2020 AB Lietuvos Geležinkeliai Annual Report Contents CEO FOREWORD 3 BASIC INFORMATION ABOUT THE GROUP AND THE COMPANY 4 ACTIVITY OF THE GROUP 7 GROUP STRUCTURE 9 CORPORATE GOVERNANCE 10 STRATEGY 27 MOST SIGNIFICANT EVENTS IN 2020 34 EVENTS AFTER THE END OF THE REPORTING PERIOD 40 OVERVIEW OF THE GROUP’S KPIS 41 ANALYSIS OF FINANCIAL AND OPERATIONAL PERFORMANCE 45 GROUP PERFORMANCE RESULTS 45 SPECIAL OBLIGATIONS 52 PERFORMANCE OF THE MAIN GROUP COMPANIES 54 INVESTMENTS 62 EMPLOYEES 66 RISKS AND THEIR MANAGEMENT 71 INFORMATION ON THE COMPLIANCE WITH THE GUIDELINES ON TRANSPARENCY 73 CORPORATE SOCIAL RESPONSIBILITY REPORT 76 FINANCIAL STATEMENTS 86 INDEPENDENT AUDITOR’S REPORT 87 CONSOLIDATED AND SEPARATE STATEMENTS OF FINANCIAL POSITION 93 CONSOLIDATED AND SEPARATE STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 95 CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITY 96 CONSOLIDATED AND SEPARATE STATEMENTS OF CASH FLOWS 98 EXPLANATORY NOTES 100 ABBREVIATIONS: LTG – AB Lietuvos Geležinkeliai LTG Group, Group, LTG Corporate Group – AB Lietuvos Gelsauga – LUAB Gelsauga Geležinkeliai and its subsidiaries Saugos Paslaugos – UAB Saugos Paslaugos LTG Cargo – AB LTG Cargo RBS – UAB Rail Baltica Statyba LTG Link – UAB LTG Link govt. – Government of the Republic of Lithuania LTG Infra – AB LTG Infra LTSA – Lithuanian Transport Safety Administration VLRD – UAB Vilniaus Lokomotyvų Remonto Depas EU – the European Union GTC – UAB Geležinkelio Tiesimo Centras SOE – State-owned enterprise The annual and interim reports and financial statements are publicly available on the Company’s websitehttps://www.litrail.lt . CEO foreword Dear employees, partners, customers, In reviewing the achievements of the LTG Group in 2020, I will not seem original by starting with the COVID-19 pandemic, which trembled the entire world, and its effects on the Group’s activity. We have acquainted with it better than we have wished – it is doubtless that it has been an enormous challenge both to our team and to business processes which we comprehensively disclose in the report. I would like to emphasise that the people of the LTG Group have banded together in an exemplary manner and not only have they taken care of each other’s safety and health and have extended a helping hand but they also have remarkably handled business challenges and achieved excellent results. At the beginning of the pandemic, we were prepared for a substantially worse scenario; thus, we do not lack optimism in assessing operating results. This is a merit of an excellent team. It is important to note that none of the significant investment projects of LTG has been suspended against the crisis, and the operating results reflect our ambition to become regional leaders. We are sure that the railway has a great future ahead, we are especially pleased about the initiative to announce the year 2021 as the European Year of Rail. I am pleased we have asked all our employees for their opinion MANTAS BARTUŠKA for the first time in the Company’s recent history. In implementing the survey “Voice of Employees” we have received feedback from CEO the three quarters of the Group’s employees – we especially AB Lietuvos Geležinkeliai appreciate their views and turn them into actual changes. Between the two waves of the pandemic, we have found a great opportunity to present the changed image of Lietuvos Geležinkeliai in July. The activity purification project and have been also preparing to finish this project – both LTG Link formation of the largest group of railway in the Baltic States have and LTG Cargo have been preparing for acquisition of electric been completed by the new brands. Thereafter, each company tractions. The new passenger trains will ensure travelling to be has a clear mission - LTG Infra is engaged in management of the convenient and, most importantly, with zero emission of CO2. state railway network, LTG Link takes care of convenient travelling of people, and LTG Cargo focuses on freight transportation. Business whose freights are transported by electric locomotives Meanwhile, the company Lietuvos Geležinkeliai of more than a will also be able to use the same zero-emission advantages hundred years of history has obtained a new holding role and – this is a way of Lithuania benefiting against the markets of will take care of health of the entire LTG Group. neighbouring countries and becoming a more significant player in the global market. I am pleased that LTG Cargo has been Already today, railway is the cleanest choice for travelling and searching for opportunities not only in Lithuania but also abroad business needs. In 2020, we laid foundation for significant and has started active development in Poland and Ukraine. projects which will not only bring economic benefits to the entire country but will also contribute with more than a million I believe that the year 2020 which was full of complex lessons green kilometres – environmentally friendly travelling. has taught the LTG team the skills necessary for future changes. Our businesses are prepared for changes, our people have First of all, we have started an electrification project of the professional knowledge to implement those changes. Therefore, major state highway Vilnius – Klaipėda. Our goal is to make I am sure that after the public life is back on track and economy it available for electrically powered rolling stocks to travel it of the country is back to growth trajectory, LTG will add even already at the end of 2023. Our transportation companies greater value to our shareholders – the people of Lithuania. 3 Basic information about the Group and the Company Parent company AB Lietuvos Geležinkeliai Date and Company Company Company Telephone, place of Website Core business name address code e-mail registration* Public limited Mindaugo g. 24 12 1991 110053842 (+370 5) 269 http://www. Increasing the Group’s business value liability company 12, Vilnius 2038 litrail.lt and efficiency of railway transport Lietuvos [email protected] operations by ensuring the effective Geležinkeliai management, maintenance, renovation and development of the public rail infrastructure and effective provision of rail transport and related public services LTG subsidiaries Date and A share Company Company Company Telephone, place of Website held by Core business name address code e-mail registration* LTG, % Public limited Geležinkelio 28 12 2018 304977594 (+370 5) 269 http://cargo. 100% Freight transportation and liability company g. 12, Vilnius 2745 litrail.lt/ provision of freight-related LTG Cargo [email protected] services Joint stock Geležinkelio 28 02 2019 305052228 (+370 5) 269 http://www. 100% Passenger and luggage company g. 16, Vilnius 3265 litrail.lt/keleiv- transportation by rail and LTG Link [email protected] iams provision of related services www.traukini- obilietas.lt Public limited Geležinkelio 01 07 2019 305202934 (+370 5) 269 https://ltgin- 100% Management, use and disposal liability company g. 2, Vilnius 3353 fra.lt/ of railway infrastructure, LTG Infra LGinfrastruktu- implementation of the [email protected] functions of the manager of public railway infrastructure Joint stock Švitrigailos g. 21 08 2003 126280418 (+370 5) 269 https://vlrd.lt/ 100% Manufacture of new switching company 39, Vilnius 2035 diesel locomotives and Vilniaus [email protected] track machinery, performing Lokomotyvų overhaul and routine repairs Remonto Depas and maintenance of all types of rolling stock, wagon manufacture and repair Joint stock Trikampio g. 21 12 2001 181628163 (+370 5) 269 https://gtc.lt/ 100% Construction and repair of company 10, Lentvaris, 3202 railway track infrastructure Geležinkelio Trakų raj. [email protected] Tiesimo Centras Joint stock company Prūsų g. 1, 11 12 2001 125825125 (+370 5) 269 http://www. 100% Maintenance of cleaning under liquidation Vilnius 2448 gelsauga.lt/ equipment and other Gelsauga [email protected] services Joint stock Prūsų g. 1, 10 06 2019 305186992 (+370 5) 269 http://www. 100% Installation, maintenance and company Vilnius 2448 gelsauga.lt/ repair services of physical Saugos saugospaslau- and electronic security and Paslaugos [email protected] technical security equipment Joint stock Mindaugo g. 23 01 2014 303227458 +370 614 http://www. 100% Implementation of the company 12, Vilnius 18055 rail-baltica.lt/ functions of shareholder Rail Baltica [email protected] of the Joint Venture of the Statyba Baltic States, RB RAIL AS coordinating the Rail Baltica project Public enterprise Švitrigailos g. 07 10 2011 302674602 +370 612 https://www. 80% An enterprise owned by Geležinkelių 39, Vilnius 02006 logisticspark.lt Vilnius City Municipality Logistikos logisticspark@ and AB Lietuvos Geležinkeliai Parkas logisticspark.lt responsible for the development and management of Vilnius Public Logistic Hub 4 Basic information about the Group and the Company LTG associates and subsequent companies Share Date and Company Company Company Telephone, controlled by place of Website Core business name address code e-mail LTG / its registration* subsidiaries, % Joint stock Sostinės g. 28 07 1995 110709524 (+370 5) 249 https://www. LTG holds 34% Manufacture of company 18, Valčiūnai, 3261 voestal- railway switches voestalpine Vilniaus raj. office.lietuva@ pine.com/ Railway voestalpine. railway-sys- Systems com tems-lietuva/lt/ Lietuva Public enterprise Mindaugo g. 08 02 2019 305017405 info@mobility- https://mo- LTG holds 33% Developing and Transporto 12, Vilnius tech.lt bilitytech.lt/lt/ presenting new Inovacijų pradinis/ technology oriented Centras investment projects to the stakeholders Public limited K.Valdemāra 12 11 2014 40103845025 info@railbalti- http://www. LTG’s subsidiary Coordination of the liability company iela 8-7, Ryga, ca.org railbaltica.org RBS holds 33% implementation of the RB Rail AS the Republic Rail Baltica project of Latvia Association Mindaugo g. 13 11 2018 304949011 +370 616 – – Representing the of Lithuanian 12, Vilnius 18841 rights and interests Railway irena.jan- of the Association Undertakings kute-balkune@ members-employers litrail.lt in the context of social partnership Association members: AB Lietuvos Geležinkeliai, LTG Cargo, LTG Link, LTG Infra, VLRD, GTC, RBS Joint stock Šeškinės g.