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Consolidated Annual Report 2020 MAXIMA GRUPĖ Consolidated Annual Report 2020 | 2 Consolidated Annual Report 2020 MAXIMA GRUPĖ Consolidated Annual Report 2020 | 2 CONTENT MAXIMA GRUPĖ AT A GLANCE ............................................................... 3 WHERE WE OPERATE ............................................................................... 4 HIGHLIGHTS ............................................................................................. 5 Events after the reporting period ........................................................... 6 BUSINESS OVERVIEW .............................................................................. 7 MAXIMA GRUPĖ ....................................................................................... 8 Lithuania ................................................................................................. 11 Latvia ....................................................................................................... 12 Estonia .................................................................................................... 13 Poland ..................................................................................................... 14 Bulgaria ................................................................................................... 15 E-Commerce ........................................................................................... 16 GOVERNANCE ......................................................................................... 18 OTHER INFORMATION .......................................................................... 27 Consolidated financial statements for the year ended 31 December 2020 together with independent auditor’s report ......................................... 32 Appendix 1 NASDAQ STRUCTURED TABLE FOR DISCLOSURE Appendix 2 CORPORATE SOCIAL RESPONSIBILITY REPORT MAXIMA GRUPĖ Consolidated Annual Report 2020 | 3 MAXIMA GRUPĖ AT A GLANCE MAXIMA GRUPĖ, UAB together with its Last year our biggest expansion was in subsidiaries ("the Group") continues to Poland, where we increased our store grow and expand each year. It all started network by 73 stores across the country. with a single store in Vilnius and over three Our e-grocer BABRORA joined our decades grew into one of the biggest retail expansion in Poland as well by starting its companies in Baltics, now operating 1,323 operations in Warsaw in January 2021. stores in the Baltic states, Poland and As in 2019 we joined the United Nations Bulgaria. Global Compact initiative, 2020 was the The year 2020 brought everyone year of step up for us - the Group created unexpected challenges. As COVID-19 corporate social responsibility reporting spread globally, all MAXIMA GRUPĖ system and this year we proudly release companies reacted to ensure our our first Corporate Social Responsibility employees and customers safety. United, report. we worked even harder, and proved that We will continue to improve and grow thanks to our stakeholders the Group is together with our communities. As for strong enough to overcome any now, here is what happened in our Group difficulties along the way. in 2020. In 2020, MAXIMA GRUPĖ finished structural change of its corporate group for faster and more effective business decisions. Moving forward, MAXIMA GRUPĖ will manage companies from Lithuania and transfer matters of the management of real estate operations to each country’s retail operators. Also, to continue to make business more effective MAXIMA GRUPĖ transferred the shares of its subsidiary MAXIMA International Sourcing, UAB (“MAXIMA INTERNATIONAL SOURCING”) to MAXIMA LT to consolidate the two companies purchasing teams and ensure highest quality and the best prices of products for our customers. MAXIMA GRUPĖ Consolidated Annual Report 2020 | 4 WHERE WE OPERATE 1,323 stores MAXIMA GRUPĖ Consolidated Annual Report 2020 | 5 HIGHLIGHTS 1st quarter 2020 3rd quarter 2020 • In March 2020, Viktors Troicins was • appointed as the CEO of MAXIMA Latvija MAXIMA GRUPĖ transferred the shares SIA (“MAXIMA Latvija”) and Jolanta of its subsidiary MAXIMA Bivainytė became the CEO of MAXIMA INTERNATIONAL SOURCING to LT, UAB (“MAXIMA LT”). MAXIMA LT. MAXIMA LT becomes the sole shareholder of MAXIMA • Jurgita Šlekytė became the CEO of INTERNATIONAL SOURCING. MAXIMA GRUPĖ, UAB (“the Company” or “MAXIMA GRUPĖ”) and FRANMAX, UAB (“FRANMAX”). 4th quarter 2020 • The board of MAXIMA GRUPĖ was • Mantas Kuncaitis was appointed as the renewed with 7 members: Jolanta CEO of MAXIMA GRUPĖ and FRANMAX. Bivainytė (the chairwoman), Jurgita Šlekytė, Arūnas Zimnickas, Viktors • The board of MAXIMA GRUPĖ was Troicins, Edvinas Volkas, Petar Petrov renewed with 7 members: Mantas Pavlov and Vitalij Rakovski. Kuncaitis (the chairman), Jolanta Bivainytė, Arūnas Zimnickas, Viktors Troicins, Edvinas Volkas, Petar Petrov 2nd quarter 2020 Pavlov and Vitalij Rakovski. The term of office of the Board of MAXIMA GRUPĖ • As COVID-19 spread globally, all was also renewed for a new four-year MAXIMA GRUPĖ companies reacted to term. ensure our employees and customers • health and safety. The Company has MAXIMA GRUPĖ supervisory board was introduced significant caution measures renewed with new members. Laimonas to its stores and administration. Office Devyžis and Povilas Šulys are appointed employees were transitioning to remote as new members in place of Mantas working, and in stores, additional Kuncaitis and Ignas Staškevičius, measures were taken to reduce the respectively. Evelina Černienė, the CFO spread of the virus, such as free hand of Vilniaus Prekyba, continues to chair sanitiser, gloves, glass face masks, masks, MAXIMA GRUPĖ’S supervisory board. signs to keep safe two-metre distance, • MAXIMA GRUPĖ changed its corporate protective glass barriers at checkouts structure of the group, after which the and many more. MAXIMA GRUPĖ (holds 67% of the • Agnė Voverė, who has worked at UAB shares) together with MAXIMA LT (holds “Vilniaus Prekyba” (“Vilniaus Prekyba”) 33% of the shares) owns the retail companies since 2004, became the CEO operators in Latvia and Estonia and owns of MAXIMA INTERNATIONAL 100% shares of the retail operators in SOURCING. Bulgaria and Poland. In all countries MAXIMA GRUPĖ Consolidated Annual Report 2020 | 6 where the Group operates, retailers Events after the reporting period assumed the management of the real estate used in their activities. On 15 March 2021 MAXIMA GRUPĖ Additionally, the management company successfully placed EUR 40 million issue of Lincoln Land Erste B.V, which operated Commercial Papers (Short-Term Notes) with in the Netherlands, is no longer part of 12 months tenor. The notes were placed at the MAXIMA GRUPĖ composition. 0.618% yield. • Karolis Ceizaris became the CEO of There have been no other significant events FRANMAX, a subsidiary of MAXIMA after the reporting period. GRUPĖ, which provides IT development, support and maintenance services to the MAXIMA GRUPĖ companies. • Tomas Rupšys became CEO and sole board member of MAXIMA Latvija. He also joined the management board of MAXIMA GRUPĖ. • The international credit rating agency Standard & Poor’s affirmed MAXIMA GRUPĖ BB+ credit rating with outlook revised from stable to negative. 1st quarter 2021 • In January 2021 MAXIMA GRUPĖ’S e- grocer BARBORA started operations in Poland, Warsaw. • MAXIMA GRUPĖ launched Commercial Paper (Short-Term Notes) Programme. MAXIMA GRUPĖ Consolidated Annual Report 2020 | 7 BUSINESS OVERVIEW MAXIMA GRUPĖ Consolidated Annual Report 2020 | 8 MAXIMA GRUPĖ MAXIMA GRUPĖ’s revenue growth continued in 2020, as revenue reached EUR 4,226 million, up by 5.8% from 2019. Despite COVID-19 pandemic and subsequent lockdown measures negatively affecting performance in the second quarter, group Like-for-like (LFL) revenue rebounded in the third quarter and yearly LFL growth remained positive at +0.7% at constant exchange rates. Market growth remained high in the Baltics in the range of 5% to 7%, while in Poland market grew by modest 2% and Bulgarian market shrank by 6,8%. Despite low market growth outside the Baltics, MAXIMA GRUPĖ continued its expansion there and was able to increase its market share in Poland and Bulgaria with significant revenue growth of 13.7% and 22.2% respectively, while also maintaining strong LFL revenue performance of 4.9% in Poland and 5.6% in Bulgaria. LFL revenue in the Baltics decreased by -0.8%, mainly due to COVID-19 accelerated consumer shift from brick-and- mortar stores to e-commerce (not part of LFL revenue). As a result, MAXIMA GRUPĖ owned Baltics e-commerce brand’s BARBORA revenue more than doubled in 2020 and sales of goods via e-commerce in the Baltics reached EUR 104 million and constituted of 3.4% of Baltics total revenue. MAXIMA GRUPĖ’s consolidated EBITDA, excluding non-recurring items reached EUR 374.6 million (up by 12.4% from EUR 333.4 million in 2019), while respective EBITDA margin improved from 8.3% to 8.9% in 2020. MAXIMA GRUPĖ Consolidated Annual Report 2020 | 9 In 2020, all retailers were able to increase their operational results, with largest part of EBITDA increase coming from Poland (EUR +17 million vs 2019). Meanwhile, as COVID-19 pandemic began, Baltic retailers were managing the uncertainties by reviewing costs and various initiatives, thus leading to improved Baltics EBITDA of EUR +26.4 million with largest part of growth coming from Lithuanian retail operations. Bulgaria also showed substantial growth with EBITDA increase of EUR +4.6 million. Retailers’ EBITDA increase in the above and below analysis is provided on comparable basis, after excluding items affecting
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