Annual Report and Accounts 2022
BALTIC CLASSIFIEDS GROUP PLC
BALTIC CLASSIFIEDS GROUP PLC
Annual Report and Accounts 2022
Contents
STRATEGIC REPORT
3
Strategic Highlights
6
Chair's Statement
8
CEO's Statement
10
Market Overview
12
Our Business at a Glance
•
Our business model
•
Our market position
•
Our strategy
•
Our purpose and culture
16
Moving our Strategy Forward
17
Section 172(1) Statement and Engagement with our
Stakeholders
22
Financial Review
28
Operational Review
30
Sustainability Report
•
The Task Force for Climate-Related Financial
Disclosure (“TCFD”) Report
41
Risk Management
41
Principal risks and uncertainties
45
Viability Statement
GOVERNANCE REPORT
48
Corporate Governance Report
•
Introduction by the Chair of the Board Trevor Mather
•
Board of Directors
•
Corporate Governance Statement 2022
•
Board leadership and company purpose
•
Statement of engagement with employees
•
Statement of engagement with other business
relationships
•
Division of responsibilities
•
Board composition, succession and evaluation
•
Audit, risk and internal control
66
Nomination Committee Report
70
Audit Committee Report
76
Directors' Remuneration Report
98
Directors' Report
FINANCIAL STATEMENTS
106
Independent Auditor's report to the members of Baltic
Classieds Group PLC
112
Consolidated Statement of Prot or Loss and Other
Comprehensive Income
113
Consolidated Statement of Financial Position
114
Consolidated Statement of Changes in Equity
115
Consolidated Statement of Cash Flows
116
Notes to the consolidated nancial statements
148
Company Statement of Financial Position
149
Company Statement of Changes in Equity
150
Notes to the Company nancial statements
ADDITIONAL INFORMATION
157
Glossary
157
Shareholder Information
BALTIC CLASSIFIEDS GROUP PLC
Annual Report and Accounts 2022
STRATEGIC REPORT
3
Strategic Highlights
6 Chair's Statement
8 CEO's Statement
10
Market Overview
12
Our Business at a Glance
•
Our business model
•
Our market position
•
Our strategy
•
Our purpose and culture
16
Moving our Strategy Forward
17
Section 172(1) Statement and Engagement with our Stakeholders
22
Financial Review
28
Operational Review
30
Sustainability Report
•
The Task Force for Climate-Related Financial Disclosure (“TCFD”) Report
41
Risk Management
41
Principal risks and uncertainties
45
Viability Statement
Baltic Classieds Group PLC
Annual Report and Accounts 2022
3
STRATEGIC REPORT
Strategic Highlights
The Group’s objective is to
provide trusted marketplaces
to connect sellers and buyers
across the Baltic region through
“easy-to-use”
and
“feature-rich”
portals that result in an efcient
transaction experience for all
parties.
We believe the Group achieves this with its portfolio of
leading brands, individually strong market positions and
generally scalable business model.
We aim to continue to deliver protable growth by further
monetising our portfolio of leading online classieds portals
through systematic price increases of our core classieds
products, supported by a strong value proposition and new
features and products (including listings promotions), the
development of ancillary services and selective bolt-on
acquisitions and in-market consolidation in the Group’s
existing markets and beyond.
Operational highlights
Visits per month
2021: average 69.2m visits per month
2020: average 56.8m visits per month
65.1m
Trac
3
Financial highlights
Revenue
+21%
+19%
0.49
€ cents € cents
6.40
1.7x
Revenue of €51.0m (2021: €42.3m)
Adjusted EBITDA of
€39.3m (2021: €33.0m)
(2021: (0.02) € cents) (2021: 3.43 € cents)
(2021: 6.0x)
99%
(2021: 100%)
Cash conversion
Adjusted EBITDA
Basic EPS Adjusted basic EPS
77%
(2021: 78%)
Adjusted EBITDA
margin
1
Leverage
2
1-2
See Financial review statement and note 6
3
Note: there were changes to the cookie consent policy (general obligation to consent within the framework of data protection for all cookies that are not necessary for
technical reasons).
Leadership position over closest competitor
4.4x
8.3x
32.1x
29.0x
19.7x
9.6x
Autoplius
CVbankas
Auto24
Aruodas
Skelbiu
KV
Baltic Classieds Group PLC
Annual Report and Accounts 2022
4
STRATEGIC REPORT
In addition to increasing monetisation of the core classieds
services, the Group aims to grow revenue by offering
ancillary products and services, with the overall objective of
enhancing the transaction journey of consumers and listers
in the Baltic markets.
How we measure progress
•
Developments
•
Innovations
•
Partnerships
2022 progress
Auto:
We have introduced a car price analysis tool for
dealers on Lithuanian vertical, utilising archived data to
indicate the average price and selling duration for specic
cars.
In Estonia we expanded our car nancing products
offering - in collaboration with a nancing provider, we now
intermediate in offering a full-service car rental for new
vehicles.
Real Estate:
We introduced a secure 2FA login to B2C clients’
accounts on both Lithuanian and Estonian Nr.1 portals.
We have also implemented virtual numbers on a limited
number of C2C customers in Lithuania.
Jobs & Services:
We have implemented virtual numbers for
C2C clients on our services platform in Lithuania.
On our Jobs board employers can now increase the
exposure of their listings by reaching a target audience of
job seekers.
Generalist:
On our biggest generalist in Lithuania a bulk
shipping feature has been implemented making it more
convenient to ship several parcels at the same time. In
addition, sellers’ contact details are now securely hidden
behind the registration wall.
▸
More details in our Operational Review (page 28).
Associated risks
•
Competition risk
•
Technology risks
1
“2022” means the nancial year (12 months) ended 30 April 2022, “2021” means the nancial year ended 30 April 2021, “2020” means the nancial year ended 30 April
2020
2
“Yield” refers to the change in average monthly revenue per active (Auto or Real Estate) or listed (Generalist) C2C listing
3, 4, 6
See Financial review statement and note 6
5
ARPU is monthly average revenue per user (in Auto – per dealer, in Real Estate – per broker, in Jobs & Services – per client)
Grow ancillary revenue through existing
and new partnerships
Focus on driving monetisation of core
services
The Group is considered to be at an early monetisation
stage. The primary growth driver and focus of the Group
is to drive increased monetisation of its core services, by
increasing average revenue per B2C lister and average
revenue from each C2C lister. Increased monetisation can
take different forms, including pricing actions and product
and packaging development (including listing promotions)
enabling upsell and cross-sell.
How we measure progress
•
Revenue
•
C2C yield
•
B2C ARPU
2022 progress
We ended our year 2022
1
with the highest ever yearly
revenue in all four business units, exceeding expectations
at the time of the Initial Public Offering (“IPO”) during which
we targeted c.15% growth for the Group. Group’s revenue
grew 21% to €51.0 million (2021: €42.3 million of which €0.4
million from a business that was divested at the very end of
2021 and therefore not owned in 2022). Excluding revenue
from the divested business from our comparative gures,
our revenue grew 22% this year.
At the start of the period reported on, we increased the yield
from C2C ads across all of our business units and ended
this year with the following growth in yield
2
:
Improvements to our products and packages for B2C
customers towards the end of the rst half of the period
reported supported price increases in our Auto, Real Estate
and Jobs & Services business lines and contributed to
revenue in the second half of the year. Monthly average
revenue per user (“ARPU”
5
) has grown:
+40%
in Auto
3
+22%
in Real Estate
+8%
in Generalist
4
+8%
in Auto
+15%
in Real Estate
+29%
in Jobs & Services
6
Associated risks
•
Geopolitical risk
•
Risk of disruption to our customer and / or supplier
operations
•
Competition risk
•
Laws & regulations risk
•
Technology risks
Strategic Highlights
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
5
STRATEGIC REPORT
1
Leadership position based on time on site except for Auto24. Auto24 has
no signicant vertical competitor; next relevant player is Generalist portal,
therefore the comparative market share is calculated by applying the Generalist
portal automotive listings ratio (the number of active automotive listings to the
total number of active listings on the portal at the end of the period) to that
portal time on site
2-5
See Financial review statement and note 6
While the Group already demonstrates high operating
leverage, and operational and cost eciency, it is
committed to continue optimising costs and maintaining
high cash conversion. However, the commitment to a
lean and ecient organisation does not prevent the
Group from making strategic investments, for example in
technology, to maintain its market-leading position and
strong value proposition for listers and consumers, and to
support the sustainability of a growing organisation. The
Group has a robust process of assessing business areas
requiring further investments, and a streamlined approach
to implementing internal change, with recent examples
including the increased investment in the technology team
and additional security infrastructure.
How we measure progress
•
Adjusted EBITDA and margin
•
Operating prot and adjusted operating prot
•
Cash conversion
•
Cash generated from operating activities
•
Basic EPS
•
Adjusted basic EPS
2022 progress
We ended our year 2022 with the highest ever adjusted
yearly protability, exceeding expectations at the time
of the IPO. As a reminder, at IPO we were condent in the
sustainability of Group margin prior to the impact of listed
company costs.
We have signicantly improved cybersecurity by
implementing DDOS protection and bot management
systems, migrated all services to a new infrastructure and
set up a new infrastructure to accommodate a disaster
recovery site.
In addition, at the end of February 2022, we supported a
few NGOs, helping Ukraine and Ukrainians eeing the war in
their country, with €0.2 million worth of donations.
Due to the Russian invasion of Ukraine and consequently the
internet population reading the news rather than shopping
online / searching for a property or a car, we estimate that
we lost around 1% of growth this year, both in revenue and
EBITDA margin.
Despite the above and additional public listed company
costs this year, our Adjusted EBITDA
2
grew 19% (from €33.0
million in 2021 to €39.3 million in 2022).
We ended our year with 77% Adjusted EBITDA margin (78%
in 2021).
Adjusted operating prot
3
grew 20% to €38.5 million (€32.2
million in 2021).
Reported operating prot decreased 13% to €13.6 million
reecting IPO related fees in the year 2022 (€15.7 million
in 2021).
Reported cash generated from operating activities grew
from €33.1 million in 2021 to €34.1 million in 2022, which
is already after €6.4 million of IPO fees paid during the year.
Cash conversion
4
was 99%.
Basic EPS for 2022 was 0.49 € cents (2021: (0.02) € cents).
Adjusted basic EPS
5
was 6.40 € cents (2021: 3.43 € cents).
Associated risks
•
Geopolitical risk
•
Risk of disruption to our customer and / or supplier
operations
•
Technology risks
Continuously improving the Group’s
scalability and maintaining high levels
of operational eciency while making
necessary investments
The Group will continue to leverage the existing strong
market positions of its portals, their high brand recognition
and trac to drive more listings and trac across its
portals. As more listings are added, consumer audience
trac is expected to increase, and the more trac
increases, the more attractive its portals are, which again
attracts more listings. These network effects are expected
to continue to support more revenue growth through an
increase in income from listing fees, subscription fees and
other revenue sources.
How we measure progress
•
Audience lead versus closest competitor
•
Trac to our sites
2022 progress
During the last two years, all our leading sites have increased
their audience lead
1
over the closest competitor. Leadership
position in times has changed accordingly:
Compared to pre-COVID-19, trac to our sites was at record
level. In 2022, the Group’s portals reached on average 65.1
million monthly visits (Source: Google Analytics). During the
year 2021, it was 69.2 million monthly visits on average and
during the pre-COVID-19 period, in 2020, it was 56.8 million
average monthly visits.
Associated risks
•
Geopolitical risk
•
Risk of disruption to our customer and / or supplier
operations
•
Competition risk
•
Laws & regulations risk
Drive trac through leading market
positions and network effects
Autoplius
2022
2021
2020
CVbankas
Auto24
Aruodas
Skelbiu
KV
0 10 20 30
32.1
29.0
19.7
9.6
4.4
8.3
Strategic Highlights
continued
Chair’s Statement
Overview
Baltic Classieds Group is a highly protable, high-growth
business at an early stage of its monetisation journey. Its
portfolio of classieds businesses across Estonia, Latvia
and Lithuania are the clear market leaders in their respective
sectors and have proven themselves to be extraordinarily
resilient in a time of signicant macroeconomic uncertainty.
The Group is led by a passionate and committed
management team that has deep classieds experience
and has created an environment of rapid decision making,
of trust and of fun.
I am delighted that we could bring such a high quality
business, operating entirely in the Baltic region, to the
London Stock Exchange. We entered the Premium Segment
of the LSE in July 2021 and have subsequently been included
in the FTSE 250 Index. The Group is making good progress
in terms of compliance with the UK Corporate Governance
Code 2018. For a more detailed understanding of this,
see the Corporate Governance Report on pages 48 to 65.
However, I do ask the readers of this report to understand
there are some differences that come with a business listed
in the UK with operations purely in the Baltics region. For
example, the business has been operating in a high ination
environment which drives differences in the remuneration
approach (see Remuneration Committee Report on pages
76 to 97), and the ethnic minority groups in the Baltics
are signicantly different which makes us think differently
about diversity (see Nomination Committee Report on
pages 66 to 69).
The Group has delivered our strongest ever nancial results
with both revenue and prot exceeding our guidance set out
at the IPO.
Employees
The past 12 months have thrown up some extraordinary
challenges for our employees. On top of the health
challenges, the pandemic has meant continued home
working across our businesses for most of the year.
Additionally, the history of and proximity to Russia for the
Baltic countries combined with the deep connections, for all
those who are affected by the war or have family members
so affected, has caused worry and emotional turmoil that I
can only imagine. Despite this, we have achieved everything
we set out to do and more, bringing the Company to the
public markets and exceeding expectations set out at
that time. On behalf of the Board, I want to thank all of our
employees for their remarkable contribution and dedication
this year, and for serving both our consumers and our B2C
customers so well.
Board
Preparing for the IPO meant restructuring BCG’s
organisational structure, setting up a new top holding entity
in the UK and establishing a new Board of Directors. I was
delighted to have been asked to chair the Board and believe
my previous experience as the CEO of Autotrader Group PLC
(“Autotrader”) throughout its transition from a private to a
public company will contribute positively to the business.
Ed Williams, the current Chair of Autotrader and the ex-
CEO of Rightmove PLC has taken the Senior Independent
Director role and is Chair for the Remuneration Committee.
Kristel Volver, Group CFO of the largest media company
in the Baltics joined our Board as an Independent Non-
Executive Director and Chair of the Audit Committee.
I am delighted that we could bring
such a high quality business,
operating entirely in the Baltic region,
to the London Stock Exchange
Trevor Mather
Chair
“
6
Baltic Classieds Group PLC
Annual Report and Accounts 2022
Funds advised by Apax Partners (“Apax”) now account for
35.29% of issued share capital as at 30 April 2022. Until its
shareholding falls below 10%, funds advised by Apax have a
right under a Relationship Agreement to nominate up to two
Nominee Directors, of which Tom Hall is currently in place
alongside a nominated Board Observer. Tom brings in a vast
experience in internet and consumer business and knows
BCG well since Apax’s acquisition of the Group in 2019.
On 17 May 2022, Jurgita Kirvaitienė joined the Board as
an Independent Non-Executive Director and will join all of
the Board Committees. Her 18 years of experience at PwC
where she served on the Management Board in Lithuania
and on other boards will bolster the nance and operational
experience on the Board.
With this appointment we have brought all our Committees
into full compliance with the UK Corporate Governance
Code 2018.
Environmental, Social and Governance
I am pleased to report that the Company set up the Group’s
Environmental, Social and Governance (“ESG”) working
group that is the driver of ESG initiatives and a main tool
for the Board to oversee progress in this area (refer to
Sustainability Report on page 30 for more detail). Our
Sustainability Report also includes reporting under the
recommendations of the Taskforce for Climate-related
Financial Disclosures.
We have also made a signicant increase in our charitable
giving programme this year, and aim to continue to do so in
the coming year. The Board recognises we are only at the
start of our ESG journey, and that this journey may have
different directions than many companies given the Baltic
operations - there is more to do.
Returns to Shareholders and dividends
The primary proceeds raised through the IPO were
predominately used to reduce our net external debt to a
level more appropriate for a publicly listed company. The
opportunity was also taken to renance and enter into a
new term loan facility at a signicantly lower rate of interest.
The Board is condent in our ability to deliver sustainable
returns to Shareholders and aim to return all of the surplus
cash we generate to Shareholders. In line with our intentions
expressed in the Prospectus, we are recommending a nal
dividend of 1.4 € cents per share for 2022. The nal dividend
will be paid, subject to Shareholder approval, on 14 October
2022. Whilst we will prioritise further acquisitions as the
primary use of excess cash, now that our debt is below 2X
net leverage, we will be initiating a share buy-back program
that will facilitate the return of cash to Shareholders. More
details on our capital policy can be found in the Financial
review on page 22.
Looking ahead
I have been enormously impressed yet not surprised by
the progress of Baltic Classieds Group over the past year.
I am excited that we can soon kickstart our capital policy
of returning all excess cash to our Shareholders and I am
condent that the business will continue to develop and
grow both quickly and protably - in line with the guidance
we set out at the IPO.
Trevor Mather
Chair
6 July 2022
The Group has delivered
our strongest ever nancial
results with both revenue and
Adjusted EBITDA exceeding our
guidance set out at the IPO
Trevor Mather
Chair
“
Baltic Classieds Group PLC
Annual Report and Accounts 2022
7
Chair’s Statement
continued
STRATEGIC REPORTRevenue
+21%
+19%
Revenue of €51.0m
(2021: €42.3m)
Adjusted EBITDA of €39.3m
(2021: €33.0m)
Adjusted EBITDA
This year has been the busiest and most successful in BCG’s
history and a record year in terms of nancial performance. I
am incredibly proud of all of the employees who have helped
to achieve the best performance ever despite living through
a 3
rd
wave of the pandemic and geopolitical tensions. The
period has also seen strong audience numbers on our
sites, and record numbers of automotive dealers and job
advertisers utilising our products and services.
We implemented successful pricing and package changes
across all of our business units, in C2C at the beginning
and the end of the period, and in B2C at the middle of the
year. The excellent results achieved this year have provided
ongoing momentum moving us into the next nancial year.
•
Trac to our sites was 65.1 million visits per month
which means that on average, a resident in the Baltics
visits one of our sites 11 times every month.
•
Our time on site leadership position over the nearest
competitor increased for all ve of our largest sites
compared to the same period in 2020 with Autoplius
at 4.4x (vs 3.3x), Auto24 at 32.1x (vs 15.4x), Aruodas
at 29.0x (vs 12.3x), Skelbiu at 19.7x (vs 15.1x) and
CVBankas at 8.3x (vs 3.8x).
•
The number of real estate brokers grew 1% if compared
to the same period in 2021, we have more automotive
dealers (+4%) and more employers (+47%) utilising our
sites to advertise than ever before.
•
The combination of increased prices of the goods
and services being advertised on our sites, quicker
speed of sale and changes to our packages has led to
increased yields in Automotive (B2C +8%, C2C +40%),
Real Estate (B2C +15%, C2C +22%), CVbankas (+29%)
and Skelbiu (+8%).
I am delighted that BCG has become a listed company on
the London Stock Exchange. The IPO has allowed us to
make all of our employees Shareholders of the Company.
The team’s motivation is higher than ever as we focus on
continuing to deliver outstanding products and services to
our customers.
We felt it was part of our duty to help Ukrainian refugees
arriving in our region. We have therefore developed tools in
our portals to help integrate refugees in local society faster
and donated €233,000 to non-prot organisations helping
Ukrainians which also makes our employees proud.
Market context
The Baltic region was under various COVID-19 related
restrictions for the period from October 2021 to April
2022. Despite this, Lithuania and Estonia, being our main
markets, were among the rst countries in the EU to reach
their pre-COVID-19 GDP levels. Our Company, as well as
the Baltics economy in general, showed huge resilience to
increased geopolitical tension in the region. On 24 February,
the onset of the Russian invasion of Ukraine, people were
reading more news than ever. Accordingly, our trac KPIs
temporarily dropped 20-30%. However, this was short-lived,
and by the second to third week of the war, KPIs began to
recover rapidly. By the fourth to fth week, business results
exceeded pre-war levels. The Baltics economy exports
just below 1% of locally produced goods to Russia which,
coupled with government actions such as building liquid
gas terminals and infrastructure, helps to reduce public
uncertainty and makes us fully independent from gas
imports from Russia. The Baltic states became the rst
in Europe to stop Russian gas imports. At the date of this
statement the Baltic states have also stopped importing
Russian oil and electricity.
CEO’s Statement
This year has been the busiest, most
successful in BCG’s history and a
record year in terms of nancial
performance
Justinas Šimkus
CEO
“
8
Baltic Classieds Group PLC
Annual Report and Accounts 2022
Similarly to other countries around the world, the Baltics
economies face high ination. This results in higher real
estate and automotive prices, increasing the commission
pool of our customers which in turn is supportive to our
Company’s growth, while being part of the Eurozone secures
our Shareholders’ investment.
•
Despite the supply chain issues, the used car market
has demonstrated a modest growth of 3% in the last
12 months. Demand to change vehicles has remained
high, driving up the average price per used car (by
24% YoY) and increasing the speed of sale. This has
meant dealers have maintained or increased their
protability. However, the number of days a vehicle
is advertised has reduced by 14% putting downward
pressure on the stock of vehicles on our sites.
•
The real estate market has emerged strongly post
lock-down. The number of transactions were 9% higher
year-on-year and the average price of an apartment
has increased by 10%. The larger commission pool
benets our customers.
•
The employment market has seen unprecedented
growth. Companies have faced a substantial labour
shortage. The number of employers using Cvbankas.lt
increased by 47% and average salaries have grown by
11%, leading to companies increasing their investment
in employee search and selection.
•
eCommerce activities have signicantly increased
because of lock-downs. The numbers of online buyers
and sellers grew rapidly with many transactions
moving online. This has helped the growth of our
Generalist platforms and ancillary products like
deliveries.
Justinas Šimkus
Chief Executive Ofcer
6 July 2022
9
Baltic Classieds Group PLC
Annual Report and Accounts 2022
CEO’s Statement
continued
2020
Source: State Enterprise Centre of Registers Lithuania,
Land Register Latvia, Land Board Estonia
2021 2022
2019
Source: Swedbank (prices per square metre); State Enterprise Centre of Registers
Lithuania, Land Register Latvia, Land Board Estonia (number of transactions)
2020 2021
0
50
100
150
200
250
0
500
1,000
1,500
2,000
10
Automotive market
Baltic Classieds Group currently operates its automotive
portals in Lithuania and Estonia. During the last 12 months,
ending April 2022 there were 50,200 new and 445,700 used
car transactions in the Lithuanian and Estonian automotive
market, including local used car sales and imports of used
cars, primarily from Western Europe.
Although we observed high consumer demand for both
new and used cars, the market continues to be affected
by supply chain issues. Worldwide supply chain issues as
well as chip shortages continue to have an effect on new
car deliveries and as a result buyers are waiting longer to
receive ordered vehicles. This has a knock-on effect within
the used car market, as consumers, while not being able to
acquire a new vehicle, decide to buy used ones, or postpone
the decision to sell a currently owned one. Therefore, it
has become more dicult for Baltic automotive dealers to
acquire used cars abroad for import, making it dicult to
satisfy pent up local demand.
Market Overview
Real estate market
The Group currently operates online classieds portals in
the real estate markets of Lithuania, Estonia and Latvia.
After the recovery of the rst COVID-19 shock in the spring
of 2020, the real estate market continued to grow in terms
of the number of transactions and property prices.
During the last 12 months ending April 2022, the real estate
market was particularly active. In addition to this, since
the beginning of the war in Ukraine, the demand for rental
property in the Baltics has been increasing. Ukrainians
eeing the war in their country and eastern companies
transferring their operations to the Baltics, have also
contributed to the upturn in demand.
Furthermore, the construction of new developments is
becoming more expensive and complicated. Several
developers have postponed the start of construction
because of supply-chain disruptions or increased prices
for construction materials. The already-high construction
costs are expected to increase even more, putting upward
pressure on the average price level in all Baltic capitals.
Due to the active real estate market, the total number of
transactions was 9% higher in 2022 compared to 2021. The
number of transactions of apartments for sale in Vilnius,
Riga and Tallinn grew 20% in calendar year 2021.
The average price per square metre of an apartment for sale
has increased by 10% on average across Baltic capital cities
in the calendar year 2021. This larger commission pool
benets our customers and also generates more revenue
for the portals.
0
100
200
300
400
500
New vehicles
Used vehicles
Total number of transactions, thousands
Average real estate prices per m
2
Average used vehicle price
2020
Source: Regitra, Autotyrimai and Maanteeamet
Number of transactions in Lithuania and Estonia, thousands
Number of transactions in Lithuania, Latvia and Estonia
during nancial years 2020, 2021, 2022, thousands
2021 2022 2020
Source: Company information
Average used car price in Lithuania and Estonia, Euros.
Average real estate prices per square metre
based on apartment prices in Vilnius, Riga and Tallinn
during calendar years 2019, 2020, 2021, Euros.
2021 2022
0
2,000
4,000
6,000
8,000
Initially it was expected that the delivery levels of new
vehicles would return to normal, pre-pandemic levels by
the end of calendar year 2022, but the war in Ukraine has
put further pressure on car component supply chains. As
a result, based on Autovista Group forecasts, expectations
of market recovery have been pushed further into calendar
year 2023 with used car volumes to follow afterwards.
Despite the constraints, the used car market has
demonstrated a modest growth of 3% in the last 12 months,
while new car sales have increased by 14% albeit still below
the level of 2020.
The lasting imbalance in car supply and demand has
continued to push up used car prices. The average used car
price has continued to grow by 24% in the last 12 months
to €9,357. Growing prices and shorter sales times help
increase dealers commission pool.
STRATEGIC REPORT
223.9 249.5 271.3
1,547 1,698 1,875
7,004 7,253 9,357
51.8
504.9
44.0433.8
50.2445.7
Generalist market
The Group currently operates Generalist portals in Lithuania
and Estonia. E-commerce growth in Lithuania and Estonia
was accelerated by COVID-19 pandemic limitations on
physical retail in calendar years 2020 and 2021. Customer
habits evolved to increasingly shopping online which
translated into a higher number of online buyers, sellers and
transactions.
The Lithuanian and Estonian e-commerce markets have,
Jobs market
The Group currently operates online classieds portals
in the jobs and services markets of Lithuania. A growing
economy in Lithuania drives a demand for employees. A
rapid recovery after the short crisis at the beginning of the
COVID-19 pandemic resulted in an unprecedented growth
of the Lithuanian employment market - during 2022 there
were 46% more job advertisements listed on CVbankas
compared with the prior year.
The rapid economic recovery is reected in the decreasing
unemployment. The average unemployment rate in
Lithuania has decreased from 8.5% to 7.1% in calendar year
2021.
Decreasing unemployment increased the competition
between employers. Companies have faced labour
shortages which was also highlighted by lower jobseekers’
activity - a trend that is seen worldwide. Competition for
employees was also fueled in general by a growing number
of companies that are looking for employees, accordingly
the number of employers using CVbankas increased by 47%
in 2022.
The average gross salary in Lithuania has increased by
11% during calendar year 2021. Growing salaries support
the trend of higher investment in employee search and
selection. While increased spend for job advertisement
listings and value added services are driven mainly by
an increased demand for employees, the increasing
competition among companies, lower jobseeker activity
and growing salaries, in turn, increases competition among
employers and decreases employee turnover.
combined, grown at approximately 22% CAGR between
calendar years 2015 and 2019, 37% between calendar years
2019 and 2020, and 24% between calendar years 2020
and 2021 (retail value RSP (retail selling price), source:
Euromonitor). Growth in calendar year 2021 (second
pandemic year) slowed a little compared to calendar year
2020 (rst pandemic year), but still remained at a high level.
Supportive underlying market conditions helped to grow our
Generalist platforms and ancillary products for example,
deliveries.
2019
2019
Source: The Lithuanian Department of Statistics Source: The Lithuanian Department of Statistics
Average unemployment rate in Lithuania
during calendar years 2019, 2020, 2021.
Retail value RSP for calendar years 2015-2026, excluding sales tax, current prices, million Euros.
Average monthly gross wage in Lithuania
during calendar years 2019, 2020, 2021, Euros.
2020
2020
2021
Source: Euromonitor
0%
2%
4%
6%
8%
0
500
1,000
1,500
2,000
2015 2016
2017
2018
2019
2020
2021
2022E
2023E
2024E
2025E
2026E
Lithuania
319 401
501
614
740
1,046 1,288
2,6741,611
1,9542,318
3,079
Estonia 260 310
376
463
538
708
881
1,062 1,234 1,391 1,547 1,703
Total 579 711
877
1,078
1,278 1,754
2,168
2,673
3,1873,709
4,221
4,7822021
11
Average unemployment rate Average monthly gross wage
STRATEGIC REPORTMarket Overview
continued
6.3% 8.5% 7.1%
1,296 1,429 1,579
Baltic Classieds Group PLC
Annual Report and Accounts 2022
12
STRATEGIC REPORT
Our Business at a Glance
We love
transactions!
BCG is proud to be the leading online classieds group in
the Baltics, owning and operating 12 online portals across a
range of sectors and industries, as shown in the Our Brands
section below.
Our portals are amongst the most visited sites in Lithuania
and Estonia. The vast majority of the Group’s trac is direct
trac reaching 58%. A combination of direct and search
channels to our websites comprise from 79% to 94% in
each of them, when the vast majority of the search trac
is not paid. Very little search trac is paid and total Group
advertising and marketing expenses are below 2% from
Group revenue.
Based on the number of user visits and the number of
online listings across the Group portals, BCG is foremost in
the online classieds market. In 2022, the Group’s portals
were visited on average 65.1
1
million times per month which
means that on average, a resident in the Baltics visits one of
our sites 11 times every month.
We consider using our portals as one of the easiest ways to
advertise and therefore transact real estate, auto, and other
items, as well as job seeking, recruiting or locating a service
provider.
Our brands
1
Note: there were changes in the cookie consent policy (general obligation to consent within the framework of data protection for all cookies that are not necessary for
technical reasons).
Baltic Classieds Group PLC
Annual Report and Accounts 2022
13
STRATEGIC REPORT
Our business model
Our success is the result of a proactive and consumer-
focused business model incorporating both vertical and
Generalist online portals as illustrated in the table below.
Our brands include vertical portals which serve particular
industries and facilitate promotion, advertisement and
sales within specic sectors. These portals attract a high
proportion of loyal and returning business customers (B2C
listers who have a subscription-based contract). However, it
is also highly used by individual customers and the general
population (C2C listers carrying out one-off transactions).
We also operate Horizontal or Generalist portals, such as
general marketplace, online auction and price comparison
websites, used by individual customers and the general
population.
Our brands
Lithuania
Estonia
Latvia
Automotive
Real Estate
Jobs and
Services
Generalist
% of BCG revenue
for 2022
36%
25%
19%
20%
The benets of this combined-offer business model are:
•
the large choice for prospective consumers and
maximum possible audience;
•
the ability to cross-list between the vertical and
Generalist portals widens reach, increases available
content and provides opportunity to divert trac
from Generalist portals to higher monetising vertical
portals; and
•
strong brand awareness across a wide network.
Our Business at a Glance
continued
The Group’s portals attract a large and highly engaged
consumer audience. As of 30 April 2022, the Group’s portals
were among the most visited websites in Lithuania and
Estonia. According to April 2022 ratings from SimilarWeb,
(which also include websites such as Facebook, Youtube,
news portals) Skelbiu was the 5
th
, Autoplius - 8
th
and
Aruodas and Auto24 - 13
th
in their respective countries.
Our portals leadership position
1
compared to the closest
competitor (in times) has been strong and increasing.
The Baltics benet from high levels of digital adoption,
underpinned by internet access and 4G mobile penetration.
The percentage of the population using the internet at home
stands at 87% in Lithuania, 91% in Latvia and 92% in Estonia
(source: Statista). The region also performs highly in the
fastest public wi global ranking with Lithuania ranked 1
st
,
Estonia 3
rd
th
(based on 2021 calendar year
data). The high level of digitalisation supports the Group’s
business and operations and its ability to effectively
execute its growth strategy.
Our successful business model, based on the combined-
offer of Vertical and Generalist platforms, has been
supported by strategic decisions to ensure its sustainability.
These include:
•
Investing in t-for purpose, long-term technology
capability.
All technology is developed in-house and on
a portal-specic basis. This allows an agile approach
while ensuring shared components and applications
across the platforms. This investment has resulted in
a scalable infrastructure that is capable of handling
increasing levels of trac.
•
Focusing on cash generation with excellent margins.
BCG’s market leader position and strong brand identity
allow a low marketing spend and the organisational
structure supports shared corporate functions and
minimal capital expenditure.
•
Concentrating on talent recruitment and retention.
BCG prides itself on attracting a highly skilled and
ecient workforce. The Group’s core HR objective is to
attract high potential and highly motivated employees
and give them room to grow and develop.
For our strategic aims see Moving our Strategy Forward on
page 16.
Autoplius
2022
2021
2020
CVbankas
Auto24
Aruodas
Skelbiu
KV
0 10 20 30
32.1
29.0
19.7
9.6
4.4
8.3
Our market position
Our strategy
1
Leadership position based on time on site except for Auto24. Auto24 has
no signicant vertical competitor; next relevant player is Generalist portal,
therefore the comparative market share is calculated by applying the Generalist
portal automotive listings ratio (the number of active automotive listings to the
total number of active listings on the portal at the end of the period) to that
portal time on site
14
STRATEGIC REPORT Our Business at a Glance
continued
Our purpose and culture
Connecting
consumers with
listers
BCG exists to connect consumers with listers and help
them transact more easily. The Board is satised that
the Group’s purpose, values and strategy are aligned with
its culture. Our governance framework, organisational
structure and culture contribute signicantly to the delivery
of our business model and the support of our purpose.
To achieve our purpose, we are focused on the following
strategic goals:
•
To enhance the transaction experience
•
To provide the easiest solution for sellers and buyers
to nd each other
•
To ensure a simple way of advertising for our
consumers and listers
•
To be the main solution for our consumers and listers
transaction needs
▸
See page 17 for information on our Stakeholders and our
approach to engagement
▸
See page 30 for information on our approach to
Sustainability
15
STRATEGIC REPORTOur Business at a Glance
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
16
STRATEGIC REPORT
Moving our Strategy Forward
Our Company values and behaviours
For over more than a decade, our CEO Justinas Šimkus
and COO Simonas Orkinas and their long-standing team
have built a collection of market-leading businesses and
strong brands. Every day we connect buyers and sellers and
facilitate transactions from cars and real estate, job offers
to services and consumer goods from both professional
and private listers. The digital marketplaces we operate
promote trust, fairness and eciency.
The values and behaviours that we believe in are:
•
Trustworthiness
•
Entrepreneurship
•
Less is more
•
Getting things done
•
Marketplace is our hobby
•
Work is fun
Our priority
We are committed to being a responsible business. Our
priority is to protect and support our people, customers,
Stakeholders and the environment around us.
Our strategic aims and Board activity
Our strategic delivery is based on ve strategic aims:
•
Driving monetisation of core services.
Through
various means including pricing actions, product and
packaging developing, enabling upsell and cross-sell.
•
Drive more listings and trac across the Group’s
portals.
Use our market position and brand recognition
to drive trac and increase listings, resulting in more
revenue growth through listing fees, subscriptions
fees and other sources.
•
Grow ancillary revenue through existing and new
partnerships.
The offer of ancillary products and
services will grow revenue and also help achieve the
overarching objective of enhancing the transaction
journey for consumers and listers.
•
Pursue strategic opportunities through acquisitions.
The Group constantly evaluates its portfolio to
optimise value creation and will continue its pursuit
of attractive options for inorganic growth, particularly
through bolt-on acquisitions and in-market
consolidation in the Group’s existing markets, and
We are committed to being a
responsible business.
potentially new markets outside of the Baltics with a
strong focus on similarly high-quality, market-leading
businesses.
•
Continuously improving the Group’s scalability and
maintaining high levels of operational eciency while
making necessary investments.
While the Group
already demonstrates high operating leverage and
operational and cost eciency, it is committed to
continue optimising costs and maintain high cash
conversion.
Our Stakeholders
•
Investors
•
Customers
•
Employees
•
Suppliers
•
Regulatory bodies
•
Environment and community
Responsible business and
Environment, Social and Governance
(“ESG”)
The Sustainable Development Goals (“SDGs”) (also known
as the Global Goals), were adopted by the United Nations
in 2015. Our approach to responsible business aligns quite
naturally with the goals and we have identied ve that are
most material to our business and where we contribute the
most:
•
Responsible consumption and production
•
Climate action
•
Gender equality
•
Decent work and economic growth
•
Peace, justice, and a strong institution
▸
For more on our culture see pages 12.
▸
For our S172(1) Statement and more on Engagement
with our Stakeholders see page 17.
▸
For more on our ESG see page 30.
Section 172(1) Statement and
Engagement with our Stakeholders
Companies Act 2006, Section 172(1)
“A director of a company must act in the way, he
considers, in good faith, would be most likely to
promote the success of the company for the benet
of its members as a whole, and in doing so have
regard (amongst other matters) to the following
factors:
(a)
the likely consequences of any decision in the
long term;
(b)
the interests of the company’s employees;
(c)
the need to foster the company’s business
relationships with suppliers, customers and
others;
(d)
the impact of the company’s operations on
the community and the environment;
(e)
the desirability of the company maintaining
a reputation for high standards of business
conduct; and
(f)
the need to act fairly as between members of
the company.”
Section 172(1) Statement
“Promoting the success of the Company for the
benet of all its stakeholders”.
The Board of Directors conrms that during the year under
review, it has acted to promote the long-term success of the
Company for the benet of Shareholders, whilst having due
regard to the matters set out in section 172(1)(a) to (f) of
the Companies Act 2006 (“Section 172(1)”). The Board of
Baltics Classieds Group PLC is subject to all the duties
codied in law, which includes Section 172(1).
The Board has direct engagement principally with our
employees and Shareholders but is also kept fully apprised
of the material issues of other Stakeholders through the
Executive Directors, reports from other members of Senior
Management and external advisors.
Pages 18 to 21 outline the ways in which we have engaged
with key Stakeholders and focuses on the following key
areas:
•
Who the key Stakeholders are and why they are
important to the Group
•
Board oversight and engagement mechanisms
•
Principal issues that matter to each Stakeholder group
•
Principal Board decisions and how they tie into
Section 172(1) (a) to (f)
•
Future consequences and planned actions
•
Diculties for the Board in making these decisions.
The Board considers ‘Principal Decisions’ to be those
decisions which entail signicant long-term implications
and consequences for the Company and/or its Stakeholders
– to distinguish these from the normal, ordinary course
decision-making processes that the Board engages in.
▸
The Board’s Principle Decisions can be found on pages
18 to 21.
▸
Statement of Engagement with Employees on page 56.
▸
Statement of Engagement with Suppliers, Customers
and others on page 57.
17
STRATEGIC REPORT
Stakeholder
Principal issues
that matter to the Stakeholder
Board oversight
and engagement mechanisms
INVESTORS
Why we value them
Securing our Shareholders’
trust through continuous
engagement ensures their
ongoing investment and
support.
We have a clear responsibility
to engage with Shareholders
as the owners of our business
as well as appealing to new
Shareholders so their views
are an important driver of our
strategy.
Access to capital if required.
•
Sustainable, protable growth over the
long-term
•
Immediate returns on their investment
•
Dividend policy
•
Share price
•
Understanding the risks to the business
•
Good governance and transparency
•
Good performance in Environmental,
Social and Corporate Governance areas
•
Values and culture of the Company
•
Oversight of internal and external audit
processes to protect their investments
•
Investor Roadshows (organised by Bank
of America)
•
Regular personal meetings with potential
investors in response
•
Fireside chats with brokers
•
RNS newswires
•
Annual Report and Accounts
•
Regular updates on corporate website
•
Annual General Meeting
•
Electronic communications to
Shareholders
•
Views of voting agencies
Future consequences/
planned actions
•
Board strategy day planned for September 2022
•
Views of voting agencies has led to a greater understanding of Shareholder interest and
has fed into key policies such as our Board Diversity Policy
Difculties
•
Dividend decision-making, balancing the desire of Shareholders for immediate returns,
against the need to preserve liquidity and ensure the sustainability of the business
•
Purpose setting, aimed at delivering against Shareholders’ needs for long-term,
sustainable and protable growth
Board decision and which
S172(1) (a) to (f) factors it
considered
•
Approved the Company Purpose
(a), (b), (c), (d), (e), (f)
•
Approving the declaration of a dividend
(a), (b), (e), (f)
•
Approving BCG’s ESG strategy
(a), (b), (d)
Engagement with our Stakeholders
Board activity, Stakeholders and S172(1) considerations
The following table summarises Board activity, Stakeholders and S172(1) statement. For more information on Board activity and
how it links to the culture, see page 54.
18
Section 172(1) Statement and Engagement with our Stakeholders
continued
STRATEGIC REPORT
Stakeholder
Principal issues
that matter to the Stakeholder
Board oversight
and engagement mechanisms
CUSTOMERS
Why we value them
Customers, both individual
consumers and retail
customers, will drive the
growth and reputation
necessary for sustaining
long-term growth and value
for Shareholders.
•
Competitive rates
•
Functionality and intuition of sites
•
Reputation
•
Pragmatic approach
•
Market reach and wide network
•
Excellent customer service and
complaints procedures
•
Training on new functionalities
•
Checks to ensure credibility of sellers and
measures to protect customers
•
Data protection
•
Relevant health and safety standards
•
Senior Managers for each business unit
feed customer relationship information
back to the Board
•
The Board intentionally drive strategy and
decision-making to improve the customer
experience
Future consequences
planned actions
•
Our customer service teams gather feedback from customers about technical solutions
and new functionalities with their preferences and recommendations. Major business
clients are sometimes even consulted before launching new products. Their feedback
can directly alter this product. The Board receives a summary of all such feedback when
discussing strategies for each business line which can directly affect its decision making
Difculties
•
Balancing customer needs and expectations
•
Diculties regarding data protection
•
Customer protection (e.g. protection against third-party fraud)
Board decision and which
S172(1) (a) to (f) factors it
considered
•
Approving new price changes
(a)
, (c)
•
Discussing and approving new products or changes to existing ones
(a)
, (c)
SUPPLIERS
Why we value them
Reliable and resourceful
suppliers support our
business infrastructure and
are essential for smooth
operational performance
and the delivery of long-term
strategic development and
objectives.
•
Prompt and accurate payment
•
Long-term partnerships
•
Collaboration
•
Responsible sourcing
•
Regulatory compliance
•
The Company’s nancial performance
•
Growth prospects
•
Reputation
•
Performance reports discussed and
considered at Board
Future consequences/
planned actions
•
Continuous development of our supplier management framework to strengthen our
collaboration with strategic suppliers who are instrumental in enabling the realisation of
our strategic objectives
Difculties
•
Our customers are facing supply chain issues (especially in the Auto business line) that
have an indirect impact on the Group’s operations
Board decision and which
S172(1) (a) to (f) factors it
considered
•
Board approval of larger supplier contracts based on authority matrix
(c)
, (e)
Baltic Classieds Group PLC
Annual Report and Accounts 2022
19
Section 172(1) Statement and Engagement with our Stakeholders
continued
STRATEGIC REPORT
Baltic Classieds Group PLC
Annual Report and Accounts 2022
20
STRATEGIC REPORT
Stakeholder
Principal issues
that matter to the Stakeholder
Board oversight
and engagement mechanisms
EMPLOYEES
Why we value them
BCG prides itself on a
close and united employee
community. Our employees
bring ambition, expertise
and fresh perspectives that
contribute to the values
and culture of BCG and are
essential for the delivery of our
strategic objectives. It is vital
for BCG’s long-term success
that we nurture an environment
where people feel valued,
motivated, and able to develop.
•
An inclusive and diverse working
environment
•
Positive culture, team spirit
•
Opportunities for career and
personal development
•
Having a voice
•
A safe and secure workplace
•
Good pay and benets
•
Gender equal pay
•
Whistle-Blowing Policy and
procedure for raising concerns
•
Good working practices
•
Safe working environment
•
Modern Slavery Policy
•
Regular online engagement within teams
whilst remote working
•
Every employee is a Shareholder which
fosters a feeling of ownership, unity and is
an incentive for good performance
•
Continuous improvement of policies and
employee benet schemes
•
Regular and scheduled meetings within
Business Units where employees have
the opportunity to ask questions of Senior
Management; the feedback from these
sessions is fed back to the Board during
vertical strategy sessions
•
CEO, CFO and COO update at every Board
meeting which includes relevant workforce
updates
•
Regular social activities for example, virtual
beer tasting, a Christmas party
•
Consultation (in the form of a poll and
conversation) with regards the return to
oce-working post-COVID-19
Future consequences/
planned actions
•
Virtual or face-to face team gatherings for social occasions, team lunch and similar
initiatives that support the Group’s efforts on building Group culture
Difculties
•
Engaging with the workforce due to the virtual nature of most of 2022, especially staff
onboarding
Board decision and which
S172(1) (a) to (f) factors it
considered
•
Board approval of code of conduct related policies
(b)
•
Board approval of PSP scheme and Free Share awards
(a), (b)
REGULATORY
BODIES
Why we value them
Active and regular engagement
with regulators in the Baltics
and the UK helps to ensure
we understand changing
regulatory requirements and
can continue to meet these
requirements.
•
Legal and safe operations with
compliance with relevant regulations
•
Worker pay and conditions
•
Waste management and
environmentally sound practices
•
Consumer protection
•
Product safety
•
Health and safety
•
Privacy and security
•
Gender equal Pay
•
Board oversight and approval of lings with
Companies House
•
FPPP compliance for IPO
•
Preparation of rst TCFD report
Future consequences/
planned actions
•
To continue to observe, comply and be responsive to regulation and regulatory
requirements
Difculties
•
The ongoing supervisory proceedings initiated by the Estonian Competition Authority.
See note 24 to the consolidated nancial statements for further detail
Board decision and which
S172(1) (a) to (f) factors it
considered
•
Board approval of IPO documents and half-yearly results
(a)
, (e)
, (f)
Section 172(1) Statement and Engagement with our Stakeholders
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
21
STRATEGIC REPORT
Stakeholder
Principal issues
that matter to the Stakeholder
Board oversight
and engagement mechanisms
ENVIRONMENT AND
COMMUNITY
Why we value them
Recognising where we can
make meaningful contributions
to the wider society enables us
to strengthen our relationships
with consumers, customers and
the wider community whilst also
having a positive environmental
and social impact.
•
Recognised environmental and societal
standards
•
Environmental and social issues,
including climate change, carbon
emissions, food and road safety, human
rights, waste management, and recycling
•
Having a positive impact on the
community
•
Environmental and socially responsible
business practices and credentials
•
Board involvement in the preparation
of the ESG reporting in the Annual
Report and Accounts
•
Senior Management reports to the
Board on social and environmental
concerns arising within their
business units
Future consequences/
planned actions
•
ESG Working group - building upon the work that it has started in order to achieve
full compliance with the TCFD recommendations
Difculties
•
Ensuring our procedures and processes are established in order to comply with the
TCFD recommendations whilst noting that this is our rst year as a company listed
on the London Stock Exchange
Board decision and which S172(1)
(a) to (f) factors it considered
•
Board approval and continuing support for a business model which inherently
benets the environment e.g. encourages reusing and recycling; low carbon
emissions
(a)
, (d)
, (e)
•
Board approval for a signicant donation to non-governmental organisations
helping Ukraine upon the invasion by Russia
(a)
,
(c),
(d),
(e)Further information as to how the Board has had regard to S172(1) (a) to (f) can be found in the following pages:
Section 172(1) (a) to (f) Where can you nd more in our Annual Report
Page reference
S172(1) (a)
Consequence of any decision in the long-term
Moving our strategy forward
Risk Management
Board leadership and Company purpose
16
41
53
S172(1) factors 117 S172(1) (b)
Interests of employees
Section 172(1) Statement Engagement with our Stakeholders
Sustainability report
Board leadership and Company purpose
Statement of engagement with employees
Board activity and culture
Board activity throughout the year
Non-nancial information statement
17
30
53
56
54
60
102
S172(1) factors 117 S172(1) (c)
Fostering business relationships with
suppliers, customers and others
Moving our strategy forward
Section 172(1) Statement Engagement with our Stakeholders
Board leadership and Company purpose
Statement of engagement with other business relationships
Non-nancial information statement
16
17
53
57
102
S172(1) factors 117 S172(1) (d)
Impact of operations on the community and
the environment
Moving our strategy forward
Section 172(1) Statement Engagement with our Stakeholders
Board leadership and Company purpose
Non-nancial information statement
16
17
53
102
S172(1) factors 117 S172(1) (e)
Maintaining high standard of business conduct
Moving our strategy forward
Section 172(1) Statement Engagement with our Stakeholders
Board leadership and Company purpose
Non-nancial information statement
16
17
53
102
S172(1) factors 117 S172(1) (f)
Acting fairly between members
Section 172(1) Statement Engagement with our Stakeholders
Division of Responsibilities
17
58
Section 172(1) Statement and Engagement with our Stakeholders
continued
Financial Review
Revenue
Group’s revenue grew 21% to €51.0 million (2021: €42.3
million of which €0.4 million from a business that was
divested at the very end of 2021 and therefore not owned
in 2022). Excluding the divested business revenue from the
comparative gure, our revenue grew 22% this year.
Compared to 2020, which was largely before COVID-19, and
excluding the impact of acquisitions and disposals within
the comparative period, our revenue in 2022 increased by
35% (2020: €32.3 million). This growth rate reects that
we also grew in 2021 despite the fact we did not introduce
major changes to our pricing in 2021, usually an annual
event.
Compared to 2020, which was largely
before COVID-19, and excluding the impact
of acquisitions and disposals within the
comparative period, our revenue in 2022
increased by 35% (2020: €32.3 million).
This growth rate reflects that we also
grew in 2021 despite the fact we did not
introduce major changes to our pricing in
2021, usually an annual event.
Lina Mačienė
CFO
“
Focusing on 2022, most of the percentage increase
represents underlying organic growth in revenue. A small
part of the growth reects some waiving of listing fees to
Real Estate and Auto B2C customers in the H1 prior year,
when the Baltic countries experienced the rst wave of
COVID-19.
Due to the Russian invasion of Ukraine and consequently the
internet population reading the news rather than shopping
online / searching for a property or a car, we estimate that
we lost around 1% of growth this year, which dropped down
to the bottom line as well. This was an immediate and short-
term impact on revenue which bounced back in a few weeks
to pre-war levels and our normal run-rate.
2022 €m 2021 €m 2020 €m
A) Revenue less acquisitions & disposals 43.6 35.3 32.3
B) Revenue from businesses disposed in 2021 - 0.4 0.4
C) Revenue from businesses acquired in 2020 7.4 6.5 1.5
D) Total Revenue 51.0 42.3 34.3
Reported revenue growth in 2022 (D: 2022 vs 2021) 21%
- -
Revenue growth in 2022 excluding the disposed business (A+C:
2022 vs 2021)
22%
- -
2-year revenue growth excluding disposals and acquisitions during
the period (A: 2022 vs 2020)
35%
- -
The main drivers of revenue growth were increases in
the number of advertisers across our business sectors,
an increase in the number of advertisements/active C2C
listings across all our business sectors except Autos, and an
increase in the average spend per customer/advertisement
across all our businesses.
In May 2021, we introduced C2C price changes for most
of our portals, reected in the reported revenue numbers.
In September and October 2021, we introduced B2C price
and package changes for the Real Estate, Auto and Jobs
portals, reecting improvements to our proposition. In April
2022, we introduced C2C price changes in the main portals -
these made a limited contribution to 2022 revenue, with the
full contribution to be seen in 2023.
22
Baltic Classieds Group PLC
Annual Report and Accounts 2022
0
10
20
30
40
50
2022
2021
Auto
+9%
+11%
+17%
+6%
+97%
+21%
+22%
Auto
1
Real
Estate
Generalist
Jobs &
Services
Revenue
Revenue
2
1
Auto (excluding 0.4 million from business divested in 2021)
2
Revenue excluding business divested in 2021
0
50
100
150
200
250
300
2022
2021
Auto
+4%
+1%
+47%
(18%)
+2%
+3%
+8%
+15%
+29%
+40%
+22%
+8%
Auto Auto Auto
Real
Estate
Real
Estate
Real
Estate
Real
Estate
Jobs
1
Generalist
3
Jobs
1
Generalist
3
1
CVbankas.lt only
2
the Group presents the average monthly revenue per active C2C auto listing on the basis of the C2C revenue generated by auto listings only, excluding
any C2C revenue generated from vehicle parts, vehicles other than autos and other C2C listings.
3
Skelbiu.lt only
4
ARPU - monthly average revenue per user (in Auto – per dealer, in Real Estate – per broker, in Jobs & Services – per client)
B2C –
No. of
Dealers
B2C –
No. of
Brokers
B2C –
No. of
Customers
C2C –
No. of
Active
Ads
2
C2C –
No. of
Active
Ads
C2C –
No. of
Listings
B2C –
ARPU
4
(€)
B2C –
ARPU
(€)
B2C –
ARPU
(€)
C2C –
Rev. per
Ad (€)
2
C2C –
Monthly
Rev. per
Ad (€)
C2C –
Revenue
per Listing
(€)
Revenue grew healthily in all four of our business areas.
However, we saw a much wider range of organic growth
(Jobs & Services up 97% down to Generalist up 6%) than
we have seen historically. We believe that this, in large part,
reects the indirect consequences of COVID-19 (e.g. pent
up demand in the employment market, recovering foot
trac to physical stores versus major shift to e-commerce
last year) as seen in many countries.
We are seeing strengthening network effects across all
business units as a growing number of customers drive
content, which in turn encourages greater engagement for
our audience.
In all three business units, the number of B2C customers
has increased:
•
Automotive dealers by 4% (from 3,356 in 2021 to 3,489
in 2022) mainly due to small dealers switching to B2C
subscriptions rather than placing advertisements as if
they were C2C customers.
•
Real Estate brokers by 1% (from 4,809 in 2021 to 4,855
in 2022).
•
Jobs customers by 47% due to signicantly increased
demand by companies for employees in the market
(from 1,521 in 2021 to 2,243 in 2022).
In C2C, a gradual increase in listings is primarily due to
growing activity in the underlying market in Real Estate
and Generalist. In Automotive, the average monthly number
of active advertisements is down 18% primarily due to
shortened selling time (which means each advert is active
for less time) and fewer market transactions than pre-
COVID-19, inuenced by global car shortages.
The majority of our C2C price changes were implemented
in Spring 2021, and our B2C price changes throughout
Autumn 2021.
Organically, excluding the disposed Autoleht revenue
(sold at the end of 2021 and amounting to €0.4 million in
2021), the Auto business line grew 11%. The reported Auto
business line revenue has grown 9% during 2022 (from
€16.8 million in 2021 to €18.3 million in 2022). The Jobs &
Services business line revenue almost doubled - growing
97% (from €5.0 million in 2021 to €9.8 million in 2022). Real
Estate has also contributed a solid growth to Group revenue
– the business line grew 17% (from €10.7 million in 2021 to
€12.5 million in 2022). Generalist revenues grew 6% (from
€9.8 million in 2021 to €10.4 million in 2022).
In terms of ARPU in our B2C segment:
•
Automotive ARPU was up 8% due to price and
packaging changes in September and October 2021.
ARPU growth was somewhat depressed by dealers
reducing package sizes in the context of low inventory
levels and an increased number of smaller dealers. We
expect further upside from the price changes in the
longer-term when inventory levels recover, and dealers
increase their packages.
•
Real Estate ARPU was up 15% partially due to
the discounts in the comparative period, but also
customers beneting from an increased number of
transactions and subscription fee and packaging
changes which took effect from September 2021
to January 2022 and were aimed at both growth
in ARPU and incentivising customers to choose
individual and more premium accounts with brokers.
Baltic Classieds Group PLC
Annual Report and Accounts 2022
23
Financial Review
continued
STRATEGIC REPORT
Baltic Classieds Group PLC
Annual Report and Accounts 2022
24
STRATEGIC REPORT
Aruodas.lt took actions to increase the quality of
the content by reducing the number of duplicate
advertisements which reduced the number of listings
per broker from 15 to 10 in basic and from 25 to 15 in
mid-range packages as well as introducing a new, top
package tier.
•
Jobs and Services ARPU was up 29% due to
increased prices, a higher number of advertisements
per company and intensied usage of value-
added services. Consequently, our jobs portal
CVbankas.lt is almost twice as big revenue-wise than
it was a year ago and, as the market leading job board,
is beneting from favourable underlying market trends
which are driving record job vacancy and employee
search activity. Increased prices were implemented
for new and renewing customers in September 2021
and will continue to be rolled out to all customers over
the next 12 months.
In terms of ARPU in our C2C segment:
•
Automotive average revenue per active advertisement
was up 40% due to price changes and rising average
transaction values (the average car price on our
portals grew 24%).
•
Real Estate average revenue per active advertisement
was up 22% due to price changes and rising average
transaction values (apartment prices per square metre
in Baltic capitals have increased by 10%).
•
Generalist average revenue per listing was up 8%
due to price changes, rising average transaction
values and the introduction of a “two in one” package
allowing listing in both Generalist Skelbiu.lt and
Vertical Autoplius.lt sites in new categories.
Operating costs
Our reported operating costs for 2022 included costs
relating to our IPO in July, namely the direct costs of fees
paid to advisors and the costs of a free share award to
our employees, listed in the Protability and Alternative
Performance Measures section below.
The Group has been operating in a higher ination
environment for quite a few years and recently, ination was
double-digit. However, our costs represent a relatively small
part of the revenue and this did not signicantly affect our
protability. On the contrary, rising real estate, car prices
and average salary are supportive to our revenue growth in
Real Estate, Auto and Jobs & Services.
The majority of our operating costs are people costs. Our
team grew from 124 FTEs in April 2021 to 127 FTEs in April
2022. The total labour costs were €8.9 million and included
€1.4 million free share awards to employees as a one-off.
In line with the intention stated in the Prospectus, after
Admission, the Group gifted, on an unrestricted basis, to all
employees in good standing, free shares (with the number
per employee based on length of service with the business
and ranging between €3 and €15 thousand in value).
Executive Directors and the rest of the Senior Management
team did not receive free shares under this arrangement.
Excluding one-off free share awards, investment into our
1
Leverage is calculated as Net debt over the last twelve months (LTM) of Adjusted EBITDA. The Group’s loan facility includes a Total Leverage Ratio covenant (see note
18 to the consolidated nancial statements).
people increased by 25% to €7.5 million (2021: €6.0 million).
We appreciate and invest in talent, therefore the majority of
the increase in people costs was driven by annual salary
reviews and the cost of a performance share plan (“PSP”)
in the amount of €0.6 million. The cost of the PSP should
continue increasing gradually during the rst three-year
period after the IPO based on the assumption that the PSP
will award a list of employees yearly with three-year nominal
value options. Thereafter, the cost should be relatively
constant.
Other Group costs comprise marketing, IT and general
administrative expenses. At the end of February 2022, we
supported several NGOs assisting Ukraine and Ukrainians
eeing the war in their country by donating €0.2 million.
This has not been treated as an adjusting item.
Net nance expense
BCG started its life as a public company with 2.75x
leverage
1
(as at 30 April 2021 the leverage was 6.04x) and
a signicantly lower effective interest rate on the external
debt compared to previous nancing arrangements. Instead
of a 6% interest rate prior to the IPO, the Group was paying a
2% interest rate from the lower gross debt amount borrowed
at IPO. However, the full effect of the reduced nance cost
was not yet visible this year as net nance costs of €11.2
million in 2022 included:
•
€5.1 million upfront fee that was written off upon
the repayment of the debt under the Senior Facility
Agreement (“SFA”) in July 2021 (as it is related to our
IPO renancing arrangement, we consider it being a
one-off cost item);
•
€1.6 million SFA fee relating to an early repayment
condition (as it is also related to our IPO renancing
arrangement, we consider it being a one-off cost
item); and
•
2-month interest costs relating to our pre-IPO debt
facility.
Tax
The Group tax charge of €0.05 million (2021: €1.9 million)
represented an effective tax rate of 1.9% in 2022 (2021:
105.2%).
Group tax charge is a net of:
•
current tax expense of €3.1 million (2021: €3.5 million);
and
•
change in deferred tax which is positive €3.1 million
(2021: €1.6 million) and includes €1.3 million deferred
tax relating to the upfront fee write-off in the event
of the early debt repayment under the pre-IPO SFA
in July 2021 (as it is related to our IPO renancing
arrangement, we consider it being a one-off item).
Companies under common control in Lithuania intend to
form a tax group to offset the taxable losses to taxable
prots in accordance with prevailing tax regulations,
therefore the current tax expense amount has decreased
this nancial year.
Financial Review
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
25
STRATEGIC REPORT
IFRS
Measures
2022
€m
Adjusted
Measures
2022
€m
IFRS
Measures
2021
€m
Adjusted
Measures
2021
€m
IFRS
Measures
change
€m
Adjusted
Measures
change
€m
IPO related fees - (7.4) - (0.3) - -
Free share awards - (1.4) - - - -
Acquisition related costs - - - (0.1) - -
Amortisation of intangibles arising from
acquisitions (PPA)
- (16.1) - (16.1) - -
IPO renancing: Senior Facility Agreement
(SFA) related early repayment condition
- (1.6) - - - -
IPO renancing: SFA related upfront fee write
off
- (5.1) - - - -
IPO renancing: SFA capitalised upfront fee
related deferred tax liability write off
- 1.3 - - - -
Tax effect on IPO related fees - 0.1 - - - -
Deferred tax effect of amortisation of
intangibles arising from acquisitions
- 1.4 - 1.4 - -
Tax effect of amortisation of intangibles
arising from acquisitions
- (28.8) - (15.1) - -
Total Adjusting Items - (28.8) - (15.0) - -
Revenue 51.0 51.0 42.3 42.3
21% 21%
Net income (prot / (loss) for the period)
2.4 31.2 (0.1) 14.9
n.m. 109%
WANS, million
488.5 488.5 435.3 435.3 - -
EPS, € cents 0.49 6.40 (0.02) 3.43
n.m.
86%
Taxation (0.0) (2.8) (1.9) (3.3) (98%) (15%)
Net nance costs
(11.2) (4.5) (13.9) (13.9) (20%) (68%)
Operating prot
13.6 38.5 15.7 32.2
(13%) 20%
Depreciation and amortisation (16.9) (0.7) (17.0) (0.8) (0%) (9%)
EBITDA 30.5 39.3 32.7 33.0
(7%) 19%
EBITDA margin 59.9% 77.1% 77.3% 78.1%
(17.4% pts) (1.0% pts)
Protability and Alternative
Performance Measures
The Group has identied certain Alternative Performance
Measures (“APMs”) that it believes provide additional useful
information on the performance of the Group.
These APMs are not dened within IFRS and are not
considered to be a substitute for, or superior to, IFRS
measures. These APMs may not be necessarily comparable
to similarly titled measures used by other companies.
Directors use these APMs alongside IFRS measures when
budgeting and planning, and when reviewing business
performance.
Costs arising in connection with the IPO both in 2022
and 2021 have been isolated in recognition of the nature,
infrequency, and materiality of this capital markets
transaction. These comprise IPO related legal and advisory
1
See note 17 to the consolidated nancial statements
fees, free share awards to employees and renancing
related amounts.
For clarity, since the IPO, where share-based payment
charges arise because of the operation of the Group’s post-
IPO Remuneration Policy, such as the PSP plan, these are
not treated as adjusting items and the cost is deducted
from the APMs dened below. Other adjusting items in 2021
are associated with M&A transactions. They are material,
non-recurring and outside the ordinary course of business.
As detailed at the IPO, BCG intends to return one third of
adjusted net income
1
(dened as the prot / (loss) for the
period adjusted for the post-tax impact of the IPO costs,
IPO renancing arrangement related nance and tax items,
M&A costs and the post-tax impact of the amortisation
of intangibles arising from acquisitions) each year via
an interim and nal dividend. For this purpose, we show
amortisation of acquired intangibles and the tax effect on
it together with the adjusting items in the following table.
Financial Review
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
26
STRATEGIC REPORT
€m
30 April
2022,
€m
30 April
2021,
€m
Bank Loan principal amount
84.0 214.3
Customer credit balances 2.3 2.2
Total debt 86.3 216.5
Cash 19.9 17.1
Net debt 66.4 199.4
Adjusted EBITDA LTM
39.3 33.0
Leverage 1.7x 6.0x
1
See note 6 to the consolidated nancial statements
2
Capex refers to acquisition of intangible assets and property, plant and equipment line information in the Consolidated statement of cash ows
3
Net debt is calculated as total debt (bank loans and Osta.ee customer credit balances) less cash.
Adjusted net income grew 109% and reached €31.2 million
(€14.9 million in 2021). Despite IPO related costs, reported
net income grew to €2.4 million (€(0.1) million in 2021)
mainly due to arranged renancing at IPO and therefore
signicantly lower effective interest rate on the external
debt compared to previous nancing arrangements.
Adjusted operating prot grew 20% to €38.5 million (€32.2
million in 2021) and reported operating prot decreased
13% to €13.6 million reecting IPO related fees in the year
2022 (€15.7 million in 2021). Operating prot and adjusted
operating prot is used to review business performance.
Adjusted operating prot is calculated by reference to
the prot / (loss) for the period and adjusting this to add
back income tax expense, net nance costs, IPO costs, IPO
renancing arrangement related nance and tax items, M&A
costs and acquired intangibles amortisation.
EBITDA is calculated by reference to the prot / (loss) for the
period and adjusting this to add back income tax expense,
net nance costs, depreciation and amortisation. Reported
EBITDA includes all IPO related fees, free share awards and
renancing costs.
Adjusted EBITDA
1
grew 19% to €39.3 million (€33.0 million
in 2021) and is calculated by reference to EBITDA for the
period and adjusting this for the costs related to IPO,
acquisitions and disposals in the period and one-off costs
that do not reect the underlying operations of the business
(but including ongoing operating costs of being a public
company). Management uses this measure to monitor
compliance with the Group’s nancial covenant and the
leverage as per the loan agreement, which is described in
note 18 to the consolidated nancial statements.
Adjusted EBITDA margin, which is calculated by dividing
adjusted EBITDA for the period by revenue for the period,
was 77% despite additional public listed company related
costs and our support to NGOs. We estimate that we lost
around 1% of EBITDA margin due to the invasion. Adjusted
EBITDA margin in 2021 was 78%.
Earnings per Share (“EPS”)
Basic EPS for 2022 was 0.49 € cents based on the WANS
during 2022 of 488,467,552. ((0.02) € cents for 2021 based
on WANS of 435,265,078).
Adjusted basic EPS is adjusted for the same items that are
used to adjust the Adjusted Net Income. Adjusted basic
EPS for the year 2022 was 6.40 € cents (3.43 € cents for
2021).
There is no dilution effect from the employee share
arrangements this year.
Cash ow and cash conversion
Reported cash generated from operating activities grew
from €33.1 million in 2021 to €34.1 million in 2022,
calculated after consideration of €6.4 million of IPO fees
paid during the year. If adjusted for, cash generated from
operating activities grew 22% to €40.5 million, prior to
deducting IPO fees payments.
Generated cash was used to reduce the loan liability by
partially paying down the debt. We also bought 2.1 million
of Company shares (paying €3.4 million) to the Employee
Benet Trust (“EBT”) for future employee awards (the
number of options granted in our rst year was 1.0 million
shares).
During 2022, in addition to ongoing capital expenditure
requirements, we have set up a new infrastructure to
accommodate a disaster recovery site for our Estonian and
Latvian sites. Our Cash conversion (calculated as adjusted
EBITDA minus Capex
2
(of €0,4 million) divided by adjusted
EBITDA) was at 98.9% (99.8% in 2021).
Net debt and leverage
External renancing was arranged on IPO, reducing the
Group’s external loan from €214.3 million to €98 million.
Since then, €14 million of the existing debt has been
voluntarily repaid. Compared to the end of 2021, net debt
3
was reduced by €133.0 million to €66.4 million (as at 30
April 2021: €199.4 million) with leverage at 1.7x (as at 30
April 2021: 6.0x).
Financial Review
continued
Capital allocation
We intend to use all the cash we generate in a year, within
that same year or shortly thereafter for the below:
•
As detailed at the IPO, after the rst year as a public
company, BCG intends to return one third of adjusted
net income each year via an interim and nal
dividend, split approximately one third and two thirds,
respectively. The Board proposed a nal dividend, with
such dividend expected to be paid on 14 October 2022
subject to nal shareholder approval at the AGM.
•
We will continue to consider value-creating M&A
opportunities. All options for nancing attractive
acquisition opportunities remain open, including using
cash, increasing our debt and even seeking additional
equity capital. However, using cash is the preferred
option and this would most likely not affect dividends
but might reduce capacity for share buy-backs.
•
Because our leverage is already below 2.0x and we do
not have any particular target level of debt, we intend
using a combination of share buy-backs and debt
repayment from the balance of cash.
We also intend to keep our capital policy under review and
may revise it from time to time.
Going concern
The Group generated signicant cash from operations
during the period. As at 30 April 2022 the Group had drawn
none of the €10 million unsecured Revolving Credit Facility
(“RCF”) and had cash balances of €19.9 million. The €10
million RCF is committed until July 2026.
Lina Mačienė
Chief Financial Ofcer
6 July 2022
27
Baltic Classieds Group PLC
Annual Report and Accounts 2022
Financial Review
continued
Our rst successful year as a public company listed on
the London Stock Exchange has passed. The Initial Public
Offering (“IPO”) brought new challenges and experiences in
the elds of investor relations, legal and nance, but BCG’s
business operations have remained the same as before,
that is to say: entrepreneurial, agile and pragmatic. At BCG
we continued to operate our business mostly remotely
throughout the period due to the COVID-19 pandemic
restrictions. We were able to do this successfully as
our technology enables our people to work remotely as
smoothly and productively as if they were working in the
oce.
This is the second year where industries have been
operating in a pandemic environment. Businesses have
adapted to a restrictive environment, learned how to
successfully continue their activities and customers have
become used to pandemic safety measures and have
importantly regained their consumer condence. During
this time, we have continued supporting industries by
continuously developing products and features in all of our
business lines.
Let’s take a brief look at key product developments in 2022
business line by business line:
Automotive
We have introduced a car price analysis tool on
Autoplius.lt. This system utilises archived data to indicate
the average price and selling duration for specic cars. We
also introduced webinars for dealers, focusing primarily
on improving client experience. This helps to strengthen
relationships with our customers as well as creating a
better car buyer’s experience which has a positive indirect
effect on our marketplace.
We improved our B2C offering on Autoplius.lt by introducing
two tiers of packages instead of one. In the rst package
there are features such as dealership branding, a price
analysis tool, ads export to the horizontal marketplace and
a map. The second package, which is more expensive, is
designed for premium clients who want maximum exposure
and the biggest number of leads. This package includes all
the features of the rst package plus a bump up for ads and
an enhanced listing view.
On Auto24.ee we expanded our offering of car nancing
products. In collaboration with our nancing services partner
we now offer a full-service car rental for new vehicles. This
is a very convenient product for customers who are looking
for a new car but do not want to worry about maintenance
of the vehicle. The car leasing product has been upgraded
by lifting the price threshold to €40,000. This step has
broadened the addressable market, particularly given the
trend of growing car prices in the market.
For business customers, we replaced an existing third
Auto24.ee service package with an upgraded one. Similarly
to Autoplius.lt this is the most expensive and the most
effective package.
Real Estate
We introduced a secure 2FA login to B2C clients’ accounts
on Aruodas.lt and KV.ee. This increases the security of user
accounts and the quality of listings. In addition, we have
implemented virtual telephone numbers for C2C clients on
Aruodas.lt. Virtual numbers provide C2C customers with
more security in a sense that they prevent fraudster attacks
as actual phone numbers of C2C customers are not visible
but calls from virtual numbers get forwarded to actual
phone numbers. This has initially been rolled out to a limited
number of customers in order to gain important feedback
and streamline the technology before launching it at a full
scale. The Virtual numbers project strongly contributes
to the privacy of personal data and the marketing of our
service.
We added a third B2C package on top of the existing two
in Aruodas.lt. The third package is optimised for premium
brokers who have the biggest number of properties and
seek the best branding and maximum exposure of their ads.
In the Estonian market we also introduced premium
Operational Review
During this time, we have continued
supporting industries by continuously
developing products and features in
all of our business lines.
Simonas Orkinas
COO
“
28
Baltic Classieds Group PLC
Annual Report and Accounts 2022
packages. Instead of two, we now offer four options on
KV.ee. Both the third and the fourth are premium packages,
but the fourth includes listing on two property platforms
(KV.ee and City24.ee) at once. It helps to attract customers
to list on both our Real Estate portals in a very convenient
way, providing the best service whilst providing a maximum
number of leads.
Jobs and Services
As the competition for talent intensies, we developed
a new value added service - a tool for employers which
helps attract more applicants on CVbankas.lt. Employers
can increase the exposure of their listings by reaching a
target audience of job seekers. In addition, we implemented
automatic translation of the portal’s content to make it
more attractive to foreign job seekers. A price list review
was implemented, and as a result, prices increased by 15-
25%. At the same time, more than ten integrations with
applicant tracking systems were made to onboard big
clients on CVbankas.lt.
Generalist
The delivery product received a signicant upgrade on
Skelbiu.lt. A bulk shipping feature has been implemented
making it more convenient to ship several parcels at
the same time. We also made important changes on
the platform to increase the level of privacy and fraud
prevention. Sellers’ contact details are now securely hidden
behind the registration wall.
Aside from all the consumer facing developments,
substantial progress has been made ‘under the hood’.
In 2022 we signicantly improved cybersecurity by
implementing DDOS protection and bot management
systems, migrated all services to a new infrastructure and
set up a new infrastructure to accommodate a disaster
recovery site.
Simonas Orkinas
Chief Operating Ofcer
6 July 2022
29
Baltic Classieds Group PLC
Annual Report and Accounts 2022
Operational Review
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
30
STRATEGIC REPORT
Sustainability Report
The Group is committed to being a responsible business and
our priority is to protect our people, support our customers
and Stakeholders and continue to protect the environment
around us.
Our Environmental, Social and Governance (“ESG”) strategy
can be split into two main components:
•
being a sustainable business by limiting our impact
on the environment, providing a secure and diverse
workplace for our employees and ensuring strong
governance; and
•
helping customers to make more sustainable choices
and encouraging a circular economy through four of
our business lines: Real Estate, Auto, Generalist and
Jobs and Services.
Alignment with wider global goals
The Sustainable Development Goals (“SDGs”), also known as the Global Goals, were adopted by the United Nations in 2015 as
a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity. Our
approach to responsible business aligns quite naturally with the goals and we have identied ve that are most material to our
business and where we contribute the most.
The Board has reviewed and approved BCG’s ESG strategy.
To ensure we follow and continue to evolve our strategy and
make progress towards our goals, this year we established
an ESG working group which consists of the CEO, the COO
and is chaired by the CFO. The Chair serves as a sponsor
to the ESG working Group and is actively involved in its
activities. The Board fully supports the initiatives of the
ESG working group and gives Board level oversight on
environmental, social and governance issues to look over
our progress in fullling our ESG goals. For more information
on the ESG working group, see the TCFD Report on page 31.
Many of the Group’s portals, by their
nature, play a key part in facilitating
the circular economy, in promoting
the reuse and repair of unwanted
assets, whether they be vehicles
or vehicle parts traded through our
Automotive portals, or used goods
traded through our Generalist
portals.
We are highly focused to provide
a safe, happy and supportive
working environment. The Group
seeks to treat all of its employees
equally, regardless of gender, age,
disability, health, nationality, ethnic
origin, religion, political belief,
gender identity, family status or
lifestyle, including when evaluating
performance and making hiring and
promotion decisions.
We run our business in a responsible manner and being trustworthy is one of our
top priorities. We are committed to preventing slavery and human tracking,
we require the highest standards of honesty and integrity in all our business
relationships, and we are committed to supporting human rights through our
compliance with national laws and internal policies.
▸
See more on the policies and processes relating to these in our Non-
Financial information statement on page 102.
We seek to minimise the
environmental impact of our
business activities, including in
relation to the recycling of paper
and plastic, and extensive use of
digital documentation, including
e-signatures and e-contracts to
reduce paper usage.
We believe in the power of diversity
to establish a creative workplace.
The Group actively supports women
choosing careers in the technology
industry. As of 30 April 2022, 51% of
employees were female.
▸
For more information on the
gender of our Board, Senior
Management and workforce
see page 63.
Gender
equality
Climate
action
Decent work and
economic growth
Peace, justice, and a
strong institution
Responsible
consumption and
production
Baltic Classieds Group PLC
Annual Report and Accounts 2022
31
STRATEGIC REPORT
The Task Force for Climate-Related Financial Disclosure
(“TCFD”) Report
TCFD compliance statement
We are pleased to conrm that we have included in our TCFD
Report, the material climate-related nancial disclosures
that are consistent with the four overarching thematic
recommendations, supported by the 11 recommended
disclosures. (Further to the TCFD additional guidance
“Implementing the Recommendations of the Task Force on
Climate-related Financial Disclosures” (2021 TCFD Annex)
which was released in October 2021.)
Our focus in the coming years will be to strengthen our
environmental target setting. We are planning to start work
on setting specic targets to reduce our carbon footprint.
Meanwhile, we will continue to contribute to environmental
sustainability by offsetting our carbon emissions.
The following table shows where recommended TCFD
disclosures can be found:
TCFD recommended disclosure Compliance
Governance
1.
Describe the board’s oversight of climate-related risks
and opportunities
2.
Describe management’s role in assessing and managing
climate-related risks and opportunities
The Board’s oversight of climate-related risks and
opportunities and Management’s role in assessing and
managing climate-related risks and opportunities are
described in the Governance section of this TCFD Report.
Strategy
3.
Describe the climate-related risks and opportunities the
organisation has identied over the short, medium and
long-term
4.
Describe the impact of climate-related risks and
opportunities on the organisation’s businesses, strategy
and nancial planning
5.
Describe the resilience of the organisation’s strategy,
taking into consideration different climate scenarios
The material climate-related risks and opportunities and the
impact they may have on the Group have been identied and
are disclosed in the Strategy section of this TCFD Report.
The climate-related risks and opportunities were stress-
tested in three different climate scenarios and the resilience
of our strategy are described in the Strategy section of this
Report.
Risk Management
6.
Describe the organisation’s processes for identifying
and assessing climate-related risks
7.
Describe the organisation’s processes for managing
climate-related risks
8.
Describe how processes for identifying, assessing and
managing climate-related risks are integrated into the
organisation’s overall risk management
The Group’s processes for identifying, assessing and
managing climate-related risks are described in the Risk
management section of this TCFD Report.
Climate-related risks are captured and documented in a Risk
Register in the same manner other risks are documented.
This process is described in the Risk management section
of this Report and the Risk management section in the
Strategic Report.
Metrics and Targets
9.
Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with its
strategy and risk management process
10.
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3
greenhouse gas (“GHG”) emissions, and the related risks
11.
Describe the targets used by the organisation to manage
climate-related risks and opportunities and performance
against targets
Our carbon neutrality and net zero goals are described in the
Climate-related Targets section of this TCFD Report.
Scope 1 and 2 greenhouse gas (“GHG”) emissions, energy
consumption, water consumption and information on
electricity are disclosed in the Energy and Greenhouse Gas
Report.
Sustainability Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
32
STRATEGIC REPORT
Governance
Board oversight and Management’s role.
The Board has overall responsibility for the Group’s
preparedness for adapting to climate change. To ensure
the Board has sucient oversight of BCG’s sustainable
business strategy and performance, including climate-
related targets, the Board has assigned climate-related
responsibilities to the ESG working group.
The ESG working group was established in January 2022
and consists of the CEO, the COO, the CFO and the Chair
as a sponsor. The CFO leads the ESG working group and
has overall accountability for climate change action. During
the Board meetings, the Board is updated on climate-related
risks and opportunities, environmental metrics, including
Company’s carbon footprint, environmental reporting
obligations and progress towards our climate-related goals.
During 2022, the ESG working group organised a discussion
with Senior Management to identify and assess climate-
related risk and opportunities and the owners of the risks
and mitigations strategies, which were documented in the
ESG Risk Register. Portal managers as risk owners, are
responsible for assessing and managing climate-related
risks for their respective business areas. They follow and
prepare for new environmental regulations, changing
market tendencies and increasing customer environmental
awareness. The ESG working group is responsible for
assessing and managing climate-related risks that are
general to the Group and monitoring emerging regulatory
requirements.
Climate-related areas which have been discussed by the
ESG working group during the year included:
•
governance and strategy around climate-related
issues;
•
climate-related risk management;
•
impact on the environment by the Group;
•
climate-related target setting; and
•
environmental reporting.
Areas of focus for the ESG working group in the next
nancial year will be:
•
working on environmental target setting;
•
tracking the environmental impact by the Group,
including carbon emissions; and
•
continuous to monitoring and analysis of climate-
related risks and opportunities.
During Board meetings, Board members receive updates on
the topics discussed during ESG working group meetings.
During the year ended 30 April 2022, the Board was regularly
updated on climate-related issues facing the Group,
including the areas covered in the ESG group meetings. The
aforementioned topics were discussed in the February 2022
and March 2022 Board meetings.
In addition, at the April 2022 Board meeting, the Board
reviewed and approved changes to the Risk Register
relating to climate issues.
Because of the business specics, during the nancial year
there were no other material changes to business activities
nor additional expenditure, acquisitions or divestitures
budgeted for the next year, in relation to the Company’s
strategy regarding climate issues.
Strategy
Climate-related risks and opportunities.
Due to BCG’s Business Model, the Group operates in a low-
carbon environment, where the environmental impact of
the Group is low. However, the accelerating climate change
may have an impact on BCG’s business. The Group have
identied the physical and transition risks as well as climate-
related opportunities that may arise in the future. Physical
risks resulting from climate change can be event driven or
longer-term shifts in climate patterns. Transitioning to a
lower-carbon economy may entail extensive policy, legal,
technology, and market changes to address mitigation and
adaptation requirements related to climate change.
The Group considered climate-related physical and
transitional risks and opportunities that could potentially
arise during three different time horizons:
•
short term (now-2025)
•
medium term (2026-2035)
•
long term (2036-2050)
The Group also considered the risks and opportunities by
the four main business lines:
•
Real Estate
•
Automotive
•
Generalist
•
Jobs and Services
Senior Management also discussed the potential impact
of the identied climate-related risks and opportunities
in relation to nancial planning, business and strategy,
including impact on products and services, supply chain,
adaptation to climate change and the Group’s operations.
See the following tables where we discuss: physical risks,
transition risks, opportunities; and time horizons in which
they are most likely to arise.
Sustainability Report
continued
Baltic Classieds Group PLC
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33
STRATEGIC REPORT
Physical risks
Increased severity of extreme
weather events
Increased severity of extreme weather events due to accelerating global warming
may disrupt commercial customers' behaviour, affect the availability of websites
and result in disruption to the provision of services from our service providers. These
consequences may lead to a decrease in revenue.
All business lines
Rising mean temperatures
Rising mean temperatures may result in heatwaves, which would increase cooling
costs in oces and data centres.
All business lines
Extreme variability in weather
patterns
Increases in extreme winter weather would increase heating costs in oces.
All business lines
Specic risk
Description of risk and its impact
Business line
impacted and
Time horizon
Transitional risks
Opportunities
Internal combustion engine
vehicles ban
A ban on internal combustion engine vehicles in the Baltics may lead to reduced
volume of ads, which would result in lower revenue of the Auto segment. Currently,
there are no regulations regarding the banning of internal combustion engine vehicles
in the Baltics.
Auto
Higher taxation on transactions
of internal combustion engine
vehicles
Increasing the current taxation on transactions of internal combustion engine vehicles
may reduce the volume of adverts, which would result in lower revenue of the Auto
segment.
Auto
Consumers switching to
electric vehicles
If consumers shift to electric vehicles, we will have to tailor our business by adding
additional lters and features to improve the search and sales of electric vehicles.
Auto
Energy Performance
Certicate becomes
mandatory in ads
If Energy Performance Certicates become mandatory, we will have to add additional
lters in our Real Estate portals.
Real Estate
Consumers shifting to
sustainable real estate
If consumers shift to sustainable real estate, we may have to adjust to the market and
add additional lters relating to the environmental sustainability of real estate.
Real Estate
Property detail reporting
becomes more onerous for
non-professionals/privates
If property detail reporting becomes more onerous for non-professionals/privates
due to increasing environmental regulations, the volume of ads from privates may
decrease, leading to a decrease in revenue of the Real Estate segment.
Real Estate
New regulations reduce stock
on the market
If stock is reduced on the market due to increasing environmental regulations, the
volume of transactions and ads will decrease, leading to a decrease in revenue of the
Real Estate segment.
Real Estate
Opening of new market
segments, such as advertising
EV charging infrastructure
Increasing environmental regulations and awareness may create new market
segments, such as electric vehicle charging infrastructure. This would allow us to
develop and launch services in the Auto segment, for instance, integrating charging
station offerings into electric vehicle ads, which may result in higher revenue.
Auto
Introduction of yearly internal
combustion engine vehicle
ownership tax
While increasing the current taxation on transactions of internal combustion engine
vehicles may reduce the volume of ads, the introduction of yearly internal combustion
engine vehicle ownership tax may lead to higher volumes of ads of more polluting
vehicles. This would increase revenue in the Auto segment.
Auto
New environmental regulations
reduce mortgage availability
Reduced mortgage availability due to environmental regulations may decrease the
number of transactions and increase the length of ads being advertised, leading to
higher revenue in the Real Estate segment.
Real Estate
Increased cost of materials
Climate change and environmental regulations may result in increasing raw material
prices. Increased prices in the primary market may increase the secondary market and
increase the number of ads and revenue in Generalist portals.
Generalist
Increased climate awareness
Increased climate awareness and people shifting to a circular economy may increase
the secondary market and increase the number of ads and revenue in Generalist
portals.
Generalist
Fullling environmental
reporting and sustainability
goals
Achieving our climate-related goals and being an environmentally responsible business
may lead to enhanced reputation with Shareholders, customers and investors and an
increase in share price and revenue. Improved investor relations may also result in
higher availability and lower cost of capital.
All business lines
Short term Medium term
Long term
Sustainability Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
34
STRATEGIC REPORT
Climate scenarios
After the climate-related risks and opportunities were
identied and assessed, the most signicant risks and
opportunities were stress-tested in the selected three
climate scenarios based on assumptions of NGFS (Network
for Greening the Financial System) climate scenarios:
Orderly:
this scenario assumes early, ambitious action to a
net zero CO
2
emissions economy.
The nancial impact on the Group’s nancial planning was assessed by the Senior Management based on the Group’s past
experience. The nancial impact is summarised in the following table:
Immaterial nancial impact Low nancial impact Medium nancial impact High nancial impact
Disorderly:
this scenario assumes action that is late,
disruptive, sudden and/or unanticipated.
Hot house world:
this scenario assumes limited action leads
to a hot house world with signicant global warming and, as
a result, strongly increased exposure to physical risks.
The assumptions of the scenarios are summarised in the
following table:
Scenario 1
"Orderly"
Scenario 2
"Disorderly"
Scenario 3
"Hot house world"
Policy action
Early policy action
Late policy action (from 2030)
No policy action
Transition
Smooth transition Disruptive transition
Business as usual
Time horizons
Now-2025 2026-2035
2036-2050
Temperature
Global temperatures increase
to between 1.5-2 degrees
above pre-industrial levels
Global temperatures increase
to between 1.5-2 degrees
above pre-industrial levels
Global temperatures increase
to over 3 degrees above pre-
industrial levels
Sea level rise
Low Low
High
Risks
Low physical and transition
risks
Higher transition risk
Higher physical risks
Estimated carbon
prices
Estimated range – $135-
$5,550 USD/tCO
2
e in 2030,
$245-$13,000 USD/tCO
2
e in
2050 (IPCC SR1.5)
Estimated range – $135-
$5,550 USD/tCO
2
e in 2030,
$245-$13,000 USD/tCO
2
e in
2050 (IPCC SR1.5)
Estimated range – $10-$200
USD/tCO
2
e in 2030, $45-$960
USD/tCO
2
e in 2050 (IPCC
SR1.5)
Type of risk /
opportunity
Specic risk / opportunity
Scenario 1
"Orderly"
Now-2025
Scenario 2
"Disorderly"
2026-2035
Scenario 3
"Hot house
world"
2036-2050
Physical risks
Changing weather patterns and increased severity of extreme weather
events
Transitional
risks
Internal combustion engine vehicles ban
Higher taxation on transactions of internal combustion engine vehicles
Property detail reporting becomes more onerous for non-
professionals/privates
New regulations reduce stock on the market
Opportunities
Opening of new market segments, such as advertising EV charging
infrastructure
Introduction of yearly internal combustion engine vehicle ownership
tax
New environmental regulations reduce mortgage availability
Increased cost of materials
Increased climate awareness
Fullling environmental reporting and sustainability goals
Sustainability Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
35
STRATEGIC REPORT
Management has considered the risks and nancial impact
assessment and concluded that the nancial impact
of climate-related risks on the Group’s operations are
immaterial or low (<1% of annual revenue) in scenarios
“Orderly” and “Disorderly”. Under the scenario “Hot house
world”, physical risks could have a medium nancial impact.
Given the “Hot house world” scenario assumptions,
Management believes that increased severity of extreme
weather events due to accelerating global warming may
have a medium nancial impact on capital expenditures,
operating costs and revenues:
•
extreme weather events may cause oodings in
the areas of our data centres, that would disrupt
the operation of our servers and temporarily affect
revenues, operating costs and capital expenditures;
•
extreme weather events may disrupt the internet
connection and temporarily affect the availability of
our websites, leading to nancial impact on revenues;
and
•
extreme weather events may temporarily impact
commercial customers’ behaviour during such events,
leading to fewer new ads on our websites and a
decrease in revenue.
Management has considered the potential impact on
nancial planning that may arise in the future. For the next
nancial year, Management does not foresee any material
impact on the nancial planning that may arise from
climate-related issues.
Given the uncertainty of the transition to a low-carbon
economy and the temperature increase limits achieved,
the results of the scenario analysis, enable us to better
understand and build resilience to prepare for the potential
worst case impacts of climate change. From our analysis
we know that transition risks could potentially be most
signicant under Scenario 1 “Orderly” and Scenario 2
”Disorderly” though there are differences in their timings and
materiality of nancial impacts. On the other hand, Scenario
3 “Hot house world” could have the biggest nancial impact
due to the physical climate-related risks. To ensure we are
building long-term resilience as a business, we will use the
outputs of this phase of the TCFD programme to improve
our strategies and decision making.
The ESG working group will continue to monitor and analyse
climate-related risks with the oversight of the Board.
Risk management
The Board has overall responsibility for risk management
and the ESG working group is responsible for identifying,
analysing and agreeing the mitigation, transfer, acceptance
or control of climate-related risks.
We continually mature our capacity and capability to
manage risk and uncertainty to build and maintain long-term
resilience. Climate-related risks are identied, assessed and
managed according to our Risk Management framework
(page 41). Risks are assessed based on their likelihood and
potential impact with the combination of the two measures
dening the overall score of each risk so they can be rated.
Climate-related risks are captured and documented in a
Risk Register, identifying the risk category, the likelihood
of the risk occurring, the impact if it does occur, a specic
owner for each risk, the risk trend and the mitigation plan
for each risk.
During 2022, an ESG risk register was prepared to
identify and routinely assess climate-related risks and
opportunities. These risks and opportunities are disclosed
in the Strategy section of this report. Each member of the
Senior Management has endorsed the risk management
framework and, as risk owners, are responsible for
assessing and managing climate-related risks for their
respective business areas. The ESG working group is
responsible for assessing and managing climate-related
risks that are general to the Group and monitoring emerging
regulatory requirements.
Metrics and targets
Our goal is to be carbon neutral.
We recognise the seriousness of the climate crisis. For this
reason we set a goal to be carbon neutral and achieved it
for our 2022 emissions by offsetting our carbon footprint
through UNFCCC-certied climate friendly projects that
reduce, avoid or remove greenhouse gas emissions from
the atmosphere.
In collaboration with the United Nation Carbon offset
platform, we offset 200 tCO2e to neutralise our 2022 carbon
footprint, including our Scope 1, Scope 2 and additional 5%
of our total emissions. To achieve carbon neutrality we have
funded two renewable energy related emission reduction
projects: a hydroelectric plant in Chile and a wind power
project in India.
Our goal to be carbon net zero by 2050
We are at the start of our carbon net zero journey, and we
are committed to accelerating the transformative change
needed to reach global net zero greenhouse gas (“GHG”)
emissions by 2050 or earlier in accordance with the Paris
Agreement.
We know that it will take time to create a specic roadmap
towards our net zero target and reduce our emissions. In
the coming years we are planning to start work on setting
specic targets in our net zero journey. Meanwhile, we will
continue to contribute to environmental sustainability by
offsetting our carbon emissions.
While the environmental goal setting is still in process,
climate-related performance metrics have not been
incorporated into our remuneration policies yet.
Next steps in our TCFD journey
During the following year, we will be focusing on:
•
an analysis and update of current disclosures against
the TCFD requirements;
•
a review of the effectiveness of the current systems
of internal control and risk management for climate-
related risks; and
•
evolving our environmental sustainability goals.
Sustainability Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
36
STRATEGIC REPORT
Energy and Greenhouse Gas Report
We recognise that businesses have a responsibility to protect the environment and understand the impact their operations have.
In order to better evaluate the impact our Company has on the environment we have started reporting GHG emissions.
The following table summarises the Group’s GHG emissions for this nancial year.
2022
1
Scope 1 direct emissions
Combustion of fuel and operation of facilities
48.6 Tonnes CO
2
e
Scope 2 indirect emissions
2
Purchased electricity, heating and cooling
(location-based)
324.3 Tonnes CO
2
e
Purchased electricity, heat and cooling
(market-based)
141.7 Tonnes CO
2
e
Scope 1 & 2 total CO
2
e (location-based)
372.9 Tonnes CO
2
e
Scope 1 & 2 total CO
2
e (market-based)
190.3 Tonnes CO
2
e
CO
2
e per employee
3
(location based)
3.0 Tonnes CO
2
e
CO
2
e per million revenue
4
(location-based)
7.3 Tonnes CO
2
e
CO
2
e per employee
3
(market-based)
1.5 Tonnes CO
2
e
CO
2
e per million revenue
4
(market-based)
3.7 Tonnes CO
2
e
Global energy consumption
692.8 MWh
1
All emissions incurred by the Group were Global, there were no emissions incurred in the UK.
2
Including the electricity of Scope 2 data centres.
3
Carbon emissions divided by average number of FTE employees during the year - 126.
4
Carbon emissions divided by revenue in millions - €51 million.
Methodologies
The calculations of GHG emissions align with the UK
Government’s ‘Environmental Reporting Guidelines:
Including Streamlined Energy and Carbon Reporting
Guidance’. The GHG reporting period is aligned to this
nancial reporting year. The methodology used to calculate
emissions is based on the nancial consolidation approach,
as dened in the Greenhouse Gas Protocol, A Corporate
Accounting and Reporting Standard.
Direct emission data have been converted into CO2
equivalent using 2021 emission conversion factors
published by the Department for Environment, Food and
Rural Affairs (Defra) and the Department for Business,
Energy & Industrial Strategy (BEIS). Indirect location-
based electricity emissions data was converted into CO2
equivalent using conversion factors published by The
Joint Research Centre (JRC) - the European Commission’s
science and knowledge service (v. 2018). Indirect market-
based electricity emissions data was converted into CO2
equivalent using European Residual Mixes 2018 published
by Association of Issuing Bodies.
Scope 1
Scope 1 emissions cover natural gas combustion within
boilers and road fuel combustion within owned/leased
vehicles across all the Group companies. During 2022, we
reported road fuel combustion from 11 Company owned/
leased vehicles.
Scope 2
Scope 2 emissions cover purchased electricity, heat and
cooling for own use across all the Group oces located in
Vilnius, Tallinn, Tartu and Riga, as well as electricity from
data centres falling under Scope 2. In accordance with the
UK Government’s ‘Environmental Reporting Guidelines:
Including Streamlined Energy and Carbon Reporting
Guidance’, location-based and market-based methods for
purchased electricity emission were used. All electricity,
heat and cooling purchased was outside of the UK:
Lithuania, Latvia, Estonia, Poland.
Intensity ratio
Emissions have also been calculated using an ‘intensity
metric’, which will enable the Group to monitor how well we
are controlling emissions on an annual basis, independent
of uctuations in the levels of their activity. In respect of
Scope 1 and 2, our use of energy is driven by our people
and therefore the most suitable metric is ‘Emissions per
employee’, based on the average number of employees
during the year. The emissions have also been calculated
in relation to our turnover – ‘Emissions per million revenue’,
which determines cost eciency based on comparing
carbon emissions to overall business revenue.
Sustainability Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
37
STRATEGIC REPORT
Helping customers to make more sustainable choices
We are proud that many of the Group’s portals, by their
nature, play a key part in facilitating the circular economy,
in promoting the reuse and repair of unwanted assets,
whether they be vehicles or vehicle parts traded through
our Automotive portals, or used goods traded through our
Generalist portals. As such they provide a channel of green
commerce to divert secondary goods from landll, recycling
or disuse, and allow increasingly environmentally conscious
consumers and businesses to reduce their environmental
impact. In addition, the online nature of the transactions
facilitated by the Group, and in particular the Jobs and
Services portal that connects local workers and service
providers with those in need of their services, all help to
minimise GHG emissions related to unnecessary travel.
Real Estate
Residential real estate represents an important sector in
the Baltics, which has some of the highest home ownership
rates in Europe. The Group’s Real Estate online classieds
portals play a key role in the Baltic property market, which
allows us to make a signicant environmental contribution
to the real estate sector. Our Real Estate platforms help to
reduce unnecessary travel to visit estate agents’ oces
and unsuitable properties by allowing our customers to
upload high quality photographs, video tours, oor plans
and property descriptions online. In addition, we constantly
develop new tools on our platforms to help customers save
time and resources.
Currently, various features are integrated in the ads so
that customers can save their resources and help the
environment. In order to save time and unnecessary travel,
the ads feature the possibility to check a location on the
map, giving both a route and street view option. In addition,
our customers are able to deliver 3D tours and videos to
home hunters, reducing the number of in-person viewings
and travel emissions.
In order to provide more environmental information, some of
our Real Estate portals have introduced a feature enabling
home hunters to view average heating prices in a specic
building, along with energy class and air quality, including
data about ambient air pollutants, Nitrogen dioxide (NO
2
)
and Coarse Particulate Matter (PM
10
).
Automotive
Promoting new technologies that help the environment and
introducing cleaner, more ecient fuel types is an important
issue for us. Our Auto portals have taken steps to make it
easier for car buyers to search for more environmentally
friendly vehicles. We introduced lters for fuel type,
including EV, Plug-in and Hybrids, as well as EV specic
features, including battery capacity, pollution fees, EC range,
CO
2
emissions. In addition, we publish an article series for
consumers relating to EV’s and videos about available EV’s.
Generalist
Our online classieds and marketplace portals not only
provide one of the most effective channels for people to
market and discover products and services across the
Baltics, but also helps our customers to make a choice that
helps the environment. Buying pre-owned items instead
of something new, whether it is a bicycle or a laptop,
on our Generalist portals means less items need to be
manufactured and less items are destined for landll. All of
this promotes a circular economy and translates to savings
in GHG emissions and less wasted materials.
Jobs and Services
The Group’s Jobs and Services portals also allow customers
to make more sustainable choices by nding a service
they need online. Our Jobs portal connects job seekers
with recruiters online and Service portals connect local
workers and service providers with those in need of their
services. This helps to minimise GHG emissions related to
unnecessary travel. The Jobs portals also allow job seekers
to better identify jobs with a possibility of remote interview
and encourages recruiters to organise such interviews by
adding a remote interview tag on the ad.
Electricity consumption
The total electricity consumption for 2022, for Scope 2 was
333.7 MWh. In 2022, we had no energy supply agreements
for which we were directly responsible. However, we
contacted our service providers and reviewed the details
of the electricity supply we report under Scope 2. We
established that 34% of electricity consumed by the Group
in 2022 was from renewable sources.
Energy eciency
We are conscious of the energy consumption in our oces
and thus we try to make energy consumption as ecient
as possible. The year we moved into our Vilnius oce we
installed smart lighting with motion detectors to keep the
light on only when employees are around. Also, since the
beginning of COVID-19 pandemic, during 2021 and 2022, we
replaced the vast majority of our stationary computers with
newer and more ecient laptops that use less energy for
employees working both in oces and at home.
Water
Our total water consumption during 2022 was 216 cubic
metres. The water usage is derived from our oces in
Vilnius, Tallinn, Tartu and Riga.
Sustainability Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
38
STRATEGIC REPORT
People and culture
Culture
Over more than a decade, our CEO, Justinas Šimkus and
COO, Simonas Orkinas and their long-standing team have
built a collection of market-leading businesses and strong
brands. Every day we connect buyers and sellers and
facilitate transactions from cars and real estate, job offers
to services and consumer goods from professional and
private listers. The digital marketplaces we operate promote
trust, fairness and eciency.
Equal opportunities
We are committed to providing equal opportunities to all our
employees. The Group seeks to treat all of its employees
equally, regardless of gender, age, sexual orientation,
social status, disability, race, ethnicity, religion, or personal
beliefs and provide equal opportunities to work conditions,
including, training, recruitment and redundancy, security,
and equal pay.
The Group values employee diversity and is committed
to recruiting employees based only on experience,
competence, qualication, and the right abilities for the
position.
We are highly focused on providing a safe, happy, and
supportive working environment. For this reason, we do not
tolerate any discrimination related to gender, age, sexual
orientation, social status, disability, race, ethnicity, religion,
or personal beliefs in our workplace.
All employees receive equal pay according to their
qualication, level of responsibility, work results, experience,
and other objective criteria.
Gender diversity
The Group also believes in the power of diversity to establish
a creative workplace. The Group actively supports women
choosing careers in the technology industry.
The Board is keen to strengthen and maintain female
representation in senior roles and BCG has been a contributor
to the FTSE Women Leaders Review, an initiative which
aims to increase female leadership within the FTSE 350. We
are proud to be ranked among the FTSE 250 Top Ten Best
Performers in the 2021 FTSE Women Leaders Review and
to be number one within the Technology sector of the FTSE
350 with 47.4% of women in leadership positions.
Employees with disabilities
Applications for employment by people with disabilities
are given full and fair consideration bearing in mind
the respective aptitudes and abilities of the applicant
concerned and our ability to make reasonable adjustments
to the role and the work environment. In the event of
existing employees becoming disabled, all reasonable
effort is made to ensure that appropriate training is given
and their employment within the Group continues. Training,
career development and promotion of a disabled person is,
as far as possible, identical to that of an able bodied person.
Our values
Work is fun
Less is more
Getting
things done
Entrepreneurship
Marketplace
is our hobby
Trustworthiness
All Employees by Gender
Gender diversity of employees
Male
Female
49%
51%
Executive Directors and their direct reports
1
Male
Female
53%
47%
1
Based on the gures for the Hampton - Alexander report
2021 (October 31, 2021)
▸
For gender gures for the Board and the Senior
Management see page 63.
Sustainability Report
continued
Recruitment
The competence and commitment of the Group’s employees
are important factors for the Group’s success. Our success
also depends on the ability to attract, train, motivate
and retain highly qualied individuals, whilst building
our corporate culture. The Group faces signicant and
increasing competition for qualied personnel, including
those in information technology positions. The Group
has historically offered the Senior Management and key
employees investment opportunities in the Group in order
to attract and retain highly qualied individuals. As of 30
April 2022, we had an average of eight years of tenure per
employee and 14 years of tenure per Senior Management
employee.
Employee share incentive scheme
We want our employees to benet directly from their
contribution to the Group’s success. The Group currently
operates a Performance Share Plan (“PSP”) that is subject
to a service and a non-market performance condition.
The PSP scheme consists of share options for Executive
Directors and certain key employees with a vesting period
of 3 years. On 27 July 2021, the Group awarded 1,041,745
share options under the PSP scheme.
In addition to the PSP scheme, 392,405 free shares were
awarded to all employees of the Group with the number
per employee based on length of service with the business
and ranging between €3,000 and €15,000 in value. The total
value of the shares awarded amounted to €968,000. Fringe
benet tax was paid by the Group. Executive Directors and
the Senior Management team did not receive free shares
under this arrangement.
▸
See more on the Employee share incentive scheme in
the Notes to the consolidated nancial statements on
page 116.
Wellbeing of employees
We are committed to taking care of our employees’ health
and wellbeing. For this reason, we award employees who
have worked for BCG for over two years with a healthcare
plan scheme for employees’ medical needs.
Social and community issues
The Group has donated €0.2 million to support the struggle
of Ukrainians during the war. Donations have already been
made to charity organisations. €0.1 million was donated to
the Red Cross and €0.1 million was donated to a local non-
government organisation “Blue&Yellow” that provides non-
lethal supplies to Ukraine. An additional €33 thousand was
donated to other initiatives, which help civilians who are
forced to leave their homeland and ee from the war zone.
In addition to these donations, in order to ease the
challenges faced by Ukrainian refugees and people of
Ukraine, we encourage sellers and landlords of real estate
to provide accommodation with a discount or free of
charge for Ukrainian refugees. Meanwhile, our Auto portal
is encouraging auto dealers and sellers to donate unused
vehicles to Ukraine. In addition, we are translating content
on our portals to the Ukrainian language.
39
STRATEGIC REPORTSustainability Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
40
STRATEGIC REPORT
Ethics and compliance
Data security and privacy
In order to ensure our portals are secure, we have
implemented technical measures, including DDoS
protection and strict rewall rules. All critical parts of the
infrastructure are secured from the public and our software
is up-to-date with critical security patches applied. We
conduct penetration testing, content moderation and apply
strict password policies to ensure security and mitigate the
risk of cyber crime.
Security incidents are detected via security tools such
as Cloudare WAF and internal monitoring systems.
Additionally, we implement public media monitoring
and react to feedback from customers to ensure we are
proactive in dealing with cyber threats.
We are committed to ensuring that the personal information
we collect and use is appropriate for the purpose, does
not constitute an invasion of privacy and is held securely,
responsibly and transparently. Where required, users have
to consent with our terms of services, Privacy Policy and
Cookies consent management platform.
Human rights
BCG is committed to acting in an ethical manner with
integrity and transparency in all business dealings and to
investing in the creation of effective systems and controls
across the Group to safeguard against adverse human
rights impacts.
BCG’s policy is to engage only with suppliers who meet our
ethical standards. Potential suppliers are assessed based
on their geographical location, nature of services provided
and their reputation.
We safeguard our employees through a framework of
policies and statements including Modern Slavery, Privacy,
Document Retention and GDPR policies.
Modern slavery
We are committed to addressing the potential risks of
modern slavery and human rights abuses within the Group
and in its supply chain and we will take steps to review
and, where appropriate, further improve our processes to
ensure that we mitigate these risks appropriately. Should
any instances of modern slavery be identied, we believe
the Group is well positioned to deal with and address these.
Anti-Bribery and Anti-Corruption
The Group has an employee handbook to ensure a consistent
standard of behaviour across the Group which includes its
Mission Statement and Values and an Anti-Bribery and
Corruption Policy (among other policies). BCG requires all
third-party intermediaries to comply with the Anti-Bribery
and Corruption Policy, which is intended to limit the risk
of any malpractice or any unprofessional or unacceptable
behaviour occurring across the Group’s supply chain.
Whistle-Blowing
BCG has adopted a Group-wide Whistle-Blowing Policy
designed to provide our employees with an effective and
available mechanism to help prevent malpractice occurring
across our working environment.
The CFO of Baltic Classieds Group has Board responsibility
for monitoring and evaluating Whistle-Blowing
arrangements. The CFO will update the Audit Committee
as and when whistleblowing concerns have been received,
the investigations completed and any actions arising as
a result. From time to time, the CFO will also review the
organisation’s Whistle-Blowing arrangements and ensure
they are subject to independent retrospective review.
There were no Whistle-Blowing reports made during the
nancial year.
The implementation and effectiveness of the Group’s
compliance function and policies is reviewed periodically by
the Audit Committee and is supported by periodic reviews
and risk assessments performed by the Group’s nance and
legal teams.
Sustainability Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
41
STRATEGIC REPORT
Risk Management
Principal risks and uncertainties
Risk management framework
The Company does not have a separate risk committee
and the Board has overall responsibility for determining the
nature and extent of the principal risks it is willing to take
and for ensuring that risks are effectively managed across
the Group. The Group operates a cautious attitude to risk
and its risk appetite is low.
The Board performs a robust review and assessment of
the risks, and considers potential emerging risks. Risks
are then assessed based on their likelihood and potential
impact with the combination of the two measures dening
the overall score of each risk so they can be rated.
Risks are all captured and documented in a Risk Register,
identifying the risk category, the likelihood of the risk
occurring, the impact if it does occur, a specic owner for
each risk, the risk trend and the mitigation plan for each
risk. During the year ended 30 April 2022, the CFO was
ultimately responsible for maintaining this register, with
input from the CEO and the COO. The register then formed
the basis for monitoring risks and ongoing risk discussions
within the Board. The Board reviewed the Risk Register at
both the November 2021 and April 2022 Board meetings.
The Company’s internal control framework is based on
a three lines of defence model. The rst line of defence
comprises operational management, which is responsible
for the direct management of risk. This includes ensuring
appropriate mitigating controls are in place and that they
are operating effectively. The second line of defence
is made up of the Company’s internal compliance and
oversight functions such as company secretarial, nance
and legal. The third line includes external audit reporting to
the Audit Committee, it will also include outsourced internal
audit once it starts running.
The Board has carried out a robust assessment of the
emerging and principal risks facing the Group. This included
an assessment of the likelihood and impact of each risk
identied, and the mitigating actions being taken. The
principal risks and uncertainties identied, along with the
potential impact and key mitigations, are detailed in this
section. We recognise that the Group is exposed to risks
wider than those listed, however we have disclosed those
that we believe are likely to have the greatest impact on the
Group’s performance and those that have been the subject
of discussion at Board meetings this year.
Geopolitical risk
Description & impact
Mitigation
Developments in 2022Further escalation or prolonged war
in Ukraine could result in unrest and
instability in the Baltic countries. Such
situations could impact consumer
behaviour (e.g. reducing spending /
investing), seller activity (e.g. disruption
in retailing), or impact investor
perception of the business.
•
Monitoring the situation in the region
and changes in consumer behaviour
•
Maintaining a exible cost base that
can respond to changing conditions
Russian aggression towards Ukraine
resulted in a temporary 20-30% drop
in the Group’s trac KPIs. However,
they recovered quickly and four to ve
weeks after the invasion the Group’s
results were already exceeding pre-
invasion levels. This shows that our
Company as well as Baltic economies
in general show resilience to the
increased geopolitical tension in the
region.
Risk trend
Key
Stable
Decreasing Increasing
Emerging and principal risks
Emerging risks are dened by the Group as potential but
not actual future risks that are often dicult to quantify but
may materially affect the Group.
Acquisition risk. Risk that we make an acquisition which
subsequently fails to deliver the expected benets through
poor integration, over payment, business failure, competition
authority review, or other negative factors. There is also a
risk that attractive opportunities are not available, affecting
investor perception of the Group’s outlook.
An explanation of how the Company manages nancial
risks is also provided in note 20 to the consolidated nancial
statements.
Baltic Classieds Group PLC
Annual Report and Accounts 2022
42
STRATEGIC REPORT
Disruption to our customer and / or supplier operations
Description & impact
Mitigation
Developments in 2022Disruption to the Group’s customers’ and
/ or suppliers’ operations conducting
day-to-day business such as a prolonged
recovery from the pandemic or any
other similar events may impact on the
Group’s ability to deliver desired results.
•
Remaining market leaders in
respective verticals while offering
value-adding products and packages
•
Continual improvements to our
platforms
•
Developing our product proposition
to continue meeting our customers’
needs and evolving business models
•
Maintaining a healthy liquidity
headroom with the yet unused
revolving credit facility of €10 million
as at 30 April 2022, together with a
signicant forecast headroom versus
its covenant
The Baltic region was under various
COVID-19 related restrictions for the
period from October 2021 to April
2022. Despite this, Lithuania and
Estonia, being our main markets, were
among the rst countries in the EU to
reach their pre-COVID-19 GDP levels.
Risk trend
Technology
Description & impact
Mitigation
Developments in 2022Cyber-attacks.
The Group is at greater
risk from cyber threats due to its large
scale and prominence. As the business
is entirely dependent on information
technology to provide its services,
successful attacks have the potential to
directly affect revenue.
Major data breach.
Cyber-attack or
the Group’s own failures, resulting in
disabling of platforms or systems, or
resulting in a major data breach, could
have an adverse impact on the Group’s
reputation, loss of trust and loss of
revenue and / or prots. Data breaches, a
common form of cyber-attack, can have
a massive negative business impact and
often arise from insuciently protected
data.
Disruption to availability of services.
The
availability and reliability of services to
the Group’s customers is of paramount
importance. Any downtime or disruption
to consumer or advertiser services can
have an adverse impact on the business
(complaints and credits for customers,
consumer usage, and potential
reputational impact).
Therefore, the availability of third-party
services, which are necessary when
using the services provided by the
Group, such as internet provision, mobile
communication, are also crucial.
•
Ongoing investment in security
systems to ensure our systems
remain robust
•
Ongoing monitoring of external
threats
•
Regular testing of the security of the
IT systems and platforms including
penetration testing
•
Disaster recovery and business
continuity plan in place and reviewed
and tested regularly
•
Internal audit programme which is
outsourced to Deloitte, and includes
a review of cyber security is to be
launched in 2023
Ahead of the IPO, the Group performed
a review of its technology systems,
data protection environment and
disaster recovery plans. Following
this review, the Group signicantly
improved its cybersecurity by
implementing DDOS protection and
bot management systems, migrated
all services to a revised infrastructure
and set up a new infrastructure to
accommodate a disaster recovery
site.
Risk trend
Key
Stable
Decreasing Increasing
Principal risks and uncertainties
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
43
STRATEGIC REPORT
Competition
Description & impact
Mitigation
Developments in 2022The Group might be affected by new
competitors in existing markets or new
spheres of activities. Also, changes
in technology or consumer behaviour
affect the way that people search for
cars, real estate, jobs or generalist
products, which may lead to a loss of
consumer audience. There is a risk of
a new entrant to the market with a new
business model (for example, providing
services free of charge), affecting the
Group’s audience, content and revenue.
Furthermore, as the Group diversies
into new and adjacent markets, the
competitor set widens.
•
Constant monitoring of major
competitors in adjacent business
areas
•
Continuous investment into buying
experience optimisation in order
to ensure we are reaching a broad
demographic
•
Continuous development of cross-
linkages between Group’s horizontals
and verticals
•
Continuous development of C2C
offering to provide value-for-money
and differentiated service to private
listers
During the last two years all our leading
sites have increased their audience
lead over the closest competitor; a
number of customers also showed
positive trends: the number of
automotive dealers has grown by 4%
versus the same period in 2021, we
have more employers (+47%) utilising
our sites to advertise than ever before
and we maintained roughly the same
number of real estate brokers.
Risk trend
Laws & regulations
Description & impact
Mitigation
Developments in 2022The Group is subject to certain
competition and antitrust laws. Antitrust
laws may limit the market power and
pricing or other actions of any particular
rm.
Companies can be subject to legal action
or investigations and proceedings by
national and supranational competition
and antitrust authorities and claims
from its clients and business partners
for alleged infringements of competition
and antitrust laws, which could result
in nes or other forms of liability or
otherwise damage the companies’
reputation. Such laws and regulations
could limit or prohibit the ability to grow
in certain markets.
Future acquisitions by the Group could
be impacted by applicable antitrust
laws and could be unsuccessful if the
necessary competition approvals by
competition authorities are not obtained.
•
A dedicated internal expertise within
the business who are responsible
for identifying, assessing and
responding to upcoming changes in
laws and regulations, and we utilise
external specialists where necessary
In 2022, the Group had successfully
defended its position in the
investigation by the Lithuanian
Competition Council which was
closed in June 2021.
The supervisory proceedings initiated
by the Estonian Competition Authority
are still ongoing. The proceedings
cannot lead to imposition of nes to
any Group company, however, a precept
ordering the Group companies to end
any ongoing infringements could be
imposed or the Estonian Competition
Authority could potentially initiate
misdemeanour proceedings that
would entitle the imposition of a ne
of up to €400 thousand. See note 24 to
the consolidated nancial statements
for further detail.
Risk trend
Key
Stable
Decreasing Increasing
Principal risks and uncertainties
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
44
STRATEGIC REPORT
Climate change
Description & impact
Mitigation
Developments in 2022From a long-term perspective, the Group
is subject to physical climate risks
directly related to climate change and
transitional climate risks, which may
arise due to transitioning to a lower-
carbon economy. Increased severity
of extreme weather events due to
accelerating global warming may result
in disruption to provision of services
from our service providers, affect the
availability of websites and change
commercial customers’ behaviour.
New regulations relating to the reduction
of carbon emissions and increasing
customer climate change awareness
may affect the Group’s operations and
the volume of listings and encourage
us to adapt our business to the new
regulations and changing market
tendencies.
•
The Group is committed to
contributing to the climate change
cause by being environmentally
responsible, reducing carbon
emissions, shifting to renewable
energy and offsetting carbon
emissions
•
We are already taking actions to
adapt to the increasing customer
climate change awareness and are
ready to adjust if new environmental
regulations arise: adopt the platforms
for eco-friendly products, introduce
necessary lters, educate visitors,
enrich ad data with environmental
impact related information
In 2022, the Group set a goal to
become net zero by 2050 and be
carbon neutral from 2022 onwards.
Currently 1/3 of electricity used by
the Group is derived from renewable
sources. In coming years we will
continue to improve our sustainability
goals and environmental reporting
Risk trend
Key
Stable
Decreasing Increasing
Principal risks and uncertainties
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
45
STRATEGIC REPORT
Viability Statement
Based on the going concern assessment discussed in note 2
of the nancial statements, the Directors have a reasonable
expectation that the Group has adequate resources to
continue in operational existence for the 12 months from
the date of approval of the nancial statements. For this
reason, they continue to adopt the going concern basis in
preparing the nancial statements.
As required by the UK Corporate Governance Code 2018 (the
“Code”), the Directors have assessed the long-term viability
of the Group over a period signicantly longer than 12
months from the approval of these nancial statements. The
Directors have assessed the Group’s prospects considering
its current nancial position, its recent historical nancial
performance and the principal and emerging risks and
uncertainties on page 41.
The Directors have determined that a period of three years
to April 2025 is an appropriate period over which to provide
its viability statement as it reects reasonable expectations
in terms of the reliability and accuracy of operational
forecasts and the fact that any projections looking out
further than three years are signicantly less meaningful
given the pace of change in the digital market. This process
includes an annual review of the ongoing plan, led by the
Group Executive Directors in conjunction with the Group
portal managers. The latest updates to the plan were
nalised in April 2022. The plan makes certain assumptions
about operational KPIs, revenue, prot, cash ow and key
nancial ratios over the three–year period. The Group’s
funding position has also been considered, with focus on
the ongoing compliance with the covenants attached to the
Group’s external debt.
The strategic plan has been subject to robust downside
stress testing which involved exing several main
assumptions underlying the plan to assess the impact of
severe but plausible scenarios. Analysis was performed to
evaluate the potential nancial impact over the period of the
Group’s principal risks occurring, including:
•
the impact of any major data breach as a result of a
cyber-attack;
•
adverse changes to the business environment due
to competition or disruption to our customer and / or
supplier operations; and
•
a continuing geopolitical tension in the neighbouring
countries.
Specic scenarios that have been modelled include
downside scenarios in relation to:
•
growth of revenues: either limited or at growth rate;
•
effect on operating costs: data breach related nes,
increased marketing costs; and
•
effect on nancial costs: higher interest margin due
to a higher leverage as a result of a limited revenue
growth and a higher cost base.
A plausible combination of these scenarios was also
assessed.
The objective of the scenario modelling was to project cash
ows generated by the Group to ensure the Group remains
cash positive during the assessment period and to project
a total leverage ratio to make sure a healthy covenant
headroom is maintained during this period. It was taken into
account that the Group’s term loan of €84 million is due in
July 2026 only and during the assessment period the Group
has access to a revolving credit facility that amounts to
€10 million and is available until July 2026. In all scenarios
tested, the Group remained cash positive and with a
signicant covenant headroom over the three-year period.
Other factors providing comfort to the Directors about the
Group’s long-term viability in the face of adverse economic
conditions include that the Group has high margins,
signicant free cash ow generation and an ability to adjust
the discretionary dividend to enhance liquidity. Therefore
the Directors have a reasonable expectation that the Group
will be able to continue in operation and meet its liabilities
as they fall due over the period of the assessment.
The Company’s Strategic report, set out on pages 3
to 45, was approved by the Board on 6 July 2022 and
signed on its behalf by:
Justinas Šimkus
Chief Executive Ofcer
6 July 2022
GOVERNANCE REPORT
48
Corporate Governance Report
•
Introduction by the Chair of the Board Trevor Mather
•
Board of Directors
•
Corporate Governance Statement 2022
•
Board leadership and company purpose
•
Statement of engagement with employees
•
Statement of engagement with other business relationships
•
Division of Responsibilities
•
Board Composition, Succession and Evaluation
•
Audit, risk and internal control
66
Nomination Committee Report
70
Audit Committee Report
76
Directors' Remuneration Report
98
Directors' Report
Governance Highlights
•
Admission to the London Stock Exchange on 5 July 2021
•
Post Admission:
▸
Formal adoption of Company purpose and strategic objectives
▸
Formal adoption of the Board Diversity Policy
▸
Embedding the governance framework to work towards Code compliance
▸
The appointment of an additional Independent Non-Executive Director
I am delighted that we could bring
such a high quality business,
operating entirely in the Baltic region,
to the London Stock Exchange
Trevor Mather
Chair
“
48
GOVERNANCE REPORT
Corporate Governance Report
Baltic Classieds Group PLC
Annual Report and Accounts 2022
49
GOVERNANCE REPORT
Introduction by the Chair of the Board
Trevor Mather
Dear Shareholder
On behalf of the Board, I am pleased to present the Group’s
rst Corporate Governance Report since Admission to
trading on the Main Market of the London Stock Exchange
on 5 July 2021.
This Corporate Governance Report explains the key features
of the Group’s governance framework and how it complies
with the Financial Reporting Council’s UK Corporate
Governance Code 2018 (the “Code”).
Governance framework
In preparation for Admission, the Board carried out a review
of the existing governance structure in conjunction with
various external advisors, in order to identify any measures
that would need to be implemented prior to Admission. The
review also enabled the Directors to satisfy themselves
that they were able to provide the conrmation that was
required on Admission that the Company has established
procedures in place which provide a reasonable basis for
the Board to make proper judgments on an ongoing basis
as to the nancial position and prospects of the Group. This
Corporate Governance Report discusses the framework for
controlling and managing the Group in further detail.
Code compliance
As set out in the Prospectus, the Board is committed to
the highest standards of corporate governance and to full
compliance with the Code. During this, our rst year post
Admission, we recognise that we are still embedding our
processes and have worked hard to comply with all of the
Principles and Provisions of the Code. With the appointment
of Jurgita Kirvaitienė to the Board as an Independent Non-
Executive Director shortly after the year end, the Board
is now compliant with all Code requirements on gender
diversity and got closer to achieving a full compliance in
terms of Board’s independence.
We believe it only makes sense to conduct Board evaluations
and External Audit evaluations once we have had a full year
as a public company. Post IPO, we have had no need for
our External Auditors to act as our supplier of non-audit
services. The details on where we have not complied by the
end of the nancial year can be found on page 52 and we
anticipate that we will achieve full compliance during this
next nancial year.
Purpose and culture
The Company has always focused on, and continues to
focus on using our love of transactions to ensure a better
experience for our buyers and sellers. During the year, the
Board agreed on values and strategic aims to support that
goal. For more on this see ‘Moving our strategy forward’ on
page 16.
We recognise that our success and culture are inextricably
linked and over the years, our Senior Management have
lived a culture where employees are carefully selected and
highly valued, resulting in very high retention rates across
the business. BCG boasts a committed and motivated team
which enjoys a relatively at structure and during the year
we were pleased to offer free share awards to all employees
in good standing (except for the Senior Management team
who already hold shares).
Board diversity
During the year, the Board approved its Board Diversity
Policy. For more on this, see the Nomination Committee
Report on page 66.
We are pleased to report that shortly after the year end, on
17 May 2022, the Board approved the appointment of a new
Independent Non-Executive Director. Jurgita Kirvaitienė
brings extensive nancial, audit, internal audit and a
diverse Board experience to BCG. With her appointment,
the Board is now compliant with all Code requirements on
gender diversity. The Group will also begin searching for an
additional Non-Executive Director in 2023 where seeking
diversity on more dimensions and with greater relevance
and sensitivity to the Baltic environment will be a key
criteria.
Stakeholder engagement
We spent considerable time engaging with Stakeholders
and the Group’s new Shareholders both in the course of the
IPO and during the period after, to help us get to know their
objectives and also to ensure they understand the business.
A full review of Stakeholder engagement can be found in the
Strategic Report on page 17.
TCFD and climate change
We recognise that climate change is a key concern for
all businesses. I am pleased to include our rst report on
Taskforce for Climate-related Financial Disclosures on
page 31. For more on our ESG strategy see page 32. I am
very happy to be part of the recently formed ESG working
group. We are at the start of this journey and look forward to
expanding our focus in this area in the forthcoming years.
2022 Annual General Meeting
Our 2022 Annual General Meeting (“AGM”) will be held at
11:00 am local time on Wednesday 28 September 2022 in
the headquarters of Baltic Classieds Group at Saltoniškių
9B, Vilnius, LT-08105 Lithuania. Myself and other Directors
will join the meeting either in person or via teleconference.
We strongly encourage all Shareholders to cast their votes
by proxy, and to send any questions in respect of AGM
business to cosec@balticclassieds.com.
Trevor Mather
Chair
6 July 2022
Baltic Classieds Group PLC
Annual Report and Accounts 2022
50
GOVERNANCE REPORT
Board of Directors
The Directors have skills and experience relevant to the sector in which the Group operates in order to effectively set the
strategic direction and purpose of the Group.
Trevor Mather
Chair
Appointed:
2021
Nationality:
British
Independent:
No
Experience:
Trevor was Chief
Executive of Autotrader from
June 2013 until February
2020. Previously, Trevor
was President and CEO of
ThoughtWorks, a global IT
and software consulting
company. Before his time at
ThoughtWorks, Trevor spent
almost ten years at Andersen
Consulting (now Accenture).
Trevor holds an M.Eng. in
Aeronautics and Astronautics
from Southampton University.
Key external appointments:
Trevor holds directorships
in the following companies:
Mather Property Limited;
Mather Consultancy Services
Limited; Mather Charitable
Foundation; and MF MidCo
limited.
Committee membership:
Nomination Committee
(Committee Chair),
Remuneration Committee.
Justinas Šimkus
Chief Executive Ofcer
Appointed:
2021
Nationality:
Lithuanian
Independent:
No
Experience:
Justinas joined
the Group in 2005 as CEO of
Diginet LTU. Justinas holds
a BSc in Management and
Business Administration from
Vilnius University and an MSc
in International Business from
Vilnius University.
Key external appointments:
Justinas holds directorships in
the following companies: UAB
EIKA Real Estate Fund; UAB
EIKA Development Fund; and
UAB EIKA Residential Fund.
Committee membership:
None
Lina Mačienė
Chief Financial Ofcer
Appointed:
2021
Nationality:
Lithuanian
Independent:
No
Experience:
Lina joined the
Group in 2017 as CFO. She
previously worked at PwC
in its audit and assurance
services department from 2010
until 2017. Lina holds a BSc
in Economics from Kaunas
University of Technology and
an MSc in Management and
Business Administration from
ISM University of Management
and Economics.
Key external appointments:
None
Committee membership:
None
Simonas Orkinas
Chief Operating Ofcer
Appointed:
2021
Nationality:
Lithuanian
Independent:
No
Experience:
Simonas joined
the Group in 2007 as Skelbiu.
lt Portal Manager, in 2009
was appointed COO of the
Group and was appointed
CEO of Diginet LTU in August
2019. Simonas holds a BSc in
Business Management from
Vilnius University.
Key external appointments:
None
Committee membership:
None
Baltic Classieds Group PLC
Annual Report and Accounts 2022
51
GOVERNANCE REPORT
Ed Williams
Senior Independent
Non-Executive Director
Appointed:
2021
Nationality:
British
Independent:
Yes
Experience:
Ed was appointed
Chair of Autotrader prior to its
otation on the London Stock
Exchange in March 2015. He
served as an independent
director of idealista, the
privately owned Spanish
property portal from 2015
to 2020. Ed was founding
Chief Executive of Rightmove,
serving in that capacity from
2000 until his retirement from
the business in 2013.
Key external appointments:
Chair
of the Board of Autotrader
Group PLC
Committee membership:
Remuneration Committee
(Committee Chair) Audit
Committee, Nomination
Committee.
Tom Hall
Non-Executive Director
Appointed:
2021
Nationality:
British
Independent:
No
Experience:
Tom joined the
Group in July 2019. He leads
the Internet/Consumer team
in Europe for Apax, where he
has worked for over 20 years.
He has led many of Apax’s
marketplace investments,
including Autotrader, idealista
and SouFun.
Key external appointments:
Tom serves on the Boards of
idealista, MatchesFashion,
NEXT and Wehkamp. Tom
also holds directorships in the
following companies: Apax
Partners LLP, idealista Global
S.A., MF Midco Limited, MF
Topco Limited, RFS Holland
Holding BV, RFS Statutory
Holding BV, Takko Fashion
GmbH, Wehkamp Management
Pooling Company BV, Stichting
Administratiekantoor Co-
Investment STAK, Stichting
Administratiekantoor Sweet
Equity STAK, and Tinka Holding
BV.
Committee membership:
Nomination Committee.
Kristel Volver
Independent
Non-Executive Director
Appointed:
2021
Nationality:
Estonian
Independent:
Yes
Experience:
Kristel worked in
the audit department at KPMG
from 2012 to 2015, was deputy
head of Group Finance Estonia
for Nordea from 2015 to
2017 and Group CFO for Eesti
Meedia (Postimees Grupp).
She holds a BSc and MSc in
Finance from the University of
Tartu and has been a certied
auditor since 2016.
Key external appointments:
Since 2019, Kristel has been a
board member of MM Grupp
OÜ and is currently a member
of the supervisory boards
of Postimees Grupp AS,
Magnum AS, Apollo Group OÜ,
iDeal Group AS, 15min UAB,
AS Kroonpress and TVNET
Latvia. Kristel also holds
directorships in the following
companies: Semetron AS;
Beinita Kodu AS; Leta SIA; Balti
Meediamonitooringu Grupp OÜ;
and Linnamäe Lihatööstus AS.
Committee membership:
Audit
Committee (Committee Chair),
Remuneration Committee,
Nomination Committee.
Jurgita Kirvaitienė
Independent
Non-Executive Director
Appointed:
17 May 2022
Nationality:
Lithuanian
Independent:
Yes
Experience:
JJurgita built her
career at PwC from 1997 to
2015 where she progressed
to become a Director and a
member of the Management
Board for Lithuania.
Subsequently she became
General Manager, and Board
member, of a FinTech startup,
and supplemented this with
being a member of the Audit
Committee at Maxima Grupe.
Jurgita has a BSc in Business
Administration and an MSc in
International Business from
Vilnius University, completed
an International EMBA at the
Baltic Management Institute,
is a fellow member of ACCA,
has been a certied auditor
since 2003 and was President
of the Lithuanian Chamber of
Auditors from 2010 to 2014.
Key external appointments:
Jurgita now works part-time as
an Internal Audit Consultant at
Baltic Economist UAB
Committee membership:
Audit
Committee, Remuneration
Committee, Nomination
Committee
Board of Directors
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
52
GOVERNANCE REPORT
Corporate Governance Statement 2022
This Corporate Governance Statement as required by the
UK Financial Conduct Authority’s Disclosure Guidance and
Transparency Rules 7.2 (“DTR 7.2”), together with the rest
of the Corporate Governance Report and the Committee
Reports forms part of the Directors’ Report and has been
prepared in accordance with the principles of the Financial
Reporting Council’s UK Corporate Governance Code 2018
(the “Code”).
A copy of the Code can be found on the Financial Reporting
Council’s website: www.frc.org.uk.
The Company’s obligation is to state whether it has
complied with the relevant principles and provisions of the
Code, or to explain why it has not done so up to the date of
this Annual Report and Accounts.
Additional requirements under the DTR 7.2 are covered in
greater detail throughout the Annual Report and Accounts
for which we provide reference as follows:
•
The Group’s risk management and internal control are
found on page 41.
•
Information with regards to share capital is presented
in the Directors’ Report from page 100.
•
Information on Board and Committee composition
can be found on pages 50 to 51.
•
Information on Board diversity can be found on pages
63 to 64.
The Company has applied the principles of the Code and
has complied with the Principles and Provisions of the Code
during the nancial year, except for as outlined below:
Code Principle
and Provision
Area
Explanation
Provision 11
At least half the board,
excluding the chair,
should be non-executive
directors whom the
board considers to be
independent
Shortly after the year-end on 17 May 2022, the Board appointed Jurgita Kirvaitienė
as an additional Independent Non-Executive Director. Following this appointment,
the Company has one Chair, three Independent Non-Executive Directors, one Non-
Independent Non-Executive Director and three Executive Directors. The Company
will continue with its recruitment to achieve full compliance in the year ahead. See
page 62 for more information on Board independence.
Provision 21
and 22
Annual Board evaluation
Whilst no formal Board evaluation has been held during this nancial year, there is
a plan to conduct a Board effectiveness review in the Autumn of 2022 which will be
reported in the Annual Accounts for the nancial year ending 2023.
Principle M
Annual external audit
evaluation
An annual evaluation reviewing the effectiveness of the external audit process
has not yet been performed as the Company considers that an evaluation of a full
audit cycle will be more effective. The Audit Committee plans to carry out a formal
evaluation of the performance and effectiveness of the External Auditors in the
rst half of the next nancial year once a full year audit cycle is complete.
Principle M
Formal policy on
the engagement of
the external auditor
to supply non-audit
services
A formal policy on the engagement of the External Auditor to supply non-audit
services is planned to be developed in the rst half of the nancial year ending
2023. In the period between the Admission and the publication of this Annual
Report there has been no requirement for any non-audit services where the
External Auditor would be considered as a supplier.
Provision 24
Audit Committee with
minimum membership
of three
At the point of IPO, the Board made clear that it was looking to appoint an
additional Independent Non-Executive Director by the AGM and that it was aware
that at that point in time it was not compliant with this provision due to having two
members only. Shortly after the year-end, on 17 May 2022, the Board appointed
Jurgita Kirvaitienė as Independent Non-Executive Director and invited her to
join all current Board Committees including the Audit Committee. Following this
appointment, the Company is compliant with Provision 24.
Key areas in this section Page reference
Board leadership and Company purpose 53
Division of responsibilities 58
Composition, succession and evaluation 62
Audit, risk and internal control 65
Remuneration 65
Code Principle
A
Effective Board See page 53
B
Purpose, strategy, values and culture See page 53
C
Prudent and effective controls and Board
resources
See page 55
D
Stakeholder engagement See page 55
E
Workforce policies and practices See page 57
Board Leadership and Company Purpose
Effective Board
The Board understands that a successful company is led
by an effective and entrepreneurial board, whose role is to
promote the long-term sustainable success of the company,
generating value for Shareholders and contributing to wider
society.
The Board has a deep industry knowledge brought from
their past and current professional experience.
Most Board members are also investors in the Company,
therefore promoting success is in their best interest.
Purpose, strategy, values and culture
Since incorporation, the Board of BCG has been heavily
focused on ensuring that the Company was ready for
premium listing on the London Stock Exchange. Not only
did it achieve listing but it also joined the FTSE 250 in
September 2021 all whilst simultaneously delivering a
strong nancial performance.
During the course of the year, the Board dedicated time on
the Board agenda to discuss and approve the Company
purpose and time has been set aside for a full strategy
session shortly after the year-end in September 2022 where
it is anticipated that strategic objectives will be set and
we look forward to providing our Stakeholders with a full
update on this in the Annual Report and Accounts for the
nancial year ending 2023.
The Group has an entrepreneurial, team-focused and
ambitious culture rmly based in principles of equality and
inclusivity. The Board recognises the contribution of this
culture to the success of the business and is satised that it
is aligned with the Company’s purpose, values and strategy,
indeed, the Board describes this as the Company’s “super-
power”.
The Board monitors the culture of the Group through
updates at each Board meeting from the CEO, CFO and COO
who are directly responsible for workforce issues. These
updates are on people, culture, inclusivity and talent.
53
GOVERNANCE REPORT
Baltic Classieds Group PLC
Annual Report and Accounts 2022
54
GOVERNANCE REPORT
Board activity and culture
The following table summarises some of the Board activity and how it links to the culture of the organisation. For more
information on Board activity, Stakeholders and S172(1) Statement see page 17:
Board activity
Link to culture
Free shares gifted to all employees in good standing
1
Ensuring the employees can feel a greater connection to
the Company and further motivation to succeed. Aligning
employees' interests with those of Shareholders.
Performance Share Plan programme for key employees of
the Group
Align Management and Shareholders’ interests to
create long-term value. Incentivising and motivating key
employees.
Discussions in the Remuneration Committee around wider
employee remuneration and rewards
Enables assessment and oversight to ensure that
employees’ remuneration and rewards are supportive of
employees’ motivation.
Purpose and values
Working with the team to build a collection of market-leading
businesses and strong brands. The digital marketplaces we
operate promote trust, fairness and eciency.
Board supports an open culture
BCG has a dynamic and motivated team. We like to have
fun and enjoy working together and that is our superpower.
CEO, CFO and COO directly responsible for workforce issues
Ensuring the Board is intrinsically connected to the
employees. The Executive Directors work alongside the
workforce who have a direct connection to the Board and
understand that the culture is set from the top.
Discussions around the strategy of each of the four vertical
business areas
Gives the Board a chance to engage with the portal
managers directly to discuss all things in their business
areas including their markets, customer and employee
needs that enables knowledge sharing, motivation and
team building.
Board reviews and approves Modern Slavery Statement and
monitors the Gender Pay Gap
Enables assessment of the broader culture of the Group and
its relationships with suppliers and employees.
Board reviews and approves key workforce-related policies
including Whistle-Blowing and Conicts of Interest
Gives the Board oversight to ensure that policies reect the
values and desired behaviours of employees.
Updates to the Board on employee matters including
recruitment, retention, wellbeing and diversity
Enables the Board to gauge the culture and to identify areas
where change is necessary to improve the culture.
1
Except for the Senior Management team.
▸
For more on purpose, values and strategy see the Strategic Report on page 12.
▸
For more on engagement with the workforce see Engagement with our Stakeholders on page 17 and the Statement of
Engagement with employees on page 56.
Board Leadership and Company Purpose
continued
Prudent and effective controls and
Board resources
As part of the IPO, the governance framework of the
Company was analysed and updated to ensure that it was
robust and t for purpose. The Board provides leadership
within a framework of prudent and effective controls. The
Board has clear Board roles and divisions of responsibility.
The framework of the Board and its Committees provides
clearly-stated duties and responsibilities and clear lines
of accountability and effective oversight. These controls
ensure timely decision-making at the correct level.
As part of the Board and Committee review which is
scheduled to be completed in the Autumn of 2022, the
Board will also review its Schedule of Matters Reserved
for the Board and all Committee Terms of Reference. A
good governance structure is not static and as the Group
grows and develops, the Board continues to monitor the
framework so it remains appropriate to the business.
The Board provides support to Senior Management in
implementing strategic priorities, as well as oversight and
constructive challenge.
Board materials, quality of information and resources as
a whole were discussed by the Board during the year and
it was identied that more resources might be required in
the nance team which resulted in additional support. An
internal Board effectiveness review will be carried out by the
Chair of the Company early in the new nancial year when it
was agreed it would drive more meaningful results.
During the year, no Director raised any concerns about the
operation of the Board or the management of the Company.
Stakeholder engagement
We conducted a comprehensive programme of investor and
analyst meetings prior to Admission.
Looking forward, the Board has dened an investor
relations programme that aims to ensure both that existing
and potential investors understand the Group’s strategy
and business, and that Executive Management are able
to devote appropriate time to business leadership and
Shareholder value creation.
The Executive Directors will give formal presentations to
investors and analysts on the half-year and full-year results
(in December and July respectively), following which, these
updates will be posted on the Group’s investor relations
section of the website and available to all Shareholders. A
summary of these results presentations is also delivered to
the employees later that same day.
There is also an ongoing programme of meetings with
investors, fund managers and analysts in addition to a
number of conferences where the Executives meet in 1:1
and group settings with current and potential investors.
These meetings cover a range of topics including strategy,
performance and governance, with care taken to ensure
that any price sensitive information is released to all
Shareholders at the same time. During the period between
the IPO and the nancial year-end the Executive Directors
had 67 investor meetings, all of them remote.
The Chair will engage directly with our major Shareholders to
discuss governance matters, performance against strategy
and any material changes. The Chair of the Remuneration
Committee consulted with major Shareholders in relation to
our Remuneration Policy. The Board is kept informed of the
views and opinions of Shareholders and analysts. Directors
receive regular updates from the CEO and the CFO, as well
as share register analyses and market reports from the
Company’s corporate brokers Bank of America ML.
Tom Hall is a Non-Executive Director and sits on the Board
as a Shareholder Director representing Major Shareholder
Apax Partners. For more information on this relationship
see Board independence on page 62.
During the year, the Board answered questions from the
investors on a range of topics including the growth story,
resilience to historic market disruptions and how it feels to
be a public company.
55
Board Leadership and Company Purpose
continued
GOVERNANCE REPORT
Statement of Engagement with
Employees -
The engagement method used by the Board for the purposes
of Provision 5 of the Code is that the Executive Directors
take direct responsibility for workforce related issues and
the CEO, CFO and COO provide updates at every Board
meeting which includes relevant workforce updates. This
engagement method is effective due to the management
structure of the Group, the Board is particularly hands-on,
engaged and committed to ensuring that it understands the
composition and views of employees.
The Board met with the workforce through a variety of
communications and forums throughout the IPO process
and meets various components of the workforce face-to-
face whenever it physically convenes in any of the BCG
oces. This has been limited this year due to the pandemic,
but will increase moving forward.
Additionally, an ESG sub-committee will bring forward
proposals for formal employee engagement, with an
expectation that this will include regular meetings between
Non-Executive Directors and nominated or elected
employees. Any themes or issues will be taken back into the
Board room and addressed as appropriate. We will report on
this engagement in the Annual Report for the nancial year
ending 2023.
Since the start of March 2020, Senior Management agreed
to put appropriate protocols in place to support employees
whilst working from home and, when appropriate, in the
oce during the COVID-19 pandemic. Processes were
introduced to ensure regular contact between in-house
teams, but also across the whole Group ranging from
virtual meetings to online social events. More recently there
Sch 7.11(1)(b) Companies (Miscellaneous Reporting) Regulations 2018, – Employee engagement
has been a consultation which involved an anonymous
online poll where employees were asked to express their
preferences with regards to the return to oce-working
post-COVID-19. Shortly after the IPO, the Company made
each employee a Shareholder which has fostered a feeling
of ownership, unity and an incentive for good performance.
As a result, the team’s motivation is higher than ever as we
focus on continuing to deliver outstanding products and
services to our customers.
▸
See page 39 for more information on the free share
award to employees.
The Company has a dynamic and motivated team that
likes to have fun and enjoy working together. The Company
believes that is the cornerstone to its strength and continued
long-term success.
At the year end, BCG had 140 employees (on a headcount
basis) and an experienced Senior Management team with
an average tenure at BCG of 14 years.
The Company is an equal opportunities employer
and is working hard to create an environment for our
employees that is free from discrimination, harassment
and victimisation, reecting our commitment to creating
a diverse workforce and an inclusive environment that
supports all individuals irrespective of their gender, age,
race, disability, sexual orientation, or religion.
This statement should be read in conjunction with
Engagement with our Stakeholders on page 17, the Non-
nancial information statement on page 102 and Board
principal decisions on pages 18 to 21.
56
Baltic Classieds Group PLC
Annual Report and Accounts 2022
57
GOVERNANCE REPORT
Statement of Engagement with Other
Business Relationships -
The Directors have regard for the need to foster the
Company’s business relationships with suppliers,
customers and others, and this regard effects the principal
decisions taken by the Company during the nancial year.
Stakeholder analysis
During the year, the Executive Directors and other
key members of the Senior Management undertook a
Stakeholder analysis workshop to consider all of the Group’s
Stakeholders, their material interests and engagement
mechanisms with them. The resulting Stakeholder matrix
was reviewed by the Board and feeds into the Board’s
activity and the Board’s decision making process. The
Stakeholder analysis provides the Board with assurance
that the potential impacts on our Stakeholders are being
carefully considered by Management when developing
plans for Board approval.
By thoroughly understanding our key Stakeholder groups,
the Board can factor their needs and concerns into
boardroom discussions.
This statement should be read in conjunction with our
Section 172(1) Statement and Engagement with our
Stakeholders on page 17, the Non-Financial Information
Statement on page 102 and Board Principal Decisions on
pages 18 to 21.
Sch 7.11B(1)Companies (Miscellaneous Reporting) Regulations 2018
Workforce policies and practices
The Board takes responsibility for all workforce policies and
practices which are consistent with the Company values
and support its long-term sustainable success.
The Board reviews and approves all signicant policies that
impact our workforce. The Executive Directors take direct
responsibility for all workforce related issues to ensure that
they align with the Group’s values and purpose.
The Board understands that a diverse range of experience,
expertise and perspectives contributes to the success of
the Company. In its workforce strategy, the Company set
out that it aims to attract high potential, highly motivated
employees and that upon appointment, these employees
will be given the space to develop and grow. The workforce
is currently 49% male and 51% female.
Policies are published on the Company intranet. Our
employees are required to conrm their understanding of
these policies upon recruitment and on an annual basis.
Where relevant, training is given to the workforce such as
for Whistle-Blowing and Anti-Bribery and Corruption.
All employees (including the Board) are required to notify
the Company as soon as they become aware of a situation
that could give rise to a conict or potential conict of
interest. The register of potential conicts of interest is
regularly reviewed to ensure it remains up to date. The Board
is satised that potential conicts have been effectively
managed throughout the year (see page 61).
The Board approves the Remuneration Policy for the
Executive Directors and, via the Remuneration Committee,
has oversight of the wider workforce remuneration practices
(further information on page 76).
As a business, we seek to conduct ourselves with honesty
and integrity and believe that it is our duty to take appropriate
measures to identify and remedy any malpractice within or
affecting the Company. Our employees embrace our high
standards of conduct and are encouraged to speak out if
they witness any wrongdoing which falls short of those
standards. We have a Board approved Whistle-Blowing
policy. To date, there have been no reports made under this
policy.
For more information on workforce policies and practices
see the Non-nancial information statement on page 102.
Baltic Classieds Group PLC
Annual Report and Accounts 2022
58
GOVERNANCE REPORT
Division of Responsibilities
Responsibilities of the Board
The Board is committed to the highest standards of
corporate governance. The Board is collectively responsible
for the long-term success of the Group. The business of
the Group is managed by the Board who may exercise all
the powers of the Company. The Board delegates certain
matters to the Board Committees, and delegates the
detailed implementation of matters approved by the Board
and the day-to-day operational aspects of the business to
its Executive Management.
At the date of listing, the Board comprised the Chair, the CEO,
the CFO, the COO, a Non-Executive Director appointed by the
Major Shareholder, a Senior Independent Non-Executive
Director (“SID”) and an Independent Non-Executive Director.
Shortly after the year-end on 17 May 2022, the Board
appointed Jurgita Kirvaitienė as an additional Independent
Non-Executive Director.
The Board sets the Group’s purpose, values and strategy
and satises itself that these are aligned with culture;
provides entrepreneurial leadership, promoting long-term
sustainable success and Shareholder value creation; and
oversees the Group’s risk management processes and
internal control environment.
The Board remains condent that individual members
will continue to devote sucient time to undertake their
responsibilities effectively.
There is a clear division between Executive and Non-
Executive responsibilities. The Statement of division of
responsibilities between the Chair and the CEO and the
role of the SID is available on the Company website. The
Schedule of matters reserved for the Board is also available
on the Company website. Both will be reviewed annually as
part of the Board effectiveness process.
Code principles
F
Board roles See page 58
G
Independence See page 62
H
External commitments See page 61
I
Board eciency: Key Board activities
See page 61
Board roles
Chair
•
Leads the Board and is responsible for the overall
effectiveness of Board governance
•
Sets the Board’s agenda, with emphasis on strategy,
performance and value creation
•
Ensures good governance
•
Shapes the culture of the Board, promoting openness
and debate
Chief Executive Ofcer
•
Develops strategies, plans and objectives for
proposing to the Board
•
Leads the organisation to ensure the delivery of the
strategy agreed by the Board
Chief Financial Ofcer
•
Provides strategic nancial leadership of the Group
and runs the nance function on a day-to-day basis
Chief Operating Ofcer
•
Runs the Group on a day-to-day basis and implements
the Board’s decisions
•
Heads the IT Team
Senior Independent Non-Executive Director
•
Acts as a sounding board for the Chair
•
Available to Shareholders if they require contact both
generally and when the normal channels of Chair, CEO
or CFO are not appropriate
•
Leads the annual appraisal of the Chair’s performance
and the search for a new Chair, when necessary
Non-Executive Directors
•
Demonstrate independence and impartiality (other
than the Nominee Director)
•
Bring experience and special expertise to the Board
•
Constructively challenge the Executive Directors
•
Monitor the delivery of the strategy within the risk and
control framework set by the Board
•
Monitor the integrity and effectiveness of the
Group’s nancial reporting, internal controls and risk
management systems
Company Secretary
•
Responsible for advising the Board and assisting the
Chair in all corporate governance matters
Leadership structure
The Board is responsible for providing leadership to the
Group. The structure of the Board and its Committees and
the Executive Management ensures controls and oversight
with a balanced approach to risk aligned with the Group’s
culture.
The Board delegates certain matters to its three permanent
Committees, the Terms of Reference of which are available
on the Company website. The table below shows the role of
each of the Board Committees:
Board Committees
Audit Committee
Assist the Board in discharging its responsibilities with regard to: nancial reporting; external and internal audits and controls,
including reviewing and monitoring the integrity of the Group’s Annual and Interim nancial statements; reviewing and monitoring
the extent of the non-audit work undertaken by External Auditors; advising on the appointment of External Auditors; overseeing
the Group’s relationship with its External Auditors; reviewing the effectiveness of the external audit process; and reviewing the
effectiveness of the Group’s internal audit, internal controls, Whistle-Blowing and fraud systems.
Remuneration Committee
Assists the Board in determining its responsibilities in relation to Executive Directors’ remuneration, including making
recommendations to the Board on the Company’s policy on Executive remuneration, including setting the overarching principles,
parameters and governance framework of the Group’s Remuneration Policy and determining the individual remuneration and
benets package of each of the Executive Directors, the Chair and members of the Executive Management team (being the rst
layer of management below the level of the Board and reporting to the CEO, including the Company Secretary).
Nomination Committee
Assists the Board in discharging its responsibilities relating to the composition and make-up of the Board and any Committees
of the Board. It is also responsible for periodically reviewing the Board’s structure and identifying potential candidates to be
appointed as Directors or Committee members as the need may arise.
Senior Management
The Senior Management is responsible for the day-to-
day running of the business, carrying out and overseeing
operational management and implementing the strategies
the Board has set. The Senior Management is small and
agile and is made up of the three Executive Directors and
eight portal managers. The Senior Management meets
regularly and no less than weekly. Portal managers come to
any Board meetings where their subject is being discussed
and are encouraged to stay for the whole Board meeting.
59
Division of Responsibilities
continued
GOVERNANCE REPORT
Baltic Classieds Group PLC
Annual Report and Accounts 2022
60
GOVERNANCE REPORT
Board activities throughout the year
The following table sets out some of the Board’s key activities since the incorporation of BCG on 26 April 2021:
Area
Key Actions
Links to S172(1)
(a) to (f)
Stakeholder
group
Strategy and
operations
•
Approved the IPO transaction
•
Reviewed of the strategies of Group’s verticals
•
Approved major pricing actions
(a)
,
(b),
(e),
(f) Investors
Suppliers
Customers
Employees
Leadership and
employees
•
Engaged in a search for an additional Independent
Non-Executive Director
•
Reviewed the employee requirements following the IPO
•
Approved PSP scheme and free share awards
(b)
Employees
Culture
•
Approved free share awards to all employees in good standing
1
•
Approved code of conduct related policies
•
Instructed the formation of the ESG Working group of which
the Chair is a sponsor and the Board has oversight
(a)
,
(b),
(c),
(d) Employees
Finance and
Investor Relations
•
Approved the 2022 forecast and 2023 annual budget
•
Approved the Group’s capital policy
•
Received reports and updates on investor relations activities
(a)
,
(c),
(e)Investors
Suppliers
Customers
Business
performance
•
Reviewed strategic and operational performance
•
Reviewed nancial performance against budget
(a)
,
(c),
(d),
(e)Investors
Suppliers
Customers
Governance
•
Approved the numerous procedures and controls needed
to comply with the regulation and governance of a listed
company
(b)
,
(c),
(e),
(f) Investors
Employees
Suppliers
Customers
1
Except for Senior Management
Companies Act 2006, Section 172(1)
A director of a company must act in the way, he
considers, in good faith, would be most likely to
promote the success of the company for the benet of
its members as a whole, and in doing so have regard
(amongst other matters) to the following factors:
(a)
the likely consequences of any decision in the
long-term;
(b)
the interests of the company’s employees;
(c)
the need to foster the company’s business
relationships with suppliers, customers and
others;
(d)
the impact of the company’s operations on the
community and the environment;
(e)
the desirability of the company maintaining
a reputation for high standards of business
conduct; and
(f)
the need to act fairly as between members of the
company.
Division of Responsibilities
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
61
GOVERNANCE REPORT
Board and Committee meetings and
attendance
The Board’s plan is to have a combination of remote
and face-to-face meetings. During the period, due to the
pandemic, the Board and its Committees conducted most
meetings remotely through video calls to enable the Board
to continue to function and maintain the integrity of our
governance structure. The Board plans to have more
physical meetings as planned at the IPO which would be
held in either of Vilnius, Tallinn or London as soon as is
practical and safe to do so.
The table below sets out attendance at the scheduled
meetings during the year. Attendance is expressed as the
number of scheduled meetings attended out of the number
of such meetings possible or applicable for the Director to
attend.
During the period, the Non-Executive Directors held one
additional meeting without the Executive Directors present.
In the event a Director was unable to attend a meeting
they still received all the papers for the meeting and were
updated on matters discussed at the meeting.
External commitments and conicts of
interest
The Company is mindful of the time commitment required
from Non-Executive Directors in order to effectively full
their responsibilities on the Board, particularly providing
constructive challenge and holding Senior Management to
account and utilising their diverse skills and experience to
benet the Company and provide strategic guidance.
As part of any appointment process, any prospective
Directors are asked to provide details of any other roles or
signicant obligations that may affect the time available for
them to commit to the Company. The Chair and the Board
are then kept informed by each Director of any proposed
external appointments or other signicant commitments as
they arise which are monitored.
Board Director
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
Trevor
Mather
14 / 14 3 / 3
1
Justinas
Šimkus
14 / 14 3 / 3
1
2 / 2
1
4 / 4
1
Lina
Mačienė
14 / 14 3 / 3
1
2 / 2
1
4 / 4
1
Simonas
Orkinas
14 / 14 3 / 3
1
2 / 2
1
4 / 4
1
Ed
Williams
14 / 14 3 / 3 2 / 2 4 / 4
Tom Hall
12 / 14 3 / 3
1
2 / 2 4 / 4
1
Kristel
Volver
14 / 14 3 / 3 2 / 2 4 / 4
1
Attended by invitation
The Chair’s approval is required prior to a Director taking on
any additional external appointment. The Chair’s approval
will only be given once the Chair is satised and the Director
conrms that, as far as they are aware, there are no conicts
of interest.
Non-Executive Director Tom Hall is a partner of Apax Partners
and a director of other entities in which the funds advised
by Apax Partners have an interest. The Major Shareholder is
controlled by funds advised by Apax Partners.
Each Director’s biographical details and signicant time
commitments outside of the Company are set out in the
Board biographies on pages 50 to 51.
Change in Directors’ commitments
Shortly after the year-end on 17 May 2022, the Board
appointed Jurgita Kirvaitienė as an additional Independent
Non-Executive Director. For more details on this appointment
see the Nomination Committee Report on page 66.
Conicts of interest
The Companies Act 2006 provides that Directors must
avoid a situation where they have, or may have, a direct
or indirect interest that conicts, or possibly may conict,
with the Company’s interests. Boards of public companies
may authorise conicts and potential conicts, where
appropriate, if their company’s articles of association
permit, which the Articles do.
The Board has established formal procedures for the
declaration, review and authorisation of any conicts of
interest of Board members. As part of the induction process,
a newly appointed Director will be required to disclose
any conicts of interest to the Company. Thereafter, each
Director has an opportunity to disclose conicts at the
beginning of each Board and Committee meeting and as
part of an annual effectiveness review.
During the year, none of the Directors declared to the
Company any actual or potential conicts of interest
between any of their duties to the Company and their
private interests and/or other duties, except in the case of
the Executive Directors, each of whom holds the position of
Director of the Company and director of a number of Group
subsidiary companies.
Board eciency and information for
Directors
The Chair is responsible for ensuring that all of the Directors
are properly briefed on issues arising at Board meetings and
that they have full and timely access to accurate, relevant
information. To enable the Board to discharge its duties,
all Directors receive appropriate information, including
brieng papers distributed in advance of the Board
meetings. Directors can, where they judge it to be necessary
to discharge their responsibilities as Directors, obtain
independent professional advice at the Company’s expense.
The Board Committees have access to sucient resources
to discharge their duties, including external consultants
and advisors and access to internal resources and relevant
personnel. The Directors also have access to the advice and
services of the Company Secretary as required.
Division of Responsibilities
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
62
GOVERNANCE REPORT
Board Composition, Succession and
Evaluation
Code Principle
J
Appointments to the Board See page 62
K
Board composition See page 62
L
Annual Board evaluation See page 52
Independence
Chair
Independent NED
Non-Independent Director
1
2
4
30 April
2022
17 May
2022
1
3
4
30 April
2022
17 May
2022
Appointments to the Board
The Board is collectively responsible for the long-term
success of the Group. The business of the Group is
managed by the Board who may exercise all the powers
of the Company. The Board delegates certain matters
to the Board Committees, and delegates the detailed
implementation of matters approved by the Board and the
day-to-day operational aspects of the business to its Senior
Management.
During the period under review, the Board was composed of
three Executive Directors and four Non-Executive Directors.
One Non-Executive Director represents a Major Shareholder,
for details on this see page 7. Details of all appointments
are disclosed in the Prospectus. Biographies for each
Director are available on pages 50 to 51. Shortly after the
year-end, the Board appointed Jurgita Kirvaitienė as an
additional Independent Non-Executive Director bringing
its total number to three Executive Directors and ve Non-
Executive Directors.
Succession planning
The Nomination Committee is responsible for succession
planning and continues to focus both on the optimal
composition of the Board and for emergency situation
planning.
For more on the Nomination Committee’s responsibilities in
relation to succession planning, see page 66.
Board composition
During the year, each Director participated in a diversity,
skills and experience analysis as part of a process to ensure
that the composition of the Board has the appropriate
balance of skills and experience.
Factors that are taken into account when assessing the
composition of the Board include a broad range of diversity
characteristics as indicated below and particular skills
and experience considered to be relevant to this particular
Group in this sector. Board independence and tenure is also
considered.
The Board is satised that it has the appropriate range of
skills, experience, independence and knowledge of the
Group to enable it to effectively discharge its duties and
responsibilities. The matrix on page 64 details some of
the key skills and experience that the Board has identied
as valuable to the effective oversight of the Group and
execution of its strategy.
Board tenure
The Non-Executive Directors post IPO, were all appointed on
2 June 2021, and Jurgita was appointed on 17 May 2022
and therefore there is no issue with Board tenure.
Independence
The Code recommends that at least half the board of
directors of a company, excluding the Chair, should comprise
non-executive directors whom the board considers to be
independent. Noting that the Chair is only independent upon
appointment. As at the year-end date, the Company did not
comply with the Code requirement to have at least half of
the Board members as independent (Provision 11). Shortly
after the year-end on 17 May 2022, the Board appointed an
additional Independent Non-Executive Director bringing the
number of Independent Non-Executive Directors to three.
We are condent that this is a solid basis for our Board
and is sucient for providing a constructive challenge
and to provide an independent view on the running of the
Company. We will continue to monitor the composition and
diversity of the Board.
The balance of independence is in favour of the ‘Non-
Independent’ due to the role of Non-Executive Director
Tom Hall. Pursuant to the Relationship Agreement, the
Major Shareholder may appoint one Non-Executive Director
to the Board for so long as it (together with any of its
Associates) holds voting rights over 10% or more of the
Company’s issued share capital. The Major Shareholder’s
rst appointed representative Director is Tom Hall. Tom
is therefore not an Independent Non-Executive Director. If
the Major Shareholder’s shareholding fell below 10% then
Tom Hall would no-longer serve on the Board and the
Baltic Classieds Group PLC
Annual Report and Accounts 2022
63
GOVERNANCE REPORT
Board
Gender Diversity
Senior Management
1
direct reports
2
Male
Female
Male
Female
Male Female
Full Board
5 2 3 21 1
Non-Executive
Directors
Executive
Directors
73% 50%
50%
27%
Independent and Non-Independent Directors would equal 3
and 3 respectively plus the Chair.
The Major Shareholder will consult in advance with the
Nomination Committee regarding the identity of any Director
proposed to be nominated by it. In addition, for so long as
the Major Shareholder (together with any of its Associates)
holds voting rights over 10% or more of the Company’s
issued share capital, the Major Shareholder’s representative
Director shall be a member of the Nomination Committee
and shall be entitled to attend as an observer all meetings
of the Audit Committee and the Remuneration Committee.
Diversity and Inclusion
The Board considers a truly diverse Board, representative
of its Stakeholders, leads to better outcomes and improved
decision making.
The Board is keen to strengthen and maintain female
representation in senior roles and this year the Company
contributed to the FTSE Women Leaders Review, an initiative
which aims to increase female leadership within the FTSE
350. The Group is proud to be acknowledged by the 2021
FTSE Women Leaders Review and ranked among Top Ten
Best Performers within the FTSE 250 and to be number one
within the Technology sector of the FTSE 350. Although
we acknowledge that we still have far to go, particularly
in light of the recommendations to increase female board
representation to 40% by 2025.
Like most organisations, particularly those in the technology
sector, there is signicant room for improvement in terms
of diversity. We understand that at present there is a lack
of ethnic diversity both on our Board and in our workforce.
We continue to be an equal opportunities employer and we
recruit based on talent, skill and experience.
Figures above taken as at 30 April 2022
1
Senior Management team is made up of the three Executive Directors and eight portal managers
2
Executive Management direct reports here are dened as the direct reports of the three Executive Directors, including eight portal managers.
Board engagement with Diversity and Inclusion:
•
Board skills and experience analysis and review
•
Approved the Board Diversity Policy
•
Monitoring diversity levels across the organisation
For more information on Diversity and Inclusion in the
workforce, see page 38 in the Strategic Report.
Board Induction, Training and
Professional Development
Prior to Admission, the Company’s external lawyers provided
all Directors with training in respect of their legal, regulatory
and governance duties, responsibilities and obligations.
Board members also received technical training on Board
policies including:
•
Anti-Bribery
•
Anti-Money Laundering
•
Fraud Prevention
•
Whistle-Blowing
•
Conicts of interest
•
Board and Committee procedures and constitutional
documents including Matters Reserved for the Board
and Committee Terms of Reference
All Directors who had not previously worked with the Group
then participated in a range of meetings with members of the
Senior Management to familiarise them with the business
and its strategy and goals. Equivalent arrangements will be
put in place for future Board appointments when induction
will be the responsibility of the Chair and the Company
Secretary.
Board Composition, Succession and Evaluation
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
64
GOVERNANCE REPORT
5
7
3
6
7
3
2
2
3
1
1
1
1
Diversity characteristics
Figures above taken as at 30 April 2022
Age
30-35
35-40
50-55
55-60
Disability
None
Highest level of education
Masters
Bachelors
Nationality
Lithuanian
British
Estonian
Ethnicity
White
Gender
Male
Female
Combination of skills and experience as identied by the Board
Knowledge of operating classieds businesses
Pricing and packaging
Finance
M&A
Technology and innovation
Digital business
7
6
4
6
4
6
Figures above taken as at 30 April 2022
The Board receives regular corporate governance updates
including:
•
Market Abuse Regulations including their
responsibilities as a PDMR and other matters
pertaining to the Share Dealing Code and insider
dealing
•
Investor relations and understanding our investor
base and share register
•
TCFD Reporting
Board meetings generally include one or more presentations
from Senior Management on areas of strategic focus.
Specic business-related presentations are given to the
Board by Senior Management and external advisors when
appropriate.
Board effectiveness review
The rst evaluation of the operation and effectiveness of
the Board, its Committees and individual Directors will take
place during the nancial year ending 2023. The Board
intends to comply with the Code recommendation that
an externally facilitated evaluation should take place at
least every three years and for the Chair and the Company
Secretary to carry out internal Board and Committee reviews
for the intervening years.
Annual General Meeting and Director
re-election
The Company’s Articles of Association specify that a
Director appointed by the Board must stand for election
at the rst AGM subsequent to such appointment and at
each AGM thereafter, every Director shall retire from oce
and seek re-election by Shareholders. This is in line with the
Code, which recommends that Directors should be subject
to annual re-election.
All Directors, having been appointed during the period under
review, will stand for election at the Company’s 2022 AGM.
The Board therefore recommends that Shareholders approve
the resolutions to be proposed at the Annual General
Meeting 2022 relating to the election of the Directors.
Board Composition, Succession and Evaluation
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
65
GOVERNANCE REPORT
Audit, Risk and Internal Control
The Board’s objective is to give Shareholders a fair,
balanced and understandable assessment of the Group’s
position and prospects for the business model and strategy
and it has responsibility for preparing the Annual Report.
The Board is also responsible for maintaining adequate
accounting records and seeks to ensure compliance with
statutory and regulatory obligations. An explanation from
the Directors about their responsibility for preparing the
nancial statements can be found in the Statement of
Directors’ Responsibilities in the Directors’ Report.
The Board, with the assistance of the Audit Committee,
monitors and oversees the Group’s risk management
process. At least twice a year the Board reviews and
approves the risks identied and the mitigation plan
suggested by the Executive Management.
The Board has established a management structure with
dened lines of responsibility and clear delegation of
authority. This includes controls relating to the nancial
reporting process.
As part of preparation for the IPO, the Financial Position and
Prospects Procedures Report (the “FPPP”) was produced
where the Group’s internal controls environment was
reviewed. During the nancial year, the Audit Committee
followed up on the remaining open action points that were
identied in the FPPP until all were closed.
Code Principle
M
Effectiveness of External Auditor and
Internal Audit and integrity of accounts
See page 52
N
Fair, balanced and understandable
assessment of Company’s prospects
See page 103
O
Internal nancial controls and risk
management
See page 65
Remuneration
The Board is conscious that remuneration policies and
practices must be designed to support strategy and
promote the long-term sustainable success of the Group.
It delegates responsibility to the Remuneration Committee
to ensure that there are formal and transparent procedures
for developing policy on Executive remuneration and
determining Director and Executive Manager remuneration.
Code Principle
P
Linking remuneration with purpose and
strategy
See page 76
Q
A formal and transparent procedure for
developing policy
See page 76
R
Independent judgment and discretion See page 76
The Audit Committee is in the process of establishing an
Internal Audit function which it anticipates reporting on
in the next nancial year. The Board was very involved in
prioritising the risks to be covered by the Internal Audit rst.
On behalf of the Board, the Audit Committee plans to review
the Group’s internal control systems, enabling the Executive
Management to consider how to manage or mitigate risk in
line with the Group’s risk strategy.
How the Board has assessed the Group’s longer-term
viability can be found on page 45, the adoption of the Going
Concern basis on page 118 and the Directors’ assessment
of whether the Annual Report and Accounts is fair, balanced
and understandable can be found on page 103.
The Committee and the Group were proud to
be acknowledged by the FTSE Women Leaders
Review as among the Top Ten Best Performers
within the FTSE 250 and to be number one
within the Technology sector of the FTSE 350,
with 33% of Executive Directors being female.
Nomination Committee membership
Trevor Mather
- Chair - Appointed on 2 June 2021
Non-Executive Director
Kristel Volver
- Appointed on 2 June 2021
Independent Non-Executive Director
Ed Williams
- Appointed on 2 June 2021
Senior Independent Non-Executive Director
Tom Hall
- Appointed on 2 June 2021
Non-Executive Director
Jurgita Kirvaitienė
- Appointed on 17 May 2022
Independent Non-Executive Director
▸
Committee meeting attendance can be found on page 61.
▸
Committee Terms of Reference can be found on our corporate
website at: balticclassieds.com/corporate-governance.
Trevor Mather
Chair of the Nomination Committee
“
Nomination Committee Report
66
GOVERNANCE REPORT
Baltic Classieds Group PLC
Annual Report and Accounts 2022
67
GOVERNANCE REPORT
Key responsibilities
Board and Executive Management Composition:
•
Review the structure, size and composition of the
Board, its Committees and the Executive Management
team; and
•
Evaluate the combination of skills, experience,
diversity, independence and knowledge on the Board,
its Committees and the Executive Management team.
Succession planning:
•
review the leadership needs of the organisation, both
Executive and Non-Executive Directors with a view to
ensuring the continued ability of the organisation to
compete effectively in the marketplace;
•
ensure plans are in place for orderly succession to
the Board and the Executive Management positions,
taking into account the challenges and opportunities
facing the Group and the skills and expertise needed
on the Board and in the Executive Management team
in the future;
•
have oversight over talent development with a view
to monitoring and overseeing the development of a
diverse pipeline within the Group; and
•
identify and nominate potential candidates for
Board vacancies as and when they arise, in line with
succession planning.
Main activities during the Year
Since Admission on 5 July 2021, the Committee has met
twice and its key activities were:
•
formal adoption of the Committee’s Terms of
Reference;
•
succession planning for the Board and for the
Executive Management team;
•
reviewing gender and ethnic diversity, including the
adoption of a Board Diversity Policy; and
•
post year-end, appointment of a new Independent
Non-Executive Director.
Board effectiveness:
•
review the independence and time commitment of the
Non-Executive Directors;
•
review and act upon the results of the Board
performance evaluation process and assess how
effectively members work together to achieve
objectives; and
•
review the interaction between the Board and its
Committees.
Diversity and Inclusion
•
oversee Diversity and Inclusion across the Group and
to monitor progress made against objectives.
Planning for Financial Year Ending
2023
•
Internal Board evaluation anticipated to take place
during the rst half of the 2023 nancial year.
•
Continued succession planning of Board and Senior
Management team.
•
Induction of the newly appointed Independent Non-
Executive Director.
•
Search for a further Independent Non-Executive
Director with an ethnically diverse background
(representative of the Baltic region).
•
Continued activities and monitoring around diversity.
Dear Shareholders
On behalf of the Board, I am pleased to present the
Company’s rst Nomination Committee Report, for the
nancial year ending 30 April 2022.
Board composition
As part of the preparation for the Admission there was
a Group corporate restructure which resulted in the
incorporation of Baltics Classieds Group PLC and the
appointment of its full Board of Directors.
The appointment process concentrated on independence,
diversity and ensuring a combination of skills including
listed company and committee experience to complement
the Executive Directors.
I am delighted to say that, as promised at the IPO, shortly
after the year end we appointed a further Independent Non-
Executive Director.
On 17 May 2022, Jurgita Kirvaitienė was appointed to the
Board as an additional Independent Non-Executive Director.
After an extensive network search and fantastic response
from our advert on our own CVBankas, we had a strong
shortlist, and we are delighted to welcome Jurgita who
brings extensive nancial, audit, internal audit and a diverse
Board experience to BCG.
The appointment of Jurgita strengthens our female
representation on the Board and brings the number of
Independent Non-Executive Directors to three. We feel this
is a good foundation for offering a constructive challenge
and independent oversight of the running of the Company.
Nomination Committee Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
68
GOVERNANCE REPORT
Appointment to the Board of Independent Non-Executive Director
The appointment process includes the following stages:
Evaluate Board composition and
determine ideal capabilities of
proposed appointee
Advertise role and determine
long list of potential candidates
Rene short list of potential
candidates and complete
interviews
Consideration and approval by
Nomination Committee
Consideration and approval
by Board
Evaluate the Board’s skills, experience, independence, diversity and knowledge
and utilise this to develop a specication which reects the role and specic
capabilities required.
Advertise the role using open advertising and by instructing external
recruitment advisors with the necessary expertise. Identify a long list of
potential candidates based on, amongst other things, experience, merit and
diversity.
Determine a short-list and invite the potential candidates to complete a formal
interview process. Interview process facilitated by various Board members but
specically the Chair, Chief Executive Ocer and Audit Committee Chair.
Nomination Committee to consider the short-listed candidates and feedback
from the interview process from both interviewers and interviewee. Determine
the preferred candidate and recommend their appointment to the Board for
approval.
Board to consider, and if thought t, approve the proposed appointment of the
preferred candidate. Market announcement is made by the end of the next
working day following the Board’s decision.
The Board is satised that it has the appropriate range of
skills, experience, independence and knowledge of the
Group to enable it to effectively discharge its duties and
responsibilities. Details of the key skills and experience
that the Board has identied as valuable to the effective
oversight of the Group and execution of its strategy can be
found on page 64.
Diversity and Inclusion
The Committee regards breadth of Board representation
as a key area of focus. During the course of the year, the
Committee has met to consider and approve a Board
Diversity Policy and already meets the Hampton-Alexander
target for 33% representation of women on the Board.
At the date of this report, the Board has 37.5% female
representation. The Board commits to comply with the FCA
target of 40% of women on the Board by 2024 and it already
complies with the recommendation of one of the senior
Board positions (in our case our CFO) being female.
The Committee and the Group were proud to be
acknowledged by the FTSE Women Leaders Review as
among the Top Ten Best Performers within the FTSE 250
and to be number one within the Technology sector of the
FTSE 350, with 33% of Executive Directors being female.
Across all levels of employment, the Group employs 49%
colleagues who identify as male and 51% colleagues who
identify as female.
The FRC UK Corporate Governance Code 2018 (the “Code”)
recommends that at least half the board of directors of
a company, excluding the Chair, should comprise Non-
Executive Directors whom the board considers to be
independent. At the year-end, excluding the Chair, our Board
was composed of three Executive Directors and three Non-
Executive Directors, two of whom are Independent. Following
the appointment of Jurgita, this number (excluding the
Chair) is three Executive directors, three Independent Non-
Executive Directors and a Non-independent Non-Executive
Director.
•
Details of all appointments are disclosed in the
Prospectus.
•
Biographies for each Director are available on pages
50 to 51.
•
For more information on the appointment of Jurgita,
see the process described below.
Skills, experience and diversity
evaluation
The Board is collectively responsible for the long-term
success of the Group. The business of the Group is
managed by the Board who may exercise all the powers
of the Company. The Board delegates certain matters
to the Board Committees, and delegates the detailed
implementation of matters approved by the Board and
the day-to-day operational aspects of the business to its
Executive Management.
Nomination Committee Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
69
GOVERNANCE REPORT
The Board is aware of the recommendations of the Parker
Review to include one or more Directors from a diverse
ethnic background (as dened by the Parker Review) and
discussions on how to improve this for the Group have
begun and will be a focus for the next nancial year. Ethnic
diversity is an identier for a minority population subgroup
which is broadly accepted to be a combination of national
origin, racial origin, and cultural identity. It is clear that who
is in a minority or majority subgroup of any population will
vary by country and region and given that Baltic Classieds
Group operates all business in the Baltic region, due
consideration needs to be given to this and the difference
to that of the UK or the US needs to be considered.
We understand the FCA is introducing ‘comply or explain’
disclosure requirements for companies with nancial years
starting after April 2022, to state that at least one member
of the board should be from an ethnic minority background
excluding white ethnic groups (as set out in categories used
by the Oce for National Statistics (“ONS”). Given that
national minorities are recognised in Lithuania, Estonia and
Latvia and the ONS states that Nationality is an aspect of
ethnicity; especially where signicant migration has taken
place, we believe our starting point should be to open up
the discussion of diversity further, starting with national
considerations.
See gures 1, 2 and 3 for the current ethnicity distribution
in each of Lithuania, Latvia and Estonia which are countries
relevant to the Group in terms of employees and Directors.
Lithuanians
Poles
Russian
Belarussian
Ukrainian
Other
Latvian
Russian
Belarussian
Ukrainian
Poles
Other
Estonian
Russian
Belarussian
Ukrainian
Poles
Other
Figure 2.
Latvian population
by ethnicity
Figure 3.
Estonian population
by ethnicity
Figure 1.
Lithuanian
population by
ethnicity
Here we can clearly see the ethnic diversity of these
countries does include white ethnic groups. In terms of
openness and transparency of our Diversity and Inclusion,
we feel this data is important to demonstrate both the
context and the pool of resources available to the Group.
Compliance with this new disclosure requirement will not
be as straight-forward for the Group as it might be for those
entities located in the United Kingdom by comparison
The Group will continue opening up the discussion around
diversity. When considering Board appointments and hiring
or promoting to leadership positions, the Group will continue
to take account of its diversity targets, while seeking to
ensure that each post is offered on merit.
Induction and training
Prior to Admission, the Company’s external lawyers
provided all Directors with training in respect of their legal,
regulatory and governance duties, responsibilities and
obligations. All Directors who had not previously worked
with the Group then participated in a range of meetings with
members of the Senior Management team to familiarise
them with the business and its strategy and goals.
Equivalent arrangements will be put in place for future
Board appointments.
Board meetings generally include one or more presentations
from Senior Management on areas of strategic focus.
Specic business-related presentations are given to the
Board by Senior Management and external advisors when
appropriate.
For our newest Board member, an induction plan has been
created including 1:1 meetings with Executive Directors,
and a pack of material covering Company history, business
overview, Company culture, governance and nances as
well as the key IPO documents prepared.
Board evaluation
As this is the rst year operating as a Board, the Board has
decided that the most effective time to carry out a Board
effectiveness review will be in the early part of the next
nancial year. The Board intends to comply with the Code
recommendation that an externally facilitated evaluation
should take place at least every three years.
Election and re-election of Directors
In accordance with the Code, all Directors will offer
themselves for election by Shareholders at the AGM. Both
the Committee and the Board are satised that all Directors
continue to be effective in, and demonstrate commitment
to, their respective roles on the Board and that each makes
a valuable contribution to the leadership of the Company.
The Board therefore recommends that Shareholders
approve the resolutions to be proposed at the 2022 AGM
relating to the election of the Directors.
I will be available at the AGM to answer any questions about
the work of the Nomination Committee.
Trevor Mather
Chair of the Nomination Committee
6 July 2022
Source: Ofcial Statistics Portal of Lithuania, Ofcial Statistics Portal
of Latvia, Statistics Estonia
Nomination Committee Report
continued
The Annual Report,
taken as a whole, is fair,
balanced and understandable
Audit Committee membership
Kristel Volver
- Chair - Appointed on 2 June 2021
Independent Non-Executive Director
Ed Williams
- Appointed on 2 June 2021
Independent Non-Executive Director
Jurgita Kirvaitienė
- Appointed on 17 May 2022
Independent Non-Executive Director
Kristel Volver
Chair of the Audit Committee
“
Audit Committee Report
70
GOVERNANCE REPORT
▸
Committee meeting attendance can be found on page 61.
▸
Committee Terms of Reference can be found on our corporate
website at: balticclassieds.com/corporate-governance.
Baltic Classieds Group PLC
Annual Report and Accounts 2022
71
GOVERNANCE REPORT
Key responsibilities
•
To assist the Board in discharging its responsibilities
with regard to: nancial reporting; external and
internal audits and controls, including reviewing and
monitoring the integrity of the Group’s annual and
interim nancial statements.
•
Reviewing and monitoring the extent of the non-audit
work undertaken by the External Auditor, advising on
the appointment of the External Auditor, overseeing
the Group’s relationship with its External Auditor,
reviewing the effectiveness of the external audit
process.
•
Reviewing the effectiveness of the Group’s internal
audit, internal controls, Whistle-Blowing and fraud
systems.
Main activities during the year
Since Admission on 5 July 2021 the Committee met three
times and its key activities were:
•
Formally adopting the Committee’s Terms of
Reference
•
Review of the Group’s progress in regards to the areas
for improvement identied in the Group’s Financial
Position, Prospects and Procedures Report (“FPPP”)
prior to Admission.
•
Approving the appointment of KPMG as the Group’s
External Auditor.
•
Discussion and approval of the Group’s approach
to internal audit for 2023, development of a plan for
subsequent 2 years.
•
Review of the Group’s GDPR , disaster recovery and
cybersecurity arrangements.
•
Assessment of the integrity of the Group’s half-
year report, considering the application of nancial
reporting and governance standards.
•
Review of Management’s approach to any key
judgmental areas of reporting and the related
comments of the External Auditor.
•
In line with the UK Corporate Governance Code 2018
(the “Code”), all members of the Audit Committee are
independent. The Chair of the Committee has recent
and relevant nancial experience and both members
are deemed to have competence relevant to the sector
in which the Company operates.
•
The Committee notes the Code’s requirement for
a Company of its size to have an Audit Committee
membership of three; with Jurgita Kirvaitienė joining
the Board and the Audit Committee as an Independent
Non-Executive Director shortly after the year-end on
17 May 2022, the Company became compliant in this
regard.
•
All Board members and external as well as Internal
Auditors may attend meetings by invitation.
•
The Group’s External Auditor is KPMG.
•
Deloitte has been engaged to start providing internal
audit services which will commence in the rst half of
the next nancial year.
Planning for nancial year ending April
2023
•
Oversee and scrutinise the preparation of the Group’s
nancial statements for the year ended 30 April 2022
and assess whether suitable accounting policies have
been adopted.
•
Assess the Group’s going concern and viability
statements.
•
Assess the use of Alternative Performance Measures
in the Annual Report.
•
Conrm to the Board that the Annual Report is fair,
balanced and understandable.
•
Develop and implement a formal policy on the
engagement of the External Auditor to supply non-
audit services.
•
Monitor and review the effectiveness of the internal
audit function.
•
Review the effectiveness of the external audit process.
•
Review the adequacy and effectiveness of the Group’s
anti-money laundering systems and controls.
•
Review the adequacy and effectiveness of the Group’s
compliance function.
•
Review the Group’s internal controls systems,
procedures for detecting fraud and Whistle-Blowing
procedures.
Audit Committee Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
72
GOVERNANCE REPORT
Dear Shareholders
I am pleased to present the Group’s rst Audit Committee
report. This report provides a summary of the Committee’s
role and activities for the period from Admission on 5 July
2021 to the end of the nancial year ended 30 April 2022
and sets out the work that the Committee has performed in
respect of this Annual Report.
In accordance with the Code, the Committee is composed
entirely of Independent Non-Executive Directors and
the Chair of the Company is not a member of the Audit
Committee. We did not comply with the Code’s requirement
to have a minimum of three members at year-end, however
with Jurgita Kirvaitienė joining the Board and the Audit
Committee as an Independent Non-Executive Director
shortly after the year-end on 17 May 2022, we became
compliant in this regard. I full the requirement for a
Committee member to have recent and relevant nancial
experience, and all members have competence in consumer
and digital businesses. New Audit Committee members
also have recent and relevant nancial experience. The
biographies of each member of the Committee are set out
on pages 50 to 51.
From the date of Admission on 5 July 2021 until the end of
nancial year ended 30 April 2022, there were three Audit
Committee meetings. All meetings were attended by both
Committee members. The Group’s External Auditor, KPMG,
attended two out of three Audit Committee meetings held
during the nancial year. The rest of the Board attended the
meetings by invitation. Both KPMG and the newly appointed
Internal Auditor, Deloitte, will regularly attend future
meetings as invited. The External Auditor has direct access
to me as the Audit Committee Chair to raise any concerns
outside of formal Committee meetings. The Committee also
plans to periodically set time aside to seek the views of the
External Auditor, without the presence of Management. The
rst such meeting took place after the end of the nancial
year ended 30 April 2022.
The Committee’s Terms of Reference include: monitoring
the integrity of the Group’s nancial reporting; effectiveness
of the internal control and internal audit; and the
independence and effectiveness of external audit. The
Internal Audit function will be outsourced to Deloitte, who
will provide the Group with specialist expertise in delivering
a risk-based review programme.
During the year, the main focus of the Committee was
on the approach towards the internal audit and nancial
reporting. The plan for the upcoming year is to review the
effectiveness of both the internal and external audit as well
as reviewing the adequacy and effectiveness of certain
controls and procedures within the Group.
The Committee has reviewed the content in this 2022
Annual Report and considers that it explains the Group’s
strategy, nancial performance and position in a way which
we believe to be fair, balanced and understandable. Whilst
this Audit Committee Report contains some of the matters
addressed during the year, it should be read in conjunction
with the External Auditor’s report starting on pages 106 to
111 and the nancial statements in general.
At the 2022 AGM, Shareholders will vote on the Board’s
recommendation to re-appoint KPMG as the Group’s
External Auditor. During the nancial year ending 2023, the
Committee will carry out a review of the effectiveness and
continued independence of KPMG.
Financial reporting
The Committee is responsible for reviewing the
appropriateness of the Group’s half-year report and annual
nancial statements.
In the preparation of the Group’s nancial statements for the
nancial year ended 30 April 2022, the Committee assessed
the accounting principles and policies adopted, Alternative
Performance Measures used and whether Management
had made appropriate estimates and judgments. In doing
so, the Committee discussed Management reports and
enquired into judgments made. The Committee reviewed
the reports prepared by the External Auditor on the 2022
Annual Report.
The Committee, together with Management, identied
signicant areas of nancial statement risk and judgment
as described below.
Audit Committee Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
73
GOVERNANCE REPORT
Signicant area
Audit Committee action
Revenue recognition
As more fully described in note 3 to the nancial statements,
the Group’s revenue is derived from listing fees on the
Group’s platforms, advertising and nancial intermediation
services. There are a number of different duration service
packages available for customers. In line with IFRS15, the
Group recognises this revenue over time based on service
usage.
Revenue is an area of focus, in particular the timing of
recognition of revenue. The Group’s revenue is accounted
over time based on service usage.
The Committee reviewed the rationale and the process
implemented to account for the revenue based on usage
and disclosure around revenue recognition made by
Management.
The Committee was satised with the explanations provided
and conclusions reached in relation to revenue recognition.
Going concern and viability statement
The Directors must satisfy themselves as to the Group’s
viability and conrm that they have a reasonable expectation
that it will continue to operate and meet its liabilities as
they fall due. The period over which the Directors have
determined it is appropriate to assess the prospects of
the Group has been dened as three years. In addition, the
Directors must consider if the going concern assumption is
appropriate.
In assessing the validity of the viability and going concern
statements detailed on page 45, the Committee reviewed
the work undertaken by Management to assess the Group’s
resilience to the Principal Risks set out on pages 41 to
44 under various stress test scenarios. The Committee
concluded that the viability time period of three years
remained appropriate. The Committee was satised that
sucient rigour was built into the process to assess going
concern and viability over the designated periods.
Goodwill
The Group has a signicant balance of goodwill that arose
during acquisitions and it is considered to be a signicant
estimate.
An impairment review is performed of goodwill balances by
the Group on a ‘value in use’ basis. This requires judgment
in estimating the future cash ows and the time period over
which they occur, arriving at an appropriate discount rate
to apply to the cashows as well as an appropriate long-
term growth rate. Each of these judgments has an impact
on the overall value of cashows expected and therefore
the headroom between the cashows and carrying values
of the cash generating units.
The Committee has reviewed the assumptions made
and judgments applied by Management and, after due
discussion, was content with the outcome of the impairment
review.
Group restructure / IPO
As part of the preparation for the IPO in July 2021, the Group
completed a series of reorganisation steps and renanced
the external debt. Subsequent to the successful IPO, the
Group has completed a number of steps to simplify its legal
entity structure.
The Committee reviewed the assumptions made in respect
of the reorganisation and legal entity simplication and was
satised that these were appropriately accounted for under
IFRS.
The Committee has satised itself that accounting for
the Group reorganisation using common control merger
accounting is appropriate. The Committee is also satised
with the disclosure and accounting policy, and the adequacy
of related party disclosures.
Share based payments
The Company has two share-based payment arrangements,
accounted for under IFRS 2. These require the use of
valuation models and certain assumptions in determining
their fair value at grant date and in the recognition of
charges in the income statement.
Share-based payment arrangements in which the Group
receives goods or services as consideration for its own
equity instruments are accounted for as equity settled
share-based payment transactions. The grant date fair value
of share-based payment awards granted to employees is
recognised as an employee expense, with a corresponding
increase in equity, over the period that the employees
become unconditionally entitled to the awards.
The Committee has reviewed the judgments made in this
area by Management and, after due discussion, was content
with the assumptions made and the judgments applied.
The Audit Committee has also considered the opinion of
KPMG as to the reasonableness of the assumptions made
in estimating the share-based payment charge.
Audit Committee Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
74
GOVERNANCE REPORT
Is the report fair?
•
Is the whole story presented and has any sensitive material been omitted that should have
been included?
•
Are key messages in the narrative aligned with the KPIs and are they reected in the nancial
reporting?
Is the report balanced?
•
Do you get the same messages when reading the front end and back end of the Annual
Report independently?
•
Are threats identied and appropriately highlighted?
•
Are the Alternative Performance Measures explained clearly with appropriate prominence?
•
Are the key judgments referred to in the narrative reporting and signicant issues reported
in this Committee Report consistent with disclosures of key estimation uncertainties and
critical judgments set out in the nancial statements?
•
How do these judgments compare with the risks that KPMG are planning to include in their
Auditor’s Report?
Is the report
understandable?
•
Is there a clear and cohesive framework for the Annual Report?
•
Are the important messages highlighted appropriately throughout the Annual Report?
•
Is the Annual Report written in easy to understand language and are the key messages
clearly drawn out?
•
Is the Annual Report free of unnecessary clutter?
Conclusion
Following its review, the Committee is of the opinion that the Annual Report, taken as a whole,
is fair, balanced and understandable and provides the information necessary for Shareholders to
assess the Group’s position, performance, business model and strategy.
Fair, balanced and understandable
At the request of the Board, the Committee has reviewed
the content of the Annual Report and considered whether,
taken as a whole, in its opinion it is fair, balanced and
understandable and provides the information necessary
for Shareholders to assess the Company’s position,
performance, business model and strategy. The Committee
was provided with a draft of the Annual Report and
the opportunity to comment where further clarity or
information should be added. The nal draft was then
recommended for approval by the Board. When forming
its opinion, the Committee had regard to discussions held
with Management and reports received from the External
Auditor. To aid with forming its opinion, the Committee
considered the questions below.
Internal Audit
The Committee has undertaken a review of internal audit
providers, with the decision made by the Committee to
appoint Deloitte as the Group’s outsourced Internal Audit
function. They are accountable to the Audit Committee
and use a risk-based approach to provide independent
assurance over the adequacy and effectiveness of the
control environment.
The internal audit plan for the nancial year ending 2023
was approved by the Audit Committee held on 21 March
2022 with work commencing during the rst half of the
nancial year ending 2023. It will cover a broad range of
core nancial and operational processes and controls,
focusing on specic risk areas. The Committee will review
Deloitte’s performance annually as Internal Auditor.
Audit Committee Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
75
GOVERNANCE REPORT
External Auditor
One of the Committee’s roles is to oversee the relationship
with the External Auditor, KPMG, and to evaluate the
effectiveness of the service provided and their ongoing
independence. The Committee received and discussed
KPMG’s review of the half-year report to 31 October 2021
and its audit of the nancial statements for the nancial
year ended 30 April 2022. The Committee Chair met with
representatives from KPMG without Management present
and also with Management without representatives of
KPMG present, to ensure that there were no issues in the
relationship between Management and the External Auditor
to be addressed. There were none.
One of the Committee’s roles is to evaluate the effectiveness
of audit services provided and ongoing independence.
Due to the ten-month only period between Admission to
listing and the publication of this report, the Committee
plans to carry out a formal evaluation of the performance
and effectiveness of the External Auditor in the rst half
of the next nancial year once the whole year audit cycle
is complete. A statement will be included in the 2023
Annual Report detailing the upcoming review of KPMG.
The recommendation to reappoint KPMG in the future will
depend on continuing satisfactory performance and value
for money.
Non-audit services provided by the
External Auditor
The External Auditor is primarily engaged to carry out
statutory audit work. There may be other services where
the External Auditor is considered to be the most suitable
supplier by reference to their skills and experience. The
Committee is planning to develop a formal policy on the
engagement of the External Auditor to supply non-audit
services in the rst half of the nancial year ending 2023.
During the nancial year ended 30 April 2022, KPMG charged
the Group €0.1 million for audit-related assurance services,
that includes fees for the half-year review. During this
nancial year, KPMG also charged the Group €0.8 million for
transaction related and other assurance services that relate
to the IPO, which will not be repeated in the future. No other
non-audit services were procured from KPMG during the
nancial year ended 30 April 2022.
Statement of Compliance: The Statutory Audit Services
for Large Companies Market Investigation (Mandatory Use
of Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014 (the “Order”)
A competitive tender was carried out in 2019 and KPMG
was rst appointed as statutory Auditor of Group’s top
holding company preceding Baltic Classieds Group PLC
for the year ended 30 April 2020. KPMG was contracted in
2021 to provide offering and Admission related reporting
accountant’s services and was also appointed as a statutory
Auditor of the Company following its Admission to listing.
The current external audit engagement partner is Kate Teal.
The Order has applied to the Company since September
2021, when Baltic Classieds Group PLC entered the
FTSE 250 index. The Company conrms its compliance
with the Order and intends to provide further information
on its approach to re-tender of the audit in the Annual
Report of the Company for the year ending 30 April 2023.
Any recommendation by the Audit Committee in relation
to the (re-) appointment of the statutory Auditor will take
account of the statutory Auditors’ skills, experience and
performance, and the value for money offered.
Shareholder engagement
In compliance with the Code, I will be available at the 2022
AGM to answer any questions.
Kristel Volver
Chair of the Audit Committee
6 July 2022
Audit Committee Report
continued
The Remuneration Committee believes the
new remuneration approach put in place at
Admission complies with best practice and
serves the interests of the Company and
Shareholders.
Remuneration Committee membership
Ed Williams
- Chair - Appointed on 2 June 2021
Independent Non-Executive Director
Kristel Volver
- Appointed on 2 June 2021
Independent Non-Executive Director
Trevor Mather
- Appointed on 2 June 2021
Chair of the Board (Independent on appointment)
Jurgita Kirvaitienė
- Appointed on 17 May 2022
Independent Non-Executive Director
Ed Williams
Chair of the Remuneration Committee
“
Directors’ Remuneration Report
76
GOVERNANCE REPORT
▸
Committee meeting attendance can be found on page 61.
▸
Committee Terms of Reference can be found on our corporate
website at: balticclassieds.com/corporate-governance.
Baltic Classieds Group PLC
Annual Report and Accounts 2022
77
GOVERNANCE REPORT
Key responsibilities
•
Determines the policy for rewarding Directors and the
rest of the Senior Management (the “Remuneration
Policy”) and oversees how the Group implements the
Remuneration Policy.
•
Oversees the level and structure of remuneration
arrangements for Senior Management, approves
share incentive plans and recommends them to the
Board and Shareholders.
•
Reviews workforce remuneration and related policies
with the alignment of incentives and rewards with
culture.
Main activities during the year
•
The Committee reviewed its membership and formally
adopted its Terms of Reference.
•
Deloitte was appointed as remuneration advisor.
Deloitte is a founding member of the Remuneration
Consultants Group and adheres to its Code in relation
to executive remuneration consulting in the UK. The
Committee is satised that the Deloitte engagement
team, which provided remuneration advice to the
Committee, does not have connections with Baltics
Classied Group PLC or its Directors. The Committee
is satised that the advice received is objective,
independent and free of undue inuence.
•
The Director’s Remuneration Philosophy and Policy
was approved and will be subject to a vote at the 2022
AGM.
•
Approval was given to awards under the Company’s
Performance Share Plan shortly after Admission.
•
In line with the FRC UK Corporate Governance Code
2018 (the “Code”), all members of the Committee
have relevant business experience.
•
The Chair of the Committee has previous experience
chairing the Remuneration Committee of another
(at the time) FTSE 250 business and has attended
dozens of Remuneration Committee meetings in his
capacities as CEO of Rightmove PLC and Chair of
Autotrader PLC.
•
Executive Directors, Tom Hall (Non-Executive Director)
and third-party remuneration consultants attend
meetings by invitation.
•
No individual takes part in any decision relating to
their own remuneration.
Deloitte’s fees are charged on a time and materials basis. During the year, Deloitte was paid €35,523 for advice provided to the
Committee. Deloitte was also contracted to provide Internal Audit services (see Audit Committee Report), but did not provide
any other service to the Group during the year.
Dear Shareholders
I am pleased to present Baltics Classied Group’s rst
Directors’ Remuneration Report as a listed company for the
nancial year ended 30 April 2022.
The Directors’ Remuneration Report, as approved by the
Board, comprises three parts:
Part 1:
Annual statement: this statement being my annual
report on the activities of the Remuneration
Committee during the year;
Part 2:
the Directors’ Remuneration Philosophy and
Policy: this explains how Directors will be paid from
the Admission on 5 July 2021 and will be subject to
a binding vote at the 2022 AGM; and
Part 3:
Annual Remuneration Report: which explains
how the Directors have been rewarded during the
nancial year ended 30 April 2022 and any other
matters not covered in the previous two parts. It
will be subject to an advisory vote at the 2022 AGM.
The numbers in Part 3 are for the full nancial year. The
Remuneration Policy relates to the ten months of this
reporting period in which the Company was public. This
distinction in reality makes relatively little difference to
the reported numbers, as compared to if the Company had
become public at the start of the nancial year.
The report (excluding the Remuneration Policy (on pages 79
to 94) will be subject to advisory Shareholder approval at
the 2022 AGM to be held on 28 September 2022.
Remuneration compliance
This report complies with Schedule 8 of the Large and
Medium-sized Companies and Group (Accounts and
Reports) Regulations 2008, as amended in 2013 and 2018,
the FRC UK Corporate Governance Code 2018 and the FRC
Listing Rules.
Directors’ Remuneration Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
78
GOVERNANCE REPORT
Committee composition
The Remuneration Committee comprises the two Non-
Executive Directors, namely Ed Williams and Kristel Volver,
together with the Company Chair, Trevor Mather. Their
biographies are set out on pages 50 to 51. Shortly after year
end, on 17 May 2022, Jurgita Kirvaitienė was appointed to
the Board as an Independent Non-Executive Director. As
intended, she also joined the Remuneration Committee (see
the Nomination Committee Report on page 66).
Context of remuneration
On 5 July 2021, the Company was admitted to the premium
listing segment of the Ocial List of the Financial Conduct
Authority and to trading on the London Stock Exchange’s
Main Market for listed securities. It became a constituent of
the FTSE 250 in September 2021.
With effect from the IPO, new remuneration arrangements
were introduced covering both the Executive Directors and
the other members of the Board. All full-time employees
of the business, including the Executive Directors, are
based in the three Baltics countries. This has a number of
consequences. Firstly, it was agreed that all Board members
should be compensated in line with the lower levels of
remuneration prevalent in Lithuania, where most employees
are resident, rather than in line with remuneration levels in
the country of listing - the UK. Secondly, comparable local
market public companies to use for benchmarking were not
available. Thirdly, while policies and reporting should be fully
compliant with the UK Listing best practice, there are certain
disclosures only required with regard to UK employees, such
as the CEO pay ratio.
We believe that all the remuneration arrangements put in
place are very modest, reect bottom quartile levels, and
further, have been adjusted down to reect Lithuanian
costs of living. We believe the structure of the remuneration
is amongst the simplest, quite possibly the simplest, of
any in the FTSE 250. Shareholders should be reassured
that, while Executive Directors have not been involved in
determining their own remuneration, they have, as signicant
Shareholders themselves, been supportive of these
arrangements. Therefore, in relation to our current Executive
Directors and, most likely, future Executive Directors
appointed from existing employees, we believe that these
remuneration arrangements will be motivational.
It is on these arrangements that approval for the Policy is
being sought at the 2022 AGM. They are intended to last for
a minimum of three years. On reading the details, you will see
that they have actually been designed explicitly for a ve-year
period, though any continuation would be subject to a further
Shareholder vote at the 2025 AGM or before.
Prior remuneration
Prior remuneration was disclosed in the Prospectus for
the IPO. No elements of remuneration prior to the IPO have
carried forward to the Directors. Their nancial interests in
the Company are now reected solely through their holdings
of Ordinary Shares in the Company and the Remuneration
Policy set out here. Directors did not participate in an award
of free shares made shortly after the Company’s Admission.
Malus, clawback and minimum
shareholding requirements
The Committee reviewed the malus, clawback provisions
and minimum shareholding requirements. Given these
were considered best practice (or better) at the time of the
Admission of the company in July 2021, and there have been
no material changes in recommendations from advisory
organisations, we considered our current policy to be
appropriate.
COVID-19
The Remuneration Committee is of the view that there was
no aspect of COVID-19 which should give rise to any variation
to remuneration arrangements.
Wider employee remuneration
The Committee reviews remuneration arrangements across
the Company to ensure that differences from Executive
Directors are justied and that Company remuneration
overall, is modest and appropriate. The Committee receives
regular updates regarding remuneration arrangements
across the Group. These updates are taken into consideration
when determining the Remuneration Policy for the Executive
Directors and in particular, when considering any changes to
policy and increases in the level of xed remuneration.
We can report that all remuneration for the rest of the Senior
Management is structured in the same way as for Executive
Directors, and that the levels of base salary and long-term
incentives are, in the opinion of the Committee, modest and
appropriate.
The Baltic countries do not operate any government
approved schemes to encourage employee share ownership.
Nonetheless, the Directors believe that widespread employee
share ownership is a good thing. The Board has sought to
encourage this in two ways. Firstly, through a free award of
shares of between €3 and €15 thousand in value depending
on length of tenure, to all employees in good standing (except
for the Senior Management team), following the IPO. The
awards were not subject to performance criteria or holding
periods. No Director was able to participate in this free
award. Secondly, the PSP has been, and may continue to be
used, from year-to-year to ensure that employees important
to the future of the Company have a potential opportunity
to establish and build an equity stake. This means that the
number of employees who receive awards under the PSP
every year as part of their standard remuneration, may be
low. But many of those receiving an award may do so without
it being part of their formal remuneration entitlement and
without an expectation being set that they would receive
such an award the following year.
Executive Director remuneration for
2022
Executive Director remuneration for 2022 consisted entirely
of a base salary (with no pension or other meaningful level of
benets) and an award under the Company’s PSP, its choice
of mechanism for putting in place long-term incentives.
These were implemented as set out in the Prospectus and no
Part 1: Annual Statement
Directors’ Remuneration Report
continued
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subsequent changes were made during 2022. The amounts
are set out in Part 3 of this Remuneration Report.
The Policy of the Company is not to have an annual bonus.
Therefore, the Remuneration Committee has not been called
upon to make any judgment as to whether criteria have been
met, let alone apply discretion to any aspect of remuneration
for any employee.
Director remuneration for 2023
At IPO, base remuneration for Executive Directors was
set at a lower level to help manage costs as the business
transitions to being a UK listed company. As outlined in
the Prospectus, the intention is that salary increases in the
initial years are likely to be above the increases to the wider
workforce salaries as the Executive Directors transition to
salary levels determined by the Remuneration Committee
to be appropriate for the long-term. The Executive Directors
accepted the rst step in the unwinding of the salary
discounts, representing increases of €25,000 for the CEO,
€20,000 for the COO and €15,000 for the CFO. The schedule
for the unwinding of these discounts through to 2026 is set
out and explained in Part 2 of this Remuneration Report.
The Committee approved a 10% increase for Executive
Director base salaries after applying the unwinding of the
salary discounts. This is in line with the policy of increasing
Director remuneration at or below the average increase to
base salaries received by the wider workforce. A 10% increase
to the Chair’s remuneration was approved by the Committee,
also in line with the above policy. The Board reviewed Non-
Executive remuneration and increased it by 10%, maintaining
alignment among all Directors.
No changes to pensions or benets have been approved for
2023.
The Committee will review every year, the basis of and targets
set, for the Long Term Incentive Plan. The performance target
for 2023 awards will continue to be based on adjusted EPS
1
.
Our rationale for using this measure is set out in Part 2 of
this Report.
Shareholder engagement
We look forward to engaging with Shareholders and other
Stakeholders. I would welcome any feedback or comments
on the Directors’ Remuneration Report. I will be available at
the 2022 AGM to answer any questions,
Ed Williams
Chair of the Remuneration Committee
6 July 2022
The Company’s proposed Remuneration Policy (the “Policy”)
is included in this section on pages 79 to 94. At the 2022
AGM to be held on 28 September 2022, a resolution to adopt
the Policy will be put to Shareholders for approval. The Policy
is set to apply, subject to shareholder approval through to the
2025 AGM.
This Part of the report is broken into two distinct sections:
Section 2.1 provides a narrative description of the process
adopted by the Committee in developing the Policy, including
the objectives the Committee set itself, the culture, beliefs
and needs of the Company itself, the main challenges we
encountered and the steps we took to address potential
conicts of interest. It includes reference data used in
reaching our recommendations.
Section 2.2 sets out our formal Directors Remuneration
Policy including the terms of employment and the actual
remuneration levels which the Committee established. It
differs in a number of important respects from the policy
of most UK publicly listed companies, with the differences
accounted for by the aims of simplicity, transparency
and objectivity. To a lesser extent differences may also
be inuenced by the Lithuanian context and the history of
key Executives as founders and owners. We believe any
assessment of the Policy as set out in section 2.2 would
strongly benet from reecting on the narrative in section
2.1.
Part 2: The Directors’ Remuneration Philosophy and
Policy
2.1 The Process by which the
Committee formulated the Policy
Approach
We decided at the outset that the remuneration approach
for all Directors would be based on Lithuanian levels and
employment practices. All three Executive Directors are based
in and employed in Lithuania. The majority of employees are
based in Lithuania, which is also the venue for the majority of
Board meetings. However, the business is listed in London.
In comparison to the UK, remuneration in Lithuania:
•
is substantially lower;
•
has been increasing in real terms considerably faster
than in the UK as the Baltic countries head towards
average EC levels of wealth; and
•
is, at the present time at least, the subject of
substantially higher ination, running at the time of
writing at over 18%, signicantly higher than the UK
rate.
As a consequence, investors should anticipate substantially
lower levels of compensation, but should expect those levels
to rise faster in both nominal and real terms than in the UK.
1
Adjusted EPS in the Director’s Remuneration Report is basic EPS adjusted for M&A impact as determined by the Committee.
Directors’ Remuneration Report
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The rst phase of our work consisted of three parallel steps:
1.
Determining the objectives we sought to achieve
through our approach to Executive remuneration.
2.
Understanding the culture and needs of the Company,
including the existing approach to remuneration.
3.
Seeking base data to inform the decision as to what
constitutes a responsible and reasonable level of
Executive remuneration.
Our overall approach to determining remuneration arrangements for the Baltics Classieds Group, as a public company, is
summarised below:
Phase 1
Determine
remuneration
objectives
Establish the culture
and needs of the
business
Formulate initial
proposed structure
and quantum of
remuneration
Review with
remuneration advisors
Discuss with CEO Agree with Executive
Revise proposals and
devise LTIP scheme
rules
Implement LTIP
scheme, set targets
and implement service
contracts
Seek base data on
remuneration
Identify
Lithuanian plc
peer group
Identify
Lithuanian
private
company
remuneration
Identify UK
listed peer
group
Identify
broad FTSE
benchmark
data
Adjust
benchmark
data for
Lithuania
Select relevant
benchmark
data based on
the Company
Phase 2 Phase 3 Phase 4
The rst two of these steps were straightforward; the third
was challenging.
We then went on to formulate our policy and set the quantum
of remuneration before discussing our proposals with the
CEO. We reected on his feedback, before implementing
the Remuneration Policy, setting targets and drawing up
service contracts for all the Directors.
Directors’ Remuneration Report
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1. Objectives
We set ourselves the following objectives:
1.1
Establish an approach to, and level of, remuneration that is likely to result in BCG retaining its existing
Executive team.
1.2
Establish an approach to and level of remuneration that is likely to be capable of attracting future talent,
particularly should it be required at the Executive Director level.
1.3
Establish an approach which not only is consistent with the culture of the Company but actively supports the
culture and needs of the Company, including, for example, aligning all Executive benets with the rest of the
organisation.
1.4
Ensure that the overall level of remuneration is modest by public company standards and is appropriate for
the local living standards of the Baltics states where the executives reside and where the business is operated
from, rather than the UK where the Company is listed.
1.5
Create a structure that is signicantly simpler than found in the considerable majority of public companies.
1.6
Ensure the structure and targets are aligned with the strategy of the business.
1.7
Create a structure intended to be durable and where Shareholders know what to expect over a number of
years. We believe the right Executives prefer to focus at all times on what is right for the business and that
continuously reopening and adjusting the approach to remuneration rarely, if ever, results in more motivated
executives.
1.8
Articulate our policy in a simple and transparent way with the minimum of jargon, including expressing things
wherever reasonably possible in terms of absolute values of money rather than in a series of ratios and
percentages.
1.9
Conform with public company best practices in relation to protecting Shareholders from excess remuneration
being paid in the case of poor business performance and particularly with regard to any instances of unethical
or more generally reputational damaging behaviour by Executives. This includes Director shareholding
requirements, holding periods, Board discretion on payments and clawback provisions.
1.10
Set targets that are subject to auditable, objective and independently veriable measures without the need for
Board discretion or opaque formulae.
1.11
Ensure that for any given absolute level of remuneration, Executives receive it in a way that maximises its
effectiveness to them in terms of making them feel valued.
1.12
Avoid as far as possible, approaches that could give rise to signicant rewards to Executives arising incidental
to their performance in running the business.
1.13
Ensure that Executives’ remuneration does not inuence, nor is affected positively or negatively by the
decisions the Board takes on capital policy (e.g. distributing or retaining cash in the business; distributing
through dividends or using share buy-backs).
1.14
Adopt a process in determining remuneration, and in administering remuneration, which is consistent with
the focus on low costs exhibited in every other area of the business.
1.15
Ignore the impact of pre-existing equity ownership and additional equity ownership resulting from the IPO (i.e.
the triggering of the private equity incentive scheme) on future reward structures and levels.
We believe we have been largely, though not entirely, successful in fullling these objectives. A brief self-assessment is included
at the end of this section, though the true measure will be how it works in practice.
Directors’ Remuneration Report
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2. Culture and needs of the Company
We identied the following features of the Company:
Specically on Executive remuneration
2.1
The Company has historically adopted the same structure for remuneration across all employees, with the
only exception being that a group of Senior Management participating in a long-term equity-based incentive
scheme, typical of those employed by private equity owners.
2.2
Performance based incentives related to the overall performance of the business not personal performance
measures.
2.3
The Company did not pay annual bonuses to any employee and, over the years, has gone to considerable
effort to remove annual bonuses from companies it has acquired.
2.4
The Company has absolutely minimal employee benets, with those benets that do exist, open to all
employees.
2.5
Awards in the private equity Management Incentive Plan were not based on Executives’ base salaries.
Wider cultural factors
2.6
The Company has a relentless focus on simplicity and clarity in everything it does and is extremely cost
conscious.
2.7
The Company has a history of making acquisitions in the Baltic region. Part of the acquisition process is to
move employees and Executives of the acquired business into the BCG remuneration structure rapidly.
2.8
The Executives seek to be, and are expected by staff to be, exemplars of all the behaviours that they value in
others, including when it comes to remuneration.
2.9
The Executives see their own remuneration as a signicant component of the overall costs of the business.
Their remuneration can inuence the level of remuneration paid to their direct reports. They seek strong prot
growth, including from limiting the growth of the cost base.
2.10
The CEO has a history of signicant equity ownership. Following the IPO, the private equity management
incentive scheme will leave the Executive Directors and other long-term employees with substantial equity
in the business. In line with a high proportion of Baltic companies, receiving remuneration in the form of
dividends is a normal part of the remuneration, most likely reecting the specic economic history of the
region and wide differences in taxation rates on income (above 40%) and dividends (around 15%).
2.11
The Lithuania government does not operate any share ownership schemes which give favourable treatment
or which incentivise a wide range of employees to buy shares in their business.
3. Base Data
We sought comparative evidence for remuneration
packages from the following sources:
•
Comparable listed companies in the Baltics region:
The only other sizeable on-line classieds business is
in Latvia, is private and continues to be owned by the
founders. Even opening the denition of comparator
companies to cover all media and all technology,
the only public company identied was a €25 million
market capitalisation investment vehicle for investing
in small software businesses. The remuneration
consultants we approached also did not believe that
comparable data was available.
•
Seeking to identify direct comparator public
companies outside the Baltics region: The comparable
set was limited and the remuneration packages were
self-evidently excessive for BCG in its Baltics context.
We therefore decided to use UK data but adjusted for
Purchasing Power Parity (“PPP”) and a specic difference
in relation to the Lithuanian tax structure. Based on the
likely market capitalisation, we looked at the average
remuneration among non-nancial services companies
ranked between 251 and 350 in the FTSE index (ranging
from market capitalisations of around €1.5 billion down
to €0.75 billion) as at May 2021. This information is
readily available publicly. The numbers were converted to
Euros and adjusted to 73.3% of UK levels using the OECD
PPP ratios averaged for the ve years from 2016 to 2021.
Directors’ Remuneration Report
continued
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An upward adjustment of 12% was made to reect that
Lithuania applies virtually all employment related taxes to
employees and not the employer (see Note 1).
Note 1
On 1 January 2019, Lithuania transferred
responsibility for virtually all payroll related taxes
and social insurance (national insurance) to the
individual. The Lithuanian government mandated
that at the introduction of this change all base
salaries should be increased by 28.9%. The result
was no change to the cost to companies of
employing people and no change to employees’
take-home pay, but a big difference to employee
gross income. Contrasting this to Estonia and
Latvia, taxes on the employer there can amount to
up to 30% of the total cost of employment. Headline
salaries are commensurately lower, even if the
cost to the employer and the take home pay of the
employee are the same. As 13.8% would be paid by
the company on UK based executive compensation,
we adjusted up our benchmark data to be on a like-
for-like basis, by 12% (being the 13.8% less the small
remaining 1.77% employer deduction in Lithuania).
The above process gave us the benchmark data set
out in Table 1.
Table 1 - Benchmark data
FTSE 251-350 excluding nancial services
In Euros adjusting for Lithuanian cost of living, benets and different approach to employer/employee payroll taxation/social
insurance
CEO
(€ thousands)
CFO
(€ thousands)
COO
(€ thousands)
Chair
1
(€ thousands)
NED
(€ thousands)
Audit chair
(€ thousands)
Remco chair
(€ thousands)
Single gure
remuneration
- Upper quartile
1,548 957 - 181 43 10 9
- Median 977 635 - 144 40 7 7
- Lower quartile
650 393 - 130 36 6 6
Salaries
- Upper quartile
448 310 - 181 43 10 9
- Median 399 263 239 144 40 7 7
- Lower quartile
343 240 - 130 36 6 6
Maximum annual
bonus
- Upper quartile
806 458 - - - - -
- Median 592 337 - - - - -
- Lower quartile
431 260 - - - - -
Maximum LTIP
-
- Upper quartile
1,019 555 - - - - -
- Median 751 438 - - - - -
- Lower quartile
593 361 - - - - -
1
Chair includes chairing committees
Determining the benchmark level of
compensation
We took the view that there were a number of factors likely to
mean that the actual benchmark for remuneration would be
at the lower end of the range for FTSE 251-350 companies
(even after adjusting for Lithuanian cost of living):
•
The operational scale of the business, including
relatively low number of employees;
•
The absence of signicant international travel
requirements;
•
The relative absence of risk factors including
reputational risk and the likelihood of needing to, or
being required to, operate in a visible public context;
and
•
The culture of the Company.
We also considered the extent to which Lithuanian
Executives worked in an international market for talent. The
skill set of the Executives is highly transferable within the
European marketplace in a market sector attracting a lot of
interest from large technology and media companies. The
Executives have excellent English language skills, further
assisting them to operate internationally. On the other
hand, given limited use of the Lithuanian (and Estonian)
languages by non-nationals, it might be hard for non-
Directors’ Remuneration Report
continued
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GOVERNANCE REPORT
local Executives to be fully effective working in Lithuania.
In the end, we decided not to attempt to factor in any
special considerations regarding consideration of local or
international levels of remuneration beyond adjusting for
Lithuanian costs of living.
Ultimately, we felt that lower quartile FTSE 251-350
remuneration, after conversion to Euros and the overall
downward adjustment to reect Lithuanian purchasing
parity and adjusted for the specic tax consideration
described above, was a sensible starting point.
Table 2 sets out the lower quartile CEO, CFO, Chair and Non-
Executive Directors remuneration for public companies
in the FTSE 251-350 expressed in Euros and with the
adjustments described above.
Table 2 - Benchmark level of compensation
Based on the lower quartile bottom 100 of the FTSE 350, converted to Euros and adjusted for different approach to taxation and
for purchasing power parity compensation would be:
CEO
(€ thousands)
CFO
(€ thousands)
COO
(€ thousands)
Chair
(€ thousands)
NED
(€ thousands)
Audit chair
(€ thousands)
Remco chair
(€ thousands)
Single gure
remuneration
649,9 392,8 - 130,0 36,1 6,5 6,1
Salary 343,0 239,7 218,0 130,0 36,1 6,5 6,1
Maximum annual
bonus
431,1 259,9 236,4 - - - -
Maximum LTIP
592,8 361,0 328,3 - - - -
Total maximum
remuneration
1 366,9 860,7 782,7 130,0 36,1 6,5 6,1
Structure of remuneration compared to
benchmarks
Remuneration for executives in the FTSE 251-350 group
almost invariably consists of ve elements:
1.
a base salary;
2.
pension;
3.
other benets;
4.
an annual bonus; and
5.
a Long-Term Incentive Plan (“LTIP”)
We concluded that it was in the best interests of the
Company and Shareholders not to introduce a new benets
package, nor a pension scheme, nor to introduce an annual
bonus scheme. This decision was in accordance with the
wishes of the CEO, our own assessment of the needs of the
Company and our previously stated objective to be simple
and transparent. In particular, our experience of annual
bonus schemes, both as previous executive directors and
as non-executive directors of other companies, is that they
are the least transparent and most time-consuming aspect
of executive remuneration. With the right executives they
make no actual difference to executive behaviour or positive
contribution to motivation. Through supercially aligning
remuneration more closely to performance, including
non-nancial performance, in practice we believe they
do so poorly by comparison with long-term equity-based
incentive plans.
In considering a remuneration approach based on only two
of the normal ve elements:
•
we decided not to factor in any specic recompense
to Executives for the absence of benets or pensions.
We believe that Shareholders would be sympathetic
at some point in the future, if the Company felt it was
in the best interests of employees to offer a pension
scheme, for Executive Directors to participate in such
a scheme on an equal basis with all other employees;
and
•
we also did not attempt to formulaically adopt a
higher level of long-term incentives because of the
absence of an annual bonus. However, we took the
view that our ultimate recommendations need not
be constrained by standard salary multiples for the
LTIP, provided that the absolute value of the LTIP was
well within the normal range for FTSE 250-350 ranked
companies.
The Remuneration Committee therefore proposed
remuneration at the levels set out in Table 3.
The Remuneration Committee expects to increase
remuneration for all Directors annually in line with any basic
rise in employee salaries applied across the Company.
We consider the use of Performance Share Plan as the
basis for the LTIP to be the most appropriate form, in line
with widespread practice.
IPO-related success payments and
awards
Frequently, companies approaching an IPO put in place
some form of one-off compensation, generally for one of
three reasons (from the narrowest through to the broadest):
1.
specically, to reect the enormous extra workload on
key individuals, especially the CFO;
2.
to reward the executive team for the success of the IPO,
and specically to give the executives an initial equity
stake in the business, generally in the circumstances
that executives are not and would not otherwise be
holders of equity stakes in the business; or
Directors’ Remuneration Report
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3.
to provide a retention mechanism given that in a
public company environment it will normally be at
least 3 years before any long-term incentives put in
place as a public company will vest and 5 years before
executives can actually realise the value.
While we greatly appreciated the efforts of the Executive
Directors and particularly the CFO, we felt that the pre-
existing Management Incentive Programme (“MIP”) offered
ample reward, in the form of shares in the business, to the
Executives for achieving a successful IPO. Therefore, the
rst two reasons did not apply. In consultation with the
CEO, we formed the view that it was not necessary to put
in place a scheme to “bridge” the period prior to the public
company schemes being realised. The Company has very
high retention rates and most employees in a scheme,
should it have been implemented, would have already been
with the Company for more than ten years and would have
beneted from the MIP.
Holding periods, minimum
shareholdings, malus and clawback
provisions
We believe that Shareholders should be protected against
payment for failure and particularly with regard to any
improper behaviour on the part of Directors of the Company
and in relation to termination of employment.
We therefore have adopted best practice policies and intend
to update them as thinking continues to evolve. Currently
this means:
•
A holding period of a minimum of ve years from
award of shares under the LTIP.
•
A minimum shareholding amount of €1 million for the
CEO and €0.5 million for other Executive Directors.
Where Executive Directors do not have that level of
holding on appointment, they will be required to retain
at least half of all future vested shares until they reach
that level.
•
Wide ranging and lengthy malus / clawback provisions
in the following circumstances:
▸
material misstatement of nancial information;
Table 3 - Proposal for 2026
Proposal for
FY2026
CEO
(€ thousands)
CFO
(€ thousands)
COO
(€ thousands)
Chair
(€ thousands)
NED
(€ thousands)
Audit chair
(€ thousands)
Remco chair
(€ thousands)
SID
(€ thousands)
Single gure
remuneration
- - - - - - - -
Salary 350,0 210,0 280,0 120,0 30,0 7,5 7,5 2,5
Maximum
annual bonus
- - - - - - - -
Maximum LTIP
700,0 300,0 500,0 - - - - -
Total maximum
remuneration
1 050,0 510,0 780,0 120,0 30,0 7,5 7,5 2,5
Median for
FTSE251-350 in
Euros
2 079,3 1 239,7 - 172,4 47,4 8,6 8,6 -
▸
serious misconduct;
▸
material failure of risk management;
▸
serious reputational damage;
▸
serious corporate failure;
▸
error in the number on shares awarded;
▸
error in calculating performance or performance
calculations based of misleading data; and/or
▸
other circumstances of a similar nature at the
discretion of the Non-Executive Directors.
Malus and clawback provisions will apply for a period
of ve years from award. There will be no time limit
in applying malus / clawback provisions from actions
through the legal system against Directors or through
deliberate concealment of information by Executives
that subsequently becomes known to the Board,
subject to the provisions being implemented within
two years of the completion of the legal action or the
information becoming available.
•
Payment on termination is limited to clearly dened and
limited contractual obligations regarding base salary
and notice period. In addition, the CEO’s appointment
as a Director of the Company is terminable by him or
the Company on 12 months’ written notice and each
of the other Executive Directors’ appointments as a
Director of the Company is terminable by each of them
and the Company on six months’ written notice. The
Company has the ability to terminate the appointment
of each of the Executive Directors of the Company
with immediate effect by making a payment in lieu of
notice which shall consist of the fee payable to them
in respect of their role as a Director of the Company for
the unexpired period of notice. The Company’s policy
is not to enter into employment agreements or letters
of appointment with a notice period greater than 12
months.
•
“Good leaver” provisions focused on allowing an open
dialogue between Executives and Non-Executives,
particularly as it reects retirement from the business,
to encourage succession planning to be done in a
collaborative manner. Good leaver provisions will
automatically apply in the case of death, resignation
Directors’ Remuneration Report
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through ill-health, injury or disability, and on retirement
as a full-time Executive (to be tested after two
years). The Remuneration Committee will also have
discretion in considering someone to be a good
leaver, with redundancy being the most probable
circumstance in which to exercise this discretion. In
the event of someone being determined to be a “Good
leaver” awards would normally be prorated for time
in employment and remain subject to vesting on the
normal vesting date. There is Committee discretion to
allow awards to vest on leaving, taking into account
performance against targets and pro-rating for time.
•
Holding periods post-termination or retirement will be
enforced in full for two years and any pro-rata amounts
in line with how they would have vested should the
retired Executive still have been in employment.
Setting of targets in the Long-Term
Incentive Plan
The primary business strategy of the Baltic Classieds
Group is the rapid organic growth of revenues and prots in
our core geographical on-line classied advertising market.
Therefore, it seems self-evident that the best alignment of
strategy with long-term Executive compensation is broadly
in the area of revenue and prot growth.
We decided on balance to set 100% of the performance
target based on the three-year growth in adjusted EPS. This
target is strongly aligned with the strategy of the business
to grow revenues rapidly in its core businesses and to do
so at high prot margins. “Adjusted EPS” in the Director’s
Remuneration Report is a basic EPS after adjustments that
are likely to be restricted to those arising from mergers and
acquisitions as determined by the Committee. Basic EPS
is an audited number. Our reasons for preferring this over
other targets (or over a mix of targets) is set out below.
Our aim is to make the operation of the LTIP neutral, in
terms of the capital return policy of the business. This is in
order to address the challenge that businesses undertaking
signicant levels of share buy-backs do so, at least in part,
to advantage executives in long-term incentive schemes. In
part, neutrality is achieved by awarding additional shares to
executives equivalent to the value of dividends that would
have been received on shares awarded but not vested. The
other aspect is the potential of share buy-backs which boost
earnings per share. In practice, we believe that the level of
share buy-backs is unlikely to have a material impact on
adjusted EPS over the next three-year period. Nonetheless,
in setting the adjusted EPS targets we have factored in
an expectation that, in addition to paying dividends, the
Company will both repay debt and buy-back shares.
Should the Company buy-back shares as the result of
receiving signicant proceeds from the disposal of a
business or through taking on signicant additional debt,
to do so, we would intend to “normalise” adjusted EPS by
using the number of shares outstanding prior to such an
event. Should the capital policy of the business materially
diverge from that assumed when setting the adjusted EPS
targets, and that difference materially affects the level of
vesting of the PSP, the Remuneration Committee will reect
that at the time of vesting.
The adjusted earnings per share number will be extracted
from our relevant accounts.
In considering other potential choices of targets, we looked
at a number of options in some detail and at some length.
Revenue growth versus earnings per share
The primary strategic goal of the business is to continue
to grow revenue strongly, organically. We would not
forego an opportunity to secure protable revenue growth
opportunities simply because the new revenue might
be at a lower long-term margin than the high margins on
existing revenue. Nonetheless the ultimate purpose of
strong revenue growth is to drive prot growth. Hence, we
considered a prot related target as preferable to a purely
revenue target.
Total Shareholder Return
The most time and effort was spent on the extent to which
the long-term targets should be aligned with shareholder
value creation through the inclusion of a Total Shareholder
Return (“TSR”) test.
We have decided at this time not to introduce a TSR
component, though we believe relative TSR is a good
measure in principle. Our reasons for not adopting a TSR
component are:
•
diculty in identifying a meaningful peer group of
companies against which to benchmark;
•
risk of inappropriate outcomes if benchmarked against
a much wider set of companies (e.g. FTSE 250) not
least because the benchmark would be expressed in
GBP but BCG’s entire earnings are in Euros. Attempting
to adjust for differences in exchange rates would not
be simple, transparent or, most likely, audited; and
•
ability to achieve a key positive feature of TSR, that
neutralises the effect of different capital policies, by
other means (e.g. the inclusion of dividends during the
period up to vesting).
ESG-related targets
ESG-related targets are now present in a high proportion of
annual bonus schemes. The actual measures often appear
to us as relatively subjective and the timeframe of 12
months is poorly aligned to the realities of speed of change
in terms of many aspects of ESG (e.g. carbon emissions,
gender diversity, gender pay gap). As we do not have an
annual bonus scheme this issue does not affect BCG.
ESG targets are starting to make an appearance in long-term
incentive plans but are yet to be the norm. The Company
is at an early stage in developing its ESG approach, so
we considered it inappropriate to set targets that would
determine Executive remuneration in three to ve years
when we had yet to even identify our priorities and areas
in which we can make the biggest impact. Once we have a
robust ESG framework we will reconsider including one or
more ESG measures.
Directors’ Remuneration Report
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Non-nancial targets
In terms of non-nancial targets, our view was that no one or
two single KPIs stood out as most important to the business.
Our view is that managing any business is complex. There
are many factors and KPIs which Executives need to take
into account and the focus on each varies over time.
Over a three-year timeframe material changes to individual
KPIs in areas such as audience visiting the Company’s
websites, the level of organic revenue growth, operating
margin and even wider measures such as customer and
employee satisfaction, are likely to be reected in the
operating prot of the Company. In a complex world of
changing priorities, we do not believe that selecting one
or two additional performance measures is likely to align
Executive remuneration better to Shareholder value and
Stakeholder value more generally.
Impact of acquisitions
Acquisitions have long been a part of the strategy of the
Baltics Classieds Group. Acquisitions have the ability to
distort EPS, our preferred performance measure.
Where acquisitions are small relative to the size of the
overall Group, we would not expect to adjust for the impact
of acquisitions. Where an acquisition is more signicant
relative to the size of the Group, we would seek to adjust
targets to the best of our ability to make them fair to
Shareholders and participants in the LTIP.
Publication of targets
Investors should expect targets to be published as part of
the Annual Report published before the awards are made.
The Board reserves the right not to make disclosures prior to
grant where the nature of the target might be commercially
sensitive or sensitive in the wider geo-political context.
Timing and pricing of share awards
under the long-term incentive scheme
We propose to grant awards once a year. The performance
target for the grant will be set and published ahead of the
grant date.
In recent years, signicant gyrations in share prices
have raised the question of share awards being made at
articially low prices. The Non-Executive Directors have
sympathy with this point of view. However, the exercise of
discretion in this context by Non-Executive Directors puts
them in an invidious and asymmetric position: who are they
to say that the market as a whole is mispriced or that their
company is being mispriced compared to other companies;
why are they expected to exercise discretion on downturns
(which may or may not prove to be the bottom of the
market) but not exercise discretion in the instance of strong
rises (which may or may not be the peak of the market).
Just such a challenge currently exists given the undoubted
effect of the Russian invasion of Ukraine on BCG’s share
price.
To help address this concern, the price used will be the
average daily closing price of the shares in the period of the
last three months before the grant date. We acknowledge
that this could result in the award of a larger or smaller
number of shares than would be awarded at the share price
on the day of grant. However, we believe the approach is
both a strong alignment with Shareholders and the best
way to avoid subjective judgment. Though from time-to-
time awards may be made at what seem like favourable (or
unfavourable) prices, relative to the price on the day of the
award, the continuity embedded in the approach even these
out over time, the ultimate value realisation for Executives
is at least ve years away, and in any event, provided
performance conditions are met, the Executive Directors
will be getting shares that have a value.
Discussion with CEO
The CEO conrmed that the proposed structure of
remuneration was in line with the culture of the organisation.
He was also strongly supportive of the provisions intended
to protect the interest of Shareholders.
The only signicant area of concern was in relation to the
proposed base salaries. These were seen as representing
a substantial addition to the cost base of the business,
especially at a time when there were a number of other
costs arising from being a public company. As the Company
grows he felt that the proposed amounts would be less of a
drag on prots, especially if fed in gradually over a number
of years.
As a result, he proposed that he and his Executive Director
colleagues receive a very signicantly lower level of base
salary than proposed. Annual salaries could then be
increased in a number of steps over ve years to reach the
levels that were supported by external data and proposed
by the Remuneration Committee.
The cost of awards under any LTIP were seen as less of
an issue in terms of their impact on the cost base of the
Company in that the cost would naturally be phased in over
three years based on the way accounting policies determine
how their costs are allocated.
The Remuneration Committee indicated that they could
see no basis on which they could insist Executives receive
higher remuneration than Executives felt was appropriate.
A phased approach, as proposed by the CEO, would result
in signicant annual rises in base salary for a number of
years, something that typically received adverse comment
by advisory organisations and some institutional investors.
The Remuneration Committee accepted the CEO’s proposal,
with the following caveats:
•
the Committee wished to make it explicit to
Shareholders as to what the Committee considered
the correct base salary levels were for the Executive
Directors, even if the contractual agreement between
the Company and the Executives was at a lower
level. As a consequence, the Board could seek
Shareholder approval to higher salary levels than
those contractually agreed, to be referred to as the
“standard base salary”;
•
a schedule be provided to Shareholders (Table 4)
showing the transition from the initial post-IPO base
salaries over ve years to the “standard base salary”
(which would be adjusted upward each year in line
Directors’ Remuneration Report
continued
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GOVERNANCE REPORT
with the basic salary increases applied widely within
the business). By mutual agreement between the
Remuneration Committee and the Executive Directors,
the transition could be completed in less than the ve
years as set out in Table 4 and/or with larger increases
in any year towards but not exceeding the standard
base salary; and
•
the Committee felt that the proposed awards under
the LTIP should stand. Given the long-term nature
of the LTIP, the fact that awards should only vest
if the Company has signicantly grown (given the
adjusted EPS performance target) and the way in
which accounting policy would see the costs of the
LTIP “layer in” over time, the Committee felt that
concerns about increased costs were less relevant to
this scheme than to base salaries. Therefore, for the
purposes of the LTIP, the standard base salary would
be used in relation to award levels and minimum
shareholdings.
Table 4 - Migration route to standard base salaries in 2026
FY2022 FY2023
(€ thousands)
(€ thousands)
FY2024 (€ thousands)
FY2025 (€ thousands)
FY2026 (€ thousands)
Salary
LTIP
Max
rem
Salary
LTIP
Max
rem
Salary
LTIP
Max
rem
Salary
LTIP
Max
rem
Salary
LTIP
Max
rem
CEO
250 700 950 275 700 975 300 700 1,000 325 700 1,025 350 700 1,050
CFO
150 300 450 165 300 465 180 300 480 195 300 495 210 300 510
COO
200 500 700 220 500 720 240 500 740 260 500 760 280 500 780
Assessment of the remuneration arrangements against factors identied in the
Corporate Governance Code 2018 (the “Code”)
Our Policy has been designed with regard to the six factors listed in the Code: clarity; simplicity; risk; predictability; proportionality;
and alignment to culture.
Clarity
We believe the Policy has clarity.
Above all, the clarity ows from
the simplicity. Clarity is enhanced
through extensive use of absolute
values rather than percentage
ratios. Clarity of outcome is further
enhanced by reducing the need
and opportunity for the Board to
exercise discretion.
Predictability
Predictability again ows primarily
from simplicity. The approach has
been explicitly thought about in
terms of a timeframe of longer
than three years. As implemented,
the most signicant element
of unpredictability in terms of
outcomes may prove to be the
future path of the share price.
Simplicity
We believe the Policy is self-
evidently simple. This starts at the
highest level by only having two of
what are normally ve elements
of remuneration: we have salary
and long-term incentives, we do
not have other benets, pensions
or an annual bonus. The absence
of an annual bonus we consider
of particular benet in achieving
simplicity.
Proportionality
The nature and quantum of
remuneration has been considered
with specic consideration for the
Baltics. The Committee retains
discretion to adjust for unforeseen
factors, of which the most likely, in
the opinion of the Committee, would
be the effect of acquisitions or the
effect of a signicant change to
capital policy. We do not envisage
situations where the ultimate
rewards for the Executive Directors
could be driven materially by any
other factor than the share price.
Risk
Appropriate limits are set out in the
Policy and within the plan rules.
The long-term nature of what we
would hope will be the majority
of remuneration encourages a
long-term sustainable mindset.
Clawback and malus provisions
fully meet with best practice.
Alignment to culture
The culture of BCG is focused on
simplicity, high growth, with low
costs, and a long-term ownership
mind-set. We believe the Policy
clearly aligns with this culture.
Directors’ Remuneration Report
continued
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Self-assessment
As the Committee set itself a larger number of more specic objectives than the six set out in the Code, we have attempted
a simple self-assessment. Table 5 below attempts a qualitative self-assessment by the Remuneration Committee of how the
resulting remuneration arrangements hold up against the objectives set at the start of the process.
Table 5 - Self-assessment
1
Establish an approach to, and level of, remuneration that is likely to result in BCG
retaining its existing Executive team
Yes
2
Establish an approach to and level of remuneration that is likely to be capable of
attracting future talent, particularly should it be required at the Executive Director level
Probably if
internal or from
Baltics; probably
not if recruiting
internationally
3
Establish an approach which not only is consistent with the culture of the Company
but actively supports the culture and needs of the Company
Yes
4
Ensure that the overall level of remuneration is modest by public company standards
Yes
5
Create a structure that is signicantly simpler than found in the considerable majority
of public companies
Yes
6
Ensure the structure and targets are aligned with the strategy of the business
Yes
7
Create a structure intended to be durable and where Shareholders know what to
expect over a number of years
To be seen
8
Articulate our Policy in a simple and transparent way with the minimum of jargon
Yes
9
Conform with public company best practices in relation to protecting Shareholders
from excess remuneration being paid in the case of general poor business
performance and particularly with regard to any instances of unethical or more
generally, reputational damaging behaviour by Executives. This includes Director
shareholding requirements, holding periods, Board discretion on payments and
clawback provisions
Yes
10
Set targets that are subject to auditable, objective and independently veriable
measures without the need for Board discretion or opaque formulae
Yes
11
Ensure that for any given absolute level of remuneration, Executives receive it in a way
that maximises its effectiveness to them in terms of making them feel valued
To be seen
12
Avoid as far as possible approaches that could give rise to signicant rewards to
Executives arising incidental to their performance in running the business
We believe so
13
Ensure that Executive remuneration does not inuence, nor is affected positively or
negatively by the decisions the Board takes on capital policy
Yes
14
Adopt a process in determining remuneration, and in administering remuneration,
which is consistent with the focus on low costs exhibited in every other area of the
business
Yes
15
Ignore the impact of pre-existing equity ownership and additional equity ownership
resulting from the IPO on future reward structures and levels
Only partly
Directors’ Remuneration Report
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2.2. Terms of Employment and Remuneration
Most of the Policy has been described as part of the philosophy and process. However, in this section we aim to bring all the
information on the actual terms of employment and remuneration into a single place.
Executive Directors
Base salary
Purpose and link to strategy
To retain and attract Executive Directors to deliver the strategy
Operation
The Committee has set base salary based on a ve-year transition to reach typical lower
quartile non-nancial FTSE 250-350 base salaries (adjusted for Lithuanian Purchasing
Power Parity and approach to payroll tax)
Changes normally effective from 1 May
Maximum opportunity
The base salary for each year will normally be as indicated in Table 4 of this report plus the
application of any market adjustment applied each year to wider Company employees
The Committee may make further salary adjustments in exceptional circumstances
For 2022 maximums were €250,000 for CEO, €200,000 for COO and €150,000 for CFO
Performance measures
Not applicable
Benets
Purpose and link to strategy
To maintain the low cost base, simplicity and consistency with other employees of the
Company
Operation
No benets are payable
Maximum opportunity
Should benets be introduced for all employees, Executive Directors would be eligible on
the same basis
One off or ongoing benets may be provided in the event that an Executive is required to
relocate or in other exceptional circumstances
Performance measures
Not applicable
Pensions
Purpose and link to strategy
To maintain the low-cost base, simplicity and consistency with other employees of the
Company
Operation
No pensions are payable
Maximum opportunity
Should pensions be introduced for all employees, Executive Directors would be eligible on
the same basis
Performance measures
Not applicable
Annual Bonus
Purpose and link to strategy
To maintain the low cost base, simplicity and consistency with other employees of the
Company
Operation
No annual bonuses are payable
Maximum opportunity
The Committee does not envisage revisiting the question of annual bonuses prior to 2025
Performance measures
Not applicable
Directors’ Remuneration Report
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Long-term Incentive Plan
The Company provides its long-term incentives under a Performance Share Plan (“PSP”).
Purpose and link to strategy
•
To retain and attract Executive Directors to deliver the strategy
•
The PSP aligns the interest of selected employees with those of Shareholders and may
act as a retention tool
•
To achieve simplicity and transparency and minimise the need for the Committee to
exercise discretion
Operation
•
PSP awards are made annually in the form of conditional shares or nominal cost options.
The intention is to use a share price based on the average of the daily closing share
prices for the previous three months. Awards normally vest over a period not shorter than
three years and in the case of nominal cost options would normally be exercisable up to
10 years from grant
•
Performance condition(s) apply and will be disclosed in the annual report prior to award.
Normally 25% of awards vest for threshold level of performance
•
Awards will normally be subject to a further two-year holding period
•
The value of dividends paid between grant and vesting will accrue to the benet of PSP
participants
•
Exceptionally, at the discretion of the Committee, settlements may be made in cash
Maximum opportunity
•
The maximum annual award is set by the scheme rules at 250% of base salary (with an
allowance for 300% in exceptional circumstances)
•
The Policy for the next three years is to award an absolute value of € 700,000 for the CEO,
€ 500,000 for the COO and € 300,000 for the CFO
•
In no case would these awards represent greater than 200% of the long-term target base
salary as set out in Table 4
Performance measures
•
The intention is to use adjusted EPS, with the Committee exercising discretion primarily
in relation to the signicant impact of acquisitions, demergers or variations in share
capital
•
The rules of the PSP offer discretion to the Board to vary the choice of performance
measures / targets prior to setting those targets
•
The Committee reserves the right to adjust PSP vesting levels if it considers that the
outcome would not otherwise reect the performance of the Company or the individual.
The Committee may adjust targets, provided such changes do not make the targets
materially less dicult to satisfy than envisaged at the time of award
The IPO prospectus provided for an initial post-IPO award of shares, under the new PSP and with the terms for such an award
materially in line with that described immediately above. The level of awards and performance targets are set out in Part 3 of
this Report.
Directors’ Remuneration Report
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Share ownership guidelines, malus and clawback
Purpose and link to strategy
•
Help ensure Executive remuneration is aligned with the interest of Shareholders
Operation
•
Executive Directors are expected to hold shares in the Company of at least the following
values: CEO €1 million, others €0.5 million
•
Should Executive Directors not hold sucient shares to meet the guideline they will be
required to retain at least half of all vested shares received under any scheme
•
Executive Directors are expected to maintain their minimum holding for two years
following their departure from the Company
•
Clawback provisions apply to the PSP relating to a wide range of circumstances including
material misstatement, reputational damage, misconduct, business failure, or error in
setting or applying the PSP
•
Clawback can be applied for up to three years from vesting or until up to one year
following the resolution of litigation, if longer
Maximum opportunity
•
Not applicable
Performance measures
•
Under certain circumstances, the Committee has the discretion to waive the minimum
share ownership guideline. Situations of personal hardship would be the most likely to
be considered
Employment contracts and leaving
policy
The Executive Directors are each subject to a Board
appointment letter, under the law of England and Wales,
and a service contract, under the law of the Republic of
Lithuania. All six contracts are dated 3 June 2021. The
Board appointment letters are for a xed-term and the
service contracts are rolling contracts with no xed expiry
date.
The Board appointment letters are terminable on written
notice by either party, or earlier if employment ceases earlier
under the service contracts. The notice period is 12 months
for the CEO and six months for other Executive Directors.
The Board appointment letters require, at the Company’s
discretion, the Executive to resign from employment
effective on termination of their Board appointment.
The appointment letters and service contracts are available
for inspection at the 2022 AGM and at the Company’s
registered oce.
In the event of early termination, a payment in lieu of notice
may be based only for the outstanding notice period and
may be paid monthly or as one or more lump sums at
the discretion of the Committee. Except for instances of
retirement, long-term ill-health or other compassionate
reasons, payments will normally be subject to mitigation
based on the individual taking reasonable steps to nd
an alternative position. The Committee may make any
other payments in good faith to discharge existing legal
obligations or to settle claims arising from the termination.
The Board appointment letters and the service contracts of
Executive Directors contain provisions to secure intellectual
property rights. The Board appointment letters provide for
12 months non-solicitation. The Company retains the right,
at its discretion, to apply post-employment non-compete
provisions for up to 12 months via the service contracts,
subject to the payment of a signicant proportion of the
employee’s base salary during that period (as required to
have condence of enforceability in Lithuanian).
The treatment of leavers under the Company’s Long-
term Incentive Plan is determined by the rules of the
PSP. Outstanding awards will lapse unless the leaver is
deemed by the Committee to be a “good leaver”. Death is
automatically considered as a “good leaver” and awards
would vest immediately subject to the Committee’s
reasonable assessment of the extent to which performance
criteria are likely to be met. The Committee has discretion
to determine that other leavers are “good leavers”, with
discretion likely to be considered in cases where the
individual is leaving for reasons of retirement, redundancy,
long-term illness or compassionate reasons, considered to
be in good faith. The Committee will determine the basis of
vesting with a presumption that vesting takes place on the
same basis and against the same performance conditions
as if the person had stayed and the proportion vested be
adjusted pro-rata for the proportion of the vesting period
during which the individual was actually employed. The
normal period for exercising an option is 12 months from
vesting.
Remuneration outcomes in different
performance scenarios
The following charts illustrate how the composition of the
Executive Directors’ remuneration packages varies under
three different performance scenarios: below threshold;
mid-range; and maximum, both as a percentage of total
remuneration opportunity and as a total value. It should be
noted that these scenarios are for illustrative purposes only
and have been determined using the approach specied
in the regulations. They should not be construed as prot
forecasts or a prediction of share price movements.
Directors’ Remuneration Report
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Modeling of performance scenario impact on remuneration packages
Assumptions:
•
Below threshold = xed pay only
•
Mid-range = xed pay plus 25% vesting under the PSP
•
Maximum = xed pay plus 100% PSP vesting
•
Maximum + share price growth = xed pay plus 100%
PSP vesting with a 50% increase in share price applied
to the PSP award
Salary levels used in the illustration are agreed Executive
salaries for 2023. PSP gures reect PSP awards that
will be granted to the Executives in 2023. Aside from the
maximum + share price growth scenario, no share price
increase is assumed and any dividend equivalents payable
are not included.
Recruitment Policies
When determining the remuneration package for a newly
appointed Executive Director, the Committee would seek to
apply the following principles:
•
the service contract terms and notice period would be
in line with that of the previous holder of that position,
or the COO, in the event of it being a new role;
•
the package should be market competitive to facilitate
the recruitment of individuals of sucient calibre to
lead the business. At the same time, the Committee
would intend to pay no more, nor less, than it believes
is necessary to secure the required talent. In practice,
where an issue with existing levels of Executive
Director remuneration is likely to arise is if the relevant
“market” is the pan-European talent pool of on-line
executive talent. However, our aspiration, and given
language constraints, the more likely scenario would
be that the relevant “market” is the Baltic region, with
the Company itself a leading source of local talent;
•
we would seek to determine a remuneration package
within the existing structure of base salary and LTIP,
including conforming to the rules and limits set in the
PSP rules. Should this not prove possible, we would
disclose any additional components in the relevant
Remuneration Report, together with our view of the
implications for the remuneration of other Executive
Directors and the wider workforce;
•
Where an individual forfeits outstanding variable
pay opportunities or contractual rights at a previous
employer as a result of the appointment, the Committee
may offer compensatory payments or awards, in such
form as the Committee considers appropriate, taking
into account all relevant factors including the form
of awards, expected value and vesting time frame
of forfeited opportunities. The guiding principle of
such an arrangement would be that such payment
or awards were no more than a reasonably assessed
“like-for-like” compensation. The Committee may
grant awards in such circumstances relying on the
exemption in the Listing Rules which allows for grant
of awards to facilitate, in unusual circumstances, the
recruitment of an Executive Director without seeking
prior Shareholder approval;
•
the Committee may provide assistance with relocation,
with a strong emphasis of one-off costs as opposed to
ongoing payments; and
•
in the event of the appointment of an internal
candidate, pre-existing entitlements would normally
be honoured. Should the employee not meet the
shareholding guidelines at the time of appointment,
the requirement to retain half of all vested shares
until the requirement be met would only be applied to
awards made subsequent to the new appointment.
0
300
600
900
1200
1500
€ thousands
CEO
Below
threshold
100%
303
Mid-range
63%
478
37%
Max
30%
1,003
70%
Max with
share
price
growth
22%
1,353
52%
26%
COO
Below
threshold
100%
242
Mid-
range
66%
367
34%
Max
33%
742
Max with
share
price
growth
24%
992
50%
67%
26%
CFO
Below
threshold
100%
182
Mid-range
71%
257
29%
Max
38%
482
Max with
share
price
growth
29%
632
48%
62%
23%
Share price growth
PSP
Fixed pay
Directors’ Remuneration Report
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Wider Executives and employees
Remuneration arrangements are determined throughout
the Group based on the same principles as for Executive
Directors. The rest of the Senior Management team does
not receive annual bonuses or sales bonuses (sales
bonuses exist at more junior levels).
Participation in PSP is determined each year, with no
employee (other than the Executive Directors) having
an entitlement to participation as part of their terms of
employment. The intention, initially, is to target awards
to key employees, often different groups of employees
each year, with the hope of creating widespread retention
incentives and subsequently meaningful shareholdings.
The level of awards is determined as a set of absolute
amounts not percentages of salary. It would be rare for any
one individual to receive signicantly more than 50% of
base salary (and in the few cases where they do, this would
typically reect comparatively lower base salaries in the
rst place).
The Chair and Non-Executive Directors serve the Company
on the basis of renewable letters of appointment which can
be terminated by six months’ written notice by either party.
No compensation is awarded on termination. Letters of
appointment are available for inspection at the 2022 AGM
and the Company’s registered oce.
Consideration of the views of
employees
The Committee does not consult with employees specically
on its Remuneration Policy for Directors. However, the
Policy puts consistency in treatment as a key principle.
Chair and Non-Executive Director remuneration and terms of employment
Purpose and link to strategy
•
To enable the Company to attract and retain experienced skilled Chair and Non-
Executive Directors (“NEDs”)
Operation
•
NEDs receive a fee, paid in cash. In the case of NEDs (other than the Chair) there is a
supplementary fee for chairing (but not being a member of) a Board Committee and
for the Senior Independent Director
•
The Chair is paid a xed fee in cash
•
Changes normally effective from 1 May
•
Reasonable costs in relation to travel and accommodation are payable where
supported by appropriate proof of having been incurred
•
The Company may pay an additional fees should the Company require signicant
additional time commitment in exceptional circumstances
•
NEDs do not participate in any other form of remuneration or benets
Maximum opportunity
•
Fees paid to NEDs are subject to consideration by and approval of the Board, Chair’s
fee is subject to Committee approval
•
Until 2025 changes are likely to be limited to increases in line with the annual market
adjustment applied widely within the Company
Investor consultation
The Committee will consider Shareholder views throughout
the year and at the 2022 AGM. It intends to consult with
major Shareholders in advance of making material changes.
As this is our rst year as a company listed on the London
Stock Exchange we have undertaken specic investor
consultation on the Policy set out in the Report.
Directors’ Remuneration Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
95
GOVERNANCE REPORT
Those parts of this report which are subject to audit have been identied as such.
Pay and benets
Implementation of policy in 2022
Component of pay
Implementation for FY 2022
Base salaries
•
CEO: €250,000
•
CFO: €150,000
•
COO: €200,000
•
The base salaries for Executive Directors were set at IPO.
PSP
•
Details of the awards granted at IPO are set out on page 95.
NED fees
•
Chair fee: €120,000
•
Non-Executive Director base fee: €30,000
•
Senior Independent Director: €2,500
•
Audit and Remuneration Committee Chairs: €7,500
Single total gure for remuneration (audited)
The remuneration of the Directors of the Company during the nancial year ended 30 April 2022 for time served as a Director
1
is as follows:
Base salary
and fees
2
(€ thousands)
PSP
(€ thousands)
Total
remuneration
(€ thousands)
Total xed
remuneration
(€ thousands)
Total variable
remuneration
(€ thousands)
Executive Directors
Justinas Šimkus 224 - -
224
224Lina Mačienė
155 - -
155
155Simonas Orkinas 187 - -
187
187Non-Executive Directors
Trevor Mather 107 - -
107
107Ed Williams 35 - -
35
35Kristel Volver 41 - -
41
41Tom Hall - - -
-
-1
Executive Directors entered into service contracts on 3 June 2021 while Non-Executive Directors were appointed on 2 June 2021. Salary and fees in the table above are
provided for the whole nancial year.
2
The annual base salaries for the CEO, COO and CFO were €250,000, €200,000 and €150,000 respectively from the Admission only.
Part 3: Annual Remuneration Report
PSP awards during the year (audited)
Nominal cost share options granted in the year under the PSP scheme are shown below.
Date of grant
No. of
shares
granted
Share
price used
1
(€)
Face value
of award
2
(€ thousands)
Multiple
of salary
% award
vesting
at threshold
(% maximum)
Performance period
3
CEO 27 July 2021 364,611 1.92 700 280% 25% 1 May 2021 - 30 April 2024
CFO 27 July 2021 156,262 1.92 300 200% 25% 1 May 2021 - 30 April 2024
COO 27 July 2021 260,436 1.92 500 250% 25% 1 May 2021 - 30 April 2024
1
IPO share price of £ 1.65 / € 1.92 was used for the rst set of PSP awards
2
Awards are determined based on a xed monetary value
3
PSP awards will normally be eligible to vest three years from grant (27 July 2024) based on performance over the three years to 30 April 2024 and continued employment.
Performance targets starting at adjusted EPS
4
for 2024 of 4 € cents per share for 25% of the award and then in a straight line to 5 € cents per share for 100% vesting.
4
Adjusted EPS in the Director’s Remuneration Report is basic EPS adjusted for M&A impact as determined by the Committee.
Directors’ Remuneration Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
96
GOVERNANCE REPORT
Benecially owned
shares as at 30 April
2022
1
Number of awards
held under the
PSP conditional on
performance
Number of vested but
unexercised
nominal cost options
Target shareholding
guideline
(€ m)
Shareholding value as
at 30 April 2022
2
(€ m)
Executive Directors
Justinas Šimkus 22,737,463 364,611 - 1.0 36.4
Lina Mačienė
2,269,713 156,262 - 0.5 3.8
Simonas Orkinas 3,444,696 260,436 - 0.5 5.8
Non-Executive Directors
Trevor Mather 4,614,418 - - - 7.3
Ed Williams 4,910,936 - - - 7.7
Kristel Volver 515,151 - - - 0.8
Tom Hall - - - - -
1
Includes shares owned by connected persons. Only benecially owned shares count towards the shareholding guideline. There have been no changes in share ownership
between 1 May 2022 and 6 July 2022.
2
Based on the share price at close of business on 29 April 2022 of £1.32 / €1.57.
Share interests (audited)
Executive Directors are required to maintain a certain
minimum level of shareholding in the Company: €1 million
Euros for the CEO and €0.5 million Euros for other Executive
Directors. In relation to existing Executive Directors, the
minimum value of shareholding acts as a restriction on
selling shares to the extent that doing so would cause
the shareholding to fall below the minimum shareholding
guideline. All existing Executive Directors meet their
shareholding guideline. In the event of the appointment
of a new Executive Director with no shares or fewer shares
than the minimum shareholding guideline applied to them,
they will be expected to retain at least half of any award
of shares made to them by the Company that vest until
the guideline is met. Non-Executive Directors do not have
shareholding guidelines.
Awards held under the PSP are subject to a holding period
of two years after vesting.
The following table sets out the number of shares held or
potentially held by Directors (including their connected
persons where relevant) as at 30 April 2022, or at the date of
retiring from the Board.
TSR Performance
The following graph shows the 10-month TSR performance
of the Company from the start of conditional share dealing
on 30 June 2021 until the nancial year-end on 30 April
2022, against the FTSE All-Share index. This peer group was
selected as it represents a broad equity market index, of
which the Company is a constituent. The TSR graph shows
the growth in the value of a hypothetical holding of £100
invested on 30 June 2021 and will be updated yearly with
the intention to build up to a 10-year rolling period in future
annual reports.
CEO remuneration
The following table summarises the CEO single gure. This
table outlines the proportion of PSP awards vesting in that
year as a percentage of the maximum opportunity. Like the
TSR chart, this table will be updated annually to build up to
a 10-year rolling period.
CEO single gure
2022
CEO total remuneration (€ thousands) 224
PSP vesting (% of maximum)
1
-
1
No PSP awards vested during 2022.
Percentage change in the remuneration
As this is the rst year of reporting Directors’ remuneration,
there is no prior year comparison to disclose. Such
disclosure will be included in next year’s report.
Since the year-end and to the date of this Annual Report and Accounts, there have been no changes in the shareholdings
shown in the table above.
Relative importance of spend on pay
The following table shows the Group’s actual spend
on pay for all employees compared to distributions to
shareholders. The average number of employees has also
been included for context. Revenue and Adjusted EBITDA
have also been disclosed as these are two key measures of
Group performance.
2022
(€ thousands)
Employee costs
(refer note 7 to the consolidated nancial statements)
8,886
Dividends paid to shareholders
(refer note 17 to the consolidated nancial statements)
-
Purchase of own shares
(refer note 16 to the consolidated nancial statements)
3,418
Average number of employees
(refer note 7 to the consolidated nancial statements)
126
Revenue (refer to Consolidated statement of prot or loss and other
comprehensive income)
50,959
Adjusted EBITDA
(refer note 6 to the consolidated nancial statements)
39,281
Directors’ Remuneration Report
continued
60
90
120
150
Jun
21
Aug
21
£ value of £100 invested at 29 June 2021
Oct
21
Dec
21
Feb
22
Apr
22
Baltic Classieds Group PLC
FTSE All-Share
Baltic Classieds Group PLC
Annual Report and Accounts 2022
97
GOVERNANCE REPORT
Migration route to standard base salaries in 2026
FY2022
(€ thousands)
FY2023 (€ thousands)
FY2024 (€ thousands)
FY2025 (€ thousands)
FY2026 (€ thousands)
Salary
LTIP
Max rem Salary
LTIPMax rem Salary
LTIPMax rem Salary
LTIPMax rem Salary
LTIPMax rem
CEO
250 700 950 303 700 1,003 330 700 1,030 358 700 1,058 385 700 1,085
CFO
150 300 450 182 300 482 198 300 498 215 300 515 231 300 531
COO
200 500 700 242 500 742 264 500 764 286 500 786 308 500 808
CEO pay ratio
The Company has less than 250 employees in the UK and
therefore is not required to disclose the CEO pay ratio.
Executive Directors’ service contracts
The details of each Executive Director’ service contract are
noted in the following table:
Date of service contract Notice period
Justinas Šimkus 3 June 2021 12 months
Lina Mačienė
3 June 2021 6 months
Simonas Orkinas 3 June 2021 6 months
Non-Executive Directors’ terms of
appointment
The NEDs do not have service contracts with the Company
but instead have letters of appointment. The date of
appointment and the most recent reappointment and the
length of service for each NED are shown in the following
table:
Date of appointment
Length of service
as at 2022 AGM
Trevor Mather 2 June 2021 1 year
Ed Williams 2 June 2021 1 year
Kristel Volver 2 June 2021 1 year
Tom Hall 2 June 2021 1 year
Payments for loss of oce and/or
payments to former Directors (audited)
No payments for loss of oce, nor payments to former
Directors were made during 2022.
Executive Directors’ external
appointments
External appointments are listed on pages 50 to 51.
How remuneration will be implemented
for 2023
The Remuneration Committee reviewed the base salaries
for Executive Directors and the fees for the Chair with regard
to 2023. Ination in Lithuania at the time of the review was
16.6% (April 2022). The Lithuanian Department of Statistics
only issues average wage ination measures every three
months, the most recent rate was 5.1% (October - December
2021).
The considerable majority of employees in the business will
receive a pay rise of at least 10% for 2023.
The Remuneration Committee agreed to a 10% pay rise for
Executive Directors on top of the phased increase in base
salary explained previously. The Remuneration Committee
also agreed to a 10% pay rise for the Chair. The Board
proposed and agreed a 10% increase in all fees for Non-
Executive Directors.
Component
of pay
Implementation for FY 2023
Base
salaries
•
CEO: €302,500
•
CFO: €181,500
•
COO: €242,000
PSP
•
In 2023 the Executives will be awarded the
below values of three year nominal cost
share options each:
▸
CEO: €700,000
▸
CFO: €300,000
▸
COO: €500,000
•
Performance will be measured based on
adjusted EPS for 2025 of 7.5 € cents for 25%
to vest and then straight line to 8.5 € cents for
100% to vest
NED fees
•
Chair fee: €132,000
•
Non-Executive Director base fee: €33,000
•
Senior Independent Director: €2,750
•
Audit and Remuneration Committee Chairs:
€8,250
As a consequence, the future base salaries for Executive
Directors as they transition to public company levels, will
be increased by 10% for years 2024 to 2026 and may be
subject to further market adjustment.
Statement of Shareholder voting at the
2022 AGM
The Remuneration Committee welcomes feedback on an
ongoing basis and this Report seeks to describe and explain
our remuneration decisions clearly.
This is the rst Policy and Directors’ Remuneration Report
submitted to Shareholders. Disclosure of the voting results
at the 2022 AGM will be presented in the Annual Report
on Remuneration for 2023. I hope that having read the
Directors’ Remuneration Report
continued
information in this Report, and considering the performance
of the Group during the year since the IPO, you will vote in
support of the Directors Remuneration Report and the
Remuneration Policy at the 2022 AGM.
I will be available at the 2022 AGM to answer any questions.
On behalf of the Board
Ed Williams
Chair of the Remuneration Committee
6 July 2022
Baltic Classieds Group PLC
Annual Report and Accounts 2022
98
GOVERNANCE REPORT
The Directors of Baltic Classieds Group PLC present their
report, together with the audited accounts for the year
ended 30 April 2022.
As permitted by Section 414 C(11) of the Companies Act
2006, some matters required to be included in the Directors’
Report in accordance with the Companies Act 2006 and
Listing Rule 9.8.4R of the Financial Conduct Authority’s
Listing Rules, have instead been included in the Strategic
Report. These disclosures are incorporated by reference in
the Directors’ Report. The Strategic Report can be found on
pages 3 to 45.
Directors’ Report
Directors’ Report disclosures
This Directors’ Report should be read in conjunction with
the Strategic Report (pages 3 to 45), which includes the
ESG Report (pages 30 to 40), and the Corporate Governance
Statement (page 52), which are incorporated by reference
into this Directors’ Report.
The Company has chosen in accordance with Section 414C
(11) of the Companies Act 2006 to provide disclosures and
information in relation to a number of matters which are
covered elsewhere in this Annual Report and Accounts.
These matters, together with those required under the 2013
Large and Medium sized Companies and Groups (Accounts
and Report Regulations 2008), are cross referenced in the
following table.
Disclosure Guidance and Transparency
Rule 4.1.8
The Strategic Report and the Directors’ Report (or parts
thereof), together with sections of this Annual Report
incorporated by reference, are the “Management Report” for
the purposes of DTR 4.1.8
Topic
Section
of the report
Page
Fair review of the
Company’s business
Management Report, as
dened in the Directors' Report
3
Principal risks and
uncertainties
Management Report, as
dened in the Directors' Report
3
Strategy Strategic Report 3
Business Model Strategic Report 3
Gender Breakdown Sustainability Report
Corporate Governance Report
30
48
Important events
impacting the business
Strategic Report 3
Likely future developments
Strategic Report 3
Financial key performance
indicators
Financial review 22
Non-nancial key
performance indicators
Financial review
Sustainability Report
22
30
Financial instruments Notes to the consolidated
nancial statements
116
Environmental matters Sustainability Report 30
Employees with
disabilities
Sustainability Report 30
Employee engagement S172 (1) Statement
Statement of engagement with
employees
Corporate Governance Report
17
56
48
Engagement with
suppliers, customers
and others in a business
relationship with the
Company
S172 (1) Statement
Statement of engagement with
employees
Corporate Governance Report
17
56
48
Social, community and
human rights issues
Section 172(1) Statement
Statement of engagement with
other business relationships
17
57
Natural Resources Sustainability Report 30
Board activity and culture Corporate Governance Report 48
Board diversity Corporate Governance Report
Nomination Committee Report
48
66
Directors' induction and
training
Board Composition,
Succession and Evaluation
Nomination Committee Report
62
66
Topic
Section
of the report
Page
Information Required by Listing Rules 9.8.4 (R)
Directors’ interests in Shares Directors’ Remuneration
Report
76
Going concern and viability
statements
Strategic Report 3
Long-term incentive schemes
Directors’ Remuneration
Report
76
Information Required by Listing Rules 9.8.6(8)*
Climate-related disclosures The Task Force for
Climate-Related Financial
Disclosure Report
31
Information Required by DTR 7.2
Corporate Governance
Statement
Corporate Governance
Report
48
This Annual Report
The Directors are required under the Companies Act 2006
to prepare a Strategic Report for the Company and Group.
The Strategic Report contains the Directors’ explanation of
the basis on which the Group preserves and creates value
over the longer term and the strategy for delivering the
objectives of the Group.
Baltic Classieds Group PLC
Annual Report and Accounts 2022
99
GOVERNANCE REPORT
Percentage of voting
right attached to Ordinary
Shares of £0.01
Nature of
holding
Date of notication
of interest
Antler EquityCo S.à r.l. 35.290000 Direct 25 January 2022
BlackRock, Inc. 10.250000 Indirect 30 March 2022
Kayne Anderson Rudnick Investment Management, LLC
9.006000 Direct 26 April 2022
Justinas Šimkus 4.547493 Direct 6 July 2021
These gures represent the number of shares and percentage held as at the date of notication to the Company.
Subsequent to the year-end, the following notications were received by the Company:
Percentage of voting
right attached to Ordinary
Shares of £0.01
Nature of
holding
Date of notication
of interest
BlackRock, Inc. 10.040000 Indirect 7 June 2022
The Companies Act 2006 requires that the Strategic Report
must:
•
contain a fair review of the Group’s business and
contain a description of the principal risks and
uncertainties facing the Group; and
•
be a balanced and comprehensive analysis of the
development and performance of the Group’s business
during the nancial year and the position of the Group’s
business at the end of that year, consistent with the
size and complexity of the business. The information
that fulls the strategic report requirements is set out
in the Strategic Report on pages 3 to 45.
The Non-Financial information statement on page 102
forms part of the Strategic Report.
The Strategic Report and the Directors’ Report, together
with the sections of this Annual Report incorporated by
reference, have been drawn up and presented in accordance
with and in reliance upon applicable English company law
and the liabilities of the Directors in connection with that
report shall be subject to the limitations and restrictions
provided by such law.
Corporate governance arrangements
During the nancial year ended 30 April 2022, we have
applied the principles of good governance contained in
the UK Corporate Governance Code 2018 (the “Code”). Our
Board of Directors
Details of the Directors of the Company who were in oce
during the year under review are set out on pages 50 to 51.
There were no appointments to or resignations from the
Board during the nancial year.
Powers of the Directors
Subject to the Company’s Articles of Association (the
“Articles”), the Companies Act 2006 and any special
resolution of the Company, the business of the Company is
managed by the Board, who may exercise all the powers of
the Company. In particular, the Board may exercise all the
powers of the Company to borrow money, to guarantee, to
indemnify, to mortgage or charge any of its undertakings,
property, assets and uncalled capital and to issue debentures
and other securities and to give security for any debt, liability
or obligation of the Company or of any third party.
Appointment and replacement of
Directors
The appointment and replacement of Directors is governed
by the Articles, the UK Corporate Governance Code 2018 (the
“Code”), the Companies Act 2006 and related legislation.
Appointment of Directors:
Directors may be appointed by
ordinary resolution of the Shareholders, or by the Board.
Appointment of a Director from outside the Group is on
the recommendation of the Nomination Committee, whilst
internal promotion is a matter decided by the Board unless
it is considered appropriate for a recommendation to be
requested by the Nomination Committee.
Compliance Statement for this nancial year 2022 is on
page 52. Further details on how we have applied the Code
can be found in the Corporate Governance Report on pages
48 to 65.
Results and dividends
The nancial statements set out the results of the Group
for the nancial year ended 30 April 2022 and are shown
on page 112. The Directors recommend a nal dividend of
1.4 € cents per Ordinary Share, giving total dividends per
Ordinary Share of 1.4 € cents for the year ended 30 April
2022. Subject to nal approval by Shareholders of the
recommended nal dividend, the dividend to Shareholders
for 2022 will total €7.0 million. If approved, the Company will
pay the nal dividend on 14 October 2022 to Shareholders
on the register of members at 9 September 2022.
Substantial Shareholders
The table below shows the holdings in the Company’s issued
share capital which had been notied to the Company
pursuant to the Financial Conduct Authority’s Disclosure
Guidance and Transparency Rules. The information below
was correct at the date of notication. It should be noted
that these holdings may have changed since the Company
was notied.
Directors’ Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
100
GOVERNANCE REPORT
Pursuant to the Relationship Agreement, the Major
Shareholder will be able to appoint one Non-Executive
Director to the Board for so long as it (together with any of
its Associates) holds voting rights over 10% or more of the
Company’s issued share capital. The Major Shareholder will
consult in advance with the Nomination Committee regarding
the identity of any Director proposed to be nominated by
it. The Major Shareholder’s rst appointed representative
Director is Tom Hall.
A Director appointed by the Board holds oce only until the
next Annual General Meeting of the Company and is then
eligible for reappointment.
Retirement of Directors:
At every Annual General Meeting of
the Company, each Director shall retire from oce and may
offer himself or herself for reappointment by the members.
Removal of Directors by special resolution:
The Company
may, by special resolution, remove any Director before the
expiration of their period of oce.
Vacation of oce:
The oce of a Director shall be vacated
if: (i) they resign; (ii) their resignation is requested by all of
the other Directors (not fewer than three in number); (iii) they
have been suffering from mental or physical ill health and
the Board resolves that their oce be vacated; (iv) they are
absent without the permission of the Board from meetings of
the Board (whether or not an alternative Director appointed
by them attends) for six consecutive months and the Board
resolves their oce is vacated; (v) they become bankrupt;
(vi) they are prohibited by law from being a Director; (vii) they
cease to be a Director by virtue of the Companies Act 2006;
or (viii) they are removed from oce pursuant to the Articles.
Directors’ indemnities and insurance
The Company maintains appropriate Directors’ and Ocers’
liability insurance cover in respect of any potential legal
action brought against its Directors. The Company has also
indemnied each Director to the extent permitted by law
against any liability incurred in relation to acts or omissions
arising in the ordinary course of their duties. The indemnity
arrangements are qualifying indemnity provisions under the
Companies Act 2006 and were in force throughout the year.
Signicant related party agreements
At no time during the nancial year ended 30 April 2022,
did any of the Directors, any close members of a Director’s
family or any controlling Shareholder of the Company, have a
material interest in any contract with the Company or any of
its subsidiaries. There is no person with whom the Group has
a contractual or other arrangement that is essential to the
business of the Company.
Share capital
The Company’s authorised and issued Ordinary Share capital
as at 30 April 2022 comprised a single class of Ordinary
Shares. As at 6 July 2022, being the last practicable date
prior to publication of this report, the Company’s issued share
capital comprised 500,392,405 fully paid Ordinary Shares of
£0.01 each.
Details of the Ordinary Share capital and shares issued during
the year can be found in note 15 to the nancial statements.
Rights and restrictions attaching to
shares
The Company’s shares when issued are credited as fully paid
and free from all liens, equities, charges, encumbrances and
other interests. All shares have the same rights (including
voting and dividend rights and rights on return of capital) and
restrictions as set out in the Articles, described below.
Except in relation to dividends that may have been declared
and rights on liquidation of the Company, the Shareholders
have no rights to share in the prots of the Company.
The Company’s shares are not redeemable. However, the
Company may purchase or contract to purchase any of the
shares on market, subject to the Companies Act 2006 and
the requirements of the Listing Rules.
Subject to the Articles of Association, the Companies Act
and other Shareholders’ rights, shares in the Company
may be issued with such rights and restrictions as the
Shareholders may by ordinary resolution decide, or if there is
no such resolution, as the Board may decide provided it does
not conict with any resolution passed by the Shareholders.
At a General Meeting of the Company held on 29 June 2021,
it was resolved that following Admission the Directors
be and are generally and unconditionally authorised to
allot shares or grant rights to subscribe for or convert any
security into shares up to an aggregate nominal amount of
£166,666,666.66 and up to an aggregate nominal amount of
£333,333,333.33 in connection with an offer by way of a rights
issue to Ordinary Shareholders in proportion to their existing
shareholdings and to holders of other equity securities as
required by the rights of those securities or as the Directors
see otherwise t. The Company will, at the AGM, continue to
seek authority to allot shares on the basis of the authorities
sought in the 2021 General Meeting.
These rights and restrictions will apply to the relevant shares
as if they were set out in the Articles of Association. Subject
to the Articles of Association, the Companies Act and other
Shareholders’ rights, unissued shares are at the disposal of
the Board.
Restrictions on transfer of securities in
the Company
There are no specic restrictions on the transfer of securities
in the Company, which is governed by its Articles of
Association and prevailing legislation, save as set out below.
The transferor of a share is deemed to remain the holder until
the transferee’s name is entered in the register. The Board
can decline to register any transfer of any share that is not
a fully paid share. The Company does not currently have any
partially paid shares.
The Board may also decline to register a transfer of a
certied share unless the instrument of transfer: (i) is duly
stamped or certied or otherwise shown to be exempt
from stamp duty and is accompanied by a relevant share
certicate; (ii) is in respect of only one class of share; and
(iii) if to joint transferees, is in favour of not more than four
such transferees. Registration of a transfer of an uncertied
share may be refused in the circumstances set out in the
Uncertied Securities Regulations 2001.
Directors’ Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
101
GOVERNANCE REPORT
The Company is not aware of any agreements between
Shareholders that may result in restrictions on the transfer
of securities.
Power for the Company to buy-back its
shares
The Company proposes to seek authorisation from its
Shareholders at its AGM on 28 September 2022 to purchase
in the market up to 10% of its issued Ordinary Shares
(excluding any treasury shares), subject to certain conditions
laid out in the authorising resolution. This standard authority
is renewable annually.
Voting rights
Shareholders will be entitled to vote at a general meeting
whether on a show of hands or a poll, as provided in the
Companies Act.
Where a proxy is given discretion as to how to vote on a show
of hands, this will be treated as an instruction by the relevant
Shareholder to vote in the way in which the proxy decides to
exercise the discretion. This is subject to any special rights
or restrictions as to voting which are given to any shares or
upon which any shares may be held at the relevant time and
to the Articles of Association.
If more than one joint holder votes (including voting by proxy),
the only vote which will count is the vote of the person whose
name is listed rst on the register for the share.
Restrictions on voting
Unless the Directors decide otherwise, a Shareholder cannot
attend or vote at any general meeting of the Company or upon
a poll or exercise any other right conferred by membership in
relation to general meetings or polls if they have not paid all
amounts relating to those shares which are due at the time
of the meeting, or if they have been served with a restriction
notice (as dened in the Articles of Association) after
failure to provide the Company with information concerning
interests in those shares required to be provided under the
Companies Act.
The Company is not aware of any agreements between
Shareholders that may result in restrictions of voting rights.
Change of control
The Group’s term loan and credit facility arrangements
contain provisions that, where the parties are unable to agree
the implications of any change of control, on notice being
given to the Group, the lenders may exercise their discretion to
require repayment of a loan under the agreement concerned.
Post-balance sheet events
Details of post-balance sheet events are given in note 26 of
the consolidated nancial statements.
Articles of Association
The Company has not adopted any special rules regarding
the appointment and replacement of Directors or the
amendment of the Articles of Association, other than as
provided for under UK company law.
Amendment of Articles of Association
The Company’s Articles may be amended by a Special
Resolution of the Company’s Shareholders. The existing
Articles of Association were adopted on 29 June 2021.
Company status and branches
Baltic Classieds Group PLC is the holding company of the
Baltic Classieds group of companies and has no branches.
It is listed on the London Stock Exchange main market with
a premium listing, and is registered in England and Wales
(company number 13357598).
Key Stakeholders
The long-term success of the Group is dependent on its
relationships with its key Stakeholders. On pages 17 to 21
we outline the ways in which we have engaged with key
Stakeholders, the material issues they have raised with us,
and how these issues have been taken into account in the
Board’s decision-making processes.
Statement of Engagement with
Employees
The Board recognises the importance of attracting,
developing and retaining the right people. In accordance with
best practice, we have employment policies in place which
provide equal opportunities for all employees, irrespective
of sex, race, colour, disability, sexual orientation, religious
beliefs or marital status. Further information on the Board’s
methods for engaging with the workforce are on page 56.
Employees with disabilities
Applications for employment by people with disabilities
are given full and fair consideration bearing in mind the
respective aptitudes and abilities of the applicant concerned
and our ability to make reasonable adjustments to the role
and work environment. In the event of existing employees
becoming disabled, all reasonable effort is made to ensure
that appropriate training is given and their employment
within the Company continues. Training, career development
and promotion of a disabled person is, as far as possible,
identical to that of an able bodied person.
Statement of Engagement with
Suppliers, Customers and Others
Details on the methods used to build strong business
relationships with the Company’s suppliers, customers and
partners and the effect of those interests on decision-making
can be found in the Engaging with our Stakeholders section
on pages 17 to 21 and the Corporate Governance Report on
page 48.
Political donations
There were no political donations during the nancial year.
Directors’ Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
102
GOVERNANCE REPORT
Research and development activities
The Company has dedicated in-house software design
and development teams, with primary focus on IT and
improvements to customer interfaces.
Greenhouse Gas Emissions
In line with our commitment to transparent and best practice
reporting, we have included a Sustainability report on page
30. This includes our Task Force on Climate-related Financial
Disclosures (“TCFD”) and our Streamlined Energy and Carbon
Reporting (“SECR”) disclosures on page 31, along with our
annual GreenHouse Gas (“GHG”) emissions footprint and
an intensity ratio appropriate for our business, which full
the requirements of the Companies Act 2006 (Strategic and
Directors’ Report) Regulations 2013.
Future developments of the business
The Group’s likely future developments including its strategy
are described in the Strategic Report on pages 3 to 45.
Going concern and viability
The Group’s going concern statement is contained within the
consolidated nancial statements on page 118. The long-
term Viability Statement is set out on page 45.
Annual General Meeting
Baltic Classieds Group PLC’s 2022 AGM will be held
at Saltoniškių st. 9B, LT-08105 Vilnius, Lithuania on 28
September 2022 at 11.00 am local time. The Notice of the
Meeting together with explanatory notes is contained in the
circular to Shareholders that accompanies the Annual Report
and Accounts.
In the event we receive 20% or more votes against a
recommended resolution at a general meeting, we would
announce the actions we intend to take to engage with our
Shareholders to understand the result in accordance with
the Code. We would follow this announcement with a further
update within six months of the meeting, with an overview of
our Shareholders’ views on the resolutions and the remedial
actions we have taken.
Disclosure of information to the Auditor
KPMG LLP, which was appointed in 2021, has expressed
its willingness to continue in oce as the Group’s Auditor
and, accordingly, resolutions to reappoint it and to authorise
the Audit Committee, for and on behalf of the Directors, to
determine its remuneration will be proposed at the AGM.
These are resolutions 13 to 14 set out in the Notice of the
Meeting.
In accordance with Section 418 of the Companies Act 2006,
the Directors who held oce at the date of approval of this
Directors’ Report conrm that, so far as they are each aware,
there is no relevant audit information of which the Company’s
Auditor is unaware and that each Director has taken all the
steps that they ought to have taken as a Director to make
themselves aware of any relevant audit information and
ensure that the Auditor is aware of such information.
Non-nancial information statement
The following table sets out where Stakeholders can nd
relevant non-nancial information within this Annual Report,
further to the Financial Reporting Directive requirements
contained in Sections 414CA and 414CB of the Companies
Act 2006. Where possible it also states where additional
information can be found that supports these requirements.
Reporting topic
Policies and standards
which govern our approach
Annual Report and
Accounts section reference
Page
Environmental
N/A Sustainability Report 30
Employees
•
Whistle-Blowing Policy
•
Disciplinary rules and procedures
policy
Section 172(1) Statement
Sustainability Report
17
30
Social and
community
matters
•
Modern Slavery Statement
•
Diversity Policy
Section 172(1) Statement
Sustainability Report
17
30
Respect for human
rights
•
Modern Slavery Statement
•
Privacy Policy
•
Document Retention Policy
•
GDPR Policy
Section 172(1) Statement
Sustainability Report
17
30
Anti-bribery and
corruption
•
Anti-Bribery and Anti-Corruption Policy
•
Gifts and Entertainment Policy
Sustainability Report 30
Business model
N/A
Our Business at a Glance; Our purpose,
values and strategy
12
Principal risks and
uncertainties
•
Risk register
Risk Management
Sustainability Report
41
30
Non-nancial KPIs
N/A
Market overview
Financial review
Sustainability Report
10
22
30
Directors’ Report
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
103
GOVERNANCE REPORT
Statement of Directors’ responsibilities
in respect of the Annual Report and
nancial statements
The Directors are responsible for preparing this Annual Report
and the Group and parent Company nancial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and
parent Company nancial statements for each nancial year.
Under that law they are required to prepare the Group nancial
statements in accordance with UK-adopted international
accounting standards and applicable law and have elected
to prepare the parent Company nancial statements in
accordance with UK accounting standards and applicable
law, including FRS 102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland.
Under company law the Directors must not approve the
nancial statements unless they are satised that they give
a true and fair view of the state of affairs of the Group and
parent Company and of the Group’s prot or loss for that
period. In preparing each of the Group and parent Company
nancial statements, the Directors are required to:
•
select suitable accounting policies and then apply
them consistently;
•
make judgments and estimates that are reasonable,
relevant, reliable and prudent;
•
for the Group nancial statements, state whether they
have been prepared in accordance with UK-adopted
international accounting standards;
•
for the parent Company nancial statements, state
whether applicable UK accounting standards have
been followed, subject to any material departures
disclosed and explained in the parent Company
nancial statements;
•
assess the Group and parent Company’s ability to
continue as a going concern, disclosing, as applicable,
matters related to going concern; and
•
use the going concern basis of accounting unless
they either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic
alternative but to do so.
The Directors are responsible for keeping adequate
accounting records that are sucient to show and explain
the parent Company’s transactions and disclose with
reasonable accuracy at any time the nancial position of the
parent Company and enable them to ensure that its nancial
statements comply with the Companies Act 2006. They are
responsible for such internal control as they determine is
necessary to enable the preparation of nancial statements
that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking
such steps as are reasonably open to them to safeguard
the assets of the Group and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the Directors are
also responsible for preparing a Strategic Report, Directors’
Report, Directors’ Remuneration Report and Corporate
Governance Statement that complies with that law and those
regulations.
The Directors are responsible for the maintenance and
integrity of the corporate and nancial information included
on the company’s website. Legislation in the UK governing
the preparation and dissemination of nancial statements
may differ from legislation in other jurisdictions.
Responsibility statement of the Direc-
tors in respect of the Annual Report
and nancial statements
We conrm that to the best of our knowledge:
•
the nancial statements, prepared in accordance with
the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, nancial position
and prot or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
•
the Strategic Report includes a fair review of the
development and performance of the business and the
position of the issuer and the undertakings included
in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that
they face.
We consider the Annual Report and Accounts, taken as a
whole, is fair, balanced and understandable and provides
the information necessary for Shareholders to assess the
Group’s position and performance, business model and
strategy.
The Directors’ Report is approved by the Board and signed
on its behalf by
Justinas Šimkus
Chief Executive Ofcer
6 July 2022
Directors’ Report
continued
FINANCIAL STATEMENTS
106
Independent Auditor's report to the members of Baltic Classieds Group PLC
112
Consolidated Statement of Prot or Loss and Other Comprehensive Income
113
Consolidated Statement of Financial Position
114
Consolidated Statement of Changes in Equity
115
Consolidated Statement of Cash Flows
116
Notes to the consolidated nancial statements
148
Company Statement of Financial Position
149
Company Statement of Changes in Equity
150
Notes to the Company nancial statements
Baltic Classieds Group PLC
Annual Report and Accounts 2022
106
FINANCIAL STATEMENTS
Independent auditor’s report to the
members of Baltic Classieds Group PLC
1. Our opinion is unmodied
2. Key audit matters: our assessment of risks of material
misstatement
We have audited the nancial statements of Baltic
Classieds Group PLC (“the Company”) for the year
ended 30 April 2022 which comprise the Consolidated
Statement of Prot or Loss and Other Comprehensive
Income, Consolidated and Company Statement of Financial
Position, Consolidated and Company Statement of Changes
in Equity, Consolidated Statement of Cash Flows and the
related notes, including the accounting policies in note 1.
In our opinion:
•
the nancial statements give a true and fair view of
the state of the Group’s and of the parent Company’s
affairs as at 30 April 2022 and of the Group’s prot for
the year then ended;
•
the Group nancial statements have been properly
prepared in accordance with UK-adopted international
accounting standards;
•
the parent Company nancial statements have been
properly prepared in accordance with UK accounting
standards, including FRS 102 The Financial Reporting
Standard applicable in the UK and Republic of Ireland;
and
Key audit matters are those matters that, in our professional
judgement, were of most signicance in the audit of the
nancial statements and include the most signicant
assessed risks of material misstatement (whether or not
due to fraud) identied by us, including those which had the
greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. We summarise below the key audit
matter in arriving at our audit opinion above, together with
our key audit procedures to address this matter and, as
required for public interest entities, our results from those
procedures. This matter was addressed, and our results
are based on procedures undertaken, in the context of,
and solely for the purpose of, our audit of the nancial
statements as a whole, and in forming our opinion thereon,
and consequently are incidental to that opinion, and we do
not provide a separate opinion on this matter.
The risk (group and parent company):
Initial Public Offering (“IPO”) and Group
restructure – accounting treatment
Refer to page 73 (Audit Committee Report), page 121
(accounting policy) and page 137 to 138 (nancial disclosures).
The IPO and associated group restructure (and other
•
the nancial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable
law. Our responsibilities are described below. We believe
that the audit evidence we have obtained is a sucient
and appropriate basis for our opinion. Our audit opinion is
consistent with our report to the audit committee.
We were rst appointed as statutory auditor by the directors
on 17 August 2021. The period of total uninterrupted
engagement is for the one nancial year ended 30 April
2022. We have fullled our ethical responsibilities under,
and we remain independent of the Group in accordance with,
UK ethical requirements including the FRC Ethical Standard
as applied to listed public interest entities. No non-audit
services prohibited by that standard were provided.
ancillary transactions such as the capital reduction) are
signicant unusual transactions in the year. In the group
nancial statements, accounting for the restructure and the
IPO involved careful application of accounting treatments,
such as common control transaction accounting and the
presentation of comparative amounts as if the UK group
had always been in existence. In the group and parent
company nancial statements, accounting for the IPO
involved careful application of accounting treatments such
as whether share issue costs are directly attributable to new
shares and can be recorded within share premium, and the
application of UK company law reliefs relating to capital and
reserves. The uncommon nature of these transactions, the
fact that certain steps in the IPO and restructure involved
transactions with related parties, and unfamiliarity of the
group with UK company law increases the risk of an error
arising in the accounting for and disclosures of the IPO and
group restructure.
Our procedures included:
•
Assessment of external expert:
Evaluated the
competence, objectivity and independence of the
expert engaged by the Group to prepare an accounting
steps paper outlining the entries to be recorded as
part of the IPO and restructure process.
Baltic Classieds Group PLC
Annual Report and Accounts 2022
107
FINANCIAL STATEMENTS
3. Our application of materiality and an overview of the
scope of our audit
Materiality for the group nancial statements as a whole was
set at €0.60m, determined with reference to a benchmark
of group prot before tax, normalised to exclude this year’s
non-recurring costs relating to free share awards, the IPO
costs and Senior Facility Agreement early repayment ne
and upfront fee write off, as disclosed in note 17 (of which
it represents 3.4%).
Materiality for the parent company nancial statements as a
whole was set at €0.21, which is the component materiality
for the parent company determined by the group audit
engagement team. This is lower than the materiality we
would otherwise have determined with reference to parent
company total assets, of which it represents less than 1%.
In line with our audit methodology, our procedures
on individual account balances and disclosures were
performed to a lower threshold, performance materiality, so
as to reduce to an acceptable level the risk that individually
immaterial misstatements in individual account balances
add up to a material amount across the nancial statements
as a whole.
Performance materiality was set at 65% of materiality for
the nancial statements as a whole, which equates to
£0.39m for the group and €0.13m for the parent company.
We applied this percentage in our determination of
performance materiality because we did not identify any
factors indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected
or uncorrected identied misstatements exceeding €0.03m,
in addition to other identied misstatements that warranted
reporting on qualitative grounds.
Of the group’s 8 reporting components, we subjected 4 to
full scope audits for group purposes.
•
Accounting analysis:
Evaluated the accounting for
the following with reference to UK-adopted IFRS for
the group, FRS 102 for the parent company, and UK
company law (for both group and parent company):
▸
common control accounting for the insertion
of Baltic Classieds Group PLC as the new top
company in the group
▸
share for share exchange to insert Baltic Classieds
Group PLC as the new top company in the group,
▸
share issue related transaction costs recorded in
share premium (rather than expensed), and
▸
parent company investments in subsidiaries
and the related group and parent company share
capital and reserves impacts arising from the
group restructure.
•
Tests of detail:
Inspected the related legal
documentation, board minutes, resolutions and
other documentation to agree the amounts recorded
for each step of the IPO and subsequent group re-
organisation.
•
Tests of detail:
Evaluated whether the costs recorded
in share premium related to the issuance of new
shares are directly attributable to issuing new shares,
and assessed the judgments involved in splitting
costs between issuance of new shares and listing
existing shares. We performed an assessment of
whether an overstatement of costs deducted against
share premium identied through these procedures
was material.
•
Assessing application:
Assessed whether the
common control and share-for-share exchange
accounting treatments were applied as stated in the
basis of preparation for consolidation by reconciling
the opening reserves to the prior year comparatives
and auditing adjustments made for the retrospective
restatement of share capital and share premium. We
performed an assessment of whether in the group
nancial statements an omission of non-controlling
interests identied through these procedures was
material, taking into account qualitative aspects of
the nancial statements as a whole.
•
Assessing transparency:
Assessed the transparency
of disclosures relating to the IPO, with particular
focus on equity and cash ow items, such as share
issues and share capital reduction, common control
accounting impacts and disclosure of the entries
involving related parties.
We performed the tests above rather than seeking to rely
on any of the group’s or company’s controls because the
nature of the balance is such that we would expect to obtain
audit evidence primarily through the detailed procedures
described.
Our results:
The results of our testing were satisfactory and we consider
the accounting and disclosure of the IPO and group
restructure to be acceptable.
The components within the scope of our work accounted for the following percentages of the group’s results:
Number of
components
Group
revenue
Group prot
before tax
Group total
assets
Audits for group reporting purposes 4 94% 87% 99%
Total 4 94% 87% 99%
Independent auditor’s report to the members of Baltic Classieds Group PLC
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
108
FINANCIAL STATEMENTS
For the residual components, we performed analysis at an
aggregated group level to re-examine our assessment that
there were no signicant risks of material misstatement
within these.
The Group team instructed component auditors as to the
signicant areas to be covered, including the relevant risks
detailed above and the information to be reported back.
The Group team approved the component materialities,
which ranged from €0.50m to €0.21m, having regard to
the mix of size and risk prole of the Group across the
components.
On account of travel restrictions in place during the
performance of the audit, the Group team did not visit the
component auditors and instead senior members of the
Group audit team held regular video conference meetings
with all in scope component auditors. These meetings
We considered the potential impacts of climate change
on the nancial statements as part of planning our audit.
Taking into account the nature of the business operations,
our risk assessment of climate change to long term assets
and the solvency of the group we did not identify any risks
The directors have prepared the nancial statements on the
going concern basis as they do not intend to liquidate the
Group or the Company or to cease their operations, and as
they have concluded that the Group’s and the Company’s
nancial position means that this is realistic. They have
also concluded that there are no material uncertainties
that could have cast signicant doubt over their ability to
continue as a going concern for at least a year from the date
of approval of the nancial statements (“the going concern
period”).
We used our knowledge of the Group, its industry, and the
general economic environment to identify the inherent risks
to its business model and analysed how those risks might
affect the Group’s and Company’s nancial resources or
ability to continue operations over the going concern period.
The risks that we considered most likely to adversely affect
the Group’s and Company’s available nancial resources
and metrics relevant to debt covenants over this period
were:
•
Major data breach caused by cyber attacks; and
•
The impact on growth caused by increased
competition or unfavourable effects to the Baltic
markets due to prolonged war in Ukraine.
We considered whether these risks could plausibly affect
the liquidity or covenant compliance in the going concern
period by comparing severe, but plausible downside
scenarios that could arise from these risks individually and
collectively against the level of available nancial resources
and covenants indicated by the Group’s nancial forecasts.
Our procedures also included a critical assessment of
the assumptions in the Group’s base case and downside
scenarios, in particular in relation to the recent geopolitical
instability in Ukraine on the economic situation in the Baltic
region (and its impact on the Group), and our knowledge
of the entity and the sector in which it operates. We also
involved explanation of Group audit instructions, involvement
in planning audit procedures, discussing progress updates
and emerging ndings, reviewing outcomes of testing
performed and discussing audit ndings. The Group audit
team reviewed the audit documentation of component
audits through various stages of their audits. The Group
team also attended component virtual closing meetings.
At these meetings, the ndings reported to the Group team
were discussed in more detail, and any further work required
by the Group team was then performed by the component
auditor.
The work on 2 of the 4 components was performed by
component auditors and the rest, including the audit of the
parent company, was performed by the Group team.
The scope of the audit work performed was predominately
substantivex as we placed limited reliance upon the Group’s
internal control over nancial reporting.
that signicantly impact the nancial statements of the
Group or our audit.
We read the disclosure of climate related information in the
front half of the annual report and considered consistency
with the nancial statements and our audit knowledge.
compared past budgets to actual results to assess the
directors’ track record of budgeting accurately.
We considered whether the going concern disclosure in
note 1 to the nancial statements gives a full and accurate
description of the directors’ assessment of going concern,
including the identied risks.
Our conclusions based on this work:
•
we consider that the directors’ use of the going
concern basis of accounting in the preparation of the
nancial statements is appropriate;
•
we have not identied, and concur with the directors’
assessment that there is not, a material uncertainty
related to events or conditions that, individually or
collectively, may cast signicant doubt on the Group’s
or Company’s ability to continue as a going concern
for the going concern period;
•
we have nothing material to add or draw attention
to in relation to the directors’ statement in Note 2
to the Group and Note 1 to the Company nancial
statements on the use of the going concern basis of
accounting with no material uncertainties that may
cast signicant doubt over the Group and Company’s
use of that basis for the going concern period, and we
found the going concern disclosure in those notes to
be acceptable; and
•
the related statement under the Listing Rules set out
on page 118 is materially consistent with the nancial
statements and our audit knowledge.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that
are inconsistent with judgements that were reasonable at
the time they were made, the above conclusions are not a
guarantee that the Group or the Company will continue in
operation.
4. The impact of climate change on our audit
5. Going concern
Independent auditor’s report to the members of Baltic Classieds Group PLC
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
109
FINANCIAL STATEMENTS
6. Fraud and breaches of laws and regulations – ability
to detect
Identifying and responding to risks of material
misstatement due to fraud
To identify risks of material misstatement due to fraud
(“fraud risks”) we assessed events or conditions that could
indicate an incentive or pressure to commit fraud or provide
an opportunity to commit fraud. Our risk assessment
procedures included:
•
Enquiring of directors, the audit committee, internal
audit and inspection of policy documentation as to
the Group’s high-level policies and procedures to
prevent and detect fraud, and the Group’s channel
for “whistleblowing”, as well as whether they have
knowledge of any actual, suspected or alleged fraud.
•
Reading Board and audit committee minutes.
•
Considering remuneration incentive schemes and
performance targets for management, directors and
other staff.
•
Using analytical procedures to identify any unusual or
unexpected relationships; and
•
Our forensic specialists assisted us in identifying key
fraud risks. This included holding a discussion with
the engagement partner, engagement manager and
component auditors.
We communicated identied fraud risks throughout the
audit team and remained alert to any indications of fraud
throughout the audit. This included communication from
the Group audit team to full scope component audit teams
of relevant fraud risks identied at the Group level and
request to full scope component audit teams to report to
the Group audit team any instances of fraud that could give
rise to a material misstatement at the Group level.
As required by auditing standards, and taking into account
possible pressures to meet prot targets, we perform
procedures to address the risk of management override of
controls and the risk of fraudulent revenue recognition, in
particular:
•
the risk that Group and component management may
be in a position to make inappropriate accounting
entries; and
•
the risk that C2C revenue is overstated through
recording revenues in the wrong period.
We did not identify any additional fraud risks.
We also performed procedures including:
•
Identifying journal entries and other adjustments
to test for all full scope components based on risk
criteria and comparing the identied entries to
supporting documentation. These included those
posted to unusual accounts;
•
Evaluated the business purpose of signicant unusual
transactions; and
•
Assessing signicant accounting estimates for bias.
Identifying and responding to risks of material
misstatement related to compliance with laws
and regulations
We identied areas of laws and regulations that could
reasonably be expected to have a material effect on the
nancial statements from our general commercial and
sector experience, through discussion with the directors
and other management (as required by auditing standards),
and discussed with the directors and other management
the policies and procedures regarding compliance with laws
and regulations.
We communicated identied laws and regulations
throughout our team and remained alert to any indications
of non-compliance throughout the audit. This included
communication from the Group audit team to full-scope
component audit teams of relevant laws and regulations
identied at the Group level, and a request for full scope
component auditors to report to the Group audit team any
instances of non-compliance with laws and regulations that
could give rise to a material misstatement at the Group
level.
The potential effect of these laws and regulations on the
nancial statements varies considerably.
Firstly, the Group is subject to laws and regulations that
directly affect the nancial statements including nancial
reporting legislation (including related companies
legislation), distributable prots legislation and we assessed
the extent of compliance with these laws and regulations
as part of our procedures on the related nancial statement
items.
Secondly, the Group is subject to many other laws and
regulations where the consequences of non-compliance
could have a material effect on amounts or disclosures in the
nancial statements, for instance through the imposition of
nes or litigation. We identied the following areas as those
most likely to have such an effect: data protection laws,
anti-bribery, employment law, competition law, consumer
protection and certain aspects of company legislation
recognising the nature of the Group’s activities. Auditing
standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry
of the directors and other management and inspection of
regulatory and legal correspondence, if any. Therefore if
a breach of operational regulations is not disclosed to us
or evident from relevant correspondence, an audit will not
detect that breach.
Context of the ability of the audit to detect fraud
or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some
material misstatements in the nancial statements, even
though we have properly planned and performed our audit
in accordance with auditing standards. For example, the
further removed non-compliance with laws and regulations
Independent auditor’s report to the members of Baltic Classieds Group PLC
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
110
FINANCIAL STATEMENTS
is from the events and transactions reected in the nancial
statements, the less likely the inherently limited procedures
required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk
of non-detection of fraud, as these may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal controls. Our audit procedures are
designed to detect material misstatement. We are not
responsible for preventing non-compliance or fraud and
cannot be expected to detect non-compliance with all laws
and regulations.
The directors are responsible for the other information
presented in the Annual Report together with the nancial
statements. Our opinion on the nancial statements does
not cover the other information and, accordingly, we do
not express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether, based on our nancial
statements audit work, the information therein is materially
misstated or inconsistent with the nancial statements or
our audit knowledge. Based solely on that work we have not
identied material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
•
we have not identied material misstatements in the
strategic report and the directors’ report;
•
in our opinion the information given in those reports
for the nancial year is consistent with the nancial
statements; and
•
in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report
to be audited has been properly prepared in accordance
with the Companies Act 2006.
Disclosures of emerging and principal
risks and longer-term viability
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
disclosures in respect of emerging and principal risks and
the viability statement, and the nancial statements and our
audit knowledge.
Based on those procedures, we have nothing material to
add or draw attention to in relation to:
•
the directors’ conrmation within Viability statement
(page 45) that they have carried out a robust
assessment of the emerging and principal risks facing
the Group, including those that would threaten its
business model, future performance, solvency and
liquidity;
•
the Emerging and Principal Risks disclosures
describing these risks and how emerging risks are
identied, and explaining how they are being managed
and mitigated; and
•
the directors’ explanation in the Viability statement
of how they have assessed the prospects of the
Group, over what period they have done so and why
they considered that period to be appropriate, and
their statement as to whether they have a reasonable
expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over
the period of their assessment, including any related
disclosures drawing attention to any necessary
qualications or assumptions.
We are also required to review the Viability statement, set
out on page 45 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures
are materially consistent with the nancial statements and
our audit knowledge.
Our work is limited to assessing these matters in the
context of only the knowledge acquired during our nancial
statements audit. As we cannot predict all future events
or conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the absence of
anything to report on these statements is not a guarantee
as to the Group’s and Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
corporate governance disclosures and the nancial
statements and our audit knowledge.
Based on those procedures, we have concluded that each
of the following is materially consistent with the nancial
statements and our audit knowledge:
•
the directors’ statement that they consider that the
annual report and nancial statements taken as
a whole is fair, balanced and understandable, and
provides the information necessary for shareholders
to assess the Group’s position and performance,
business model and strategy;
•
the section of the annual report describing the work of
the Audit Committee, including the signicant issues
that the audit committee considered in relation to
the nancial statements, and how these issues were
addressed; and
•
the section of the annual report that describes
the review of the effectiveness of the Group’s risk
management and internal control systems.
We are required to review the part of the Governance
Statement relating to the Group’s compliance with the
provisions of the UK Corporate Governance Code specied
by the Listing Rules for our review. We have nothing to
report in this respect.
7. We have nothing to report on the other information in
the Annual Report
Independent auditor’s report to the members of Baltic Classieds Group PLC
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
111
FINANCIAL STATEMENTS
Kate Teal (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
66 Queen Square
Bristol
BS1 4BE
6 July 2022
8. We have nothing to report on the other matters on
which we are required to report by exception
9. Respective responsibilities
10. The purpose of our audit work and to whom we owe
our responsibilities
Under the Companies Act 2006, we are required to report to
you if, in our opinion:
•
adequate accounting records have not been kept by
the parent Company, or returns adequate for our audit
have not been received from branches not visited by
us; or
•
the parent Company nancial statements and the part
of the Directors’ Remuneration Report to be audited
are not in agreement with the accounting records and
returns; or
Directors’ responsibilities
As explained more fully in their statement set out on page
103, the directors are responsible for: the preparation of the
nancial statements including being satised that they give
a true and fair view; such internal control as they determine is
necessary to enable the preparation of nancial statements
that are free from material misstatement, whether due to
fraud or error; assessing the Group and parent Company’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the
going concern basis of accounting unless they either intend
to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s
members, as a body, for our audit work, for this report, or for
the opinions we have formed.
•
certain disclosures of directors’ remuneration
specied by law are not made; or
•
we have not received all the information and
explanations we require for our audit.
We have nothing to report in these respects.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the nancial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they
could reasonably be expected to inuence the economic
decisions of users taken on the basis of the nancial
statements.
A fuller description of our responsibilities is provided on the
FRC’s website at
www.frc.org.uk/auditorsresponsibilities
.
The Company is required to include these nancial
statements in an annual nancial report prepared using the
single electronic reporting format specied in the TD ESEF
Regulation. This auditor’s report provides no assurance
over whether the annual nancial report has been prepared
in accordance with that format.
Independent auditor’s report to the members of Baltic Classieds Group PLC
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
112
FINANCIAL STATEMENTS
Consolidated Statement of Prot or Loss
and Other Comprehensive Income
For the year ended 30 April 2022
Note
2022
(€ thousands)
2021
(€ thousands)
Revenue 5 50,959 42,268
Other income 6 7
Expenses 6 (37,349 ) (26,565 )
Operating prot 13,616 15,710
Finance income 8 138 2
Finance expenses 8 (11,309 ) (13,935 )
Net nance costs
(11,171 ) (13,933 )
Prot / (loss) before tax 2,445 1,777
Income tax expense 9 (46 ) (1,870 )
Prot / (loss) for the period 2,399 (93 )
Other comprehensive income/(loss) - -
Total comprehensive income/(loss) for the year 2,399 (93 )
Attributable to:
Owners of the Company 2,399 (93 )
Earnings / (loss) per share (€ cents)
Basic and diluted 10 0.49 (0.02 )
Baltic Classieds Group PLC
Annual Report and Accounts 2022
113
FINANCIAL STATEMENTS
Consolidated Statement of Financial
Position
At 30 April 2022
Note
2022
(€ thousands)
2021
(€ thousands)
Assets
Property, plant and equipment 474 211
Intangible assets and goodwill 11 400,489 416,909
Right-of-use assets 12 457 761
Non-current assets 401,420 417,881
Trade and other receivables 13 2,970 2,571
Prepayments 189 46
Cash and cash equivalents 14 19,914 17,115
Current assets 23,073 19,732
Total Assets 424,493 437,613
Equity
Share capital 15 5,822 506,509
Own shares held 16 (3,418 ) -
Capital reorganisation reserve 15 (286,904 ) (287,033 )
Other reserves - 27
Retained earnings 611,877 (11,229 )
Total equity 327,377 208,274
Loans and borrowings
18 82,478 210,413
Deferred tax liabilities 9 5,844 8,901
Non-current liabilities 88,322 219,314
Current tax liabilities 9 4 1,293
Loans and borrowings
18 323 2,713
Payroll related liabilities 866 770
Trade and other payables 19 4,458 3,601
Contract liabilities 5 3,143 1,648
Current liabilities 8,794 10,025
Total liabilities 97,116 229,339
Total equity and liabilities 424,493 437,613
These nancial statements were approved by the board of directors on 6 July 2022 and were signed on its behalf by:
Justinas Šimkus
Director
Company registered number: 13357598
Baltic Classieds Group PLC
Annual Report and Accounts 2022
114
FINANCIAL STATEMENTS
Consolidated Statement of Changes in
Equity
For the year ended 30 April 2022
Note
Share
Capital
(€ thousands)
Share
premium
(€ thousands)
Own
shares
held
(€ thousands)
Capital
reorganisation
reserve
(€ thousands)
Other
reserves
(€ thousands)
Retained
earnings
(€ thousands)
Total
Equity
(€ thousands)
Balance at 1 May 2020 15 506,452 - - (287,033 ) - (11,109 ) 208,310
Loss for the period - - - - - (93 )
(93 )
Other comprehensive
income
Total comprehensive
income
Issuance of preference
shares
15 57 - - - - - 57
Transfer to reserves - - - - 27 (27 ) -
Balance at 30 April 2021 506,509 - - (287,033 ) 27 (11,229 ) 208,274
Prot for the period - - - - - 2,399 2,399
Other comprehensive
income
Total comprehensive
income
Transactions with owners:
Group restructure and IPO
15 75,265 43,143 - 129 (27 ) - 118,510
Transfer arising from
capital reduction
15 (575,956 ) (43,143 ) - - - 619,099 -
Share issue post IPO 15 4 - - - - (4 ) -
Share based payments 23 - - - - - 1,612 1,612
Purchase of shares for
performance share plan
16 - - (3,418 ) - - -
(3,418 )
Balance at 30 April 2022 5,822 - (3,418 ) (286,904 ) - 611,877 327,377
Baltic Classieds Group PLC
Annual Report and Accounts 2022
115
FINANCIAL STATEMENTS
Consolidated Statement of Cash Flows
For the year ended 30 April 2022
Note 2022
(€ thousands)
2021 (€ thousands)
Cash ows from operating activities
Prot / (loss) for the period 2,399 (93 )
Adjustments for:
Depreciation and amortisation 6 16,894 16,966
Amortisation of up-front fee and borrowing costs 8 5,580 938
Impairment loss on trade receivables 13 59 23
(Prot) / Loss on property, plant and equipment disposals - 20
Taxation 9 46 1,870
Net nance costs
8 5,606 12,997
Share-based payments 23 1,612 -
Other non-cash items 93 -
Working capital adjustments:
(Increase) in trade and other receivables (521 ) (452 )
(Increase) / Decrease in prepayments (128 ) 158
Increase in trade and other payables 966 252
Increase in contract liabilities 1,495 387
Cash generated from operating activities 34,101 33,066
Corporate income tax paid (4,403 ) (3,420 )
Interest and commitment fees paid (8,870 ) (12,950 )
Net cash inow from operating activities 20,828 16,696
Cash ows from investing activities
Acquisition of intangible assets and property, plant and equipment (433 ) (78 )
Proceeds from sale of property, plant and equipment - 75
Acquisition of subsidiaries, net of cash acquired - (25,000 )
Other investments - (11 )
Net cash used in investing activities (433 ) (25,014 )
Cash ows from nancing activities
Proceeds from issuance of share capital 15 121,339 57
Proceeds from loans and borrowings 18 96,650 15,000
Repayment of loans and borrowings 18 (228,295 ) (10,000 )
Capitalised borrowing costs (677 ) -
Payment of lease liabilities (305 ) (339 )
Share issue related expenses 15 (2,874 ) -
Purchase of own shares for performance share plan 16 (3,418 ) -
Net cash from nancing activities
(17,580 ) 4,718
Net cash inow from operating, investing and nancing activities 2,815 (3,600 )
Differences on exchange (16 ) -
Net Increase / (Decrease) in cash and cash equivalents 2,799 (3,600 )
Cash and cash equivalents at the beginning of the year 17,115 20,715
Cash and cash equivalents at the end of the year 19,914 17,115
Baltic Classifieds Group PLC
Annual Report and Accounts 2022
116
FINANCIAL STATEMENTS
Notes to the consolidated nancial
statements
1. General information
nancial statements as at and for the year ended 30 April 2022 comprise the Company and its subsidiaries (together referred to
as the “Group”). The principal business of the Group is operating leading online classieds portals for automotive, real estate,
jobs and services, and general merchandise in the Baltics .
2. Principles of preparation of consolidated nancial
statements
These consolidated nancial statements have been prepared as at, and for the year ended 30 April 2022 . These consolidated
nancial statements, which have been audited, have been prepared in accordance with the Disclosure Guidance and Transparency
Rules of the Financial Conduct Authority and with UK-adopted international accounting standards (“UK-adopted IFRS”).
The Group nancial statements consolidate those of the Company and its subsidiaries (together referred to as the “Group”).
The parent company nancial statements present information about the Company as a separate entity and not about its group.
The Group nancial statements have been prepared and approved by the Directors in accordance with UK-adopted IFRS. The
Company has elected to prepare its parent company nancial statements in accordance with FRS 102; these are presented on
pages 148 to 155.
Baltic Classieds Group PLC was incorporated on 26 April 2021 and on 5 July 2021 was admitted to trading on the London Stock
Exchange. At the same time as the Admission, the Company acquired 88.42 per cent of the share capital of ANTLER TopCo S.à
r.l and 100% of ANTLER Management S.A. that owned the residual 11.58% of the share capital of ANTLER TopCo S.à r.l in a share
for share exchange, thereby inserting Baltic Classifieds Group PLC as the Parent Company of the Group that includes ANTLER
MidCo S.à r.l.
These are the rst set of consolidated nancial statements of the Company. By applying the principles of common control
accounting, this group reorganisation has been accounted for as a business combination outside of the scope of a business
combination as dened under IFRS 3. Book value accounting has been adopted, meaning that the carrying values of assets
and liabilities of the parties to the combination were not adjusted to fair value on consolidation, and the results and cashows
of ANTLER TopCo S.à r.l. and Baltic Classieds Group PLC were brought into the consolidated nancial statements of Baltic
Classieds Group PLC as if Baltic Classieds Group PLC had always owned ANTLER TopCo S.à r.l.
The comparative nancial information for the year ended 30 April 2021 are the consolidated results of ANTLER TopCo S.à r.l.
(see below). They constitute the nancial statements of ANTLER TopCo S.a.r.l, ANTLER PIKCo S.a r.l and the consolidated
nancial statements of ANTLER MidCo S.à r.l.. The consolidated nancial statements of ANTLER MidCo S.à r.l were presented
as part of the Prospectus submitted as part of the Admission. As the comparative information presented in these consolidated
nancial statements also includes ANTLER TopCo S.a.r.l and ANTLER PIKCo S.a r.l there are immaterial differences between this
nancial information and that previously presented as part of the Prospectus. The application of UK-adopted IFRS (rather than
IFRSs as adopted for use in the EU) did not require any adjustment to the nancial information related to ANTLER MidCo S.à r.l.
Baltic Classieds Group PLC has adopted the nancial reporting framework of the group below it, which has previously presented
nancial statements under EU adopted International Financial Reporting Standards and given there are no differences between
the UK and EU adopted International Financial Reporting Standards, the Group does not consider itself to be a rst time adopter
of UK-adopted IFRS.
The audited consolidated nancial statements of ANTLER MidCo S.a.r.l for nancial year ended 30 April 2021 are available on
request from the Company’s registered oce. Historic Financial Information in respect of ANTLER MidCo S.a.r.l is also available
in Part B of the Prospectus submitted as part of Admission which can be found on the Company’s website.
The comparative gures for the nancial year ended 30 April 2021 are not the statutory accounts of Baltic Classieds Group PLC
for that nancial year as this is the rst set of nancial statements.
Baltic Classieds Group PLC
Annual Report and Accounts 2022
117
FINANCIAL STATEMENTS
Basis of measurement
These consolidated nancial statements have been prepared on the historical cost basis, unless otherwise stated in the
accounting policies below.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group has existing rights that give it the ability to direct
the relevant activities of an entity and has the ability to affect the returns the Group will receive as a result of its involvement
with the entity. In assessing control, potential voting rights are taken into account. The nancial statements of subsidiaries are
included in the consolidated nancial statements from the date that control commences until the date that control ceases.
Functional and presentation currency
These consolidated nancial statements are presented in Euro (€), which is the Company’s functional currency. All amounts are
rounded to the nearest thousand (€ 000), except where otherwise indicated.
The Group companies use Euro (€) as a functional currency considering the nature of the Group companies’ revenue, costs, and
debt instruments. The Company and its direct subsidiary BCG Holdco Limited are UK based companies and their share capital
is denominated in British pound (£). All equity transactions of these companies that took place during the year ended 30 April
2022 as well as a majority of operating expenses incurred are in British pound (£). However, while being the ultimate holding
companies, Baltic Classieds Group PLC and BCG Holdco Limited follow the functional currency of their operating subsidiaries,
i.e. Euro (€), as that is the currency they are most exposed to. There were no signicant transactions in currencies other than
Euro (€) during the preceding nancial year ended 30 April 2021.
Use of estimates and judgments
The preparation of the consolidated nancial statements, in accordance with UK-adopted IFRS, requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimates are revised or in any future periods affected.
Estimates
The below accounting estimate is considered to be critical to the reporting of results of operations and nancial position:
•
Carrying values of goodwill.
An impairment review is performed of goodwill balances by the Group on a ‘value in use’
basis. This requires judgment in estimating the future cash ows, the time period over which they occur, and in arriving
at an appropriate discount rate to apply to the cashows as well as an appropriate long term growth rate. Each of these
judgments has an impact on the overall value of cashows expected and therefore the headroom between the cashows
and carrying values of the cash generating units. Key assumptions and uncertainties for impairment are disclose in note
11.
Other important estimates:
•
Useful lives of intangible assets.
A useful life is assigned to an acquired intangible asset based on the estimated period
of time an asset is likely to remain in service. This judgement has an impact on the amortisation expense for any given
period. Useful lives of intangible assets are disclosed in note 3.
•
Share-based payments.
Share-based payment arrangements in which the Group receives goods or services as
consideration for its own equity instruments are accounted for as equity-settled share-based payment transactions. The
fair value of services received in return for share options is calculated with reference to the fair value of the award on
the date of grant. Black-Scholes model has been used to calculate the fair value and the Directors have therefore made
estimates with regard to the inputs to that model and the period over which the share award is expected to vest (see note
23).
Judgments
The below judgment is also considered to be important to the reporting of results of operations and nancial position:
•
Deferred tax asset.
An unrecognised deferred tax asset of €3.9m (30 April 2021: €4.0m) has not been recognised in relation
to tax losses incurred by the Company’s indirect subsidiary UAB Antler Group. Deferred tax assets are recognised only
to the extent that it is probable that future taxable prots will be available against which the temporary differences can
be utilised. Recognition, therefore, involves judgement regarding the probability of future taxable prot of the indirect
subsidiary being available. Taxable losses carried forward for which no deferred tax asset is recognised are discussed in
note 9 (d).
Notes to the consolidated nancial statements
continued
2. Principles of preparation of consolidated nancial statements
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
118
FINANCIAL STATEMENTS
Going concern
The Directors have made an assessment of the Group’s ability to continue as a going concern covering a period of at least 12
months from the date of approval of these consolidated nancial statements and has a reasonable expectation that the Group
has adequate resources to continue in operational existence over this period.
The Group meets its day-to-day working capital requirements from cash balances, if needed the Group also has access to a
revolving credit facility that amounts to €10m and is available until July 2026. As at 30 April 2022 no amounts of the revolving
credit facility were drawn down. The bank loan matures in July 2026 and its availability is subject to continued compliance with
certain covenants, it becomes repayable on demand in the case of a change in control. The Group voluntarily repaid €14m of the
loan during the FY 2022, the outstanding balance at the year end amounts to €84m. The Group had cash balances of €19.9m
at the year end.
During the nancial year ended 30 April 2022 the Group has generated a prot of €2.4m, however it was highly affected by the
one-off IPO and Free Share Awards related expenses (note 6). The Directors also prepared detailed cash ow forecasts for the
period ending 12 months from the date of approval of these consolidated nancial statements. The assumptions used in the
cash ow forecasts are based on the Group’s historical performance and the Directors’ experience of the industry and takes into
account both internal and external factors.
Stress case scenarios have been modelled to make the assessment of going concern to take into account severe but plausible
potential impacts of a major data breach, adverse changes to the competitive environment and a continuing geopolitical
tensions in the neighbouring countries. The stress testing indicates that the Group would be able to withstand the impact,
remain cash generative and be able to continue to comply with debt covenants for the assessment period.
Consequently, the Directors are condent that the Group will have sucient funds to continue to meet its liabilities as they fall
due for at least 12 months from the date of approval of these consolidated nancial statements and therefore have prepared
these consolidated nancial statements on a going concern basis.
Effective new standards as at 1 May 2021
The following amendments to standards have been adopted by the Group for the rst time for the nancial year beginning on
1 May 2021:
•
COVID-19-Related Rent Concessions (Amendment to IFRS 16);
•
Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16).
The adoption of these amendments has had no material effect on the Group’s consolidated nancial statements.
Standards issued but not yet effective
There are a few amendments to IFRS that have been issued by the IASB that become mandatory in a subsequent accounting
periods including:
•
Reference to the Conceptual Framework (Amendments to IFRS 3);
•
Property, Plant and Equipment – Proceeds before Intended Use (Amendments to IAS 16);
•
Onerous Contracts – Cost of Fullling a Contract (Amendment to IAS 37);
•
Annual Improvements to IFRS Standards 2018-2020;
•
Classication of Liabilities as Current or Non-Current (Amendments to IAS 1);
•
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts;
•
Denition of Accounting Estimates (Amendments to IAS 8);
•
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
•
Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) (not yet endorsed
by EU).
The Group has evaluated these changes, and none are expected to have a signicant impact on these consolidated nancial
statements.
Notes to the consolidated nancial statements
continued
2. Principles of preparation of consolidated nancial statements
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
119
FINANCIAL STATEMENTS
3. Signicant accounting policies
The Group has consistently applied the accounting policies to all the periods presented in these consolidated nancial
statements.
Revenue
Revenue is measured based on the consideration specied in a contract with a customer and is recognised at the point when
the performance obligations are satised. The Group applies the ve-step revenue recognition model in accordance with IFRS
15 as follows.
(a)
Identication of the contract with a customer
(b)
Identication of performance obligations
(c)
Determination of the transaction price
(d)
Allocating the transaction price to individual performance obligations
(e)
Recognition of revenue when performance obligations are satised
The Group’s revenue streams include listings revenue, advertising revenue, nancial intermediation and ancillary revenue. The
different types of services offered to customers along with the nature and timing of satisfaction of performance obligations are
set as follows:
Listing fees
The Group operates leading online classieds portals for automotive, real estate, jobs and services, and general merchandise.
Listing fees revenue is generated from both private (“C2C”) and business customers (“B2C”).
Private customers pay a fee in advance to advertise their product (automotive, real estate, general merchandise) on the Group’s
platform for a specied period. Revenue is deferred until the customer obtains control over the services. Control is obtained
by customers across the life of the contract as their product is continuously listed. Contracts for these services are typically
entered into for a period of between a day and a year.
Business customers pay fees to obtain a “service pack” which allows the customer to advertise a set number of listings during
a period, unused listings cannot be rolled over. Revenue is deferred until the customer obtains control over the services. Control
is obtained by the customers across the life of the performance obligation being provided, which is either the set period in the
contract, or the period of service, if shorter. B2C typically invoice monthly, although some contracts are annual contracts and
have 7-60 days settlement terms.
The Group applies a xed price to all listings, both C2C and B2C.
One of the Group’s general merchandise platforms, Osta.ee allows a customer to ll an e-wallet with money that can then
be used to pay for services provided by the Group. The customer can cash out at any time. This cash balance is therefore
accounted for as a nancial liability labelled ‘customer credit balances’ within trade and other payables in the consolidated
statement of nancial position and as cash within cash and cash equivalents. This cash is physically separated from the rest in
a dedicated bank account and, although there is no formal restriction on this cash, the Group’s policy is keep the cash balance
at a level not lower than the e-wallet balance. No revenue is recognised unless the customer purchases a product provided by
the Group using money from their e-wallet. Revenue is then recognised in accordance with the product purchased.
Advertising
Advertising revenue comprises fees (net of rebates) from business customers for banner advertising on the Group’s platforms.
The customer pays fees to advertise on the Group’s platforms. Revenue is deferred until the customer obtains control over the
services. Control is obtained by the customers over the life of the advertisement. Customers are typically invoiced monthly and
have a 7-60 days settlement term.
The Group has rebate agreements with some customers. The Group estimates, based on agreed metrics, the discount which is
then applied in determining the transaction price for advertising. The estimate is updated throughout the term of the contract
and is settled annually. The rebate amounts are not material.
Ancillary
Ancillary revenue comprises revenue from nancial intermediation, subscription services and other.
Ancillary revenue is recognised as the Group satises its performance obligation by bringing leads to a customer or by providing
other agreed services. Financial intermediation revenue comprises commission fees from nancial institutions for directing
potential customers from the Group’s portals to nancing offers such institutions provide. At the beginning of each month the
Group agrees certain trac metrics with nancial institutions and issues invoices for the commission or a minimum agreed fee.
Notes to the consolidated nancial statements
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
120
FINANCIAL STATEMENTS
Revenue is recognised as the Group satises its performance obligation by directing potential customer trac to the nancial
institutions.
The revenue accounting policy across business lines is the same for each revenue stream, i.e. advertising revenue is accounted
for the same in both automotive and real estate business lines.
The timing of the satisfaction of performance obligations usually is the same as the typical timing of payment or recognition of
trade receivable; when it is not, a contract liability is recognised.
Other income and expenses
Other income and expenses comprise gains or losses from disposal of property, plant and equipment, intangible assets, as well
as other income and costs not directly related to the primary activities of the Group.
Finance income and nance costs
Finance income and expenses comprise interest receivable and payable, realised and unrealised exchange gains and losses
regarding trade receivables, trade payables and loans denominated in foreign currencies.
Interest income is recognised as it accrues in prot or loss, using the effective interest method.
Finance costs comprise interest expense on borrowings and unwinding of discounts on provisions. Borrowing costs that are
not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in prot or loss using
the effective interest method.
Foreign currency gains and losses are reported on a net basis.
Income tax
Income tax on the prot or loss for the period comprises current and deferred tax. Income tax is recognised in prot or loss
except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantially enacted at
the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
nancial reporting purposes and the amounts used for taxation purposes.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on
laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there
is a legally enforceable right to offset current tax liabilities and assets, and if they relate to income taxes levied by the same tax
authority.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is
probable that future taxable prots will be available against which they can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax benet will be realised.
Segment information
Operating segment information is reported in a manner consistent with the internal reporting provided to the Chief Operating
Decision Maker (CODM). The CODM, who is responsible for allocating resources, assessing performance of the operating
segment and making strategic decisions, has been identied as the Board of Baltic Classieds Group PLC.
Earnings per share
Basic earnings per share and diluted earnings per share are presented for ordinary shares.
Basic earnings per share is calculated by dividing prot / (loss) attributable to owners of the Company by the weighted average
number of shares outstanding.
Diluted earnings per share adjust the gures used in the determination of basic earnings per share to take into account the
weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all
dilutive potential ordinary shares.
Notes to the consolidated nancial statements
continued
3. Signicant accounting policies
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
121
FINANCIAL STATEMENTS
Consolidation
(a) Business combinations
Business combinations are accounted for using the acquisition method when control is transferred to the Group. The
consideration transferred in the acquisition is measured at fair value, as are the identiable net assets acquired. Any goodwill
that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in prot or loss immediately.
Transaction costs are expensed as incurred, except if related to the issuance of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts
are recognised in prot or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If the obligation to pay contingent consideration
meets the denition of a nancial instrument and is classied as equity, it is not remeasured, and settlement is accounted for
within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent
changes in the fair value of the contingent consideration are recognised in prot or loss.
(b) Non-controlling interests (hereinafter - NCI)
NCI are measured initially at their proportionate share of the acquiree’s identiable net assets at the date of acquisition. Changes
in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
(c) Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related NCI
and other components of equity. Any resulting gain or loss is recognised in prot or loss. Any interest retained in the former
subsidiary is measured at fair value when control is lost.
(d) Transactions eliminated on consolidation
All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are
eliminated in full.
Acquisitions from entities under common control
A “business combination involving entities or businesses under common control” is a business combination in which all of the
combining entities or businesses are ultimately controlled by the same party or parties both before and after the combination,
and that control is not transitory. Business combinations under common control are excluded from the scope of IFRS 3 Business
Combinations. For business combinations among entities under common control, the Group elects to apply the common control
exclusion in IFRS 3 and where this is the case applies an accounting policy reecting the “predecessor value method” or “book
value accounting method”. Under this method, rather than acquisition accounting in accordance with IFRS 3, the acquired assets
and liabilities of the acquired business are recorded at their existing carrying “book” values, as such no goodwill is recorded. A
business combination involving entities under common control was completed in the current period and is described in note 15.
Foreign currency
Transactions in foreign currencies are translated to the functional currency of Group entities at the foreign exchange rate ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are
retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on
translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical
cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and
liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign
exchange rates ruling at the dates the fair value was determined.
Intangible assets and goodwill
(a) Recognition and measurement
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses.
Other intangible assets, including customer relationships, software and trademarks, that are acquired by the Group and have
nite useful lives, are measured at cost less accumulated amortisation and any accumulated impairment losses.
Notes to the consolidated nancial statements
continued
3. Signicant accounting policies
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
122
FINANCIAL STATEMENTS
(b) Research and development
Costs associated with maintaining software programmes are recognised as an expense as incurred. Material development
costs that are directly attributable to the design and testing of identiable and unique software products controlled by the Group
are recognised as intangible assets where the following criteria are met:
•
it is technically feasible to complete the software so that it will be available for use
•
management intends to complete the software and use or sell it
•
there is an ability to use or sell the software
•
it can be demonstrated how the software will generate probable future economic benets
•
adequate technical, nancial and other resources to complete the development and to use or sell the software are available,
and
•
the expenditure attributable to the software during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software include employee costs. Capitalised development costs
are recorded as intangible assets and amortised from the point at which the asset is ready for use.
Research expenditure and development expenditure that do not meet the criteria above are recognised as an expense as
incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
(c) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benets embodied in the specic asset to
which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in prot
or loss as incurred.
(d) Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line
method over their estimated useful lives and is recognised in prot or loss. Goodwill is not amortised. Estimated useful lives
are as follows:
Property, plant and equipment
(a) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost
includes expenditure that is directly attributable to the acquisition of the asset.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of
property, plant and equipment.
The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal
with the carrying amount of the property, plant and equipment, and is recognised within other operating income/other operating
expenses in prot or loss.
(b) Subsequent expenditure
The expenditure of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item
if it is probable that the future economic benets within the part will ow to the Group, and its costs can be measured reliably.
The carrying amount of the replaced part is derecognised. The cost of the day-to-day servicing of property, plant and equipment
are recognised in prot or loss as incurred.
(c) Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less
its residual value. Depreciation is recognised in prot or loss on a straight-line basis over the estimated useful lives of each part
of an item of property, plant and equipment, since this most closely reects the expected pattern of consumption of the future
economic benets embodied in the asset. Depreciation is calculated from the rst day of the next month when the asset is
available for use, using the straight-line method.
Notes to the consolidated nancial statements
continued
3. Signicant accounting policies
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
123
FINANCIAL STATEMENTS
Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the
Group will obtain ownership by the end of the lease term. Land is not depreciated. The estimated useful lives of property, plant
and equipment for current and comparative periods are as follows:
The useful lives, residual values and depreciation method are reviewed annually to ensure that the depreciation period and other
estimates are consistent with the expected pattern of economic benets from items in property, plant and equipment.
Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if
the contract conveys the right to control the use of an identied asset for a period of time in exchange for consideration. To
assess whether a contract conveys the right to control the use of the identied asset, the Group uses the denition of a lease
in IFRS 16 Leases.
As a lessee
At commencement or on modication of a contract that contains a lease component, the Group allocates the consideration in
the contract to each lease component on the basis of its relative stand-alone prices.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end
of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or
the cost of the right-of-use asset reects that the Group will exercise a purchase option. In that case the right-of-use asset
will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property
and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental
borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external nancing sources and
makes certain adjustments to reect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
•
Fixed payments, including in-substance xed payments
•
Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement
date
•
Amounts expected to be payable under a residual value guarantee
•
The exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional
renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a
lease unless the Group is reasonably certain not to terminate early
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in
the future lease payments arising from a change in an index or rate, if there is a change in the Group‘s and the Group’s estimate
of the amount expected to be payable under a residual value guarantee, if the Group’s changes its assessment of whether it will
exercise a purchase, extension or termination option or if there is a revised in-substance xed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use
asset or is recorded in prot or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group presents right-of-use assets that do not meet the denition of investment property in `Right-of-use assets’ and lease
liabilities in `long-term lease liabilities` and `short-term lease liabilities` in the statement of nancial position.
Notes to the consolidated nancial statements
continued
3. Signicant accounting policies
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
124
FINANCIAL STATEMENTS
Impairment of non-nancial assets
At each reporting date, the Group reviews the carrying amounts of its non-current assets to determine whether there is any
indication of impairment. If any such indications exist, then the asset’s recoverable amount is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inows from
continuing use, that are largely independent of the cash inows of other assets (the “cash-generating unit, or CGU”).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is
based on the estimated future cash ows, discounted to their present value using a pre-tax discount rate that reects current
market assessments of the time value of money and the risks specic to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses
are recognised in prot or loss. Impairment loss is reversed to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation and amortisation, if no impairment loss had been
recognised.
Cash and cash equivalents
Cash includes cash at banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known
amounts of cash with original maturities of three months or less and that are subject to an insignicant risk of change in value.
In the statement of cash ows, cash and cash equivalents include cash at banks.
Financial instruments
A nancial instrument is any contract that gives rise to a nancial asset of one entity and a nancial liability or equity instrument
of another entity.
(a) Financial assets
(i) Initial recognition and measurement
The Group qualies nancial assets to one of the following categories:
•
measured at amortised cost
•
measured at fair value through other comprehensive income
•
measured at fair value through prot or loss
The classication of nancial assets at initial recognition depends on the nancial asset’s contractual cash ow characteristics
and the Group’s business model for managing them. With the exception of trade receivables that do not contain a signicant
nancing component, the Group initially measures a nancial asset at its fair value plus, in the case of a nancial asset not at
fair value through prot or loss, transaction costs. Trade receivables that do not contain a signicant nancing component are
measured at the transaction price determined under IFRS 15.
The Group’s business model for managing nancial assets refers to how the Group manages its nancial assets in order to
generate cash ows. The business model determines whether cash ows will result from collecting contractual cash ows,
selling the nancial assets, or both.
Purchases or sales of nancial assets are recognised on the trade date, i.e., the date that the Group commits to purchase or
sell the asset.
(ii) Subsequent measurement
After initial recognition, the Group measures a nancial asset at amortised cost (debt instruments).
(iii) Financial assets at amortised cost (debt instruments)
The Group measures nancial assets at amortised cost if both of the following conditions are met:
•
The nancial asset is held within a business model with the objective to hold nancial assets in order to collect contractual
cash ows and
•
The contractual terms of the nancial asset give rise on specied dates to cash ows that are solely payments of principal
and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to
impairment. Gains and losses are recognised in prot or loss when the asset is derecognised, modied or impaired.
The Group’s nancial assets at amortised cost includes trade, other current and non-current receivables and contract assets.
Notes to the consolidated nancial statements
continued
3. Signicant accounting policies
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
125
FINANCIAL STATEMENTS
(iv) Impairment of nancial assets
As relevant for:
•
Financial assets measured at amortised cost
•
Contract assets
The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured at
12-month ECLs:
•
debt securities that are determined to have low credit risk at the reporting date
•
other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the
nancial instrument) has not increased signicantly since initial recognition
Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECLs.
When determining whether the credit risk of a nancial asset has increased signicantly since initial recognition and when
estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost
or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience
and informed credit assessment, and includes forward-looking information.
The Group considers a nancial asset to be in default when the nancial asset is more than 180 days past due.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a nancial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting
date (or a shorter period if the expected life of the instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed
to credit risk.
(v) Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls
(i.e. the difference between the cash ows due to the entity in accordance with the contract and the cash ows that the Group
expects to receive).
ECLs are discounted at the effective interest rate of the nancial asset.
(vi) Presentation of allowance for ECL in the statement of nancial position
Loss allowances for nancial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
(vii) Write-off
The gross carrying amount of a nancial asset is written off when the Group has no reasonable expectations of recovering
a nancial asset in its entirety or a portion thereof. For individual and corporate customers, the Group individually makes an
assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery.
The Group expects no signicant recovery from the amount written off. However, nancial assets that are written off could still
be subject to enforcement activities in order to comply with the procedures for recovery of amounts due.
(b) Financial liabilities
(i) Initial recognition and measurement
Financial liabilities are classied, at initial recognition, as nancial liabilities at fair value through prot or loss, loans and
borrowings and payables. All nancial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs. The Predecessor and the Group’s nancial liabilities include trade and
other payables, loans and borrowings, lease liabilities and nancial liabilities measured at fair value with changes recognised
in prot or loss.
(ii) Subsequent measurement
The measurement of nancial liabilities depends on their classication.
After initial recognition, the Group’s loans, borrowings and other payables are subsequently measured at amortised cost using
the EIR method. Gains and losses are recognised in prot or loss, when the liabilities are derecognised as well as through the
EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR amortisation is included as nance expenses in prot or loss.
Notes to the consolidated nancial statements
continued
3. Signicant accounting policies
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
126
FINANCIAL STATEMENTS
(c) Offsetting of nancial instruments
Financial assets and nancial liabilities are offset and the net amount is reported in the statement of nancial position if there
is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, i.e. to
realize the assets and settle the liabilities simultaneously.
Payroll related liabilities
Short-term payroll related liabilities are expensed as the related service is provided. These include salaries and wages, social
security contributions, vacation payouts, compensation for illness, bonuses, allowances, severance payments, vacation
accruals, all of which are recognised as costs when an employee has fullled his duties in exchange for the received allowance.
Share-based payments
Equity-settled awards are valued at the grant date, and the fair value is charged as an expense in the income statement spread
over the vesting period. Fair value of the awards are measured using Black-Scholes pricing model. The credit side of the entry is
recorded in equity. Cash-settled awards are revalued at each reporting date with the fair value of the award charged to the prot
and loss account over the vesting period and the credit side of the entry recognised as a liability.
Provisions
Provisions on obligations are accounted for only when the Group has legal obligation or irrevocable commitment as a result
of past events, and it is probable that an outow of resources embodying economic benets will be required to settle it, and
the amount of obligation can be measured reliably. Provisions are determined by discounting the expected future cash ows
at a pre-tax rate that reects current market assessments of the time value of money and the risks specic to the liability. The
unwinding of the discount is recognised as nance expenses.
Ordinary shares
Incremental costs directly attributable to the issue of ordinary shares are recognised as deductions from equity. Income tax
relating to transaction costs of equity transactions is accounted for in accordance with IAS 12.
Own shares held
The Employee Benet Trust (‘EBT’) provides for the issue of shares to Group employees principally under Performance Share Plan
scheme. The Group has control of the EBT and therefore consolidates the EBT in the Group nancial statements. Accordingly,
shares in the Company held by the EBT are included in the balance sheet at cost as a deduction from equity.
Capital reorganisation reserve
The capital reorganisation reserve arose on consolidation as a result of the share for share exchange transactions that took
place on 5 July 2021 (note 15). It represents the difference between the nominal value of shares issued by Baltic Classieds
Group PLC in this transaction and the share capital and other capital reserves of ANTLER TopCo S.a.r.l.
Dividends
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s nancial statements in the period
in which the dividend is approved by the Company’s shareholders in the case of nal dividends, or the date at which they are
paid in the case of interim dividends.
Contingencies
Contingent liabilities are not recognised in the consolidated nancial statements but are disclosed unless the possibility of an
outow of resources embodying economic benets is remote.
Contingent assets are not recognised in the consolidated nancial statements, unless the realisation of income is virtually
certain. They are disclosed in the consolidated nancial statements when an inow of economic benet is probable.
Subsequent events
Events that provide additional evidence on conditions that existed at the end of the reporting period (the adjusting events) are
recognised in the nal statements. Other subsequent events are not adjusting events and are disclosed in the notes if material.
Notes to the consolidated nancial statements
continued
3. Signicant accounting policies
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
127
FINANCIAL STATEMENTS
Alternative performance measures
In the analysis of the Group’s nancial performance, certain information disclosed in the nancial statements may be prepared
on a non-GAAP basis or has been derived from amounts calculated in accordance with IFRS but are not themselves an expressly
permitted GAAP measure. These measures are reported in line with the way in which nancial information is analysed by
management and designed to increase comparability of the Group’s year-on-year nancial position, based on its operational
activity. The key alternative performance measures presented by the Group are:
•
Adjusted Operating prot which is calculated by reference to the prot (loss) for the period and adjusting this to add back
income tax expense, net nance costs, IPO costs, IPO renancing arrangement related nance and tax items, M&A costs
and acquired intangibles amortisation.
•
EBITDA which is calculated by reference to the prot / (loss) for the period and adjusting this to add back income tax
expense, net nance costs, depreciation and amortisation.
•
Adjusted EBITDA which is calculated by reference to EBITDA for the period and adjusting this for the costs related to IPO,
acquisitions and disposals in the period and one-off costs that do not reect the underlying operations of the business
(but including ongoing operating costs of being a public company).
•
Adjusted EBITDA Margin which is calculated by dividing Adjusted EBITDA for the period by revenue for such period.
•
Adjusted Net Income which is dened as the prot / (loss) for the period adjusted for the post-tax impact of the IPO costs,
IPO renancing arrangement related nance and tax items, M&A costs and the post-tax impact of the amortisation of
intangibles arising from acquisitions.
•
Adjusted basic EPS is adjusted for the same items that are used to adjust the Adjusted Net Income.
•
Net Debt which is calculated as total debt (bank loans and Osta.ee customer credit balances) less cash.
•
Leverage which is calculated as Net Debt over last twelve months (LTM) of Adjusted EBITDA. The Group’s loan facility
includes a Total Leverage Ratio covenant (see note 18).
The Directors believe that these alternative performance measures provide a helpful measure of the Group’s business
performance and year-on-year trends, as IPO related expenses or one-off Free Share Awards are signicant but do not reect
operational activity.
4. Operating segments
Operating segments are identied on the basis of internal reports about components of the Group that are regularly reviewed
by the chief operating decisionmaker (“CODM”) in order to allocate resources to the segments and to assess their performance.
The CODM has been identied as the Board of Baltic Classieds Group PLC.
The main focus of the Group is operating leading online classieds platforms for automotive, real estate, jobs and services, and
general merchandise in the Baltics. The Group’s business is managed on a consolidated level. The Board views information
for each classied platform at a revenue level only and therefore the platforms are considered products but not a separate
line of business or segment. The Group considers itself a classied business operating in a well-dened and economically
similar geographical area, the Baltic countries. And therefore the Board views detailed revenue information but only views costs
and prot information at a Group level. As such, management concluded that BCG has one operating segment, which also
represents one reporting segment.
The revenue break-down is disclosed by primary geographical markets, key revenue streams and revenue by business lines in
accordance with IFRS 15 in note 5.
Notes to the consolidated nancial statements
continued
3. Signicant accounting policies
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
128
FINANCIAL STATEMENTS
5. Revenue
In the following tables, revenue from contracts with customers is disaggregated by primary geographical markets, key revenue
streams and revenue by business lines.
Primary geographic markets
2022
(€ thousands)
2021
(€ thousands)
Lithuania
35,236 27,915
Estonia 14,620 13,332
Latvia
1,103 1,021
Total 50,959 42,268
Key revenue streams
2022
(€ thousands)
2021
(€ thousands)
Advertising revenue 3,731 3,661
Listings revenue
43,725 35,091
- Listings revenue: B2C
24,590 18,187
- Listings revenue: C2C
19,135 16,904
Ancillary revenue
1
Total 50,959 42,268
Revenue by business lines
2022
(€ thousands)
2021
(€ thousands)
Automotive 18,293 16,822
- Advertising revenue 1,122 1,111
- Listings revenue: B2C
7,432 6,629
- Listings revenue: C2C
6,507 5,847
- Ancillary revenue 3,232 3,235
Real Estate 12,451 10,655
- Advertising revenue 1,903 1,782
- Listings revenue: B2C
7,052 6,051
- Listings revenue: C2C
3,439 2,778
- Ancillary revenue 57 44
Generalist 10,397 9,798
- Advertising revenue 701 763
- Listings revenue: B2C
1,282 1,218
- Listings revenue: C2C
8,200 7,587
- Ancillary revenue 214 230
Jobs & Services 9,818 4,993
- Advertising revenue 7 5
- Listings revenue: B2C
8,822 4,289
- Listings revenue: C2C
988 692
- Ancillary revenue 1 7
Total 50,959 42,268
1
Ancillary revenue includes revenue from nancial intermediation, subscription services, and other. Financial intermediation revenue accounts for 94% of the total
ancillary revenue for the year ending 30 April 2022 and 85% of the total ancillary revenue for the year ending 30 April 2021.
Due to the large number of customers the Group serves, there are no individual customers whose revenue is greater than 10%
of the Group’s total revenue in all periods presented in these nancial statements.
Notes to the consolidated nancial statements
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
129
FINANCIAL STATEMENTS
Contract liabilities
Contract liabilities
1
include advanced consideration received for which revenue is received as or when services are provided. The
movement of contract liabilities is provided below:
2022
(€ thousands)
2021
(€ thousands)
Opening balance 1,464 1,121
Recognised in revenue in the period (4,333) (1,121)
Advanced consideration received 5,851 1,464
Closing balance 2,982 1,464
1
Contract liabilities amount in the statement of nancial position also include prepayments received from customers.
6. Operating prot
Operating prot reconciliation with the Adjusted EBITDA
2022
(€ thousands)
2021
(€ thousands)
Operating prot
13,616 15,710
Depreciation and amortisation 16,894 16,966
EBITDA 30,510 32,676
Acquisition related costs
1
IPO related fees
2
Free share awards
3
Adjusted EBITDA 39,281 33,007
Adjusted EBITDA margin 77.1% 78.1%
1
Fees and costs incurred in relation to the acquisition of eight legal entities including Auto24.ee.
2
Fees and costs incurred in relation to the Initial Public Offering (IPO).
3
Costs related to Free Share Awards to employees of the Group (note 23).
2022
(€ thousands)
2021
(€ thousands)
Operating prot is after charging the following:
Labour costs
1
(note 7) (8,886) (6,047)
Depreciation and amortisation (16,894) (16,966)
Advertising and marketing services (841) (756)
IT expenses (692) (546)
Impairment (loss) / reversal on trade receivables and
contract assets
(59) (23)
Other
2
(37,349) (26,565)
1
For the year ended 30 April 2022 labour costs include €1,378 thousand free share awards related expenses (note 23). For the year ended 30 April 2021 labour costs
include €36 thousand of Auto24 acquisition related expenses.
2
Other expenses include 1 and 2 from the table below.
Notes to the consolidated nancial statements
continued
5. Revenue
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
130
FINANCIAL STATEMENTS
Services provided by the Company’s auditors
2022
(€ thousands)
2021
(€ thousands)
Fees payable for audit services:
Audit of the Company and consolidated nancial statements
(244) (73)
Audit of the Company’s subsidiaries pursuant to legislation (103) (77)
Total audit remuneration (347) (150)
Fees payable for other services:
- Audit related assurance services (110) -
- Transaction related services (532) -
- Other assurance services (267) -
- Tax advisory services - (4)
Total non-audit remuneration (909) (4)
Total (1,256) (154)
Transaction related and other assurance services provided by the Company’s auditors during the year ended 30 April 2022 relate
to the IPO. Refer to Audit Committee Report on page 70 for further detail.
7. Employee numbers and costs
The average number of persons employed (including Executive Directors but excluding 4 Non-Executive Directors) during the
year, analysed by category, was as follows:
2022
(number)
2021
(number)
Administration 120 127
Key Management Personnel (note 22) 6 6
Total 126 133
The aggregate payroll costs of these persons were as follows:
2022
(€ thousands)
2021
(€ thousands)
Wages and salaries (6,219) (5,369)
Social security costs (645) (678)
(6,864) (6,047)
Share-based payment costs (note 23) (2,022) -
Total (8,886) (6,047)
Notes to the consolidated nancial statements
continued
6. Operating prot
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
131
FINANCIAL STATEMENTS
8. Net nance costs
2022
(€ thousands)
2021
(€ thousands)
Other nancial income
138 2
Total nance income
138 2
Interest expenses
1
Commitment and agency fees (132) (497)
Other nancial expenses
2
Interest unwind on lease liabilities (17) (26)
Total nance expenses
(11,309) (13,935)
Net nance costs recognised in prot or loss
(11,171) (13,933)
1
Interest expense for the year ended 30 April 2022 contains €5,075 thousand of upfront fee that was written off upon the repayment of Senior Facility Agreement in July
2021.
2
Other nancial expenses for the year ended 30 April 2022 contain €1,618 thousand of Senior Facility Agreement related early repayment condition.
9. Income taxes
(a) Tax recognised in prot or loss
2022
(€ thousands)
2021
(€ thousands)
Current tax expense
Current year (3,102) (3,519)
Deferred tax expense
Change in deferred tax
1
Tax expense (46) (1,870)
1
Change in deferred tax for the year ended 30 April 2022 contains €1,266 thousand of deferred tax liability related to the upfront fee that was written off upon the
repayment of Senior Facility Agreement in July 2021. In this case DTL arose due to tax differences in Luxembourg as a since liquidated Group company ANTLER HoldCo
Sàrl was the borrower in case of previous Senior Facility Agreement.
Tax losses can be transferred between companies within the same tax group effectively reducing consolidated income tax
expense.
(b) Reconciliation of effective tax rate
2022
(€ thousands)
2021
(€ thousands)
Prot (loss) before tax
2,445 1,777
Tax using the consolidating entity’s domestic tax rate (2022 UK 19%,
2021 Luxembourg 25%)
(465) (444)
Effect of tax rates in foreign jurisdictions 726 (509)
Non-deductible expenses (1,614) (199)
Tax-exempt income - 899
Reversal of a temporary timing difference 1,307 140
Current year losses for which no deferred tax asset is recognised - (1,757)
(46) (1,870)
Notes to the consolidated nancial statements
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
132
FINANCIAL STATEMENTS
(c) Movement in deferred tax balances
For the year ended 30 April 2021:
Net balance at
30 April 2020
(€ thousands)
Recognised in
prot or loss
(€ thousands)
Recognised
in OCI
(€ thousands)
Acquired in
business
combinations
(€ thousands)
Net balance
at 30 April
2021
(€ thousands)
Deferred tax
asset
(€ thousands)
Deferred tax
liability
(€ thousands)
Intangible
assets
amortisation
(9,216) 1,264 - - (7,952) - (7,952)
Front-end
commission fee
(1,447) 140 - - (1,307) - (1,307)
Other temporary
differences
113 245 - - 358 358 -
Tax assets
(liabilities)
before set-off
(10,550) 1,649 - - (8,901) 358 (9,259)
Set-off of tax
1
Net tax assets
(liabilities)
(10,550) 1,649 - - (8,901) - (8,901)
For the year ended 30 April 2022:
Net balance at
30 April 2021
(€ thousands)
Recognised in
prot or loss
(€ thousands)
Recognised
in OCI
(€ thousands)
Acquired in
business
combinations
(€ thousands)
Net balance
at 30 April
2022
(€ thousands)
Deferred tax
asset
(€ thousands)
Deferred tax
liability
(€ thousands)
Intangible
assets
amortisation
(7,952) 1,691 - - (6,261) - (6,261)
Front-end
commission fee
(1,307) 1,307 - - - - -
Other temporary
differences
358 59 - - 417 417 -
Tax assets
(liabilities)
before set-off
(8,901) 3,057 - - (5,844) 417 (6,261)
Set-off of tax
1
Net tax assets
(liabilities)
(8,901) 3,057 - - (5,844) - (5,844)
1
Set-off is allowed as it is the same jurisdiction (Lithuania).
Summary of taxation rates by country is presented below:
2022
(€ thousands)
2021
(€ thousands)
United Kingdom
19% 19%
Lithuania
15% 15%
Latvia
1
Estonia
1
20% 20%
Luxembourg
25% 25%
1
0% income tax rate applies in Estonia and Latvia if there are no prot distributions.
Notes to the consolidated nancial statements
continued
9. Income taxes
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
133
FINANCIAL STATEMENTS
(d) Unrecognised deferred tax asset
The Group’s accumulated tax losses consists of tax losses incurred by the Company’s indirect subsidiary UAB Antler Group.
No deferred tax assets have been recognised in respect to these tax losses as it is not probable that future taxable prot will
be available against which UAB Antler Group can use the benets therefrom. The applicable tax rate is 15%. Gross amount of
taxable losses for the year ended 30 April 2021 also included losses incurred by ANTLER HoldCo Sàrl, an indirect subsidiary
which was liquidated in February 2022.
2022
(€ thousands)
2021 (€ thousands)
Gross amount Tax effect Gross amount Tax effect
Tax losses (26,229) (3,934) (26,547) (3,995)
(26,229) (3,934) (26,547) (3,995)
(e) Tax losses carried forward
Tax losses carried forward include losses incurred by the Company’s indirect subsidiary UAB Antler Group, they amount to
€26,229 thousand.
According to Lithuanian legislation, deductible tax losses carried forward can be used to reduce the taxable income earned
during the reporting year by maximum 70%. Tax losses can be carried forward for an indenite period.
Tax losses carried forward by expiration:
2022
(€ thousands)
2021
(€ thousands)
Expire in 2037 - (61)
Expire in 2038 - (69)
Does not expire (26,229) (26,417)
Total (26,229) (26,547)
10. Earnings per share
2022
(€ thousands)
2021
(€ thousands)
Weighted average number of shares outstanding number 488,467,552 435,265,078
Prot (loss) attributable to owners of the Company
€ thousands 2,399 (93)
Basic earnings per share (0.02)
€ cents
0.49Basic earnings per share (EPS) amounts are calculated by dividing net prot for the year attributable to ordinary equity holders
of the parent by the weighted average number of ordinary shares outstanding during the year. The weighted average number
of shares for the current and the comparative periods has been stated as if the Group share for share exchange (note 15) has
occurred at the beginning of the comparative periods.
In calculating diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all
potentially dilutive shares. The Group’s potentially dilutive instruments are in respect of share-based incentives granted to
employees. Options under the Performance Share Plan are contingently issuable shares and are therefore only included within
the calculation of diluted EPS if the performance conditions are satised.
Although the Group started operating a Performance Share Plan (note 23), the potential ordinary shares are not treated as
dilutive as the PSP performance condition was not satised for the year ended 30 April 2022.
Notes to the consolidated nancial statements
continued
9. Income taxes
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
134
FINANCIAL STATEMENTS
11. Intangible assets and goodwill
Goodwill
(€ thousands)
Trade-marks
and domains
(€ thousands)
Relationship
with clients
(€ thousands)
Other
intangible
assets
(€ thousands)
Total
(€ thousands)
Cost
Balance at 1 May 2020 328,732 63,317 50,710 1,535 444,294
Disposals - (97) - (188)
(285)
Balance at 30 April 2021 328,732 63,220 50,710 1,347 444,009
Balance at 1 May 2021 328,732 63,220 50,710 1,347 444,009
Disposals - - - (23)
(23)
Balance at 30 April 2022 328,732 63,220 50,710 1,324 443,986
Accumulated amortisation and impairment losses
Balance at 1 May 2020 - 4,375 6,308 94 10,777
Amortisation - 6,331 9,824 340
16,495
Disposals - (13) - (159)
(172)
Balance at 30 April 2021 - 10,693 16,132 275 27,100
Balance at 1 May 2021 - 10,693 16,132 275 27,100
Amortisation - 6,323 9,824 273
16,420
Disposals - - - (23)
(23)
Balance at 30 April 2022 - 17,016 25,956 525 43,497
Carrying amounts
Balance at 1 May 2020 328,732 58,942 44,402 1,441 433,517
Balance at 30 April 2021 328,732 52,527 34,578 1,072 416,909
Balance at 30 April 2022 328,732 46,204 24,754 799 400,489
Impairment testing for cash generating units containing goodwill
The following carrying amounts of goodwill are allocated to each cash-generating unit within the Group:
2022
(€ thousands)
2021
(€ thousands)
Diginet LTU UAB
228,515 228,515
AllePal OU
82,027 82,027
Kinnisvaraportaal OU
13,976 13,976
City24 SIA 3,039 3,039
VIN Solutions OU
1,175 1,175
328,732 328,732
The reconciliation of the weighted average number of shares is provided below:
Number of shares
Issued ordinary shares at 1 May 2020 435,265,078
Weighted average number of ordinary shares at 30 April 2021 435,265,078
Issued ordinary shares at 1 May 2021 435,265,078
Effect of ordinary shares issued at 5 July 2021
53,206,784
Effect of ordinary shares issued at 19 October 2021
208,566
Effect of ordinary shares purchased by EBT at 25 March 2022 (note 16)
(212,876)
Weighted average number of ordinary shares at 30 April 2022 488,467,552
Notes to the consolidated nancial statements
continued
10. Earnings per share
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
135
FINANCIAL STATEMENTS
The smallest groups of assets that generate cash inows from continuing use are legal entities based in Lithuania, Estonia
and Latvia. The recoverable amount of each cash generating unit as at 30 April 2022 and 2021 was determined based on the
value in use calculations that use cash ow projections based on the ve-year nancial forecasts prepared by management.
The post-tax discount rates applied to the post-tax cashows are derived from the post-tax weighted cost of capital. The
assumptions used in the calculation of the Group’s weighted average cost of capital are benchmarked to externally available
data. The terminal growth rate was determined based on management’s estimate of the long-term growth rate, consistent with
assumptions that would be made by a reasonable market participant. Budgeted revenues and expenses were estimated based
on past performance and management’s expectation of growth from pricing, volume and product development. Due, in part, to
rapid technological changes, evolving industry standards and changing needs and preferences of listers and consumers, the
Group’s competitive landscape is changing rapidly. It is, therefore, dicult for the Group to accurately assess or predict the
Group’s future competitors and the competitive threats the Group may be facing.
The key assumptions used for the value in use calculations are as follows:
2022
In percent
Diginet LTU
UAB
AllePal OÜ
Kinnisvara-
portaal OÜ
City24 SIA
VIN
SolutionsOÜ
Revenue growth rate 11-15% 11-13% 8-9% 11-19% 4-7%
Discount rate (pre-tax) 8.75% 9.02% 9.02% 9.58% 9.02%
Terminal value growth rate 2% 2% 2% 2% 2%
2021
In percent
Diginet LTU
UAB
AllePal OÜ
Kinnisvara-
portaal OÜ
City24 SIA
VIN
SolutionsOÜ
Revenue growth rate 10-15% 7-12% 2-9% 5-11% 10-12%
Discount rate (pre-tax) 9.48% 9.16% 9.16% 9.68% 9.16%
Terminal value growth rate 2% 2% 2% 2% 2%
The value in use forecasts assume a double digit growth in revenue in the initial 5 year period. Key drivers to future growth
rates are dependent on the Group’s ability to maintain and grow income streams. The level of headroom may change if different
growth rate assumptions or a different pre-tax rates were used in the cashow projections. Therefore revenue growth and
discount rate are considered to be key assumptions.
Sensitivity analysis has been performed in assessing the recoverable amounts of goodwill. There are no changes to the key
assumptions of revenue growth or discount rate that are considered by the management to be reasonably possible, which
give rise to an impairment of goodwill relating to any of the CGU’s, with the exception of Kinnisvaraportaal OÜ (“KVP”) and Vin
Solutions OÜ (“VIN”) (see below). KVP is part of real estate business line in Estonia while VIN is part of automotive business
line in Estonia.
For both KVP and VIN a pre-tax discount rate of 9.02% has been applied based on the weighted average cost of capital reecting
specic principal risks and uncertainties to these entities. Forecasts cashows assume stable organic growth due to increased
revenue via price increases or product development.
Sensitivity analysis has been performed in assessing the recoverable amounts of goodwill. Management has considered
reasonably possible although not currently expected changes in three key assumptions being revenue growth, pre-tax discount
rate and terminal growth. Management has identied that for KVP and VIN a reasonably possible change in these assumptions
could cause the carrying value to exceed the recoverable amount. The amounts by which these two assumptions would need to
change individually and collectively for the estimated recoverable amount to be equal to the carrying amount are set out below:
•
Increasing the pre-tax discount rate by 3 percentage points (“pp”) for KVP and by 2pp for VIN would lead to an impairment
charge of €1,4m for KVP and €0.2m for VIN;
•
Decreasing revenue growth in the initial 5 year period by 4pp for VIN would not lead to a material impairment charge;
•
Increasing the pre-tax discount rate by 1pp and decreasing the revenue growth by 2pp for KVP which would not lead to a
material impairment charge;
•
Increasing the pre-discount rate by 1pp and decreasing the revenue growth by 1pp for VIN which would not lead to a
material impairment charge;
•
Decreasing terminal growth rate by 1pp for VIN which would not lead to a material impairment charge.
Having completed the impairment review for the year ended 30 April 2022, no impairment has been recognised in relation to any
of the CGU’s (for the period ended 30 April 2021: no impairment).
Notes to the consolidated nancial statements
continued
11. Intangible assets and goodwill
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
136
FINANCIAL STATEMENTS
12. Right-of-use assets
Buildings
(€ thousands)
Vehicles
(€ thousands)
Other
(€ thousands)
Total
(€ thousands)
Cost
Balance at 30 April 2020 929 145 19 1,093
Acquisitions - 108 -
108
Re-assessment 67 2 10
79
Balance at 30 April 2021 996 255 29 1,280
Acquisitions - 22 15
37
Disposals - (89) -
(89)
Re-assessment 30 - -
30
Balance as at 30 April 2022 1,026 188 44 1,258
Accumulated depreciation and impairment losses
Balance at 30 April 2020 165 28 4 197
Depreciation 255 57 10
322
Balance at 30 April 2021 420 85 14 519
Depreciation 256 43 9
308
Disposals - (26) -
(26)
Balance as at 30 April 2022 676 102 23 801
Carrying amounts
Balance at 30 April 2020 764 117 15 896
Balance at 30 April 2021 576 170 15 761
Balance at 30 April 2022 350 86 21 457
13. Trade and other receivables
2022
(€ thousands)
2021
(€ thousands)
Trade receivables 3,002 2,524
Expected credit loss (-) on trade receivables (71) (84)
Other short term receivables 39 131
Total 2,970 2,571
Trade and other receivables (except for loan receivables) are non-interest bearing. The Group has recognised impairment losses
in the amount of €71 thousand as at 30 April 2022 (€84 thousand as at 30 April 2021). Change in impairment losses for trade
receivables, netted with recoveries, for nancial period amounted to €59 thousand as at 30 April 2022 and €23 thousand as at
30 April 2021.
As at 30 April 2021, all trade receivables were pledged to secure the bank loans (see note 18). As at 30 April 2022, there are no
pledges on trade receivables (see note 18).
Notes to the consolidated nancial statements
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
137
FINANCIAL STATEMENTS
Reconciliation of changes in impairment allowance for trade receivables:
(€ thousands)
Balance at 30 April 2020 (107)
Recoveries 53
Write offs 46
Changes in allowance and allowance recognised for new nancial assets originated
(76)
Balance at 30 April 2021 (84)
Recoveries 77
Write offs 72
Changes in allowance and allowance recognised for new nancial assets originated
(136)
Balance as at 30 April 2022 (71)
14. Cash and cash equivalents
The balance of the Group’s cash and cash equivalents as at 30 April 2022 and 30 April 2021 comprises of cash in banks. The
credit rating of banks the Group holds its cash and cash equivalents varies from A1 to Baa1 as per Moody’s ratings.
As at 30 April 2021, cash in major bank accounts was pledged to secure the bank loans. As at 30 April 2022, there are no pledges
on bank accounts (see note 18).
As at 30 April 2022 and 30 April 2021, there are no restrictions on cash in Group’s bank accounts.
15. Equity
Number of shares
Share capital
amount
(€ thousands)
Share premium
amount
(€ thousands)
Balance as at 1 May 2020 435,265,079 506,452 -
Redeemable preference share issued - 57 -
Balance as at 1 May 2021 435,265,079 506,509 -
Group restructure:
- Redeemable preference share redeemed - (57) -
- Share issue for IPO 64,734,921 75,322 48,959
- Share issue related transaction costs - - (5,816)
Nominal value of ordinary shares reduced and share
premium cancelled to create distributable reserves
- (575,956) (43,143)
Shares issued to satisfy Free share awards (note 23) 392,405 4 -
Balance as at 30 April 2022 500,392,405 5,822 -
BCG was incorporated on 26 April 2021 with 1 ordinary share with a value of £1 (€1.15) per share allotted. On 27 April 2021 the
company issued 1 redeemable preference share with a value of £49,999 (€57,487) per share.
On 5 July 2021 BCG was inserted into the Group’s holding structure via a share for share exchange with the shareholders of a
previous top holding entity, ANTLER TopCo S.a.r.l:
1) BCG issued 38,740,076 ordinary shares at £1 (€1.16) each in the share for share exchange to acquire ANTLER Management
S.A. that was a minority shareholder of ANTLER TopCo S.a.r.l.
2) BCG issued 396,525,002 ordinary shares at £1 (€1.16) each in the share for share exchange to acquire the rest of ANTLER
TopCo S.a.r.l.
3) 1 redeemable preference share with a value of £49,999 (€57,487) per share was redeemed.
On 5 July 2021 BCG issued 64,734,921 ordinary shares with a value of £1 (€1.16) each that were listed at £1.65 (€1.92) on the
London Stock Exchange.
Share issue related expenses amounting to €5,816 thousand were set against the share premium that arose during the listing,
out of which €2,942 thousand relate to the underwriting fee that reduced the cash received from the IPO proceeds.
On 23 September 2021 BCG undertook a Court approved capital reduction to create distributable reserves. The entire amount
standing to the credit of BCG share premium account was cancelled and the nominal value of each ordinary share in issue in the
capital of BCG was reduced from £1 (€1.15) to £0.01 (€0.01). This created a total of €619,100 thousand in distributable reserves.
Notes to the consolidated nancial statements
continued
13. Trade and other receivables
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
138
FINANCIAL STATEMENTS
On 19 October 2021 BCG issued 392,405 shares with a value of £0.01 (€0.01) each to be gifted, on an unrestricted basis, to all
employees other than the Executive Directors and the rest of the Senior Management team.
Share capital and share premium in the comparative periods have been stated as if the Group share for share exchange has
occurred at the beginning of the comparative periods. For this reason, a capital reorganisation reserve has been created which
comprises a difference between the recalculated share capital amount and the total of share capital and share premium of
ANTLER TopCo S.a.r.l.
Included within shares in issue at 30 April 2022 are 2,100,000 (nil in previous period) shares held by the Employee Benet Trust
(“EBT”) (note 16).
16. Own shares held
Shares held by EBT
Amount
(€ thousands)
Number
Balance as at 1 May 2021 - -
Purchase of shares for performance share plan
1
(3,418) 2,100,000
Balance as at 30 April 2022 (3,418) 2,100,000
1
Shares were purchased on 25 March 2022 at a price of £1.35 (€1.62) per share. Stamp duty reserve tax amounting to €16 thousand were capitalised to the cost.
17. Dividends
No interim dividend was declared for the year ended 30 April 2022 and therefore no dividends have been paid out in the period.
The proposed nal dividend for the year ended 30 April 2022 of 1.4 € cents per share, totalling €6,976 thousands, is subject to
approval by shareholders at the Annual General Meeting (“AGM”) and hence has not been included as a liability in the nancial
statements. Dividends will be paid in euros however shareholders will have an opportunity to opt for a payment in British pounds.
The Directors intend to return one third of Adjusted Net Income (as dened below) each year via an interim and nal dividend,
split one third and two thirds, respectively.
The Adjusted Net Income is dened as the prot / (loss) for the period adjusted for the post-tax impact of the IPO costs, IPO
renancing arrangement related nance and tax items, M&A costs and the post-tax impact of the amortisation of intangibles
arising from acquisitions.
The Adjusted Net Income for the year ended 30 April 2022 as well as for the year ended 30 April 2021 is as follows:
2022
(€ thousands)
2021
(€ thousands)
Prot / (loss) for the period
2,399 (93)
Acquisition related costs
1
Tax effect of Acquisition related costs
- -
IPO related fees
2
Tax effect of IPO related fees
(70) -
Free share awards
3
IPO renancing: Senior Facility Agreement related early repayment condition
4
IPO renancing: Senior Facility Agreement related upfront fee write off
5
IPO renancing: Senior Facility Agreement capitalised upfront fee related
deferred tax liability write off
6
(1,266) -
Amortisation of intangibles arising from acquisitions (PPA)
7
Deferred tax effect of amortisation of intangibles arising from acquisitions
(1,434) (1,434)
Adjusted Net Income 31,240 14,946
1
Fees and costs incurred in relation to the acquisition of eight legal entities including Auto24.ee.
2
Fees and costs incurred in relation to the Initial Public Offering (IPO).
3
Costs related to Free Share Awards to employees of the Group (note 23).
4
Previous Senior Facility Agreement related early repayment ne.
5
Previous Senior Facility Agreement related capitalised upfront fee write off.
6
Previous Senior Facility Agreement capitalised upfront fee related deferred tax liability write off.
7
Amortisation of trademarks and domains and amortisation of relationship with clients (note 11).
Notes to the consolidated nancial statements
continued
15. Equity
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
139
FINANCIAL STATEMENTS
18. Loans and borrowings
Non-current liabilities
2022
(€ thousands)
2021
(€ thousands)
Bank loan 82,311 210,051
Lease liabilities
167 362
82,478 210,413
Current liabilities
2022
(€ thousands)
2021
(€ thousands)
Bank loan 121 2,412
Lease liabilities
202 301
323 2,713
Bank loan:
Period end Maturity
Loan currency
Effective interest
rate
Amount
(€ thousands)
Bank Loan
30 April 2022 2026 July € 4.04%
1
Bank Loan
30 April 2021 2026 July € 6.08% 212,463
1
Effective interest rate for the year ended 30 April 2022 includes 2 months of since repaid loan.
In July 2021 the Group drew down a new loan consisting of Facility B (€98,000 thousand) and agreed on a new revolving credit
facility of €10,000 thousand. The previous loan was fully repaid in July 2021. Due to early repayment the Group paid an early
repayment condition that amounted to €1,618 thousand (included within other nancial expenses for the year ended 30 April
2022). The Group also wrote off a capitalised upfront fee that amounted to €5,075 thousand (included within interest expenses
for the year ended 30 April 2022) and a related deferred tax liability that amounted to €1,266 thousand (included within deferred
tax expenses for the year ended 30 April 2022).
As at 30 April 2022 the loan comprised of Facility B (outstanding balance: €84,000 thousand as €14,000 thousand were repaid
during the nancial year), the undrawn revolving credit facility amounted to €10,000 thousand. As at 30 April 2021 the loan
comprised of Facility A1 (outstanding balance: €35,000 thousand), Facility A2 (€17,500 thousand), Facility B1 (€115,000
thousand) and Facility B2 (€31,410 thousand).
Capitalised debt issue costs amounted to €1,689 thousand and €5,243 thousand for the year ended 30 April 2022 and 30 April
2021 respectively. Interest payable amounted to €121 thousand and €3,411 thousand for the year ended 30 April 2022 and 30
April 2021 respectively.
The loan agreement prescribes a Total Leverage Ratio covenant. Total Leverage Ratio is calculated as Net Debt over last twelve
months (LTM) of Adjusted EBITDA and shall not exceed 5.50:1. As at 30 April 2022 the Group complied with the covenant
prescribed in the loan agreement.
As per the same agreement, the interest margin for each facility is tied to the Total Leverage Ratio at each interest calculation
date on a semi-annual basis:
Total Leverage Ratio
Facility B Margin
(% p.a.)
Revolving Facility
Margin (% p.a.)
Greater than 4.50:1 3.50 3.50
Equal to or less than 4.50:1 but greater than 4.00:1 3.00 3.00
Equal to or less than 4.00:1 but greater than 3.50:1 2.75 2.75
Equal to or less than 3.50:1 but greater than 3.00:1 2.50 2.50
Equal to or less than 3.00:1 but greater than 2.75:1 2.25 2.25
Equal to or less than 2.75:1 but greater than 2.50:1 2.00 2.00
Equal to or less than 2.50:1 1.75 1.75
Notes to the consolidated nancial statements
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
140
FINANCIAL STATEMENTS
For the borrowings received from the bank, the following pledges and securities were granted as of 30 April 2022: group
companies shares. The following pledges and securities were granted as of 30 April 2021: loan receivables, cash in major bank
accounts and trademarks. The carrying amount of pledged assets is as follows:
Pledged assets
2022
(€ thousands)
2021
(€ thousands)
Group companies shares
1
332,227 705,369
Current receivables (including intragroup) - 58,837
Bank accounts - 5,742
Trademarks -
39,947
332,227 809,895
1
As dened in the loan agreement, the pledged assets include the shares held by Group companies (see the full list of subsidiaries in note 25):
the shares of UAB Antler Group that are held by BCG HoldCo limited.
the shares of Baltics Classieds Group OÜ and UAB Diginet LTU that are held by UAB Antler Group
the shares of AllePal OÜ that are held by Baltics Classieds Group OÜ
Reconciliation of movements of liabilities to cashows arising from nancing
activities
Borrowings
(€ thousands)
Lease liabilities
(€ thousands)
Total
(€ thousands)
Balance as at 1 May 2020 206,481 818 207,299
Changes from nancing cash flows
- Proceeds from loans and borrowings 15,000 -
15,000
- Repayment of borrowings (10,000) -
(10,000)
- Payment of lease liabilities - (339)
(339)
Total changes from nancing cash ows
5,000 (339) 4,661
Other liability related changes
- New leases - 184
184
- Interest expenses 13,396 26
13,422
- Interest paid (12,414) (26)
(12,440)
Total other liability related changes 982 184 1,166
Balance as at 30 April 2021 212,463 663 213,126
Balance as at 1 May 2021 212,463 663 213,126
Changes from nancing cash flows
- Proceeds from loans and borrowings 96,650 -
96,650
- Repayment of borrowings (228,295) -
(228,295)
- Payment of lease liabilities - (305)
(305)
Total changes from nancing cash ows
(131,645) (305) (131,950)
Other liability related changes
- New leases - 67
67
- Lease disposal
- (56)
(56)
- Capitalised borrowing costs (676) -
(676)
- Capitalised borrowing costs write off 5,075 -
5,075
- Interest expenses 4,351 17
4,368
- Interest paid (7,136) (17)
(7,153)
Total other liability related changes 1,614 11 1,625
Balance as at 30 April 2022 82,432 369 82,801
Notes to the consolidated nancial statements
continued
18. Loans and borrowings
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
141
FINANCIAL STATEMENTS
20. Financial risk management
In its activities, the Group is exposed to various nancial risks: market risk (including interest rate risk), credit risk and liquidity
risk. The Directors are responsible for creation and control of overall risk management policy in the Group.
Risk management policies are established to identify and analyse the risks faced by the Group, and to set appropriate risk
limits and controls. Risk management policies and systems are reviewed on a regular basis to reect changes in the market
conditions and the Group‘s activities. The Group, through its training and management standards and procedures, aims to
develop a disciplined and constructive control environment in which all employees understand their roles and obligations. From
time to time, the Group may use derivative nancial instruments in order to hedge against certain risks.
The note below presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and
processes for measuring and managing the risk, and the Group’s management of capital.
(a) Credit risk
Credit risk is the risk of Group’s nancial loss if a customer or counterparty fails to comply with contractual obligations. Credit risk
is controlled by applying credit limits depending on the risk prole of the customer and monitoring debt collection procedures.
The carrying amount of nancial assets represents the maximum credit exposure. The maximum exposure to credit risk at the
reporting date was as follows:
Note
2022
(€ thousands)
2021
(€ thousands)
Trade receivables 13 2,931 2,440
Other short term receivables 13 39 131
Cash and cash equivalents 14 19,914 17,115
22,884 19,686
The Group’s exposure to credit risk is inuenced mainly by the individual characteristics of each customer. However, management
also considers the factors that may inuence the credit risk of its customer base, including the default risk associated with the
industry and country in which customers operate.
Credit risk related to loans receivable is managed by monitoring counterparty’s protability and their cash ow projections.
Credit risk related to cash and cash equivalent balances is managed by monitoring credit ratings of the Group’s banks.
Expected credit loss assessment for trade receivables
The Group allocates each exposure to a credit risk grade based on data that is determined to be predictive of the risk of loss
(including but not limited to external ratings, audited consolidated nancial statements, management accounts and cash ow
projections and available press information about customers) and applying experienced credit judgement.
Credit risk grades are dened using qualitative and quantitative factors that are indicative of the risk of default and are aligned
to external credit rating denitions from agencies.
An ECL rate is calculated based on delinquency status and actual credit loss experience over the past three years. These
rates are multiplied by scalar factors to reect differences between economic conditions during the period over which the
historical data has been collected, current conditions and the Group’s view of economic conditions over the expected lives of
the receivables.
19. Trade and other payables
2022
(€ thousands)
2021
(€ thousands)
Trade payables 235 322
Accrued expenses 344 203
Other tax 1,578 849
Customer credit balances 2,289 2,210
Other payables 12 17
4,458 3,601
Notes to the consolidated nancial statements
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
142
FINANCIAL STATEMENTS
The trade receivables do not have a signicant nancing component. The Group’s credit terms on sales to business customers
are 7-60 days from receipt of the invoice by the customer. For sales to private customers, the Group collects payments instantly
at the time of the transaction and is not exposed to credit risk.
The Group applies the simplied approach for trade receivables.
The Group has elected to use a provision matrix to calculate lifetime ECLs, which is based on:
•
Historical default rates over the expected life of the trade receivables
•
Adjustment for forward-looking estimates
Impairment allowance – analysis as at 30 April 2022:
ECL rate
Trade receivables
(€ thousands)
Impairment allowance
(€ thousands)
Not past due
(0.4%) 2,101 (9)
1 – 30 days past due
(0.3%) 378 (1)
31 – 60 days past due
(1.1%) 147 (2)
61 – 90 days past due
(2.0%) 71 (1)
> 90 days past due
(19.2%) 305 (58)
(2.4%)
3,002 (71)
Impairment allowance – analysis as at 30 April 2021:
ECL rate
Trade receivables
(€ thousands)
Impairment allowance
(€ thousands)
Not past due
(0.2%) 1,825 (4)
1 – 30 days past due
(1.1%) 306 (3)
31 – 60 days past due
(4.6%) 113 (5)
61 – 90 days past due
(8.4%) 63 (5)
> 90 days past due
(30.1%) 217 (67)
(3.3%)
2,524 (84)
For the movement in impairment allowance see note 13.
(b) Liquidity risk
Liquidity risk is the risk that the Group will encounter diculty in meeting the obligations associated with its nancial liabilities
that are settled by delivering cash or another nancial asset. The Group’s approach to managing liquidity is to ensure, as far as
possible, that it will always have sucient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group‘s policy is to maintain sucient amounts of cash and cash equivalents via operations, borrowings and credit facilities
to meet its commitments at a given date. This policy excludes the potential impact of extreme circumstances that cannot be
reasonably predicted, such as natural disasters.
Cash ow budgeting is performed by the Group’s management and the Group’s liquidity requirements are monitored to ensure
it has sucient cash to meet operational needs.
The Group has access to a credit facility with the current lender at a total of EUR 94 000 thousands. All of the commitment
matures in July 2026. At 30 April 2022, EUR 84 000 thousands was drawn under the credit facilities available. The undrawn
revolving credit facility amounted to €10,000 thousand. The covenant of this credit facility is discussed in note 18.
Notes to the consolidated nancial statements
continued
20. Financial risk management
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
143
FINANCIAL STATEMENTS
The table below summarises the remaining contractual maturities of nancial liabilities as at 30 April of 2022, including
estimated interest payments:
Financial
liabilities
Carrying
amount
(€ thousands)
Contractual
cash ows
(€ thousands)
Up to 1 year
(€ thousands)
1-2 years
(€ thousands)
2-5 years
(€ thousands)
More than
5 years
(€ thousands)
Bank loan 82,432 (91,501) (1,764) (1,769) (87,968) -
Lease liabilities
369 (472) (273) (134) (65) -
Trade payables 235 (235) (235) - - -
Other payables 2,301 (2,301) (2,301) - - -
85,337 (94,509) (4,573) (1,903) (88,033) -
The table below summarises the remaining contractual maturities of the Group’s nancial liabilities as at 30 April of 2021,
including estimated interest payments:
Financial
liabilities
Carrying
amount
(€ thousands)
Contractual
cash ows
(€ thousands)
Up to 1 year
(€ thousands)
1-2 years
(€ thousands)
2-5 years
(€ thousands)
More than
5 years
(€ thousands)
Bank loan 212,463 (286,684) (13,097) (13,194) (39,620) (220,773)
Lease liabilities
663 (779) (312) (260) (207) -
Trade payables 322 (322) (322) - - -
Other payables 2,227 (2,227) (2,227) - - -
215,675 (290,012) (15,958) (13,454) (39,827) (220,773)
(c) Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - will affect the Group’s
income or the value of its holdings of nancial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimizing the return.
(i) Currency risk
EUR is the functional currency of each legal entity comprising the Group, as well as the Group’s reporting currency. The Group is
exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than EUR.
The Group is not using any nancial instruments to hedge against the foreign currency exchange risk.
As at 30 April 2022, the Group has no signicant monetary assets and liabilities denominated in other currencies than EUR
except for €1.7m cash held in GBP. As at 30 April 2021 the Group had no monetary assets and liabilities denominated in other
currencies than EUR.
(ii) Interest rate risk
The Group’s income and operating cash ows are substantially independent of changes in market interest rates. The Group has
no signicant interest-bearing assets.
At the reporting date, the interest rate prole of the Group’s interest-bearing nancial instruments was as follows:
Carrying amount
2022
(€ thousands)
2021
(€ thousands)
Instruments with a variable interest rate
Bank loan 82,311 209,052
82,311 209,052
Notes to the consolidated nancial statements
continued
20. Financial risk management
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
144
FINANCIAL STATEMENTS
Cash ow sensitivity analysis for variable rate instruments
A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity
and prot or loss by the amounts shown below. The analysis assumes that all other variables remain constant.
2022
Impact of nancial instruments on prot before tax
Financial instruments by class
Increase
Impact to nance costs
(€ thousands)
Decrease
Impact to nance costs
(€ thousands)
Variable rate instruments +100 bp (840) -100 bp 840
2021
Impact of nancial instruments on prot before tax
Financial instruments by class
Increase
Impact to nance costs
(€ thousands)
Decrease
Impact to nance costs
(€ thousands)
Variable rate instruments +100 bp (2,143) -100 bp 2,143
c) Capital management
Equity in combination with net debt is considered to be capital for capital management purposes. The Group’s policy is to
maintain the condence of creditors and the market, to fund business development opportunities in the future and comply with
external capital requirements.
Fair value of nancial instruments
The Group’s principal nancial instruments not carried at fair value are trade and other receivables, trade and other payables,
non-current and current borrowings.
The management of the Group is of the opinion that carrying amount of trade and other receivables, trade and other payables is
a reasonable approximation of fair value due to their short-term nature.
Based on the discounted cash ow analysis performed, management considers that the borrowings carrying amount is a
reasonable approximation of fair value. The discounted cash ow analysis was performed using a market rate of interest and
principal payments discounted to a present value using interest rate as a discount rate.
A number of the Group’s accounting policies and disclosures require determination of fair value, for both nancial and non-
nancial assets and liabilities.
Fair value hierarchy
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values
are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Group recognised transfers between the fair value hierarchy from the end of the reporting period in which the change
occurred. Below listed are nancial assets and nancial liabilities:
2022
Carrying amount
(€ thousands)
Level 1
(€ thousands)
Level 2
(€ thousands)
Level 3
(€ thousands)
Total
(€ thousands)
Trade and other receivables 2,970 - - - -
Cash and cash equivalents 19,914 - - - -
Loans and borrowings
(82,432) - (82,432) - (82,432)
Trade and other payables (4,458) - - - -
(64,006) - (82,432) - (82,432)
Notes to the consolidated nancial statements
continued
20. Financial risk management
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
145
FINANCIAL STATEMENTS
2021
Carrying amount
(€ thousands)
Level 1
(€ thousands)
Level 2
(€ thousands)
Level 3
(€ thousands)
Total
(€ thousands)
Trade and other receivables 2,571 - - - -
Cash and cash equivalents 17,115 - - - -
Loans and borrowings
(212,463) - (212,463) - (212,463)
Trade and other payables (3,601) - - - -
(196,378) - (212,463) - (212,463)
21. Related party transactions
During the period ended 30 April 2022 the transactions with related parties outside the consolidated Group included:
•
remuneration of key management personnel (note 22), including share option awards under the PSP scheme (note 23);
•
before the IPO a part of ANTLER Management S.A. shares were acquired by the three Executive Directors together with
other key employees as part of management incentive program that existed since BCG acquisition by funds advised by
Apax Partners (“Apax”) in FY 2020; shares were purchased at a value equal to the price paid by Apax in FY 2020;
•
at the IPO three Non-Executive Directors purchased shares of ANTLER TopCo Sàrl outside the Offer at the IPO price;
•
share for share exchange transaction during the reorganisation for the IPO (note 15) where three Executive Directors, three
Non-Executive Directors and Directors of Group Companies exchanged the shares they held in ANTLER Management S.A.
and ANTLER TopCo Sàrl for the like-for-like amount of shares in Baltic Classieds Group PLC.
During the year ended 30 April 2021 there were no transactions with related parties outside the consolidated Group except for
the remuneration of key management personnel (note 22).
22. Remuneration of key management personnel and
other payments
Key management personnel comprise three Executive Directors (CEO, CFO, COO), four Non-Executive Directors (since July 2021
only) and Directors of Group companies. Remuneration of key management personnel in the reporting period, including social
security and related accruals, amounted to €969 thousand for the period ended 30 April 2022 and €560 thousand for the period
ended 30 April 2021. Remuneration of Directors of the Board (three Executive and four Non-Executive Directors) in the reporting
period, including social security and related accruals, amounted to €748 thousand. As the Board was formed in the reporting
period only, the closest comparative to the remuneration of the Directors of the Board would be the remuneration of three
Executive Directors which, including social security and related accruals, amounted to €345 thousand for the year ended 30
April 2021.
During the period ended 30 April 2022 the Executive Directors of the Group were granted a set number of share options under the
PSP scheme. Share-based payment expenses amounted to €509 thousands for the period ended 30 April 2022 (nil in previous
period). None of the options vested during the reporting period. See note 23 for further detail.
During the year ended 30 April 2022 and 30 April 2021, key management personnel of the Group did not receive any loans,
guarantees, no other payments or property transfers occurred and no pension or retirement benets were paid.
23. Share-based payments
Performance Share Plan
The Group currently operates a Performance Share Plan (PSP) that is subject to a service and a non-market performance
condition. The estimate of the fair value of the PSP is measured using Black-Scholes pricing model.
The total charge in the period relating to the PSP scheme was €644 thousand (nil in previous periods).
The PSP plan consists of share options for Executive Directors and certain key employees with a vesting period of 3 years.
If the options remain unexercised after a period of 10 years from the date of grant, the options expire. Furthermore, options are
forfeited if the employee leaves the Group before the options vest, unless under exceptional circumstances.
Notes to the consolidated nancial statements
continued
20. Financial risk management
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
146
FINANCIAL STATEMENTS
On 27 July 2021, the Group awarded 1,041,745 share options under the PSP scheme. For these awards, the Group’s performance
is measured by reference to the Group’s Earnings per Share in FY2024. See Directors’ Remuneration Report for further detail.
The fair value of the 2021 award was determined to be €2.56 per option using a Black-Scholes pricing model. The resulting
share-based payments charge is being spread evenly over the period between the grant date and the vesting date.
The assumptions used in the measurement of the fair value at grant date of the PSP awards are as follows:
Grant date Condition
Share price at
grant date
(€)
Exercise
price
(€)
Expected
volatility
(%)
Vesting period
(years)
Risk-free rate
(%)
Dividend
yield
(%)
Fair value per
option
(€)
27 July
2021
EPS
dependent
2.62 0.01 53% 3 (0.20)% 0.78% 2.56
The expected volatility was determined using UK listed peers’ historical volatility average as at the date of option valuation own
data was not available due to a relatively recent Admission.
The number of options outstanding and exercisable as at 30 April 2022 was as follows:
2022 2021
(number) (number)
Outstanding at beginning of pe-riod - -
Options granted in the period 1,041,475 -
Options exercised in the period - -
Options forfeited in the period - -
Outstanding at period ending 1,041,475 -
Free Share Awards
In addition to the PSP scheme, as it was intended and noted in the Prospectus (section 11.2 (Company-wide remuneration)
of Part XVII (Additional Information)) 392,405 of free shares were awarded to all employees of the Group with the number per
employee based on length of service with the business and ranging between €3,000 and €15,000 in value. The total value of the
shares awarded amounted to €968 thousand. Fringe benet tax was paid by the Group, it amounted to €410 thousand.
Executive Directors and the rest of Senior Management team did not receive free shares under this arrangement.
24. Contingent liabilities and contingent assets
As at 30 April 2022 as well as at 30 April 2021, there was no on-going litigation, which could materially affect the consolidated
nancial position of the Group.
As disclosed in the Prospectus, Diginet LTU UAB, a Group company, was subject to an investigation by the Lithuanian
Competition Council (“LCC”) following a complaint by UAB Ober Haus (the “Claimant”), a real estate broker, who alleged that
the Group’s Lithuanian real estate portal had abused its position in the real estate online classieds markets by applying unfair
high listing prices. In December 2020, the LCC concluded after an in-depth analysis that the prices to B2C listers and C2C
listers were not unfair or restrictive to competition and closed the investigation. In January 2021, Claimant appealed the LCC’s
decision with the court of rst instance, asking the court to annul the LCC’s decision and to return the case back to the LCC for
further investigation arguing that the LCC erred in applying the necessary legal standards for evaluation of unfair prices. On 17
June 2021, the court of rst instance declined to annul the LCC’s decision and dismissed the Claimant’s appeal. The Group had
successfully defended its position as the Claimant refused to use its right to appeal the decision to the Lithuanian Supreme
Administrative Court and the case is closed.
In March 2019 the Estonian Competition Authority (“ECA”) initiated supervisory proceedings against the AllePal OÜ and
Kinnisvaraportaal OÜ, the operators of two real estate online classied portals, based on the complaint led by various real
estate companies and portals (“Claimants”). The Claimants alleged that the Group had abused its position by unfairly limiting
the conditions for XML data exchange and applying excessively high prices. On 12 November 2021 the ECA terminated the
supervisory proceedings with regard to the part that concerned the conditions of XML data exchange. The Group is co-operating
with the ECA and although the Group expects that the supervisory proceedings will be terminated without any material effect
to the nancial position or operations of the Group, the Group cannot make any assurances that the ECA will not nd any
infringements. As the ECA or any other Estonian authorities have not initiated any misdemeanour (or criminal) proceedings
against any Group company, the ongoing supervisory proceedings cannot lead to any imposition of nes to any Group company,
however, if the ECA concludes that AllePal OÜ and Kinnisvaraportaal OÜ abused their position, the ECA could issue a precept
ordering these Group companies to end any ongoing infringements.
Notes to the consolidated nancial statements
continued
23. Share-based payments
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
147
FINANCIAL STATEMENTS
On 4 February 2022 the ECA initiated supervisory proceedings against AllePal OÜ, the operator of real estate online classied
portal, based on the complaint led by Reales OÜ. Reales OÜ had entered into a service agreement with AllePal OÜ for the
insertion of real estate ads on the both real estate online classied portals, and according to the complaint, AllePal OÜ unfairly
refused to provide the service to Reales OÜ by terminating the agreement. According to AllePal OÜ, the service agreement
was terminated because the claimant used the services to provide real estate ads brokerage or aggregation services and did
not engage in real estate brokerage, for which the real estate online classieds portals are intended. AllePal OÜ actively co-
operates with the ECA and provides all necessary information and also holds negotiations with Reales OÜ in order to develop a
suitable contract and the pricing for the service needed by the claimant. On March 15, 2022, Reales OÜ submitted an additional
complaint to initiate additional supervisory proceedings against AllePal OÜ, which alleges that the pricing difference between
the prices offered to the business and private customers indicates the abuse of a dominant position. On 1 April 2022 the ECA
decided not to initiate additional proceedings and investigate the raised question within the ongoing supervisory proceedings.
As the ECA nor any other Estonian authorities have initiated any misdemeanour (or criminal) proceedings against any Group
company, the ongoing supervisory proceedings cannot lead to any imposition of nes to any Group company. However, if the
ECA concludes that AllePal OÜ and Kinnisvaraportaal OÜ abused their position, the ECA could issue a precept, ordering these
Group companies to end any ongoing infringements.
25. List of subsidiaries
Company name
Registered oce
Registration
Number
Activity
Share in
capital
Held
directly?
BCG HOLDCO Limited
Highdown House,
Yeoman Way, Worthing,
West Sussex, United
Kingdom, BN99 3HH
13415193
Acquiring
participations
100%
Yes
ANTLER Management SA
1-3 Boulevard de la Foire,
Luxembourg
B235771
Liquidated on 21
April 2022
- -
ANTLER TopCo Sàrl
1-3 Boulevard de la Foire,
Luxembourg
B235647
Liquidated on 21
April 2022
- -
ANTLER PiKCo Sàrl
1-3 Boulevard de la Foire,
Luxembourg
B235730
Liquidated on 31
March 2022
- -
ANTLER MidCo Sàrl
1-3 Boulevard de la Foire,
Luxembourg
B235872
Liquidated on 10
March 2022
- -
ANTLER HoldCo Sàrl
1-3 Boulevard de la Foire,
Luxembourg
B234342
Liquidated on 24
February 2022
- -
UAB Antler Group
V. Nagevičiaus 3, Vilnius,
Lithuania
305147427
Management and
consulting services
100% No
UAB Diginet LTU
Saltoniškių 9B-1, Vilnius,
Lithuania
126222639 No
Online classieds
100%OÜ AllePal
Pärnu mnt. 141, Tallinn,
Estonia
12209337 No
Online classieds
100%OÜ Kinnisvaraportaal
Pärnu mnt. 141, Tallinn,
Estonia
10680295 No
Online classieds
100%OÜ VIN Solutions Turu 2, Tartu, Estonia 14071883
Information
services
100% No
OÜ Baltic Classieds
Group
Pärnu mnt. 141, Tallinn,
Estonia
14608656 No
Online classieds
100%SIA City24
Gustava Zemgala 78 - 1,
Rīga, Latvia
40003692375 No
Online classieds
100%26. Subsequent events
On 1 July 2022, the Company’s indirect subsidiary City24 SIA acquired GetaPro business in exchange for €1.6 million in cash. It
was an assets acquisition. GetaPro is a services classieds portal operating in Latvia and Estonia. We believe this acquisition
will allow us to increase our presence in the services classieds market in the Baltics.
Notes to the consolidated nancial statements
continued
24. Contingent liabilities and contingent assets
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
148
FINANCIAL STATEMENTS
Company Statement of Financial Position
As at 30 April 2022
Notes
2022
(€ thousands)
Fixed assets
Investments 4 508,064
Current assets
Debtors: amounts falling due within one year 5 113,181
Cash at bank or in hand 6 1,979
Creditors: amounts falling due within one year
Amounts due from subsidiary undertakings 7 (4,988)
Other creditors 7 (842)
Net current assets 109,330
Total assets less current liabilities 617,394
Capital and reserves
Called up share capital 10 5,822
Retained earnings 620,707
Own shares held 11 (3,418)
Prot and loss for the period
(5,717)
Total Capital and reserves 617,394
The accompanying notes form part of these nancial statements.
The nancial statements of Baltic Classieds Group PLC, company number 13357598, were approved and authorised for issue
by the board and were signed on its behalf on 6 July 2022.
Justinas Šimkus
Director
Baltic Classieds Group PLC
Annual Report and Accounts 2022
149
FINANCIAL STATEMENTS
Company Statement of Changes in Equity
For the period from incorporation 26 April 2021 to 30 April 2022
Called up
share capital
(€ thousands)
Share premium
(€ thousands)
Own
shares held
(€ thousands)
Retained
earnings
(€ thousands)
Total
equity
(€ thousands)
Balance at 26 April
2021
- - - - -
Prot / (loss) for the
period
- - - (5,717) (5,717)
Other comprehensive
income
- - - - -
Total comprehensive
income
- - -
(5,717) (5,717)
Transactions with
owners:
Group restructure and
IPO
581,774 43,143 - - 624,917
Transfer arising from
capital reduction
(575,956) (43,143) - 619,099 -
Share issue post IPO 4 - - (4) -
Share based payments - - - 1,612 1,612
Acquisition of treasury
shares
- - (3,418) -
(3,418)
Balance at 30 April
2022
5,822 - (3,418) 614,990 617,394
The accompanying notes form part of these nancial statements.
Baltic Classieds Group PLC
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150
FINANCIAL STATEMENTS
Notes to the Company nancial statements
1. Accounting policies
Baltic Classieds Group PLC (“the Company”) is a public company limited by shares, incorporated in England, United Kingdom
on the 26th of April 2021 with registration number 13357598 and listed on the London Stock Exchange. The Company is
registered and domiciled in the UK. Principal place of the business is Highdown House, Yeoman Way, Worthing, West Sussex,
United Kingdom, BN99 3HH.
Statement of compliance and basis of preparation
The nancial statements of Baltic Classieds Group PLC have been prepared in compliance with United Kingdom Accounting
standards, including Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic
of Ireland (“FRS 102”) and the Companies Act 2006.
The Company nancial statements have been prepared under the historical cost convention, as modied for the revaluation of
certain nancial assets and liabilities through prot or loss. The current year nancial information presented is at and from the
date of incorporation 26 April 2021 to 30 April 2022.
The Company uses the Euro (EUR) as functional currency and presentation currency. Foreign currency transactions are
translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the translation at month-end exchange rates
of monetary assets and liabilities denominated in foreign currencies are recognised in the prot or loss for the period. Non-
monetary items measured at fair value are measured using the exchange rate when fair value was determined. The Company
nancial statements have been rounded to the nearest thousand except where otherwise indicated.
As permitted by Section 408 of the Companies Act 2006, an entity prot and loss account is not included as part of the published
consolidated nancial statements Baltic Classieds Group PLC. The loss for the nancial period dealt with in the nancial
statements of the parent company was €5,717 thousands.
The Company’s parent undertaking, Baltic Classieds Group PLC includes the Company in its consolidated nancial statements.
The consolidated nancial statements of Baltic Classieds Group PLC are prepared in accordance with the UK adopted
International Financial Reporting Standards and are available to the public. In these nancial statements, the Company
is considered to be a qualifying entity and has applied the exemptions available under FRS 102 in respect of the following
disclosures:
•
statement of comprehensive income with related notes;
•
cash ow statement with related notes; and
•
key management personnel compensation.
Going concern
The nancial statements have been prepared on a going concern basis which the Directors consider to be appropriate for the
following reasons.
The Directors have prepared cash ow forecasts for a period of 12 months from the date of approval of these nancial statements
which indicate that, taking account of reasonably possible Company will have sucient funds to meet its liabilities as they fall
due for that period.
In making this assessment the Directors have considered the fact that the Company’s activities are principally as a holding
company with long-term investments in subsidiaries. For the current year started from incorporation 26 April to 30 April 2022
the Company incurred a loss, however this resulted due to the one-off IPO related expenses. The Company’s assets consist of
investments in subsidiary undertakings, and intercompany loan receivable balances.
Consequently, the Directors are condent that the Company will have sucient funds to continue to meet its liabilities as they
fall due for at least 12 months from the date of approval of the nancial statements and therefore have prepared the nancial
statements on a going concern basis.
Signicant accounting judgments and key sources of estimation uncertainty
In preparing the nancial statements, management is required to make estimates and assumptions that affect the application of
policies and reported income, expenses, assets, and liabilities. Estimates and judgments are continually reviewed and are based
on historical experience and other factors, including expectations of future events that are believed to be reasonable under
the current circumstances. Actual results may differ from the initial estimate or judgement and any subsequent changes are
Baltic Classieds Group PLC
Annual Report and Accounts 2022
151
FINANCIAL STATEMENTS
accounted for with and effect on the nancial statements at the time such updated information becomes available. Estimates
and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimates are revised or in any future periods affected. There are no signicant judgments or key sources of
estimation uncertainty for the Company.
Other judgments and sources of estimation uncertainty
The Company considers Share-based payments for accounting estimates to be important to the reporting of Company’s results
of operations and nancial position. Share-based payment arrangements in which the Company receives goods or services as
consideration for its own equity instruments are accounted for as equity-settled share-based payment transactions. The fair
value of services received in return for share options is calculated with reference to the fair value of the award on the date of
grant. Black-Scholes model has been used to calculate the fair value and the Directors have therefore made estimates with
regard to the inputs to that model and the period over which the share award is expected to vest.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these
nancial statements.
Share-based payment transactions
Equity-settled awards are valued at the grant date. Fair value of the awards are measured using Black-Scholes pricing model. In
the consolidated nancial statements, on the assumption that the arrangement is equity-settled, the transaction is treated as an
equity-settled share-based payment, as the group has received services in consideration for the group’s equity instruments. An
expense is recognised in the group income statement for the grant date fair value of the share-based payment over the vesting
period, with a credit recognised in equity. In the parent Company’s separate nancial statements, there is no share-based
payment charge, as no employees are providing services to the parent. The parent would therefore record a debit, recognising an
increase in the investment in the subsidiaries as a capital contribution from the parent and a credit to equity. In the subsidiaries’
nancial statements, the award is treated as an equity-settled share-based payment. An expense for the grant date fair value
of the award is recognised over the vesting period, with a credit recognised in equity. The credit to equity is treated as a capital
contribution, as the parent is compensating the subsidiaries’ employees with no cost to the subsidiaries.
Investment in subsidiaries
These are separate nancial statements of the Company. The cost method is applied to investments in other companies. The
cost price increases when funds are added through capital increase or when group contributions are made to subsidiaries.
Taxation
The Company’s prot for the period arises mostly from the receipt of BCG Holdco Limited intercompany loan interest income.
Any interest income received by the company is taxable as a loan relationship. However, the corresponding expense on BCG
Holdco Limited should be deductible for the tax purposes. Group relief allows losses to be surrendered from loss-making
companies to protable companies in the same group. Given BCG Holdco Limited and Baltic Classieds Group PLC are in the
same group for group relief purposes and BCG Holdco Limited would be able to surrender its losses to Baltic Classieds Group
PLC, there is no net tax payable as a result of the loan. In addition, Baltic Classieds Group PLC provides taxable supplies for
management service to UAB Antler Group based on management agreement, however incurred administration costs cover
revenue and as a result, no provision for Corporation tax is needed in these nancial statements.
Shares held by the Employee Benet Trust
The Employee Benet Trust (‘EBT’) provides for the issue of shares to Group employees principally under Performance Share Plan
scheme. The Group has control of the EBT and therefore consolidates the EBT in the Group nancial statements. Accordingly,
shares in the Company held by the EBT are included in the balance sheet at cost as a deduction from equity.
Financial instruments
The Company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of nancial instruments.
(a) Financial assets
Basic nancial assets, including trade and other receivables, cash and bank balances, loans to Group companies are initially
recognised at transaction price (unless the arrangement constitutes a nancing transaction) and are subsequently carried at
amortised cost using the effective interest method.
(b) Financial liabilities
Basic nancial liabilities, including trade and other payables that are classied as debt, are initially recognised at transaction
price, unless the arrangement constitutes a nancing transaction, where the debt instrument is measured at the present value
Notes to the Company nancial statements
continued
1. Accounting policies
continued
Baltic Classieds Group PLC
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FINANCIAL STATEMENTS
of the future receipts discounted at a market rate of interest. Debt instruments are subsequently carried at amortised cost, using
the effective interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from
suppliers. Accounts payable are classied as current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised
cost using the effective interest method.
Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s nancial statements in the period
in which the dividend is approved by the Company’s shareholders in the case of nal dividends, or the date at which they are
paid in the case of interim dividends.
2. Services provided by the Company’s auditor
2022
(€ thousands)
Fees payable for audit services:
Audit of the Company and consolidated nancial statements
(244)
Fees payable for other services:
- Audit related assurance services (104)
- Transaction related services (532)
- Other assurance services (267)
Total (1,147)
Transaction related and other assurance services provided by the Company’s auditors during the year ended 30 April 2022 relate
to the IPO. Refer to Audit Committee Report on page 70 for further detail.
3. Directors’ remuneration
The Company has no employees other than the Directors. Full details of the Directors’ remuneration and interests are set out in
the Directors’ remuneration report on page 76, Employee numbers and costs in note 7 and Remuneration of key management
personnel and other payments in note 22 to the consolidated nancial statements.
4. Investment in subsidiaries
2022
(€ thousands)
Balance at 26 April 2021 -
Incorporation of BCG Holdco Limited at 24 May 2021
-
Acquisition of ANTLER Management S.A
45,076
Acquisition of ANTLER TopCo S.à r.l.
461,376
Share based payments 1,612
Investment in subsidiaries at 30 April 2022.
508,064
On 3 June 2021 BCG Group undertook a group reorganisation whereby the Company in exchange for the allotment of ordinary
shares acquired ANTLER Management S.A 38,740,076 ordinary shares at £1 (€1.16) and ANTLER TopCo S.à r.l. 396,525,002
ordinary shares at £1 (€1.16). Therefore, the Company incorporated on 26 April 2021, became the ultimate parent of the trading
group immediately controlled by Antler Group UAB. Subsequently, BCG Holdco Limited acquired ANTLER TopCo S.à r.l. from the
Company and ANTLER Management S.A in exchange for shares in BCG Holdco Limited. Closing balance of the Investment in
subsidiaries at 30 April 2022 consists of €506,452 thousand investment in BCG Holdco Limited and share based payments in
amount to €1,612 thousand.
Additions to share based payments in the year relate to equity-settled share-based payments granted to the employees of
subsidiary companies. Subsidiary undertakings are disclosed within note 25 to the consolidated nancial statements.
Notes to the Company nancial statements
continued
1. Accounting policies
continued
Baltic Classieds Group PLC
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153
FINANCIAL STATEMENTS
5. Debtors: amounts falling due within one year
2022
(€ thousands)
Intercompany loan to BCG HoldCo Limited
112,915
Amounts owed by subsidiary undertakings 180
Other short-term receivables 86
113,181
Terms, repayment of intercompany loan
The loan is used to nance the repayment of the indebtedness of ANTLER HoldCo S.a.r.l. and its subsidiaries. The loan is
repayable on immediately on demand by the lender. The borrower may prepay or repay any or all of the Loan at any time and bear
interest at rate of 2.5% plus 6 months EURIBOR. The loan is not expected to be paid within 1 year in the course of the normal
operating cycle.
6. Cash and cash equivalents
2022
(€ thousands)
Cash at bank 1,979
1,979
There were no restrictions on cash and cash equivalents held at 30 April 2022.
7. Creditors: amounts falling due within one year
2022
(€ thousands)
Trade creditors (6)
Taxation and social security (590)
Accruals (246)
Amounts owed to subsidiary undertakings (4,988)
(5,830)
The proposal of the nal dividend for the year ended 30 April 2022 is a subject to approval by shareholders at the Annual
General Meeting, therefore advance payments executed by UAB Antler Group in this regard was recognised as amounts owed
to subsidiary undertakings in the nancial statements. The amount of subsidiary undertakings also consists of the advance
payments for the services provided within one year of the Company.
8. Financial instruments
Financial instruments utilised by the Company during the year ended 30 April 2022 may be analysed as follows:
2022
(€ thousands)
Financial assets measured at amortised cost 115,160
115,160
Financial assets specied and detailed disclosed in notes 5 and 6.
Notes to the Company nancial statements
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
154
FINANCIAL STATEMENTS
2022
(€ thousands)
Financial liabilities measured at amortised cost (5,830)
(5,830)
Financial liabilities specied and detailed disclosed in note 7.
Current assets and liabilities
Financial instruments included within current assets and liabilities (excluding cash and borrowings) are generally short term in
nature and accordingly their fair values approximate to their book values.
9. Financial risk management
In its activities, the Company is exposed to various nancial risks: market risk (including interest rate risk), credit risk and
liquidity risk. The Board of Directors is responsible for creation and control of overall risk management policy in the Company.
Credit risk is the current or prospective risk to earnings and capital arising from a debtor’s BCG Holdco Limited failure to meet
the terms of intercompany loan with the Company or if a debtor otherwise fails to perform.
The credit risk on cash in banks is limited because the counterparties are banks with high credit-ratings assigned by international
credit-rating agencies. Cash in banks is the only nancial asset exposed to credit risk. Barclays Bank UK PLC had a credit rating
of Fitch A+, Moody’s A1 as at 30 April 2022.
The Company can take on exposure to market risk, which means the risk for the Company to incur losses due to the adverse
uctuations in the market parameters such as interest rates (interest rate risk) and currency exchange rates (foreign currency
risk).
Interest rate risk is the risk to experience losses because of unfavorable changes of interest rate. A company granting a loan
with a xed interest will experience supposed losses (i.e., will get less income than it could get), if the interest rate on the market
is going up, and the company which has taken a loan will experience the supposed losses, if the interest rate goes down. In case
a oating interest rate is established in the contract, market uctuations will have an impact on the nancial income/expenses
earned/incurred by the parties involved. Since a oating interest rate is applied to the loan granted by The Company to BCG
Holdco Limited, The Company and BCG Holdco Limited bear the interest rate risk.
Foreign currency exchange risk is associated with potential prot variability, which may be caused by uctuations of foreign
currencies exchange rates. EUR is the functional currency of the Company. The Company is exposed to currency risk on sales,
purchases and borrowings that are denominated in a currency other than EUR. As at 30 April 2022, the Company has no
signicant monetary assets and liabilities denominated in currencies other than EUR except for €297 thousand cash held in
GBP and one-off payable VAT €589 thousand regarding IPO transaction costs of non-recoverable VAT part.
Liquidity risk is understood as incapability to full undertaken obligations in due time without experiencing unacceptable
losses. Having in mind that both the Company and BCG Holdco Limited are related parties, the Company assumes liquidity risk
to the limited extent.
10. Share capital and share premium
Number of
shares
Share capital
amount
(€ thousands)
Share premium
amount
(€ thousands)
Incorporation of Baltic Classieds Group PLC: 1 ordinary
and 1 redeemable preference shares issue
2 57 -
Redeemable preference share redeemed (1) (57) -
Shares issued to acquire ANTLER Management S.A
38,740,076 45,076 -
Shares issued to acquire ANTLER TopCo S.à r.l.
396,525,002 461,376 -
Share Issue for IPO 64,734,921 75,322 48,959
Share issue related transaction costs - - (5,816)
Nominal value of ordinary shares reduced and share
premium cancelled to create distributable reserves
- (575,956) (43,143)
Shares issued to satisfy Free share awards 392,405 4 -
Balance as at 30 April 2022 500,392,405 5,822 -
Notes to the Company nancial statements
continued
8. Financial instruments
continued
Baltic Classieds Group PLC
Annual Report and Accounts 2022
155
FINANCIAL STATEMENTS
Fully paid ordinary shares, which have a par value of GBP 0.01, carry one vote per share and carry a right to dividends.
Baltic Classieds Group PLC was incorporated on 26 April 2021 with 1 ordinary share with a value of £1 (€1.15) per share
allotted. On 27 April 2021 the company issued 1 redeemable preference share with a value of £49,999 (€57,487) per share.
On 5 July 2021 BCG was inserted into the Group’s holding structure via a share for share exchange with the shareholders of a
previous top holding entity, ANTLER TopCo S.a.r.l:
1) BCG issued 38,740,076 ordinary shares at £1 (€1.16) each in the share for share exchange to acquire ANTLER Management
S.A. that was a minority shareholder of ANTLER TopCo S.a.r.l.
2) BCG issued 396,525,002 ordinary shares at £1 (€1.16) each in the share for share exchange to acquire the rest of ANTLER
TopCo S.a.r.l..
3) 1 redeemable preference share with a value of £49,999 (€57,487) per share was redeemed.
On 5 July 2021 BCG issued 64,734,921 ordinary shares with a value of £1 (€1.16) each that were listed at £1.65 (€1.92) on the
London Stock Exchange.
Share issue related expenses amounting to €5,816 thousand were set against the share premium that arose during the listing.
On 23 September 2021 BCG undertook a Court approved capital reduction to create distributable reserves. The entire amount
standing to the credit of BCG share premium account was cancelled and the nominal value of each ordinary share in issue in
the capital of BCG was reduced from £1 (€1.15) to £0.01 (€0.012). This created a total of €619,100 thousand in distributable
reserves.
On 19 October 2021 BCG issued 392,405 shares with a value of £0.01 (€0.012) each to be gifted, on an unrestricted basis, to all
subsidiaries’ employees other than the executive directors and senior management team.
11. Own shares held
2022
(€ thousands)
Own shares held (3,418)
(3,418)
On 25 March 2022 EBT bought Baltic Classieds Group PLC 2.1m shares £1.35 (€1.62) per share.
12. Dividends
No interim dividend was declared for the year ended 30 April 2022 and therefore no dividends have been paid out in the period.
The proposed nal dividend for the year ended 30 April 2022 of 1.4 € cents per share, totalling €6,976 thousands, is subject to
approval by Shareholders at the Annual General Meeting (“AGM”) and hence has not been included as a liability in the nancial
statements. Dividends will be paid in euros however Shareholders will have an opportunity to opt for a payment in British
pounds.
13. Related party transactions
During the year, a management charge of €274.7 thousand was provided to UAB Antler group in respect of services rendered. At
the year end, balances outstanding with other Group undertakings were €113,095 thousand for debtors as set out in note 5 and
€4,988 thousand for creditors as set out in note 7. Related party transactions for remuneration of key management personnel
are disclosed within note 21 to the consolidated nancial statements.
14. Ultimate parent company and parent company of
larger group
The Company is a parent and the ultimate controlling party. The largest group in which the results of the Company are consolidated
is that headed by Baltic Classieds Group PLC with registered oce in Highdown House, Yeoman Way, Worthing, West Sussex,
United Kingdom, BN99 3HH. No other group nancial statements include the results of the Company. The consolidated nancial
statements of Baltic Classieds Group are available to the public and may be obtained from www.balticclassieds.com
Notes to the Company nancial statements
continued
10. Share capital and share premium
continued
ADDITIONAL INFORMATION
157
Glossary
157
Shareholder Information
Baltic Classieds Group PLC
Annual Report and Accounts 2022
157
Additional Information
Glossary
2020
– means the nancial year ended
30 April 2020.
2021
– means the nancial year ended
30 April 2021.
2022
– means the nancial year ended
30 April 2022.
AGM
– means Annual General Meeting.
Apax
– means funds advised by Apax
Partners
ARPU
– means average revenue per
user.
Admission
– means the admission of
the ordinary shares of the Company
to the premium listing segment of
the Ocial List and to trading on the
London Stock Exchange’s main market
for listed securities which occurred on
5 July 2021.
B2C listers
– means listers that have
a subscription-based contract with the
Group for online classieds services
and products.
C2C listers
– means listers that
transact with the Group through one-
off transactions for online classieds
services and products and do not have
a subscription-based contract with the
Group for online classieds services
and products.
CEO
– means chief executive ocer.
Major Shareholder
– means ANTLER
EquityCo S.à r.l., an entity controlled by
funds advised by Apax Partners.
Marketplace
– means a place where
products and/or services are bought
and sold.
Performance Share Plan
– means
the long-term incentive arrangement
for the Executive Directors and other
eligible employees.
Portals
– means online classieds
websites.
Prospectus
– means the Company’s
prospectus dated June 2021 and
prepared in connection with the
Company’s Admission.
Relationship Agreement
– means an
agreement governing the relationship
between the Company and the Major
Shareholder.
Senior Management
– means the
Executive Directors and all portal
managers.
Verticals
– means specialised portals,
listing products and services of a
specic market, such as automotive,
real estate and jobs and services.
CFO
– means chief nancial ocer.
Code
– means the UK Corporate
Governance Code published by the FRC
in 2018.
COO
- means chief operating ocer.
Deloitte
– means Deloitte LLP or
Deloitte Lietuva, UAB both being
members of the Deloitte organisation, a
global network of independent rms.
Executive Directors
– means Justinas
Šimkus, Lina Mačienė and Simonas
Orkinas.
Generalist portals
– means portals
with no specialisation, listing a wide
range of products and services to
consumers.
KPI
– Key performance indicator.
KPMG
– means KPMG LLP, a UK
limited liability partnership and a
member rm of the KPMG global
organisation of independent member
rms.
Listers
– means C2C and B2C listers.
Listing
– means an ad posted on a
portal.
Management Incentive Programme
(MIP)
– means an equity incentive plan
designed to reward and incentivise
eligible employees.
Shareholder Information
Share capital
The Company’s authorised and issued Ordinary Share capital as at 30 April 2022 comprised a single class of Ordinary Shares. As
at 6 July 2022, being the last practicable date prior to publication of this report, the Company’s issued share capital comprised
500,392,405 fully paid Ordinary Shares of £0.01 each.
Details of the Ordinary Share capital and shares issued during the year can be found in note 15 to the consolidated nancial
statements.
AGM
The AGM will be held at Saltoniškių st. 9B, LT-08105 Vilnius, Lithuania on 28 September 2022 at 11.00 am local time. Further
details can be found in the Notice of Meeting sent to Shareholders, which is also available at www.balticclassieds.com.
Shareholder queries
Please contact our Registrar, Equiniti Limited, directly for all enquiries about your shareholding:
Online: https://help.shareview.co.uk
By post:
Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA
By telephone: 0371 384 2310
International callers: +44 (0)371 384 2030
Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open 8.30 am to 5.30 pm, Monday to Friday excluding public holidays in England and Wales.
Baltic Classieds Group PLC
Annual Report and Accounts 2022
158
Additional Information
Electronic Shareholder communication
We encourage our Shareholders to opt for electronic communications as opposed to hardcopy documents by post. This has a
number of advantages for the Company and its Shareholders. Increased use of electronic communications will deliver savings
to the Company in terms of administration, printing and postage costs, as well as increasing the speed of communication and
provision of information in a convenient form. Less paper also reduces our impact on the environment.
If you would like to receive notications by email, you can register your email address by the Share Portal https://help.shareview.
co.uk or by writing to Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA. Please note that if you
hold your shares corporately or in a CREST account, you are not able to use the Share Portal to inform us of your preferred
method of communication and should instead write to Equiniti Limited.
Warning about share fraud
Shareholders should be aware that they may be targeted by certain organisations offering unsolicited investment advice or
the opportunity to buy or sell worthless or non-existent shares. Should you receive any unsolicited calls or documents to this
effect, you are advised not to give out any personal details or to hand over any money without ensuring that the organisation is
authorised by the United Kingdom Financial Conduct Authority (“FCA”) and doing further research.
If you are unsure or think you may have been targeted you should report the organisation to the FCA. For further information,
please visit the FCA’s website at www.fca.org.uk/scamsmart/share-bond-boiler-room-scams, email consumer.queries@fca.org.
uk or call the FCA consumer helpline on 0800 111 6768 if calling from the United Kingdom or +44 20 7066 1000 if calling from
outside the United Kingdom.
Share price information
The Company’s Ordinary Shares are listed on the London Stock Exchange. The price of the Company’s shares is available on the
Corporate Website at www.balticclassieds.com.
Financial calendar
1
28 September 2022 Annual General Meeting
December 2022 Half-year results announcement
July 2023 Final results announcement
1
Dates are provisional
Company Information
Registered oce: Highdown House, Yeoman Way, Worthing, West Sussex, United Kingdom, BN99 3HH
Company number: 13357598
Company Secretary:
Miglė Pranaitytė
Independent Auditor:
KPMG LLP
Forward-looking Statements
Certain Statements made in this Annual Report are Forward-looking Statements. Such Statements are based on current
expectations, forecasts and assumptions and are subject to a number of risks and uncertainties that could cause actual events or
results to differ materially from any expected future events or results expressed or implied in these Forward looking Statements.
They appear in a number of places throughout this Annual Report and include Statements regarding the intentions, beliefs or
current expectations of the Directors concerning, amongst other things, the Group’s results of operations, nancial condition,
liquidity, prospects, growth, objectives, strategies and the business. Nothing in this Annual Report should be construed as a
prot forecast. All Forward-looking Statements in this Annual Report are made by the Directors in good faith based on the
information and knowledge available to them as at the time of their approval of this Annual Report. Persons receiving this report
should not place undue reliance on Forward-looking Statements. Unless otherwise required by applicable law, regulation or
accounting standard, the Group does not undertake any obligation to update or revise publicly any Forward-looking Statements,
whether as a result of new information, future events, future developments or otherwise.
All Intellectual Property Rights in the content and materials in this Annual Report vests in and are owned absolutely by Baltic
Classieds Group PLC unless otherwise indicated, including in respect of or in connection with but not limited to all trademarks
and the Report’s design, text, graphics, its selection and arrangement.
Shareholder Information
continued
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This document is printed
on sustainably sourced paper
Head oce
Saltoniškių st. 9b,
LT-08105 Vilnius,
Lithuania
+ 370 5 207 5061
balticclassieds.com
Registered in England and Wales.
Registered oce address:
Highdown House, Yeoman Way,
Worthing, West Sussex,
United Kingdom,
BN99 3HH.
Company number: 13357598