with related parties, according to the Law on Companies article 37
2
(by
specifying the counterparty (legal form, name, code, register of the legal entity in which the person is stored, premises
(address); name, surname, address of the natural person and the value of the transaction);
Information regarding Transactions with Related Parties, according to the Law on Companies article 37
2
, is published on the
Company‘s web site – „For Investors“ → „Legal documents“. The link to the Company‘s website: https://bre.invl.com/en/for-
investors/legal-documents/
Related party transaction policy of UTIB Baltic Real Estate was approved during the General Shareholders Meeting held on 29
th
April
2021.The policy is published on the Company’s website: https://bre.invl.com/lit/en/for-investors/documentslegal-documents
At the time the report was published, the Company provides information about Company‘s Transactions with Related Parties
published on the Company's web site:
Related party
Company’s relationship with
the other counterparty
Date and value of the transaction
Other
information
Dommo Grupa SIA
Code 40003733866
„Lapegles“, Stuniši,
Olaines dist., Latvia
The Register of
Enterprises of the
Republic of Latvia
100 percent managed by UTIB
INVL Baltic Real Estate
Dommo Grupa, SIA, 100 percent owned by UTIB INVL
Baltic Real Estate signed a Loan Agreement No.
BRE/200522/1 on 22th May 2020. Loan amount – EUR
1.45 million. Loan balance as of 31th December 2021
– EUR 0,3 mln.
An agreement was signed on 28 December 2021 to
extend the loan repayment term until 31 December
2023.
Proprietas, UAB
Code 303252098
Gynėjų str. 14, Vilnius,
Lithuania
Register of Legal Entities
100 percent managed by UTIB
INVL Baltic Real Estate
A loan agreement with Proprietas, UAB was signed on
8th October 2020 No. BRE/201008/01 for the amount
of EUR 5 mln.
The loan was repaid on 26
th
February 2021.
Dommo Bizness parks,
SIA
Code 40003865398
„Lapegles“, Stuniši,
Olaines dist., Latvia
The Register of
Enterprises of the
Republic of Latvia
100 percent indirectly managed
by UTIB INVL Baltic Real Estate
SIA Dommo Biznesa Parks, a company indirectly
managed by UTIB INVL Baltic Real Estate by 100
percent, signed a loan agreement no. BRE / 201020/1
on 20th October 2020. The amount of the loan is EUR
1,075,000.
Loan balance as of 31th December 2021 – EUR
675,000.
An agreement was signed on 28 December 2021 to
extend the loan repayment term until 31 December
2023.
Proprietas, UAB
Code 303252098
100 percent managed by UTIB
INVL Baltic Real Estate
On 31th December 2020, the Company entered into a
loan agreement no. BRE / 201230/01 with UAB
Proprietas for the amount of EUR 387,338.47.
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Related party
Company’s relationship with
the other counterparty
Date and value of the transaction
Other
information
Gynėjų str. 14, Vilnius,
Lithuania
Register of Legal Entities
On 8th December 2021, a part of the loan was repaid,
the remaining part of the loan was repaid on 31
December 2021.
Proprietas, UAB
Code 303252098
Gynėjų str. 14, Vilnius,
Lithuania
Register of Legal Entities
100 percent managed by UTIB
INVL Baltic Real Estate
On 18th January 2021, the company entered into a
loan agreement no. BRE / 210118/01 with UAB
Proprietas for the amount of EUR 5,5 mln.
An agreement was signed on 23 June 2021 to extend
the loan repayment term until 30 June 2022.
The loan was repaid on 27
th
September 2021
Rovelija, UAB
Code 302575846
Gynėjų str. 14, Vilnius,
Lithuania
Register of Legal Entities
100 percent managed by UTIB
INVL Baltic Real Estate
On 18th January 2021, the company entered into a
loan agreement no. BRE / 210118/02 with UAB
Rovelija in the amount of EUR 900,000.
An agreement was signed on 23 June 2021 to extend
the loan repayment term until 30 June 2022.
The loan was repaid on 27
th
September 2021
Perspektyvi Veikla, UAB
Code 302607087
Gynėjų str. 14, Vilnius,
Lithuania
Register of Legal Entities
100 percent indirectly managed
by UTIB INVL Baltic Real Estate
On 18th January 2021, the company entered into a
loan agreement no. BRE / 210118/03 with UAB
Perspektyvi veikla for the amount of EUR 910,000.
The loan was repaid on 24
th
May 2021
Inservis, UAB
Code 126180446
Juozapavičiaus str. 6,
Vilnius, Lithuania
Register of Legal Entities
100 percent managed by
Invalda INVL, AB.
Invalda INVL, AB owns 30
percent of shares in UTIB INVL
Baltic Real Estate
Proprietas, UAB a company 100% owned by the
company, signed the appendix no. 32 to 02-05-2011
Service Purchase - Sale Agreement No. 2011/05 / 01-
03 on the provision of technical farm maintenance
services at the facility located at Žygio str 97, Vilnius.
The subscription fee for extended services increased
from EUR 421.24 plus VAT to EUR 491.24 plus VAT.
Proprietas, UAB
Code 303252098
Gynėjų str. 14, Vilnius,
Lithuania
Register of Legal Entities
100 percent managed by UTIB
INVL Baltic Real Estate
On 21th June 2021, the company entered into a loan
agreement no. BRE /210621/01 with UAB Proprietas for
the amount of EUR 200,000.
The loan was repaid on 31 December 2021.
Invalda INVL, AB
Code 121304349
Gynėjų str. 14, Vilnius,
Lithuania
Register of Legal Entities
Shareholder of UTIB INVL Baltic
Real Estate, owning 30 percent
of shares in the Company
On 2 August 2021, the Company signed the Service
Provision Agreement No. 20130701/20 amendment on
increasing the price of accounting services to EUR
1,750 / month. without VAT.
Proprietas, UAB
Code 303252098
Gynėjų str. 14, Vilnius,
Lithuania
Register of Legal Entities
100 percent managed by UTIB
INVL Baltic Real Estate
On 2nd August 2021 100 percent UTIB INVL Baltic
Real Estate company UAB Proprietas signed an
agreement with AB Invalda INVL 20140531/02 on
increasing the price of accounting services to 1,300
Eur / month. without VAT.
Proprietas, UAB
Code 303252098
Gynėjų str. 14, Vilnius,
Lithuania
Register of Legal Entities
100 percent managed by UTIB
INVL Baltic Real Estate
On 1st October 2021, the Company signed an
agreement to the Asset Administration Agreement No.
12/28/2017 on the revision of the list of assets under
administration.
Proprietas, UAB
Code 303252098
Gynėjų str. 14, Vilnius,
Lithuania
Register of Legal Entities
100 percent managed by UTIB
INVL Baltic Real Estate
On 8th December 2021, the Company signed a Share
Subscription Agreement, on the basis of which the
Company will increase the share capital of UAB
Proprietas from EUR 252,300 to EUR 368,300 by
issuing 400,000 ordinary registered shares with a
nominal value of EUR 0.29. The authorized capital of
UAB Proprietas has been registered in the Register of
Legal Entities on 16 December 2021.
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Related party
Company’s relationship with
the other counterparty
Date and value of the transaction
Other
information
Proprietas, UAB
Code 303252098
Gynėjų str. 14, Vilnius,
Lithuania
Register of Legal Entities
100 percent managed by UTIB
INVL Baltic Real Estate
On 28th December 2021, the Company entered into a
loan agreement no. BRE / 211228/01 with UAB
Proprietas in the amount of EUR 493,174.02.
Dommo Grupa SIA
Code 40003733866
„Lapegles“, Stuniši,
Olaines dist., Latvia
The Register of
Enterprises of the
Republic of Latvia
100 percent managed by UTIB
INVL Baltic Real Estate
IPAS INVL Asset Management, Code
40003605043, 100 percent owned by Invalda
INVL, AB signed a Service contract No. 21/04/2021
on 21th April, 2021 about Legal support for
reorganization. Transaction value EUR 900.80
without VAT.
6. information regarding the shareholders who have special rights of control and the description of such rights
There are no shareholders having special rights of control in the Company.
7. information regarding all current restrictions on voting rights (such as the restrictions on voting rights of persons having
a certain percentage or number of the votes, the deadlines by which voting rights may be exercised or systems, according to
which the property rights granted by the securities are to be separated from the holder of those securities)
No restrictions on voting rights are applied in the Company.
8. information regarding the rules governing the appointment and dismissal of board members, as well as the
amendment of the company’s articles of association
The management of the Company is transferred to the Management company UAB INVL Asset Management which exercises
the functions of the Head and the board of the Company. The Rules of Procedure of the Board are applicable to the board
members of the Management company. The provisions governing the appointment and dismissal of board members are not
provided for by the aforementioned Rules, except for the possible resignation and procedures related thereof. A person who
seeks to become the Board member of the Management company shall obtain a prior permit from the Supervision Service of
the Bank of Lithuania (hereinafter – the Bank of Lithuania) to occupy a corresponding post. Moreover, such person shall fill in
the Form of the Questionnaire of the Manager approved by the Bank of Lithuania and comply with the indicated requirements.
According to the Articles of Association of the Company, the Articles of Association of INVL Baltic Real Estate may be amended
by the decision of the General Shareholders’ Meeting, passed by more than 3/4 of votes (except in cases stated in the Law on
Companies of the Republic of Lithuania and in cases stated in Company’s Articles of Association).
9. information regarding the powers of the board members
The management of the Company is transferred to the Management company UAB INVL Asset Management which exercises
the functions of the Head and the board of the Company. The Board members of the Management company act in accordance
with the Law on Companies of the Republic of Lithuania, Articles of Association of the Management company, Rules of Procedure
of the Board, as well as other applicable legislation, and have no special powers. The Board members of the Management
company always act for the benefit of the Company and its shareholders.
10. information regarding the competence of the general meeting of shareholders, the rights of shareholders and
implementation thereof, if such information is not established in the applicable legislation
The company provides information regarding the competence of the general meeting of shareholders, the rights of shareholders,
and implementation thereof, as well as the procedure for convening the meetings of shareholders, in Clause 12.1 of the
consolidated annual report of 2021.
11. information regarding the composition of the management, supervisory bodies, and the committees thereof, as
well as the fields of activity of the aforesaid bodies and the manager of the company
The management of the Company is transferred to the Management company UAB INVL Asset Management which exercises
the functions of the Head and the Board of the company. There is a Supervisory Board in the Company. The Company provides
information regarding the board members of the Management company, General Manager of the Management company, the
members of the Investment Committee and the members of the Supervisory Board of the Company in Clause 13 of the
consolidated annual report of 2021.
The board members of the management company, General Manager of the management company, the members of the
Investment Committee and members of the Supervisory Board of the company act in accordance with the Rules of Procedure
of the Board, Provisions of the General Manager, Provisions of the Investment Committee and Rules of Procedure of the
Supervisory Board. In addition to this, the board members of the Management company, General Manager of the Management
company, the members of the Investment Committee and members of the Supervisory Board always act for the benefit of the
Company and its shareholders.
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12. description of diversity policy applicable in appointing the manager of the company, management, and supervisory
bodies, related to the aspects such as age, gender, education, professional experience, objectives of such policy,
methods of implementation thereof, and results of the reference period. if the diversity policy is not applied, the
reasons thereof shall be indicated
The management of the Company is transferred to the asset management company INVL Asset Management, which applies
the Policy of Equal Opportunities in its activities. The Policy specifies that the Company organizes its activities in a way that
employees, despite of their duties and the need to upgrade their qualifications, are secure about equal working conditions,
opportunities to develop competence, etc. Equally, the same benefits are granted regardless of the gender, race, nationality,
language, origin, social status, believes or convictions, age, sexual orientation, disability, ethnicity, religion, marital status,
intention of having children's or membership of the political party or association.
INVL Asset Management has joined the UN-supported Principles for Responsible Investment (PRI) in the middle of 2017.
The PRI, founded in 2006, is a global network of over 1700 investors, aims to assess the investment implications of
environmental, social and governance (ESG) factors. An economically efficient, sustainable global financial system is considered
a necessity for long-term value creation. Investors who support the PRI voluntarily work to apply the principles in their
investment activities.
Six specific responsible investment Principles are outlined by the PRI. They provide a menu of possible actions for incorporating
ESG issues into investment practice – from investment analysis and decision-making to their incorporation into ownership
policies and practices. Additionally, signatories to the Principles are encouraged to promote the Principles’ acceptance in the
investment industry and to work together for their effective implementation.
13. shareholders (their terms and conditions)
The Company's shareholders do not have mutual agreements.
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APPENDIX 4. COMPANY'S OPERATING AND FINANCIAL INDICATOR
FORMULAS AND DEFINITIONS
In according with the guidelines on Alternative Performance Indicators which were published by the European Securities and Markets
Authority in 2015 and came into force on 3 July 2016, the Company provide definitions and formulas (below) of the company's
operating and financial indicators.
The Company's performance and financial indicators are used to evaluate the Company's financial position or status. For these
indicators, the Company's investor can obtain additional information to help understand the Company's financial position and
strategy.
All the information stated in Appendix 4 is provided on the website of the Company (Company‘s web site section „For Investors“ →
„Financial information and reports“ . The link: https://bre.invl.com/en/for-investors/financial-information-and-reports/)
Dividend yield – dividends attributable to shareholder paid per share for the last financial year divided by the price per share at
the end of a financial period.
The set value of dividends paid per share for the last financial year
Dividend yield = ——————————————————————————————————————
The price per share at the end of a financial period
Dividend yield ratio is a particularly an important valuation measure for investors seeking regular income. The higher the yield,
the higher the payout for the shareholder compared to the price of the share.
Book value per share – Group‘s equity divided by the number of shares, excluding Company’s own shares, at the end of a
financial period.
The Group's equity
Book value per share = ———————————————————————————————————————————————————
The number of shares, excluding the Company's own shares, at the end of a financial period
The book value per common share indicates the remaining value for shareholder after all assets are liquidated and all liabilities
are covered.
Price to Book ratio – ratio between the share price at the end of a financial period and book value per share.
The share price at the end of a financial period
Price to Book ratio = ———————————————————————————————
The book value per share
Price-to-book ratio compares a companies market value to book value by dividing price per share by book value per share. This
shows how the valuation of the company is covered by equity.
Dividends/Net profit – ratio between the dividends allocated at the ongoing year for the year before and ongoing year net profit
of the Company.
The dividends allocated at the ongoing year for the year before
Dividends/Net profit = ——————————————————————————————————————
Ongoing year net profit of the Company
The dividend payout ratio is the ratio of the total amount of dividends paid out to shareholders relative to the net income of the
company. It is the percentage of earnings paid to shareholders in dividends.
Return on Equity (ROE) – ratio between net income and average equity of a financial period, measured in percentage terms.
Net income
Return on Equity (ROE) (measured in percentage terms) = ———————————————————————————
Average equity for a financial period
Return on equity excludes debt in the denominator and compares net profit for the period with total average shareholders’ equity.
It measures the rate of return on shareholders’ investment.
Average equity is an arithmetical average of the beginning equity and ending equity of a financial period.
Average equity = (The beginning equity for the financial period + The ending equity for the financial period) / 2
Return on Assets (ROA) – ratio between net income and average total assets of a financial period, measured in percentage
terms.
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Net income
Return on Assets (ROA) (measured in percentage terms) = ——————————————————————————————
Average total assets for a financial period
Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets. ROA indicates how efficient a
company is using its assets to generate earnings.
Average total equity is an arithmetical average of the beginning total assets and ending total assets of a financial period.
Average total equity = (The beginning total assets of a financial period + The ending total assets of a financial period) / 2
Debt ratio – ratio between total liabilities and total assets.
Total liabilities
Debt ratio = ————————————
Total assets
The debt ratio is a financial ratio that measures the extent of a company’s leverage. It can be interpreted as the proportion of a
company’s assets that are financed by debt.
Debt to Equity ratio – ratio between total liabilities and Shareholders’ equity.
Total liabilities
Debt to Equity ratio = ——————————————
Shareholders' equity
The debt to Equity ratio is calculated by dividing a company’s total liabilities by its shareholder equity. The ratio is used to evaluate
a company's financial leverage.
Gearing ratio – ratio between net debt and sum of net debt and equity. Net debt is the difference between borrowings and cash
and cash equivalents.
Net debt
Gearing ratio = ——————————————
Net debt + equity
Gearing ratio is analysis ratio of a level of net debt compared to equity capital. Lower gearing ratio means greater financial
stability. However, borrowings are a way for companies to leverage their value to increase profits for shareholders.
Liquidity ratio – ratio between current assets, including assets classified as held for sale, and current liabilities.
Current assets (including assets classified as held for sale)
Liquidity ratio = ————————————————————————————————————
Current liabilities
Liquidity ratio is a financial metric used to determine a debtor's ability to pay off current debt obligations without raising external
capital.
Quick ratio – ratio between current assets (excluding inventories, prepayments and deferred charges and current loans granted)
and current liabilities.
Current assets (excluding inventories, prepayments and deferred charges and current loans granted)
Quick ratio = ————————————————————————————————————————————————————————
Current liabilities
The quick ratio is an indicator of a company’s short-term liquidity position and measures a company’s ability to meet its short-
term obligations with its most liquid assets.
Normalized operating profit - operating profit excluding interest income, net gains (losses) from fair value adjustments on
investment property and other income adding the re-estimation of provision for the Performance Fee.
Normalized operating profit = Operating profit – Interest income – Net gains (losses) from fair value adjustments on investment
property – Other income + The re-estimation of provision for the Performance Fee.
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Normalized operating profit is measurement of the companies operating profit and allows viewing operating trends and identifying
strategies to improve operating performance and assists in comparing performance across reporting periods on a consistent basis
by excluding item that are not indicative of the companies core operating performance.
Normalized operating profit margin – ratio between normalized operating profit and sales, measured in percentage terms.
Normalized operating profit
Normalized operating profit margin (measured in percentage terms) = —————————————————————
Sales
Normalized operating profit margin is a operating profit margin excluding item that are not indicative of the companies core
operating performance.
Pre-tax profit margin – ratio between pre-tax profit and sales, measured in percentage terms.
Pre-tax profit
Pre-tax profit margin (measured in percentage terms) = ——————————————
Sales
The pretax profit margin is the ratio of a company's pre-tax earnings to its total sales. The higher the pretax profit margin, the
more profitable the company.
Price earnings ratio (P/E) – share price at the end of a financial period divided by earnings per share (EPS).
The share price at the end of a financial period
Price earnings ratio (P/E) = —————————————————————————————————
Earnings per share (EPS)
To determine the P/E value, one simply must divide the current stock price by the earnings per share (EPS). It is used to compare
a company against its own historical record or to compare aggregate markets against one another or over time.
Borrowings to value of investment properties – ratio between borrowings and investment properties.
Borrowings
Borrowings to value of investment properties = ———————————————————
Investment properties
This indicator shows the proportion of the investment assets financed by borrowed funds.
Interest coverage ratio – ratio calculated as normalized operating profit divided by borrowings' interest expenses. The latter
amounted to interest expenses of bank borrowings plus interest expenses of borrowings from related parties.
Normalized operating profit
Interest coverage ratio = ————————————————————
Borrowings' interest expenses*
*Borrowings' interest expenses = Interest expenses of bank borrowings + Interest expenses of borrowings from related parties
The purpose of this ratio is to give an indication of the companies general ability to service the interests of it‘s debts.
Bank’s Debt Service Coverage Ratio – ratio between normalized operating profit and bank’s debt service costs. Bank’s debt
service costs is during reporting period paid interest, commitment fees according to borrowings' agreements and principal
repayments.
Normalized operating profit
Bank's Debt Service Coverage Ratio = ——————————————————————
Bank's debt service cost*
*Bank's debt service cost = Interest paid during reporting period, commitment fees according to borrowings' agreements and
principal repayments.
The purpose of this ratio is to give an indication of the companies general ability to service its debt.
Net operating income is calculated by deducting from revenue premises rent costs (excluding provision for onerous contract),
utilities expenses, repair and maintenance expenses, property management and brokerage costs, taxes on property and insurance
costs.
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Net operating income = Revenue premises rent costs (excluding provision for onerous contract) – Utilities expenses – Repair and
maintenance expenses – Property management and brokerage costs – Taxes on property and insurance costs.
Net operating income is a calculation used to analyze the profitability of real estate investments that generate income. Net
operating income equals all revenue from the property minus all reasonably necessary operating expenses.
Net profit margin – net profit divided by sales, expressed in percentage terms.
Net profit
Net profit margin (measured in percentage terms) = ——————————————————
Sales
The net profitability is equal to how much net income or profit is generated as a percentage of revenue. It illustrates how much
of each euro in revenue collected by a company translates into profit.
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APPENDIX 5. REMUNERATION REPORT
Brief overview of the Company's activities in 2021
In 2021, INVL Baltic Real Estate earned EUR 3.4 million of consolidated net profit, or 37% less than in the previous year. By the
end of 2021, the value of the company's consolidated equity, reached EUR 20.3 million, or EUR 2.52 per non-redeemable share.
The consolidated net operating income of INVL Baltic Real Estate from own objects amounted to EUR 1.6 million as at 31 December
2021 and was 27% lower than in the respective period last year. The company's consolidated income was EUR 2.7 million or 31%
lower than in 2020 in the same period, of which consolidated operating income from own objects decreased by 39%, down to EUR
1.7 million. This was influenced by the sale of the IBC Business Centre and Vilnius vartai completed during 2020.
Looking at future prospects, the Company continues its work in developing the existing property and increasing its value, and is
ready to invest in non-standard, creative solutions that would help to earn a high return for investors and expand the real estate
management business.
The year 2021 was also second successful year of the coworking space Talent Garden Vilnius - Talent Garden Vilnius, taking into
account the epidemiological situation influenced by Covid-19, not only enjoys a sufficiently large occupancy of the space but also
successfully competes in the collaborating spaces market.
Management of the company
The management of INVL Baltic Real Estate is delegated to UAB INVL Asset Management (hereinafter referred to as the Management
Company), which also performs the functions of the Board and Managers of INVL Baltic Real Estate. Given that and taking into
account the fact that INVL Baltic Real Estate has to approve the remuneration policy (hereinafter referred to as the Policy) in
accordance with Article 37
3
of the Law on Companies of the Republic of Lithuania, it is established that the Company is subject to
the Policy of the Management Company, the provisions of which are adapted in order to reveal as much as possible the transparency
of remuneration of the persons considered to be managers of INVL Baltic Real Estate, the accountability of the management and to
enable the shareholders, potential investors and stakeholders to get a comprehensive and reliable picture of the wages paid to each
manager of INVL Baltic Real Estate. Moreover, from 26 July 2021, the Company has a collegial supervisory body – the Supervisory
Board. The General Meeting of Shareholders, held on 29 April 2021 approved the Remuneration Policy of the Supervisory Board of
the Company. For the purposes of this Report, the General manager of the Management Company, members of the Board of the
Management Company, members of the CEIC Investment Committee appointed by the Management Company (hereinafter referred
to as the Management) and the members of the Supervisory Board of the Company (hereinafter referred to as the members of the
Supervisory Board) shall be considered to be managers of INVL Baltic Real Estate.
Official monthly wage
The regular remuneration of the Management includes the official monthly wage, employee fees and additional benefits granted
irrespective of the performance results and paid to all employees meeting the established criteria in accordance with the procedure
in force in the Management Company (e.g. pension contributions to voluntary pension funds). In addition to the official monthly
wage or remuneration received in a different form, a supplementary component may be paid - the variable wage allocated depending
on the fulfilment of the Company's annual business plan and/or budget and the fulfilment of the Management's individual plans and
tasks. The official monthly wage is determined in such a way as to ensure proper proportions between the official monthly wage
and the bonus components. The official monthly wage constitutes a sufficiently high proportion of the total remuneration paid so
that it makes it possible to implement a flexible incentive policy.
According to the decision of the General Meeting of the Shareholders of the Company hold on 29 April 2021 it was set the hourly
remuneration of the elected independent member of the Supervisory Board at EUR 145 per hour. The other Members of the
Supervisory Board do not receive remuneration for these duties.
Bonuses and the procedure for payment thereof
A bonus, including the deferred part thereof, may be granted and/or paid to the Management only in the case of a sustainable
financial situation in the Company, taking into account the Company's performance results, and only if the results of the annual
individual assessment of the Management are positive. In assessing the individual performance results of the Management, non-
financial criteria, such as adherence to internal rules and procedures, communication with clients and investors, compliance with
rules, enhancement of professional qualifications, etc., are also taken into account. If the financial performance results of the
Company in a given year are negative or the Company has failed to achieve the established business objectives, the Company has
the right to make a decision not to pay the bonus or part thereof, or to reduce the amount of previously estimated bonus, as well
as the payment of such amounts earned previously, by defining the period of such non-payment or reduction which may not be
shorter than 1 year. No such adjustment or deferral was applied during the reporting period. Likewise, the Board of the Management
Company is entitled to demand that the Management refunds all or part of the bonus paid to it if it subsequently becomes clear
that the bonus was paid to it as a result of the Management's bad faith or errors in the accounts.
The bonus is paid to Management in accordance with the following payment terms:
• 60% of the bonus amount is paid in a single payment in accordance with the procedure and within the time limits established
by the decision of the Board of the Management Company;
• the remaining part of the bonus (i.e. the remaining 40% of the bonus) is paid to the employee on a pro rata basis within
three years, i.e. the deferred portion of the bonus is distributed proportionally over the entire deferral period, beginning not
earlier than 1 year after the end of the employee’s performance assessment and is paid on a yearly basis by disbursing the
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 135
portion of the bonus calculated pro rata. In individual cases, the competent body of the Management Company has the right
to decide on a longer deferral period (usually not longer than 5 years) taking into consideration the business cycle of activities
of the Management Company and/or respective collective investment undertaking or pension fund and other criteria provided
for in the legislation.
As a rule, the bonus is paid in money. The Management Company, in accordance with the principle of proportionality, does not
apply the requirement regarding the mandatory payment of the bonus in financial instruments. However, if the Management
Company provides for such possibility, the bonus may be replaced by other incentives, by grating financial instruments or equivalent
instruments (share options, contributions to a private pension fund) at the discretion of the Management itself.
Upon termination of the employment relationship, regardless of the grounds for termination of the employment relationship, the
deferred part of the bonus payable will not be paid out.
The variable remuneration component for 2021 will be allocated in 2022, after the approval of the financial statements for 2021. In
the allocation of this portion of the remuneration, account will be taken, inter alia, of the real estate purchase transaction carried
out by INVL Baltic Real Estate during the reporting period. More information about the transaction is available at: INVL Baltic Real
Estate acquires building at Vilniaus Street 37-4, Vilnius.
The remunerations of the General manager and Board members of the Management Company are calculated on the basis of the
proportion of the Management Company's management income (including management and success fee revenues) received from
the Company within the total income of the Management Company. The remunerations of the members of the Investment
Committee of the Company are calculated in accordance with the part of the time actually allocated to the Company's management.
Amounts of remuneration allocated and paid to Management for the years 2019, 2020 and are presented in the tables on the pages
below.
Breakdown of wages allocated and paid during 2021:
Name Surname,
Position
ID code
1. Regular remuneration,
in EUR 000s
2. Variable remuneration,
in EUR 000s
3. One-
time
payments,
in EUR
000s
4.
Contributi
ons to
pension
funds, in
EUR 000s
5. Total
remuner
ation, in
EUR
000s
6. Portion
of
variable
remune-
ration in
%*
Official
annual re-
muneration
Other
payouts
Reward
in kind
Annual
bonuses*
Multiannual
results
bonuses*
Laura
Križinauskienė,
General
manager of the
Management
Company
[sensitive
data]
13.33
-
-
7.84
-
-
3.76
24.93
31,44
Darius Šulnis,
Chairman of the
Board of the
Management
Company
[sensitive
data]
5.24
-
-
-
-
-
-
5.24
-
Nerijus
Drobavičius,
Member of the
Board of the
Management
Company
[sensitive
data]
10.67
-
-
8.19
-
-
0.03
18.89
43,37
Vytautas
Plunksnis,
Member of the
Board of the
Management
Company
[sensitive
data]
8.18
-
-
1.83
-
-
1.59
11.60
15,72
Vytautas
Bakšinskas,
Member of the
Investment
Committee
[sensitive
data]
81.97
-
-
148.74
-
-
1.59
232.30
64,03
Andrius
Daukšas,
Member of the
Investment
Committee
[sensitive
data]
42.65
-
-
23.80
-
-
2.17
68.62
34,68
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 136
Raimondas
Rajeckas,
Member of the
Supervisory
Board
[sensitive
data]
-
-
-
-
-
-
-
-
-
Audrius
Matikūnas,
Member of the
Supervisory
Board
[sensitive
data]
-
-
-
-
-
-
-
-
-
Eglė
Surplienė,
Chairman of the
Supervisory
Board**
[sensitive
data]
-
-
-
-
-
-
-
-
-
* The variable remuneration component for 2021 will be allocated in 2022, after approval of financial statements for 2021.
** It is set an hourly salary of EUR 145 (excluding taxes) for an independent member of the Supervisory Board Eglė Surplienė .
For 2021 no remuneration was paid to Egle Surpliene.
Breakdown of wages allocated and paid during 2021 in other undertakings of the Group of the Company:
Name Surname,
Position
ID code
1. Regular remuneration,
in EUR 000s
2. Variable remuneration,
in EUR 000s
3. One-
time
payment
s, in EUR
000s
4.
Contributi
ons to
pension
funds, in
EUR 000s
5. Total
remunerat
ion, in
EUR 000s
6. Portion
of variable
remune-
ration in
%*
Official
annual re-
muneration
Other
payouts
Reward in
kind
Annual
bonuses*
Multiannual
results
bonuses*
Vytautas
Bakšinskas,
Member of the
Investment
Committee**
[sensitive
data]
0.96
-
-
-
-
-
-
0.96
-
* The variable remuneration component for 2021 will be allocated in 2022, after approval of financial statements for 2021.
**Other members of the Management did not receive remuneration from other companies of the Group of the Company.
Breakdown of wages allocated and paid during 2020:
Name Surname,
Position
ID code
1. Regular remuneration,
in EUR 000s
2. Variable remuneration,
in EUR 000s
3. One-
time
payments,
in EUR
000s
4.
Contributi
ons to
pension
funds, in
EUR 000s
5. Total
remuner
ation, in
EUR
000s
6. Portion
of
variable
remune-
ration in
%*
Official
annual re-
muneration
Other
payouts
Reward
in kind
Annual
bonuses*
Multiannual
results
bonuses*
Laura
Križinauskienė,
General
manager of the
Management
Company
[sensitive
data]
18.61
-
-
4.69
-
-
4.61
27.91
16.80
Darius Šulnis,
Chairman of the
Board of the
Management
Company
[sensitive
data]
9.75
-
-
-
-
-
-
9.75
-
Nerijus
Drobavičius,
Member of the
Board of the
Management
Company
[sensitive
data]
13.39
-
-
-
-
-
0.04
13.43
-
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 137
Vytautas
Plunksnis,
Member of the
Board of the
Management
Company
[sensitive
data]
13.27
-
-
-
-
-
1.98
15.25
-
Vytautas
Bakšinskas,
Member of the
Investment
Committee
[sensitive
data]
80.13
-
-
141.88
-
-
1.59
223.6
63.45
Andrius
Daukšas,
Member of the
Investment
Committee
[sensitive
data]
42.61
-
-
22.70
-
-
0.85
66.16
34.31
Breakdown of wages allocated and paid during 2020 in other undertakings of the Group of the Company:
Name Surname,
Position
ID code
1. Regular remuneration,
in EUR 000s
2. Variable remuneration,
in EUR 000s
3. One-
time
payment
s, in EUR
000s
4.
Contributi
ons to
pension
funds, in
EUR 000s
5. Total
remunerat
ion, in
EUR 000s
6. Portion
of variable
remune-
ration in
%*
Official
annual re-
muneration
Other
payouts
Reward in
kind
Annual
bonuses*
Multiannual
results
bonuses*
Vytautas
Bakšinskas,
Member of the
Investment
Committee**
[sensitive
data]
0.96
-
-
-
-
-
-
0.96
-
**Other members of the Management did not receive remuneration from other companies of the Group of the Company.
As a rule, the bonus is paid in money. The Management Company, in accordance with the principle of proportionality, does not
apply the requirement regarding the mandatory payment of the bonus in financial instruments. The managers of the Company are
not granted shares of the Company, nor are there any share options for the Company's shares with them. In accordance with the
Policy of the Management Company in force in the Company, the portion of the variable remuneration allocated to the employee of
the Management Company (all or part of it) may be allocated in the options of AB Invalda INVL. Their pro rata payment is realised
through the assignment of shares (i.e. the grant or obtaining of the right to acquire the relevant quantities of shares at different
terms) under the procedures and conditions laid down in the option agreements.
Comparison of wages allocated and paid over the last five years
Due to the fact that the management of the Company is delegated to the Management Company and its management bodies are
not formed, and the Company itself does not have employees, the annual changes in remuneration and the full-time equivalent
changes in average remuneration, based on the employees of the Company who are not members of the management bodies,
cannot be compared. It is also not possible to provide information on the annual changes in the remuneration of the members of
the Supervisory Board and the average remuneration, as the members of the Supervisory Board do not receive remuneration.
Since only the remunerations of the members of the Investment Committee of the Company are calculated on the basis of the
actual part of the time allocated to the management of the Company and their remunerations depend on the performance of the
Management Company related to the activities of the Company, therefore, the table below reflects only the remunerations of the
members of the Investment Committee and the financial results of the Company.
The remuneration of the
Investment Committee***
ID code
2017 (in
EUR 000s)
2018 (in
EUR 000s)
2019 (in
EUR 000s)
2020 (in
EUR 000s)
2021 (in
EUR 000s
Vytautas Bakšinskas, Member
of the Investment Committee
[sensitive data]
95.66
72.08
113.97
224.56
233.62
Andrius Daukšas, Member of
the Investment Committee
[sensitive data]
36.26
34.92
47.35
66.16
68.62
*** Total remuneration received from the Company and other companies of the Group
The Company's results
2017
(in EUR 000s)
2018
(in EUR 000s)
2019
(in EUR 000s)
2020
(in EUR 000s)
2021 (in
EUR 000s
INVL Baltic Real Estate, code 152105644, Gynėjų str. 14, Vilnius
INVL BALTIC REAL ESTATE
2021 ANNUAL REPORT | 138
Net profit per share****
0.27
0.24
0.79
0.41
0.37
Net profit
3.577
3.169
10.423
5.416
3.399
Assets
57.989
59.896
75.377
41.935
33.026
**** Recalculated with the par value per share at EUR 1.45.
The Company's Remuneration Report, together with the Policy and the Remuneration Policy of the Supervisory Board, is publicly
available on INVL Baltic Real Estate website at https://bre.invl.com/lit/en
PricewaterhouseCoopers UAB, J. Jasinskio str. 16B, 03163 Vilnius, Lithuania
+370 (5) 239 2300, lt_vilnius@pwc.com, www.pwc.lt
Company code 111473315, registered with the Legal Entities’ Register of the Republic of Lithuania
Independent auditor’s report
To the shareholders of INVL Baltic Real Estate Special Closed-End Type Real Estate Investment
Company AB
Report on the audit of the separate and consolidated financial statements
Our opinion
In our opinion, the separate and consolidated financial statements give a true and fair view of the
separate and consolidated financial position of INVL Baltic Real Estate Special Closed-End Type Real
Estate Investment Company AB (the “Company”) and its subsidiaries (together - the “Group”) as at
31 December 2021, and of the Company’s and of the Group’s separate and consolidated financial
performance and separate and consolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards as adopted by the European Union.
Our opinion is consistent with our additional report to the Audit Committee dated 18 March 2022.
What we have audited
The Company’s and the consolidated financial statements comprise:
● the consolidated and Company’s statement of financial position as at 31 December 2021;
● the consolidated and Company’s statements of comprehensive income for the year then ended;
● the consolidated and Company’s statements of changes in equity for the year then ended;
● the consolidated and Company’s statements of cash flows for the year then ended; and
● the notes to the consolidated and Company’s financial statements, which include significant
accounting policies and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Company and the Group in accordance with the International Code of
Ethics for Professional Accountants (including International Independence Standards) issued by the
International Ethics Standards Board for Accountants (IESBA Code) and the Law of the Republic of
Lithuania on the Audit of Financial Statements that are relevant to our audit of the consolidated and
Company’s financial statements in the Republic of Lithuania. We have fulfilled our other ethical
responsibilities in accordance with the IESBA Code and the Law of the Republic of Lithuania on the
Audit of Financial Statements.
To the best of our knowledge and belief, we declare that non-audit services that we have provided to
the Company and the Group are in accordance with the applicable law and regulations in the Republic
of Lithuania and that we have not provided non-audit services that are prohibited under Article 5(1) of
Regulation (EU) No 537/2014 considering the exemptions of Regulation (EU) No 537/2014 endorsed
in the Law of the Republic of Lithuania on the Audit of Financial Statements.
No non-audit services were provided to the Company and the Group, in the period from
1 January 2021 to 31 December 2021.
Our audit approach
Overview
● Overall Company and Group materiality: € 202 thousand and € 202
thousand, representing 1% of total equity of the Company and the
Group, respectively.
● The full scope audit was performed for the Company. The Group
engagement team performed audit work on the selected balances
and transactions of subsidiaries, which were assessed as material
from the Group audit perspective.
● Our audit scope covered all of the Group’s revenues and 99% of
the Group’s total assets.
● Valuation of investment properties
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the consolidated and Company’s financial statements (together “the financial
statements”). In particular, we considered where management made subjective judgements; for
example, in respect of significant accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all of our audits, we also addressed the
risk of management override of internal controls, including, among other matters, consideration of
whether there was evidence of bias that represented a risk of material misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance whether the financial statements are free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Company and Group materiality for the financial statements as a whole as set out
in the table below. These, together with qualitative considerations, helped us to determine the scope
of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements, if any, both individually and in aggregate on the financial statements as a whole.
Overall Company and Group
materiality
Overall materiality applied to the Company and the Group
amounted to € 202 thousand and € 202 thousand (2019:
€ 285 thousand and € 285 thousand), respectively.
How we determined it
1% of total equity of the Company and the Group,
respectively.
Rationale for the materiality
benchmark applied
We chose the Company’s and Group’s equity as the
benchmark because, in our view, it is an appropriate
measure of underlying performance, and it is the benchmark
against which the performance of the Company, the Group
Materiality
Group
scoping
Key audit
matters
and other companies in this industry is most commonly
measured by users, and it is a generally accepted
benchmark. The key driver of the business and determinant
of the Company’s and the Group’s value is investments into
various properties. For this reason, the key area of focus in
the audit of the financial statements of the Company and the
Group is the valuation of investment properties. Accordingly,
an overall Company and Group materiality was based on
total equity.
We chose 1 %, which is within the range of acceptable
quantitative materiality thresholds.
We agreed with the Audit Committee that we would report to them misstatements identified during our
audit above € 20,2 thousand, the same for the Company and the Group, as well as misstatements
below that amount that, in our view, warranted reporting for qualitative reasons.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Valuation of investment properties
Refer to Notes 2.22 and 11 to the financial
statements on pages 23 and 43, respectively.
The Group’s/Company’s investment properties
represent the most significant category of the
Group’s/Company’s assets. Investment
properties are accounted at fair value.
Management estimated the fair value of the
Group’s/Company’s investment properties to
be € 29,616 thousand and € 20,797 thousand
at 31 December 2021, respectively, as
compared to € 24,133 thousand and € 15,774
thousand at 31 December 2020, respectively.
Net gains from fair value adjustments on
investment property of € 2,854 thousand and €
2,395 thousand (2020: € 4,961 thousand and €
5,004 thousand) was recorded in the
consolidated and Company’s statements of
comprehensive income, respectively.
The valuation of investment properties was
based on the values determined by
independent appraisers as at 31 December
2021.
In determining the value of leased-out
properties, the external appraisers take into
account property- specific current information
Our procedures in relation to management’s
valuation of investment properties included as
follows:
• evaluation of the independent external valuers’
competence, capabilities and objectivity;
• assessment of the methodologies used and
appropriateness of key assumptions based on our
knowledge of real estate industry;
• testing, on a sample basis, whether specific
information supplied to the valuers reflected the
underlying property records held by the
Group/Company;
• testing the data inputs underpinning the
valuation for a sample of properties, including
rental income, capital expenditure, by agreeing
them back to the supporting documentation;
• testing of investment properties additions with
supporting documents.
Because of the subjectivity involved in
determining the value of investment properties
and existence of alternative assumptions and
valuation methods, we have reviewed the
sensitivity analysis of the fair value of investment
such as current tenancy agreements and
rental income earned by the asset.
Subsequently, they apply assumptions in
relation to capitalisation rates and current
market rental prices and their growth, based
on available market data and transactions, to
arrive at a range of valuation outcomes, from
which they derive a point estimate. Due to
unique nature of each property, the
assumptions applied take into consideration
the individual property characteristics at a
granular tenant-by-tenant level, as well as the
qualities of the property as a whole.
The valuations of investment properties under
development are also dependent upon the
estimated costs to complete and expected
profit margin of a developer.
Given the materiality of investment properties,
the revaluation to fair value had a significant
impact on the financial statements. We also
focused on this area as the conclusions are
dependent upon significant estimates involved
in performing the valuation, and they are most
sensitive to the assumptions underlying those
valuations. In particular, the most significant
estimates relate to capitalisation, discount
rates and fair market rental prices or sales
prices of comparable assets, estimated costs
to completion and risk premium assumptions.
For the above-mentioned reasons, due to
existence of significant estimation uncertainty,
we gave specific audit focus and attention to
this area.
properties to changes in key assumptions, which
was prepared by the Group's management.
How we tailored our Group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the consolidated the financial statements as a whole, taking into account the structure of
the Group, the accounting processes and controls, and the industry in which the Group operates.
The Group consists of 6 entities: the Company and its subsidiaries, three subsidiaries located in
Lithuania and two subsidiaries located in Latvia. The Group engagement team conducted audit work
covering all significant reporting entities in Lithuania as well as in Latvia. We performed audit work on
the selected balances and transactions of subsidiaries, which were assessed as material from the
Group audit perspective. The Group’s consolidation and the financial statements disclosures were
audited by the group engagement team. Our work addressed all of the Group’s revenues and 99% of
the Group’s total assets.
Reporting on other information including the consolidated annual report
Management is responsible for the other information. The other information comprises the
consolidated annual report, including the corporate governance report and the remuneration report
(but does not include the financial statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover the other information, including the
consolidated annual report.
In connection with our audit of the financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated.
With respect to the consolidated annual report, we considered whether the consolidated annual report
includes the disclosures required by the Law of the Republic of Lithuania on Consolidated Financial
Reporting by Groups of Undertakings, the Law of the Republic of Lithuania on Financial Reporting by
Undertakings.
Based on the work undertaken in the course of our audit, in our opinion:
● the information given in the consolidated annual report for the financial year for which the financial
statements are prepared, is consistent with the financial statements; and
● the consolidated annual report has been prepared in accordance with the Law of the Republic of
Lithuania on Consolidated Financial Reporting by Groups of Undertakings and the Law of the
Republic of Lithuania on Financial Reporting by Undertakings.
In addition, in light of the knowledge and understanding of the Company and the Group and their
environment obtained in the course of the audit, we are required to report if we have identified material
misstatements in the consolidated annual report which we obtained prior to the date of this auditor’s
report. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the financial
statements
Management is responsible for the preparation of the financial statements that give a true and fair
view in accordance with International Financial Reporting Standards as adopted by the European
Union, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing the Company’s and
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Company and the Group or to cease operations, or has no realistic alternative but to do
so.
Those charged with governance are responsible for overseeing the Company’s and the Group’s
financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
● Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
● Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s and the Group’s internal control.
● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
● Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company’s and the Group’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Company and the Group to cease to continue as a going concern.
● Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the Group audit.
We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and have communicated with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Report on other legal and regulatory requirements
Report on the compliance of the format of the separate and consolidated financial statements
with the requirements of the European Single Electronic Reporting Format
We have been engaged based on the amendment to our audit agreement by the management of the
Company to conduct a reasonable assurance engagement for the verification of compliance with the
applicable requirements of the European single electronic reporting format of the Company’s and the
Group’s separate and consolidated financial statements, including the consolidated annual report, for
the year ended 31 December 2021 (the “Single Electronic Reporting Format of the separate and
consolidated financial statements”).
Description of a subject matter and applicable criteria
The Single Electronic Reporting Format of the separate and consolidated financial statements has
been applied by the management of the Company to comply with the requirements of art. 3 and 4 of
the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive
2004/109/EC of the European Parliament and of the Council with regard to regulatory technical
standards on the specification of a single electronic reporting format (the “ESEF Regulation”). The
applicable requirements regarding the Single Electronic Reporting Format of the separate and
consolidated financial statements are contained in the ESEF Regulation.
The requirements described in the preceding sentence determine the basis for application of the
Single Electronic Reporting Format of the separate and consolidated financial statements and, in our
view, constitute appropriate criteria to form a reasonable assurance conclusion.
Responsibility of the management and those charged with governance
The management of the Company is responsible for the application of the Single Electronic Reporting
Format of the separate and consolidated financial statements that complies with the requirements of
the ESEF Regulation.
This responsibility includes the selection and application of appropriate markups in iXBRL using ESEF
taxonomy and designing, implementing and maintaining internal controls relevant for the preparation
of the Single Electronic Reporting Format of the separate and consolidated financial statements which
is free from material non-compliance with the requirements of the ESEF Regulation.
Those charged with governance are responsible for overseeing the financial reporting process, which
should also be understood as the preparation of financial statements in accordance with the format
resulting from the ESEF Regulation.
Our responsibility
Our responsibility was to express a reasonable assurance conclusion whether the Single Electronic
Reporting Format of the separate and consolidated financial statements complies, in all material
aspects, with the ESEF
Regulation.
We conducted our engagement in accordance with International Standard on Assurance
Engagements 3000 (Revised) ‘Assurance Engagements other than Audits and Reviews of Historical
Financial Information’ (“ISAE 3000 (R)”). This standard requires that we comply with ethical
requirements, plan and perform procedures to obtain reasonable assurance whether the Single
Electronic Reporting Format of the separate and consolidated financial statements complies, in all
material aspects, with the applicable requirements.
Reasonable assurance is a high level of assurance, but it does not guarantee that the service
performed in accordance ISAE 3000 (R) will always detect the existing material misstatement
(significant non-compliance with the requirements).
Summary of the work performed
Our planned and performed procedures were aimed at obtaining reasonable assurance that the
Single Electronic Reporting Format of the separate and consolidated financial statements was applied,
in all material aspects, in accordance with the applicable requirements and such application is free
from material errors or omissions. Our procedures included in particular:
• obtaining an understanding of the internal control system and processes relevant to the
application of the Single Electronic Reporting Format of the separate and consolidated financial
statements, including the preparation of the XHTML format and marking up the separate and
consolidated financial statements;
• verification whether the XHTML format was applied properly;
• evaluating the completeness of marking up the separate and consolidated financial statements
using the iXBRL markup language according to the requirements of the implementation of single
electronic format as described in the ESEF Regulation;
• evaluating the appropriateness of the Company’s and the Group’s' use of XBRL markups selected
from the ESEF taxonomy and the creation of extension markups where no suitable element in the
ESEF taxonomy has been identified; and
• evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
conclusion.
Conclusion
In our opinion, the Single Electronic Reporting Format of the separate and consolidated financial
statements for the year ended 31 December 2021 complies, in all material aspects, with the ESEF
Regulation.
Appointment
We were first appointed as auditors of the Company and the Group as at 23 December 2014. Our
appointment has been renewed annually by shareholder resolution representing a total period of
uninterrupted engagement appointment of 8 years.
The key audit partner on the audit resulting in this independent auditor’s report is Rasa Selevičienė.
On behalf of PricewaterhouseCoopers UAB
/signed with electronic signature/
Rasa Selevičienė
Assurance director
Auditor's Certificate No.000504
Vilnius, Republic of Lithuania
18 March 2022
The auditor's electronic signature is used herein to sign only the Independent Auditor's Report