VILNIAUS BALDAI, AB Registration code: 121922783 VAT code: LT219227811

+370 5 25 25 700, info@vilniausbaldai.lt, www.vilniausbaldai.lt

Pramonės str. 23, Guopstos village, Trakai region, LT-21148

Account number: LT86 7290 0990 7740 6347

AS „Citadele banka“ Lithuanian branch, b.c. 72900 SWIFT INDULT2X

RESPONSIBLE PERSONS CONFIRMATION

11 December 2025

Following the Law on Securities of the Republic of Lithuania and the Rules on Information

Disclosure of the Bank of Lithuania, management of Vilniaus baldai, AB, hereby confirm that, to

the best of our knowledge, audited Consolidated and Company‘s Financial Statements for the

Financial Year 2025 ended 31 August 2025 are prepared in accordance with the International

Financial Reporting Standards as adopted by the European Union, give a true and fair view of

the assets, liabilities, financial position, profit and cash flows. The presented Consolidated

Annual Report provides a true and fair overview of the business and its development, the

Company‘s and consolidated Group‘s circumstances together with an overview of the main risks

and uncertainties faced.

General Manager Jonas Krutinis

Chief Financial Officer Egidijus Žvaliauskas

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

VILNIAUS BALDAI AB

CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS

FOR THE FY 2025 ENDED 31 AUGUST 2025,

PREPARED ACCORDING TO THE INTERNATIONAL FINANCIAL REPORTING STANDARDS AS

ADOPTED BY THE EUROPEAN UNION,

PRESENTED TOGETHER WITH INDEPENDENT AUDITOR’S REPORT

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

CONTENTS

CONSOLIDATED MANAGEMENT REPORT ........................................................................................................ 3

OBJECTIVE REVIEW OF THE COMPANIES GROUP’S POSITION, ACTIVITY AND DEVELOPMENT .............. 3

COMPANY MANAGEMENT REPORT ................................................................................................................. 15

COMPANY REMUNERATION POLICY ................................................................................................................ 23

AB "VILNIAUS BALDAI" CORPORATE SUSTAINABILITY REPORT .................................................................... 25

VILNIAUS BALDAI AB REPORT ON THE COMPLIANCE WITH THE GOVERNANCE CODE FOR THE

COMPANIES LISTED ON THE STOCK EXCHANGE NASDAQ VILNIUS REGULATED MARKET FOR THE

FY2025 ................................................................................................................................................................. 26

CONSOLIDATED AND COMPANY‘S FINANCIAL STATEMENTS ..................................................................... 41

CONSOLIDATED AND COMPANY‘S STATEMENT OF FINANCIAL POSITION ............................................. 41

CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENT OF PROFIT OR LOSS AND OTHER

COMPREHENSIVE INCOME ................................................................................................................................ 43

CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENT OF CHANGES IN EQUITY ......................... 44

CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENT OF CASH FLOWS ....................................... 46

NOTES TO THE FINANCIAL STATEMENTS ....................................................................................................... 48

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

CONSOLIDATED MANAGEMENT REPORT

11 December 2025

OBJECTIVE REVIEW OF THE COMPANIES GROUP’S POSITION, ACTIVITY AND

DEVELOPMENT

COMPANIES COMPOSING THE GROUP

Vilniaus Baldai AB (hereinafter “the Company”) prepares both separate Company’s and consolidated financial statements.

The Group (hereinafter “the Group”) consists of Vilniaus Baldai AB and subsidiary ARI-LUX UAB in which the Company

directly controls 100% of shares.

GENERAL INFORMATION ABOUT THE COMPANY:

Name

Joint stock company Vilniaus Baldai AB

Legal form

Joint stock company

Code

121922783

VAT payer’s code

LT219227811

LEI code

529900MJDB8L13ZF6G26

Authorised capital

EUR 4,508,069.72, divided into 3,886,267 ordinary registered

shares with the par value of EUR 1.16 each

Office address

Pramones str. 23, Guopstu vil., LT-21148 Traku district

Telephone

(+370~5) 252 57 00

E-mail

info@vilniausbaldai.lt

Internet website

www.vilniausbaldai.lt

Registration date and place

9 February 1993, Vilnius City Board

is collected and stored

Main type of activity

Design, production and selling of furniture

GENERAL INFORMATION ABOUT THE SUBSIDIARY:

Name

Limited liability company ARI-LUX UAB

Legal form

Limited liability company

Code

120989619

VAT payer’s code

LT209896113

Authorised capital

EUR 2,896

Office address

Pramones str. 23, Guopstu vil., LT-21148 Traku district

Telephone

(+370~5) 252 57 44

E-mail

info@ari-lux.lt

Registration date and place

28 October 1991, Vilnius City Board

is collected and stored

Main type of the activity

Packaging

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

1. OBJECTIVE REVIEW OF THE COMPANIES GROUP’S POSITION, ACTIVITY AND DEVELOPMENT,

CHARACTERISATION OF THE MAIN TYPES OF RISKS AND UNCERTAINTIES FACED BY THE COMPANY

Following the record financial results achieved in the 2024 financial year, the Company entered a new stage of development,

focusing on the efficient utilization of its existing production capacities and the expansion of output volumes, while

maintaining its long-term strategic direction. During the 2025 financial year, the Company achieved a moderate increase in

sales revenue of 7.1%, reaching EUR 104,219 thousand, compared to EUR 97,272 thousand in the previous reporting

period. At the same time, the volume of products sold and produced grew significantly — 3,686 thousand units were sold in

2025 financial year, compared to 2,512 thousand units in the previous reporting period (a 46.7% increase). Following the

record results of 2024, the Group’s EBITDA decreased by 37.0%, amounting to EUR 11,143 thousand (compared to EUR

17,686 thousand in the previous reporting period), while the EBITDA margin declined from 18.2% to 10.7%. These changes

in revenue and profitability were in line with the Company’s plans and reflect both the events that took place during the 2025

financial year and the Company’s strategic direction in the short-term.

Both the change in revenue and profitability are linked to the Company’s strategy to fully utilize its existing production

capacities and to continue investing in their expansion. The increase in revenue was primarily driven by the expansion of

the product portfolio, which, on the other hand, had a negative impact on profitability indicators. The main reasons for the

decrease in profitability are as follows:

- Significant increase in the number of new employees. To implement the substantial growth (+46.7%), the Company

had to significantly expand its workforce. Including leased employees, the total number of Group staff increased by

38% (from 446 to 614) during the period from 31 August 2024 to 31 August 2025. Not all new employees adapt

immediately — it takes time to integrate them into production processes and achieve the expected performance levels.

This resulted a slower improvement of production efficiency, which led to the higher personnel expenses.

- Introduction of new products. At the end of the first quarter of the previous financial year, the Company initiated the

process of introducing new products into production. In the short-term, this led to a temporary decline in quality and

production efficiency indicators. On the positive side, the introduction of new products required a review and

reorganization of production flows, improvements to existing processes, and opened up new opportunities for further

optimization.

- Development of administrative competencies. In parallel with the expansion of production capacities, the Company also

strengthened its administrative resources to effectively manage current growth and prepare for future challenges. The

Company expanded its competencies in compliance, technology, new product implementation, employee onboarding,

investment project management, data analytics, as well as equipment maintenance.

In September 2024, the Company announced the successful refinancing of its long-term financial obligations by signing

financing agreements with AB Artea Bank (former AB Šiaulių Bankas) for EUR 30 million. The more favorable loan repayment

schedule, combined with declining EURIBOR rates, resulted in reduced overall loan servicing costs, positively impacting the

Company’s cash flows. Excluding one-off refinancing expenses, debt service payments in the 2025 financial year decreased

by approximately EUR 2,356 thousand, or 26% compared to the previous reporting period, enabling increased investments

in production modernization and competitiveness enhancement. Investments in fixed assets (primarily modernization of

production equipment) amounted to EUR 4,707 thousand in the 2025 financial year, compared to only EUR 789 thousand

in the previous reporting period – nearly sixfold. Part of these investments was directed towards strengthening energy

independence: with increasing production volumes and corresponding energy needs, the Company completed the

construction of a 1 MW ground-mounted solar power plant in the last quarter of the 2025 financial year. The solar power

plant is expected to cover up to 10% of electricity consumption. Additionally, the Company implemented compressor system

renovations and excess heat recovery projects, enabling electricity savings in compressed air production and utilizing surplus

heat for building heating. To enhance business management efficiency and cybersecurity, from the beginning of the 2026

financial year, the Company began using a new enterprise management system (ERP).

It is worth noting that in the 2025 financial year, the Company celebrated the 25th anniversary of its listing on the stock

exchange. Being part of the listed companies category ensures adherence to standards of transparency, accountability, and

good governance, facilitates smooth collaboration with financial institutions both in Lithuania and abroad, and, in the long-

term, expands the range of financing opportunities, which is important for the Company’s capital investment objectives.

In the upcoming 2026 financial year, the Company will maintain its strategic direction, continue improving internal processes

– including further integration of the new enterprise management system – expand its own electricity generation capacity,

and implement new technologies. Significant attention will continue to be given to the attraction, development, and retention

of specialists with engineering and technological expertise.

The 2026 financial year is expected to bring similar growth-related challenges, and the Company anticipates that lessons

learned will help achieve better operational results. Due to the planned gradual introduction of new products, 2026 is

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

expected to see further increases in production and sales volumes. This trend will also be supported by the comparative

base still reflecting the initial quarters of the 2025 financial year.

Other major priorities for the 2026 financial year include the further implementation of LEAN methodologies, workplace

safety, environmental protection, enhancement of energy independence, improvement of employee conditions, and

engagement in new product development.

Main risks faced by the Group:

Economic risk factors. The sales to the main customer Swedish IKEA constituted approximately 98.8% of total sales of

Vilniaus baldai AB during 2025 (in 2024 – 99.5%). Furniture accounted for 99.5% of the Company’s sales during 2025 (in

2024 – 99.7%), while the rest came from sales of raw materials and waste of raw materials.

Global economic development trends determine the pace of expansion of the Company’s main customer and influence

fluctuations in the demand for the Company’s manufactured furniture.

The Company competes with the furniture manufacturers worldwide.

Political risk factors. Changing geopolitical situation has an impact on the international trade flows.

A part of the Company’s production is exported to the United States. In the 2025 financial year, exports of the Company’s

products to the U.S. accounted for 11.6% of total sales revenue. During the 2025 financial year, changes in trade policy were

introduced in this market, including the implementation of import tariffs on products manufactured in Europe. However, the

Company does not anticipate a significant short-term impact on production volumes as a result of these measures. In the

medium and long term, any potential effects are expected to be mitigated through planned investments aimed at improving

production and cost efficiency.

Although potential risks exist, the current global military conflicts have no significant impact on the Company’s operations.

The tax reform implemented by the government in 2025 is not expected to have an impact on the Company’s operations.

The current Lithuanian government continues to increase both the minimum monthly wage and various social benefits;

however, this should not affect the Company, as it aims to provide competitive rather than minimum remuneration and

continuously improve working conditions through efficiency investments. There are no government-imposed restrictions or

regulatory requirements that would affect the issuer’s operations.

Social risk factors. The Company faces an ongoing shortage of engineering specialists due to external circumstances – a

lack of such professionals is felt throughout the market, and current education, training, and incentive programs do not meet

the actual demand for specialists. To address this, the Company implements long-term internal programs to support

employee education, provide theoretical and practical training, and enhance competencies and qualifications.

This financial year, the Company successfully continued its internal learning academies (such as the Operator Academy),

expanded cooperation with vocational schools, contributed to the training of electricians, provided resources for student

internships. Additionally, the Company participated in career fairs and events, joined exam boards, shared knowledge and

motivation in presentations for Engineering Day, and carried out other initiatives.

The Company systematically invests in strengthening employee competencies. Within the People and Culture Department,

a dedicated Training Division operates, where training mentors are responsible for employee onboarding, individual

competency matrices, technical training, and professional development. Administrative employees are provided with access

to learning budgets linked to their performance evaluations. In addition, specialized group training sessions are organized

for employees. For the first time during this financial year, mandatory annual training on key topics relevant to the Company’s

operations was conducted interactively through an e-learning platform.

The Company also contributes to addressing other social and labor market issues by collaborating with educational

institutions, municipality, and government agencies. Additionally, the Company helps reduce unemployment in the region by

hiring employees from both nearby and more distant areas, ensuring they have access to free, convenient, and regular

transportation. During the financial year, the Company employed new staff from additional regions such as Kaišiadorys,

Alytus, Elektrėnai, Žiežmariai, and Druskininkai.

An active labor union also operates within the Company, which represents employees' interests and ensures a smooth social

dialogue. In order to adapt to the constantly changing needs of personnel, the Company continuously improves its

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

organizational structure, increases work efficiency, enhances working conditions, and expands employee training

opportunities.

The Company actively seeks to adopt best practices from other entities by organizing visits to similar companies, where

experiences and best management and technological solutions are shared. In addition, the Company hosts educational tours

for students, schoolchildren, and representatives from other businesses, as well as career-oriented excursions in order to

educate about career opportunities in the furniture industry and promote greater participation in the sector.

The Company values employee feedback and regularly conducts surveys on various topics to promptly address their needs

and improve organizational processes. Employee meetings are held to discuss the Company‘s performance, market

conditions, and relevant employee concerns.

Additionally, the Company implements large-scale projects that involve employees from various departments. These

initiatives focus on finding the most effective solutions for improving workplace safety, increasing production efficiency, and

addressing key issues that require greater attention at any given time. The Company aims to enhance the employee

experience by optimizing the tools used in daily operations — for example, by transitioning employee-prepared and

completed documentation to an electronic document management system.

The Company takes care of employees’ mental health and has implemented a well-being program designed to strengthen

psychological resilience, reduce stress, and promote mindfulness in the workplace. Program participants have access to

free consultations with psychologists and psychotherapists. The Company also operates a medical office where employees

can receive health check-ups, vaccinations, and participate in wellness programs.

The Company strongly believes that continuous investment in employee development, workplace improvement, and

engagement drives organizational growth and market competitiveness.

Supply. The Company is not currently experiencing any disruptions in the supply of raw materials, and geopolitical factors

have not had an impact. The increase in purchased raw materials, driven by higher production volumes, has been managed

smoothly. During the first three quarters of the 2025 financial year, a steady decline in the prices of key raw materials was

observed, while in the fourth quarter, price increases began to emerge.

In the upcoming 2026 financial year, the primary objective will be to secure raw materials to support further growth in

production volumes.

Technical and technological risk factors. Equipment maintenance is continuously and systematically improved, with the

aim of reducing the number of failures and increasing the availability of equipment by involving both technicians and line

operators in this process. The Company is proud that, over the past few years, it has transitioned from preventive

maintenance to predictive maintenance methodology, when maintenance work is planned and carried out based on various

real-time equipment performance parameters. During the 2025 financial year, approximately 80 sensors were installed,

which on several occasions enabled the detection of equipment issues before failures occurred. In the 2026 financial year,

the Company plans to further expand the sensor network and enhance competencies in working with this methodology.

For planning periodic and preventive maintenance tasks, the Alldevice program is used, allowing the scheduling of regular

maintenance tasks for technicians and operators.

In the 2024 financial year, the Company began implementing a new enterprise management system tailored for

manufacturing-profile companies. The system was fully implemented and put into operation since the beginning of the 2026

financial year. It is expected that the new system will provide enhanced functionality, enable optimization of standard

operational processes, and ensure best practices in security, protecting the Company’s business operations from various

cyber threats and breaches. During the 2026 financial year, the Company aims to fully integrate the new system into its

business processes and fully leverage its capabilities.

The physical and operational condition of the Company’s main production equipment is good and poses no risk to operations.

Ecological risk factors. The Company uses energy and natural resources in its operations, which poses a risk of

environmental pollution. The Company is committed to protecting the environment and continuously reducing its negative

impact by using resources efficiently, including energy and natural resources, and by complying with legal and standard

requirements related to quality, environmental protection, and all its activities. To manage environmental risks and improve

performance, the Company has implemented quality and environmental management systems that comply with ISO 9001

and ISO 14001 standards.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

The ISO 9001 Quality Management System is a set of procedures and actions that help the organization improve its daily

operations, ensure product quality, reduce costs, save time, increase productivity, and maintain good relationships with

customers. Every year, the procedures are reviewed, performance effectiveness is analyzed, and improvement actions are

planned.

The ISO 14001 Environmental Management System ensures the identification of significant environmental protection

aspects, the implementation of preventive measures, the assignment of responsible persons, and the execution of a

monitoring program. Employees of the Company are trained and certified. Adhering to this standard helps ensure compliance

with legal requirements and significantly reduces ecological and environmental risks. On September 12, 2025, an ISO system

maintenance audit was conducted. No non-compliance or observations were found during the audit. There were no

production restrictions due to environmental pollution.

More than half of the furniture produced by the Company is made using hollow-core panel technology, replacing solid wood

with core filling made from recycled paper. This allows for up to a five-fold reduction in wood raw material consumption. The

Company uses 100% primary wood sourced from socially responsibly managed forests. The company has implemented the

FSC® (FSC-C104209) Chain of Custody system tracking the product’s journey from the forest or (in the case of secondary

raw materials) from the moment of recycling to the point where it is sold with the FSC® label and/or finished and labeled with

the FSC® tag. FSC® Chain of Custody certification ensures that only certified raw materials are used in production. This

eliminates the risk that the raw materials might be mixed with non-certified ones. An annual FSC® maintenance audit was

conducted on March 17, 2025.No non-compliance or observations were found during the audit.

Repayment of loans. In September 2024, the Company refinanced its financial obligations to the European Bank for

Reconstruction and Development (EBRD), AS “Citadele Banka” Lithuanian branch, KŪB “Pagalbos verslui fondas,” and AB

“Invalda Privatus Kapitalas” using newly obtained financing from AB Artea Bank. This decision provided the Company with

a more favorable loan repayment schedule, reduced debt servicing costs, and allowed the freed-up cash flows to be allocated

to necessary investments.

Interbank interest rates applied to the Company’s existing financial obligations decreased during the 2025 financial year. No

significant short-term fluctuations in this indicator are expected, and therefore the cost of servicing existing loans is expected

to remain stable in the coming financial years. Loan repayments have been made in accordance with the schedules agreed

with creditors. Information on the Group’s and the Company’s financial obligations, repayment terms and conditions, as well

as credit and interest rate risks, is provided in the explanatory notes to the financial statements for the financial year ended

on August 31, 2025 (Notes 13 and 24).

Characteristics of internal control and risk management systems related to the preparation of consolidated financial

statements of the Group and the Company. The compliance with the requirements for the preparation of the set of the

consolidated financial statements, internal control and financial risk management systems, legal acts regulating the

preparation of the set of the consolidated financial statements is supervised by the Audit Committee established on 22

December 2021.

The Company's Chief Accountant and Chief Financial Officer regularly review the International Financial Reporting

Standards (IFRS) adopted in the European Union to ensure timely implementation of all changes in the financial statements,

analyze transactions material to the Group and the Company, ensure fair and timely collection of information and periodically

inform senior management about the progress of the financial statements.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

The Audit Committee:

Tomas Bubinas

Position

Independent Member of the Audit Committee, elected to the Audit Committee 22/12/2021, end of the term – 2025

Work experience

Since 2022 board member of AB Invalda INVL

2013–2022 Chief Operating Officer at Biotechpharma UAB

2010–2012 Senior Director at TEVA Biopharmaceuticals USA

2001–2010 Chief Financial Officer at SICOR Biotech / TEVA Baltic

1999–2001 Senior Manager at PricewaterhouseCoopers

1994–1999 Senior Auditor, Manager at Coopers & Lybrand

Education

Master’s degree in economics at Vilnius University and Executive MBA of BMI (Baltic Management Institute), a fellow

member of the Association of Chartered Certified Accountants (ACCA) and a registered Lithuanian Sworn Auditor

Participation in Vilniaus baldai AB authorised capital

Number of shares and of voting rights

Vaidas Savukynas

Position

Member of the Audit Committee, elected to the Audit Committee on 22/12/2021, end of the term – 2025

Work experience

Since 2013 Chief Financial Officer at Invalda Privatus Kapitalas AB

2011–2013 Chief Financial Officer at food retail chain Narodnyi in Kyrgyz Republic

2010–2010 Director of Administration at Zemaitijos Pienas AB

1998–2009 Chief Financial Officer and Financial Analyst at concern MG Baltic and its companies (MG Baltic Trade,

Apranga, Minvista)

1993–1995 Chief Executive Officer at brokerage company Bankoras

1990–1993 Marketing Manager at Lietuvos Birza AB

Education

Vilnius University diploma in economics, master’s degree in social sciences at Stockholm University (Sweden), Financial

sector schemes introductory courses in Leeds University (Great Britain)

Participation in Vilniaus baldai AB authorised capital

Number of shares and of voting rights

Danutė Kadanaitė

Position

Member of the Audit Committee, elected to the Audit Committee on 22/12/2021, end of the term – 2025

Work experience

Since 2014 Head of “Verus Sensus” UAB

2009 UAB “Legisperitus” – a lawyer

2008 – 2009 AB FMĮ “Finasta” – a lawyer

2008 AB “Invalda” – a lawyer

1999 – 2002 Attorney Artūras Šukevičius office – administrator

1994 – 1999 UAB FMĮ “Apyvarta” – a legal adviser

Education

Master of Finance Law at M. Romeris University, Bachelor of Law at Law University of Lithuania, Manager at International

Business School.

Participation in Vilniaus baldai AB authorised capital

Number of shares and of voting rights

The Company’s Head of Finance department is responsible for the preparation of the consolidated financial statements,

ensures the collection of information from Group companies, its’ timely and fair processing and preparation for the financial

statements.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

2. THE ANALYSIS OF THE FINANCIAL AND NON-FINANCIAL ACTIVITY RESULTS, INFORMATION RELATED TO

THE ENVIRONMENTAL AND PERSONNEL MATTERS

Indicators characterising the operation of the Group in the period of 2021–2025*:

Indicator

2025 m.

2024 m.

2023 m.

2022 m.

2021 m.

Net profitability = net profit / sales * 100

4.26%

10.28%

1.60%

1.40%

0.15%

Average return on assets ROA = net profit /

(assets at the beginning of the period + assets at

the end of the period) / 2 *100

5.30%

12.06%

1.89%

1.64%

0.17%

Return on equity ROE = net profit / equity*100

11.28%

26.37%

5.61%

5.35%

0.60%

Net earnings per share EPS = net profit /

number of shares

1.14

2.57

0.40

0.36

0.04

Debt ratio = liabilities / assets

0.53

0.55

0.66

0.69

0.71

Debt to equity coefficient = liabilities / equity

1.11

1.23

1.91

2.22

2.49

Current ratio = current assets / current

liabilities

0.98

1.28

0.98

0.79

0.64

Asset’s turnover = sales / (assets at the

beginning of the period + assets at the end of the

period) / 2

1.24

1.17

1.18

1.17

Book value of share = equity / number of

10.12

9.76

7.18

6.77

6.39

Turnover (million EUR)

104.22

97.27

97.87

100.74

99.36

Gross profit (million EUR)

13.14

18.98

7.72

-0.23

7.33

Net profit (million EUR)

4.44

10.00

1.57

1.41

0.15

EBITDA (million EUR)**

11.14

17.69

8.75

8.45

5.49

EBIT (million EUR)***

6.36

13.21

4.20

3.52

1.46

Dividends per share (for the prior accounting

period) (EUR)

0.78

0.00

Price to Earnings ratio P/E

10.16

3.21

16.14

22.38

278.63

The lowest share price (EUR)

7.70

6.00

6.15

7.00

8.05

The highest share price (EUR)

14.20

9.35

8.40

10.80

11.20

Closing price (EUR)

11.60

8.25

6.50

8.10

10.60

Capitalisation (million EUR)

45.08

32.06

25.26

31.48

41.19

* - the figures in the table have been updated in accordance with Note 3 of the financial statements, adjusting the relevant

items of assets, equity, and expenses for previous periods.

** - EBITDA has been calculated excluding the impact of IFRS 16. In addition, the amount of EUR 375 thousand, representing

compensation for losses assumed from a group company in the 2024 financial year in accordance with the provisions of the

Republic of Lithuania Law on Corporate Income Tax, has been excluded from this figure.

*** - from the EBIT figure presented in the table, the amount of EUR 375 thousand, representing compensation for losses

assumed from a group company in the 2024 financial year in accordance with the provisions of the Republic of Lithuania

Law on Corporate Income Tax, has been excluded.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

PRODUCTION AND SALES

Vilniaus baldai AB designs, produces flat-pack furniture. The production of the Company is produced from wood particle

boards, using board on frame technology, which allows to produce lightweight, yet massively looking furniture. When

employing this technology less raw materials can be used, and stable quality of the production is attained. New products are

developed and production technologies of existing ones are improved taking into consideration the needs of consumers and

prevailing tendencies. The planning system implemented in the Company is constantly developed to achieve higher

production flexibility and efficiency.

Modern equipment, purchased from such world-renowned manufacturers as Schelling, Burkle, Weeke, Wikoma, Biesse,

Biele, Cefla, etc., enables to manufacture different types of the furniture, coated with plywood, pigment or foil.

The volumes of Company’s production in terms of value in the period of 2021–2025:

Production

2025

2024

2023

2022

2021

thousand

EUR

thousand

EUR

thousand

EUR

thousand

EUR

thousand

EUR

Furniture

101,133

100,288

97,169

96,447

100,581

Other production

Total

101,133

100,288

97,169

96,447

100,581

Production per employee (at sales prices), working on employment contract basis or leased staff, 2021–2025 (thousand

EUR per year):

The production efficiency indicators presented in the chart have been adjusted compared with the previous reporting period,

with leased employees included throughout the comparative period, reflecting their increased impact on the Company’s

metrics in the 2025 financial year.

In the 2025 financial year, production volumes (at sales prices) increased by 1%, while production per employee decreased

by 10%. This change was driven by the renewal of the Company’s product portfolio and changes in its structure, adjustments

to existing product prices, and the introduction of new products, whose production efficiency and quality indicators are

expected to improve gradually in the coming financial years. The Company also plans significant investments in modern

equipment, optimal inventory management, production planning, and other measures to enhance production efficiency. In

the medium-term, the Company intends to make substantial investments in production automation, robotics, and the

implementation of new technologies, which will ensure a steady increase in competitiveness within the furniture

manufacturing sector.

109,3

122,0

175,3

213,3

191,7

0,0

50,0

100,0

150,0

200,0

250,0

2021 2022 2023 2024 2025

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Production sales according to the markets in the period of 2021–2025:

Sales

2025

2024

2023

2022

2021

Thousand

EUR

Thousand

EUR

Thousand

EUR

Thousand

EUR

Thousand

EUR

Lithuania

973

0.93

545

0.56

683

0.70

798

0.79

477

0.48

Overseas

103,246

99.07

96,727

99.44

97,185

99.30

99,940

99.21

98,887

99.52

Total

104,219

100.00

97,272

100.00

97,868

100.00

100,738

100.00

99,364

100.00

The Company‘s sales in Lithuania consisted not only of furniture but also sales of raw materials and material waste, as well

as services provided.

SUPPLY

Vilniaus baldai AB has introduced an effective system of the purchase of raw materials and services. The Company maintains

strategic relations with suppliers and constantly searches for new opportunities in the markets of raw materials and services.

The purchase process is distinguished into strategic and operational purchases. The Company aims to manage the supply

risk; therefore, main raw materials may be supplied by principal or alternative suppliers. Vilniaus baldai AB has implemented

and continuously improves the assessment system of suppliers; audits of suppliers are carried out.

The Company establishes long-term contracts with its suppliers. The main raw materials are sourced from suppliers in

Lithuania, Poland, and Slovakia. The main suppliers are IKEA Industry Lietuva UAB, “Woodeco“ Sp.z.o.o., IKEA

Components S.R.O, IKEA Industry Polska Sp.zo.o., Homanit Krosno Odrzanskie SP, Rehau UAB, Remmers Baltica UAB.

The local supply of the raw materials is pre-conditioned by the cheap transportation costs and good relations with the major

suppliers.

ENERGY

Vilniaus baldai AB consumed 14.195 thousand kWh of electricity in 2025 financial year (11,824 thousand kWh in 2024

financial year), electricity consumption per EUR 1 of production amounted to 0,140 kWh (0,118 kWh in 2024 financial year).

The chart presenting production output in value terms compared with electricity consumption confirms an improvement in

the Company’s energy efficiency in recent years. Although electricity consumption increased in the 2025 financial year

relative to the value of production (electricity consumed per euro of production rose by 19.0%, from 0.118 to 0.140 kWh),

this was related to changes in the product mix and reductions in the prices of existing products. It is noteworthy that the

quantity of production in units increased by 46.7% in 2025, while electricity consumption per unit of production has decreased

for three consecutive years.

28.617

23.141

14.158

11.824

14.195

0,285

0,240

0,146

0,118

0,140

0,000

0,050

0,100

0,150

0,200

0,250

0,300

5.000

10.000

15.000

20.000

25.000

30.000

35.000

2021 2022 2023 2024 2025

Consumption of electricity, thousand kWh

Consumption of electricity (kWh) per 1 EUR of production

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

The Company uses electricity generated from renewable energy sources in its production processes. A long-term fixed-price

electricity supply agreement with an independent provider has enabled the Company to stabilize and forecast electricity

costs, as well as to avoid potential price fluctuations in the energy market. As production volumes and corresponding energy

needs increased, in the last quarter of the 2025 financial year the Company installed a 1 MW solar power plant, which is

expected to cover up to 10% of the Company’s electricity needs in the coming financial year.

EMPLOYEES

The Company has an efficient and fair compensation system designed to attract, retain, and motivate employees. All

employment contracts with employees, including management, are concluded in compliance with the requirements of the

Labor Code of the Republic of Lithuania. The remuneration procedures are based on clear, accessible, and uniformly applied

rules for all employees, as outlined in the Company’s collective agreement. This agreement was updated on December 5,

2023. Its goal is to ensure harmonious teamwork, guarantee a high standard of working conditions, remuneration, and other

employment terms for various categories of employees, as well as to provide additional social benefits beyond those

stipulated by Lithuanian law.

The collective agreement covers the procedures for establishing, amending and terminating employment contracts; working

hours and rest time; compensation terms; employee skill development; workplace safety and medical services; social

welfare; guarantees for labor union activities; and protections for elected employee representatives. If the terms of the

collective agreement are more favorable than those in an individual employment contract, the collective agreement takes

precedence.

The remuneration system clearly defines employee categories and the positions assigned to these categories. The

remuneration provisions set forth in the system and its appendices are applied to prevent any form of discrimination, including

by gender. Men and women receive equal pay for the same or equivalent work. Job responsibilities, required qualifications

(if specific to a position), and mandatory or optional skill development requirements are set forth in the job descriptions and/or

employment contracts.

Compensation consists of a fixed and variable component. The fixed component is the employee’s basic monthly salary

specified in the employment contract, paid monthly. The variable component is awarded based on the Company’s

performance. Employees may also receive bonuses for acquired qualifications and/or additional pay for extra work or the

execution of additional duties or tasks.

The main criteria for the compensation and motivation system are employee competence, the level of responsibility and

complexity of the position, individual achievements, and contribution to the overall company performance. Vilniaus baldai AB

ensures a proper work-rest schedule, the right to annual or other statutory leave, and a fair salary that matches the

employee's qualifications. All company employees receive a salary higher than the national minimum wage.

8,802

9,117

6,051

4,501

3,856

28.617

23.141

14.158

11.824

14.195

5.000

10.000

15.000

20.000

25.000

30.000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2021 2022 2023 2024 2025

Consumption of electricity (kWh) per unit Consumption of electricity, thousand kWh

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

As of 31 August 2025, the Group employed 569 people, of which 505 were employed by the Company (as of 31 August

2024, the Group employed 507 people, and the Company – 446). The average age of employees was 42 years.

In the 2025 financial year, the Company filled part of its vacancies with leased employees: at the end of the reporting period,

their number was 109 (as of 31 August 2024, no leased employees were working at the Company).

The average number of the Company’s recorded employees, working on an employment contract basis, in the period of

2021–2025:

2025

2024

2023

2022

2021

Executive personnel

Specialists

Workers

403

394

493

707

748

Total

470

453

553

778

813

Remuneration comprises a basic and variable component. A variable component of remuneration depends on the

Company’s results of operations.

The average wages of the employees in the period of 2021–2025, EUR:

2025

2024

2023

2022

2021

Executive personnel

11,962

8,271

6,209

5,592

6,480

Specialists

4,365

3,247

2,983

2,647

2,399

Workers

2,648

2,432

2,135

1,893

1,782

Total

2,959

2,621

2,279

2,001

1,881

Vilniaus Baldai AB maintains social dialogue and partnership with employee representatives – the independent trade union

of Vilniaus Baldai AB.

3. REFERENCES AND ADDITIONAL EXPLANATIONS ABOUT THE INFORMATION PRESENTED IN THE ANNUAL

FINANCIAL STATEMENTS

All information is presented in the annual financial statements and the explanatory notes.

4. INFORMATION ABOUT OWN SHARES

The Company did not have any own shares, did not acquire or transfer any in the reporting period.

5. INFORMATION ABOUT THE BRANCHES AND REPRESENTATIVE OFFICES OF THE COMPANY

The Company does not have any branches or representative offices.

6. IMPORTANT EVENTS, WHICH HAVE OCCURED AFTER FINANCIAL YEAR END

After the end of the reporting period, the Company completed the implementation of a new Enterprise Resource Planning

(ERP) system. The new ERP, designed for manufacturing-oriented companies, will provide new opportunities and

functionalities in production, inventory, and financial management, while ensuring a high level of protection against various

cybersecurity threats and breaches. The implementation, testing, and employee training took place during the 2024–2025

financial years. Data migration and the launch of the new ERP system occurred at the transition between the 2025 and 2026

financial years, in order to ensure a smooth transformation, uninterrupted reporting process, and data comparability.

7. OPERATING PLANS AND FORECASTS OF THE GROUP’S ACTIVITY

In the completed 2025 financial year, the Company firmly established itself in a new business cycle – it demonstrated

flexibility in adapting to changing conditions, enhanced its competitiveness, and maintained its strategic direction. The

reduced-price strategy adopted for this period enabled the Company to compete effectively in the global market. The product

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

portfolio and factory capacity utilization were expanded, resulting in growth in both sales revenue (+7.1%) and production

volume (+40.1%). Compared to the previous financial year, profitability ratios were slightly lower; however, this outcome was

anticipated and aligned with the Company’s forecasts.

During the year, the Company also focused on strengthening team competencies and expanding its energy independence.

The team was expanded, opportunities for professional development were enhanced, and key projects were implemented

— including the construction of a ground-mounted solar power plant, the renovation of the compressor station, and the

installation of a waste heat recovery system. These and other investment projects not only contribute to the Company’s

current performance but are also aimed at further improving efficiency. The Company identifies this as a long-term strategic

direction that drives competitiveness. The Company is continuously seeking new solutions and opportunities for further

improvement.

In the global demand environment, instability remains a relevant factor that has almost become a normal feature of market

conditions. The introduction of new products, portfolio diversification, stable profitability, and solid cash flows currently enable

the Company to better navigate market fluctuations.

In the coming periods, the Company will continue to maintain its strategic direction, focusing on further improvement of

internal processes, including deeper integration of the new enterprise resource planning (ERP) system, expansion of

electricity generation capacity, and implementation of new technologies. Particular attention will remain on attracting,

developing, and retaining specialists with strong engineering and technological competencies.

8. INFORMATION ABOUT THE RESEARCH AND DEVELOPMENT ACTIVITY OF THE COMPANY

In the 2025 financial year, the Company carried out a project classified as research and experimental development (R&D)

activity titled “Development of an Automated Hot-Melt Gluing Machine for Particle Board (PB) Frames”. The project’s

objective is to create an automated PB frame gluing device that ensures high frame quality, increases production process

speed, and reduces material and labor resource requirements. The total project value amounts to EUR 224 thousand.

According to the provisions of the Law on Corporate Income Tax of the Republic of Lithuania, companies are allowed to

deduct R&D expenses from income three times, which resulted in an impact of EUR -671 thousand on the Company’s and

the Group’s 2025 financial year income tax expenses.

9. WHEN THE GROUP EMPLOYS FINANCIAL INSTRUMENTS AND WHEN IT IS IMPORTANT FOR THE VALUATION

OF THE COMPANY’S ASSETS, EQUITY, LIABILITIES, FINANCIAL POSITION AND ACTIVITY RESULTS OF THE

COMPANY, THE COMPANY DISCLOSES THE OBJECTIVES OF THE FINANCIAL RISK MANAGEMENT, ITS POLICY

FOR HEDGING MAJOR TYPES OF FORECASTED TRANSACTIONS FOR WHICH HEDGE ACCOUNTING IS USED,

AND COMPANY’S EXPOSURE TO PRICE RISK, CREDIT RISK, LIQUIDITY RISK AND CASH FLOW RISK

The Group did not use any financial instruments, which are important to the evaluation of the Group’s assets, liabilities,

financial position and operation results.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

COMPANY MANAGEMENT REPORT

1. INFORMATION ON THE CONTRACTS WITH THE INTERMEDIARIES OF THE PUBLIC TURNOVER OF THE

SECURITIES

All of the Company’s obligations under the securities accounting agreements and dividend payments to shareholders are

fulfilled by Artea bankas AB (Tilžės str.149, LT–76348 Šiauliai, Lithuania).

2. STRUCTURE OF THE ISSUER’S AUTHORISED CAPITAL

Structure of the authorised capital of Vilniaus baldai AB:

Type of shares

Number of

shares, units

Nominal value,

EUR

Total nominal

value, EUR

Share in the

authorised

capital, %

Ordinary registered shares

3,886,267

1.16

4,508,069.72

100.00

The Company’s authorised share capital is divided into 3,886,267 ordinary registered shares with the par value of EUR 1.16

each. The shares are uncertificated. They are recorded in personal securities accounts of shareholders. These accounts are

managed following the procedure established by regulatory legislation on the securities market.

Rights and obligations carried by the shares

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 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 Meeting or voted against such a resolution shall have the right to refrain from paying additional

contributions.

A shareholder shall repay to the Company any dividends paid out in violation of the mandatory norms of the Law on

Companies of the Republic of Lithuania, if the Company proves that the shareholder knew or should have known thereof.

The shareholders have the following property and non-property rights:

1. to receive a part of the Company’s profit (dividends);

2. to receive Company’s funds when the authorized capital of the Company is decreased in order to pay the

Company’s funds to the shareholders;

3. to receive shares without payment if the authorized capital is increased out of the Company’s funds except in cases

provided for by the Law on Companies of the Republic of Lithuania;

4. to have the pre-emption right in acquiring shares or convertible debentures issued by the Company, except in cases

when the General 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;

5. to lend the Company in the manner prescribed by laws, but the Company, borrowing from its shareholders has no

right to mortgage its property to shareholders. The interest shall not exceed the average interest rate of commercial

banks in the lender’s place of residence or business in force at the time of the loan contract when the Company is

borrowing from the shareholder. In this case it is prohibited to the Company and its shareholders to agree on a

higher interest rate;

6. to receive a part of assets of the Company in liquidation;

7. other statutory property rights;

8. the rights, indicated in items 1–4, are granted to those persons who were the Company’s shareholders at the tenth

day after the decision that was accepted at the end of general shareholders’ meeting (hereinafter – at the end of

right record day);

9. to participate in general shareholders’ meetings;

10. to submit the questions related to the agenda of general shareholders’ meetings to the Company in advance;

11. to vote at general shareholders’ meetings according to voting rights carried by their shares. Each registered ordinary

share carries one vote at the general shareholders’ meeting except the exceptions indicated in the Law on

Companies of the Republic of Lithuania. The right to vote at the general shareholders’ meetings may be prohibited

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

or restricted by the Law on Companies of the Republic of Lithuania and other cases established by law, as well as,

when the ownership of the share is being disputed;

12. to receive information on the Company as indicated in the Law on Companies of the Republic of Lithuania;

13. to file a claim with the court for reparation of the Company’s damage resulting from nonfeasance or malfeasance

by the Company’s executive and board members of their obligations prescribed by the Law on Companies of the

Republic of Lithuania and other laws as well as Company’s regulations;

14. to authorize natural or legal person to represent him in relations with the Company and other persons;

15. other non-property rights established by the Law on Companies of the Republic of Lithuania, other laws or the

Company’s regulations.

3. SHAREHOLDERS

Total number of the shareholders as of 31 of August 2025 is 1,364.

The shareholders who had upon the property rights or possessed more than 5% of the issuer’s authorised capital as of

31 August 2025:

Names of the companies, office addresses,

codes

Number of shares

owned under the

property rights, units

Part of the

authorised

capital, %

Part of the votes,

Invalda Privatus Kapitalas AB, company code

303075527, Zalgirio str. 92-901, Vilnius

3,407,135

87.67

There are no shareholders, having any special rights of control.

There are no voting rights restrictions.

The Company is not aware of any agreements between the shareholders, because of which the transfer of the securities

and (or) the voting right could be limited.

1.248

Distribution of the shareholders of Vilniaus

Baldai AB by country, 31/08/2025

Lithuania Latvia Estonia Other

87,67%

12,33%

Authorised capital structure, %

Invalda privatus kapitalas, AB Other

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

4. INFORMATION ABOUT THE ISSUER’S STOCK EXCHANGE TRADING ON THE REGULATED MARKETS

The Company’s ordinary shares are registered on the Secondary list of Nasdaq Vilnius AB.

The main characteristics of shares:

Type of shares

VP ISIN code

Abbreviation

Number of

shares, units.

Nominal

value, EUR

Total nominal

value, EUR

Ordinary registered shares

LT0000104267

VBL1L

3,886,267

1.16

4,508,069.72

Trading statistics of the Company‘s shares:

2025

2024

2023

2022

2021

Price of the shares, EUR:

- opening

8.25

6.50

8.10

10.60

8.50

- highest

14.20

9.35

8.40

10.80

11.20

- lowest

7.70

6.00

6.15

7.00

8.05

- closing

11.60

8.25

6.50

8.10

10.60

Turnover of shares, units

73,980

23,649

14,553

22,441

30,623

Turnover of shares, EUR

843,442

174,181

100,226

202,900

308,827

Total number of transactions, units

1,649

709

645

821

1,138

Capitalization, million EUR

45.08

32.06

25.26

31.48

41.19

Shares turnover and price of Vilniaus baldai AB in the period of 01/09/2020–31/08/2025:

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Comparison of the price of shares of Vilniaus baldai AB with the OMXBB and OMXV index in the period of 01/09/2020–

31/08/2025:

5. 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.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Vilniaus baldai AB dividend payments during the past 5 years:

Financial

year

Net profit,

th EUR

Earnings per

share, EUR

Dividends

approved,

th EUR

Dividend per

share, EUR

Dividends to

profit ratio, %

Dividend

yield*, %*

2025

4,438

1.14

-**

2024

10,000

2.57

3,031

0.78

30%

9.5%

2023

1,565

0.40

0.00

0.0%

2022

1,406

0.36

0.00

0.0%

2021

148

0.04

0.00

0.0%

* - the dividend yield is calculated as the ratio of dividends per share to the closing price at the end of the reporting period.

** - the General Meeting of Shareholders, at which the consolidated and the Company’s financial statements for the financial

year 2025, as well as the profit distribution, will be approved, will take place after the preparation of these consolidated and

the Company’s financial statements.

6. ORDER OF CHANGING OF THE ISSUER’S ARTICLES OF ASSOCIATION

The Articles of Company are changed by the resolution of the General Meeting of shareholders, adopted by the majority of

more than 2/3 of all the votes.

7. ISSUER’S BODIES

The Company has the General Meeting of shareholders, a one-man management body – chief executive officer (General

Manager) and the collegial management body – the Board. The Company does not have Supervisory Board.

The Board of the Company consists of 3 members. It is elected for the period of four years by the General Meeting. The

Board of the Company elects and withdraws and dismisses from the position the Chief Executive Officer, determines his

salary, confirms the job descriptions, appoints him and imposes penalties.

The competence of the General Manager and the Board of the Company, the procedure of their appointment and removal

does not differ from what is specified in the Law on Companies. The Board is made up of people with different professional

experiences and competencies.

The Board and Administration of the Company:

Vytautas Bucas

Position

Chairman of the Board, elected to the Board on 12/04/2007, re-elected on 27/04/2012, 05/07/2016,

08/10/2020 and 27/12/2024, end of the term – 2028.

Work experience

Since May 2013 Adviser, Chairman of the Board of Invalda Privatus Kapitalas AB

2006–May 2013 Adviser of Invalda LT AB, Board member (since May 2007 until May 2013

Chairman of the Board)

2006–2007 Director of Invaldos NekilnAojamojo Turto Fondas AB

2000–2006 SEB Bankas AB, Board member, Vice President, CFO, Head of IT Department

1992–2000 Senior Auditor, Senior Manager, Manager at Arthur Andersen

Participation in the activities of other companies

Number of shares and of

voting rights

Chairman of the Board of Invalda Privatus Kapitalas AB

39.63%

Chairman of the Board of Bordena UAB

0.00%

Board Member of Švytėjimas UAB

0.00%

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Dalius Kaziunas

Position

Board member, elected to the Board on 29/04/2010, re-elected on 27/04/2012, 05/07/2016,

08/10/2020 and 27/12/2024, end of the term – 2028.

Work experience

Since May 2013 CEO, Board member of Invalda Privatus Kapitalas AB

2012–May 2013 President of Invalda LT AB, Board member (until 30/04/2012)

2008–2011 Adviser and Board member of Invalda LT AB

2008–2009 Director of Bankas Finasta AB

1996–February 2008 assistant of financial broker of FMI Finasta AB, financial broker,

Director

Participation in the activities of other companies

Number of shares and of

voting rights

CEO and Board Member of Invalda Privatus Kapitalas AB

1.70%

Chairman of the Board of Lauko Gelininkystes Bandymu Stotis UAB

0.00%

Member of the Supervisory Board at Vernitas AB

0.00%

Member of the Board of Bordena UAB

0.00%

Chairman of the Board of Svytejimas UAB

0.00%

Andrius Anusauskas

Position

Chairman of the Board, elected to the Board on 08/10/2020, re-elected on 27/12/2024, end of the

term – 2028.

Work experience

Since May 2022 General manager at Inreal valdymas UAB

2018 – 2022 Finance director at Inreal valdymas UAB

2013 – 2018 Finance project manager at Invalda privatus kapitalas AB

2008 – 2013 Finance project manager at Invalda AB

2006 – 2008 CFO at SNORO fondų valdymas UAB

2004 – 2006 Accountant at Finasta AB FMĮ

2002 – 2004 Accountant at Labochema, UAB

Participation in the activities of other companies

Number of shares and

voting rights

Member of the Board at Lauko Gėlininkystės Bandymų Stotis UAB

0.00 %

Director at Kulpės slėnis UAB

0.00 %

Director at Inreal UAB

0.00 %

Director at Deltuvis UAB

0.00 %

Director at DOMMO Nerija UAB

0.00 %

Director at Inreal valdymas UAB

0.00 %

Director at Inreal tarpininkavimas UAB

0.00 %

Jonas Krutinis

Position

Head of Finance Department since 23/02/2015, Head of Finance since 12/10/2015, General

manager since 15/05/2018.

Work experience

2014–2015 Business Intelligence Manager at SEB Baltics

2006–2014 Deputy Chairman of the Management Board, Head of Business Support, CFO at SEB

Bank, Russia

2002–2006 Head of Planning at SEB Vilniaus bankas AB

1999–2002 Business Consultant at Arthur Andersen UAB

1997–1999 Analyst at VB Vilfima UAB

1995–1997 Specialist at CSDL

Participation in the activities of other companies

Number of shares and of

voting rights

Board member of Autoverslas UAB

0.00%

Chairman of the Board of Autoverslo terminalas UAB

0.00%

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

The Company’s key management personnel include the Company’s General Manager, Chief Financial Officer, Chief

Operating Officer, Head of Technical Services, Head of HR, Head of Purchasing, Strategic Projects Manager and Head of

Business Development. In 2025 the average monthly remuneration to the management of the Company amounted to EUR

75 thousand (2024 – EUR 63 thousand). The remuneration is not paid to the Board members of the Company.

Remuneration to the management members of the Company (in thousand EUR) during the past 5 years:

2025

2024

2023

2022

2021

Wages, salaries

881

745

586

539

732

Social security contributions

Total

897

759

598

549

744

In the 2025 financial year, the total amount of annual bonuses paid to the Company’s management for the results achieved

during the reporting period was 275 thousand EUR (bonuses paid for results achieved during the reporting period in the

2024 financial year amounted to 109 thousand EUR). During 2025 the Company did not transfer any assets to the Board

members, the Company’s General Director, Head of Finance department; it also did not provide any guarantees or

warranties, by which the performance of their liabilities would be secured.

8. SIGNIFICANT AGREEMENTS IN WHICH THE COMPANY IS INVOLVED AND WHICH WOULD BECOME EFFECTIVE,

WOULD CHANGE OR WOULD BE TERMINATED IF THE CONTROL OF ISSUER CHANGED

During 2025 no material agreements were signed which would become effective, would change or would be terminated if

the control of the issuer changed. Furthermore, there were no agreements signed during 2025 between the Company and

its body, employees which allow compensations if they resign or are fired without the justified reason or their work finishes

as a result of the change of the issuer’s control.

9. RELATED PARTY TRANSACTIONS

The parties are considered related when one party has the possibility to control the other one or have significant influence

over the other party in making financial and operating decisions. The related parties of the Company as of 31 August 2025

were:

1. ARI-LUX UAB (the subsidiary) – reg.no 120989619, address Pramones str. 23, Guopstu vil., LT-21148 Trakai district,

2. Invalda Privatus Kapitalas AB (ultimate shareholder) – reg.no 303075527, address Žalgirio str. 92-901, LT-09303

Vilnius,

3. entities controlled by Invalda Privatus Kapitalas AB:

- Bordena UAB – reg. No 304073881, address Žemaičių str. 49B, Ariogala, LT-60253 Raseinių district,

- Svytejimas UAB – reg. No 123017127, address Švenčionių str. 110A, Nemenčinė, Vilnius district,

- Panerių konversija UAB – reg. No 305993224, address Žalgirio str. 94-1, LT-09300 Vilnius,

- Lauko gėlininkystės bandymų stotis UAB - reg. No 221496060, address A. Kojelavičiaus str. 1, LT-11100 Vilnius.

The related parties of the Company as of 31 August 2024 were:

1. ARI-LUX UAB (the subsidiary) – reg. No 120989619, address Pramones str. 23, Guopstu vil., LT-21148 Trakai district,

2. Invalda Privatus Kapitalas AB (ultimate shareholder) – reg. No 303075527, address Žalgirio str. 92-901, LT-09303

Vilnius,

3. entities controlled by Invalda Privatus Kapitalas AB:

- Bordena UAB – reg. No 304073881, address Žemaičių str. 49B, Ariogala, LT-60253 Raseinių district,

- Svytejimas UAB – reg. No 123017127, address Švenčionių str. 110A, Nemenčinė, Vilnius district,

- Panerių konversija UAB – reg. No 305993224, address Žalgirio str. 94-1, LT-09300 Vilnius.

Transactions with the Group’s related parties in 2025 and 2024 and the balances in 2025 and 2024 are provided in the notes

(Note 26) to the consolidated and Company’s financial statements for the year 2025.

10. INFORMATION REGARDING COMPLIANCE WITH THE GOVERNANCE CODE OF LISTED COMPANIES

The Company complies with the principles set out by the governance code of companies listed on Nasdaq Vilnius AB stock

exchange. Compliance with the governance code in accordance with the form approved by the stock exchange is disclosed

in the appendix to this management report: “Vilniaus baldai AB report on the compliance with the governance code for the

companies listed on the stock exchange Nasdaq Vilnius regulated market for the FY2025”.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

11. DATA ON THE PUBLICLY DISCLOSED INFORMATION

The publicly disclosed information about Vilniaus baldai AB for the financial year of 2025 can be found on the Company’s

website www.vilniausbaldai.lt.

Summary of publicly disclosed information since 1 September 2024:

Date of disclosure

Brief description of disclosed information

27/09/2024

VILNIAUS BALDAI AB refinances long-term financial liabilities

29/10/2024

VILNIAUS BALDAI AB interim condensed consolidated financial statement for the twelve

months of FY2024 ended August 31, 2024

28/11/2024

VILNIAUS BALDAI AB annual audited information for the year 2024

06/12/2024

VILNIAUS BALDAI AB investor's calendar for 2025

06/12/2024

Convocation of the general shareholders meeting of VILNIAUS BALDAI AB

16/12/2024-

Draft resolutions of the General Shareholders Meeting (27th of December)

27/12/2024

Resolutions of the Annual General Shareholders Meeting of VILNIAUS BALDAI AB on

27/12/2024

30/12/2024

VILNIAUS BALDAI AB result for activity and non audited condensed interim consolidated

financial statement for the three months of FY 2025

06/01/2025

Procedure for the payout of dividends

31/03/2025

VILNIAUS BALDAI AB interim condensed consolidated financial statements and management

report for the six months of FY 2025

30/06/2025

VILNIAUS BALDAI AB result for activity and unaudited interim condensed consolidated

financial statements for the nine months of FY 2025

30/10/2025

VILNIAUS BALDAI AB interim condensed consolidated financial statement for the twelve

months of FY2025 ended August 31, 2025

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

COMPANY REMUNERATION POLICY

General information

Vilniaus baldai AB (hereinafter – the Company) prepared the Company Remuneration Report (hereinager – the Report) for

the 2025 financial year, which started on 1 September 2024 and ended on 31 August 2025. The Report is prepared in

accordance with the Law of the Republic of Lithuania on Financial Reporting as well as other legal acts. The Company

Remuneration Policy was approved by the Company’s shareholders at the General Meeting (hereinafter – the GM) held on

8 October 2020. The Report outlines the principles of remuneration for each member of the Board of Directors (hereinafter

– the Board) and the Audit Committee as well as provides information about other financial benefits.

Remuneration of Members of Board of Directors

Members of the Board are elected for the duration of four years as specified in the Articles of Association. Bonuses to the

members of the Board are approved and become payable by the decision of the Company’s shareholders at the GM in

accordance with relevant legal acts.

Once the total amount of the bonuses available for distribution is approved at the GM, members of the Board determine how

such bonus is divided among the members of the Board, depending on each member’s contribution to Company’s

performance.

Members of the Board may receive remuneration from the Company according to clauses of their contracts of employment

with the Company. Such clauses must be approved by the Board as well as the Audit Committee in advance.

Should members of the Board enter into Directors‘ Service Contracts with the Company, such contracts shall come into force

only by the decision taken at the GM.

Members of the Board shall not be entitled to receive any other types of remuneration or other benefits from the Company

unless such benefits are agreed at the GM.

Remuneration of the General Manager

The General Manager shall receive renumeration consisting of a fixed and variable portions:

1. Fixed remuneration is a fixed salary amount payable monthly and in accordance with the non-fixed term employment

contract between the General Manager and the Company. Such salary amount is determined by the Board.

2. Variable remuneration is portion of the renumeration which depends on the financial performance of the Company. The

amount of variable renumeration is determined by the Board and is payable on an annual basis.

The Board has the right to approve contractual arrangements between the General Manager and the Company in respect

of additional pensions benefits, early retirement benefits as well as payments in respect of termination of the contract of

employment.

The Company does not make any deferred payments of renumeration and does not exercise the option to recover a variable

portion of remuneration.

Company Remuneration Policy for FY2025

The remuneration policy is in line with the Company's strategy, long-term goals and interests, and has the following aims:

1. to ensure competitive remuneration of the key management personnel, corresponding to the financial results of the

Company;

2. increase the transparency of the Company and the accountability of key management personnel and enable

shareholders, potential investors and interested parties to get a complete and reliable picture of the remuneration

awarded to each member of key management personnel;

3. avoid conflicts of interest and discrimination on any basis while determining the remuneration of key management

personnel and members of the Board

The Company does not form any Remuneration or other relevant committees. The function of these committees is performed

by the Board of the Company.

There were no deviations from the remuneration policy during the 2025 financial year.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Key financial indicators of the Group during the period of FY2021 to FY2025*:

2025

2024

2023

2022

2021

Net profitability = net profit / turnover * 100

4.26%

10.28%

1.60%

1.40%

0.15%

EBITDA margin = EBITDA / turnover * 100

10.69%

18.18%

8.94%

8.39%

5.53%

Turnover (million EUR)

104.22

97.27

97.87

100.74

99.36

Net profit (million EUR)

4.44

10.00

1.57

1.41

0.15

EBITDA (million EUR)**

11.14

17.69

8.75

8.45

5.49

EBIT (million EUR)***

6.36

13.21

4.20

3.52

1.46

* - the figures in the table have been updated in accordance with Note 3 of the financial statements, adjusting the relevant

items of assets, equity, and expenses for previous periods.

** - EBITDA has been calculated excluding the impact of IFRS 16. In addition, the amount of EUR 375 thousand, representing

compensation for losses assumed from a group company in the 2024 financial year in accordance with the provisions of the

Republic of Lithuania Law on Corporate Income Tax, has been excluded from this figure.

*** - from the EBIT figure presented in the table, the amount of EUR 375 thousand, representing compensation for losses

assumed from a group company in the 2024 financial year in accordance with the provisions of the Republic of Lithuania

Law on Corporate Income Tax, has been excluded.

Remuneration of Company‘s employees consists of a fixed and variable portions. The variable portion of remuneration is

based on performance of the Company.

Remuneration of Company‘s employees during the period of FY2021 to FY2025, EUR:

2025

2024

2023

2022

2021

Executive personnel

11,962

8,271

6,423

5,592

6,480

Specialists

4,365

3,247

2,983

2,647

2,399

Workers

2,648

2,432

2,135

1,893

1,782

Total

2,959

2,621

2,279

2,001

1,881

Information about the Renumeration to the Members of the Board and Key Management Personnel in FY2025

Annual bonuses paid to the members of the Company’s Board in the 2025 financial year amounted to EUR 100 thousand

(as approved by the resolution of the General Meeting of Shareholders on 27 December 2024).

In FY2025 a fixed portion of remuneration of 119 thousand EUR was paid to the General Manager, in accordance with the

non-fixed term employment contract between the General Manager and the Company.

Remuneration of the General Manager of the Company in FY2025:

Fixed remuneration,

EUR

Variable renumeration,

EUR

Other benefits,

EUR

Jonas Krutinis

118,672

106,099

20,414

The General Manager of the Company did not receive any renumeration from the Company which belongs to the Group of

companies, as defined by the Law of the Republic of Lithuania on Consolidated Financial Reporting by Groups of

Undertakings. The General Manager of the Company was not offered and did not receive any Company shares or options

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

of the Company shares. The Company does not make any deferred payments of renumeration and does not exercise the

option to recover a variable portion of remuneration.

AB "VILNIAUS BALDAI" CORPORATE SUSTAINABILITY REPORT

The Company’s sustainability report is appended after the submitted consolidated and Company’s financial statements and

is also published on the Company’s website at www.vilniausbaldai.lt and on stock exchange AB Nasdaq Vilnius.

General Manager Jonas Krutinis

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

VILNIAUS BALDAI AB REPORT ON THE COMPLIANCE WITH THE

GOVERNANCE CODE FOR THE COMPANIES LISTED ON THE

STOCK EXCHANGE NASDAQ VILNIUS REGULATED MARKET FOR

THE FY2025

1. Summary of the Corporate Governance Reporting Form

According to the Articles of Association of Vilniaus baldai AB (hereinafter – “the Company”), the governing bodies of the

Company are the General Meeting of Shareholders, the Board of Directors, and the Company's General Manager. The

Company does not have a Supervisory Board. The functions of the Supervisory Board, as specified in the Law on Companies

of the Republic of Lithuania, are performed by the Company's Board of directors, which is elected for a term of four years.

An Audit committee operates within the Company, while Remuneration and Nomination committees are not established.

2. Structured table for disclosure

The Company, following Article 12(3) of the Law on Securities of the Republic of Lithuania and item 25.4 of the Trading

Rules of the stock exchange NASDAQ Vilnius AB, discloses its compliance with the Governance Code, approved for the

companies listed on the regulated market, and its specific provisions. In the event of non-compliance with the Code or with

certain provisions thereof, it must be specified which provisions are not complied with and the reasons of non-compliance.

PRINCIPLES/ RECOMMENDATIONS

YES/NO/

NOT

APPLICAB

COMMENTARY

1. Principle 1: General meeting of shareholders, equitable treatment of shareholders, and shareholders’ rights

1.1 The corporate governance framework should ensure the equitable treatment of all shareholders. The corporate

governance framework should protect the rights of shareholders.

1.1.1. 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 fully follows the provisions

listed in this recommendation.

1.1.2. 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 Company’s capital consists of

ordinary shares that grant the same rights

to all their holders.

1.1.3. It is recommended that investors should have access

to the information concerning the rights attached to

the shares of the new issue or those issued earlier in

advance, i.e. before they purchase shares.

Yes

The Company fully follows the provisions

listed in this recommendation.

1.1.4. Exclusive transactions that are particularly important

to the company, such as transfer of all or almost all

assets of the company which in principle would mean

the transfer of the company, should be subject to

approval of the general meeting of shareholders.

Yes

The last such significant transaction was

the sale of the premises of the old factory,

which was approved in the general

shareholders meeting.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

1.1.5. 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

All the shareholders of the Company are

informed about the date, venue and time

of the General Meeting. Prior to the

General Meeting of Shareholders all the

shareholders have possibility to receive

information related to the agenda of the

General Meeting.

1.1.6. With a view to ensure the right of shareholders living

abroad to access the information, it is recommended,

where possible, that documents prepared for the

general meeting of shareholders in advance should

be announced publicly not only in Lithuanian

language but also in English and/or other foreign

languages in advance. It is recommended that the

minutes of the general meeting of shareholders after

the signing thereof and/or adopted decisions should

be made available publicly not only in Lithuanian

language but also in English and/or other foreign

languages. It is recommended that this information

should be placed on the website of the company.

Such documents may be published to the extent that

their public disclosure is not detrimental to the

company or the company’s commercial secrets are

not revealed.

Yes

The Company discloses the documents

prepared for the General Meeting,

including draft resolutions of the meetings

via the information disclosure system of

AB NASDAQ Vilnius Stock Exchange.

This information is also publicly

accessible on the website of the

Company.

1.1.7. 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 can

implement the right to participate at the

General Meeting of Shareholders either in

person, or through the representative, if a

person has the duly issued Power of

Attorney. The Company also provides the

possibilities for the shareholders to vote

by completing the general voting ballot.

1.1.8. 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.

Not

applicable

Until now the Company has not had any

need to implement this recommendation.

Shareholders of the Company can vote

through the authorized person or

completing the general voting ballot.

1.1.9. It is recommended that the notice on the draft

decisions of the general meeting of shareholders

being convened should specify new candidatures of

members of the collegial body, their proposed

remuneration and the proposed audit company if

these issues are included into the agenda of the

general meeting of shareholders. Where it is

proposed to elect a new member of the collegial

body, it is recommended that the information about

his/her educational background, work experience

and other managerial positions held (or proposed)

should be provided.

Yes

The Company follows this

recommendation.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

1.1.10. Members of the company’s collegial management

body, heads of the administration

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

The Company follows this

recommendation.

2. Principle 2: Supervisory board

2.1. Functions and liability of the supervisory board. The supervisory board of the company should ensure representation

of the interests of the company and its shareholders, accountability of this body to the shareholders and objective

monitoring of the company’s operations and its management bodies as well as constantly provide recommendations

to the management bodies of the company. The supervisory board should ensure the integrity and transparency of

the company’s financial accounting and control system.

2.1.1. Members of the supervisory board should act in good

faith, with care and responsibility for the benefit and

in the interests of the company and its shareholders

and represent their interests, having regard to the

interests of employees and public welfare.

Not

applicable

The Supervisory Board is not formed in

the Company. The functions of the

Supervisory Board are performed by the

Board of the Company.

2.1.2. Where decisions of the supervisory board may have

a different effect on the interests of the company’s

shareholders, the supervisory board should treat all

shareholders impartially and fairly. It should ensure

that shareholders are properly informed about the

company’s strategy, risk management and control,

and resolution of conflicts of interest.

Not

applicable

Members of the Supervisory Board are

not appointed by the Company.

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.

Not

applicable

Members of the Supervisory Board are

not appointed by the Company.

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

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.

Not

applicable

Members of the Supervisory Board are

not appointed by the Company.

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

Members of the Supervisory Board are

not appointed by the Company.

For the purposes of this Code, heads of the administration are the employees of the company who hold top level

management positions.

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.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

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.

Not

applicable

Members of the Supervisory Board are

not appointed by the Company.

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.

Members of the Supervisory Board are

not appointed by the Company.

2.2.2. Members of the supervisory board should be

appointed for a specific term, subject to individual re-

election for a new term in office in order to ensure

necessary development of professional experience.

Members of the Supervisory Board are

not appointed by the Company.

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.

Members of the Supervisory Board are

not appointed by the Company.

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.

Members of the Supervisory Board are

not appointed by the Company.

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.

Members of the Supervisory Board are

not appointed by the Company.

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.

Members of the Supervisory Board are

not appointed by the Company.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

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.

Members of the Supervisory Board are

not appointed by the Company.

3. Principle 3: Management Board

3.1. Functions and liability of the management board. The management board should ensure the implementation of the

company’s strategy and good corporate governance with due regard to the interests of its shareholders,

employees and other interest groups.

3.1.1. The management board should ensure the

implementation of the company’s strategy approved

by the supervisory board if the latter has been formed

at the company. In such cases where the supervisory

board is not formed, the management board is also

responsible for the approval of the company’s

strategy.

Yes

The Company follows this

recommendation.

3.1.2. As a collegial management body of the company, the

management board performs the functions assigned

to it by the Law and in the articles of association of

the company, and in such cases where the

supervisory board is not formed in the company, it

performs inter alia the supervisory functions

established in the Law. By performing the functions

assigned to it, the management board should take

into account the needs of the company’s

shareholders, employees and other interest groups

by respectively striving to achieve sustainable

business development.

Yes

The Company has a collegial

management body – the Board.

3.1.3. The management board should ensure compliance

with the laws and the internal policy of the company

applicable to the company or a group of companies

to which this company belongs. It should also

establish the respective risk management and control

measures aimed at ensuring regular and direct

liability of managers.

Yes

The Company follows this

recommendation.

3.1.4. Moreover, the management board should ensure that

the measures included into the OECD Good Practice

Guidance

on Internal Controls, Ethics and

Compliance are applied at the company in order to

ensure adherence to the applicable laws, rules and

standards.

Yes

The Company follows this

recommendation.

3.1.5. When appointing the manager of the company, the

management board should take into account the

appropriate balance between the candidate’s

qualifications, experience and competence.

Yes

The Company follows this

recommendation.

3.2. Formation of the management board

Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oecd.org/daf/anti-

bribery/44884389.pdf

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

3.2.1. The members of the management board elected by

the supervisory board or, if the supervisory board is

not formed, by the general meeting of shareholders

should collectively ensure the required diversity of

qualifications, professional experience and

competences and seek for gender equality. With a

view to maintain a proper balance in terms of the

current qualifications possessed by the members of

the management board, it should be ensured that the

members of the management board would have, as

a whole, diverse knowledge, opinions and

experience to duly perform their tasks.

Yes

The Board formation mechanism allows

ensuring proper monitoring of the

Company. Only a person, having the

proper qualification can become a Board

member.

3.2.2. Names and surnames of the candidates to become

members of the management board, information on

their educational background, qualifications,

professional experience, current positions, other

important professional obligations and potential

conflicts of interest should be disclosed without

violating the requirements of the legal acts regulating

the handling of personal data at the meeting of the

supervisory board in which the management board or

individual members of the management board are

elected. In the event that the supervisory board is not

formed, the information specified in this paragraph

should be submitted to the general meeting of

shareholders. The management board should, on

yearly basis, collect data provided in this paragraph

on its members and disclose it in the company’s

annual report.

Yes

Information about current Board

members is presented in the Company’s

periodic reports.

3.2.3. All new members of the management board should

be familiarized with their duties and the structure and

operations of the company.

Yes

The Company’s Board members are

acquainted with the Company’s

organisation, its activity and management

specifics.

3.2.4. Members of the management board should be

appointed for a specific term, subject to individual re-

election for a new term in office in order to ensure

necessary development of professional experience

and sufficiently frequent reconfirmation of their

status.

Yes

The Company follows this

recommendation. The Company’s Board

is elected till 2028.

3.2.5. Chair of the management board should be a person

whose current or past positions constitute no

obstacle to carry out impartial activity. Where the

supervisory board is not formed, the former manager

of the company should not be immediately appointed

as chair of the management board. When a company

decides to depart from these recommendations, it

should furnish information on the measures it has

taken to ensure the impartiality of supervision.

Yes

Chairman of the Board of the Company is

not and was not the chief executive officer

of the Company. There are no obstacles

for independent and fair supervision.

3.2.6. Each member should devote sufficient time and

attention to perform his duties as a member of the

management board. Should a member of the

management board attend less than a half of the

meetings of the management board throughout the

financial year of the company, the supervisory board

of the company or, if the supervisory board is not

formed at the company, the general meeting of

shareholders should be notified thereof.

Yes

Board members perform their functions

properly: actively participate in the Board

meetings and devote sufficient time and

attention to perform their duties. Board

meetings are attended by all members.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

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

, 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.

Yes

The Company follows this

recommendation.

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.

Yes

The general shareholders’ meeting

approves the amount of annual bonuses

paid to the members of the Board.

3.2.9. The members of the management board should act

in good faith, with care and responsibility for the

benefit and the interests of the company and its

shareholders with due regard to other stakeholders.

When adopting decisions, they should not act in their

personal interest; they should be subject to no-

compete agreements and they should not use the

business information or opportunities related to the

company’s operations in violation of the company’s

interests.

Yes

The Company follows this

recommendation.

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.

There was no such practice.

4. Principle 4: Rules of procedure of the supervisory board and the management board of the company

4.1. 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.

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.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

4.1.1. The management board and the supervisory board,

if the latter is formed at the company, should act in

close cooperation in order to attain benefit for the

company and its shareholders. Good corporate

governance requires an open discussion between

the management board and the supervisory board.

The management board should regularly and, where

necessary, immediately inform the supervisory board

about any matters significant for the company that

are related to planning, business development, risk

management and control, and compliance with the

obligations at the company. The management board

should inform he supervisory board about any

derogations in its business development from the

previously formulated plans and objectives by

specifying the reasons for this.

Not

applicable

Members of the Supervisory Board are

not appointed by the Company.

4.1.2. 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

The Company follows this

recommendation.

4.1.3. 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

The Company follows this

recommendation.

4.1.4. In order to coordinate the activities of the company’s

collegial bodies and ensure effective decision-

making process, the chairs of the company’s collegial

supervision and management bodies should mutually

agree on the dates and agendas of the meetings and

close cooperate in resolving other matters related to

corporate governance. Meetings of the company’s

supervisory board should be open to members of the

management board, particularly in such cases where

issues concerning the removal of the management

board members, their responsibility or remuneration

are discussed.

Not

applicable

Members of the Supervisory Board are

not appointed by the Company.

5. 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.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Committees should exercise independent judgment and integrity when performing their functions and provide the

collegial body with recommendations concerning the decisions of the collegial body. However, the final decision

should be adopted by the collegial body.

5.1.1. Taking due account of the company-related

circumstances and the chosen corporate governance

structure, the supervisory board of the company or,

in cases where the supervisory board is not formed,

the management board which performs the

supervisory functions, establishes committees. It is

recommended that the collegial body should form the

nomination, remuneration and audit committees

The Committees of Nomination and

Remuneration are not established

because of the structural simplicity of the

Company’s management.

Question regarding establishment of

nomination and remuneration committees

will be solved in the future after analyzing

situation, evaluating financial expenses

and other factors, implementing best

practices in the market.

Compliance with the requirements for the

preparation of the set of the consolidated

financial statements, internal control and

financial risk management systems, legal

acts regulating the preparation of the set

of the consolidated financial statements is

supervised by the Audit Committee

established on 22 December 2021.

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.

The Committees of Nomination and

Remuneration are not established

because of the structural simplicity of the

Company’s management.

Question regarding establishment of

nomination and remuneration committees

will be solved in the future after analyzing

situation, evaluating financial expenses

and other factors, implementing best

practices in the market.

Compliance with the requirements for the

preparation of the set of the consolidated

financial statements, internal control and

financial risk management systems, legal

acts regulating the preparation of the set

of the consolidated financial statements is

supervised by the Audit Committee

established on 22 December 2021.

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.

The Committees of Nomination and

Remuneration are not established

because of the structural simplicity of the

Company’s management.

The Audit Committee of Vilniaus baldai

AB consists of 3 members, one of them is

independent.

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).

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

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.

The Committees of Nomination and

Remuneration are not established

because of the structural simplicity of the

Company’s management.

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.

The Committees of Nomination and

Remuneration are not established

because of the structural simplicity of the

Company’s management.

5.2. Nomination committee

5.2.1. The key functions of the nomination committee

should be the following:

1) to select candidates to fill vacancies in the

membership of supervisory and management bodies

and the administration and recommend the collegial

body to approve them. The nomination committee

should evaluate the balance of skills, knowledge and

experience in the management body, prepare a

description of the functions and capabilities required

to assume a particular position and assess the time

commitment expected;

2) assess, on a regular basis, the structure, size and

composition of the supervisory and management

bodies as well as the skills, knowledge and activity of

its members, and provide the collegial body with

recommendations on how the required changes

should be sought;

3) devote the attention necessary to ensure

succession planning.

The Committees of Nomination and

Remuneration are not established

because of the structural simplicity of the

Company’s management.

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.

The Committees of Nomination and

Remuneration are not established

because of the structural simplicity of the

Company’s management.

5.3. Remuneration committee

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

5.3.1. 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.

The Committees of Nomination and

Remuneration are not established

because of the structural simplicity of the

Company’s management.

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

Yes

The compliance with the requirements for

the preparation of the set of the

consolidated financial statements,

internal control and financial risk

management systems, legal acts

regulating the preparation of the set of the

consolidated financial statements is

supervised by the Audit Committee

established on 22 December 2021.

The main functions of the Audit

Committee of Vilniaus baldai AB are:

1. to advice for the Board on the selection,

assignment, repeated assignment and

dismissal of the external audit company

and on the conditions of the agreement

with external audit company;

2. to observe the process of external

audit;

3. to observe if external audit company

and its auditors keep the principles of

independency and objectivity;

4. to observe the process of preparation

of financial statements;

5. to observe the efficiency of internal

control and risk management systems

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

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

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

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.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

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.

Yes

and to evaluate the need of internal audit

functions once per financial year.

6. Currently, there is no separate internal

auditor position in Vilniaus baldai AB. To

reduce the risk of fraud. The company has

an effective internal control system, which

is implemented through the company's

procedures, procedures and orders, and

internal audits of compliance with

procedures.

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

6. Principle 6: Prevention and disclosure of conflicts of interest

6.1. 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.

6.1.1. 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

The Company follows this

recommendation.

7. Principle 7: Remuneration policy of the company

7.1. 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.

7.1.1. 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 follows this

recommendation.

The Company’s remuneration policy is

posted on the website of the company

www.vilniausbaldai.lt

7.1.2. 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 Company follows this

recommendation.

7.1.3. With a view to avoid potential conflicts of interest, the

remuneration policy should provide that members of

the collegial bodies which perform the supervisory

functions should not receive remuneration based on

the company’s performance.

Yes

The Company follows this

recommendation.

7.1.4. 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.

Yes

By the decision of the Board, agreements

on the conditions of termination of the

employment contract and payments

related to the termination of the

employment contract may be concluded

with the head of the Company.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

7.1.5. 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.

Not

applicable

Schemes anticipating remuneration of

directors in shares, share options or any

other right to purchase shares or be

remunerated on the basis of share price

movements are not used in the Company.

7.1.6. 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 follows this

recommendation.

7.1.7. It is recommended that the remuneration policy or

any major change of the policy should be included on

the agenda of the general meeting of shareholders.

The schemes under which members and employees

of a collegial body receive remuneration in shares or

share options should be approved by the general

meeting of shareholders.

Yes

The Company follows this

recommendation.

8. Principle 8: Role of stakeholders in corporate governance

8.1. 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.

8.1.1. The corporate governance framework should ensure

that the rights and lawful interests of stakeholders are

protected.

Yes

The information about the Company,

indicated in these recommendations, is

disclosed in the following sources: in the

consolidated management report of the

Company, financial statements, reports

on the purchase/loss of blocks of shares,

the reports on the essential events,

announcing this information in the

information disclosure system of Nasdaq

Vilnius AB Stock Exchange and on the

Company’s website.

8.1.2. 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.

8.1.3. Where stakeholders participate in the corporate

governance process, they should have access to

relevant information.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

8.1.4. Stakeholders should be provided with the possibility

of reporting confidentially any illegal or unethical

practices to the collegial body performing the

supervisory function.

9. Principle 9: Disclosure of information

9.1. 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.

9.1.1. 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:

9.1.1.1. operating and financial results of the company;

Yes

The information about the Company,

indicated in these recommendations, is

disclosed in the following sources: in the

consolidated management report of the

Company, financial statements,

sustainability report, reports on the

purchase/loss of blocks of shares, the

reports on the essential events,

announcing this information in the

information disclosure system of Nasdaq

Vilnius AB Stock Exchange and on the

Company’s website.

9.1.1.2. objectives and non-financial information of the

company;

9.1.1.3. 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;

9.1.1.4. 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;

9.1.1.5. 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;

9.1.1.6. potential key risk factors, the company’s risk

management and supervision policy;

9.1.1.7. the company’s transactions with related parties;

9.1.1.8. 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.);

9.1.1.9. structure and strategy of corporate governance;

9.1.1.10. 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.

9.1.2. When disclosing the information specified in

paragraph 9.1.1.1 of recommendation 9.1.1, 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 follows this

recommendation.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

9.1.3. When disclosing the information specified in

paragraph 9.1.1.4 of recommendation 9.1.1, 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

The information about the Company,

indicated in these recommendations, is

disclosed in the following sources: in the

consolidated management report of the

Company, financial statements, and on

the Company’s website.

9.1.4. 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 information on the information

disclosure of NASDAQ Vilnius AB Stock

Exchange is presented in the Lithuanian

and English languages simultaneously.

The Stock Exchange announces the

received information on its website and in

the trading system, in this way ensuring

the simultaneous presentation of the

information to everybody. The Company

strives to announce the information

before or after a trading session of Stock

Exchange. The Company does not

disclose the information, which might

have impact on the value of its shares, in

any comments, interviews or other ways

until such information is announced

officially through the information system

of the Stock Exchange.

10. Principle 10: Selection of the company’s audit firm

10.1. The company’s audit firm selection mechanism should ensure the independence of the report and opinion of the

audit firm.

10.1.1. 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 independent firm of auditors

conducts the audit of the annual financial

statements and reviews the management

report to check whether there is no

material inconsistencies between the

financial information included in it and in

the audited financial statements.

10.1.2. 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

Company follows this principle. A

candidate firm of auditors to the General

Meeting is proposed by Board of the

Company.

10.1.3. 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

Shareholders are informed about other

fees paid to auditors for non-audit

services, if such fees occur.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

CONSOLIDATED AND COMPANY‘S FINANCIAL STATEMENTS

CONSOLIDATED AND COMPANY‘S STATEMENT OF FINANCIAL POSITION

		Group			Company
		As of 31	As of 31	As of 31	As of 31
	Notes	August	August	August	August
		2025	2024	2025	2024
ASSETS
Non-current assets
Intangible assets	5	344	165		344	165
Property, plant and equipment	6
Land and buildings		28,776	29,328		28,776	29,328
Machinery and equipment		24,304	23,716		24,304	23,716
Other property, plant and equipment		4,232	4,557		4,228	4,551
Total property, plant and equipment		57,312	57,601		57,308	57,595
Investments in subsidiaries	7	-	-		5	5
Other non-current receivables	9	-	-		-	-
Deferred income tax asset	22	925	1,023		925	1,023
Long term rent (adaptation of IFRS 16)	13.1	483	844		483	844
Total non-current assets		59,064	59,633		59,065	59,632
Current assets
Inventories	3 and 8	10,614	9,623		10,614	9,623
Trade receivables	9	11,258	10,467		11,258	10,467
Prepayments		74	6		74	6
Current income tax prepayment		446	1		443	-
Other receivables and current assets	10	1,074	1,051		1,073	1,050
Cash and cash equivalents	11	322	3,867		274	3,865
Total current assets		23,788	25,015		23,736	25,011
Total assets		82,852	84,648		82,801	84,643

(Cont’d on the next page)

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Consolidated and company’s financial statements of financial position (cont’d)

		Group			Company
		As of 31	As of 31	As of 31	As of 31
	Notes	August	August	August	August
		2025	2024	2025	2024
EQUITY AND LIABILITIES
Equity
Share capital	1	4,508	4,508	4,508	4,508
Legal reserve	12	451	451	451	451
Retained earnings	3	34,389	32,964	34,407	32,905
Total equity		39,348	37,923	39,366	37,864
Liabilities
Non-current liabilities
Non-current borrowings	13	23,479	26,129	23,479	26,129
Provisions for employee benefits	14	727	635	689	604
Long term rent (adaptation of IFRS 16)	13.1	212	456	212	456
Total non-current liabilities		24,418	27,220	24,380	27,189
Current liabilities
Current portion of non-current borrowings	13	3,964	7,140	3,964	7,140
Trade payables	15	10,225	7,506	10,325	7,686
Payables for property, plant and equipment		353	91	353	91
Other current liabilities and accrued	16	4,221	4,322	4,090	4,227
liabilities
Long term rent (adaptation of IFRS 16)	13.1	323	446	323	446
Total current liabilities		19,086	19,505	19,055	19,590
Total liabilities		43,504	46,725	43,435	46,779
Total equity and liabilities		82,852	84,648	82,801	84,643
The accompanying notes set out in pages 48 – 86 is an integral part of these financial statements.

General Manager

Jonas Krutinis

11 December 2025

Finance Director

Egidijus Žvaliauskas

11 December 2025

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENT OF PROFIT OR

LOSS AND OTHER COMPREHENSIVE INCOME

		Group		Company
	Notes	2025	2024	2025	2024
Revenue	17	104,219	97,272	104,219	97,272
Cost of sales	3 and 18	(91,075)	(78,291)	(91,102)	(78,316)
Gross profit (loss)		13,144	18,981	13,117	18,956
Selling and distribution	19	(1,344)	(1,653)	(1,344)	(1,653)
expenses
Administrative expenses	19	(5,488)	(4,517)	(5,381)	(4,418)
Other income	20	923	1,140	925	1,143
Other expenses	20	(825)	(612)	(825)	(612)
Operating profit		6,410	13,339	6,492	13,416
Financial income	20	18	43	18	43
Financial costs	0	(2,011)	(2,735)	(2,011)	(2,735)
Result from financial	20	(1,993)	(2,692)	(1,993)	(2,692)
activities
Profit before income tax	3	4,417	10,647	4,499	10,724
Income tax expense	3 and 22	21	(647)	21	(644)
Net profit for the reporting period		4,438	10,000	4,520	10,080
Other comprehensive income
not to be re-grouped to profit
or loss
Actuarial change of employee- related accruals	14	19	21	13	21
Income tax effect	14	-	-	-	-
Total comprehensive income		4,457	10,021	4,533	10,101
for the reporting period
Attributable to owners of the Company:
Net profit	3	4,438	10,000	4,520	10,080
Other comprehensive income		19	21	13	21
Total comprehensive income		4,457	10,021	4,533	10,101
Basic and diluted earnings per	23	1.14	2.57	1.16	2.59
share (in EUR)

The accompanying notes set out in pages 48 – 86 is an integral part of these financial statements.

General Manager

Jonas Krutinis

11 December 2025

Finance Director

Egidijus Žvaliauskas

11 December 2025

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENT OF CHANGES IN

EQUITY

GROUP	Notes	Share	Legal	Retained
		capital	reserve	earnings	Total
Balance as of 31 August 2023	3	4,508	451	22,943	27,902
Net profit for the reporting period	3	-	-	10,000	10,000
Other comprehensive income		-	-	21	21
Total comprehensive income		-	-	10,021	10,021
Transactions with owners		-	-	-	-
Dividends declared		-	-	-	-
Total transactions with owners		-	-	-	-
Balance as of 31 August 2024	3	4,508	451	32,964	37,923
Net profit for the reporting period		-	-	4,438	4,438
Other comprehensive income		-	-	19	19
Total comprehensive income		-	-	4,457	4,457
Transactions with owners		-	-	-	-
Dividends declared		-	-	(3,031)	(3,031)
Total transactions with owners		-	-	-	-
Balance as of 31 August 2025		4,508	451	34,389	39,348

(cont’d on the next page)

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Consolidated and Company’s financial statement of changes in equity (cont’d)

COMPANY

Notes

capital

Legal

reserve

Retained

earnings

Total

Balance as of 31 August 2023

4,508

451

22,804

27,763

Net profit for the reporting period

10,080

Other comprehensive income

Total comprehensive income

10,101

Transactions with owners

Dividends declared

Total transactions with owners

Balance as of 31 August 2024

4,508

451

32,905

37,864

Net profit for the reporting period

4,520

Other comprehensive income

Total comprehensive income

4,533

Transactions with owners

Dividends declared

(3,031)

Total transactions with owners

Balance as of 31 August 2025

4,508

451

34,407

39,366

The accompanying notes set out in pages 48 – 86 is an integral part of these financial statements.

General Manager

Jonas Krutinis

11 December 2025

Finance Director

Egidijus Žvaliauskas

11 December 2025

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENT OF CASH FLOWS

Notes

		Group		Company
		2025	2024	2025	2024
Cash flows from operating activities
Profit (loss) for the period	3	4,438	10,000	4,520	10,080
Adjustments for:
Depreciation and amortization		4,787	4,472	4,785	4,470
Change in provisions for employee benefits		92	46	65	53
Result from the disposal of property, plant and equipment		-	11	-	11
Interest expenses (income)		1,619	2,614	1,619	2,614
Income tax		(21)	647	(21)	644
Other		374	(43)	374	(54)
		11,289	17,747	11,342	17,818
Changes in working capital:
Decrease (increase) in inventories	3	(991)	(3,540)	(991)	(3,540)
Decrease (increase) in prepayments		(68)	49	(68)	49
Decrease (increase) in trade receivables		(791)	(3,192)	(791)	(3,192)
Decrease (increase) in other receivables		(23)	55	(23)	14
Decrease in other current payables and liabilities		3,447	(801)	3,348	(835)
Cash flows from operating activities		12,863	10,318	12,817	10,314
Income tax (paid)		(1,036)	0	(1,036)	0
Net cash flows from operating activities		11,827	10,318	11,781	10,314
Cash flows from investing activities
Loans granted to related party		-	-	-	-
Loan repayments received from related		-	-	-	-
party
Grants received		61	-	61	-
Received interest		13	-	13	-
Purchases of property, plant and equipment		(4,707)	(791)	(4,707)	(789)
and intangible assets
Proceeds on sale of property, plant and equipment		10	43	10	43
Other investing activities		-	-	-	-
Net cash flows from (used in) investing		(4,623)	(748)	(4,623)	(746)
activities

(cont’d on the next page)

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region, Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Consolidated and Company’s financial statement of cash flows (cont’d)

Consolidated and Company’s financial statement

of cash flows (cont’d)

Notes

	Group		Company
	2025	2024	2025	2024
Cash flows from (used in) financing activities
Proceed from factoring	-	-	-	-
Proceeds from borrowings	29,205	-	29,205	-
Repayments of borrowings	(34,413)	(6,481)	(34,413)	(6,481)
Dividends paid	(2,956)	-	(2,956)	-
Other financial income and expenses	(390)	(52)	(390)	(52)
Interest paid	(2,195)	(2,651)	(2,195)	(2,651)
Net cash flows (used in) financing activities	(10,749)	(9,184)	(10,749)	(9,184)
Net (decrease) increase in cash and cash	(3,545)	386	(3,591)	384
equivalents
Cash and cash equivalents at the beginning	3,867	3,481	3,865	3,481
of the period
Cash and cash equivalents at the end of the period	322	3,867	274	3,865

The accompanying notes set out in pages 48 – 86 is an integral part of these financial statements.

General Manager

Jonas Krutinis

11 December 2025

Finance Director

Egidijus Žvaliauskas

11 December 2025

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

NOTES TO THE FINANCIAL STATEMENTS

1. General information

Vilniaus baldai AB (hereinafter “the Company”) is a public limited liability company registered in the Republic of

Lithuania. The address of its registered office is Pramones str. 23, Guopstos village, Trakai region, Lithuania.

The Company is engaged in furniture production and trade. The Company was registered on 9 February 1993; its

shares are traded in the Secondary List of the NASDAQ Vilnius AB.

As of 31 August, 2025 and 2024 the shareholders of the Group and the Company were:

	2025			2024
	Number of	Percentage	Number of	Percentage
	votes held		votes held
Invalda Privatus Kapitalas AB	3,407,135	87.67	3,407,135	87.67
Other shareholders	479,132	12.33	479,132	12.33
Total	3,886,267	100.00	3,886,267	100.00

Main shareholders of Invalda Privatus Kapitalas AB are private persons Vytautas Bučas (39.63%), Irena Ona

Mišeikienė (30.05%) and Nijolė Paulina Bučienė (20.47%).

As of 31 August, 2025, the Company’s share capital amounted to EUR 4,508,069.72 and it was divided into 3,886,267

ordinary registered shares. As of 31 August, 2025 and 31 August 2024 all the shares of the Company are ordinary

shares with the par value of EUR 1.16 each and were fully paid. The share capital did not change in 2025 and 2024.

The Company did not hold its own shares.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one

vote per share at annual and general meetings of the Company. All shares rank equally with regard to the Company’s

residual assets.

The Group consists of Vilniaus baldai AB and its subsidiaries ARI-LUX UAB (hereinafter “the Group”). ARI-LUX UAB

information as of 31 August 2025:

		Share of		Profit (loss)
		ownership		for the
	Registration	held by the	Share	reporting		Main
Company	address	Company, %	capital	period	Equity	activities
	Pramones str. 23,
ARI-LUX UAB	Guopstos village,	100	3	(83)	(21)	Packaging
	Trakai region
As of 31 August, 2025 the number of employees of the Group and the Company was 569 and 505, respectively (as of 31 August 2024 – 507 and 446, respectively). These financial statements include the consolidated financial statements of the Group and the separate financial statements of the Company. The Company’s management approved these financial statements on 11 December 2025. The shareholders of the Company have a statutory right to approve these financial statements or not to approve them and to require preparation of another set of financial statements. 2. Accounting principles The principal accounting policies adopted in preparing the Group’s and the Company’s financial statements for the year 2025 are as follows: 2.1. Basis of preparation These financial statements have been prepared in accordance with International Financial Reporting Standards (hereinafter IFRSs), as adopted by the European Union (hereinafter the EU). The financial statements have been prepared under the historical cost basis.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

The preparation of financial statements in conformity with IFRSs, as adopted by the European Union, requires the use

of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying

the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where

assumptions and estimates are significant to the financial statements are disclosed in Note 2.26. Although these

estimates are based on management’s best knowledge of current events and actions, actual results ultimately may

differ from those estimates.

The Group and the Company have consistently applied the accounting policies set out in Note 2 to all periods presented

in these financial statements.

The financial statements are presented in thousands of EUR, rounded to the nearest thousand. As a result of rounding,

immaterial discrepancies may occur between individual line items and their aggregated amounts. Such discrepancies

are deemed immaterial and do not affect the fair presentation of the financial statements.

Rounding differences may amount to up to ±1 thousand EUR in an individual line item and up to ±1 thousand EUR in

aggregated or consolidated amounts, provided that these differences are not material to the users of the financial

statements or to the decisions made on the basis of them.

These financial statements for the year ended 31 August 2025 have been prepared under the assumption that the

Group and the Company will continue as a going concern.

ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

In the current year, the Company and the Group has adopted all of the new and revised Standards and Interpretations

that are relevant to its operations and effective for accounting periods beginning on 1 January 2024.

2.1.1 The following standards, amendments and interpretations are mandatory for accounting periods

beginning on or after 1 January 2024

Amendments to IAS 1: Classification of Liabilities as Current or Non-current and Classification of Liabilities as

Current or Non-current - Deferral of Effective Date (issued on 23 January 2020, effective from 1 January 2024)

The amendments aim to promote consistency in applying the requirements by helping companies determine whether,

in the statement of financial position debt and other liabilities with an uncertain settlement date should be classified as

current or non-current. The amendments affect the presentation of liabilities in the statement of financial position and

do not change existing requirements around measurement or timing of recognition of any asset, liability, income or

expenses, nor the information that entities disclose about those items. Also, the amendments clarify the classification

requirements for debt which may be settled by the company issuing own equity instruments.

The amendments in Non-current Liabilities with Covenants (Amendments to IAS 1) (issued on 31 October 2022,

effective from 1 January 2024):

Modify the requirements introduced by Classification of Liabilities as Current or Non-current on how an entity classifies

debt and other financial liabilities as current or non-current in particular circumstances: only covenants with which an

entity is required to comply on or before the reporting date affect the classification of a liability as current or non-current.

In addition, an entity has to disclose information in the notes that enables users of financial statements to understand

the risk that non-current liabilities with covenants could become repayable within twelve months. The amendments are

applied retrospectively in accordance with IAS 8 and earlier application is permitted.

The amendments do not have a material impact on the Group's/Company's financial statements

Amendments to IFRS 16 Lease Liability in a Sale and Leaseback with amendments that clarify how a seller-

lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be

accounted for as a sale (issued on 22 September 2022, effective from 1 January 2024):

Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) requires a seller-lessee to subsequently measure

lease liabilities arising from a leaseback in a way that it does not recognise any amount of the gain or loss that relates

to the right of use it retains. The new requirements do not prevent a seller-lessee from recognising in profit or loss any

gain or loss relating to the partial or full termination of a lease. A seller-lessee applies the amendments retrospectively

in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to sale and leaseback

transactions entered into after the date of initial application.

The amendments do not have a material impact on the Group's/Company's financial statements

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements (issued on May 2023, effective from 1 January

2024):

Supplier Finance Arrangements amends IAS 7 Statement of Cash Flows to require an entity to provide additional

disclosures about its supplier finance arrangements. The amendments also add supplier finance arrangements as an

example within the liquidity risk disclosure requirements of IFRS 7 Financial Instruments: Disclosures.

The amendments do not have a material impact on the Group's/Company's financial statements

2.1.2 Standards and amendments that have been approved but are not yet effective and have not been applied

in advance

Amendments to IAS 21 Lack of Exchangeability (issued on August 2023, effective from 1 January 2025, early

application is possible):

Lack of Exchangeability amends IAS 21 The Effects of Changes in Foreign Exchange Rates to require an entity to

apply a consistent approach to assessing whether a currency is exchangeable into another currency and, when it is

not, to determining the exchange rate to use and the disclosures to provide.

The Company has not yet evaluated the impact of the implementation of these amendments.

Contracts Referencing Nature-dependent Electricity – Amendments to IFRS 9 and IFRS 7 (issued on 18

December 2024, effective from 1 January 2026 with early application permitted)

The amendments are to the own-use requirements, and hedge accounting requirements, together with related

disclosures. The scope of the amendments is narrow, and only if contracts meet the specified scoping characteristics

will they be in the scope of the amendments.

The amendments include - clarifying the application of the ‘own-use’ requirements; permitting hedge accounting if these

contracts are used as hedging instruments; and adding new disclosure requirements to enable investors to understand

the effect of these contracts on a company’s financial performance and cash flows.

Amendments to IFRS 9 Financial Instruments

- the own-use requirements in IFRS 9 are amended to include the factors an entity is required to consider when

applying IFRS 9:2.4 to contracts to buy and take delivery of renewable electricity for which the source of

production of the electricity is nature-dependent; and

- the hedge accounting requirements in IFRS 9 are amended to permit an entity using a contract for nature-

dependent renewable electricity with specified characteristics as a hedging instrument:

o to designate a variable volume of forecast electricity transactions as the hedged item if specified

criteria are met; and

o to measure the hedged item using the same volume assumptions as those used for the hedging

instrument.

Amendments to IFRS 7 “Financial Instruments: Disclosures” and IFRS 19 “Subsidiaries without Public

Accountability: Disclosures”

The IASB amends IFRS 7 and IFRS 19 to introduce disclosure requirements about contracts for nature-dependent

electricity with specified characteristics.

The amendments are effective for annual reporting periods beginning on or after 1 January 2026. Early application is

permitted.

The amendments shall be applied retrospectively; prior periods need not be restated to reflect the application of the

amendments.

The Company has not yet evaluated the impact of the implementation of these amendments.

Annual Improvements Volume 11 (issued on 18 July 2024 effective from 1 January 2026, earlier application is

permitted)

These amendments include clarifications, simplifications, corrections and changes aimed at improving the consistency

of several IFRS Accounting Standards. The amendments contained in the Annual Improvements relate to:

- IFRS 1 First-time Adoption of International Financial Reporting Standards - Hedge Accounting by a First-time

Adopter

- IFRS 7 Financial Instruments: Disclosures:

o Gain or loss on derecognition

o Disclosure of differences between the fair value and the transaction price

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

o Disclosures on credit risk

- IFRS 9 Financial Instruments:

o Derecognition of lease liabilities

o Transaction price

- IFRS 10 Consolidated Financial Statements - Determination of a ‘de facto agent’

- IAS 7 Statement of Cash Flows - Cost Method.

These amendments are mandatory for financial years beginning on or after 1 January 2026; earlier application is

permitted.

The Company has not yet evaluated the impact of the implementation of these amendments.

Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and

IFRS 7 (issued on 30 May 2024 effective from 1 January 2026; earlier application is permitted)

Clarifying the classification of financial assets with environmental, social and corporate governance (ESG) and similar

features—ESG-linked features in loans could affect whether the loans are measured at amortised cost or fair value.

Stakeholders asked how to determine how such loans should be measured based on the characteristics of the

contractual cash flows. To resolve any potential diversity in practice, the amendments clarify how the contractual cash

flows on such loans should be assessed.

Settlement of liabilities through electronic payment systems—stakeholders highlighted challenges in applying the

derecognition requirements in IFRS 9 to the settlement of a financial asset or a financial liability via electronic cash

transfers. The amendments clarify the date on which a financial asset or financial liability is derecognised. The IASB

also decided to develop an accounting policy option to allow a company to derecognise a financial liability before it

delivers cash on the settlement date if specified criteria are met.

With these amendments, the IASB has also introduced additional disclosure requirements to enhance transparency for

investors regarding investments in equity instruments designated at fair value through other comprehensive income

and financial instruments with contingent features, for example features tied to ESG-linked targets.

The amendments are effective for annual reporting periods beginning on or after 1 January 2026. Earlier application of

either all the amendments at the same time or only the amendments to the classification of financial assets is permitted.

An entity is required to apply the amendments retrospectively. An entity is not required to restate prior periods to reflect

the application of the amendments, but may do so if, and only if, it is possible to do so without the use of hindsight.

The Company has not yet evaluated the impact of the implementation of these amendments.

IFRS 18 Presentation and Disclosure in Financial Statements (issued on 9 April 2024 effective from 1 January

2027)

IFRS 18 introduces new requirements on presentation within the statement of profit or loss, including specified totals

and subtotals. It also requires disclosure of management-defined performance measures and includes new

requirements for aggregation and disaggregation of financial information based on the identified ‘roles’ of the primary

financial statements and the notes.

The Company has not yet evaluated the impact of the implementation of this standard.

There are no other new standards, amendments to the existing standards or their interpretations that are not yet

effective but may have a material impact on the Company or the Group.

2.2. Functional and financial statements currency

The Group’s and the Company’s functional and financial statements currency is euro. Financial statements are

prepared in thousands of euro. In these financial statements, all amounts are expressed in euros and rounded down

to the nearest thousand (EUR ‘000).

2.3. Financial year

Financial year of the Group and the Company starts on 1 September and ends on the 31 August of the next year.

Under decision of the Company`s shareholder of 8 October 2014 the financial year was changed from 31 August 2015.

2.4. Consolidation principles

The consolidated financial statements of the Group include Vilniaus baldai AB and its parent (subsidiary) companies.

The financial statements of the subsidiaries are prepared for the same reporting year and using the same accounting

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

principles. Subsidiaries are consolidated from the date their control passes to the Group and are no longer consolidated

from the date control is transferred outside the Group. All intra-Group transactions, balances and unrealized profits or

losses from transactions between Group companies are eliminated. Equity and net result attributable to minority

shareholders (non-controlling interests) are presented separately in the statement of financial position and the

statement of comprehensive income. Revenues and expenses of subsidiaries acquired or sold during the year are

included in the consolidated statement of comprehensive income from the date of acquisition of the subsidiary to the

date of sale of the subsidiary, respectively. The gross income of subsidiaries is attributed to the owners of the Company

and the non-controlling interest (even if the result of the non-controlling interest would become negative). Financial

statements of subsidiaries are adjusted so that their accounting policies are consistent with the accounting policies

applied by other Group companies, if necessary. For consolidation purposes, financial statements of subsidiaries are

prepared according to the financial year of the parent company. All intra-Group transactions, balances, income and

expenses are eliminated during consolidation. Acquisitions and disposals of the minority share of the Group are

accounted for as an equity transaction: the difference between the value of the net assets acquired from the minority

share/transferred to the minority in the Group's financial statements and the purchase/sale price of the shares is

accounted for directly in equity.

2.5. Business combinations

The Group accounts for business combinations using the acquisition method when control is transferred to the Group.

The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets

acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in

profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity

securities.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such

amounts are generally recognized in profit of loss.

Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent

consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and

settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each

reporting date and subsequent changes in the fair value of the contingent consideration are recognized in profit or loss.

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to,

variable returns from its involvement with the entity and has the ability to affect those returns through its power over

the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date

on which control commences until the date on which control ceases.

Non-controlling interest are measured initially at their proportionate share of the acquirer’s identifiable net assets at the

date of acquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted

for as equity transactions.

When the Group loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any

related NCI and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest

retained in the former subsidiary is measured at fair value when control is lost.

Intra-group balances and transaction, and any unrealized income and expenses arising from intra-group transactions,

are eliminated. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there

is no evidence of impairment.

2.6. Investments in subsidiaries in the Company's separate financial statements

In the Company's separate financial statements, investments in subsidiaries are stated at cost. The value of the

investment is reduced by recognizing the impairment of the investment.

Impairment is determined by estimating the recoverable amount of the cash-generating unit. When the recoverable

amount of a cash-generating unit is less than its carrying amount in the Company's statement of financial position, an

impairment loss is recognized.

2.7. Intangible assets

Intangible assets are measured initially at cost. Intangible assets are recognized if it is probable that future economic

benefits that are attributable to the asset will flow to the Group and the Company and the cost of asset can be measured

reliably. After initial recognition, intangible assets are measured at cost less accumulated amortization and any

accumulated impairment losses. Intangible assets are amortized on a straight-line basis over the best estimate of their

useful lives.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Software

The costs of acquisition of new software are capitalized and treated as an intangible asset if these costs are not an

integral part of the related hardware. Software is amortized over a period not exceeding 3 years.

Costs incurred in order to restore or maintain the future economic benefits that the Group and the Company expects

from the originally assessed standard of performance of existing software systems are recognized as an expense when

the restoration or maintenance work is carried out.

2.8. Property, plant and equipment

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

When assets are sold or retired, their cost and accumulated depreciation are eliminated from the accounts and any

gain or loss resulting from their disposal is included in profit or loss.

The initial cost of property, plant and equipment comprises its purchase price, including non-refundable purchase taxes

and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Expenditures incurred after the property, plant and equipment have been put into operation, such as repair and

maintenance costs, are normally charged to profit or loss in the period the costs are incurred.

Depreciation is computed on a straight-line basis over the following estimated useful lives:

Buildings

10–66 years

Machinery and equipment

6–20 years

Vehicles

5–10 years

Other property, plant and equipment, critical spare parts

2–6 years

The assets’ residual values and useful lives are reviewed periodically to ensure that the period of depreciation is

consistent with the expected pattern of economic benefits from items in property, plant and equipment.

Construction-in-progress is stated at cost. This includes the cost of construction, plant and equipment and other directly

attributable costs. Construction-in-progress is not depreciated until the relevant assets are completed and available for

use.

Borrowing costs directly attributable to the acquisition, construction or production of assets that are not stated at fair

value and necessarily take a substantial time to get ready for intended use or sale (qualifying assets) are capitalised

as part of the costs of those assets.

Capitalisation of borrowing costs continues up to the date when the assets are substantially ready for their use or sale.

The Group and the Company capitalise borrowing costs that could have been avoided if they had not made capital

expenditure on qualifying assets. Borrowing costs capitalised are calculated at the Group’s and the Company’s average

funding cost (the weighted average interest cost is applied to the expenditures on the qualifying assets), except to the

extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset. Where this occurs, actual

borrowing costs incurred less any investment income on the temporary investment of those borrowings are capitalised.

Spare parts are classified as property, plant and equipment if they meet the definition, including the requirement to be

used over more than one period. Otherwise, they are classified as inventory. For spare parts that are kept to ensure

smooth operation of some machinery without interruptions, the depreciation period starts immediately when those spare

parts are acquired.

2.9. Inventories

Inventories are initially recorded at acquisition cost. After the initial recognition, inventories are valued at the lower

number of cost or net realizable value. Net realizable value is the selling price in the ordinary course of business, less

the costs of completion and applicable variable marketing and distribution costs. Cost is determined by the first-in, first-

out (FIFO) method. The cost of finished goods and work in progress includes the applicable allocation of fixed and

variable overhead costs based on a normal operating capacity. Unrealizable inventory is fully written-off. Inventory

items that have not moved or been used for more than one year are written down based on the following criteria:

Customer commitment to compensate

0 % (0% write-down)

To be used in production

70 % (30% write-down)

To be sold in the secondary market (liquid inventory)

50 % (50% write-down)

Illiquid inventory

100 % (100% write-down)

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

2.10. Financial instruments

Financial assets

The financial assets of the Group and the Company include cash and cash equivalents, loans granted, trade receivables

and other receivables.

Trade receivables are initially recognized when they arise. Upon initial recognition, all other financial assets are

recognized when the Group and the Company become parties to the contractual provisions of the instrument. Financial

assets (except for trade receivables without a significant financing component), if not measured at fair value through

profit or loss, are initially measured at fair value plus transaction costs directly attributable with acquisition or issue.

Trade receivables without a significant financing component are initially recognized at the transaction price.

Financial assets are classified in three groups according to their measurement:

i. financial assets that are subsequently measured at amortized cost;

ii. financial assets that are subsequently measured at fair value through other comprehensive income;

iii. financial assets that are subsequently measured at fair value through profit or loss.

The classification of a financial asset depends on the financial asset management business model (assessing how the

entity manages the financial assets to generate cash flows) and the characteristics of the contractual cash flows of the

financial asset (whether contractual cash flows include only principal and interest payments).

Financial asset is stated at amortized cost if both of the following conditions are satisfied:

• financial asset is held within a business model whose objective is to hold financial assets in order to collect

contractual cash flows; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and

interests on the principal amount outstanding.

Financial assets that do not meet the above conditions are measured at fair value through profit or loss and through

other comprehensive income.

The Group and the Company have no financial assets, which, in subsequent periods, are measured at fair value through

profit or loss and other comprehensive income.

Financial assets that are subsequently measured at amortized cost are measured using the effective interest method.

Amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses, and impairment

losses are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

The effective interest method is a method of calculating the amortized cost of a financial asset or liability and of

allocating the interest income or expense over a period of time. The effective interest rate is the rate that discounts

estimated future cash payments through the expected life of the financial asset or liability or, where appropriate, a

shorter period.

Financial assets at fair value through profit or loss are initially recognized at fair value through profit or loss.

Subsequently, the fair value gain and loss, including any interest and dividends, is recognized in profit or loss and other

comprehensive income.

Financial assets (or, where applicable, part of a financial asset or part of a group of similar financial assets) are

derecognized when:

• the right to receive cash flows from the financial asset expires;

• the Group and the Company retain the right to receive cash flows from the asset, but have agreed to pay in

full without material delay to a third party under a ‘pass through’ arrangement;

• The Group and the Company transfer their right to receive cash flows from assets and/or:

a) have transferred substantially all the risks and rewards of the financial asset;

b) have neither transferred nor retained substantially all the risks and rewards of the financial assets but

have transferred control of the assets.

When the Group and the Company transfer rights to receive cash flows from an asset but neither transfer nor retain

substantially all the risks and rewards of the asset nor transfer control of the asset, the asset is recognized to the extent

of the Group’s and the Company’s continuing involvement in the asset. The Company's and the Group’s assets that

have been transferred as guarantee are measured at the lower of the carrying amount and the maximum amount of

consideration that the Group and the Company could be required to repay.

The Group and the Company reduce the gross carrying amount of their financial asset if they cannot reasonably expect

to recover all or part of the financial asset. A write-off is an event of derecognition.

Cash and cash equivalents consist of cash in bank accounts. Cash equivalents are short-term, highly liquid investments

that are readily convertible to known amounts of cash. Such investments have a maturity of up to three months and the

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

risk of changes in value is very insignificant. For the purposes of the cash flow statement, cash and cash equivalents

include cash on hand, deposits in current accounts, and other short-term highly liquid investments.

Trade and other receivables on initial recognition, trade and other receivables are recognized at the transaction price

and subsequently measured at amortized cost.

Financial liabilities

The Group’s and the Company’s financial liabilities comprise borrowings, trade payables and other payables.

At the time of initial recognition, financial liabilities are recognised when the Group and the Company become parties

to the contractual terms of the instrument.

Financial liabilities are divided into two groups according to their measurement:

a) financial liabilities that are subsequently measured at amortised cost;

b) financial liabilities that are subsequently measured at fair value through profit or loss.

A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as

such on initial recognition.

Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are

recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest

expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is

also recognized in profit or loss.

The Group and the Company derecognize financial liabilities when their contractual obligations are discharged or

cancelled or expire. The Group and the Company also derecognize a financial liability when its terms are modified and

the cash flows of the modified liability are substantially different. In this case, the new financial liability is recognized at

fair value under the modified terms of the contract.

In the event of derecognition of a financial liability, the difference between the carrying amount written off and the

consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss in

the statement of profit or loss and other comprehensive income.

Trade and other payables. Upon initial recognition, trade and other payables are recognized when the Company

becomes a party to the contractual provisions. Trade and other payables are initially measured at fair value plus directly

attributable transaction costs.

Borrowed funds. Borrowings are initially recognized at fair value less transaction costs and subsequently measured at

amortized cost using the effective interest method.

Financial guarantees. A financial guarantee contract is a contract that obliges the Company to make specific payments

to compensate the contract holder for the holder's default on timely payment of the original or modified terms of a debt

instrument. Financial guarantees are initially recognized at fair value, which is usually the amount receivable.

Offsetting financial assets and financial liabilities

Financial assets and financial liabilities are offset when, and only when, the Group and the Company have a legally

enforceable right to set off the amounts and they intend either to settle them on the net basis or to realise the asset

and settle the liability simultaneously.

2.11. Share capital

Ordinary registered shares are classified as share capital. Ordinary registered shares are stated at their par value.

2.12. Dividends

Dividends are recognised in the Company’s financial statements in the period in which the dividends are approved by

the Company’s shareholders. Dividends paid are classified as cash flows from financing activities in the statement of

cash flows.

2.13. Leases

The Group and the Company are lessees

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

(a) Finance lease

Leases of property, plant and equipment where the Group and the Company have substantially all the risks and rewards

of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower

of the fair value of the leased property and the estimated present value of the minimum lease payments. Each lease

payment is allocated between the liability and finance charges so as to achieve a constant interest rate on the finance

lease balance outstanding. The corresponding rental obligations, net of finance charges, are included in long-term

payables except for instalments due within 12 months which are included in current liabilities.

The property, plant and equipment acquired under finance leases are depreciated over the shorter of the asset’s useful

life and the lease term.

(b) Operating lease

At the beginning of the contract, the Company and the Group assess whether the contract is a lease or includes a lease.

This means assessing whether the contract confers a right to manage the use of the identified asset for a period of time

in return for remuneration.

The Company and the Group apply a single recognition and measurement method to all leases, except for short-term and

low-value leases. The Company and the Group recognize a lease obligation to pay lease payments and a right-of-use

asset that entitles the holder to use the leased asset.

Assets managed under lease right

The Company and the Group recognize the right-of-use asset at the inception date (ie the date from which the underlying

asset is available for use). Assets held under usable rights are carried at cost less any accumulated depreciation and any

accumulated impairment losses. The cost of an asset held for use includes the amount of the initial measurement of the

lease liability, the initial direct costs, the lease payments at or before the inception date, less any lease incentives received.

Depreciation is calculated on a straight-line basis over the lease term.

If the ownership of the leased property is transferred to the Company and the Group before the end of the lease term or if

the price of the asset managed by the right of use indicates that the lessee will exercise the call option, depreciation is

calculated based on the estimated useful life of the asset.

Assets held for use are also assessed for impairment.

Lease obligations

At the beginning date, the Company / Group recognizes lease liabilities at the present value of the lease payments due

during the lease term. Lease payments include fixed payments (including equivalent payments) less any rental incentives

receivable, variable rents that depend on an index or rate, and amounts that would be payable under residual value

guarantees. Such lease payments also include the exercise price of the call option if it is reasonably known that the

Company / Group will exercise that option, and penalties for terminating the lease if it is assumed that the Company /

Group will exercise the option to terminate the lease during the lease term. Variable lease payments that are independent

of an index or a rate are recognized as an expense (unless they are incurred to produce inventories) in the period in which

the event occurs or the condition that gives rise to the tax arises.

In calculating the present value of the lease payments, the Company / Group applies the borrowing rate accrued at the

beginning of the lease, as the interest rate specified in the lease cannot be readily determined. After the commencement

date, the amount of the lease liability is increased by the estimated interest and the amount of lease payments paid is

reduced. In addition, the carrying amount of a lease is remeasured if certain adjustments are made, the lease term or

lease payments change (for example, changes in future lease payments due to a change in the index or rate used to

determine such lease payments) or a change in the option to purchase the lease. evaluation.

Short-term and low-value property lease

The Company and the Group apply the recognition exemption to their current assets (i.e. leases with a term of less than

12 months at the inception date that do not include an option to purchase the asset). It also observes this exception by

recognizing the lease of low-value assets consisting of office inventory. Lease payments for short-term and low-value

assets are recognized as an expense on a straight-line basis over the lease term.

The Group and the Company are lessors

(a) Operating lease

As a lessor, the Company and the Group determine at the beginning of a lease whether the contract is a finance lease or

an operating lease. If the Company and the Group determine that substantially all the risks and rewards of ownership of

a leased asset are transferred under a lease, it classifies the lease as a finance lease. Leases under which the Company

and the Group do not transfer substantially all the risks and rewards incidental to ownership of a leased asset are classified

as operating leases. Lease income is recognized on a straight-line basis over the term of the lease and is recognized in

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

the statement of comprehensive income on a straight-line basis over the term of the lease. Initial direct costs incurred in

negotiating and arranging a lease shall be included in the carrying amount of the leased asset and recognized as an

expense over the lease term on the same basis as the lease income. Contingent contributions are recognized as income

in the period in which they are earned.

2.14. Employee benefits

(a) Social security contributions

The Group and the Company pay social security contributions to the state Social Security Fund (the Fund) on behalf

of their employees based on the defined contribution plan in accordance with the local legal requirements. A defined

contribution is a plan under which the Group and the Company pay fixed contributions into the Fund and will have no

legal or constructive obligations to pay further contributions if the Fund does not hold sufficient assets to pay all

employees benefits relating to employee service in the current and prior period. Social security contributions are

recognised as expenses on an accrual basis and are included in payroll expenses.

(b) Termination benefits

Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date

or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group or the Company

recognise termination benefits when they are demonstrably committed to either: terminating the employment of current

employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a

result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the date of

the statement of financial position are discounted to their present value.

The Group and the Company recognise a liability and an expense for bonuses where contractually obliged or where

there is a past practice that has created a constructive obligation.

(d) Provisions for pensions and jubilee payments

According to the terms of the collective employment agreement effective at the Group and the Company, each

employee is entitled to a pension benefit amounting to 2 or 3 months’ salary payment when leaving the Group and the

Company after reaching the pension age and a jubilee benefit. Actuarial calculations are made to determine liability for

such payments. The liability is recognised at present value discounted using market interest rate.

The Group and the Company recognise re-measurements of the pension benefit obligation in ‘Other comprehensive

income that will not be reclassified to profit or loss’. These amounts recognised as other comprehensive income are

accounted for under equity. Jubilee benefits and long-service benefits are accounted for by the Group and the Company

within profit or loss.

2.15. Provisions

Provisions are recognized when the Group and the Company have a present obligation (legal or constructive) as a

result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle

the obligation and a reliable estimate can be made of the amount of the obligation. The provisions are reviewed at each

statement of financial position date and adjusted in order to present the most reasonable current estimate. If the effect

of the time value of money is material, the amount of provision is equal to the present value of the expenses, which are

expected to be incurred to settle the liability. Where discounting is used, the increase in the provision due to the passage

of time is recognized as a borrowing cost.

A provision for warranties is recognized when the underlying products are sold, based on historical warranty data and

weighting of possible outcomes against their associated probabilities.

2.16. Income tax

Income tax charge is based on profit for the year and considers deferred taxation. Income tax is calculated based on

the Lithuanian tax legislation.

The standard income tax rate in the Republic of Lithuania was 15% in 2025 (15% in 2024).

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. Such carrying forward is disrupted if the Company change its activities due to

which these losses were incurred except when the Company do not continue its activities due to reasons which do not

depend on the Company itself. Starting from 2014 the amount of utilised tax losses cannot exceed 70% of taxable profit

for the tax period calculated by deducting non-taxable income, allowed tax deductions and allowed limited amount

deductions from income, except for tax losses of the previous periods. Starting from 2010, tax losses can be transferred

at no consideration or in exchange for certain consideration between the Group companies if certain conditions are

met.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

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. The limitation

(up to 70% on profit from transfer of securities) is not applied to losses on transfer of securities from previous tax periods

deductible from profit on transfer of securities from the taxable period.

Deferred taxes are calculated using the liability method. Deferred income taxes reflect the net tax effects of temporary

differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts

used for income tax purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply

to taxable income in the years in which those temporary differences are expected to reverse based on tax rates enacted

or substantively enacted at the reporting date.

A deferred tax asset is recognized in the statement of financial position to the extent the management believes it will

be realized in the foreseeable future, based on taxable profit forecasts. If it is believed that part of the deferred tax asset

is not going to be realized, this part of the deferred tax asset is not recognized in the financial statements.

Deferred tax assets and liabilities are offset when they are related to taxes levied by the same tax authority and when

there is a legally enforceable right to cover current payable taxes at net value.

Income tax and deferred tax for the accounting period

Income tax and deferred income tax are charged or credited to profit or loss, except when they relate to items included

directly to equity, in which case the deferred income tax is also accounted for in other comprehensive income.

2.17. Revenue recognition

Revenues of the Group and the Company are recognized in accordance with IFRS 15, that is, the Group and the

Company recognize revenue at such time and to such an extent that the transfer of goods or services to customers

represents the consideration that the Group and the Company expect to receive in exchange for those goods or

services. In applying this Standard, the Company takes into account the terms of the contract and all relevant facts and

circumstances.

The Company's revenue is recognized using the 5-step model:

Step 1 - Identify customer agreements.

A contract recognizes an agreement between two or more parties (subject to purchase / sale terms) that creates

enforceable rights and enforceable obligations (not applicable if a joint venture agreement is signed). A contract is

within the scope of IFRS 15 if all of the following criteria are met:

a) the parties have approved the contract (in writing, orally or in accordance with any other normal

commercial practice) and are bound by their obligations under the contract,

b) it is possible to identify the rights of each party with regard to the goods and / or services to be transferred,

c) it is possible to identify the payment terms for the goods and / or services to be transferred,

d) the contract has commercial substance,

e) it is probable that the consideration to which the Group and the Company are entitled to in exchange for

the goods or services will be collected.

Contracts with the customer may be aggregated or disaggregated into several contracts, while retaining the criteria of

former contracts. Such aggregation or disaggregation is considered modification of the contract.

Step 2 - Identify performance obligations in the contract.

Contractual commitment to deliver goods and / or services to a customer. If separate goods and/or services are

identifiable, the liabilities are recognized separately. Each liability is identified in one of two ways:

a) a good and / or service is distinct, or

b) a set of individual goods and / or services that are substantially the same and have the same pattern of

transfer to the customer.

Step 3 - Determine the transaction price.

Under the new IFRS 15, the transaction price may be fixed, variable, or both.

The transactions concluded by the Company apply fixed prices for both continuous services and services performed

at a certain point in time. The transaction price is also adjusted considering the time value of money, if the contract

includes a significant financing arrangement, and considering any consideration payable to the customer and non-cash

consideration received, if any. The Group and the Company apply the following sales price calculation methods:

adjusted market assessment approach, expected cost plus margin approach and residual approach. Similar

transactions are measured equally.

Step 4 - Allocate the transaction price to each performance obligation.

A performance obligation is a contractual promise to deliver to the customer a separate good or service, or a set of

individual goods or services that are substantially the same and have the same pattern of transfer to the customer. The

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

transaction price is apportioned between each performance obligation based on the relative separate selling prices of

the good or service promised in the contract. If the contracts do not specify separately the price of the service or good

(for example, one price for two products), the Company shall determine it. In measuring the transaction price, the

Company estimates a discount or variable amount of consideration that relates only to a particular portion of the

contract.

Step 5 - Recognise revenue when (or as) the Group and the Company satisfy a performance obligation.

The Group and the Company recognize revenue when they satisfy a performance obligation by transferring promised

goods or services to the customer (i.e. when the customer obtains control of the mentioned goods or services). The

recognized amount of revenue is equal to the amount of satisfied performance obligation. Performance obligation may

be satisfied at a point of time or over time. A period of time is recognised as a calendar month.

The recognition of revenue depends on whether the obligation is satisfied over a period of time (continuous) or at a

point in time. In any event, the transfer of control shall be taken into account.

Revenue is recognized at the fair value of the consideration received or receivable. Revenue is reduced by the

estimated amount of customer returns, discounts, and other similar provisions. Revenue is recognized when it is

probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the

revenue can be measured reliably. Revenue from sales is recognized net of VAT and discounts, including any

cumulative expected discounts for the current year.

The Group’s and the Company’s revenue types:

a) Revenue from sale of furniture

b) Revenue from sale of raw materials and waste

Revenue from sales of furniture and revenue from the sale of raw materials are recognized at a point of time in the

statement of profit and loss and other comprehensive income.

2.18. Expense recognition

Expenses are recognized on the basis of accrual and revenue and expense matching principles in the reporting period

when the income related to these expenses was earned, irrespective of the time the money was spent. In those cases

when the costs incurred cannot be directly attributed to the specific income and they will not bring income during the

future periods, they are expensed as incurred.

The amount of expenses is usually accounted for as the amount paid or due, excluding VAT. In the cases when a long

period of payment is established and the interest is not distinguished, the amount of expenses shall be estimated by

discounting the amount of payment using the market interest rate.

2.19. Foreign currency transactions

Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions. Gains

and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities

denominated in foreign currencies on the statement of financial position date are recognized in profit or loss. Such

balances are translated at period-end exchange rates. Non-monetary assets and liabilities that are measured in terms

of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non -

monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to euro at

foreign exchange rates ruling at the dates the fair value was determined.

2.20. Impairment of assets

Non-financial assets

Non-financial assets, other than inventories and deferred tax are reviewed for impairment whenever events or changes

in circumstances indicate that the carrying amount of an asset may not be recoverable. If any such indication exists,

the asset’s recoverable amount is estimated.

The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Whenever the carrying

amount of an asset exceeds its recoverable amount, an impairment loss is recognized in profit or loss.

Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment

losses recognized for the asset no longer exist or have decreased. Reversal is accounted for in the same caption in

profit or loss as impairment losses. For evaluation of impairment of assets, the entire Group is considered as one cash

generating unit.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Impairment of financial assets

Impairment losses on financial assets measured at amortized cost are measured using the expected credit loss (ECL)

model. Credit losses are measured at the present value of all cash losses (the difference between the cash flows that

the Group and the Company hold under the contract and the cash flows the Group and the Company expect to receive).

ECLs are discounted applying an effective interest rate.

At the end of each reporting period, the Company and the Group recalculate and record the allowance for expected

credit losses, taking into account past events, current market conditions and future prospects. At the end of each

financial period, the Group and the Company assess whether there has been a material change in the credit risk of the

financial instrument since initial recognition.

At the end of each reporting period, the Group and the Company assess whether financial assets carried at amortized

cost are impaired. A financial asset is impaired when one or more events have occurred that have a negative impact

on the estimated future cash flows of the financial asset. The following criteria are used by the Company to determine

whether there is objective evidence that an impairment loss has been incurred:

• the counterparty experiences financial difficulties as evidenced by its financial information;

• in the event of a breach of contract, such as a default or payment delay more than 90 days;

• the counterparty is considering bankruptcy or financial reorganization;

• there is an adverse change in the payment status of the counterparty's as a result of changes in national or

local economic conditions affecting the counterparty; or

• the value of collateral, if any, significantly decreases as a result of deteriorating market conditions.

Losses on financial assets measured at amortized cost are deducted from the gross value of such assets.

The gross carrying amount of a financial asset is written off when the Group and the Company have no reasonable

expectation of recovering all or part of the asset. Non-recoverable assets are written off against recognized related

impairment loss allowance, provided that all necessary steps have been taken to recover the asset and the amount of

the loss has been determined. The amounts previously written off and recovered in subsequent periods are credited to

the impairment loss account within the statement of profit or loss and other comprehensive income.

2.21. Segment information

The operating segment is a part of the Group and the Company participating in economic activities from which it can

earn profit or incur costs. The results of the operating segment are verified by the management of the Group and the

Company on a regular basis by taking a decision regarding resources which have to be allocated to the segment and

evaluating its operating results, and who present separate financial information.

Management of the Company has determined the operating segments based on the reports reviewed by the board of

directors, considered to be the chief operating decision makers that are used to make strategic decisions. Based on

this it was decided that the Group and the Company have a single reportable segment, i.e. furniture production and

trade.

2.22. Related parties

Related parties are defined as shareholders, employees, members of the Board, their close relatives and companies

that directly or indirectly (through the intermediary) control or are controlled by, or are under common control with, the

Group and the Company, provided the listed relationship empowers one of the parties to exercise the control or

significant influence over the other party in making financial and operating decisions.

2.23. Contingencies

Contingent liabilities are not recognized in the financial statements. They are disclosed unless the possibility of an

outflow of resources embodying economic benefits is remote.

A contingent asset is not recognized in the financial statements but disclosed when an inflow of economic benefits is

probable.

2.24. Subsequent events

Events after the reporting date that provide additional information about the Group’s and the Company’s position at the

statement of financial position date (adjusting events) are reflected in the financial statements. Events after the reporting

date that are not adjusting events are disclosed in the notes when material.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

2.25. Offsetting and comparative figures

When preparing the financial statements, assets and liabilities, revenue and expenses are not set off, except the cases

when certain IFRS specifically requires such set-off. Financial assets and liabilities are offset and the net amount

reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts

and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

2.26. Use of estimates in the preparation of financial statements

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates

and assumptions that affect the reported amounts of assets, liabilities, income and costs and disclosure of

contingencies, at the reporting date and within the next financial year. Estimates and judgements are continually

evaluated and are based on management’s experience and other factors, including expectations of future events that

are believed to be reasonable under the circumstances. Revisions to accounting estimates are recognized in the period

i n which the estimate is revised if the revision affects only that period or in the period of the revision and future periods

if the revision affects both current and future periods.

Management also makes certain judgements, apart from those involving estimations, in the process of applying the

accounting policies. 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.

Estimates and assumptions

The main areas where management is required to make significant and critical judgements and areas where estimates

and assumptions might have significant impact for the preparation of financial statements are described below:

Property, plant and equipment – useful life

The key assumptions concerning determination of the useful life of property, plant and equipment are as follows:

expected usage term of the asset, expected technical, technological or other obsolescence arising from changes or

improvements in the production, legal or similar limits on the use of the asset, such as the expiry dates of related leases.

Tax liabilities

The tax authorities have a right to examine the Group’s and the Company’s books and accounting records at any time

during the 5-years period after the current tax year and account for additional taxes and fines. In the opinion of the

Company’s management currently there are no circumstances which would raise substantial liability in this respect.

Related-party transactions

In the normal course of business the Group and the Company enter into transactions with their related parties. These

transactions are priced at market rates. Judgement is applied in determining if transactions are priced at market or non-

market rates, where there is no active market for such transactions. The basis for judgement is pricing for similar types

of transactions with unrelated parties.

Pension and jubilee benefits

Key assumptions used in determining the provision for pension and jubilee benefits are as follows: employee turnover

rate by age group, discount rate, and wage and salary growth. The Group’s and the Company’s management make

judgements in relation to these assumptions. See Note 14 for more details.

Revenue recognition

The management assesses the moment of revenue recognition, i.e. whether revenue is recognized over time or at a

point of time. The management assessed that customer do not simultaneously receive and consume the benefits

provided by the Company’s performance as the Company performs, the Company’s performance does not create or

enhance an asset that the customer controls as the asset is created or enhanced, the Company’s performance create

an asset with an alternative use to the Company and the Company do not has an enforceable right to payment for

performance completed to date. Based on this assessment management decided that revenues should be recognised

at a point in time. Also, the management estimates expected returns.

The management assesses if the sale of raw materials meets revenue recognition criteria according to IFRS 15. The

Company provides raw materials to several external and related parties in order to obtain service from these parties -

production of component parts used in the further production of furniture. The management has analysed such

contracts based on the requirements of IFRS 15 and determined, that in most of cases there is no actual sale of raw

materials and acquisition of components but transaction is rather a purchase of production service. Vilniaus baldai, AB

controls the process and has full responsibility for the final customer. Raw materials were sold at purchase price to the

production service provider.

Expected credit losses estimation

The management measures expected credit losses (ECL) and estimates allowance for trade receivables and contract

assets. Key assumption is determining the weighted-average loss rate.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Classification of spare part

The management makes judgement if spare parts meet the definition of property, plant and equipment. The basis of

judgement is determining if spare part is kept ensuring smooth operation of some machinery without interruptions or it

not.

Recognition of deferred tax assets from unused investment relief

The management assesses the extent that it is probable that future taxable profits will be available against which

recognized deferred tax assets can be used.

Factoring

A factoring transaction is a financing transaction in which the factoring company finances the Company by purchasing

debt obligations from it. By this transaction, the Company transfers to the Factor the right to its receivables under the

invoices due, which are due in the future. Factoring can be with recourse (the factoring agent has the right to repay the

debt obligations to the Company) and without the right of recourse (the factoring agent has no right to repay the debt

obligations to the Company). Receivables transfer (factoring without recourse, it means, the buyer of the debt has no

right to cancel the transaction) is treated as a sale of debts and is written off immediately if the Company transfers all

risks associated with the debt transfer and no debt repurchase is contemplated, there is no provision for a debt buyer

to foreclose on this transaction.

2020FY factoring contract is without the right of recourse (the factoring agent has no right to cancel the transaction),

for this reason, the trade receivables are reduced after the receipt of the factoring advance payment. In the statements

of cash flows factoring is included in the cash flows from financing activities.

2.27. Fair value measurement

A number of the Group’s and the Company’s accounting policies and disclosures require the determination of fair value,

for both financial and non-financial assets and liabilities.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date in the principal, or in its absence, the most advantageous market

to which the Group and the Company have access at that date. The fair value of a liability reflects its non-performance

risk.

When measuring the fair value of an asset or a liability, the Group and the Company use market observable data as

far as possible. Fair values are categorised within different levels in a fair value hierarchy based on the inputs used in

the valuation techniques as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either

directly (i.e. as prices) or indirectly (i.e. derived from prices);

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised within different levels of the

fair value hierarchy, the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy

as the lowest level input that is significant to the entire measurement.

The Group and the Company recognize transfers between levels of the fair value hierarchy at the end of the reporting

period during which the change has occurred.

Fair values have been determined for measurement and / or disclosure purposes based on the described methods.

Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes

specific to that asset or liability (Note 14 – Provisions for employee benefits).

2.28. Reportable segments

Based on the reports reviewed by the board of directors, considered to be the chief operating decision makers that are

used to make strategic decisions, Management of the Company has decided that the Company and the Group have a

single reportable segment, i.e. furniture segment, including sales of raw materials and finished production. No separate

detailed disclosure of segment reporting is presented.

3. Correction of prior period errors

During the 2025 financial year, the Company identified that certain inventory values had not been recognized as

expenses in the 2023 financial statements, leading to the misstatement of inventory and retained earnings. The error

amounted to EUR 220 thousand. In accordance with International Accounting Standard (IAS) 8 “Accounting Policies,

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Changes in Accounting Estimates and Errors”, the Company corrected this error retrospectively by adjusting the

retained earnings balance as of the end of 2023.

Impact of the error correction on the financial statements:

Group
Item	2023	Correction	2023
	(was presented)	(+/-)	(corrected)
STATEMENT OF FINANCIAL POSITION
Retained earnings	23,163	(220)	22,943

Correction of the error had no impact on the Company’s cash flows.

Company
Item	2023	Correction	2023
	(was presented)	(+/–)	(corrected)
STATEMENT OF FINANCIAL POSITION
Retained earnings	23,024	(220)	22,804

During the 2025 financial year, the Company identified that certain inventory values had not been recognized as

expenses in the 2024 financial statements. As a result of this error, the amount of inventories as of the end of 2024

was EUR 17 thousand higher, and retained earnings were correspondingly overstated. The Company accordingly

adjusted the 2024 comparative information and the retained earnings at the beginning of 2025 by an amount of EUR

17 thousand. This information is reflected in the financial statements.

In accordance with International Accounting Standard IAS 8 Accounting Policies, Changes in Accounting Estimates

and Errors, the Company corrected this error retrospectively by adjusting the comparative information presented in the

2024 financial statements.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Group
Item		2024 m.	(was	Correction	2024 m.
			presented)	(+/–)	(corrected)
STATEMENT OF FINANCIAL POSITION
Inventory			9,860	(237)	9,623
Total non-current assets			25,252	(237)	25,015
Total assets			84,885	(237)	84,648
Retained earnings			33,201	(237)	32,964
Total equity			38,160	(237)	37,923
Total equity and liabilities			84,885	(237)	84,648
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Cost of sales			78,274	17	78,291
Gross profit (loss)			18,998	(17)	18,981
Operating profit			13,356	(17)	13,339
Profit before income tax			10,664	(17)	10,647
Net profit for the reporting period			10,017	(17)	10,000
Total comprehensive income for the reporting period			10,038	(17)	10,021
STATEMENT OF CHANGES IN EQUITY
Balance as of 31 August 2023
-	Retained earnings		23,163	(220)	22,943
- Net profit for the reporting period	Total		28,122	(220)	27,902
-	Retained earnings		10,017	(17)	10,000
- Bendrųjų pajamų iš viso	Total		10,017	(17)	10,000
-	Retained earnings		10,038	(17)	10,021
- 2024 m. rugpjūčio 31 d. likutis	Total		10,038	(17)	10,021
-	Retained earnings		33,201	(237)	32,964
- STATEMENT OF CASH FLOWS	Total		38,160	(237)	37,923
Profit (loss) for the period			10,017	(17)	10,000
Decrease (increase) in inventories			(3,557)	17	3,540

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Company
Item		2024 m.	(was	Correction	2024 m.
			presented)	(+/–)	(corrected)
STATEMENT OF FINANCIAL POSITION
Inventory			9,860	(237)	9,623
Total non-current assets			25,248	(237)	25,011
Total assets			84,880	(237)	84,643
Retained earnings			33,142	(237)	32,905
Total equity			38,101	(237)	37,864
Total equity and liabilities			84,880	(237)	84,643
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Cost of sales			78,299	17	78,316
Gross profit (loss)			18,973	(17)	18,956
Operating profit			13,433	(17)	13,416
Profit before income tax			10,741	(17)	10,724
Net profit for the reporting period			10,097	(17)	10,080
Total comprehensive income for the reporting period			10,118	(17)	10,101
STATEMENT OF CHANGES IN EQUITY
Balance as of 31 August 2023
-	Retained earnings		23,024	(220)	22,804
- Net profit for the reporting period	Total		27,983	(220)	27,763
-	Retained earnings		10,097	(17)	10,080
- Bendrųjų pajamų iš viso	Total		10,097	(17)	10,080
-	Retained earnings		10,118	(17)	10,101
- 2024 m. rugpjūčio 31 d. likutis	Total		10,118	(17)	10,101
-	Retained earnings		33,142	(237)	32,905
- STATEMENT OF CASH FLOWS	Total		38,101	(237)	37,864
Profit (loss) for the period			10,097	(17)	10,080
Decrease (increase) in inventories			(3,557)	17	3,540

4. Changes in significant accounting policies

There were no significant changes in accounting policies during the reporting period.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

5. Intangible assets

	Software
	Group	Company
Cost:
Balance as of 31 August 2023	516	516
Additions	133	133
Sold and written off asset	-	-
Balance as of 31 August 2024	649	649
Additions	211	211
Sold and written off asset	-	-
Balance as of 31 August 2025	860	860
Amortisation:
Balance as of 31 August 2023	407	407
Charge for the year	77	77
Sold and written off asset	-	-
Balance as of 31 August 2024	484	484
Charge for the year	32	32
Sold and written off asset	-	-
Balance as of 31 August 2025	516	516
Net book value as of 31 August 2024	165	165
Net book value as of 31 August 2025	344	344

Amortization expenses of intangible assets are included within operating expenses in profit or loss. Intangible assets

of the Group and the Company with an acquisition cost of EUR 517 thousand as of 31 August 2025 (as of 31 August

2024 – EUR 286 thousand) are fully amortized and were still in use.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

6. Property, plant and equipment

				Other
Group		Machinery		property,
	Land and	and	Vehicle	plant and
	buildings	equipment	s	equipment	Total
Cost:
Balance as of 31 August 2023	31,760	51,203	-	5,899	88,550
Additions	61	216	-	770	1,047
Sold and written off asset	-	(401)	-	(11)	(412)
Overwriting from one article to another	-	-	-	-	-
Balance as of 31 August 2024	31,821	51,019	-	6,658	89,497
Additions	49	4,211	-	195	4,455
Sold and written off asset	-	(45)	-	(1)	(46)
Overwriting from one article to another	-	-	-	-	-
Balance as of 31 August 2025	31,870	55,185	-	6,853	93,907
Accumulated depreciation:			-
			-
Balance as of 31 August 2023	1,895	24,104	-	1,611	27,610
Charge for the year	599	3,498	-	492	4,588
Sold and written off asset	-	(299)	-	(3)	(302)
Balance as of 31 August 2024	2,494	27,302	-	2,101	31,897
Charge for the year	600	3,614	-	520	4,734
Sold and written off asset	-	(36)	-	-	(36)
Balance as of 31 August 2025	3,094	30,881	-	2,621	36,596
Net book value as of 31 August 2024	29,328	23,716	-	4,557	57,601
Net book value as of 31 August 2025	28,776	24,304	-	4,233	57,312

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Property, plant and equipment (cont’d)

				Other
Company		Machinery		property,
	Land and	and		plant and
	buildings	equipment	Vehicles	equipment	Total
Cost:
Balance as of 31 August 2023	31,760	51,203	-	5,884	88,550
Additions	61	216	-	768	1,045
Sold and written off asset	-	(401)	-	(11)	(412)
Overwriting from one article to another	-	-	-	-	-
Balance as of 31 August 2024	31,821	51,019	-	6,641	89,480
Additions	49	4,211	-	195	4,454
Sold and written off asset	-	(45)	-	(1)	(46)
Overwriting from one article to another	-	-	-	-	-
Balance as of 31 August 2025	31,870	55,185	-	6,835	93,889
Accumulated depreciation:
Balance as of 31 August 2023	1,895	24,104	-	1,603	27,602
Charge for the year	599	3,498	-	489	4,586
Sold and written off asset	-	(299)	-	(3)	(302)
Balance as of 31 August 2024	2,494	27,302	-	2,090	31,886
Charge for the year	600	3,614	-	517	4,731
Sold and written off asset	-	(36)	-	-	(36)
Balance as of 31 August 2025	3,094	30,881	-	2,607	36,582
Net book value as of 31 August 2024	29,328	23,716	-	4,551	57,595
Net book value as of 31 August 2025	28,776	24,304	-	4,228	57,308

Depreciation of property plant and equipment is presented below:

	Group		Company
	2025	2024	2025	2024
Direct and indirect cost	4,684	4,540	4,683	4,540
Operating expenses	50	48	48	46
Total depreciation	4,734	4,588	4,731	4,586

As at 31 August 2025 the Company had no property, plant and equipment acquired under finance leases (EUR 343

thousand as of 31 August 2024 , ).

The Company’s prepayments for non-current assets amounted to EUR 1,515 thousand as of 31 August 2025 (EUR

104 thousand as of 31 August 2024). Prepayments are classified as other property, plant and equipment.

As at 31 August 2025, the Group and the Company have reclassified spare parts amounting to EUR 1,365 thousand

(EUR 1,218 thousand as of 31 August 2024) that meet the Property, plant and equipment criteria from Inventories to

Property, plant and equipment. These spare parts are booked under Other property, plant and equipment.

As of 31 August, 2025, the Company’s property, plant and equipment with the net book value of EUR 51,971 thousand

and inventories which classified as non-current assets amounting to EUR 1,365 thousand was pledged to the bank as

collateral for loans granted (respectively EUR 41,090 thousand and EUR 1,218 thousand as of 31 August 2024) (Note

13).

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

During 2025 and 2024, there were no capitalized borrowing costs in non-current assets.

7. Investments into subsidiaries

Acquisition cost of investment of the Company in subsidiaries as of 31 August 2025 and 2024 are presented below:

2025

2024

		Acquisition	Share	Acquisition
	capital	cost	capital	cost
ARI-LUX UAB	100%	5	100%	5
Performance results of the subsidiary ARI-LUX UAB before elimination of related transactions in 2025 and 2024.

Statement of financial position

	As of 31 August	As of 31 August
	2025	2024
Other non-current assets	4	6
Trade receivables	104	184
Other receivables and current assets	1	1
Cash and cash equivalents	48	2
Total assets	157	193
Share capital	3	3
Retained earnings	9	64
Trade liabilities	-	1
Other current payables and accrued liabilities	145	125
Total equity and liabilities	157	193
Statement of profit or loss and other comprehensive income

2025

		2024
Revenue	858	879
Cost of sales	(832)	(855)
Gross profit	26	24
Operating expenses	(109)	(102)
Profit (loss) before income tax	(83)	(78)
Income tax expense	-	(3)
Net profit (loss) for the reporting period	(83)	(81)

8. Inventories

	Group		Company
	2025	2024	2025	2024
Raw materials	2,587	2,441	2,587	2,661
Work in progress	2,342	1,523	2,342	1,523
Finished goods	5,222	5,220	5,222	5,220
Spare parts for the repair of equipment used in activities	464	439	464	439
Goods for resale	-	2	-	2
Adjustment to net realizable value	(1)	(2)	(1)	(2)
	10,614	9,623	10,614	9,623

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Raw materials consist of wood, accessories, plastics, chemical materials and other materials used in production.

Inventories in value of EUR 10,614 thousand are pledged to the bank according to loan agreements (Note 13) as of 31

August 2025. Inventories in value of EUR 9,623 thousand were pledged to the bank as of 31 August 2024.

9. Trade receivables

	Group		Company
	2025	2024	2025	2024
Other receivables after one year, gross	-	-	-	-
Less: impairment for doubtful receivables	-	-	-	-
	-	-	-	-
Trade receivables, gross	11,258	10,467	11,258	10,467
Less: impairment for doubtful receivables	-	-	-	-
	11,258	10,467	11,258	10,467
The increase in receivables is largely due to changes in payment terms. At the beginning of the 2025 financial year,

the payment terms of the main client, IKEA, were adjusted back to 30 days from the previous 21 days.

Trade receivables are non-interest bearing and are generally on 30 days payment terms.

During FY2025 no impairment was recorded in relation to any doubtful trade receivables by the Group and the Company

(in FY2024 no impairment was calculated in relation to any doubtful trade receivables).

The aging analysis of the Group’s and the Company’s trade receivables as of 31 August 2025 and 31 August 2024 is

as follows:

						Trade receivables past due, but not impaired	Total
						More
	Trade receivables neither	Less than	30–60	60–90	90–120	than 120
	past due nor impaired	30 days	days	days	days	days
COMPANY
2024	9,829	638	-	-	-	-	10,467
2025	10,079	1,179	-	-	-	-	11,258

						Trade receivables past due, but not impaired		Total
	Trade receivables neither	Less than	30–60	60–90	90–120	More	than 120
	past due nor impaired	30 days	days	days	days	days
GROUP
2024	9,829	638	-	-		-	-	10,467
2025	10,079	1,179	-	-		-	-	11,258

The company was not granted any new loans during the reporting period.

10. Other receivables

Group

Company

2025

		2024	2025	2024
Refundable VAT	854	663	868	663
Receivables of Employment Services Under the Ministry	-	-	-	-
of Social Security and Labour
Other receivables	220	388	205	387
	1,074	1,051	1,073	1,050
Other receivables of the Group and the Company were neither past due nor impaired as of 31 August 2025 and

31 August 2024.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

11. Cash and cash equivalents

		Group			Company
	2025		2024	2025		2024
Cash at bank		322	3,867		274	3,865
		322	3,867		274	3,865
The Company's cash balances in bank accounts denominated in foreign currency and euro, and future inflows to the accounts at bank were pledged to the bank as collateral for loans granted (Note 13). 12. Reserves Legal reserve A legal reserve is a compulsory reserve under Lithuanian legislation. Annual transfers of not less than 5% of net profit are compulsory until the reserve reaches 10% of the share capital. As of 31 August 2025 the Company’s legal reserve was fully formed at amount 451 thousand. EUR (31 August 2024 – EUR 451 thousand). 13. Financial liabilities

	Group			Company
	As of 31	As of 31	As of 31	As of 31
	August	August	August	August
	2025	2024	2025	2024
Non-current borrowings
Syndicated loan from commercial banks	-	15,817	-	15,817
VIVA bond issue amount	-	6,000	-	6,000
Loans from related party	-	3,000	-	3,000
Accrued interest on loans from related party	-	572	-	572
Loans from Ikea Supply AG and accrued interest	364	740	364	740
Artea bank loan	17,910	-	17,910	-
Artea bank overdraft	5,205		5,205
Other loans	-	-	-	-
	23,479	26,129	23,479	26,129

	Group			Company
	As of 31	As of 31	As of 31	As of 31
	August	August	August	August
	2025	2024	2025	2024
Current borrowings
Syndicated loan from commercial banks	-	5,131	-	5,131
Accrued interest of VIVA bonds	-	21	-	21
Loans from Ikea Supply AG and accrued interest	391	1,645	391	1,645
Artea bank loan and accrued interest	3,573	-	3,573	-
Other loans	-	343	-	343
	3,964	7,140	3,964	7,140
At the end of the 2025 financial year, the Company’s financial obligations were secured by collateral required by credit institutions, which include non-current tangible assets (land, buildings, and structures) and a complex of assets (software, machinery and equipment, other tangible assets), as well as existing and future funds (cash inflows) in bank accounts with the credit institution, up to the maximum collateral value, and inventories. In September 2024, the Company refinanced its financial obligations to the European Bank for Reconstruction and Development (EBRD), AS “Citadele Banka” Lithuanian branch, KŪB “Pagalbos verslui fondas,” and AB “Invalda Privatus Kapitalas” using newly obtained financing from AB Artea Bank. At the end of the reporting period, the Company’s long-term and short-term loans and obligations to credit institutions amounted to: - Artea Bankas AB long-term loan (maturity in the 2030 financial year)

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

- Artea Bankas AB overdraft (maturity in the 2026 financial year)

- Ikea Supply AG long-term loan (maturity in the 2027 financial year)

Weighted average interest rates of borrowings outstanding at the year-end:

Group

			Company
	2025	2024	2025	2024
Loans	4.99 %	6.85 %	4.99 %	6.85 %

Borrowings at the end of the year in different currencies:

	Group		Company
	2025	2024	2025	2024
Borrowings denominated in:
EUR	27,443	32,926	27,443	32,926
SEK	0	343	0	343
	27,443	33,269	27,443	33,269

Reconciliation of movements of liabilities to cash flows arising from financing activities:

	Group	Company
Borrowings as at 31/08/2024	32,407	32,407
Proceeds from borrowings	29,205	29,205
Repayments of borrowings	(34,413)	(34,413)
Borrowings as at 31/08/2025	27,198	27,198

13.1. IFRS 16 “Leases”

The Group and the Company apply the new standard using a modified retrospective method, which means that the

comparative figures will not be restated. The overall effect of applying IFRS 16 was recognized on 1 January 2019.

From 1 January 2019 lease liabilities classified as leases that were previously classified in accordance with IAS 17 for

buses are measured at the present value of the remaining discounted lease payments using an additional borrowing

rate. The Group and the Company recognize the assets under their ownership in an amount equal to the lease liabilities,

adjusted for the amount of lease payments prepaid or accrued until 31 August 2019.

Group

Company

2025

2024

			2025	2024
Assets under management:	483	844	483	844
Premises	-	129	-	129
Vehicles	483	715	483	715
Increase in total liabilities:	535	902	535	902
Long - term lease obligations	212	456	212	456
Short - term lease obligations	323	446	323	446
The Group and the Company have entered into lease agreements for the operation of vehicles and premises.

Previously, operating lease costs were recognized by the Group and the Company on a straight-line basis over the

lease term, and assets and liabilities were recognized only to the extent of the time difference between the actual lease

payments and the recognized expense.

From 2019 September 1 The Group and the Company includes payments due in the lease as a lease liability.

		Group			Company
	2025		2024	2025		2024
Long time rent according IFRS 16 of which:		212	456		212	456
Premises lease obligation		0	0		0	0
Vehicle rental obligation		212	456		212	456
Long time rent according IFRS 16 current liabilities of which:		323	446		323	446
Premises lease obligation		0	133		0	133
Vehicle rental obligation		323	313		323	313
		535	902		535	902

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

14. Provisions for employee benefits

		Group			Company
	2025		2024	2025		2024
Provisions for pension benefits		293	211		254	180
Provisions for jubilee and other benefits		434	424		434	424
		727	635		689	604

Provisions for pension and jubilee benefits comprise amounts calculated in line with the collective employment

agreement effective at the Company. Each employee is entitled to a jubilee benefit and a pension benefit amounting

to 2- or 3-months’ salary payments on leaving the Company after reaching the retirement age. Key assumptions used

in determining the provisions for pension and jubilee benefits are as follows: employee turnover rate by age group,

discount rate, and wage and salary growth.

The main actuarial assumptions used for the calculation of provisions for pension and jubilee benefits were as follows:

	2025	2024
	2.0%	1.5%
Discount rate based on inflation forecast
Salary growth rate	6%	6%
Rate of employee turnover by age group:
younger than 25 years	80%	80%
from 25 to 45 years	30%	30%
from 45 to 59 years	25%	25%
from 59 to 75 years	20%	20%

Management has reviewed the rate of employee turnover by age group and based on historical data has adjusted them

to bring the data into line with the Company’s data.

The following table demonstrates the sensitivity of the Group’s and the Company’s other comprehensive income to

possible changes in actuarial assumptions with all other variables held constant.

Group	Increase /decrease,	Impact on other
	%	comprehensive income
2025
Discount rate	+0.5%	12
Salary growth rate	+0.5%	(12)
Discount rate	-0.5%	(12)
Salary growth rate	-0.5%	11

Company	Increase /decrease,	Impact on other
	%	comprehensive income
2025
Discount rate	+0.5%	11
Salary growth rate	+0.5%	(11)
Discount rate	-0.5%	(11)
Salary growth rate	-0.5%	10

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

The movement in the provisions for pension benefits is as follows:

Group	2025		2024
At 1 September		228		195
Growth in the current year		31		5
Payments		15		(13)
Re-measurements of pension benefits		19		24
At 31 August		293		211
Company	2025		2024
At 1 September		200		161
Growth in the current year		26		(2)
Payments		15		-
Re-measurements of pension benefits		13		21
At 31 August		254		180

The movement in the provisions for jubilee and other benefits is as follows:

Group	2025		2024
At 1 September		424	410
Growth in the current year		262	265
Payments		(252)	(252)
At 31 August		434	424
Company	2025		2024
At 1 September		424	410
Growth in the current year		262	265
Payments		(252)	(252)
At 31 August		434	424

15. Trade payables

Trade payables are non-interest bearing and are normally settled on 30–90 days terms.

16. Other current and accrued liabilities

	Group		Company
	2025	2024	2025	2024
Payroll liabilities and related taxes	1,366	1,099	1,272	1,032
Accrued vacation	1,053	638	1,018	611
Dividends payable	1,061	986	1,061	986
Other payables and accrued liabilities	741	1,599	739	1,598
	4,221	4,322	4,090	4,227

Other payables are non-interest bearing and are normally settled on 15–30 day terms. Typically, the declared dividends

are paid within one month.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

17. Revenue

In 2025 sales of goods comprised sales of furniture, which accounted for approx. 99.5% (in 2024 – 99.7%) of total

sales, while the rest were sales of raw materials and waste. The main customer of the Company is IKEA Supply AG.

Sales to this customer in 2025 amounted to EUR 102,929 thousand, i.e. 98.8% of total sales (in 2024 sales amounted

to EUR 96,738 thousand, i.e. 99.5% of total sales).

	Group			Company
	2025	2024	2025	2024
Primary geographical markets:
European Union countries, excluding	72,628	68,933	72,628	68,933
Lithuania
Non-European Union countries	30,619	27,795	30,619	27,795
Lithuania	973	545	973	545
	104,219	97,272	104,219	97,272
Major products lines:
Furniture	103,609	96,954	103,609	96,954
Raw materials	552	318	552	318
Other	58	0	58	318
	104,219	97,272	104,219	97,272

18. Cost of sales

	Group		Company
	2025	2024	2025	2024
Materials	65,144	55,328	65,144	55,329
Wages, salaries	14,207	11,850	13,404	11,025
Social security	254	200	239	185
Depreciation	4,705	4,348	4,704	4,346
Depreciation according to IFRS 16	277	291	277	291
Other production expenses	6,488	6,274	7,334	7,140
	91,075	78,291	91,102	78,316

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

19. Selling and distribution expenses and administrative expenses

	Group		Company
	2025	2024	2025	2024
Selling and distribution expenses:
Wages, salaries	419	357	419	357
Social security	7	6	7	6
Transportation and storage services	691	1,142	691	1,142
Other selling expenses	227	149	227	149
	1,344	1,653	1,344	1,653

	Group		Company
	2025	2024	2025	2024
Administrative expenses:
Wages, salaries	3,040	2,595	2,954	2,512
Social security	54	40	52	39
Personnel expenses	311	180	305	178
Environmental expenses	122	71	122	71
Insurance expenses	171	169	170	168
IT, telecommunications and low-value inventory		368	503	367
expenses	504
Audit and consultation expenses	172	142	171	140
Vehicle exploitation and maintenance expenses	81	86	77	82
Operating taxes	130	152	129	150
Depreciation and amortization	81	124	79	123
Depreciation according to IFRS 16	173	179	173	179
Other expenses	649	411	646	409
	5,488	4,517	5,381	4,418

The increase in administrative expenses in the 2025 financial year was primarily driven by personnel costs, which rose

both due to changes in the number of employees and general salary increases. Other expenses include profit-based

remuneration (annual bonuses to the board members), which amounted to EUR 100 thousand in the 2025 financial

year (no annual bonuses to the board members were paid in the 2024 reporting period).

20. Other operating income and expenses

	Group			Company
	2025	2024	2025	2024
Other operating income
Rent and utilities income	363	360	363	360
Gain on disposal of property, plant and equipment	-	1	-	1
Heating revenue	537	531	537	531
Other income	23	248	25	251
	923	1,140	925	1,143
Other operating expenses
Direct costs of rent income	-	-	-	-
Heat generation costs	(450)	(472)	(450)	(472)
Losses on disposal of property, plant and equipment	-	(11)	-	(11)
Other expenses	(375)	(129)	(375)	(129)
	(825)	(612)	(825)	(612)

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Other operating income (from rental and heat supply activities) slightly increased in the 2025 financial year compared

to the previous reporting period. The decrease in other income related to one-off events was due to the Company’s

income from the sale of non-current assets recorded in the 2024 financial year (EUR 207 thousand).

The decline in heat production costs in the 2025 financial year compared to the previous reporting period was mainly

driven by approximately 13% lower operating costs of heating power plant. The largest impact on other operating

expenses came from the increase in the line “other expenses”, which was affected by a one-off event – the recognition

of losses taken over from a group company for the 2024 financial year (EUR 375 thousand).

21. Finance income and finance costs

	Group		Company
	2025	2024	2025	2024
Finance income	18	43	18	43
Interest income	13	37	13	37
Income due to currency exchange	5	6	5	6
Finance costs	(2,011)	(2,735)	(2,011)	(2,735)
Interest expenses	(1,632)	(2,629)	(1,632)	(2,629)
Expenses due to currency exchange	(19)	(55)	(19)	(55)
Other financial expenses	(360)	(51)	(360)	(51)
	(1,993)	(2,692)	(1,993)	(2,692)

During 2024 and 2025, there were no capitalized borrowing costs in non-current assets.

22. Income tax

	Group		Company
	2025	2024	2025	2024
Components of the income tax expense
Income tax expenses for the reporting year	(119)	793	(119)	790
Income tax expenses from dividends paid to natural	-	-	-	-
persons
Total current income tax expense	(119)	793	(119)	790
Recognition and reversal of temporary differences	98	(146)	98	(146)
Change in deferred tax	98	(146)	98	(146)
Income tax expense carried in profit or loss	(21)	647	(21)	644

Deferred income tax asset and liability as of 31 August 2024 and 31 August 2025 was accounted using tax rate of 16%.

Investment projects implemented by the Company that are eligible for the corporate income tax relief under Article 46¹

of the Law on Corporate Income Tax of the Republic of Lithuania amounted to EUR 2.0 million in the 2025 financial

year (EUR 0.7 million in the 2024 financial year).

In 2025, the Company, in accordance with the provisions of the Republic of Lithuania Law on Corporate Income Tax,

utilized tax losses incurred in 2024 by a related party. The amount of tax losses transferred was EUR 2,500 thousand

(the amount reducing the Company’s taxable profit, applying the 15% tax rate, totals EUR 375 thousand).

Income tax expense disclosed in the statement of profit or loss and other comprehensive income may be reconciled to

income tax expense that would arise using an enacted income tax rate applicable to profit before income tax.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Group

	2025		2024
Profit (loss) before tax		4,417		10,647
Tax calculated at a statutory 15% tax rate	15 %	663	15 %	1,597
Tax effects of:
- Expenses not deductible for tax purposes	0 %	195	0 %	202
- Income not subject to tax	0 %	(116)	0 %	(78)
- Income tax relief due to investment projects	(15 %)	(296)	(15 %)	(945)
- Transfer of group losses	(15 %)	(375)	-	-
Income tax expense carried in profit or loss	15 %	71	15 %	776

Company	2025		2024
Profit (loss) before tax		4,499		10,724
Tax calculated at a statutory 15% tax rate	15 %	675	15 %	1,609
Tax effects of:
- Expenses not deductible for tax purposes	0 %	195	0 %	202
- Income not subject to tax	0 %	(116)	0 %	(78)
- Income tax relief due to investment projects	(15 %)	(296)	(15 %)	(945)
- Transfer of group losses	(15 %)	(375)	-	-
Income tax expense carried in profit or loss	15 %	83	15 %	788

The analysis of deferred tax assets and deferred tax liabilities is as follows:

	Group			Company
	2025	2024	2025		2024
Deferred tax assets	925	1,023		925	1,023
Deferred tax liability	-	-		-	-
	925	1,023		925	1,023

The movement in the Group’s and Company’s deferred tax assets and liabilities (prior to and after offsetting the

balances) during the year was as follows:

Group

		Credited		Credited
		(debited)		(debited)
		to income		to income
		tax		tax
	2023	expenses	2024	expenses	2025
Deferred tax assets
– Accrued charges	100	60	160	(23)	137
– Unused Investment relief	777	86	863	(75)	788
	877	146	1,023	(98)	925
Deferred tax liabilities
– Investment relief	-	-	-	-	-
	-	-	-	-	-
Deferred tax assets, net	877	146	1,023	(98)	925

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

23. Earnings per share

Basic and diluted earnings per share are calculated by dividing the net profit attributable to shareholders by the

weighted average number of ordinary shares issued and paid during the year. There are no potential ordinary shares

to be issued, therefore basic and diluted earnings per share are equal.

	Group			Company
	2025	2024	2025		2024
Net profit attributable to shareholders	4,438	10,000		4,520	10,080
Weighted average number of shares (thousand)	3,886	3,886		3,886	3,886
Basic earnings per share (in EUR)	1.14	2.57		1.16	2.59

There were no changes in the share capital of the Company during 2025 and 2024; therefore, the weighted average

number of shares equals the total number of shares.

24. Financial risk management

General part

The Group and the Company are exposed to the following financial risks: liquidity risk, credit risk, foreign exchange risk

and interest rate risk. This note provides information on the impact of these risks on the Group and the Company, the

objectives, policies, and processes for assessing and managing these risks.

The Group's and the Company's risk management is performed by the Group's management - it identifies and analyzes

the risks faced by the Group and the Company, implements and maintains appropriate limits and controls. The Group

and the Company strive to create a disciplined and constructive risk management environment in which all employees

are aware of their roles and responsibilities.

Financial instruments by category

Company

2023

Credited

(debited)

to income

tax

expenses

2024

Credited

(debited)

to income

tax

expenses

2025

Deferred tax assets

– Accrued charges

100

160

(23)

137

– Unused Investment relief

777

863

(75)

788

877

146

1,023

(98)

925

Deferred tax liabilities

– Investment relief

Deferred tax assets, net

877

146

1,023

(98)

925

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

The financial risk management has been applied to the line items below:

Category – Loans and receivables

Group

Company

2025

2024

2025

2024

Financial assets

Loans granted

Trade and other receivables, of

which:

12,126

11,132

12,126

11,132

Other receivables after one year

Receivables from customers

11,258

10,467

11,258

10,467

VAT refundable

868

665

868

665

Receivables from the Employment

Service

to the Ministry of Social Security and

Labor

Other receivables

Cash and cash equivalents

322

3,867

274

3,865

12,448

14,999

12,400

14,997

Category – Financial liabilities	Group		Company
measured at amortised cost
	2025	2024	2025	2024
Financial liabilities
Borrowings	27,443	33,269	27,443	33,269
Other financial liabilities
Trade and other payables, of which:	13,039	9,715	13,031	9,815
Trade debt	10,225	7,506	10,325	7,686
Amounts payable on fixed assets	353	91	353	91
Wages and related taxes	1,366	1,099	1,272	1,032
Dividends payable	1,061	986	1,061	986
Other amounts payable	34	33	20	20
	40,482	42,984	40,474	43,084

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 their strategic plans. The Group’s and the Company’s liquidity (total current assets / total current liabilities) and

quick ratios ((total current assets – inventories) / total current liabilities) as of 31 August 2025 were 1.25 and 0.69

(Group’s), 1.24 and 0.68 (Company’s) respectively (the Group’s liquidity and quick ratio as of 31 August 2024 – 1.28

and 0.79, and the Company’s 1.12 and 0.61 respectively).

The Group and the Company use borrowed capital in their operations. The tables below summarize repayments of

loans and interest coverage to financial institutions by periods.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

				More
Group	Less than 3	3 to 12		than 5
	months	months	1 to 5 years	years	Total
Loan repayments	502	3,910	20,524	7,470	32,406
Interest payments	1,066	1,460	3,820	38	6,384
Balance as of 31 August 2024	1,569	5,370	24,344	7,508	38,790
Loan repayments	968	2,903	23,327	-	27,198
Interest payments	334	919	2,131	-	3,384
Balance as of 31 August 2025	1,302	3,823	25,458	-	30,583

				More
Company	Less than 3	3 to 12		than 5
	months	months	1 to 5 years	years	Total
Loan repayments	502	3,910	20,524	7,470	32,406
Interest payments	1,066	1,460	3,820	38	6,384
Balance as of 31 August 2024	1,569	5,370	24,344	7,508	38,790
Loan repayments	968	2,903	23,327	-	27,198
Interest payments	334	919	2,131	-	3,384
Balance as of 31 August 2025	1,302	3,823	25,458	-	30,583

The amount of dividends payable by the Company accumulated from previous reporting periods increased during the

2025 financial year and amounted to EUR 1,061 thousand as of August 31, 2025 (EUR 985 thousand as of August 31,

2024) .

Amounts payable to the Company's suppliers on demand as of August 31, 2025, amounted to EUR 83 thousand (EUR

153 thousand as of August 31, 2024). Amounts payable to the Group's suppliers on demand as of August 31, 2025,

amounted to EUR 83 thousand (EUR 44 thousand as of August 31, 2024).

Credit risk

Credit risk is a risk that the Group and the Company will incur financial losses, if a buyer or other party fails to fulfil its

contractual liabilities. This risk is mainly associated with the Group’s and the Company’s trade debtors.

The Group and the Company have significant concentration of trading counterparties. The main customer of the Group

and the Company – IKEA Supply AG – as of 31 August 2025 accounted for approximately 99% of the total Group’s

and Company’s trade receivables (as of 31 August 2024 approximately 88%). Also, the major part of the Company’s

sales is with this customer (Note 17).

The Group and the Company do not guarantee obligations of other parties. The maximum exposure to credit risk is

represented by the carrying amount of each financial asset. Consequently, the Management of the Group and the

Company considers that its maximum exposure is reflected by the amount of trade receivables recognized at the

statement of financial position date.

With respect to trade and other receivables that are neither impaired nor past due, there are no indications as of the

reporting date that the debtors will not meet their payments obligations since receivables balances are monitored on

an ongoing basis.

On the date of the financial report there are no indications that the counterparts of trade receivables and other

receivables, which are not due and not impaired, will not be able to fulfil any of their payment obligations, because the

outstanding balances of receivables are regularly monitored and controlled.

As of 1 September 2019, the Group and the Company assess the probability of default upon initial recognition of

financial assets and at each reporting date considering whether the credit risk has significantly increased since initial

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

recognition. To assess whether there has been a significant increase in credit risk, the Group and the Company

compare the risk of default related to assets as at the reporting date to the risk of default on initial recognition.

Credit risk is measured as the maximum credit exposure for each group of financial instruments and is equal to their

carrying amount. The major credit risk relates to the carrying amount of each group of assets.

The Group’s sales and trade receivable amounts from main customers comprised:

Customers:	Sales	Trade receivables
Four or more years "trading history with the Group"	103,443	11,151
Less than four years "trading history with the Group"	776	107
Higher risk	-	-
Total gross carrying amount	104,219	11,258

The maximum exposure to credit risk of the Group’s and the Company’s cash and cash equivalents is equal to the fair

value of cash and cash equivalents classified as cash and cash equivalents at the date of financial position statements

preparation. The management of the Group and the Company considers that the risk arising from placement of cash

and cash equivalents at bank accounts and other short-term financial instruments is not significant, as placements are

made only in commercial banks in Lithuania which have high credit ratings.

For calculation of the expected credit losses, trade receivables are categorised into separate groups according to credit

risk characteristics. The amounts for each group are analysed by the number of days past due. As trade and other

receivables usually do not include deposit or other collaterals, the ratio of expected losses coincides with the probability

of default.

The Group and the Company determine credit risk based on historical data, considering past due payments.

The following table provides information about the Group’s and the Company’s exposure to credit risk and ECLs for

trade receivables as at 31 August 2025:

	Expected credit	Initial value	Impairment	Carrying amount
Not past due	losses, %	10,079		10,079
Past due for 1 to 30 days	0%	1,179	-	1,179
Past due for 31 to 60 days	1%	-	-	-
Past due for 61 to 120 days	2%	-	-	-
Past due for over 120 days	3%	-	-	-
Total		11,258	-	11,258

The Management had analyzed trade receivables. As of 2025 August 31 no impairments have been made to the

Group's and the Company's trade receivables. (2024 August 31 no impairments have been made ).

Foreign exchange risk

Major currency risks of the Group and the Company occur due to the fact that the Group and the Company borrow

foreign currency denominated funds and are involved in imports and exports. The Group’s and the Company’s policy

is to match cash flows arising from highly probable future sales and purchases in each foreign currency. The Group

and the Company do not use any financial instruments to manage their exposure to foreign exchange risk other than

aiming to borrow in EUR.

Financial assets and liabilities stated in various currencies as of 31 August 2025 were as follows (stated in EUR):

	Group			Company
	Assets	Liabilities	Assets	Liabilities
EUR	12,448	43,287	12,400	43,356
SEK	-	-	-	-
PLN	-	6	-	6
	12,448	43,293	12,400	43,362
Financial assets and liabilities stated in various currencies as of 31 August 2024 were as follows (stated in EUR):

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

	Group			Company
	Assets	Liabilities	Assets	Liabilities
EUR	14,999	45,519	14,997	45 573
	-		-
SEK		343		343
PLN	-	72	-	72
	14,999	45,934	14,997	45,988

Interest rate risk

Part of the Group’s and the Company’s financial debts and financial leases consists of obligations with variable interest

rates (EURIBOR and the policy rate of the Swedish central bank), which creates an interest rate risk. As of August 31,

2025, financial obligations with variable interest rates accounted for 98% of the Group's and the Company's total

financial debts and financial lease values (compared to 66% as of August 31, 2024).

As of August 31, 2025, and August 31, 2024, the Group and the Company did not hold any financial instruments

intended to manage interest rate risk. The table below calculates the impact of a 1 percentage point change in the

variable interest rate on the Group's and the Company’s results, based on the average financial debts and financial

lease obligations for the 2024–2025 financial years.

	Group			Company
	Increase/	Effect on profit	Increase/	Effect on profit
	decrease, %	before tax	decrease, %	before tax
2024
EUR	+1 %	(241)	+1 %	(241)
EUR	-1 %	241	-1 %	241
2025
EUR	+1 %	(256)	+1 %	(256)
EUR	-1 %	256	-1 %	256

Fair value of financial assets and liabilities

The Group and the Company hold cash and make investments only in other short-term investing instruments of

commercial banks in Lithuania with high credit ratings.

Trade and other receivables, trade and other payables and borrowings. In the management’s opinion, the

carrying amounts of trade and other receivables, trade and other payables and borrowings approximate with the fair

values, as trade and other receivables, trade and other payables are due within one year, and borrowings are subject

to variable interest rates based on market EURIBOR conditions.

25. Capital management

The Group’s and the Company’s capital includes share capital, legal reserve and retained earnings. The primary

objective of the capital management is to ensure that the Group and the Company comply with externally imposed

capital requirements.

The Group and the Company manage their capital structure and make adjustments to it in the light of changes in

economic conditions and the risk characteristics of their activities. To maintain or adjust the capital structure, the

Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No

changes were made in the objectives, policies or processes of capital management during the year ended 31 August

2025.

The Company is obliged to keep its equity at no less than 50% of its share capital, as imposed by the Law on Companies

of the Republic of Lithuania.

The Group and the Company have externally imposed capital requirements from the bank.

In September 2024, the Company refinanced its financial obligations to the European Bank for Reconstruction and

Development (EBRD), AS “Citadele Banka” Lithuanian branch, KŪB “Pagalbos verslui fondas,” and AB “Invalda

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

Privatus Kapitalas” using newly obtained financing from AB Artea Bank. Under these agreements, the following

covenants are established for the implementation of long-term loans and short-term financing instruments:

Financial Ratios:

a) Debt Service Coverage Ratio (DSCR) – not less than 1.2. When calculating the DSCR, dividends paid are

added to the debt service amount.

b) Short-term credit utilization ratio – not less than 0.8. This ratio is calculated as the amount of utilized short-

term credit funds divided by the sum of inventories, trade receivables, cash and cash equivalents, less trade

payables (including supplier credits for working capital).

c) Equity ratio – not less than 0.3. It is calculated as the ratio of equity to total assets.

d) Financial debt to earnings before interest, taxes, depreciation, and amortization (Debt / EBITDA) ratio – not

higher than 5.

The management monitors that the Company is in line with both above mentioned capital requirements. No other

capital management instruments are used.

The actual covenants of Artea Bankas AB and their implementation are presented below:

• Debt Service Coverage Ratio (DSCR) – not less than 1.2. As of 31 August 2025, the Company’s DSCR was

1.7.

• Short-term credit utilization ratio – not less than 0.8. As of 31 August 2025, the Company’s short-term credit

utilization ratio was 0.38. This ratio is reported to Artea Bankas AB every month, based on preliminary data

as of the last day of the previous month. During the reporting period, the short-term credit utilization ratios

reported to Artea Bankas AB ranged from 0.00 to 0.38.

• Equity ratio – not less than 0.3. As of 31 August 2025, the Company’s equity ratio was 0.5.

• Debt / EBITDA ratio – not higher than 5. As of 31 August 2025, the Company’s Debt / EBITDA ratio was 2.4.

26. Related-party transactions

The parties are considered related when one party has the possibility to control the other one or have significant

influence over the other party in making financial and operating decisions. The related parties of the Company as of 31

August 2025 were: ARI-LUX UAB (the subsidiary), Invalda Privatus Kapitalas AB (ultimate shareholder) and all

companies controlled by Invalda Privatus Kapitalas AB (Bordena UAB, Švytėjimas UAB, Inreal UAB, Inreal Geo UAB,

Geruvis UAB, Panerių konversija UAB). (31 August 2024 were: ARI-LUX UAB (the subsidiary), Invalda Privatus

Kapitalas AB (ultimate shareholder) and all companies controlled by Invalda Privatus Kapitalas AB (other related

parties).)

Transactions of the Group and the Company with related parties during 2025 and 2024 and the balances as of 31

August 2025 and 31 August 2024 were as follows:

a) Sales and purchases of goods and services and year-end balances arising from these sales/purchases

2024
Group	Purchases	Sales	Receivables	Payables
UAB „Panerių konversija“	278	-	-	-
UAB „Bordena“	17,613	8,401	1,143	-
UAB „Švytėjimas“	111	4	-	-
	18,002	8,405	1,143	-

2024
Company	Purchases	Sales	Receivables	Payables
UAB „ARI-LUX“	879	5	1	183
UAB „Panerių konversija“	278	-	-	-
UAB „Bordena“	17,613	8,401	1.143	-
UAB „Švytėjimas“	111	4	-	-
	18,882	8,410	1.144	183

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

2025
Group	Purchases	Sales	Receivables	Payables
UAB „Panerių konversija“	322	-	-	375
UAB „Bordena“	19,370	11,140	-	438
UAB „Švytėjimas“	151	-	165	-
UAB „Lauko gėlininkystės bandymų	4	-	-	-
stotis“	19,847	11,140	165	813

2025
Company	Purchases	Sales	Receivables	Payables
UAB “ARI-LUX”	858	4	-	60
UAB „Panerių konversija“	322	-	-	375
UAB „Bordena“	19,370	11,140	-	438
UAB „Švytėjimas“	151	-	165	-
UAB „Lauko gėlininkystės bandymų	4	-	-	-
stotis“	20,705	11,144	165	873

In 2025 financial year sales to related parties comprised sale of raw materials (EUR 10,743 thousand), as well as rental

income and other income.

b) Loans from Invalda Privatus Kapitalas AB to Trenduva UAB, transferred to the Company after the merger of UAB

Trenduva:

	2025	2024
At 1 September	-	-
Non-current loans	-	3,000
Loan repayments received	-	-
Interest charged	9	105
Interest payable	-	572
At 31 August	9	3,677

Remuneration of the management and other payments

The Company’s General Manager, Chief Financial Officer, Head of Technical Services, Chief Operating Officer, Head

of HR, Head of Purchasing, Strategic Projects Manager and Head of Business Development are considered to be the

key management of the Group.

	Group		Company
	2025	2024	2025	2024
Wages, salaries	921	762	881	745
Social security	25	15	16	14
	946	777	897	759

The management of the Group and the Company did not receive any loans, guarantees; no other payments or property

transfers were made or accrued.

27. Contingent liabilities

As of 31 August 2025 the Group and the Company had no significant contingent liabilities.

The tax authorities have a right to examine the Groups and the Company’s books and accounting records at any time

during the 3 years’ period after the current tax year and account for additional taxes and fines. In the opinion of the

Company’s management currently there are no circumstances which would raise substantial liability in this respect.

VILNIAUS BALDAI AB, company code 121922783, Pramones str. 23, Guopstos village, Trakai region,

Lithuania

CONSOLIDATED ANNUAL REPORT FOR THE FY2025 ENDED 31 AUGUST 2025

(all amounts are in EUR thousand unless otherwise stated)

28. Going concern

In the completed 2025 financial year, the Company firmly established itself in a new business cycle – it demonstrated

flexibility in adapting to changing conditions, enhanced its competitiveness, and maintained its strategic direction. The

reduced-price strategy adopted for this period enabled the Company to compete effectively in the global market. The

product portfolio and factory capacity utilization were expanded, resulting in growth in both sales revenue (+7.1%)

and production volume (+40.1%). Compared to the previous financial year, profitability ratios were slightly lower;

however, this outcome was anticipated and aligned with the Company’s forecasts.

During the year, the Company also focused on strengthening team competencies and expanding its energy

independence. The team was expanded, opportunities for professional development were enhanced, and key

projects were implemented — including the construction of a ground-mounted solar power plant, the renovation of the

compressor station, and the installation of a waste heat recovery system. These and other investment projects not

only contribute to the Company’s current performance but are also aimed at further improving efficiency. The

Company identifies this as a long-term strategic direction that drives competitiveness. The Company is continuously

seeking new solutions and opportunities for further improvement.

In the global demand environment, instability remains a relevant factor that has almost become a normal feature of

market conditions. The introduction of new products, portfolio diversification, stable profitability, and solid cash flows

currently enable the Company to better navigate market fluctuations.

In the coming periods, the Company will continue to maintain its strategic direction, focusing on further improvement

of internal processes, including deeper integration of the new enterprise resource planning (ERP) system, expansion

of electricity generation capacity, and implementation of new technologies. Particular attention will remain on attracting,

developing, and retaining specialists with strong engineering and technological competencies.

29. Events after the end of the reporting period

After the end of the reporting period, the Company completed the implementation of a new Enterprise Resource

Planning (ERP) system. The new ERP, designed for manufacturing-oriented companies, will provide new opportunities

and functionalities in production, inventory, and financial management, while ensuring a high level of protection against

various cybersecurity threats and breaches. The implementation, testing, and employee training took place during the

2024–2025 financial years. Data migration and the launch of the new ERP system occurred at the transition between

the 2025 and 2026 financial years, in order to ensure a smooth transformation, uninterrupted reporting process, and

data comparability.

General Manager

Jonas Krutinis

11 December 2025

Finance Director

Egidijus Žvaliauskas

11 December 2025

END

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

AB “VILNIAUS BALDAI”

CONSOLIDATED SUSTAINABILITY

REPORT 2025

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Contents

1. GENERAL INFORMATION – ESRS (2 ESRS)

2. GENERAL DISCLOSURES – 2 ESRS

3. DOUBLE MATERIALITY ASSESSMENT

(2 ESRS SBM-3 AR 17-19) (2 ESRS IRO-1, IRO-2)

1.1. General basis for report preparation

(2 ESRS BP-1 3) (2 ESRS BP-1 5)

2.1. Governance model and responsibilities

(2 ESRS GOV-1) (2 ESRS GOV-2)

3.1. Value chain (2 ESRS SBM-1)

1.2. Value chain coverage (2 ESRS BP-1) (2 ESRS BP-2)

(2 ESRS SBM-1) (2 ESRS TR 16)

2.2. Risk management and internal controls over sustainability

reporting (2 ESRS GOV-5)

1.3. Reporting period (2 ESRS BP-2)

2.3. Incentive schemes (2 ESRS GOV-3)

1.4. Qualitative characteristics of information (2 ESRS BP-2)

2.4. AB “Vilniaus baldai” strategy, business model, resilience;

ESRS BP-2 / SBM-3)

3.1.1 Value chain map (processes, parties, partners)

3.1.2 Analysis of impacts, risks and opportunities in

the value chain

3.1.5 Progress monitoring system (KPIS, responsibilities)

3.1.4 Supplier management policy and control mechanisms

3.1.3 Sustainability due diligence and its link to the DMA

4. ENVIRONMENT

4.1. ESRS E1 – climate change

4.2. ESRS E2 – pollution

3.2. Stakeholder engagement and double materiality

assessment context (2 ESRS SBM-2 AR 16)

3.3. Double materiality assessment (impact, risks and opportunities)

(2 ESRS SBM-3 AR17-18) (2 ESRS IRO-1, IRO-2) (2 ESRS SBM)

3.4. Materiality matrix

4.1.1. Assessment of climate change risks and opportunities

(E1-2 ESRS SBM-3) (E1-2 ESRS) (2 ESRS IRO-1)

4.2.1. Air, water, and soil pollution management (E2-1 ESRS)

(E2-2 ESRS) (2 ESRS GOV-5)

4.2.2. Significant pollution topics: impacts, risks, and

opportunities (E2 ESRS IRO-1) (2 ESRS SBM-3) (E2-1 ESRS)

4.2.3. Pollution management measures, control, and

monitoring (E2-2 ESRS) (E2-3 ESRS) (E2-4 ESRS)

4.1.3. Climate neutrality targets and action plan

(E1-3, E1-4 ESRS)

4.1.2. Greenhouse gas (CO

e) emissions (E1-6 ESRS)

4.1.4. Energy consumption (E1-5)

4.2.4. Pollution indicators (E2-3 ESRS) (E2-4 ESRS)

3.3.1 Materiality assessment process (SBM-3 TR17)

3.1.5 Compliance with ESRS 2 APPENDIX B

(additional datapoints)

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

4.3. ESRS E3 – water and marine resources

4.4. ESRS E4 – biodiversity and ecosystems

(E4-1, E4-2, E4-3, 2 ESRS IRO-1)

4.5. ESRS E5 – resources and circular economy

(E5-1, E5-2, E5-3, E5-4, E5-5, E5-6, 2 ESRS IRO-1)

4.3.1. Water conservation and pollution reduction

(E3-1, E3-2, E3-3, E-5, 2 ESRS IRO-1)

4.3.2. Water pollution impacts, risks, and opportunities

4.4.1. Policy related to biodiversity

4.5.1. Application of circular economy principles

(ESRS E5-1, ESRS E5-2)

4.4.2. Use of wood resources

4.4.4. Biodiversity conservation measures

4.4.3. Impacts, risks, and opportunities for ecosystems

4.5.2. Circular economy impact, risks, and opportunities

4.5.3. Tasks related to resource use and circular economy

(E5-3 ESRS)

4.5.4. Results and targets (E5-4, E5-5)

5.1.9. Policy for eliminating discrimination: scope, diversity and

inclusion commitments and procedures (S1 ESRS-1)

5.1.4. Characteristics of own workforce

(S1 ESRS-6, S1 ESRS-9, S1 ESRS-10)

5.1.2. Policies related to own workforce (S1 ESRS-1)

5.1.3. Workforce composition, diversity, and inclusion

5.1.5. Persons with disabilities (S1 ESRS–12)

5.1.7. Remuneration policy and incentive system

5.1.13. Health and safety metrics (S1 ESRS–14)

5.1.6. Protection of children’s interests (S1 ESRS–1)

5.1.15. Employee turnover (S1 ESRS–13)

5.1.17. Social goals (S1 ESRS–13)

5.1.16. Training and skills development metrics (S1 ESRS–13)

5.1.8. Social protection (S1 ESRS-11)

5.1.14. Employee engagement (S1 ESRS–1) (S1 ESRS–3)

(S1 ESRS–4)

5.1.11. Incidents, complaints and severe human rights impacts

(S1 ESRS-17)

5.1.10. Collective bargaining coverage and social dialogue

(S1 ESRS-8)

5.1.12. Work-life balance (S1 ESRS–15)

4.4.5. Biodiversity indicators and data under ESRS E4 (required

by E4-5)

5.1.1. Material impacts, risks, and opportunities and their interaction

with strategy and business model (ESRS 2 SBM-3, S1-1)

5. SOCIAL

5.1. ESRS S1 – employees

5.2. ESRS S2 – workers in the value chain (S2-6, S-7)

Contents

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

5.3. ESRS S3 – affected communities

5.4. ESRS S4 – consumers and end-users

5.3.1. Policies, governance, and principles related to affected

communities (S3 ESRS-1) (S3 ESRS-2)

5.3.3. Processes for involving affected communities in

decision-making on impact-related issues (S3 ESRS-2)

5.3.4. Impacts, risks, and opportunities for communities

(S4 ESRS-SBM-3)

6.1.7. Political and lobbying activities (G1 ESRS-5)

6.1.9. Governance targets (ESRS G1–5)

6.1.8. Restrictions on lobbying and political activities

(G1 ESRS-5)

5.3.2. Positive impact and opportunities (S3 ESRS SBM-3)

5.3.5. Goals and progress monitoring (S3 ESRS-5) (S3 ESRS-4)

5.4.1. Product safety (S4 ESRS-1)

6.1.1. G1 ESRS-1 fair and transparent business practices

6.1.4. Prohibition of substance abuse (G1 ESRS-1)

6.1.6. Payment practices (G1 ESRS-6)

5.4.2. Cybersecurity and data protection (S4 ESRS-1)

6.1.2. Anti-corruption and anti-bribery procedures (G1 ESRS–4)

6.1.3. Sustainability in the supply chain (G1 ESRS-1) (G1 ESRS-

2) (G1 ESRS-3)

6.1.5. Quality and environmental management system

(G1 ESRS-1, G1 ESRS-3) (S4 ESRS-4)

6. GOVERNANCE

7. TAXONOMY REGULATION DISCLOSURES

6.1. ESRS G1 ESRS – business conduct

7.1. EU taxonomy regulation (EU) 2020/852 and its delegated

acts

7.3. Identification of taxonomy activities

100

7.2. Application of the eu taxonomy regulation at

AB “Vilniaus baldai”

100

7.4. Assessment limitations and transitional period (FY2025)

103

7.5. Financial KPIs under the EU taxonomy regulation

(FY2025)

103

APPENDIX 1. Data points index (index of esrs 2 (horizontal) and

topical esrs data points required by other eu legislation)

108

APPENDIX 3. Iro-2 table of significant impacts, risks,

and opportunities

114

APPENDIX 4. 2 ESRS IRO-2

115

APPENDIX 5. Data points index

117

APPENDIX 2. Double materiality assessment:

impact analysis

111

Contents

GENERAL

INFORMATION

– ESRS (2 ESRS)

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

1.1. GENERAL BASIS FOR REPORT

PREPARATION (2 ESRS BP-1 3) (2 ESRS BP-1 5)

AB „Vilniaus Baldai“ Sustainability Report prepared in accordance

with the Law of the Republic of Lithuania on Corporate Reporting,

the EU Corporate Sustainability Reporting Directive (hereinafter –

CSRD), and Commission Delegated Regulation (EU) 2023/2772,

which supplements Directive 2013/34/EU of the European Par-

liament and of the Council with sustainability reporting standards

(hereinafter – ESRS).

Reporting boundaries and data scope. This sustainability report

applies the same consolidation boundary as the financial state-

ments. Data are collected using the operational control approach

and cover the Group’s directly managed sites, processes, and re-

sources. Value chain data are disclosed where they are available or

can be substantiated using validated assumptions; significant lim-

itations and the application of transitional provisions are indicated

in the relevant thematic sections.

Unless otherwise stated in specific sections, all data presented in

this report are consolidated at Group level, in line with the financial

reporting consolidation boundary (ESRS BP-1). This sustainability

report uses the terms “Group”, “Company”, and UAB “Ari-Lux” to

clearly define the scope of data and the boundaries applied in the

report. The “Group” is the consolidated entity comprising the par-

ent company AB „Vilniaus Baldai“ and the subsidiary UAB “Ari-Lux“.

We use the term “Group” wherever consolidated metrics are pre-

sented (energy, GHG emissions, waste, water), social metrics (em-

ployees, safety, training), as well as in the assessment of impacts,

risks and opportunities, the value chain, EU Taxonomy disclosures,

and overall governance processes. The “Company” is used when

referring only to the parent company AB “Vilniaus Baldai“- its man-

ufacturing operations, assets, processes, employees, or metrics

that do not relate to the subsidiary. UAB Ari-Lux is a subsidiary op-

erating within AB „Vilniaus Baldai“ production premises. Both com-

panies follow the same Group internal policies, procedures, and

management systems (health and safety, environmental protection,

sustainability, risk management, human resources, etc.). Therefore,

data are generally presented for the Group as a whole, and UAB

“Ari-Lux“ is singled out separately only when its operational specif-

ics or social mission (e.g., employment of persons with disabilities)

is material to sustainability disclosures. Associates are not included

in consolidation and are accounted for using the equity method.

The parent company AB “Vilniaus baldai“ has been listed on the

Nasdaq Vilnius stock exchange trading list since 2000.

In previous years, AB “Vilniaus baldai“ prepared a Corporate Social

Responsibility report, which covered only part of the topics and

metrics now required under ESRS.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

This report has been prepared in accordance with ESRS 1 and ESRS

2, applying ESRS transitional provisions that allow certain elements

of value chain and financial impact assessment to be implemented

in phases. Any departures from full disclosures are clearly indicat-

ed in the thematic sections. Due to first-time application, the pro-

visions of ESRS E1-9, E2-6, E3-5, E4-6, E5-6 are applied during the

transitional period, and data collection and accounting processes

will be gradually improved until full compliance is achieved.

The sustainability report also includes an assessment of compli-

ance with the EU Taxonomy Regulation.

The report presents the double materiality assessment (hereinafter

– DMA), the process of which includes the analysis of impacts, risks

and opportunities (hereinafter – IRO-1) across the Group’s opera-

tions, including upstream and downstream parts of the value chain.

The thematic sections explain how the company’s policies, actions,

targets, and metrics cover the entire value chain.

The report provides information on AB “Vilniaus baldai“ material

environmental, social and governance (hereinafter - ESG) impacts.

All information reflects the most up-to-date data available at the

time of report preparation. Sustainability disclosures are based on

a consistent reporting policy at Group level and rely on internal

accounting records, management systems, operational data and,

where necessary, modelling or estimates supported by reasonable

assumptions.

We apply the provision in ESRS 1, Appendix C 3, which allows in-

formation to be omitted if its disclosure could reveal trade secrets.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

1.2. VALUE CHAIN COVERAGE (2 ESRS BP-1)

(2 ESRS BP-2) (2 ESRS SBM-1) (2 ESRS TR 16)

AB “Vilniaus baldai“ value chain encompasses the full process from

raw material procurement through delivery of products to end cus-

tomers and the closure of the product life cycle. The Company’s

approach to the value chain is grounded in responsible resource

management, supply chain transparency, and the reduction of en-

vironmental impacts across all stages of operations. The upstream

scope includes input suppliers, including suppliers of timber, pan-

els, fittings, and packaging materials, as well as service providers

such as transport, logistics, equipment maintenance, energy, and

technical solutions providers.

The downstream scope comprises logistics, distribution, sales, and

customer-facing activities where the Group retains responsibility

for actions taken or has a material influence on environmental and

social impacts. Within this part of the value chain, the primary focus

is placed on product durability, recyclability, and sustainable con-

sumption.

Certain metrics disclosed in this sustainability report include value

chain data estimated using indirect sources, in particular in cases

where primary data from suppliers or partners are not available.

Some value chain data are not yet fully covered: (i) quantitative in-

dicators relating to end use and downstream end-of-life, and (ii)

indicators for part of transport and subcontractor activities. These

gaps are explained in the relevant thematic sections, applying tran-

sitional provisions.

Some of the metrics disclosed in this sustainability report include

value chain data estimated using indirect sources, particularly

where primary data from suppliers or partners are not available.

Data are collected based on source documents (invoices, meter

readings, documents provided by suppliers) and internal account-

ing systems. To ensure data quality, control procedures are ap-

plied: initial checks within departments, methodological checks,

and a final review by Finance and IT staff.

This approach has been adopted with due regard to the ESRS

transitional provision set out in Chapter 5 “Value chain”. The Com-

pany is committed to remedying this limitation and enhancing its

data collection processes over the next two years, by 2027. The

Group considers that investments in improved data collection and

management systems will enable the disclosure of more compre-

hensive and more reliable information in future reports, thereby

strengthening sustainability reporting and the Company’s overall

accountability.

The Group plans to increase engagement of supply chain entities

by implementing a comprehensive supplier management policy

and introducing a supplier questionnaire. This initiative is intend-

ed to ensure that all suppliers adhere to our ethical standards and

sustainability objectives and provide more detailed information re-

quired for sustainability reporting. The questionnaire will address

key areas such as labour practices, environmental impacts, and

regulatory compliance.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

1.3. REPORTING PERIOD (2 ESRS BP-2)

Considering that AB “Vilniaus Baldai“’s financial year does not co-

incide with the calendar year, unless otherwise stated, the informa-

tion presented in this report covers relevant data and events falling

within the respective financial year periods, which are defined in

this document as follows:

Financial year 2025 – the period from 1 September 2024 to 31

August 2025;

Financial year 2024 – the period from 1 September 2023 to 31

August 2024;

Financial year 2023 – the period from 1 September 2022 to 31

August 2023;

Financial year 2022 – the period from 1 September 2021 to 31

August 2022.

The definitions of time horizons used in the sustainability report are

aligned with the ESRS:

Short-term – the reporting period used in the financial state-

ments;

Medium-term – from the end of the reporting period up to five

years;

Long-term – more than five years.

1.4. QUALITATIVE CHARACTERISTICS OF

INFORMATION (2 ESRS BP-2)

Relevance. This report presents all material information that sub-

stantially influences stakeholders’ assessments and decision-mak-

ing, or that reflects significant economic, environmental, and social

impacts.

Faithful representation. In line with the principle of neutrality, the

report discloses both favourable and unfavourable outcomes and

topics.

Transparency. The report provides open information on the Com-

pany’s activities and impacts. Data and information required for

sustainability reporting are collected on an ongoing basis.

Dialogue. Continuous engagement is maintained through surveys,

meetings, and consultations.

Accountability. Stakeholder feedback is integrated into deci-

sion-making processes.

Accuracy. Data accuracy is ensured through clear measurement

and verification practices.

Comparability. For the purposes of KPI comparability, results for

the last 3–5 years are presented. All disclosed data are document-

ed in relevant systems and, where necessary, can be traced back to

original source documentation.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

As this is the first sustainability report prepared in accordance with

ESRS, comparative information for prior periods is not available

for certain topics. Previously, the Company prepared a Corporate

Social Responsibility report, which did not cover all indicators re-

quired by ESRS; therefore, full comparability of data cannot be en-

sured. Comparative indicators will be disclosed once a sufficient

historical data series has been established. Data quality has been

assessed in accordance with the qualitative characteristics set out

in ESRS BP-2: accuracy, completeness, consistency, timeliness, and

traceability.

Continuous improvement. Commitments are reviewed annually,

taking account of evolving requirements. To reduce reporting er-

rors, a unified sustainability data system is applied, together with a

systematic methodology for risk prioritisation.

As ESRS requirements are applied for the first time, certain indica-

tors are based on newly developed or expanded data collection

and accounting methodologies, which are being improved on a

phased basis. The Group plans to implement an end-to-end data

governance and management system within the next two years (by

2027), ensuring accurate, traceable, and standardised disclosures

in accordance with ESRS requirements.

Option to omit information related to intellectual property (BP-1).

Certain information has been omitted from this sustainability re-

port to protect intellectual property, trade secrets, practical know-

how, and the results of innovation activities.

Option to omit information related to future operational changes

(BP-1). The Group has not exercised the option, permitted under

national law, to withhold information relating to future operational

changes or matters subject to ongoing negotiations.

Disclosure under specific circumstances (BP-2). Information has not

been withheld under the provisions for specific circumstances set

out in Appendix C to ESRS 1. However, the Group has applied tran-

sitional relief and has not disclosed expected financial effects and

opportunities (E1-9, E2-6, E3-5, E4-6, E5-6) due to insufficient data

currently available. This information is expected to be analysed

and assessed in the future once additional information becomes

available regarding location-specific risks and opportunities relat-

ed to climate change, pollution, water resources, biodiversity, and

resource use.

In accordance with the ESRS transitional provisions (ESRS 1, Chap-

ter 5 – Value chain), the Group will not provide complete value

chain data until 2027 in cases where collecting such data would

impose a disproportionate burden on the reporting process.

2. GENERAL

DISCLOSURES

– 2 ESRS

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

2.1. GOVERNANCE MODEL AND

RESPONSIBILITIES (2 ESRS GOV-1)

(2 ESRS GOV-2)

Role of the administrative, management and supervisory bodies, the

information provided to them, and the sustainability matters they

address (ESRS 2 GOV-1; ESRS 2 GOV-2)

In accordance with the Articles of Association of AB “Vilniaus baldai“,

the Company’s governance bodies comprise the General Meeting

of Shareholders, the Board (performing a supervisory function), and

the Chief Executive Officer.

The Board, which currently consists of three members, performs

oversight and control functions. Board members are appointed by

the General Meeting of Shareholders for a four-year term.

The Board appoints and dismisses the Company’s Chief Executive

Officer, determines his remuneration, approves job descriptions,

and decides on performance incentives and disciplinary measures.

The competences of the Chief Executive Officer and the Board,

and the procedures for their appointment and removal, do not dif-

fer from those set out in the Law on Companies of the Republic of

Lithuania. The Board is composed of individuals with differing pro-

fessional experience and competencies. The Board’s competence

in sustainability matters has been assessed as sufficient, taking into

account the members’ professional experience in strategic manage-

ment, finance, and risk management.

No requirements are set for the composition of the Board that could

result in discrimination on the grounds of gender. In 2025, the Board

consisted of three men (100%). The Board members are not employ-

ees of the Company and do not work under employment contracts.

In 2025, the proportion of independent Board members was 0%, as

all three Board members were appointed by shareholders and do

not meet the independence criteria. The absence of independent

members reflects the shareholder appointment model; the Compa-

ny periodically reviews its governance structure needs in light of reg-

ulatory requirements and investor expectations. The Board does not

perform executive functions and does not participate in day-to-day

operations; its role is strategic oversight, control, and decision-mak-

ing in relation to sustainability, risk, and governance matters.

The Board is the ultimate body responsible for oversight of the man-

agement of impacts, risks and opportunities (hereinafter – IROs). It

reviews and approves the results of the double materiality assess-

ment, sustainability policies, targets, and action plans, and oversees

the effectiveness of the risk management system and internal con-

trol procedures. The Board ensures that all material functions are in-

volved in sustainability matters and that decisions are integrated into

strategic and financial planning.

As no Supervisory Council is established within the Group, the

Board also performs supervisory functions, considers and approves

the Group’s strategy, and analyses and evaluates information on the

implementation of the operating strategy. The Company’s collegial

management body - the Board- also performs the functions of the

nomination committee and the remuneration committee.

The General Meeting of Shareholders appoints the Audit Com-

mittee for a four-year term. The Audit Committee consists of three

members, two of whom meet the independence requirements. The

Audit Committee supports the Board in performing its oversight re-

sponsibilities. It oversees the Company’s financial reporting process,

internal control and financial risk management systems, and the

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

audit process, and monitors the Company’s compliance with appli-

cable laws and regulations and internal procedures. In 2025, the Au-

dit Committee consisted of two men (66%) and one woman (33%).

The Audit Committee also performs oversight of the reliability of

sustainability information, as required by ESRS GOV-5.

During the 2025 reporting period, the Board considered the fol-

lowing material categories of impacts, risks and opportunities:

climate change and energy consumption risks (E1), including in-

vestments in solar energy;

supply chain sustainability risks (origin of raw materials, FSC®,

EUDR, IWAY compliance);

employee health and safety risks (S1), accident prevention and

the strengthening of safety culture;

data and cybersecurity risks (IT system continuity and data pro-

tection);

social responsibility and reputational risks (human rights in the

supply chain, relations with the community).

Sustainability matters and material IROs are presented to the ad-

ministrative, management and supervisory bodies at least semi-an-

nually, and the effectiveness of key policies, actions and key perfor-

mance indicators hereinafter - (KPIs) is assessed at least annually. In

the event of significant developments (e.g., a major incident, reg-

ulatory change, or material supply disruption), the management

team promptly informs the Board and the Audit Committee. The

Board annually assesses the compliance of sustainability reporting

with ESRS requirements and approves the reporting preparation

process, as required by ESRS GOV-1.

Further information on the members of the Board and the Audit

Committee, including their other significant commitments, is pro-

vided in the “Corporate Governance Report” section of the Annual

Report.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

2.2. RISK MANAGEMENT AND INTERNAL

CONTROLS OVER SUSTAINABILITY

REPORTING (2 ESRS GOV-5)

In preparing the 2025 sustainability report, the Company had ap-

proved an ESG policy, an ESG strategy, a double materiality deter-

mination procedure, and a risk management policy. However, the

Company’s Articles of Association and the internal regulations of

the governance bodies do not yet provide for specific responsibil-

ities for the management of impacts, risks and opportunities, and

dedicated control measures are not currently applied. The Compa-

ny plans to integrate such provisions into its governance arrange-

ments on a phased basis by 2027. AB “Vilniaus baldai“ continues

to develop its governance system in line with leading practices in

sustainability oversight and to ensure that future disclosures meet

both regulatory requirements and stakeholder expectations. In

2026, the Company plans to establish impact management ob-

jectives and to develop a sustainability target monitoring system

defining clear responsibilities for both the governance bodies and

senior management.

For sustainability matters, the Company applies a standard internal

control system based on the risk management policy, internal au-

dits, and process monitoring. The management team is responsi-

ble for implementing sustainability control measures, and regular

reporting (reports, risk reviews, double materiality assessment re-

sults, and analysis of impacts, risks and opportunities) is provided

to the Board and the Audit Committee.

ESG risks are assessed together with other business risks in accord-

ance with the Company’s risk management policy. At least annually,

and whenever significant changes occur, a structured assessment

of impacts, risks and opportunities is performed, whereby each

risk is evaluated based on its likelihood and the magnitude of its

potential impact on financial results, the environment, and stake-

holders (low / medium / high). Risk priorities are determined based

on overall risk significance, distinguishing critical and high-signifi-

cance risks, which receive additional Board attention.

The key sustainability risks currently identified are:

climate and energy risks (energy price volatility, impacts of regu-

latory changes, supply disruptions resulting from climate policy

requirements);

supply chain social and human rights risks (labour conditions,

human rights violations, non-compliance with IWAY and EUDR

requirements);

occupational health and safety risks (accidents, unfavourable

working conditions);

data and cybersecurity risks (data leaks, vulnerabilities of IT sys-

tems).

Specific control measures are applied to manage these risks, in-

cluding: monitoring of energy consumption and emissions; in-

vestments in energy efficiency and renewable energy; supplier

assessment and IWAY audit processes; an occupational safety pro-

gramme and monitoring of TRIR/FR indicators; a data protection

policy, cybersecurity procedures, regular penetration testing, and

incident management processes. The list of key risks and their mit-

igation measures is reviewed annually by the Board and the Audit

Committee.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Dedicated sustainability-specific control measures have not yet

been fully developed; they will be integrated into the internal con-

trol system by 2027, as envisaged in the transitional provisions.

The results of sustainability reporting risk assessment and internal

control are integrated into the Company’s core internal processes:

annual budgeting and investment planning, review of strategy and

sustainability targets, updates to operational plans, and updates

to the double materiality assessment. Identified material risks and

conclusions regarding control gaps are documented in the risk

monitored through regular management team and Board reviews.

At least once per year, the Board and the Audit Committee receive

a consolidated update on the results of internal controls for sus-

tainability reporting, identified risks, corrective actions and pro-

gress; in the event of material incidents or newly emerging risks,

an extraordinary report is provided.

A schematic overview of sustainability decision-making and sustainability-related responsibilities within the Group is presented below.

Implementation of shareholder rights.

General

Meeting of

Shareholders

Chief

Executive

Officer

Management

Team

People and

Culture

Department

Environmental

Specialist

Occupational

Safety

Specialist

Finance

and IT

Department

Technical

Department

Board

Approval of sustainability policy, strategy,

and materiality assessment results.

Approval of regulations, allocation of

resources, ensuring implementation

of sustainability goals.

Setting sustainability strategy and goals,

responsibility for integration into daily

management, participation in double

materiality assessment.

Provision of data, conducting

assessments, execution of action plans.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Oversees the sustainability strategy and approves the sustainabili-

ty policy and sustainability targets. It monitors the implementation

of sustainability projects and targets, oversees the impacts, risks

and opportunities assessment process, and reviews the material

IRO categories identified by the management team (climate risks,

supply chain risks, occupational health and safety risks, and data

security risks). The results of the Group’s 2025 double materiality

assessment were approved by the Board.

The Board

Sets the sustainability strategy and targets and is responsible for

key sustainability integration matters in the Group’s day-to-day

management. The Group’s senior management is directly respon-

sible for managing impacts, risks and opportunities and for imple-

menting ESG objectives within their respective areas of responsi-

bility. In 2025, the management team participated in the double

materiality assessment process.

The management team

Other functions provide data, perform assessments, and implement

action plans. Responsibilities are allocated as follows: the Technical

Unit is responsible for energy-related data and the maintenance

of buildings and production equipment, as well as heat and wa-

ter data; Finance and IT Department are responsible for account-

ing accuracy and cost summaries; the Environmental Specialist is

responsible for the management and retention of environmental

documentation; the Occupational Health and Safety Specialist col-

lects and retains data related to employee safety; and the People &

Culture Department ensures the security of employee data.

Other Company Departments

The Finance and IT Department plans and performs assessments,

prepares reports, and coordinates with other functions. It organis-

es and manages key sustainability-related activities, including the

consolidated double materiality assessment, the assessment of

climate-related risks and opportunities, monitoring of established

targets, and the collection of data for sustainability reporting. This

includes arrangements for employee engagement and the incor-

poration of consumer and customer feedback into impact man-

agement and recalculation processes.

Information flow to the administrative, management and super-

visory bodies. The administrative, management and supervisory

bodies are regularly informed of sustainability progress. Sustain-

ability information is provided to the Board at least semi-annually

Finance and IT Department

Approves internal regulations, allocates the necessary resources,

and ensures implementation.

The Chief Executive Officer

and, in the event of material risks or incidents, without delay. In-

formation provided to the Audit Committee covers the reliability

of sustainability data, internal control results, the effectiveness of

IRO management processes, identified non-compliances, and cor-

rective measures. During the reporting period, the following were

presented to the governing bodies: the results of the double ma-

teriality assessment, the analysis of climate-related risks and op-

portunities, and “hotspots” in the implementation of sustainability

targets.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Climate change

Pollution E2

Water and

marine resourse

Resource use

and circular

economy E4

Own workforce

Workers in value

chain- Affected

communities

S2 S3

Business

conduct /

Business ethics

Double

materiality

assessment

Board • •

Chief Executive Officer • • • • • • • •

Chief Finance Officer • • • • • • • •

Head of People &

Culture

• • • •

Chief Procurement

Officer

• • •

Head of Technical Unit • • • • • •

Environmental

Specialist

• • • • •

Occupational Health

and Safety Specialist

• • • •

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

2.3. INCENTIVE SCHEMES (2 ESRS GOV-3)

There is currently no sustainability-linked incentive mechanism in

the Group.

The remuneration of the Board members is performance-based

and is evaluated on the basis of business results, operational ob-

jectives, and strategic activities. The Group has not established a

dedicated sustainability incentive policy. Sustainability elements

may have an indirect influence on evaluations through business or

risk results; however, specific sustainability-linked key performance

indicators (KPIs) are not applied. Sustainability indicators do not

separate comparative benchmarks and are not integrated into the

remuneration policy. The variable remuneration formally depends

on sustainability objectives at a rate of 0%.

2.4. AB “VILNIAUS BALDAI” STRATEGY,

BUSINESS MODEL, RESILIENCE; ESRS

BP-2 / SBM-3)

AB „Vilniaus baldai“’s strategy is based on a clear vision: to become

the most efficient children’s furniture manufacturing company for

its key customer, while consistently pursuing long-term objectives

to be a sustainable, responsible and innovative company that cre-

ates value for its employees, partners and society.

AB „Vilniaus baldai“’s sustainability strategy is integrated into the

business model and is aligned with the requirements of ESRS BP-

2. It defines how the Company’s sustainability objectives, and the

identified impacts, risks and opportunities (IROs), shape priorities

and decisions in the short, medium and long term. The Company’s

employees actively participate in energy efficiency and sustainabil-

ity trainings organised by the key customer, as well as in joint pro-

jects and initiatives that strengthen competencies and foster a sus-

tainability culture within the organisation. A sustainability-oriented

organisation responds to stakeholder expectations, and contrib-

utes to a more sustainable, values-based future aligned with the

needs of future generations.

The Company’s sustainability objectives are based on the 3P strat-

egy (Profit, People, Planet) and reflect the commitment to create

long-term economic value, use energy resources and raw materials

responsibly, reduce environmental impacts, and continuously im-

prove working conditions.

The resilience of the business model has been analysed in accord-

ance with ESRS SBM-3 principles, assessing the effects of climate,

energy, supply chain, social and regulatory scenarios.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

The sustainability strategy has been developed based on the out-

comes of the double materiality assessment (IROs). Topics related

to GHG emissions, energy efficiency, raw material sourcing, circu-

larity, occupational safety, and supply chain social risks were iden-

tified as the most material (score 4–5). Accordingly, the strategy

prioritises these areas. In assessing the resilience of the strategy

and the business model, scenarios related to climate policy, energy

prices, supply chain disruptions and regulatory changes were ana-

lysed. The key conclusions indicate that the Group’s specialisation

in the children’s furniture segment and its long-term partnership

with its key customer increase business stability; however, they also

entail high requirements for energy efficiency, emissions reductions

and responsible raw material sourcing. These risks are integrated

into the sustainability action plan, and the main resilience-enhanc-

ing measures include the transition to renewable energy, circular

economy solutions, and strengthened supplier assessment.

AB “Vilniaus baldai“’s business model is based on the manufacture

of lightweight case furniture for its key customer, creating econom-

ic, social and environmental value for all stakeholders.

certified timber raw materials and wood-based panels (FSC®),

fittings, adhesives, finishing and packaging materials;

energy and water for production and auxiliary processes, includ-

ing renewable energy sources;

employee competencies and experience, process know-how,

production infrastructure and equipment;

a long-term partnership with the key customer and a network of

more than 170 suppliers;

financial and technological resources (IT systems, Monitor ERP,

quality and environmental management systems).

Key inputs of the business model:

product design and process/technology preparation;

wood processing, component calibration, assembly, surface fin-

ishing and packaging;

quality control, logistics organisation and supply chain manage-

ment;

optimisation of energy use, waste, and raw material yields, ap-

plying circular economy principles;

occupational safety programmes and skills development.

Key activities:

furniture products for the key customer’s assortment, delivered

to more than 30 countries worldwide;

heat generated from biomass fuel (use of sawdust and wood res-

idues) and other energy efficiency solutions;

waste streams that are recycled or returned to the production

cycle;

economic value: revenue, jobs created, investments and taxes

paid;

social value: safe and decent workplaces, employee develop-

ment, partnerships with the community;

environmental value: lower GHG emissions, efficient use of re-

sources, circular solutions.

Key outputs and outcomes:

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

This business model generates clear benefits for different stake-

holder groups: for customers - affordable, safe and sustainable fur-

niture; for employees - stable and safe jobs and opportunities for

development; for investors - long-term profitability based on sus-

tainable growth; and for the local community and the environment

- investments in circular solutions, lower emissions and responsible

resource use.

Accordingly, the business model is directly linked to sustainability

objectives: each investment decision and process improvement is

assessed based on its impact on profitability, people and the plan-

et (the 3P principle).

In 2025, the Company’s Board approved the Sustainability Policy

and the Sustainability Strategy, which defines sustainability ob-

jectives, tasks, principles, and priorities. The policy sets out long-

term commitments in environmental, social, and governance areas

where AB “Vilniaus Baldai” has the greatest impact and the great-

est opportunities to create value.

The Company’s strategic goals until 2030:

Sustainable sourcing, ensuring the use of certified raw materials

that meet responsible forestry requirements and the strict sus-

tainability requirements and goals of our main client, guaran-

teeing traceability of raw materials and increasing the share of

recycled materials.

Improving energy efficiency by using only renewable energy, in-

creasing the share of self-generated energy, investing in equip-

ment energy efficiency, and improving internal processes.

Reducing waste by increasing and optimizing raw material yield,

returning waste to production processes, implementing circular

economy principles, and converting waste into thermal energy;

Eco-friendly production by using environmentally friendly finish-

ing materials and adhesives, and conserving water resources.

Social responsibility by ensuring fair and safe workplaces for all

employees – aiming for zero accidents, creating opportunities

for development and professional growth, and participating in

community initiatives.

Preparing and publishing the Company’s sustainability reports

to transparently present the Company’s actions to society, em-

ployees, clients, and investors.

Ensuring a reliable, responsible, and transparent Company

governance system through effective internal control and risk

management, adherence to high standards of business ethics,

transparency and integrity, and application of a zero-tolerance

principle for corruption.

SUSTAINABILITY

Social

Environment

Planet

Environment

Profit

Economy

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

The most important areas where AB “Vilniaus Baldai”, in pursuit of

sustainability, can make the greatest impact:

2026–2027 – harmonisation of data collection systems, integrati-

on of Monitor ERP, enhancement of circular economy solutions,

definition of key KPIs, and preparedness for the transitional pe-

riod.

2027–2030 – automation of CO

, water and waste KPIs, expansi-

on of supply chain traceability (EUDR), and approval of pollution

and water targets.

2030–2050 – implementation of long-term sustainability targets,

updates to the implementation plans for the climate-neutrality

pathway, expansion of in-house energy generation capacity, and

delivery of projects aimed at reducing environmental impacts.

Progress towards these long-term targets will be monitored throu-

gh annual assessments of sustainability indicators (KPIs) and peri-

odic internal audits.

The implementation of targets is

structured into three phases

Circular

economy

development

(zero-waste

production)

Social

responsibility

(responsible

business)

Employer

ensuring

equal

opportunities

Renewable

resources,

environmental

protection

Reliable,

responsible,

and

transparent

governance

Good

workplaces

(employee

self-realization

and reducing

exclusion)

Climate

neutrality

(CO₂ footprint)

3. DOUBLE MATERIALITY

ASSESSMENT (2 ESRS

SBM-3 AR 17-19)

(2 ESRS IRO-1,

IRO-2)

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

3.1. VALUE CHAIN (2 ESRS SBM-1)

AB “Vilniaus baldai“’s operations are guided by the principles of

integrity, transparency and sustainability, contributing to societal

well-being, economic progress and environmental protection. The

Company seeks to ensure that all stages of its operations create

long-term value for employees, partners, customers and other

stakeholders.

3.1.1 VALUE CHAIN MAPPING PROCESS

(PROCESSES, PARTIES, PARTNERS)

AB “Vilniaus baldai“’s value chain covers the full cycle from raw ma-

terial to end-user:

Raw material sourcing (upstream): timber and wood-based pan-

els, fittings, adhesives, finishing materials, packaging, energy

supply, as well as cleaning, security and transport services. The

Company has more than 170 direct suppliers, most of whom

are located in the European Union, with a smaller share in third

countries.

Manufacturing (core operations): wood processing, milling and

cutting of components, assembly, surface finishing, packaging,

quality control, waste sorting and return/reintegration loops at

AB “Vilniaus baldai“ and UAB “Ari-Lux“ operations in Lithuania.

Logistics and distribution (downstream): shipment of finished

goods to the key customer, transportation to more than 30 coun-

tries worldwide, and packaging traceability and return solutions.

Use and end-of-life of products: use of furniture products in

households and the public sector, product recyclability and end-

of-life waste management on the consumer side (currently not

quantified systematically; planned to be further developed by

2027, applying ESRS transitional provisions).

Sustainability-related objectives are linked to the Company’s core

product group- children’s furniture and lightweight case furniture

manufactured for the key customer -and to the markets in which

these products are sold. Key objectives by value chain segment

are:

Products and services: lower CO

footprint per unit; a higher

share of certified and recycled raw materials; increased durabil-

ity and repairability;

Customer categories: contribution to the key customer’s net-ze-

ro and circular design objectives; ensuring compliance with

IWAY, EUDR and other sustainability requirements;

Geographical markets: ensuring compliance with EU climate

and environmental requirements; adapting logistics solutions to

reduce emissions;

Stakeholder relationships: engaging suppliers in sustainability

programmes, maintaining dialogue with the community, and

strengthening employee safety and well-being.

For materiality assessment purposes, the value chain is defined

as the full set of the Company’s activities, resources and relation-

ships associated with its business model and the external envi-

ronment in which it operates. The value chain includes all pro-

cesses, resources and relationships on which the Company relies

to create its products - from concept development to delivery

to the key customer. The Group’s key customer is IKEA, which

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

acts as an integrated supply chain partner from product design

through to distribution to end-users. The principal served mar-

kets are the European Union and the United States, where the

key customer’s assortment is distributed.

At present, value chain data are disclosed only where they are

available or can be supported by validated assumptions. Indica-

tors not covering the value chain are identified in the respective

thematic sections.

Supplier

staff

Water

Wood

Serving

services

Fuel and

enegy

Office

supplies

Packaging

Logistics

Quality

assurance

Technical

supervision

Supplier

management

Product

development

Renewable energy

production

Water

barchole

Burning

sawdust

Water and

wastewater

treatment

Vilniaus baldai

factory

Logistics

Waste

management

End

consumers

Packaging

recycling

Sales

Customers

Communities Staff Internal career

Corporate

culture

Own operationsUpstream Downstream

Notification

channels

Public

Institutions and

organisations

Chemical

materials

Raw

materials

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

3.1.2 ANALYSIS OF IMPACTS, RISKS AND

OPPORTUNITIES IN THE VALUE CHAIN

Value chain impacts, risks and opportunities were assessed in ac-

cordance with ESRS 2 IRO-1 criteria (scale, scope, remediability,

likelihood and financial effects) in order to determine where the

most significant environmental, social and governance matters

are concentrated across the value chain. For the value chain as-

sessment, data were collected and analysed from publicly avail-

able sources (e.g., sector sustainability reports and statistical da-

tabases). Additionally, internal sources were used: incident and

non-conpliance registers (occupational health and safety, environ-

mental, quality, ethics), supplier qualification and audit results, le-

gal compliance reviews, KPI information, and management review

information. Based on the information gathered, potentially mate-

rial impacts, risks and opportunities were identified.

Responsible consumption and production. In its operations, the

Group contributes to the development of the circular economy

and applies environmentally preferable technologies in produc-

tion and other operating cycles, including waste segregation,

reuse and responsible material use. The Group reduces ener-

gy and other resource consumption through the deployment of

modern, innovative technologies and by encouraging and edu-

cating employees regarding sustainable consumption. The main

environmental focus areas include: waste segregation, reuse and

recycling; energy and raw material efficiency through innovative

technologies; and responsible management of expansion through

environmental impact assessments and compliance with applica-

ble environmental standards. The Company invests in energy ef-

ficiency, process improvements and renewable energy sources. In

2025, a 1 MW ground-mounted solar power plant was installed.

In addition, by replacing four old compressors with two new units

and installing heat recovery equipment, the Company reduces

electricity consumption for compressed air production and uses

waste heat for building heating. Only green certified electricity is

used in production and office operations. In 2026, further expan-

sion of the solar power plant is planned to increase the share of

self-generated energy.

Social matters. In its social disclosures, the Company provides in-

formation on its employees, working conditions, health and safety,

diversity and gender equality, training and upskilling opportuni-

ties, and community relations. The report includes information on:

headcount, demographic structure and diversity; working condi-

tions and health and safety indicators (TRIR, FR, number of inci-

dents); the extent of employee training and professional develop-

ment; implementation of gender equality and inclusion policies;

community initiatives and partnerships; and labour practices in the

supply chain.

Key social risks include occupational health and safety, discrim-

ination, remuneration, and compliance of employment relations.

These areas are monitored through internal audits and KPIs.

The Company describes how management, governance bodies

and the organisational structure support the sustainability strate-

gy and ensure that ESG matters are integrated into business deci-

sions. The allocation of responsibilities is described, including: who

is responsible for sustainability policy within the organisation; how

governance bodies make decisions on sustainability; and which

procedures are applied for risk management and transparency.

Key dependencies supporting continuity and value creation.

The continuity of operations and value creation at AB “Vilniaus bal-

dai“ depend on a broad range of resources, infrastructure, tech-

nological and financial capabilities. Key dependencies have been

identified based on their impact on production processes, product

quality, and delivery of sustainability objectives.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

The principal dependencies are:

Types of raw materials: timber-based materials, veneers/coverings,

adhesives, finishing materials, fittings, packaging materials, com-

ponents;

Energy and water: supply of electricity, heat and water for manufac-

turing and office operations;

Fuel for transportation: for procurement, logistics and outbound

distribution processes;

Renewable energy infrastructure: operation of the solar power

plant, electric vehicle charging stations;

Buildings and maintenance: proper operation and maintenance of

production, warehousing, administrative and auxiliary premises;

Equipment and maintenance: efficient operation and regular ser-

vicing of manufacturing equipment, technological lines and control

systems;

Workforce: qualified employees and competencies supporting ef-

ficient production, administrative and governance processes;

Finance: equity financing (capital markets), bank loans;

Technological resources: information technologies, hardware and

software, including warehouse management systems, data protec-

tion systems, and business process management systems.

When assessing impacts, risks and opportunities, each value chain

stage (raw material sourcing, manufacturing, logistics and distribu-

tion, use and end-of-life) was assigned separate impact materiality

(scale, scope, remediability and likelihood) and financial material-

ity scores, in line with ESRS 2 IRO-1. The results of these assess-

ments were integrated into the overall double materiality assess-

ment process described in section 3.3.

Key sustainability impacts and risks associated with the Company’s

business model include:

Supply risks: EUDR requirements, risk of losing FSC certification,

supplier raw material price volatility;

Climate risks: rising energy prices, impacts of heatwaves on pro-

duction processes, drought impacts on raw materials (forestry

sector), extreme weather;

Process risks: VOC restrictions, downtime of technological

equipment, disruption of compressed air and heat supply;

Financial risks: increases in emissions-related costs, need for

investments in efficiency projects, additional supplier audit re-

quirements;

Reputational risks: non-compliance regarding origin of raw ma-

terials, human rights violations in the supply chain, insufficient

data management.

The value chain analysis is an integral part of the double material-

ity assessment: identified dependencies and impacts are used to

assess topic materiality from both the impact perspective and the

financial risk and opportunity perspective.

3.1.3 SUSTAINABILITY DUE DILIGENCE PROCESS IN THE

VALUE CHAIN (2 ETAS GOV-4)

The Group conducts sustainability due diligence as an integrated

process, closely linked to the double materiality assessment herein-

after - (DMA). The DMA is the main mechanism used to identify and

prioritise material impacts, risks and opportunities in the Group’s

operations and value chain, while the due diligence process en-

sures that the identified IROs are managed consistently, monitored

and periodically reviewed.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

The DMA covers the value chain (upstream and downstream) and

enables the Group to determine where the most significant actual

or potential adverse impacts and risks may occur. Based on the val-

ue chain analysis, priorities for due diligence actions are set—first

focusing on areas where the scale/likelihood of impacts or finan-

cial materiality is highest, and where the Group can exert influence

through business relationships or management measures. Priori-

ties are set by documenting assessment scores in line with ESRS 2

IRO-1 criteria and reviewing them during periodic reviews.

Value chain scope

Coordination of sustainability data collection and consolidation is

carried out by Finance and IT employees, involving the responsible

functions by topic (e.g., procurement/supply chain, production,

environmental management, occupational health and safety spe-

cialists, and People & Culture employees). This helps ensure that

material IROs identified through the DMA are data-driven, and that

due diligence measures are implemented and monitored consist-

ently.

Responsibilities and data governance

SOURCES OF INFORMATION

DMA results (material IRO) value chain analysis, incident and non-

compliance registres (OHS, enviroment, quility, ethics), supplier

qualification and audits, leagal/regulatory and compliance reviews,

staholder feedback, and grievance channels.

IDENTIFICATION AND ASSESSMENT

IROs are identified during the DMA, using internal data and

procedures (e.g., incident and non-compliance registers in

occupational health and safety, environmental, quality and ethics

areas), compliance reviews, supplier assessments/audits, and

stakeholder feedback.

PRIOTISATION AND INTEGRATION INTO GOVERNANCE

Priorities are appoved, responsibles persons/functions are assigned

(risk powners), and the outcomes are integrated into policies,

procedures, targets and control measures.

PREVENTION AND MITIGATION

Preventive and risk-mitigating measures are applied to identified

material topics and embedded in policies, procedures, contractual

requirements and control mechanisms (including supply chain

management measures).

REMEDIATION AND CESSATION

Where non-compliances are identified, corrective actions are

implemented; in cases of material or repeated breaches, actions

are taken to remedy the impact (e.g., requiring corrective measures,

restricting or terminating contractual relationships).

MONITORING AND ACCOUNTABILITY

Implementation and outcomes are monitored through KPIs and

periodic reviews, as well as internal audits and management reviews;

DMA results and priorities are reviewed regularly, taking into account

achieved results and new data.

IMPROVEMENT

Data collection methodologies and processes are improved in phases

to increase traceability, consistency and automation.

Key stages of the process

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Key Elements of Comprehensive Due Diligence Sustainability Report Sections People Environment Governance

Integration of due diligence into governance, strategy, and business model

ESRS GOV-2 ESRS GOV-3

ESRS SBM-3

• • •

Integration of due diligence into key stages (identification – assessment –

decisions – disclosure)

ESRS GOV-2 ESRS SBM-2

ESRS IRO-1 ESRS MDR-P

• • •

Double materiality assessment (impact and financial) ESRS SBM-3 ESRS IRO-1

• • •

Identification of significant impacts, risks, and opportunities ESRS SBM-3 (E1–E5, S1–S4, G1)

• • •

Determination of financial impact (risks and opportunities)

ESRS SBM-3 ESRS IRO-1

E2, E3, E4, E5, S1–S4

• • •

Link between strategy and business model with impacts, risks, and

opportunities

ESRS SBM-1 ESRS SBM-3

• • •

Role of governance structures in sustainability oversight

ESRS GOV-1 ESRS GOV-2

ESRS GOV-3

• • •

Climate change (E1) impacts, risks, and opportunities ESRS E1

•

Pollution (E2) impacts, risks, and opportunities ESRS E2

•

Water and marine resources (E3) impacts, risks, and opportunities ESRS E3

•

Biodiversity and ecosystems (E4) impacts, risks, and opportunities ESRS E4

•

Resources and circular economy (E5) impacts, risks, and opportunities ESRS E5

•

Social impacts on employees (S1) ESRS S1

•

Impacts and risks for value chain workers (S2) ESRS S2

•

Community impacts and risks (S3) ESRS S3

•

Consumer impacts and risks (S4) ESRS S4

•

Governance and ethics systems (G1) – impacts and risks ESRS G1

• • •

Data boundaries, methodologies, quality assurance ESRS MDR-A ESRS MDR-P

• • •

Inclusion of value chain in due diligence ESRS SBM-3 ESRS IRO-1

• • •

Transitional applications (when information is not yet collected) E2-6, E3-5, E4-4, E5-6

• • •

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

3.1.4 SUPPLIER MANAGEMENT POLICY AND CONTROL

MECHANISMS

The management of suppliers and other value chain partners is

integrated into the Group’s sustainability and business ethics sys-

tems. All key suppliers are required to comply with the IWAY stand-

ard, the Code of Business Ethics, FSC® requirements, human rights

principles, the prohibition of child labour, occupational health and

safety provisions, and anti-corruption requirements.

Prior to selecting new suppliers, the Company performs prelimi-

nary due diligence, assessing social, environmental and govern-

ance aspects. Periodic audits are carried out for higher-risk groups,

covering working conditions (including remuneration, working

time and occupational safety), document compliance and certifi-

cations. Where non-compliances are identified, corrective actions

are required; repeated breaches may result in termination of the

contractual relationship. The frequency and scope of audits are de-

termined based on the score of risk (e.g., more frequent audits for

high-risk suppliers), and the results are documented and used to

monitor corrective actions (CAPA).

More detailed information on the supplier management policy,

control mechanisms and audits is provided in the thematic sec-

tions G1 – Business conduct and S2 – Workers in the value chain.

3.1.5 PROGRESS MONITORING SYSTEM (KPIS,

RESPONSIBILITIES)

Management of value chain impacts and risks is monitored using

quantitative and qualitative indicators and clearly defined respon-

sibilities. The following key indicators are currently monitored and

disclosed in the report:

the share of FSC®-certified timber raw materials in total timber

consumption;

the share of supplier audits performed within the key supplier

portfolio;

the number of critical non-compliances identified in the supply

chain;

energy and raw material consumption in direct production pro-

cesses;

waste volumes and recycling rates;

occupational health and safety indicators in production (TRIR,

FR, number of accidents).

From financial year 2026, value chain KPI monitoring will be further

digitalised and integrated into the Monitor ERP system, including

the planned calculation of the CO

footprint and other ESRS-re-

quired indicators across the value chain. By 2027, the Group plans

to fully implement the ESRS-defined set of value chain indicators,

in line with the transitional provisions.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

3.1.6 COMPLIANCE WITH ESRS 2 APPENDIX B

(ADDITIONAL DATAPOINTS)

In accordance with ESRS 2 Appendix B, AB “Vilniaus baldai“ in-

cludes in its sustainability report additional datapoints required by

European Union legislation. These datapoints cover topic groups

related to climate, resources, water, biodiversity, workers, the sup-

ply chain, consumers, and the governance system.

Some of these datapoints are already disclosed in the thematic

sections of this report (E1–E5, S1–S4, G1) in line with the relevant

ESRS requirements. Topics for which sufficiently mature data are

not yet available (e.g., certain value chain indicators, financial effect

assessment data, and selected workforce- and supply chain-relat-

ed indicators) will be collected on a phased basis up to 2027, using

the ESRS transitional provisions.

The Company has developed a preliminary data collection plan

under which all additional datapoints required by ESRS 2 Appen-

dix B will be collected and implemented by 2027, including:

more detailed GHG (Scope 3) and energy consumption indica-

tors;

a complete dataset on water, biodiversity and circular economy;

indicators for workers in the value chain (S2), including supplier

audits and statistics on social risk incidents;

consumer safety, data protection and complaints handling indi-

cators;

KPIs for governance and control systems.

By 2027, the sustainability report will present the full set of required

datapoints, ensuring compliance with all ESRS appendices.

In this report, compliance with ESRS 2 Appendix B is demonstrated

through a table titled “List of datapoints from ESRS cross-cutting

and topical standards required by other EU legislation”, presented

in Appendix 1. The table specifies: the disclosure requirement and

related datapoint, a reference to TFIAR, a reference to Pillar 3, a

reference to the Benchmarks Regulation, and a reference to the EU

Climate Law.

To ensure audit traceability, Appendix 1 additionally provides, for

each datapoint listed in the table, a reference to the relevant sec-

tion and page of this report.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

3.2. STAKEHOLDER ENGAGEMENT AND

DOUBLE MATERIALITY ASSESSMENT

CONTEXT (2 ESRS SBM-2 AR 16)

Implementation of AB “Vilniaus baldai“’s sustainability strategy is

based on responsible and consistent engagement with stakehold-

ers. Stakeholders are individuals, groups or organisations whose

actions affect the Company, or who are affected by the Company’s

activities. The Company operates within a broad network of inter-

nal and external stakeholders, including: (1) affected stakeholders-

natural and legal persons, organisations or groups whose interests

are, or could be, positively or negatively affected by the Group’s

activities or its direct business relationships in the value chain; and

(2) primary users of the sustainability report - existing and potential

investors and creditors.

In assessing stakeholder engagement in the context of double ma-

teriality, the Company emphasises its commitment to take stake-

holders’ views into account and to actively involve them. Effective

stakeholder engagement is an essential prerequisite for long-term

value creation, operational transparency and sustainable growth.

Through continuous dialogue, the Company seeks to understand

stakeholders’ perspectives, concerns and expectations. This ongo-

ing dialogue informs the implementation of sustainability objec-

tives, projects and processes that reflect stakeholder interests and

expressed views.

To ensure accountability and to support decision-making that ap-

propriately reflects social, economic and environmental impacts,

the Company maintains regular engagement with employees, the

key customer, suppliers, shareholders, local communities, pub-

lic authorities and other partners. The table below presents the

Group’s key stakeholder groups, stakeholder engagement meth-

ods and their organisation, as well as the objectives and imple-

mentation of such engagement.

Stakeholder insights were systematically integrated into the dou-

ble materiality assessment. Information received on stakeholder

expectations and matters of concern was used to identify poten-

tial impacts, risks and opportunities and to assess topic materiality

from both an impact materiality and a financial materiality perspec-

tive.

Stakeholder views were collected through employee engagement

surveys, targeted meetings, ongoing consultations with the key

customer, and dialogue with the trade union and the local com-

munity.

In accordance with the European Sustainability Reporting Stand-

ards, in 2024 the Company performed a baseline analysis aimed at

assessing readiness to implement sustainability reporting require-

ments. During that period, a double materiality assessment was

not conducted.

In 2025, the Company carried out its first double materiality as-

sessment from the Company perspective. The assessment sought

to determine which impacts, risks and opportunities are most rele-

vant and material to AB “Vilniaus baldai“’s activities, taking into ac-

count its strategic direction, the nature of its operations and value

chain characteristics.

As certain impacts, risks and opportunities may be more signifi-

cant for the Company than for other stakeholders, the assessment

process aimed to balance and consolidate these perspectives by

determining materiality both in terms of impacts on environmental,

social and governance matters and in terms of financial risk.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Stakeholder Stakeholder Sustainability Goals Company Goals Communication Channels

Main Client

Reduce GHG emissions

Achieve net-zero result

Use only renewable or recycled energy

throughout the value chain

All raw materials – responsibly sourced, certified,

or recycled

All products must be 100% circular design

(durable, repairable, recyclable, upgradable)

Contribute to biodiversity conservation and

ecosystem restoration both in the supply chain

and communities

Reduce GHG emissions

Implement energy-saving projects

Use only certified renewable energy

Increase the amount of self-generated energy

All raw materials responsibly sourced, certified

(FSC), or recycled

Wood scraps and sawdust transferred to biofuel

sector or used for particleboard production

Contribute to biodiversity conservation

Ensure compliance with EUDR (EU Deforestation

Regulation) and related specifications

Long-term partnership

principle. The Group

maintains structured

dialogue through weekly

and monthly meetings,

audits, reviews of

qualitative, quantitative, and

sustainability indicators,

and joint projects on

operational and energy

efficiency and circular

economy solutions

Ensure human rights, fair wages, and workplace

safety in all supply chain countries

Implement IWAY code for all suppliers (social,

environmental, labour responsibility)

Increase gender equality and inclusion – both in

management and workforce

Promote local communities and social enterprises

– partnerships with local manufacturers, support

projects

Reduce inequality: ensure sustainable solutions

are accessible to low-income customers

Compliance with Ethics Code and IWAY

requirements

Ensure human rights throughout the supply chain

Implement Gender Equality Policy

Career mentoring programs

Leadership development programs for managers

Transparent career and recruitment system

Career planning and reintegration after

maternity/paternity leave

Create educational and inspiring initiatives for

sustainable living – through IKEA centers, online

resources, partnerships with municipalities and

NGOs

Encourage consumers to choose sustainable

products – at lower, not higher prices

Contribute to local community projects, crisis

assistance, humanitarian programs

Community partnerships – periodic meetings

Tree planting campaigns

Volunteering – community assistance

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Stakeholder Stakeholder Sustainability Goals Company Goals Communication Channels

Main Client

Ensure business growth is decoupled from

emissions and resource consumption

Invest in innovations that increase circular

economy value: recycling, reuse, refurbishment,

rental models

Make sustainable products accessible to the

general public, not only high-price segments

Digitize the supply chain to ensure transparency

and accountability for raw material origin

Organize annual anti-corruption training

Implement cybersecurity standards

Deploy multi-layer IT protection

Conduct regular penetration tests

Regular cybersecurity training

Employees

Ensure safe, decent, and inclusive working

conditions

Fair pay and motivation

Career and professional growth opportunities

Participation in decision-making

Work-life balance

Implement S1 objectives: safety, well-being,

training, inclusion

Career and competency development programs

Transparent recruitment system, reintegration

after parental leave

Employee representation and participation

Regular employee engage-

ment is the key factor un-

derpinning all workforce-re-

lated sustainability actions.

Considering employee di-

versity, the Company uses

various channels: electronic

(intranet, email, social net-

works), regular meetings,

internal surveys, training,

health and safety pro-

grams, ensures employee

representation and partici-

pation in decision-making,

encourages involvement

and aims for employees to

feel empowered to create

change in HR and sustaina-

bility decisions

Shareholders

and Investors

Transparent financial and operational results

Long-term and stable growth

Risk management

Clear climate risk strategy

Responsible supply chain management

Reliable risk management and sustainable

growth

Transparent reporting of results

Implementation of climate strategies (E1) and

GHG reduction

Circular economy and energy efficiency projects

The Group provides regular

financial and weekly opera-

tional reports, including sus-

tainability results, organizes

meetings with board mem-

bers, provides necessary

information, and ensures

transparent information dis-

semination

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Stakeholder Stakeholder Sustainability Goals Company Goals Communication Channels

Suppliers

Transparent procurement criteria

Social responsibility and environmental

standards

FSC®, IWAY, workplace safety

Stable, long-term relationships

Clearly defined supplier evaluation

criteria

Application of IWAY and FSC® standards

Regular audits and involvement in

efficiency projects

Circular packaging solutions

The Company seeks to ensure

transparency and objectivity in cooperation

with suppliers. It engages suppliers

through audits, evaluations, joint efficiency

projects, best practice exchanges, and

supplier education initiatives. During

negotiations, requirements and evaluation

criteria are openly presented to potential

partners, and cooperation conditions are

defined in contracts

Local Com-

munity

Expectation that the Group will contribute

to regional economic, social, and

environmental well-being, promote job

creation, and social responsibility

Community partnerships – periodic

meetings

Tree planting campaigns

Encouraging employee volunteering

The Group maintains dialogue with local

authorities, supports cultural and social in-

itiatives, promotes employee volunteering

and community engagement

Competitors –

Partners

Cooperation in innovation and best

practices

Fair and ethical competition

Compliance with laws and regulations

Adherence to principles of fair

competition

Knowledge sharing in product

development

Participation in industry educational

platforms

Cooperation is encouraged by the main

client working with both the Company and

other Lithuanian and foreign furniture man-

ufacturers, who are both competitors and

partners to AB “Vilniaus Baldai.” Regular

communication with competitors-partners

is very important for shaping product de-

velopment strategy. Cooperation is based

on fair and ethical competition, compliance

with laws and regulations, sharing best

practices in seminars, and conducting visits

Natural

Environment

Expectations include reducing negative

environmental impact, improving

energy efficiency, using sustainable raw

materials, and preserving biodiversity

Contribute to biodiversity conservation

and ecosystem restoration both in the

supply chain and communities

The Group implements an environmen-

tal management system according to ISO

14001, applies circular economy principles,

uses FSC-certified wood, monitors environ-

mental impact, and introduces innovative

solutions

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

3.3. DOUBLE MATERIALITY ASSESSMENT

(IMPACT, RISKS AND OPPORTUNITIES)

(2 ESRS SBM-3 AR17-18) (2 ESRS IRO-1, IRO-2)

(2 ESRS SBM)

The double materiality assessment constitutes the reference point

for sustainability reporting under ESRS and is used to assess ma-

terial impacts, risks and opportunities. A key distinction from the

earlier concept of materiality is that the assessment considers not

only impact materiality, but also financial materiality. A sustainabili-

ty matter is deemed material if it meets the criteria for one or both

types of materiality.

The double materiality assessment was performed in accordance

with ESRS 2 IRO-1 and IRO-2 requirements, applying two equiva-

lent assessment lenses:

impact materiality;

financial materiality.

A sustainability matter is considered material if it meets at least one

of these criteria, or both.

The double materiality assessment process was coordinated by

the Finance and IT department together with the Management

Team, involving the environmental specialist, occupational health

and safety specialists, and the People and Culture and Technical

functions. The results were discussed within the management team

and approved by the Group’s Board.

3.3.1 MATERIALITY ASSESSMENT PROCESS (SBM-3 TR17)

Business context analysis. The business context analysis included

an assessment of: the Company’s business model, strategy and ge-

ographical footprint of operations; the competitive environment

and internal processes; the partner ecosystem and stakeholder

expectations; the value chain (suppliers, partners, customers, em-

ployees and the natural environment); and an evaluation of soci-

etal and sector trends and regulatory developments.

Identification of topics. In line with ESRS requirements, an initial

list of sustainability topics and sub-topics was prepared, identifying

potential negative and/or positive impacts on the environment and

people, as well as risks and/or opportunities that could materially

affect the Company’s financial position. This list formed the basis

for the initial screening stage, after which impact materiality and fi-

nancial materiality were assessed in accordance with ESRS 2 IRO-1.

Identification and engagement of stakeholders. Stakeholder en-

gagement was conducted in accordance with ESRS 2 SBM-2 re-

quirements, using employee surveys, individual meetings, con-

sultations with the key customer, and dialogue with suppliers.

Stakeholder insights were used to support the identification of IRO,

assessing their relevance and significance.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Identification of IRO (impacts, risks and opportunities). One of

the key steps was to identify the impacts, risks and opportunities

arising from each identified sustainability matter. The time horizon

over which the IRO could occur, or has occurred, was determined

as follows: S (short-term) - the reporting period up to one year;

M (medium-term)- from one to five years; and L (long-term)- more

than five years.

The status was determined as either actual (IROs, IROs already oc-

curring and observable) or potential (IROs expected to occur in the

future).

The nature of the impact was identified as positive or negative (for

impact materiality assessment only).

Assessment of impact materiality. In the impact assessment, quan-

titative and qualitative criteria were applied, including thresholds

used to determine the impact materiality scale.

Fully

remediable

Almost

remediable

Partially

remediable

Largely

irreversible

Irreversible

impact

1 2 3 4 5

Low Moderate Significant Material Critical

1 2 3 4 5

Scale of impact: rated on a scale from 1 (immaterial or non-existent

impact) to 5 (negative impact on the environment or people be-

yond the Company’s operations, with a long-term effect).

Remediability: scale from 1 (fully remediable impact) to 5 (irrevers-

ible impact).

Likely within

next 6 months

Likely in

6–12 months

Likely in 1-3

years

Likely in 3-5

years

Likely in

more than 5

years

1 2 3 4 5

Impact time horizon (period of occurrence): assessed based on

likelihood and timeframe of occurrence: scale from 1 (likely within

the next 6 months) to 5 score (likely after more than 5 years). Based

on these criteria, sustainability topics considered material for re-

porting purposes were identified.

Low

(Company

only)

Moderate

(Localized)

Significant

(Regional)

Material

(Country)

Critical

(Global)

1 2 3 4 5

Scope: scale from 1 (impact limited to the Company’s operations)

to 5 (impact at global scope).

Low

up to 0.1%

Up to 123

Moderate

0.1–0.5%

From 124 -

to 615

Significant

0.5–1%

From 616 -

to 1 230

Material

1–1.5%

From 1 231-

to 1 847

Critical

>1.5%

over 1,847

1 2 3 4 5

Based on these criteria, sustainability topics considered material

for reporting purposes were identified.

Financial materiality assessment. Both quantitative and qualitative

criteria were applied. Impact magnitude and significance were de-

termined according to the following principles:

Financial impact size: scale from 1 (impact up to 0.1% of annual

revenue, i.e., up to EUR 123,000) to 5 (impact over EUR 1,847,000)*

* thou EUR

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Very unlikely

(near 0%)

Could

happen

(up to 25%)

Likely

(25–50%)

Very likely

(51–75%)

Certain

(>75%)

1 2 3 4 5

Based on these criteria, the sustainability topics deemed material

for reporting purposes were identified.

Likelihood of occurrence:

Qualitative assessment is applied in cases where the effects cannot

be quantified reliably and is used to capture additional non-finan-

cial context (e.g., regulatory developments, reputational consider-

ations, and market pressure).

Identification of material matters (ESRS 2 IRO-2; TR 19). An in-

tegrated assessment of impact materiality and financial materiali-

ty is performed to determine the matters that are material for the

Group. Matters may be material from an impact perspective, from

a financial perspective, or from both. Where a sustainability matter

is assessed as falling within the “Material” category, it is classified

among the Group’s priority matters and is subject to targets and

objectives and the highest level of management attention.

Matters whose integrated impact and/or financial materiality as-

sessment falls within the “Material” or “Critical” categories are con-

sidered material for ESRS disclosure purposes and are included

in the thematic sections of this report. Matters with lower assess-

ments are monitored, but are not currently considered material for

reporting purposes.

The double materiality assessment will be reviewed and, where

necessary, updated at least once every three years, or more fre-

quently in the event of material changes in the business model,

scale of operations, legal and regulatory requirements, or stake-

holder expectations.

3.4. MATERIALITY MATRIX

Double materiality assessment matrix

Impact on the environment and people

543210

Finansinis poveikis

543210

1 Waste

2 Employee remuneration

3 Occupation health and safety

4 Soil pollution

5 Energy

6 Ethical principles

7 Recource outputs

8 Recource inputs

9 IT systems

10 Anti-corruption (prevention)

11 Training and inovation

12 Wastewater

13 Air pollution

14 Impacts on communities

15 Product safety

16 GHG emmissions

17 Water pollution

18 Water consumption

19 Raw material sourcing

20 Human rights

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

ESRS

topical

standard

Topic Sub-topic Sub-sub-topic Impact risk level Financial risk impact Topic materiality

E1 Climate change

Energy

Energy consumption

efficiency

Critical Critical Material

GHG emissions

emissions from

energy consumption

Critical Critical Material

E2 Pollution

Soil pollution Storage of chemicals Significant Moderate Not material

Air pollution

Volatile organic

compounds (VOC)

emissions

Material Significant Material

Air pollution Wood dust Material Moderate Material

Water pollution

Wastewater

discharge

Significant Moderate Not material

Water and marine

resources

Wastewater

Water discharge to

the environment

Moderate Moderate Not material

Water consumption Process water use Moderate Moderate Not material

Biodiversity and

ecosystems

Raw material

sourcing

Deforestation /

forest harvesting

Significant Significant Not material

Resource use and

circular economy

Resource use and

circular economy

Waste

Packaging

(cardboard, plastic)

Material Moderate Material

Waste

Wood residues;

sawdust

Moderate Material Material

Resource inputs

Resource

consumption

Significant Material Material

Resource outputs

Recyclability of

manufactured (sold)

products

Significant Moderate Not material

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

ESRS

topical

standard

Topic Sub-topic Sub-sub-topic Impact risk level Financial risk impact Topic materiality

Resource use and

circular economy

Resource outputs

Recyclability of

manufactured (sold)

products

Significant Moderate Not material

S1 Own workforce

Remuneration Lack of transparency Material Material Material

Occupational health

and safety

Accidents Critical Material Material

Training and

innovation

Skills gaps; labour

shortages

Critical Significant Material

Workers in the value

chain

Human rights Child labour Material Significant Material

Human rights

Breaches of working

conditions

Significant Significant Not material

Consumers and

end-users

Product safety Furniture stability Material Significant Material

Affected

communities

Impacts on

communities

Noise and transport Moderate Moderate Not material

Business conduct

Corporate culture /

ethical principles

Breaches of the

Code of Conduct

Significant Significant Not material

Business conduct Anti-corruption Dishonest suppliers Significant Moderate Not material

Data governance IT systems Data protection Material Significant Not material

ENVIRONMENT

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

4.1. ESRS E1 – CLIMATE CHANGE

4.1.1. ASSESSMENT OF CLIMATE CHANGE RISKS AND

OPPORTUNITIES (E1-2 ESRS SBM-3) (E1-2 ESRS) (2 ESRS

IRO-1)

In 2025, as part of the double materiality assessment, the Group

assessed climate-related risks and opportunities; however, a cli-

mate scenario resilience assessment has not yet been carried out.

Resilience assessment work has been initiated by integrating the

climate change topic into the double materiality assessment and

the Group’s risk management processes.

The assessment process used internal company information based

on the best data currently available, including the sustainability

reports and expectations of the Group’s main customer. This in-

formation will be reviewed annually or updated when significant

changes occur in the business context, legislation, or physical-en-

vironment forecasts.

Preliminary (qualitative) conclusions indicate that the business mo-

del’s greatest sensitivity to climate change relates to: energy de-

mand and exposure to energy price volatility; the stability of raw

material (wood) supply and tightening traceability requirements;

and production continuity in the event of extreme weather events.

The Group plans to complete a comprehensive assessment of

climate change impacts on the organisation by 2027 in line with

TCFD recommendations, including scenario analysis, sensitivity as-

sessment, and an adaptation action plan.

The resilience analysis will apply within the Group’s consolidation

boundary (AB “Vilniaus baldai” and UAB “Ari-Lux”) and will cover

key elements of the business model: energy and heat supply and

consumption in manufacturing; raw material supply (especially

wood and panels) and traceability; continuity of production pro-

cesses; logistics and product distribution; and the key interfaces

with the value chain where the Group has significant influence or

dependency (suppliers and the main customer).

The assessment will cover both physical risks (e.g., extreme we-

ather, heatwaves, risks to raw material availability) and transition

risks (e.g., regulatory changes, shifts in energy prices and techno-

logies).

The Group’s impact on climate change is primarily assessed thro-

ugh greenhouse gas (GHG) accounting and management. During

the double materiality assessment, it was determined that the main

climate-related transition and physical risks in the short term and

the long term fall into the high-probability category.

Furniture manufacturing is an energy-intensive sector; therefore,

the Group has identified critically significant areas where environ-

mental impacts are greatest and has set clear reduction targets.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Subtopic Sub-sub-topic Impact Description Risk Description Opportunity Description

GHG emissi-

ons

emissions from energy

consumption

emissions generated by

the Company’s operations that

are associated with energy

consumption have a material

impact on climate change,

environmental quality and,

indirectly, on people’s living

conditions. The intensity of

energy consumption determines

the volume of greenhouse gas

emissions, thereby contributing

to global temperature change

and deterioration of air quality.

The increasing frequency

of extreme weather events

(heatwaves, heavy rainfall and

storms) may affect the reliability

of supply chains, the availability

of raw materials, the security

of energy supply and the

continuity of production.

The impact is assessed as

material because energy

consumption directly drives CO

emissions, which represent a

key source of greenhouse gas

emissions. This risk is global

in nature and directly linked

to climate change mitigation

objectives; therefore, its

management is a strategic

priority.

Investments in a solar power

plant, the use of biofuel, and

the transition to refrigerants

with a low global warming

potential (low-GWP) reduce

both costs and the CO

footprint. Such initiatives

also support reputation

and competitiveness in the

market.

Energy Energy efficiency

The impact is assessed as

material because energy

efficiency influences the

Company’s greenhouse

gas emissions and overall

environmental footprint.

The composition of energy

sources (e.g., fossil fuels

versus renewable sources)

directly affects the Company’s

contribution to climate change.

Key measures include the

deployment of modern

technologies, regular

energy audits, reductions in

energy consumption, and

improvements in the energy

efficiency of production lines,

including by optimising the

operation of dust extraction

systems, compressed air

supply and switching off

equipment when production

processes are not running.

Topical ESRS Topic Subtopic Sub-sub-topic

Impact

Materiality

Impact Effect Status Impact Period

E1 Climate Change GHG emissions

emissions

from energy

consumption

Material Negative Actual SML

E1 Climate Change Energy Energy efficiency Material Negative Actual SML

See Appendix 2 “Double Materiality Assessment” for more detail. Impact assessment.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

4.1.2. GREENHOUSE GAS (CO₂E) EMISSIONS (E1-6 ESRS)

The European Union has set an ambitious goal – to become a cli-

mate-neutral continent by Y2050. AB “Vilniaus Baldai” aims to man-

age and systematically reduce greenhouse gas emissions, thereby

contributing to the creation of a climate-neutral economy.

GHG emissions inventory was conducted at the Group level using

the operational control method, applying the same consolidation

boundary as in the financial statements.

In disclosing this information, the emission sources and the calcu-

lation methodologies are presented, indicating the relevant Scope

to which each emission source is attributed. The calculation of GHG

emissions was performed in line with the Greenhouse Gas Protocol

and ESRS guidance.

e = Activity Data × Emission Factor.

The baseline year for GHG calculations is Y2024, as this was the

first year in which operational emissions were assessed.

The data used for the inventory is accurate, and the calculations

are reliable. They are based on purchase invoices, meter readings,

and energy origin guarantee documents provided by suppliers.

To ensure data quality, a three-level data verification procedure is

applied: initial verification at functional unit level, internal method-

ological review, and final review by the employees of Finance De-

partment.

Sources of emission factors used:

European Environment Agency air pollution inventory guide-

lines;

Association of Issuing Bodies (AIB, Residual mix and Production

mix) for electricity;

National GHG Inventory Report (LT NIR 2024);

IPCC.

In 2025, Scope 1 and Scope 2 GHG emissions were assessed.

Include energy generation in stationary combustion sources, mo-

bile sources related to the manufacturing process, and Compa-

ny-operated vehicles.

Stationary sources. In both 2025 and 2024, AB “Vilniaus baldai“ did

not use fuel for generating energy in its own equipment. Backup

electricity generators using diesel are installed in the production

premises. During 2024, 500 litres of diesel were refuelled, and the

calculated stationary source emissions amounted to 1,31 tCO

e. In

2025, no additional refuelling occurred.

Transport emissions. Transport emissions were calculated by inven-

torying the controlled vehicle fleet and analysing the volume of

fuel purchased. In the middle of financial year 2024, AB „Vilniaus

Baldai“ renewed its vehicle fleet. The total number of vehicles avail-

able to AB „Vilniaus Baldai“ is 8: five are petrol/electric hybrids, one

is fully electric, one is petrol, and one is diesel. The vehicles comply

with EU “Euro” standards aimed at minimising CO

emissions: two

vehicles meet EURO 5 and the remaining six meet EURO 6. One

diesel vehicle is not used in the Company’s operations; therefore,

fuel consumption for five vehicles was used in the calculations.

In accordance with GHG Protocol guidance, emissions from this

source amounted to 18,62 tCO

e in 2025 and 28,35 tCO

e in 2024.

Scope 1 emissions

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

The Company has entered into loan-for-use and lease agreements

with employees. Under these agreements, fuel compensated to

employees is treated as fuel consumption controlled by the Com-

pany, as the Company determines the scope and conditions of the

compensation and the expenses are recorded in the Company’s

accounts. Therefore, emissions from this source are classified as

Scope 1 GHG emissions and are calculated in accordance with the

GHG Protocol, using fuel consumption data and the relevant emis-

sion factors.

Emissions from this source amounted to 288,49 tCO

e in 2025 and

254,47 tCO

e in 2024. The higher CO

e in 2025 is attributed to a

greater number of loan-for-use and lease agreements signed, re-

sulting in higher total fuel-related CO

e (in Y2025: 2,11 tCO

e per

agreement; in Y2024- 2,20 tCO

e per agreement).

Refrigerant (freon) emissions. Refrigerants are substances with low

boiling points used for heat transfer. The Company uses them in

ventilation and air-conditioning systems in administrative and pro-

duction premises. The Company operates three chillers in produc-

tion, and 15 air-conditioning units are installed in employee rest

areas, the server room and the switchgear room. The refrigerant

circuits of both chillers and air-conditioning units are closed sys-

tems and therefore do not require regular refilling. No refrigerant

refills occurred in 2024–2025. In accordance with GHG Protocol

guidance, emissions from this source are assessed as 0 tCO

Heat generation. AB “Vilniaus baldai“ heats both production and

administrative premises using sawdust generated in the produc-

tion process. The volume of sawdust used is estimated based on

heat meter readings installed in the boiler house and the calorific

value relationship of sawdust (based on studies indicating a cal-

orific value of approximately 4.7 MWh/t). In 2025, approximately

957,95 t of sawdust were used, corresponding to 18,26 tCO

e; in

2024, approximately 1.178,62 t were used, corresponding to 22,47

tCO

Emissions (tCO2e) Y2025 Y2024 Deviation, %

Fuel for energy 18,26 23,78 -23,21

Transport 307,11 282,82 8,59

Gas leaks / refrigerants

(freons)

0,0 0,0 0

Scope 1 325,37 306,60 6,12

Purchased energy from the grid or other companies – purchased

electricity. Emissions were calculated based on operational data by

multiplying purchased energy quantities by relevant emission fac-

tors specified in national or international sources. Location-based

method emissions were calculated using the average national

emission factor. Market-based method emissions considered the

purchase of green electricity. Electricity purchases are supported

by contractual instruments and original guarantees that confirm

the acquisition of certified green electricity from renewable sourc-

es. Data sources for emission calculations included the Company ‘s

financial accounting documents (invoices, meter readings, internal

accounting systems).

Electricity emissions. Reducing emissions and improving energy

efficiency is a significant part of the Company’s strategy – aimed at

reducing its climate impact. During the reporting period, a total of

14.194 MWh of electricity was consumed. We are proud that 100%

of electricity used in AB “Vilniaus Baldai” production is from certi-

fied renewable sources (mainly wind) and is supported by green

energy certificates. According to GHG Protocol recommendations,

emissions from this source amounted to 0 tCO

Scope 2 GHG emissions include

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

2024 Y2025

Variance 2025

vs 2024

Scope 1 GHG

Total Scope 1 GHG emissions

(tCO

306,60 325,37 6,12%

Scope 1 GHG emissions

subject to regulated ETS,

percentage (%)

0,0 0,0 -

Scope 2 GHG

Total Scope 2 GHG emissions

(market-based) (tCO

0,0 0,0 -

Total Scope 2 GHG emissions

(location-based) (tCO

1.404,26 1.685,69 20,04%

GHG Intensity per Net Revenue

Total GHG emissions

(market-based), divided by

net revenue (tCO

e / mio

EUR)

3,15 3,12 -0,95%

Total GHG emissions

(location-based), divided by

net revenue (tCO

e / mio

EUR)

17,59 19,30 9,71%

2024 m. 2025 m.

Variance 2025

vs 2024

t CO2e / mio Eur 3,15 3,12 -0,95%

t CO2e / employee 0,68 0,69 2,06%

t CO2e / 1000 units 0,10 0,06 -36.37%

2024 m. 2025 m.

Variance 2025

vs 2024

t CO2e / mio Eur 17,59 19,30 9,71%

t CO2e / employee 3,79 4,28 13,04%

t CO2e / 1000 units 0,56 0,40 -29,52%

Scope 1 and Scope 2 GHG emissions (market-based method)

Scope 1 and Scope 2 GHG emissions (Local method)

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

The increase in Scope 2 emissions under the location-based meth-

od (from 1.404,3 tCO

e in 2024 to 1.685,7 tCO

e in 2025, i.e.

+20.0%) was driven by higher electricity consumption in manufac-

turing. It should be noted that while revenue increased by 7.2%,

the number of components produced increased by 66,8%; as a re-

sult, electricity consumption rose and tCO

e per product increased

by the same proportion. In 2025, the Group’s electricity consump-

tion increased by approximately one fifth; consequently, Scope 2

emissions calculated using the location-based method increased

proportionally.

Nevertheless, Scope 2 emissions calculated using the market-based

method remained at 0 tCO

e, as 100% of electricity is purchased

from certified renewable energy sources. Accordingly, the Group’s

primary focus is on improving energy efficiency and the energy mix

(renewable versus fossil sources), rather than on changes in the ab-

solute volume of location-based emissions.

Intensity KPIs were calculated as total Scope 1 and Scope 2 GHG

emissions divided by net revenue. 2024 is treated as the base year,

and the KPI set will be expanded in future periods to include mate-

rial Scope 3 emissions.

Biogenic CO

emissions are not included in the aggregated Scope

1 GHG metrics and are disclosed separately, in line with E1-6 re-

quirements.

Heat production. Reducing air pollution is an important topic for

ensuring sustainability and business continuity. AB “Vilniaus bal-

dai,” which became an independent heat producer in 2018, gen-

erates thermal energy from a by-product (wood sawdust) and

supplies it to the Vilnius city centralized heating network. A new

UNICONFORT biofuel boiler with a capacity of 4,5 MW, equipped

with an economizer and an efficient flue gas cleaning system, has

been installed in the Company’s boiler house. The main fuel is a

by-product of production – sawdust. In total, AB “Vilniaus baldai”

invested more than EUR 1,5 million in this heat energy production

and supply project. The decrease in sales volumes over the past

two years was due to the commissioning of the Vilnius Combined

Heat and Power Plant.

Emissions not included in Scope 1 and 2

2025 2024 2023 2022

Sold, MWh 10.504 9.711 16.414 16.917

AB “Vilniaus baldai” has not yet calculated Scope 3 GHG emis-

sions, making use of the ESRS transitional provision regarding val-

ue chain data and emissions assessment. Currently, the main ob-

stacle is insufficient data availability from suppliers and customers.

The Group plans to assess the most significant Scope 3 emissions

sources and include them in GHG accounting by 2027.

Scope 3 GHG emissions

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

4.1.3. CLIMATE NEUTRALITY TARGETS AND ACTION PLAN (E1-3, E1-4 ESRS)

The Group systematically implements energy efficiency and CO

reduction measures.

The Group aims to align its long-term GHG reduction targets with the European Union’s goal of becoming a climate-neutral continent by

2050 and the objectives of the Paris Agreement. Therefore, the climate transition plan will be further developed and detailed, taking into

account new data and the results of clime scenario analysis.

All energy consumption and renewable energy targets are intensity- and structure-based, with the baseline year being the 2025 financial

year unless otherwise specified. The scope of the targets covers the entire Group (AB “Vilniaus baldai” and UAB “Ari-Lux”).

KPI Current Value Target 2030 Action Plan

Share of renewable energy 100% 100% Purchase only renewable energy.

Share of self-generated energy 1,35% 33%

- Install a 5.5 MW solar power plant on the existing

factory roof and car parking area.

- Use compressor heat for production needs.

- Reduce energy losses and increase energy

efficiency.

Electricity consumption per product (kWh/

product)

2,79 2,42

- Implement an Energy Management System

(EMS).

- Deliver energy efficiency projects.

- Integrate the Life-Cycle Costing (LCC) concept

into the investment decision-making process by

developing and implementing an LCC calculation

methodology and tool.

- Ensure regular leak detection and compressed

air system audits.

Electricity consumption per product (kWh/

product)

0,14 0,12

emissions reduction;

emissions reduction % per year

Specific target is not

set*

- Set objectives by 2027 after calculating CO

emissions, considering Scopes 1, 2, and 3.

- Define GHG reduction objectives and approve

the plan by 2027.

- Transition to refrigerants with low Global

Warming Potential (low GWP).

*The Group takes advantage of the ESRS E1 transitional provision and plans to set quantitative GHG emission reduction targets by 2027, including targets for Scope 1 and

Scope 2 emissions and, after assessment, targets for significant Scope 3 emissions.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

4.1.4. ENERGY CONSUMPTION (E1-5)

Y2025 Y2024 Y2023 Y2022

Electricity in Office,

MWh

42,81 36,26 25,72 49,08

Electricity in

Production, MWh

14.152,00 11.824,35 14.158,10 23.141,15

Energy for Heating,

MWh

2.260,00 2.755,00 n.d n.d

Energy from

Renewable Sources

100% 100% 100% 100%

Energy

Consumption

Intensity per Net

Revenue (MWh/

million EUR)

140,24 n.a. n.a. n.a.

The energy data presented reflect the final energy consumption

associated with the Group’s manufacturing and administrative ac-

tivities, applying the same consolidation boundary as in the finan-

cial statements. Data are collected by the Group’s energy special-

ists on the basis of purchase invoices and meter readings. Energy

sources include: indirect sources - electricity and heat received

from the grids; and renewable sources - electricity generated by

the Group’s own solar power plant.

AB “Vilniaus baldai“’s electricity use efficiency is 0,358 units/kWh,

and on average 2,79 kWh of electricity is consumed to manufac-

ture one product. The Company consumes, on average, 140,24

MWh of energy per EUR 1 million of net revenue generated.

In financial year 2025, an independent energy audit was carried out

across the Group, covering production and administrative premis-

es, the boiler house, and compressed air, dust extraction and ven-

tilation systems. The audit identified the main energy consumption

“hotspots” and confirmed priority energy efficiency measures. The

audit findings confirmed that, following the transition to 100%

green electricity, the primary pathway for reducing GHG emissions

is to reduce energy intensity and to increase the share of self-gen-

erated renewable energy.

GHG absorption and GHG reduction projects financed by carbon

credits (E1-7): The Group does not implement such projects.

Carbon pricing (E1-8): AB “Vilniaus baldai” is not subject to a car-

bon pricing system.

Expected financial impact of significant climate-related physical

and transition risks and potential opportunities (E1-9): The Com-

pany has applied the ESRS transitional exemption and does not

present the expected financial impact of significant climate-related

physical and transition risks and potential opportunities (E1-9) in

this report, as it currently lacks sufficient reliable data and models.

This assessment is planned to be carried out after a comprehen-

sive climate scenario analysis is completed by 2027.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

4.2. ESRS E2 – POLLUTION

4.2.1. AIR, WATER, AND SOIL POLLUTION MANAGEMENT

(E2-1 ESRS) (E2-2 ESRS) (2 ESRS GOV-5)

AB “Vilniaus baldai“ holds a pollution permit covering ambient air

pollution management and the handling and discharge of waste-

water. Under this permit, the Company controls emissions of ni-

trogen oxides (NOx), particulate matter, and sulphur dioxide (SO

)

released to the environment, as well as the scope of pollution in

wastewater permitted to be discharged to the natural environment.

In accordance with the ESRS requirements on interconnections

between E2 and E1, pollution management is linked to climate

change impacts and energy-related processes, in particular the

relationship between VOC and particulate emissions and green-

house gas emissions and air quality indicators.

The Company applies the principles of Integrated Pollution Preven-

tion and Control (IPPC) and manages pollution in line with ESRS E2

requirements, covering both impact and financial risk aspects. The

pollution management system includes permit-based controls,

monitoring and measurements, technical prevention measures,

and incident management procedures.

Management of impacts and risks in the most material environ-

mental areas (air, water and soil pollution) is carried out in accord-

ance with:

IPPC principles and the conditions of the pollution permit(s);

the Group’s quality, environmental and FSC chain-of-custody

policies, internal procedures and technical standard require-

ments.

Following the double materiality assessment, it was determined

that the Company’s most significant direct impacts in the area of

pollution relate to air emissions (wood dust and VOCs). Risks relat-

ed to water and soil pollution are considered lower; nevertheless,

they are monitored systematically and compliance with pollution

permit conditions is actively managed. Other forms of pollution

(e.g., noise, odour) are currently assessed as not material under

ESRS E2; however, they will be reviewed periodically as part of up-

dates to the double materiality assessment.

Pollution management is integrated into the Company’s ISO 14001

environmental management system. Responsibility for monitoring

pollution indicators and ensuring environmental compliance is as-

signed to the environmental specialist and the Technical function.

During the period 2024–2025, no pollution incidents, legal breach-

es or sanctions were identified in relation to the Company.

AB “Vilniaus baldai“ has not yet set specific targets to manage ma-

terial impacts, risks and opportunities related to pollution preven-

tion and control; however, the Company continuously seeks to re-

main within the limits prescribed by national legislation, supported

by periodic monitoring and inspections.

Making use of the ESRS E2 transitional provisions, the Company

does not currently provide a separate description of a dedicated

pollution reduction policy (E2-1, E2-2) and relies on IPPC require-

ments and the conditions of its pollution permits as the primary

pollution management framework. The preparation and approval

of a dedicated pollution management policy (E2-1) is planned by

2027.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

4.2.2. SIGNIFICANT POLLUTION TOPICS: IMPACTS,

RISKS, AND OPPORTUNITIES (E2 ESRS IRO-1) (2 ESRS

SBM-3) (E2-1 ESRS)

Pollution topics are included in AB “Vilniaus baldai” double mate-

riality assessment system, which evaluates: the scale, scope, and

reversibility of environmental impact; as well as financial impact

(possible fines, investment needs, reputational risk).

Currently, only direct (Scope 1) pollution impacts are disclosed.

Value chain (Scope 3) pollution impacts will be systematically iden-

tified and disclosed starting in 2027, after the ESRS transitional pe-

riod ends.

Topics considered significant are those with an impact materiality

of 4–5.

At this stage, only direct Company activity pollution indicators are

disclosed; value chain (Scope 3) pollution aspects will be gradually

assessed and disclosed starting from 2027 onward.

Topical

ESRS

Topic Subtopic Sub-sub-topic Risk Scope Impact Effect Status Impact Period

E2 Pollution Air Pollution Wood Dust Material Negative Actual SML

E2 Pollution Air Pollution

Volatile Organic

Compound

(VOC) Emissions

Material Negative Actual SML

E2 Pollution Water Pollution

Wastewater

Discharge

Significant Negative Potential SML

E2 Pollution Soil Pollution

Chemical

Storage

Significant Negative Potential SML

More details are provided in Appendix 2 “Double Materiality Assessment” (Impact assessment).

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Topic Subtopic Impact Significance Risk Description Opportunity Description

Air Pollution Wood Dust

Wood processing generates

dust that can affect employee

health and ambient air quality.

Impact is easily reversible.

Proper maintenance and

regular audits allow quick

reduction of pollution levels and

ensure a safe environment for

employees.

Occupational health issues,

possible fines for exceeding

emission limits, reputational

damage, operational

restrictions. Risk includes

direct financial and indirect

consequences – loss of client

trust, regulatory sanctions.

Air Pollution

Volatile Organic Compound

(VOC) Emissions

Varnishes, adhesives and

finishing materials used in

production emit volatile organic

compounds (VOCs). These have

a direct effect on air quality,

contribute to smog formation

and may affect employee health.

Elevated concentrations may

cause respiratory disorders

and lead to longer-term

environmental impacts.

VOC emissions are assessed as

material due to their impacts on

employee health and ambient

air quality, notwithstanding the

low likelihood of exceeding

regulatory limits.

Impact is partially reversible

through effective air

filtration, ventilation, and

emission capture systems.

Opportunities include

transitioning to water-based

products; implementation of

modern adhesive and coating

technologies; investment in

equipment reducing VOC

emissions.

Water Pollu-

tion

Wastewater Discharge

Production of wastewater may

contain pollutants posing

risks to the environment and

local communities. Impact is

assessed as medium because

improperly treated or above-

limit wastewater directly affects

water bodies, groundwater, and

surrounding ecosystems. Such

pollution can have irreversible

consequences for wildlife and

pose health risks to humans.

The Company’s production

processes do not directly use

water, but equipment cleaning

and auxiliary processes may

generate small amounts of

wastewater. Therefore, water

pollution risk is considered low

but existing, in line with ESRS

E2-1 requirements to assess

potential impacts.

Soil Pollution Chemical Storage

Improper storage of chemicals

can cause soil and groundwater

contamination.

Soil contamination, ecosystem

damage, legal non-compliance,

reputational harm.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Pollution management opportunities include: implementing VOC

reduction technologies, optimizing production processes, reduc-

ing water and chemical usage, developing alternative adhesive

and coating formulas, adopting energy recovery technologies, and

establishing a more sustainable raw material supply model.

The results of these assessments are used to make decisions re-

garding investments, technological improvements, and the setting

environmental objectives.

Anticipated financial effects from pollution-related impacts, risks

and opportunities (E2-6)

The Company has used the ESRS transitional period and does not

disclose the expected financial impact of pollution risks and op-

portunities (E2-6) in this report, as it currently lacks sufficient reli-

able data. This assessment is planned to be carried out by 2027.

4.2.3. POLLUTION MANAGEMENT MEASURES,

CONTROL, AND MONITORING (E2-2 ESRS) (E2-3 ESRS)

(E2-4 ESRS)

A formal allocation of responsibilities is applied for collecting and

monitoring pollution indicators: the environmental specialist is re-

sponsible for air pollution measurements and compliance with the

pollution permit, the technical department for the technical condi-

tion of filtration equipment and incident prevention, and laborato-

ries are responsible for conducting for accredited measurements.

These measures implement ESRS E2-2, E2-3, and E2-4 require-

ments, covering pollution prevention policy, processes, technolog-

ical measures, measurement systems, and incident management

protocols.

The Company implements a comprehensive pollution manage-

ment system, which includes the following measures:

Permit compliance – consistent adherence to IPPC and pollu-

tion permit conditions, meeting deadlines, analyzing and imple-

menting results of planned and unplanned inspections.

Technical measures – modernization of dust extraction and filtra-

tion systems, VOC reduction technologies, pre-treatment solu-

tions for wastewater, and safe chemical storage infrastructure.

Data quality and operational control – periodic measurements of

emissions, wastewater, and air quality; instrument calibration; re-

porting in line with permit conditions; documentation of meas-

urement data; traceability to primary sources; periodic internal

reviews.

Prevention and response – incident prevention plans, spill man-

agement procedures, emergency drills.

Training and competencies – targeted employee training in

chemical handling, VOC management, and waste management.

These measures help reduce emissions to air, soil, and water, en-

sure legal compliance, and increase the reliability of the Compa-

ny’s operations.

These processes complement the Company’s double materiality

assement, ensuring that identified risks are managed systematical-

ly and that measures are proportionate to the scale and nature of

the impact.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

4.2.4. POLLUTION INDICATORS (E2-3 ESRS) (E2-4 ESRS)

AB “Vilniaus baldai” holds a pollution permit for managing air

emissions, wastewater treatment, and discharge. Under the permit

conditions, the following indicators are monitored:

AB “Vilniaus baldai” does not use or release microplastics or mate-

rials containing them in production; therefore, this disclosure cate-

gory is not applicable (ESRS E2-4).

Pollution data covers only AB “Vilniaus baldai” direct operations.

Value chain (Scope 3) pollution data is currently not collected, mak-

ing use advantage of the ESRS transitional period until 2027.

All pollution measurements are carried out by accredited laborato-

ries or in accordance with methodologies specified in permit con-

ditions, with data documented and traceable to original measure-

ment protocols.

2024 * 2023 * 2022 *

Total Pollution,

tonnes

4,29 5,98 8,31

NOx, tonnes 1,76 2,46 3,42

CO, tonnes 2,51 3,51 4,88

Particulate

Matter, tonnes

0,01 0,01 0,01

*Calendar year

Data accuracy is ensured based on annual pollution permit reports,

laboratory measurement protocols, and periodic monitoring by ac-

credited laboratories. Emission measurements are performed ac-

cording to standardized pollutant-measurement methodologies.

Over the past three years, a consistent trend of pollution reduction

has been observed, driven by:

more efficient air purification technologies,

investments in equipment upgrades, resulting in more accurate

adhesive/paint dosing and reduced consumption,

increasing energy efficiency,

optimization of production processes.

Currently, the Company has not set quantitative pollution reduc-

tion targets but plans to establish and approve them by 2027, in

line with the ESRS E2-3 transitional period.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

4.3. ESRS E3 – WATER AND MARINE

RESOURCES

4.3.1. WATER CONSERVATION AND POLLUTION

REDUCTION (E3-1, E3-2, E3-3, E-5, 2 ESRS IRO-1)

AB “Vilniaus baldai” considers water conservation and pollution

reduction to be one of its key objectives and strives to minimize

water use and wastewater generation in production by all feasi-

ble means, as well as to create circular processes for water reuse.

Water is used only for domestic purposes; it is not used in the pro-

duction process. For this reason, the impact on water resources is

minimal. Water supply is provided by the Company’s own wells,

so the Company is not dependent on public supply networks, and

water costs remain stable.

This report discloses only AB “Vilniaus baldai” direct operational

water use and wastewater data, applying the operational control

principle. Value chain (Scope 3) water use and related impacts are

currently not quantified and will begin to be assessed by 2027,

making use of ESRS transitional provisions.

Water consumption data is collected based on well meter readings

and accounting documents (invoices, internal accounting systems),

and is therefore considered accurate and traceable.

Currently, the Company has not yet set quantitative water use re-

duction targets; these targets are planned to be approved by 2027,

making use of the ESRS transitional exemption.

AB “Vilniaus baldai” operations are not located in areas of water

scarcity or water stress according to international water stress in-

dices; therefore, ESRS E3-4 disclosures do not apply, as these as-

pects are considered non-material.

4.3.2. WATER POLLUTION IMPACTS, RISKS, AND

OPPORTUNITIES

The water topic was assessed in the double materiality assessment,

taking into account the scale, scope, reversibility of impact, likeli-

hood of occurrence, and potential financial impact.

The identified impacts and risks in the Water Use and Wastewater

topics arise from the Company’s direct operations. Raw material

supply impacts are related to the value chain and are disclosed in

more detail in the Biodiversity (ESRS E4) section.

According to ESRS E3-5, the Group has used the transitional ex-

emption and currently does not provide a quantitative assessment

of the expected financial impact and opportunities related to water

resources due to insufficient data maturity. This information will be

assessed and, if material, disclosed no later than in the 2027 sus-

tainability report.

2025 2024 2023 * 2022*

Total water consumption,

m³

17.321 21.272 26.156 33.310

*Calendar year

Note: 2023 data was adjusted because, after starting water usage monitoring in

autumn 2022, previous figures did not cover the full period. The presented data

reflects actual annual consumption.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Topical

ESRS

Topic Subtopic Sub-sub-topic

Impact Risk

Level

Impact Effect Status Impact Period

Water and

Marine

Resources

Water Use

Technological Water

Use

Moderate Negative Actual SML

Water and Marine

Resources

Wastewater

Water Discharge

into Environment

Moderate Negative Potential SML

Topic Subtopic Impact Significance Risk Description Opportunity Description

Water

consump-

tion

Process/technical

water use.

Water is used for auxiliary

processes and for domestic needs.

Even minimal consumption affects

operational efficiency and costs.

Increases in water prices or supply

restrictions may affect costs. The

risk includes direct financial impacts

and indirect reputational impacts.

Key measures include monitoring

of water use, use of own boreholes,

automation of metering/

accounting, and water-saving

actions.

Waste-

water

Discharge of water

to the environment.

Wastewater may affect local

communities and infrastructure.

The impact is assessed as low, as

water is not used in manufacturing

processes and the main

consumption is related to domestic

and auxiliary needs.

Potential consequences include

legal sanctions and reputational

damage in the event of non-

compliance or exceedance of

permitted limits.

Key measures include strict

wastewater quality control, regular

analyses, internal audits and

preventive actions.

Raw

material

sourcing

Forest harvesting

and the supply

chain

Unsustainable timber sourcing

may pose risks to biodiversity and

sustainability.

Potential consequences include

the loss of FSC® certification,

reputational damage and supply

chain disruptions.

Key measures include FSC®

certification, supplier audits,

raw material traceability and the

application of responsible forestry

principles.

More details are provided in Appendix 2 “Double Materiality Assessment” (Impact assessment).

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

4.4. ESRS E4 – BIODIVERSITY AND

ECOSYSTEMS (E4-1, E4-2, E4-3, 2 ESRS IRO-1)

4.4.1. POLICY RELATED TO BIODIVERSITY

During the reporting period, the Company did not have a separate

biodiversity policy. In accordance with ESRS E4-1 transitional pro-

visions, a biodiversity policy covering the supply chain, sustainable

raw material use, and impact reduction on ecosystems will be de-

veloped and approved by 2027.

4.4.2. USE OF WOOD RESOURCES

Biodiversity and ecosystems are important from a business per-

spective not only as ecological values, but also as key factors in-

fluencing long-term business sustainability. Companies depend

on global biodiversity and ecosystem services. This includes both

natural resources - such as water and raw materials - and regulat-

ing services, such as climate regulation and disease control. It is

also essential to invest in biodiversity conservation and the main-

tenance of ecosystems, as this can help companies mitigate risks

associated with nature loss.

AB “Vilniaus baldai“ recognises that biodiversity conservation is an

integral part of sustainable operations. In the Company’s activities,

sustainable use of raw materials is of particular importance, espe-

cially the responsible stewardship of timber resources.

Information in this section is disclosed in accordance with ESRS E4-

1, E4-2, E4-3, and ESRS IRO-1 requirements, focusing mainly on

wood raw material supply, forest resource use, and related ecosys-

tem impacts in the value chain.

Every item of furniture manufactured by AB “Vilniaus baldai“ is re-

quired to be of high quality, functional, of distinctive design and

produced in a sustainable environment - an expectation set by the

Company’s key customer. When expanding the Company’s prod-

uct range, preference is given to the lightest and lowest-density

solutions, while ensuring that products remain sufficiently durable

and fully comply with quality and safety requirements.

More than half of the Company’s furniture is produced using hol-

low honeycomb panel technology, whereby solid wood is replaced

with a honeycomb core made from recycled paper. This enables a

reduction in wood raw material use of up to five times. 100% of

the primary wood used by the Company is sourced from socially

responsible forest management. The Company has implemented

an FSC® Chain of Custody (CoC) system (FSC-C104209), which en-

sures product traceability from the forest - or, in the case of second-

ary raw materials, from the point of recycling - through to the point

where the product is sold with an FSC® claim and/or is completed

and labelled with an FSC® mark. FSC® Chain of Custody certifica-

tion confirms that only certified raw materials are used in produc-

tion, thereby eliminating the risk that incoming materials could be

mixed with non-certified inputs.

The Company seeks to ensure that its operations do not have signif-

icant adverse impacts on ecosystems and that raw materials used

in the supply chain originate from responsibly managed, certified

sources. The Company’s premises and production facilities are not

located in environmentally sensitive or protected natural areas;

therefore, the direct impact on ecosystems is assessed as low.

In February 2025, the annual FSC® surveillance audit was con-

ducted. No non-conformities or observations were identified. At

present, the Company has not set quantitative targets related to

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

biodiversity conservation or the reduction of ecosystem impacts.

In accordance with ESRS transitional provisions, the need for and

scope of such targets will be assessed by 2027, following an as-

sessment of the materiality of biodiversity-related impacts within

the value chain.

4.4.3. IMPACTS, RISKS, AND OPPORTUNITIES FOR

ECOSYSTEMS

The assessment of impacts, risks and opportunities was performed

in line with the requirements of ESRS E4-3, analysing potential im-

pacts on terrestrial, freshwater and soil ecosystems, natural habi-

tats and species diversity. The most significant impacts were iden-

tified within the supply chain related to the sourcing of timber raw

materials.

Biodiversity and ecosystems are closely linked to, and interde-

pendent with, other topics disclosed in this report, such as climate

change, pollution and the circular economy. AB „Vilniaus baldai“

has not yet carried out a systematic risk assessment of the resil-

ience of its strategy and business model in relation to biodiversity

and ecosystems and has not, at present, assessed whether a tran-

sition plan is required.

Currently, there is insufficient data granularity in the value chain to

reliably assess the financial impact (ESRS E4-4). The assessment will

be carried out by 2027.

Topical

ESRS

Topic Subtopic Sub-sub-topic

Impact Risk

Level

Impact Effect Status Impact Period

E4 Biodiversity

Raw Material

Supply

Forest Logging Significant Negative Potential SML

Subtopic Impact Description Risk Description Management Measures

Forest Conservation

Unsustainable timber supply harms

biodiversity, natural habitats, and

ecosystem resilience. This can have

long-term effects on production

processes (raw material availability

and costs), the Company reputation,

cause cost fluctuations, and influence

relationships with suppliers, customers,

and the community. The impact

is considered partially reversible

– certified timber is supplied, but

ecosystem restoration and biodiversity

recovery are long processes.

Unsustainable suppliers may

contribute to biodiversity loss or forest

degradation.

Supplier selection based on FSC®

requirements, supplier audits,

traceability control.

More details are provided in Appendix 2 “Double Materiality Assessment” (Impact assessment).

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

4.4.4. BIODIVERSITY CONSERVATION MEASURES

Action plans and processes related to biodiversity protection are

not yet formalized as separate plans. In accordance with ESRS E4-2

requirements, action plans will be developed by 2027, covering:

measures, targets, and responsible units; planned deadlines and

time horizons; progress evaluation indicators.

Sustainable raw material sourcing – only FSC® certified wood is

used, sourced from responsibly managed forests.

Waste recycling and reuse – wood waste (sawdust, chips) is used

for heat energy production.

Ecological investments – expansion of biofuel boilers and solar

power plants reduces fossil fuel use and air pollution.

By 2027 – implement a full monitoring system for circular pro-

duction principles (including water and energy use).

Local community engagement – the Company cooperates with

Trakai District Municipality on environmental initiatives (e.g., tree

planting campaigns).

To ensure responsible resource use, AB “Vilniaus baldai” contin-

uously invests in energy-saving technologies and applies circular

processes to conserve natural resources such as wood and water.

4.4.5. BIODIVERSITY INDICATORS AND DATA UNDER

ESRS E4 (REQUIRED BY E4-5)

AB “Vilniaus baldai” currently does not collect all biodiversity indi-

cators required by ESRS E4. In line with the transitional period, by

2027 the following indicators will begin to be collected: share of

supply chain raw materials with potential impacts on biodiversity;

indicators assessing the impact of sites on ecosystems; investments

in ecosystem restoration and protection; ecosystem dependency

indicators.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

4.5. ESRS E5 – RESOURCES AND CIRCULAR

ECONOMY (E5-1, E5-2, E5-3, E5-4, E5-5, E5-

6, 2 ESRS IRO-1)

Currently, circular economy indicators cover only the Company’s

direct operations in Lithuania. Value chain (Scope 3 input and out-

put flows) indicators will begin to collected from 2027.

AB “Vilniaus baldai” follows a sustainable business strategy – busi-

ness development is based on a balance of economic growth,

social well-being, and environmental prosperity. At present, the

Company does not have a separate circular economy policy. In ac-

cordance with ESRS E5-1 transitional provisions, a circular econ-

omy policy covering waste prevention, packaging management,

product recyclability, and supply chain return cycles will be devel-

oped and approved by 2027.

Circular

economy

Residual

waste

Production

Consumption

Reuse

Repair

Waste

management

Raw

materials

Collection

Sustainable

design

Distribution

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

4.5.1. APPLICATION OF CIRCULAR ECONOMY

PRINCIPLES (ESRS E5-1, ESRS E5-2)

Employees segregate production waste at the point of generation.

Waste sorting containers are installed in both production and ad-

ministrative premises. Production waste suitable for reuse is sepa-

rated, while waste not suitable for reuse is transferred to authorised

waste management contractors. Waste records are maintained

electronically in the GPAIS system (Product, Packaging and Waste

Accounting Information System). At the end of each calendar year,

the share of waste that has been sorted is calculated.

In its operations, the Company seeks to ensure sustainable and

responsible sourcing of raw materials and materials. Almost all

produced and purchased fibre (cellulose, wood) is certified under

the FSC® Chain of Custody (CoC) scheme (The Forest Stewardship

Council).

AB “Vilniaus baldai“ sorts generated waste and packaging mate-

rials and transfers them to waste managers or downstream users.

This is done to increase reuse and recycling, or to enable energy

recovery where recycling is not feasible.

In this sustainability report, resource and waste data are disclosed

using the operational control approach, i.e., only the Group’s di-

rectly controlled sites are included. Material flows and circularity

indicators across the value chain (suppliers and end-of-life/use

phases) are not yet fully quantified; in line with ESRS transitional

provisions, the assessment and disclosure of these aspects will be

further developed by 2027.

4.5.2. CIRCULAR ECONOMY IMPACT, RISKS, AND

OPPORTUNITIES

The identified impacts, risks, and opportunities in resource and

waste topics were assessed during the double materiality asses-

sment in accordance with 2 ESRS IRO-1 requirements, applying

criteria such as impact scale, scope, reversibility, likelihood, and

potential financial impact.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Topical

ESRS

Topic Subtopic Sub-sub-topics

Impact Risk

Level

Impact Effect Status Impact Period

Circular

Economy

Waste

Wood offcuts; wood

sawdust

Circular

Economy

Resource

Outputs

Recyclability of

manufactured (sold)

products

Significant Negative Potential SML

Circular

Economy

Resource Inputs

Resource

consumption

Material Negative Actual SML

Circular

Economy

Waste

Packaging

(cardboard, plastic)

Low Negative Actual SML

Topic Subtopic Impact Description

Risk

Description

Opportunity Description

Waste

Wood offcuts;

wood sawdust

Sale of waste to the biofuel sector

creates additional revenue. Offcuts

and sawdust are handed over to

waste handlers who use them as

raw material for particleboard

production.

Resource

Inputs

Resource

consumption

Raw materials, energy, and water are consumed, waste is

generated, pollutants are emitted, and this has a direct impact

on the environment, resource availability, and supply chain

sustainability. Poorly managed resource consumption increases

greenhouse gas emissions, waste volumes, and energy costs.

Rising

resource

prices

Resource

Outputs

Recyclability of

manufactured

(sold) products

All products manufactured by AB „Vilniaus baldai“ are designed

to be recyclable and are labelled with a recycling symbol;

however, the actual end-of-life recycling rate depends on

consumer behaviour and the availability of waste management

infrastructure. Where products are not recycled, the waste life

cycle is prolonged and the volume of materials accumulated in

landfills increases.

Waste

Packaging

(cardboard,

plastic)

The use of packaging increases waste volumes. This can have

long-term impacts on production processes and reputation,

cause cost fluctuations, and affect relationships with suppliers,

customers, and the community.

More details are provided in Appendix 2 “Double Materiality Assessment” (Impact assessment).

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

4.5.3. TASKS RELATED TO RESOURCE USE AND

CIRCULAR ECONOMY (E5-3 ESRS)

The establishment of quantitative targets related to resource effi-

ciency and the reduction of waste generation, and their integration

into the sustainability KPI system, is planned by 2027. In accord-

ance with ESRS E5-2, a comprehensive circular economy action

plan will be developed by 2027, covering: waste prevention meas-

ures; responsible functions and implementation timelines; clear

progress tracking and indicator measurement methodologies; and

measures aimed at optimising the entire product life cycle.

4.5.4. RESULTS AND TARGETS (E5-4, E5-5)

Currently, the Company has not set quantitative circular economy

indicators according to ESRS methodology (recycling rate, waste

prevention, share of reuse, raw material renewability). These tar-

gets will be established by 2027 after determining the baseline

and approving the data collection system.

2025 2024 2023* 2022*

Wood, tonnes 1.621,30* 334,38 292,52 776,69

Metals, tonnes 31,47 45,75 26,65 65,39

Paper, tonnes 292,54 257,24 267,93 303,38

Plastic, tonnes 71,56 59,56 60,07 74,42

* Calendar year

**the by-product (wood sawdust), which was previously combusted for energy

recovery (space heating), is transferred to waste management operators. The

operators subsequently use the sawdust for recycling, as a raw material in the

production of particleboard (MDP) panels.

Waste delivered for recycling:

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

2025 2024 2023* 2022*

Total waste, tonnes 2.262,19 950,70 948,90 1.471,94

Hazardous waste,

tonnes

6,11 2,53 11,42 14,58

Non-hazardous

waste, tonnes

2.256,08 948,17 937,48 1.457,36

Percentage of

recycled waste

96 89 89 82

Percentage of

recovery waste

4 11 11 18

Percentage of waste

that ends up in a

landfill

0 0 0 0

Waste quantity and type data are collected according to GPAIS

(Product, Packaging, and Waste Accounting Information System),

waste acceptance-transfer acts, and reports from waste handlers.

The data covers waste directly generated by AB “Vilniaus baldai”

and UAB “Ari-Lux” and is considered accurate and traceable to

original accounting documents.

The presented indicators of waste quantity and treatment methods

reflect only the waste generated at the Group’s own operational

sites. Value chain waste (generated by suppliers and consumers,

including end-of-life products) is currently not quantified; these in-

dicators will begin to be systematically addressed in stages, prior-

itizing the most significant product groups.

The Company supports and adheres to the European Union waste

policy, which states that the main principle of waste management

is the waste hierarchy: priority is given to waste prevention, then

preparation for reuse, and finally recycling and secondary use.

We contribute to our main client’s goal of using materials by 2030

that are recyclable and produced from renewable resources. Cur-

rently, about 96% of the waste generated by the Company is sent

for secondary recycling – 7% more than last year; 4% of waste is

sent for incineration to generate energy, and 0% is sent to landfill.

*Calendar year

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Prevention

Preparation for reuse

Recycling - 96%

is sent for recycling

Other use - 4%

is incinerated

Disposal

0 proc.

WASTE HIERARCHY

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

The Company applies the following circular economy principles:

Use of reusable packaging. Packaging supplied to raw material

suppliers and partners is reused, creating a “closed loop” sys-

tem.

Waste recyclability. All products manufactured by AB “Vilniaus

baldai” are recyclable and labeled with the recycling symbol.

Sustainable packaging. Materials used (cardboard, plastic, met-

al) are sorted and delivered to certified waste handlers or for

reuse.

Utilization of production residues. Wood scraps and sawdust are

transferred to the biofuel sector or used for particleboard (MDP)

production. These measures help reduce raw material consump-

tion, promote resource efficiency, and contribute to the EU circu-

lar economy goal of a “zero waste” vision.

The anticipated financial impact, risks, and opportunities related to

resource use and circular economy (E5-6 ESRS) are acknowledged.

The Company has used an exemption and has not provided infor-

mation on the expected financial impact and opportunities due to

currently insufficient available data.

KPI

Current

Value

Target

2030

Action Plan

Share of waste

recycled

96% 98%

- Implement waste segregation and recycling programmes.

- Optimise logistics processes to reduce empty runs, excess inventory and packaging waste.

- Ensure continuous improvement of waste accounting and traceability in line with EU Taxonomy

and ESRS requirements.

Share of certified

raw materials (as a

proportion of total

purchases)

100% 100%

- Ensure compliance with the EUDR (EU Deforestation Regulation) and related specifications.

- Implement a system for raw material origin traceability and quality control.

- Introduce new suppliers and materials that meet sustainability criteria.

- Incorporate supplier audits and quality improvement activities.

Waste sent to

landfill

0% 0%

- Segregate used materials (cardboard, plastic, metal) and transfer them to certified waste

operators or for reuse.

- Transfer wood offcuts and sawdust to the biofuel sector or use them for the production of

particleboard (MDP).

- Expand partnerships with suppliers implementing sustainable packaging and raw material return

solutions.

Reduction of

chemical substances

(use)

Specific

target is

not set*

Specific

target is

not set*

- Invest in equipment upgrades, enabling more accurate adhesive/paint dosing and reduced

adhesive/paint consumption.

- Invest in an automated line for packaging products in paper-based packaging.

- Achieve full alignment of production processes with circular economy principles.

SOCIAL

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

AB “Vilniaus baldai” actively contributes to the United Nations Sus-

tainable Development Agenda goals related to human rights and

equal opportunities, as well as to the implementation of nation-

al legal commitments to ensure equal opportunities by 2030. The

Company places special emphasis on employee well-being, hu-

man capital growth, and employee engagement in the Company’s

activities. It aims to foster effective social dialogue with employees

and create progressive working conditions by implementing ad-

vanced technological solutions, providing necessary work tools,

and offering competitive remuneration and benefits packages.

Stakeholder interests and opinions (ESRS 2 SBM-2) Information is

disclosed in the ESRS 2 General Information section, under Stake-

holder Interests and Opinions.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

5.1. ESRS S1 – EMPLOYEES

5.1.1. MATERIAL IMPACTS, RISKS, AND OPPORTUNITIES

AND THEIR INTERACTION WITH STRATEGY AND

BUSINESS MODEL (ESRS 2 SBM-3, S1-1)

To support employee well-being, the Company continuously mon-

itors and assesses impacts, risks and opportunities related to its

workforce. An annual employee engagement survey is conducted

to identify areas of strength and areas for improvement. In carrying

out its manufacturing operations, AB “Vilniaus baldai“ prioritises

occupational health and safety and continuously assesses impacts

and risks in order to prevent workplace accidents.

During the double materiality assessment, material topics related

to the Group’s own workforce were identified and assessed for

both impact materiality and financial materiality. When assessing

the sub-topics and sub-sub-topics attributed to the own workforce,

occupational health and safety was identified as the most critical

sub-topic for the Group’s operations.

Topical

ESRS

Topic Subtopic Sub-sub-topic

Impact Risk

Level

Impact Effect Status Impact Period

S1 Workforce

Employee health

and safety

Accidents Critical Negative Actual SML

S1 Workforce

Training and

innovation

Lack of

competencies; staff

shortage

Critical Negative Actual SML

Compensation

policy

Employee

remuneration

Lack of transparency Material Positive Actual SML

More details are provided in Appendix 2 “Double Materiality Assessment” (Impact assessment).

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Topic Impact Description Risk Description Opportunities

Employee Health

and Safety

Workplace accidents directly affect

employees’ health, safety and well-

being. Severe incidents may result

in long-term consequences, ranging

from loss of work capacity to fatality,

with significant social and ethical

implications.

Lost productivity and legal penalties.

The risk includes not only direct

financial losses but also indirect

consequences, such as loss of trust

from the key customer, operational

disruption, or regulatory liability/

enforcement actions.

Investments in safety measures

and training strengthen employee

protection. A zero-tolerance approach

to breaches and continuous monitoring

of compliance reduce the likelihood of

accidents. Regular safety audits identify

potentially unsafe workplaces.

Training and

Innovation

The impact extends across all areas

of the Company’s operations that

require technical competencies. In

addition, workforce shortages affect

both manufacturing and administrative

processes, and the impact may also

extend to supply chain partners due to

delays or production stoppages.

Employee turnover and a lack of

innovation. The risk includes not only

direct financial losses but also indirect

consequences, such as loss of trust

from the key customer, operational

disruption, or regulatory liability/

enforcement actions.

Employee

Compensation

Paying competitive, market-aligned

remuneration has a direct impact on

employee motivation, loyalty, and the

Company’s ability to attract and retain

qualified specialists.

Remuneration that is below market

levels and/or determined in a non-

transparent manner may increase

employee turnover, reduce

engagement, create internal tensions,

and lead to additional costs related to

recruiting and training new employees.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

5.1.2. POLICIES RELATED TO OWN WORKFORCE (S1

ESRS-1)

AB “Vilniaus baldai” has established clear sustainable operation

priorities – privacy and security, human rights, transparency, an-

ti-corruption, freedom of expression, employee safety. AB “Vilniaus

baldai” policies cover all Company employees, including perma-

nent, fixed-term, and part-time workers. Health and safety, human

rights, anti-discrimination, and remuneration policies also apply

to leased employees. These policies are implemented through a

comprehensive due diligence process that ensures impact, risk,

and opportunity assessment, their management, and monitoring

of results. These priorities are embedded in various Company doc-

uments:

Collective Agreement

IWAY Standard

Code of Business Ethics

Procedure for recognizing and responding to psychological vio-

lence (including mobbing)

Procedure for investigating and recording workplace incidents

Occupational health and safety instructions

Procedure for preparing and instructing employees on health

and safety instructions

Procedure for employee training and certification on occupa-

tional health and safety

Procedure for civil safety training and practical skills verification

Procedure for providing employees with personal protective

equipment

Procedure for performing work that poses increased risk to em-

ployee health and safety

Occupational health and safety instructions, safety committee

activities, unsafe situation module

Procedure for preventing child labour and responding to identi-

fied cases among suppliers and subcontractors

Procedure for onboarding and training new employees

Procedure for manager training

Procedure for qualification improvement of production unit em-

ployees

Procedure for employee training and certification on occupa-

tional health and safety

The above-mentioned policies and internal procedures provide

the basis for the systematic management of impacts, risks and op-

portunities related to the Group’s own workforce. They apply to

all Group employees, including those on fixed-term and part-time

contracts, as well as agency workers. The implementation of these

policies is reviewed periodically, drawing on employee engage-

ment surveys, incident reporting and investigation data, and inter-

nal audit results.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

5.1.3. WORKFORCE COMPOSITION, DIVERSITY, AND

INCLUSION

Actions taken on material impacts on own workforce, and ap-

proaches to mitigating material risks and pursuing material op-

portunities related to own workforce, and effectiveness of those

actions (S1 ESRS-4)

Darbuotojų duomenys atskleidžiami pagal ETAS S1-6, S1-9 ir S1-10

Employee data are disclosed in line with the structure of ESRS S1-6,

S1-9 and S1-10, covering headcount, employment contract types

and working time arrangements.

AB „Vilniaus baldai“ is an equal opportunity employer. The Com-

pany values each employee’s uniqueness, placing particular em-

phasis on competencies and experience. The Company does not

discriminate on the basis of gender, race, religion or any other

grounds; employees are assessed based on qualifications, and

equal employment and career opportunities are ensured for all.

In organising both work and recruitment processes, the Company

strictly follows applicable legal requirements and recognised good

practice. This supports a comfortable, safe and development-ori-

ented working environment. The Company’s workforce includes

citizens of Lithuania and other countries. Equal opportunities for

current and prospective employees are ensured throughout all

processes, including job advertising, recruitment, hiring, training

and development, workplace design and other Company process-

es.

The Company prohibits any discrimination based on gender, age,

origin, race, nationality, language, religion, belief, opinion, political

activity, trade union activity, family status, pregnancy, health condi-

tion, disability or sexual orientation. Indirect discrimination is also

prohibited. The principle of non-discrimination applies through-

out the employment cycle, regardless of whether employment is

permanent, fixed-term or part-time. Any form of mobbing, psycho-

logical violence, bullying or abuse of position is not tolerated. The

Company respects and protects the rights of every employee, acts

respectfully and fairly, provides safe working conditions appropri-

ate to employees’ needs, and encourages personal and profes-

sional development.

Gender data. In 2025, as in previous years, the majority of AB „Vil-

niaus baldai“ employees were men (62,77%), which is typical for

the furniture manufacturing sector. The Company does not cur-

rently collect data on non-binary gender identities. Consequently,

gender diversity indicators currently cover only women and men;

this may not fully reflect workforce diversity, as existing data collec-

tion systems and processes are not yet designed to capture infor-

mation on non-binary identities.

Headcount and employment contract type. The reported number

of employees is reconciled with financial data. Employees on pa-

rental leave and employees holding roles in more than one Group

entity are excluded. The average number of employees is calcu-

lated in accordance with the Order of the Minister of Finance of

the Republic of Lithuania of 15 May 2022 “On the Approval of the

Rules for Calculating the Average Annual Number of Employees.”

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

5.1.4. CHARACTERISTICS OF OWN WORKFORCE (S1 ESRS-6, S1 ESRS-9, S1 ESRS-10)

Number of employees by contract type:

2025 2024 2023 2022

Women Men Total Women Men Total

Number of hired employees 175 295 470 180 273 453 553 778

Management 2 5 7 2 6 8 8 8

Administration 24 36 60 26 25 51 52 63

Production employees 149 254 403 152 242 394 493 707

UAB “Ari-Lux”, employees 29 24 53 33 25 58 63 72

Permanent employees (Permanent contracts) 173 292 465 180 269 449 n.a. n.a.

Temporary employees (Fixed-term contracts) 2 3 5 0 4 4 n.a. n.a.

Employees working full-time 175 295 470 180 273 453 n.a. n.a.

Age of hired employees 45 41 43 45 41 42 42 41

Management 35 39 38 35 39 38 n.a. n.a.

Administration 39 39 39 37 38 37 n.a. n.a.

Production employees 47 41 43 46 41 43 n.a. n.a.

UAB “Ari-Lux”, employees age 45 46 45 47 46 46 n.a. n. a.

Number of leased employees* 70 39 109 n.a. n.a. n.a. n.a. n.a.

Age of leased employees* 41 32 37 n.a. n.a. n.a. n.a. n.a.

*Data as of 2025-08-31

Characteristics of non-employee workers in the undertaking’s own

workforce (S1 ESRS-7)

The Group has no non-employed workers who would be classified

as the Company’s own workforce.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

2025 2024

Women Men Total Women Men Total

Average work tenure,

years

6,3 5,6 5,9 8,6 8,5 8,5

Employee distribution

by work tenure*

Less than 1 year 43 82 125 28 46 74

1–3 years 23 25 48 28 22 50

3–5 years 35 42 77 41 50 91

5–10 years 31 61 91 37 64 101

10–15 years 7 46 54 8 48 56

More than 15 years 35 39 75 38 43 81

2025 2024

Women Men Total Women Men Total

Average age 45 41 43 45 41 42

Employee distribution

by age*

Younger than 25 years 17 22 39 10 18 28

25–35 years 23 79 103 29 74 103

35–45 years 43 103 146 49 95 145

45–59 years 55 75 129 53 71 124

Older than 59 years 37 16 53 38 16 54

AB “VILNIAUS BALDAI”EMPLOYEES

DISTRIBUTION BY WORK TENURE IN Y2025, %

Less than 1 year

Younger than

25 years

5–10 years 45–59 years

1–3 years 25–35 years

10–15 years Older than 59 years

3–5 years 35–45 years

More than 15 years

11 8

AB “VILNIAUS BALDAI” EMPLOYEES

DISTRIBUTION BY AGE IN Y2025, %

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

UAB “ARI-LUX” EMPLOYEES

DISTRIBUTION BY AGE IN Y2025, %

UAB “ARI-LUX“ EMPLOYEES

DISTRIBUTION BY WORK TENURE IN Y2025, %

Less than 1 year

Younger than

25 years

5–10 years 45–59 years

1–3 years 25–35 years

10–15 years Older than 59 years

3–5 years 35–45 years

More than 15 years

2025 2024

Women Men Total Women Men Total

Average work tenure,

years

7,1 5,9 6,6 8,4 7,9 8,2

Employee distribution

by work tenure*

Less than 1 year 3 4 7 0 0 0

1–3 years 4 1 5 5 4 9

3–5 years 6 7 13 6 4 10

5–10 years 7 6 13 10 6 16

10–15 years 3 4 7 4 4 8

More than 15 years 6 2 8 6 2 8

2025 2024

Women Men Total Women Men Total

Average age 45 46 45 47 46 46

Employee distribution

by age*

Younger than 25 years 1 0 1 0 0 0

25–35 years 4 3 7 6 2 8

35–45 years 6 10 16 7 8 15

45–59 years 10 9 19 9 4 13

Older than 59 years 8 2 10 9 6 15

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

5.1.5. PERSONS WITH DISABILITIES (S1 ESRS–12)

AB “Vilniaus baldai” subsidiary UAB “Ari-Lux” employs people who

have lost professional and general work capacity, are economically

inactive, and cannot compete equally in the labour market. In this

way, we help people return to the labour market, develop neces-

sary skills, promote integration, and aim to contribute to reducing

social exclusion, meeting the needs of employees as effectively

as possible by adapting workplaces and creating conditions that

enable them to work according to their abilities. In the 2025 finan-

cial year, the average number of employees at UAB “Ari-Lux” was

53. AB “Vilniaus baldai” also employs persons with disabilities on

a nondiscriminatory basis – this year, there were four such employ-

ees.

5.1.6. PROTECTION OF CHILDREN’S INTERESTS (S1

ESRS–1)

AB „Vilniaus baldai“ strictly prohibits child labour both in its own

operations and throughout the value chain. The Company employs

only individuals whose employment is permitted under applicable

legislation.

Child labour prevention is embedded in the IWAY standard and

applies to suppliers, subcontractors and business partners. The

Company has approved a Child Labour Prevention and Response

Procedure, which defines the supplier verification system, the ac-

tion plan and the allocation of responsibilities.

The risk is assessed as very low due to the nature and scope of op-

erations; however, as required by ESRS, monitoring is performed

annually.

5.1.7. REMUNERATION POLICY AND INCENTIVE SYSTEM

Remuneration metrics (pay gap and total remuneration) (S1 ESRS–

16) (S1 ESRS–10)

All Group employees are paid fair wages in accordance with the

provisions of Directive (EU) 2022/2041.

AB “Vilniaus baldai“ is a reliable employer that ensures a transpar-

ent, fair and motivating remuneration system. The rules governing

remuneration payments are defined in the Company’s Collective

Agreement through clear provisions that are accessible to em-

ployees and applied consistently to all. The remuneration system

clearly specifies employee categories and the positions assigned

to those categories. The pay provisions set out in the system and

its annexes are applied in a manner that prevents any discrimina-

tion on the grounds of gender or other grounds. Women and men

receive equal pay for the same work or work of equal value. The

content of employees’ work, mandatory qualification requirements

(where applicable to a specific position), and the procedures for

mandatory and voluntary professional development are defined in

job descriptions and/or employment contracts.

Remuneration consists of a fixed and a variable component. The

fixed component is the employee’s basic monthly salary as set

out in the employment contract and paid each month. The vari-

able component is paid subject to the Company’s performance

results. Employees may also receive allowances for acquired qual-

ifications and/or supplements for additional work, including the

performance of additional duties and tasks. The key criteria under-

pinning the remuneration and motivation system are employee

competence, the level of responsibility and complexity of the role,

individual achievements, and contribution to the Company’s over-

all performance results. AB “Vilniaus baldai“ ensures appropriate

working time and rest arrangements, the right to annual leave and

other statutory leave, and fair remuneration commensurate with

qualifications. All employees receive remuneration above the stat-

utory minimum wage in Lithuania.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

Average salary:

2025 2024 2023 2022 2021

Women/Men Women/Men

AB “Vilniaus Baldai“ employees 1:1,2 2.959 1:1,3 2.621 2.279 2.001 1.881

Management 1:1,3 11.962 1:1,5 8.271 6.423 5.592 6.480

Administration 1:1,2 4.365 1:1,4 3.247 2.983 2.647 2.399

Production employees 1:1,2 2.648 1:1,3 2.432 2.135 1.893 1.782

UAB “Ari-Lux“ employees 1:1,1 1.928 1:1,1 1.652 n.d. n.d. n.d.

The pay gap analysis is performed annually and is used to set tar-

gets for reducing the gender pay gap. At AB “Vilniaus baldai“, wom-

en’s remuneration was 24% lower than men’s, calculated on the

basis of gross hourly pay. Female production employees earned

19% less than male production employees. The main drivers of the

gap identified were:

differences in qualification levels between women and men;

a higher concentration of men in higher production grades

where a higher base pay is applied;

a higher share of men in middle management and management

team positions;

women more frequently holding specialist rather than manage-

rial positions.

These factors indicate a structural, rather than discriminatory, pay

gap. Remuneration at AB “Vilniaus baldai“ is determined on the

basis of objective criteria, including role responsibility, job com-

plexity, required qualifications and competencies.

Progress: Since 2024, a significant reduction in the pay gap has

been observed across all employee groups - among specialists,

the management team and production employees. This progress

was driven by a more systematic approach to job evaluation, clear-

er remuneration-setting criteria and efforts to improve gender bal-

ance across organisational levels.

Planned actions to reduce the gap:

annual review of job positions and remuneration;

upskilling programmes for women in production roles;

strengthening internal career pathways (especially into leader-

ship roles);

a more transparent remuneration-setting methodology and

clearer communication of evaluation criteria;

improving gender balance in the management team and in

technical roles.

In 2025, no cases of discrimination on the grounds of gender or

other characteristics were recorded

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

1.652

2024 2025

1.928

AB “VILNIAUS BALDAI” AVERAGE SALARY, EUR

UAB “ARI-LUX“ AVERAGE SALARY, EUR

1.881

2021 2024 2022 20252023

2.001

14%

15%

13%

2.279

2.621

2.959

17%

5.1.8. SOCIAL PROTECTION (S1 ESRS-11)

Group employees are covered by social protection in accordance

with to the laws of the Republic of Lithuania (mandatory health in-

surance, parental leave, retirement, etc.), as well as additional so-

cial guarantees: benefits in case of illness, benefits paid to family

members upon the employee’s death, benefits upon the death of

an employee’s family members, gifts upon the birth of a child and

on milestone birthdays, additional paid leave days for marriage,

childbirth, and the death of a close relative.

Employees are provided with free transportation by bus to and

from work. Currently, about 300 employees use this service daily.

In 2024, the Company allocated more than EUR 768 thou for em-

ployee transportation to work.

5.1.9. POLICY FOR ELIMINATING DISCRIMINATION:

SCOPE, DIVERSITY AND INCLUSION COMMITMENTS

AND PROCEDURES (S1 ESRS-1)

The Company ensures respect for human rights and promotes re-

spectful conduct, including the protection of personal honour and

dignity. Employees may participate in civic and political life and

may express their views publicly, provided that public statements

are clearly presented and understood as personal opinions and

not as the Company’s position. The Company does not tolerate

interference in employees’ private or family life; it respects indi-

vidual privacy and encourages employees to submit suggestions,

opinions and observations. Internal discussions are conducted on

the basis of facts and reasoned arguments, rather than personal re-

marks or emotions, reflecting the Company’s commitment to open

and fair cooperation and to a socially responsible value chain.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

The prevention of discrimination, harassment and mobbing is em-

bedded in the Code of Business Ethics, the Procedure for the Pre-

vention of Psychological Violence, and the Collective Agreement.

Employees have multiple grievance and reporting channels, in-

cluding an anonymous channel, as described in the section “Inci-

dents, grievances and severe human rights impacts” of this report.

All grievances received are investigated, appropriate corrective

actions are implemented, and outcomes are reported to manage-

ment on a periodic basis.

5.1.10. COLLECTIVE BARGAINING COVERAGE AND

SOCIAL DIALOGUE (S1 ESRS-8)

All internal policies and guidelines related to employees are coor-

dinated with the independent trade union of AB “Vilniaus baldai,”

with which the Company maintains social dialogue and a long-

term, productive partnership. Negotiations on base rates and bo-

nuses are ongoing with the trade union, and representatives partic-

ipate in employee competency evaluations.

The trade union has the opportunity to actively participate in dis-

cussions – all issues related to employees’ social and economic

well-being are coordinated with it, information is provided in a

timely manner, and consultations are carried out. Trade union rep-

resentatives also belong to the mobbing and compensation com-

mission.

The Company has a Collective Agreement. The Collective Agree-

ment covers the procedure for concluding, amending, and termi-

nating employment contracts, working and rest time, remuneration

conditions, employee qualification improvement, occupational

safety, medical services, etc. The Collective Agreement provides

additional favorable conditions beyond those stipulated by Lithua-

nian laws or the Labour Code.

The Collective Agreement applies to all employees employed by

AB “Vilniaus baldai” Group.

5.1.11. INCIDENTS, COMPLAINTS AND SEVERE HUMAN

RIGHTS IMPACTS (S1 ESRS-17)

Processes to remediate negative impacts and channels for value

chain workers to raise concerns (S1 ESRS-3) (S1 ESRS-17)

We organize annual training on violence and harassment topics,

presenting the issues, holding discussions with employees, and

teaching them to recognize such situations and respond appropri-

ately. A confidential complaints and reporting channel is available

to all employees both online and by phone. Complaints can be

submitted anonymously. In 2025, 7 reports were received, 100% of

which were analyzed and resolved within the established 30-calen-

dar-day period. Identified violations were corrected with corrective

measures; no financial penalties or damages were identified.

2025 2024

Cases of discrimination 0 n. a.

Number of complaints submitted through

channels where people belonging to the

workforce can raise issues of concern

7 6

Total amount of fines, penalties, and

compensation for damages related to the

incidents and complaints disclosed above

0 n. a.

Number of major human rights incidents related

to the Company's workforce

0 n. a.

Number of significant human rights issues and

incidents related to the Company's workforce

that are not in line with the UN Guiding

Principles and OECD Guidelines for Multinational

Enterprises

0 n. a.

Amount of monetary penalties, fines, and

compensation for significant human rights

issues and incidents related to the Company's

workforce

0 n. a.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

5.1.12. WORK-LIFE BALANCE (S1 ESRS–15)

Taking into account employees’ personal needs, the Company

supports remote work. This option is available to all administrative

employees whose work can be effectively performed remotely. In

addition, for long-term uninterrupted work at the Company, em-

ployees are granted additional vacation days within one year. Em-

ployees with more than 10 years of uninterrupted service at the

Company receive 3 working days, and for each subsequent year

of uninterrupted service at the Company – one additional working

day. In 2025, a total of 4.818 calendar days were granted to 158

employees, including maternity and childbirth leave, sick leave for

caring for an ill person, an additional day off (for the start of the

school year celebration or in case of a family member’s death), pa-

rental leave, and paternity leave.

In 2025 31 employees were entitled to parental leave, of which 9

used it (29%), women – 45%, men – 20%. All administrative em-

ployees have the option to apply flexible working hours or work

remotely if the nature of their work allows it.

Ensuring a healthy work–life balance is considered one of the key

employee well-being topics. The Company does not currently col-

lect separate quantitative metrics in line with ESRS S1-15 (e.g., the

percentage of employees making use of flexible working arrange-

ments); however, the monitoring of these indicators will be intro-

duced on a phased basis by 2027, taking into account data availa-

bility and employee expectations.

2025

Women Men Total

Employees entitled to childcare leave 11 20 31

Production employees 8 13 21

Administration 2 6 8

Management 1 1 2

Employees who took childcare leave (of

those who were entitled to it)

5 4 9

Production employees 4 3 7

Administration 0 1 1

Management 1 0 1

Employees who took childcare leave (of

those who were entitled to it), %

45 20 29

Employees who have left to perform

military service

0 6 6

Employees who have taken leave due to

family reasons

n.a. n.a. 158

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5.1.13. HEALTH AND SAFETY METRICS (S1 ESRS–14)

Employee safety is the highest priority. AB “Vilniaus baldai” has

established occupational health and safety procedures. The Com-

pany conducts annual risk assessments, health and safety training,

and has defined preventive measures and an occupational health

and safety plan. These actions help ensure that the risk of employ-

ee injuries and occupational remains minimal.

Employees are provided with essential information on health and

safety issues. The Company conducts health and safety training:

first aid training, manual handling of loads, working in noisy envi-

ronments, working with chemicals, fire safety, working at heights,

and working with electric forklifts, electric carts, and platform carts;

as well as health and safety training for team leaders. All these

trainings are free of charge and take place during working hours.

Knowledge checks are conducted after all trainings (a written test

or written questions). We delegate specialists to external training

– this way we continuously help employees improve, increase their

awareness so that everyone personally protects themselves and

other team members, and knows how to take all necessary meas-

ures in case of danger.

To improve Company operations, we implement projects based

not only on technical improvements but also on LEAN methodolo-

gies. During these projects, we invite all employees to participate

and contribute to improvements in various processes within the

Company. One of these is the creation and application of an unsafe

situations reporting module in daily operations. Every employee

who notices an unsafe situation (for example, if there is a risk of

injury), a place or situation that does not meet safety requirements,

can register this situation and monitor the progress of its resolution

by using a phone and scanning a QR code. Progress is commu-

nicated via SMS messages. During the 2025 financial year, we re-

solved 243 unsafe situations (zones) within the Company premises,

which were registered by employees during their daily work.

Despite all efforts, 11 minor accidents were recorded, but each in-

cident was thoroughly investigated and corrective and preventive

measures were implemented. All departments monitor safety in-

dicators daily on morning meeting boards (including number of

accidents per day and number of days without accidents in the

Company). No fatalities or serious accidents were recorded.

2025 2024 2023

Total incidents 11 10 8

Fatal incidents 0 0 0

Serious injuries 0 0 0

Minor incidents (injuries) 11 10 8

Health issues - incidents 12 20 28

Unsafe situations registered 243 199 61

Fixed unsafe situations 243 199 n.a.

LEAN improvements 23 40 n.a.

TRIR* 2,56 n.a. n.a.

FR** 12,81 n.a. n.a.

Accidents and unsafe situation management:

*TRIR – total recordable employee injury rate per 200.000 working hours.

**FR – frequency rate, total recordable employee injury rate per 1.000.000 working hours.

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AB “Vilniaus baldai“ promotes and supports employees’ physical

and mental health. The Company assists employees in addressing

health-related issues and in preventative health management. A

Health Office operates within the Company and is responsible for

planning and implementing health promotion programmes and,

where necessary, providing first aid and emergency support. The

health specialist organises free vaccination campaigns (influenza,

tick-borne encephalitis and COVID-19). During the current season,

15% of employees were vaccinated against influenza and 20%

against tick-borne encephalitis.

The Health Office is equipped with necessary medicines and im-

plements cardiovascular disease prevention measures (including

blood pressure, blood cholesterol and other tests) and diabetes

prevention measures (including blood glucose and other tests).

Vision checks are provided free of charge, periodic medical exam-

inations are organised, and consultations are offered. Employees’

health data are processed and stored in accordance with GDPR

requirements.

The Company also places strong emphasis on employees’ emo-

tional well-being, with the aim of strengthening mental health and

supporting employees in addressing challenges that may arise

both in and outside the workplace. AB „Vilniaus baldai“ implements

a dedicated mental health programme under which the Company

reimburses employees for consultations with a psychiatrist, psy-

chologist and psychotherapist. Full confidentiality and privacy are

ensured in the implementation of this programme.

5.1.14. EMPLOYEE ENGAGEMENT (S1 ESRS–1)

(S1 ESRS–3) (S1 ESRS–4)

Managers in the Company regularly conduct one-to-one meetings

with their direct reports, and middle management participates in

ongoing collaboration sessions. In order to strengthen a culture

of cooperation and openness, special training on providing feed-

back was delivered to production team leaders by external ex-

perts. In addition, periodic all-employee meetings are organised

and aligned with shift schedules. During these meetings, the man-

agement team presents updates across key areas, reviews perfor-

mance results and current developments, and communicates stra-

tegic plans, action plans and priorities. The meetings are recorded,

and video recordings are made available to employees who were

unable to attend. Employees may ask questions and discuss topics

of relevance during these sessions.

For a number of years, the Company has made both long-term

and day-to-day decisions guided by its core values: responsibility,

teamwork and professionalism. The Company also seeks to estab-

lish and maintain dialogue with each team member and to provide

opportunities for employees to express their views, needs and ex-

pectations.

AB “Vilniaus baldai“ conducts an annual employee engagement

survey. In financial year 2025, 177 employees expressed willing-

ness to participate. The survey captures employees’ views on what

they value and what they would like improved, their motivation fac-

tors, the quality of communication with their manager, the quality

of feedback provided by their direct manager, team relationships,

internal communication channels, stress levels, the clarity of ob-

jectives and values, and other aspects. Participants also assessed

working conditions, including transport arrangements, catering

and the organisation of occupational health and safety.

The survey results indicate that the most positively assessed are-

as relate to organisational culture values (responsibility, teamwork

and professionalism). The survey also identified four areas for

improvement. Based on the results, the Company should place

greater focus on strengthening employee engagement, enhanc-

ing communication, improving emotional well-being at work, and

preventing disrespectful behaviour in the workplace.

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Most favorable evaluations and areas for improvement

Positive evaluation Negative evaluation

Discrimination

(not experienced /

experienced

Teamwork /

helping colleagues

Satisfaction with

communication

channels

Excellent relationship

eith manager

Employee engagement

Adherence to (belief

in) values

Low-work related stress

Belief in the company’s

future

Conection with

colleagues

86%

84%

62%

88%

16%

38%

12%

70%

66%

93%

94%

30%

34%

Processes for involving own employees and employee represent-

atives in decision-making on impact-related issues (S1-2)

The Company consistently monitors the effectiveness of internal

and external communication, adapts communication tools, and in-

vests in new solutions. Consistent internal communication remains

a priority for AB “Vilniaus baldai”; therefore, during this financial

year, the intranet was updated, allowing employees to convenient-

ly access information relevant for direct work (for example, work

schedules, access to the virtual learning academy) and for qual-

ity engagement (for example, articles about employees’ career

achievements within the Company). Employees are regularly pro-

vided with information through various channels that is necessary

for work, development, and quality leisure. The internal communi-

cation network is being expanded; feedback tablets and informa-

tion screens have been installed in the factory to share the most

important Company news.

Several forms of employee involvement are applied in the Com-

pany: weekly departmental meetings; joint meetings of managers

and employees; annual employee engagement survey; and con-

tinuous participation of the trade union in decision-making. Feed-

back results are systematically discussed with managers and em-

ployee representatives.

To make it easier for new employees to integrate into the work en-

vironment and team, a new initiative was introduced during this

period – professional breakfasts for newly joined administrative

employees with the management team. Regularly, newly hired

employees can meet the management team during these break-

fasts, introduce themselves, and more easily become part of the

new team. The Company encourages strong and trust-based team

relationships. To strengthen them, each team is allocated a budget

that can be used for team-building and strengthening events.

Additionally, twice a year, AB “Vilniaus baldai” organizes Compa-

ny-wide events for all employees. During the summer and winter

celebrations, employees can strengthen their sense of community

by participating in team activities and tasks.

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5.1.15. EMPLOYEE TURNOVER (S1 ESRS–13)

We strive to meet the needs of all employees; therefore, we mon-

itor the employee turnover rate, observing whether the turnover

rate changes significantly compared to the long-term average and

assessing the underlying reasons.

Data on turnover of employed staff. This indicator includes only

employees working under an employment contract. Non-em-

ployed workers are not included in the calculations. To calculate

the employee turnover rate, we first determine the number of em-

ployees who left in 2024 and then divide this number by the aver-

age number of employees during the year.

5.1.16. TRAINING AND SKILLS DEVELOPMENT METRICS

(S1 ESRS–13)

To improve employee experience, the Company fundamentally

updated the onboarding process for new team members during

this financial year. We standardized the onboarding process for

production and administrative employees and introduced a basic

two-day introductory program for production workers. In addition,

a specialized onboarding program was developed and imple-

mented for production team leaders. It provides a lot of relevant

additional information, strengthens skills required for such posi-

tions, and begins forming best practices for daily work.

AB “Vilniaus baldai” continuously improves processes so that new

and existing employees can take advantage of professional growth

opportunities. For this reason, we updated the competency matri-

ces for production employees, which contribute to more efficient

team formation, help identify career opportunities, and support

convenient and effective development and career plans. Compe-

tency matrices also function as an engagement tool, becoming

part of both onboarding and daily work for production employees.

To further empower employees, the Company stregthened the

People and Culture Department by creating a dedicated training

division. This division can comprehensively plan and implement

training programs, and training mentors working there provide con-

tinuous attention and consultations to employees. Training men-

tors organize regular meetings with managers at Career Boards to

discuss the situation and plan how each employee’s competencies

will be developed. These meetings serve as an important informa-

tion resource, contributing to more effective recruitment, training

planning, and quick response in any situation.

As in previous years, AB “Vilniaus baldai” provides employees with

opportunities to upgrade their category – 128 employees upgrad-

ed their category during the year.

The increase was primarily driven by a significant intake of new

employees due to the creation of new shifts and the expansion of

existing ones. As is typical during periods of rapid organizational

growth, turnover levels among newly hired employees were high-

er. This naturally elevated turnover within this group had a direct

and measurable impact on the overall employee turnover rate.

2025 2024 2023

Number of hired employees who left

the Company

178 n.a. n.a.

Employee turnover, % 38 27 39

Employee turnover:

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2025 2024 2023

Average number of training hours 3 n.a. n.a.

Number of participants 587 n.a. n.a.

Employees who participated in

regular performance and career

development reviews, %

10 n.a. n.a.

Production employees who have

upgraded their qualifications*

128 60 63

Production employees training hours 950 122 37

Amount allocated to training, EUR** 90,6 78,8 35,3

Training indicators:

*Employees who upgraded their qualifications were counted based on category upgrade

protocols.

**For 2026, EUR 120 thou is planned.

Employees are provided with feedback on achieved results, and,

where possible, their preferences regarding training and career

development are taken into account.

The number of training participants is calculated by summing up

the number of participants in each training session. Depending on

the nature of the training, duplication may occur because the same

individuals participate in more than one session. The information is

taken from training registration reports and enables only the total

number of hours to be presented.

Currently, training hours data are not collected by gender and em-

ployee categories. In accordance with ESRS S1 transitional provi-

sions, by 2027 the Group plans to update data collection systems

to disclose training indicators by gender, job groups, and type of

employment contract.

Another important element of our training initiatives is the men-

toring program – a program dedicated to developing equipment

operators. Mentors are selected based on their qualifications and

provided with a training program through which employee train-

ing is carried out. Mentors not only share knowledge but also sup-

port professional growth and foster a culture of collaboration, pro-

viding the best possible assistance to new employees and helping

to manage psychological workload during the onboarding period.

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5.1.17. SOCIAL GOALS (S1 ESRS–13)

Objectives related to managing significant negative impacts, in-

creasing positive impacts, and managing significant risks and op-

portunities (S1 ESRS 5)

By 2027, implement all quantitative indicators required by ESRS S1

(training hours by gender and category, data on non-binary indi-

viduals, data on all non-employed workers within the definition of

own workforce, etc.).

*Employees who upgraded their qualifications were counted based on category upgrade protocols.

**For 2026, EUR 120 thou is planned.

KPI Current value Target 2030 Action plan

Increase employee safety level

- Periodic employee safety training, risk assessment

- Implementation of smart sensors and alarms in

hazardous areas

- Conduct regular safety audit process

- Analysis of incidents and “near misses,” corrective

actions

- Employee engagement programs, anonymous

reporting channels, incentive mechanisms

- Continuous KPI monitoring cycle and adjustments

TRIR – total recordable employee injury rate per

200.000 working hours

2,56 <2

FR – total recordable employee injury rate per

1.000.000 working hours

12,8 <10

Registration of unsafe situations 243 700

Share of women in managerial positions

No specific

indicator is set

No specific

indicator is set

- Gender equality policy

- Career mentoring programs

- Leadership development programs for managers

- Transparent career and recruitment system

Reducing the gender pay gap 1:1,25 1:1,12

- Career planning and reintegration after maternity/pa-

ternity leave

- Support for returning employees (flexible working con-

ditions, creation of part-time positions with equal pay)

Investment in training

No specific

indicator is set

No specific

indicator is set

- Define a clear training budget for each employee

- Integrate training planning into the annual goal-setting

process

- Track training results in the electronic training platform

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5.2. ESRS S2 – WORKERS IN THE VALUE CHAIN

(S2-6, S-7)

The IWAY standard applies to all suppliers, requiring them to com-

ply with human rights, occupational safety, working time, and re-

muneration requirements. 100 per cent of key supplier contracts

include provisions prohibiting child labour and ensuring human

rights.

Currently, the Group does not collect complete statistics on sup-

plier audits and identified violations. In accordance with ESRS S2

transitional provisions, by 2027 a systematic monitoring system for

value chain worker risks and impacts will be established, covering

More details are provided in Appendix 2 “Double Materiality Assessment” (Impact assessment).

supplier audits, identified violations, corrective action status, and

changes in contractual relationships.

Workers in the value chain are considered to be employees of sup-

pliers, subcontractors, and service providers involved in raw mate-

rial supply (wood, fittings, packaging), logistics, cleaning, security,

and other services. Most key suppliers are located in EU countries,

while a smaller portion are in third countries where human rights

and working conditions risks are assessed as higher.

Topical

ESRS

Topic Subtopic Sub-sub-topic Risk Scope Impact Effect Status Impact Period

Supply chain

workers

Human rights Child labour Significant Negative Potencial SML

Supply chain

workers

Human rights

Violations

of working

conditions

Moderate Negative Potencial SML

Topic Impact Description Risk Description

Human Rights

The likelihood is assessed as low because only a small

portion of suppliers may come from regions where social

responsibility practices are not fully implemented, leaving

isolated cases of compliance violations.

Insufficient supply chain control poses a risk of social

violations. This can have long-term effects on both

production processes and reputation, cause cost fluctuations,

and influence relationships with suppliers, customers, and the

community.

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5.3. ESRS S3 – AFFECTED COMMUNITIES

Interests and views of stakeholders (2 ESRS SBM-2)

During the double materiality assessment, community representatives were involved in the evaluation process. More information is provid-

ed in “Interests and views of stakeholders.”

Topical

ESRS

Topic Subtopic Sub-sub-topic Risk Scope Impact Effect Status Impact Period

S4 Community

Impact on

communities

Noise and

transportation

Moderate Negative Potencial SML

Topic Impact Description Risk Description Opportunities

Regional

Employment and

Inclusion

New jobs in regions, greater

employment opportunities

(transportation from 16 locations).

Labour market competition,

qualification mismatches, risk of social

exclusion for vulnerable groups.

Professional internships, retraining,

ongoing dialogue with the Employment

Service, military, and educational

institutions.

Social Capital and

Trust

Continuous communication with local

authorities, educational and community

organizations increases trust in the

Company.

Possible complaints about traffic flows,

noise, events, or other activity impacts.

Open channels for complaints and

suggestions, informational sessions,

joint projects.

Environmental

Community

Initiatives

Consistent tree-planting campaigns

(“forest planting”), educational events

for students.

Insufficient awareness of goals and

results may reduce engagement

effectiveness.

Encouraging volunteer initiatives,

involving community leaders.

Social Support and

Philanthropy

Support for organizations, events, and

community initiatives.

Uneven distribution of support may

create expectation mismatches.

Clear criteria, annual support program,

measurement of results and benefits for

the community.

More details are provided in Appendix 2 “Double Materiality Assessment” (Impact assessment).

AB “VILNIAUS BALDAI” CONSOLIDATED

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Topical

ESRS

Topic Subtopic Sub-sub-topic

Impact Risk

Level

Impact Effect Status Impact Period

S3 Consumers Product safety Furniture stability Significant Negative Potencial SML

5.3.1. POLICIES, GOVERNANCE, AND PRINCIPLES

RELATED TO AFFECTED COMMUNITIES (S3 ESRS-1) (S3

ESRS-2)

AB “Vilniaus baldai” is committed to acting in a socially responsi-

ble manner, respecting the interests of local communities and con-

tributing to the economic and social development of regions. The

Company’s social responsibility principles are embedded in inter-

nal documents (Code of Business Ethics, IWAY Standard, social di-

alogue and support guidelines) and implemented through double

materiality assessment processes, evaluating impacts, risks, and

opportunities for communities.

5.3.2. POSITIVE IMPACT AND OPPORTUNITIES (S3 ESRS

SBM-3)

Acting as a responsible and market-open employer, the Company

provides a wide range of opportunities to join the team for both

early-career individuals and those returning to the labour market.

AB “Vilniaus baldai“ operates an internship programme in which

students from various educational institutions participate on an on-

going basis. The Company offers paid, experience-rich internships,

following which some interns remain employed.

In addition, AB “Vilniaus baldai“ actively cooperates with educa-

tional institutions, municipalities and state authorities, including

the Employment Service and the Lithuanian Armed Forces. This co-

operation creates additional pathways for unemployed individuals

and former statutory officers transitioning out of service to reinte-

grate into the labour market.

The Company also organises educational visits for school pupils of

different ages, during which participants are introduced to manu-

facturing processes, technologies and professions. Through these

activities, the Company contributes to youth career education, the

dissemination of manufacturing technologies and processes, and

broader awareness of the sector.

AB “Vilniaus baldai“ cooperates with the Trakai District Municipali-

ty, supports and participates in municipal community and business

events, and contributes to various municipal social initiatives. Em-

ployees actively engage in voluntary community support initiatives.

5.3.3. PROCESSES FOR INVOLVING AFFECTED

COMMUNITIES IN DECISION-MAKING ON IMPACT-

RELATED ISSUES (S3 ESRS-2)

Community representatives can submit complaints and sugges-

tions via email, phone, and through municipal channels. During the

2024–2025 period, no formal complaints were received from the

local community regarding the Company’s activities.

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The Company also contributes to solving other social and labour

market issues:

Cooperation with other companies by providing temporary jobs

for their employees during downtime;

Active collaboration with vocational and higher education insti-

tutions, organizing career information sessions, career planning

presentations, educational tours, factory open days, and partici-

pating in career fairs organized by universities;

AB “Vilniaus baldai” employees become Company ambassa-

dors. Employees can recommend friends, relatives, or acquaint-

ances to join the AB “Vilniaus baldai” team, and upon successful

completion of the probationary period, they receive a monetary

bonus;

Traditional tree planting. This financial year, a tree planting event

was organized during which the team ensured the establishment

of a forest in the Rūdiškės forestry area by planting 14.200 trees.

This initiative has been ongoing for many years, and the number

of trees planted increases annually. The number of trees planted

during the latest event symbolizes the number of years the Com-

pany has been operating;

The Company encourages and supports employees’ profes-

sional advancement initiatives – team members participated in a

forklift driving championship;

During 2025, AB “Vilniaus baldai” supported four organizations

and events, providing furniture donations. More than EUR 22 thou

were allocated for charity and support.

5.3.4. IMPACTS, RISKS, AND OPPORTUNITIES FOR

COMMUNITIES (S4 ESRS-SBM-3)

Data management: operational data are collected from inter-

nal registers (transport route schedules, personnel data, support

agreements), traceable to original documents, and audited ac-

cording to internal control procedures.

5.3.5. GOALS AND PROGRESS MONITORING (S3 ESRS-5)

(S3 ESRS-4)

Medium-term goals (by 2027):

Systematize the register of community complaints and sugges-

tions (unified KPIs: received–reviewed–resolved; average re-

sponse time);

Volunteering and environmental projects: annual number of

trees planted not less than 14.200, continuing tree planting and

ecological initiatives;

Partnerships with educational institutions: long-term agreements

with key vocational and higher education schools (covering in-

ternship placements, joint educational materials).

Currently, the Group does not collect all quantitative indicators re-

quired by ESRS S3 (e.g., the structure of community complaints,

formal impact assessments by project). In accordance with transi-

tional provisions, the Group plans to implement a unified commu-

nity impact and complaint monitoring system by 2027.

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5.4. ESRS S4 – CONSUMERS AND END-USERS

5.4.1. PRODUCT SAFETY (S4 ESRS-1)

AB “Vilniaus baldai” ensures that products supplied to its main cli-

ent comply with applicable furniture safety and stability standards.

Products are tested in line with the client’s technical specifications

and relevant international safety standards.

In 2025, no product recalls due to safety non-compliance were re-

corded, and no formal complaints were received regarding injuries

or accidents related to the use of furniture manufactured by the

Company.

Product safety is managed through the main client’s product de-

velopment and testing process, which includes prototype testing,

periodic laboratory testing and quality audits conducted against

international standards.

In the period 2024–2025, the Company was not subject to financial

penalties or other sanctions for breaches of product safety require-

ments.

The Company does not currently collect additional quantitative

indicators under ESRS S4 (e.g., the number of product-related in-

cidents per million units sold). However, after the end of the transi-

tional period, it plans - together with the main client - to assess the

need and feasibility of monitoring such indicators.

5.4.2. CYBERSECURITY AND DATA PROTECTION

(S4 ESRS-1)

AB “Vilniaus baldai” applies high standards of data privacy and hu-

man rights protection, in accordance with the EU General Data Pro-

tection Regulation (GDPR) and other applicable international legal

acts. The Company has implemented data privacy and information

security practices that cover personal data processing principles,

employee training, risk management procedures and data breach

response processes. These measures are intended to ensure trans-

parent, lawful and proportionate processing of personal data re-

lating to customers, partners and employees, while strengthening

trust in the Company and the reliability of its operations.

The Company applies guidelines for the prevention of data protec-

tion and cybersecurity risks, establishing clear governance princi-

ples such as data minimisation, encryption, regular audits, access

control and information security testing. Data protection special-

ists continuously update policy provisions in response to legal and

technological developments.

A data classification approach is applied, defining different protec-

tion levels depending on the data type and level of risk. Access

rights are granted strictly on a “need-to-know” basis, are reviewed

periodically and are automatically revoked when an employee

changes roles or terminates employment. Data is retained only for

as long as necessary for legitimate purposes, in accordance with

the GDPR and the Company’s data retention policy.

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In the event of an incident, the Company takes immediate steps

to mitigate impacts and prevent recurrence. A centralised report-

ing channel is in place through which employees, customers or

partners may report suspected breaches. All reports received are

analysed. The Company also ensures transparent notification of

breaches and responsible communication with affected individu-

als. This openness supports transparency and strengthens trust.

Employees are trained to recognise potential threats, including so-

cial engineering attempts, and to apply safe behaviour principles.

Such measures reinforce accountability and reduce the likelihood

of human error. AB “Vilniaus baldai” also seeks to involve custom-

ers and partners in security processes by encouraging feedback

and the sharing of information on potential breaches or vulnera-

bilities.

The Company continuously improves its risk management meth-

ods to minimise any impact on users and customers. Risk assess-

ments are reviewed regularly, state-of-the-art data protection

measures are applied and threat trends are monitored. This en-

sures that potential incidents are identified at an early stage and

that their impacts are kept as low as reasonably possible. A sustain-

able and responsible approach to security enables the Company

to strengthen customer trust and foster a safe digital environment.

Additional ongoing security measures include regular external and

internal penetration testing (pentests) to identify and remediate

vulnerabilities, as well as phishing simulations to assess employee

resilience to social engineering attacks and reinforce secure be-

haviour practices. In financial year 2025, the Company carried out

two internal phishing simulation exercises and one external simula-

tion. Based on observed employee responses in recent years - par-

ticularly difficulties in distinguishing unsafe emails - the Company

plans to increase the volume of simulations in financial year 2026,

with phishing exercises becoming monthly in order to familiarise

employees with online risks and promote vigilance both at work

and in their personal lives.

The Company monitors key cybersecurity and data security per-

formance indicators, including the number of identified incidents,

the volume of reports related to suspected security breaches, re-

sponse times and the effectiveness of preventive measures. It also

assesses training coverage, participation in cybersecurity and data

protection training, and training outcomes. Security testing is used

to track trends in identified vulnerabilities and the timeframes for

their remediation. The Company regularly analyses these indica-

tors to assess risks in a timely manner, monitor progress and en-

sure the ongoing effectiveness of security measures.

Data protection and cybersecurity measures form an important

component of ESRS S4 - Consumers and end-users, as they en-

sure that customers’ and users’ personal data is processed secure-

ly and transparently. Cybersecurity measures directly contribute to

the protection of consumers’ and customers’ interests by reducing

the risks of unauthorised access, data leakage, fraud and social en-

gineering. Regular threat analysis and penetration tests help en-

sure that customer data is protected throughout its lifecycle, while

incident management processes enable rapid and transparent re-

sponses to potential breaches.

GOVERNANCE

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6.1. ESRS G1 ESRS – BUSINESS CONDUCT

6.1.1. G1 ESRS-1 FAIR AND TRANSPARENT BUSINESS

PRACTICES

In order to ensure fair and transparent business practices, the Com-

pany has implemented a Code of Ethics grounded in the values

fostered by the team—trust, honour and integrity. The Code defines

and safeguards compliance with specific standards of conduct,

including how we work and how we establish and maintain rela-

tionships with colleagues, customers, business partners and other

members of society. All employees are required to comply with the

provisions set out therein.

During the double materiality assessment, the following sub-topics

were identified as material within the business conduct area: an-

ti-corruption and bribery prevention, management of conflicts of

interest, fair competition and reliable supply chain management.

These matters are considered material due to their potential fi-

nancial effects (including fines, sanctions, contract termination and

reputational damage) and their impacts on affected stakeholders.

They are integrated into the Group’s strategy through the Code of

Business Ethics, anti-corruption procedures, supplier assessment

processes, and internal control and audit functions.

The Code of Business Ethics and other rules related to business

conduct (including anti-corruption, conflict of interest manage-

ment, and supplier conduct requirements) are approved by the

Company’s Board and apply across all entities of the AB “Vilniaus

baldai” Group. These policies are reviewed periodically, taking into

account changes in legislation, business practices and risk man-

agement arrangements.

Role of Administrative and Supervisory Bodies (G1 ESRS)

Information is provided in section 2.1. Governance Model and Re-

sponsibilities (GOV-1) (GOV-2).

Topical

ESRS

Topic Subtopic Sub-sub-topic Risk scope Impact Effect Status Impact Period

Business

Conduct

Fair competition

and supply chain

Supply chain

management

and fair

procurement

practices

Moderate Negative Potential SML

Company

Culture

Ethical Principles

Code of Conduct

Violations

Significant Negative Potential SML

More details are provided in Appendix 2 “Double Materiality Assessment” (Impact assessment).

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

6.1.2. ANTI-CORRUPTION AND ANTI-BRIBERY

PROCEDURES (G1 ESRS–4)

AB “Vilniaus baldai” does not tolerate any form of corruption or its

manifestations, strives for open competition, ethical business condi-

tions, and proper assurance of transparency and publicity in its op-

erations. The Group does not tolerate fraud, extortion, the creation

of unofficial accounting, the execution of unofficial and improperly

documented transactions, recording of fictitious expenses, use of

falsified documents, and other forms of corruption.

Employees are prohibited from accepting monetary gifts or cash

equivalents (such as gift vouchers that can be transferred or ex-

changed for cash), money transfers, tradable securities, loans, shares,

or giving or receiving gifts, or obtaining benefits in exchange for fa-

vorable conditions intended to influence a business transaction or

gain a business or personal advantage.

Board members, employees, suppliers, and Company representa-

tives must disclose any situation that may create a conflict of inter-

est that could harm the Company’s interests in favor of their own

or those of closely related persons. Situations where employees’

personal, family, or financial interests could intersect with the Com-

pany’s interests must be avoided.

The Company’s Board and Audit Committee oversee the imple-

mentation of fair and transparent business practices, anti-corrup-

tion measures, conflict-of-interest prevention, and business ethics.

The management team is responsible for implementing policies,

applying control measures, and organizing employee training.

AB “Vilniaus baldai” assesses corruption and fraud risks by con-

ducting an analysis of business partners’ reliability. Anti-corruption

and business ethics training is mandatory for all managers and em-

ployees who make decisions regarding contracts, supplier selec-

tion, or have contact with clients and government institutions.

The management team is responsible for the implementation of

policies, the application of control measures, and the organisation

of employee training.

AB “Vilniaus baldai” assesses corruption and fraud risks by incor-

porating an integrity and reliability review of business partners. An-

ti-corruption and business ethics training is mandatory for all man-

agers and employees who make decisions on contracts, supplier

selection, or have interactions with clients and public authorities.

2025 2024

Number of convictions for violations of anti-

corruption and anti-bribery laws, units

0 0

Amount of fines for violations of anti-

corruption and anti-bribery laws, EUR

0 0

Total number and nature of confirmed cases

of corruption or bribery, units

0 0

Number of confirmed cases where employees

were dismissed or disciplined for corruption

or bribery-related incidents, units

0 0

Number of confirmed incidents related to

contracts with business partners that were

terminated or not renewed due to corruption

or bribery-related violations, units

0 0

Incidents related to corruption and bribery:

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

6.1.3. SUSTAINABILITY IN THE SUPPLY CHAIN (G1 ESRS-

1) (G1 ESRS-2) (G1 ESRS-3)

AB “Vilniaus baldai” selects suppliers and partners whose approach

to sustainable and responsible business aligns with the Compa-

ny’s values and principles. When selecting suppliers, the Company

conducts a comprehensive due diligence process to assess sup-

pliers’ reliability in fulfilling commitments, as well as their quality

assurance and sustainability performance.

We ensure that the Company’s business partners, service provid-

ers, suppliers of goods or raw materials, and their subcontractors,

as well as companies operating or performing work on the Com-

pany’s premises, comply with the provisions of the ethics code re-

garding equal opportunities, respect for human rights, prevention

of harassment, child labour, forced and compulsory labour, safety

and health, and drug/alcohol prevention.

Suppliers whose employees work permanently or for an extend-

ed period for the Company or on its premises are informed that

during audits (once every four months), they will be asked to pro-

vide employee lists, timesheets, and payroll reports. In case of

non-compliance, penalties/warnings are applied; repeated viola-

tions may result in contract termination. We also ensure that they

are informed about and agree with our stance on corruption and

bribery prevention.

All new suppliers are evaluated based on human rights, social re-

sponsibility, working conditions, sustainability, safety, and anti-cor-

ruption criteria.

Supplier evaluation and audit processes are aligned with IWAY

standard requirements and linked to the policies and indicators in

section S2 – Employees in the Value Chain.

6.1.4. PROHIBITION OF SUBSTANCE ABUSE (G1 ESRS-1)

Work at the Company requires clear thinking and quick reactions

– factors that directly affect work quality and the safety of the em-

ployee and other team members. The Company strictly prohib-

its employees, partners, and suppliers from consuming alcohol,

drugs, or other psychoactive substances, or from arriving at work

under their influence. Everyone entering or leaving the Company’s

premises must undergo a sobriety screening.

6.1.5. QUALITY AND ENVIRONMENTAL MANAGEMENT

SYSTEM (G1 ESRS-1, G1 ESRS-3) (S4 ESRS-4)

The Company operates in a highly competitive environment;

therefore, it is essential that the products manufactured are of high

quality and remain competitive. The Company has implemented a

quality and environmental management system that complies with

the requirements of ISO 9001 and ISO 14001.

ISO 9001 Quality Management System supports the Company

in: ensuring that the needs of clients and stakeholders are iden-

tified and assessed (linked to ESRS SBM-2); managing processes

related to product safety, consistent quality, and compliance (S4 –

consumer/product safety); applying the continuous improvement

principle (PDCA cycle) across sustainability-relevant areas; ensur-

ing transparent incident management and corrective actions (G1

– business conduct).

Each year, audits are performed, procedures are reviewed, opera-

tional effectiveness is assessed, and improvement actions are de-

fined.

ISO 14001 Environmental Management System. Periodic internal

and external audits are conducted, and recertification is performed

to confirm ongoing compliance with the standard’s requirements.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

The ISO 14001 environmental management system strengthens

the Company’s sustainability performance by: identifying material

environmental aspects (GHG emissions, waste, energy, water); ap-

plying an environmental risk and opportunity management process

(ESRS E1, E2, E3, E5); monitoring compliance with environmental

legal requirements; implementing monitoring programmes and

impact reduction measures; and establishing a structured environ-

mental accountability framework.

During the 2024–2025 period, no major non-conformities were

identified during external certification audits; minor observations

were remedied within the prescribed deadlines.

The Board annually reviews the achievement of quality and envi-

ronmental objectives, audit results, and approves improvement

action plans.

The operational cycles under ISO 9001 and ISO 14001 are directly

linked to sustainability objectives: sustainability targets are set; re-

sources and responsibilities are assessed; environmental aspects

are evaluated; energy and raw material efficiency, waste preven-

tion, and impact reduction are addressed. This enables the Com-

pany to meet ESRS requirements in a consistent and integrated

manner rather than through stand-alone initiatives.

For several years, the Company has applied the Kaizen methodolo-

gy, with all employees encouraged to participate. Employees may

submit ideas using Kaizen paper forms or via a mobile device by

scanning QR codes displayed in the most frequently used areas of

the Company’s premises.

In FY2025, the Company received 174 improvement proposals and

implemented 70. A further 44 proposals remain in progress (imple-

mentation requires more time due to standardisation across mul-

tiple machines, supplier lead times for additional parts/improve-

ments, installation works, or specific implementation schedules).

In FY2025, employees’ suggestions primarily related to improving

newly introduced equipment or recently deployed tools.

In FY2025, the Company focused on the implementation and

launch of a new business management system, Monitor ERP. Al-

though it was not possible to go live during FY2025, the system

will become operational from the start of FY2026, i.e., 1 September

2025. The “sustainability” module within Monitor ERP is expected

to support improved assessment of environmental impacts, enable

calculation of the carbon footprint, and facilitate informed strategic

decision-making.

6.1.6. PAYMENT PRACTICES (G1 ESRS-6)

Payment practices are defined in the business contracts conclud-

ed. The Group does not apply discriminatory payment terms to

small and medium-sized suppliers compared to large suppliers;

payment terms are determined by the nature of the contract and

are applied consistently across all supplier groups. The Group has

approved an Invoice Payment and Control Procedure, which sets

out the invoice payment process.

The average actual settlement period was 30 days. Approximately

97% of invoices were paid on time in accordance with contractual

terms, and there were no payments overdue by more than 60 days.

The Company has no disputes or legal proceedings related to late

payments or unfair settlement practices.

At present, the Company does not collect disaggregated data on

payment terms by supplier category (SMEs and large suppliers). In

line with the ESRS G1-6 transitional provisions, the Group plans to

upgrade its data collection systems by 2027 in order to disclose

more detailed indicators on payment practices.

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

6.1.7. POLITICAL AND LOBBYING ACTIVITIES (G1 ESRS-5)

The Group has decided to remain politically neutral and not pro-

vide any financial support to political parties, groups, or politicians.

This code also defines behavioral rules for employees engaged in

political activities to avoid any connections or potential reputation-

al risks.

6.1.8. RESTRICTIONS ON LOBBYING AND POLITICAL

ACTIVITIES (G1 ESRS-5

)

The Company is not registered as a lobbying organization and does

not provide any financial support to political parties, candidates, or

political campaigns. Membership in business associations is trans-

parent – all membership fees are declared in financial statements.

Employees participating in political activities must ensure that their

actions do not create conflicts of interest and are not associated

with the Company’s position.

6.1.9. GOVERNANCE TARGETS (G1 ESRS 5)

The Group’s governance objectives are designed to ensure ethical,

transparent and accountable business conduct and to strengthen

the prevention and management of governance-related impacts,

risks and opportunities across the Group and its value chain. Gov-

ernance targets focus on maintaining a robust system of internal

controls, ensuring compliance with applicable legal and regulatory

requirements, and embedding integrity standards in decision-mak-

ing, supplier management and day-to-day operations.

KPI

Current

value

Target

2030

Action plan

Anti-corruption

(corruption

prevention)

0 0

- Organise annual anti-

corruption training.

- Apply a dual-approval

principle in procurement.

Cybersecurity –

data leakage

0 0

- Implement a cybersecurity

standard.

- Deploy layered (defence-in-

depth) IT security controls.

- Perform regular penetration

testing.

- Provide regular

cybersecurity training.

Long-term

profitability

and investment

efficiency

0 0

- Improve manufacturing

efficiency through innovation.

- When assessing investments,

also assess sustainability

impacts.

Resilience 0 0

- Ensure value chain

transparency to identify risks

and opportunities.

- Actively apply the “Best Buy

Principles” to reduce risks.

Sustainability

integration

0 0

- Integrate sustainability

performance and ambitions

into business development

activities and decisions.

- Reduce costs and enable

investment in sustainability

initiatives, while also

contributing to lower costs

(e.g., by reducing GHG

emissions and improving

efficiency).

In line with ESRS requirements, the Group’s governance targets

cover, inter alia:

TAXONOMY

REGULATION

DISCLOSURES

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

7.1. EU TAXONOMY REGULATION (EU)

2020/852 AND ITS DELEGATED ACTS

The EU Taxonomy Regulation (EU) 2020/852 and the delegated

acts adopted under it (together, the “Taxonomy”) establish a classi-

fication system for environmentally sustainable economic activities

and a common terminology for describing activities that contribute

to the achievement of the EU’s environmental objectives. The Reg-

ulation sets out the criteria used to determine whether an econom-

ic activity can be considered environmentally sustainable, enabling

an assessment of the environmental sustainability of investments.

Taxonomy-eligible economic activity means an economic activity

described in the European Commission’s delegated acts, regard-

less of whether the activity meets any or all of the technical screen-

ing criteria set out in the delegated act(s) for the climate-related

objectives. Accordingly, taxonomy-eligibility does not, in itself, im-

ply environmental performance or sustainability.

Transitional activity means an activity for which there are no tech-

nologically and economically feasible low-carbon alternatives, and

which has greenhouse gas (GHG) emission intensity that corre-

spond to the best performance in the sector or industry. Such ac-

tivity must meet both of the following conditions:

(a) it does not hamper the development and deployment of

low-carbon alternatives; and

(b) it does not lead to a lock-in of carbon-intensive assets, taking

into account the economic lifetime of those assets.

Enabling activity means an activity that directly enables other ac-

tivities to make a substantial contribution to one or more environ-

mental objectives.

Taxonomy-aligned economic activity means an activity that: (i)

makes a substantial contribution to one or more environmental

objectives set out in the delegated acts; (ii) does not significantly

harm any of the other environmental objectives (DNSH); (iii) is car-

ried out in compliance with minimum safeguards; and (iv) meets

the applicable technical screening criteria.

Taxonomy-non-eligible (non-taxonomy) economic activity means

an activity that is not covered (i.e., not described) in the European

Commission’s delegated acts under the EU Taxonomy.

The Taxonomy covers six environmental objectives: climate change

mitigation; climate change adaptation; the sustainable use and

protection of water and marine resources; the transition to a circu-

lar economy; pollution prevention and control; and the protection

and restoration of biodiversity and ecosystems.

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AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

7.2. APPLICATION OF THE EU TAXONOMY

REGULATION AT AB “VILNIAUS BALDAI”

7.3. IDENTIFICATION OF TAXONOMY

ACTIVITIES

AB “Vilniaus baldai” is a large public-interest entity with more than

500 employees and therefore falls within the scope of the EU Tax-

onomy reporting requirements. The Company specialises in the

manufacture of lightweight ready-to-assemble case furniture. The

Company’s core activity is not currently covered as a taxonomy-eli-

gible activity. Nevertheless, an assessment was performed to iden-

tify whether other activities carried out by the Company meet the

definitions of taxonomy-eligible activities.

The assessment was performed in accordance with Commission

Delegated Regulation (EU) 2021/2178, by analysing all activities

carried out by AB “Vilniaus baldai”, related investments and associ-

ated operating expenditures. The Company identified several ac-

tivities that are taxonomy-eligible; however, only a subset of them

can presently be assessed against the technical screening crite-

ria—primarily those related to energy generation, energy efficiency,

buildings and facilities management, and transport. When evalu-

ating taxonomy eligibility and potential alignment, the Company

considered the relevant technical screening criteria, the “do no sig-

nificant harm” (DNSH) requirements, and the minimum safeguards.

AB “Vilniaus baldai” (including UAB “Ari-Lux”) assessed its activities

against the descriptions of taxonomy-eligible activities set out in

the EU Taxonomy delegated acts. The identified taxonomy-eligible

activities are presented in the table “List and assessment of taxon-

omy-eligible activities of AB “Vilniaus baldai”.

As this is the Company’s second year of EU Taxonomy identifica-

tion and assessment, it was not possible to fully assess certain ac-

tivities for 2025 due to limitations in accounting system granular-

ity and the administrative burden of data collection. In particular,

the Company does not yet have dedicated taxonomy accounting

tools in place (e.g., tagging of taxonomy-related activities within

the accounting system), which limited the completeness of the

assessment for certain activities, especially transport-related ex-

penditures. The Company aims to ensure that by 2027 all taxono-

my-eligible activities are identified and assessed in full.

Following the identification of taxonomy-eligible activities, the

Company analysed the applicable technical screening criteria and

assessed whether its processes meet those criteria. Alignment was

also assessed with respect to minimum safeguards, i.e., the Com-

pany reviewed not only the technical screening criteria but also

whether the activities are carried out in a manner consistent with

the UN Guiding Principles on Business and Human Rights and the

OECD Guidelines for Multinational Enterprises.

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AB “VILNIAUS BALDAI” CONSOLIDATED

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Activity Taxonomy Indicator Activity Compliance

4.2. Electricity Generation Using Solar

Energy Concentration Technology

Capital Expenditures,

Operating Costs

In FY2025, the Group commissioned a 1 MW ground-mounted photovoltaic (PV)

power plant to generate electricity for own use.

EU Taxonomy classification:

- Taxonomy-eligible: the activity is considered taxonomy-eligible as it falls under the

relevant climate delegated act activity covering the installation and operation of on-

site photovoltaic solar energy systems and related auxiliary technical equipment.

- Taxonomy-aligned: alignment is assessed against the applicable Technical Screening

Criteria (TSC).

The Do No Significant Harm (DNSH) criteria and Minimum Safeguards. Based on the

FY2025 assessment, electricity generation from solar PV has no direct CO₂ emissions

during operation and no significant adverse impacts were identified in relation to

water, pollution, circular economy and biodiversity (NTA).

4.16. Installation and operation of

electric heat pumps

Operating expenses

The Company operates 15 air-to-air heat pumps (split AC units) and 3 electric chillers.

The equipment uses electricity for compressor operation and falls within heating/

cooling technical building systems.

EU Taxonomy classification:

- Taxonomy-eligible: the activity may be taxonomy-eligible under the relevant activity

for the installation/upgrade of technical building systems for heating and/or cooling.

- Taxonomy-aligned: not confirmed in FY2025, as the Company does not yet have

a complete evidence set demonstrating compliance with all applicable TSC (e.g.,

energy performance requirements and/or requirements related to refrigerants with

respect to Global Warming Potential (GWP)).

DNSH (high-level): water and biodiversity – not applicable / not material (NTA);

pollution – dependent on refrigerant GWP and related compliance; circular economy

– assessed based on equipment replacement and end-of-life management practices.

4.24. Production of heat or cooling from

bioenergy

Turnover, Operating

expenses

The Company uses its manufacturing by-product (wood dust/sawdust) for heat

generation. The assessment considers sustainability and GHG savings criteria

applicable to biomass-based energy.

EU Taxonomy classification:

- Taxonomy-eligible: the activity may be taxonomy-eligible under taxonomy activities

related to the generation of energy from renewable sources/biomass.

- Taxonomy-aligned: alignment may be demonstrated if compliance with the

relevant biomass sustainability and GHG savings criteria is evidenced (e.g., criteria

aligned with RED II and the applicable delegated acts), and if DNSH and Minimum

Safeguards requirements are met. For FY2025, the assessment is preliminary, based

on the assumption that reported GHG savings values exceed minimum requirements

(typical value 94%, default value 93%); however, final alignment requires documented

evidence supporting feedstock status (residue/by-product), calculation assumptions/

methodology and compliance.

DNSH (high-level): pollution – assessed through emission controls and biomass

sustainability criteria; circular economy – expected to be met given the use of a

manufacturing residue; biodiversity – expected to be met if the activity does not drive

conversion of natural ecosystems and meets applicable sourcing criteria; water and

climate adaptation – NTA / assessed based on applicability.

102

AB “VILNIAUS BALDAI” CONSOLIDATED

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Veikla Taksonomijos rodiklis Veiklos atitiktis

7.5. Installation, maintenance, and

repair of building energy performance

measurement, regulation, and control

devices and equipment

Operating expenses

The Company has implemented an electricity metering system (“Meteron”), enabling

improved monitoring and analysis of energy consumption.

EU Taxonomy classification:

- Taxonomy-eligible: the activity may be taxonomy-eligible under the category

covering the installation of smart electricity meters and related sensor systems.

- Taxonomy-aligned: not confirmed in FY2025, as there is currently insufficient

evidence that the system delivers automated optimisation/control of technical

building systems or otherwise meets all applicable TSC where required.

DNSH: considered met at a high level (NTA), as the system does not create direct

adverse impacts on water, pollution or biodiversity and is not associated with

hazardous emissions during use.

7.6. Installation, Maintenance,

and Repair of Renewable Energy

Technologies

Capital Expenditures,

A project was implemented to upgrade compressed air compressors and recover

waste heat for space heating. The solution reduces energy consumption, improves

energy efficiency and contributes to GHG emission reductions.

EU Taxonomy classification:

- Taxonomy-eligible: the activity may be taxonomy-eligible as an energy efficiency

improvement measure related to technical systems/process efficiency.

- Taxonomy-aligned: alignment may be demonstrated if compliance with relevant

TSC is evidenced (e.g., documented energy savings/performance criteria), and

if DNSH and Minimum Safeguards requirements are met. In FY2025, the activity is

assessed as contributing to climate change mitigation, while final alignment should

be supported by documented energy savings and compliance assessment.

DNSH: water/pollution/waste/biodiversity – NTA or expected to be met, provided

that replacement equipment and related waste streams are managed in line with

legal requirements and internal procedures.

7.7. Acquisition and ownership of

buildings

Operating expenses

The Company operates manufacturing buildings with an energy performance

certificate class A++.

EU Taxonomy classification:

- Taxonomy-eligible: buildings may be assessed under taxonomy activities related to

the acquisition/ownership/management of buildings or renovation (depending on

the specific taxonomy activity applied).

- Taxonomy-aligned: alignment is determined against the applicable TSC (e.g., EPC

class thresholds and/or the “top 15%” performance criterion, where applicable), as

well as DNSH and Minimum Safeguards. For FY2025, the assessment relies on the

existing EPC documentation; however, taxonomy alignment should be confirmed

through a documented assessment against the selected TSC pathway.

DNSH: considered met provided that building operation and maintenance comply

with applicable environmental requirements (waste management, pollution

prevention, and other relevant controls).

103

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

7.4. ASSESSMENT LIMITATIONS AND

TRANSITIONAL PERIOD (FY2025)

No taxonomy dimensions in the accounting system: the ac-

counting system does not currently include dedicated taxonomy

activity dimensions, therefore a portion of OpEx could not be

allocated to specific taxonomy activities.

Incomplete climate risk and vulnerability assessment: a compre-

hensive climate change risk and vulnerability assessment has not

yet been performed for all relevant activities; this constitutes a

gap in the evidence base required for certain DNSH criteria.

Insufficient data for transport activities: the Company does not

yet have sufficient data to assess transport-related activities (in

particular activity 6.6 freight transport by road) against the Tech-

nical Screening Criteria; therefore, these activities cannot be

concluded as taxonomy-aligned.

Investments not fully measured under the Taxonomy classifica-

tion system: part of the FY2025 investments had not yet been

captured and tagged using a taxonomy classification approach,

limiting the completeness of the assessment.

Despite these limitations, the Company confirms that in FY2025

the only activity included in category A.1 for turnover and operat-

ing expenditure KPIs – generation of heat and/or cool from bioen-

ergy (4.24) – fully meets the applicable Technical Screening Criteria

and DNSH requirements, based on available evidence. The Com-

pany plans to address the above limitations by FY2027, includ-

ing through the implementation of the Monitor ERP sustainability

module and the update of the investment classification policy.

During the assessment, the following

limitations were identified

7.5. FINANCIAL KPIS UNDER THE EU

TAXONOMY REGULATION (FY2025) –

ENGLISH

Accounting policy. In accordance with Commission Delegated

Regulation (EU) 2021/2178, the Company discloses the account-

ing policy explaining how the KPIs (turnover, CapEx and OpEx)

were determined and allocated to the numerator, as well as the

basis used to calculate each KPI.

The KPIs were calculated based on the methodology set out in

Annex I “KPIs of non-financial undertakings” of Delegated Regu-

lation (EU) 2021/2178 and relevant European Commission notices

and Q&A clarifications. As the available clarifications are not fully

comprehensive, the Company applied internal assumptions when

allocating operating expenses to individual taxonomy activities. As

a result, OpEx reported in the financial statements does not fully

reconcile to the OpEx amounts included in the Taxonomy OpEx

KPI calculation.

All disclosed KPIs related to taxonomy-eligible and/or taxono-

my-aligned activities are prepared without double counting, as

each KPI amount is allocated to distinct, non-overlapping activities.

The information is presented for FY2025 (01 September 2024 –

31 August 2025). Revenue and expenses arising from intragroup

transactions between Group companies (including UAB “Ari-Lux”)

were excluded from the Taxonomy assessment to avoid double

counting.

All taxonomy activities identified contribute to climate change mit-

igation; therefore, disclosures are presented under this environ-

mental objective only.

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AB “VILNIAUS BALDAI” CONSOLIDATED

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Turnover KPI. The Company’s main activity – furniture manufactur-

ing – is not classified as a taxonomy activity. Taxonomy turnover

is generated from generation of heat and/or cool from bioenergy

(4.24).

In FY2025, turnover from taxonomy-aligned activities represent-

ed approximately 0.51% of the Company’s total revenue. Freight

transport by road (6.6) was identified as taxonomy-eligible; how-

ever, for FY2025 it could not be fully assessed due to accounting

system limitations and disproportionate administrative burden.

CapEx KPI. Capital expenditure was assessed based on specific ac-

quisitions that can be allocated to taxonomy activities. In line with

Delegated Regulation (EU) 2021/2178, the CapEx KPI includes ad-

ditions to tangible and intangible assets before depreciation, am-

ortisation and revaluations, excluding fair value changes.

In FY2025, taxonomy-aligned CapEx was identified in two activities:

Installation, maintenance and repair of renewable energy technol-

ogies (7.6): approximately 6,80%; and Electricity generation using

solar photovoltaic technology (4.2): approximately 8,86%.

The total share of taxonomy-aligned activities in CapEx amounted

to 15,66% of total CapEx considered for the purposes of the Tax-

onomy KPI.

OpEx KPI. Under Delegated Regulation (EU) 2021/2178, the Tax-

onomy OpEx KPI is calculated as the ratio of OpEx associated with

assets and processes linked to taxonomy activities to total OpEx as

defined by the Taxonomy Regulation. The OpEx denominator in-

cludes only direct non-capitalised costs related to (i) building ren-

ovation measures, (ii) short-term lease, (iii) maintenance and repair,

and (iv) day-to-day servicing of property, plant and equipment.

In FY2025: OpEx related to taxonomy-aligned activity generation

of heat and/or cool from bioenergy (4.24) amounted to EUR 992

thou, or 72,60% of the Taxonomy OpEx denominator. OpEx related

to taxonomy-eligible but not environmentally sustainable activities

(taxonomy-eligible but not aligned) – electric heat pumps (4.16)

and energy performance measurement and control equipment for

buildings (7.5) – amounted to EUR 5 thousand, or 0,36% of total

OpEx (Taxonomy denominator).

Total taxonomy OpEx (A.1 + A.2) amounted to 26,20%, with the

remaining 73,80% classified as non-taxonomy.

As the accounting system did not include taxonomy-specific di-

mensions in FY2025 to distinguish direct non-capitalised expendi-

tures by taxonomy activity, the Company was not able to disclose

all potentially eligible OpEx. The Company plans to update its ac-

counting and data collection systems by FY2027, and expects to

expand OpEx capture across all taxonomy activities in future re-

porting periods.

DNSH and alignment status – summary. As a comprehensive cli-

mate risk and vulnerability assessment has not yet been performed

for all activities, certain taxonomy-eligible activities (e.g., 4.16, 7.5,

7.7, 6.6) can currently be classified as taxonomy-eligible but not

taxonomy-aligned.

Based on the evidence available, no DNSH breaches were identi-

fied for bioenergy (4.24) and for the solar PV and compressor up-

grade projects (4.2 and 7.6); therefore, these activities are treated

as taxonomy-aligned.

In support of the European Green Deal objectives, the Company

intends, to the extent feasible given the nature of its operations, to

consider the EU Taxonomy Regulation when planning long-term

investments, with the aim of increasing the share of investments

allocated to taxonomy-aligned activities.

The results of the assessment are presented below using the EU

Taxonomy templates.

If you want, I can compact this into a ready-to-paste report layout

(headings + paragraph style + bullet consistency) or adjust termi-

nology to match the exact wording your auditor prefers (e.g., “Tax-

onomy KPIs” vs “PVRR”, “FY2025” vs “financial year 2025”).

105

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The percentage of Turnover derived from products or services related to a qualifying taxonomic economic activity for 2025.

2025 financial year Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm')

Economic Activities (1) Code

Absolute

turnover (3)

Proportion

of Turnover

(4)

Climate

Change

Mitigation

(5)*

Climate

Change

Adaptation

(6)

Water (7)

Pollution

(8)

Circular

Economy

(9)

Biodiver-

sity and

ecosys-

tems (10)

Climate Chan-

ge Mitigation

(11)

Climate Chan-

ge Adaptation

(12)

Water

(13)

Pollution

(14)

Circular

Economy

(15)

Biodiver-

sity (16)

Minimum

Safeguards

(17)

Taxonomy aligned pro-

portion of total turnover,

year N (18)**

Catego-

ry(enablin-

gactivity)

(19)

Category

(transi-

tional

activity)

(20)

Text

In thou-

sands of

EUR

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

4.24. Production of heat or

cooling from bioenergy

35.30 537 0,51 Y N NTA NTA T NTA Y Y Y Y Y Y Y 0,54 - -

Turnover of

environmentally

sustainable activities

(Taxonomy-aligned) (A.1)

537 0,51 0,51% % % % 0,54% % Y Y Y Y Y Y Y 0,54 - -

2025 financial year Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm')

Of which: enabling

activity”

0 0 - - - - - - - - - - - - %

Of which: transitional

activity

0 0 - - - - - - - - - - - - %

A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

YA; NTA (f) YA; NTA (f) YA; NTA (f) YA; NTA (f) YA; NTA (f) YA; NTA (f)

Turnover of Taxonomy-

eligible but not

environmentally

sustainable activities

(not Taxonomy-aligned

activities) (A.2)

- - - % % % % % 0,00

2025 financial year Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm')

Total (A.1+A.2) 537 0,51 0,51% % % % % % 0,54

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

Turnover of Taxonomy-

non-eligible activities

103.682

99,49

Total 104.219 100,00

106

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The percentage of capital expenditure received for products or services related to a qualifying taxonomic economic activity for 2025.

2025 financial year

Year

Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm')

Economic Activities (1) Code

Absolute

CapEx (3)

Proportion

of CapEx

(4)

Climate

Change

Mitigation

(5)*

Climate

Change

Adaptation

(6)

Water (7)

Pollution

(8)

Circular

Economy

(9)

Biodiver-

sity and

ecosys-

tems (10)

Climate Chan-

ge Mitigation

(11)

Climate Chan-

ge Adaptation

(12)

Water

(13)

Pollution

(14)

Circular

Economy

(15)

Biodiver-

sity (16)

Minimum

Safeguards

(17)

Taxonomy

alignedproportion

of total CapEx, year

N (18)

Category

(enabling

activity)

(19)

Category

(transitio-

nal activity)

(20)

Text

In thou-

sands of

EUR

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E P

TAXONOMY-ELIGIBLE ACTIVITIES

A.1. CapEx of environmentally sustainable activities (Taxonomy-aligned)

4.2. Electricity generation

using solar energy

concentration technology

35.11 413 8.86 Y N NTA NTA NTA NTA Y Y Y Y Y Y Y 0 E -

7.4 Installation, maintenance

and repair of energy

efficiency equipment

43.21 Y N NTA NTA NTA NTA Y Y Y Y Y Y Y 11,34 E -

7.6. Installation, maintenance

and repair of renewable

energy technologies

43.22 317 6,80 Y N NTA NTA NTA NTA Y Y Y Y Y Y Y 0,00 E -

Capital expenditures for

environmentally sustainable

activities (Taxonomy-aligned)

(A.1)

731 15,66 15,66 % % % % % Y Y Y Y Y Y Y 11,34 - -

2025 financial year Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm')

Of which: enabling activity 0 0 - - - - - - - - - - - - - 0,00 E

Of which: transitional activity 0 - - - - - - - - - - - - - 0,00 T

A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned)

7.2. Renovation of existing

buildings

- YA YA NTA NTA NTA NTA 0,10

CapEx of Taxonomy-eligible

but not environmentally

sustainable activities (not

Taxonomy-aligned activities)

(A.2

- - - % % % % % 0,10

2025 financial year Svaraus prisidėjimo kriterijai Reikšmingos žalos nedarymo kriterijai (h)

Total (A.1+A.2) 731 15,66 15,66 % % % % % 17,20

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

Capex of Taxonomy-non-

eligible activities

3.936 84,34

Total (A+B) 4.666 100 %

107

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The percentage of operating expenditure that is earned on products or services related to a qualifying taxonomic economic activity for 2025.

2025 financial year Year Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm')

Economic Activities (1) Code

Absolute

OpEx (3)

Proportion

of OpEx (4)

Climate

Change

Mitigation

(5)*

Climate

Change

Adaptation

(6)

Water (7)

Pollution

(8)

Circular

Economy

(9)

Biodiver-

sity and

ecosys-

tems (10)

Climate Chan-

ge Mitigation

(11)

Climate Chan-

ge Adaptation

(12)

Water

(13)

Pollution

(14)

Circular

Economy

(15)

Biodiver-

sity (16)

Minimum

Safeguards

(17)

Taxonomy aligned

proportion of total

OpEx, year N (18)

Category

(enabling

activity)

(19)

Category

(transi-

tional

activity)

(20)

Text

In thou-

sands of

EUR

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y; N; NTA

(b) (c)

Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

4.24. Production of heat/cool

from bioenergy

43.2,

71.1,

C16

992

72,6

YA NTA NTA NTA NTA NTA 2,80 - -

7.7 Acquisition and

ownership of buildings

68.1;

41;F43

YA NTA NTA NTA NTA NTA 1,41

OpEx of Taxonomy-eligible

but not environmentally

sustainable activities (not

Taxonomy-aligned activities)

(A.2)

992 72,6 72,6 % % % % % Y Y Y Y Y Y Y 0 - -

2025 financial year Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm')

Of which: enabling activity 0 0 - - - - - - - - - - - - 0 E

Of which: transitional activity 0 0 - - - - - - - - - - - - 0 T

A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned)

4.16. Installation and

operation of electric heat

pumps

33.12,

43.22

11 0,83 YA YA NTA YA NTA NTA 0,27 - -

7.5. Installation, maintenance

and repair of instruments

and devices for measuring,

regulating and controlling

energy performance of

buildings

43.42 5 0,36 YA NTA NTA NTA NTA NTA 0,11

OpEx of Taxonomy-eligible

but not environmentally

sustainable activities (not

Taxonomy-aligned activities)

(A.2)

16 1,19 1,19 % % % % % 18,71 - -

2025 financial year Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm')

Total (A.1+A.2) 1.009 73,80 73,80 % % % % % 18,73

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

OpEx of Taxonomy-non-

eligible activities

358 26,20

Total (A+B) 1.367 100 %

108

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APPENDIX 1. DATA POINTS INDEX

(Index of ESRS 2 (horizontal) and topical ESRS data points required by other EU legislation)

Disclosure requirement &

related data point

Reference

to SFDR

(23)

Reference to Pillar

3 (24)

Reference to Benchmark

Regulation (25)

Reference to EU Climate Law

(26)

Reference to the report

(section/page)

ESRS 2 GOV-1 – Gender

balance on the administrative,

management and supervisory

bodies

Art. 21(d)

Annex I, Table 1,

indicator 13

—

Commission Delegated

Regulation (EU) 2020/1816,

Annex II

2.1 Governance model

and responsibilities – p.

12-13

ESRS 2 GOV-1 – Share of

independent board members

(%)

Art. 21(e) — —

Commission Delegated

Regulation (EU) 2020/1816,

Annex II

2.1 Governance model

and responsibilities – p. 12

ESRS 2 GOV-4 – Statement on

due diligence

Art. 30

Annex I, Table 3,

indicator 10

— —

3.1.3 Sustainability due

diligence and its link to

the DMA - p. 26-287

ESRS E1-1 – Transition plan

for climate change mitigation

(towards a climate-neutral

economy by 2050)

Art. 14 — —

Regulation (EU) 2021/1119,

Art. 2(1)

4.1.3 Climate neutrality

targets and action plan –

p. 47

ESRS E1-4 – GHG emission

reduction targets

Art. 34

Annex I, Table 2,

indicator 4; Art.

449a; 2022/2453

template 3

Delegated Regulation (EU)

2020/1818, Art. 6

—

4.1.3 Climate neutrality

targets and action plan –

p. 41

ESRS E1-5 – Energy

consumption and mix

Art. 37

Annex I, Table 1,

indicator 5

— —

4.1.4 Energy consumption

– p. 47

ESRS E1-6 – Gross Scope 1, 2, 3

and total GHG emissions

Art. 44

Annex I, Table 1,

indicators 1–2; Art.

449a; 2022/2453

template 1

Delegated Regulation (EU)

2020/1818, Art. 5(1), Art. 6

and Art. 8(1)

—

4.1.2. Greenhouse gas

(CO

E) emissions (E1-6

ESRS) p.43-46

ESRS E2-4 – Quantities of

pollutants listed in Annex II to

E-PRTR

Art. 28

Annex I, Table 1,

indicator 8; Annex

I, Table 2, indicators

1–3

— —

4.2.3 Pollution

management measures

– p. 52; 4.2.4 Pollution

metrics – p. 53

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Disclosure requirement &

related data point

Reference

to SFDR

(23)

Reference to Pillar

3 (24)

Reference to Benchmark

Regulation (25)

Reference to EU Climate Law

(26)

Reference to the report

(section/page)

ESRS E3-1 – Water and

marine resources (policy and

governance)

Art. 9; Art.

13; Art. 14

Annex I, Table 2,

indicators 7–8 and

— —

4.3.1 Water saving and

pollution reduction – p. 54

ESRS E4-2 – Policy to address

deforestation

Art. 24(d)

Annex I, Table 2,

indicator 15

— —

4.4.2 Use of wood

resources – p. 56-57

ESRS E5-5 – Non-recycled waste Art. 37(d)

Annex I, Table 2,

indicator 13

— —

4.5.4 Results and targets

(E5-4, E5-5) – p. 62-63

ESRS E5-5 – Hazardous waste

and radioactive waste

Art. 39

Annex I, Table 1,

indicator 9

— —

4.5.4 Results and targets

(E5-4, E5-5) – p. 62-63

ESRS S1-1 – Human rights policy

commitments

Art. 20

Annex I, Table 3,

indicator 9 and

Table 1, indicator 11

— —

5.1.2 Policy related to own

workforce (ESRS S1-1) - p.

ESRS S1-1 – Due diligence policy

(ILO Conventions No. 1–8)

Art. 21 — —

Commission Delegated

Regulation (EU) 2020/1816,

Annex II

5.1.2 Policy related to own

workforce (ESRS S1-1) - p.

ESRS S1-1 – Occupational

accident prevention policy or

management system

Art. 23

Annex I, Table 3,

indicator 1

— —

5.1.2 Policy related to own

workforce (ESRS S1-1) - p.

ESRS S1-3 – Grievance and/or

complaints handling mechanism

Art. 32(c)

Annex I, Table 3,

indicator 5

— —

5.1.11. Incidents,

complaints and severe

human rights impacts (S1

ESRS-17) - p. 71

ESRS S1-14 – Number and rate

of fatalities and work-related

accidents

Art. 88(b)

and (c)

Annex I, Table 3,

indicator 2

—

Commission Delegated

Regulation (EU) 2020/1816,

Annex II

5.1.13. Health and safety

metrics (S1 ESRS–14) - p.

S1-14 ETAS - Number of

working days lost due to injuries,

accidents, fatalities or illness

Art. 88(e)

Annex I, Table 3,

indicator 3

— —

5.1.13. Health and safety

metrics (S1 ESRS–14) - p.

ESRS S1-16 – Unadjusted

gender pay gap

Art. 97(a)

Annex I, Table 1,

indicator 12

—

Commission Delegated

Regulation (EU) 2020/1816,

Annex II

5.1.7 Pay policy and

incentive system p. 76

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Disclosure requirement &

related data point

Reference

to SFDR

(23)

Reference to Pillar

3 (24)

Reference to Benchmark

Regulation (25)

Reference to EU Climate Law

(26)

Reference to the report

(section/page)

ESRS S2-1 – Policy related to

value chain workers

Art. 18

Annex I, Table 3,

indicators 11 and 4

— —

5.2. ESRS S2 – Workers in

the value chain (S2-6, S-7)

- p. 86

ESRS S3-4 – Issues and incidents

in relation to human rights

Art. 36

Annex I, Table 3,

indicator 14

— —

5.3.5. Goals and progress

monitoring (S3 ESRS-5)

(S3 ESRS-4) -p. 89

ESRS S4-1 – Policy related to

consumers and end-users

Art. 16

Annex I, Table 3,

indicator 9 and

Table 1, indicator 11

— —

5.4. ESRS S4 – Consumers

and end-users - p. 90-91

ESRS G1-4 – Fines for breaches

of anti-corruption/anti-bribery

Art. 24(a)

Annex I, Table 3,

indicator 17

—

Commission Delegated

Regulation (EU) 2020/1816,

Annex II

6.1.2 Anti-corruption and

anti-bribery procedures

(G1 ESRS-4) - p. 94

ESRS G1-4 – Standards for

preventing corruption and/or

bribery

Art. 24(b)

Annex I, Table 3,

indicator 16

— —

6.1.2 Anti-corruption and

anti-bribery procedures

(G1 ESRS-4) - p. 94

111

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APPENDIX 2 – DOUBLE MATERIALITY ASSESSMENT: IMPACT ANALYSIS

The-

matic

ESRS

Topic Subtopic Sub-subtopic Impact description Magnitude Scale (Scope) Remediability Risk scope

Impact

effect

Status

Impact

time

horizon

Climate

change

GHG

emissions

from energy

use

emissions generated in

the Company’s operations and

related to energy consumption

have a material impact on

climate change, environmental

quality and, indirectly, people’s

living conditions. Energy

intensity drives the volume of

GHG emissions that contribute

to global temperature change

and deteriorating air quality.

Increasing frequency of extreme

weather events (heatwaves,

heavy rainfall, storms) may affect

supply chain reliability, raw

material availability, security of

energy supply and continuity of

production.

Strong – a large share

of energy is used in

manufacturing, resulting

in a high CO

footprint

and strong effects on

environmental quality,

ecosystems and human

health; global in nature

and strategically relevant to

climate mitigation goals.

Regional; affects not only

internal operations but

also the wider value chain

(from energy suppliers to

transportation).

Partially remediable

– reductions are

possible through

energy efficiency and

renewable solutions,

but neutrality requires

long-term measures.

Critical Negative Actual SML

Climate

change

Energy

efficiency

High energy use in

manufacturing results in a high

CO₂ footprint and indirectly

contributes to climate change.

This may have long-term effects

on production processes and

reputation, drive cost fluctuations

and influence relationships

with suppliers, customers and

communities.

Strong – significant

energy use affects both

environmental performance

and business outcomes

(costs, reputation,

relationships).

Strong – affects internal

processes (efficiency,

cost structure) and

external factors (emissions

balance, supply chain

sustainability).

Partially remediable

– can be reduced

through technological

and preventive

measures, though

impacts remain

important from

a sustainability

perspective.

Critical Negative Actual SML

E2 Pollution Air pollution Wood dust

Wood processing generates

dust that can affect workers’

health and ambient air quality.

Proper maintenance and regular

audits enable rapid reduction of

the impact and support a safe

working environment.

Low/Weak – dust may

negatively affect respiratory

health, cause allergies and

contribute to long-term

health issues for workers.

Limited – confined to

specific processes/areas

and several zones within

a unit.

Easily remediable

– effective dust

collection, filtration

and air-cleaning

equipment, supported

by maintenance and

audits.

Material Negative Actual SML

E2 Pollution Air pollution VOC emissions

Varnishes, adhesives and

finishing materials emit VOCs,

directly affecting air quality,

contributing to smog formation

and impacting workers’ health.

Elevated concentrations may

cause respiratory disorders and

long-term environmental effects.

Medium – affects air quality

and health but not at a

systemic/global scale.

Local – primarily within

the site and nearby

area; greatest impact

on employees and

surrounding communities.

Partially remediable –

can be reduced with

filtration/ventilation

and emission capture;

full remediation

requires systemic

prevention.

Material Negative Actual SML

E2 Pollution

Water pollu-

tion

Wastewater

discharge

Production wastewater could

contain pollutants posing risks

to the environment and local

communities; however, as water

is not used in the manufacturing

process, the likelihood of

pollutant-containing production

wastewater is minimal.

Low/Weak – potential direct

impacts exist if limits are

exceeded, but the risk is

minimal due to the nature of

processes.

Significant – could affect

the site and surrounding

areas.

Easily remediable

– manageable with

standard measures;

no long-term

consequences

expected.

Significant Negative Actual SML

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The-

matic

ESRS

Topic Subtopic Sub-subtopic Impact description Magnitude Scale (Scope) Remediability Risk scope

Impact

effect

Status

Impact

time

horizon

E2 Pollution Soil pollution

Storage of

chemicals

Improper storage of chemicals

may cause soil and groundwater

contamination, with potential

long-term ecological impacts

and risks to employee and

community health.

Strong – spills/leaks can lead

to long-term contamination

and health risks.

Limited – specific

workplaces/processes,

but with potential broader

environmental harm.

Partially remediable

– prevention/control

reduces risk; full

remediation after an

incident is costly and

time-consuming.

Significant Negative Actual SML

Water and

marine reso-

urces

Water con-

sumption

Technological

water use in

production

processes

Water is used for auxiliary

processes and domestic needs;

even minimal consumption

affects efficiency and costs.

Not significant – water is not

used in the manufacturing

process.

Limited – confined to

specific activity areas.

Remediable – can

be reduced through

standard prevention

and control measures.

Low Negative Actual SML

Water and

marine reso-

urces

Wastewater

Water

discharge to the

environment

Wastewater may affect local

communities and infrastructure;

use is mainly domestic/

auxiliary as water is not used in

production.

Low/Weak – limited

relevance to environment or

worker well-being.

Limited – confined to a

specific activity area.

Remediable – can

be reduced through

standard prevention

and control measures.

Low Negative Actual SML

Biodiversity

and ecosys-

tems

Raw material

supply

Wood raw

material supply

Unsustainable wood sourcing

harms biodiversity, habitats and

ecosystem resilience, potentially

affecting raw material availability/

price and the Company’s

reputation; certified sourcing

is used, but restoration is long-

term.

Strong – unsustainable

sourcing can significantly

harm biodiversity.

Broad – sourcing across

the region (Lithuania and

neighbouring countries).

Partially remediable –

certification helps, but

ecosystem recovery is

long-term.

Significant Negative Potential SML

Resources

and circular

economy

Resource

inputs

Resource

consumption

Consumption of raw materials,

energy and water, along with

waste generation and emissions,

directly affects the environment,

resource availability and supply

chain sustainability; poor

management increases GHG

emissions, waste and energy use.

Medium – intensive resource

and energy use has direct

environmental and supply

chain impacts.

Medium – covers a

localised market.

Partially remediable

– measures can

significantly reduce

impacts.

Material Negative Actual SML

Resources

and circular

economy

Resource

outputs

Durability /

repairability

All products are recyclable and

labelled with a recycling symbol,

but actual recycling depends on

consumer behaviour and waste

infrastructure; non-recycling

increases landfill accumulation

and extends waste lifecycles.

Medium – recyclability

exists, but end-of-life

outcomes depend on

external factors.

Strong – impacts extend

beyond the Company;

products are shipped to

30 countries.

Partially remediable

– products are

recyclable and

labelled, but real-

world recycling rates

are outside full control.

Significant Negative Potential SML

Circular

economy

Waste

Packaging

(cardboard,

plastic)

Packaging use increases

waste volumes and may affect

processes, reputation and costs;

impacts are mainly linked to

cardboard and plastic used for

packing and storage.

Low/Weak – contributes

to resource use and

environmental pollution if

not managed properly.

Strong – occurs across

supply/manufacturing

and related logistics, but

mainly localised to the

site.

Almost fully

remediable – sorting,

recycling and reuse

systems (e.g., FSC-

certified cardboard,

bioplastics) reduce

impacts effectively.

Low Negative Actual SML

S1 Workforce

Health and

safety

Workplace

accidents

Workplace accidents directly

affect employee health, safety

and well-being; severe cases

may result in long-term disability

or death, with major social and

moral impacts.

Strong – direct, potentially

severe consequences for

workers.

Internal – affects a

significant share of

production personnel and

can influence recruitment/

retention.

Partially remediable

– prevention and

training reduce risk,

but consequences

of incidents and

reputational impacts

are hard to fully

eliminate.

Critical Negative Actual SML

S1 Workforce

Training and

innovation

Skills gaps;

labour

shortages

Skills gaps and labour shortages

affect both production and

administrative processes and

may extend to supply chain

partners through delays or

production stoppages.

Strong – directly affects

productivity and long-term

capability retention.

Significant – impacts all

areas requiring technical

competences and can

propagate to partners.

Medium (time-

consuming) – training

investments can

address gaps, but

building skills takes

time.

Critical Negative Actual SML

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The-

matic

ESRS

Topic Subtopic Sub-subtopic Impact description Magnitude Scale (Scope) Remediability Risk scope

Impact

effect

Status

Impact

time

horizon

Working

conditions

Pay and

benefits

Pay transparen-

cy and competi-

tiveness

Competitive, market-aligned pay

affects employee motivation,

loyalty and the ability to attract

and retain qualified specialists.

Strong – inadequate pay

can reduce motivation and

loyalty.

Regional – recruitment

from 16 different

localities; potential

broader reputational

impact if public.

Easily remediable

– pay policy review,

clear criteria,

communication of

principles and periodic

pay transparency

audits.

Material Positive Actual SML

Supply

chain wor-

kers

Human rights Child labour

Likelihood is low, as only a

small share of suppliers may

operate in regions where social

responsibility practices are not

fully implemented; isolated

compliance breaches may

occur, but child labour cases

would severely breach human

rights and labour standards and

pose major reputational and

contractual risks.

Very high materiality if it

occurs – direct violation of

fundamental human rights

and ILO standards; major

reputational risk.

Critical – multi-country

supply chain; one supplier

can affect international

reputation.

Partially remediable

– audits, supplier

development

and termination

of relationships;

reputational impacts

may be long-lasting

once public.

Material Negative Actual SML

Supply

chain wor-

kers

Human rights

Labour

conditions

violations

Likelihood is low, but isolated

breaches may occur; violations

(unsafe workplaces, excessive

hours, lack of social protection)

can harm worker health and

human rights and create

reputational impacts.

Material – potentially serious

social and reputational

consequences.

Strong – supply chain

spans suppliers/

subcontractors across

countries; buyer/investor

expectations increase

sensitivity.

Partially remediable

– audits and supplier

changes possible,

but trust impacts may

persist.

Significant Negative Actual SML

S4 Consumers

Product

safety

Furniture

stability

Unsafe furniture can

harm consumers; stability

shortcomings may lead to

serious incidents, especially

involving children’s furniture,

with long-term reputational and

cost impacts (e.g., recalls).

Strong – direct consumer

safety risk; even single

incidents can be severe.

Strong – may affect

multiple product lines and

markets.

Partially remediable

– recalls and design

improvements

are possible; trust

recovery may take

time.

Significant Negative Actual SML

Communi-

ties

Impacts on

communities

Noise and

transport

Noise and heavy transport may

affect local communities and

create reputational impacts if

community needs are ignored.

Low – no significant adverse

impact identified; primarily

reputational sensitivity.

Local – limited to the

surrounding region.

Easily remediable –

communication and

community initiatives

can restore trust.

Significant Negative Actual SML

Business

conduct

Anti-corrup-

tion

Unfair suppliers

Non-transparent practices

undermine trust and may affect

operations and reputation, costs

and stakeholder relationships.

Medium – primarily

reputational/relationship

impacts rather than direct

environmental or social

harm.

Strong – applies across

the organisation and

supply chain.

Partially remediable

– termination of

contracts, supplier

review and

strengthened controls;

reputational recovery

may take time.

Significant Negative Actual SML

Corporate

culture

Ethics and

transparency

Breaches of the

Code of Ethics

Unethical behaviour undermines

image and trust and may affect

operations and relationships.

Low/Weak – typically

indirect impacts through

culture, trust and

engagement.

Medium – covers

employees, management

and supply chain

representatives; repeated

cases can scale up.

Easily remediable

– clear controls and

communication

(ethics committees,

reporting channels,

training) make impacts

manageable.

Significant Negative Actual SML

Cybersecu-

rity / Data

governance

IT systems Data protection

Inadequate data management

can lead to data leaks or system

disruptions, causing operational

stoppages, reputational damage

and legal consequences (GDPR).

Material – potentially broad

operational, legal and

reputational consequences.

Significant – impacts

internal systems and

external stakeholders

(partners, customers,

supply chain).

Partially remediable

– systems can

be restored, but

reputational damage

may persist.

Material Negative Actual SML

114

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

APPENDIX 3. IRO-2 TABLE OF SIGNIFICANT IMPACTS, RISKS, AND OPPORTUNITIES

Topics Impacts Risks Opportunities Impact effect

E1 Climate Change

GHG emissions, energy

consumption

Regulatory risk, cost increase

Energy efficiency, CO

reduction

Negative

E2 Pollutants Air, water pollution Environmental violation risk Cleaner processes Negative

E3 Water and Marine

Resources

Water consumption Water scarcity risk Water-saving technologies Negative

E4 Circular Economy Waste, material use Increasing waste Recycling, efficiency Negative

E5 Biodiversity Impact on ecosystems Biodiversity loss risk

Greening, compensatory

measures

Negative

S1 Own Workforce Health, safety, remuneration Accidents, turnover Training, well-being Negative

S2 Value Chain Workers Supplier working conditions Child labour, OHS risk Supplier assessment Negative

S3 Communities Noise, transport Dissatisfaction Dialogue, social initiatives Negative

S4 Consumers Product safety Safety breaches Quality improvement Negative

G1 Governance Ethics, anti-corruption Corruption risk Transparency, audits Negative

115

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

APENDIX 4. 2 ESRS IRO-2

ESRS topic Impact / risk / opportunity description Type (IRO) Materiality Status Value chain level

E1 – Climate change

GHG emissions (Scopes 1 and 2), energy

efficiency, physical and transition risks

Impact / risk /

opportunity

Critical Actual Scope 1

E2 – Air pollution Wood dust Impact / risk Material Actual Scope 1

E2 – Air pollution

VOC emissions from adhesives, varnishes

and coatings

Impact / risk /

opportunity

Material Actual Scope 1

E2 – Water pollution Wastewater discharge Impact / risk Significant Potential Scope 1

E2 – Soil pollution Storage of chemicals Impact / risk Significant Potential Scope 1

E3 – Water consumption Technological water use Impact / risk Moderate Actual Scope 1

E3 – Water pollution

Discharge of wastewater to the

environment

Impact / risk Moderate Potential Scope 1

E4 – Biodiversity

Deforestation in the value chain (wood

supply)

Impact / risk Significant Potential Scope 3

E5 – Resource inputs

Consumption of raw materials, energy

and materials

Impact / risk Material Actual Scope 1

E5 – Resource outputs Product durability / recyclability Impact Significant Potential Scope 3

E5 – Waste Wood offcuts, sawdust Opportunity Moderate Actual Scope 1

E5 – Waste Packaging waste (cardboard, plastic) Impact Material Actual Scope 1

S1 – Occupational health &

safety

Accidents at work, occupational risk

Impact / risk /

opportunity

Critical Actual Scope 1

S1 – Pay and gender gap Women’s pay is 24% lower than men’s Risk Critical Actual Scope 1

S1 – Skills / training Labour shortages, skills gaps Risk Critical Actual Scope 1

S1 – Diversity & inclusion

Risk of discrimination and bullying/

harassment

Risk Moderate Potential Scope 1

116

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

ESRS topic Impact / risk / opportunity description Type (IRO) Materiality Status Value chain level

S1 – Social protection Risks of burnout and sickness absence Risk Moderate Potential Scope 1

S1 – Employee turnover High turnover (38%) Risk Material Actual Scope 1

S1 – Worker representation

Risks related to grievances and

engagement

Risk Moderate Potential Scope 1

S2 – Value chain workers

Risks of child labour, poor working

conditions, human rights violations

Impact / risk Significant Potential Scope 3

S3 – Communities Noise, transport impacts, social risk Impact / risk Moderate Potential Scope 1

S4 – Consumer safety Furniture stability and safety risk Impact / risk Material Potential Scopes 2–3

S4 – Data protection Risk of data leakage and fraud Impact / risk Material Potential Scope 1

G1 – Corruption and

transparency

Risks of bribery, fraud, conflicts of interest Impact / risk Moderate Potential Scope 1

G1 – Supply chain

management

Risk of unfair suppliers / non-compliance Risk Significant Potential Scope 3

G1 – Data Quality and

Traceability

Risk of unreliable data Risk Moderate Actual 1 level

117

AB “VILNIAUS BALDAI” CONSOLIDATED

SUSTAINABILITY REPORT 2025

APPENDIX 5. DATA POINTS INDEX

ESRS standard Requirement Report section

ESRS 2 General disclosures Sections 1–4

ESRS E1 Climate change Section 5.1

ESRS E2 Pollution Section 5.2

ESRS E3 Water and marine resources Section 5.3

ESRS E4 Biodiversity and ecosystems Section 5.4

ESRS E5 Resource use and circular economy Section 5.5

ESRS S1 Own workforce Section 6.1

ESRS S2 Workers in the value chain Section 6.2

ESRS S3 Affected communities Section 6.3

ESRS S4 Consumers and end-users Section 6.4

ESRS G1 Business conduct Section 7

EU Taxonomy

Regulation (EU) 2020/852 and Delegated

Regulation (EU) 2

Section 8

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Independent Practitioners' Limited Assurance Report on AB Vilniaus Baldai consolidated

Sustainability Statement

To the Shareholders of AKCINĖ BENDROVĖ „VILNIAUS BALDAI“

Opinion

We have performed a limited assurance engagement on the consolidated sustainability information of AB

Vilniaus Baldai Group (hereinafter – the Group) as at and for the year ended 31 August 2025, presented in the

section “‘AB Vilniaus Baldai Consolidated Sustainability Report’” the Consolidated Management Report

(hereinafter – the Sustainability Statement), in order to determine whether it has been prepared in accordance

with the Law on Corporate and Corporate Group Reporting of the Republic of Lithuania and the European

Sustainability Reporting Standards (ESRS).

Based on the procedures performed and the evidence obtained, nothing has come to our attention that causes

us to believe that the Group’s Sustainability Statement as at and for the year ended 31 August 2025 is not, in all

material respects, prepared in accordance with the Law on Corporate and Corporate Group Reporting of the

Republic of Lithuania, including:

• compliance with the European Sustainability Reporting Standards (ESRS), including that the process

carried out by the Group to identify the information disclosed in the Sustainability Statement (hereinafter

– the Process) is in accordance with the description provided in the Double materiality assessment

subsection “Description of the process to identifying and assess material impacts, risks, and

opportunities (IRO-1)”; and

• compliance of the disclosure provided in subsection “EU Taxonomy Alignment Overview” of the

Sustainability Statement with Article 8 of Regulation (EU) 2020/852 (hereinafter – the Taxonomy

Regulation).

Our opinion on the Sustainability Statement does not cover any other information presented together with the

Sustainability Statement, including the Consolidated and Separate Financial Statements and the Consolidated

Management Report for the year ended 31 August 2025.

Basis for opinion

We performed our limited assurance engagement on the Sustainability Statement in accordance with

International Standard on Assurance Engagements (ISAE) 3000 (Revised) “Assurance Engagements Other

than Audits or Reviews of Historical Financial Information”, issued by the International Auditing and Assurance

Standards Board (IAASB). Our responsibilities under this standard are further described in the section “Our

Responsibility” of our opinion.

We complied with the independence and other ethical requirements set out in the International Code of Ethics

for Professional Accountants (including International Independence Standards), issued by the International

Ethics Standards Board for Accountants (IESBA).

Our firm applies International Standard on Quality Management 1 (ISQM 1), “Quality Management for Firms that

Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements”,

issued by the IAASB. Under this standard, the firm is required to design, implement, and operate a system of

quality management, including policies and procedures related to compliance with ethical requirements,

professional standards, and applicable legal and regulatory requirements.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Other matter

The subject matter information for the year ended 31 August 2024 was not part of our limited assurance

engagement; therefore, we do not express a opinion or any assurance on this information.

Inherent limitations in the preparation of the Sustainability Statement

When providing forward-looking information in accordance with ESRS, the Group's management is required to

prepare such information based on disclosed assumptions about potential future events and possible future

actions of the Group. It is likely that actual results will differ, as anticipated events often do not occur as expected.

In determining the disclosures in the Sustainability Report, the Group's management interprets undefined legal

and other concepts. These undefined legal and other concepts may be subject to varying interpretations,

including in terms of legal compliance, and are therefore inherently uncertain.

Management’s responsibilities for the Sustainability Statement

The Group’s management is responsible for designing, implementing, and maintaining a process to identify the

information reported in the Sustainability Statement in accordance with the ESRS, and for disclosing this process

in the Double materiality assessment subsection “Description of the Process for Identifying and Assessing

Material Impacts, Risks and Opportunities (IRO-1)” of the Sustainability Statement. This responsibility includes:

• understanding the context in which the Group’s activities and business relationships take place, as well

as identifying the relevant affected stakeholders;

• identifying actual and potential (both negative and positive) impacts related to sustainability matters, as

well as risks and opportunities that affect or could reasonably be expected to affect the Group’s financial

position, financial performance, cash flows, access to finance, or cost of capital in the short, medium, or

long term;

• assessing the materiality of the identified impacts, risks, and opportunities related to sustainability

matters by selecting and applying appropriate thresholds; and

• developing methodologies and making assumptions that are reasonable in the circumstances.

In addition the Group’s management is responsible for the preparation of the Sustainability Statement in

accordance with the Law on Reporting by Undertakings and Groups of Undertakings of the Republic of Lithuania,

including:

• compliance with the ESRS;

• the preparation of the disclosure presented in subsection “Disclosure in accordance with Article 8 of

Regulation (EU) 2020/852 (the Taxonomy Regulation)” of the Sustainability Statement, in accordance

with Article 8 of Regulation (EU) 2020/852 (hereinafter – the Taxonomy Regulation); and

• the design, implementation and maintenance of such internal controls as the Group's management

deems necessary to enable the preparation of the Sustainability Statement that is free from material

misstatement, whether due to fraud or error; and

• the selection and application of appropriate sustainability reporting methods, as well as the development

of assumptions and estimates related to individual sustainability disclosures that are reasonable in the

circumstances;

• the making of judgments and estimates that are reasonable in the circumstances;

• the prevention and detection of fraud;

• the selection of the content of the Sustainability Statement, including the identification of and

engagement with stakeholders in order to understand their information needs;

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• the setting of targets, goals, and other performance indicators, and the implementation of actions to

achieve such targets, goals, and performance indicators;

• the supervision of other personnel involved in the preparation of the Sustainability Statement.

Our responsibilities

Our engagement is to plan and perform the assurance engagement to obtain limited assurance on whether the

Sustainability Statement is free from material misstatement, whether due to fraud or error, and to issue our

limited assurance opinion to the Group’s management. Misstatements, whether due to fraud or error, are

considered material if it is reasonable to expect that, individually or in aggregate, they could influence the

decisions of users taken based on the Sustainability Statement as a whole.

Our responsibility related to the Process applied to the Sustainability Statement:

• to obtain an understanding of the Process, but not for the purpose of expressing a opinion on the

effectiveness of the Process, including the results of the Process; and

• to design and perform procedures to evaluate whether the Process is consistent with the Group’s

description of the Process as disclosed in the subsection “EU Taxonomy Alignment Overview” regarding

to Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council.

Our other responsibilities related to the Sustainability Statement include:

• to obtain an understanding of the Group’s control environment, processes and information systems

relevant to the preparation of the Sustainability Statement, but without assessing the design of specific

control activities, obtaining evidence about their implementation, or testing their operating effectiveness;

• to identify disclosures in which material misstatements due to fraud or error could arise; and

• to design and perform procedures responsive to those Sustainability Statement disclosures where

material misstatements could arise. 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 controls.

Summary of the work we performed as the basis for our opinion

The limited assurance of engagement involves performing procedures to obtain evidence regarding the

compliance of the Sustainability Statement. We designed and performed our procedures to obtain sufficient and

appropriate evidence to provide a basis for our opinion on the Sustainability Statement. The nature, timing, and

extent of the procedures depended on our understanding of the Sustainability Statement and other engagement

circumstances, including the identification of disclosures where material misstatements may arise due to fraud

or error. Throughout the engagement, we exercised professional judgment and maintained professional

skepticism.

In performing the limited assurance procedures related to the Process, we:

• Obtained an understanding of the Process by:

✓ making inquiries to understand the sources of information used by the Group’s management (e.g.,

stakeholder engagement, business plans, and strategy documents); and

✓ reviewing the Group’s internal documentation of the Process; and

• Evaluated whether the evidence obtained through our procedures regarding the Process was consistent

with the description of the Process disclosed in the subsection “EU Taxonomy Alignment Overview”.

In performing the limited assurance procedures related to the Sustainability Statement, we:

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• obtained an understanding of the Group’s reporting processes related to the preparation of the

Sustainability Statement by:

✓ making inquiries to understand the Group’s reporting process related to the preparation of the

Sustainability Statement;

✓ assessing the data governance processes, information systems, and working methods used to

collect and consolidate the Sustainability Statement disclosures; and

• evaluated whether the material information identified through the Process was included in the

Sustainability Statement;

• evaluated whether the structure and presentation of the Sustainability Statement complied with the

ESRS;

• made inquiries with relevant personnel and performed analytical procedures on selected disclosures

within the Sustainability Statement;

• performed detailed assurance procedures on a sample basis for selected disclosures in the

Sustainability Statement;

• obtained evidence regarding the methods, assumptions, and data used in preparing material estimates

and forward-looking information, and how those methods were applied;

• obtained an understanding of the process for identifying taxonomy-eligible and taxonomy-aligned

economic activities, and the corresponding disclosures in the Sustainability Statement;

• performed other procedures related to EU taxonomy disclosures.

The nature, timing, and extent of the procedures performed in a limited assurance engagement are different

from, and less extensive than, those required in a reasonable assurance engagement. As a result, the level of

assurance obtained in a limited assurance engagement is substantially lower than the level that would have

been obtained had a reasonable assurance engagement been performed.

11 December 2025

Certified auditor

Genadij Makušev

Auditor’s certificate No.000162

21-1 Upės str ,Vilnius, the Republic of Lithuania

Grant Thornton Baltic UAB

Audit firm certificate No. 001513

An electronic document signed with an electronic signature has the same legal force as a signed written document and is an admissible

means of evidence. Only the Independent Auditor’s Report is signed with the auditor’s electronic signature.