VILNIUS - Lietuvos paštas · vilnius annual report and financial statements for 2015 prepared according to international financial reporting standards as adopted by the european

VILNIUS

ANNUAL REPORT AND FINANCIAL STATEMENTS FOR 2015PREPARED ACCORDING TO INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION, PRESENTED TO-GETHER WITH INDEPENDENT AUDITOR’S REPORT

PUBLIC LIMITED COMPANY LIETUVOS PAŠTAS 2015

CONTENTS

Annual Report 2Statement of Comprehensive Income 30Statement of Financial Position 31 Cash Flow Statement 32Statement of Changes in Equity 33Explanatory Notes to the Financial Statements 34

2015 Annual Report by the Public Limited Company Lietuvos Paštas

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VILNIUS

PUBLIC LIMITED COMPANY LIETUVOS PAŠTAS ANNUAL REPORT FOR THE YEAR 2015


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Dear colleagues, customers and partners,

Reviewing the last year, I am glad that 2015 was a successful year to Lithuania Post. Our company strengthened its position even more not only in the postal but also in financial services and retail markets.

Constantly improving activities and financial results prove that Lithuania Post is able to accept challenges of the 21st century, despite the annually decreasing need of traditional postal services. Rapidly becoming popular e-commerce and the development of digital technologies, become an opportunity for us to change, improve and move forward!

The successfully installed modern electronic self-service system and the further developed E-delivery service illustrate that today Lithuania Post work is directed not only to meet the needs and expectations of the current, but also of the future customers.

We have set ourselves an ambitious aim – by 2020 to become one of the leaders in our sector in Central and Eastern Europe. Cherish-ing international cooperation, we maintain strong partnerships with the major and active in the international market China’s logistics and courier companies. Today Lithuania has become a transit country – a gateway through which consignments are delivered from China to European countries. Last year 59.8 million postal items were sent and received via Lithuania Post; it is by 12.8 per cent more than in 2014.

Analysts predict that e-commerce will continue to grow rapidly, therefore, we have already rearranged our action plan in order to be able to deliver constantly increasing number of consignments containing goods purchased in both Lithuanian and foreign e-stores.

We invest in modern and meeting the highest contemporary standards logistics centers. In 2015 the largest Lithuania Post logistics center was opened; having it opened, we will increase the scope of work even a few times and we will process increasing deluge of consignments much faster.

Last year in Vilnius we opened a customer service center of a new concept called a “future post”. A spacious, cozy and provided with a modern equipment Lithuania Post department ensures the highest quality of customer service, rapidity and comfort. During 2015, modern self-service consignments packing units were installed in more than 100 post offices. We aim that services of Lithuania Post would be convenient for customers.

2015 was a profitable year! Last year Lithuania Post’s net profit amounted to EUR 865 thousand, whereas, the company’s operational income boosted by 12 per cent amounting to more than EUR 69 million. Income increased from postal and financial services, non-targeted advertisements, retail and other services.

I have no doubt that the success factor of Lithuania Post is a team of tenacious, strong and professional employees. Their professional-ism was demonstrated when at the beginning of 2015, once Lithuania adopted Euro, we had to face a great challenge – to become one of the main places where the currency was exchanged free of charge. This task that demanded focus and the highest professionalism was overcome perfectly!

I hope that in 2015 Lithuania Post met the expectations of its shareholder – State, clients, business partners and employees. We will continue seeking to be a reliable partner for you!


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Name Public Limited Company Lietuvos paštas (hereinafter referred to as “Lithuania Post” or “the Company”)

Legal domicile J. Jasinskio g. 16, 03500 Vilnius

Telephone (8 700) 55 400

Fax (8 5) 216 3204

E-mail [email protected]

Website address www.lietuvospastas.lt

Legal status Public limited company, private legal entity of limited civil liability

Term of activity Open-ended

Company code 121215587

VAT payer code LT212155811

Data processor of legal entities State Enterprise Centre of Registers

Registration date 14 September 2009

Core activity Postal, Courier, Financial intermediary

Company’s vision – Lithuania Post in 2020 – a successful company rendering delivery, financial intermediation, and retail services as well as one of the leading market players in the Central and Eastern Europe, and the number one choice for Lithuania’s customers.

Company’s mission – to provide quality, reliable, and professional postal, logistic, and financial services.

Company’s Values

Progress. Development of electronic services, innovations, and constant striving for excellence will give grounds for Lithuania Post to become the most modern postal operator in the Baltic region. Efficiency. While achieving the highest results with optimal costs, Lithuania Post will become the best state-owned company in the country.Quality. Lithuania Post is the first choice of customers who need relevant, up-to-date, and high quality services.Reliability. Conducting socially responsible activities and being a reliable service provider and business partner, Lithuania Post is becoming the company that appears to be at the fingertips of customers and one of the best employers in Lithuania.

GENERAL INFORMATION

Reporting period

The fiscal year starts on 1 January 2015The fiscal year ends on 31 December 31

Contact details


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Major Events after the End of the Fi-nancial Year

From 1 January 2016, the Company started applying a new dis-count system which is based on the number of consignments sent and the points of delivery. The new discount system is ap-plicable to business clients having signed an agreement with Lithuania Post which send more than 250 large correspond-ence items or 1,000 and more small correspondence items per month. The price of delivery services will be subject to the number of dispatched consignments and the “geography”, i.e. the delivery point. While giving discounts to business clients 3 geographical territories of consignment delivery will be taken into account: cities, district centres and towns, small towns and villages.

Major Events of the Reporting Period

On 1 March 2015, Lithuania Post completed the provision of currency exchange services, namely, the exchange of Litas into Euro. In the period from 1 January 2015 to 1 March 2015, resi-dents of Lithuania exchanged as many as LTL 829 million (EUR 240.1 million) into Euros in 330 units of Lithuania Post.

On 26 February 2015, Kaunas saw the opening of new logistics centre of Lithuania Post which will conduct mail sorting. Es-tablished in the geographical centre of Lithuania this centre of logistics will be able to provide better communication opportu-nities and will ensure compliance with modern operational and logistics standards. On 7 April 2015, the recast of the collective agreement was ap-proved in the conference of the managers and employees of Lithuania Post, the managers and representatives of Trade Un-ion of Lithuania Post and Lithuanian Communication Workers Trade Union. The new collective agreement defines remunera-tion issues, introduces a new classification of post offices, le-gitimizes regional policy, as well as sets forth slightly modified provisions on annual leave, additional rest time, etc.

On 26 August 2015, Resolution No. 914 of the Government of the Republic of Lithuania “On the Approval of Regulations of the National Information System for the Delivery of Electronic Consignments By Use of the Postal Network” (http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc_l?p_id=1071739&p_tr2=2) was adopted which approved the Regulations of the National In-formation System for the Delivery of Electronic Consignments by Use of Postal Network. In addition, state institutions ac-countable to the Government of the Republic of Lithuania were obliged to send each other and other legal and natural persons only electronic consignments using this system instead of items of correspondence from 1 January 2016, except for the cases where the original copy of a document must be delivered. Other state institutions and budgetary institutions were advised to use the online delivery system from 1 January 2016.

On 20 November 2015, the Information Society Development Committee and Lithuania Post signed the agreement on the Provision of Services of the Operator of National Information System for the Delivery of Electronic Consignments by Use of the Postal Network (Online Consignment Delivery System).

In July 2015, Lithuania Post sold its administrative building, the area which was about 3,000 square meters, located on A. Vivul-skio Street, Vilnius, for the amount of almost EUR 1.7 million. It has been one of the biggest real estate objects (both in terms of the area and the value) ever sold by the company.

On 29 October 2015, Lithuania Post and Danske Bank signed a loan contract effective until 31 October 2018.


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The Central Securities Depository of Lithuania (hereinafter re-ferred to as the “Depository”) converted the currency of its share issue from Litas to Euros in its securities accounting system on 1 January 2015.

In accordance with this conversion conducted by the Deposi-tory, the brokerage company Finasta, AB, in turn, converted the nominal value of its shares from Litas to Euros in the securi-ties accounting system of brokerage company Finasta, AB, on 1 January 2015.

Shareholders

All shares are owned by the State. Ensuring the rights in the Company reserved to the State via the possessed shares, the State is represented by the Ministry of Transport and Commu-nications of the Republic of Lithuania.

No own shares had been obtained before the accounting period, and no own shares were obtained or assigned during the year 2015. No shares of other companies were obtained or assigned.

Awards

Successfully Operating CompanyIn the awards of “Successfully Operating Companies” organised by the Lithuanian Confederation of Industrialists so as to honour and present to the general public the companies which success-fully do business in Lithuania as well as their talented managers and specialists, Lithuania Post earned the title of a “Successfully Operating Company”. Moreover, for its successful operation in 2015, Lietuvos Paštas, AB (Lithuania Post) was nominated and awarded in the category of large companies.

Appreciation for the Promotion of Social DialogueIn 2015, the Ministry of Social Security and Labour awarded Lithuania Post for the promotion of social dialogue. The perfor-mance of Lithuanian enterprises in terms of social responsibil-ity was assessed and the corresponding awards (certificates) were given by a special commission. Lithuania Post was nomi-nated for this award by the Trade Union of workers of Lithuania Post.

Membership and International CooperationSince 1992, Lithuania has been one of 192 members of the Uni-versal Postal Union (hereinafter referred to as “UPU”) (www.upu.int), and Lithuania Post is a member of PostEurop, one of the regional unions of the UPU (www.posteurop.org), and a member of the Baltic Postal Union. Also, the Company has been participating in the activities of the Committee for the Improve-ment of Service Quality.

Lithuania Post’s membership in international postal organi-sations opens possibilities for international cooperation and plays an important role in networking, sharing best practices and state-of-the-art achievements. All this gives us additional knowledge that is directly applied for the improvement of ser-vices and makes relations with customers stronger.

Lithuania Post is a member of the Lithuanian Business Confed-eration (ICC Lithuania), a member of Investors’ Forum as well as a non-associate member of the Lithuanian Confederation of Industrialists. Authorised Capital

The authorised capital of Lithuania Post makes EUR 32,791,579 consisting of 113, 074, 410 ordinary registered shares with the par value of EUR 0.29.

The shares of the company are recorded by way of entries in the securities account which has been managed by the public lim-ited company Šiaulių Bankas since 21 December 2015, which has later merged with the reorganised Finasta, public limited brokerage company. The rights and responsibilities of the bro-kerage company Finasta and Finasta Bank, AB, were taken over by Šiaulių Bankas.


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Dividend Policy

Lithuania Post pays dividends in accordance with the procedures set forth in Resolution No. 20 of the Government of the Republic of Lithuania of 14 January 1997 (edition of Resolution No. 359 dated 4 April 2012) governing the allocation of dividends for shares owned by the State.

In 2014, Lithuania Post’s net profit amounted to EUR 233,000, and in 2015, it made payments to its shareholders in the amount EUR 187,000 in the form of dividends from the 2014 distribut-able profit.

Management Bodies

Pursuant to the Articles of Association of the Company, the bod-ies of the Company are as follows: the General Shareholders’ Meeting, the Board, and Chief Executive Officer of the Com-pany. The Supervisory Board is not formed in the Company. The Board of the Company represents the shareholders and per-

forms supervisory and control functions.

The decisions of the General Shareholders’ Meeting are equalled to the written decisions of the Ministry of Transport and Communications.

The Board of the Company is a collegiate body consisting of five members elected for a term of four years. The Board elects a Chair from its membership. The Members of the Board are elected by the General Shareholders’ Meeting.

The Board elects and recalls the CEO of the Company, sets his salary and other terms and conditions of labour contract, ap-proves job description, awards incentives and imposes penalties. The CEO is the top manager of the Company. The CEO is the sole management body which arranges daily activities of the Com-pany based on the authorisation granted to him/her.

Members of the Board (data as of 31 December 2015)

Full name Position Education Beginning of the term of office

Alfonsas Macaitis

Adviser to the Minister of Transport and Communications Faculty of Radioelectronics, Kaunas

University of Technology (former Kaunas Polytechnic Institute)

17/11/2014

Janina Laskauskienė

Head of Evaluation of Budget Pro-grammes Division under Budget and State Property Management Depart-ment of the Ministry of Transport and Communications

Faculty of Economics at Vilnius Uni-versity. Studies in the fields of finance and credits. Qualification of a certified economist.

07/02/2012

Irma KirklytėHead of Law Division of the Ministry of Transport and Communications Faculty of Law at Vilnius University 20/08/2012

Linas Sasnauskas Finance Director at Carlsen Baltic, UAB

International Management, Stockholm School of Economics(SSE)

14/06/2012

Jonas Butautis General Manager of Magnetic MRO AS

Master’s Degree in Business Administra-tion, Vytautas Magnus University

30/06/2014


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Management Team Members (data as of 31 December 2015)

In 2015, the Sales Division underwent changes: Arūnas Venckavičius who had held the office of Sales Division Director until 22 July 2015 was replaced by Aurimas Čiagus who took up this position on 1 December 2015. Aurimas Čiagus has ex-perience in the fields of sales and electronic trading. Before, he headed the on-line shop Barbora, and had also held the position of marketing manager of Pigu.lt.

Wages allocated to the management of the Company in 2015 accounted EUR 271,500 and in 2014 – to EUR 256,400.

Full name Position Education

Lina Minderienė CEO

Vilnius University, studies in finance and credit fields. Qualification of economist granted in 1993.

Kęstutis Jaržemskas Director of Financial Division

Kaunas University of Technology, Faculty of Economics and Management. Master’s Degree in Management and Busi-ness Administration. Specialisation – Finance Management (2002).

Gytis Kundrotas Director of Legal and Administrative Affairs Division

Vilnius University, programme of integrated studies in law. Master’s Degree in Law (2003).

Aurimas Čiagus Director of Sales Division

Vilnius University, Faculty of Economics; Business Admin-istration and Management (2006)

Rasa Radzevičienė Director of Postal Operations Divi-sion

Vilnius University, Management and Business Administra-tion programme. Bachelor’s Degree in Management and Business Administration (2007).

Inga Dundulienė Director of Postal Network Division

Vilnius University, studies in accounting and audit. Qualifi-cation of economist granted in 1993

Aurika Pelanienė Head of Accounting Department, Chief Accountant

Vilnius University, studies in economic informatics. Qualifi-cation of economist granted in 1990.


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The Company has no branches or representative offices.

On 31 December 2015, the Company had three subsidiary com-panies: Baltic Post, UAB, Lietuvos Pašto Finansinės Paslaugos, UAB, and LP Mokėjimų Sprendimai, UAB.

Organisational Structure of the Company

The present structure of the Company consists of the CEO, di-rectors of 5 divisions (Finance, Sales, Postal Operations, Legal and Administrative Affairs, and Postal Network) and 20 depart-ments, five of which, namely, IT, Internal Control and Audit, HR, Marketing and Communication, and Business Development) are directly subordinate to the CEO.

Baltic Post, UAB Lietuvos Pašto Finansinės Paslaugos, UAB

LP Mokėjimų Sprendimai, UAB

Legal status (company type) private limited liability company

private limited liability company

private limited liability company

Incorporation date 9 September 2010 4 September 2007 12 October 2012

Company code 302544039 301178592 302889099

Legal domicile J. Jasinskio g. 16A, 01112 Vilnius

Rodūnios kelias 9, 02034 Vilnius

J. Jasinskio g. 16, 03500 Vilnius

Telephone (8 5) 205 2120 (8 5) 236 1228 (8 5) 274 4100

E-mail [email protected]

Website address www.lpexpress.lt

Type of core activitiesCourier services, LP

EXPRESS 24, logistics services

Printing services Consultancy services

Part of shares owned by Lithuania Post 100 100 100

Basic Details on Subsidiary Companies


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come was largely determined by postal services: revenues gen-erated by this type of services increased by 12.8 % compared to the revenues received a year ago.

In 2015, EBITDA accounted for EUR 2, 558,000, and was 1.4% lower compared to the year 2014 (EUR 2, 595,000).

OVERVIEW OF ACTIVITIES

Despite the increasingly popular electronic channels and, as a result, the decreasing demand for traditional postal services, the year 2015 was successful – the Company made net profit in the amount of EUR 865 thousand.

In 2015, the Company managed to boost its operational income by 12 % amounting to EUR 69,027 thousand. The growth in in-

2015 2014 2013 Performance indicatorsNumber of services provided (thousand items) 172 338 182 290 183 010Number of UPS (Universal Postal Services) (thousand items) 16 994 17 732 17 400Investments in tangible and intangible assets (EUR thousand) 2 225 2 435 1 036Number of employeesNumber of employees in the beginning of the period 5 678 5 897 6 003

Average conditional number of employees (full-time jobs) 4 682 4 737 4 911

Financial indicators, EUR thousandOperating revenue 69 027 61 648 58 095

Sales revenue 67 702 60 742 57 192

Operational profit 1 076 631 3 642

EBITDA 2 558 2 595 5 550Profit before tax 1 056 739 3 609

Net profit 865 233 3 070

Fixed assets 47 821 48 288 43 528

Current assets 28 336 44 634 28 311

Total assets 76 157 92 923 71 839

Equity 34 388 33 667 35 890

Profitability ratios (%)

Return on equity (ROE) 2,5 0,7 8,6

Return on assets (ROA) 1,1 0,3 4,3

Operating profit margin 1,6 1,0 6,4EBITDA margin 3,8 4,3 9,7Pre-tax profit margin 1,6 1,2 6,3

Net profit margin 1,3 0,4 5,4

Financial ratiosDebt ratio 0,5 0,6 0,5Equity to assets ratio 0,5 0,4 0,5Current liquidity ratio 1,0 0,8 0,9

Asset turnover ratio

Fixed (non-current) asset turnover 1,4 1,3 1,3

Inventory turnover 31,0 41,9 39,4

Trade receivables turnover 10,1 17,6 12,1


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Most of the sales income, namely, 58.0 %, was received from postal services, though when calculated according to the num-ber of services (items), they accounted for 35 % of all services.

Income In 2015, Lithuania Post earned EUR ‘69,027 thousand in the form of operating income which is 12.0 % more than in 2014. Sales income amounted to EUR 67,702 thousand, thus grew by 11.5 % in a year.

Postal services. Postal services. Postal services helped Lithua-nia Post earn EUR 39,264,000, thus 12.8 % more than in 2014. This, in turn, largely determined the growth in the Company’s sales income.

In 2015, as many as 59.8 million consignments were received or dispatched via Lithuania Post. This was 12.8 % more than in 2014 when 53.0 million consignments were received and sent off. The boost in the flow of consignments was mostly deter-mined by the cooperation of Lithuania Post and international logistics and courier companies which operate in the Chinese market. Lithuania Post delivered consignments from China to European countries.

Compared to the 2014 data, revenue from universal postal ser-vices (UPS) increased by 11.1 % in 2015, though the number of provided UPS (where calculated in items) decreased. The growth in income was determined by the augmentation in international postal items and the change in the highest rates for USP which took place on 1 August 2014.

The amount of income from postal services provided to business clients increased by 14.5 % because the number of dispatched and received postal items increased by 21.4 %. This growth was determined by the cooperation between Lithuania Post and Chi-nese companies.

Courier services. The amount of income received from courier services dropped by 23.6 %. The provision of these services was transferred to the subsidiary company Baltic Post, UAB.

Financial services. In 2015, as many as EUR 11,799,000 were received from financial services, or 4.8 % more than in 2014, however, their share in the sales income continued decreasing

and accounted for 17.4 % of the Company’s sales income in 2015 (18.5 % - in 2014).

The market of financial services continued shrinking as cus-tomers often chose the Internet as an alternative to traditional payment services. The amounts of delivery and payment of pen-sions and other benefits gradually decreased due to the natu-rally reducing number of pensioners.

The most dramatic growth in income from financial services provided in 2015 was seen in the field of consumer credit inter-mediation services. The amount of income from these services increased by 37.9 % compared to 2014.

Other services. The Company also provides the services of sub-scription of periodicals, non-targeted advertisements, retail and other services. In 2015, the provision of these services generated EUR 15, 012, 000. This means that income received from these services increased by 19.6 % in a year and accounted for 22.1 % of total sales income. The most considerable growth was noticed in the provision of additional postal services for the shipment of consignments of Chinese company, and the income from retail increased by as many as 6.1 %.

In 2015, Lithuania Post installed on-line self-service system and launched the provision of new electronic services, namely, self-service, to business partners and other organisations and insti-tutions. Users of the new electronic services not only prepare the consignments for dispatch but can also follow the status of all registered consignments and order additional postal services having logged in to their self-service account. Business clients, who supply registered consignments via the e-self-service sys-tem, can expect special discounts.

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In December, shopping centre BIG Vilnius saw the opening of a new concept-based customer service centre. This spacious, cosy branch of Lithuania Post which is also equipped with new tech-nology will provide all postal and financial intermediation ser-vices at the same time ensuring high quality service, expedience and comfort.

The new centre has clients’ flow control system which enables fast provision of services and can shorten wait times to the maximum. The client service centre also has a self-service shop offering a renewed range of goods.

In 2015, over 100 post offices saw the installation of modern consignment packaging self-service stands where customers can find the items and materials required for a qualitative pack-aging of a consignment and can also find tips how to pack their parcels to ensure their safe and high-quality delivery.

In 2015, PayPost terminals, i.e. divisions of Lithuania Post pro-viding financial services, launched the provision of new services: tickets to various cultural and sports events distributed by Ticket Market can be purchased here.

Operating Expenses

Compared to the year 2014, operating expenses in 2015 in-creased by 11.4 % and amounted to EUR 67, 951,000.

The major share of operating expenses, namely, 54.0 %, ac-counted for the expenses related to the staff and was 6.5 % higher than a year ago. Nevertheless, the number of employees did not change. The increase in employee-related expenses was determined by the increase in a minimal monthly wage, some changes in wages which were provided for in the collective em-ployment contract and came into force from 1 April 2015, and new project-related jobs.

In 2015, the most dramatic increase – 43.5 % – was seen in the expenses for international delivery of postal items and pay-ments with foreign post offices. These accounted for 18.6 % of total operating expenses. Such changes were determined by the volume of dispatched international consignments and the cost of international shipments both of which augmented.

Increase in the Company’s operating expenses was also affected by the increase in transport lease expenses which rose by 6.2 % due to the expansion of delivery of postal items by vehicles. The Company pays to its postmen for the lease of their personal vehicles to deliver postal items. On 31 December 2015, the num-ber of delivery areas where postal items were delivered by car amounted to 1,364 which was by 283 areas more than a year ago.

Other expenses were 4.7 % higher than at the end of 2014. This change resulted from the expenses of shipments from China to Lithuania, also the increase in premise lease in the new logis-tics centre of Lithuania Post and tax expenses due to the non-refundable VAT.


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Operating Results

In 2015, Lithuania Post made profit.

The 2015 EBITDA was EUR 2, 558,000 which was 1.4 % less than in 2014 where EBITDA amounted to EUR 2, 595,000.

In 2015, the Company’s profit before profit tax amounted to EUR 1, 056,000 which was 43.0 % more than last year.

The 2015 net profit amounted to EUR 865,000; net profit mar-gin was 1.3 %. A year ago, net profit was EUR 233,000, and net profit margin amounted to 0.4 %.

Balance Sheet

In 2015, the assets of Lithuania Post reduced by 18.0 % and amounted to EUR 76, 157,000.

In 2015, fixed assets in the general asset structure account-ed for 62.8 %, i.e. reduced by 1 % in a year, namely, to EUR 47,821,000.

The amount of current assets dropped by 36.5 % in a year and accounted for 37.2 % of total assets as the most liquid assets – cash and its equivalents – reduced by 86.4 % due to the loan of 2014 taken to conduct currency exchange (from Litas to Euro) as stipulated in the Law on Euro Adoption. The Company was authorised and obliged to perform currency exchange opera-tions for 60 days after the introduction of the Euro. To provide these services Lithuania Post was given the loan in the amount of EUR 58 million which was repaid by the Company before 4 March 2015.

In 2015, equity increased by 2.1 %, i.e. to EUR 34, 388,000 and accounted for 45.2 %.

Late December 2015, the Company’s liabilities were 29.5 % lower than a year ago due to the drop in financial debts result-ing from the loan of the bank for currency exchange which ac-counted for 64.9 %.

Investments

In 2015, Lithuania Post’s investments in tangible and non-tangi-ble assets amounted to EUR 2,225,000.

The Company acquired fixed tangible assets for EUR 2,103,000. Investments were intended to improve the premises used for customer service and staff’s work places in the Mail Sorting Department and post offices in Vilnius and Marijampolė, also to reconstruct the premises of post offices at Rodūnios k. 9, Vil-nius, Kęstučio g. 5, Marijampolė, and the Vilnius 56th post of-fice as well as to prepare the concept of POS (point of sale), to acquire IT equipment and transport.

Non-tangible assets were intended for the acquisition of licenc-es and software.

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Regulation

The provision of postal services is governed by the Postal Law of the Republic of Lithuania which gives legal grounds for postal activities, sets relations between the providers of postal services and their users, defines rights and obligations as well as liabili-ties and compensation for damage.

The Postal Law obliges the provider of universal postal services to guarantee continuous rendering of the UPS in the territory of the Republic of Lithuania to all users under equal conditions no less than 5 working days [per week].

The Government of the Republic of Lithuania obliged Lithuania Post to provide the UPS in the entire territory of the Republic of Lithuania for 7 years. Law No. XI-2379 (Official Gazette, 2012, No. 135-6867) dated 08/11/2012 stipulates that public limited company Lithuania Post shall be the provider of the universal postal services until 31 December 2019. The universal postal service means postal services meeting the requirements set out in legal acts that must be provided in the whole territory of the Republic of Lithuania for affordable price to everyone wishing to receive such services.

The Communications Regulatory Authority approves the max-imum rates of the UPS on the basis of weight steps of postal

items. In accordance with the maximum allowable approved UPS rates, the CEO of Lithuania Post approved the rates for universal and other postal services by way of his/her orders.

Rates applicable to the universal postal services must be rea-soned by the expenses of the provided UPS, however, they must be accessible to all users of postal services, also be transparent and non-discriminatory. In the event where the Communications Regulatory Authority fixes the maximum USP rates which are lower than the expenses for postal services, the difference be-tween such expenses and rates must be paid from the funds of the state budget as provided for in the procedure established by the Government.

Despite the fact that delivery of periodicals to subscribers in ru-ral areas is not attributed to the UPS, Lithuania Post, designated by the Government to provide the UPS, has an obligation to de-liver periodicals to subscribers in rural areas. The UPS provider will have to justify the rates applied for these services referring to its expenses, and the bookkeeping of these services will have to be conducted in accordance with the basic expense accounting handling principles established by the Communications Regula-tory Authority as well as in pursuance of the requirements of the expense accounting system and other expense accounting system related requirements.

In the case where the Government, taking into account the earli-er adopted criteria, sets the tariffs for the delivery of periodicals to subscribers in rural areas, and those tariffs are lower than the costs incurred while providing these services, the difference between the costs and the tariffs will be covered in the manner set forth by the Government from the funds earmarked in the State budget.

On 24 February 2011, the Company received a licence of a pay-ment institution. The licence grants Lithuania Post the right to:- provide services enabling to deposit cash into payment ac-counts and to perform other operations related to handling of payment accounts;- provide services enabling to withdraw cash from payment ac-counts and to perform other operations related to handling of payment accounts;- perform payment operations including transfer of funds to a payment account opened by the user’s provider of payment ser-vices, or account opened at the institution of another payment services provider: - performance of direct debit operations in-cluding single direct debit transfers; performance of payment operations using payment cards or similar means; - execution of credit transfers, including periodical transfers; - issue and (or) admit payment means; - provide the service of money orders.

At present, on the basis of the payment institution licence, the Company provides all the aforementioned services, except for the issuance and (or) acceptance of payment means.


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Financial intermediation services (acceptance of contribu-tions and charges, money orders, payment of pensions and allowances, intermediation in granting consumer credits, pay-ment accounts)

Retail trade (sale of goods online and using the postal network)

Given the expansion of electronic services and the active use of electronic services, more online services are offered to the cus-tomers. Lithuania Post enables its clients to order Lithuanian and foreign publications, items of philately, etc. which are deliv-ered in the manner chosen during the purchase.

Markets

According to the report data provided by the Communications Regulatory Authority (hereinafter referred to as the CRA”), on 31 December 2015, as many as 66 economic entities were operat-ing in the postal services’ market in total; of them 53 entities carried out real activities, i.e. 80.3 % of all the postal service providers contained in the list.

Public Network

Fulfilling the requirements for the arrangement of UPS provi-sion points, Lithuania Post must maintain a specific network of post offices. As stipulated in Order No. 3-46 of the Minister for Transport and Communications of 25 January 2013 “On the Ap-proval of Characteristics of Public Post Network of the Provider of Universal Postal Services”, rural residential areas in the ter-ritory of one township must have no less than one point for the provision of UPS or a workplace intended for the agents of the UPS provider.

On 31 December 2015, Lithuania Post had a UPS network with 793 points of service provision; of them: 637 stationary post of-fices (192 – in town and cities and 445 – in rural areas), 22 post subdivisions (19 – in towns and cities, 3 – in rural areas), 133 UPS provision points were located in rural areas, where postal ser-vices were provided by 27 mobile post offices, and 1 workplace for the postal agent to provide USP.

In the year 2015, the number of UPS points decreased by 18 (pcs.). In total, one point (of them) was located in a residential location, and 17 – in rural residential areas.

On 31 December 2015, the excessive (with more than one post office in a township) number of post offices in rural areas ac-counted for 70 post offices. In 2015, this number reduced by 19 excessive post offices.

On 31 December 2015, the network of PayPost providing finan-cial services was comprised of 177 units. PayPost units provide traditional financial services, such as payment of taxes, money transfers and receipt, issue consumer credits, also provide in-surance services, open LP payment accounts, conduct sale of tickets to cultural and sports events.

The subsidiary Baltic Post, UAB, operates 80 parcel self-service terminals LP EXPRESS in 41 towns of Lithuania. LP EXPRESS is the largest network of self-service terminals operating in Lithuania 24/7, and located in the places where the biggest cli-ent flows are recorded (shopping centres, petrol stations, etc.) LP EXPRESS terminals enable people and enterprises send con-signments not only in Lithuania but also to 22 other European countries.

Core services

Postal services (the universal postal service and other postal services);

Courier service (parcels, other items sent via courier, items de-livered in person obtaining the addressee’s signature (via cou-rier));


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In 2015 Q4, the list of postal service providers was supplement-ed by 3 economic entities, namely: Aleksas Sinkevičius, Itella Logistics, UAB, and Invicte, UAB. As many as 5 economic entities were removed from the list. These were as follows: Laurynas Ovsiukas, Skubių Siuntų Sprendimai, UAB, Naujoji Tvarka, UAB, OSWEE, UAB, and Verslo Sprendimų ir Paslaugų Grupė, UAB.

Based on the CRA data, in 2015 Q4, the common postal services market increased by 13.1%, in terms of income, as compared to 2014, i.e. from EUR 30.8 to 34.9 million. Income received from

consignments sent through the postal network increased by 5.1 % in 2015 Q4, meanwhile, income received from consignments delivered in person (per courier) increased by 20.4 %.

In terms of income received from consignments dispatched via postal network, Lithuania Post occupied the major share of the market, namely, 93.0 %. In the common postal services market, the company also took the major share of the market in 2015 Q4 according to the income received (42.8 %), and the share of the market occupied by the subsidiary company Baltic Post, UAB, accounted for 4.1 %.

The data of the Bank of Lithuania (Lietuvos Bankas) shows that on 1 January 2016 the Public List of Payment Entities contained 40 registered payment institutions. Of them, as many as 27 en-tities had licences granting the right to provide payment servic-es in the Republic of Lithuania and other EU Member States, 13

Market share of Lithuania Post in terms of income, %

2015 Q4 2014 Q4

From sending items via postal network 93,0 92,0

From in-person delivery services (via courier) 2,3 3,2

Market share in the common market of postal services 42,8 45,8

entities had the licences of a limited activity payment institution which entitled the entities to operate solely in the territory of the Republic of Lithuania and stipulated that the average amount of payment transactions conducted by the payment institutions in recent 12 months would not exceed EUR 3 million per month.

According to the data of the Bank of Lithuania, in 2015 (just like in previous accounting reference periods) Lithuania Post occu-pied a significant part of the entire system of payment entities in terms of the volume of provided payment services. In 2015, the Company’s income from payment services accounted for 46 % of total income from payment services provided by all pay-ment entities, and its turnover accounted for 52 % of the total turnover of all payment entities. Compared to the same period last year, these relative indicators increased by 7 % and 9 %, accordingly.

Looking at the contribution collection market, the main rivals in the market are banks, credit unions, Maxima, Perlas termi-nals, etc. In 2015, payment entity Perlo Paslaugos, UAB, sup-plemented the list of its agents intermediating in providing pay-ment services. Currently, the Public List of Payment Institutions includes fifteen agents of Perlo Paslaugos, UAB.

According to the data of the Bank of Lithuania, on 31 December 2015, the Public List of Consumer Credit Givers included 66 en-tities (other than credit institutions) entitled to give consumer credits. The market of consumer credits (regardless of a high number of consumer credit givers) is quite concentrated. In the end of 2015, as many as 5 consumer credit givers had paid out 65 % of total loans given to consumer credit receivers. Most consumer credits were given by companies which give credits on the basis of linked consumption credit contracts (leasing).


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Company’s Customers and their Groups

Lithuania Post provides services both to ordinary residents and to different companies and organisations, and cooperates with foreign postal institutions.

Customers of Lithuania Post are categorised into two large groups: customers using postal services at the postal counter

(hereinafter referred to as “postal counter customers”), and business customers having contractual relations with the com-pany.

In 2015, the share of the total income received from rendering services to the postal counter customers accounted for 31.3 %, and for 68.7 % - from services provided to business clients.

Service Quality

To render universal postal services (UPS) Lithuania Post must comply with the established service quality guidelines “Qual-ity of UPS: Sending and Delivery of Priority and Non-Priority Postal Correspondence Items”.

Quality requirements for the UPS (standards) are established in the Description of Quality Requirements for the Universal Postal Services for Domestic Correspondence Items approved by Order No. 3-495 of the Minister for Transport and Commu-nication of 12 October 2004 (Official Gazette, 2004, No. 157-5742; 2007, No. 91-3670).

The Company conducts annual service quality surveys which are carried out by an independent quality assurance review or-ganisation. The methodology of verification of service quality is based on the European standards and is used in all European countries.

Lithuania Post takes an active part in those activities of the Uni-versal Postal Union, the Association of European Public Postal Operators PostEurop, and the Committee for the Improvement of Service Quality which are aimed at establishing and imple-menting quality standards for the provision of postal services.

Term Quantitative criterion Results

D + 1 85 % of priority correspondence items 81.1 %

D + 3 97 % of priority correspondence items 99.0 %

Customer group Sales income Postal services Courier services Financial ser-vices Other services

Postal counter customers 31 33 2 23 35

Contractual customers 69 67 98 77 65

Breakdown of income according to customers, 2015 (%)

The Company implemented the European standard EN 14012 on Postal Services. Quality of Service. Measurement of Complaints and Redress Procedures, as well as the centralized claims reg-istration system in line with the requirements of this standard.Lithuania Post enhances its cooperation with foreign postal op-erators so as to ensure that the recipients will receive better-quality delivery services. Damages for the lost or damaged postal items sent from / to Lithuania have most often been paid to foreign post offices in recent years. Liability for the greater part (as many as 95 %) of consignments lost or damaged in 2015 was assumed and compensations for the incurred dam-ages were paid out by foreign postal operators.

Indicators of Sending and Delivery of Domestic Priority Postal Correspondence Items in Lithuania in 2015


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Employees

In 2015, the number of employees of Lithuania Post reduced by 219 people: from 5, 897 to 5, 678. More than half of employees are part-time employed as the work load in rural areas and the change of seasons cannot ensure full-time jobs. This trend con-tinued in the Company in 2015 as well.

In 2015, the average conditional number of employees amount-ed to 4, 682 full-time jobs, and compared to the data of 2014, reduced by 55 full-time jobs.

General Annual Wage Fund and Gener-alised Average Monthly Wages Accord-ing to the Taken Position

In 2015, wages with social contributions, including, annual leave payments reserve required EUR 35,699,000 or 6.3 % more than in 2014.

In 2015, the average wage increased by 10.3 %, i.e. from EUR 440 to 485, compared to 2014.

Average Fixed (Designated) Earnings of Lithuania Post’s Employees According to their Position, EUR

Seq. No. Job title or occupational group 2015 2014

1. Chief Executive Officer 3 785 3 217

2. Director of division 3 281 2 974

3. Other manager-level administrative employees 1 667 1 503

4. Other administrative employees 711 664

5. Head of post office 519 477

6. Customer service specialist 467 421

7. Data input operator, operator 396 356

8. Sorting staff 425 376

9. Mail escort staff, driver in mail escort 552 496

10. Postman, postman driving a car 370 347

11. Deliverer of pensions 335 328

12. Workers of economic unit or auxiliary staff 341 313


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or post-secondary education increases keeps prevailing. This might have been determined by the fact that the Company’s em-ployees were studying in higher education institutions or col-leges, also by the employee turnover, and continuous update of data.

Breakdown of the Company’s Employ-ees Based on Age

Although the average age of Lithuania Post’s employees changed very slightly in 2015 (from 44.8 to 45.3), the trend that Lithuania Post’s employees age keeps prevailing. This is deter-

Breakdown of the Company’s Employ-ees Based on Education

In 2015, as many as 21.9 % of the Company’s employees had a university-degree education, 39.7% - post secondary education and 36.1 % - secondary education.

The trend that the number of employees with university-degree

mined largely by the several following factors: general trends of employee ageing in Lithuania and the EU; mass positions such as postmen, are less attractive to young employees.

Age

2015 m. 2014 m. Change per year

Number of employees

Comparative part, %

Number of employees

Comparative part, % Employees %

Under 35 1 174 20,5 % 1 254 21,2 % -80 -6 %

From 35 to 45 1 325 23,2 % 1 393 23,6 % -68 -5 %

from 45 to 55 1 878 32,8 % 1 956 33,1 % -78 -4 %

From 55 to 60 803 14,0 % 825 14,0 % -22 -3 %

Over 60 541 9,5 % 483 8,2 % 58 12 %

Education

2015 2014 Change per year

Number of employees

Comparative part, %

Number of employees

Comparative part, % Employees %

University degree 1 253 21,9 % 1 212 20,5 % 41 3,4 %

Post-secondary 2 271 39,7 % 2 260 38,2 % 11 0,5 %

Secondary 2 065 36,1 % 2 297 38,9 % -232 -10,1 %

Basic 132 2,3 % 142 2,4 % -10 -7,0 %


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Cooperation with Trade Unions

The representatives of Trade Unions are Lithuania Post’s social partners. In 2015, while cooperating with trade unions which operate within the company by way of negotiations the agree-ment was reached on a new collective contract whereby the key issues in relation to the group (collective) of employees were set forth and internal regulations were approved. These regulations detail and specify certain provisions laid down in the collective agreement. Elected members of Trade Unions’ bodies were given the opportunity to participate in different discussions-meetings held by the employer where such issues as wage, oc-cupational safety and health, reorganisation of work organisa-tion and other social and economic issues would be considered. In 2015, the Occupational Safety and Health Committee contin-ued operating. Among the members of the Committee, there are representatives of the employer and the trade unions. In 2015, two meetings were held during which economic issues were dis-cussed: repairs of post offices, improvement of working condi-tions. On 29 May 2015, along with the representatives of trade unions, a working group was formed whose main aim, given the employees’ complaints, was to analyse the current situation and provide suggestions how to improve it. Two meetings were held which focused on the discussion of information communication to the employees of post offices, the question of setting certain standards/amounts of postmen’ workload and payment rates.

Key Provisions of the Collective Agree-ment

The collective agreement was signed on 7 April 2015.The collective agreement applies solely to the employees of the public limited company Lithuania Post (Lietuvos Paštas). The most important provisions:

• The period of validity of the collective agreement was de-fined, namely, 4 (four) years from the date of its signing. • From 1 January 2015, the period of 3-month total working time accounts came into force. Its direct benefit to employees is faster payment for overtime.• The procedure of granting annual leave changed: the right to annual leave 4 times a year was established, the duration of annual leave would be no longer limited by weeks but by

incorporating rest days into the total annual leave time where annual leave is taken before weekends. • Employees having children under 12, upon their request, would be granted a leave for half of their working time on the first school day. • Employees arriving to work at night would be compensated for additional costs.• Additional paid 2 (two)-day leave would be granted for fu-nerals of relatives. • Unpaid leave would be granted for the period of up to 60 calendar days. • Changes in relation to remuneration: general procedure of paying wages in the company, rating of positions, wage struc-ture, regional policy were modified and the basic wage rates were increased.

Number of programmes Number of employees trained/taught

In-house training 15 1 151

Training outside the Company 48 611

On-line training 30 14 288

In total: 93 16 050

Lithuania Post takes care of courses intended for upgrading employees’ qualification or skills in a coherent manner. In 2015, different trainings were organised in the Company: online (via

EMTS system), newcomers’, and sales training; employees par-ticipated in different seminars and conferences.


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Safety at Work

Lithuania Post follows the approved Personnel Safety and Health Guidelines the main aim of which is to ensure safety and health at work by reducing accidents and occupational diseases. In 2011, the Company established Occupational Safety and Health Committee. The Committee analyses and assesses the employees’ safety and health condition, gives suggestions on health improvement, holds discussions on preventive measures against accidents and occupational diseases, submits proposals to the Collective Agreement.

The Company pays for regular mandatory health examination of employees, employees are supplied with personal protec-tive means (clothes, footwear, anti-slip shoe devices, gloves, gas sprays).

For the purpose of accident and occupational disease preven-tion, the following measures were implemented: regular oc-cupational health surveillance, trainings and testing from the areas of safety and health at work and fire prevention, supply with personal protection measures.

In 2015, as many as 4,715 post employees were insured against occupational accidents. In 2015, as many as 47 minor occupational accidents occurred in Lithuania Post (in 2014, there were 41 accidents); one occupa-tion accident resulted in grievous bodily harm. The reason for occupational accidents was slippery and rough road surface.

Key Main Risk Factors

The Company faces the following key risk factors in its activi-ties: regulation, competition, macroeconomic factors, credits, interest margin, currency rate, and liquidity.

Regulatory risks arise from changes in legal environment and from decisions taken by regulatory institutions. To render postal and part of financial intermediation services, the Com-pany must obtain licences. Changes in legal acts and regulatory regime hinder the Company’s relations with customers and its flexibility in planning its future operational prospects.

With its obligation assigned by the State to provide continuous universal postal services to all users throughout the whole terri-tory of Lithuania on equal conditions at least five working days per week, Lithuania Post must comply with certain characteris-tics applied to the public postal network of the USP provider as established by the Minister for Transport and Communication, i.e. the Company must maintain a certain network of post of-fices which is served by specially created logistic and delivery (performed by postmen) systems. Taking into account this obli-gation, the Company encounters a threat of failure to close part of post offices, especially in rural areas, despite of their loss-making nature.

Lithuania Post is facing competition in almost all areas of activi-ties. With the aim to maintain the market share it occupies and to comply with requirements set for the quality of service, the Company is improving its sales and marketing strategies, im-proving customer services, pursuing policy orientated to optimi-zation of activity processes and reduction of costs.

The economic situation in Lithuania affects the Company’s sales volumes and, as a result, its performance results. Postal ser-vices closely correlate with the general economic situation in the country. The key factors having an impact on the Company’s activities are purchasing power of citizens and companies, un-employment level, income level – all these factors determine demand for postal services and depend on the level of economic development. The expansion of the range of services provided via the Internet and the replaceability of postal services by elec-tronic ones explains the reduction in demand for traditional postal services in the market. For this reason, the Company will inevitably face the loss of a considerable part of income.

Information on financial risks (credit, interest rate, currency ex-change rate, liquidity) is provided in [Explanatory] Note 26 of the 2015 financial statements of the Company.


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Prospects

• Development of new services and the expansion of the elec-tronic channel services• Possibility to expand in the segments of financial services and retail• Improvement of the existing services by offering customers more additional value• Provision of new services, expansion of the sales channel• Optimisation of the public postal network

Threats

• Recovering labour market poses threat to lose the best em-ployees • The arrival of international companies means the emer-gence of new rivals• Decreasing population means the drop in the demand for services• Increase of minimal wage

Research and Development Activities

The Company conducts long-term strategic planning which en-ables it to establish directions for the Company’s development and required investments.

In the period from 2016 to 2020, the Company will continue its projects which are important for the expansion of new services of Lithuania Post, for automation of service-related processes and optimisation of work, as well as for the adjustment of its infrastructure to the needs and convenience of the customers.

Correspondence between Performance Results and the Company’s goals

While implementing its goals, Lithuania Post’s net profit earned in 2015 amounted to EUR 865,000 or was 10.2% higher than planned.

One of the Company’s goals is to maintain the leading positions in the market of postal services and to develop international postal services.

According to the data of the Communications Regulatory Au-thority (CRA), Lithuania Post occupied the biggest share of the market in 2015 Q4 accounting for 42.8 % of the common postal services market, and accounting for 93.0% of this market in terms of income received from consignments sent using the postal network.

To attract new clients and provide the existing customers with a higher value services, the Company actively cooperated with the enterprises operating in the Chinese market and shipped their parcels from China to Europe: both the EU Member States and other foreign partners. Meetings with representatives of

foreign posts concerning closed transit system for postal items and integrated solutions were held.

The company is installing a common platform for rendering retail financial services. Lithuania Post is planning to use it for the provision of new financial services. All work related to the development of Lithuania Post’s payment account have almost been completed, therefore, the provision of these services will be launched in 2016.

The Ministry of Transport and Communication along with its partner Lithuania Post is implementing project “Development of Delivery System of Electronic Messages and Electronic Documents to Natural and Legal Persons”. This project is aimed at expanding electronic services, i.e. at using the public postal network for delivering electronic messages and documents to natural and legal persons. It is expected that such documents could have the same legal power as that of a registered postal item. The project is being expanded. Following this stage, paid services will be provided to the customers who use electronic delivery services.

In 2015, Lithuania Post had its electronic self-service system installed thus business customers and other organisations and institutions started using Lithuania Post services through this system.

In December, shopping centre BIG Vilnius saw the opening of a new concept-based customer service centre. This spacious, cosy branch of Lithuania Post which is also equipped with new tech-nology will provide all postal and financial intermediation ser-vices at the same time ensuring high quality service, expedience and comfort.

Plans and Forecast

Strategic directions of Lithuania Post remain the same, namely, to retain the leading position in the postal services market, to develop new services, reorganise the existing service provision infrastructure and increase the speed of client service as well as accessibility to services.


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Lithuania Post is the leader in the postal service market in Lithu-ania. The Company will seek to retain its position in the postal service market by making sales more active, by expanding the range of additional services as well as providing international services and focusing on the biggest clients.

The provision of postal correspondence, financial services, sub-scription of periodicals, retail and other services is becoming in-creasingly popular in electronic space. To remain the provider of these services and offer a package of all these available services Lithuania Post will expand the range of its services and will of-fer more services online. The Company is planning to obtain a licence for electronic money.

To fulfil quality requirements set by the customers (reliability, speed, price, convenience), the Company will continue focusing on the increase of performance efficiency and flexibility. There are plans to conduct a substantial review and reconsider the pro-cesses of provision of certain services. Most of service provision expenses are related to the maintenance of the postal network (infrastructure). For this reason, to reduce costs the Company intends to gradually reduce the load of network of post offic-es by installing personal boxes for consignments in cities and towns and by expanding the network of agents in rural areas.

Postage Stamps Issuance

Lithuania Post annually issues 25-27 new postage prepayment impressions. Being the universal postal service provider, Lithu-ania Post is entitled to issue and withdraw from circulation the means of postal prepayment as prescribed in the Postal Law (Paragraph 5 of Point 2 of Article 16).

The subject of a postage stamp is chosen in accordance with Clause II of the Rules for the Issue, Withdrawal from Circulation and Accounting of Postage Prepayment Impressions approved by Order No. 3-258 of the Minister for Transport and Commu-nications of the Republic of Lithuania of 30 April 2013, mean-while, the designs of postage stamps are chosen and printed in accordance with Clauses III and IV of the aforementioned Rules. In 2015, the Company issued 26 new stamps of postal prepay-ment/ postage prepayment impressions and their series as fol-lows:

02/01/2015 – Vytis (an armour-clad knight on horseback hold-ing a sword and shield), a symbol of the coat of arms of Lithu-ania, on coins (a standard 6 postage stamp series);02/01/2015 – Adoption of the Euro in Lithuania (postage stamp);10/01/2015 – Liquefied Natural Gas Terminal (marked post-card);17/01/2015 – Lithuanian Red Book. Mammals: otter (Lutra lutra) and the European mink (Mustela lutreola) (a 2 postage stamp series);07/02/2015 – the 500th birth anniversary of Mikalojus Rad-vila the Black (postage stamp);07/03/2015 – the 25th anniversary of the Act of Reinstating the Independence of Lithuania (postage stamp);11/04/2015 – Technical monuments: Kaunas fortress (postage stamp);25/04/2015 – Repeated issue: Vytis (an armour-clad knight on horseback holding a sword and shield), a symbol of the coat of arms of Lithuania, on coins (a standard 2 postage stamp series);09/05/2015 – Europe. The old toys (a 2 postage stamp series);06/06/2015 – the 200th anniversary of Jonas Juška (postage stamp);20/06/2015 – Tourism in Lithuania (postage stamp);04/07/2015 – Lithuania’s bridges (postage stamp);18/07/2015 – 2015: the year of ethnographic regions (postage stamp block);08/08/2015 – Modern Lithuanian Art: Fashion (postage stamp);29/08/2015 – The day of education and knowledge (postage stamp);26/09/2015 – the 250th birth anniversary of Mykolas Kleopas Oginskis (postage stamp);24/10/2015 – Information technology (postage stamp);07/11/2015 – Traditional crafts in Lithuania (postage stamp);14/11/2015 – Christmas and New Year (a 2 postage stamp se-ries).


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Lithuania Post invited people to celebrate this anniversary the whole month and to share festive moments on Facebook. The authors of the best and most liked photographs were given an extraordinary gift, namely, a personal collection of postcards and the national flags.

Lithuania Post contributed to the Constitution Exam organised by the Ministry of Justice of the Republic of Lithuania for the ninth year in a row and invited all Lithuanian citizens to test their knowledge on the Constitution by disseminating this mes-sage (invitation to participate) to the public.

Employees. Lithuania Post, which focused on customer service the entire year, in April, as usual, invited all residents to evalu-ate and vote for the workers who provided best customer service. In 2015, the record number of almost 3,000 people expressed their opinion on the customer service in Lithuania Post offices.

In cooperation with the National Blood Centre Lithuania Post organised blood donation campaign for the tenth time.

For the second year in a row, children of the Lithuania Post’s staff and their friends, classmates, and teachers visited post of-fices on the occasion of the International Children’s Defence Day. They learned how the letter they write travels to the destination point. This year more than 320 children visited our post offices. Almost two hundred employees of Lithuania Post participated in sports competitions, namely, the races of Vilnius Marathon, Kaunas Half-Marathon and Avon Female Race, also Trakai Tri-athlon, and Christmas race.

From April to June 2015, Lithuania Post conducted health cam-paign during which employees of the Company listened to the lectures on healthy diet, how to relax after a tiring day, how to exercise at work. In total, almost 200 employees of Lithuania Post attended the seminars.

In 2015, a video clip about Lithuania Post was created (on its val-ues, changes and social responsibility) and an application was submitted for the participation in the competition “Aš Myliu Savo Įmonę” (I love my company). Lithuania Post received over 2,000 votes in the competition, therefore, Lithuania Post par-ticipated in the second round and was the second among the winners in the category of XL-size companies.

Lithuania Post contributed to fostering of employees’ healthy lifestyles and to the promotion of their self-education. Em-ployees were given lectures and workshops were organised on the benefits of laugh for emotional health, on how to cope with stress, and on time management as well as the meeting with dentists was organised.

On the occasion of Christmas all employees of the Company could choose a 12-month subscription of science popularising magazines as a Christmas gift. In this way the Company sought to prompt employees take interest in world cognition, promote their education and self-improvement as well as to help re-dis-cover the pleasure of reading.

Lithuania Post provided Lithuanian business entities with an op-portunity to acquire a unique representative postage stamp. On 29 June 2015, the first postage stamp of a personal representa-tive type designed for the 75th anniversary of Kaunas Clinics was issued. On 29 January 2016 this type postage was issued for one of the biggest and most modern milk processing com-panies in Lithuania, namely, Žemaitijos Pienas.

In 2015, two international exhibitions of postage stamps were attended: on 13-16 May – in London, UK, and on 29-31 October – in Sindelfingen, Germany.

In 2015, four quarterly information publications intended for philatelists, journalists and regions of the Company Ekspres-informacija were released and one publication on all products released during 2015 was published at the end of the year.

Environment

Lithuania Post has no considerable interaction with natural en-vironment during the provision of services. The company uses no specific resources and no land plots for its activities; it does not transport specific cargoes, thus, does not emit by-products resulting from its operation, i.e. it does not release any pollut-ants into the environment which could exceed the permissible level.

Where possible, the Company uses advanced means and tech-nological processes for conducting its activities and meets eco-logical standards which help reduce negative impact on the en-vironment, reduce the consumption of electrical power, water, and fuel. In 2015, the Company reduced its power consumption by 8.5%, water – by 0.9 %, and fuel – by 8.3 %.

In cooperation with the Electronic Distributors Association, we collect used batteries and discharge lamps in our post offices. We support the idea of sorting waste and seek that as little un-sorted hazardous materials as possible reach landfills along with municipal waste.

Social Responsibility

To develop responsible business the Company supports com-munity initiatives, public projects and contributes to the devel-opment and expansion of socially responsible business, i.e. the one which educates, solves social problems, promotes national-ity, public-spirit thinking and dialogue between the public and business. Lithuania Post’s activities constitute an integral part of the society.

The Company continuously runs various environmental, nation-ality-promoting, customer-service-improving projects as well as projects on the increase of employees’ motivation and participa-tion in community’s activities.

Fostering nationality. On 11 March, commemorating the 25th anniversary of the restoration of independence of Lithuania,


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calendar postage impressions as well as postage stamps issued during the inter-war period and found on the letters and other documents of famous cultural and public figures of Lithuania of the 20th century.

In December, the exhibition of a philatelist Antanas Jasulaitis “The World Celebrates Christmas” was opened where one could see postage stamps, festive postcards and envelopes marked with special Christmas prints. The exposition displayed postal correspondence sent in the Christmas period as well as other Christmas related accessories used for decorating the products of philately from more than 100 different countries of the world. Environmental protection. 2015 was the fifth year in a row when Lithuania Post joined the cleaning campaign “Darom” (Let’s do it) which is conducted throughout Lithuania. By con-tributing to this campaign we want to show that people working for Lithuania Post are responsible and determined to engage in meaningful activities, that they want to live, work and spend time in a clean environment.

Education. Lithuania Post is the organiser of the national-level phase of the International Contest of Epistolary Writing. For this reason, it invites children to write letters on various subjects on an annual basis and later awards the best authors of letters. In 2015, the subject of the contest was “Write a Letter About the World You Want to Grow In”. In 2016, the subject for the contest organised by the Universal Postal Union was announced for the 45th time, namely, “Write a Letter to Yourself When You Are 45 Years Old”.

Lithuania Post continues cooperation with project “What do we need it for?!” (Lithuanian ‘Kam to reikia?!’); it thus organises lectures for schoolchildren on the subject of philately as well as trips to post offices. This year, a few hundred of schoolchildren of different age and schools and gymnasiums of the country were familiarized with the activities carried out by the post. In May, following the issuance of a new postage stamp “The Old Toys” for the series “Europe”, Lithuania Post invited residents to vote in the election of the most beautiful European postage stamps. Voting took place on the website of PostEurop http://www.posteurop.org/europa2015.

In August, Lithuania Post announced the list of postage stamps to be issued in 2016 and invited people to submit designs for the stamps and also apply for monetary premiums with their designs of postage stamps as well as to become part of the his-tory of creation of Lithuanian postage stamps.

The Company participated in the traditional project “Schoolchil-dren to the Government”. This year, the winners of the selection for the project were Gabija Tarvydytė from Kaunas and Deimilė Diškevičiūtė from Stakliškės. They had an opportunity to see and find out about Lithuania Post (with the activities of the Mail Sorting Department, Printing Services Division, LP EXPRESS terminals and the central post office).

Safe traffic is the subject which is used by Lithuania Post to communicate (by means of social media channels) the range of products intended for safe traffic and found in post offices. It also organises different contests to win such products (its partner is online shop “Būk Matomas” which sells certified reflectors and flashlights) and distributes partners’ information about safety on the road (dissemination of information about the event Ei-smo Kiškiai (Traffic Hares) organised by Moki Lizingas, special prizes for the followers of Lithuania Post Facebook account who play virtual games and participate in contests).

To mark the 140th birth anniversary of the prominent Lithuani-an painter, composer and cultural figure Mikalojus Konstantin-as Čiurlionis, Vilnius Central Post Office presented an exhibition of souvenir envelopes “M. K. Čiurlionis and Lithuania’s Fine Arts” (Lithuanian M. K. Čiurlionis ir Lietuvos dailė) created by painter, graphist, and philatelist Antanas Rimantas Šakalys.

The exhibition of a philatelist Liudas Mažylis “Postage Impres-sions of the Inter-war Lithuania: 1919–1940 and their Later Use” demonstrated the examples of the use of different type of


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an Lagoon (in Klaipėda, Nida) (the special Lithuania Post round).The Company organised the trip of Selemonas Paltanavičius, a prosaist, naturalist and the author of books for children, to Pagynė Children’s Care Home and his meeting with the small friends of Lithuania Post.

On the occasion of big holidays (Christmas and New Year), the employees of Lithuania Post donated books to the Family and Children Support Centre in Trakai district. Over 300 different books were collected and delivered to the centre right before Christmas.

Information on Special Obligations

In accordance with Order No 4-1100 of the Minister for Econ-omy of 20 December 2013 “On the Determination of Special Obligations to State-Controlled Companies and the Approval of Recommendations for the Provision of Information”, the com-pany considers the provision of universal postal services and the delivery of periodicals to the subscribers of rural areas to be its special obligations.

In the corporate set of 2015 financial statements, namely, bal-ance sheet and profit (loss) statements, the Company provides no breakdown of financial information based on the performed functions. Information on the Company’s special obligations is provided as a separate document.

Information on the Compliance with the Provisions of Chapters IV-VII of the Description of the Guidelines for En-suring Transparency of Performance of the State-Controlled Companies

In conducting its activities the Company follows the provisions of the Transparency Policy approved by Resolution No. 1052 of the Government of the Republic of Lithuania of 14 July 2010. The 2015 annual report has been drawn up in accordance with the provisions and requirements laid down in the Guidelines for Ensuring Transparency.

CEOLina Minderienė

Lithuania Post also contributed to the project “Mamų Mugė” (“Mothers’ Fair”) in Vilnius, i.e. launched a new service: the com-pany helped mothers, who sold outgrown and no longer worn clothes and items, by sending these items to them (to the fair) by post.

November 2015 was declared the “Clean Month” in post offices: residents were encouraged to dispose of old batteries and bring them to the post office. The collected waste was safely trans-ported for recycling in December.

Communities. Lithuania Post contributed to the unique project organised by the organisation Save the Children and to its so-cial initiative, namely, to the organisation of a solidarity race, by inviting people to register for the race and support the or-ganisation as well as poor children in Lithuania and the remote Zambia.

Using social communication means, the Company also contrib-uted to the global campaign, namely, the dissemination of the message to the Lithuanian population about the initiative to sing the national anthem on 6 July (the State Day of Lithuania) at 9 pm local time in any point of the world.

Lithuania Post supported the Lithuania rugby team in the Euro-pean Championship as well as the XLVIII Regatta of the Curroni-

VILNIUS

Public Limited Company Lietuvos PaštasCOMPANY’S FINANCIAL STATEMENTS FOR THE YEAR 2015

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Public Limited Company Lietuvos PaštasCOMPANY’S FINANCIAL STATEMENTS FOR THE YEAR 2015 (all amounts are in EUR, unless otherwise stated)

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Lease where the Company does not transfer substantially all the risk and benefits of ownership of the asset is classified as operating lease. Initial direct

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