Grigeo AB
INDEPENDENT AUDITOR’S REPORT,
CONSOLIDATED ANNUAL REPORT AND
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2
Translation note:
This version of the accompanying documents is a translation from the original, which was prepared in Lithuanian. All
possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all
matters of interpretation of information, views or opinions, the original language version of the accompanying documents
takes precedence over this translation.
TABLE OF CONTENTS
FOREWORD BY THE PRESIDENT .......................................................................................................................... 3
CONSOLIDATED ANNUAL REPORT ....................................................................................................................... 4
1. Business model .................................................................................................................................................. 5
1.1. The future is circular .............................................................................................................................. 5
1.2. Sustainability as part of our strategy ..................................................................................................... 5
2. Overview of operations ...................................................................................................................................... 7
2.1. Executive summary of 2021 .................................................................................................................. 7
2.2. Financial and operating performance of the Group and the Company ................................................. 9
2.3. Business plans and forecasts of the Group ........................................................................................ 10
2.4. Employees ........................................................................................................................................... 10
2.5. Environmental protection .................................................................................................................... 11
2.6. Risk management ............................................................................................................................... 12
3. Group companies ............................................................................................................................................. 14
3.1. Structure and contact details ............................................................................................................... 14
3.2. Main activities of the Group companies .............................................................................................. 15
4. Data on the Issuer’s securities ......................................................................................................................... 16
4.1. Contracts with intermediaries of public trading in securities ............................................................... 16
4.2. Main characteristics of the Company’s shares ................................................................................... 16
4.3. Trade in the Company’s shares .......................................................................................................... 16
4.4. Capitalisation of the Company’s shares .............................................................................................. 17
5. Corporate governance report ........................................................................................................................... 18
5.1. Significant directly and indirectly controlled shares ............................................................................ 18
5.2. Rules regulating the election and replacement of the management and supervisory bodies ............ 18
5.3. Management and supervisory bodies ................................................................................................. 20
5.4. Functions and responsibilities of the management and supervisory bodies....................................... 22
6. Remuneration report ........................................................................................................................................ 23
6.1. Remuneration policy............................................................................................................................ 23
6.2. Remuneration paid to the management and supervisory bodies ....................................................... 24
6.3. Compliance with the Remuneration Policy ......................................................................................... 25
7. Social responsibility report ............................................................................................................................... 25
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS .......................................................................... 26
STATEMENTS OF FINANCIAL POSITION .......................................................................................................... 27
STATEMENTS OF COMPREHENSIVE INCOME ................................................................................................ 29
STATEMENTS OF CHANGES IN EQUITY .......................................................................................................... 30
STATEMENTS OF CASH FLOWS ....................................................................................................................... 31
NOTES TO THE FINANCIAL STATEMENTS ......................................................................................................... 32
STATEMENT OF COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE ........................................... 84
CONFIRMATION OF RESPONSIBLE PERSONS .................................................................................................. 99
INDEPENDENT AUDITOR’S REPORT ................................................................................................................ 100
3
« Table of Contents
FOREWORD BY THE PRESIDENT
Dear members of the society,
You’ve already heard and read it on numerous occasions
and yet, there is no other way to describe the year 2021
as a period of challenges. Turbulence in the markets of
raw materials, energy, logistics and other rocked the
whole world. However, despite this, Grigeo AB group of
companies has demonstrated a consistent and
sustainable growth, which reveals that we have strong
business fundamentals and people who are capable of
creating value even in the most dynamic environment.
To support this, we present you the report for 2021 which
provides information about the key performance
indicators and significant events in the areas of finance,
environmental protection, social responsibility and
governance of Grigeo AB group of companies.
Operating in a sustainable manner, the financial
performance of Grigeo AB group of companies was
excellent in 2021. The pandemic kept on changing
consumer habits by boosting the online sales, which
resulted in a growing demand for packaging, while the
increasing consumers’ and businesses’ sensitivity to
environment encouraged to search for alternatives to
plastic packaging. Recyclable, multi-purpose and reliable
corrugated packaging has strengthened its position in the
segment of e-trade as a highly sustainable and popular
solution.
A growing need for sustainable products will have a
positive long-term effect on the group of companies. As
much as 98% of the Group’s products were
manufactured using renewable raw materials. Secondary
raw material reached 32% of all raw material used in
production during the last year. And in 2021, the total of
more than 139K tons of waste paper was processed.
In 2021, we have also revised our long-term strategy. We
are an integral part of circular economy, thus we have
decided to take on a mission – create a future circular
society. Last year we carried out an extensive analysis of
stakeholders and assessed the needs of our operation
and their significance. It enabled us to precisely identify
economic, social and environmental challenges which
are key to the group of companies and stakeholders.
As for social area, the occupational safety and health remained our
priority. Maximum attention and responsibility when applying Covid-19
management measures allowed us to guarantee uninterrupted
production, and an opportunity for the employees to take advantage of
additional health insurance enabled us to provide people with a broad
access to health care services. In 2021, the assessment of employee
engagement was carried out in the Group companies as well. The results
of the survey have exceeded the average of production companies,
however – what is even more important – these results have enabled us
to place a stronger focus on the employees’ expectations.
A significant increase in prices of raw materials and resources in 2021
added extra challenges to those caused by the pandemic. Even though
the pandemic had no material direct impact on the financial performance
of the Group, rising prices of raw materials and energy resources had an
adverse effect on the profitability indicators. In 2021, the Group’s EBITDA
was at EUR 23.7M which is less by 9.6% if compared to 2020, and
EBITDA margin remained on a high level, i.e. at 14.5%. The overall
increase in prices resulted in the Group’s revenue soaring to record highs
in 2021, i.e. EUR 163.2M.
In 2021, the investments made by the Group amounted to EUR 12.4M,
the major portion whereof was aimed at acquisition of modern, more
efficient facilities and improvement of processes of environmental
protection. We see investments from the perspective of sustainability – we
seek is that changes helped to strengthen safety at work and ensured a
more efficient use of resources.
After the environmental incident in Grigeo Klaipėda AB that took place in
2020, in 2021 the prosecutor’s office completed the pre-trial investigation
regarding the wastewater treatment carried out by Grigeo Klaipėda AB,
and the criminal proceedings were referred to the court. We assume the
moral responsibility and hope that the fact of damage to natural
environment will be established by the court and, once it has been
established, an objective scope of damage will be determined as well. This
will allow Grigeo Klaipėda AB to recover the impact made on the natural
environmental in a fair manner and in compliance with international
standards.
In 2021, for the first time the Group prepared a sustainability report
according to the GRI (Global Reporting Initiative) standards. The
implementation of this standards will make it possible for us to achieve the
highest level of the Group’s accountability and transparency in the society.
The calculation of GHG emissions was carried out by the Group for all
entities. Having made estimates of our impacts, the matters of
sustainability were included in our Group’s obligations. After the
assessment of the regulatory environment, expectations of stakeholders
and standards of the industry, we have projected the main challenges
which have a direct impact on the long-term sustainable development. In
2022 we are going to approve common sustainability objectives.
As for the coming year, we will strive to maintain the profitability indicators
of the Group, manage the effect of prices of raw materials and energy on
the production. After the environmental incident Grigeo Klaipėda AB will
seek to recover the impact made on the natural environment. Having
integrated the sustainability objectives in our long-term strategy, we will
work towards turning of the sustainable operation into the axis of strategic
activity and efficient execution of the mission that we took on – to create
a future circular society.
President of Grigeo AB
Gintautas Pangonis
CONSOLIDATED ANNUAL REPORT
5
Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
1. Business model
Grigeo AB (hereinafter the “Company” or the “Issuer”) company group is the only paper and wood industry company
group in Lithuania and one of the largest groups in the Baltic countries. Grigeo AB company group consists of the
following entities: Grigeo AB, Grigeo Packaging UAB, Grigeo Baltwood UAB, Grigeo Klaipėda AB, Mena Pak AT,
Grigeo Recycling UAB and Grigeo Recycling SIA and Grigeo Investicijų Valdymas UAB (hereinafter the “Group”).
1.1. The future is circular
The Group operates following the principle of a circular economy. A part of paper used for the production of tissue
paper products and all raw materials designated for the production of corrugated cardboard, i.e., testliner (smooth
layered cardboard) and fluting (paper for corrugation and raw material for paper honeycomb), are produced by
recycling secondary raw materials, i.e., waste-paper, thus contributing to the reduction of waste in Lithuania and
neighbouring countries as well as to the preservation of forests.
In the scope of its operational processes, the Group performs an almost complete cycle of processing of wood and
paper components, producing products with higher added value: tissue paper, i.e., toilet paper, tissues, paper towels,
paper for the production of corrugated cardboard, honeycomb, corrugated cardboard and packaging, as well as solid
fibreboard.
1.2. Sustainability as part of our strategy
A more intensive use of renewable raw materials leads to a higher involvement in the circular economy (secondary
use of raw materials), thus allowing to make a more significant contribution to economic sustainability.
In 2021, the Group’s management carried out the analysis of stakeholders, impact and significance with respect to
them. The comprehensive significance assessment helped to identify the economic, social and environmental issues
that are the most important to the Group and its stakeholders.
The significance assessment served as a primary data source for the Group’s sustainability targets, as well as for the
integration of those targets into the Group’s strategy. The Group’s management recognises a strategic importance of
the sustainability reporting, it was therefore actively involved in the development of the Group’s sustainability strategy.
Detailed information on sustainability is presented in a separate Sustainability report which is publicly available on
Company’s website https://www.grigeo.lt/en.
Third party paper
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Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
Under our business strategy, we commit the following:
Each direction has at least one target, which is directly related to the sustainability strategy. More detailed information
is presented in a separate Sustainability report which is publicly available on Company’s website
https://www.grigeo.lt/en.
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Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Overview of operations
2.1. Executive summary of 2021
During 2021, compared to 2020:
- The Group’s and the Company’s revenue increased by EUR 33.6 million (25.9%) and EUR 3.9 million (6.1%),
respectively.
- The Group’s and the Company’s EBITDA was lower by EUR 2.5 million (9.6%), EUR 8.8 million (59.8%),
respectively.
- The Group’s and the Company’s EBT was lower by EUR 1.3 million (8.6%), EUR 7.0 million (71.0%),
respectively.
Indicator, EUR million
Group
Company
2021
2020
Change
2021
2020
Change
Revenue
163.2
129.6
25.9%
67.6
63.7
6.1%
EBITDA
23.7
26.2
-9.6%
5.9
14.8
-59.8%
Profit before tax (EBT)
13.6
14.9
-8.6%
2.9
9.9
-71.0%
In 2021, the Group reached the record high level of turnover – EUR 163.2 million (EUR 129.6 million in 2020).
The increase in turnover was driven by higher quantities of products sold as well as increase in sale prices.
The Group’s net profit for 2021 decreased and was equal to EUR 12.4 million (EUR 13.3 million in 2020). Despite
increase in turnover, the Group’s profitability ratios declined due to a significant increase in prices of raw materials
and energy resources (the comparison of ratios is presented in section 2.2).
The Group's performance remains satisfactory due to business diversification: more profitable segments compensate
poorer performance of other segments at different times, and vertical integration, i.e., the Group covers a full
production cycle of corrugated cardboard and related products, and in the tissue paper segment – from paper
production to final products.
More detailed information on reasons of these changes is presented in the table and explanations below according to
business segments.
Revenue, gross profit, and gross margin of the business segments*:
Indicator,
EUR
million
Tissue paper and
paper products
Wood fibreboards
Raw materials for
corrugated
cardboard and
related products
Unallocated
TOTAL
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Revenue
60.7
58.9
20.7
17.3
78.7
51.2
3.1
2.2
163.2
129.6
Gross profit
9.6
17.6
4.5
3.6
19.1
12.1
0.3
0.2
33.6
33.5
Gross
margin of the
segment
15.9%
29.9%
21.7%
20.6%
24.3%
23.6%
9.5%
10.5%
20.6%
25.8%
*The data is presented after the elimination of the impact of transactions between the segments.
Segment of tissue paper and paper products
In 2021, the tissue paper segment’s sales in tons remained at a similar level as in 2020. The COVID-19 pandemic
management measures in 2021 and 2020, which imposed restrictions on the activities of hotels and catering
establishments, had a similar negative impact on sales of tissue paper for the business segment. The segment's
turnover in 2021 reached EUR 60.7 million (EUR 58.9 million in 2020). The increase in turnover was mainly driven by
the increase in the prices of products sold.
129,9
142,5
140,0
129,6
163,2
9,3
14,3
13,6
13,3
12,4
2017 2018 2019 2020 2021
Revenue of the Group, EUR million Net profit of the Group, EUR million
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Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
Despite a higher turnover, the segment's gross profitability in 2021 decreased significantly to 15.9% (29.9% in 2020).
The decrease in gross profitability was caused by the significant increase in the prices of pulp and white wastepaper,
as well as a sharp rise in energy prices in the second half of 2021.
The Group’s management believes that as a result of the easing of restrictions and self-isolation rules over the course
of the COVID-19 pandemic the hotel and catering sector should return to the pre-pandemic level in the upcoming
years, and sales of tissue paper to the business segment will recover accordingly.
Prices of raw materials stabilised to some extent at the beginning of 2022, however they are not expected to decline
in the future. Energy prices are likely to fall after the end of the winter season, but there are no guarantees or sound
projections that similar energy price spikes will not occur in the future.
Segment of wood fibreboards
The segment’s sales revenue amounted to EUR 20.7 million (EUR 17.3 million in 2020). A significant growth of 20.1%
was partly driven by increased sales volumes (67.8 tons sold in 2021; 65.1 tons in 2020), though the main reason for
the increase in turnover was higher sales prices.
The increase in sale prices in this segment was determined by the global rise in the prices of wood raw materials.
Significantly higher energy prices contributed to the increase in the cost of the segment’s products, but higher sale
prices compensated the increase in costs of production and increased overall profitability of the segment to 21.7% in
2021 (2020: 20.6%).
The main buyers of fibreboard are manufacturers of cabinet furniture and soft furnishings, manufacturers and users
of special packaging, DIY (“Do-It-Yourself”) sector, and construction companies.
The Group’s management believes that the prices in this segment, both in respect of raw materials and final products,
will remain at a high level.
Raw materials for corrugated cardboard and related products
In 2021, this segment showed a significant growth – sales revenue reached EUR 78.7 million. It was 53.8% higher
than in 2020 (EUR 51.2 million). The segment was negatively affected by increase in prices of wastepaper and
significant increase in the prices of energy resources in the last quarter of 2021, but higher sales volumes and sales
prices increased the segment's gross profit to EUR 19.1 million (57.9% higher than in 2020, when it amounted to
EUR 12.1 million). Accordingly, the gross margin of the segment increased as well from 23.6% to 24.3%.
The segment’s sales of raw materials for corrugated cardboard (paper rolls) reached 102.3 thousand tons and were
6.2% higher than in 2020 (96.3 thousand tons). Sales of related products (corrugated cardboard boxes and sheets)
in 2021 reached 48.8 thousand tons and were 20.1% higher than in 2020 (40.7 thousand tons).
Higher segment revenue was mostly affected by higher sales prices. The increase in paper packaging prices was
driven by a significant rise in demand, which is growing globally. The main reasons are:
− Growth of e-commerce. The COVID-19 pandemic has contributed significantly to the growth of online
shopping, which is increasing the need of packaging for shipments.
− Sustainability initiatives. More and more businesses are choosing paper alternatives to plastic packaging.
− Other reasons, such as logistics disruptions, rising wastepaper prices.
The Group's management believes that the prices of raw materials for corrugated cardboard and related products will
continue to rise in 2022 due to the reasons mentioned above.
9
Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2.2. Financial and operating performance of the Group and the Company
In 2021, the profitability ratios remained high, yet they declined due to increase in the prices of raw materials and
energy resources. The values of the liquidity and capital structure ratios remained at a similar level compared to the
respective values in 2020 – ratios confirm the financial stability as well as low financial risk of the Group and the
Company. The share price to earnings ratio (P/E) increased compared to the previous year, but still remains below
10 indicating the potential of the share price growth in the future.
Indicator
Group
Company
2021
2020
2019
2021
2020
2019
Revenue, EUR million
163.2
129.6
140.0
67.6
63.7
65.2
Net profit, EUR million
12.4
13.3
13.6
3.2
9.0
17.2
EBITDA, EUR million
23.7
26.2
28.6
5.9
14.8
11.6
EBIT, EUR million
13.9
15.1
17.2
3.0
10.0
10.3
Profitability ratios
Gross margin
20.6%
25.8%
23.7%
13.4%
27.2%
20.1%
EBITDA profitability
14.5%
20.2%
20.4%
8.8%
23.2%
17.8%
EBIT profitability
8.5%
11.7%
12.3%
4.4%
15.7%
15.8%
Net margin
7.5%
10.3%
9.7%
4.8%
14.1%
26.4%
ROE profitability
13.3%
16.0%
18.8%
5.5%
15.9%
37.8%
ROA profitability
9.6%
11.1%
11.7%
4.2%
12.0%
24.3%
ROCE profitability
13.8%
15.8%
19.9%
5.0%
15.6%
17.7%
Liquidity ratios
Current ratio
1.51
1.56
1.13
1.01
1.63
1.08
Quick ratio
1.07
1.23
0.80
0.72
1.33
0.76
Capital structure ratios
Debt to equity ratio
0.41
0.38
0.52
0.33
0.28
0.37
Debt to total assets ratio
0.29
0.27
0.34
0.25
0.22
0.27
Market value ratios*
P/E
9.92
6.57
7.03
37.83
9.73
5.53
Dividend pay-out ratio
64.3%
-
29.2%
245.1%
-
22.9%
Basic earnings per share, in EUR
0.093
0.101
0.103
0.024
0.068
0.131
*Ratios for year 2020 and 2019 are adjusted following the Company's authorised share capital increase on 19 May
2021 using the Company’s retained earnings (section 4.2).
The above-mentioned indicators have been calculated in accordance with the formulas recommended by Nasdaq
Vilnius AB:
EBITDA profitability = EBITDA / sales revenue. EBITDA to revenue ratio shows the overview of operational efficiency and cash
flows.
Gross margin = Gross profit / sales revenue. Gross profit margin shows the ability to earn profit from operating activity, control the
level of sales revenue and cost.
EBIT profitability = Profit from operations / sales revenue. Monetary value of the coefficient shows operating margin to 1 sales
EUR. Higher ratio shows higher profitability.
Net margin = Net profit attributable to shareholders / sales revenue. The ratio describes the profitability of the final total operational
result.
ROE profitability = Net profit attributable to shareholders / average equity. This ratio estimates shareholders’ return on investment.
ROA profitability = Net profit attributable to shareholders / average assets. Return on assets shows how effectively assets are used
to generate profit.
ROCE profitability = EBIT / capital used. The used capital return shows income generated by each euro invested in the capital.
Current ratio = Current assets / current liabilities. The ratio shows the ability to cover current liabilities with current assets.
Quick ratio = (Current assets – Inventories) / current liabilities. Liquidity describing the ability to fulfil current liabilities from quickly
realisable current assets.
Debt to equity ratio = Liabilities / equity. The ratio estimates the combination of fund resources in the balance and compares funds
from owners and those that were borrowed.
Debt ratio = Liabilities / assets. The ratio shows the asset share financed from borrowed funds. The lower the value, the more
borrowings are covered with assets.
P/E = the market price of share / total of attributable profit. The ratio shows how much investors pay for one EUR of profit.
Dividend pay-out ratio = Dividends / Net profit attributable to shareholders. The ratio shows the portion of earnings paid out as
dividends.
Basic earnings per share = (Net profit – preferred stock dividends) / weighted average number of ordinary shares in circulation.
The calculated profit shows the earned net profit per share.
10
Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2.3. Business plans and forecasts of the Group
In 2022, the Group plans various investments and modernisations that will contribute to higher efficiency in production
processes, as well as sustainability-enhancing investments that will contribute to the improvement of environmental
protection, a safer working environment, and energy savings.
The main planned investments include as follows:
Grigeo AB
Having successfully implemented investments in new production equipment in recent years, Grigeo AB plans to invest
in a dust collection system, a system for collecting and using rainwater in the production process, improve fire-fighting
systems and make improvements in other areas.
Grigeo Klaipėda AB
Grigeo Klaipėda AB plans to modernise the treatment of circulating water generated in the paper production process
by installing an anaerobic bioreactor for circulating water treatment. The wastewater treatment efficiency of the
anaerobic bioreactor according to BOD
7
is at least 80%.
Grigeo Baltwood UAB
Grigeo Baltwood UAB plans to make investments in and start using water evaporation-concentration equipment. Its
principle of operation is the evaporation and concentration of the water used during production, followed by the re-
use of the retrieved biomass in production, and afterwards transfer of significantly treated technical water for further
treatment.
2.4. Employees
There were no significant changes in the number of employees during 2021. Natural personnel turnover rates
prevailed in the Group companies in the reported period.
The average salary in the Company and in the Group increased for all categories of employees as compared to the
year 2020. The growth of the average salary was mostly driven by the consistent salary increase policy and
recruitment of workers with higher competences.
The number of employees in the Group and in the Company:
Group
Company
At 31 December
2021
At 31 December
2020
At 31 December
2021
At 31 December
2020
Number of employees
833
859
266
288
The average salary in the Group and in the Company*, in euros:
Employees
Group
Company
2021
2020
2021
2020
Workers
1,822
1,675
1,890
1,798
Specialists
2,139
1,988
2,218
2,061
Managers
4,559
4,365
5,583
5,097
Total
2,214
2,036
2,393
2,229
* - information on the average salary does not include data of Mena Pak AT in order to show a more precise average
salary in the Group that is not affected by fluctuations in exchange rate of the Ukrainian hryvnia.
Management of the COVID-19 situation
In 2021, the Group continued to pay large attention to the management of the COVID-19 situation.
Awareness and focus of all employees contributed to the timely response and control of COVID-19 pandemic
developments. The companies of the Group implemented the following COVID-19 prevention measures:
− preventive measurement of temperature of employees and all visitors entering the territory, continuous control
of employees’ temperature during work;
− continuous provision of personal and collective protective equipment (face masks, respirators, gloves,
disinfectant fluid) to employees;
− remote work, management of employee flows;
− constant disinfection of all premises and surfaces, use of an antibacterial cleaning and air disinfection system;
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Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
− continuous provision of information to employees about the compliance with preventive measures;
− and preventive testing of employees using COVID-19 tests.
These measures and employee awareness made it possible to prevent employees who had any symptoms from
coming to work, to record cases of coronavirus disease in a timely manner, to isolate exposed employees, and to
control the situation and spread of the virus within the Group companies. In the situation of a pandemic, it is important
for us to protect employees not only at the workplace, but also at home, so we constantly notify employees about
compulsory compliance with preventive measures not only at work, but also in households, strive to raise employees’
awareness, improve their discipline and grow the sense of responsibility.
Year 2021
Grigeo
AB
Grigeo
Klaipėda AB
Grigeo
Packaging
UAB
Grigeo
Baltwood
UAB
Grigeo Recycling
UAB/ Grigeo
Recycling SIA
AT
Mena Pak
COVID-19 tests performed
1,261
120
2,147
1,459
194
-
COVID-19 cases detected
44
30
34
24
10
14
Year 2020
Grigeo
AB
Grigeo
Klaipėda AB
Grigeo
Packaging
UAB
Grigeo
Baltwood
UAB
Grigeo Recycling
UAB/ Grigeo
Recycling SIA
AT
Mena Pak
COVID-19 tests performed
343
46
149
463
106
35
COVID-19 cases detected
24
11
11
24
11
5
More detailed information on human resources is provided in separate Sustainability report which is publicly available
on Company’s website https://www.grigeo.lt/en.
2.5. Environmental protection
The Group fully recognises that sustainable development embraces economic, environmental and social business
issues which remain relevant in the daily operations of the organization. In 2021 the Group consistently made
investments the majority of which was aimed at the acquisition of modern, more efficient facilities and improvement
of processes of environmental protection. After the environmental incident in Grigeo Klaipėda AB that took place in
2020, in 2021 the prosecutor’s office completed the pre-trial investigation regarding the wastewater treatment carried
out by Grigeo Klaipėda AB, and the criminal proceedings were referred to the court. Assuming moral responsibility
we hope that the fact of damage to the natural environment will be established by the court and, once it has been
established, an objective scope of damage will be determined. This will allow Grigeo Klaipėda AB to recover the
impact made on the natural environment in a fair manner and in compliance with international standards.
We have set clear guidelines for our further development starting from 2022.
A previous shift to renewable electricity allowed us to avoid greenhouse gas (GHG) emissions of 16,740t of CO2
equivalent. In order to set an ambitious and effective GHG reduction goals, in 2022 we will be working on to:
- reducing our GHG emission intensity,
- improve nature- and people-friendly product properties,
- select more environmentally friendly mix of energy sources,
- invest in energy efficiency,
- promote responsible collection of waste paper,
- reduce chemical compound intensity,
- better manage the wastewater quality,
- reduce the disposable waste.
Environmental management system certificates ISO 14001:2015 implemented at the companies of the Group are a
proof that we aim to control the environmental impact in our production and distribution processes. We responsibly
choose and use raw materials and energy sources, implement environmentally friendly technologies, and manage
production waste – these priorities will remain the focus of our Group entities future activities.
Detailed information on environmental protection is provided in a separate Sustainability report which is publicly
available on Company’s website https://www.grigeo.lt/en.
EU Taxonomy
The disclosure requirements of the EU Taxonomy came into force as of 1 January 2022. The Taxonomy is the EU-
wide classification system, which will allow businesses and investors speak the same language in identifying those
economic activities which are considered environmentally sustainable.
Economic sectors and economic activities included in the EU Taxonomy have the potential to make a substantial
contribution to climate change mitigation or climate change adaptation. The approach differs for each of these
objectives, reflecting their nature.
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Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
The current version of the EU Taxonomy does not list the Group’s core activities as eligible. In their final report, the
Technical Experts Group (TEG) recognises that the scope of the manufacturing section of the Taxonomy should be
extended to cover more manufacturing activities. The TEG recommends considering screening criteria and thresholds
for other manufacturing sectors including paper manufacturing in the next phase of the industry analysis. The TEG
recommends that the future platform address these manufacturing sectors, by prioritising those processes that
generate the most significant portion of emissions (e.g., steam generation in the paper and pulp sector) and work to
establish thresholds for these specific processes.
We continue monitoring the development of the sustainable finance platform to make sure the Group is ready to report
the compliance with the EU Taxonomy when needed. We are using this time to properly prepare our internal reporting
systems to be ready to provide all relevant and significant sustainability data and comply with upcoming requirements.
2.6. Risk management
COVID-19-related risks
The main business risks associated with the COVID-19 pandemic are:
- a significant proportion of production workers becoming infected with COVID-19, which may lead to the suspension
of the production process;
- quarantine restrictions imposing limitations on the activities of hotels and catering establishments. The introduction
of restrictions in these sectors leads to a significant reduction in sales of tissue paper to this business sector.
The companies of the Group have introduced pandemic management measures that allowed to ensure social
distancing of employees and continuity of production. The companies of the Group did not suspend production in
2021 and in 2020 due to the COVID-19 disease. Along with the easing of restrictions and self-isolation rules, the
Group's management believes that COVID-19 risks to production processes will diminish in the long term and will
become insignificant.
Lockdowns for certain business sectors have had a negative impact on hygiene paper sales in the short term. In the
medium term, this risk is diminishing as countries move from the complete lockdowns of individual sectors to the
control of human flows (in terms of numbers, or access permits only upon vaccination).
Another important factor providing the ability to manage risk in a long run is the diversification of the Group's business.
Due to the disruptions in the above-mentioned sectors of the sale of hygiene paper, there is a continuing increase in
the demand in packaging which results in increasing sales of raw materials for corrugated board and related products.
Lockdowns have led to higher purchases of various products in online stores, what has increased the demand for
paper packaging.
Ecological risk
The Group is constantly exposed to ecological risks in the course of its manufacturing activities. In order to properly
manage environmental risks, ISO 14001 (Environmental Management System) has been implemented in all of the
Group's manufacturing companies in Lithuania, the effectiveness of which is constantly monitored with the help of
external certification consultants.
The Company follows the integrated pollution prevention and control principles in its economic activities. The
Company rationally uses energy and natural resources through the application of modern production technologies
and technologies for the treatment of environmental components without worsening the quality of the products
manufactured.
Product risk
The Group's hygiene paper segment manufactures products that come into contact with food or are used as personal
hygiene products. For these reasons, the Group must apply the highest quality standards.
In 2020, Grigeo AB was the first personal hygiene product manufacturer in Lithuania to receive an IFS HPC quality
certificate. It accredits that tissue paper products are manufactured in compliance with the highest quality and safety
standards and the products supplied to the market are safe to be in contact with food.
This certification is carried out every year. In 2021, the certificate was renewed. The Group plans to continue renewing
this certificate on an annual basis in order to maintain a minimal risk of the tissue paper product.
13
Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
Climate change risk
The management of the Group recognises the importance of analysis in disclosing climate-related risks and
opportunities. In 2021, the Group’s management decided to start with a qualitative analysis that will help explore a
possible range of effects of climate change. The Group used the reporting principles of the Climate-Related Financial
Disclosure Working Group (TCFD) to analyse the potential impact of the climate change on the activities of the
companies of the Group.
Although the physical risk to the Group is low, in the opinion of the management, the reputational risk and market risk
remain significant in the context of the climate change risk. During the production process, the Group's companies
emit greenhouse gases (GHGs) and the Group is sensitive to electricity needs. In order to ensure the Group's
transparency, the Group uses electricity from renewable sources and provides GHG emissions data calculated by
independent consultants (see separate Sustainability report which is publicly available on Company’s
https://www.grigeo.lt/en) and sets targets for reducing emissions and energy needs through technological means,
through the purchase of new and more energy-efficient equipment and upgrade of existing ones.
Risk of prices of raw materials
One of the consequences of the protracted COVID-19 pandemic is the shortage of raw materials and supplies as well
as the rise in their prices. This is connected to increased demand for raw materials and to higher logistics costs, as
well as to disruptions in supply chains around the world.
To manage this risk, the Group companies enter into long-term supply contracts with the major suppliers of raw
materials and supplies. Efforts are also being made to expand the supply chain through potential alternative suppliers
and maintain higher than usual inventory levels that help cushion late deliveries of raw materials and supplies.
Risk of prices of energy resources
Increased demand for energy resources (electricity, gas), the prices of emission allowances in 2021 resulted in
multiple price increases of these resources.
The Group companies have long-term contracts for both electricity and gas supply. Opportunities to invest in
renewable energy resources are being explored, thus reducing the need to purchase them and related costs for the
Group. The Group is constantly investing in new technologies that increase energy efficiency and reduce the need for
energy resources. Under favourable market conditions, a part of the prices of energy resources is fixed to avoid the
impact of price volatility or to reduce it.
Risk related to the process of financial reporting
The Company’s financial accounting is performed, and financial statements are prepared in accordance with the
requirements of International Financial Reporting Standards, as adopted by the European Union effective at 31
December 2021. The annual financial statements are audited by the independent auditors elected by the General
Meeting of Shareholders. Independence of the auditors is assessed by the Company’s Audit Committee. This
procedure guarantees the relevance and transparency of the data presented in the Company’s financial statements.
Financial risk
The information on financial risks and their management is disclosed in Note 3 to the consolidated and separate
financial statements.
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Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
3. Group companies
3.1. Structure and contact details
As at 31 December 2021, the Group consisted of the Company and its nine subsidiaries as indicated below:
The Company has sales representatives operating in Latvia and Estonia. No new representative offices or branches
are planned to be opened in 2022.
Status
Parent company
Subsidiary
Subsidiary
Company name
Grigeo Klaipėda AB
Grigeo Packaging UAB
Code
110012450
141011268
302329061
Authorised share capital
EUR 38,106,000
EUR 11,890,550
EUR 15,202,900
Portion of shares
directly/indirectly controlled
by Grigeo AB
The Company has not
acquired own shares
97.68%
100%
LEI code
529900YXT3CDTZGS0R43
-
89450051UF5GVR6C9B04
Address
Nemuno g. 2, Klaipėda
Vilniaus g. 10, Grigiškės,
Vilnius City Municipality
Telephone
+370 5 243 5801
+370 46 39 5601
+370 5 243 5838
Fax
+370 5 243 5802
+370 46 39 5600
-
E-mail
info@grigeo.lt
info.klaipeda@grigeo.lt
info.packaging@grigeo.lt
Website
https://www.grigeo.lt/en
https://www.grigeo.lt/en
https://www.grigeo.lt/en
Legal form
Public limited liability
company
Private limited liability
company
Date of registration
23 May 1991
22 September 1994
10 April 2009
Manager of the register
State enterprise Centre of
Registers
State enterprise Centre of
Registers
State enterprise Centre of
Registers
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Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
Status
Subsidiary
Subsidiary
Subsidiary
Company name
Grigeo Baltwood UAB
Grigeo Recycling UAB
Grigeo Recycling SIA
Code
126199731
302529158
40203001091
Authorised share capital
EUR 4,000,000
EUR 2,960,000
EUR 500,000
Portion of shares
directly/indirectly controlled
by Grigeo AB
100%
100%
100%
Address
Vilniaus g. 10, Grigiškės,
Vilnius City Municipality
Vilniaus g. 10, Grigiškės,
Vilnius City Municipality
Ēdoles iela 5, Riga, Latvia
Telephone
+370 5 243 5900
+370 5 243 3393
+370 5 243 3393
Fax
+370 5 243 5910
-
-
E-mail
info.baltwood@grigeo.lt
info.recycling@grigeo.lt
info.recycling@grigeo.lt
Website
https://www.grigeo.lt/en
https://www.grigeo.lt/en
-
Legal form
Private limited liability
company
Private limited liability
company
Private limited liability
company
Date of registration
10 April 2003
16 July 2010
16 June 2016
Manager of the register
State enterprise Centre of
Registers
State enterprise Centre of
Registers
Register of Enterprises of the
Republic of Latvia
Status
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Company name
Mena Pak AT
Grigeo Investicijų
Valdymas UAB
Naujieji Verkiai UAB
Grigiškių Energija
UAB
Code
00383260
302416687
300015674
302674488
Authorised share capital
UAH 4,011,470
EUR 19,329,776
EUR 28,962
EUR 2,900
Portion of shares
directly/indirectly controlled
by Grigeo AB
100%
100%
100%
100%
Address
Koševovo g. 6,
Chernihiv region, Mena,
Ukraine
Vilniaus g. 10, Grigiškės,
Vilnius City Municipality
Popieriaus g. 15,
Vilnius
Vilniaus g. 10,
Grigiškės, Vilnius City
Municipality
Telephone
+380 4644 21341
+370 698 87433
+370 5 243 5933
+370 5 243 5933
Fax
+380 4644 21084
-
+370 5 243 5802
+370 5 243 5802
E-mail
menapack@ukr.net
info.giv@grigeo.lt
info@grigeo.lt
vigmantas.kazukauskas
@grigeo.lt
Website
www.menapack.com.ua
-
-
-
Legal form
Public limited liability
company
Private limited liability
company
Private limited liability
company
Private limited liability
company
Date of registration
30 December 1993
10 July 2009
6 April 2004
7 October 2011
Manager of the register
Mena District State
Administration,
Chernihiv Region
State enterprise Centre
of Registers
State enterprise
Centre of Registers
State enterprise
Centre of Registers
3.2. Main activities of the Group companies
Grigeo Klaipėda AB manufactures the raw material for the production of corrugated cardboard – testliner (smooth
layered cardboard) and fluting (paper for corrugation) as well as paper honeycomb used in the furniture industry.
Grigeo Packaging UAB manufactures corrugated cardboard and corrugated cardboard products.
Grigeo Baltwood UAB manufactures uncoloured hardboard and painted hardboard panels.
Grigeo Recycling UAB collects secondary raw materials and prepares them for recycling.
Grigeo Recycling SIA collects secondary raw materials and prepares them for recycling.
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Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
Mena Pak AT (in Ukranian – акцiонерне товариство „МЕНА ПАК“) manufactures corrugated cardboard and
corrugated cardboard products.
Grigeo Investicijų Valdymas UAB is engaged in investment activities and management of companies.
Naujieji Verkiai UAB is engaged in construction and development of real estate; the company was dormant in 2021.
The activities of Grigiškių Energija UAB are related to heat production and sale; the company was dormant in 2021.
The transactions between related parties are disclosed in Note 30 to the financial statements.
4. Data on the Issuer’s securities
The ordinary registered shares of Grigeo AB are listed on the Official Baltic List of Nasdaq Vilnius Stock Exchange
(trading code of shares is GRG1L).
The Company and the companies of the Group did not purchase own shares during the reporting period and have no
such shares acquired.
4.1. Contracts with intermediaries of public trading in securities
The Company has signed a contract with Šiaulių Bankas AB (telephone: 1813 (+370 37 301337 for calls from abroad),
kc@sb.lt) on payment of dividends to the shareholders for the previous financial year.
The Company has signed a contract with FMĮ Orion Securities UAB (A. Tumėno g. 4, Vilnius, telephone: (8~5) 231
3833, info@orion.lt) on the bookkeeping of securities issued by the Company and on market making activities.
4.2. Main characteristics of the Company’s shares
Date
Type of shares
Securities’
ISIN code
Number of
shares, units
Par value,
EUR
Total par
value, EUR
Until 18/05/2021
Ordinary registered shares
LT0000102030
65,700,000
0.29
19,053,000
From 19/05/2021
Ordinary registered shares
LT0000102030
131,400,000
0.29
38,106,000
Based on the decision of the Ordinary General Meeting of Shareholders held on 30 April 2021, the Company's
authorised share capital was increased on 19 May 2021 out of the Company’s retained earnings from
EUR 19,053 thousand to EUR 38,106 thousand by issuing 65,700,000 ordinary registered shares with par value of
EUR 0.29.
4.3. Trade in the Company’s shares
Reporting
period
Price, EUR
Turnover, EUR
Total turnover
Max.
Min.
Last
session
Average
Max.
Min.
Last
session
Units
EUR
2018
0.788
0.663
0.663
0.707
1,089,964
-
14,277
7,535,222
5,327,757
2019, Q1
0.730
0.658
0.720
0.703
26,314
-
5,517
721,208
507,184
2019, Q2
0.730
0.678
0.680
0.695
103,995
-
1,715
1,256,884
873,498
2019, Q3
0.698
0.653
0.653
0.677
55,746
266
33,354
755,028
510,790
2019, Q4
0.735
0.660
0.723
0.710
104,495
42
13,623
1,257,594
892,451
2019
0.735
0.653
0.723
0.698
104,495
-
13,623
3,990,714
2,783,923
2020, Q1
0.750
0.482
0.530
0.554
342,036
310
23,212
6,240,586
3,458,776
2020, Q2
0.600
0.510
0.593
0.567
67,608
11
6,651
1,630,360
925,039
2020, Q3
0.640
0.590
0.628
0.616
50,999
151
2,737
985,304
606,631
2020, Q4
0.665
0.613
0.665
0.630
40,416
9
9,670
973,192
613,338
2020
0.750
0.482
0.665
0.570
342,036
9
9,670
9,829,442
5,603,785
2021, Q1
0.753
0.630
0.673
0.676
178,553
77
3,085
2,120,000
1,432,306
2021, Q2
0.980
0.670
0.974
0.878
576,103
1,782
64,516
6,366,053
5,590,079
2021, Q3
0.998
0.964
0.964
0.986
2,079,207
3,054
12,209
6,960,462
6,862,103
2021, Q4
0.964
0.866
0.926
0.905
90,003
260
6,726
1,265,914
1,145,714
2021
0.998
0.630
0.926
0.899
2,079,207
77
6,726
16,712,429
15,030,202
17
Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
Price and turnover of shares over the period form 1 January 2019 to 31 December 2021
Share price benchmarked against the Baltic market index over the period form 1 January 2019 to 31 December
2021
4.4. Capitalisation of the Company’s shares
0
400
800
1 200
1 600
2 000
0,40
0,60
0,80
1,00
1,20
1,40
2019-01 2019-04 2019-07 2019-10 2020-01 2020-04 2020-07 2020-10 2021-01 2021-04 2021-07 2021-10
turnover, EUR thousand share price, EUR
50%
75%
100%
125%
150%
175%
200%
2019-01 2019-04 2019-07 2019-10 2020-01 2020-04 2020-07 2020-10 2021-01 2021-04 2021-07 2021-10
OMX_Baltic_Benchmark_GI GRG1L - Grigeo
Last session date
Capitalisation, EUR
31/12/2018
87,052,500
31/03/2019
94,608,000
30/06/2019
89,352,000
30/09/2019
85,738,500
31/12/2019
94,936,500
31/03/2020
69,642,000
30/06/2020
77,854,500
30/09/2020
82,453,500
31/12/2020
87,381,000
31/03/2021
88,366,500
30/06/2021
127,983,600
30/09/2021
126,669,600
31/12/2021
121,676,400
18
Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
5. Corporate governance report
The applied corporate governance code and information on compliance with the code are presented in the section
“Statement of compliance with the corporate governance code”.
5.1. Significant directly and indirectly controlled shares
As at 31 December 2021, the number of shareholders of Grigeo AB was 4,360 (31 December 2020: 3,412).
There are no shareholders holding special controlling rights at the Company. There are no limitations of voting rights
at the Company. Moreover, the Company is not aware of any agreements between the shareholders under which a
transfer of securities and / or voting rights could be restricted. The Company is not aware of any agreements
concluded between the shareholders.
Shareholders holding more than 5% of the Issuer’s authorised share capital by the right of ownership as at 31
December 2021 and 31 December 2020 are presented in the table below:
Shareholder’s name,
surname (company’s name,
type, registered office
address, company code
31 December 2021
31 December 2020
Number of
ordinary
registered
shares owned
by the
shareholder,
units
Portion of
the
authorised
share
capital
held, %
Votes granted
by shares held
by the right of
ownership, %
Number of
ordinary
registered
shares owned
by the
shareholder,
units
Portion of
the
authorised
share capital
held, %
Votes granted
by shares held
by the right of
ownership, %
Turniškių g. 10a-2, Vilnius,
125436533
60,809,151
46.28
46.28
28,582,407
43.50
43.50
Irena Ona Mišeikienė
17,168,342
13.07
13.07
8,584,171
13.07
13.07
*Gintautas Pangonis holds 100% of shares of Ginvildos Investicija UAB. During 2021, after the Company's authorised
share capital increase out of the Company’s retained earnings (section 4.2), Ginvildos Investicija UAB additionally
acquired 3,644,337 shares.
5.2. Rules regulating the election and replacement of the management and supervisory bodies
According to the Company’s Articles of Association, the Company’s bodies are the General Meeting of Shareholders,
the Supervisory Board (the collegial supervisory body), the Board (the collegial management body), and the Manager
of the Company (the President). The Audit Committee is formed at the Company, which is the advisory body to
the Company’s Supervisory Board.
The Company pursues that the elected members of management and supervisory bodies ensure the diversity of
qualifications, professional experience and competences as well as gender equality.
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Grigeo AB, company code 110012450
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for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
Supervisory Board
The Supervisory Board consists of five members. The members of the Supervisory Board are elected by the General
Meeting of Shareholders for a period of four years as defined by the Articles of Association of the Company.
The General Meeting of Shareholders may recall the entire Supervisory Board or its individual members before the
end of the term of office of the Supervisory Board. In the election of the members of the Supervisory Board, each
shareholder holds the number of votes which is equal to the number of votes conferred by the shares held by them
multiplied by the number of the Supervisory Board members to be elected. The shareholder distributes these votes
at his own discretion – in favour of one or several candidates. The candidates who have collected the largest number
of votes are elected. In case the number of candidates who collected equal number of votes exceeds the number of
vacancies on the Supervisory Board, a repeated voting is organised during which each shareholder may vote only for
one of the candidates who collected equal number of votes. The Supervisory Board performs its functions for a period
defined by the Articles of Association or until a new Supervisory Board is elected but no longer than until the Ordinary
General Meeting of Shareholders is held in the year in which the Supervisory Board’s term of office ends. The number
of terms of office of a member of the Supervisory Board is unlimited.
More than a half of the Supervisory Board members must have no employment relations with the Company, at least
1/3 of the Supervisory Board members must be independent. The Supervisory Board or its members commence their
activities after the end of the General Meeting of Shareholders which elected the Supervisory Board or its members.
The Supervisory Board is chaired by its chairperson who is elected by the Supervisory Board from its members.
Audit Committee
The Audit Committee is formed at the Company and it consists of three members. The Audit Committee is formed,
and its composition is approved by the decision of the Supervisory Board for the period defined therein but no longer
than for four years. Only a private individual may be a member of the Audit Committee. The Audit Committee must
include at least one Audit Committee member with knowledge of at least one of the following areas: finance,
accounting, audit of financial statements, or the sector in which the company operates; at least one member of the
Audit Committee must have at least three years’ working experience in the area of accounting and (or) audit of financial
statements. The Manager of the Company and a person who has held this position for the past five years may not be
a member of the Audit Committee. More than a half of the Audit Committee members must be independent members.
The chairperson of the Audit Committee is elected by the members of the Audit Committee. An independent member
is elected to be the chairperson of the Audit Committee.
Board
The Company’s Board consists of five members. The Board is elected for a period of four years as defined by the
Articles of Association of the Company. The Board performs its functions for a period defined by the Articles of
Association or until a new Board is elected and starts to perform its functions but no longer than until the Ordinary
General Meeting of Shareholders is held in the year in which the Board’s term of office ends. The Board elects the
chairperson of the Board from its members. Only a private individual may be elected to be a member of the Board.
The number of terms of office of a member of the Board is unlimited. The Board or its members commence their
activities after the end of the meeting of the Supervisory Board which elected the Board or its members. The
Supervisory Board may recall the entire Board or its individual members before the end of their term of office.
Manager of the Company
The Manager of the Company is elected, recalled and dismissed by the Board of the Company. An employment
contract is signed with the Manager of the Company. The Company’s Manager starts to perform his/her duties from
the election day, unless otherwise provided by the agreement signed.
Articles of Association of the Company
The General Meeting of Shareholders has the exclusive right to amend the Articles of Association of the Company
subject to the exceptions provided by the Law on Companies of the Republic of Lithuania. The Articles of Association
of the Company are amended following the procedure established by the Law on Companies of the Republic of
Lithuania.
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Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
5.3. Management and supervisory bodies
Composition of the management and supervisory bodies
Name, surname
Position
Education
Term of office
Portion of
ownership
interest and
voting rights,
%
Supervisory Board
Norimantas Stankevičius
Chairman
Vilnius University, Physicist
From 26 April
2019 until the
General
Shareholders’
Meeting to be
held in 2023
4.42
Vilius Oškeliūnas
Independent Member
Vilnius University, Bachelor’s and
Master’s degree in Economics
-
Romualdas Degutis
Member
Kaunas University of Technology,
Telecommunications Engineer
0.03
Normantas Paliokas
Member
Vilnius Gediminas Technical
University, Architect
-
Daiva Duksienė
Independent Member
Vilnius University, Economist
-
Audit Committee
Daiva Duksienė
Chairwoman
(independent
member)
Vilnius University, Economist
From 26 April
2019 until the
General
Shareholders’
Meeting to be
held in 2023
-
Norimantas Stankevičius
Member
Vilnius University, Physicist
4.42
Vilius Oškeliūnas
Independent Member
Vilnius University, Bachelor’s and
Master’s degree in Economics
-
Board
Gintautas Pangonis
Chairman
Kaunas University of Technology,
Telecommunications Engineer
From 26 April
2019 until the
General
Shareholders’
Meeting to be
held in 2023
Indirectly 46.28*
Algimantas Variakojis
Independent Member
(since 13/07/2020)
Vilnius University, Economist
0.16**
Vigmantas Kažukauskas
Member
Kaunas University of Technology,
Telecommunications Engineer
0.88
Saulius Martinkevičius
Member
Vilnius University, Master’s degree
in Business Administration and
Management, Bachelor’s degree in
Economics and Business IT
Systems
0.17
Tomas Jozonis
Member
ISM University of Management
and Economics, Bachelor’s
degree in Management and
Business Administration; Vilnius
University, Master’s degree in
Business
-
Manager of the Company
Gintautas Pangonis
President
Kaunas University of Technology,
Telecommunications Engineer
-
Indirectly 46.28*
*Ginvildos Investicija UAB holds 46.28% of the Company’s shares. 100% of shares of Ginvildos investicija UAB are
held by Gintautas Pangonis.
**The Board member holds 0.13% of the Company’s shares directly and 0.03% – through 100% owned company
Alro Kapitalas UAB.
Gintautas Pangonis – Chairman of the Board, President. Education – higher education. Profession – multichannel
telecommunication engineer. Workplaces during the last 10 years:
Employer
Position
Grigeo AB
General Director, Chairman of the Board
Grigeo AB
President, Chairman of the Board
21
Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
Participation of the management and supervisory bodies in the activities of other organisations
Name,
surname
Position
Name of the enterprise, institution and organisation
Norimantas
Stankevičius
Chairman of the Supervisory Board,
Member of the Audit Committee
Grigeo AB
Project Manager
Didma UAB
Vilius
Oškeliūnas
Independent Member of the
Supervisory Board, Member of the
Audit Committee
Grigeo AB
Wealth Manager
Gerovės Valdymas UAB
Director, Board Member
Atelier Investment Management UAB
Director
IM Investment UAB
Deputy Director
WB Invest UAB
True Member
Gerovės Partneriai KŪB
Board Member
Invalda Privatus Kapitalas AB, ETA projektai UAB, Liv in LT UAB, V46
UAB
Romualdas
Degutis
Member of the Supervisory Board
Grigeo AB
Strategy and Development Director
InComSystems UAB
Chairman of the Board
Antena UAB, InComSystems UAB
Normantas
Paliokas
Director
Elnorma UAB
Member of the Supervisory Board
Grigeo AB
Daiva
Duksienė
Independent Member of the
Supervisory Board, Chairperson of the
Audit Committee
Grigeo AB
Chief Accountant
Autodina UAB, Vilturas UAB, Autovizija LT UAB
Gintautas
Pangonis
President
Grigeo AB
Director
Ginvildos investicija UAB
Chairman of the Board
Grigeo AB
Board Member
Grigeo Klaipėda AB, Grigeo Packaging UAB
Chairman of the Board
Naujieji Verkiai UAB, Grigeo Baltwood UAB, Grigiškių Energija UAB,
Grigeo Recycling UAB, Grigeo Investicijų Valdymas UAB
Member of the Supervisory Board
Mena Pak AT
Chairman of the Supervisory Board
Grigeo Recycling SIA
Vigmantas
Kažukauskas
Vice President for Business
Development
Grigeo AB
Board Member
Grigeo AB, Grigeo Klaipėda AB, Grigeo Baltwood UAB, Grigeo
Packaging UAB, Grigeo Investicijų Valdymas UAB
Director, Board Member
Naujieji Verkiai UAB, Grigiškių Energija UAB
Member of the Supervisory Board
Mena Pak AT
Algimantas
Variakojis
Independent Board Member
Grigeo AB
Partner, True Member
Verslo Angelų fondas I KŪB
Member of the council
Vilnius University of Applied Sciences
Director
Alro Kapitalas UAB, Verslo Praktika UAB
Board Member
Nailtex UAB, Chipper Blades Center UAB
Chairman of the Board
Mes Invest UAB
Saulius
Martinkevičius
Vice President, Procurement and
Logistics
Grigeo AB
Board Member
Grigeo AB, Grigeo Baltwood UAB, Grigeo Packaging UAB, Grigeo
Klaipėda AB, Naujieji Verkiai UAB, Grigiškių Energija UAB, Grigeo
Investicijų Valdymas UAB
Tomas Jozonis
Managing Director
Grigeo AB
Board Member
Grigeo AB, Grigeo Recycling UAB, Grigiškių Energija UAB
Member of the Supervisory Board
Grigeo Recycling SIA
22
Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
5.4. Functions and responsibilities of the management and supervisory bodies
Supervisory Board
The Supervisory Board discusses and approves the business strategy of the Company, elects members of the Board
of the Company and recalls them from their positions, adopts decisions regarding transactions with related parties,
supervises the activity performed by the Board and the Manager of the Company, submits replies and proposals
regarding the set of financial statements, the proposed profit or loss appropriation and the annual report of the
Company as well as the activity of the Board and the Manager of the Company to the General Meeting of
Shareholders; and resolves other issues assigned to the competence of the Supervisory Board by the Articles of
Association of the Company and by the decisions of the General Meeting of Shareholders regarding the supervision
of the activities of the Company and its management bodies.
Audit Committee
The functions of the Audit Committee are to inform the Manager or the supervisory body of the Company about the
results of the audit of the financial statements and to explain how this audit contributed to the reliability of the financial
statements and the role of the Audit Committee in doing that; to monitor the financial reporting process and submit
recommendations for ensuring the reliability thereof; to monitor the audit of the annual financial statements and the
consolidated financial statements; to review and monitor the independence of the auditors or the audit companies; to
provide recommendations regarding the appointment of statutory auditors or the audit companies; to submit opinions
regarding the transactions conducted by the Company with the related parties.
Board
The Board discusses and approves the Company’s annual and interim reports, the management structure of the
Company; elects and removes from the office the Manager of the Company, sets his/her remuneration and other
terms and conditions of the employment contract; analyses and assesses the information submitted by the Manager
of the Company on the organisation of the Company’s business activities, financial condition, the set of the Company’s
annual financial statements, proposed profit or loss appropriation and submits to the Supervisory Board and General
Meeting of Shareholders together with the responses and proposals in relation thereto and the Company’s annual
report; analyses, assesses the draft business strategy and information about the implementation of the Company’s
business strategy submitted by the Manager of the Company and adopts other decisions assigned to the competence
of the Board by the Law on Companies of the Republic of Lithuania, the Articles of Association or the decisions of the
General Meeting of Shareholders of the Company. The Articles of Association of the Company provide for the
following competence of the Board in addition to those provided by the Law on Companies of the Republic of Lithuania:
the Board discusses and approves the employee payment systems; elects and recalls employees directly reporting
to the Manager of the Company, directors of the Company’s divisions, sets their salaries, other terms and conditions
of the employment contract, approves their job descriptions, allocates bonuses to these employees; elects and recalls
the accounting company providing accounting services to the Company, sets the conditions of payment for the
accounting services; approves the systems and procedures of bonuses, incentives to the employees procedures; sets
the non-current assets’ depreciation or amortisation rates and calculation methods applied in the Company.
Manager of the Company
The Manager of the Company – the President – organises the Company’s economic commercial business activities.
The Manager of the Company has the right to unilaterally conclude transactions, except for the cases provided by
the Articles of Association of the Company where the Manager of the Company may conclude transactions subject to
the decision of the Board of the Company to conclude such transactions. The Manager of the Company is responsible
for the organisation of the Company’s business activities and for the implementation of its goals, preparation of the
set of the annual financial statements, preparation of the Company’s annual report, and for the fulfilment of other
obligations provided by the Law on Companies of the Republic of Lithuania and other legal acts as well as the Articles
of Association of the Company.
23
Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
6. Remuneration report
On 30 April 2021, the General Meeting of the Shareholders approved the remuneration report of 2020.
The remuneration report presents information about the remuneration paid to each member of the management and
supervisory bodies of the Company (including but not limited to, all of its components, i.e., fixed and variable
remuneration, bonuses, premiums and other benefits and taxes related to all payments or accrued benefits) by the
Company and any other entity within the group of Grigeo AB.
The remuneration report includes personal data of the members of the management and supervisory bodies of the
Company (name, surname and other specified data) which is processed in order to enhance the Company’s
transparency, improve the accountability of the management and supervisory bodies, and monitor the remuneration
of the members of the management and supervisory bodies.
6.1. Remuneration policy
The Company’s remuneration policy (the “Remuneration Policy”), which was approved on 4 August 2020, is applicable
to the Company’s Manager, members of the Board and the Supervisory Board. The Remuneration Policy is published
on the Company’s website www.grigeo.lt. The main provisions of the Remuneration Policy of the Company are
presented below:
Manager of the Company
The remuneration to the Company’s Manager consists of the fixed (base) monthly salary in the amount defined by
the Board of the Company, bonuses, and other benefits. By the decision of the Board of the Company, the Company’s
Manager may be granted annual bonuses depending on the Company’s financial performance and calculated
following the bonus scheme approved by the Board of the Company. The amount of the annual bonus may not exceed
50% of the annual salary of the Company’s Manager. Following the Rules for Granting Shares of the Company,
the Manager of the Company may be remunerated by granting shares.
Board
A civil agreement on the provision of services is concluded with the member of the Board of the Company who has
no employment relations with the Company whereby a fixed monthly remuneration is set amounting to no more than
EUR 2,500 (before the applicable taxes). The member of the Board is paid an additional monthly remuneration for the
performance of the duties of the chairperson of the Board of the Company which cannot exceed 25% of the fixed
monthly remuneration agreed with the member of the Board in the agreement. No variable remuneration components,
bonuses or supplements are normally set to the member of the Board who has no employment relations with the
Company, and no remuneration is offered by granting shares, no specific remuneration criteria are predefined
depending on the financial and non-financial performance.
Тhe member of the Board who is the Company’s employee receives remuneration under the employment contract
signed with the Company. The remuneration of the member of the Board who is the Company’s employee consists
of a fixed (base) monthly salary, bonuses, and other benefits applicable to the employees of the Company. A specific
fixed (base) monthly salary is set by the Board of the Company. By the decision of the Board of the Company, a
member of the Board may be granted annual bonuses depending on the Company’s financial performance, calculated
in accordance with the bonus scheme approved by the Board of the Company. Following the Rules for Granting
Shares of the Company, the member of the Board who is the Company’s employee may be remunerated by granting
shares.
Following the procedure established by the Law on Companies of the Republic of Lithuania and by other legal acts,
by the decision and at the discretion of the General Meeting of Shareholders of the Company, the members of the
Board of the Company may be granted annual bonuses.
Supervisory Board
A civil agreement on the provision of services is concluded with the member of the Supervisory Board of the Company
whereby a fixed annual remuneration is set amounting to no more than EUR 3,000 (before the applicable taxes). In
case the member of the Supervisory Board has performed his/her activity for less than a calendar year, a proportionally
lower remuneration is paid thereto in view of the actual performance of the activity of the member of the Supervisory
Board. A member of the Supervisory Board shall be paid an annual additional remuneration of no more than 25% for
the performance of the duties of the Chairperson of the Supervisory Board of the Company, no more than 20% for
the performance of the duties of the member of the Audit Committee of the Company, and no more than 20% for the
performance of the duties of the Chairperson of the Audit Committee of the Company. No variable salary components,
bonuses or premiums depending on the Company’s performance are commonly set to the member of the Supervisory
Board, and no remuneration is offered by granting shares, no specific remuneration criteria are predefined depending
on the financial and non-financial performance.
24
Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
Following the procedure established by the Law on Companies of the Republic of Lithuania and by other laws, by the
decision and at the discretion of the General Meeting of Shareholders of the Company, a member of the Supervisory
Board may be granted annual bonuses. In case annual bonuses are granted to a member of the Supervisory Board,
they also comprise the remuneration payable to the member of the Supervisory Board.
6.2. Remuneration paid to the management and supervisory bodies
Position, name, surname
Reporting
period
Fixed salary component
Variable
salary
component
One-off
payments
Total
remune-
ration
Fixed to
variable
salary ratio,
%
Base salary
Other
benefits
Chairman of the Board, President
Gintautas Pangonis
2021
133
15
59
-
207
71% / 29%
2020
115
5
-
-
120
100% / 0%
Member of the Board Tomas Jozonis
2021
117
4
50
-
170
71% / 29%
2020
100
4
37
-
141
74% / 26%
Member of the Board
Saulius Martinkevičius
2021
86
3
21
-
109
81% / 19%
2020
82
4
12
-
97
88% / 12%
Member of the Board Vigmantas
Kažukauskas
2021
87
2
21
2
112
80% / 20%
2020
82
2
20
-
104
81% / 19%
Member of the Board
Nina Šilerienė (until 12/07/2020)
2021
-
-
-
-
-
-
2020
71
2
-
54
128
58% / 42%
Independent Member of the Board
Algimantas Variakojis (from 13/07/2020)
2021
30
-
-
-
30
100% / 0%
2020
14
-
-
-
14
100% / 0%
No remuneration by granting the Company’s shares was allocated to members of the management and supervisory
bodies of the Company. The Company has not granted any share options to the members of the management and
supervisory bodies.
During the reporting period, variable remuneration was not recovered.
Annual remuneration paid to the members of the management bodies of the Company as compared to the Group’s
performance and the average salary of the employees:
Position, name, surname
2017
2018
2019
2020
2021
Chairman of the Board, President Gintautas Pangonis
153
176
206
120
207
Member of the Board Tomas Jozonis
-
-
64
141
170
Member of the Board Saulius Martinkevičius
-
-
48
97
109
Member of the Board Vigmantas Kažukauskas
109
127
148
104
112
Member of the Board Nina Šilerienė (until 12/07/2020)
107
126
150
128
-
Independent Member of the Board Algimantas Variakojis
(from 13/07/2020)
-
-
-
14
30
The Group’s performance
2016
2017
2018
2019
2020
2021
EBITDA (-1 year)*
16,068
22,894
28,113
28,603
26,243
23,726
Average annual salary paid to full-time employees
2017
2018
2019
2020
2021
Average annual salary paid to the Group’s employees**
15.0
16.4
22.2
23.8
25.9
*The EBITDA ratio is presented in each case for the previous year as the results of operations are assessed based
on the previous year’s financial performance.
**The presented data is related to employees working in the Group companies operating in Lithuania who are not
members of the management and supervisory bodies of the Company.
25
Grigeo AB, company code 110012450
CONSOLIDATED ANNUAL REPORT
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
Annual remuneration paid to the members of the supervisory body of the Company as compared to the Group’s
performance and the average salary of the Group’s employees:
Position, name, surname
2017
2018
2019
2020
2021
Chairman of the Supervisory Board, member of the Audit
Committee Norimantas Stankevičius
9.0
10.0
12.0
-
8.7
Independent Member of the Supervisory Board, Member of the
Audit Committee Vilius Oškeliūnas
1.8
1.8
2.2
-
7.2
Member of the Supervisory Board
Romualdas Degutis
1.8
1.8
2.2
-
6.0
Independent Member of the Supervisory Board, Chairwoman of
the Audit Committee Daiva Duksienė
1.8
1.8
2.2
-
8.4
Member of the Supervisory Board Normantas Paliokas
-
-
-
-
6.0
The Group’s performance
2016
2017
2018
2019
2020
2021
EBITDA (-1 year)*
16,068
22,894
28,113
28,603
26,243
23,726
Average annual salary paid to full-time employees
2017
2018
2019
2020
2021
Average annual salary paid to the Group’s employees**
15.0
16.4
22.2
23.8
25.9
*The EBITDA ratio is presented in each case for the previous year as the operating results are assessed based on
the previous year’s financial performance.
**The presented data is related to employees working in the Group companies operating in Lithuania who are not
members of the management and supervisory bodies of the Company.
6.3. Compliance with the Remuneration Policy
The remuneration received by the members of the Company’s management and supervisory bodies complies with
the approved Remuneration Policy.
Four out of five members of the Board of the Company (except for the independent member of the Board) are the
Company’s employees holding the top-level management positions at the Company. They receive the remuneration
in the amount set by the Board under the employment contract signed with the Company. The amounts of
remuneration paid to the members of the Board who are the Company’s employees are set in view of the qualifications
and competence of each specific employee, the scope of functions and responsibilities assumed within the Company,
the aim to retain a specific person in the Company’s top management position, motivate him/her to work in good faith,
with due care, qualification and loyalty for the Company to achieve the Company’s goals, and implement the
Company’s strategy and interests, thereby increasing the Company’s profitability and ensuring a consistent
improvement of its financial performance in the long-term perspective. Following the bonus system approved by the
Board of the Company, annual bonuses were allocated to the members of the Board of the Company who are the
Company’s employees depending on the Group’s and/or the Company’s financial performance. When allocating
annual bonuses to the top-level employees, the Group’s and/or the Company’s profitability and EBITDA are the main
criteria that are taken into consideration when evaluating the employees’ performance.
The monthly remuneration paid to the independent member of the Board is set in accordance with the provisions of
the Remuneration Policy and is provided for in the agreement signed with the member of the Board on the provision
of management activities/services subject to remuneration by the member of the Board.
The members of the Supervisory Board of the Company were allocated annual bonuses following the procedure set
by the Law on Companies of the Republic of Lithuania, by the decision and at the discretion of the General Meeting
of Shareholders of the Company.
The remuneration paid to the Manager, members of the Board and the Supervisory Board of the Company complies
with the remuneration guidelines defined by the Remuneration Policy of the Company and enables better
accountability of members of the management and supervisory bodies to the Company and its shareholders as well
as encourages members of the management and supervisory bodies of the Company to focus on the long-term goals
and strategy rather than take high-risk decisions that may imply positive results only in the short-term.
7. Social responsibility report
Required disclosures of Social responsibility report are presented in a separate Sustainability report which is publicly
available on Company’s website https://www.grigeo.lt/en.
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
27
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, LT-27101, Lithuania
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
STATEMENTS OF FINANCIAL POSITION
Notes
Group
Company
At 31
December
2021
At 31
December
2020
At 31
December
2021
At 31
December
2020
ASSETS
Non-current assets
Property, plant and equipment
5
Right-of-use assets
6
Intangible assets
7
Investment property
8
Investments in subsidiaries
1
Other amounts receivable
10
Deferred income tax assets
25
Total non-current assets
Current assets
Inventories
9
Trade and other amounts receivable
10
Prepaid income tax
Other current assets
Cash and cash equivalents
11
Total current assets
TOTAL ASSETS
(Cont'd on the next page)
28
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, LT-27101, Lithuania
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
STATEMENTS OF FINANCIAL POSITION (CONTINUED)
Notes
Group
Company
At 31
December
2021
At 31
December
2020
At 31
December
2021
At 31
December
2020
EQUITY AND LIABILITIES
Equity
Authorised share capital
12
Share premium
12
Legal reserve
12
Reserve for hedging instruments
12
(4 )
Foreign currency translation reserve
12
(2,161 )
(2,407 )
Retained earnings
12
Equity attributable to shareholders of the
Company
Non-controlling interest
Total equity
Liabilities
Non-current liabilities
Borrowings
13
Lease liabilities
14
Grants
15
Deferred income tax liability
25
Long-term employee benefits
16
Other amounts payable
Total non-current liabilities
Current liabilities
Borrowings
13
Lease liabilities
14
Income tax payable
Trade and other amounts payable
17
Fair value of financial instruments
3
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
The accompanying notes are an integral part of these financial statements.
The financial statements were prepared by the management on 31 March 2022 and signed with a qualified
electronic signature on its behalf by:
Gintautas Pangonis
President
Martynas Nenėnas
Finance Director
29
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, LT-27101, Lithuania
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
STATEMENTS OF COMPREHENSIVE INCOME
Notes
Group
Company
2021
2020
2021
2020
Revenue
18
Cost of sales
19
(129,657 )
(96,133 )
(58,532 )
(46,424 )
Gross profit
Selling and distribution expenses
20
(12,179 )
(11,706 )
(4,995 )
(5,158 )
Administrative expenses
21
(8,134 )
(7,828 )
(3,076 )
(2,985 )
Other income
22
Other gains/(losses) – net
23
Operating profit
Finance income
24
Finance costs
24
(260 )
(332 )
(93 )
(129 )
Finance income/(costs) – net
(226 )
(221 )
(89 )
(123 )
Profit before income tax
Income tax
25
(1,250 )
(1,646 )
(916 )
PROFIT FOR THE PERIOD
Profit for the period is attributable to:
Shareholders of the Company
Non-controlling interest
(23 )
Other comprehensive income/(expenses)
Items that will not be reclassified
subsequently to profit or loss
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translation of foreign
operations
(612 )
Cash flow hedges – effective portion of changes
in fair value
(11 )
Total items that may be reclassified
subsequently to profit or loss
(584 )
Other comprehensive income/(expenses) for
the period
(584 )
Total comprehensive income for the period
Total comprehensive income for the period
is attributable to:
Shareholders of the Company
Non-controlling interest
(23 )
Basic and diluted earnings per share (in EUR)
26
The accompanying notes are an integral part of these financial statements.
Gintautas Pangonis
President
Martynas Nenėnas
Finance Director
30
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, LT-27101, Lithuania
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
STATEMENTS OF CHANGES IN EQUITY
Group
Equity attributable to owners of the Company
Non-
controlling
interest
Total equity
Share
capital
Share
premium
Legal
reserve
Reserve
for
hedging
instru-
ments
Foreign
currency
transla-
tion
reserve
Retained
earnings
Total
At 1 January 2020
(17 )
(1,795 )
Profit for the year
(23 )
Other comprehensive
income/(expenses)
(612 )
(584 )
(584 )
Total comprehensive
income/(expenses) for
the period
(612 )
(23 )
At 31 December 2020
(2,407 )
Profit for the year
Other comprehensive
income/(expenses)
(11 )
Total comprehensive
income/(expenses)
(11 )
Approved dividends
(7,884 )
(7,884 )
(7,884 )
Share capital increase
(19,053 )
Transactions with the
Company’s owners
(26,937 )
(7,884 )
(7,884 )
Acquisition of non-
controlling interest
(2 )
(2 )
Transactions with the
non-controlling
interest
(2 )
(2 )
At 31 December 2021
(2,161 )
Company
Share
capital
Share
premium
Legal
reserve
Hedging
reserve
Retained
earnings
Total
equity
At 1 January 2020
(12 )
Profit for the year
Other comprehensive income
Total comprehensive income
At 31 December 2020
(4 )
Profit for the year
Other comprehensive income
Total comprehensive income
Approved dividends
(7,884 )
(7,884 )
Share capital increase
(19,053 )
Transactions with the Company’s
owners
(26,937 )
(7,884 )
At 31 December 2021
The accompanying notes are an integral part of these financial statements.
Gintautas Pangonis
President
Martynas Nenėnas
Finance Director
31
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, LT-27101, Lithuania
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
STATEMENTS OF CASH FLOWS
Notes
Group
Company
2021
2020
2021
2020
Cash flows from operating activities
Profit before income tax
Adjustments for non-cash items:
Depreciation and amortisation
Dividends received
(1,500 )
Interest expenses on borrowings and lease
24
(Income)/expenses from other financing activities – net
24
(96 )
(2 )
Gain on disposal of property, plant and equipment
(112 )
(81 )
(29 )
(36 )
Changes in working capital
(Increase)/decrease in inventories
(5,280 )
(785 )
Decrease/(increase) in trade and other amounts receivable
(7,213 )
(3,149 )
(Increase)/decrease in other assets
(38 )
(46 )
(11 )
Increase/(decrease) in trade and other amounts payable
(90 )
(296 )
(1,191 )
Interest paid
(202 )
(317 )
(93 )
(111 )
Income tax paid
(835 )
(435 )
(334 )
Net cash inflow from operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment and intangible
assets
5, 7
(12,438 )
(7,868 )
(5,567 )
(4,222 )
Acquisition of investment property
8
(2,122 )
(257 )
(2,122 )
(257 )
Disposal of property, plant and equipment
Acquisition of non-controlling interest
1
(2 )
Reduction of the share capital of the subsidiary
1
Dividends received
22
Net cash (outflow) from investing activities
(14,373 )
(7,978 )
(6,160 )
(3,329 )
Cash flows from financing activities
Dividends paid
(7,726 )
(10 )
(7,723 )
(9 )
Repayments of borrowings
(6,403 )
(8,576 )
(2,281 )
(3,271 )
Proceeds from borrowings
Lease payments
(446 )
(357 )
(337 )
(305 )
Net cash (outflow) from financing activities
(12,844 )
(8,943 )
(9,341 )
(3,585 )
Net increase/(decrease) in cash flows
(5,832 )
(9,635 )
Cash and cash equivalents at the beginning of the
period
Cash and cash equivalents at the end of the period
The accompanying notes are an integral part of these financial statements.
Gintautas Pangonis
President
Martynas Nenėnas
Finance Director
NOTES TO THE FINANCIAL STATEMENTS
33
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
1. General information
Grigeo AB (hereinafter the “Company”) is a public limited liability company registered in the Republic of Lithuania on
23 May 1991. The Company is engaged in the production of toilet paper, paper towels and paper napkins. The paper
mill in Grigiškės was established in 1923.
The address of the Company’s registered office is as follows: Vilniaus g. 10, Grigiškės, Vilniaus m. sav., Lithuania.
The Company’s shares are listed on the Baltic Main List of Nasdaq AB Vilnius Stock Exchange (ISIN code of shares
is LT0000102030). The trading code of shares on Nasdaq AB Vilnius stock exchange is GRG1L.
Based on the decision of the Ordinary General Meeting of the Shareholders of the Company that was held on
30 April 2021, the Company's authorised share capital was increased on 19 May 2021 out of the Company’s retained
earnings from EUR 19,053 thousand to EUR 38,106 thousand by issuing 65,700,000 ordinary registered shares with
a nominal value of EUR 0.29.
After the authorised share capital increase and as at 31 of December 2021, the Company’s authorised share capital
was divided into 131,400,000 ordinary registered shares (31 December 2020: 65,700,000) with a nominal value of
EUR 0.29 each. All shares were fully paid.
Three major shareholders as at 31 December 2021 and 2020 are listed below:
At 31 December 2021
At 31 December 2020
Number of
shares
%
Number of
shares
%
Ginvildos Investicija UAB
60,809,151
46.28
28,582,407
43.50
Mišeikienė Irena Ona
17,168,342
13.07
8,584,171
13.07
Norimantas Stankevičius
5,807,256
4.42
2,903,628
4.42
TOTAL
83,784,749
63.76
40,070,206
60.99
As at 31 December 2021, the number of the Group’s employees was 833 (31 December 2020: 859). As at 31
December 2021, the number of the Company’s employees was 266 (31 December 2020: 288).
The shareholders of the Company have a statutory right to approve these financial statements or not to approve them
and to require preparation of a new set of the financial statements.
Structure of the Group
As at 31 December 2021 and 2020, the Grigeo group consisted of Grigeo AB and the following subsidiaries
(hereinafter the “Group”):
At 31 December 2021
At 31 December 2020
Ownership
interest
held by
the Group
Amount
(cost) of
investment
Ownership
interest
held by the
Group
Amount
(cost) of
investment
Address
Principal activities
Date of acquisition (establishment)
Subsidiaries directly controlled by the Company:
Grigeo Baltwood
UAB
100%
2,555
100%
2,555
Vilniaus g. 10, Grigiškės,
Vilniaus m. sav., Lithuania
Manufacturing of wood fibreboards.
10 April 2003
Grigeo Recycling
UAB
100%
1,066
100%
1,066
Vilniaus g. 10, Grigiškės,
Vilniaus m. sav., Lithuania
Collection of secondary raw materials and
preparation for recycling.
16 July 2010
Naujieji Verkiai
UAB
100%
-
100%
-
Popieriaus g. 15, Vilnius,
Lithuania
Building and development of real estate.
The company was dormant in 2021 and
2020.
6 April 2004
Grigeo Investicijų
Valdymas UAB
100%
19,427
100%
19,427
Vilniaus g. 10, Grigiškės,
Vilniaus m. sav., Lithuania
Investment activities and corporate
governance.
1 March 2010
Grigiškių Energija
UAB
100%
3
100%
3
Vilniaus g. 10, Grigiškės,
Vilniaus m. sav., Lithuania
Heat production and sale. The company
was dormant in 2021 and 2020.
7 October 2011
Total
23,051
23,051
34
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
1. General information (continued)
At 31 December 2021
At 31 December 2020
Ownership
interest
held by
the Group
Amount
(cost) of
investment
Ownership
interest
held by
the Group
Amount
(cost) of
investment
Address
Principal activities
Date of acquisition (establishment)
Subsidiaries directly controlled by the Company:
Grigeo Klaipėda
AB*
97.68%
-
97.67%
-
Nemuno g. 2, Klaipėda,
Production of cardboard and cardboard
paper honeycomb.
1 March 2010
Grigeo Packaging
UAB*
100%
-
100%
-
Vilniaus g. 10, Grigiškės,
Vilniaus m. sav., Lithuania
Manufacturing of corrugated cardboard and
packaging.
10 April 2009
Меna Pak AT**
100%
-
100%
-
Koševovo g. 6, Černigovo
raj., Mena, Ukraine
Manufacturing of corrugated cardboard and
packaging.
1 March 2010
Grigeo Recycling
SIA***
100%
-
100%
-
Ēdoles iela 5, Riga, Latvia
Collection of secondary raw materials and
preparation for recycling.
16 June 2016
*Controlled by Grigeo Investicijų Valdymas UAB; ** Controlled by Grigeo Klaipėda AB; ***Controlled by Grigeo
Recycling UAB.
The non-controlling interest consists of 2.32% of shares of Grigeo Klaipėda AB, which are not owned by the
Company’s shareholders. On 18 November 2021, Grigeo Investicijų Valdymas UAB redeemed 0.01% of shares of
subsidiary Grigeo Klaipėda AB from the minority shareholders.
Changes in 2021 and 2020
There were no significant changes in 2021.
The increase of the authorised share capital of Grigeo Baltwood UAB in 2020:
The Articles of Association of Grigeo Baltwood UAB that were amended under the decision of the sole shareholder
Grigeo AB dated 27 May 2020 were registered with the Register of Legal Entities on 26 August 2020. The share
capital of Grigeo Baltwood UAB was reduced from EUR 6,100 thousand to EUR 4,000 thousand by annulling
2,100,000 ordinary registered shares with the nominal value of EUR 1 in order to pay the company’s funds to the sole
shareholder. A part of the amount (EUR 1,038 thousand) was offset against the loan and interest payable by
the Company to Grigeo Baltwood UAB, and the remaining amount (EUR 1,062 thousand) was transferred to
the Company’s settlement account.
COVID-19
As at the date of the presentation of these financial statements in fight with the global COVID-19 pandemic the
governments of a large number of countries, including Lithuania, have passed various decisions that could have
impact on business undertakings.
Taking into consideration the situation related to the COVID-19 disease (coronavirus infection), as well as that
the government, the municipal institutions and other countries implemented measures to contain the outbreak, the
Company took immediate preventive actions aiming to protect health of its employees and partners. Accordingly,
the crisis response team was formed at the Group that conducted daily monitoring and analysis of the situation at the
Group companies and adjusted the action plan when necessary.
The large-scale economic impact was caused by these events, namely:
- Business and economic activities were disrupted in Lithuania, all stages of the supply chain were negatively
affected;
- Significant disruptions occurred in certain business sectors in Lithuania and in the markets which are dependent
on the foreign supply chain as well as in the export oriented companies dependent on foreign markets. The
mentioned sectors comprise trade and transport, travel and tourism, entertainment, production, construction,
retail trade, insurance, education and finance sectors;
- There has occurred a significant decrease in demand for non-essential goods and services;
- Economic uncertainty has increased and it was reflected by volatility in property prices and foreign exchange
rates.
Referring to this public information, the management has assessed possible dynamics of the outbreak and its potential
impact on the Company and the economic environment in which it operates, including measures implemented by the
Lithuanian Government and the governments of the countries in which the main partners and customers of the
Company are located.
35
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
1. General information (continued)
The management has taken into consideration the following operational risks that could have a negative impact on
the Group and the Company:
- A major part of employees involved in the production process becoming infected with COVID-19;
- Disruptions in transportation of goods which could cause disruptions in the delivery of goods to the sales
locations;
- Possible decline in the current level of available cash due to possible delays in settlements by customers;
- Possible non-compliance with bank covenants after the end of the year due to possible liquidity risk.
The Group continued production after the declaration of the quarantine in Lithuania. The Group closely monitored the
situation and regularly communicated its plans and contractual obligations to the customers and the suppliers. To
mitigate the risks arising from possible negative scenarios, the management started to implement the following
measures:
- The production unit’s employees were trained to observe very strict precautionary measures;
- In order to respond to a possible decline in demand for the Company’s products, a possibility was considered to
adjust the scope of the Company’s activities (reduce production volumes);
- Economic market tendencies in Europe and the CIS countries were assessed including their possible long-term
effect. Aiming to mitigate the impact of the outbreak, among others, the Company has accumulated significant
financial resources, a sufficient amount of inventories and raw materials and diversified the supply and purchase
chains of raw materials.
Although the quarantine restrictions had no material impact on the Company’s and the Group’s activities, the Company
and the Group closely monitored economic tendencies in Europe and the CIS countries and their possible long-term
impact on their financial position and results of operations. Settlements from the Group’s customers were not
significantly overdue during 2021. The Group generated positive cash flows from operating activities and its current
assets exceeded its current liabilities as at 31 December 2021. There were also no significant disruptions in supply
lines of raw materials – no delays were observed, the suppliers fulfilled their obligations. Moreover, the delivery and
acquisition chains of raw materials were diversified. The health of the Group’s employees was regularly monitored.
Climate change-related matters
The management of the Group recognises the importance of analysis in disclosing climate-related risks and their
significance to the financial statements. In 2021, the management of the Group decided to start with a qualitative
analysis that will help explore a possible range of effects of climate change. The Group used the reporting principles
of the Climate-Related Financial Disclosure Working Group (TCFD) to analyse the potential impacts of climate
change.
Based on the Group management’s analysis, the direct risk of climate change in the Group's operations is insignificant,
but the indirect risk related to the transition to more environmentally friendly technological solutions in the long term
may affect the Group's financial performance due to additional investments for the acquisition of new equipment or
upgrade of existing one.
During the transition period, the management will additionally assess the projected cash flows due to the amount and
timing of potential investments, as well as assess the risks of impairment of existing non-current assets and review
the useful lives of renewed or newly acquired assets.
For the current and previous reporting years, such potential risks and their impact on the significant accounting
estimates and assumptions used in the preparation of the financial statements were assessed as not significant. The
qualitative analysis will be continued by including the climate change risk assessment in the periodic review and
updates of the assumptions used by management.
36
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These
principles were applied consistently for the reported periods unless stated otherwise (adoption of new and/or amended
standards and their interpretations).
2.1 Basis of preparation
The financial statements of the Group and the Company have been prepared in accordance with International
Financial Reporting Standards (IFRS), as adopted by the European Union (EU) effective at 31 December 2021. All
references to IFRS used below are references to IFRS approved by the EU.
These financial statements of the Group and the Company have been prepared on a historical cost basis, except of
financial instruments used for hedging that are accounted for at fair value.
These financial statements of the Group and the Company for the year ended 31 December 2021 have been prepared
under the assumption that the Group and the Company will continue as a going concern.
All amounts in these financial statements of the Group and the Company are presented in the euros. Amounts are
rounded to the nearest thousand (EUR thousands), unless otherwise stated.
The preparation of financial statements in conformity with IFRS requires the management to make judgements,
assumptions and estimates that are related to the application of the Group’s and the Company’s accounting policies.
Estimates and judgements are based on the management’s experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
2.2 Amendments to standards and their interpretations
Adoption of new and/or amended IFRS and interpretations of the International Financial Reporting Interpretations
Committee (IFRIC)
a) The following IFRSs, amendments thereto were adopted by the Group and the Company for the first
time in the financial year ended 31 December 2021:
Covid-19-related rent concessions – Amendments to IFRS 16
The amendments provided lessees (but not lessors) with relief in the form of an optional exemption from assessing
whether a rent concession related to COVID-19 is a lease modification. In the opinion of the Group and the Company,
these amendments had no significant impact on the Group’s and the Company’s financial statements.
Interest rate benchmark (IBOR) reform – phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
The Phase 2 amendments address issues that arise from the implementation of the reforms (among which -
accounting for changes in the basis for determining contractual cash flows as a result of IBOR reform, end date for
Phase 1 relief for non-contractually specified risk components in hedging relationships, additional temporary
exceptions from applying specific hedge accounting requirements, additional IFRS 7 disclosures related to IBOR
reform) including the replacement of one benchmark with an alternative one. In the opinion of the Group and the
Company, these amendments had no significant impact on the Group’s and the Company’s financial statements.
b) Standards, interpretations and amendments thereto that are not yet effective and have not been early
adopted by the Group and the Company
Proceeds before intended use, Onerous contracts – cost of fulfilling a contract, Reference to the Conceptual
Framework – narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual Improvements to IFRSs
2018-2020 – amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41
The amendment to IAS 16 prohibits an entity from deducting from the cost of an item of PPE any proceeds received
from selling items produced while the entity is preparing the asset for its intended use. An entity will use IAS 2 to
measure the cost of those items where cost will not include depreciation of the asset being tested because it is not
ready for its intended use. The amendment to IAS 16 also clarifies that an entity is ‘testing whether the asset is
functioning properly’ when it assesses the technical and physical performance of the asset.
The amendment to IAS 37 clarifies the meaning of ‘costs to fulfil a contract’. The amendment explains that the direct
cost of fulfilling a contract comprises the incremental costs of fulfilling that contract; and an allocation of other costs
that relate directly to fulfilling.
IFRS 3 was amended to refer to the 2018 Conceptual Framework for Financial Reporting, in order to determine what
constitutes an asset or a liability in a business combination.
37
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies (continued)
The amendment to IFRS 9 addresses which fees should be included in the 10% test for derecognition of financial
liabilities.
Illustrative Example 13 that accompanies IFRS 16 was amended to remove the illustration of payments from the
lessor relating to leasehold improvements.
IFRS 1 allows an exemption if a subsidiary adopts IFRS at a later date than its parent.
The requirement for entities to exclude cash flows for taxation when measuring fair value under IAS 41 was removed.
In the opinion of the Group and the Company, these amendments will not have any impact on the Group’s and
the Company’s financial statements.
Covid-19-related rent concessions – Amendments to IFRS 16
In May 2020 an amendment to IFRS 16 was issued that provided an optional practical expedient for lessees from
assessing whether a rent concession related to COVID-19, resulting in a reduction in lease payments due on or before
30 June 2021, was a lease modification. An amendment issued on 31 March 2021 extended the date of the practical
expedient from 30 June 2021 to 30 June 2022. In the opinion of the Group and the Company, these amendments will
have no significant impact on the Group’s and the Company’s financial statements.
c) Standards, interpretations and amendments that have not been adopted by the European Union and
that have not been early adopted by the Group and the Company:
- IFRS 14 Regulatory deferral accounts
- Sale or contribution of assets between an investor and its associate or joint venture – Amendments to IFRS 10
and IAS 28
- Classification of liabilities as current or non-current – Amendments to IAS 1
- Classification of liabilities as current or non-current, deferral of the effective date – Amendments to IAS 1
- Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies
- Amendments to IAS 8: Definition of Accounting Estimates
- Deferred tax related to assets and liabilities arising from a single transaction – Amendments to IAS 12
The Group and the Company are currently assessing the impact of these amendments on the Group’s and the
Company’s financial statements.
There are no other new standards, amendments to the existing standards or interpretations that are not yet effective
and that could have a material impact on the Group and the Company.
2.3 Principles of consolidation
The Group’s consolidated financial statements include Grigeo AB and its subsidiaries.
Subsidiaries
Subsidiaries are all entities controlled by the Company. The Company controls an entity when the Company is
exposed, 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 control of an entity is normally evidenced when the Company owns more than
50% of the shares granting voting rights. Subsidiaries are consolidated from the date on which effective control is
transferred to the Company or the Group, and they are no longer consolidated from the date on which control is
transferred out of the Group.
Inter-company transactions
The financial statements of the subsidiaries are prepared for the same reporting year using consistent accounting
policies. All inter-company transactions, balances and unrealised gains or losses and dividends on transactions
between the Group companies are fully eliminated.
Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if that results in a
deficit balance of the non-controlling interest. A change in the ownership interest of a subsidiary that does not result
in a loss of control is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:
- Derecognises the assets (including goodwill) and liabilities of the subsidiary;
- Derecognises the carrying amount of any non-controlling interest;
- Derecognises the cumulative foreign exchange differences, recorded in equity;
38
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies (continued)
- Recognises the consideration received at fair value;
- Recognises any investment retained at fair value;
- Recognises any surplus or deficit in the statement of comprehensive income;
- Reclassifies the parent’s share of components previously recognised in other comprehensive income to the
statement of comprehensive income or retained earnings, as appropriate.
Business combinations and accounting for goodwill
Business combinations are accounted for using the acquisition method of accounting. The cost of an acquisition is
measured as the aggregate of the consideration transferred, measured at the acquisition-date fair value and the
amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the
non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable
net assets. Acquisition costs incurred are expensed and included in administrative expenses.
If the business combination is achieved in stages, the acquisition-date fair value of the acquirer’s previously held
equity interest in the acquiree is remeasured to fair value at the acquisition date in the statement of comprehensive
income. Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition
date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability,
will be recognised in accordance with IFRS 9 either in profit or loss or as a change to other comprehensive income.
Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted
for within equity.
Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the
amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed.
If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised
in the statement of comprehensive income.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purposes of
impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the
Group’s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of
whether other assets or liabilities of the acquired entity are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the
goodwill associated with the operation disposed of is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based
on the relative values of the operation disposed of and the portion of the cash-generating unit retained.
Split of companies
When a company is split by way of a spin-off or split-off, its assets and liabilities are transferred to newly established
or other operating companies, and a decrease in assets, liabilities and equity is registered in the accounting of the
split company.
The difference in value of assets and liabilities of the spin-off or split-off companies provided in the conditions of the
split determines the equity amount of the newly established or operating companies, and in their accounting equity is
registered in the account of the authorised share capital and other equity accounts as at the date of reception and
transfer according to the conditions of the split. If the conditions of the split do not provide in which equity accounts
the difference in value of assets and liabilities should be registered, it is registered in the account of the formed share
capital and share premium or the account of retained earnings (loss).
2.4 Presentation currency
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the “functional currency”). All amounts in the financial
statements are presented in the euros, which is the Group’s and the Company’s functional and presentation currency.
The functional currency of the Company and its subsidiaries operating in Lithuania is the euro. The functional
currencies of foreign subsidiaries are the respective currencies of the foreign countries in which their registered offices
are based. The amounts in the financial statements of these subsidiaries are presented in their functional currencies.
39
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies (continued)
Assets and liabilities of the foreign subsidiaries are translated into euros at the reporting date using the exchange rate
prevailing at the date of the statement of financial position, whereas the statements of comprehensive income of the
foreign subsidiaries are translated using the weighted average exchange rate for the year. Exchange differences
arising on translation are recognised in other comprehensive income.
On disposal of a foreign subsidiary, the result of foreign currency translation accumulated in other comprehensive
income is reclassified to the statement of comprehensive income.
Transactions and balances
Foreign currency transactions are initially measured using the functional currency at the date of the transaction.
Monetary assets and liabilities denominated in foreign currency are translated into the functional currency at the date
of the statement of financial position using the exchange rate prevailing at the date of the statement of financial
position. All non-monetary items that are measured at amortised cost are translated using the exchange rates at the
date of the transactions.
2.5 Investments in subsidiaries (the Company)
Investments in subsidiaries in the Company’s separate financial statements are carried at cost, less impairment.
2.6 Discontinued operations
A discontinued operation is a component of the Group's or the Company’s business, the operations and cash flaws
of which can be clearly distinguished from the rest of the Group and the Company and which:
- represents a separate major line of business or geographical area of operation;
- is part of a single co-ordinated plan to dispose of a separate major line of business or major geographical area
of operations; or
- is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to
be classified as held-for-sale.
When an operation is classified as a discontinued operation, the comparative statement of comprehensive income is
re-presented as if the operation had been discontinued from the start of the comparative year.
2.7 Intangible assets (other than goodwill)
Intangible assets acquired separately are stated initially at cost. The cost of intangible assets acquired in a business
combination is its fair value at acquisition date. Intangible assets are recognised when it is probable that economic
benefits will flow to the enterprise in relation to these assets in the future and the value of these assets can be
measured reliably.
The useful lives of intangible assets are assessed to be either finite or indefinite.
After initial recognition, intangible assets with finite lives are carried at cost, less accumulated amortization and
accumulated impairment losses, if any. Intangible assets are amortised using the straight-line method over the
estimated useful lives:
Licences, patents, etc.
3–6 years
Software
3–8 years
Other intangible assets
3–6 years
Intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be
impaired.
The useful lives, residual values and amortisation method are reviewed annually to ensure that they are consistent
with the expected pattern of economic benefits from intangible assets other than goodwill.
The Group and the Company do not have any intangible assets (excluding goodwill) with indefinite useful life.
Accounting principles for goodwill are presented in section 2.3.
The Group and the Company have no capitalised internally created intangible assets.
2.8 Property, plant, and equipment
Property, plant and equipment is stated at cost (or deemed cost – see below) less accumulated depreciation and
impairment losses.
40
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies (continued)
Before 31 December 2010, buildings were accounted for as follows:
- The Company’s buildings, acquired before 1 January 1996, were stated at the indexed value less indexed
accumulated depreciation and estimated impairment losses.
- The Company’s buildings, acquired after 1 January 1996, were stated at acquisition cost less accumulated
depreciation and estimated impairment losses.
On 31 December 2010, according to the exception available under IFRS 1, a part of the buildings acquired before
1 January 1996 were measured at fair value which was determined at that date by the independent property valuers,
and these values were used as deemed cost from that date.
After 31 December 2010, property, plant and equipment is stated at cost less accumulated depreciation and
impairment losses.
The initial value of property, plant and equipment comprises the acquisition cost including not refundable acquisition
taxes and all directly attributable costs associated with the preparation for use or transportation to the place of use of
assets concerned. Repair and maintenance costs incurred after property, plant and equipment has been made
available for intended use are normally charged to the statement of comprehensive income in the period when such
costs are incurred. Depreciation is calculated on a straight-line basis over the following estimated useful lives:
Buildings and structures of reinforced concrete
40-80 years
Lightweight buildings and structures
8-25 years
Machinery and equipment
5–68 years
Motor vehicles
4–10 years
Other fixtures and equipment
2–10 years
The useful lives, residual values and the depreciation method are reviewed annually to ensure that they are consistent
with the expected pattern of economic benefits from property, plant and equipment. In the reporting and previous
financial years, the useful live of the items of property, plant and equipment was reviewed and adjusted accordingly.
Property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from
its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive income in
the year in which the asset is derecognised.
Construction in progress is stated at cost which comprises the value of building, constructions and facilities and other
directly attributable costs. Construction in progress is not depreciated until the completion of construction and until
the assets are ready for use.
2.9 Investment property
Investment property, including part of buildings and structures, is held for earning rentals and/or for capital
appreciation rather than for use in the production, provision of services, or for administration purposes or sale.
Investment property is stated at historical cost less accumulated depreciation and impairment losses, if any.
Depreciation is calculated on a straight-line basis over the following estimated useful lives: buildings – 62-91 years,
infrastructure objects – 9-12 years.
Transfers to and from investment property are made only when there is an evidence of change in an asset’s use.
When the asset is transferred from investment property to owner-occupied property, plant and equipment, the cost of
that asset is deemed to be the carrying amount of investment property at the date of transfer. If property, plant and
equipment are transferred to investment property, the Company and the Group account for such assets in accordance
with the accounting principles applicable to property, plant and equipment until the date of transfer. The deemed cost
of the transferred investment property is considered to be the carrying amount of that asset at the date of transfer.
2.10 Impairment of non-financial assets
Non-financial assets, except for goodwill, inventories and deferred income tax, are assessed for impairment when
events or circumstances indicate that the value of assets may not be recoverable. If such circumstances exist, the
asset’s recoverable amount is estimated. Where the carrying amount of an asset exceeds its recoverable amount,
impairment loss is accounted for in the statement of comprehensive income. A reversal of an impairment loss
recognised in prior periods is recorded when there is an indication that the impairment loss recognised for the asset
no longer exists or has materially decreased. Reversal is accounted for in the statement of comprehensive income
under the same item as impairment loss. Impairment of goodwill is recorded in the statement of comprehensive
income.
41
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies (continued)
The recoverable amount of other assets is the higher of an asset’s or cash-generating unit’s (CGU) fair value less
costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an
asset or CGU exceeds its recoverable amount, the asset is considered impaired and impairment is recognised for a
part of its value in excess of the recoverable amount.
2.11 Assets held for sale
Assets held for sale are measured at the lower of their carrying amount and the fair value less expected costs to sell.
Assets are classified as held for sale when their carrying amount is to be recovered principally through a sale
transaction and a sale is considered highly probable. This condition is regarded as met only when the sale is highly
probable, and the asset is available for immediate sale in its present condition. The management must be committed
to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of
classification.
Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.
In the reporting and the previous financial year, the Company and the Group had no assets held for sale.
2.12 Emission allowances
Based on Directive 2003/87/EC of the European Union, the greenhouse gas emissions trading (EU ETS) scheme was
developed which came into force on 1 January 2005. The first operating phase of this system covered the period of 3
years which started in 2005 and ended in 2007; the second phase covered the period of 5 years which started in 2008
and ended in 2012, thus coinciding with the period detailed in the Kyoto Agreement. The third phase covered the
period of 8 years which started in 2013 and ended in 2020. The fourth phase started on 1 January 2021 and it will
end in 2030. The system works on the ‘cap and trade’ principle. The governments of the EU Member States are
required to set caps for each emission unit in the scheme and for the period of implementation.
This cap is established in the National Allocation Plan (NAP), which is issued by the relevant authority in each Member
State. The NAP determines the amount of yearly emissions (measured in tonnes of carbon dioxide equivalent) for
each emission unit and for each operating phase and allocates allowances on an annual basis.
A Member State has an obligation to allocate emission allowances by 28 February of each year in accordance with
the NAP (a part of emission allowances is set aside for new units).
A Member State is to assure that an operator of each emission unit submits data on actual amount of gas emitted to
the environment by the unit during the current calendar year not later than by 30 April of the next year.
The Group and the Company apply the net liability approach in accounting for the emission allowances received.
Under this method emission allowances are recorded at a nominal (nil) value. When actual emissions exceed
allocated emission allowances, the obligation of purchasing additional allowances is recognised as a provision
measured at the market value of the allowances as at the reporting date. The Group and the Company assess the
shortage of emission allowances by comparing the annual quantity of emission allowances obtained with the actual
annual emissions.
Disposals of emission allowances are recorded at the fair value of the disposal transaction. Any differences between
the actual selling price and the carrying amount of emission allowances obtained are recognised as profit or loss,
irrespective of whether such transaction results in the actual or possible shortage of emission allowances. Income
from emission allowances is presented in the statement of cash flows as cash flows from operating activities. If the
disposal of emission allowances results in an actual shortage of emission allowances, an additional provision is
recognised in the statement of financial position.
2.13 Borrowing costs
Borrowing costs comprise interest and other expenses (currency exchange differences) that the Company and the
Group incur when borrowing funds. Borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset form part of the cost of that asset. Other borrowing costs are recognised as expenses
as incurred.
A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or
sale.
Capitalisation of borrowing costs is ceased when substantially all the activities necessary to prepare the qualifying
asset for its intended use or sale are complete.
42
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies (continued)
2.14 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
Recognition and initial measurement
The Group and the Company recognise a financial asset or a financial liability in their statement of financial position
when, and only when, the entity becomes a party to the contractual provisions of the instrument. Financial instruments
are initially recognised at fair value which is equal to the fair value of consideration paid plus transaction costs for all
financial assets not carried at fair value in the statement of comprehensive income.
Classification and subsequent measurement
The Group and the Company classify financial assets into the following categories:
- measured at amortised cost;
- measured at fair value through other comprehensive income;
- measured at fair value through profit or loss;
- hedging financial instruments.
The Group and the Company classify financial assets into the appropriate category depending on the business model
for managing financial assets and on the characteristics of contractual cash flows for a respective financial asset.
The Group and the Company classify trade receivables, loans granted, other accounts receivable of financial assets
and cash and cash equivalents as assets measured at amortised cost.
At the initial recognition the Group and the Company attribute equity instruments, i.e. shares of other entities, to
financial instruments measured at fair value through other comprehensive income.
The Group and the Company attribute financial derivatives not used for hedge accounting and hedging instruments
measured in accordance with the hedge accounting principles to assets measured at fair value in the statement of
comprehensive income.
The Group and the Company classify financial liabilities into the following categories:
- measured at amortised cost;
- measured at fair value through profit or loss;
- hedging financial instruments.
The Group and the Company attribute trade liabilities, other accounts payable and borrowings to financial liabilities
measured at amortised cost.
Liabilities of derivative financial instruments not designated for hedge accounting are measured by the Group and the
Company at fair value in the statement of comprehensive income.
Measurement of financial assets at amortised cost
The Group and the Company apply the effective interest rate method to measure financial assets at amortised cost.
After initial recognition trade receivables are measured at amortised cost using the effective interest rate method,
including impairment losses, while trade receivables with maturities less than 12 months from the date of recognition
(i.e., not containing a financing element) and not classified as factoring, are not discounted and are measured at a
nominal value.
The effective interest rate method is a method of calculating the amortised cost of a financial asset or a financial
liability and of allocating the interest income or interest expenses over the relevant period. The effective interest rate
exactly discounts future cash payments over the expected life of the financial liability, or (where appropriate) a shorter
period.
Measurement of financial assets at fair value through other comprehensive income
Gains and losses on a financial asset constituting an equity instrument classified as at fair value through other
comprehensive income are recognised in other comprehensive income, except for income from received dividends.
43
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies (continued)
Financial assets measured at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for sale, i.e. acquired for selling it in
the near term. Gain or loss from change in the value of these assets is recognised in statement of comprehensive
income. Gain or loss on assets classified at fair value through profit or loss also includes interest or dividend income.
As at 31 December 2021 and 2020, the Group and the Company had no financial instruments measured at fair value
through profit or loss.
Derivative financial instruments and hedge accounting
The Group and the Company use derivative financial instruments to hedge their interest rate risk exposures.
Embedded derivatives are separated from the host contract and accounted for separately if certain criteria are met.
Derivatives initially are measured at fair value; any directly attributable transaction costs are recognised in the
statement of comprehensive income as incurred. Subsequent to initial recognition, derivatives are measured at fair
value, and changes therein are generally recognised in the statement of comprehensive income.
Cash flow hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value
of the derivative is recognised in other comprehensive income and accumulated in the hedging reserve. Any
ineffective portion of changes in the fair value of the derivative is recognised immediately in the statement of
comprehensive income.
The amount accumulated in equity is retained in other comprehensive income and reclassified to profit or loss in the
same period or periods during which the hedged forecast cash flows affect profit or loss or the hedged item affects
profit or loss.
If the forecast transaction is no longer expected to occur, the hedge no longer meets the criteria for the hedge
accounting, the hedging instrument expires or is sold, terminated or exercised, or the designation is revoked, then
hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the
amount accumulated in equity is reclassified to profit or loss.
Derecognition of a financial instrument in the statement of financial position
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is
derecognised when:
- the rights to receive cash flows from the asset have expired;
- the Group/Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay
them in full without material delay to a third party under a “pass through” arrangement; or
- the Group/Company has transferred its rights to receive cash flows from the asset and either (a) has transferred
substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred control of the asset.
Where the Group/Company has transferred its rights to receive cash flows from the asset and has neither transferred
nor retained substantially all the risks and rewards of the asset, nor transferred control of the asset, the asset is
recognised to the extent of the Group’s/Company’s continuing involvement in the asset. Continuing involvement that
takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of
the asset and the maximum amount of consideration that the Group/Company could be required to repay.
A financial liability is derecognised when the obligation under the liability is settled, cancelled or expires. When an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange or modification is treated as derecognition of the
original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised
in the statement of comprehensive income.
Offsetting financial assets and financial liabilities
Financial assets and financial liabilities are offset and the net amount is 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.
44
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies (continued)
Impairment of financial assets
IFRS 9 contains a new model for calculation of impairment of financial assets measured at amortised cost or at fair
value through other comprehensive income (except for investments in equity instruments and contract assets). The
impairment model is based on calculated expected losses.
In determining impairment losses, the Group and the Company apply the following models:
- general model (basic);
- simplified model.
The Group and the Company apply the general model for financial assets measured at amortised cost, except for
trade receivables and assets measured at fair value through other comprehensive income.
By applying the general model, the Group and the Company monitor changes in the level of credit risk associated
with a respective financial asset and classify financial assets to one of three stages for determining impairment losses
based on changes in the credit risk level after the initial recognition of the instrument.
Depending on the categorisation to individual stages, impairment is measured at an amount equal to a 12-month
period (stage 1) or the lifetime of the instrument (stage 2 and stage 3).
On each end day of the reporting period, the Group and the Company analyse indications, based on which financial
assets are categorised to individual stages for measuring impairment losses. Indications may include changes in the
debtor’s creditworthiness, serious financial problems of the debtor, significant adverse changes in the debtor’s
economic, legal or market environment.
For the purpose of estimating expected credit losses, the Group and the Company apply default probability levels
implicit in market quotes of credit derivatives, for entities with a granted credit rating and from a respective sector.
The Group and the Company include forward looking information in the parameters of the expected credit loss
estimation model by calculating the probability of insolvency parameters based on current market quotes.
The simplified model is applied by the Group and the Company for trade receivables.
By applying the simplified model, the Group and the Company do not monitor changes in the credit risk level during
the lifetime of the instrument and estimate expected credit losses for the period until the end of the use of the
instrument.
For the purpose of estimating expected credit losses, the Group and the Company use the provision matrix calculated
referring to historical levels of repayment and recovery of amounts receivable from clients.
The Group and the Company include information about the future periods in the parameters used in the expected loss
estimation model by adjusting the key insolvency probability parameters.
For the purpose of calculating expected credit losses, the Group and the Company determine default probability
parameters for liabilities of accounts receivable that are calculated based on historical analysis of the number of
unpaid invoices, and default probability parameters that are calculated based on historical analysis of the value of
unpaid invoices.
Expected credit losses are calculated when the amount receivable is recognised in the statement of financial position
and is updated on each subsequent end day of the reporting period depending on the number of overdue days of the
amount receivable.
Impairment losses (reversal of impairment losses) on financial instruments
Impairment losses (reversal of impairment losses) on financial instruments include, in particular, losses (reversal of
losses) due to impairment of trade receivables and losses (reversal of losses) due to impairment of loans granted.
2.15 Inventories
Inventories are recognised at the lower of cost or net realisable value. Net realisable value is the estimated selling
price in the ordinary course of business, less the costs of completion, marketing and distribution. The cost of
inventories is determined using 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 (cost of raw materials, electricity, heat (steam)
energy production, depreciation, salaries and other costs) based on a normal operating capacity.
45
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies (continued)
2.16 Leases – where the Group is a lessee
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. The contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of
time, the Group follows IFRS 16 Leases.
At the commencement or on modification of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component on the basis of its relative stand‑alone price.
The lease contract, when the right to control the use of an identified asset for a period of time is acquired in exchange
for consideration, is recognised by the lessee as right-of-use assets and is measured at a discounted cost at the
commencement date.
The Group and the Company recognise right-of-use assets and lease liabilities at the lease inception date, i.e. the
date when the Group or the Company can start to use the leased assets. The right‑of‑use asset is initially measured
at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before
the commencement date, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee
in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying
asset to the condition required by the terms and conditions of the lease, less any lease incentives received.
The right-of-use asset is subsequently measured at cost, less accumulated depreciation and impairment losses, and
adjusted for any remeasurement of the lease liability. The right‑of‑use asset is depreciated using the straight‑line
method from the commencement date until the end of the lease term, unless the lease transfers ownership of the
underlying asset to the Group by the end of the lease term or the cost of the right‑of‑use asset reflects that the Group
will exercise a purchase option. In that case the right‑of‑use asset will be depreciated over the useful life of the
underlying asset, which is determined on the same basis as those of property, plant and equipment. In addition, the
right‑of‑use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of
the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, using the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate
as the discount rate. In 2021, the Group applied a discount rate of 4.0% (2020: 4.0%) to land and buildings used
under the lease rights and the discount rate of 1.3% (2020: 1.3%) was applied to machinery and equipment. The
Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources
and makes certain adjustments to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of a lease liability include:
- fixed payments, including in‑substance fixed payments;
- variable lease payments that depend on an index or rate initially measured using an index or a rate as at the
commencement date;
- amounts expected to be payable under a residual value guarantee; and
- the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in
an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for
early termination of a lease unless the Group is reasonably certain not to terminate early.
Lease liabilities are subsequently measured at amortised cost using the effective interest rate method. The lease term
is a non-cancellable term; the periods covered by an option to extend or terminate the lease (if any) are included in
the lease term only if it is reasonably certain that the lease will be extended or terminated.
The lease liability is subsequently increased by the amount of interest on the lease liability and reduced by the amount
of lease payments made. It is remeasured when there is a change in future lease payments arising from a change in
an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual
value guarantee (there were no guaranteed residual values as at 31 December 2021 and 31 December 2020), if the
Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a
revised in‑substance fixed lease payment (no extension options under the lease contracts were accounted for as at
31 December 2021 and 31 December 2020 due to uncertainty). When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the right‑of‑use asset, or is recorded in the statement of
comprehensive income if the carrying amount of the right‑of‑use asset has been reduced to zero.
46
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies (continued)
The cost of right-of-use assets comprises: the amount of the initial measurement of the lease liability; additional lease
payments or concessions made before the commencement date of the contract; direct contract costs; additional costs
associated with the asset’s preparation for use. As at 31 December 2021 and 31 December 2020, the Group did not
recognise any lease incentives, initial direct expenses, renewal expenses or other expenses in respect of the leased
assets.
The depreciation period of right-of-use assets is normally the shorter of the useful life of the assets or the lease term.
Depreciation is calculated using the straight-line method. As at 31 December 2021 and 31 December 2020, the
straight-line method was applied to the Company’s leased right-of-use assets.
Interest expenses of lease liabilities and depreciation of right-of-use assets are accounted for separately in the
statement of comprehensive income. Right-of-use assets and lease liabilities are disclosed separately in the statement
of financial position.
Payments related to short-term lease of equipment and lease of all low-value assets are recognised as expenses in
the statement of comprehensive income using the straight-line method.
2.17 Leases – where the Group is a lessor
Classification
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an
operating lease.
To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the
risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease;
if not, i.e., the lessor retains substantially all risks and rewards, then it is an operating lease. As part of this assessment,
the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.
Initial recognition
The underlying assets leased under the operating lease contracts are accounted for in the lessor’s balance sheet.
Subleases
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately.
A lease is classified as a finance lease if it transfers substantially all of the risks and rewards incidental to right-of-use
assets; otherwise it is classified as an operating lease. The Group’s subleases are classified as an operating lease. It
assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease,
not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the
exemption described above, then it classifies the sub-lease as an operating lease. The Group and the Company had
no sublease contracts in 2021 and 2020.
Accounting for non-lease components
At inception or on modification of a contract that contains a lease component, the Group allocates the consideration
in the contract to each lease component on the basis of their relative stand-alone prices. If an arrangement contains
lease and non-lease components, then the Group applies IFRS 15 to allocate the consideration in the contract and to
account for a non-lease component.
The Group applies the derecognition and impairment requirements in IFRS 9 to the net investment in the lease. The
Group further regularly reviews estimated unguaranteed residual values used in calculating the net investment in the
lease.
Rental income
The Group recognises lease payments received under the operating leases as income on a straight-line basis over
the lease term when it is earned as part of ‘other income’. All contracts for the lease of real estate contain a fixed,
periodic lease payment.
2.18 Long-term employee benefits
Each employee of retirement age who terminates his/her employment with the Group or the Company upon retirement
is entitled to receive a one-off payment equal to 2 monthly salaries as stipulated in the Lithuanian Labour Code.
The past service costs are recognised as an expense in the statement of comprehensive income immediately after
the assessment of such liability. Gain or loss resulting from changes in employee benefits (decrease or increase) is
recognised immediately in the statement of comprehensive income.
47
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies (continued)
Employee benefit obligation is calculated with reference to actuarial valuations using the projected unit credit
method. Liability is recognised in the statement of financial position and it reflects the present value of these benefits
at the date of the preparation of the statement of financial position.
The present value of employee benefit obligation is determined by discounting the estimated future cash flows using
the interest rates set for government bonds denominated in the same currency as the benefits and with a maturity
similar to the expected timing of benefits settlement. Actuarial gains and losses are recognised in other comprehensive
income
2.19 Financial guarantees contracts
Financial guarantees provided for the liabilities of the Group companies (i.e., companies controlled by the same
parent) during the initial recognition are accounted for at fair value as equity contribution and as financial liability in
the balance sheet.
Subsequent to initial recognition this financial liability is amortised and recognised as income depending on the related
amortisation/settlement of the Group company’s financial liability to the bank. If there is a possibility that the Group
company may fail to fulfil its obligations to the bank, a financial liability of the Group company is accounted for at the
higher of the amortised value and the value estimated according to IAS 9 Financial instruments.
2.20 Grants and subsidies
Grants and subsidies (hereinafter “grants”) allocated for the purchase, construction or any other acquisition of non-
current assets are defined as grants related to assets. Grants related to assets are recognised in the statement of
comprehensive income in the proportions in which depreciation expense on those assets is recognised, and a relevant
line item of expenses is reduced in the statement of comprehensive income.
Grants received as a compensation for expenses or unearned income of the current or previous reporting period,
also, all the grants, which are not grants related to assets, are defined as grants related to income. Grants related to
income are recognised as used in parts to the extent of expenses incurred during the reporting period or unearned
income to be compensated by that grant.
2.21 Income tax and deferred income tax
The Group companies are taxed individually, irrespective of the overall results of the Group. Income tax charge is
based on profit for the year and considers deferred taxation. Corporate income tax is included in these financial
statements based on the management’s calculations prepared in accordance with the respective tax legislation
applied in the Republic of Lithuania and Ukraine.
With effect from 1 January 2010, companies operating in the Republic of Lithuania are subject to income tax at a rate
of 15%. A standard income tax rate in Ukraine for the year 2021 was 18% (2020: 18%).
Tax losses can be carried forward for an indefinite period, except for losses incurred as a result of disposal of securities
and/or derivative financial instruments and for the losses accumulated in the Ukrainian company (losses can be
carried forward for 4 years according to the Ukrainian regulatory legislation). Such carrying forward is disrupted if the
Company changes its activities due to which these losses were incurred except when the Company does not continue
its activities due to reasons which do not depend on the Company itself. The losses from disposal of securities and/or
derivative financial instruments can be carried forward for 5 consecutive years and can only be used to reduce the
taxable income earned from the transactions of the same nature.
With effect from 2014, according to the Lithuanian regulatory legislation deductible tax losses available for carry
forward can be used to reduce taxable income of the current tax year by maximum 70%.
Deferred taxes are calculated using the balance sheet liability method. Deferred tax represents a net tax effect of
temporary differences arising between the tax bases of assets and liabilities and their carrying amounts reported in
the financial statements. Deferred tax assets and liabilities are measured using a tax rate that is expected to be used
when deferred tax assets are utilised or deferred tax liability is settled taking account of tax rates adopted or actually
effective at the date of the statement of financial position.
Deferred tax assets are recognised in the statement of financial position to the extent that the management expects
to utilise such assets in the near future taking into consideration forecasts of taxable profit. When it is probable that a
portion of deferred tax will not be utilised, this portion of deferred tax is not recognised in the financial statements.
48
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies (continued)
2.22 Revenue recognition
The Group’s and the Company’s revenue is recognised in accordance with the provisions of IFRS 15, i.e. the Group
and the Company recognise revenue at the time and to such an extent so that the transfer of goods or services to
customers would show the amount which reflects to the consideration that the Company expects to receive in
exchange for the goods or services. When applying this standard, the Company takes into consideration the terms of
the contract and all significant facts and circumstances. Revenue is recognised in the Company using the five-step
model.
Identification requirements for contracts with customers
A contract with a costumer meets the definition if all of the following criteria are met: the contract has been approved
by the parties to the contract and they committed to perform their obligations; the Group and the Company can identify
each party’s rights in relation to the goods and services to be transferred; the Group and the Company can identify
the payment terms for the goods and services to be transferred; the contract has commercial substance and it is
probable that the Group and the Company will collect the consideration to which they will be entitled to in exchange
for the goods or services that will be transferred to the costumer. Contracts with customers can be combined or
separated into several contracts by maintaining the criteria of the previous contracts. Such combination or separation
is treated as a contract modification.
Identification of performance obligations
At the inception of the contract, the Group and the Company assess the goods and services promised in the contract
with the client and identify as an obligation to perform any promise to transfer to the client: a good or service (or bundle
of goods or services)
that is distinct or a series of distinct goods or services that are substantially the same and that have the same pattern
of transfer to the customer.
Determination of transaction price
In order to determine the transaction price, the Group and the Company take into account the terms of the contract
and the customary business practices. The transaction price is the amount of consideration to which the Group and
the Company expect to be entitled in exchange for the transfer of promised goods and services to the customer,
except for the amounts collected on behalf of third parties. The consideration specified in the contract with the
customer may include fixed amounts, variable amounts or both.
When calculating variable amounts, the Group and the Company decided to apply the most probable value method
for contracts with one threshold or the expected value method for contracts with more value thresholds from which
the customer receives a discount.
Allocation of the transaction price for each performance obligation
The Group and the Company allocate the transaction price to each performance obligation at an amount that reflects
the amount of consideration to which the Group and the Company expect to be entitled in exchange for the transfer
of the promised goods or services to the customer.
Revenue recognition when performance obligations are satisfied
The Group and the Company recognise revenue when the Group and the Company satisfy a performance obligation
by transferring to the customer a promised good or service (i.e., the customer obtains control of the asset). Revenue
is recognised as amounts equal to the transaction price that was allocated to a given performance obligation.
The Group and the Company transfer the right to control goods or services over time and thus satisfy the performance
obligation and recognise revenue over time, if one of the following criteria is met:
− the customer simultaneously receives and consumes the benefits provided by the Group and the Company as
they perform;
− the Group’s and the Company’s performance creates or enhances an asset that the customer controls as the asset
is created or enhanced; or
the Group’s and the Company’s performance does not create an asset with an alternative use to the Group and the
Company and the Group and the Company have an enforceable right to payment for performance completed to
date.
49
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies (continued)
Type of goods sold and
services rendered
Nature and timing of the fulfilment of
performance obligations and payment terms
Revenue recognition
under IFRS 15
Paper and paper
products
Wood fibreboards
Raw materials for
corrugated cardboard
(test liner and fluting),
corrugated cardboard
and its products
Other goods
The customer takes over the control of
goods when goods are delivered. Invoices
for goods are issued at the time when goods
are delivered to the customer or when goods
are removed from the warehouse. Invoices
are usually paid within 30-45 calendar days.
Turnover discounts are applied to goods sold
which are calculated the end of each month,
quarter and year for the previous period.
Revenue is recognised when goods are delivered
to the customer or when goods are removed from
the warehouse.
Related expenses are recognised in the statement
of comprehensive income when incurred.
Marketing expenses that are directly related to
earning of revenue are accounted for in the
statement of comprehensive income as a
reduction of revenue.
Possible loss for the contract is recognised
immediately in the statement of comprehensive
income.
Sales of heat energy
and other utility
services
Invoices for the serviced rendered during the
month are issued on the last day of the
month. A standard established payment term
is 10-30 calendar days.
Revenue is recognised over a period of time when
the services are rendered.
2.23 Recognition of expenses
Expenses are recognised on an accrual basis and following the matching principle during the reporting period in which
revenue associated with such expenses is earned, regardless of the timing of the cash payments. Expenses incurred
during the reporting period, which cannot be attributed directly to specific revenue earned and will not generate any
revenue in subsequent reporting periods, are recognised as expenses in the period in which they were incurred.
Expenses are usually measured at the amount paid or payable, net of VAT. When a long term of settlement is
established and no interest is charged, expenses are determined by discounting the amount of settlement at the
market interest rate.
2.24 Fair value measurement
Certain accounting policies and disclosures of the Group and the Company require the fair value measurement for
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.
In determining the fair value of assets or liabilities the Group and the Company use as much as possible inputs that
are observable in the market. A fair value hierarchy categorises into three levels the inputs to valuation methods used
to measure fair value:
- quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
- inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices) (Level 2);
- inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
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. In those cases, 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 recognise the amounts transferred within the fair value hierarchy levels at the end of
the reporting period in which the change occurred.
When applicable, further information on assumptions used in determining fair values is disclosed in the note related
to specific assets or liabilities:
Note 8 – Investment property
Note 3 – Financial risk management – Interest rate risk
50
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
2. Summary of significant accounting policies (continued)
2.25 Contingencies
Contingent liabilities are not recognised in the financial statements, except for contingent liabilities related to business
combinations. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is
remote.
A contingent asset is not recognised in the financial statements but disclosed when an inflow of income or economic
benefits is probable.
2.26 Events after the end of the reporting period
Events after the reporting period that provide additional information about the Group’s/Company’s position at the date
of the statement of financial position (adjusting events) are reflected in the financial statements. Events after the
reporting period other than adjusting events are disclosed in explanatory notes to the financial statements when such
events are significant.
2.27 Comparative figures
New accounting estimates do not affect reliability of information disclosed in the financial statements, therefore they
are corrected in the accounting records and presented in the financial statements prospectively.
2.28 Inter-company offsetting
For the purpose of the financial statements, assets and liabilities, income and expenses are not offset, unless such
offsetting is required by a specific Business Accounting Standard.
3. Financial risk management
The Group and the Company are exposed to financial risks in their operations, i.e., credit risk, liquidity risk and market
risk (foreign exchange risk, interest rate risk). In managing these risks, the Group and the Company seek to mitigate
the effect of factors which could make a negative effect on the financial performance of the Group and the Company.
Credit risk
The largest exposure to credit risk is represented by the carrying amount of each financial asset. Consequently,
the Company’s management considers that its maximum exposure is reflected by the amount of current and non-
current trade and other receivables, net of recognised impairment losses and cash and cash equivalents at the date
of the statement of financial position. Credit risk or the risk of counterparties defaulting, is controlled by the application
of credit terms and monitoring procedures using services of external credit insurance and debt recovery agencies.
The Company’s objective is to maximise the number of insured clients and with regard to the clients who are not
insured by a credit insurance company the advance payment basis is usually applied.
Maximum exposure to credit risk
The table below summarises all credit risk exposures relating to on-balance sheet items of the Group and the
Company.
Group
Company
At 31
December
2021
At 31
December
2020
At 31
December
2021
At 31
December
2020
Trade receivables
19,071
13,420
8,112
6,462
Trade receivables from related parties
-
-
1,294
425
Other amounts receivable
1,232
966
558
394
Cash and cash equivalents
12,443
18,275
818
10,453
Total
32,746
32,661
10,782
17,734
Trade receivables
As at 31 December 2021 and 2020, the Company and the Group carried out the assessment of a loss allowance for
expected losses according to IFRS 9. For trade receivables, the Company and the Group apply a simplified approach
to measure the amount of lifetime expected credit losses. The amount of the allowance for expected losses for trade
receivables is calculated on the basis of the profile of payments for sales in 2019-2021. Historical loss rates are
adjusted with reference to the present and future-oriented information on the macroeconomic factors affecting the
customers’ ability to settle the amounts due. The Company has established that the growth rate of the Lithuanian
GDP is the major factor and adjusts historical loss rates accordingly referring to expected changes in these factors.
51
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
3. Financial risk management (continued)
Based on the impairment tests performed, no individually assessed loss allowance was established at the Group in
2021 (individually assessed loss allowance of EUR 54 thousand was additionally established in 2020). Movements in
the loss allowance for amounts receivable were as follows:
Group
Company
Individually
assessed
impairment
Individually
assessed
impairment
Collectively
assessed
impairment
Collectively
assessed
impairment
Individually
assessed
impairment
Individually
assessed
impairment
Collectively
assessed
impairment
Collectively
assessed
impairment
2021
2020
2021
2020
2021
2020
2021
2020
At 1 January
153
117
-
-
72
72
-
-
Increase in
allowance
-
54
-
1
-
-
-
-
Receivables
written off
(7)
(18)
-
-
-
-
-
-
At 31
December
146
153
-
1
72
72
-
-
Change in the loss allowance for trade receivables in 2021 and 2020 is included in administrative expenses.
Expected credit losses:
Group
Not
past
due
Trade receivables past due
Total
< 30
days
30–60
days
60–90
days
90–360
days
> 360
days
Trade receivables – net (2021)
17,016
1,797
201
36
21
-
19,071
Trade receivables – gross
17,016
1,797
201
36
21
146
19,217
Recognised loss allowance
-
-
-
-
-
(146)
(146)
Expected loss coefficient
-
-
-
-
-
100%
Trade receivables – net (2020)
12,245
986
108
52
29
-
13,420
Trade receivables – gross
12,245
986
108
52
29
153
13,573
Recognised loss allowance
-
-
-
-
-
(153)
(153)
Expected loss coefficient
-
-
-
-
-
100%
Company
Not
past
due
Trade receivables past due
Total
< 30
days
30–60
days
60–90
days
90–360
days
> 360
days
Trade receivables – net (2021)
7,850
254
8
2
-
-
8,112
Trade receivables – gross
7,850
254
8
-
-
72
8,184
Recognised loss allowance
-
-
-
-
-
(72)
(72)
Expected loss coefficient
-
-
-
-
-
100.0%
Trade receivables – net (2020)
6,337
120
2
2
-
-
6,461
Trade receivables – gross
6,337
120
2
2
-
72
6,533
Recognised loss allowance
-
-
-
-
-
(72)
(72)
Expected loss coefficient
-
-
-
-
-
100%
The concentration of trade partners of the Group and the Company is not high. As at 31 December 2021, the Group’s
trade receivables from two major customers accounted for respectively 8.6% and 4.5% of the total trade receivables
(31 December 2020: 9.4% and 2.0%, respectively). As at 31 December 2021, the Company’s amounts receivable
from two major customers accounted for respectively 20.3% and 11.6% of the total trade receivables (31 December
2020: 20.4% and 4.4%, respectively).
As at 31 December 2021 and 31 December 2020, the Group and the Company did not recognise a loss allowance
for expected credit losses for trade receivables not past due and trade receivables past due and past due less than
360 days due to immateriality of the amounts.
52
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
3. Financial risk management (continued)
Amounts receivable from related parties and other amounts receivable
The Group’s other amounts receivable comprise amounts receivables of the recovery of a part of the PSO (services
under public service obligation (PSO) scheme) fee and other amounts receivable. The recovery amount of a part of
the PSO service fee is the amount receivable from the state authority. Based on the management’s estimate, risk
arising from amounts receivable from the state enterprises is minimal and the credit rating of the Republic of Lithuania
is applied to them. The Group’s and the Company’s other amounts receivable are not analysed due to their
immateriality. The risk of recovery of the Company’s amounts receivable from the related parties is not significant
because the operations of the subsidiaries are profitable and amounts receivable from the related parties are not
material.
Cash and cash equivalents
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 the preparation of the
statements of financial position. The Group’s and the Company’s management considers that the risk arising from
cash and cash equivalents held in bank accounts and other short-term financial instruments is not significant as cash
is held only in those commercial banks that have high credit ratings.
The credit quality of cash held in bank accounts is evaluated based on the long-term borrowing ratings assigned by
Standard & Poor’s (or equivalent rating assigned by Moody’s):
Group
Company
At 31
December
2021
At 31
December
2020
At 31
December
2021
At 31
December
2020
AA-
269
-
-
-
A+
8,114
17,898
763
10,080
BBB+
2,056
373
55
373
BBB
2,000
-
-
-
Other
4
4
-
-
Total
12,443
18,275
818
10,453
Liquidity risk
The table below summarises the maturity profile of the Group’s financial liabilities as at 31 December 2021 and 2020
based on contractual undiscounted payments.
Group
Less than 3
months
3 to 12
months
1 to 5
years
Over 5
years
Total
Carrying
amount
Borrowings
514
1,529
951
-
2,994
2,958
Lease liabilities
143
363
896
7,545
8,947
3,537
Trade payables
25,270
-
-
-
25,270
25,270
Other amounts payable
1,687
-
-
-
1,687
1,687
At 31 December 2021
27,614
1,892
1,847
7,545
38,898
33,452
Borrowings
1,713
4,738
1,240
-
7,691
7,630
Lease liabilities
131
387
951
7,173
8,642
3,674
Trade payables
15,768
-
-
-
15,768
15,768
Other amounts payable
1,824
-
-
-
1,824
1,824
At 31 December 2020
19,436
5,125
2,191
7,173
33,925
28,896
53
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
3. Financial risk management (continued)
The table below summarises the maturity profile of the Company’s financial liabilities as at 31 December 2021 and
2020 based on contractual undiscounted payments.
Company
Less than 3
months
3 to 12
months
1 to 5
years
Over 5
years
Total
Carrying
amount
Borrowings
421
972
176
-
1,569
1,555
Lease liabilities
99
292
417
2,806
3,614
1,579
Amounts payable to related
parties
601
-
-
-
601
601
Trade payables
12,013
-
-
-
12,013
12,013
Other amounts payable
650
-
-
-
650
650
At 31 December 2021
13,784
1,264
593
2,806
18,447
16,398
Borrowings
658
1,649
558
-
2,865
2,837
Lease liabilities
94
282
742
2,848
3,966
1,864
Amounts payable to related
parties
661
-
-
-
661
661
Trade payables
7,910
-
-
-
7,910
7,910
Other amounts payable
711
-
-
-
711
711
At 31 December 2020
10,034
1,931
1,300
2,848
16,113
13,983
Interest payments on borrowings bearing variable interest rates in the table above indicate average market interest
rates at the period end, and these amounts may change as market interest rates change. It is not expected that the
cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
As disclosed in Note 3, the Group and the Company have secured bank borrowings that are subject to loan covenants.
In case of breach of covenants, the Group may be required to repay the borrowing earlier than it is indicated in the
above table. The finance team regularly monitors compliance with the loan covenants. To ensure the fulfilment of
contractual obligations reports on compliance with the terms are regularly provided to management.
Market risk
Interest rate risk
A major part of the Group’s and the Company’s borrowings comprises borrowings and lease liabilities that bear a
variable interest rate linked with EURIBOR and expose them to the interest rate risk (Note 3).
In 2016, the Company entered into two interest rate swap agreements with the bank establishing fixed interest rates
on loans. The agreements came into effect on 15 February 2016 and were effective until 15 March 2021. As at 31
December 2020, the financial instrument’s fair value, which is calculated by the bank, was EUR 4 thousand for the
Company and ЕUR 5 thousand for the Group. As at 31 December 2020, the nominal value of the financial instruments
was EUR 2,865 thousand for the Company and ЕUR 3,664 thousand for the Group.
The following table demonstrates the sensitivity of the Group’s and the Company’s profit before tax to possible
changes in interest rates with all other variables held constant (through the impact on variable interest rate
borrowings).
Increase/decrease in
basis points
Group
Company
Effect on profit
before tax
Effect on profit
before tax
2021
EUR
+100
(22)
(10)
EUR
-100
-
-
2020
EUR
+100
(54)
(15)
EUR
-100
-
-
54
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
3. Financial risk management (continued)
Foreign exchange risk
The Company’s financial assets and liabilities as at 31 December 2021 and 2020 are denominated in the euros. The
Group’s financial assets and liabilities as at 31 December 2021 and 2020 are denominated in the euros and the
Ukrainian hryvnias. The table below shows the sensitivity of the Group’s profit before tax to possible changes in the
exchange rate of the Ukrainian hryvnia:
2021
2020
Reasonably possible change in the EUR/UAH exchange rate, %
+/-10%
+/-10%
Financial assets denominated in the Ukrainian hryvnias
879
686
Financial liabilities denominated in the Ukrainian hryvnias
304
241
Estimated negative effect on profit before tax
(52)
(41)
Estimated positive effect on profit before tax
64
50
Fair value of financial instruments
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.
The carrying amount of the Group’s and the Company’s trade and other receivables, cash and cash equivalents,
borrowings, lease liabilities, trade and other payables approximates their fair value. The fair value of financial
instruments is measured at the Group and the Company using the following hierarchy levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. The Group’s and the
Company’s financial assets attributed to this level comprise cash and cash equivalents.
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). The
Group’s and the Company’s assets and liabilities attributed to this level comprise:
• Trade and other amounts receivable, trade and other amounts payable. The average payment term of these
financial instruments is less than 3 months (7-90 days for trade receivables, 10-120 days for trade payables),
therefore their fair value approximates the carrying amount.
Borrowings and lease liabilities. The fair value of these financial instruments approximates the carrying amount as
they are stated at the amortised cost and interest rates applicable to them are similar to the market interest rates at
the balance sheet date.
Capital risk management
The main objective of the Group’s and the Company’s capital management is to ensure that the Group and the
Company comply with externally imposed capital requirements and that the Group and the Company maintain healthy
capital ratios in order to support their business and to maximise shareholders’ value (capital in the meaning of IAS 1
corresponds to equity presented in the financial statements and attributable to the Company’s owners).
The Group and the Company manage the capital structure and make adjustments to it in the light of changes in
economic conditions and the operating risks. In order to maintain or adjust the capital structure, the Company may
adjust the amount of dividends paid to shareholders, return capital to shareholders, or issue new shares. No changes
were made concerning risk management objectives, policies or processes during the year ended 31 December 2021.
Pursuant to the Lithuanian Law on Companies, the Group’s and the Company’s equity must be not less than 50% of
their share capital. As at 31 December 2021 and 2020, the Company complied with this requirement.
The Group and the Company use the debt-to-equity ratio to evaluate their capital. Capital includes ordinary shares,
reserves, retained earnings attributable to the equity holders of the parent. It is aimed that the debt-to-equity ratio
should not be higher than 50%-60%.
55
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
3. Financial risk management (continued)
Group
Company
At 31
December
2021
At 31
December
2020
At 31
December
2021
At 31
December
2020
Non-current liabilities (excluding subsidies,
grants and deferred income tax liability)
4,496
4,986
1,505
2,196
Current liabilities
32,822
27,416
16,229
13,482
Total liabilities
37,318
32,402
17,734
15,678
Equity attributable to owners of the
Company
93,576
88,959
56,389
61,053
Debt-to-equity ratio
40%
36%
31%
26%
4. Significant accounting estimates and assumptions
Set out below are the areas significant to the Group’s and the Company’s financial statements that involve complex
judgements, assumptions and accounting estimates.
Useful lives of property, plant and equipment
The estimation of the useful lives of items of property, plant and equipment is a matter of judgment based on the
experience with similar assets. The management assesses the remaining useful lives in accordance with the current
technical conditions of the assets and estimated period during which the assets are expected to earn benefits for the
Group. In assessing the remaining useful life of property, plant and equipment, the management takes into account
conclusions presented by the employees responsible for technical maintenance of assets.
Impairment of goodwill
Goodwill is tested for impairment annually by calculating the recoverable value. The recoverable value of goodwill is
calculated by discounting future cash flows to their present value. The management tested goodwill of EUR 3,001
thousand, which was recognised upon the acquisition of subsidiary Grigeo Klaipėda AB, for impairment and did not
establish any indications of impairment (Note 7).
Legal processes
Subsidiary Grigeo Klaipėda AB has received a claim in relation to indemnification for damage to the environment.
Based on the management’s estimate, the outcome of the claim involves a high degree of uncertainty (Note 332).
56
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
5. Property, plant and equipment
Group
Buildings
and
structures
Machinery
and
equipment
Motor
vehicles
Other
assets
Construction
in progress
and
prepayments
Total
At 1 January 2020
Cost
47,326
112,333
2,337
2,535
2,344
166,875
Accumulated depreciation
(17,716)
(73,304)
(1,466)
(1,402)
-
(93,888)
Net book amount
29,610
39,029
871
1,133
2,344
72,987
Opening net book amount
at 1 January 2020
29,610
39,029
871
1,133
2,344
72,987
Additions
21
278
259
282
7,889
8,729
Disposals and write-offs
(1)
(23)
(39)
(3)
-
(66)
Transfer from inventory
-
18
-
-
-
18
Transfer from construction in progress
to property, plant and equipment
472
1,930
13
181
(2,596)
-
Reclassification to investment property
(61)
-
-
-
(2)
(63)
Reclassification between categories
-
249
85
(334)
-
-
Foreign exchange effect
(42)
(155)
(2)
(1)
(22)
(222)
Depreciation charge
(2,444)
(7,707)
(288)
(315)
-
(10,754)
Closing net book amount
at 31 December 2020
27,555
33,619
899
943
7,613
70,629
At 31 December 2020
Cost
46,988
112,980
2,378
2,454
7,613
172,413
Accumulated depreciation
(19,433)
(79,361)
(1,479)
(1,511)
-
(101,784)
Net book amount
27,555
33,619
899
943
7,613
70,629
Opening net book amount
at 1 January 2021
27,555
33,619
899
943
7,613
70,629
Additions
51
490
171
181
9,956
10,849
Disposals and write-offs
-
(70)
(5)
(1)
-
(76)
Transfer to inventory
-
(15)
-
-
-
(15)
Transfer from construction in progress
to property, plant and equipment
328
7,154
35
49
(7,566)
-
Reclassification to investment property
(618)
(9)
-
3
-
(624)
Reclassification between categories
-
15
-
(15)
-
-
Foreign exchange effect
17
55
-
-
15
87
Depreciation charge
(2,241)
(6,419)
(272)
(354)
-
(9,286)
Closing net book amount
at 31 December 2021
25,092
34,820
828
806
10,018
71,564
At 31 December 2021
Cost
46,700
119,730
2,468
2,514
10,018
181,430
Accumulated depreciation
(21,608)
(84,910)
(1,640)
(1,708)
-
(109,866)
Net book amount
25,092
34,820
828
806
10,018
71,564
The Group’s prepayments amounted EUR 1,880 thousand as at 31 December 2021 (31 December 2020:
EUR 68 thousand).
57
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
5. Property, plant and equipment (continued)
Company
Buildings
and
structures
Machinery
and
equipment
Motor
vehicles
Other
assets
Construction
in progress
and
prepayments
Total
At 1 January 2020
Cost
17,475
55,162
587
1,042
532
74,799
Accumulated depreciation
(5,947)
(39,674)
(321)
(714)
-
(46,656)
Net book amount
11,528
15,488
266
328
532
28,143
Opening net book amount
at 1 January 2020
11,528
15,488
266
328
532
28,143
Additions
-
49
187
98
4,613
4,947
Disposals and write-offs
-
(18)
(30)
(3)
-
(51)
Transfer from/to inventories
-
18
-
-
-
18
Transfer from construction in progress
to property, plant and equipment
142
71
13
118
(344)
-
Reclassification to investment property
(61)
-
-
-
(2)
(63)
Depreciation charge
(910)
(3,240)
(82)
(148)
-
(4,380)
Closing net book amount
at 31 December 2020
10,699
12,368
354
393
4,799
28,613
At 31 December 2020
Cost
16,964
54,035
708
1,086
4,799
77,592
Accumulated depreciation
(6,265)
(41,667)
(354)
(693)
-
(48,979)
Net book amount
10,699
12,368
354
393
4,799
28,613
Opening net book amount
at 1 January 2021
10,699
12,368
354
393
4,799
28,613
Additions
17
27
-
65
4,963
5,072
Transfer from/to inventory
-
(15)
-
-
-
(15)
Reclassification between categories
-
15
-
(15)
-
-
Transfer from construction in progress
to property, plant and equipment
125
4,422
-
9
(4,556)
-
Reclassification to investment property
(618)
(9)
-
3
-
(624)
Depreciation charge
(864)
(2,923)
(85)
(154)
-
(4,026)
Closing net book amount
at 31 December 2021
9,359
13,885
269
301
5,206
29,020
At 31 December 2021
Cost
16,364
57,714
654
1,028
5,206
80,966
Accumulated depreciation
(7,005)
(43,829)
(385)
(727)
-
(51,946)
Net book amount
9,359
13,885
269
301
5,206
29,020
The Company’s prepayments amounted EUR 450 thousand as at 31 December 2021 (31 December 2020: EUR 11
thousand).
58
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
5. Property, plant and equipment (continued)
The depreciation charge of the Group’s and the Company’s property, plant and equipment is included in the following
line items of the statement of comprehensive income and the statement of financial position:
Group
Company
At 31
December
2021
At 31
December
2020
At 31
December
2021
At 31
December
2020
Cost of sales
8,897
10,374
3,782
4,138
Administrative expenses
271
260
170
169
Selling and distribution expenses
118
120
74
73
Statement of comprehensive income
– total
9,286
10,754
4,026
4,380
As at 31 December 2021, the Group’s and the Company’s property, plant and equipment with the carrying amount of
respectively EUR 18,249 thousand and EUR 12,152 thousand (31 December 2020: EUR 50,139 thousand and
EUR 16,927 thousand, respectively) was pledged to the banks as security for borrowings (Note 13).
A part of the Group’s and the Company’s property, plant and equipment was fully depreciated but still in use.
Information by category of assets is presented below:
Group
Company
At 31
December
2021
At 31
December
2020
At 31
December
2021
At 31
December
2020
Buildings and structures
880
791
332
272
Machinery and equipment
5,246
6,757
1,445
2,062
Motor vehicles
642
457
175
172
Other assets
514
597
248
290
Total
7,282
8,602
2,200
2,796
The Group’s and the Company’s commitments for the acquisition of property, plant and equipment under the signed
agreements amounted to respectively EUR 3,333 thousand and EUR 323 thousand as at 31 December 2021
(31 December 2020: EUR 446 thousand and EUR 251 thousand, respectively).
59
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
6. Right-of-use assets
Group
Land
Buildings and
structures
Machinery and
equipment
Total
At 1 January 2020
Cost
3,695
-
-
3,695
Accumulated depreciation
(408)
-
-
(408)
Net book amount
3,287
-
-
3,287
Opening net book amount
at 1 January 2020
3,287
-
-
3,287
Change in value-in-use
260
242
765
1,267
Foreign exchange effect
(6)
-
-
(6)
Amortisation charge
(65)
(110)
(244)
(419)
Closing net book amount
at 31 December 2020
3,476
132
521
4,129
At 31 December 2020
Cost
3,945
242
765
4,952
Accumulated depreciation
(469)
(110)
(244)
(823)
Net book amount
3,476
132
521
4,129
Opening net book amount
at 1 January 2021
3,476
132
521
4,129
Change in value-in-use
-
175
156
331
Foreign exchange effect
2
-
-
2
Disposals and write-offs
-
-
(58)
(58)
Amortisation charge
(63)
(113)
(259)
(435)
Closing net book amount
at 31 December 2021
3,415
194
360
3,969
At 31 December 2021
Cost
3,948
416
823
5,187
Accumulated depreciation
(533)
(222)
(463)
(1,218)
Net book amount
3,415
194
360
3,969
60
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
6. Right-of-use assets (continued)
Company
Land lease
rights
Buildings and
structures
Machinery and
equipment
Total
At 1 January 2020
Cost
821
461
-
1,282
Accumulated depreciation
(13)
(231)
-
(244)
Net book amount
808
230
-
1,038
Opening net book amount
at 1 January 2020
808
230
-
1,038
Change in value-in-use
195
693
241
1,129
Disposals, write-offs
(1)
-
-
(1)
Amortisation charge
(15)
(237)
(81)
(333)
Closing net book amount
at 31 December 2020
987
686
160
1,833
At 31 December 2020
Cost
1,013
1,154
241
2,408
Accumulated depreciation
(26)
(468)
(81)
(575)
Net book amount
987
686
160
1,833
Opening net book amount
at 1 January 2021
987
686
160
1,833
Change in value-in-use
-
-
57
57
Disposals, write-offs
-
-
(29)
(29)
Amortisation charge
(13)
(229)
(85)
(327)
Closing net book amount
at 31 December 2021
974
457
103
1,534
At 31 December 2021
Cost
1,014
1,154
243
2,411
Accumulated depreciation
(40)
(697)
(140)
(877)
Net book amount
974
457
103
1,534
The depreciation charge of the Group’s and the Company’s right-of-use assets is included in the following line items
of the statement of comprehensive income:
Group
Company
At 31
December
2021
At 31
December
2020
At 31
December
2021
At 31
December
2020
Cost of sales
319
292
65
52
Administrative expenses
64
64
14
15
Selling and distribution expenses
52
62
248
266
Total
435
418
327
333
As at 31 December 2021, the Group’s and the Company’s land lease rights with the carrying amount of respectively
EUR 477 thousand and EUR 358 thousand (31 December 2020: EUR 2,022 thousand and EUR 364 thousand,
respectively) were pledged to the banks as security for borrowings (Note 13).
61
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
7. Intangible assets
Group
Goodwill
Licences,
patents
Software
Other assets
Total
At 1 January 2020
Cost
3,001
150
2,192
531
5,874
Accumulated amortisation
-
(52)
(1,495)
(529)
(2,076)
Net book amount
3,001
98
697
2
3,798
Opening net book amount
at 1 January 2020
3,001
98
697
2
3,798
Additions
-
8
11
-
19
Reclassification from property, plant and
equipment
-
-
10
-
10
Foreign exchange effect
-
-
(1)
-
(1)
Amortisation charge
-
(34)
(167)
(1)
(202)
Closing net book amount
at 31 December 2020
3,001
72
550
1
3,624
At 31 December 2020
Cost
3,001
158
2,207
531
5,897
Accumulated amortisation
-
(86)
(1,657)
(530)
(2,273)
Net book amount
3,001
72
550
1
3,624
Opening net book amount
at 1 January 2021
3,001
72
550
1
3,624
Additions
-
11
38
23
72
Foreign exchange effect
-
1
-
-
1
Amortisation charge
-
(38)
(145)
(1)
(184)
Closing net book amount
at 31 December 2021
3,001
46
443
23
3,513
At 31 December 2021
Cost
3,001
169
2,243
553
5,966
Accumulated amortisation
-
(123)
(1,800)
(530)
(2,453)
Net book amount
3,001
46
443
23
3,513
Goodwill
On 1 March 2010, the Company acquired the Grigeo Investicijų Valdymas UAB group consisting of Grigeo Investicijų
Valdymas UAB, Avesko UAB (in 2010, Avesko UAB was reorganised by merging it with Grigeo Klaipėda AB), Grigeo
Klaipėda AB and Mena Pak AT.
Goodwill of EUR 3,001 thousand was recognised on acquisition of these subsidiaries. The goodwill arose on expected
synergies of the activities of the Group companies. Goodwill is not amortised but is tested annually for possible
impairment.
For the purpose of impairment testing as at 31 December 2021 and 2020, goodwill was allocated to the Grigeo
Klaipėda AB cash-generating unit. As at 31 December 2021 and 2020, the recoverable amount of the cash-generating
unit was determined based on projected future discounted cash inflows according to the five-year financial forecasts
approved by the management.
62
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
7. Intangible assets (continued)
Forecasts as at 31 December 2021:
Revenue
Projected annual revenue growth (decrease), %
2021
2022
2023
2024
2025
2026
54,488
39.3
2.7
0.2
(0.3)
0.1
Gross profit margin, %
2021
2022
2023
2024
2025
2026
18.2
24.4
22.6
22.9
22.8
22.4
Projected significant increase in revenue in 2022 is related to increasing sale prices in the market as well as sales of
honeycomb that are expected to almost double compared to the year 2021 due to the expansion of the customer
base. This also contributes to rise in a gross profit margin.
Forecasts as at 31 December 2020:
Revenue
Projected annual revenue growth (decrease), %
2020
2021
2022
2023
2024
2025
31,100
33.5
13.7
0.6
(5.0)
0.0
Gross profit margin, %
2020
2021
2022
2023
2024
2025
10.0
22.2
27.2
26.0
19.4
18.1
Revenue was projected based on the management’s assumptions as at 31 December 2021 and 31 December 2020
respectively, which forecast that future revenue will increase due to investments in the enhancement of operational
efficiency of production facilities and intensification of sales actions. As at 31 December 2021, projected investments
for the upcoming period of 5 years amounted to EUR 2,202 thousand on average annually (31 December 2020:
EUR 1,571 thousand). Expenses were projected in view of actual expenses taking into consideration the projected
level of inflation. Cash flows beyond the five-year period were extrapolated using a 1% annual growth rate that reflects
the management’s best estimate in view of the current situation in this industry. The discount rate used by the
management for a specific cash-generating unit was calculated as a weighted average cost of capital which is equal
to 6.7% after tax for the cash generating units located in Lithuania as at 31 December 2021 (as at 31 December 2020:
7%).
The calculation of the recoverable amount of the cash-generating unit as at 31 December 2021 and 2020 did not
indicate any impairment of goodwill. The assessment was performed without taking into consideration the legal
process described in Note 32 of the financial statements. With regard to the assessment of the recoverable amount
of the above-mentioned cash-generating unit as at 31 December 2021 and 2020, the management believes that no
possible change in any of the above key assumptions would cause the carrying amount of the cash-generating unit
to materially exceed its recoverable amount.
The sensitivity analysis of the calculation of the recoverable amount of the investment in Grigeo Klaipėda AB shows
the impact of change in the assumptions used in the impairment testing on the assessment result:
Changes in assumptions
Effect as at 31
December 2021 and
2020
Decrease in revenue and cost of sales of each forecast year by 10%
-
Decrease in gross profit margin by 500 basis points
-
Increase in discount rate by 100 basis points
-
Considering the above changes in the assumptions, no impairment indicators of goodwill were identified in the
sensitivity analysis.
63
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
7. Intangible assets (continued)
Company
Licences,
patents
Software
Other assets
Total
At 1 January 2020
Cost
150
994
10
1,154
Accumulated amortisation
(52)
(573)
(8)
(633)
Net book amount
98
421
2
521
Opening net book amount
at 1 January 2020
98
421
2
521
Additions
8
-
-
8
Reclassification from property, plant and
equipment
-
10
-
10
Amortisation charge
(34)
(74)
(1)
(109)
Closing net book amount
at 31 December 2020
72
357
1
430
At 31 December 2020
Cost
158
998
10
1,166
Accumulated amortisation
(86)
(641)
(9)
(736)
Net book amount
72
357
1
430
Opening net book amount
at 1 January 2021
72
357
1
430
Additions
11
27
23
61
Amortisation charge
(37)
(79)
(1)
(117)
Closing net book amount
at 31 December 2021
46
305
23
374
At 31 December 2021
Cost
169
1,025
33
1,227
Accumulated amortisation
(124)
(720)
(9)
(853)
Net book amount
46
305
23
374
Amortisation expenses of intangible assets are included in the following line items of the statement of comprehensive
income:
Group
Company
At 31 December
2021
At 31 December
2020
At 31 December
2021
At 31 December
2020
Cost of sales
182
200
117
109
Administrative expenses
-
-
-
-
Selling and distribution
expenses
2
2
-
-
Total
184
202
117
109
64
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
7. Intangible assets (continued)
A part of the Group’s and the Company’s intangible assets was fully amortised but still in use. Information by category
of assets is presented below:
Group
Company
At 31 December
2021
At 31 December
2020
At 31 December
2021
At 31 December
2020
Licences, patents
15
9
15
9
Software
179
522
72
72
Other assets
520
521
-
-
Total
714
1,052
87
81
8. Investment property
Group and Company
Buildings
Construction in
progress and
prepayments
Total
At 1 January 2020
Cost
1,775
40
1,815
Accumulated depreciation
(294)
-
(294)
Net book amount
1,481
40
1,521
Opening net book amount at 1 January 2020
1,481
40
1,521
Additions
-
484
484
Reclassification from property, plant and equipment
61
(8)
53
Depreciation charge
(79)
-
(79)
Closing net book amount at 31 December 2020
1,463
516
1,979
At 31 December 2020
Cost
2,266
516
2,782
Accumulated depreciation
(803)
-
(803)
Net book amount
1,463
516
1,979
Opening net book amount at 1 January 2021
1,463
516
1,979
Additions
-
1,983
1,983
Transfer from construction in progress
2,171
(2,171)
-
Reclassification from property, plant and equipment
623
-
623
Depreciation charge
(168)
-
(168)
Closing net book amount at 31 December 2021
4,089
328
4,417
At 31 December 2021
Cost
5,203
328
5,531
Accumulated depreciation
(1,114)
-
(1,114)
Net book amount
4,089
328
4,417
As at 31 December 2021, the Group’s and the Company’s investment property (buildings) with the acquisition cost
of respectively EUR 7 thousand and EUR 7 thousand (31 December 2020: EUR 31 thousand and EUR 31
thousand, respectively) was fully amortised but still in use.
The Group and the Company had no prepayments as at 31 December 2021 (31 December 2020: prepayments
totalled EUR 28 thousand).
65
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
8. Investment property (continued)
Commitments for the acquisition of investment property under the signed agreements amounted to EUR 165 thousand
as at 31 December 2020. There were no such commitments as at 31 December 2021.
Investment property comprises the buildings and structures located at Popieriaus street 15 and Popieriaus street 25
in Naujieji Verkiai and the leased site at Vilniaus street 10 in Grigiškės. A part of the investment property (80% as at
31 December 2021 and 82% as at 31 December 2020 at the carrying amount) is leased to third parties. The lease
term under the contracts is between 1 months to 5 years. As at 31 December 2021, future annual revenue amounted
to EUR 492 thousand (31 December 2020: EUR 311 thousand) in the period from 2022 to 2026. Depreciation
expenses are included in administrative expenses.
Fair value measurement
The fair value of the investment property was measured based on the cash flows from the investment property for a
10-year period with reference to forecast revenue and expenses. Cash flows were calculated using a discount rate of
10%, a rental yield at the end of the assessed period was equal to 9%. According to the calculation, the fair value of
the investment property is equal to EUR 4,153 thousand (31 December 2020: EUR 2,270 thousand).
The fair value measurement of investment property does not include construction in progress and prepayments. The
management of the Group estimates the book value of construction in progress and prepayments approximate their
fair value.
The sensitivity of the value measurement considering reasonably possible changes in the discount rate and the rental
yield is presented below:
At 31
December
2021
At 31
December
2020
Change in the discount rate (+100 basis points)
3,857
2,100
Change in the discount rate (-100 basis points)
4,480
2,450
Change in the rental yield (+100 basis points)
3,810
2,140
Change in the rental yield (-100 basis points)
4,580
2,420
9. Inventories
Group
Company
At 31
December
2021
At 31
December
2020
At 31
December
2021
At 31
December
2020
Materials
6,593
4,507
1,690
1,153
Work in progress
1,838
1,392
1,169
1,010
Finished products
5,600
3,035
1,880
1,779
Inventories in transit
289
164
38
36
Prepayments
108
35
19
18
Total
14,428
9,133
4,796
3,996
As at 31 December 2021, the acquisition value (cost) of the Group’s and the Company’s inventories was decreased
by respectively EUR 776 thousand and EUR 298 thousand (31 December 2020: EUR 398 thousand and EUR
167 thousand, respectively) to net realisable value. The net realisable value adjustment was accounted for under cost
of sales.
In 2021, inventories of EUR 97 million (2020: EUR 62 million) for the Group and inventories of EUR 46 million
(2020: EUR 34 million) for the Company were included in cost of sales.
As described in the Note 13, as at 31 December 2021, the Group and the Company had pledged inventories with a
carrying amount of respectively EUR 1,158 thousand and EUR 1,158 thousand (31 December 2020: EUR 1,158
thousand and EUR 1,158 thousand, respectively) as security for bank borrowings.
66
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
10. Trade and other amounts receivable
Group
Company
At 31
December
2021
At 31
December
2020
At 31
December
2021
At 31
December
2020
Trade receivables – gross
19,217
13,573
8,184
6,533
Loss allowance
(146)
(153)
(72)
(72)
Trade receivables – net
19,071
13,420
8,112
6,461
Amounts receivable from related parties
(Note 30)
-
-
1 294
425
Amount receivable of the recovery of a
part of the PSO* service fee
900
758
314
273
VAT receivable
2,040
744
551
87
Other amounts receivable – gross
332
208
244
121
Total trade and other amounts
receivable – net
22,343
15,130
10,515
7,367
Of which:
Non-current amounts receivable
3
3
-
-
Current amounts receivable
22,340
15,127
10,515
7,367
*PSO – services under public service obligation scheme.
As disclosed in Note 13, as at 31 December 2021, the Company and subsidiaries Grigeo Packaging UAB and Grigeo
Baltwood UAB had pledged future inflows to secure the repayment of bank borrowings. As at 31 December 2020,
only the Company and subsidiary Grigeo Packaging UAB had pledged future inflows.
11. Cash and cash equivalents
Group
Company
At 31 December
2021
At 31 December
2020
At 31 December
2021
At 31 December
2020
Cash at bank
12,443
18,275
818
10,453
Cash on hand
-
-
-
-
TOTAL
12,443
18,275
818
10,453
As at 31 December 2021, cash held in bank accounts amounting to EUR 1,052 thousand (2020: EUR 13,089
thousand) for the Group and EUR 641 thousand (2020: EUR 10,453 thousand) for the Company was pledged as
collateral against borrowings as further described in Note 13. As at 31 December 2021 and 2020, there were no
restrictions on the use of cash balances held in the pledged bank accounts.
12. Authorised share capital and reserves
Authorised share capital
Date
Type of shares
Securities’
ISIN code
Number of
shares, units
Par value,
EUR
Total par
value, EUR
Until 18/05/2021
Ordinary registered shares
LT0000102030
65,700,000
0.29
19,053,000
From 19/05/2021
Ordinary registered shares
LT0000102030
131,400,000
0.29
38,106,000
Based on the decision of the Ordinary General Meeting of the Shareholders of the Company that was held on 30 April
2021, the Company's authorised share capital was increased on 19 May 2021 out of the Company’s retained earnings
from EUR 19,053 thousand to EUR 38,106 thousand by issuing 65,700,000 ordinary registered shares with a nominal
value of EUR 0.29.
All the shares of the Company have been fully paid up. The Company does not have any other categories of shares
than ordinary shares mentioned above. The Company’s Articles of Association do not establish any restrictions on
rights to shares or special control rights for the shareholders. The Company and its subsidiaries do not hold the
Company’s shares. The Company has not issued any convertible securities, exchangeable securities or guarantee
securities, neither has unfulfilled acquisition rights or commitments to increase share capital as at 31 December 2021
and 2020.
67
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
12. Authorised share capital and reserves (continued)
Share premium
The Company’s authorised share capital was increased after the additional issue of shares with the total nominal
value of EUR 1,650,834 in accordance with the decisions of the Ordinary General Meeting of the Shareholders of
the Company held on 26 April 2013. The nominal value per share is EUR 0.29, while the shares were issued for
EUR 0.51 per share. Share premium is the difference between the issue price and the nominal value of shares, less
expenses related to the issue of shares.
Reserves
A legal reserve is a compulsory reserve under the Lithuanian legislation. Annual transfers of at least 5% of profit to
be appropriated calculated in accordance with the accounting principles established by laws are required until the
reserve reaches 10% of the authorised share capital. In accordance with the procedure prescribed by the laws, the
reserve can be used to cover the company’s losses.
Following the authorised share capital increase, the Company’s legal reserve represents 5% of the authorised share
capital as at 31 of December 2021 (31 December 2020: 10%).
The foreign currency translation reserve arises from exchange differences that occur on consolidation of the financial
statements of the foreign subsidiary (Note 2.4).
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of the hedging
instruments used in cash flow hedges that will be subsequently recognised in the statement of comprehensive income.
Dividends
During the Ordinary General Meeting of Shareholders of the Company held in 2021, a decision was made to
allocate dividends equal to EUR 0.06 per share (Note 27). No dividends were allocated in 2020.
13. Borrowings
Group
Company
At 31
December 2021
At 31
December 2020
At 31
December 2021
At 31
December 2020
Non-current borrowings:
Bank borrowings
864
1,226
175
556
864
1,226
175
556
Current borrowings:
Bank borrowings
2,094
6,404
1,380
2,281
2,094
6,404
1,380
2,281
TOTAL
2,958
7,630
1,555
2,837
Movements in bank borrowings during the year are presented in the table below:
Group
Company
At 31
December 2021
At 31
December 2020
At 31
December 2021
At 31
December 2020
Opening balance
7,630
16,206
2,837
6,107
Proceeds from borrowings
1,731
-
1,000
-
Repayments
(6,403)
(8,576)
(2,282)
(3,270)
Interest charged
62
183
25
66
Interest paid
(62)
(183)
(25)
(66)
Closing balance
2,958
7,630
1,555
2,837
Borrowings outstanding at the year-end by currency:
Group
Company
2021
2020
2021
2020
EUR
2,958
7,630
1,555
2,837
TOTAL
2,958
7,630
1,555
2,837
The unwithdrawn balance under the credit agreements amounted to EUR 5,802 thousand for the Group and
EUR 3,715 thousand for the Company as at 31 December 2021. Neither the Group nor the Company had credit limit
agreements as at 31 December 2020.
68
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
13. Borrowings (continued)
Compliance with loan covenants
The Company’s borrowings
Under the loan and overdraft agreements, the Group and the Company have to comply with certain financial and non-
financial covenants, such as: debt service coverage ratio, the Company’s EBITDA to financial liabilities ratio, equity
to the Company’s liability ratio, free cash flow indicator. The Company and its certain subsidiaries are also required
to conduct a certain number of settlements through the bank that provided the loan.
Indicators of the Company’s borrowings:
Indicator
Established
ratio
Indicators of the Group
Indicators of the Company
At 31
December
2021
At 31
December
2020
At 31
December
2021
At 31
December
2020
Borrowings/EBITDA
< 3.0
(0.40)
(0.40)
(0,12)
(0.51)
Debt service coverage ratio
(DSCR)
> 1.2
3.59
2.98
2.50
4.43
As at 31 December 2021 and 31 December 2020, the Company complied with all financial and non-financial
requirements established in the bank agreements.
Loans received by the subsidiaries
As at 31 December 2021, the Group complied with all financial and non-financial requirements established in the bank
agreements.
As at 31 December 2020, the Group complied with all financial and non-financial requirements established in the bank
agreements, except for Grigeo Klaipėda AB which did not comply with the DSCR, however it had the bank’s consent
regarding non-compliance with the requirement (established ratio – 1.2, calculated ratio – 0.6). The consent was
received on 25 February 2021 and although it was received after the end of the financial year, the classification of
current liabilities was not affected because the loan of Grigeo Klaipėda AB was repaid in 2021, i.e., the loan was
classified within current liabilities.
Interest rates
As at 31 December 2021 and 31 December 2020, the Company’s and the Group's borrowings were subject to variable
interest rates. They are linked with the EURIBOR interest rate base and with the margin agreed with the bank. In 2021
and 2020, the period of re-pricing variable interest rates on borrowings ranged from 3 to 6 months.
The weighted average interest rate applicable to the Group’s and the Company’s bank borrowings is presented in the
table below:
Group
Company
At 31
December
2021
At 31
December
2020
At 31
December
2021
At 31
December
2020
Weighted average interest rate
1.55%
1.47%
1.51%
1.42%
Pledged assets
The Group and the Company have pledged to the banks property, plant and equipment (Note 4), right-of-use assets
(Note 6), inventories (Note 9), cash balances in bank accounts (Note 11) and future inflows (Note 10) as security for
borrowings.
69
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
14. Lease liabilities
Group
Company
2021
2020
2021
2020
Non-current
3,177
3,287
1,259
1,554
Current
360
387
320
310
TOTAL
3,537
3,674
1,579
1,864
The assets leased by the Group and the Company under lease contracts comprised motor vehicles, equipment, and
lease of premises and land. The lease terms of the lease contracts: between 8 and 79 years for the lease of land;
between 2 and 3 years for the lease of buildings; and between 1 and 4 years for the lease of machinery and equipment.
The lease contracts are denominated in the euros.
Movements in liabilities related to lease over the year are provided in the table below:
Group
Company
2021
2020
2021
2020
Balance at 1 January
3,674
2,801
1,864
1,064
New lease liabilities
331
1,267
56
1,129
Interest charged
124
142
65
47
Lease payments
(534)
(536)
(377)
(376)
Lease terminations
(58)
-
(29)
-
Balance at 31 December
3,537
3,674
1,579
1,864
The Group’s and the Company’s lease liabilities are secured by right-of-use assets (Note 6).
15. Grants
Group
Company
Balance at 1 January 2020
1,494
1,101
Amortisation charge
(347)
(131)
Balance at 31 December 2020
1,147
970
Amortisation charge
(208)
(159)
Balance at 31 December 2021
939
811
The grants consist of the support received from the EU funds for the construction of structures, acquisition of
machinery and equipment (non-current assets).
No agreements were signed in 2021 and 2020.
Amortisation of grants is recognised in the statement of comprehensive income within the cost of sales and reduces
depreciation expenses of the related assets.
16. Long-term employee benefits
As at 31 December 2021 and 2020, the Group and the Company accounted for long-term employee benefits for
employees leaving the Group or the Company after reaching the retirement age. Expenses related to the accounting
for these liabilities are included in the statement of comprehensive income.
Group
Company
At 1 January 2020
156
68
Change during the year 2020
35
18
At 31 December 2020
191
86
Change during the year 2021
(18)
(15)
At 31 December 2021
173
71
Actuarial gains and losses during 2021 and 2020 were insignificant, therefore they were not separately disclosed in
other comprehensive income.
The main assumptions applied in evaluating the Group’s and the Company’s long-term employee benefits are as
follows:
At 31
December 2021
At 31
December 2020
Discount rate
0.16%
0.16%
Expected annual salary increase
5%
2.18%
70
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
17. Trade and other amounts payable
Group
Company
At 31
December 2021
At 31
December 2020
At 31
December 2021
At 31
December 2020
Trade payables
25,270
15,768
12,614
8,571
Wages and salaries and social
security contributions
3,224
2,209
1,236
1,147
Advance amounts received
187
247
29
106
Accrued expenses
332
353
47
274
Other amounts payable
1,355
1,471
603
437
TOTAL
30,368
20,048
14,529
10,535
Of which:
Attributable to financial liabilities
(Note 3)
26,957
17,592
13,264
9,282
Not attributable to financial liabilities
3,411
2,456
1,265
1,253
18. Segment information
Segment reporting
For decision making purposes, the Group is organised into three operating business units based on its products
produced and has three reportable segments: paper and paper products, wood fibreboards and wood products, raw
materials for corrugated cardboard and related products. The Group analyses segment information only up to gross
profit, as other operating income and finance income and expenses are not attributed to any segment. Assets and
liabilities of the Group are not divided into segments for decision-making purposes. However, information about
property, plant and equipment and intangible assets, investment property and right-of-use assets is disclosed
according to the segments.
Segment information about these three business segments is presented below:
Group
2021
Paper and
paper
products
Woodfibre
boards
Raw
materials
for
corrugated
cardboard
and related
products
Total
reportable
segments
Unallocated
Elimination
TOTAL
Sales
60,662
20,728
78,727
160,117
3,098
-
163,215
Inter-segment sales
(5,471)
(836)
(26,884)
(33,191)
(6,064)
39,255
-
Unconsolidated segment
sales
66,133
21,564
105,610
193,307
9,163
(39,255)
163,215
Cost of sales
(51,041)
(16,224)
(59,588)
(126,853)
(2,804)
-
(129,657)
Gross profit
9,621
4,504
19,139
33,264
294
-
33,558
Depreciation and
amortisation
3,817
742
4,713
9,272
801
-
10,073
Property, plant and
equipment of the segment
26,189
4,929
36,965
68,083
3,481
-
71,564
Intangible assets of the
segment
276
1
136
413
99
-
512
Investment property of the
segment
-
-
-
-
4,417
-
4,417
Right-of-use assets of the
segment
169
888
1,888
2,945
1,024
-
3,969
Goodwill
-
-
3,001
3,001
-
-
3,001
Investments of the segment
5,060
2,493
3,011
10,564
2,340
-
12,904
71
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
18. Segment information (continued)
Group
2020
Paper and
paper
products
Woodfibre
boards
Raw
materials
for
corrugated
cardboard
and
related
products
Total
reportable
segments
Unallocated
Elimination
TOTAL
Sales
58,909
17,260
51,184
127,353
2,249
-
129,602
Inter-segment sales
(5,310)
(657)
(12,305)
(18,272)
(3,926)
22,198
-
Unconsolidated segment
sales
64,219
17,916
63,490
145,625
6,175
(22,198)
129,602
Cost of sales
(41,308)
(13,705)
(39,108)
(94,121)
(2,012)
-
(96,133)
Gross profit
17,601
3,555
12,076
33,233
237
-
33,469
Depreciation and
amortisation
4,573
706
5,774
11,053
401
-
11,454
Property, plant and
equipment of the segment
25,365
3,154
37,980
66,499
4,130
-
70,629
Intangible assets of the
segment
322
2
190
513
110
-
623
Investment property of the
segment
-
-
-
-
1,979
-
1,979
Right-of-use assets of the
segment
290
904
1,901
3,095
1,034
-
4,129
Goodwill
-
-
3,001
3,001
-
-
3,001
Investments of the segment
4,711
634
3,059
8,404
828
-
9,232
1
Unallocated sales comprise sales not attributable to either of the listed segments, mainly, sales of heating energy (steam) (as the
Company has its own steam house) and sales of other utilities.
2
Unallocated cost of sales comprises cost related to unallocated sales, mainly, the cost of wood and gas necessary for the energy
generation.
3
Unallocated depreciation and amortisation, property, plant and equipment, investment property, intangible assets and capital
expenditure are related to sales of thermal energy and other utilities.
Breakdown by country
The following table shows a breakdown of revenue by country for the year ended 31 December:
Group
Company
2021
2020
2021
2020
Domestic market (Lithuania)
55,283
38,189
22,294
19,388
Foreign market
Poland
28,723
22,161
11,526
9,554
Latvia
14,423
11,820
8,514
7,582
Estonia
13,348
8,222
3,773
4,390
Ukraine
11,869
8,019
2,081
1,924
Finland
8,288
8,006
3,592
3,528
Denmark
7,671
7,879
6,119
6,658
Sweden
7,011
6,545
3,901
4,169
Belarus
3,648
3,881
992
863
The Netherlands
3,173
2,747
1,782
2,105
Russia
1,833
1,350
572
577
Germany
1,794
2,768
724
1,791
Norway
1,452
873
1,240
806
Great Britain
1,105
943
14
-
Austria
1,054
664
64
53
Belgium
936
599
181
165
Czech Republic
384
272
9
-
France
302
246
-
-
Hungary
232
143
21
18
China
-
1,551
-
-
Saudi Arabia
-
1,513
-
-
Other markets
686
1,211
192
164
TOTAL
163,215
129,602
67,591
63,735
72
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
18. Segment information (continued)
Breakdown of property, plant and equipment, intangible assets, right-of-use assets and investment property by
geographical location:
Group
Company
2021
2020
2021
2020
Lithuania
82,297
79,299
35,345
32,855
Latvia
381
293
-
-
Ukraine
785
769
-
-
TOTAL
83,463
80,361
35,345
32,855
19. Cost of sales
Group
Company
2021
2020
2021
2020
Raw materials and consumables
72,867
48,704
36,455
28,539
Energy
23,673
13,597
9,496
5,182
Wages and salaries and social security contributions
15,853
14,973
5,547
5,317
Depreciation and amortisation of non-current assets, including
grants
9,190
10,520
3,806
4,167
Other expenses
8,074
8,339
3,228
3,219
TOTAL
129,657
96,133
58,532
46,424
20. Selling and distribution expenses
Group
Company
2021
2020
2021
2020
Fuel and transport services
8,512
7,895
3,006
2,839
Wages and salaries and social security contributions
2,448
2,366
1,137
1,237
Other selling expenses
516
715
173
226
Intermediation, marketing, advertising and representation
324
446
249
442
Property maintenance and servicing
207
99
108
74
Depreciation and amortisation of non-current assets
172
185
322
340
TOTAL
12,179
11,706
4,995
5,158
21. Administrative expenses
Group
Company
2021
2020
2021
2020
Wages and salaries and social security contributions
3,799
3,293
1,496
1,612
Legal services
610
602
39
20
Taxes (other than income tax)
596
502
164
185
Depreciation and amortisation of non-current assets
503
402
352
262
Property maintenance and servicing
433
481
324
283
Security services
341
329
39
46
Social expenses
278
202
96
76
Consultation services
244
505
90
25
Advertising and representation
236
47
34
11
Insurance services
211
181
74
61
Support
180
255
24
140
Audit services
140
146
55
64
Personnel training and recruitment expenses
113
47
57
34
Bonuses and other similar payments
66
14
66
14
Fuel and transport services
40
32
18
15
Expenses for the listing of securities and related expenses
39
35
39
35
Impairment of doubtful amounts receivable/(reversal of
impairment)
(3)
70
-
-
Other administrative expenses
310
685
109
102
TOTAL
8,134
7,828
3,076
2,985
During 2021, audit services provided to the Group and the Company by audit firm PricewaterhouseCoopers UAB
under the audit agreements amounted to respectively EUR 104 thousand and EUR 40 thousand
(2020: EUR 96 thousand and EUR 32 thousand, respectively); non-audit services provided amounted to respectively
EUR 11 thousand and EUR 6 thousand (2020: EUR 28 thousand and EUR 9 thousand, respectively).
73
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
22. Other income
Group
Company
2021
2020
2021
2020
Rental income
423
373
437
312
Dividend income
-
-
1,500
-
TOTAL
423
373
1,937
312
In 2021, the Company received dividends of EUR 1,500 thousand from Grigeo Baltwood UAB.
23. Other gains/(losses) – net
Group
Company
2021
2020
2021
2020
Net gain from turnover of emission
allowances
110
645
(52)
459
Result of disposal of assets
89
98
28
36
Other gain/(losses)
(6)
85
60
42
TOTAL
193
828
36
537
24. Finance income and costs
Group
Company
2021
2020
2021
2020
Interest income
7
16
-
2
Foreign exchange gain – net
-
90
-
-
Other finance income
27
5
4
4
Total finance income
34
111
4
6
Interest on loans and lease
(194)
(317)
(91)
(123)
Foreign exchange loss – net
(38)
-
-
-
Default charges
(28)
-
(2)
-
Other finance costs
(15)
-
(6)
Total finance costs
(260)
(332)
(93)
(129)
Net finance costs
(226)
(221)
(89)
(123)
Capitalisation of interest on loans and lease
No interest was capitalised in 2021 and 2020.
25. Income tax and deferred income tax
Income tax expense components:
Group
Company
2021
2020
2021
2020
Current year income tax
787
783
-
352
Adjustments to previous year income tax
(39)
17
(34)
-
Deferred income tax (benefit)
502
846
(310)
564
Income tax expenses recognised in the
statement of comprehensive income
1,250
1,646
(344)
916
74
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
25. Income tax and deferred income tax (continued)
The amount of income tax expenses attributable to the operating result for the year can be reconciled against
the amount of income tax expenses that would result from applying the statutory income tax rate to profit before
income tax:
Group
Company
2021
2020
2021
2020
Profit before income tax
13,635
14,915
2,872
9,894
Income tax expenses calculated at the tax
rate of 15%
2,046
2,237
431
1,484
Effect of a higher income tax rate applied in
Ukraine
22
18
-
-
Effect of a tax rate due to taxation in Latvia
(28)
(6)
-
-
Effect of change in unrecognised deferred
income tax
-
48
-
(29)
Effect of investment relief
(849)
(589)
(523)
(572)
Support
(10)
(58)
(7)
(28)
Adjustments of income tax in respect of
prior periods
(36)
37
(31)
-
Non-allowable deductions
113
103
16
63
Income not subject to tax
(8)
(144)
(230)
(2)
Income tax expenses recognised in the
statement of comprehensive income
1,250
1,646
(344)
916
Group
Company
At 31 December
2021
At 31 December
2020
At 31 December
2021
At 31 December
2020
Deferred income tax assets
Decrease in net realisable value
of amounts receivable
20
23
11
11
Investment relief
409
403
366
-
Write-downs of inventories to net
realisable value
116
60
45
25
Long-term employee benefits
26
29
11
13
Vacation reserve
196
182
95
86
Right-of-use assets and liabilities
9
11
7
4
Tax losses carried forward
-
311
-
-
Other accruals
-
38
-
38
Grants
69
4
69
-
Deferred income tax assets
845
1,061
604
177
Less: unrecognised part
(11)
(11)
(11)
(11)
Deferred income tax assets –
net
834
1,050
593
166
Deferred income tax liability
Property, plant and equipment
(1,413)
(1,127)
(470)
(353)
Deferred income tax liability
(1,413)
(1,127)
(470)
(353)
Deferred income tax – net
(579)
(77)
123
(187)
The Group’s deferred income tax assets and liabilities were offset at the amount which is related to the same tax
administration authority and the same taxable entity.
75
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
25. Income tax and deferred income tax (continued)
Movements in the Group’s deferred income tax differences before and after tax were as follows:
Group
At 31
December
2019
Change
At 31
December
2020
Change
At 31
December
2021
Non-current assets
(624)
(503)
(1,127)
(286)
(1,413)
Investment relief
1,172
(769)
403
6
409
Long-term employee benefits
23
6
29
(3)
26
Decrease in net realisable value of
amounts receivable
18
5
23
(3)
20
Write-downs of inventories to net
realisable value
41
19
60
56
116
Vacation reserve
165
17
182
14
196
Right-of-use assets and liabilities
-
11
11
(2)
9
Tax losses carried forward
-
311
311
(311)
-
Grants
-
38
38
31
69
Other
32
(29)
4
(4)
-
Total deferred income tax
827
(894)
(66)
(502)
(568)
Unrecognised part
(59)
48
(11)
-
(11)
Deferred income tax – net
769
(846)
(77)
(502)
(579)
In 2021, write-downs of inventory were recognised as deferred income tax. As at 31 December 2020, the amount of
the Group’s unrecognised deferred income tax was related to decrease in net realisable value of amounts receivable
(EUR 11 thousand).
Movements in the Company’s deferred income tax differences before and after tax were as follows:
Company
At 31
December
2019
Recognised in
the statement
of comprehen-
sive income
At 31
December
2020
Recognised in
the statement
of comprehen-
sive income
At 31
December
2021
Property, plant and equipment
(83)
(270)
(353)
(117)
(470)
Investment relief
368
(368)
-
366
366
Long-term employee benefits
11
2
13
(2)
11
Decrease in net realisable value
of amounts receivable
11
-
11
-
11
Write-downs of inventories to net
realisable value
29
(4)
25
20
45
Vacation reserve
81
5
86
9
95
Grants
-
38
38
31
69
Right-of-use assets and liabilities
-
4
4
3
7
Total deferred income tax
417
(593)
(176)
310
134
Unrecognised part
40
(29)
11
-
11
Deferred income tax – net
377
(564)
(187)
310
123
Deferred income tax assets and liabilities related to the companies operating in Lithuania were accounted for at a
rate of 15% in 2021 and 2020. Deferred taxes related to the company operating in Ukraine were calculated at a rate
of 18% in 2021 and 2020. Deferred income tax assets arising from the investment relief can be realised by the
companies operating in Lithuania over the current and subsequent four years.
76
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
26. Basic and diluted earnings per share
Earnings per share are calculated by dividing the net profit attributable to the shareholders by the weighted annual
average of ordinary shares issued and paid. The Company has no instruments that could affect the number of shares,
therefore the basic and diluted earnings per share are equal. The calculation of the basic and diluted earnings per
share is presented below:
Group
2021
2020
(adjusted)*
2020
Net profit for the year attributable to the Company’s shareholders
12,266
13,292
13,292
Weighted average number of ordinary shares
131,400,000
131,400,000
65,700,000
Earnings per share (in EUR)
0.093
0.101
0.202
Company
2021
2020
(adjusted)*
2020
Net profit for the year attributable to the Company’s shareholders
3,216
8,978
8,978
Weighted average number of ordinary shares
131,400,000
131,400,000
65,700,000
Earnings per share (in EUR)
0.024
0.068
0.137
*On 19 May 2021 the Company's authorised share capital was increased out of the Company’s retained earnings
from EUR 19,053 thousand (65,700,000 ordinary registered shares with a nominal value of EUR 0.29) to
EUR 38,106 thousand (131,400,000 ordinary registered shares with a nominal value of EUR 0.29). The Group’s and
the Company’s basic earnings per share ratios for the previous periods were adjusted retrospectively using a new
number of shares.
27. Dividends per share
2021
2020***
Allocated dividends*
7,884
-
Number of shares**
131,400,000
131,400,000
Allocated dividends per share (in EUR)
0.06
-
* The year when dividends are allocated.
** The date when dividends are allocated.
*** The number of shares for year 2020 is adjusted as described in Note 26.
28. Adjusted EBITDA
The management of the Group and the Company calculate the adjusted EBITDA – they monitor this performance
indicator both at the consolidated level and at the individual company level. The management believes that this
indicator is important for understanding the Group’s and the Company’s financial performance. The adjusted EBITDA
is calculated by adjusting profit from continuing operations to exclude the impact of taxation, net finance costs,
depreciation, amortisation, impairment losses/reversals related to goodwill, intangible assets, property plant and
equipment. The calculation also includes amortisation of subsidies related to non-current assets which affects the
profit for the period.
The adjusted EBITDA as a performance indicator is not established by IFRS. The Group’s definition of the adjusted
EBITDA may not match with similarly named performance indicators and disclosures of other entities.
Group
Company
2021
2020
2021
2020
Profit for the period
12,385
13,269
3,216
8,978
Income tax
1,250
1,646
(344)
916
Profit before income tax
13,635
14,915
2,872
9,894
Adjustment:
Finance costs – net (Note 24)
226
221
89
123
Dividends received (Note 22)
-
-
(1,500)
-
Depreciation* (Notes 5 and 8)
9,454
10,833
4,194
4,459
Amortisation (Notes 6 and 7)
619
621
444
442
Amortisation of grants (Note 15)
(208)
(347)
(159)
(131)
Adjusted EBIDTA
23,726
26,243
5,941
14,787
*The depreciation in 2021 has decreased mainly due to revised useful live of the items of property, plant and
equipment.
77
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
29. Financial instruments by category
Group
Notes
At 31 December 2021
At 31 December 2020
Financial assets at amortised cost
Trade receivables
10
19,071
13,420
Other amounts receivable
10
1,232
966
Cash and cash equivalents
11
12,443
18,275
Total financial assets at amortised cost
32,746
32,661
Financial liabilities at amortised cost
Borrowings
13
2,958
7,630
Lease liabilities
14
3,537
3,674
Trade payables
17
25,270
15,768
Other amounts payable
17
1,687
1,824
Total financial liabilities at amortised
cost
33,452
28,896
Company
Notes
At 31 December 2021
At 31 December 2020
Financial assets at amortised cost
Trade receivables
10
8,112
6,461
Amounts receivable from related parties
10
1,294
425
Other amounts receivable
10
558
394
Cash and cash equivalents
11
818
10,453
Total financial assets at amortised cost
10,782
17,733
Financial liabilities at amortised cost
Borrowings
13
1,555
2,837
Lease liabilities
14
1,579
1,864
Trade payables
17
12,013
7,910
Trade payable to related parties
17
601
661
Other amounts payable
17
650
711
Total financial liabilities at amortised
cost
16,398
13,983
Risks associated with the financial instruments relevant to the Company and the Group are disclosed in Note 3.
30. Related-party transactions
The Group’s related parties are as follows:
− Companies having significant influence – Ginvildos Investicija UAB – the main shareholder of Grigeo AB;
− Other related parties – the companies related to the members of the Supervisory Board (transactions were
conducted with the following companies: Didma UAB and Statybų Namai UAB, Elnorma UAB).
The Company’s related parties are as follows:
- Companies having significant influence – Ginvildos Investicija UAB – the main shareholder of the Company;
- Subsidiaries – subsidiaries of Grigeo AB (the list of the subsidiaries is presented in Note 1);
- Other related parties – the companies related to the members of the Supervisory Board (transactions were
conducted with the following companies: Didma UAB and Statybų Namai UAB, Elnorma UAB).
Transactions with the related parties comprise regular sales and purchases of goods and services related to the
Company's activity.
As at 31 December 2021 and 2020, there were no guarantees or pledges given or received in respect of the related-
party payables and receivables at the Group.
At the date of the issue of these financial statements, the Company had provided the letter to Grigeo Klaipėda AB
confirming that it had assumed the obligation to grant financial support to Grigeo Klaipėda AB, if a need arises, for
the next 12 months from the date of the letter.
78
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
30. Related-party transactions (continued)
Related-party payables and receivables are expected to be settled in cash or by set-off against payables/receivables
to/from a respective related party.
Related-party payables and receivables are subject to the same terms and conditions that are applicable to
payables/receivables to/from the external customers/suppliers.
Group (the year 2021)
Sales of
goods and
services
Purchases of
goods and
services
Amounts
receivable
Amounts
payable
Companies having significant influence
-
14
-
2
Other related companies
2
-
-
-
TOTAL
2
14
-
2
Group (the year 2020)
Sales of
goods and
services
Purchases of
goods and
services
Amounts
receivable*
Amounts
payable
Companies having significant influence
-
15
-
3
Other related companies
12
-
-
-
TOTAL
12
15
-
3
Company (the year 2021)
Sales of
goods and
services
Purchases of
goods and
services
Amounts
receivable*
Amounts
payable**
Companies having significant influence
-
10
-
2
Subsidiaries
6,094
7,654
1,294
601
Other related companies
-
-
-
-
TOTAL
6,094
7,664
1,294
603
Company (the year 2020)
Sales of
goods and
services
Purchases of
goods and
services
Amounts
receivable*
Amounts
payable**
Companies having significant influence
-
15
-
3
Subsidiaries
4,036
6,619
425
661
Other related companies
10
-
-
-
TOTAL
4,046
6,634
425
664
* Amounts receivable comprise prepayments for goods and services.
** Amounts payable also comprise loans received from the subsidiaries.
Key management personnel compensation
Compensation calculated to the key management personnel for the year ended 31 December:
Group
Company
2021
2020
2021
2020
Key management personnel compensation
1,280
1,121
654
641
Average annual number of management personnel
11
11
5
5
In 2021 and 2020, no loans, guarantees or any other benefits were paid or calculated, nor any assets were transferred
to the Company’s key management personnel. Bonuses paid by the Company to the Supervisory Board totalled
EUR 36 thousand in 2021. No bonuses were paid in 2020.
Shares (directly and indirectly held ownership interest) and job positions held by the Group’s and the Company’s key
management personnel at the Company are disclosed below:
Full name
Job position
Percentage of share capital
and voting rights held at the Company, %
Gintautas Pangonis
President
46.28
Vigmantas Kažukauskas
Vice-President for Business Development
0.88
Saulius Martinkevičius
Vice-President for Purchase and Logistics
0.17
Tomas Jozonis
Managing Director
-
79
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
31. Contingent liabilities
Taxes
The Tax Authorities have not carried out a full-scope tax audit at the Group companies. The Tax Authorities may
inspect accounting, transaction and other documents, accounting records and tax returns for the current and previous
3 calendar years at any time, and in certain cases, for the current and previous 5 or 10 calendar years and impose
additional taxes and penalties. The Group’s management is not aware of any circumstances which may give rise to a
potential material liability in respect of taxes not paid.
Legal processes
A claim has been filed against Grigeo Klaipėda AB, subsidiary of Grigeo AB, regarding compensation for damage
caused to the environment. In the management’s opinion, numerous uncertainties exist in relation to the outcome of
the claim (Note 32).
32. Legal processes
Background information
In 2021, the pre-trial investigation regarding wastewater management by Grigeo Klaipėda AB, subsidiary of
Grigeo AB (hereinafter the “Subsidiary”), was completed by the Klaipėda District Prosecutor’s Office of the Klaipėda
Regional Prosecutor’s Office (hereinafter the “Prosecutor’s Office”) and the criminal case was referred to the Klaipėda
Regional Court. The Subsidiary is charged in the criminal case under Articles 270(2), 228(2) and 300(3) of the Criminal
Code of the Republic of Lithuania. The Subsidiary is suspected of its actions related to improper operation of its
wastewater treatment plant (hereinafter the “WWTP”) during the period from 1 January 2012 to 13 February 2020
when partially biologically treated wastewater would be discharged through the treated wastewater collector of
municipal company Klaipėdos Vanduo AB to the Curonian Lagoon.
According to the Prosecutor’s Office’s indictment act of 31 December 2021 in the criminal case No 04-2-00154 - 19,
(hereinafter the “Indictment Act”), the Subsidiary abused the office, forged documents and violated the legal acts in
order to seek material gain (to avoid a pollution tax in the amount of at least EUR 37,863,706) and caused significant
damage to the environment. No claim has been brought against the Subsidiary for unpaid related taxes.
The Environmental Protection Department filed a civil claim against the Subsidiary regarding the compensation for
material damage caused to the environment in the criminal case in the amount of EUR 48,257,676.57.
The Subsidiary is not denying its legal liability and it expressed its standpoint in writing to the Prosecutor’s Office that
it was and still is prepared to compensate for the objectively calculated damage if such damage is to be determined
on the basis of unbiased expert calculations.
In the event of environmental damage, if such proved, the Subsidiary is under an obligation to instantly take all
necessary actions to ensure immediate control of pollutants and/or other harmful agents in order to reduce or prevent
greater damage to the environment and adverse effects on, or further deterioration of human health. The Subsidiary
is ready to implement the environment remedy measures plan as soon as possible with the aim of restoring the original
condition of the environment and compensating for the damage that it has caused, objectively determined and
proceeding from unbiased expert calculations.
Scientific research
In order to expedite the determination of the fact and scope of damage caused to the environment (the water of the
Curonian Lagoon) the Subsidiary has organised on its own initiative a tender process in order to select international
experts to assess potential environmental damage caused by the Subsidiary. As a result, a group of the expert
organisations of the USA and Italian companies providing consultative expert services in the environmental area
(i.e. TIG Environmental (leading expert Dr. Carlo Monti (the Italian scientist and the Executive Director of TIG
Environmental Forensic Examination), Veritas Economic Consulting and Hydrodata S.p.A (hereinafter “TIG”)) was
engaged in April 2020 to determine and calculate the damage to the water status of the Curonian Lagoon inflicted by
the incriminated illicit activities of the Subsidiary. Prior to initiation of procedures for identification and selection of
international experts, the Subsidiary approached the Prosecutor’s Office and the Environmental Protection
Department with a proposal to cooperate in this respect, however, both of them refused to do so.
80
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
32. Legal processes (continued)
The TIG’s environmental assessment has been performed according to Directive 2004/35/EC of the European
Parliament and of the Council of 21 April 2004 on environmental liability regarding the prevention and remedying of
environmental damage (hereinafter “Directive 2004/35/EC”) and according to the guideline published by the European
Commission (European Commission, Eftec and Stratus Consulting, 2013) which provides specific guidelines for
damage assessment. The guideline is in line with the principles of Directive 2004/35/EC which stipulate that
compensatory remediation is carried out by compensating for the temporary loss of natural resources and / or
functions until such resources and functions are restored. Such compensation is to consist of additional improvements
to protected natural habitats and species or water, either in the damaged area or in an alternative area. Directive
2004/35/EC does not provide for punitive damages.
On 26 June 2020, the Environmental Protection Department submitted to the Subsidiary the assessment of the
ecological status or ecological potential and deterioration of chemical status of the surface water body – the Curonian
Lagoon – performed by the Environmental Protection Agency and requested the Subsidiary to submit a plan of
environmental restoration measures.
In response to a letter from the Environmental Protection Department dated 26 June 2020, the Subsidiary stated that
(i) the Environmental Protection Department, rather than the Subsidiary, should prepare and submit to it the applicable
plan of environmental restoration measures; (ii) there are currently no objective data and supporting evidence that the
Subsidiary has caused significant damage to the water status of the Curonian Lagoon through its actions; (iii) for the
determination and calculation of the damage caused to the water status of the Curonian Lagoon TIG did not identify
any significant negative impact on the water status of the Curonian Lagoon.
On 28 October 2020, TIG delivered the final report on the environmental damage assessment for the Curonian Lagoon
which analysed the composition of the combined wastewaters of Grigeo Klaipėda AB and municipal company
Klaipėdos Vanduo AB (because they get mixed before entering the Lagoon), their impact on the local environment,
the biodiversity, the ecological condition of the Curonian Lagoon, and the landscape. During the assessment
the above-mentioned monitoring data from the Environmental Protection Agency, municipal company Klaipėdos
Vanduo AB, the Klaipėda Seaport Authority were used, a survey of the Curonian Lagoon’s condition performed by
the University of Klaipėda, analysis results from the State Food and Veterinary Service as well as Grigeo Klaipėda
AB’s wastewater test results rendered by the independent laboratories were taken into consideration.
TIG did not identify any significant damage to the water status of the Curonian Lagoon by the discharge of biologically
partially untreated wastewater. In the worst-case scenario (if only 15% of the wastewaters were treated biologically in
the Subsidiary’s WWTP) a very low ecological impact (i.e., not damage) from the releases of untreated wastewater
could have been caused.
The TIG’s economics expert has developed an estimate of potential ecological service losses for the Curonian Lagoon
for the purposes of the environmental damage assessment. As the loss in ecosystem service is related only to the
superficial waters in the Klaipėda port area and in an area close to the outlet and is related only to the possible oxygen
concentration (and saturation) reduction by maximum 16% at the outlet area, the expected costs of offsetting
ecological impacts from the releases of untreated wastewater in the worst-case scenario has been estimated as
unsignificant. Under the best-case scenario (if 90% of the wastewaters were treated biologically in the Subsidiary’s
WWTP), there are no estimated resource losses or human-use service losses, and the potential costs of offsetting
ecological impacts from the releases of untreated wastewater would be equal to EUR 0.
Civil claim
On 3 March 2020, the Environmental Protection Department filed a civil claim against the Subsidiary for compensation
of a EUR 3,982,184 damage caused to the environment in the pre-trial investigation case (the civil claim was received
by the Subsidiary on 17 July 2020). On 26 January 2021, the Subsidiary received from the Prosecutor’s Office
a revised civil claim of the Environmental Protection Department regarding the compensation of a material damage
caused to the environment in the criminal case in the amount of EUR 48,257,676.57. The amount of damage caused
to the environment specified in the civil claim corresponds to the amount indicated in the Indictment Act delivered
against the Subsidiary.
The damage caused to the water body (the Curonian Lagoon) was estimated in the civil claim according to the general
mathematical formula specified in the Methodology for estimation of the amounts of compensation for damage caused
to the environment approved by Order No 471 of the Minister of Environment of the Republic of Lithuania of 9
September 2002 (hereinafter the “Methodology”) using the following information and documentation:
- the quantities of sewage discharged to the collector of municipal company Klaipėdos Vanduo AB;
- the biochemical composition of sewage discharged to the collector of municipal company Klaipėdos Vanduo AB
which is supported by the documents evidencing the data for exceedingly limited period (November 2019 to
7 January 2020), which could not be construed as sufficient and representative time-basis to substantiate findings
for the entire incriminated period (from 1 January 2012 to 7 January 2020);
81
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
32. Legal processes (continued)
- the statement that a substantial amount of wastewater was not treated, whereas the said conclusion casts doubt
caused by substantively contradicting findings of experts of both parties (the Prosecutor’s Office and
the Company) in relation to technical capabilities of the Company’s waste treatment facilities as regards
quantities and composition of pollution (partially untreated wastewater) reportedly released to the environment
(the Curonian Lagoon);
- the unsupported statement that the damage done to the environment occurs by diminution or loss of certain
values without indication which specific environmental element was negatively affected and what values and to
what extent were lost due to the Subsidiary's actions.
No claim has been brought against the Subsidiary for unpaid related taxes. According to the Subsidiary’s
management, such a claim seeking the award of unpaid taxes, in all likelihood, could not be brought against the
Subsidiary, as the purpose of legal actions relating to adjudication of environmental pollution tax and to the
compensation (remedy) of environmental damage differs. In case of pollution, the environment is polluted in a place
agreed with responsible authorities by measuring the pollutants and paying of respective environmental tax, whereas
the amount of environmental damage is calculated on the basis that a person in charge made the breach of
prohibitions set up by the legal acts. If there is a claim lodged for compensation of environmental damage made, as
result of release of the specified pollutants in violation of the requirements of the legal acts, in the view of the
Subsidiary’s management, it is not possible at the same time (concurrently) to claim payment of applicable pollution
tax for the same pollutants released.
On 3 January 2022, the Prosecutor’s Office announced that it completed the pre-trial investigation in the environmental
case regarding wastewater management by the Subsidiary. The case has been referred to the court, nonetheless
the court proceedings have not yet begun as at the date of this report.
Key considerations of the civil claim of the Environmental Protection Department
The following was not considered and/or indicated in the civil claim:
- the requirements of Article 32 of the Environment Protection Law whose provisions are implemented by
the Methodology. Article 32 of the Environment Protection Law indicates that the damage to the environment is
assessed and the amount of compensation is calculated in accordance with the methodology approved by
the Minister of the Environment, assessing the initial condition of the environment, significance of negative impact
on the environment, natural recovery possibilities and time, as well as adopted remediation measures;
- identification of specific environmental element(s) which was(were) affected and assessment of the significance
of the negative impact of Subsidiary's actions on the environment (Curonian Lagoon);
- data on the fact and extent of the damage caused by the Subsidiary's actions;
- the causal link between the identified significant negative impact on the environment and the Subsidiary's actions.
The Subsidiary’s management considers the above list to remain conclusive notwithstanding the pre-trial investigation
files that the Subsidiary became acquainted with in September 2021. Different expert reports within the pre-trial
investigation case deliver inconsistent findings and conclusions which further substantiates the fact of numerous
uncertainties in relation to the outcome of court proceedings and the amount of expenditure required to settle related
outstanding obligations of the Subsidiary.
Summary of uncertainties
At the date of approval of these consolidated financial statements the management faces the following uncertainties
in relation to the amount of the civil claim or determination of the timing of any possible outcome of the civil claim:
- The Subsidiary does not currently possess any objective, complete and comprehensive factual data in relation
to the period, extent, frequency and biochemical composition of its sewage discharged to the collector of
municipal company Klaipėdos Vanduo AB.
- The damage caused to the environment was determined in the civil claim according to the general mathematical
formula specified in the Methodology without identifying initial condition of the environment, significance of
negative impact on the environment and not taking into account that a plan of measures for the environment
restoration is not prepared and applied as required by legal acts.
- The fact and scope of damage caused to the environment were not determined in the civil claim by special
scientific and other valid studies aimed at individual approach to a particular case in line with methods entrenched
in Directive 2004/35/EC and Directive 2000/60/EC of the European Parliament and of the Council of 23 October
2000 establishing a framework for Community action in the field of water policy (hereinafter the “Directives”),
instead, a general mathematical formula specified in the Methodology was used.
82
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
« Table of Contents
32. Legal processes (continued)
- The fact of pollution by the Subsidiary is mistakenly equated with the fact of environmental damage. The fact and
extent of the actual environmental damage made by the Subsidiary is not established and determined.
- Uncertainties of the damage calculated in the civil claim are also related to the fact that it is not clear why
the Environmental Protection Department did not apply the mandatory legal act Description of the procedure for
selecting environmental remediation measures and obtaining prior approval (hereinafter the “Legal Act on ERM”)
approved by the Minister of Environment by Order No D1-228 of 16 May 2006 to implement the principles and
legal requirements of Directive 2004/35/EC. Clause 10 of the Legal Act on ERM states that environmental
damage related to water (the Curonian Lagoon) is to be remedied by restoring the baseline condition of
environment by choosing the following methods of environmental restoration: primary, supplementary and
compensatory.
Conclusion
The Subsidiary is not denying its legal liability and is prepared to compensate for objectively calculated damage.
The Subsidiary’s management, following the scientific research performed by the independent TIG Environmental
experts, estimates that the potential costs of offsetting ecological impact from the releases of biologically untreated
wastewater are limited. On the upper limit of the range the assessment of the Environmental Protection Department,
the claim filed amounts to EUR 48,257,676.57 which is uncertain in the following areas:
- The claim amount is based on the mathematical formula specified in the Methodology with the key components
of the formula – quantities and biochemical composition of sewage – being uncertain. The management thus far
does not possess objective information to reliably estimate quantity of the pollutants (BDS7, nitrogen, phosphorus
or any other elements) in the biologically partially untreated wastewater released.
- The management considers that the claim is not in line with the methods entrenched in the above-mentioned
local legal acts and the Directives.
International Accounting Standard 37 requires measuring the provision in the amount of the best estimate of the
expenditure required to settle the present obligation. As there is a wide range of estimates depending on the source
of information and significant uncertainties relating to them, as described above, it is difficult to estimate probability of
any outcome as well as to assess the amount of expenditure required to settle this obligation. Having no objective
information on the quantities and biochemical composition of the sewage discharged to the collector of municipal
company Klaipėdos Vanduo AB, the management could not reliably estimate the amount of provision and the
provision was not recognised in the financial statements, but instead is disclosed as a contingent liability. The
management remains to hold an opinion that any compensation for the potential damage should be scientifically
based and estimated following the legal acts and in accordance with the legal framework of the Republic of Lithuania
and the European Union.
33. Events after the end of the reporting period
Russia’s invasion of Ukraine on 24 February 2022 will have a negative financial impact on the Group’s and the
Company’s financial performance for the year 2022. The Group’s subsidiary Grigeo Klaipeda AB has investments in
Ukrainian subsidiary AT Mena Pak, which ceased its operations completely after the start of the war. The Group and
the Company incurred losses after the reporting date due to the investment in AT Mena Pak and due to receivables
from Ukraine and the countries that attacked it.
Uncertainties related to the investment in Mena Pak AT
The Group’s statement of financial position as at 31 December 2021 includes the following consolidated assets and
liabilities of Mena Pak AT:
Mena Pak AT
At 31
December 2021
Non-current assets
786
Current assets
2,308
TOTAL ASSETS
3,094
Shareholders’ equity
2,670
Non-current liabilities
17
Current liabilities
407
TOTAL EQUITY AND LIABILITIES
3,094
83
Grigeo AB, company code 110012450, Vilniaus g. 10, Grigiškės, 27101 Vilnius City Municipality
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
All amounts are in EUR thousands unless otherwise stated
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33. Events after the end of the reporting period (continued)
The Group’s statement of comprehensive income for the year 2021 includes the following consolidated results of
Mena Pak AT for 2021:
Mena Pak AT
2021
Revenue
8,124
Profit before tax
742
Net profit
611
EBITDA
932
The Group’s management believes that the war that began has no material impact on the Group’s assets, liabilities,
financial position as at 31 December 2021, as well as on the Group’s profit or loss and cash flows for the year 2021,
because the war is considered to be a non-adjusting post-balance sheet event. Moreover, the major portion of financial
assets and liabilities was recovered or settled before the start of the war.
Changes in assets and liabilities of Mena Pak AT during January and February in 2022 were not material. The net
profit amounted to EUR 10 thousand in January 2022, there is no possibility to determine the results for February
2022.
The Group’s management estimates that in 2022 a high uncertainty exists in relation to Mena Pak AT’s assets of EUR
3.1 million and liabilities of EUR 0.4 million due to the started war and high uncertainty of future events.
Impact on activities of the Group
Since the start of the war, the Group suspended sales to Ukraine, Belarus, and Russia.
The supply chain of the Group and the Company did not have any material purchases from these countries.
As disclosed in Note 18, for the year 2021 the sales to Ukraine, Belarus and Russia amounted to EUR 17,350
thousand, or 10,6% of total sales of the Group (respectively, EUR 3,645 thousand or 5.4% of total sales of the
Company).
Currently the management of the Group is estimating potential financial impact over future periods. However, due to
significant uncertainties, as well as foreseen energy price increases, it is impossible to estimate the financial impact
reliably. The Group is selling production in over 20 countries, therefore, if needed, lost sales will be redirected to other
markets.
Amounts receivable from these countries comprised as follows as at 28 March 2022:
Group
Company
Ukraine
226
226
Russia
14
-
Belarus
25
25
TOTAL
265
251
The recoverability of these amounts is doubtful.
S
STATEMENT OF COMPLIANCE WITH THE
CORPORATE GOVERNANCE CODE
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STATEMENT OF COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
Grigeo AB (hereinafter the “Company”), acting in compliance with Article 12(3) of the Republic of Lithuania Law on Securities and
paragraph 24.4 of the Listing Rules of Nasdaq Vilnius AB, hereby discloses how it complies with the Corporate Governance Code
for the Companies listed on Nasdaq Vilnius as well as its specific provisions or recommendations. In case of non-compliance with
this Code or some of its provisions or recommendations, the specific provisions or recommendations that are not complied with
are indicated and the reasons for such non-compliance are specified. In addition, other explanatory information indicated in this
form is provided.
PRINCIPLES/ RECOMMENDATIONS
YES /NO /NOT
APPLICABLE
COMMENTARY
Principle 1: General meeting of shareholders, equitable treatment of shareholders, and shareholders’ rights
The corporate governance framework should ensure the equitable treatment of all shareholders. The corporate governance
framework should protect the rights of shareholders.
1.1. All shareholders should be provided with access
to the information and/or documents established in
the legal acts on equal terms. All shareholders should
be furnished with equal opportunity to participate in
the decision-making process where significant
corporate matters are discussed.
Yes
The Company fully complies with this
recommendation and provides the information and/or
documents established in the legal acts to the
shareholders in accordance with the requirements
established by the Republic of Lithuania Law on
Securities and other legal acts.
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 authorised share capital of the Company
consists of 131,400,000 ordinary registered shares,
each with a nominal value of EUR 0.29. All
shareholders of the Company are granted equal
rights.
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 complies with this
recommendation.
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 Company will comply with this recommendation.
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
The procedures for convening and attending general
meetings of shareholders of the Company provide
equal opportunities for shareholders to attend a
meeting and do not prejudice their rights and
interests. The notice of the general meeting of
shareholders is published in the central database of
regulated information managed by Nasdaq Vilnius
AB and on the Company’s website in accordance
with the procedure prescribed by the Law on
Securities. General meetings of shareholders of the
Company are convened at the registered office and
business address of the Company at Vilniaus str. 10
Grigiškės, Vilnius city municipality. The chosen
location of the general meeting of shareholders does
not prevent active participation of the shareholders in
the meeting. In view of the situation related to
COVID-19 disease (coronavirus infection), in 2021 all
shareholders could participate in the extraordinary
general meeting of shareholders of the Company
only by voting in writing in advance by completing the
general voting ballot paper and submitting it to the
Company pursuant to the procedure provided in the
notice of the meeting being convened. In the notice
of the general meeting of shareholders being
convened, the Company specifies that the
shareholders may submit the proposed draft
resolutions at any time prior to the general meeting.
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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 complies with this recommendation.
The Company publishes documents prepared for the
general meeting of shareholders in advance in the
Lithuanian and English languages. The Company
also publicly announces information about the
resolutions adopted by the general meeting of
shareholders in the Lithuanian and English
languages. The Company also announces the
aforementioned information on the Company’s
website.
1.7. Shareholders who are entitled to vote should be
furnished with the opportunity to vote at the general
meeting of shareholders both in person and in
absentia. Shareholders should not be prevented from
voting in writing in advance by completing the general
voting ballot.
Yes
The Company complies with this recommendation.
The notice of the general meeting of shareholders
being convened always indicates the possibility for
the shareholders to vote in writing by filling in the
attached voting ballot form.
1.8. With a view to increasing the shareholders’
opportunities to participate effectively at general
meetings of shareholders, it is recommended that
companies should apply modern technologies on a
wider scale and thus provide shareholders with the
conditions to participate and vote in general meetings
of shareholders via electronic means of
communication. In such cases the security of
transmitted information must be ensured and it must
be possible to identify the participating and voting
person.
No
The Company does not comply with this
recommendation due to legal uncertainties and
obstacles regarding the participation and voting of
shareholders in general meetings of shareholders via
electronic means of communication. The notice of the
general meeting of shareholders being convened
always states that the Company does not provide the
shareholders with the conditions to participate and
vote in the general meeting of shareholders via
electronic means of communication.
1.9. It is recommended that the notice on the draft
decisions of the general meeting of shareholders
being convened should specify new candidatures of
members of the collegial body, their proposed
remuneration and the proposed audit company if
these issues are included into the agenda of the
general meeting of shareholders. Where it is
proposed to elect a new member of the collegial
body, it is recommended that the information about
his/her educational background, work experience
and other managerial positions held (or proposed)
should be provided.
Yes
The Company complies with this recommendation.
The Company discloses information about the
candidates for the collegial body of the Company to
the shareholders immediately upon the receipt of the
proposals for the candidates for the collegial body.
The Company has only paid to the members of the
collegial body annual bonuses for their work that
were granted by the general meeting of
shareholders, and therefore, the proposed
remuneration was not indicated in the information
about the candidates for the collegial body. The
Company also provides information on the proposed
audit firm and the proposed remuneration for the
services when this issue is included in the agenda of
the general meeting of shareholders.
1.10. Members of the company’s collegial
management body, heads of the administration1 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 complies with this recommendation.
Relevant competent persons who can provide
information relating to the agenda of the general
meeting of shareholders always attend the general
meeting of shareholders. Proposed candidates for
the members of the collegial body attend the general
meetings of shareholders as far as possible.
1
For the purposes of this Code, heads of the administration are the employees of the company who hold top level management
positions.
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Principle 2: Supervisory board
2.1. Functions and liability of the supervisory board
The supervisory board of the company should ensure representation of the interests of the company and its shareholders,
accountability of this body to the shareholders and objective monitoring of the company’s operations and its management bodies
as well as constantly provide recommendations to the management bodies of the company.
The supervisory board should ensure the integrity and transparency of the company’s financial accounting and control system.
2.1.1. Members of the supervisory board should act in
good faith, with care and responsibility for the benefit and in
the interests of the company and its shareholders and
represent their interests, having regard to the interests of
employees and public welfare.
Yes
According to the knowledge of the Company, all
members of the supervisory board act in good faith
for the benefit of the Company and its
shareholders.
2.1.2. Where decisions of the supervisory board may have
a different effect on the interests of the company’s
shareholders, the supervisory board should treat all
shareholders impartially and fairly. It should ensure that
shareholders are properly informed about the company’s
strategy, risk management and control, and resolution of
conflicts of interest.
Yes
The supervisory board treats all shareholders fairly
and impartially.
2.1.3. The supervisory board should be impartial in
passing decisions that are significant for the company’s
operations and strategy. Members of the supervisory board
should act and pass decisions without an external influence
from the persons who elected them.
Yes
The supervisory board is independent in passing
decisions that are significant for the Company’s
operations and strategy.
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. Independent2 members of the supervisory board
should: a) maintain independence of their analysis and
decision-making; b) not seek or accept any unjustified
privileges that might compromise their independence.
Yes
The supervisory board members are impartial in
passing decisions and clearly voice their will
regarding the decisions passed.
2.1.5. The supervisory board should oversee that the
company’s tax planning strategies are designed and
implemented in accordance with the legal acts in order to
avoid faulty practice that is not related to the long-term
interests of the company and its shareholders, which may
give rise to reputational, legal or other risks.
Yes
The supervisory board oversees that the
Company’s tax planning strategies are designed
and implemented in accordance with the legal acts.
2.1.6. The company should ensure that the supervisory
board is provided with sufficient resources (including
financial ones) to discharge their duties, including the right
to obtain all the necessary information or to seek
independent professional advice from external legal,
accounting or other experts on matters pertaining to the
competence of the supervisory board and its committees.
Yes
Meetings of the supervisory board are provided
with premises and all necessary information and
the supervisory board has the right to seek
independent professional advice from external
legal, accounting, or other experts on matters
falling within their competence.
2
For the purposes of this Code, the criteria of independence of members of the supervisory board are interpreted as the criteria of
unrelated parties defined in Article 31(7) and (8) of the Law on Companies of the Republic of Lithuania.
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2.2. Formation of the supervisory board
The procedure of the formation of the supervisory board should ensure proper resolution of conflicts of interest and effective and
fair corporate governance.
2.2.1. The members of the supervisory board elected by
the general meeting of shareholders should collectively
ensure the diversity of qualifications, professional
experience and competences and seek for gender equality.
With a view to maintain a proper balance between the
qualifications of the members of the supervisory board, it
should be ensured that members of the supervisory board,
as a whole, should have diverse knowledge, opinions and
experience to duly perform their tasks.
Yes
The members of the supervisory board elected by
the general meeting of shareholders of the
Company ensure the diversity of qualifications,
professional experience and competences, and the
supervisory board has members of both genders.
2.2.2. Members of the supervisory board should be
appointed for a specific term, subject to individual re-election
for a new term in office in order to ensure necessary
development of professional experience.
Yes
According to the Articles of Association of the
Company, the supervisory board is elected by the
general meeting of shareholders for a period of 4
years, i.e. the maximum period permitted by the
legislation of the Republic of Lithuania.
2.2.3. Chair of the supervisory board should be a person
whose current or past positions constituted no obstacles 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. 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
Chair of the supervisory board is a person whose
current or past positions constitute no obstacles to
carry out impartial activities. Former managers or
management board members of the Company
were not appointed as chairs of the supervisory
board.
2.2.4. Each member should devote sufficient time and
attention to perform his duties as a member of the
supervisory board. Each member of the supervisory board
should undertake to limit his other professional obligations
(particularly the managing positions in other companies) so
that they would not interfere with the proper performance of
the duties of a member of the supervisory board. Should a
member of the supervisory board attend less than a half of
the meetings of the supervisory board throughout the
financial year of the company, the shareholders of the
company should be notified thereof.
Yes
Each member devotes sufficient time and attention
to perform his/her duties as a member of the
supervisory board and his/her other professional
obligations do not interfere with the proper
performance of the duties of a member of the
supervisory board.
2.2.5. When it is proposed to appoint a member of the
supervisory board, it should be announced which members
of the supervisory board are deemed to be independent. The
supervisory board may decide that, despite the fact that a
particular member meets all the criteria of independence,
he/she cannot be considered independent due to special
personal or company-related circumstances.
No
The Company submits to the shareholders
received proposals concerning the candidates for
the members of the supervisory board.
2.2.6. The amount of remuneration to members of the
supervisory board for their activity and participation in
meetings of the supervisory board should be approved by
the general meeting of shareholders.
Yes
The amount of remuneration to members of the
supervisory board for their activity and participation
in meetings of the supervisory board is approved by
the general meeting of shareholders. Guidelines for
the determination of remuneration of the members
of the supervisory board of the Company and the
procedure for payment of remuneration is
established by the Company’s remuneration policy
approved by the Resolution of the Ordinary General
Meeting of Shareholders on 4 August 2020.
2.2.7. Every year the supervisory board should carry out
an assessment of its activities. It should include evaluation
of the structure of the supervisory board, its work
organization and ability to act as a group, evaluation of the
competence and work efficiency of each member of the
supervisory board, and evaluation whether the supervisory
board has achieved its objectives. The supervisory board
should, at least once a year, make public respective
information about its internal structure and working
procedures.
No
The supervisory board has not carried out an
assessment of its activities.
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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.
No
The supervisory board has not approved the
Company’s strategy.
3.1.2. As a collegial management body of the company,
the management board performs the functions assigned to
it by the Law and in the Articles of Association of the
company, and in such cases where the supervisory board is
not formed in the company, it performs inter alia the
supervisory functions established in the Law. By performing
the functions assigned to it, the management board should
take into account the needs of the company’s shareholders,
employees and other interest groups by respectively striving
to achieve sustainable business development.
Yes
The management board, as a collegial
management body of the Company, performs the
functions assigned to it by the Law on Companies
and in the Articles of Association of the Company.
By performing the functions assigned to it, the
management board takes into account the needs of
the Company’s shareholders, employees and other
interest groups and, respectively, strives to achieve
sustainable business development.
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 management board, within the limits of its
competence and functions assigned to it, aims to
ensure the compliance with the provisions of the
laws and the internal policy of the Company.
3.1.4. Moreover, the management board should ensure
that the measures included into the OECD Good Practice
Guidance
3
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 applies a variety of documents
ensuring the highest level of internal control, ethics
and measures of compliance management.
3.1.5. When appointing the manager of the company, the
management board should take into account the appropriate
balance between the candidate’s qualifications, experience
and competence.
Yes
When appointing the manager of the Company, the
management board takes into account the
appropriate balance between the candidate’s
qualifications, experience and competence.
3.2. Formation of the management board
3.2.1. The members of the management board elected by
the supervisory board or, if the supervisory board is not
formed, by the general meeting of shareholders should
collectively ensure the required diversity of qualifications,
professional experience and competences and seek for
gender equality. With a view to maintain a proper balance in
terms of the current qualifications possessed by the
members of the management board, it should be ensured
that the members of the management board would have, as
a whole, diverse knowledge, opinions and experience to duly
perform their tasks.
Yes
The management board members elected by the
supervisory board of the Company ensure the
diversity of qualifications, professional experience
and competences. During the election of the
members of the management board, the Company
aims to ensure gender equality and the
management board has had members of both
genders for a number of years.
3
Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oecd.org/daf/anti-
bribery/44884389.pdf
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3.2.2. 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
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 are disclosed at the meeting of
the supervisory board in which the management
board or individual members of the management
board are elected. The data on the members of the
management board referred to in this paragraph is
also disclosed in the Company’s annual report.
3.2.3. All new members of the management board should
be familiarized with their duties and the structure and
operations of the company.
Yes
Members of the management board are
familiarised with their duties and the structure and
operations of the Company, and the main corporate
documents of the Company are shared.
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
Members of the management board are appointed
for a term of four years, subject to re-election for a
new term in office. The number of terms in office of
a member of the management board is unlimited.
3.2.5. Chair of the management board should be a person
whose current or past positions constitute no obstacles 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
A person whose current or past positions constitute
no obstacles to impartially carry out the functions of
the chair of the management board is appointed as
the chair of the management board.
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
Each member devotes sufficient time and attention
to perform their duties as a member of the
management board.
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
4
, 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.
Not
applicable
The supervisory board has been formed at the
Company.
4
For the purposes of this Code, the criteria of independence of the members of the board are interpreted as the criteria of unrelated
persons defined in Article 33(7) of the Law on Companies of the Republic of Lithuania.
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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 meeting of shareholders of the
Company approves the amount of remuneration to
the members of the management board for their
activity and participation in the meetings of the
management board. Guidelines for the
determination of remuneration of the members of
the management board of the Company and the
procedure for payment of remuneration is
established by the Company’s remuneration policy
approved by the Resolution of the Ordinary General
Meeting of Shareholders of 4 August 2020.
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
According to the information available to the
Company, all members of the management board
act in good faith, with care and responsibility for the
benefit and the interests of the Company and its
shareholders and put an effort to maintain their
independence in decision-making. In accordance
with the provisions of the Republic of Lithuania Law
on Companies, all members of the management
board must protect the Company’s commercial
(industrial) secrets and confidential information that
they got acquainted with when they were members
of the management board.
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
organisation 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 the respective information about its internal structure
and working procedures in observance of the legal acts
regulating the processing of personal data.
No
The management board has not carried out an
assessment of its activities.
Principle 4: Rules of procedure of the supervisory board and the management board of the company
The rules of procedure of the supervisory board, if it is formed at the company, and of the management board should ensure
efficient operation and decision-making of these bodies and promote active cooperation between the company’s management
bodies.
4.1. The management board and the supervisory board, if
the latter is formed at the company, should act in close
cooperation in order to attain benefit for the company and its
shareholders. Good corporate governance requires an open
discussion between the management board and the
supervisory board. The management board should regularly
and, where 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 the supervisory board about any derogations in its
business development from the previously formulated plans
and objectives by specifying the reasons for this.
Yes
The management board and the supervisory
board act in close cooperation.
4.2. It is recommended that meetings of the company’s
collegial bodies should be held at the respective intervals,
according to the pre-approved schedule. Each company is
free to decide how often meetings of the collegial bodies
should be convened but it is recommended that these
meetings should be convened at such intervals that
uninterruptable resolution of essential corporate governance
issues would be ensured. Meetings of the company’s
collegial bodies should be convened at least once per
quarter.
Yes
Meetings of the Company’s collegial bodies are
convened at such intervals that uninterruptable
resolution of essential Company’s management
and supervision issues is ensured.
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4.3. Members of a collegial body should be notified of the
meeting being convened in advance so that they would have
sufficient time for proper preparation for the issues to be
considered at the meeting and a fruitful discussion could be
held and appropriate decisions could be adopted. Along with
the notice of the meeting being convened all materials
relevant to the issues on the agenda of the meeting should
be submitted to the members of the collegial body. The
agenda of the meeting should not be changed or
supplemented during the meeting, unless all members of the
collegial body present at the meeting agree with such
change or supplement to the agenda, or certain issues that
are important to the company require immediate resolution.
Yes
Members of a collegial body are notified of the
meeting being convened and all materials
relevant to the issues on the agenda of the
meeting are submitted to them in advance, so that
members of a collegial body 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.
4.4. In order to coordinate the activities of the company’s
collegial bodies and ensure effective decision-making
process, the chairs of the company’s collegial supervision
and management bodies should mutually agree on the dates
and agendas of the meetings and closely cooperate in
resolving other matters related to corporate governance.
Meetings of the company’s supervisory board should be
open to members of the management board, particularly in
such cases where issues concerning the removal of the
management board members, their responsibility or
remuneration are discussed.
Yes
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 mutually agree on the dates
and agendas of the meetings and cooperate
closely in resolving other matters related to the
Company’s management.
Principle 5: Nomination, remuneration and audit committees
5.1. Purpose and formation of committees
The committees formed at the company should increase the work efficiency of the supervisory board or, where the supervisory
board is not formed, of the management board which performs the supervisory functions by ensuring that decisions are based
on due consideration and help organise its work in such a way that the decisions it takes would be free of material conflicts of
interest.
Committees should exercise independent judgment and integrity when performing their functions and provide the collegial body
with recommendations concerning the decisions of the collegial body. However, the final decision should be adopted by the
collegial body.
5.1.1. Taking due account of the company-related
circumstances and the chosen corporate governance
structure, the supervisory board of the company or, in cases
where the supervisory board is not formed, the management
board which performs the supervisory functions, establishes
committees. The collegial body is recommended to form the
nomination, remuneration and audit committees
5
.
Yes
The Audit Committee has been formed at the
Company.
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.
Yes
The nomination and remuneration committees
have not been formed at the Company.
Candidates proposed for the members of a
collegial body in accordance with the procedure
established by the legal acts are submitted for
consideration to the electing general meeting of
shareholders or collegial body, and candidates to
the top-level management positions are
considered and approved by the management
board of the Company. The remuneration of the
employees who hold top-level management
positions is determined by the management
board of the Company.
5
The legal acts may provide for the obligation to form a respective committee. For example, the Law on the Audit of Financial
Statements of the Republic of Lithuania provides that public-interest entities (including but not limited to public limited liability
companies whose securities are traded on a regulated market of the Republic of Lithuania and/or of any other Member State) are
under the obligation to set up an audit committee (the legal acts provide for the exemptions where the functions of the audit
committee may be carried out by the collegial body performing the supervisory functions).
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5.1.3. In the cases established by the legal acts, the
functions assigned to the internal committees of the
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.
Yes
Provisions of the Code pertaining to the
committees (particularly those related to their
role, operation and transparency) apply to the
collegial body performing the functions of the
committees.
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.
Yes
The Company has formed the Audit Committee
consisting of three members of the supervisory
board of the Company. The chair of the
management board is not a member of the Audit
Committee.
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.
Yes
The supervisory board of the Company has
established the authority of the Audit Committee
in the internal rules of the Audit Committee
approved by the supervisory board itself.
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.
Yes
In accordance with the internal rules of the Audit
Committee, it has the right to invite the chair of
the supervisory board and certain employees of
the Company, as well as external auditors, to its
meetings.
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) to 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) to devote the attention necessary to ensure succession
planning.
No
To date, the nomination committee has not been
formed at the Company.
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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.
No
To date, the nomination committee has not been
formed at the Company.
5.3. Remuneration committee
The main functions of the remuneration committee should be as
follows:
1) to 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) to 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) to review, on a regular basis, the remuneration policy and its
implementation.
No
To date, the remuneration committee has
not been formed at the Company.
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
6
.
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.
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.
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.
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.
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
The Company has the Audit Committee the
main functions of which comply with these
recommendations.
6
Issues related to the activities of audit committees are regulated by Regulation No. 537/2014 of the European Parliament and the
Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities, the Law on the Audit of
Financial Statements of the Republic of Lithuania, and the Rules Regulating the Activities of Audit Committees approved by the
Bank of Lithuania.
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Principle 6: Prevention and disclosure of conflicts of interest
The corporate governance framework should encourage members of the company’s supervisory and management bodies to
avoid conflicts of interest and ensure a transparent and effective mechanism of disclosure of conflicts of interest related to
members of the supervisory and management bodies.
The corporate governance framework should recognize the rights of stakeholders entrenched in the laws 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.
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 fully complies with these
recommendations.
Principle 7: Remuneration policy of the company
The remuneration policy and the procedure for review and disclosure of such policy established at the company should prevent
potential conflicts of interest and abuse in determining remuneration of members of the collegial bodies and heads of the
administration, in addition it should ensure the publicity and transparency of the company’s remuneration policy and its long-
term strategy.
7.1. The company should approve and post the remuneration policy
on the website of the company; such policy should be reviewed on
a regular basis and be consistent with the company’s long-term
strategy.
Yes
The Company has approved its
remuneration policy and published it on the
Company’s website.
7.2. The remuneration policy should include all forms of
remuneration, including the fixed-rate remuneration, performance-
based remuneration, financial incentive schemes, pension
arrangements and termination payments as well as the conditions
specifying the cases where the company can recover the disbursed
amounts or suspend the payments.
Yes
The remuneration policy of the Company
includes all forms of remuneration.
7.3. With a view to avoid potential conflicts of interest, the
remuneration policy should provide that members of the collegial
bodies which perform the supervisory functions should not receive
remuneration based on the company’s performance.
Yes
The remuneration policy of the Company
provides that the remuneration of the
members of its supervisory board is not
based on the Company’s performance.
7.4. The remuneration policy should provide sufficient information
on the policy regarding termination payments. Termination
payments should not exceed a fixed amount or a fixed number of
annual wages and in general should not be higher than the non-
variable component of remuneration for two years or the equivalent
thereof. Termination payments should not be paid if the contract is
terminated due to inadequate performance.
Yes
The Company fully complies with this
recommendation.
7.5. In the event that the financial incentive scheme is applied at the
company, the remuneration policy should contain sufficient
information about the retention of shares after the award thereof.
Where remuneration is based on the award of shares, shares
should not be vested at least for three years after the award thereof.
After vesting, members of the collegial bodies and heads of the
administration should retain a certain number of shares until the end
of their term in office, subject to the need to compensate for any
costs related to the acquisition of shares.
No
The financial incentive scheme is not
applied at the Company.
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7.6. The company should publish information about the
implementation of the remuneration policy on its website, with a key
focus on the remuneration policy in respect of the collegial bodies
and managers in the next and, where relevant, subsequent financial
years. It should also contain a review of how the remuneration
policy was implemented during the previous financial year. The
information of such nature should not include any details having a
commercial value. Particular attention should be paid on the major
changes in the company’s remuneration policy, compared to the
previous financial year.
Yes
The Company complies with this
recommendation.
7.7. It is recommended that the remuneration policy or any major
change of the policy should be included on the agenda of the
general meeting of shareholders. The schemes under which
members and employees of a collegial body receive remuneration
in shares or share options should be approved by the general
meeting of shareholders.
Yes
The Company complies with this
recommendation.
Principle 8: Role of stakeholders in corporate governance
The corporate governance framework should recognize the rights of stakeholders entrenched in the laws or mutual agreements
and encourage active cooperation between companies and stakeholders in creating the company value, jobs and financial
sustainability. In the context of this principle the concept “stakeholders” includes investors, employees, creditors, suppliers,
clients, local community and other persons having certain interests in the company concerned.
8.1. The corporate governance framework should ensure that the
rights and lawful interests of stakeholders are protected.
Yes
The Company complies with all statutory
requirements ensuring the rights of
stakeholders.
8.2. The corporate governance framework should create conditions
for stakeholders to participate in corporate governance in the
manner prescribed by law. Examples of participation by
stakeholders in corporate governance include the participation of
employees or their representatives in the adoption of decisions that
are important for the company, consultations with employees or
their representatives on corporate governance and other important
matters, participation of employees in the company’s authorized
capital, involvement of creditors in corporate governance in the
cases of the company’s insolvency, etc.
Yes
The Company complies with all statutory
requirements ensuring the rights of
stakeholders.
8.3. Where stakeholders participate in the corporate governance
process, they should have access to relevant information.
Yes
The Company complies with all statutory
requirements ensuring the rights of
stakeholders.
8.4. Stakeholders should be provided with the possibility of
reporting confidentially any illegal or unethical practices to the
collegial body performing the supervisory function.
No
Pursuant to the legislation of the Republic of
Lithuania, the Company has established an
internal whistleblowing channel and
individuals have also been informed about
this on the Company’s website.
Principle 9: Disclosure of information
The corporate governance framework should ensure the timely and accurate disclosure of all material corporate issues,
including the financial situation, operations and governance of the company.
9.1. In accordance with the company’s procedure on confidential
information and commercial secrets and the legal acts regulating
the processing of personal data, the information publicly disclosed
by the company should include but not be limited to the following:
9.1.1. operating and financial results of the company;
Yes
The Company complies with this
recommendation.
9.1.2. objectives and non-financial information of the company;
Yes
The Company complies with this
recommendation.
9.1.3. persons holding a stake in the company or controlling it
directly and/or indirectly and/or together with related persons as well
as the structure of the group of companies and their relationships
by specifying the final beneficiary;
Yes
The Company complies with this
recommendation.
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9.1.4. members of the company’s supervisory and management
bodies who are deemed independent, the manager of the company,
the shares or votes held by them at the company, participation in
corporate governance of other companies, their competence and
remuneration;
Yes
The Company complies with this
recommendation.
9.1.5. reports of the existing committees on their composition,
number of meetings and attendance of members during the last
year as well as the main directions and results of their activities;
No
To date, the Company has not published
this information.
9.1.6. potential key risk factors, the company’s risk management
and supervision policy;
Yes
The Company complies with this
recommendation.
9.1.7. the company’s transactions with related parties;
Yes
The Company complies with this
recommendation by disclosing information
about transactions with related parties that
are not a part of the Company’s normal
economic activities and/or exert a significant
influence on the Company.
9.1.8. main issues related to employees and other stakeholders
(for instance, human resource policy, participation of employees in
corporate governance, award of the company’s shares or share
options as incentives, relationships with creditors, suppliers, local
community, etc.);
Yes
The Company complies with this
recommendation.
9.1.9. structure and strategy of corporate governance;
No
The Company has not published its
structure and strategy of corporate
governance.
9.1.10. initiatives and measures of social responsibility policy and
anti-corruption fight, significant current or planned investment
projects.
This list is deemed minimum and companies are encouraged not to
restrict themselves to the disclosure of information included into this
list. This principle of the Code does not exempt companies from
their obligation to disclose information as provided for in the
applicable legal acts.
Yes
The Company complies with this
recommendation.
9.2. When disclosing the information specified in paragraph 9.1.1 of
recommendation 9.1, it is recommended that the company which is
a parent company in respect of other companies should disclose
information about the consolidated results of the whole group of
companies.
Yes
The Company complies with this
recommendation.
9.3. When disclosing the information specified in paragraph 9.1.4 of
recommendation 9.1, it is recommended that the information on the
professional experience and qualifications of members of the
company’s supervisory and management bodies and the manager
of the company as well as potential conflicts of interest which could
affect their decisions should be provided. It is further recommended
that the remuneration or other income of members of the company’s
supervisory and management bodies and the manager of the
company should be disclosed, as provided for in greater detail in
Principle 7.
Yes
The Company complies with this
recommendation.
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9.4. Information should be disclosed in such manner that no
shareholders or investors are discriminated in terms of the method
of receipt and scope of information. Information should be disclosed
to all parties concerned at the same time.
Yes
The Company discloses the information in
the Lithuanian and English languages
simultaneously through the information
disclosure system used by Nasdaq Vilnius
AB Stock Exchange. The Company usually
publishes information before or after the
trading session of Nasdaq Vilnius AB Stock
Exchange and presents it simultaneously to
all markets where the Company’s securities
are traded. The Company does not disclose
any information that may affect the price of
its issued securities in comments, interviews
or otherwise until such information is made
public through the information disclosure
system of the Stock Exchange. This
information is also disclosed on the
Company’s website www.grigeo.lt.
Principle 10: Selection of the company’s audit firm
The company’s audit firm selection mechanism should ensure the independence of the report and opinion of the audit firm.
10.1. With a view to obtain an objective opinion on the
company’s financial condition and financial results, the company’s
annual financial statements and the financial information provided
in its annual report should be audited by an independent audit firm.
Yes
The Company complies with this
recommendation.
10.2. It is recommended that the audit firm would be proposed to
the general meeting of shareholders by the supervisory board or, if
the supervisory board is not formed at the company, by the
management board of the company.
Yes
The Company complies with this
recommendation.
10.3. In the event that the audit firm has received remuneration
from the company for the non-audit services provided, the company
should disclose this publicly. This information should also be
available to the supervisory board or, if the supervisory board is not
formed at the company, by the management board of the company
when considering which audit firm should be proposed to the
general meeting of shareholders.
Yes
When considering which audit firm should
be proposed to the general meeting of
shareholders, the Company’s supervisory
board had information on whether the audit
firm has received remuneration from the
Company for the non-audit services
provided.
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CONFIRMATION OF RESPONSIBLE PERSONS
for the year ended 31 December 2021
CONFIRMATION OF RESPONSIBLE PERSONS
In accordance with the Law on Securities of the Republic of Lithuania, and the Rules on
the Disclosure of Information of the Bank of Lithuania, we, President of Grigeo AB Gintautas
Pangonis and Finance Director of Grigeo AB Martynas Nenėnas, hereby confirm that, to the best
of our knowledge, the consolidated financial statements of Grigeo AB for the year ended 31
December 2021, prepared in accordance with the International Financial Reporting Standards as
adopted by the European Union, give a true and fair view of the issuer’s and of the consolidated
companies’ assets, liabilities, financial position, profit or loss and cash flows, and also that the
consolidated annual report includes a fair overview of the business development and operations.
President of Grigeo AB
Gintautas Pangonis
Finance Director of Grigeo AB
Martynas Nenėnas
