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: