TELIA LIETUVA, AB
FINANCIAL STATEMENTS,
ANNUAL REPORT AND
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTENTS
PAGES
INDEPENDENT AUDITOR’S REPORT
3 – 5
FINANCIAL STATEMENTS
6 – 49
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
6
STATEMENT OF FINANCIAL POSITION
7
STATEMENT OF CHANGES IN EQUITY
8
STATEMENT OF CASH FLOWS
9 – 10
NOTES TO THE FINANCIAL STATEMENTS
11 – 49
ANNUAL REPORT
50 – 80
CORPORATE GOVERNANCE REPORTING
81 – 93
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Member of Deloitte Touche Tohmatsu Limited
UAB „Deloitte Lietuva“
Jogailos g. 4
LT-01116 Vilnius
Lietuva
Juridinio asmens k.: 111525235
PVM mok. k.: LT115252314
Duomenys kaupiami ir saugomi
Juridinių asmenų registre
Tel.: +370 5 255 3000
www.deloitte.lt
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Telia Lietuva, AB:
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Telia Lietuva, AB (the Company), which comprise the statements of financial position of
the Company as at 31 December 2021, and the statements of profit or loss and other comprehensive income, changes in equity and
cash flow for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, of the financial position of the Company
as at 31 December 2021, and their financial performance and cash flows for the year then ended in accordance with the International
Financial Reporting Standards as adopted by the European Union.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are
independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code) together with the requirements of the Law on Audit of Financial Statements of the Republic
of Lithuania that are relevant to audit in the Republic of Lithuania, and we have fulfilled our other ethical responsibilities in
accordance with the Law on Audit of Financial Statements of the Republic of Lithuania and the IESBA Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed the Key Audit Matter
Revenue recognition
Refer to pages 22, 30 of the financial statements
The Company’s net sales amounted to EUR 420,794 thousand
for the year then ended 2021.
The net sales encompass several revenue streams such as
traffic charges, including interconnect and roaming,
subscription fees, installation fees, other services and sale of
equipment. Furthermore, all these services and products give
rise to multiple customer offerings (bundle services) which are
subject to price allocation among the services and related
products, incentives and discounts.
The Company uses multiple billing systems and other
interrelated data applications to maintain the accurate and
complete accounting records. IT systems differ across a range
of products and lines of business. The Company is
implementing SAP as the new core platform, as well as legacy
systems run in parallel to ensure uninterrupted operations. IT
environment is thus a critical part in the revenue processes.
Our audit procedures in this area included, among others:
• assessing the application on the Company’s accounting
policies with the respect to IFRS 15 to services and
products delivered and the accounting implication of the
new business models to verify that the Company’s
accounting policies were appropriate for these models
and were followed;
• evaluating the design and implementation as well as
testing for operating effectiveness key internal controls,
including relevant IT systems, used for billing and
monitoring of revenue recognition;
• assessing based on sample of customer bills for accuracy
for new products and tariffs introduced in the year;
• under multiple-element contractual arrangements
(bundled product offers), on a sample evaluating the
deliverables to determine whether they represent
separate element and testing the value allocated to the
undelivered elements based on their respective fair
values;
Complex products and services and a combination of those
requires significant management judgment about the timing
and value of revenue to be recognized and impose the risk of
accuracy of revenue related accounting records, as well as
recognizing revenue in the correct accounting period. Due to
this, we considered this to be a key audit matter.
• evaluating on a sample basis revenues allocated to
undelivered elements (deferred and recognized over the
estimated term of provision of these elements);
• reconciling revenue accruals to actual data traffic
available after month closing;
• evaluating the adequacy of disclosures related to the
various revenue streams;
• assessing and testing general IT controls for relevant IT
systems in the areas of access security (especially
privileged access management), system change control,
as well as management of data center and network
operations.
Other Information
The other information comprises the information included in the Company’s annual report, including Corporate Governance
statement, Remuneration Report and Corporate Social Responsibility Report, but does not include the financial statements and our
auditor’s report thereon. Management is responsible for the other information.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon, except as specified below.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
In addition, our responsibility is to consider whether information included in the Company’s annual report, including Corporate
Governance statement and Remuneration Report, for the financial year for which the financial statements are prepared is consistent
with the financial statements and whether the Company’s annual report, including Corporate Governance statement and
Remuneration Report, has been prepared in compliance with applicable legal requirements. Based on the work carried out in the
course of audit of financial statements, in our opinion, in all material respects:
• The information given in the Company’s annual report, including Corporate Governance statement and Remuneration
Report, for the financial year for which the financial statements are prepared is consistent with the financial statements;
and
• The Company’s annual report, including Corporate Governance statement and Remuneration Report, has been prepared
in accordance with the requirements of the Law on Financial Reporting by Undertakings of the Republic of Lithuania.
We also need to check that the Corporate Social Responsibility Report has been provided. If we identify that Corporate Social
Responsibility Report has not been provided, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with the
International Financial Reporting Standards as adopted by the European Union, and for such internal control as management
determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout
the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance
in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
In accordance with the decision made by Shareholders on 27 April 2021 we have been chosen to carry out the audit of the Company’s
financial statements. Our appointment to carry out the audit of the Company’s financial statements in accordance with the decision
made by Shareholders has been for year 2021 and the period of total uninterrupted engagement is eight years.
We confirm that our opinion in the section ‘Opinion’ is consistent with the additional report which we have submitted to the
Company and Audit Committee.
We confirm that in light of our knowledge and belief, services provided to the Company are consistent with the requirements of the
law and regulations and do not comprise non-audit services referred to in Article 5(1) of the Regulation (EU) No 537/2014 of the
European Parliament and of the Council.
In addition to services provided to the Company in the course of audit and disclosed in the annual report, we performed translation
of the financial statements from English into Lithuanian language, as well as performed audit procedures related to the separation
of payment service activities from other services and the internal controls applicable to the former activities.
Report on the compliance of format of the financial statements with the requirements for European Single Electronic
Reporting Format
The Company's management has applied European Single Electronic Format for the Company's financial statements in order to
implement the requirement of Article No. 3 of the Commission Delegated Regulation (EU) 2019/815 that amends European
Parliament and Commission Directive 2004/109 / EC with regulatory technical standards establishing a single format for electronic
reporting (hereinafter "the ESEF Regulation"). These requirements specify the Company’s obligation to prepare its financial
statements in a XHTML format. We confirm that the European single electronic reporting format of the financial statements for the
year ended 31 December 2021 complies with the ESEF Regulation in this respect.
The engagement partner on the audit resulting in this independent auditor’s report is Mindaugas Jukna.
Deloitte Lietuva UAB
Audit Company License No 001275
Mindaugas Jukna
Lithuanian Certified Auditor
License No 000580
Vilnius, Republic of Lithuania
31 March 2022
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 6
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Approved by
the Annual General Meeting
of Shareholders, as at ___ April 2022
Year ended 31 December
Notes
2021
2020
Revenue
5
420,794
399,041
Cost of goods and services
6
(168,690)
(163,815)
Employee related expenses
(56,632)
(50,488)
Other operating expenses
7
(58,287)
(50,776)
Other income
8
-
330
Other gain / (loss) – net
9
1,414
502
Depreciation, amortisation and impairment of fixed assets and assets
classified as held for sale
14
(77,669)
(69,952)
Operating profit
60,930
64,842
Gain/loss from investment activities
-
(318)
Finance income
1,463
2,320
Finance costs
(3,548)
(4,594)
Finance and investment activities – net
10
(2,085)
(2,592)
Profit before income tax
58,845
62,250
Income tax
11
(2,037)
(6,336)
Profit for the year
56,808
55,914
Other comprehensive income:
Other comprehensive income for the year
-
-
Total comprehensive income for the year
56,808
55,914
Profit and comprehensive income attributable to:
Owners of the Parent
56,808
55,914
Non-controlling interests
-
-
Basic and diluted earnings per share for profit attributable to the
equity holders of the Company (expressed in EUR per share)
12
0.098
0.096
The notes on pages 11 to 49 form an integral part of these financial statements.
The financial statements on pages 6 to 49 have been approved for issue by the Board of Directors as at 31 March 2022 and
signed on their behalf by the CEO and the Head of Finance:
Dan Strömberg
CEO
Arūnas Lingė
Head of Finance
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 7
STATEMENT OF FINANCIAL POSITION
Approved by
the Annual General Meeting
of Shareholders, as at ___ April 2022
As at 31 December
Notes
2021
2020
ASSETS
Non-current assets
Property, plant and equipment
14
267,034
256,923
Goodwill
15
26,769
26,769
Intangible assets
15
114,025
105,454
Right-of-use assets
16
46,124
47,217
Investment property
17
-
-
Investments in associates and subsidiaries
18
-
-
Costs to obtain contract
32
4,837
4,806
Contract asset
33
696
445
Trade and other receivables
21
16,789
15,543
Finance lease receivables
21
6,685
6,340
482,959
463,497
Current assets
Inventories
19
12,711
10,427
Contract asset
33
1,102
1,196
Trade and other receivables
21
66,497
71,623
Current income tax assets
5,201
114
Finance lease receivables
21
5,920
4,568
Cash and cash equivalents
22
61,769
55,941
153,200
143,869
Assets classified as held for sale
5,310
1,082
Total assets
641,469
608,448
EQUITY
Capital and reserves attributable to equity holders of the Company
Issued capital
23
168,958
168,958
Legal reserve
24
16,896
16,896
Retained earnings
144,200
145,653
Equity attributable to owners of the Company
330,054
331,507
Non-controlling interests
-
-
Total equity
330,054
331,507
LIABILITIES
Non-current liabilities
Borrowings
26
30,000
60,574
Lease liabilities
26
45,720
47,295
Deferred tax liabilities
27
19,604
18,880
Deferred revenue and accrued liabilities
25
6,645
7,815
Contract liability
33
-
-
Provisions
28
12,398
11,833
114,367
146,397
Current liabilities
Trade, other payables and accrued liabilities
25
57,416
55,158
Current income tax liabilities
-
-
Borrowings
26
124,254
62,569
Contract liability
33
2,054
1,610
Lease liabilities
26
13,324
11,207
Provisions
28
-
-
197,048
130,544
Total liabilities
311,415
276,941
Total equity and liabilities
641,469
608,448
The notes on pages 11 to 49 form an integral part of these financial statements.
The financial statements on pages 6 to 49 have been approved for issue by the Board of Directors as at 31 March 2022 and signed on their
behalf by the CEO and the Head of Finance:
Dan Strömberg
CEO
Arūnas Lingė
Head of Finance
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 8
STATEMENT OF CHANGES IN EQUITY
Approved by
the Annual General Meeting
of Shareholders as at ___ April 2022
Notes
Share
capital
Legal
reserve
Retained
earnings
Total
equity
Balance at 1 January 2020
168,958
16,896
140,080
325,934
Profit for the year
-
-
55,914
55,914
Other comprehensive income for the year, net of
income tax
-
-
-
-
Total comprehensive income for the year
-
-
55,914
55,914
Dividends paid for 2019
13
-
-
(52,435)
(52,435)
Result from legal merger
30
-
-
2,094
2,094
Balance at 31 December 2020
168,958
16,896
145,653
331,507
Profit for the year
-
-
56,808
56,808
Other comprehensive income for the year, net of
income tax
-
-
-
-
Total comprehensive income for the year
-
-
56,808
56,808
Dividends paid for 2020
13
-
-
(58,261)
(58,261)
Balance at 31 December 2021
168,958
16,896
144,200
330,054
The notes on pages 11 to 49 form an integral part of these financial statements.
The financial statements on pages 6 to 49 have been approved for issue by the Board of Directors as at 31 March 2022 and
signed on their behalf by the CEO and the Head of Finance:
Dan Strömberg
CEO
Arūnas Lingė
Head of Finance
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 9
STATEMENT OF CASH FLOWS
Approved by
the Annual General Meeting
of Shareholders, as at ___ April 2022
Year ended 31 December
Notes
2021
2020
Operating activities
Profit for the year
56,808
55,914
Adjustments for:
Income tax expenses recognized in profit or loss
11
2,037
6,336
Depreciation, amortisation and impairment charge
7, 14
79,764
72,027
Dividends received from subsidiaries
8
-
(330)
Other gain / (loss) – net
9
(1,451)
388
Impairment of investments in subsidiaries
10, 18
-
318
Interest income
10
(1,463)
(2,153)
Interest expenses
3,382
4,275
Changes in working capital (excluding the effects of acquisition and
disposal of subsidiaries):
Inventories / Assets held for sale
(3,528)
(246)
Trade and other receivables
1,752
5,867
Decrease/(increase) in contract assets
33
(157)
(112)
Decrease/(increase) in contract costs
32
(31)
(181)
Trade, other payables and accrued liabilities, deferred tax liability
(381)
(2,120)
Increase/(decrease) in contract liabilities
33
444
1,109
Increase/(decrease) in deferred revenue and accrued liabilities
(1,170)
(561)
Increase/(decrease) in provisions
28
31
(13)
Cash generated from operations
136,037
140,518
Interest paid
(3,367)
(4,226)
Interest received
414
382
Income taxes paid
(6,711)
(5,773)
Net cash generated by operating activities
126,373
130,901
Investing activities
Purchase of property, plant and equipment and intangible assets
(52,270)
(47,494)
Proceeds from disposal of property, plant and equipment and intangible
assets
4,661
249
Proceeds from / repayments for finance sublease receivables
(648)
4,809
Acquisition of subsidiaries and investment in an associate
10, 18
-
(318)
Legal merger (cash acquired)
30
-
3,075
Dividends received
8
-
330
Net cash used in investing activities
(48,257)
(39,349)
(Continued in the next page)
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 10
STATEMENT OF CASH FLOWS (CONTINUED)
Year ended 31 December
Notes
2021
2020
Financing activities
Repayment of borrowings
26
(95,188)
(81,176)
Proceeds from borrowings
26
89,648
61,715
Increase (decrease) in lease liabilities
(8,487)
(11,997)
Dividends paid to shareholders
13
(58,261)
(52,435)
Net cash received in financing activities
(72,288)
(83,893)
Increase (decrease) in cash and cash equivalents
5,828
7,659
Movement in cash and cash equivalents
At the beginning of the financial year
55,941
48,282
Increase (decrease) in cash and cash equivalents
5,828
7,659
At the end of the financial year
22
61,769
55,941
(Concluded)
The notes on pages 11 to 49 form an integral part of these financial statements.
The financial statements on pages 6 to 49 have been approved for issue by the Board of Directors as at 31 March 2022 and
signed on their behalf by the CEO and the Head of Finance:
Dan Strömberg
CEO
Arūnas Lingė
Head of Finance
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 11
NOTES TO THE FINANCIAL STATEMENTS
1
General information
Telia Lietuva, AB (hereinafter – the Company) is a public company (joint-stock company) incorporated on
6 February 1992. The Company is domiciled in Vilnius, the capital of the Republic of Lithuania. Address of its
registered office is Saltoniškių str. 7A, LT-03501, Vilnius, Lithuania.
The Company’s shares are traded on Nasdaq Vilnius stock exchange from 16 June 2000. Nasdaq Vilnius stock
exchange is a home market for the Company’s shares. From January 2011, the Company’s shares are included
into the trading lists of the Berlin Stock Exchange, the Frankfurt Stock Exchange, the Munich Stock Exchange and
the Stuttgart Stock Exchange.
The shareholders’ structure of the Company was as follows:
31 December 2021
31 December 2020
Number of shares
%
Number of shares
%
Telia Company AB (publ), Sweden
513,594,774
88.15
513,594,774
88.15
Other shareholders
69,018,364
11.85
69,018,364
11.85
582,613,138
100.00
582,613,138
100.00
The Company’s principal activity is provision of telecommunications, TV and IT services to business and residential
customers in the Republic of Lithuania.
The Communication Regulatory Authority (CRA) of Lithuania has designated the Company together with its related
legal entities as an operator with significant market power (SMP) in 6 telecommunications markets. Following the
provisions of the Law on Electronic Communications of the Republic of Lithuania the Company is obliged to provide
access to other undertakings, to follow obligation of non-discrimination, obligation of transparency, obligations of
price control and cost accounting, obligation of accounting separation. Also, to publish public offer regarding the
access.
The Company has a limited activities electronic money institution license issued by the Bank of Lithuania. The
license grants the right to issue electronic money and provide payment services as set out in Article 5 of the
Payments Law of the Republic of Lithuania.
The number of full-time employees of the Company at the end of 2021 amounted to 1,939 (2020: 2,001).
The investments included in the Company’s financial statements are indicated below:
Ownership interest in %
Associate
Country of
incorporation
31 December
2021
31 December
2020
Profile
VšĮ Numerio
Perkėlimas
Lithuania
50%
50%
A non-profit organization established by
Lithuanian telecommunications operators
administers central database to ensure
telephone number portability.
Until 1 July 2020, the Group consisted of Telia Lietuva, AB and Telia Customer Services LT, AB (subsidiary). The
Group consolidated financial statements were prepared for the year ended 31 December 2020 and 2019. As at
31 December 2020 and 2021, the Company had no investments in subsidiaries.
The financial statements for the year ended 2021 are prepared on stand-alone basis in accordance with
IAS 27 “Separate Financial Statements”.
The consolidated statement of profit or loss and comprehensive income is presented for comparability purposes in
the Note 30.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 12
2
Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
2.1
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS),
as adopted by the EU. The financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting
policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates
are significant to the financial statements are disclosed in Note 4.
The financial statements have been prepared under the going concern basis. Historical cost is generally based on the
fair value of the consideration given in exchange for goods and services.
Initial application of new amendments to the existing standards effective for the current reporting period
The following amendments to the existing standards issued by the International Accounting Standards Board (IASB)
and adopted by the EU are effective for the current reporting period:
Amendments to IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and
Measurement”, IFRS 7 “Financial Instruments: Disclosures”, IFRS 4 “Insurance Contracts” and IFRS 16
“Leases” – Interest Rate Benchmark Reform — Phase 2 adopted by the EU on 13 January 2021 (effective for
annual periods beginning on or after 1 January 2021),
Amendments to IFRS 16 “Leases” – Covid-19-Related Rent Concessions beyond 30 June 2021 adopted by the EU
on 30 August 2021 (effective from 1 April 2021 for financial years starting, at the latest, on or after 1 January 2021),
Amendments to IFRS 4 Insurance Contracts “Extension of the Temporary Exemption from Applying IFRS 9”
adopted by the EU on 16 December 2020 (the expiry date for the temporary exemption from IFRS 9 was extended
from 1 January 2021 to annual periods beginning on or after 1 January 2023).
The adoption of amendments to the existing standards has not led to any material changes in the Company’s financial
statements.
Standards and amendments to the existing standards issued by IASB and adopted by the EU but not yet
effective
At the date of authorisation of these financial statements, the following amendments to the existing standards were
issued by IASB and adopted by the EU and which are not yet effective:
Amendments to IAS 16 “Property, Plant and Equipment” – Proceeds before Intended Use adopted by the EU
on 28 June 2021 (effective for annual periods beginning on or after 1 January 2022),
Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” – Onerous Contracts –
Cost of Fulfilling a Contract adopted by the EU on 28 June 2021 (effective for annual periods beginning on or after
1 January 2022),
Amendments to IFRS 3 “Business Combinations” – Reference to the Conceptual Framework with amendments
to IFRS 3 adopted by the EU on 28 June 2021 (effective for annual periods beginning on or after 1 January 2022),
IFRS 17 “Insurance Contracts” including amendments to IFRS 17 adopted by the EU on 19 November 2021
(effective for annual periods beginning on or after 1 January 2023),
Amendments to various standards due to “Improvements to IFRSs (cycle 2018 – 2020)” resulting from the
annual improvement project of IFRS (IFRS 1, IFRS 9, IFRS 16 and IAS 41) primarily with a view to removing
inconsistencies and clarifying wording – adopted by the EU on 28 June 2021 (The amendments to IFRS 1, IFRS 9
and IAS 41 are effective for annual periods beginning on or after 1 January 2022. The amendment to IFRS 16 only
regards an illustrative example, so no effective date is stated).
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 13
2.1
Basis of preparation (continued)
New standards and amendments to the existing standards issued by IASB but not yet adopted by the EU
At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the International
Accounting Standards Board (IASB) except for the following new standards and amendments to the existing
standards, which were not endorsed for use in EU as at date of publication of financial statements (the effective dates
stated below is for IFRS as issued by IASB):
IFRS 14 “Regulatory Deferral Accounts” (effective for annual periods beginning on or after 1 January 2016) – the
European Commission has decided not to launch the endorsement process of this interim standard and to wait for
the final standard,
Amendments to IAS 1 “Presentation of Financial Statements” – Classification of Liabilities as Current or Non-
Current (effective for annual periods beginning on or after 1 January 2023),
Amendments to IAS 1 “Presentation of Financial Statements” – Disclosure of Accounting Policies (effective for
annual periods beginning on or after 1 January 2023),
Amendments to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” – Definition of
Accounting Estimates (effective for annual periods beginning on or after 1 January 2023),
Amendments to IAS 12 “Income Taxes” – Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (effective for annual periods beginning on or after 1 January 2023),
Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and
Joint Ventures” – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture and further
amendments (effective date deferred indefinitely until the research project on the equity method has been concluded),
Amendments to IFRS 17 “Insurance contracts” – Initial Application of IFRS 17 and IFRS 9 – Comparative
Information (effective for annual periods beginning on or after 1 January 2023).
The Company anticipates that the adoption of these new standards and amendments to the existing standards will
have no material impact on the financial statements of the Company in the period of initial application.
Hedge accounting for a portfolio of financial assets and liabilities whose principles have not been adopted by the EU
remains unregulated.
According to the Company’s estimates, the application of hedge accounting to a portfolio of financial assets or
liabilities pursuant to IAS 39: “Financial Instruments: Recognition and Measurement” would not significantly
impact the financial statements, if applied as at the balance sheet date.
2.2
Foreign currency translation
Functional and presentation currency
Items included in the financial statements are presented in Euro (EUR), which is the functional currency of the
Company.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the statement of profit or loss.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the
statement of profit or loss within “Finance income” or “Finance costs”. All other foreign exchange gains and losses
are presented in the statement of profit or loss within “Other gain / (loss) – net”.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 14
2.3
Property, plant and equipment
Property, plant and equipment are carried at its historical cost less any accumulated depreciation and any
accumulated impairment loss. Historical cost includes expenditures that are directly attributable to the acquisition of
the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of
the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and
maintenance are charged to the statement of profit or loss during the financial period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated on the straight-line method to allocate their cost
to their residual values over their estimated useful life, as follows:
Buildings
10 – 50 years
Ducts and telecommunication equipment
3 – 30 years
Other tangible fixed assets
2 – 10 years
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period,
with the effect of any changes in estimate accounted for on a prospective basis.
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately
to its recoverable amount.
Construction in progress is transferred to appropriate groups of fixed assets when it is completed and ready for its
intended use.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of an
asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is
recognised in profit or loss.
2.4
Intangible assets
Goodwill
Goodwill arises on the acquisition of business and represents the excess of the consideration transferred over the fair
value of the Company’s share of the net identifiable assets of the acquired subsidiary / associate at the date of
acquisition. Goodwill on acquisitions of subsidiaries is included in ‘Intangible assets’. Goodwill on acquisitions of
associates is included in ‘investments in associates and subsidiaries’. Separately recognised goodwill is tested
annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are
not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the
entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are expected to benefit from the business combination
in which the goodwill arose.
Other intangible assets
Intangible assets expected to provide economic benefit to the Company in future periods have finite useful life and
are measured at acquisition cost less any accumulated amortisation and any accumulated impairment losses.
Amortisation is calculated on the straight-line method to allocate the cost of intangible asset over estimated benefit
period as follows:
Licenses and software
3 – 20 years
Client base
15 years
Trademarks
5 years
Other intangible fixed assets
5 years
The assets’ useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each reporting date.
Separately acquired licenses are shown at historical cost. Licenses acquired in a business combination are
recognised at fair value at the acquisition date.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 15
2.4
Intangible assets (continued)
Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the
specific software.
Costs associated with maintaining computer software programs are recognised as an expense as incurred.
Development costs that are directly attributable to the design and testing of identifiable and unique software products
controlled by the Company are recognised as intangible assets when the following criteria are met:
− it is technically feasible to complete the software product so that it will be available for use;
− management intends to complete the software product and use or sell it;
− there is ability to use or sell the software product;
− it can be demonstrated how the software product will generate probable future economic benefits;
− adequate technical, financial and other resources to complete the development and to use or sell the
software product are available; and
− the expenditure attributable to the software product during its development can be reliably measured.
Directly attributable cost that are capitalised as part of the software product include the software development
employee costs and an appropriate portion of relevant overheads. Other development expenditures that do not meet
these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense
are not recognised as an asset in a subsequent period.
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or
disposal. Gains or loss arising from derecognition of an intangible asset, measured as the difference between the net
disposal proceeds and the carrying amount of the asset, are included within 'Other gain / (loss) – net' in the statement
of profit or loss.
2.5
Investment property
Property that is held for undetermined use and that are not occupied are classified as investment property. Investment
property comprises construction in progress.
Recognition of investment property takes place only when it is probable that the future economic benefits that are
associated with the investment property will flow to the Company and the cost can be measured reliably. Subsequent
expenditure is included in the asset’s carrying amount only when it is probable that future economic benefits
associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs
and maintenance costs are charged to the statement of profit or loss during the financial period in which they are
incurred.
Investment properties are stated at cost less accumulated depreciation and any accumulated impairment losses.
Transaction costs are included on initial recognition. The fair values of investment properties are disclosed in the Note
17.
2.6
Impairment of tangible and intangible assets excluding goodwill
At each reporting date, the Company reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset
does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount
of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be
identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to
the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with an indefinite useful life are tested for impairment at least annually and whenever there is an
indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset for which the estimates of future
cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 16
2.6
Impairment of tangible and intangible assets excluding goodwill (continued)
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset
(or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated
as a revaluation increase.
2.7
Goodwill
Goodwill is initially recognised and measured as set out above.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing,
goodwill is allocated to each of the Company’s cash-generating units (or groups of cash-generating units) expected
to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the
recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the
unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill
is not reversed in a subsequent period.
On disposal of a cash generating unit, the attributable amount of goodwill is included in the determination of the profit
or loss on disposal.
2.8
Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular
way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame
established by regulation or convention in the marketplace.
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value,
depending on the classification of the financial assets.
2.8.1
Classification of financial assets
Debt instruments that meet the following conditions are measured subsequently at amortised cost:
− the financial asset is held within a business model whose objective is to hold financial assets in order to
collect contractual cash flows; and
− the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are measured subsequently at fair value through other
comprehensive income (FVTOCI):
− the financial asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling the financial assets; and
− the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL).
Amortised cost and effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating
interest income over the relevant period.
For financial assets other than purchased or originated credit-impaired financial assets (i.e. assets that are
credit-impaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash
receipts (including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the
debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial
recognition. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate is
calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of
the debt instrument on initial recognition.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 17
2.8
Financial assets (continued)
2.8.1
Classification of financial assets (continued)
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition
minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference
between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of
a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.
If collection is expected in one year or less, they are classified as current assets, if not, they are presented as non-
current assets.
Interconnection receivables and payables to the same counterparty are stated net, when there is a legally enforceable
right to offset the recognised amounts and there is an intention to settle on a net basis.
Interest income is recognised using the effective interest method for debt instruments measured subsequently at
amortised cost. For financial assets that have subsequently become credit-impaired, interest income is recognised by
applying the effective interest rate to the amortised cost of the financial asset. If, in subsequent reporting periods, the
credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired,
interest income is recognized by applying the effective interest rate to the gross carrying amount of the financial asset.
Interest income is recognised in profit or loss and is included in the "finance income – interest income" line item (Note
10).
2.8.2
Impairment of financial assets
The Company recognises a loss allowance for expected credit losses on investments in debt instruments that are
measured at amortised cost or at FVTOCI, lease receivables, trade receivables and contract assets, as well as on
financial guarantee contracts. The amount of expected credit losses is updated at each reporting date to reflect
changes in credit risk since initial recognition of the respective financial instrument.
The Company always recognises lifetime ECL for trade receivables, contract assets and lease receivables. The
expected credit losses on these financial assets are estimated using a provision matrix based on the Company’s
historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and
an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time
value of money where appropriate.
Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the
magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default
and loss given default is based on historical data adjusted by forward-looking information as described above.
As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the
reporting date; for financial guarantee contracts, the exposure includes the amount drawn down as at the reporting
date, together with any additional amounts expected to be drawn down in the future by default date determined based
on historical trend, the Company’s understanding of the specific future financing needs of the debtors, and other
relevant forward-looking information.
For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that
are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive,
discounted at the original effective interest rate. For a lease receivable, the cash flows used for determining the
expected credit losses is consistent with the cash flows used in measuring the lease receivable in accordance with
IFRS 16 Leases.
2.8.3
Derecognition of financial assets
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire,
or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues
to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability
for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a
transferred financial asset, the Company continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount
and the sum of the consideration received and receivable is recognised in profit or loss.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 18
2.9
Financial liabilities
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when
the continuing involvement approach applies, and financial guarantee contracts issued by the Company, are
measured in accordance with the specific accounting policies set out below.
2.9.1
Financial liabilities measured subsequently at amortised cost
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii)
held-for-trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective
interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash payments (including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where
appropriate) a shorter period, to the amortised cost of a financial liability.
2.9.2
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged,
cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the
consideration paid and payable is recognised in profit or loss.
When the Company exchanges with the existing lender one debt instrument into another one with the substantially
different terms, such exchange is accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability. Similarly, the Company accounts for substantial modification of terms of an
existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability.
It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new
terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10
per cent different from the discounted present value of the remaining cash flows of the original financial liability. If the
modification is not substantial, the difference between: (1) the carrying amount of the liability before the modification;
and (2) the present value of the cash flows after modification should be recognised in profit or loss as the modification
gain or loss within other gains and losses.
2.10
Investments in subsidiaries and associates in the separate financial statements of the Company
Investments in subsidiaries that are included in the separate financial statements of the Company are accounted at
cost less impairment.
Investments in associates that are included in the financial statements of the Company are accounted for using the
equity method of accounting. Under the equity method, the investments is initially recognised at cost, and the carrying
amount is increased or decreased to recognize the investor’s share of the profit or loss of the investee after the date
of acquisition. Dividends received or receivable from associated are recognized as a reduction in the carrying amount
of the investment. The Company’s investment in associates includes goodwill identified on acquisition.
When the Company’s share of losses in an equity-accounted investment equals or exceeds its interest in the equity,
the Company does not recognize further losses.
2.11
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined by the weighted average
method. The cost of inventories comprises purchase price, taxes (other than those subsequently recoverable by the
Company), transportation, handling and other costs directly attributable to the acquisition of inventories. Net realisable
value is the estimate of the selling price in the ordinary course of business, less the applicable selling expenses. All
inventories held by the Company attribute to the materials and goods for resale categories.
2.12
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents includes cash in hand, deposits held at call
with banks, other short-term highly liquid investments with original maturities of three months or less.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 19
2.13
Assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying value will be recovered
principally through a sale transaction rather than through continuing use. An asset held for sale is measured at the
lower of its previous carrying value and fair value less costs to sell. One of the conditions that must be satisfied for an
asset to be classified as held for sale is that the sale is highly probable and the asset (or disposal group) is available
for immediate sale in its present condition. One criteria for the sale to qualify as highly probable is that the appropriate
level of management must be committed to a plan to sell the assets or disposal group in its present condition. In the
telecom industry acquisitions often require regulatory approval. If the buyer is a telecom operator in the same market
parties often have to agree to a number of remedies to get the approval. If the buyer is expected to be a telecom
operator in the same market and significant remedies are expected, a sale is usually not regarded as highly probable
and consequently the assets are not classified as held for sale by the Company, until the remedies are agreed upon
and accepted by management. The determination if and when non-current assets and disposal groups should be
classified as held for sale requires management judgment considering all facts and circumstances relating to the
transaction, the parties and the market and entities can come to different conclusions under IFRS.
2.14
Issued capital
Ordinary shares are classified as equity. Issued capital is considered by law order only registered issued capital. All
issued shares have been paid in full and carry equal rights to vote and participate in the assets of the Company.
2.15
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in ordinary course of business.
Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
2.16
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated
at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is
recognised in the statement of profit or loss over the period of the borrowings using the effective interest method. All
borrowing costs are recognised in the statement of profit or loss in the period in which they are incurred.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting date.
Supplier financing arrangements
An entity may enter into arrangements under which a ‘factor’ (typically, a financial institution) pays a supplier on its
behalf, with the entity (i.e. the purchaser) then reimbursing the factor. Such arrangements may be referred to as, for
example, ‘supplier financing’, ‘reverse factoring’ or ‘structured payable arrangements’.
Borrowings are disclosed in the Note 26.
2.17
Accounting for leases − where the Company is the lessee
The Company recognises a right-of-use asset and a lease liability on the statements if financial position when the
underlying asset is made available for the Company, i.e. at the commencement date. The Company applies the
practical expedients to recognise payments associated with short-term leases and leases of low value as an expense
in the profit or loss. The Company does not apply IFRS 16 to intangible assets.
The lease liability is initially measured at the present value of the lease payments during the estimated lease term that
are not paid at the commencement date. Lease payments included in the measurement of the lease liability comprise
of fixed lease payments including in-substance fixed payments, variable lease payments that depend on an index or
a rate, amounts expected to be payable under a residual value guarantee and payment related to options that the
Company is reasonably certain to exercise. In all asset classes, payments related to non-lease components are
separated from the lease payments and expensed as incurred.
The estimated lease term includes the non-cancellable period of the lease together with both periods covered by
extension options (if the Company is reasonable certain to exercise that option) and periods covered by termination
options (if the Company is reasonable certain not to exercise that option).
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 20
2.17
Accounting for leases − where the Company is the lessee (continued)
The lease liability is re-measured if there are modifications to the lease contract or if there are changes in the cash
flow based on the initial contract terms. Changes in cash flows based on initial term occurs when; the Company
changes its initial estimation of whether extension and/or termination options will be exercised, there are changes in
earlier estimates of whether a purchase option will be exercised, lease payments changes due to changes in index or
rate, or if there is a change in estimates regarding amounts expected to be under a residual value guarantee.
The lease payments are discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Company’s incremental borrowing rate. For the majority of all lease contracts the Company uses its
incremental borrowing rate, as the interest rate implicit in the lease usually is not readily determinable.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability plus any
lease payments made at or before the commencement date and any initial direct costs incurred, less any lease
incentives received.
The right-of-use asset is subsequently depreciated on a straight-line basis from the commencement date to the earlier
of the end of the useful life of the underlying asset or the end of the estimated lease term. Any re-measurement of the
lease liability results in most cases in a corresponding adjustment of the right-of-use asset. If the carrying amount of
the right-of-use asset has already been reduced to zero, the remaining re-measurement is recognised in the profit or
loss. The right-of-use assets are tested for impairment whenever events or changes in circumstances indicate that
the carrying value of an asset may not be recoverable.
Right-of-use asset are presented as a separate line in the statement of financial position and lease liabilities as long-
term and short-term borrowings in the statement of financial position.
In the profit or loss, depreciation charges of the right-of-use asset are presented in the different functions depending
on the type of leased asset. The interest expense on the lease liability is presented as finance costs. Lease payments
associated with leases of low value and short-term leases are presented in the different functions depending on the
type of leased asset.
Repayment on the lease liability are presented as a cash flow from financing activities. Payments of interest as well
as payments for short-term leases and leases of low value are presented as cash flow from operating activities.
2.18
Accounting for leases − where the Company is the lessor
In arrangements where the Company is a lessor, determination of whether each lease is a finance lease or an
operating lease is made at lease inception. To classify each lease, an overall assessment is made of whether the
lease transfers substantially all the risk and rewards incidental to the ownership of the underlying asset. If substantially
all of the risk and rewards are transferred, then the lease is a finance lease. If not, it is an operating lease. If a contract
includes both lease and non-lease components, the Company allocates the consideration to the components identified
on the basis of relative stand-alone selling prices (see 2.21 section “Revenue recognition”).
In arrangements where the Company is an intermediate lessor the classification of the sublease is assessed with
reference to the right-of-use asset arising from the head lease.
The Company as finance lessor
The Company owns assets that are leased to customers under finance lease agreements. Amounts due from lessees
are recorded as receivables at the amount of the net investment in the leases, which equals the net present value.
Initial direct costs are included in the initial measurement of the financial lease receivable and reduce the amount of
income recognized over the lease term. Interest income is recognized over the lease term on an annuity basis.
The Company as operating lessor
Rental revenues from operating leases are recognized on a straight-line basis over the term of the relevant lease.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying value of the
leased asset and are recognized on the same basis as the lease revenues.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 21
2.19
Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of past event,
it is probable that the Company will be required to settle that obligation and a reliable estimate can be made of the
amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation
at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is
measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of
those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third
party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount
of the receivable can be measured reliably.
Restructurings
A restructuring provision is recognised when the Company has developed a detailed formal plan for the restructuring
and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the
plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes
only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed
by the restructuring and not associated with the ongoing activities of the entity.
Restoration provisions
Provisions for the costs to restore leased plant assets to their original condition, as required by the terms and
conditions of the lease, are recognised when the obligation is incurred, either at the commencement date or as a
consequence of having used the underlying asset during a particular period of the lease, at the managements’ best
estimate of the expenditure that would be required to restore the assets. Estimates are regularly reviewed and
adjusted as appropriate for new circumstances.
2.20
Income tax
The tax expenses for the period comprise current and deferred tax. Tax is recognised in the statement of profit or
loss, except to the extent that it relates to item recognised in other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not
recognized if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting, nor taxable profit or loss. Deferred tax is determined using tax rates (and legislation) that
have been enacted or substantially enacted on the reporting date and are expected to apply when the related deferred
tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised only to the extent that is probable that future taxable profit will be available against
which the temporary differences can be utilised.
Profit for 2021 is taxable at a rate of 15% (2020: 15%) in accordance with Lithuanian regulatory legislation on taxation.
Income tax expense is calculated and accrued for in the financial statements based on information available at the
moment of the preparation of the financial statements.
The Company may be entitled to claim special tax deductions for investments in qualifying assets. The Company
accounts for such allowances as tax credits, which means that the allowance reduce income tax payable and current
tax expense.
According to Lithuanian legislation, tax losses accumulated as at 31 December 2021 are carried forward indefinitely
except for tax loss arising from the transfer of securities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred tax assets and liabilities relate to income tax levied by the same taxation
authority on the same taxable entity. Current tax assets and tax liabilities are offset where the same taxable entity has
a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the
liability simultaneously.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 22
2.21
Revenue recognition
Revenue principally consist of mobile service revenues including subscription, interconnect and roaming and fixed
service revenues including telephony, broadband, TV, installation fees and business solutions, as well as revenue
from equipment sales and leases. There are both revenue from products and services sold separately and from
products and services sold as a bundle.
Revenue is recognized based on a single principle based five-step model which is applied to all contracts with
customers (IFRS 15). Revenue is allocated to performance obligations (equipment and services) in proportion to
stand-alone selling prices of the individual items. Revenue is recognized when (at a point in time) or as (over a period
of time) the performance obligations are satisfied, which is determined by the manner in which control passes to the
customer. Revenue is measured based on the consideration specified in a contract with a customer and excludes
amount collected on behalf of third parties. The consideration promised in a contract with a customer may include
fixed amounts, variable amounts or both. For variable consideration accumulated experience is used to estimate and
provide for the variable consideration, and revenue is only recognized to the extent that it is highly probable that a
significant reversal will not occur.
Service revenues are recognized over time, in the period in which the service is performed, based on actual traffic or
over the contract term, as applicable. Revenue from voice and data services is recognized when the services are used
by the customer. Subscription fees are recognized as revenue over the subscription period. Sales relating to pre-paid
phone cards, primarily mobile, are deferred as a contract liability and recognized as revenue based on the actual
usage of the cards. Revenue from interconnect traffic with other telecom operators is recognized at the time of transit
across the Company’s network.
Subscription fees are recognized as revenue over the subscription period. Sales relating to pre-paid phone cards,
primarily mobile, are deferred and recognized as revenue based on the actual usage of the services cards.
Revenue from equipment sales is recognized at the point in time when control is transferred to the customer, which
normally is on delivery and when accepted by the customer. If the customer has the right to return the equipment, the
amount of revenue recognized is adjusted for expected returns, estimated based on historical data.
Bundled services and products
The Company may bundle services and products into one customer offering. Offerings may involve the delivery or
performance of multiple products, services, or rights to use assets (multiple deliverables). The Company accounts for
each individual product and service separately if they are distinct – i.e. if a product or service is separately identifiable
from other items in the bundled package and if a customer can benefit from it. When the transaction price is determined
for bundles that includes services (e.g. a mobile subscription), the minimum non-cancellable contract term is
considered. When applicable, the transaction price is adjusted for financing components and expected returns. There
are usually no or few other variable components in the transaction price. The transaction price is allocated to each
equipment and service accounted for as a separate performance obligation, based on their relative stand-alone price.
For most performance obligations, the stand-alone selling prices are directly observable. If stand-alone selling prices
are not directly observable, they are estimated based on expected cost plus margin. In some cases the offerings
includes non-refundable upfront fees such as activation fees. Payments for such fees are included in the transaction
price, and, if not related to the satisfaction of a performance obligation, allocated to other performance obligations
identified in the contract.
Some bundled offerings include lease components, e.g. TV boxes, as well as non-lease components, e.g. subscription.
In those arrangements, the transaction price is allocated to both the lease components and non-lease components
identified as separate performance obligations. The lease components are then accounted for as either an operating
lease or a finance lease depending on the lease classification. Revenue for the non-lease components are recognized
when or as the performance obligations are satisfied. Equipment that can be used only in connection with services
provided by the Company and that have no other significant function for the customer than delivering the service, e.g.
routers, is not accounted for as a separate performance obligation. In such arrangements, the transaction price is
allocated to the performance obligations identified, i.e. no part of the transaction price is allocated to the equipment.
Any consideration received upfront, when the equipment is delivered, is recognized as a contract liability and
recognized as revenue when or as the identified performance obligations are satisfied.
Principal versus agent
Sometimes a third party is engaged in delivering goods or services to the Company, e.g. the Company offers several
value-added services (VAS) to the customers in bundled offers.
In arrangements where the Company acts as a principle, revenue is recognised on a gross basis. When the Company
acts as an agent and arranges goods or services to be provided by another party, revenues are recognised as the net
amount of consideration that the Company retains after paying that other party. When invoicing end-customers for
third-party content services, amounts collected on behalf of the principle are excluded from revenues.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 23
2.22
Interest income
Interest income is recognised on a time-proportion basis, by reference to the principal outstanding and the effective
interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected
life of the financial asset to that asset’s net carrying amount on initial recognition.
Interest income on held-to-maturity investments, loans granted are classified as “Other income”, interest income on
cash and cash equivalents are classified into “Finance income”.
2.23
Dividend income
Dividend income from investments is recognised when the right to receive payment has been established.
2.24
Employee benefits
Social security contributions
The Company pays social security contributions to the State Social Security Fund (the Fund) on behalf of its
employees based on the defined contribution plan in accordance with the local legal requirements. A defined
contribution plan is a plan under which the Company pays fixed contributions into the Fund and will have no legal or
constructive obligations to pay further contributions if the Fund does not hold sufficient assets to pay all employees
benefits relating to employee service in the current and prior period.
Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date per mutual
agreement or employers will. The Company recognise termination benefits when it is demonstrably committed to
either: terminating the employment of current employees according to a detailed formal plan without possibility of
withdrawal; or providing termination benefits as a result of mutual agreement. Benefits falling due more than 12 months
after reporting date are discounted to present value.
Bonus plans
The Company recognise a liability and an expense for bonuses based on predefined targets. The Company recognise
related liability where contractually obliged or where there is a past practice that has created a constructive obligation.
Supplementary health insurance
The Company pays supplementary health insurance contributions to the insurance company on behalf of its
employees. Supplementary health insurance for employees is the possibility to get health care and health improvement
services in a selected health care institution. The supplementary health insurance contributions are recognized as
expenses when incurred.
Contributions to Pension Fund
The Company is contributing to III pillar pension funds on behalf of its employees who decided to participate in pension
fund’s program proposed by the Company with cooperation with “SEB Investicijų valdymas”. These contributions are
recognized as expenses when incurred.
2.25
Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements
in the period in which the dividends are approved by the Company’s shareholders.
Withholding tax on dividends paid to legal entities amounts to 15% (2020: 15%). According to statutory law,
participation exemption (i.e. no withholding tax on dividends) could be applied when shareholder holds more than 10%
of share capital and retains the holding for more than one year. There is also withholding tax exemption on dividends
paid to pension and investment funds.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 24
2.26
Segment information
Business customer segment (B2B) is responsible for services sales and customer care for big, medium and small
business customer and operators including retail and wholesale telecommunication and IT services.
Private customer segment (B2C) is responsible for service and customer care for private customers.
Other segment includes technology division and support units financial performance.
The management assesses the performance of the segments based on measure of revenue and operational profit
using the same accounting policies as used in preparation of these financial statements.
Segment revenue represents revenue generated from external customers. Management assess segment operating
profit according to its responsibility defined in segment budget. Intersegment sales and expenses are not included into
segment activities assessment.
The Company’s segment reporting 2020:
January – December 2020
B2B
B2C
Other
Total
Revenue from external customers
154,813
240,990
3,238
399,041
Cost of goods and services, employee related
expenses, other operating expenses
(80,779)
(102,357)
(81,613)
(264,749)
Operational result
74,034
138,633
(78,375)
134,292
Other income
-
Other gain/ (loss) – net
502
Depreciation, amortisation and impairment of fixed
assets and assets classified as held for sale
(69,952)
Operating profit
64,842
The Company’s segment reporting 2021:
January – December 2021
B2B
B2C
Other
Total
Revenue from external customers
155,251
261,577
3,966
420,794
Cost of goods and services, employee related
expenses, other operating expenses
(82,265)
(109,520)
(91,824)
(283,609)
Operational result
72,986
152,057
(87,858)
137,185
Other income
-
Other gain / (loss) – net
1,414
Depreciation, amortisation and impairment of fixed
assets and assets classified as held for sale
(77,669)
Operating profit
60,930
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 25
3
Financial risk management
3.1
Financial risk factors
The Company’s activities expose them to financial risks: market risk (including foreign exchange risk, and interest
rate risk), credit risk, liquidity risk. The Company’s Policy for Financial Management putting the main guidelines for
financial risk management and seeks to minimise potential adverse effects of the financial performance of the
Company.
Financial risk management is carried out by a Telia Company, AB Treasury under policies approved by the Board of
Directors. Telia Company, AB Treasury identifies and evaluates financial risks in close co-operation with the Telia
Company’s operating units. The Board provides written principles for overall risk management, as well as written
policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investing excess
liquidity.
Market risk
Foreign exchange risk
The Company operates in euro zone and main stream of revenue and payments are in euro therefore its exposure
to currency risk is not significant. Certain foreign exchange risk exposure arises from the Company’s international
activities with foreign telecommunication operators and suppliers from outside the euro zone and is primarily related
to settlements in US Dollars (USD). Substantially all the Company’s trade payables and trade receivables in foreign
currency are short-term and insignificant as compared to total cash pool in EUR. As the foreign exchange risk is
insignificant, the sensitivity analysis of foreign exchange risk is not disclosed. The Company manages foreign
exchange risk by minimising the net exposure to open foreign currency position. Further exposure to foreign exchange
risk is disclosed in Notes 21, 22, 25 and 26.
Cash flow and interest rate risk
The Company is exposed to interest rate risk through funding, financing and cash management activities.
At the reporting date the interest rate profile of the Company’s interest-bearing financial assets and liabilities:
2021
2020
Financial assets
Accounts receivables with deferred payments
35,828
32,020
Financial liabilities
Loans with variable interest rate
30,000
60,000
Provisions (ARO)
12,398
11,833
Pensions accruals
425
440
Accounts payables with deferred payment
6,807
7,409
A change in the interest rates at the reporting date would have increased (decreased) assets or liabilities and equity
by the amounts shown below. This analysis assumes that all other variables remain constant.
Interest rate
applied
Change in
interest rate
(-100 basis
points)
Change in
interest rate
(+100 basis
points)
Delta, EUR
thousand
Financial assets
Accounts receivables with deferred
payments
5,21%
36,227
35,462
366
Financial liabilities
Loans with variable interest rate
0,60%
30,139
29,282
139 / (718)
ARO
2,69%
13,558
11,700
1,160 / (698)
Pensions accruals
2,70%
448
405
23 / (20)
Accounts payables with deferred payment
2,21%
7,162
6,475
355 / (332)
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 26
3.1
Financial risk factors (continued)
Credit risk
The financial assets exposed to credit risk represent cash deposits and trade receivables.
To manage credit risk of trade receivables the Company checks the creditworthiness of all customers (business and
residential) before signing any new contracts, except for low value contracts, e.g. additional TV packaged or other
value added services (VAS). Customers’ invoices payment control consists of a few various reminders starting with
a notification before due date and then additional reminders after due date are sent. Services are limited after 20
days past due and contract is terminated and penalties issued after 50 days past due. Residential customers’ bad
debts after sending additional reminding letters are sold or handed over to external bad debt collection agencies for
debt recovery.
Impairment provision for trade receivables is calculated on a monthly basis according to the Company’s internal policy
for trade receivable impairment. Estimation of impairment is based on expected loss of trade receivables categories
and application of certain impairment rates to each category. The impairment rates and the Company’s internal policy
for trade receivable impairment estimation are updated on a yearly basis.
Debtors of the Company may be affected by the lower liquidity situation which could in turn impact their ability to
repay the amounts owed. Deteriorating operating conditions for debtors may also have an impact on management's
cash flow forecasts and assessment of the impairment of financial and non-financial assets. To the extent that
information is available, management has properly reflected revised estimates of expected future cash flows in its
impairment assessments.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial
liabilities that are settled by delivering cash or another financial asset.
Liquidity risk relates to the availability of sufficient funds for debt service, capital expenditure and working capital
requirement or dividend payment. Prudent liquidity risk management implies maintaining sufficient cash and cash
equivalents. Accordingly, the Company’s management implemented formal procedures for liquidity risk management,
where minimum required liquidity position (calculated as cash and cash equivalents plus undrawn committed credit
facilities) should at any time exceed the level of 2 per cent of planned annual revenue.
The Company has internal control processes and contingency plans for managing liquidity risk. The short-term and
mid-term liquidity management takes into account the maturities of financial assets and financial liabilities and
estimates of cash flows from operations.
For the maturity analysis of the undiscounted cash flows of the Company’s borrowings, into relevant maturity
groupings based on the remaining period at the balance sheet to the contractual maturity date see Note 26.
Operational transaction exposure sensitivity
In most cases, the Company customers are billed in local currency. Receivables from and payables to other operators
for international fixed-line traffic and roaming are normally settled net through clearing-houses.
The sensitivity analysis based on the assumption that the operational transaction exposure is equivalent to that in
2021 did not reveal any significant interest rate or currency exchange risk, no hedging measures were taken.
Fair value estimation
IFRS 13 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are
observable or unobservable. Observable inputs reflect market data obtained from independent sources; unobservable
inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when
available.
The objective of the fair value measurement, even in inactive markets, is to arrive at the price at which an orderly
transaction would take place between market participants to sell the asset or transfer the liability at the measurement
date under current market conditions.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 27
3.1
Financial risk factors (continued)
In order to arrive at the fair value of a financial instrument different methods are used: quoted prices, valuation
techniques incorporating observable data, and valuation techniques based on internal models. These valuation
methods are divided according with the fair value hierarchy in Level 1, Level 2, and Level 3.
The level in the fair value hierarchy within which the fair value of a financial instrument is categorized, is determined
on the basis of the lowest level input that is significant to the fair value in its entirety.
The classification of financial instruments in the fair value hierarchy is a two-step process:
1) Classifying each input used to determine the fair value into one of the three levels;
2) Classifying the entire financial instrument based on the lowest level input that is significant to the fair value in its
entirety.
Quoted market prices – Level 1
Valuations in Level 1 are determined by reference to unadjusted quoted prices for identical assets or liabilities in
active markets where the quoted prices are readily available, and the prices represent actual and regularly occurring
market transactions on an arm’s length basis.
Valuation techniques using observable inputs – Level 2
Valuation techniques in Level 2 are models where all significant inputs are observable for the asset or liability, either
directly or indirectly. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability
either directly (that is, as price) or indirectly (that is, derived from prices).
Valuation technique using significant unobservable inputs – Level 3
A valuation technique that incorporates significant inputs that are not based on observable market data (unobservable
inputs) is classified in Level 3. Unobservable inputs are those not readily available in an active market due to market
illiquidity or complexity of the product. Level 3 inputs are generally determined based on observable inputs of a similar
nature, historic observations on the level of the input or analytical techniques.
Assets and liabilities for which fair value is disclosed
The carrying amount of liquid and short-term financial instruments (with maturity below 3 months), for example, cash
and cash equivalents, short-term deposits, short-term trade payables and trade receivables, short-term bank
borrowings corresponds to its fair value.
3.2
Capital management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amounts of dividends paid to
shareholders, return capital to shareholders and issue new shares.
The Company defines capital as equity which is disclosed in the statement of financial position.
Pursuant to the Lithuanian Law on Companies the authorised share capital of a joint stock company must be not less
than EUR 40,000, and the shareholders’ equity should not be lower than 50 per cent of the company’s registered
share capital. As at 31 December 2021 and 2020, the Company complied with these requirements.
The Company’s operations are financed by the external parties as well as by the shareholders’ capital. The Company
had finance lease and vendor financing liabilities plus outstanding EUR 30 million external loans with Lithuanian and
foreign banks at the end of 2021. For more detailed borrowings related information see Note 26.
The Company is not subject to any externally imposed capital requirements.
3.3
Fair value estimation
The carrying value less impairment losses of trade receivables and carrying value of payables are assumed to
approximate their fair value (as market rates are used).
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 28
3.4
Offsetting financial assets and financial liabilities
Financial assets
The following financial assets are subject to offsetting, according to criteria described in Note 2.8:
As at 31 December
2021
2020
Trade and other receivable
Gross amounts of recognized financial assets
97,082
98,872
Gross amounts of recognized financial liabilities set off in the statement of
financial position
(3,878)
(3,281)
Net amounts of financial assets presented in the statement of financial
position
93,204
95,591
Related amounts not set off in the statement of financial position
-
-
Net amount
93,204
95,591
Financial liabilities
The following financial liabilities are subject to offsetting, according to criteria described in Note 2.9:
As at 31 December
2021
2020
Trade payables
Gross amounts of recognized financial liabilities
200,971
167,493
Gross amounts of recognized financial assets set off in the statement of financial
position
(3,878)
(3,281)
Net amounts of financial liabilities presented in the statement of financial
position
197,093
164,212
Related amounts not set off in the statement of financial position
-
-
Net amount
197,093
164,212
4
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company’s accounting policies, which are described in Note 3, the directors are required to
make judgements (other than those involving estimations) that have a significant impact on the amounts recognized
and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions are based on historical experience and
other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and future periods.
Impairment of goodwill
The Company tests annually whether goodwill has suffered any impairment, in accordance with the accounting
policy stated in Note 2.6 and Note 2.7. The recoverable amounts of cash-generating units have been determined
based on value-in-use calculations. These calculations require the use of estimates (Note 15).
The purpose of impairment test is to ensure that assets are carried at no more than their recoverable amount. The
recoverable amounts (that is, the higher of value in use and fair value less cost to sell) are normally determined on
the basis of value in use, applying discounted cash flow calculations. In the recoverable amount calculations,
management used assumptions that it believes are reasonable based on the best information available. The key
assumptions in the value in use calculations were sales growth, EBITDA margin development, the weighted average
return on assets (WARA), CAPEX-to-sales ratio, and the terminal growth rate of free cash flow.
The value in use calculations were based on forecasts approved by management, which management believes
reflect past experience, forecasts in industry reports, and other externally available information. The forecasted cash
flows were discounted at the weighted average return on assets (WARA). It represents a method of calculating a
company's average cost of capital, in which each category of capital is weighted in accordance with the share of that
particular category of capital in overall company's financing. WARA mirrors the Internal rate of return (IRR), which
is the expected result of the purchase price allocation (PPA). Weighted average cost of capital (WACC) is lower than
IRR as a rational and knowledgeable market investor does not invest in projects, which yield is below WACC.
Therefore, WACC is usually below WARA and IRR.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 29
4
Critical accounting judgements and key sources of estimation uncertainty (continued)
Goodwill was tested for impairment at 31 December 2021 and 2020. Calculations were done using pre-tax cash flow
projections based on financial budgets approved by management covering a five-year period. Management
determined budgeted profit after tax based on past performance, valued contracts with customers and its
expectations of market development. For details of assumptions used in impairment valuation are presented in Note
15. Based on analysis performed, the management concluded no impairment loss.
Intangibles
Estimates concerning useful lives of intangibles are disclosed above and amortization charge for the year is
disclosed in Note 15. Intangible assets with the estimated useful life and amortization method are reviewed at the
end of each reporting year, with the effect of any changes in estimate being accounted for on a prospective basis.
The estimations are done based on the entity’s consideration of its own historical experience consistent with the
highest and best use of the asset and with the expected use of the asset in future. Recognized intangible asset
reflects the period over the asset will contribute. The estimation of the useful life for customer data basis was done
based on the statistics of current number of customers and the disconnected amount of customers over the period.
Property, plant and equipment
Estimates concerning useful lives of property, plant and equipment due to constant technology advances – useful
lives are disclosed above and depreciation charge for the year is disclosed in Note 14. Increasing an asset’s
expected useful life or its residual value would result in a reduced depreciation charge. The useful lives of property,
plant and equipment are determined by management at the time the asset is acquired and reviewed on an annual
basis for appropriateness. The lives are based on historical experiences with similar assets as well as anticipation
of future events, which may impact their life, such as changes in technology. Furthermore, network infrastructure
cannot be depreciated over a period that extends beyond the expiry of the associated license under which services
are provided.
Impairment allowance for accounts receivable
Impairment allowance for accounts receivable was determined based on the management’s estimates on
recoverability and timing relating to the amounts that will not be collectable according to the original terms of
receivables. This determination requires significant judgment. Judgment is exercised based on significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or
delinquency in payments. Current estimates of the Company could change significantly as a result of change in
situation in the market and the economy as a whole. Recoverability rate also highly depends on success rate and
actions employed relating to recovery of significantly overdue amounts receivable.
Allowance for doubtful receivables reflects estimated losses that result from the inability of customers to make
required payments. Management determines the size of the allowance based on the likelihood of recoverability of
accounts receivable taking into account actual losses in prior years and current collection trends.
Cloud computing costs
In April 2021, International Financial Reporting Interpretations Committee published an agenda decision on
accounting for cloud computing costs. The new guidance addresses configuration and customization costs on a
supplier’s application in a cloud arrangement. The guidance should be applied retrospectively and implies that
depending on facts and circumstances, some costs should be recognized as operating expenses when the work is
performed. The projects that meet new guidance requirements occurred only starting 2021 and were accounted for
as operating expenses in the amount of EUR 839 thousand. There were no restatements to the previous periods.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 30
5
Revenue
Year ended 31 December
2021
2020
Mobile services
136,298
129,159
Equipment sales revenue
97,431
91,786
Internet services
64,410
57,890
Voice telephony services
41,504
44,411
TV services
39,042
35,987
IT services
17,653
14,428
Data communication and network capacity services
17,454
17,964
Other services
7,002
7,416
Total
420,794
399,041
6
Cost of goods and services
Year ended 31 December
2021
2020
Costs of goods and services purchased
113,876
105,222
Network’s interconnection
43,252
48,490
Network capacity costs
11,562
10,103
Total
168,690
163,815
7
Other operating expenses
Year ended 31 December
2021
2020
Marketing expenses
16,631
14,827
Consultations and other services from group
14,876
12,369
Energy, premises and transport costs
12,320
10,381
Maintenance and other services
7,880
5,990
Impairment of accounts receivable
1,715
2,075
Other expenses
4,865
5,134
Total
58,287
50,776
8
Other income
Year ended 31 December
2021
2020
Income from dividends (Note 31)
-
330
Total
-
330
9
Other gain (loss)
Year ended 31 December
2021
2020
Gain on sales of property, plant and equipment
1,639
514
Loss on sales of property, plant and equipment
(188)
(126)
Other gain (loss)
(37)
114
Total
1,414
502
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 31
10
Financial and investment activities
Year ended 31 December
2021
2020
Gain/loss from investments in subsidiaries and associates
-
(318)
Interest income from instalments amortisation
1,049
1,823
Interest income on finance leases
353
274
Interest income on cash and cash equivalents
48
56
Capital gains on sales of shares
-
115
Foreign exchange gain (loss) on financing activities
-
26
Other finance income
13
26
Finance income
1,463
2,320
Interest expenses on leases
(2,464)
(2,884)
Interest expenses on borrowings
(896)
(1,391)
Foreign exchange gain (loss) on financing activities
(121)
(275)
Other finance costs
(67)
(44)
Finance costs
(3,548)
(4,594)
Financial and investment activities – net
(2,085)
(2,592)
11
Income tax
Year ended 31 December
2021
2020
Current tax expenses
1,313
7,261
Deferred tax change (Note 27)
724
(925)
Income tax expenses
2,037
6,336
As at 1 January 2009, amendments to Law on Corporate Profit Tax came into effect which provides tax relief for
investments in new technologies. As a result, the Company’s calculated profit tax relief amounts for 2021 to
EUR 6.8 million (2020: EUR 2.1 million). Investments in new technologies are capitalised as property, plant and
equipment, and their depreciation is deductible for tax purposes, therefore, the tax relief does not create any deferred
tax liability.
The tax authorities may at any time inspect the books and records within 5 years from the end of the year when tax
declaration was submitted and may impose additional tax assessments with penalty interest and penalties.
The Company’s management is not aware of any circumstances, which may give rise to a potential material liability
in this respect.
The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the basic tax
rate as follows:
Year ended 31 December
2021
2020
Profit before income tax
58,845
62,250
Tax calculated at a tax rate of 15% (2020: 15%)
8,827
9,338
Non-taxable dividends received (tax effect)
-
(50)
Income not subject to tax (-) and expenses not deductible for tax purposes (+)
1,220
(291)
Tax relief
(6,853)
(2,106)
Other
(1,157)
(555)
Income tax expense recognized in profit or loss and other comprehensive
income statement
2,037
6,336
Effective tax rate
3.46%
10.18%
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 32
12
Earnings per share
Basic earnings per share are calculated by dividing the net profit (loss) for the period by the weighted average
number of ordinary shares in issue during the period. The Company has no dilutive potential ordinary shares and
therefore diluted earnings per share are the same as basic earnings per share.
The weighted average number of shares for both reporting periods amounted to 582,613 thousand.
Year ended 31 December
2021
2020
Net profit
56,808
55,914
Weighted average number of ordinary shares in issue (thousands)
582,613
582,613
Basic earnings per share (EUR)
0.098
0.096
13
Dividends per share
The dividends per share declared in respect of 2020 and 2019 and paid in 2021 and 2020 were EUR 0.10 and
EUR 0.09 respectively.
14
Property, plant and equipment
The depreciation, amortisation and impairment charge in the statement of profit or loss items:
Year ended 31 December
2021
2020
Depreciation of property, plant and equipment (Note 14)
50,687
44,555
Impairment of property, plant and equipment (Note 14)
802
267
Amortisation of intangible assets (Note 15)
16,885
15,762
Impairment of intangible assets (Note 15)
-
-
Amortisation of right-of-use-asset (Note 16)
9,295
9,368
Total
77,669
69,952
Impairment of assets classified as held for sale
-
-
Total
77,669
69,952
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 33
14
Property, plant and equipment (continued)
Land and
buildings
Ducts and
telecommu-
nication
equipment
Other
tangible
fixed assets
Construction
in progress
Total
Year ended 31 December 2020
Opening net book amount
11,155
222,640
16,780
9,324
259,899
Legal merge (Note 30)
3,740
4
34
-
3,778
Additions
-
493
-
38,340
38,833
Reclassifications
36
(33)
(35)
(155)
(187)
Disposals and write-offs
(47)
(176)
(355)
-
(578)
Transfers from construction in
progress
1,240
28,908
3,723
(33,871)
-
Depreciation charge
(1,296)
(38,909)
(4,350)
-
(44,555)
Impairment charge
-
(242)
(25)
-
(267)
Closing net book amount
14,828
212,685
15,772
13,638
256,923
At 31 December 2020
Cost
43,775
789,416
58,965
13,638
905,794
Accumulated depreciation
(28,947)
(574,758)
(43,192)
-
(646,897)
Impairment charge
-
(1,973)
(1)
-
(1,974)
Net book amount
14,828
212,685
15,772
13,638
256,923
Year ended 31 December 2021
Opening net book amount
14,828
212,685
15,772
13,638
256,923
Additions
-
534
-
67,741
68,275
Reclassifications
(3,863)
(18)
172
(293)
(4,002)
Disposals and write-offs
(2,302)
(301)
(70)
-
(2,673)
Transfers from construction in
progress
1,769
49,390
3,605
(54,764)
-
Depreciation charge
(1,376)
(44,389)
(4,922)
-
(50,687)
Impairment charge
(80)
(721)
(1)
-
(802)
Closing net book amount
8,976
217,180
14,556
26,322
267,034
At 31 December 2021
Cost
30,979
796,147
53,582
26,322
907,030
Accumulated depreciation
(21,962)
(577,292)
(39,025)
-
(638,279)
Impairment charge
(41)
(1,675)
(1)
-
(1,717)
Net book amount
8,976
217,180
14,556
26,322
267,034
During 2021, the Company reviewed the write-off principles of fully depreciated assets based on economical benefits
criteria as disclosed in the accounting policy. Based on a new criteria the Company has written-off fully depreciated
assets for EUR 32,491 thousand of acquisition cost (during 2020: EUR 45,447 thousand).
During 2021, the Company has done the reclassification from tangible assets to assets held for sale in amount of
EUR 3,848 thousand.
Also, the Company reviewed the accounted projects and has done the reclassification from tangible assets to
intangible assets in amount of EUR 154 thousand (during 2020: EUR 184 thousand).
The Company still uses depreciated property, plant and equipment with acquisition cost as at 31 December 2021
amounting to EUR 318,687 thousand (2020: EUR 352,803 thousand), comprising buildings with acquisition cost as
at 31 December 2021 amounting to EUR 9,424 thousand (2020: EUR 10,560 thousand), plant and machinery with
acquisition cost of EUR 287,271 thousand (2020: EUR 312,476 thousand) and other fixtures, fitting, tools and
equipment with acquisition cost of EUR 21,992 thousand (2020: EUR 29,767 thousand).
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 34
14
Property, plant and equipment (continued)
The category ‘Ducts and telecommunication equipment’ includes terminal equipment leased by the group to third
parties under operating leases with the following carrying amounts:
2021
2020
Cost
60,523
59,254
Accumulated depreciation at 1 January
(39,769)
(35,746)
Depreciation charge for the year
(7,019)
(7,378)
Disposals and write-offs accumulated depreciation
3,477
3,355
Net book amount
17,212
19,485
15
Intangible assets
Licenses and
software
Goodwill
Other
intangible
assets*
Construction
in progress**
Total
Year ended 31 December 2020
Opening net book amount
58,028
26,769
38,167
9,193
132,157
Legal merge (Note 30)
1
-
-
-
1
Additions
-
-
-
15,701
15,701
Reclassifications
9,361
-
-
(9,176)
185
Disposals and write-offs
(59)
-
-
-
(59)
Amortisation charge
(12,285)
-
(3,477)
-
(15,762)
Closing net book amount
55,046
26,769
34,690
15,718
132,223
At 31 December 2020
Cost
117,579
29,408
58,087
15,718
220,792
Accumulated amortisation
(62,533)
-
(19,813)
-
(82,346)
Impairment charge
-
(2,639)
(3,584)
-
(6,223)
Net book amount
55,046
26,769
34,690
15,718
132,223
Year ended 31 December 2021
Opening net book amount
55,046
26,769
34,690
15,718
132,223
Additions
43
-
-
25,312
25,355
Reclassifications
15,893
-
-
(15,739)
154
Disposals and write-offs
(53)
-
-
-
(53)
Amortisation charge
(13,437)
-
(3,448)
-
(16,885)
Closing net book amount
57,492
26,769
31,242
25,291
140,794
At 31 December 2021
Cost
128,254
29,408
57,711
25,291
240,664
Accumulated depreciation
(70,762)
-
(22,885)
-
(93,647)
Impairment charge
-
(2,639)
(3,584)
-
(6,223)
Net book amount
57,492
26,769
31,242
25,291
140,794
* Other intangible assets at 31 December 2021 consist of the client base and trademark (acquired while merging
AB Omnitel) for an amount of EUR 31,245 thousand (31 December 2020: EUR 34,691 thousand), the remaining
amortisation period is 9 years.
** Construction in progress comprise intangible assets developed for internal use and provision of services, are expected
to be completed within 2022.
During 2021, the Company reviewed the write-off principles of fully amortised assets based on economical benefits
criteria as disclosed in the accounting policy. Based on a new criteria the Company has written-off fully amortised
assets for EUR 14,492 thousand of acquisition cost (during 2020: EUR 13,284 thousand).
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 35
15
Intangible assets (continued)
At the end of 2021, the carrying value of client base was EUR 31.2 million and goodwill – EUR 26.8 million.
Management measured their recoverable amounts using discounted cash flow method. Management determined
budgeted profit after tax based on past performance, valued contracts with customers and its expectations of market
development. Carrying amount of goodwill was allocated to the mobility business as cash generating unit (CGU),
working capital and capital investments were allocated to CGU as a proportion of sales. Cash flows beyond the five-
year period are extrapolated using the estimated rates as follows: for client base – growth rate perpetuity: 2% (2020:
2%), discount rate: 13.6% (2020: 13.6%); for goodwill: growth rate perpetuity: 1% (2020: 1%), discount rate: 4.3%
(2020: 3.9%). The discount rates used are post-tax and reflect specific risks relating to the relevant cash generating
units. Based on analysis performed, the management concluded no impairment loss. If the discount rate is increased
by 2 p. p. client base or goodwill would not be impaired.
Provision of fixed, long distance and international telecommunication services (including transmission) is not a
subject to licensing in Lithuania.
During 2021, the Company reviewed the accounted projects and has done the reclassification from tangible assets
to intangible assets in amount of EUR 154 thousand (during 2020: EUR 184 thousand).
The Company still uses amortized software and licenses with acquisition cost as at 31 December 2021 amounting
to EUR 23,230 thousand (2020: EUR 25,812 thousand).
16
Right-of-use-assets
Land and
premises
Dark
fibre
Equipment
rent
Other
Total
Year ended 31 December 2020
Opening net book amount
40,379
7,026
-
414
47,819
Legal merge (Note 30)
81
-
-
-
81
Additions
5,675
2,469
7,079
541
15,764
Disposals and write-offs
-
-
(7,079)
-
(7,079)
Amortisation charge
(7,929)
(1,173)
-
(266)
(9,368)
Closing net book amount
38,206
8,322
-
689
47,217
At 31 December 2020
Cost
51,522
10,641
-
1,157
63,320
Accumulated amortisation
(13,316)
(2,319)
-
(468)
(16,103)
Impairment charge
-
-
-
-
-
Net book amount
38,206
8,322
-
689
47,217
Year ended 31 December 2021
Opening net book amount
38,206
8,322
-
689
47,217
Additions
5,323
2,597
6,440
282
14,642
Disposals and write-offs
-
-
(6,440)
-
(6,440)
Amortisation charge
(7,764)
(1,257)
-
(274)
(9,295)
Closing net book amount
35,765
9,662
-
697
46,124
At 31 December 2021
Cost
56,665
13,238
-
1,439
71,342
Accumulated depreciation
(20,900)
(3,576)
-
(742)
(25,218)
Impairment Charge
-
-
-
-
-
Net book amount
35,765
9,662
-
697
46,124
17
Investment property
As at 31 December 2021 and 2020, the Company did not have any investment property.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 36
18
Investments in associates and subsidiaries
The movement in Investments in associates and subsidiaries during the period is as follows:
As at 31 December
2021
2020
At the beginning of year
-
4,122
Acquisition / increase of share capital of associates
1
-
-
Divestment/ reclass of subsidiaries and associates
1
-
-
Legal merger
-
(4,122)
At end of year
-
-
1
In December 2017, the Company together with other two largest Lithuanian mobile operators – UAB Bitė Lietuva and UAB
Tele2 – each acquired a 33.3 per cent stake in UAB Mobilieji Mokėjimai. Till 18 May 2020, Mobilieji Mokėjimai was providing
mobile payment services under MoQ brand following the limited activity electronic money institution license granted by the
Bank of Lithuania in May 2017. On 18 June 2020, the Company together with the other shareholders – UAB Bitė Lietuva
and UAB Tele 2 – sold all shares of UAB Mobilieji Mokėjimai to the third party, SEPAxpress FS, UAB. On 31 December
2019, the Company impaired the value of this investment to one euro. The authorized capital of the associate as at 31
December 2019 amounted to EUR 7.8 million. During 2020, the Company in several instalments extended loan to associate
UAB Mobilieji Mokėjimai for the total amount of EUR 289.3 thousand. On 31 May 2020, the loan including accumulated
interests was used to cover the losses of UAB Mobilieji Mokėjimai and additional cash contribution of EUR 26.7 thousand
to cover losses was made on 16 June 2020. The Company stake of 33.3 per cent in UAB Mobilieji Mokėjimai was disposed
to the third party on 18 June 2020.
On 1 July 2020, the fully owned subsidiary of the Company, Telia Customer Service LT, following the Terms of
Merger approved on 6 November 2019 and decisions of the shareholders was merged into the Company pursuing
to Part 3 of Article 2.97 of the Civil Code of the Republic of Lithuania (Note 30).
19
Inventories
As at 31 December
2021
2020
Goods for resale
12,813
10,321
Supplies and consumables
110
415
12,923
10,736
Less: allowance for obsolete inventory
(212)
(309)
Total
12,711
10,427
20
Financial instruments by category
The accounting policies for the financial instruments have been applied to the line item below:
As at 31 December
2021
2020
Assets as per statement of financial position
Trade and other receivables
93,204
95,591
Cash and cash equivalents
61,769
55,941
Total
154,973
151,532
All financial liabilities of the Company amounting to EUR 197,093 thousand (2020: EUR 164,212 thousand) fell under
the category of other financial liabilities, there are no liabilities at fair value through profit and loss.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 37
21
Trade and other receivables
As at 31 December
2021
2020
Trade receivables from business customers and residents
78,869
79,675
Trade receivables from other operators
2,843
2,404
Total trade receivables
81,712
82,079
Less: provision for impairment of receivables
(4,296)
(3,673)
Trade receivables – net
77,416
78,406
Receivables from companies collecting payments for telecommunication services
576
260
Prepaid expenses and other receivables
2,365
2,532
Finance lease receivables
12,605
10,908
Receivables from related parties (Note 31)
2,929
5,968
95,891
98,074
Less: non-current portion
(23,474)
(21,883)
Current portion
72,417
76,191
All non-current receivables are due within three years from the reporting date.
The fair values of trade and other receivables are approximate to their carrying values.
The maximum exposure to credit risk at the reporting date is the carrying value of receivables mentioned above. The
Company does not hold any collateral as security.
There has been no change in the estimation techniques or significant assumptions made during the current reporting
period.
As at 31 December 2021, the Company’s trade receivable of EUR 81,712 thousand (2020: EUR 82,079 thousand)
were not impaired and provided for. The amount of the Company’s provision was EUR 4,296 thousand as at 31
December 2021 (2020: EUR 3,673 thousand). Impairment allowance by major part has been recognized on an
issued invoices, based on the impairment rates assessed by management.
The Company started to account an expected credit losses on account receivables according to IFRS 9
requirements.
The main rules used in calculation of expected credit losses are as following:
• Historical data is used to estimate expected credit losses.
• A provision matrix specifies fixed provision rates depending on the number of days that account receivable
is past due.
• The same provision rate is applied to all customer‘s account receivables (which may have different days
past due) according to the oldest due date. Postponed payments for installments are also included in
calculation of expected credit losses.
• Different provision rates are applied for different customer segments – Mobility B2C; Mobility B2B;
Broadband B2C; Broadband B2B/B2O as historical credit loss experience shows different loss patterns for
these segments. This means that in case customer has services in different systems (e.g. Broadband and
Mobility) different provision rates will be applied for the same customer.
The ageing of these receivables is as follows:
As at 31 December
2021
2020
Trade receivable total
81,712
82,079
Of which not overdue
63,594
63,951
Overdue up to 3 months
13,501
13,668
4 to 6 months
888
687
7 to 12 months
352
690
Over 12 months
3,377
3,083
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 38
21
Trade and other receivables (continued)
The age of past due but not impaired accounts receivable is as follows:
As at 31 December
2021
2020
Total
-
-
Overdue up to 3 months
-
-
4 to 6 months
-
-
7 to 12 months
-
-
Over 12 months
-
-
The age of fully and partially impairment accounts receivables is as follows:
As at 31 December
2021
2020
Total
81,712
82,079
Of which not overdue
63,594
63,951
Overdue up to 3 months
13,501
13,668
4 to 6 months
888
687
7 to 12 months
352
690
Over 12 months
3,377
3,083
The carrying amounts of the trade and other receivables are denominated in the following currencies:
As at 31 December
2021
2020
Currency
EUR
92,644
95,393
Other currency
3,247
2,681
Total
95,891
98,074
Movements of impairment for trade receivables are as follows:
Year ended 31 December
2021
2020
At the beginning of year
3,673
5,749
Receivables written off during the year as uncollectible
(714)
(3,339)
Provision for receivables impairment / Unused amount reversed (-)
1,337
1,263
At the end of year
4,296
3,673
The recognition and release of provision for impaired receivables have been included in “Other operating expenses”
in the profit or loss (Note 7).
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 39
22
Cash and cash equivalents
As at 31 December
2021
2020
Cash in hand and at bank
21,769
55,941
Short-term investments
40,000
-
Total
61,769
55,941
In 2021, in order to avoid negative interest rate charged for the Company’s residuals at the banks the Company
started to grant short term loans to the largest shareholder of the Company, Telia Company AB, for up to 3 months
period at 0 interest rate. The funds placed with Telia Company are available to the Company on demand within 2
business days and treated as cash/short term investment on demand. As at 31 December 2021, the total amount of
funds placed with the Parent company amounted to EUR 40 million.
The carrying amounts of the cash and cash equivalents are denominated in the following currencies:
As at 31 December
2021
2020
Currency
EUR
61,745
55,883
USD
24
58
Total
61,769
55,941
The credit quality of cash in hand and at bank can be assessed by reference to Standard & Poor’s long term credit
ratings (or equivalent by Moody’s):
As at 31 December
2021
2020
A+
21,189
54,421
A-2 (short term)
40,000
-
Baa1 (Moody’s)
169
204
Other
411
1,316
Total
61,769
55,941
The maximum exposure to credit risk at the reporting date is the carrying value of cash and cash equivalents
classified as other cash and cash equivalents.
23
Share capital
The authorised share capital comprises of 582,613,138 ordinary shares of EUR 0.29 nominal value each. All shares
are fully paid up.
24
Legal reserve
A legal reserve is a compulsory reserve under Lithuanian legislation. Annual transfer of 5% of net profit, calculated
in accordance with Lithuanian regulatory legislation on accounting, is compulsory until the reserve including share
premium reaches 10% of the share capital. The legal reserve can be used to cover the accumulated losses. The
amount of the legal reserve surplus which exceeds the size of legal reserve required by the legislation can be added
to retaining earnings for the profit distributing purpose.
At the end of year 2021 and 2020 legal reserve – EUR 16.9 million.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 40
25
Trade, other payables and accrued liabilities
As at 31 December
2021
2020
Trade payables
28,452
26,746
Taxes, salaries and social security payable
9,803
10,192
Accrued liabilities
4,129
2,373
Amounts payable to related parties (Note 31)
3,684
3,990
Accruals to operators
3,424
4,210
Trade payables to operators
1,614
1,979
Other payables and deferred revenue
12,955
13,483
64,061
62,973
Less non-current portion
(6,645)
(7,815)
Current portion
57,416
55,158
The carrying amounts of the trade and other payables are denominated in the following currencies:
As at 31 December
2021
2020
Currency
EUR
57,137
58,417
Other currency
6,924
4,556
Total
64,061
62,973
26
Borrowings and lease liabilities
As at 31 December
2021
2020
Current
Borrowings
-
7,500
Reverse factoring
123,681
54,244
Lease liabilities
13,324
11,207
Finance lease liabilities
573
825
137,578
73,776
Non-current (due between 2 and 5 years)
Borrowings
30,000
60,000
Lease liabilities
45,720
47,295
Finance lease liabilities
-
574
75,720
107,869
Total borrowings and lease liabilities
213,298
181,645
All the borrowings denominated in EUR.
In November 2021, the Company repaid a half (EUR 30 million) of a syndicated banks’ loan of EUR 60 million granted
in May 2017. The outstanding amount of EUR 30 million will be repaid in May 2024.
In 2017, the Company concluded five lease agreements with SEB bank AB. Company’s finance leases concern
company cars for employees, and other vehicles. There is subleasing. Cars lease agreements are for 5 years.
Reverse factoring or Supplier Invoice Financing (SIF) is a program where invoices are paid by 3
rd
party banks in 7
days for the agreed fee which is covered by supplier. The Company does not pay any credit fees and does not
provide any additional collateral or guarantee to the banks. Company pays banks full amount in approximately one-
year period, no longer than that (actual term depends on few variables agreed between all 3 parties). There were
31 suppliers which participated in SIF program during 2021 (26 in 2020) and generated over EUR 69 million
(EUR 15 million in 2020) cash flow.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 41
26
Borrowings and lease liabilities (continued)
The Company’s minimum lease payments under finance leases and their present values are as follows:
Due in
1 year
Due between 2
and 5 years
Due after
5 years
Total
Minimum lease payments at
31 December 2020
14,379
37,938
18,270
70,587
Less future finance charges
(2,347)
(5,506)
(2,833)
(10,686)
Present value of minimum lease
payments at 31 December 2020
12,032
32,432
15,437
59,901
Minimum lease payments at
31 December 2021
16,049
36,811
16,207
69,067
Less future finance charges
(2,152)
(4,828)
(2,470)
(9,450)
Present value of minimum lease
payments at 31 December 2021
13,897
31,983
13,737
59,617
27
Deferred income taxes
On 1 February 2017, AB Omnitel was merged into the Company therefore, a tax goodwill of EUR 71.2 million was
calculated upon the merger. The Company was also potentially liable to recognise a deferred tax asset of approx.
EUR 10 million due to potential additional tax amortisation of goodwill, however, due to the negative binding ruling
received from the Tax Authorities, such deferred tax asset was not recognised by the Company. The negative binding
ruling was appealed to the Supreme Administrative Court. As at 6 November 2019, the Supreme Administrative
Court passed a negative ruling.
In 2020, the Company has renewed the discussions with Tax Authorities regarding tax goodwill recognition and filed
for an adjustment of the FY2017 Corporate Income Tax return. In the adjusted return the Company claimed right to
tax deduction for goodwill amortization as well as loan interest expenses relating to a merger transaction in 2017.
The Tax Authorities has completed the tax audit of the Company for the year of 2017. A final decision was issued
by the Tax Authorities on 29 October 2021. The Company has been granted partial right to goodwill and loan interest
expenses deduction for 2017 as well as exempted from fines and penalties. This decision and deduction was also
applicable for the period of 2018-2021 and will be applicable for further goodwill deduction until 2032.
This agreement is accounted in Company’s financial statements for the year ended 2021.
The net movement on the deferred tax liabilities and deferred tax assets is as follows:
As at 31 December
Deferred tax liabilities
2021
2020
At the beginning of year
18,880
19,196
Result from legal merger
-
609
Charged/ (credited) to profit or loss (Note 11)
724
(925)
At the end of year
19,604
18,880
The analysis of deferred tax assets and deferred tax liabilities is as the follows:
As at 31 December
Deferred tax liabilities
2021
2020
Deferred tax asset to be recovered / liability settled after more than 12 months
19,397
18,671
Deferred tax asset to be recovered / liability settled within 12 months
207
209
At the end of year
19,604
18,880
According to Lithuanian tax legislation, investments in subsidiaries of the Company qualify for participation
exemption, therefore deferred income tax liabilities have not been established on the unremitted earnings of
subsidiaries.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 42
27
Deferred income taxes (continued)
The movement in deferred tax assets and liabilities of the Company (prior to offsetting of balances) during the period
is as follows:
Deferred tax liabilities
Investment
relief
1
Difference in
useful lives
2
IFRS 16
Other
Total
At 31 December 2019
1,853
17,309
8,203
1,705
29,070
Legal merger
-
633
-
-
633
Charged / (credited) to profit or loss
(230)
(917)
516
743
112
At 31 December 2020
1,623
17,025
8,719
2,448
29,815
Charged / (credited) to profit or loss
(208)
2,282
628
(1,436)
1,267
At 31 December 2021
1,415
19,307
9,347
1,012
31,082
Deferred tax asset
Tax losses
Assets
retirement
obligation
IFRS 16
Other
Total
At 31 December 2019
-
(1,689)
(8,071)
(114)
(9,874)
Charged / (credited) to profit or loss
-
(86)
(704)
(271)
(1,061)
At 31 December 2020
-
(1,775)
(8,775)
(385)
(10,935)
Charged / (credited) to profit or loss
-
(85)
(343)
(115)
(543)
At 31 December 2021
-
(1,860)
(9,118)
(500)
(11,478)
1
under investments relief applied till year 2001, value of assets invested was deducted for income tax purpose in the year
of investment. Further depreciation expenses of these assets are not tax-deductible therefore deferred tax liability was
created. It will be fully utilized during useful lives of these assets.
2
when depreciation is prolonged for accounting purposes, as useful lives set by tax laws are shorter than normal wear-and-
tear rates.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities. The following amounts, determined after appropriate offsetting, are shown in the
balance sheet:
As at 31 December
2021
2020
Deferred tax asset
(11,478)
(10,935)
Offset with deferred tax liabilities
11,478
10,935
Deferred tax asset as per statement of financial position
-
-
Deferred tax liabilities
31,082
29,815
Offset with deferred tax asset
(11,478)
(10,935)
Deferred tax liabilities as per statement of financial position
19,604
18,880
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 43
28
Provisions
The Company provisions movement during January-December 2021:
Provision for
restructuring
Assets
retirement
obligation
Total
Closing net book amount at 31 December 2020
-
11,833
11,833
Additions
-
534
534
Used provisions
-
(49)
(49)
Discounting
-
80
80
Closing net book amount at 31 December 2021
-
12,398
12,398
The Company leases land for the construction of mobile stations. Upon expiry of the lease term the mobile stations
should be disassembled and land restored so that it could be returned to the land owner in a condition it was before
the lease. Similarly, the Company has telecommunication equipment installed in the premises or on the buildings
leased from third parties. This equipment will have to be disassembled when the lease agreement expires. To cover
these estimated future costs, assets retirement obligation has been recognized. The Company expects that assets
retirement obligation will be realized later than after one year. Therefore, the whole amount of assets retirement
obligation has been classified as non-current provision for other liabilities and charges.
29
Contingent liabilities and contingent assets
Guarantees
As at 31 December 2021, the aggregate guarantees (obligations guaranteed under tender, agreement performance
and advance payment arrangements) provided by AB SEB Bankas, AB Lietuvos Draudimas and AAS BTA Baltic
Insurance Company branch in Lithuania on behalf of the Company amounts to EUR 871 thousand (2020: EUR 1,078
thousand).
As at 31 December 2021, tender and performance guarantees represented the following expected maturities:
Expected maturity
EUR in thousand
Jan-Mar
2022
Apr-Jun
2022
Jul-Sep
2022
Oct-Dec
2022
2023
2024
2025
2026
and
later
Total
Guarantees
203
21
32
82
327
32
151
23
871
Minimum lease payments receivable
The future minimum lease payments to be received under non-cancellable operating leases are as follows:
As at 31 December
2021
2020
Not later than 1 year
6,188
8,235
Later than 1 year but not later than 5 years
20,235
20,427
Total
26,423
28,662
Minimum lease payments recognized in the statement of profit or loss and other comprehensive income during 2021
were EUR 7,321 thousand (2020: EUR 8,901 thousand).
The future minimum lease payments to be received:
• not later than 1 year consist of EUR 1,254 thousand Telia Asset Finance (TAF) contracts <EUR 5,000 and
EUR 4,934 thousand other equipment (2020: EUR 3,696 thousand and EUR 4,540 thousand);
• later than 1 year but not later than 5 years consist of EUR 2,231 thousand Telia Asset Finance (TAF)
contracts <EUR 5,000 and EUR 18,004 thousand other equipment (2020: EUR 4,039 thousand and EUR
16,387 thousand).
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 44
29
Contingent liabilities and contingent assets (continued)
Capital commitments
Capital expenditure contracted for at the reporting date but not recognized in the financial statements is as follows:
As at 31 December
2021
2020
Property, plant and equipment
7,460
1,999
Intangible assets
1,689
2,861
Total
9,149
4,860
Operating lease commitments – where the Company is the lessee (AP)
The Company lease passenger cars, IT equipment and premises under operating lease agreements.
The operating lease expenditure charged to the statement of profit or loss are as follows:
As at 31 December
2021
2020
Minimum lease payments
14,325
15,276
Total
14,325
15,276
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
As at 31 December
2021
2020
Not later than 1 year
607
916
Later than 1 year but not later than 5 years
2,912
2,939
Later than 5 years
694
1,317
Total
4,213
5,172
The Company’s operating lease agreements primarily concern office and server space, leased buildings, land,
vehicles and IT equipment, infrastructure. Certain contracts include renewal options for various periods of time.
Subleasing consists mainly of office and server premises.
Network Infrastructure Registration
New law on Special land use conditions entered into force on January 1, 2020.
The Law provides for the procedures and requirements to establish and register protection zones of various
infrastructure objects (including electronic communications networks) as well as compensation for restrictions
imposed on land owners due to protection zones. Existing networks must be registered by 2025 (transition period of
3 years is suggested):
− until 2023 provides possibility to register the cable network without the consent of the landowner;
− from 2023 registration requires the consent of the landowner.
From 2025 economic activity may be carried out if the network is established and registered in the Real Estate
Register.
The Company has evaluated the impact of the new legislation and concluded that there is no obligation to account
for a provision as at 31 December 2021 and 2020. The Company expects the cost associated with implementation
of this legislation for infrastructure currently in use will be accounted for as cost of sales. Estimated cost to complete
the registration is approximately in between EUR 6 million and EUR 16 million that will be recognized till 2025.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 45
30
Legal merger
To streamline Telia Lietuva Group structure, in April 2019 shareholders of Telia Lietuva, AB and Telia Customer
Service LT, AB have agreed to prepare reorganisation terms, under which the Company’s subsidiary, Telia Customer
Service LT, AB, would be merged into Telia Lietuva, AB. The terms of merger were prepared and on
6 November 2019 approved by the Boards of both companies. On 28 April 2020, shareholders of both entities
decided to reorganize Telia Lietuva, AB and Telia Customer Service LT, AB pursuant to Part 3 of Article 2.97 of the
Civil Code of the Republic of Lithuania by way of merging.
On 1 July 2020, the Register of Legal Persons of the Republic of Lithuania registered a new wording of the By-laws
of Telia Lietuva, AB that continues activities following the reorganization process whereby Telia Customer Service
LT, AB was merged into Telia Lietuva, AB. Telia Customer Service LT, AB terminated its activities as legal entity,
and its activities are carried on by Telia Lietuva, AB. The Company took over all assets, rights and obligations of
Telia Customer Service LT, AB. Telia Lietuva, AB authorised capital unchanged and is equal to EUR 168,958
thousand. The Company’s shareholder proprietary and non-property rights remain unchanged.
30 June
2020
Less
net
investment
Carrying
amounts
merged
Property, plant and equipment
3,778
-
3,778
Intangible assets
1
-
1
Right of use assets
81
-
81
Assets classified as held for sale
410
-
410
Trade and other receivables
117
-
117
Cash and cash equivalents
3,075
-
3,075
Equity
(6,216)
4,122
(2,094)
Deferred tax liability
(609)
-
(609)
Long term lease liability
(80)
-
(80)
Trade and other payables
(557)
-
(557)
Identifiable net assets:
Amount settled in cash:
Cash and cash equivalents
-
Net cash inflow arising from legal merger:
Consideration received in cash and cash equivalents
3,075
The Group consolidated financial statements were prepared for the year ended 31 December 2020 and 2019. As at
31 December 2021 and 2020, the Company had no investments in subsidiaries. The financial statements for the
year ended 2021 are prepared on stand-alone basis in accordance with IAS 27 “Separate Financial Statements”.
Consolidated statements of profit or loss and
other comprehensive income
Year ended 31
December
2020
Revenue
398,083
Cost of goods and services
(158,023)
Employee related expenses
(54,887)
Other operating expenses
(50,760)
Other income
-
Other gain / (loss) – net
502
Depreciation, amortisation and impairment of fixed assets and assets classified as held for sale
(70,069)
Operating profit
64,846
Gain/loss from investment activities
(318)
Finance income
2,320
Finance costs
(4,593)
Finance and investment activities – net
(2,591)
Profit before income tax
62,255
Income tax
(6,389)
Profit for the year
55,866
Profit and comprehensive income attributable to:
Owners of the Parent
55,866
Non-controlling interests
-
Basic and diluted earnings per share for profit attributable to the equity holders of the
Company (expressed in EUR per share)
0.096
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 46
31
Related party transactions
The Company is controlled by Telia Company AB (publ), registered in Sweden, and owning 88.15% of the Company’s
shares and votes. The largest shareholder of Telia Company AB is the State of Sweden.
The following transactions were carried out with related parties:
Year ended 31 December
2021
2020
Sales of telecommunication and other services to:
Telia Company AB and its subsidiaries
8,480
11,187
Subsidiaries of the Company
-
998
Total sales of telecommunication and other services
8,480
12,185
Year ended 31 December
2021
2020
Purchases of assets and services:
Purchases of assets from:
Telia Company AB and its subsidiaries
630
1,613
630
1,613
Purchases of services from:
Telia Company AB and its subsidiaries
23,712
24,142
Subsidiaries of the Company
-
6,086
23,712
30,228
Total purchases of assets and services
24,342
31,841
Year-end balances arising from sales / purchases of assets / services:
Receivables and accrued revenue from related parties:
As at 31 December
2021
2020
Receivables from related parties:
Long term receivables:
Telia Company AB and its subsidiaries
140
140
140
140
Short-term receivables:
Telia Company AB and its subsidiaries
2,120
4,798
2,120
4,798
Accrued revenue from related parties:
Telia Company AB and its subsidiaries
669
1,030
669
1,030
Total receivables and accrued revenue
2,929
5,968
The receivables from related parties arise mainly from sale transactions and due one month after the date of sale.
The receivables are unsecured in nature and bear no interest. No provisions are held against receivables from related
parties as at 31 December 2021 and 2020.
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 47
31
Related party transactions (continued)
Payables and accrued expenses to related parties:
As at 31 December
2021
2020
Payables to related parties:
Telia Company AB and its subsidiaries
3,672
4,202
3,672
4,202
Accrued expenses to related parties:
Telia Company AB and its subsidiaries
12
(212)
12
(212)
Total payables and accrued expenses
3,684
3,990
The payable to related parties arise mainly from purchase transactions and are due one month after date of purchase.
The payables bear no interest.
Year ended 31 December
2021
2020
Borrowings from related parties:
Beginning of the year
-
5,003
Borrowings
-
8,000
Repayments of borrowings (in cash)
-
(13,000)
Interest charged (including VAT)
-
8
Interest paid (including VAT)
-
(11)
End of the year
-
-
The borrowings from related parties have the following terms and conditions:
Name of the related party
Date of
agreement
Original currency
of agreement
Amount
borrowed
Maturity
Interest
rate
Year ended 31 December 2020
Telia Company AB
25 May 2020
EUR
8,000
25 August 2020
0.368%
As at 31 December 2021, the Company had no outstanding internal loans provided by Telia Company AB (2020:
none) under the Revolver Loan Agreement which was valid till 20 May 2021.
During 2020, the Company extended loans for the total amount of EUR 289.2 thousand to UAB Mobilieji Mokėjimai,
an associated entity where the Company till 18 June 2020 held 33.3 per cent stake. The Company’s claim under not
repaid loan and accumulated interest was used to cover losses of UAB Mobilieji Mokėjimai. As at 31 December
2020, the Company does not have any exposure in UAB Mobilieji Mokėjimai. An additional shareholders’ contribution
of EUR 26.7 thousand to cover losses was made before divestment of shares.
In 2021, in order to avoid negative interest rate charged for the Company’s residuals at the banks the Company
started to grant short term loans to Telia Company AB for up to 3 months period at 0 interest rate. The funds placed
with Telia Company AB are available to the Company on demand within 2 business days and treated as cash/short
term investment on demand. As at 31 December 2021, the total amount of funds placed with the Parent company
amounted to EUR 40 million.
All transactions with related parties are carried out based on an arm’s length principle.
In 2021, dividends paid out to Telia Company AB amounted to EUR 51,359 thousand (2020: EUR 46,224 thousand).
No dividends were received by the Company from subsidiary in 2021 (2020: EUR 330 thousand).
Remuneration of the Company’s key management
Year ended 31 December
2021
2020
Remuneration of key management personnel
5,507
5,108
Social security contributions on remuneration
100
71
Total remuneration
5,607
5,179
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 48
Key management includes CEO, Heads of Units directly reporting to CEO and Heads of the largest Units of the
Company. The total number of top management personnel employed as at 31 December 2021 was 46 (as at 31
December 2020: 49).
According to the Law, the rate of social security contribution on remuneration paid by the Company is 1.77%. In
2020, social security contribution for remuneration exceeding 84 Average Salaries (i.e. EUR 104 thousand) was not
calculated.
The total amount of annual payments (tantiemes) assigned to two independent members of the Board of the
Company for the year 2020 during 2021 amounted to EUR 31 thousand. All remuneration of the Company’s key
management falls under short term employee benefits.
32
Costs to obtain a contract
Contract cost assets balance roll forward:
As at 31 December
2021
2020
Contract cost assets at the beginning of the year
4,806
4,625
Increase of contract assets due to new contracts within the year
6,293
6,206
Amortization expense of costs to obtain contracts
(6,262)
(6,025)
Contract cost assets as at 31 December
4,837
4,806
Costs to obtain a contract are incremental costs incurred resulting in obtaining a contract with a customer, where the
Company would not have incurred if the contract had not been obtained. These costs are typically external
commissions paid or internal commission or bonus paid related to obtaining a new contract. The asset is amortized
on a straight-line basis over the average customer life period, assessed at a portfolio level. If the Company pays a
significant commission on contract renewal, the asset is amortized over the minimum contract term.
33
Contract assets and liabilities
Contract assets balance roll forward:
As at 31 December
2021
2020
Current contract assets at 1 January
1,196
1,178
Increase in the balance due to new contract modification
2,752
1,913
Decrease in balance due to normal unwind or contract modification
(2,846)
(1,895)
Current contract assets as at 31 December
1,102
1,196
Non-current contract assets at 1 January
445
351
Increase in the balance due to new contracts
485
396
Decrease in balance due to normal unwind or contract modification
(234)
(302)
Non-current contract assets as at 31 December
696
445
Total contract assets as at 31 December
1,798
1,641
Contract liability balance rollforward:
Current contract liabilities at 1 January
1,610
501
Increase in contract liability during the year
2,450
1,910
Derecognition of contract liability
(2,006)
(801)
Current contract liabilities as at 31 December
2,054
1,610
Non-current contract liabilities at 1 January
-
-
Increase in the balance due to new contracts
-
-
Decrease in balance due to normal unwind or contract modification
-
-
Balance transfer from non-current to current contract liabilities
-
-
Non-current contract liabilities as at 31 December
-
-
Total contract liabilities as at 31 December
2,054
1,610
(All tabular amounts are in EUR ‘000 unless otherwise stated)
Telia Lietuva, AB Financial statements for the year ended 31 December 2021 49
34
Events after the reporting period and going concern
Reacting to the Russian Federation’s military invasion into Ukraine, the Company from 24 February till at least the
end of March will provide free and unlimited calls and SMS to and from Ukraine. The Company also offered an
unlimited number of prepaid mobile communication SIM cards with communication services to Ukrainian war refugees
arriving to Lithuania. For Ukrainian businesses considering or preparing to relocate to Lithuania, the Company has
prepared a special support package including broadband Internet, voice telephony and mobile connection as well as
IT services. Following the sanctions imposed by European Union and the United States of America, and orders of the
Radio and Television Commission of Lithuania, the Company suspended rebroadcasting of Russian TV channels.
As provider of telecommunication and IT services, the Company has a limited exposure to telecommunication
operators and some customers, users of webhosting and cloud services provided by the Company, from the Russian
Federation and the Republic of Belarus. The Company is reconsidering continuation of those relationship due to
imposed sanctions and possible settlements disruption in order to mitigate accumulation of overdue or bad debts.
The Management of the Company has considered the possible impact of sanctions imposed by European Union and
the United States of America to certain legal and natural entities of the Russian Federation and the Republic of
Belarus, and as of the day of signing this document it has determined that they do not create a material uncertainty
that casts significant doubt regarding the Company’s ability to continue as a going concern. The possible negative
impact of currently imposed sanctions in case they will be valid through the whole year 2022 are estimated to be
below 1 per cent of the Company’s annual revenue and below 2 per cent of the Company’s annual EBITDA.
CONFIRMATION OF RESPONSIBLE PERSONS
Following the Article No 22 of the Law on Securities of the Republic of Lithuania and Rules on Information Disclosure
of the Bank of Lithuania, we, Dan Strömberg, CEO of Telia Lietuva, AB, and Arūnas Lingė, Head of Finance of Telia
Lietuva, AB, hereby confirm that, to the best of our knowledge, Telia Lietuva, AB Financial Statements as of and for
the year ended 31 December 2021 as set out on above are prepared in accordance with International Financial
Reporting Standards as adopted by the European Union and give a true and fair view of the assets, liabilities, financial
position, profit or loss and cash flows of the Company of undertakings.
Dan Strömberg
CEO
Arūnas Lingė
Head of Finance
Telia Lietuva, AB Annual report for the year ended 31 December 2021 50
ANNUAL REPORT
Approved by the Board
on 31 March 2022
GENERAL INFORMATION
Reporting period
Year ended 31 December 2021
Issuer and its contact details
Name of the Issuer
Telia Lietuva, AB (hereinafter – “the Company”)
Legal form
public company (joint-stock company)
Date of registration
6 February 1992
Name of Register of Legal Entities
State Enterprise Centre of Registers
Code of enterprise
1212 15434
LEI code
5299007A0LO7C2YYI075
Registered office
Saltoniškių str. 7A, LT-03501 Vilnius, Lithuania
Telephone number
+370 5 262 1511
Fax number
+370 5 212 6665
E-mail address
info@telia.lt
Internet address
www.telia.lt
Main activities of the Company
From 1 February 2017, Telia Lietuva, AB continues the activities of TEO LT, AB, AB Omnitel and AB Baltic Data Center.
Following the reorganisation whereby AB Omnitel and AB Baltic Data Center were merged into TEO LT, AB, and TEO LT,
AB on 1 February 2017 changed its name to Telia Lietuva, AB, the Company provides telecommunications, IT and TV
services from a single source to residents and businesses in Lithuania.
The Company is a part of Telia Company Group, a telecommunication services provider in the Nordic and Baltic countries.
Our updated purpose – we reinvent better connected living. Our shared values are dare, care, simplify. We dare to innovate,
to lead and speak up. We care for our customers, for each other and our world. We simplify execution, teamwork and our
operations.
The Communication Regulatory Authority (CRA) of Lithuania has designated the Company together with its related legal
entities as an operator with significant market power (SMP) in Lithuania on the following markets of:
- voice call termination on the mobile network;
- calls termination on individual public telephone networks provided at a fixed location;
- wholesale local access provided at a fixed location;
- wholesale central access for mass market products;
- wholesale high quality data transmission services via terminating segment;
- digital terrestrial television broadcasting transmission services provided by the Company in the territory of the Republic of
Lithuania.
Following the provisions of the Law on Electronic Communications of the Republic of Lithuania the Company is obliged to
provide access to other undertakings, to follow obligation of non-discrimination, obligation of transparency, obligations of
price control and cost accounting, obligation of accounting separation. Also, to publish public offer regarding the access.
The Company has a limited activities electronic money institution licence issued by the Bank of Lithuania. The licence grants
the right to issue electronic money and provide payment services as set out in Article 5 of the Payments Law of the Republic
of Lithuania.
The Company is certificated for compliance with the following ISO standards: IT Management (ISO 20000), Information
Security Management (ISO 27001), Quality Management (ISO 9001), Environmental Management (ISO 14001) and
Occupational Health & Safety (ISO 45001).
Telia Lietuva, AB Annual report for the year ended 31 December 2021 51
As of 31 December 2021, the Company had the following entity as associate of the Company:
Name of the
company
Date of registration, code, name of
Register of Legal Entities
Contact details
The Company’s share
in the share capital of
the entity (%)
The Company’s
share of votes
(%)
VšĮ Numerio
Perkėlimas
5 September 2014,
code 3033 86211,
State Enterprise Center of Registers
Jogailos str. 9,
LT- 01116 Vilnius,
Lithuania
-
50.00
VšĮ Numerio Perkėlimas, a joint not-for-profit organization, established together with Lithuanian telecommunication
companies (UAB Bitė Lietuva and UAB Tele2 holding a 25 per cent stakes each), from 1 January 2016 in cooperation with
UAB Mediafon administers the central database to ensure telephone number portability in Lithuania.
Telia Customer Service LT, AB (established on 27 July 1992, code 1104 01957, name of the Register of Legal Entities:
State Enterprise Center of Registers, address: Vytenio str. 18, LT-03503 Vilnius, Lithuania), a 100 per cent owned subsidiary
of the Company, that took care of the Company’s customers and provided Directory Inquiry service 118 in Lithuania, and
annually served more than 20 million contacts over the phone or e-channels, was merged into the Company on 1 July 2020.
On 18 June 2020, Telia Lietuva together with other shareholders – UAB Bitė Lietuva and UAB Tele 2 – sold all shares of
UAB Mobilieji Mokėjimai to the third party, SEPAxpress FS, UAB. In December 2017, three Lithuanian mobile operators
acquired shares of UAB Mobilieji Mokėjimai (registered on 12 December 2016, code 3044 31143, name of the Register of
Legal Entities: State Enterprise Center of Registers, address: Žalgirio str. 92-701, LT- 09303 Vilnius, Lithuania) in equal
stakes of 33.3 per cent. In May 2017, the Bank of Lithuania granted a limited activities electronic money institution license to
UAB Mobilieji Mokėjimai required for activities related to instant payments. Until 18 May 2020 Mobilieji Mokėjimai was
providing mobile payment services under MoQ brand.
The Company has no branches or representative offices.
Agreements with intermediaries of public trading in securities
Since 1 December 2000, the Company and SEB Bankas AB (code 1120 21238), Konstitucijos ave. 24, LT-01103 Vilnius,
have an agreement on accounting of the Company’s securities and services related to the accounting of securities.
Data about securities traded on regulated market
Since 2000 Nasdaq Vilnius stock exchange is a home market for the Company’s shares. Since January 2011, the Company’s
ordinary shares are included into the trading lists of the Berlin Stock Exchange (Berlin Open Market called Freiverkehr), the
Frankfurt Stock Exchange (Open Market (Freiverkehr)), the Munich Stock Exchange and the Stuttgart Stock Exchange. The
Company’s share symbol on German stock exchanges is ZWS.
The following securities of the Company are included into the Main List of Nasdaq Vilnius stock exchange (symbol: TEL1L)
as of 31 December 2021:
Type of shares
Number of shares
Nominal value
(in EUR)
Total nominal value
(in EUR)
Issue Code
Ordinary registered shares
582,613,138
0.29
168,957,810.02
LT0000123911
Securities of the merged Company’s subsidiary, Telia Customer Service LT, AB, were not traded publicly as the subsidiary
was 100 per cent owned by the Company. Stakes in VšĮ Numerio Perkėlimas and UAB Mobilieji Mokėjimai are/were jointly
owned together with UAB Bitė Lietuva and UAB Tele2, and are not for public trade.
MANAGEMENT REPORT
The year 2021 the whole Telia Company Group has started with the new purpose and updated strategy. Our new purpose is
reinvent better connected living through our digital connectivity, digital experiences and digital infrastructure by excelling at
inspiring customers, connecting everyone, transforming to digital and delivering sustainable so that we have the most loyal
customers, most engaged employees, most satisfied shareholder and most empowered societies.
During the first half of 2021 we continued to operate under second COVID-19 quarantine which in Lithuania was imposed
from November 2020 and lasted till the end of June 2021. During the second quarantine our retail outlets were partially closed
and provided only vital services that could not be offered online. Online sale and remote customer care became extremely
important during the pandemic. Closed shops effected sale of mobile devises and cross-border travelling restrictions have a
negative impact on revenue from roaming services.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 52
During the second quarantine majority of the Company’s employees continued to work from home. After lockdown was over,
employees of the Company were enabled to combine work in the office with remote work from home or other locations. The
workcation, a possibility to work from any EU country up to one month per year, was introduced.
The pandemic highlighted the relevance of our services for both residents and businesses. Due to lockdown demand for
solutions supporting flexible way of working as well as entertainment was strong. To respond to the increased customer
preference for video-on-demand, our already appreciated content library was further strengthened. To be in the forefront of
innovation we launched new eSIM services using the most advance VoLTE technology.
Quarantine has driven the need for e-services for all businesses rushing to adapt to the new reality. We have often been a
frontrunners of those changes: from remote work to data transfer to the cloud, from e-shops to smart customer communication
solutions. In response to increased demand for IT services and solutions during 2021 we have expanded and modernised
two major data centres in Vilnius.
The importance of high-quality connectivity remain high. Our record high investments of EUR 94 million during 2021 into
upgrade and expansion of both fixed and mobile networks reflected in growing number of customers and the highest average
speed of mobile Internet in the country. At the end of the year two important connectivity milestone were reached: from
October every second call in the Company’s mobile network is made using VoLTE technology while mobile data download
speed in the Company’s network exceeded 100 Mbps and at the end of December amounted to 104.5 Mbps.
Last year we have started a strategic project to upgrade our mobile network with Ericsson equipment. About 2,000 base
stations will be installed over the next three years, making the Company’s network more sustainable, secure and ready for
commercial 5G deployment in the future. This will be one of the biggest investment projects ever. By the end of 2021, more
than 450 base stations supporting 2G, 3G, 4G and 5G connection were already upgraded with Ericsson equipment.
In October 2021, Telia Lietuva has joined the memorandum signed by the main Lithuanian telecommunications operators
and state institutions. All parties agreed to cooperate aiming to launch 5G network in Vilnius by 2022, in five largest cities of
Lithuania – by 2023 and by 2025 in all towns, international transport routes as well as on the state importance roads, railways
and ports. It also sets a goal to ensure Internet speed of 100 Mbps available to at least 95 per cent of Lithuanian households
and along all major transport routes.
The Company’s leadership in quality of connectivity allowed to attract new customer. More than 80 thousand of households
appreciating benefits of unique on the market converged service offer, Telia1. During the 2021:
− number of mobile service subscriptions grew by 8.6 per cent up to 1,518 thousand,
− number of fiber-optic Internet connections went up by 2.7 per cent up to 305 thousand,
− number of TV service users increased by 0.8 per cent up to 255 thousand.
Intake of new customers in combination with the persisting demand for mobile data and quality content as well as
implementation of number of IT projects for business customers and increased sale of equipment and flagship smart devices
pushed the revenue up. Over the year, comparing with the consolidated data for the year 2020:
− revenue from IT services grew by 24.3 per cent,
− revenue from broadband Internet services went up by 11.2 per cent,
− revenue from billed mobile services increased by 10.4 per cent,
− revenue from TV services was up by 8.5 per cent.
During 2021, besides the pandemic we as the whole country faced new challenges such as rising electricity prices, growing
salaries and inflation. That also had an effect on our financial results. Nevertheless, EBITDA for the year 2021 was the highest
in the Company’s history. In 2021, we sold our office building in Kaunas and recorded a EUR 1.2 million gain from this sale.
Strong cash flows allowed the Company to reduce its banks’ loan by a half to EUR 30 million.
In May, the Company paid-out a record high EUR 58.3 million (0.10 euro per share) dividends following the decision of the
Annual General Meeting of shareholders. Shareholders for a new two-years’ term elected the Board of the Company: five
members of the previous Board were re-elected (including one independent) and another independent new member of the
Board, Dovilė Grigienė, was elected. Douglas Lubbe was re-elected as the Chair of the Board.
For creation of customer experience worth sharing and in order to enhance focus, the customer channels organization was
restructured into the Dare – Care model. Implying a Dare organization with focus on driving sales results and a Care
organization focused on improving efficiency and providing superior customer care.
The two-years project for renovation of 30 largest customer care shops was finished by the end of 2021. In total, EUR 2.5
million was invested into making the Company’s retail shops more comfortable and cosy. In November, Telia Lietuva for the
second year in a row was recognized for the best customer care quality provided by telecommunication company in Lithuania.
The survey was conducted by mystery shoppers, working with Dive Lietuva trademark.
We remain committed to our sustainability agenda. Together with the colleagues from Estonia we are the first in Telia
Company Group to reached parity of male and female employed and equal number of male and female managers. Our efforts
Telia Lietuva, AB Annual report for the year ended 31 December 2021 53
were recognised during National Responsible Business Awards – Telia Lietuva was named as the Best Employer in 2020
among the large corporations.
During the National Responsible Business Awards for the year 2021, the Company has been named the most environmental
friendly company in the large enterprise category The Company was recognised for its sustainable business decisions and
responsible supply chain design. We are also number one operator in Lithuania according to Sustainable Brand Index rating.
As a proof, in March 2021 we have offered refurbished phones – used but tested smartphones for affordable price.
At the end of 2021, Telia Lietuva also received the maximum score in the latest business transparency assessment conducted
by the Lithuanian branch of Transparency International.
During 2021, the Company paid EUR 80.3 million of taxes and contributions, not including taxes and contributions that were
withheld and paid on behalf of other persons. An amount of EUR 14.3 million was contributed to the State Social Insurance
Fund and a total of EUR 66 million was paid to the State Tax Inspectorate.
COVID-19 impact
During the second COVID-19 lockdown which lasted from November 2020 till June 2021, the Company’s retail outlets were
partially and majority of employees were working from home except for staff in business-critical functions.
As in 2020, due to limitation on cross-border travelling, the Company’s service revenue was negatively impacted by lower
revenue from roaming service. In 2021, revenue from roaming services to incoming country’s visitors were EUR 476 thousand
lower than a year ago, and revenue from retail roaming services over the year declined by EUR 763 thousand. During the
second half of 2021, there were positive tendency in revival of revenue from roaming charges, however, the uncertainty
surrounding COVID-19 implies a certain risk going forward.
During 2021, financial markets have rebounded after initial COVID-19 caused turbulence in the beginning of 2020. The
Company’s financial risk management is in all material aspects remained unchanged. The debt capital market has recovered
to pre COVID-19 interest rate levels for the Company’s credit. The general credit risk that had increased in 2020 has
decreased and there has been no need for any significant increases in the Company’s allowances for expected credit losses
in 2021.
Management of the Company has considered the possible consequences of COVID-19 and other events and conditions, and
it has determined that they do not create a material uncertainty that casts significant doubt regarding the Company’s ability
to continue as a going concern.
Recent events
Reacting to the Russian Federation’s military invasion into Ukraine, the Company from 24 February till at least the end of
March will provide free and unlimited calls and SMS to and from Ukraine. The Company also offered an unlimited number of
prepaid mobile communication SIM cards with communication services to Ukrainian war refugees arriving to Lithuania. For
Ukrainian businesses considering or preparing to relocate to Lithuania, the Company has prepared a special support package
including broadband Internet, voice telephony and mobile connection as well as IT services. Following the sanctions imposed
by European Union and the United States of America, and orders of the Radio and Television Commission of Lithuania, the
Company suspended rebroadcasting of Russian TV channels.
As provider of telecommunication and IT services, the Company has a limited exposure to telecommunication operators and
some customers, users of webhosting and cloud services provided by the Company, from the Russian Federation and the
Republic of Belarus. The Company is reconsidering continuation of those relationship due to imposed sanctions and possible
settlements disruption in order to mitigate accumulation of overdue or bad debts. The Management of the Company has
considered the possible impact of sanctions imposed by European Union and the United States of America to certain legal
and natural entities of the Russian Federation and the Republic of Belarus, and as of the day of signing this document it has
determined that they do not create a material uncertainty that casts significant doubt regarding the Company’s ability to
continue as a going concern. The possible negative impact of currently imposed sanctions in case they will be valid through
the whole year 2022 are estimated to be below 1 per cent of the Company’s annual revenue and below 2 per cent of the
Company’s annual EBITDA.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 54
FINANCIAL INFORMATION
The financial statements of the Company have been prepared according to the International Financial Reporting Standards
as adopted by the European Union. For the year ended 31 December 2020, the Company had prepared Consolidated and
Separate financial statements because until 1 July 2020 the Company had a subsidiary, Telia Customer Service LT, AB. For
the year ended 31 December 2021, only standalone financial statements of the Company were prepared and therefore for
comparability and consistency purposes key financial figures of the Company for the year 2021 below are compared to
standalone and consolidated figures for the year 2020.
Key financial figures
(in thousands of EUR unless otherwise stated)
2021
2020
consolidated
Change
(%)
2020
Company
Change
(%)
Revenue
420,794
398,083
5.7
399,041
5.5
Adjusted EBITDA excl. non-recurring items
139,063
136,236
2.1
136,115
2.2
Adjusted EBITDA margin (%)
33.0
34.2
34.1
EBITDA
138,599
134,915
2.7
134,794
2.8
EBITDA margin (%)
32.9
33.9
33.8
EBIT excluding non-recurring items
61,394
66,167
(7.2)
66,163
(7.2)
EBIT margin excluding non-recurring items (%)
14.6
16.6
16.6
Operating profit (EBIT)
60,930
64,846
(6.0)
64,842
(6.0)
EBIT margin (%)
14.5
16.3
16.2
Profit before income tax
58,845
62,255
(5.5)
62,250
(5.5)
Profit before income tax margin (%)
14.0
15.6
15.6
Profit for the period
56,808
55,866
1.7
55,914
1.6
Profit for the period margin (%)
13.5
14.0
14.0
Earnings per share (EUR)
0.098
0.096
1.7
0.096
1.6
Number of shares (thousand)
582,613
582,613
-
582,613
-
Share price (EUR)
2.040
1.825
11.8
1.825
11.8
Market capitalisation
1,188,531
1,063,269
11.8
1,063,269
11.8
Total assets
641,469
608,448
5.4
608,448
5.4
Shareholders’ equity
330,054
331,507
(0.4)
331,507
(0.4)
Cash flow from operations
126,373
132,427
(4.6)
130,901
(3.5)
Operating free cash flow
78,764
84,869
(7.2)
83,338
(5.5)
Capital investments (Capex)
93,937
53,856
74.4
53,856
74.4
Net debt
92,485
67,202
37.6
67,202
37.6
Financial ratios*
31-12-2021
31-12-2020
consolidated
31-12-2020
Company
Return on average capital employed** (%)
13.4
15.1
15.1
Return on average assets** (%)
9.9
11.0
11.0
Return on average shareholders’ equity** (%)
17.6
17.4
17.4
Operating cash flow to sales (%)
30.0
33.3
32.8
Capex to sales (%)
22.3
13.5
13.5
Net debt to EBITDA ratio
0.67
0.50
0.50
Gearing ratio (%)
28.0
20.3
20.3
Debt to equity ratio (%)
46.7
37.1
37.1
Current ratio (%)
77.7
110.2
110.2
Rate of turnover of average assets (%)**
68.1
67.6
67.8
Equity to assets ratio (%)
51.5
54.5
54.5
Price to earnings (P/E) ratio
20.9
19.0
19.0
Notes:
* Description of financial ratios and their calculation is provided at the Company’s website:
https://www.telia.lt/eng/investors/financial-results
** Averages are calculated including quarterly data of respective year.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 55
Operating figures
31-12-2021
31-12-2020
Change
(%)
Mobile service subscriptions, in total (thousand)
1,518
1,398
8.6
- Post-paid (thousand)
1,236
1,104
12.0
- Pre-paid (thousand)
282
294
(4.1)
Broadband Internet connections, in total (thousand)
421
417
1.0
- Fiber-optic (FTTH/B) (thousand)
305
297
2.7
- Copper (DSL, VDSL) (thousand)
116
120
(3.3)
TV service customers (thousand)
255
253
0.8
Fixed telephone lines in service (thousand)
230
261
(11.9)
Number of personnel (head-counts)
2,095
2,161
(3.1)
Number of full-time employees
1,939
2,001
(3.1)
Revenue
Double digit growth in revenue from mobile communication, broadband Internet and IT services pushed total revenue up.
Due to COVID-19 pandemic limited travelling abroad had a negative effect on revenue from roaming services.
(in thousands of EUR)
2021
2020
consolidated
Change
(%)
2020
Company
Change
(%)
Fixed services
187,065
177,708
5.3
178,096
5.0
Voice telephony services
41,504
44,400
(6.5)
44,411
(6.5)
Internet services
64,410
57,914
11.2
57,890
11.3
Datacom and network capacity services
17,454
17,964
(2.8)
17,964
(2.8)
TV services
39,042
35,987
8.5
35,987
8.5
IT services
17,653
14,200
24.3
14,428
22.4
Other services
7,002
7,243
(3.3)
7,416
(5.6)
Mobile services
136,298
128,548
6.0
129,159
5.5
Billed services
117,521
106,457
10.4
107,068
9.8
Other mobile service
18,777
22,091
(15.0)
22,091
(15.0)
Equipment
97,431
91,827
6.1
91,786
6.2
Total
420,794
398,083
5.7
399,041
5.5
Share of revenue from fixed and mobile communication services amounted to 44.5 and 32.4 per cent, respectively, from the
total revenue for the year 2021. Share of revenue from equipment sales reached 23.1 per cent. Revenue from services
provided to residential customers (B2C) amounted to 62.4 per cent and to business customers (B2B) – 37.6 per cent of the
total revenue for January-December of 2021.
By the end of December 2021, the number of households that took advantage of converged fixed and mobile services value
offer, Telia1, was 80.5 thousand (almost 75 thousand a year ago). From September 2021 in addition to higher Internet speed
and more TV content, Telia1 offers a doubled amount of gigabytes.
During 2021, the number of mobile service subscriptions went up by 120 thousand: number of post-paid subscription was
up by 132 thousand, while number of pre-paid subscriptions went down by 12 thousand. Intake of new customers, increased
APRU and higher data usage pushed revenue from billed mobile services up.
From October 2021 every second call in the Company’s mobile network is made using Voice over LTE (VoLTE) technology.
The Company was the first and so far the only to introduce this technology in Lithuania. VoLTE technology ensure fast
connection of mobile phone calls, HD voice quality and the possibility to surf the Internet during a phone call.
Eased restrictions on cross-border travelling led to recovery of revenue from roaming charges to the country’s visitors during
the second half of 2021, but for the whole year revenue from roaming charges were lower than in 2020 and in combination
with lower revenue from mobile network interconnection led to decline in revenue from other mobile services.
During 2021, the number of fixed telephony lines eased by 31 thousand (2020: 35 thousand). Revenue from voice transit
service during January-December of 2021 was almost on the same level as a year ago and that slowed decrease in total
revenue from voice telephony services caused by lower number of fixed telephony customers.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 56
Over the year, the number of broadband Internet connections over the fiber-optic network (FTTH/B) increased by 8
thousand, while the number of copper DSL connections eased by 4 thousand. Churn of copper connections was slowed by
customers’ migration from DSL to “Super VDSL” (S-VDSL) technology that provides much higher Internet speed even using
copper connection. During 2021, the total net increase in number of broadband Internet users was 4 thousand. By the end of
December of 2021, the number of Internet connections over the FTTH/B network amounted to 72 per cent of all broadband
Internet connections.
During 2021, the number of smart television (IPTV) services users increased by 2 thousand. New customers and additional
quality content had a positive impact on revenue from TV services development.
Revenue from IT services showed a double digit growth due to ongoing demand for various IT services ranging from virtual
private network (VPN) and computerised workplace management to cloud and tailor-made IT solutions. The Company’s
competence and excellence in IT area are recognised by the key partners. During 2021, Telia Lietuva was announced as a
Gold Partner by Microsoft in 16 positions in such areas as Cloud productivity, Security, Applications integrations, etc. More
partnership of the year awards were granted by Dell Technologies, Veeam, IBM and VMware.
The availability of data center services provided by the Company reaches 99.985 per cent and services are in compliance
with the major IT services management and security standards ISO 27001 and ISO 20000. The Company to local and
multinational enterprises provides the following related services: IT infrastructure, could computing, backup copy, cyber
security, IT systems and computerised workplace management as well as equipment rent and sales services.
Revenue from other services consists of the non-telecommunication services such as Directory Inquiry service 118 provided
to external customers till 1 March 2021, lease of premises, discount refunds and other. In March 2021, the Company
terminated provision of commercial information such as companies’ contacts, transport timetables, business, leisure and
other information by the Directory Inquiry service 118. Only obligatory information about publicly announced subscribers’
phone numbers is provided by the phone number 118.
Wider selection of devices in retail shops and online, launch of smart watches and exclusive offers of new flagship smart
phone resulted in higher than in 2020 revenue from equipment sale. COVID-19 pandemic caused an increase in demand
for laptops and TV sets in 2020, while in 2021 with re-opening of retail outlets demand has shifted towards recovery of mobile
devices sale. Smart gadget sale was also boosted by launching eSIM service in February 2021.
Gain or loss from sale of property, plant and equipment, as well as gain or loss on currency exchange is recorded at net value
as other gain (loss). In spring of 2021, the Company has sold an office building in Kaunas and recorded EUR 1.2 million
gain from sale of property. During 2021, the total gain from sale of property amounted to EUR 1.3 million.
Market information
According to the Report of the Communications Regulatory Authority (CRA), the Lithuanian electronic communications market
in terms of revenue for the year 2021 amounted to EUR 762.1 million, an increase by 4.1 per cent over the total market
revenue of EUR 731.8 million for January-December of 2020, mainly due to growth in mobile and fixed Internet access
segments.
Telia Lietuva remains the largest telecommunications’ service provider in Lithuania with the market share (in term of revenue)
of 38.4 per cent for the fourth quarter of 2021 with the leaders’ position on fixed broadband Internet, pay TV and fixed voice
telephony markets, while on mobile voice and mobile Internet markets the Company occupies the third place.
The market shares in terms of
customers (%)
The market shares in terms of
revenue (%)
Q4 2021
Change (p.p)
(y-o-y)
Q4 2021
Change (p.p)
(y-o-y)
Fixed voice telephony services
79.2
(2.0)
84.1
(1.3)
Mobile voice telephony services
28.6
(0.1)
27.8
0.6
Fixed Internet access
52.7
0.5
60.8
0.9
Mobile Internet access
28.2
(0.4)
26.6
(0.1)
Pay-TV services
38.7
1.6
47.9
1.2
Data communication services
n/a
n/a
53.6
(2.6)
According to the Report of the CRA, on 31 December 2021, broadband Internet penetration per 100 residents of Lithuania
was 56 per cent (53.2 per cent a year ago) and pay-TV penetration per 100 households was 46.9 per cent (50.2 per cent a
year ago). The penetration of active mobile voice communication users per 100 residents was 133.3 per cent (130.6 per cent
a year ago) and penetration of fixed voice telephony lines per 100 households – 19.1 per cent (22.4 per cent a year ago).
Telia Lietuva, AB Annual report for the year ended 31 December 2021 57
Expenses
During 2021 cost of goods and services compared with a year ago grew mainly due to higher equipment sale, while costs
of networks’ interconnection and roaming charges went down. Higher employees’ salaries and accruals for vacations pushed
employee related expenses up compared with the previous year. During 2021 significantly increased electricity tariffs and
higher marketing expenses resulted in growth of other expenses. Non-recurring redundancy pay-outs for the year 2021
amounted to EUR 858 thousand (EUR 1,321 thousand a year ago) and other non-recurring expenses amounted to EUR 943
(none a year ago).
(in thousands of EUR)
2021
2020
consolidated
Change
(%)
2020
Company
Change
(%)
Cost of goods and services
(168,690)
(158,023)
6.8
(163,815)
3.0
Operating expenses
(114,919)
(105,647)
8.8
(101,264)
13.5
Employee related
(56,632)
(54,887)
3.2
(50,488)
12.2
Other
(58,287)
(50,760)
14.8
(50,776)
14.8
Non-recurring expenses
1,801
1,321
36.4
1,321
36.4
Operating expenses
(excl. non-recurring expenses)
(113,118)
(104,326)
8.4
(99,943)
13.2
Employee related
(55,774)
(53,566)
4.1
(49,167)
13.4
Other
(57,344)
(50,760)
13.0
(50,776)
12.9
During 2021, the total number of employees (headcount) decreased by 66 – from 2,161 to 2,095. In terms of full-time
employees (FTE), the total number of employees decreased by 62 – from 2,001 to 1,939. In September 2021, the Company
handed over fiber-optic access network maintenance function and 19 employees to the third party.
Earnings
Revenue growth in spite of higher cost of goods and services, and increase in operating expenses (especially electricity
costs) ensured positive EBITDA development in 2021. Higher capital investments resulted in increase in depreciation and
amortisation charges and that had a negative effect on Operating profit.
(in thousands of EUR)
2021
2020
consolidated
Change
(%)
2020
Company
Change
(%)
EBITDA
138,599
134,915
2.7
134,794
2.8
Margin (%)
32.9
33.9
33.8
Depreciation and amortisation
(77,669)
(70,069)
10.8
(69,952)
11.0
Operating profit (EBIT)
60,930
64,846
(6.0)
64,842
(6.0)
Margin (%)
14.5
16.3
16.2
Non-recurring expenses
1,801
1,321
36.4
1,321
36.4
Gain on sale of property
1,337
-
-
EBITDA excluding non-recurring items
139,063
136,236
2.1
136,115
2.2
Margin (%)
33.0
34.2
34.1
EBIT excluding non-recurring items
61,394
66,167
(7.2)
66,163
(7.2)
Margin (%)
14.6
16.6
16.6
Non-recurring items for the year 2021 were comprised from one-off redundancy pay-outs of EUR 858 thousand, non-
recurring other expenses of EUR 943 thousand and gain of EUR 1.3 million from sale of office building in Kaunas and other
property. During 2020, the Company had only non-recurring redundancy expenses of EUR 1.3 million.
Loss from investments for the year 2020 represents result from activities of on 18 June 2020 disposed associated entity
UAB Mobilieji Mokėjimai. In March 2020, shareholders of Mobilieji Mokėjimai – three Lithuanian mobile operators: Bitė
Lietuva, Tele2 and Telia Lietuva – decided to cease operations of this loss generating associate. As of 31 December 2019,
the value of this investment was already impaired to one euro. During 2020, the Company extended loans for the total amount
of EUR 289.2 thousand to associate at an annual interest rate of 3.37 per cent. The Company’s claim under not repaid loan
and accumulated interest was used to cover losses of this entity. An additional shareholders’ contribution of EUR 26.7
thousand to cover losses was made before divestment of shares in June 2020.
Net result from finance and investment activities for the year 2021 was negative and amounted to EUR 2.1 million (in
2020 it was also negative and amounted to EUR 2.6 million).
Telia Lietuva, AB Annual report for the year ended 31 December 2021 58
(in thousands of EUR)
2021
2020
consolidated
Change
(%)
2020
Company
Change
(%)
Profit before income tax
58,845
62,255
(5.5)
62,250
(5.5)
Margin (%)
14.0
15.6
15.6
Income tax
(2,037)
(6,389)
(68.1)
(6,336)
(67.9)
Profit for the period
56,808
55,866
1.7
55,914
1.6
Margin (%)
13.5
14.0
14.0
The profit tax rate in Lithuania is 15 per cent. Following the provisions of the Law on Corporate Profit Tax regarding tax relief
for investments in new technologies, the profit tax relief the profit tax relief for the twelve months of 2021 amounted to EUR
6.8 million (in 2020 – EUR 2.1 million).
Financial position and cash flow
As of 31 December 2021, the total non-current assets amounted to 75.3 per cent (76.2 per cent a year ago), the total
current assets – to 23.9 per cent (23.6 per cent), whereof cash alone represented 9.6 per cent (9.2 per cent) of total assets.
Shareholders’ equity at the end of 2021 amounted to 51.5 per cent of the total assets (54.5 per cent at the end of 2020).
(in thousands of EUR)
31-12-2021
Company
31-12-2020
Company
Change
(%)
Total assets
641,469
608,448
5.4
Non-current assets
482,959
463,497
4.2
Current assets
153,200
143,869
6.5
whereof cash and short term investments
61,769
55,941
10.4
Assets for sale
5,310
1,082
390.8
Shareholders’ equity
330,054
331,507
(0.4)
On 27 April 2021, the Annual General Meeting of Shareholders allocated from the Company’s distributable profit of EUR
145.7 million an amount of EUR 58.3 million for the payment of dividends for the year 2020, i.e. EUR 0.10 dividend per
share, and carried forward to the financial year 2021 an amount of EUR 87.4 million as retained earnings (undistributed profit).
In May 2021, dividends for the year 2020 were paid to the shareholders of the Company.
According to the Law on Companies of the Republic of Lithuania, dividends should be paid from retained earnings of the
Company. As of 31 December 2021, retained earnings of the Company amounted to EUR 144.2 million.
The Company’s Dividend Policy that was approved by the Board in 2017 provides that the Company must maintain the net
debt to EBITDA ratio not higher than 1.5 and to pay out up to 80 per cent of free cash flow as dividend. As of 31 December
2021, the Company’s net debt to EBITDA ratio was 0.67 (0.50 a year ago).
In the second half of 2021, in order to avoid negative interest rate charged for the Company’s residuals at the banks the
Company started to grant loans to the largest shareholder of the Company, Telia Company AB, for up to three months at a
zero interest rate. The lent funds are available to the Company on demand within 2 business days. As of 31 December 2021,
the total amount of lending to the Parent company amounted to EUR 40 million.
On 4 January 2021, the Company repaid the last instalment (EUR 7.5 million) and completed repayment of EUR 150 million
loan that was borrowed in January 2016 to finance acquisition of Omnitel shares. In November 2021, the Company repaid a
half (EUR 30 million) of a syndicated banks’ loan of EUR 60 million granted in May 2017. The outstanding amount of EUR 30
million will be repaid in May 2024.
The Company participates in reverse factoring or Supplier Invoice Financing (SIF) program where suppliers’ invoices are paid
by the banks within 7 days for an agreed fee which is covered by supplier. The Company does not pay any credit fees and
does not provide any additional collateral or guarantee to the banks. The Company pays to the banks full invoice amount in
up to one-year period (actual term depends on few variables agreed between all three parties). As of 31 December 2021,
there were 31 suppliers which participated in SIF program.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 59
Information about the Company’s borrowings (EUR thousand):
31-12-2021
31-12-2020
Loans from the banks
30,000
67,500
Liabilities under reverse factoring agreements
123,681
54,244
Liabilities under financial lease agreements
573
1,399
Total borrowings
154,254
123,143
Cash and cash equivalents
61,769
55,941
Net debt
92,485
67,202
Net debt to equity (Gearing) ratio (%)
28.0
20.3
Net cash flow from operating activities in 2021 amounted to EUR 126.4 million and was 4.6 per cent lower than
consolidated cash flow of EUR 132.4 million in 2020. Operating free cash flow (operating cash flow excluding capital
investments) for 2021 amounted to EUR 78.8 million and was 7.2 per cent lower than a year ago (EUR 84.9 million).
Information about capital investments (EUR thousand):
31-12-2021
31-12-2020
Change
(%)
Fixed network
27,757
24,910
11.4
Mobile network
37,683
9,614
292.0
IT systems and infrastructure
13,381
10,843
23.4
Transformation program
13,056
6,488
101.2
Other
2,060
2,001
2.9
Total capital investments
93,937
53,856
74.4
Capital investments to revenue ratio (%)
22.3
13.5
In 2021, the Company has started a major upgrade of its radio access network (RAN) with Ericsson equipment thus phasing
out Huawei equipment earlier used in Telia Lietuva mobile network. Over the next three years, the Company plans to upgrade
around 2,000 sites in Lithuania. This will further improve the quality of 4G networks and ensure a fast upgrade to 5G, which
will eventually be available throughout the country. As of 31 December 2021, more than 450 base stations that support 2G,
3G, 4G and 5G connection were already upgraded with Ericsson equipment.
According to the latest CRA measurement data, the average Internet download speed in Telia Lietuva mobile network remains
the highest in the country amounting to 104.5 Mbps (85.1 Mbps a year ago). The Company’s 4G network is available in all
open areas across the entire country.
In 2021, the Company completed substitution of DSLAM (digital subscriber line access multiplex) equipment with MSAN
(multi-service access node) equipment, that ensure much better service quality and higher Internal speed using copper DSL
(digital subscriber line) connections. By the end of December 2021, the Company had 947 thousand households passed (937
thousand a year ago), or 70.5 per cent of the country’s households, by the fiber-optic network.
In December 2021, the Company purchased a 2-hectare land plot near Vilnius, where it will build a new data center. According
to the plans, this will be the largest data centre in the country, and the Company will invest EUR 10 million in its construction.
In 2021, the Company renovated its Žirmūnai data center for almost EUR 1 million and invested EUR 2 million into expansion
and modernization of the Naujoji Vilnia data centre. Renovations and expansion of the existing data centers are also planned
in 2022.
In 2021, under continuous business transformation program data of residential and business customers was migrated into
SAP Customer Relationship Management (CRM) system and in November private customers having both fixed and mobile
services received the single invoices instead of separate ones.
In 2021, the two-years’ project for upgrade of 30 largest customer care shops in the largest cities of Lithuania was completed.
During 2021 alone, the Company invested more than EUR 1 million into renovation of shops, while the total value of shops’
upgrade project amounted to EUR 2.5 million. Together with the partners Telia Lietuva operates a network of 52 customer
care shops. The upgrade of smaller shops with continue in 2022.
Cash and cash equivalents during 2021 increased by EUR 5.8 million.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 60
Information about related party transactions
Following the International Financial Reporting Standards as adopted by the EU, the parties related to the Company are the
Company’s subsidiaries, associates, companies that belong to Telia Company Group and management team of the
Company. Transactions with related parties are carried out based on the arm’s length principle.
In the second half of 2021, in order to avoid negative interest rate charged for the Company’s residuals at the banks the
Company following the Audit Committee and the Board approvals started to grant loans to the largest shareholder of the
Company, Telia Company AB, holding 88.15 per cent of the Company’s share capital, for up to 3 months at a zero interest
rate. The lent funds are available to the Company on demand within 2 business days. As of 31 December 2021, the total
amount of short-term loans provided to the Parent company amounted to EUR 40 million. As of 31 December 2021, there
were no loans extended by the Company to its associate.
Information about new related party transactions entered by the Company during 2021:
Related party
Transaction
Value
Telia Company AB, code 556103-4249, 169 94
Solna, Sweden
19-07-2021 the Company provided loan for 3
months at 0 per cent interest rate
EUR 20 million
23-08-2021 the Company provided loan for 3
months at 0 per cent interest rate
EUR 15 million
16-09-2021 the Company provided loan for 3
months at 0 per cent interest rate
EUR 15 million
19-10-2021 the Company prolonged loan
granted on 19-07-2021 for 1 month at 0 per
cent interest rate. Loan was repaid on
19-11-2021
EUR 20 million
25-10-2021 the Company provided loan for 3
months at 0 per cent interest rate
EUR 10 million
23-11-2021 the Company prolonged loan
granted on 23-08-2021 for 3 months at 0 per
cent interest rate
EUR 15 million
16-12-2021 the Company prolonged loan
granted on 16-09-2021 loan for 3 months at
0 per cent interest rate
EUR 15 million
The Company through its largest shareholder, Telia Company AB, is related to Telia Company Group that provides
telecommunication services in Nordic and Baltic countries. The main buyers and providers of telecommunications and other
services to the Company based on earlier signed agreements are Telia Company AB (Sweden), Telia Carrier AB (Sweden)
(till 1 June 2021), Telia Eesti AS (Estonia), LMT (Latvia), Telia Finland Oyj (Finland), Telia Finance AB (Sweden) and Telia
Global Services Lithuania, UAB (Lithuania). In May 2021, the Company paid-out to Telia Company an amount of EUR 51.4
million as dividend for the year 2020.
On 20 May 2021, a 2 years’ term Revolver Loan Agreement with Telia Company has terminated. The Agreement was
providing the Company with revolving credit facility for up to EUR 20 million of short-term (3 or 6 months tenor) loans at 0.65
per cent margin. As of 31 December 2021, the Company had no outstanding loans granted by Telia Company.
Information about volumes of the Company’s transactions with related parties during 2021 (in EUR thousand):
Telecommunication and
other services
Telia Company Group:
Sales
Purchase
Telia Company AB (Sweden)
1
13,166
Telia Asset Finance AB (Sweden)
-
7,493
Telia Carrier AB (Sweden)
880
690
Telia Försäkring AB (Sweden)
3,490
44
Telia Sverige AB (Sweden)
442
(269)
Latvijas Mobilais Telefons SIA (Latvia)
825
586
SIA Telia Latvija (Latvia)
15
101
Telia Eesti AS (Estonia)
374
750
Telia Finland Oyj (Finland)
493
178
Telia Global Services Lithuania, UAB
639
1,006
UAB Telia Carrier Lithuania (Lithuania)
380
-
Other
941
597
8,480
24,342
Telia Lietuva, AB Annual report for the year ended 31 December 2021 61
Information about related party transactions is provided in Note 31 of the Company’s Financial Statements for the year ended
31 December 2021. Following the Law on Companies of the Republic of Lithuania requirements, information about related
party transaction concluded starting from 1 January 2018 is placed on the Company’s website.
Research and development activities
Since December 2018, the Company has been testing non-commercial 5G frequencies granted by the Lithuanian
Communications Regulatory Authority (CRA) in Lithuania. Starting from November 2020, private and business customers
were able to try 5G connectivity free of charge in Vilnius, Kaunas, Raseiniai and Klaipėda. In January 2022, the Company
was the first one in Lithuania to activate the currently available 2100 MHz frequencies for 5G network in 20 base stations in
Vilnius. The next-generation technology runs in Dynamic Spectrum Sharing mode, which allows the same frequency band to
be used in parallel for both 4G and 5G connection.
In 2021, the Company continued to develop and improve existing services, digitalisation of the customer’s experience as well
as make preparation for 5G era.
Risk management
The Company’s Risk management policy describes the risk as uncertainty, that might significantly influence the Company’s
goals and level of achievement of expected results. The Company distinguish the following risk: risk of business
discontinuation, security risk, reputational risk, financial risk, regulatory risk, ethics and sustainability risk as well as
operational risk.
The Company’s risk management is based on requirements of ISO 31000 standard and COSO (Committee of Sponsoring
Organizations of the Treadway Commission) Enterprise Risk Management (ERM) system. The Company has a business
oriented risk management process, by implement which potential threats to business are indicated and plans for prevention
of business discontinuity and crises situation management are set. Risk management is fully integrated into business planning
and control processes.
The risk management includes internal and external environment of the Company, distinguishing, but not limiting to, the
following main risk management areas of internal environment: finance management, information management, information
technologies, resources management, revenue assurance, services and customer care, personnel, processes management,
strategy and network management, as well as external environment: ecology, economic conditions, competition, political,
socio-cultural, technology, legal and regulatory, suppliers and customers.
By combining related areas, the Company has a set of rules and best practices for risk management in such areas as resource
risk management, network risk management, revenue assurance risk management, services and customer care risk
management, information risk management, business relations, reputation and market risk management, legal risk
management and corruption risk management.
The Company’s activities exposes it to the following financial risks: market risk (including foreign exchange risk, cash flow
and fair value interest rate risk), credit risk, liquidity risk. The Financial Management Policy focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects of the financial performance of the Company.
The Company’s exposure to foreign exchange risk is not substantial as Telia Lietuva operates in euro zone and majority of
services are provided to residents and businesses in Lithuania as well as majority of services and goods are purchased from
local or euro zone suppliers. Certain foreign exchange risk exposure arises from the Company’s international activities with
foreign telecommunication operators and suppliers from outside the euro zone and is primarily related to settlements in US
Dollars. The Company’s trade payables and trade receivables in foreign currency are short-term and insignificant in
comparison with settlements in euro. The Company manages foreign exchange risk by minimising the net exposure to open
foreign currency position, therefore no foreign exchange hedging instruments is used.
The Company’s income and operating cash flows are partially dependent of changes in market interest rates. The repayment
of fixed interest rate 5 year’s term syndicated loan of EUR 150 million for acquisition of Omnitel was completed in January
2021. The outstanding EUR 30 million loan provided by SEB Bank, Danske Bank and Nordea Bank will be repaid in May
2024. The interest rates of this syndicated loan are set semi-annually and are based on a 6 months EURIBOR interest rate.
The Company does not use any interest rate hedging tools.
The Company’s financial assets’ exposure to credit risk is related to cash deposits and trade receivables. Credit risk of cash
deposits is managed by limiting the cash exposure to financial institutions with lower than A (according to Fitch or equivalent
by Standard & Poor’s or Moody’s) long-term credit ratings. As of 31 December 2021, majority (99.1 per cent) of the Company’s
cash and short term investments were held in A+ and A-2 rated banks.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 62
The Company has a Participation Agreement with Skandinaviska Enskilda Banken (SEB) for customer receivables. Under
agreement SEB acquired the rights to the cash flows for certain pools of the Company’s receivables from the sales of
handsets to residential customers. The objective of the agreement is to improve the Company’s working capital by achieving
derecognition of the receivables by transferring the risk related to the receivables to SEB with the use of the so called “pass-
through” rules in IFRS 9 Financial instruments.
To manage credit risk of trade receivables the Company checks the creditworthiness of all customers (business and
residential) before signing any new contracts, except for low value contracts, e.g. additional TV packaged or other value
added services (VAS). Customers’ invoices payment control consists of a few various reminders starting with a notification
before due date and then additional reminders after due date are sent. Services are limited after 20 days past due and
contract is terminated and penalties issued after 50 days past due. Residential customers’ bad debts after sending additional
reminding letters are sold or handed over to external bad debt collection agencies for debt recovery.
Liquidity risk relates to the availability of sufficient funds for the Company debt service, capital expenditure, working capital
requirement and dividend pay-out. Prudent liquidity risk management implies maintaining sufficient level of cash and cash
equivalents. The goal of the Company’s liquidity risk management is to ensure that minimum liquidity position (calculated as
cash and cash equivalents plus undrawn committed credit facilities) should at any time exceed the level of 2 per cent of the
annual revenue. During 2021, the Company’s liquidity position on average amounted to 15.9 per cent of the annual revenue.
The Company is a part of reverse factoring or Supplier Invoice Financing (SIF) program where suppliers’ invoices are paid
by third party banks within 7 days for an agreed fee which is covered by supplier. The Company does not pay any credit fees
and does not provide any additional collateral or guarantee to the banks. The Company pays banks full invoice amount in up
to one-year period (actual term depends on few variables agreed between all three parties). There were 31 suppliers which
participated in SIF program during 2021 (26 in 2020) and generated over EUR 69 million (EUR 15 million in 2020) cash flow.
At the end of December 2021, the total amount of borrowings amounted to EUR 154.3 million (EUR 123.1 million a year ago),
whereof EUR 30 million was a loan from banks, EUR 123.7 million – obligations under reverse factoring arrangement and
EUR 0.6 million – obligation under financial lease agreements.
As of 31 December 2021, the net debt amounted to EUR 92.5 million (EUR 67.2 million a year ago) and net debt to equity
(Gearing) ratio was 28 per cent (20.3 per cent at the end of December 2020). The Company’s net debt to EBITDA ratio was
0.67 (0.50 a year ago).
The Company’s financial risk management is carried out by employees of Finance unit of the Company under Telia Company
Group policies in close co-operation with Telia Company Group. More information about the Company’s financial risk
management is provided in Note 3 of the Company’s Financial Statements for the year ended 31 December 2021.
Security and integrity are of highest priority to Telia Company Group including Telia Lietuva. As a part of that we constantly
evaluate and assess all partners and suppliers. We always oversee the construction and operation of our networks and we
are constantly focused on security and that applies to all suppliers. In 2020, Telia Lietuva has entered into a strategic
partnership with Ericsson (Sweden) to modernize its mobile network for rollout of 5G technology and phasing out currently in
the Company’s radio access network used Huawei equipment starting from 2021. As of 31 December 2021, more than 450
base stations were upgraded with Ericsson equipment.
To mitigate the impact of COVID-19 pandemic in addition to measure ensuring safely of the Company’s employees and
customers, the Company has actuated contingency plans for critical functions and services to handle a situation if the
business has to be run with a minimal staffing, assessed risk and prepared contingency plans to ensure the supply of goods
and services from key suppliers, and increased follow-up of key business KPI’s to early mitigate the negative impact on
financials.
Besides the common risks associated with ongoing COVID-19 pandemic and geopolitical uncertainty, in 2022 the Company
might face the specific impact from raising energy prices and threat of high inflation in the country as well as instability of
international supply chains.
Plans and forecasts
We are on a mission to create a better Telia and reinvent better connected living through our digital connectivity, digital
experiences and digital infrastructure.
Everything we do should reflect our purpose – reinventing better connected living. This means better connected customers
empowered to live fuller lives, better connected businesses working smarter, better connected teams all working towards one
goal, and a better connected society in which people and the planet prosper together.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 63
We are building a Better Telia – our goal is to make Telia better for customers, better for our employees, better for our owners
and better for the societies in the Nordics and the Baltics. Led by our purpose to ‘Reinvent better connected living’ we aim to
grow our business and deliver sustainable value creation to our shareholders through four key strategic pillars:
− inspiring our customers with brands and experiences that go beyond connectivity,
− connect everyone through the most trusted, reliable and efficient modern network,
− transforming to digital to be simpler, faster, data driven and with lower cost,
− delivering sustainably through an accountable and empowered organization.
In Lithuania better Telia means:
− leadership in customer experience – seamless journeys across platforms, personalised experience, premium brand,
convergence, being the best B2B partner and partner of choice for SOHO/SME;
− leadership in network – quality in network and services, 5G and IoT all over, modern and legacy light;
− excellence in digitalisation – modern IT, simple processes, real-time analytics, automated solutions;
− strengthened leadership – sustainable performance, strong learning culture, customer obsession and innovation,
sustainable and responsible business.
Challenging and constantly changing business environment requires constant change. The main business focus areas of the
Company for the forthcoming two years are the maximisation of value through convergence and empowering digital. The
main tasks in inspiring customers are to use Telia1 platform to increase customers’ loyalty, to cross-sell using more services
to more customers approach and benefiting from converge customer base, to retain TV market share and to widen portfolio
for B2B customers. In connecting everyone – to secure market perception of premium services by deploying 5G, run fixed
and mobile Internet as supplementing each other and leverage on upgraded technologies by improving user’s experience
and managing the customers’ churn via renewal of customer’s end equipment and contracts. Also, to adapt price premium
perception to the market reality by commercial and marketing activities for all customers’ segments and to retain quality leader
position to build relevance. In empowering digital to continue business transformation, simplifying and digitalising sales and
customer support processes, closing down legacy in order to provide personalised and data-driven digital solutions.
During 2022, the Company plans gradually to switch off 3G mobile network. The frequencies used for 3G mobile
communication are assigned to more advanced 4G technology. Every-second call in mobile network of the Company is
already made using VoLTE (Voice over LTE) technology.
In November 2020, the Company has entered into a strategic partnership with Ericsson to modernize the mobile network and
roll-out of 5G. Ericsson is the Company’s sole partner to deliver radio access network technology (RAN) in Lithuania. Upgrade
of around 2,000 base stations all over the country will improve the quality of current 4G network and ensure a fast upgrade
to 5G. Telia Lietuva will start providing commercial 5G mobile communication services in Lithuania after the 5G frequencies’
auction, which is expected to take place in the first half of 2022.
To satisfy increased demand for cloud computing services, the Company had purchased a 2-hectare land plot near Vilnius,
where it will build a new data center. The Company plans to invest EUR 10 million into construction of the largest data centre
in the country. In 2022, the Company will continue renovations and expansion of the existing data centers.
CORPORATE GOVERNANCE
According to the By-Laws of the Company, the governing bodies of the Company are the General Shareholder’s Meeting,
the Board and the CEO. The Law of the Republic of Lithuania on Companies provides that Lithuanian companies at their
discretion could have either two (Supervisory Council and Board) or only one collegial governing body. There is no
Supervisory Council in the Company.
The decisions of the General Meeting made regarding the matters of competence of the General Meeting, are binding upon
the Shareholders, the Board, the CEO and other officials of the Company. The Shareholders of the Company that at the end
of the date of the record of the General Meeting are shareholders of the Company have the right to participate in the General
Meeting. The date of record of the General Meeting of the Shareholders of the Company is the fifth business day prior to the
General Meeting or the repeated General Meeting. The person, participating in the General Meeting and having the right to
vote, must deliver his/her identification proving document. In case the person is not a shareholder he/she is to present a
document, proving his/her right to vote at the General Meeting.
Following the By-laws, the Board of the Company consists of six members who are elected for the term of two years and
jointly act as a managing body of the Company. The Board represents the shareholders, and performs supervision and control
functions. The members of the Board are elected by the General Meeting in accordance with the procedure established by
the Law on Companies of the Republic of Lithuania. The Chair of the Board is elected by the Board from its members for two
years. The Board institutes two Committees: Audit and Remuneration. Three members of the Board comprise each
committee.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 64
The By-laws of the Company provides that the Board of Telia Lietuva:
− is responsible for the strategic direction of the Company;
− considers and approves the strategy of the Company, the annual and interim reports of the Company, the structure
of the Company’s governance and positions of the employees, the positions to which employees shall be hired
through a contest, and nominees to such positions, nominees to the positions directly reporting to the CEO,
remuneration and dismissal from the positions, regulations of branches and representative offices of the Company,
general principles (procedure) of payment of bonuses to Company’s employees;
− sets the information, which shall be held the commercial secret and confidential information of the Company;
− analyses and assesses materials provided by the CEO concerning the strategy implementation, activities and
financial status of the Company;
− adopts decisions to become incorporator or participant of other legal entities, acquisition or disposal by the Company
of the shares of other companies, acquisition, transfer, lease of any assets or business, assumption of new debt
obligations, when the amount of the transactions exceeds EUR 1.6 million (excl. VAT);
− adopts decisions concerning the annual financial statements of the Company and a draft of profit (loss) distribution
that are proposed by the CEO and presents these drafts to the General Meeting;
− adopts decisions on transactions with related parties as prescribed by the Law and transactions that has a significant
impact on the Company, its finances, assets, liabilities;
− is responsible for convocation of General Meetings in a timely manner.
The Board elects and recalls the CEO of the Company, sets his remuneration and other conditions of the employment
agreement, approves his office regulations, induces and applies penalties to him. The CEO is the Head of the Company. The
Head of the Company is a one-man management body of the Company and, within his scope of authority, organizes the day-
to-day operation of the Company. An employment agreement with the CEO is signed by the Chair of the Board or other
person, authorized by the Board. The remuneration of the CEO comprises a fixed salary and bonuses (premiums), payable
contingent on the results of the Company's activities and performance of the CEO. The Work Regulations that are approved
by CEO define the duties and authority of CEO and other officers of the Company in more details.
The By-laws of the Company provides that CEO of Telia Lietuva:
− supervises the day-to-day operation and ensure the implementation of the Company’s Business Plan;
− prepares annual financial statements and annual report of the Company;
− prepares a draft decision on the allocation of dividends;
− reports on the current operations of the Company at each meeting of the Board;
− performs the functions delegated to him by the Board and implement decisions adopted by the General Meeting;
− represents or procures the representation of the Company before companies, authorities, organizations, courts,
arbitration and in relations with any third party;
− opens or closes accounts with banking institutions and dispose of the funds therein;
− executes the Company's transactions pursuant to the By-laws, decisions of the General Meeting and the Board;
− issues authorizations to other persons to perform his functions within the scope of his authority;
− issues procurations;
− issues internal documents regulating the work of the administration, and other structural units;
− appoints and dismisses employees of the Company, signs, amends and terminates on behalf of the Company
employment agreements with employees of the Company (except where, in cases provided in these By-laws, Board
approval is required);
− determines employees' salaries and bonuses (except where, in cases provided in these By-laws, Board approval is
required); presents the procedure for payment of bonuses to the Board for approval;
− ensures the protection and increases of the Company's assets, normal working conditions, and protection of
commercial secrets;
− represents or gives another person a power of attorney to represent the Company in general meetings of
shareholders of other companies in which the Company has invested;
− approves, amends and supplements the work regulations of the administration;
− provides reports to the Shareholders and the Board on major events that are relevant to the Company's activities;
− complies with legal requirements when concluding transactions with related parties;
− executes other functions, ascribed to the competence of the head of a Company in the valid legal acts.
The Company essentially follows a recommendatory Corporate Governance Code for the Companies Listed on Nasdaq
Vilnius stock exchange (hereinafter ‘the Governance Code’) adopted in August 2006, amended in December 2009 and newly
worded from January 2019. The Company does not have a Supervisory Council, but supervision functions set by the Law on
Companies of the Republic of Lithuania are performed by the Board, which is a non-executive managing body of the Company
and is comprised from four representatives of the largest shareholder, Telia Company, and two independent members of the
Board. The Company does not have a Nomination Committee as its functions are performed by the Remuneration Committee.
The Company prepared the disclosure of compliance with the principles and recommendation set by the Governance Code
in Telia Lietuva, AB Corporate governance reporting form for the year ended 31 December 2021, which is an annex to this
Annual Report.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 65
Share capital
The authorised capital of the Company amounts to 168,957,810.02 euro and consists of 582,613,138 ordinary registered
shares with a nominal value of 0.29 euro each.
Shareholders’ rights
None of the shareholders of the Company have any special controlling rights. Rights of all shareholders are equal. As of 31
December 2021, the number of the Company’s shares that provide voting rights during the General Meeting of Shareholders
amounted to 582,613,138. One ordinary registered share of the Company gives one vote in the General Meeting of
Shareholders.
The Company is not aware of any agreements between the shareholders that could limit transfer of securities and/or their
ability to exercise their voting rights.
Shareholders
Shareholders, holding more than 5 per cent of the share capital and votes, as on 31 December 2021:
Name of the shareholder (name of the
enterprise, type and registered office
address, code in the Register of
Enterprises)
Number of ordinary
registered shares
owned by the
shareholder
Share of the
share capital
(%)
Share of votes
given by the
shares owned
by the right of
ownership (%)
Share of votes
held together
with persons
acting in concert
(%)
Telia Company AB, 169 94 Solna, Sweden,
code 556103-4249
513,594,774
88.15
88.15
-
Other shareholders
69,018,364
11.85
11.85
-
Total
582,613,138
100.00
100.00
-
Breakdown of the Company’s shareholders by the countries of residence as of 20 April 2021, a record day for the last
General Meeting of shareholder held on 27 April 2021:
Country
Number of
shareholders
Number of
shares
Part of the share
capital (%)
Sweden
9
513,602,523
88.15
Lithuania
11,561
50,994,999
8.75
Estonia
1,070
11,844,112
2.03
Latvia
49
1,614,788
0.28
Poland
3
1,385,201
0.24
Canada
3
1,146,797
0.20
U.S.A.
42
424,820
0.07
Germany
14
382,859
0.07
Ireland
8
242,058
0.04
New Zealand
1
241,559
0.04
Austria
2
191,758
0.03
United Kingdom
38
143,654
0.02
Belgium
4
135,000
0.02
Luxemburg
7
97,129
0.02
Other (22)
66
165,881
0.03
Total
12,877
582,613,138
100.00
Breakdown of the Company’s shareholders registered in Lithuania as of 20 April 2021, a record day for the last General
Meeting of shareholder held on 27 April 2021:
Number of
shareholders
Number of
shares
Part of the share
capital (%)
Private individuals
11,484
45,528,572
7.81
Financial institutions
16
3,367,132
0.58
Legal entities
61
2,099,295
0.36
Total
11,561
50,994,999
8.75
Telia Lietuva, AB Annual report for the year ended 31 December 2021 66
Shareholders meeting
The Annual General Meeting of shareholders, that was held on 27 April 2021, decided:
− to approve the Company’s audited annual financial statements for the year 2020,
− to allocate the Company’s profit for the year 2020,
− to approve the Company’s Remuneration Report for the year 2020,
− to elect UAB Deloitte Lietuva as the Company’s auditor for the year 2021 and 2022,
− to elect members of the Company’s Board for the new two-years’ term of the Board.
Due to Covid-19 virus in the Republic of Lithuania imposed and on the Annual General Meeting date valid quarantine there
was no physical gathering of shareholders. All 18 shareholders that took part in the Meeting and had 518,413,997 votes
(88.98 per cent of the total number of the Company’s vote-carrying shares), voted in writing in advance.
Procedure for amending the Company’s By-laws
The Company’s By-laws provide that the By-laws of the Company can be amended upon the initiative of the Board or
Shareholders, whose shares grant them no less than 1/20 of the whole votes. The decision on amendment of the By-laws
shall be taken by the 2/3 majority of the votes of participants of the General Meeting. In case the General Meeting takes the
decision to amend the By-laws of the Company the whole text of the amended By-laws shall be drawn and signed by the
person, authorized by the General Meeting.
Information about trading in the Company’s securities
582,613,138 ordinary registered shares of Telia Lietuva, AB (ISIN code LT0000123911) are listed on the Main List of Nasdaq
Vilnius stock exchange (code: TEL1L). Nasdaq Vilnius stock exchange is a home market for the Company’s shares.
From January 2011, the Company’s shares are included into the trading lists of Berlin Stock Exchange (Berlin Open Market
(Freiverkehr), Frankfurt Stock Exchange (Open Market (Freiverkehr), Munich Stock Exchange and Stuttgart Stock Exchange.
Telia Lietuva share’s symbol on German stock exchanges is ZWS.
During 2021, the Company’s share price on Nasdaq Vilnius stock exchange increased by EUR 0.22 or 11.8 per cent. The
shares’ turnover, compared to the year 2020, went up by 12.3 per cent. The Company’s market capitalisation as on 31
December 2021 was EUR 1,189 million, an increase by 11.8 per cent over the market capitalisation of EUR 1,063 million a
year ago.
Information about trading in the Company’s shares on Nasdaq Vilnius stock exchange in 2021:
Currency
Opening
price
Highest
price
Lowest
price
Last
price
Average
price
Turnover
(units)
Turnover
EUR
1.83
2.15
1.83
2.04
2.04
8,574,018
17,527,017
Dividends
In 2017, the Board of the Company approved dividend policy which provides that the Company must maintain the net debt to
EBITDA ratio not higher than 1.5 and to pay out up to 80 per cent of free cash flow as dividend. Each year the Company pays
dividends although there was no officially approved dividend policy until 2017.
On 25 May 2021, the Company paid out to the shareholders an amount of EUR 58.3 million of dividends or EUR 0.10 per
share for the year 2020. In accordance with the relevant legislation, dividends were paid to the shareholders who were on
the Shareholders’ List of the Company on the dividend record day, 11 May 2021, i.e. the tenth business day after the Annual
General Meeting of Shareholders. Dividends to all shareholders were paid in cash.
Information about the Company’s dividend pay-out during the last five years (in EUR thousand unless otherwise stated):
Year
Consolidated profit
for the period
Earnings per
share (EUR)
Dividends paid
Dividend per
share (EUR)
Dividends to
profit ratio (%)
2016
41,494
0.071
17,478
0.03
42.1
2017
50,077
0.086
40,783
0.07
81.4
2018
54,700
0.094
46,609
0.08
85.2
2019
54,726
0.094
52,435
0.09
95.8
2020
55,866
0.096
58,261
0.10
104.2
Treasury stocks
The Company has no treasury stocks. The Company has never acquired any shares from the management of the Company.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 67
The Board Activities
The two-year’s term of the Board terminated on 26 April 2021 and the Annual General Meeting held on 27 April 2021 decided
to re-elect five members of the Board – Douglas Lubbe, Agneta Wallmark, Claes Nycander, Hannu-Matti Mäkinen and
Mindaugas Glodas (an independent) – for a new two-year’s term of the Board, and to elect a new independent member of
the Board, Dovilė Grigienė, to replace Tomas Balžekas.
All current members of the Board are regarded as non-executive members of the Board, and Dovilė Grigienė and Mindaugas
Glodas are regarded as independent members of the Board. The current two-year’s term of the Board terminates on 27 April
2023.
The shareholders decided to allocate for two independent members to the Board – Tomas Balžekas and Mindaugas Glodas
– the total amount of EUR 31,280, or EUR 15,640 each, as a tantiemes (annual payment) for the year 2020.
On 27 May 2021, the Board has re-elected Douglas Lubbe as a Chair of the Board and has appointed members of the
Audit and Remuneration Committees.
Agneta Wallmark and Mindaugas Glodas, an independent member of the Board, were reappointed and new independent
member of the Board, Dovilė Grigienė, was appointed to the Audit Committee for the two-years’ term but in any case, not
longer than their membership in the Board. Agneta Wallmark was re-elected as the Chair of the Audit Committee.
Douglas Lubbe, Claes Nycander and independent member of the Board, Mindaugas Glodas, were re-appointed to the
Remuneration Committee for the two-years’ term but in any case, not longer than their membership in the Board. Claes
Nycander was re-elected as the Chair of the Remuneration Committee.
During 2021, ten ordinary meetings of the Board were held. Meetings were convened according to the preliminary approved
schedule of the Board meetings. During all Board meetings there was quorum prescribed by legal acts.
Information about the Board members’ attendance of the meetings in 2021 (number of attended/to be attended meetings):
Meeting attendance
Name, surname
Position
Board
Audit
Committee
Remuneration
Committee
Tantiemes for
2020 paid-out in
2021 (EUR)
Douglas Lubbe
Chair of the Board, member of the
Remuneration Committee
10/10
4/4
-
Claes Nycander
Member of the Board, Chair of the
Remuneration Committee
10/10
4/4
-
Agneta Wallmark
Member of the Board, Chair of the
Audit Committee
10/10
5/5
-
Hannu-Matti Mäkinen
Member of the Board
10/10
-
Tomas Balžekas
(till 26 April 2021)
Member of the Board, member of
the Audit Committee
3/3
1/1
15,640
Dovilė Grigienė
(from 27 April 2021)
Member of the Board, member of
the Audit Committee
6/7
3/4
-
Mindaugas Glodas
Member of the Board, member of
the Audit and Remuneration
Committees
10/10
5/5
4/4
15,640
In 2021, the Board, besides the ongoing follow up of the Company’s business plan implementation and supervision of
transformation approved:
− financial statements for the 12 months of 2020 and 3, 6 and months of 2021,
− financial statements and the consolidated annual report for the year ended 31 December 2020,
− convocation of the Annual General Meetings of Shareholders and agenda of the Meeting,
− proposal of profit allocation for the year 2020,
− Remuneration Report for the year 2020,
− payment of annual bonuses for the year 2020,
− internal audit plan for the year 2021,
− Chair of the Board, members and Chairs of the Audit and Remuneration Committee,
− budget for Radio access network (RAN) upgrade project and related procurement agreements,
− financial lease agreement with AB SEB bankas,
− lending to Telia Company AB up to total amount of EUR 80 million for up to 3 months period at 0% interest rate,
− earlier partial repayment of EUR 30 million out of the total outstanding EUR 60 million syndicate loan,
− agreement with new media partner, Arena Media UAB,
Telia Lietuva, AB Annual report for the year ended 31 December 2021 68
− outsourcing of fiber-optic access network maintenance to the third party,
− sale of real estate,
− update of the Company’s Policies,
− Financial Management Policy,
− Annual Variable Pay Instruction for 2022,
− agreements that value exceeds a threshold of EUR 1.6 million,
− the preliminary budget for related parties transaction (Common Services purchase from Telia Company Group) for
the year 2022,
− business plan, the Company’s targets and KPI’s for the year 2022.
The Board on a regular base considered reports of the Audit and Remuneration Committees as well as reports of the
Company’s management.
The Remuneration Committee of the Company shall make recommendations to the Board on how to create a competitive
compensation structure that will help attract and retain key management talent, assure the integrity of the Company’s
compensation and benefit practices, tie compensation to performance and safeguard the interests of all shareholders. The
Remuneration Committee reviews and establishes the general compensation goals and guidelines for the Company’s
employees and the criteria by which bonuses are determined, reviews and makes recommendation for compensation for
executives and management, plans for executive development and succession, supports the Chair of the Board in the
recruitment of CEO and supports CEO in recruitment of the managers directly reporting to CEO.
During 2021 four meetings of the Remuneration Committee were held. The following issues were considered during these
meetings:
− evaluation of the Company’s Management team members’ performance and approval of variable pay amounts for
Management team for the year 2020,
− base salary review for Management team members,
− evaluation of the CEO performance and approval of CEO’s variable pay amount for the year 2020,
− draft of Remuneration Report for the year 2020,
− variable pay KPI’s for the year 2021,
− leadership development and succession planning,
− labour market challenges,
− benefits overview,
− changes in performance management approach,
− new short term incentive model,
− Annual Variable Pay Instruction for the year 2022.
All members of the Committee attended all meetings of the Committee. The meetings of the Committee were chaired by
Chair of the Committee, Claes Nycander.
The purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities. The Audit Committee
reviews the financial reporting process, the system of internal control and management of financial risks, the audit process,
and the Company's process for monitoring compliance with laws and regulations and its internal orders.
During 2021, five meetings of the Audit Committee were held, during which the following issues were considered:
− report by external auditors regarding the financial statements for the year 2020,
− internal audit and risk management reports,
− draft of audited financial statements and the Annual Report for the year 2020,
− draft of Profit allocation statements for the year 2020 (dividends and tantiemes),
− candidacy of audit enterprise for the audit of the Company’s financial statements for the year 2021 and 2022,
− internal audit plan for the year 2021,
− reports of GREC (Governance, Risk, Ethics and Compliance) meeting,
− updates on the Company’s funding and liquidity, credit scoring and debt management,
− cash flow management strategy,
− agreement with Lithuanian Tax Authorities regarding the goodwill,
− update on real estate sale,
− external audit plan and auditors’ observations from internal controls testing,
− the Company’s Financial Management Policy,
− related parties’ transaction.
Following the requirements of the Law on Companies of the Republic of Lithuania, the Audit Committee produced written
opinion regarding not typical to the Company’s activities or high value related parties’ transactions and submitted their opinion
to the Board for the final approval of transactions. During 2021, the Audit Committee considered one related party transaction
– preliminary budget for Common Services purchase from Telia Company Group for the year 2022.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 69
All members of the Committee attended four meetings of the Committee. Dovilė Grigienė was absent at one meeting of the
Committee. All meetings were chaired by Chair of the Committee, Agneta Wallmark.
During the fourth meeting of the Audit Committee in 2021 the external auditors from Deloitte Lietuva presented an audit plan
for the year 2021, team of auditors and officially stated about their independence for the year 2021.
Members of the Board
Douglas Lubbe (born in 1972) – Chair of the Board, member of the Board since 23 November 2020, re-elected for the two-
year terms on 27 April 2021 (nominated by Telia Company AB), member of the Remuneration Committee. Education:
University of Southern Queensland (Australia) Master of Business Administration; South African Institute of Chartered
Accountants, Certificate of Membership; University of South Africa, Bachelor of Accounting Science; Potchefstroom University
for Christian Higher Education (South Africa), Bachelor of Commerce. Employment – Telia Sverige AB, 169 94 Solna,
Sweden, code 556430-0142, Chief Financial Officer. Current Board assignments:
− TeliaSonera Mobile Networks AB, 169 94 Solna, Sweden, code 556025-7932, member of the Board;
− Sonera Holding BV, Rodezand 34 K, 3011AN Rotterdam, Netherlands, code 33271992, member of the Board;
− TeliaSonera UTA Holdings BV, Rodezand 34 K, 3011AN Rotterdam, Netherlands, code 24311137, member of the
Board;
− We Care and Repair Nordic AB, Rörstrandsgatan 39, SE-113 41 Stockholm, Sweden, code 556989-3679, member
of the Board;
− Cygate AB, 169 94 Solna, Sweden, code 556549-8952, member of the Board.
Douglas Lubbe has no direct interest in the share capital of Telia Lietuva.
Agneta Wallmark (born in 1960) – member of the Board since 25 April 2018, re-elected for the two-year terms on 26 April
2019 and 27 April 2021 (nominated by Telia Company AB), Chair of the Audit Committee. Education: Stockholm School of
Economics (Sweden), B. Sc. Econ with special focus on Accounting and Finance and Stockholm University (Sweden), LL M
with special focus on Tax and Economics. Employment – Telia Company AB, 169 94 Solna, Sweden, code 556103-4249,
Vice President, Head of Group Treasury. Current Board assignments:
− Telia Försäkring AB (Telia Insurance), 169 94 Solna, Sweden, code 516401-8490, Chair of the Board;
− Swedish Pension Fund of Telia, 169 94 Solna, Sweden, member of the Board;
− Andra AP-fonden, Östra Hamngatan 26, 404 24 Gothenburg, Sweden, member of the Board;
− Skandia Life Insurance (Mutual), Lindhagensgatan 86, 112 18 Stockholm, Sweden, code 516406-0948, Chair of
Nomination Committee for Council elections.
Agneta Wallmark has no direct interest in the share capital of Telia Lietuva.
Claes Nycander (born in 1963) – member of the Board since 29 April 2014, re-elected for the two-year terms on 29 April
2015, 27 April 2017, 26 April 2019 and 27 April 2021 (nominated by Telia Company AB), Chair of the Remuneration
Committee. Education: Uppsala University (Sweden), Master of Business and Administration; Stanford University Palo Alto
(U.S.A.), Master of Science in Electrical Engineering; Institute of Technology at University of Linköping (Sweden), Master of
Science in Electrical Engineering, and University of Linköping (Sweden), Bachelor of Science in Mathematics. Employment
– Telia Company AB, 169 94 Solna, Sweden, code 556103-4249, Vice President & Head of Chief Operating Officer Office &
LED (Lithuania, Estonia, Denmark) Management at Common Products and Services (CPS). Current Board Assignments:
− TT-Netværket P/S, Amager Strandvej 60, 2300 København S, Denmark, code 34230625, Chair of the Board;
− Telia Towers AB, 169 94 Solna, Sweden, code 559196-5164, Chair of the Board;
− Telia Company Danmark A/S, Holmbladsgade 139, 2300 København S, Denmark, code 18530740, Chair of the
Board;
− Telia Mobile Holding AB, 169 94 Solna, Sweden, code 556855-9040, Chair of the Board;
− Telia Nättjänster Norden AB, Mårbackagatan 11, 123 43 Farsta, Sweden, code 556459-3076, Chair of the Board;
− Systecon AB, Rehnsgatan 20, 113 57 Stockholm, Sweden, code 556536-6605, member of the Board;
− Systecon Group AB, Rehnsgatan 20, 113 57 Stockholm, Sweden, code 556710-8492, member of the Board;
− Systecon Software AB, Rehnsgatan 20, 113 57 Stockholm, Sweden, code 556714-5403, member of the Board;
− Svenska UMTS-Nät AB, Warfvinges Väg 45 4tr, 11251 Stockholm, Sweden, code 556606-7996, member of the
Board;
− Svenska UMTS-licens AB, Warfinges Väg 45, 112 51 Stockholm, Sweden, code 556606-7772, member of the Board;
− Telia Eesti AS, Mustamäe tee 3, 15033 Tallinn, Estonia, code 10234957, member of the Supervisory Council;
− Latvijas Mobilais Telefons (LMT) SIA, Ropažu iela 6, Rīga, LV-1039 Latvia, code 50003050931, member of the
Supervisory Council.
Claes Nycander has no direct interest in the share capital of Telia Lietuva.
Hannu-Matti Mäkinen (born in 1970) – member of the Board since 25 April 2018, re-elected for the two-year terms on 26
April 2019 and 27 April 2021 (nominated by Telia Company AB). Education: University of Arizona (U.S.A), College of Law,
LL.M (Master of Laws) in International Trade Law, and University of Lapland (Finland), School of Law, LL. B (Bachelor of
Laws) and LL.M (Master of Laws) in Finnish and EU-Law. Employment – Telia Company AB, 169 94 Solna, Sweden, code
556103-4249, Chief Legal Counsel, Telia Asset Management. Current Board Assignments:
− Telia Finland Oyj, PL 106, FI-0051 Sonera, Finland, code 1475607-9, member of the Board;
Telia Lietuva, AB Annual report for the year ended 31 December 2021 70
− Tilts Communications A/S, Holmbladsgade 139, 2300 København, Denmark, code 17260642, member of the Board;
− Tet SIA, Dzirnavu iela 105, Rīga, LV-1011 Latvia, code 40003052786, member of the Supervisory Council;
− Valokuitunen Oy, Hämeentie 15, 00500 Helsinki, Finland, code 3101706-7, member of the Board.
Hannu-Matti Mäkinen has no direct interest in the share capital of Telia Lietuva.
Dovilė Grigienė (born in 1977) – member of the Board since 27 April 2021 (as independent member of the Board nominated
by Telia Company AB), member of the Audit Committee. Education: Concordia University Wisconsin, U.S.A., Master of
Business Administration in Finance and Management Information Systems, and Concordia International University Estonia,
Estonia, Bachelor’s degree in International Business. Involvement in activities of other entities:
− Association ‘Lyderė’, Jogailos g. 9, LT-01116 Vilnius, Lithuania, code 304439065, founder and member of the Board
(2017-2019);
− Young President Organization Lithuanian Chapter, Konstitucijos pr. 20A, LT-09321 Vilnius, Lithuania, code
304756507, founder;
− Vilnius University Institute of International Relations and Political Science, Vokiečių g. 10-403, Vilnius, Lithuania,
code 125745184, member of the Board of Trustees;
− UAB Urbo Slėnis, Stasio Lozoraičio g. 15A, Garliava, Lithuania, code 300149417, shareholder (22.5 per cent).
Dovilė Grigienė has no direct interest in the share capital of Telia Lietuva.
Mindaugas Glodas (born in 1972) – member of the Board since 25 April 2018, re-elected for the two-year terms on 26 April
2019 (as independent member of the Board nominated by Telia Company AB), member of the Audit and Remuneration
Committees. Education: University of Antwerp, Centre for Business Administration UFSIA (Belgium), Master of Business
Administration (MBA), and Vilniaus University, Faculty of Economics (Lithuania), Bachelor of Business Administration (BBA).
Employment:
− NRD Companies AS, Løkketangen 20 B, 1337 Sandvika, Norway, code 921985290, General Manager;
− Norway Registers Development AS, Løkketangen 20 B, 1337 Sandvika, Norway, code 985221405, General
Manager;
− Norway Registers Development AS Lithuanian branch, Gynėjų g. 14, LT-01109 Vilnius, Lithuania, code 304897486,
General Manager;
− NRD Systems, UAB, Gynėjų g. 14, LT-01109 Vilnius, Lithuania, code 111647812, General Manager.
Involvement in activities of other entities:
− Association Žinių Ekonomikos Forumas, Saulėtekio al. 15, LT-10221, Vilnius, Lithuania, code 225709520, member
of the Council;
− Lithuanian National Committee for UNICEF, Aušros Vartų g. 3, LT- 01304 Vilnius, Lithuania, code 191588169, Chair
of the Board;
− Association INFOBALT, A. Goštauto g. 8-313, LT-01108 Vilnius, Lithuania, code 122361495, Chair of the Board and
President;
− MB Vox Proxima, Perkūno g. 32, Gilužių k., LT-14195 Vilniaus r., Lithuania, code 303481474, member of partnership
(50 per cent).
Mindaugas Glodas has no direct interest in the share capital of Telia Lietuva.
Management Team
Dan Strömberg (born in 1958) – CEO of the Company from 4 July 2018. Education: IHM/Stockholm University (Sweden),
Finance and IHM Business School (Sweden), Marketing. Involvement in activities of other entities:
− Telia Company AB, 169 94 Solna, Sweden, code 556103-4249, Senior Vice President & Head of cluster Lithuania,
Estonia and Denmark (LED);
− Telia Eesti AS, Mustamäe tee 3, 15033 Tallinn, Estonia, code 10234957, Chair of the Supervisory Council;
− Association Investors’ Forum, Totorių str. 5-21, LT-01121 Vilnius, Lithuania, code 224996640, member of the Board.
Dan Strömberg has no direct interest in the share capital of Telia Lietuva.
Nortautas Luopas (born in 1979) – Head of Consumer (B2C) from 16 August 2019 and Head of Digitization & Analytics from
1 January 2020. Education: Klaipėda University (Lithuania), Bachelor’s degree in Applied Mathematics and IT, and Baltic
Management Institute (Lithuania), Executive MBA. Involved in activities of other entities:
− AB Utenos Trikotažas, J. Basanavičiaus g. 122, LT-28214 Utena, Lithuania, code 183709468, an independent
member of the Board.
Nortautas Luopas has no direct interest in the share capital of Telia Lietuva and has no shareholdings that exceed 5 per cent
of the share capital of any company.
Daniel Karpovič (born in 1982) – Head of Enterprise (B2B) from 6 June 2019. Education: Catholic University of Lublin in
Poland, Master of Psychology and studies in Marketing. He is not involved in activities of other entities. Daniel Karpovič has
no direct interest in the share capital of Telia Lietuva and has no shareholdings that exceed 5 per cent of the share capital of
any company.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 71
Giedrė Kaminskaitė-Salters (born in 1978) – Head of Sales and Customer Care from 8 January 2019. Education: Maastricht
University (The Netherlands), Doctor of Law; BPP Law School, London (United Kingdom), law conversion studies, juris doctor
equivalent; Oxford University (United Kingdom), MPhil in International Relations; London School of Economics (United
Kingdom), Bachelor of Science in International Relations. Involvement in activities of other entities:
− Vilnius University Institute of International Relations and Political Science, Vokiečių g. 10-403, Vilnius, Lithuania,
code 125745184, member of the Board of Trustees;
− Vilnius Gediminas Technical University (VILNIUS TECH), Saulėtekio al. 11, LT-10223 Vilnius, Lithuania, code
111950243, member of the Council;
− Telia Danmark A/S, Holmbladsgade 139, 2300 København S, Denmark, code 20367997, acting Head of Enterprise.
Giedrė Kaminskaitė-Salters has no direct interest in the share capital of Telia Lietuva and has no shareholdings that exceed
5 per cent of the share capital of any company.
Andrius Šemeškevičius (born in 1976) – Head of Technology Infrastructure from 18 August 2014. Education – Vilnius
Gediminas Technical University (Lithuania), Bachelor’s degree in Engineering Informatics and Master’s degree in Engineering
Informatics. Involved in activities of other entities:
− SIA Telia Latvija, Lielvārdes iela 8A, Rīga, LV-1006 Latvia, code 40003057571, Chair of the Supervisory Council.
Andrius Šemeškevičius has 8,761 shares of Telia Lietuva that accounts to 0.0015 per cent of the total number of the
Company’s shares and votes. He has no shareholdings that exceed 5 per cent of the share capital of any company.
Arūnas Lingė (born in 1975) – Head of Finance from 25 March 2019. Education: Kaunas Technology University (Lithuania),
Master of Management (1999), and ACCA (Association of Chartered and Certified Accountants) (UK) Member and Fellow
(1999 – 2004). He is not involved in activities of other entities. Arūnas Lingė has no direct interest in the share capital of Telia
Lietuva and has no shareholdings that exceed 5 per cent of the share capital of any company.
Ramūnas Bagdonas (born in 1974) – Head of People and Engagement from 1 June 2014. Education: Vytautas Magnus
University (Lithuania), Master of Business Administration; Baltic Management Institute (BMI) (Lithuania), Executive Master of
Business Administration. Involvement in activities of other entities:
− Association of Personnel Management Professionals, Galvydžio g. 5, LT-08236 Vilnius, Lithuania, code 300563101,
Chair of the Board.
Ramūnas Bagdonas has no direct interest in the share capital of Telia Lietuva and has no shareholdings that exceed 5 per
cent of the share capital of any company.
Daiva Kasperavičienė (born in 1968) – Head of Legal and Corporate Affairs from 25 January 2019. Education – Vilnius
University (Lithuania), Law Master's degree. She is not involved in activities of other entities. Daiva Kasperavičienė has no
direct interest in the share capital of Telia Lietuva and has no shareholdings that exceed 5 percent of the share capital of any
company.
Birutė Eimontaitė (born in 1983) – Head of Communication from 1 January 2019. Education: Vilnius University (Lithuania),
Bachelor’s degree in Communication and Information, and Vilnius University, Institute of International Relations and Political
Science (Lithuania), Master’s degree in Political Science. She is not involved in activities of other entities. Birutė Eimontaitė
has no direct interest in the share capital of Telia Lietuva and has no shareholdings that exceed 5 per cent of the share capital
of any company.
Vytautas Bučinskas (born in 1974) – Head of Business Assurance and Transformation from 15 December 2017. Education:
Baltic Management Institute (BMI) (Lithuania), Executive Master of Business Administration; Kaunas Technology University
(Lithuania), Bachelor of Management of Production and Master of Marketing. Involvement in activities of other entities:
− Member of the Cyber Security Council (Lithuania);
− Association INFOBALT, A. Goštauto g. 8-313, LT-01108 Vilnius, Lithuania, code 122361495, Deputy Chair of
Cybersecurity Committee.
Vytautas Bučinskas has no direct interest in the share capital of Telia Lietuva and has no shareholdings that exceed 5 per
cent of the share capital of any company.
Information about remuneration of key management personnel is provided in Note 31 of the Company’s Financial Statements
for the year ended 31 December 2021. Key management includes CEO, Heads of Units directly reporting to CEO and Heads
of the largest Units of the Company. The total amount of the Company’s dividends for the year 2020 paid in 2021 to key
management personnel amounted to 876.1 euro.
During 2021, there were no loans, guarantees or sponsorship granted to the members of the Board or members of the
Management Team by the Company as well as none of subsidiaries paid salaries or other payouts to the members of the
Board or members of the Management Team of the Company for being members of their managing bodies.
The principle of employees’ (including managers) equal opportunities based on competence, experience and performance,
regardless of gender, race, ethnicity, religion, age, disability, sexual orientation, nationality, political opinion, union affiliation,
social background and/or other characteristics protected by applicable law, is set in the People Policy. Nevertheless, the
Board introduced a soft target to increase the number of females in the management positions, as currently two female out
of six are members of the Board and three out of ten are members of Management Team.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 72
Information about agreements of the Company and the members of its management bodies, or the employee
providing for a compensation in case of the resignation or in case they are dismissed without due reason or their
employment is terminated in view of the change of the control of the Company
All the Company’s employment agreements with the employees, including management, of the Company are concluded
following requirements of the Labour Code of the Republic of Lithuania. Employees are employed and laid off following
requirements of the Labour Code.
Members of the Company’s Board are elected for a two-year term by the shareholders without any employment agreements
as they represent shareholders and are not employees of the Company. The Annual General Meeting of Shareholders while
adopting decision on profit allocation can also pass a decision on granting annual compensations (tantiemes) to members of
the Board for their activities. Members of the Board have a right to resign from the Board prior to the termination of the term
of the Board upon written notification to the Company submitted not later than 14 calendar days. The Rules of Procedure of
the Board do not provide for any compensations or pay-outs in case any member of the Board resigns prior to the termination
of the term of the Board.
The Board approves the main conditions of employment agreements of the members of the Company’s Management Team.
The said conditions stipulate that where a member of the Management Team has his/her employment agreement terminated
due to his/her revocation from the office under the initiative of the Company without any fault on the part of the member of
the Management Team, the Company must pay to him/her the compensation amounting up to 6 monthly salaries unless laws
regulating labour relations provide otherwise.
There are no material agreements to which the Company is a party and which would come into effect, be amended or
terminated in case of change in the Company’s control.
The main features of the Company’s internal control and risk management systems related to preparation of financial
statements
Starting from financial year that ended 31 December 2021, the Company prepares stand-alone financial statements according
to the International Financial Reporting Standards (IFRS) as adopted by the EU as the Company from 1 July 2020 has no
subsidiaries to be consolidated. Before that the Company was preparing consolidated financial statements according to the
International Financial Reporting Standards (IFRS) as adopted by the EU.
In collaboration with Telia Company AB, the Company had implemented a process of internal controls. It was implemented
following the COSO (Committee of Sponsoring Organizations of the Treadway Commission) methodology.
The process of the Company’s internal controls implies control of business processes related to provision of services and
revenue assurance (customers’ settlements and accounting, development and management of services, services provision),
performance of IT systems (customer care and billing, infrastructure, network information, financial accounting, salary
accounting, networks’ interconnection) and the process of preparation of financial reports.
The Company’s Process for Preparation of Financial Statements provides that financial statements will be prepared in a
correct and timely manner. The Process for Preparation of Financial Statements describes potential risks, methods, types
and frequencies of risks control, proves of control, employees responsible for and employees executing control related to
preparation of financial statements.
Auditors
Auditors from UAB Deloitte Lietuva, a member of the Deloitte network, audited the consolidated and separate financial
statements of the Company and its consolidated subsidiaries for the years ended 31 December 2014, 2015, 2016, 2017,
2018, 2019 and 2020 together with the related consolidated and separate statement of profit or loss and other comprehensive
income, consolidated and separate statement of financial position, consolidated and separate statement of changes in equity
and consolidated and separate statement of cash flows and a summary of significant accounting policies and other
explanatory notes for the years then ended. Auditors from UAB Deloitte Lietuva audited stand-alone financial statements of
the Company for the year ended 2021 together with the related statement of profit or loss and other comprehensive income,
statement of financial position, statement of changes in equity and statement of cash flows and a summary of significant
accounting policies and other explanatory notes for the years then ended.
On 27 April 2021, the shareholders of the Company decided to elect UAB Deloitte Lietuva as the Company’s audit enterprise
to perform the audit of the annual financial statements of the Company for the year 2021 and 2022, and to assess the annual
report of the Company for the year 2021 and 2022, and to authorize the CEO of the Company to conclude the agreement for
audit services, establishing the payment for services as agreed between the parties but in any case not more than EUR 270
thousand (VAT excluded) for the audit of the Company’s annual financial statements and the assessment of the report (i.e.
EUR 135 thousand (VAT excluded) per each financial year).
Telia Lietuva, AB Annual report for the year ended 31 December 2021 73
Deloitte is a globally connected network of member firms in more than 150 countries and territories providing audit, tax,
consulting, and financial advisory services to public and private clients spanning multiple industries. The criteria for selection
of Deloitte as the Company’s audit enterprise was decision of the Annual General Meeting of Telia Company AB shareholders
on 12 April 2021 to elected Deloitte AB (Sweden) as the auditor of Telia Company. The aim is that consolidated subsidiaries
of Telia Company be audited by the same highly reputable international audit enterprise, therefore the Company is audited
by Lithuanian arm of Deloitte.
Following the Law of the Republic of Lithuania on Audit, UAB Deloitte Lietuva on 30 March 2021 at the meeting of the Audit
Committee of the Company officially stated about UAB Deloitte Lietuva independence from the Company for the year 2020.
During 2021, UAB Deloitte Lietuva did not provided any other than audit services to the Company and did not received any
other remuneration from the Company except for the audit services provided for the total amount of EUR 122 thousand for
the audit of financial statements for the year 2020.
PERSONNEL
Number of the Company’s employees at the end of the year:
2021
2020
Change
Number of personnel (head-counts)
2,095
2,161
(66)
Number of full-time employees
1,939
2,001
(62)
While counting full-time employees, the number of part-time employees is recalculated into the number of full-time employees,
and this number does not include employees on maternity/paternity leave.
In September 2021, the Company handed over fiber-optic access network maintenance function and 19 employees to the
third party.
People Policy
Telia Company’s most valuable resource is our people. We strive to have the most engaged employees. Without our ability
to identify, hire and retain the best people, we would lose some of our unique culture and competitive edge.
People Policy defines the Company’s expectations of the employees as well as what expectations our employees shall have
of each other and on the Company as their employer. The policy does not form part of any employee’s contract of employment
and may change from time to time at the discretion of the Company.
The Code of Responsible Business Conduct lays out basic expectations on employees. Telia Company Group is committed
to several international principles and frameworks such as the UN Guiding Principles on Business and Human Rights, the
ILO Core Conventions and the Children’s Rights and Business Principles. Employees are, at all times, expected to respect
these commitments.
The People Policy covers the following areas:
− Addictive substances. The Company does not accept any form of use or possession of illegal or unauthorized
drugs in the workplace. It is forbidden to be at the workplace or perform work while under the influence of alcohol or
drugs. To maintain a smoke-free work environment, smoking is allowed only in designated areas.
− Child labor and forced labor. Child labor is not accepted in any of Telia Company Group operations or at our
suppliers or sub-suppliers. Under no circumstance will we employ anyone below the age of 15 (or the country’s legal
minimum age, if over 15). Forced labor is not accepted in any of Telia Company Group operations or at our suppliers
or sub-suppliers. Employees are free to leave their employment after a notice period, as required by law and contract.
− Disclosure of conflicting interests. Employees shall not be involved in outside employment or business interests
in potential or actual conflict with Telia Company Group business unless agreed between the employee and the
company. Employees facing a potential or actual conflict of interest situation shall discontinue it.
− Freedom of association and collective bargaining. Employees have the right to form or join associations of their
own choice concerning the relationship between the employer and the employees, and to collective bargaining. We
do not accept any discrimination or disciplinary actions, which is based on an employee’s choice to peacefully and
lawfully organize or join an association.
− Integrity. Employees shall act in a manner, which is appropriate to their position in the organization. They shall not
act in a manner, which could disrepute Telia Company. Employees shall personally not be engaged in any illegal or
criminal activities (inside or outside working hours).
− Non-discrimination, equal opportunity and diversity. Telia Company promotes a culture of diversity and equal
opportunity based on competence, experience and performance. All employees shall treat one another with respect,
dignity and common courtesy. No employee shall be treated differently because of their gender, gender identity or
expression, ethnicity, religion, age, disability, sexual orientation, nationality, political opinion, union affiliation, social
Telia Lietuva, AB Annual report for the year ended 31 December 2021 74
background and/or other characteristics protected by applicable law. As part of our commitment to a diverse and
inclusive workplace, we have zero tolerance against discrimination, victimization, harassment and bullying.
− Recruitment. The right competence, diversity and equal opportunity are all equally important factors when we
recruit, both internally and externally. Recruitments are based on business needs and we care for respect for the
individual no matter of age, gender, marital or parental status, color, religion, race, ethnicity, nationality, handicap,
sexual orientation or political opinion.
− Terms of employment and working hours. Telia Company provides working conditions, which comply with local
statutory requirements and collective bargaining agreements. The Company follows national legislation and
collective bargaining agreements on working hours. We respect the employees’ right to leisure time and a work-life
balance.
− Total remuneration. Remuneration is based on fairness and non-discrimination and regularly reviewed to ensure
these principles. Employees are provided understandable information in written about their employment conditions
regarding salaries before they enter employment. Employees are provided details of their salaries for the given pay
period each time they are paid.
− Travel. Business travel shall be conducted in the most reasonable, safe, cost-effective and environmentally friendly
manner.
Any Telia Company employee who suspects violations of the Code of Responsible Business Conduct or People Policy must
speak up and raise the issue primarily to their line manager, and secondly to the Human Resources unit, to the Ethics and
Compliance Office, or through the Speak-Up Line.
The breakdown of the Company’s employees (head-counts) by gender and main units as of 31 December 2021:
Total
Female
% of total
Male
% of total
Sales related units
1,258
753
35.9
505
24.1
Technology units
654
155
7.4
499
23.8
Support units
183
126
6.1
57
2.7
2,095
1,034
49.4
1,061
50.6
The protection and improvement of the health, safety and well-being of everyone who works for or with the Company, is a
guiding principle in all our operations. This definition includes our employees, contractors, suppliers and visitors. Our common
approach is built on promoting good health, well-being and safe work conditions, preventing occupational risks and ill health,
and rapidly reacting to injuries and unsafe conditions. This applies to both physical and psycho-social work aspects.
The Company’s occupational health and safety (OHS) management system cover all requirements of ISO 45001 standard.
The certificate of compliance with Occupational health and safety (ISO 45001) standard was obtained by the Company in
October 2017.
Remuneration
The Company’s objective is to maximize the effectiveness of remuneration programs to attract, retain and motivate high
calibre staff needed to maintain and improve the success of the business and support the change journey of becoming a new
generation telecom company. The aim of Remuneration Policy and the associated remuneration practices is to support the
strategic direction and objectives of the Company.
The Remuneration Policy sets out the following principles:
− Competitiveness and positioning. The total remuneration should be market competitive without leading relative to
the competition, and factor in the affordability for the business;
− Job levelling. Remuneration structure should take the competence required, responsibility, complexity and business
contribution of the positions into consideration when identifying the relevant remuneration levels;
− Compliance. To ensure sustainability, all remuneration structures at Telia Company should comply with statutory
requirements, collective bargaining agreements and internal policies and instructions.
− Cost effectiveness and administrative efficiency. Remuneration programs should be delivered to employees in
an optimally effective manner, both in terms of cost effectiveness and administrative efficiency.
− Performance orientation. In identifying remuneration levels for individuals, corporate, team and individual
performance should be taken into account. Performance is assessed in terms of total contribution once per year.
Both “What” and “How” is assessed with clear links to outcomes not only remuneration but also development and
promotions;
− Equal opportunity. Remuneration decisions should only be made based on the guidelines outlined in policies and
instructions. Discrimination related to factors like race, gender, age, religious or ethnic affiliation are under no
circumstances allowed.
The Company applies total remuneration approach, which means that making remuneration comparisons with market levels
and in communicating the value of remuneration to stakeholders, the emphasis is placed on the total value of the
Telia Lietuva, AB Annual report for the year ended 31 December 2021 75
remuneration, not on the individual components. The Company offers different remuneration components to its employees
differentiated based on types of businesses, functions, roles and markets. The remuneration may consist of one or more of
the following components:
− Fixed base pay, which reflects the competence required, responsibility, complexity and business contribution of the
position, type of role, external market conditions, the performance and skills of the employee and consequently is
individual and differentiates within acceptable ranges;
− Short-term annual variable pay may be offered to some of the employees and is based on the achievement of
agreed both financial and non-financial objectives and manager’s assessment of the employee’s performance;
− Functional variable pay is a sales incentive component tied to sales performance in positions related to direct sales
to customers;
− the Company may introduce long-term incentive programs (such as share-based) for some of its employees to
create confidence in and commitment to the Company’s long-term financial performance;
− other financial and non-financial benefits such as additional health insurance, pension plans, etc.
The remuneration of all employees is assessed once a year. In 2021, the remuneration was increased to 78 per cent of the
Company employees on average by 11 per cent and annual bonuses amounting to roughly one monthly salary on average
were paid to all employee of the Company which in 2020 worked in the Company for more than 3 months and did not received
sales incentive pays. According to the policy, the remuneration structure and levels for the members of the Company’s
Management Team are supervised and governed by the Remuneration Committee of the Company and are approved by the
Board.
Information about the Company’s employees’ average salaries as of 31 December 2021:
Group of employees
Number of
employees
Average monthly salary
(in EUR)
Managers (excluding CEO)
46
7,465
Middle level managers
192
3,239
Specialists
1,856
1,853
2,094
2,104
Remuneration Policy for CEO and members of the Board, which was approved by the Annual General Meeting of
shareholders on 28 April 2020, establishes requirements and guidelines in determining the remuneration of CEO and
members of the Board of the Company. The policy provides that the remuneration package of the CEO consists of: (i) the
fixed salary, (ii) variable pay which are paid out taking into consideration the financial results of the Company and personal
performance results of the CEO; and (iii) other benefits. No deferred payments mechanisms are applied to the remuneration
of the CEO unless it is agreed otherwise by mutual agreement of the Company and CEO. The maximum amount of the
variable pay to the CEO may amount to 50 percent of the CEO’s annual salary. The Company may provide other benefits
and programs in accordance with market practice which may change from time to time. The CEO may be entitled to a
company car, health and care provisions, etc. Premiums and other costs relating to such benefits may amount to not more
than 10 percent of the fixed annual cash salary.
The policy states that the General Meeting may decide to make payments for the members of the Board, according to the
provisions of the Law on Companies of the Republic of Lithuania. Members of the Board who are employees of Telia Company
AB get remuneration according to the signed employment contracts with their respective employers. No additional payments
for their activities as Members of the Board (tantiemes) are made to them by the Company. The Company only remunerates
independent members of the Board, who receive a fixed annual payment. The General Meeting decides on the exact amount
of such a payment, while approving the distribution of profit. Such payments are not treated as employment related income,
instead they are payments for the activities of the Member of the Board (tantiems). The payments to the independent
Members of the Board are set by taking into account relevant information from comparable companies (market benchmark).
The information about remuneration of CEO of Telia Lietuva, AB during 2021 (in EUR):
Name
Fixed
salary
Variable
pay
Other
benefits
Total
remuneration
Employer’s
contribution
Daily
allowance
Dan Strömberg
405,951
72,595
36,091
514,637
9,109
6,876
From August 2020, Dan Strömberg became Senior Vice President & Head of cluster Lithuania, Estonia and Denmark (LED)
at Telia Company as well as member of Telia Company Group Executive Management (GEM). Following Telia Company
policies members of GEM are not entitled to variable pay. Thus the variable pay (annual bonus) to Dan Strömberg as CEO
of the Company for the Company’s financial results in 2020 was calculated only for the period of January-July of 2020. The
variable pay to CEO for the year 2020 was considered by the Remuneration Committee and approved by the Board of the
Company in March 2021. The variable pay to the CEO amounted to 17.9 per cent of the CEO’s fixed salary. Other benefits
(income in kind) implies lease of apartment for CEO, who expatriated from his home country Sweden to work in Lithuania,
transportation and other. Other benefits amounted to 8.9 per cent of the CEO’s fixed salary. Following the Law the employer’s
Telia Lietuva, AB Annual report for the year ended 31 December 2021 76
contribution to Social Insurance Fund in 2021 amounted to 1.77 per cent of the employee’s salary. In addition, the Company
shall contribute a difference, if any, following the agreement of Double taxation between the Republic of Lithuania and the
Kingdom of Sweden. The Company does not offer any share-related incentive plans to the CEO and makes no contributions
to the CEO’s pension funds.
Following the Policy that provides that members of the Board that are employed by Telia Company AB, a largest shareholder
of the Company, are not entitled to any remuneration from the Company, only two independent members of the Board –
Tomas Balžekas and Mindaugas Glodas – by decision of the Annual General Meeting received tantiemes (annual payment)
for the year 2020: EUR 15,640 per person or EUR 31,280 in total. No other remuneration or pay-outs from the Company to
the Board members was allocated.
The Company provides additional health insurance to all employees of the Company. During 2021, in total 2,250 (2020:
2,209) employees of the Company had an additional health insurance. Employees also could insure their family members –
spouses and children.
The Company has an agreement with SEB Investicijų Valdymas (SEB Investment Management) regarding the Company
employees’ pension savings at 3rd tier pension funds. The Company employees working for at least a year could participate
in a program “Save with Telia”. The essence of the program is that the funds allocated by employer are invested into one of
the SEB Investicijų Valdymas’ fund of the employee’s choice. For all the Company’s employees participating in the program
the Company allocated EUR 8 every month, and if the employee was willing to contribute to the pension saving from his own
finances by additionally allocating 0.78, 1.55 or more per cent of his/her salary, then the Company also transferred an amount
equal to employee’s contribution but not exceeding 1.55 per cent of employees basic salary. As of 31 December 2021, in
total 787 employees of the Company were participating in a program.
Collective Bargaining Agreement
Social dialogue and partnership with the employees’ representatives, Trade Unions, is ongoing since nineties and Collective
Bargaining Agreement in the Company exists for more than 20 years.
A Collective Bargaining Agreement between the Company, as the employer, and united representation of Trade Unions was
signed on 10 January 2020. Following the requirements of a new Labour Code in order to be valid for all employees of the
Company (not only for members of Trade Union), 77 per cent of employees participated in voting and by 98 per cent majority
approved the validity of a new Collective Bargaining Agreement to all employees of the Company from 1 February 2020.
The new Agreement grants more flexible working and rest time, support for professional development, transparent
remuneration system and extra funding for social support of the Company’s employees. The Agreement provides some better
and more favourable than set by the Labour Code of the Republic of Lithuania labour, social and economic conditions to
employees of the Company:
− 50 per cent higher pay for worked time if the working schedule is changed at the last minute,
− maximum amount of overtime increased from 180 to 230 hours per annum,
− 5 additional business days of vacations depending on the number of years worked at the Company,
− 3 calendar days of paid vacations on wedding occasion,
− 3 calendar days of paid vacations in case of a death of employee’s father, mother, spouse, child (adopted child),
brother or sister,
− 1 calendar day of unpaid vacations in case of a death of employee’s grandparent, employee spouse’s parent, brother
or sister,
− upon employee’s request a possibility to attend training at least once a year,
− paid vacations for studies,
− in case of employee group redundancy and upon request from Trade Union, to order and finance outplacement
training for a group of least 5 employees who got the redundancy notice,
− if employee was fallen sick, for the first 2 days of illness to pay 70 per cent of the employee’s average remuneration;
− employee could take 2 business days off a year due to not feeling well or sickness without a sick-list while getting
remuneration,
− upon request employee who received the redundancy notice may be granted from 20 to 100 per cent of his work
time for a new job search while getting remuneration,
− employee who worked in the Company for more than 10 years gets an additional redundancy pay-out of one average
salary,
− remuneration review guidance after long-term absence,
− employees of the Company are insured against accidents all around the clock.
The Company has established a Social Needs Fund. Its purpose is to improve the organisation’s culture and to meet the
social needs of the employees in accordance with the regulations of the Fund. The Fund is managed by the Committee of
the Social Needs Fund formed of representatives of the Employer and Trade Unions.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 77
The Fund is obliged to:
− finance initiative involving employee’s children,
− pay bonus of 10 Basic Social Pay-outs (BSP) on occasion of 20, 30 and 40 years of uninterrupted work in the
Company,
− pay allowance of 10 BSP in case of death of employee’s father, mother, spouse or children (adopted children),
− pay allowance of 12 BSP and funeral expenses, excluding a funeral dinner, in case of employee’s death,
− grant allowance due to difficult financial situation of the employee or his/her family or due to incurred substantial
material loss.
The Funds also allocates funds to improve the employees’ health: rent of sports premises and grounds, support of sports and
culture events arranged on the Company level. In 2021, the Social Needs Fund allocated EUR 71.8 thousand (2020: EUR
53.7 thousand) for the above-mentioned purposes.
Mitigation of Covid-19 impact
The Company puts employees and customers health at highest priority, therefore with outspread of COVID-19 virus in spring
of 2020 and imposed quarantines in the Lithuania, Telia Lietuva took the following actions:
− implemented strict travel and meeting restrictions;
− ensured that majority of employees were able to work from home;
− ensured that engineering teams installing new services and involved in fault elimination observe extreme safety
requirements;
− adopted flexible ways of working in sales channels during official lockdown periods;
− strengthened workplace safety procedures including increased intensity of cleaning, social distancing, availability of
hand sanitizer, etc.;
− organized a coordinated return to the offices in line with recommendations from local authorities.
SUSTAINABILITY
At Telia we constantly reinvent what better connected lives, businesses, cities and societies look like. We provide the
backbone of the digital society – connectivity – as well as innovative solutions that are vital in creating a better future.
Digitalization is a catalyst for innovation and can pave the way for reducing inequalities and managing natural resources in a
sustainable way. We are committed to capture such opportunities while managing risks in a responsible way.
Together with the whole Telia Company Group we are committed to turning the 2020s into a decade of accelerated action by
making significant contributions towards the UN Sustainable Development Goals.
Our sustainability approach and agenda have been thoroughly integrated into our business strategy. Climate & Circularity,
Digital Inclusion and Privacy & Security are the key impact areas we are focusing on to truly make a difference, while our full
sustainability agenda covers a broader set of topics that are material to both Telia and the customers and society that we
serve.
Climate & Circularity
Ongoing climate change and unsustainable use of natural resources is putting both ecosystems and humanity at great risk.
Digitalization can accelerate the transformation needed to change this course. The time for forceful action is now. That’s why
we have committed to reach zero CO2 and zero waste by 2030.
In 2019, Telia Company adopted two daring environmental goals: by 2030, our CO2 and waste footprints will be zero. The
zero CO2 ambition focuses on creating a climate-neutral value chain by 2030. The work on zero waste focuses on our own
and network operations while enabling a circular economy through our offerings. To ensure action, we have set a number of
short- and mid-term goals, including our Science Based Targets (SBTs) aligned with a 1.5° C pathway.
Digital Inclusion
We are committed to connecting everyone to the most trusted, reliable and efficient modern networks. Securing that everyone
has access to reliable connectivity and the right digital skills are key to make sure that no one is left behind. Our work within
this area focuses on contributing to equality and inclusion, to make sure that society capture the full potential of digitalization.
Digitalization is currently transforming societies – bringing both new opportunities and risks. Those who are digitally included
can make the most of new opportunities, while those who are not risk being left behind when services such as healthcare
and banking are digitalized and education and many social arenas are moving online. We contribute to reducing inequalities
by bridging the digital divide.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 78
Privacy & Security
Digitalization brings great opportunities to our society but the rapid technological development also brings new and
accelerated privacy and security-related risks. At Telia we have high ambitions within both areas. Our goal is to secure top
tier positions on privacy and preferred supplier status thanks to strong security measures by 2023.
We have adopted a “privacy by design and by default” approach to ensure compliant and transparent management of
personal data in all new products and services. Key tools for implementing these principles are, among others, privacy
screening of all new initiatives that include processing of personal data and conducting a Data Protection Impact Assessment
(DPIA) before carrying out data processing where the processing is likely to result in a high risk to the rights and freedoms of
individuals.
Our approach to Security includes both proactive and reactive measures. A “Security by design and by default” approach and
mandatory security awareness trainings are two key proactive measures to ensure that security is included as an integrated
part of development and maintenance of our products, systems and infrastructure.
Our foundation
Strong governance and an ethical, rights-respecting culture are key components of our business strategy and foundation.
Our work addresses a broad set of impact areas that are material to both the Company and the customers and society that
we serve. Together with robust risk management processes they provide a foundation that is key for us to constantly gain
and maintain trust.
Beyond three key impact areas (Climate & Circularity, Digital Inclusion and Security & Privacy), our work covers a number of
other important areas that are instrumental to an ethical and rights-based culture:
− AI ethics,
− Anti-bribery and corruption,
− Children’s rights,
− Employee diversity and inclusion,
− Freedom of expression and surveillance privacy,
− Health and well-being,
− Human rights,
− Responsible sourcing,
− Responsible tax practices.
The Company is committed to a number of international guidelines and initiatives related to anti-corruption, environmental
responsibility, human rights and labour rights, including:
− The UN Universal Declaration of Human Rights,
− The core conventions of the International Labour Organization (ILO),
− The OECD Guidelines for Multinational Enterprises,
− The UN Global Compact,
− The UN Guiding Principles on Business and Human Rights,
− The Children’s Rights and Business Principles.
These guidelines form the foundation of the Code of Responsible Business Conduct. The requirements set by the Code,
which go beyond legal compliance and apply to all employees, lay out how to engage with stakeholders in a way that ensures
the highest degree of ethical business practices and behaviour. Sustainability risks are fully integrated in the Enterprise Risk
Management (ERM) process. Our Speak-Up Line is available for employees and third parties to report potential or actual
violation of laws and our requirements.
Goals and performance
Sustainability is thoroughly integrated in the Company’s business strategy. To ensure that we make progress on the most
important areas and meet increasing reporting expectations and requirements, a number of goals guide our work and
reporting.
In early 2021, Telia Company updated its business strategy and reviewed its purpose. In the new strategy, sustainability is
thoroughly integrated with new sustainability goals reflecting our ambition to constantly reinvent better connected lives and
societies. The new goals cover a broad range of topics with particular focus on the three impact areas where we believe that
we can make the biggest difference: Climate & circularity, Digital inclusion and Privacy & security.
The Company’s operations are already climate neutral with special carbon dioxide (CO2) offsetting mechanisms and green
energy, which accounts for 100 per cent of the Company’s electricity consumption. Green energy is also used by the
Company’s data centres, which have modern energy-efficient cooling equipment. As a result, about 575 tons of CO2 are
saved annually – equal to the amount of CO2 emissions produced by 130 vehicles a year.
Telia Lietuva, AB Annual report for the year ended 31 December 2021 79
In 2021, we were the first in the market to introduce refurbished phones, which are thoroughly inspected by specialists before
being returned to the market. We also launched the Eco Rating initiative, which evaluates the environmental impact of push-
button phones and smartphones, and adopted a number of other measures.
We also urge all our suppliers and partners to choose sustainability. Last year, special workshops and consultations were
organised to help companies focus more on monitoring CO2 indicators and emission reductions, as well as solving other
environmental issues.
Starting from 2021, all agreements with customers are signed electronically and that will save up to 7 million sheets or 35
tons of paper each year. Besides, the number of paper invoices send to customers was reduced by another 15 thousand and
volume of paper used in the office went down by almost the fifth, compared with year 2020.
Responsible business
We are committed to fighting corruption in all of its forms and to do business with the highest sense of transparency and
integrity. We do not accept bribery or corruption in any form.
Children and young people are active users of our services. Our commitment and responsibility is to respect and support
children’s and young people’s rights to participation, protection and well-being. We work on our own and together with
experienced partners to protect and empower children and young people online. We believe that the Internet enriches
children’s lives and provides them with opportunities to improve their digital skills as well as to socialize, play and learn.
However, children are particularly vulnerable to online threats such as cyber bullying and inappropriate content. Keeping
children safe online requires an integrated approach across the broader technology industry and the society. Telia works
closely with other companies and organizations within and outside our industry to drive common approaches to safe browsing
and app use, as well as respectful behaviour among children and young people.
At Telia Company, we stand up for diversity and respect every person’s uniqueness regardless of gender, nationality,
ethnicity, religion, age, sexual orientation, disability, personality. We are committed to offering a diverse and inclusive
workplace where every employee can be themselves, with equal access to opportunities. It is not only part of our responsibility
as a company towards our employees. We believe that more diverse teams and an inclusive environment boosts
engagement, innovation and performance, enriching our business and our culture.
Telecommunications enable access to information and the exchange of ideas in a way that supports openness and
transparency. We aim to respect freedom of expression and surveillance privacy. Issues related to freedom of expression
and surveillance privacy pose a high risk to users of telecom services globally. Risks include mass surveillance, network
shutdowns, localization of mobile devices and blocking or restriction of certain content. Respecting and promoting freedom
of expression and surveillance privacy is becoming increasingly important as legislators seek additional surveillance
measures to fight crime, terrorism, hate speech and more.
Our duty to respect and promote human rights is focused on the risks to our customers. We aim to limit potential harm to
individuals by seeking active measures to support the rights of our customers where we believe that these are at risk. The
Group Policy addresses our commitments in relation to requests or demands with potentially serious impacts on freedom of
expression and surveillance privacy in telecommunications (“unconventional requests”). A Telia Company Group instruction
sets out practical steps regarding assessments and escalation whenever a local company receives a potentially serious
request or demand.
To create the right health and well-being culture, our approach consists of promoting good health, identifying and reducing
or preventing risks and rapidly reacting to ill health. The major health and well-being risks – road safety, working at heights
and electrical work – relate to network construction and maintenance, work that is generally carried out by contractors. Telia
employees work mainly in offices or retail environments where risks relate mainly to psychosocial well-being and ergonomics.
As suppliers face health and safety risks, our aim is to have the Supplier code of conduct, which includes health and safety
requirements, included in all construction, installation and maintenance agreements. We adopt a structured management
approach by implementing ISO 45001 occupational health and safety management system.
We expect our suppliers, sub-suppliers and distributors to implement sustainable business practices and to be transparent
about their challenges. Choosing suppliers with good sustainability practices is a way for us to positively influence our supply
chain. Responsible sourcing starts with setting the expectations for our suppliers, primarily through the Supplier’s Code of
Conduct. We use a risk-based process where suppliers are categorized based on, for example, the region where the company
is registered, the type of product or service provided or how critical the supplier is to our operations. This categorization
supports in designing appropriate risk mitigation activities such as further due diligence steps (supplier self-assessment,
information research and risk analysis) before contracting, and in conducting on-site audits to evaluate whether a supplier’s
sustainability performance is sufficient.
Our aim is to know, show and manage our human rights impacts, risks and opportunities. With good faith efforts, our ambition
is to improve over time and to be considered an industry leader in human rights. Issues related to human rights, such as
customer privacy, freedom of expression and surveillance privacy can pose a risk to users of telecom services. As an
Telia Lietuva, AB Annual report for the year ended 31 December 2021 80
international group of companies with sourcing from tens of thousands of local and international suppliers, we need to manage
supply chain-specific human rights risks such as child and forced labour, labour rights and basic health and safety provisions.
We protect personal data and ensure the privacy of a person. We manage only such amount of personal data, which is
necessary considering the set purposes of data management and in strict compliance with legislative requirements. The
Company follows a strict policy on the assurance of personal data protection of its customers, thus when managing personal
data of data subjects, the Company acts in observance of the Law on Legal Protection of Personal Data of the Republic of
Lithuania, Law on Electronic Communications of the Republic of Lithuania and other directly applicable legal acts governing
personal data protection, and it cooperates with other companies and state authorities in the procedure prescribed by laws.
All employees of the Company take part in the mandatory personal data protection e-trainings and periodically renew their
knowledge in this area.
Recognitions
At the beginning of 2022, Telia Lietuva has been named the most environmentally friendly company in the large enterprise
category by the National Responsible Business Awards. The Company was recognised for its sustainable business decisions
and responsible supply chain design.
Sustainability report
Starting from the year 2006, once a year the Company along with the annual financial results prepares and publishes on-line
unaudited Sustainability Report which presents non-financial corporate responsibility information to all its stakeholders:
customers, shareholders, investors, employees, suppliers, business and social partners, and the public.
Preparation of the Company’s Sustainability Report has been inspired by the Guidelines G4 of the Global Reporting Initiative
(hereinafter - the GRI) of the United Nations, as well as the requirements applicable to telecommunications companies. G4
Guidelines are recommended internationally as one of the most advanced methodologies for non-financial reporting intended
to measure and provide information to both internal and external stakeholders. Also, recommendations of the Lithuanian
Association of Responsible Business (LAVA) on information to be presented by responsible business are considered when
preparing the report.
The Company’s Sustainability Report for the year 2021 where more detailed information about the Company’s activities in
social responsibility area is available on the Company’s website at https://www.telia.lt/eng/sustainability/reporting.
CONFIRMATION OF RESPONSIBLE PERSONS
Following Article 22 of the Law on Securities of the Republic of Lithuania and the Rules on Information Disclosure of the Bank
of Lithuania, we, Dan Strömberg, CEO of Telia Lietuva, AB, and Arūnas Lingė, Head of Finance of Telia Lietuva, AB, hereby
confirm that, to the best of our knowledge, the Annual Report of Telia Lietuva, AB, for the year 2021 includes a fair review of
the development and performance of the business and the position of the Company in relation to the description of the main
risks and contingencies faced thereby.
Dan Strömberg
CEO
Arūnas Lingė
Head of Finance
Telia Lietuva, AB Corporate governance reporting form for the year ended 31 December 2021 81
CORPORATE GOVERNANCE REPORTING FORM
FOR THE YEAR ENDED 31 DECEMBER 2021
The public limited liability company Telia Lietuva, AB (hereinafter referred to as the “Company”), acting in compliance with
Article 12 (3) of the Law of the Republic of Lithuania on Securities and paragraph 24.5 of the Listing Rules of AB Nasdaq
Vilnius, hereby discloses how it complies with the Corporate Governance Code for the Companies listed on Nasdaq Vilnius
as well as its specific provisions or recommendations. In case of non-compliance with this Code or some of its provisions or
recommendations, the specific provisions or recommendations that are not complied with must be indicated and the reasons
for such non-compliance must be specified. In addition, other explanatory information indicated in this form must be provided.
1. Summary of the Corporate Governance Reporting Form
According to the By-Laws of Telia Lietuva, AB, the governing bodies of the Company are the General Shareholder’s Meeting,
the Board and CEO. The Company does not have a Supervisory Council, but supervision functions set by the Law on
Companies of the Republic of Lithuania are performed by the Board, which is a non-executive managing body of the Company
and is comprised from four representatives of the largest shareholder, Telia Company, and two independent members of the
Board. Following the By-Laws of the Company the Board is elected for a term of two years. There are two committees in the
Company: Audit and Remuneration. The Company does not have a Nomination Committee as its functions are performed by
the Remuneration Committee. The Board elect members of both committees for a term of two years. Three members of the
Board, whereof two are independent, comprise the Audit Committee, and three members of the Board, whereof one is
independent, comprise the Remuneration Committee. The Board elects and recalls CEO of the Company, sets his/her
remuneration and other conditions of the employment agreement.
More information about the corporate governance, shareholders’ rights, activities of the Board and the Committees as well
as members of the Board and Management Team, internal control and risk management systems are provided in the Annual
Report of Telia Lietuva, AB, for the year ended 31 December 2021.
2. Structured table for disclosure
PRINCIPLES/ RECOMMENDATIONS
YES/NO/NOT
APPLICABLE
COMMENTARY
Principle 1: General meeting of shareholders, equitable treatment of shareholders, and shareholders’ rights
The corporate governance framework should ensure the equitable treatment of all shareholders. The corporate
governance framework should protect the rights of shareholders.
1.1. All shareholders should be provided with access to the
information and/or documents established in the legal acts on
equal terms. All shareholders should be furnished with equal
opportunity to participate in the decision-making process
where significant corporate matters are discussed.
Yes
The Company’s documents and information
required by the legal acts are available on the
Company’s webpage in both Lithuanian and
English languages. All shareholders have the
equal rights to participate in the General
Meetings of Shareholders.
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 share capital of the Company consists of
582,613,138 ordinary registered shares of EUR
0.29 nominal value each. Each share gives one
vote during the shareholders meeting. All shares
of the Company are given 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’s By-Laws, stipulating all the rights
of shareholders, are publicly available on the
Company’s webpage.
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 shareholders approve all the transactions
that, following the Law on Companies and the By-
Laws of the Company, should be approved by the
shareholders.
1.5. Procedures for convening and conducting a general
meeting of shareholders should provide shareholders with
equal opportunities to participate in the general meeting of
shareholders and should not prejudice the rights and interests
of shareholders. The chosen venue, date and time of the
general meeting of shareholders should not prevent active
participation of shareholders at the general meeting. In the
notice of the general meeting of shareholders being
Yes
The shareholders’ meetings of the Company are
convened at the head-quarters of the Company
in Vilnius. The Annual General Meetings are
usually held in the second half of April. In 2021
convoked the Annual General Meetings was held
without physical gathering of shareholders by
shareholders’ voting in advance in writing by
filling in the General Voting Ballots due to Covid-
Telia Lietuva, AB Corporate governance reporting form for the year ended 31 December 2021 82
convened, the company should specify the last day on which
the proposed draft decisions should be submitted at the latest.
19 quarantine imposed gatherings restrictions.
The notice of General Meetings of Shareholders
specified that draft decisions could be submitted
at any time before or at the General Meeting of
Shareholders in writing.
1.6. With a view to ensure the right of shareholders living
abroad to access the information, it is recommended, where
possible, that documents prepared for the general meeting of
shareholders in advance should be announced publicly not
only in Lithuanian language but also in English and/or other
foreign languages in advance. It is recommended that the
minutes of the general meeting of shareholders after the
signing thereof and/or adopted decisions should be made
available publicly not only in Lithuanian language but also in
English and/or other foreign languages. It is recommended
that this information should be placed on the website of the
company. Such documents may be published to the extent
that their public disclosure is not detrimental to the company
or the company’s commercial secrets are not revealed.
Yes
All the documents and information related to the
General Meeting of Shareholders including
notices of the meetings, draft decisions,
decisions and minutes of the meetings are
publicly announced in two languages –
Lithuanian and English – simultaneously via
regulatory news dissemination system and on the
Company’s website. Draft decisions for the
Annual General Meeting, held on 27 April 2021,
were announced in two languages on 2 April
2021, and the list of nominees to the Board – on
16 April 2021.
1.7. Shareholders who are entitled to vote should be furnished
with the opportunity to vote at the general meeting of
shareholders both in person and in absentia. Shareholders
should not be prevented from voting in writing in advance by
completing the general voting ballot.
Yes
Shareholders of the Company may exercise their
right to vote in the General Meeting in person or
through a representative upon issuance of proper
proxy or having concluded an agreement on the
transfer of their voting rights in the manner
compliant with the legal regulations, also the
shareholder may vote by completing the General
Voting Ballot in the manner provided by the Law
on Companies.
1.8. With a view to increasing the shareholders’ opportunities
to participate effectively at general meetings of shareholders,
it is recommended that companies should apply modern
technologies on a wider scale and thus provide shareholders
with the conditions to participate and vote in general meetings
of shareholders via electronic means of communication. In
such cases the security of transmitted information must be
ensured and it must be possible to identify the participating
and voting person.
No
Currently the Company could not provide
possibility to the shareholders to participate at the
General Meetings with means of electronic
communication as secure means to guarantee
text protection and possibilities to identify the
signatures of voting persons are not yet fully
available in Lithuania.
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 nominees to the Board are publicly
announced as soon as the Company receives
nominations. Publicly announced and presented
to the General Meeting CVs of the Board
nominees contain information about their
education, employment history and other
competence. The amount of annual
compensation (tantiemes) to the Board members
is provided in the draft of the Profit allocation
statemen presented the General Meeting. The
name of proposed audit company and proposed
remuneration for the audit services are presented
in advance as a draft decision for the General
Meeting.
1.10. Members of the company’s collegial management
body, heads of the administration or other competent persons
related to the company who can provide information related to
the agenda of the general meeting of shareholders should
take part in the general meeting of shareholders. Proposed
candidates to member of the collegial body should also
participate in the general meeting of shareholders in case the
election of new members is included into the agenda of the
general meeting of shareholders.
Yes
In 2021, due to quarantine the Annual General
Meeting of Shareholders was held without
physical gathering of shareholders by
shareholders’ voting in advance in writing by
filling in the General Voting Ballots.
Telia Lietuva, AB Corporate governance reporting form for the year ended 31 December 2021 83
Principle 2: Supervisory board
2.1. Functions and liability of the supervisory board
The supervisory board of the company should ensure representation of the interests of the company and its
shareholders, accountability of this body to the shareholders and objective monitoring of the company’s operations
and its management bodies as well as constantly provide recommendations to the management bodies of the
company.
The supervisory board should ensure the integrity and transparency of the company’s financial accounting and
control system.
2.1.1. Members of the supervisory board should act in good
faith, with care and responsibility for the benefit and in the
interests of the company and its shareholders and represent
their interests, having regard to the interests of employees
and public welfare.
Not
applicable
2.1.2. Where decisions of the supervisory board may have a
different effect on the interests of the company’s
shareholders, the supervisory board should treat all
shareholders impartially and fairly. It should ensure that
shareholders are properly informed about the company’s
strategy, risk management and control, and resolution of
conflicts of interest.
Not
applicable
2.1.3. The supervisory board should be impartial in passing
decisions that are significant for the company’s operations
and strategy. Members of the supervisory board should act
and pass decisions without an external influence from the
persons who elected them.
Not
applicable
2.1.4. Members of the supervisory board should clearly voice
their objections in case they believe that a decision of the
supervisory board is against the interests of the company.
Independent members of the supervisory board should: a)
maintain independence of their analysis and decision-making;
b) not seek or accept any unjustified privileges that might
compromise their independence.
Not
applicable
2.1.5. The supervisory board should oversee that the
company’s tax planning strategies are designed and
implemented in accordance with the legal acts in order to
avoid faulty practice that is not related to the long-term
interests of the company and its shareholders, which may give
rise to reputational, legal or other risks.
Not
applicable
2.1.6. The company should ensure that the supervisory board
is provided with sufficient resources (including financial ones)
to discharge their duties, including the right to obtain all the
necessary information or to seek independent professional
advice from external legal, accounting or other experts on
matters pertaining to the competence of the supervisory board
and its committees.
Not
applicable
2.2. Formation of the supervisory board
The procedure of the formation of the supervisory board should ensure proper resolution of conflicts of interest and
effective and fair corporate governance.
2.2.1. The members of the supervisory board elected by the
general meeting of shareholders should collectively ensure
the diversity of qualifications, professional experience and
competences and seek for gender equality. With a view to
maintain a proper balance between the qualifications of the
members of the supervisory board, it should be ensured that
members of the supervisory board, as a whole, should have
diverse knowledge, opinions and experience to duly perform
their tasks.
Not
applicable
Telia Lietuva, AB Corporate governance reporting form for the year ended 31 December 2021 84
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.
Not
applicable
2.2.3. Chair of the supervisory board should be a person
whose current or past positions constituted no obstacle to
carry out impartial activities. A former manager or
management board member of the company should not be
immediately appointed as chair of the supervisory board
either. Where the company decides to depart from these
recommendations, it should provide information on the
measures taken to ensure impartiality of the supervision.
Not
applicable
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.
Not
applicable
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.
Not
applicable
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.
Not
applicable
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.
Not
applicable
Principle 3: Management Board
3.1. Functions and liability of the management board
The management board should ensure the implementation of the company’s strategy and good corporate
governance with due regard to the interests of its shareholders, employees and other interest groups.
3.1.1. The management board should ensure the
implementation of the company’s strategy approved by the
supervisory board if the latter has been formed at the
company. In such cases where the supervisory board is not
formed, the management board is also responsible for the
approval of the company’s strategy.
Yes
As there is no Supervisory Council in the
Company, the Company’s Board performs
supervisory functions set by the Law on
Companies of the Republic of Lithuania and
approves 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
Yes
The Company’s approach towards employees,
suppliers, customers and society are set up in
respective Company’s policies and Code of
Responsible Business Conduct that are
approved by the Board and are available on the
Company’s webpage.
Telia Lietuva, AB Corporate governance reporting form for the year ended 31 December 2021 85
interest groups by respectively striving 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
Internal policies of Telia Company Group are
adopted by the Company’s Board including the
Code of Responsible Business Conduct, and
their implementation in the Company is followed
up at regular local Governance, Risk, Ethics and
Compliance (GREC) meetings.
3.1.4. Moreover, the management board should ensure that
the measures included into the OECD Good Practice
Guidance on Internal Controls, Ethics and Compliance are
applied at the company in order to ensure adherence to the
applicable laws, rules and standards.
Yes
The Company’s Governance, Risk, Ethics and
Compliance (GREC) meetings are held on a
regular basis.
3.1.5. When appointing the manager of the company, the
management board should take into account the appropriate
balance between the candidate’s qualifications, experience
and competence.
Yes
The current CEO of the Company, appointed by
the Board from 4 July 2018, has a vast
managerial experience in telecommunication
industry and used to work in Lithuania for a
couple of years.
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,
except
gender
diversity
Four members of the current Board have MBA
degrees, one has degrees in Finance and
Accounting, and one has Masters’ of Law degree.
Four out of six members of the Board are working
in the telecommunications company; one – in ICT
sector and one has banking experience.
Currently two out of six members of the Board are
females.
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
CVs of the nominees to the Board (including
information about candidate’s participation in
activities of other companies) are included into
the draft decisions for the General Meeting of
Shareholders and are available at the Company’s
website, and shareholders may be acquitted with
such information in advance.
Information about employment of the Board
members as well as their participation in the
activities of other companies is continuously
monitored and collected, and each quarter
updated information is presented at the
Company’s website as well as in the Company’s
annual and interim reports.
3.2.3. All new members of the management board should be
familiarized with their duties and the structure and operations
of the company.
Yes
Upon election, all members of the Board were
acquainted with their duties and responsibilities
set by Lithuanian legislation as well as the By-
laws of the Company. Members of the Board on
the regular basis are informed about the
Company’s performance and its development, as
well as major changes in the Company’s
activities legal framework and other
circumstances having effect on the Company
during the Board meetings and individually upon
the need and request by the Board members.
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
Following the By-Laws of the Company, the
Board members are elected for a two-year term,
not limiting the number of terms. Thus, one
member of the Board has been working in the
Board since April 2014 and has been re-elected
four times – in April 2015, April 2017, April 2019
and April 2021. Another was elected in April 2016
and worked till April 2017, and once again was
Telia Lietuva, AB Corporate governance reporting form for the year ended 31 December 2021 86
elected in April 2018 and re-elected in April 2019
and April 2021. Two members were elected in
April 2018 and re-elected in April 2019 and April
2021. One member of the current Board was
elected in November 2020 to substitute the
resigned member of the Board, and re-elected in
April 2021. New member of the Board was
elected in April 2021. The current two-year term
of the Board ends in April 2023.
3.2.5. Chair of the management board should be a person
whose current or past positions constitute no obstacle to carry
out impartial activity. Where the supervisory board is not
formed, the former manager of the company should not be
immediately appointed as chair of the management board.
When a company decides to depart from these
recommendations, it should furnish information on the
measures it has taken to ensure the impartiality of supervision.
Yes
The Chair of the Board represents the majority
shareholder of the Company and is not involved
in any daily activities of the Company, nor has at
any time been working in the Company. Former
CEOs of the Company are neither working in the
Company nor in any collegial body.
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 his duties as a member of the
collegial body. During all Board meetings in 2021
there was the quorum prescribed by legal acts.
Attendees of the meetings are registered in the
minutes of the meetings and information about
attendance of the meetings by each member of
the Board is presented in the Annual Report for
the year 2021.
3.2.7. In the event that the management board is elected in
the cases established by the Law where the supervisory board
is not formed at the company, and some of its members will
be independent, it should be announced which members of
the management board are deemed as independent. The
management board may decide that, despite the fact that a
particular member meets all the criteria of independence
established by the Law, he/she cannot be considered
independent due to special personal or company-related
circumstances.
Yes
There are two independent members of the
Board. Mindaugas Glodas was re-elected for a
new term of the Board in April 2021 and new
independent member of the Board, Dovilė
Grigienė, was elected in April 2021 and
substituted previous independent member of the
Board, Tomas Balžekas. It was disclosed before
the Annual General Meeting which nominees to
the Board upon election will regarded as
independent members of the Board.
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
While approving the Profit allocation statement
the Annual General Meeting of the Company’s
Shareholders sets the annual compensations
(tantiemes) to the members of the Board. Starting
from 2016, annual compensation of EUR 15.6
thousand per person is paid only to two
independent members of the Board.
3.2.9. The members of the management board should act in
good faith, with care and responsibility for the benefit and the
interests of the company and its shareholders with due regard
to other stakeholders. When adopting decisions, they should
not act in their personal interest; they should be subject to no-
compete agreements and they should not use the business
information or opportunities related to the company’s
operations in violation of the company’s interests.
Yes
According to the information possessed by the
Company, all members of the Board that perform
supervisory functions provided by the Law are
acting in a good faith in respect of the Company,
in the interest of the Company but not in the
interest of their own or third parties, pursuing
principles of honesty and rationality, following
obligations of confidentiality and property
separation, thus striving to maintain their
independence in decisions making.
3.2.10. Every year the management board should carry out an
assessment of its activities. It should include evaluation of the
structure of the management board, its work organization and
ability to act as a group, evaluation of the competence and
work efficiency of each member of the management board,
and evaluation whether the management board has achieved
its objectives. The management board should, at least once a
year, make public respective information about its internal
structure and working procedures in observance of the legal
acts regulating the processing of personal data.
Yes
Information about the Board and its Committees’
activities is disclosed in the Annual Report for the
year 2021. The Board members carried out an
assessment of the Board’s annual activities.
Telia Lietuva, AB Corporate governance reporting form for the year ended 31 December 2021 87
Principle 4: Rules of procedure of the supervisory board and the management board of the company
The rules of procedure of the supervisory board, if it is formed at the company, and of the management board should
ensure efficient operation and decision-making of these bodies and promote active cooperation between the
company’s management bodies.
4.1. The management board and the supervisory board, if the
latter is formed at the company, should act in close
cooperation in order to attain benefit for the company and its
shareholders. Good corporate governance requires an open
discussion between the management board and the
supervisory board. The management board should regularly
and, where necessary, immediately inform the supervisory
board about any matters significant for the company that are
related to planning, business development, risk management
and control, and compliance with the obligations at the
company. The management board should inform he
supervisory board about any derogations in its business
development from the previously formulated plans and
objectives by specifying the reasons for this.
Yes
The Company has the Board that represents the
shareholders of the Company and is responsible
for strategic management of the Company,
supervision and control of activities of CEO of the
Company. The management team of the
Company on a regular basis informs the Board
about the Company’s performance.
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
The Company’s Board meetings are convoked
according to the preliminary approved meetings
schedule for the year. At least two ordinary
meetings are held each quarter, while
extraordinary meetings could be convoked upon
the need.
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
Following the Board Rules of Procedure,
information about the meeting convocation,
agenda and all materials related to the agenda
issues should be provided to each Board
member not later than seven days before the
meeting.
The meeting agenda should not be changed
during the meeting, unless all members present
at the meeting agree or absentees inform that
they agree with the changed agenda.
4.4. In order to coordinate the activities of the company’s
collegial bodies and ensure effective decision-making
process, the chairs of the company’s collegial supervision and
management bodies should mutually agree on the dates and
agendas of the meetings and close cooperate in resolving
other matters related to corporate governance. Meetings of
the company’s supervisory board should be open to members
of the management board, particularly in such cases where
issues concerning the removal of the management board
members, their responsibility or remuneration are discussed.
Not
applicable
There is no Supervisory Council in the Company,
but dates and agenda of the Board meetings are
coordinated with the CEO of the Company, and
the CEO of the Company as well as other
members of the management team, if necessary,
participate in the Board meetings.
Telia Lietuva, AB Corporate governance reporting form for the year ended 31 December 2021 88
Principle 5: Nomination, remuneration and audit committees
5.1. Purpose and formation of committees
The committees formed at the company should increase the work efficiency of the supervisory board or, where the
supervisory board is not formed, of the management board which performs the supervisory functions by ensuring
that decisions are based on due consideration and help organise its work in such a way that the decisions it takes
would be free of material conflicts of interest.
Committees should exercise independent judgment and integrity when performing their functions and provide the
collegial body with recommendations concerning the decisions of the collegial body. However, the final decision
should be adopted by the collegial body.
5.1.1. Taking due account of the company-related
circumstances and the chosen corporate governance
structure, the supervisory board of the company or, in cases
where the supervisory board is not formed, the management
board which performs the supervisory functions, establishes
committees. It is recommended that the collegial body should
form the nomination, remuneration and audit committees.
Yes
There are two instituted by the Board
Committees in the Company: Audit and
Remuneration. The Nomination Committee is not
instituted as its functions are performed by the
Remuneration Committee. Three members of the
Board comprise each committee.
5.1.2. Companies may decide to set up less than three
committees. In such case companies should explain in detail
why they have chosen the alternative approach, and how the
chosen approach corresponds with the objectives set for the
three different committees.
5.1.3. In the cases established by the legal acts the functions
assigned to the committees formed at companies may be
performed by the collegial body itself. In such case the
provisions of this Code pertaining to the committees
(particularly those related to their role, operation and
transparency) should apply, where relevant, to the collegial
body as a whole.
Not
applicable
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
Three members of the Board comprise each
committee. Two independent members of the
Board are members of the Audit Committee. All
three members of the Audit committee have a
financial background. One independent member
of the Board is member of the Remuneration
Committee. All three members of the
Remuneration Committee have managerial
experience. Chair of the Board is an ordinary
member of the Remuneration 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
Responsibilities and work regulations of the
committees are approved by the Board. In 2019,
Rules of Procedure of both committees were
revised and updated.
The names of the Committee members are
announced in the Company’s periodic reports and
on the webpage of the Company.
Information about activities of the committees
and attendance of the committees’ meeting is
provided in the Annual Report for the year 2021.
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
Yes
Employees of the Company who are responsible
for the discussed area as well as external
partners such as auditors participate in the
Committees’ meetings and provide all necessary
information.
Telia Lietuva, AB Corporate governance reporting form for the year ended 31 December 2021 89
should be specified in the rules regulating the activities of the
committee.
5.2. Nomination committee
5.2.1. The key functions of the nomination committee should
be the following:
1) to select candidates to fill vacancies in the membership of
supervisory and management bodies and the administration
and recommend the collegial body to approve them. The
nomination committee should evaluate the balance of skills,
knowledge and experience in the management body, prepare
a description of the functions and capabilities required to
assume a particular position and assess the time commitment
expected;
2) assess, on a regular basis, the structure, size and
composition of the supervisory and management bodies as
well as the skills, knowledge and activity of its members, and
provide the collegial body with recommendations on how the
required changes should be sought;
3) devote the attention necessary to ensure succession
planning.
Yes
In the Company, the function of the Nomination
Committee is performed by the Remuneration
Committee.
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.
Yes
5.3. Remuneration committee
5.3.1. The main functions of the remuneration committee
should be as follows:
1) submit to the collegial body proposals on the remuneration
policy applied to members of the supervisory and
management bodies and the heads of the administration for
approval. Such policy should include all forms of
remuneration, including the fixed-rate remuneration,
performance-based remuneration, financial incentive
schemes, pension arrangements and termination payments
as well as conditions which would allow the company to
recover the amounts or suspend the payments by specifying
the circumstances under which it would be expedient to do so;
2) submit to the collegial body proposals regarding individual
remuneration for members of the collegial bodies and the
heads of the administration in order to ensure that they would
be consistent with the company’s remuneration policy and the
evaluation of the performance of the persons concerned;
3) review, on a regular basis, the remuneration policy and its
implementation.
Yes
Information about activities of the Remuneration
committee is provided in the Annual Report for
the year 2021.
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.
5.4.2. All members of the committee should be provided with
detailed information on specific issues of the company’s
accounting system, finances and operations. The heads of the
company’s administration should inform the audit committee
about the methods of accounting for significant and unusual
transactions where the accounting may be subject to different
approaches.
Yes
5.4.3. The audit committee should decide whether the
participation of the chair of the management board, the
manager of the company, the chief finance officer (or senior
employees responsible for finance and accounting), the
Yes
Telia Lietuva, AB Corporate governance reporting form for the year ended 31 December 2021 90
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.
Yes
Internal and external auditors present their
activities plans and reports to the Audit
Committee on a regular basis.
5.4.5. The audit committee should examine whether the
company complies with the applicable provisions regulating
the possibility of lodging a complaint or reporting anonymously
his/her suspicions of potential violations committed at the
company and should also ensure that there is a procedure in
place for proportionate and independent investigation of such
issues and appropriate follow-up actions.
Yes
Reports of the Company’s Governance, Risk,
Ethics and Compliance (GREC) meetings are
presented to the Audit Committee on a regular
basis.
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
Reports of the Audit Committee are presented at
the Board meetings on a regular basis.
Principle 6: Prevention and disclosure of conflicts of interest
The corporate governance framework should encourage members of the company’s supervisory and management
bodies to avoid conflicts of interest and ensure a transparent and effective mechanism of disclosure of conflicts of
interest related to members of the supervisory and management bodies.
Any member of the company’s supervisory and management
body should avoid a situation where his/her personal interests
are or may be in conflict with the company’s interests. In case
such a situation did occur, a member of the company’s
supervisory or management body should, within a reasonable
period of time, notify other members of the same body or the
body of the company which elected him/her or the company’s
shareholders of such situation of a conflict of interest, indicate
the nature of interests and, where possible, their value.
Yes
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 Annual General Meeting of Shareholders
held on 28 April 2020 approved the
Remuneration Policy for CEO and members of
the Board of the Company. This Policy is placed
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
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
Only two independent members of the Board
receive the annual compensations (tantiemes)
approved by the Annual General Meeting. The
amount of tantiemes is the same for a decade
and amounts to EUR 15.6 thousand per person.
Telia Lietuva, AB Corporate governance reporting form for the year ended 31 December 2021 91
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’s Remuneration Policy for CEO
and members of the Board stipulates that upon
termination of the employment contract the CEO
should be entitled to receive the statutory
severance pay as specified in the Labour Code
of the Republic of Lithuania or other laws, unless
it was agreed with the Board on different
severance pay in CEO’s employment contract.
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.
Not
applicable
The Company does not have any share options
scheme for employees’ remuneration.
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 prepared Report on implementation
of the Remuneration Policy for CEO and members
of the Board. The Report provides information on
remuneration of CEO and members of the Board.
The Report is publicly available on the Company’s
webpage.
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
Following the requirement of the Laws, the
Annual General Meeting of Shareholders
approves the Remuneration Policy for CEO and
members of the Board and annual Report on
Policy’s implementation. The Company does not
apply any schemes for remuneration in shares,
share options or any other rights to purchase
shares or be remunerated based on share price
movements.
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 Code of Responsible Business Conduct is
approved by the Board and is available on the
Company’s webpage.
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 and trade unions that represent
employees of the Company have signed a
Collective Bargaining Agreement.
In 1999, following the Company’s privatization
program, almost 5 per cent of the Company’s
shares were sold to its employees. The current
and former employees of the Company
participate in the shareholders meetings, show
interest in the Company’s performance and
results. Every year the Company pays dividends
to the shareholders. The Company has approved
Support Policy and, on the basis of it, builds its
relations with society and local communities.
Telia Lietuva, AB Corporate governance reporting form for the year ended 31 December 2021 92
8.3. Where stakeholders participate in the corporate
governance process, they should have access to relevant
information.
Yes
The Company prepares the Sustainability
Report, which discusses principles and practices
in relation to the Company’s cooperation with
investors, employees, customers and local
communities.
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.
Yes
There is a Speak-Up Line valid for the whole Telia
Company Group.
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 reports its operating and financial
results quarterly.
9.1.2. objectives and non-financial information of the
company;
Yes
The Company reports its operating and financial
results quarterly.
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 information is available on the Company’s
website and is presented in the interim and
annual reports.
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 information is available on the Company’s
website and is presented in the interim and
annual reports.
9.1.5. reports of the existing committees on their composition,
number of meetings and attendance of members during the
last year as well as the main directions and results of their
activities;
Yes
The information about composition of the
committees, number of meetings and attendance
is presented in the semi-annual and annual
reports.
9.1.6. potential key risk factors, the company’s risk
management and supervision policy;
Yes
Information is presented in the semi-annual and
annual reports.
9.1.7. the company’s transactions with related parties;
Yes
The information is available on the Company’s
website and is presented in the interim and
annual reports.
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
Information is presented in the semi-annual and
annual reports.
9.1.9. structure and strategy of corporate governance;
Yes
The information is available on the Company’s
website and is presented in the interim and
annual reports.
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
Information about investments is presented in the
interim and annual reports. Information about
social responsibility policy and anti-corruption
fight is available on the Company’s website and
is presented in the Sustainability reports.
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
Until the year 2021, the Company was preparing
consolidated financial interim and annual reports.
From 1 July 2020, the Company has no
subsidiaries to be consolidated, thus the
Company’s financial statements for the year
2021 are prepared as stand-alone.
9.3. When disclosing the information specified in paragraph
9.1.4 of recommendation 9.1, it is recommended that the
Yes
Information about remuneration of CEO and
members of the Board is provided in the Report
Telia Lietuva, AB Corporate governance reporting form for the year ended 31 December 2021 93
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.
on implementation of the Remuneration Policy for
CEO and members of the Board.
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
All information is disseminated to the
shareholders, investors and stock exchanges at
the same time and in the same amount, in both
Lithuanian and English, and all information is
publicly available on the Company’s webpage.
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
An independent audit firm carries out an audit of
the annual financial statements of the Company
prepared in accordance with the IFRS adopted
by the EU. The auditors also review Annual
Reports for any inconsistencies with financial
statements.
10.2. It is recommended that the audit firm would be
proposed to the general meeting of shareholders by the
supervisory board or, if the supervisory board is not formed at
the company, by the management board of the company.
Yes
The Board proposes the candidacy of an
independent audit firm to the Annual General
Meeting of Shareholders.
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
Information about non-audit services provided to
the Company by the audit firm (if any) is
presented in the Annual Report of the Company.