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Hansab Group

Annual Report 2013


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Table of Contents

OUR MISSION IS TO ENSURE THAT YOUR BUSINESS IS SECURE AND EFFICIENT

OUR VISION IS TO BE THE LEADING PARTNER IN INNOVATIVE TECHNOLOGY SOLUTIONS

02 04 05 06 07 08 10 12 16 17

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Mission and Vision

18

About us Structure of the Companies Hansab Group Revenue 2013

22

Systematic Changes

Margus Tammoja / Development and IT Manager of Hansab Group

Improved Service Operations Algo Puusepp / Service Manager of Hansab Group

Members of Hansab Group History

26

A Successful Year

Aigar Urva / CEO and Founder of Hansab Group Companies

Financial Results of Hansab Group in 2013 Jaak Õunpuu / CFO of Hansab Group

Consolidated Balance Sheet Consolidated Income Statement

30 34

Development and Maintenance of Competency Annika Urva-Ronk / Human Resources Manager of Hansab Group

38

Back to Growth

40

A Year of Change and Growth

42

Breakthroughs in New Business Sectors

46

Challenging Projects and Reinforcing Internal Resources

Maris Luks / Managing Director of Hansab SIA

Darius Žekonis / Managing Director of Hansab UAB

Alar Alumaa / Managing Director of Ellore OÜ

New Product Sectors

Nerijus Žikas / Business Development Manager of Hansab Group

Janno Kallikorm / Managing Director of Hansab AS

50

The First Profitable Year Tarmo Koreinik / Managing Director of Baltic Operation Services OÜ

A Brand with One Voice

Sigita Babarskaitė / Marketing Communications Manager of Hansab Group

52

Contacts

Hansab Group Annual Report 2013 /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////


1991

///// 5

HANSAB AS

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2007

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HANS

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: TALLINN, ESTO quarters NIA head

KINNISVARA OÜ HANSAB

2009

established in 2005

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headquarters:Tallinn, Estonia

SIA

Hansab employs more than 190 people under permanent contract and 65 project based personnel. Hansab aims to hire the top people in their field, at the same time encouraging young talent by providing a Hansab scholarship in some universities. Two thirds of Hansab employees are engaged in service activities.

HANSAB GROUP OÜ te ar qu ad he

In 1991, Hansab was founded in Estonia by Group CEO Aigar Urva, Jüri Mägi and Hans Tombach. Hansab Latvia followed in September 1993, and Hansab Lithuania in 1994. In 2005, Hansab Group OÜ was established to manage Hansab Group enterprises, business development and the central coordination of common processes.

, Pärn u, Jõ hvi Kuressaare, Kärd , la

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About us

Currently, Hansab Group has seven subsidiaries: Hansab AS, Hansab SIA, Hansab UAB, Baltic Operation Services OÜ, Ellore OÜ, Hansab Kinnisvara OÜ and Hansab Turtas UAB.

3 99

In 2006, Hansab Group founded Baltic Operation Services OÜ (BOS), also known under the brand name Moya, which focuses mainly on operating different vending machines. Then in 2007, Ellore OÜ was followed, mainly dealing with financial and card payment solution integration and development.

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We are the leading company providing innovative technology solutions for businesses – especially in the financial, retail and public sectors of the Baltic region.

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headquarters: TALLI NN, EST ON IA branches: Tartu

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B A U A S ANI U A H LIT RT TU ILNIUS,

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IA ON T S ,E LINN headquarters: TAL

0Ü S E VIC R E S 6 BALTIC OPERATION 200

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Margus Tammoja

Development and IT Manager

Algo Puusepp

Service Manager

Hansab Group Revenue 6084

The Hansab Group is unique in the Baltics offering a wide range of products and solutions. According to the latest statistics our companies service approximately 50 000 devices. The services offered by Hansab comply with ISO 9001 and ISO 20 000 standards. Hansab has implemented all ITIL processes ensuring we provide the necessary resources to meet our customers’ demands. Quality is a watchword for Hansab businesses. We aim for the highest level, which has been acknowledged consistently with numerous Quality Management awards.

11326

5912

Aigar Urva

CEO and Founder

Jaak Õunpuu

Chief Financial Officer

10879

5636

11839 9989

4204 3800

7488

3600

13985

3207

15298

2760

12020

2160

8426

2018

8059

2000

5500

1500

5000

1000

5000

500

Human Resources Manager

Members of Hansab Group

*in thousands of euros

Hansab complete solutions involve consultancy, software development and integration, software and hardware sales, installation and after sales services, together with service export. The processes, service and structure are common to all Hansab companies ensuring a high level of service no matter what the location.

Annika Urva-Ronk

4100

Services Sales

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Rūta Urva

Internal Audit Manager

Kari Pavelson

Chief Accountant and Quality Manager

Sigita Babarskaitė

Marketing and Communication Manager

Nerijus Žikas

Business Development Manager

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History 1991

1994

2000

2006

2007

2008

2010

2012

Hansab Estonia founded by Aigar Urva, Jüri Mägi and Hans Tombach. Headquarters in Tallinn, Estonia

Hansab Lithuania founded. Headquarters in Vilnius, Lithuania

ISO 9001 quality standard acquired

A daughter company Baltic Operation Services OÜ founded to operate reverse vending

Ellore OÜ established by Hansab and Voicecom to develop and integrate software with equipment sold by Hansab (specifically for payment systems)

Global economic crisis begins

Hansab Turtas UAB founded in Vilnius

Hansab begins active operations in Belarus

Number of employees 5

1995

1992

The first financial crisis in the Baltic financial sector

Hansab starts selling security and cash handling equipment to the financial sector

1998

1993 Hansab Latvia founded. Headquarters in Riga, Latvia Product portfolio expands to customer management systems The first service agreement is signed. Establishment of Hansab service department

Second crisis in the Baltic financial sector after collapse of the Russian economy Turnover reaches 300 000 euros Number of employees 43

1999

2003 1600m2 headquarters constructed in Tallinn

Turnover rises to 15 million euros The number of employees reaches 117

2004 Product portfolio joins POS terminal sales and service

2005 Hansab Group OÜ founded to unify and coordinate operations across the Baltics

Sales and service of NCR ATMs begins Period of rapid growth in the company

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Turnover reaches 18,5 million euros, and net profit of 1,2 million Euros, resulting in the best financial results in the history of the company The number of employees reaches 147 2500m2 Lithuanian headquarters are built in Vilnius

Hansab introduces new strategy with the emphasis on key account management and additionally to finance – focus on public and retail sectors Shift from product to solution sales New products in security field – electronic security, EAS and access control

2009 Hansab TOB Ukraine founded to manage operations in the Ukraine Turnover declines to 11.3 million Euros Number of employees drops to 135

2011 ISO 20 000 certificate acquired. Hansab becomes one of the first companies to acquire this quality management certificate in the Baltics. Project department founded to manage complex projects and to divide responsibilities between the departments

2013 Hansab TOB (Ukraine) sold Turnover 17.4 million euros Number of people employed 192 and 65 people project based Preparations begin to enter Finnish market

Turnover recovers to precrisis level – 17,5 million Euros Hansab starts service export Number of employees 168

Hansab Kinnisvara OÜ founded in Estonia Hansab Group Annual Report 2013 /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////


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“for the first time in five years every company ended the year with positive results”

The main improvements were in Baltic Operation Services OÜ (BOS). Changes in work processes and management, begun in 2012, showed positive results in 2013 and for the first time BOS achieved a profit. The company’s revenue increased by 49%, the result of an improvement in work quality and our increasingly positive reputation. Financial results increased by more than 200 thousand euros and we continue to see more positive trends in the development of BOS.

A successful year Aigar Urva CEO and Founder of Hansab Group Companies

Every one of the Group’s companies was successful in 2013 and for the first time in five years every company ended the year with positive results. As a result, the Hansab Group profit increased threefold, resulting in 698 thousand euros.

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During last year we continued with our improvements to Hansab SIA, our Latvian company. Changes were applied in service processes and we also implemented several automated solutions such as NavMob, service planner and the customer portal. Due to these efforts and the successful euro changeover process in Latvia, we ended the year in profit. In 2013, we sold the unprofitable company Hansab TOB in Ukraine. The current situation in Ukraine shows that our decision was the correct one. This has now allowed us to concentrate our resources on our core activities as well

as embark on some new initiatives. Hansab AS and Hansab UAB continued during 2013 to profitably grow, and Ellore OÜ together with the Hansab companies sold a record 5400 pieces of payment terminals. This helped us to achieve the leading position in the Estonian market and rapidly increase our market share in the Lithuanian and Latvian POS terminal market. Our main market, the financial sector, has stayed conservative with its investments except for Latvia, which in 2013 received euro changeover related investments and where we have succeeded in maintaining our market leader position. Increased rapid growth was apparent in the retail and public sectors, and we were successful in finishing several complex and innovative solutions in the security and customer service fields. In the Belarus market in 2013 there were positive developments in our business and the successful implementation of our service export projects. In 2014 we will maintain

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this course and establish a strong presence in Finland. Last year we continued our investments in improving the efficiency of our processes with the main focus on service, where we enhanced planning software, customer portal and repair processes. Also we improved project management processes through the adoption of new software. Our main task in 2014 is to implement a generic document management system in our companies. As the economic climate in our markets is improving, we are optimistic about perspectives to come. We foresee a great potential in Lithuania as it will be undergoing a change over to the euro in 2015. Our investments in improving efficiency and business development have started to pay back and we aim to increase our turnover by 20% and profit by 10% during 2014.

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“2013 was a good year for Hansab Group. All subsidiaries ended the year with positive results and Hansab Group sold the company in Ukraine which had generated losses for the group until then.”

Jaak Õunpuu CFO of Hansab Group

Financial results of hansab group in 2013 The last quarters of 2013 showed signs of economic slowdown in Estonia, but Latvian and Lithuanian economies continued with stronger growth. According to the preliminary figures, the economic growth in Estonia last year was 0.7%, in Latvia 4.0% and in Lithuania 3.4%. The price increase decelerated in all Hansab Group home markets. It was 3.2% in Estonia, 0% in Latvia and 1.2% in Lithuania.

From the beginning of 2014 Latvia is the newest member of the euro zone. The government of Lithuania is making efforts to adopt the euro from January 2015. Economic experts forecast that the growth in 2014 will be modest in Estonia, but they are more optimistic with regard to Latvian and Lithuanian economy. The main risks are related to uncertainty in Ukraine and Russia that could negatively influence the economies of Europe. 2013 was a good year for Hansab Group. All subsidiaries ended the year with positive results and Hansab Group sold the company in Ukraine which had generated losses for the group until then. In 2013, the consolidated revenue of Hansab Group was 17.4 million euros, increasing by 4% compared to 2012 (16.8 million euros), but the group managed to triple the net profit to 698 thousand euros compared to 231 thousand euros in 2012. The group’s turnover increased because of the activities of the group companies outside the traditional banking sector - particularly, big projects in the retail and public sector.

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In Latvia, the sales of euro equipment in the second half of the year contributed the most. The continuing growth in service revenues was also positive: the revenues increased in 2013 by 3% and amounted to 35% of the total turnover. The largest part of the turnover growth came from the increased revenues of companies in Estonia and Latvia. The turnover of Hansab AS increased by 13%, Baltic Operation Services OÜ by 49% and Ellore OÜ by 10%. The growth of sales in Hansab SIA was 8%, and only Hansab’s UAB turnover declined by 6%. The largest part of the consolidated turnover in 2013 was generated by Hansab AS - 35%. The share of Hansab UAB was 32% and Hansab SIA 26%. The other group companies provided 7%. In 2013, the highest net profit of 337 thousand euros was earned by Hansab AS, followed by Hansab UAB with 249 thousand euros and 122 thousand euros by Ellore OÜ. After several years which ended with

2013 Hansab AS

35%

Hansab SIA

26%

Hansab UAB BOS Other

32% 5% 2%

2012 Hansab AS

33%

Hansab SIA

26%

Hansab UAB BOS Other

35% 3% 3%

Hansab Group revenue by Companies

Hansab Group Annual Report 2013 /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////


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losses, Hansab SIA managed to earn 11 thousand euros of net profit. The first time in the company’s history also Baltic Operation Services OÜ earned small profit in 2013. The net financial expenses of Hansab Group decreased in 2013 to 46 thousand euros compared to 94 thousand euros in 2012. The decrease of costs resulted from the decrease of the loan balances and the more centralised management of cash flow by Hansab Group. The largest investments of 2013 included the acquisition of an additional land plot next to our Vilnius office, the purchase of the reverse vending machines and the renovation of service stations by Baltic Operation Services OÜ, the purchase of equipment for full-service rent to customers by Hansab AS and various software developments for Hansab companies. Related to the new investments, the group’s depreciation costs increased to 425 thousand euros (416 thousand euros in 2012).

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“The group’s turnover increased because of the activities of the group companies outside the traditional banking sector - particularly, big projects in the retail and public sector” thousand euros, which is 54% more than the year before (825 thousand euros). The consolidated balance sheet increased to 11.7 million euros. The growth came from the purchase of ATMs at the end of 2013. This deal increased the inventories and the trade payables. Most of these machines have been sold during the first months of 2014. The share of equity at the end of 2013 was more than 35% of the balance sheet. The consolidated return of equity (ROE) was 18% and the return on assets (ROA) close to 7%. The conservative financial policy of Hansab Group has ensured the strong liquidity of the company. The cash flow from operating activities in 2013 was 1,579 thousand euros. We believe that Hansab Group’s conservative financial policy, its flexible cost base and the group’s development strategies have created a basis for the growth of group’s sales and profit in the future.

Public Sector: Tallinn TV Tower Multimedia and info-technology solutions

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Hansab Group Annual Report 2013

The EBITDA in 2013 was 1,270


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Consolidated Balance Sheet

Consolidated Income Statement

*in thousands of euros

ASSETS

*in thousands of euros

31.12.2013

31.12.2012

Current assets Cash Trade receivables Other receivables Prepayments Inventories Total current assets

985 1,538 381 80 4,191 7,175

493 2,033 232 122 1,880 4,760

Non-Current assets Long-term financial investments Property, plant and equipment Intangible assets Total non-current assets

244 4,161 98 4,502 11,677

TOTAL ASSETS

LIABILITIES & EQUITY

31.12.2013

31.12.2012

LIABILITIES

2013

2012

Revenue Other operating income

17,410 33

16,791 24

Business expenses Goods, materials, services Operating expenses Labour expenses Depreciation Other expenses

-9,705 -2,067 -4,345 -425 -56

-10,100 -1,951 -3,863 -416 -76

844 -46

409 -94

798 -101

316 -84

698 638 60

231 172 60

Current liabilities Loans and borrowings Trade and other payables Accrued expenses Tax liabilities Total current liabilities

1,651 3,915 512 490 6,568

1,871 1,828 557 455 4,711

417 4,169 113 4,699

Non-Current liabilities Loans and borrowings Other long-term liabilities Total non-current liabilities

967 2 969

1,112 2 1,114

Operating profit Finance costs

9,458

TOTAL LIABILITIES

7,537

5,825

Profit before income tax Income tax

EQUITY Share capital Reserves Non-controlling interest Retained earnings Currency translation differences Net profit for the period TOTAL EQUITY TOTAL LIABILITIES AND EQUITY

3 3 143 3,355 -1 638 4,140

3 3 132 3,333 -9 172 3,633

11,677

9,458

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Net profit for the financial year Equity holders of the parent company Non-controlling interest

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“We continue to believe in products and services automation and that the self-service solutions market is constantly growing.”

Accordingly we began to organise Hansab group companies Business Innovation Forums. The Forum’s aim is to review global trends and to layout strategically developed directions for the coming years. All of the Hansab group companies’ business leaders attended this forum. We received confirmation that our existing development strategies are the right ones. Hansab Group’s business development activities are based on the following:

Margus Tammoja Development and IT Manager of Hansab Group

systematic changes

- We are consistently following the trends in technology, developing high value - creating products and solutions

In 2013 we made a number of significant improvements in our development work. In addition to our conventional solutions and introducing new products and services, we conducted a thorough review of our development practice in line with of our strategic directions.

- We are developing our own solutions. - We are integrating our software development company with our Software integration projects. - We involve our clients in solution and product development. We like it if our products are important to the customer while remaining unique. This creates a high-

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value-added product for the customer. In 2013 we worked with two new product development projects. The first project was related to a digital signage solution and the second incorporating special audio equipment. Now Hansab is able to sell a complete digital signage solution that includes all the required modules to run a complete system: software, displays, media players, communication modules and even content. Directional sound speakers are speakers that produce a very narrow beam of sound. The main purpose of these speakers is for advertisement or information distribution so that only a person in a specific area can hear the information. Such narrow beam speakers are mostly used in areas like museums, libraries or in a retail environment combined or independent of digital signage. We continue to believe in products and services automation and that the self-service solutions market is constantly growing. More and more customers are looking for complete

solutions to solve their problems and they are not just looking for a product. By a solution we include consultation, delivery, installation and setup, as well as after sales support and maintenance. Confirmation that this strategy is working is our rapidly growing digital display solutions portfolio. The customer does not just want an LCD panel. They need all of the necessary components beginning with consultancy, and then hardware, software, content creation and the subsequent maintenance. Also Cloud and SaaS services started to become more and more popular. Customers are not required to purchase expensive servers and software, when from Hansab they can access all the necessary components to run their digital signage service for a monthly fee. Changes in IT Management Hansab IT team’s main task is to ensure the effective functioning of IT in our customer service, sales department and other corporate entities. This way we can offer a better

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service to our customers. We continue to improve the services that we sell outside of Hansab. Our main service related to IT is the monitoring and management service for ATM and POS terminals. Also the monitoring and data exchange solution for reverse vending machines is continuously improving. To ensure the smooth running of the servers and customer service department we installed a backup power generator in the summer of 2013. The generator gives us the additional security that the servers and customer service activities at a PanBaltic level will continue to function during a power failure. In cooperation with the customer service department we introduced a new version of the customer portal that allows customers to order and monitor their maintenance status directly from the internet. Together with our IT partners and our customer service department we introduced a new mobile application NavMob 2.0 that allows technicians

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to view new work orders, change the order status and review and order goods from stock. All of this information is collected in the central server and our service maintenance coordinators make the necessary operational decisions and schedule their implementation. We started to roll-out a new document management system. We believe that the introduction of the system will lead Hansab Group companies to the next level in the location and storage of documents, accelerating the flow and exchange of information. We firmly believe that our in-house IT competence gives us an additional advantage over the competition and this is the reason why our IT team is constantly growing. While we want to grow our internal knowledge, we will still use different partners in order to have the highest level of support and competency in solving specific problems. In 2014 we will focus on improving the IT management systems and continue implementation of ITIL best practices in our operations.

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Retail Sector: Senukai Retail Chain Lithuania Display and security systems

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During 2013 our companies improved monitoring and helpdesk services. These two functions are separated and focused on improving service quality. A key issue was the service call planning process improvement. We developed new solutions for the service helpdesk.

Improved Service Operations Algo Puusepp Service Manager of Hansab Group

The total service revenue in 2013 was 5.2 million euros which compared to 2012 showed a growth of 5.5 %. Our biggest service agreement growth was in the POS terminal SLA, which rose to the second place after the ATM agreements. In 2013 our companies solved close to 70 thousand service orders from customers. It was 26% more compared to 2012. SLA turnover was the biggest part of service turnover and it makes up 73% of the total service turnover, an increase of 8% compared to 2012.

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The main target in 2014 is to improve planning efficiency. We track additional quality measurements which are service planning efficiency (planned time vs real time) and average solved orders per engineer. More and more new agreements include official extended work hours. All companies have a local helpdesk and monitoring centre working 12 hours per day, 7 days a week. 2013 experienced a step forward in our customer portal usage. By the end of year we had 74 different customers using the portal for entering new service requests and receiving feedback from our service helpdesk. The customer portal is a great tool for improving communications between our customers and the Hansab

Total number of solved service orders

5215

‘13 ‘12

4941

‘11

4805

‘10

4133

‘09

4064

‘08

3970

‘07 ‘06

3119 2578

Total Service Turnover without BOS and Ellore (thous. euro)

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helpdesk. Customers can enter new orders and see all the orders with a current status. They can also access invoices and our equipment database as well.

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73% 10% 6% 5% 3% 3%

Service Agreements Installation Services Repair Services Sales of spare parts Service Export Others

Service turnover

847 719

684

641

734

658

629 650

316

december

november

october

september

august

july

june

may

february

april

48

march

23

january

153

Customer portal Orders 2013 \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\

Retail Sector: Prisma Hypermarkets Complex security solutions across the Baltics Hansab Group Annual Report 2013


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64

Last year, we created a total of 17 new job positions across the entire Group. Over the year, the number of employees grew 9%, reaching a total of 190 people by the end of 2013. New positions were created mainly in the project department and customer service. The project department was the fastest growing department in all of the companies, having increased twice in Hansab AS, SIA and UAB. The growth of the project department was instigated by the sale of technological solutions that require follow-up implementation and integration increased in the turnover. This determined the need to employ specialists in the field. Job positions created in customer service in Estonia and Latvia were related to the increase

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Scholarship Programs Technology Universities

at

Top

As finding qualified manpower was challenging in all three countries, we placed an even greater emphasis on Hansab and on scholarship

9

In addition to creating new job positions, we also took job applications several times over the year due to employee turnover. In 2013, the employee turnover remained in the upper limit in Hansab AS (11%), it somewhat exceeded in Hansab UAB (14%) and in Hansab SIA, the employee turnover unfortunately significantly exceeded the target value last year as well (27%). Consequently, in Lithuania and in particular in Latvia, the greatest challenge last year was finding suitable employees. We will continue working toward it this year as well.

55

Keywords for the year 2013 in human resources were developing and maintaining competency. Because proposing new technological solutions to clients requires constant development, significant investments were made into training people both in the form of training courses in foreign countries and an internal training system.

New Job Positions across the Group Companies

10

Development and maintenance of competency

in the volume of service agreements. We also continued to focus on increasing efficiency through better planning and reorganisation of work in order to cover the growing volume of works with existing resources.

4

Annika Urva-Ronk Human Resources Manager of Hansab Group

We completed mapping the competency of technical personnel and more systematic planning and conducting of internal training. Next year, we plan to continue mapping competency in the project department.

50

‘09

‘10

‘11

‘12

Hansab AS Hansab UAB Hansab SIA Baltic Operation Services OÜ Hansab Group OÜ Ellore OÜ

‘13

The change in number of employees over the last 5 years

Employee distribuition by company

programmes in field-related vocational schools and colleges. Hansab has entered into cooperation with four schools: In Estonia, with the Estonian Information Technology College, Tallinn University of Applied Sciences and Tallinn Polytechnic School, and in Latvia with the Riga Technical University.

Internships at Hansab Estonia Hansab AS has been the most active in cooperation with vocational schools and colleges. Last year, the Estonian company was visited for internship by 14 students in customer service, repairs and project department, and several students who successfully completed the company

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“One of Hansab’s strengths is without doubt the consistency of strong organisational culture.” practice were recruited full time or part time after completing the practice. Such internship was a good way to fill half of the newly created job positions smoothly, quickly and flexibly without having to organise active and public job contests. In 2014, we are planning to continue active cooperation with vocational schools and colleges, participate in information days in schools, accept interns, conduct study visits in the company for students and offer company scholarship’s for the best students. We believe that this is a future-oriented activity, which benefits the students, the school and company alike. Focus on Employee Satisfaction We also conducted the thirteenth employee satisfaction survey, which involved the employees in the whole of the Group and assessed the activity of the management. Even though the results in the Estonian and Lithuanian company were good already in the previous year, the results increased in all of the companies even more this year and the objective was achieved.

set in the 5-point system by 0.1 points (average score 4.1) and Hansab UAB exceeded the objective by 0.3 points (average score 4.3). Hansab SIA was off the target by 0.1 points, but compared to the previous year, its results increased significantly – by 0.3 points (average score 3.9). The satisfaction survey has always been an indicator to highlight and solve issues. The highest score across the whole Group was given to issues regarding the satisfaction with cooperation in the departments, being informed and Hansab’s contribution to the well-being of people. One of Hansab’s strengths is without doubt the consistency of strong organisational culture. The company has observed the same values and principles from the beginning, and great effort and attention is given daily to prioritise the core values of Hansab, such as honesty, openness, thoughtfulness, helpfulness, integrity and keeping promises, in everyday communication and behaviour both with colleagues and clients.

Banking Sector: Swedbank Cash handling technology in the Baltics

Hansab AS exceeded the objective \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\

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Last year Hansab Latvia took up the challenge of repeating the euro changeover success we faced in Estonia in 2010. With a combination of strong team work and a well-managed public relations campaign we justified the trust of our existing customers and also delivered equipment to hundreds of new customers.

New product sectors Nerijus Žikas Business Development Manager of Hansab Group

Hansab Group business development and sales in 2013 responded well to the changes and new trends in product groups, embarking on new business opportunities abroad. We were a key player in the implementation of the euro in Latvia, while also increasing our share in the services export sector. In addition, digital signage, payment solutions and low voltage installations became the fastest growing trend in our existing product portfolio. In 2013, sales revenues of goods were 11.4 million euros, whereas in 2012 10.9 million euros.

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Revenue by product groups

In the financial sector banks continued to close branches and reduce the number of installed ATMs. The growth in this sector was in the field of payment solutions. The complexity of sales of payment solutions in the financial sector also

Services Finance and Payment Cash Handling Electronic Security Physical Security Automation Consumables Card Products

Revenue by product groups

Customers were understandably keen for us to deliver equipment at the best price and quality to meet the euro transition in Latvia. New euro coins needed new ways to be processed and that enabled us to introduce to the market modern coin deposit solutions, wrappers and coin sorters. Last year we concluded all operations in Ukraine and we feel that this decision has already proved to be strategically correct.

31% 29% 11% 9% 8% 8% 3% 2%

Revenue by customer segments

52% 16% 14% 4% 4% 3% 3% 2% 2%

Banking Retail Public services Transport Resellers Industry CIT Hotels Other

Revenue by customer segments

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had a positive impact on sales and service revenue last year. Together with the classic products we delivered customised solutions to meet customer requirements in software functionality, electronic security solutions and video surveillance. Also digital signage solutions improved our customers’ communication channels to a targeted audience, improving cross -selling possibilities. The continuous development was reflected in the retail and public services sectors. The most successful projects were connected with security, digital signage and customer service solutions. Last year the growth of export to Belarus continued. In 2013, in cooperation with our local partners in Belarus, we sold Q-Matic Queue management systems into the major Belarus banks - BelVEB, Belarusbank and Belinvestbank. We have succeeded in achieving a turnover of approximately 200 thousand euros and are continuing sales activities with the current partners and new clients such as BPS Sberbank and Belgazprom

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“digital signage, payment solutions and low voltage installations became the fastest growing trend in our existing product portfolio”

CIT Sector: G4S Estonia Vault rooms for storing most of Estonia’s cash in circulation

bank. Finally, as part of Hansab general strategy, we are focusing on the retail and healthcare sectors, where we offer Q-Matic, Swisslog, and other integrated solutions. Additional services exports including outsourcing our well trained engineers to the Scandinavian market. Currently, Hansab Lithuania is working on a project with our partner Swisslog in the healthcare sector. Over the last couple of years, we built the necessary foundation for our successful service export growth together with our partners. Finally, last year Hansab Estonia started initial preparations to begin sales activities in the Finnish market, this year the company will focus more on this strategic market.

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“A successful brand requires one voice, therefore, the main objective for Hansab marketing communications has been and will continue to be the unifying of our brand.”

Video Content

Sigita Babarskaitė Marketing Communications Manager of Hansab Group

A brand with one voice

The B2B marketing landscape now has more emphasis on video content, and we have commissioned a film depicting the key Hansab companies’ services across the Baltics, including testimonials and reviews from our key customers in the banking and finance, retail and public services sectors. In another short film we showed the Vilnius University library automation project, demonstrating its key improvements for the librarians and visitors. Content Marketing and Social Media

A successful brand requires one voice, therefore, the main objective for Hansab marketing communications has been and will continue to be the unifying of our brand to improve our customers’ experience. In the marketing department, we have been working on content marketing, video production and internal brand communication improvement within the Group’s companies. This is also in line with the strong shift to digital content marketing and social media reflected in our customer base.

B2B website content can often be heavy, complex and unattractive, so we started gathering reference images of our successful projects and telling their stories, allowing our customers to get a better understanding of the Hansab solutions portfolio. In 2013, we focused marketing activities on new channels: we launched LinkedIn and Facebook pages, as well as the Hansab YouTube channel. The main goal of these social media channels was to deliver a better

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customer experience, cut through the clutter and deliver the most important information on the go. The result? Not only did our customers start reading more about our projects and achievements, but our internal brand awareness also improved. Today, Hansab employees read and interact more fluidly. Now, during 2014 and beyond we will focus resources on further enhancing our social media communications and making the content yet more useful and effective. Focus on Digital Digital marketing was at the core of all Hansab marketing activities in 2013. Our customers’ feedback was that e-mail marketing is one of the best ways to receive information. Since the beginning of 2009, we have sent out 202 newsletters and have almost 38 000 customers in our subscription list. Our focus is now based on personalised and segmented content for our customers in the banking and finance, retail and public services sectors. Our aim is to deliver the news and information about market trends, the projects within Hansab and its

partner groups, as well as new product promotions. Moreover, Ellore, a software development company within Hansab, has started sending quarterly newsletters to our Pan-Baltic customers. English language based newsletters have proven to be valuable for informing our customers about the most important changes on the Baltic market. We are glad to announce that a CTR rate of approximately 25% shows that the content we deliver is important to our customers. For the next two years, we will continue to segment and personalise our e-mail marketing. New Websites Last year was imperative for two of the daughter companies in Hansab Group: Ellore and Baltic Operation Services launched new websites. Due to the growth, we wanted to ensure that our customers are able to access information in the easiest and most convenient way.

E-commerce Sites Sales automation and the focus on complex projects have now been our strategic targets for several years. In order to support these targets and simplify the purchase process, in all three Baltic countries we launched e-commerce sites featuring items that are easy to purchase such as: currency detectors, safes, technical aerosols, document shredders and other. Hansab e-commerce sites are designed to help customers choose their product to be delivered to their office or collected from one of our sites. We are experiencing times where the concept and practice of B2B marketing is being redefined. The shift from traditional to digital media allows us to measure each step along the way and connect it to our financial results. Owned media enables us to reach audiences we were previously unable to. For the next two years, Hansab marketing will aim at unifying the brand and improving information delivery, to our customers, partners and employees.

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“2013 was a year that will first and foremost be remembered for its exceptional growth in our service activities. ”

Back to Growth

Janno Kallikorm Managing Director of Hansab AS

2013 was a year that will first and foremost be remembered for its exceptional growth in our service activities. Due to new and extended service contracts with our key customers we were able to increase our service revenues by 16% in comparison with 2012. More specifically, the SLA (Service Level Agreement) turnover grew by 18%, which, looking at our starting position was an excellent achievement. Also the total revenue for the company increased significantly, reaching 6.6 million euros and being 13% higher than in 2012. Due to the success mentioned above we were able to double the company’s profit, which reached 0.4 million euros.

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Our continuous efforts to further improve the working atmosphere in the company and customer-partner relations were awarded by very positive feedback from the employee satisfaction survey and the customer satisfaction survey, being 4.1 and 4.24 on a 5 point scale respectively. Multimedia, Card Payments and Security Top the Focus We were able to enhance our presence in the multimedia solutions market by completing large and innovative solutions for Tallinn Technical University and the Estonian Health Care Museum. Another important project was carried out for G4S Estonia – two huge vault rooms for storing most of Estonia’s cash in circulation. We continue to witness the growing trend in card payments and during 2013 we delivered close to 3 000 Ingenico payment terminals to our main partners – Swedbank and Nets Estonia.

New Levels Reached In Services and Project Management

which will continue until the middle of 2015.

As a year ago, we can again state that new heights have been hit by our service department. Due to new and extended service agreements our service engineers successfully took care of an unbelievable 33 000 service calls during the year. This is 40% more than in 2012. To continuously maintain the quality of our services we invested both in new employees and technical innovations. An improved logistics management, the new smart planner solution and improvements in other important fields helped us to achieve our targets.

Where next? As our country continues to develop we see the constant need for new and innovative solutions in almost all customer segments. The emphasis will be on electronic security, multimedia and automated systems. Based on the previous we expect an increase of 20% in total revenue (25% from sales and 8% from services) compared to 2013.

A total number of eight new positions were created during the year, four of which were in the projects department – the fastest growing department in the company. The increase in number of employees was mainly influenced by the fact that 2013 saw the start of two large projects for pneumatic tube transportation and sound systems in the North Estonian Medical Centre

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“The euro changeover helped us increase the turnover by more than 8% and experience the first profitable year after four consecutive years in a row. ”

Maris Luks Managing Director of Hansab SIA

A YEAR OF CHANGE AND GROWTH In 2013 Latvia was the year on the way to the introduction of the euro. The euro changeover helped us increase the turnover by more than 8% and experience the first profitable year after four consecutive years in a row. The increase in the service sector revenue was almost 6% due to our active participation in projects servicing customers during the Euro changeover and POS terminal service agreements.

During 2013 Hansab Latvia realised several important projects helping us to build a strong foundation for future growth. Overall, 2013 was about the adoption of the euro, and as our customers were focused on this event it hampered other growth areas where the company operates. One of the largest deals from a sales and relationship perspective was the project with SEB bank. Hansab succeeded in agreeing with the bank not only to sell cash handling equipment but also to sign a service agreement – the importance of this euro changeover project led to us receiving the Hansab Group Sales Project of the year. Also we should mention the large cash handling deals with Swedbank including a service agreement and Citadele bank cash handling and equipment deals. Based on the realisation of money handling equipment, Hansab SIA held the leading position in the banking sector. In other state and public segments the largest deal was the Latvian post cash handling agreement. This cooperation is another success story

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for Hansab Latvia. The company also succeeded in selling several parking systems retail customers Stockmann and the Mūkusalas Business Centre. By the end of 2013 we increased the amount of installed queuing systems, the largest amount in the CSDD branch transformation project. In 2013 Hansab Latvia installed two Bibliotech Library systems in the Riga Economic University and Daugavpils University – both installations create a platform for further development in library solutions on the Latvian market. Some notable successes in 2013 had their roots in 2012, including the Apranga and the Prisma projects in the retail sector. In cooperation with our Lithuanian colleagues we installed equipment into eight Apranga group shops in Latvia. We also re-established our relationship with Statoil Latvia, where in a short period we signed two new agreements. During the euro changeover – Hansab Latvia realised the largest brand awareness campaign of the past 10 Years. “Euro Expert” was done with the help of a structured PR and brand

awareness mix campaign in the Latvian media and on the internet. We utilised such tools as: snapshot surveys, press briefings and breakfasts, media communication, cooperation with public newspapers, targeted media channels, links with associations such as the Latvian Chamber of Commerce and Industry, Latvian Trade Association, International Business Networking Consortium. We launched the website www.eiroiekartas.lv, the only website directly related with euro equipment communication for customers and ordinary citizens. Hansab Latvia also participated in signing a memorandum called the “Honest Euro Implementer”. During 2013 the company continued to work on efficiency, service quality and customer satisfaction. Hansab Latvia made several changes in the management team – the company now has a new Customer Service director and new HR and Quality manager; whom together with other team members are striving to achieve improved customer service.

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agreements, we started to restructure the customer service department and increased the amount of engineers and helpdesk personnel. In 2014 the budget is planned for almost 20% increase in sales and service. The growth forecast has been associated with ATM orders, market development in areas such as digital advertising and library solutions, as well as with the roll-out of automated product solutions in the government and public sector. Hansab SIA will continue to operate with an active sales strategy, in combination with high quality service support. One of the primary targets in 2014 is to increase our efficiency and continue to provide a high quality service for our key customers

In the fourth quarter of 2013, due to increase number of service

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“Digital signage solutions started to take off as the new information delivery channel for our consumers.”

Digital Signage Solutions Take off

BREAKTHROUGHS IN NEW BUSINESS SECTORS

Darius Žekonis Managing Director of Hansab UAB

In 2013, Hansab UAB made important advances in new business sectors and product groups. Focus on more complex solutions and digital signage were both unnoticed by our customers. In 2013 sales revenue was 5.57 million euros, which compared to 2012 meant a decline in revenue of around 6% from 5.9 million euros in 2012. Some projects’ closing dates were delayed until the following year. Our business has become increasingly project based so we now expect to see the final results when we finish larger developments.

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While some of our projects were postponed, Hansab UAB encouragingly made important breakthroughs in new business sectors. Digital signage solutions started to take off as the new information delivery channel for our consumers. It is a cost-effective and efficient channel to reach more potential customers as well as to share actual information delivered in a digital format. For Radisson Blu Lithuania, we installed modern interactive information screens in the form of a digital signage system. The project was one of the most modern and biggest hotel panel systems for the Baltic region. Screens in the hotel’s conference and events centre, reception, restaurant and bars are now managed centrally, their content is updated just by clicking a few buttons, saving our customer a lot of time and money. This solution creates modernity and portrays an exclusive image – something which is of great added value to all the firms organising

their events in the Radisson Blu Hotel conference centre. We also assisted our client Forum Cinemas to successfully migrate to a digital signage solution in their movie theatres. Printed menus, posters, advertising and information boards are rapidly moving towards a purely digital format on screens and video walls. Forum Cinemas wanted to remotely control their snacks and drinks menus, movie posters and full high definition film broadcast announcements. Focus on Complex Retail Solutions During 2013 our increased focus on more complex solutions was not unnoticed by our customers in the retail sector. IKEA, the world’s largest furniture retail chain, opened their first store in the Baltic countries during autumn of 2013. Hansab’s offer was for one of the most modern tube transport solutions, as well as video surveillance systems, electronic customer flow management, people counting system and certified safes. The complexity

of the proposal and our experience in the retail sector was the winning combination that IKEA was looking for. Hansab UAB has also continued to cooperate with Aranga, the leading clothing retailer in the Baltic States. Hansab supported the opening of 24 stores in Lithuania, Latvia and Estonia installing complex security systems. Euro in 2015 Lithuania is planning to join the euro zone from 2015 and banks have already started the preparation process. We began a series of seminars to share our experience from the Latvian and Estonian transition to the euro. Lithuania’s adoption of the euro will undeniably be one of the most important projects for our company in 2014. The collection of the old currency and introduction of the new is a big challenge for the banking sector. Our company has the knowhow, understands the processes and is ready to help with the appropriate equipment, services and support.

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“During 2013 our increased focus on more complex solutions was not unnoticed by our customers in the public sector”

Awards In 2013 Hansab UAB participated in the contest a “Socially Responsible Company 2012” organised by the Lithuanian Ministry of Labour and Social Security. We are delighted to say that Hansab was awarded a certificate for our focus on the recruitment of young people.

Public Sector: Vilnius University Library RFID systems

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“Ellore delivered over 5400 card terminal runtime software licenses throughout the Baltics.”

Challenging Projects and Reinforcing Internal Resources Alar Alumaa Managing Director of Ellore OÜ

Ellore fulfilled its main objectives for 2013 in keeping the leading position in electronic payment solutions delivery and integration projects in the Baltics. The company’s personnel efforts and systematic quality improvements in processes helped us to fulfil our major strategic and financial goals for 2013 and we concluded the year with a net profit of 122 thousand euros increasing our turnover by 10%.

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Ellore was nominated by the Estonian Business newspaper Äripäev as 11th position in the Estonian IT companies top 100. The Gazelle award is given to companies that have achieved continuous growth in revenue or gross profit for the last four financial years, and have, in total, more than doubled the revenue or the gross profit in the period. The external success factors for the good results were the increasing demand for card payment solutions, the euro migration in Latvia, incoming requests from new international accounts and continuous strengthening of card payment security related rules. Terminals Market Terminals solution delivery has been one of the most important activities during the year. In total Ellore delivered over 5400 card terminal runtime software licenses throughout the Baltics. During the year we launched a new version of Terminals Finance application with several improvements fulfilling the needs of merchants,

including increased security features to comply with new PCI security rules and greater integration with the Remote Management Server. Due to demand from the banks we developed the MultiMerchant application, which enables access for multiple merchant accounts with different profiles within a single terminal. High quality hardware from the Ingenico side and the secure feature rich software application from Voicecom help us to keep and strengthen our leading position as card payment solutions provider in the Baltics. Card Payment Solution Competence Centre The increasing volume of our card terminal installed base needs more attention and care, increasing our responsibility to retain and develop card payment technology related knowhow and competence. A major part of the everyday activities of Hansab and Ellore is carried out by our in-house developed Terminal

Management Portal. Thanks to the established processes and attached resources, Ellore was capable of taking care of an increased amount of third level technical problems, pre- and aftersales consultation from Lithuania, Latvia and Estonia. The joint efforts of Ellore and the local Hansab company allowed us to perform the smooth migration of terminals to the euro currency in Latvia. In House Software Development Our major key process is an extension of in-house development capabilities to increase the share of software development in the company’s activities portfolio. The biggest projects were development of the new POS terminal remote management services, specific security add-ons for the card payment, mobile payment solution development for closed interior parking system and Hansab Group internal IT solutions development. As part of our internal resource and competence strengthening, Ellore signed an agreement with the Estonian

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IT College to support students during two semesters of their studies in 2013. The company also provided jobs for the academic practice to extend the students practical knowhow and help to start their career. Integrated Solutions Card payments are essential for retailers to operate, and cash register integrated solutions provide effectiveness and control over transactions done in a shop. The PosXML integration feature of our terminal software provides the future proof and operative way to have an integrated solution with attended or self-service sales solutions.

“The increasing volume of our card terminal installed base needs more attention and care, increasing our responsibility to retain and develop card payment technology related know-how and competence.�

Banking Sector 5400 card payment devices with software in the Baltics

the card payment solution for many new stores throughout the Baltics including the H&M clothing chain. Ellore, an official Ingenico partner for the Baltic countries, has provided the payment terminal solution for the NFC public pilot project in Estonia. The pilot project is managed by EMT, Estonia’s largest Baltic mobile operator, top Estonian banks and Estonian retailer Tallinna Kaubamaja. The pilot project will test a service that allows a mobile phone to be used as a regular bank card. The Ingenico countertop terminal ict220, which is widely used across the Baltics was selected as the card payment hardware for the pilot.

Ellore participated in several integrations providing expertise and consultations for our partners to achieve approvals from local certification bodies. In total our card payment terminals have been integrated into more than 50 different Software Solutions to add secure and feature rich card payment functionality. Ellore had been selected to deliver

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“2013 was the first year in the history of Baltic Operation Services OÜ that concluded with a small profit and growth in turnover of 49%.”

One of many positive changes also occurred in the 27% growth of returned bottles since 2012. The high season for BOS, May to August shows the highest number of returned bottles. In addition, revenue per reverse vending machine grew by 23%. Tarmo Koreinik Managing Director of Baltic Operation Services OÜ

The first profitable year 2013 was the first year in the history of Baltic Operation Services OÜ that concluded with a small profit and growth in turnover of 49%. Over the last two years, the company was restructured and the model of rendering services was reorganised 180 degrees, the successful implementation of which brought about the desired result. We have successfully reviewed the strategy of BOS and focused on the quality of our operations.

Better Quality Services We are focusing on providing a full service to vendors and thereby have control over all parts of the service chain. Our previous strategy was to outsource the day to day operations of station and service support. Today, the number of services that we buy in is close to minimal. Baltic Operation Services, the largest of the Group companies’ by the number of employees, now has a team of 65 people. We are able to provide a better quality service for everyday operations, and we optimise our costs of service support. We continuously look for and find ways to drop activities and obligations that do not create any added value. Finding the maximum application for our existing fixed assets has led to a greater increase in profit.

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Increase of IT Systems Accuracy The quality of our IT systems and the accurate set-up of machines ensures the targeted operation of reverse vending machines and increased customer loyalty with respect to the machines installed and serviced by us. IT developments that support the everyday work of employees and increase the functionality of handling devices continues to play an important role. Continuous systematic maintenance of devices and reverse vending machines ensures increased lifecycle for the devices in addition to guaranteeing their functioning, which enables the use of resources to expand the company and develop our activities. Today’s cooperation partners were joined by two new retail chains Grossi Kaubandus and Rakvere Aldar with whom we signed long-term cooperation agreements. A lot of effort was put into promoting our brand, and today the results are visible. Our primary means of

communication are: vehicles, the exterior façades of stations, work clothes designed in the colours of the company. Revised marketing strategy now focuses on brand consistency and increased visibility across all channels of communication. We want our customers to always recognise the MOYA return points and be surrounded by a positive environment. In the coming years we aim to increase the quality of our services and develop our systems in order to become the vendor’s first choice when choosing a partner for organising return of packages.

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2500

2000

1500

1000

500 january february march april may june july august september october november december

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Average bottles returned (in thousands)

2013 2012

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contacts

Hansab AS

HANSAB AS ELLORE OÜ

BALTIC OPERATION SERVICES (BOS) OÜ

TALLINN Keevise 11 11415 Ph. +372 605 9800 hansab@hansab.ee

TARTU Tähe 127F 50113 Ph. +372 736 6444 tartu@hansab.ee

JÕHVI Jaama 14 41533 Ph. +372 337 0188 johvi@hansab.ee

PÄRNU Jalaka 4 80019 Ph. +372 443 1440 parnu@hansab.ee

KURESSAARE Rohu 5 93812 Ph. +372 666 1503 saaremaa@hansab.ee

KÄRDLA Ph +372 591 90893 hiiumaa@hansab.ee

RĪGA Plieņciema st.16 LV-2167 Ph. +371 6732 5550 hansab@hansab.lv

LIEPĀJA Ludviķa st. 7 LV-3401 Ph. +371 6342 3455 hansab@hansab.lv

REZĒKNE Atrīvošanas av. 121b LV-4601 Ph. +371 2915 0787 hansab@hansab.lv

DAUGAVPILS Ph. +371 2923 0352 hansab@hansab.lv

VALMIERA Ph. +371 2655 6999 hansab@hansab.lv

Baltic Operation Services OÜ

Ellore OÜ

TALLINN Keevise 11 11145 Ph. +372 683 6440 info@moya.ee

TALLINN Keevise 11 11145 Ph. +372 6059813 info@ellore.ee

Hansab SIA

HANSAB SIA

Hansab UAB HANSAB UAB

VILNIUS Savanorių Ave. 180a LT-03154 Ph. +370 5205 8800 info@hansab.lt

KAUNAS R. Kalantos St. 161 LT-52315 Ph. +370 3799 9252 kaunas@hansab.lt

ŠIAULIAI Žemaitės St. 43 LT-76339 Ph. +370 4120 1027 siauliai@hansab.lt

PANEVĖŽYS Pušaloto St. 38 LT-35135 Ph. +370 6151 4345 siauliai@hansab.lt

KLAIPĖDA Pramonės St. 8 LT-94102 Ph. +370 4624 6635 klaipeda@hansab.lt

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Hansab Group Annual Report 2013 WWW.HANSAB.COM

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Hansab Annual Report 2013  

Hansab annual report 2013 featuring financial information of the Group companies and overview of the year.

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