Modus Group 2018 Business Overview

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CONTENTS MODUS GROUP: DRIVING THE FUTURE ............................... 4 – 5 FINANCIAL PERFORMANCE ............................................................ 6 – 8 OUR PEOPLE ........................................................................................................... 9 CORPORATE GOVERNANCE ........................................................ 10 – 13 2018 HIGHLIGHTS ................................................................................... 14 – 17 MODUS GROUP FOOTPRINT ON EARTH ......................... 18 – 19


Launching e-kick scooters in Vilnius, Warsaw and Madrid

Sale of

Latvia and Estonia

2019

in Lithuania

Solar projects in Poland

Poland

Merger of the parking operator UniPark and City Parking Group B2C and B2B Solar-as-a-service in Europe

Building biogas power plants in Belarus

Successfully listed bonds on the Nasdaq Baltic First North alternative market for the second time

2018

Lithuania

2017 Starting partnership with EBRD

Power trading company operating in Nordic and Baltic region

Solar power plants projects in Poland and Spain

2016 Successfully listed bonds on the Nasdaq Baltic First North alternative market

2015 Implementation of first biogas power plant project in Lithuania

Lithuania and Latvia

2013

Vilnius

2012 Lithuania

2011

First solar power plant in Lithuania

2008

Belarus

2003 Lithuania

1993

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MODUS GROUP: DRIVING THE FUTURE

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to gain international financial institutions’ recognition and trust.

Liudas Liutkevičius Chairman of the Management Board

Modus Group story began in 1993 in Lithuania. During more than 26 years, the company has grown to a successful international business currently operating in nine countries: the Baltics, Netherlands, Poland, Ukraine, Belarus, Italy and Spain. We mainly focus on three areas of activity: renewable energy (Modus Energy, Green Genius), mobility services (CityBee) and automotive retail and distribution business representing a number of worldrenowned car brands. 2018 marked a period of solid and sustainable growth for Modus Group. Our revenue increased by 26% and reached EUR 342.94 million, while EBITDA grew by 30%, amounting to EUR 28.54 million. In 2018, Modus Group company investments in all markets increased fourfold to EUR 64.73 million, most of which were allocated to energy and mobility projects. Areas of investments reflect the long-term vision and priorities of Modus Group — green energy and innovative mobility services. Revenue of our energy companies increased by almost 115% last year. In March 2018, Modus Energy partnered with the European Bank for Reconstruction and Development (EBRD) to build five biogas plants in Belarus, adding 5 MW of green power and heat to our green generation portfolio. Partnership with EBRD was also a demonstration that Modus Group has already reached the maturity required

Mobility services business showed solid results as well, with revenue growth by almost 99%. This growth was mainly fuelled by the CityBee Lithuania performance and entry into the first foreign market — Poland. CityBee is continuing to grow at a fast pace. During the first half of 2019, the company began operations in three new markets — Latvia, Estonia and Spain. Revenue of our automotive retail and distribution business last year grew by 19%. We sold a record number of cars — totalling more than 13,500 units sold, increasing sales by 48% compared to 2017. In February 2018, Modus Group opened the first and only Bentley representative showroom in Vilnius and acquired Jeep importer rights in the Baltics. The merger of the parking companies UniPark and City Parking Group in 2018 also had a positive impact on the company’s EBITDA. Having completed this deal, now Modus Group is a co-owner of the biggest parking company in the Baltics and Poland (Parkdema). Last year, Modus Group successfully listed bonds on the Nasdaq Baltic First North alternative market. The group has attracted a significant amount of attention from external investors, demonstrating that the business community favourably views Modus Group’s financial outlook. Our employees also expressed their trust in the group by investing their personal funds. This was the second emission of bonds in the company’s history — both of them successful. These are just a few Modus Group highlights from 2018 — there were a number of others. In this annual business overview, we look in more detail at our key results and milestones from the last year.

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FINANCIAL PERFORMANCE In 2018, Modus Group’s revenue and EBITDA rose by 26% and 30% respectively, in comparison with 2017. Revenue of the Group reached EUR 342.94 million, the company earned EUR 28.54 million before interest, taxes, depreciation and amortization (EBITDA). Fastest revenue growth in 2018 has been observed in the Group’s activities in the fields of energy and mobility. Revenue of energy companies belonging to the Group increased by almost 115%, while businesses related to mobility services increased revenue by almost 99%.

TOTAL REVENUE mEUR

342.94 273.03

2017

Total growth: 26% 2018

TOTAL EBITDA mEUR

28.54 22.03

2017

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2018

Total growth: 30%


REVENUE BY SUBGROUP mEUR

19% 287.52

2017

241.79

2018

115%

99% 10.14

20.15

Mobility

31 3.11

Energy

-69%

2%

14.44 Automotive

3.17

Real estate

3.55

1.10

Transactions and other*

EBITDA BY SUBGROUP mEUR

87%

2017 2018

8.79

18%

27%

8.29

7.94 7.04

6.26 4.71

35% 1.58

2.44

2.13

Mobility

-43% 1.39

Energy

Automotive

Real estate

Transactions and other*

*Common practice of holding company operations is sales, mergers & acquisitions of entities and assets. Results of these operations are included in the “Transaction and other� subgroup. It was mainly driven by sales of two real estate buildings in Vilnius in 2017 and parking business UniPark merger with City Parking Group in 2018.

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FINANCIAL PERFORMANCE Last year, Modus Group companies’ investments in various fields of activity in Lithuania and markets abroad increased fourfold and amounted to EUR 64.73 million. The biggest share of the investments – EUR 50.34 million – was directed to energy projects, while EUR 10.1 million were assigned to the development of businesses related to mobility services. A large part of the investment was directed at business development in markets abroad.

INVESTMENTS mEUR

2018

Total growth: 408%

Total: 64.73 mEUR Other 3.63

Automotive 0.66

Mobility 10.1

Energy 50.34

2017 Total: 12.74 mEUR Mobility 0.92 Other 5.15

Energy 0.53

Automotive 6.14

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OUR PEOPLE Strong growth and implementation of ambitious plans is only possible because of united and dedicated Modus Group team. At the end of May 2019, around 700 people worked in our companies in the Baltics, Belarus, Poland, Spain, Italy, Netherlands and Ukraine. While the majority of the team is located in our home market Lithuania, the number of colleagues in other markets is continuing to grow. These are some of the facts about our team:

Lithuania 61%

Other markets 39%

0.3%

Automotive 50%

13%

61% DENMARK

Energy 22%

21%

0.3%

IRELAND

BELG

IUM

3% Mobility 14%

Real estate 6%

SWITZERLAND

0.2% 0.6% ALBANIA

GREECE

0.9%

Holding activities 8%

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CORPORATE GOVERNANCE Effective and transparent corporate governance is seen as one of the key elements for successful operations and strong growth of the company. Therefore, Modus Group has established corporate governance structure that meets the needs of business, its stakeholders and complies with relevant laws and regulations.

MANAGEMENT BOARD The Management Board of the company is a collegial management body consisting of 5 members responsible for different business areas in which the company operates, including mobility, renewable energy, automotive business and real estate. The Management Board is responsible for group’s business development, growth and expansion. It steers strategic vision of the group, manages investments, appoints CEOs of group’s companies, approves business plans and holds CEOs accountable for execution of agreed goals. Currently, the Management Board is comprised of the following members (from right to left):

Liudas Liutkevičius Chairman of the Board Ainė Martinkėnaitė-Martyniuk Real estate Ruslanas Sklepovičius Renewable energy Giedrius Audickas Automotive Oleg Martyniuk Mobility

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CORPORATE GOVERNANCE SUPERVISORY BOARD The Supervisory Board of the company is a collegial supervisory body which consists of 7 members, 5 of which are independent. The Supervisory Board is comprised of experts with diverse experience in fields like risk management, strategy development, finance and financial markets, digital marketing, AI, high-tech, leadership, project management. The main function of the Supervisory Board is supervising and advising the Management Board on strategic direction of the group and overseeing performance of the company for the benefit of its stakeholders. The Supervisory Board and the Management Board of the company meets 3 times a year. Currently, the Supervisory Board is comprised of the following members:

Dr. Kęstutis Bagdonavičius Chairman of the Board, Independent Member

Kęstutis Martinkėnas Member

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Jolanta Martinkėnienė Member


Ingrida Elijošiūtė Independent Member

Vytautas Paukštys Independent Member

Simon Rozas Independent Member

Saul Umbrasas Independent Member

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2018 HIGHLIGHTS GREEN ENERGY ON THE RISE Modus Group has been building renewable energy competence since 2006. Today, we have invested in energy projects in Lithuania, Belarus, Poland, Italy, Ukraine and Spain. There are three business brands under our energy umbrella. Modus Energy brand is a pioneer and leader in biogas field in Lithuania and Belarus, with 15 MW of green power and heat. Biogas power plants not only produce clean energy but also absorb greenhouse gasses, making biogas the greenest energy source. This technology is an important part of the circular economy because it biodegrades waste, extracts harmful gas, converts gas to energy and returns a liquid, odourless fertiliser. Green Genius represents solar power business supplying large-scale solar energy to the grid as well as solar-as-a-service for the business customers (B2B) and households (B2C). The Green Genius B2C line is among the first in Europe to successfully launch solar-as-a-service for private homes, aiming to make green energy affordable to everybody. This service breaks down the barriers so that anyone anywhere can quickly and easily switch to green energy to save on their power bills with no investment required. Axton Commodities was established in October 2018 to expand one of our strategic areas in renewable energy. The activities of the company include wholesale of power, guarantees of origin and European emission allowances. The company is also active in the Power Purchase Agreement (PPA) market, providing planning and balancing services to renewable energy producers and deal structuring to industrial energy consumers.

Results we are proud of: PARTNERSHIP WITH EBRD

In March 2018, Modus Energy partnered with the European Bank for Reconstruction and Development (EBRD) to build five biogas plants in Belarus, adding 5 MW of green power and heat to our green generation portfolio. These investments amounted to EUR 22 million. By completing this project in Belarus, Modus Energy biogas generation portfolio reached 15 MW.

EUR 45M INVESTED TO SOLAR IN POLAND LARGE-SCALE SOLAR IN 6 COUNTRIES SOLAR-AS-A-SERVICE PRODUCT LAUNCHED

Green Genius invested EUR 45 million to build a new ‘forest’ of solar power plants in Poland. Currently, there are already more than 50 new solar power plants constructed in the neighboring country. Our goal is to generate more than a tenth of the entire solar energy capacity of the country.

We have started development of large-scale solar projects in two new markets — Italy and Ukraine. Currently, Green Genius largescale solar projects are being developed in Spain, Italy, Poland, Lithuania, Ukraine and Belarus. Green Genius has launched a new solar-as-a-service product for businesses and private homeowners. While Lithuanians were the first to have the opportunity of choosing this innovation, we are already offering these services in Italy.

‘Our vision is to bring green energy to everyone — both by organizing big infrastructure projects and creating innovative solutions for households. The new service created by Green Genius is a great example, showing that in today’s world, everyone can produce clean electricity and save money. Installing solar panels has become as simple as installing an internet connection and this eliminates all reasons for not going solar,’ – says Ruslanas Sklepovičius.

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2018 HIGHLIGHTS MOBILITY OF THE FUTURE CityBee is one of Europe’s leading personal car, light commercial vehicle, bike and e-kick scootersharing services. In June 2019, it is already operating in Lithuania, Poland, Spain, Latvia and Estonia. While people mostly use this service for short trips, CityBee is one of the first car-sharing companies that has also become a notable player in the long-distance commute market, offering users oneway travel between multiple cities.

Results we are proud of: VILNIUS: CARSHARING CAPITAL OF EUROPE CARGO CAR SHARING LAUNCHED IN POLAND

2018 was the first profitable year for the company. Last year, CityBee’s capacity grew twofold, exceeding 1,000 vehicles (today more than 1,300) and making Vilnius the car-sharing capital of Europe, with the most shared cars per person. 3,287 trips were made each day, amounting to more than 1.2 million trips in a year. In 2018, our CityBee community grew to 180,000 users (today more than 330,000). The total distance they travelled last year can be equated to 600 times around the earth.

In October 2018, CityBee marked an important date by entering its first foreign market — cargo car sharing was launched in Poland’s largest cities. While the company’s first cars hit the roads in Warsaw, Gdansk, Krakow, Wroclaw and Poznan, by the end of 2018, CityBee was operating in 11 Polish cities, with 150 cargo cars. Poland was only the beginning: during the first half of 2019, CityBee expanded its operations by entering three new markets — Latvia, Estonia and Spain.

NEW LONGTERM CAR RENTAL OFFERED

CityBee also innovated by providing long-term car rentals for those who don’t feel like sharing. The company now offers the opportunity to use any car in CityBee’s park for an entire week, month or even year. The company provides customers mobility solutions. without the hassle of owning and servicing a car and without any unplanned fees added to your monthly bill. With this new service, we can provide mobility not only to residents in densely populated city areas but also to those who live in suburbs and other towns.

‘Citybee is a unique player in the shared mobility ecosystem that has transformed Vilnius into the car sharing capital of Europe. Our service offers a hassle-free, no commitment required alternative to car owning and the need for such freedom and flexibility is increasing every day. Today, our highly loyal customer base can choose from personal cars, cargo cars, bikes and e-kick scooters. In the future, we are planning to add other mobility means for even better coverage of withincity and intercity rides,’ – says Oleg Martyniuk.

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2018 HIGHLIGHTS TIME TESTED QUALITY: AUTOMOTIVE SOLUTIONS In 1993, Modus Group was one of the first to initiate an automotive business in Lithuania. Today, the international group of companies represents world-renowned car brands — Porsche, Bentley, Fiat, Fiat Professional, Jeep, Maserati, Alfa Romeo, Citroën, Suzuki, Isuzu, Seat, Hyundai, SsangYong, MINI and BMW — offering an impressive range of cars in Lithuania, Latvia, Estonia and Belarus.

Results we are proud of: OFFICIAL IMPORTER OF JEEP

Modus Group has become the official importer of Jeep cars manufactured by Fiat Chrysler Automobiles (FCA) in all three Baltic States. We have been working with the Jeep brand since 2011 as the official dealer of Jeep SUVs in Lithuania and Latvia. Jeep is one of five brands manufactured by Fiat Chrysler Automobiles that we represent.

FIRST BENTLEY SHOWROOM IN LITHUANIA RECORD NUMBER OF CARS SOLD

In February 2018, Modus Group opened the first and only Bentley representative showroom in Vilnius, Lithuania.

In 2018, we sold a record number of cars — totalling more than 13,500 units sold and increasing sales by 48% compared to 2017. Automotive business revenue grew by 19% and amounted to almost EUR 300 million.

‘In the last years, two car brands — Bentley and Jeep — expressed their trust by choosing us as the best partner for their brands’ growth in the Baltic market. I am proud of my team, whose hard work and contribution made this partnership possible,’ – says Giedrius Audickas.

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2018 HIGHLIGHTS DESIGNED WITH A GREENER FUTURE IN MIND: REAL ESTATE ibis Styles Vilnius is an eco-friendly hotel with its own solar plant, designed with guests’ well-being in mind. Opened in 2015, it offers not only rooms to stay, but also three multifunctional conference halls intended for business events. The modern, stylish and comfortable ibis Styles Vilnius is the first choice for those who care about a greener future.

Results we are proud of: STABLE GROWTH OF RESULTS

During the previous year, ibis Styles Vilnius had 24,415 reservations, generating 9% annual revenue growth per available room (RevPAR). This is an outstanding achievement because the supply of rooms in Vilnius has increased by 15% due to new hotels being opened. While accommodating a large number of guests, we still managed to provide superb customer care, prioritize ecology and educate clients about their footprint on the earth.

SUPPORTING ENVIRONMENTAL INITIATIVES EXTRA MILE FOR OUR CLIENTS

In 2018, ibis Styles Vilnius decided to begin an initiative that gave its guests the option to use their towels for more than one day. The money saved was dedicated to reforestation — 166 trees were planted in the Transylvanian region of Sibiu in Romania. Noting the importance of forest preservation, this year the hotel also used 10% less paper.

The hotel’s rating on Booking.com during last year was 9.0 (and 9.2 for staff) because ibis Styles always goes that extra mile for the well-being of our clients. Our team always meet guests with small gifts and are ready to solve difficult situations — whether that be driving a guest to a meeting if his or her taxi is late, or packing and bringing the guests’ luggage to the hospital if they become ill — all for the benefit of our clients.

‘We believe that commitment to superb customer care is crucial for a service business. CityBee, Porsche or ibis Styles — we want to wow the customer — this is the only way to build a truly loyal customer base. And once our team has our customer at the front of their considerations, we can increase market share in the face of growing competition, as seen in the hotel business today,’ – says Ainė Martinkėnaitė-Martyniuk.

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MODUS GROUP FOOTPRINT ON EARTH 18


USING ONLY THE GREEN ENERGY WE GENERATED, A CITY WITH 200K INHABITANTS COULD LIVE FOR A WHOLE YEAR. DURING 2018 THERE WERE 10K LESS CARS IN THE STREETS. 234K TONS OF CO2 ANNUAL SAVINGS. Growing business and creating value for our stakeholders in a sustainable manner is at the core of Modus Group strategy. By investing in future businesses like renewable energy or next-generation mobility services we are not only ensuring healthy business growth but also contributing to the cleaner environment and well-being of society. Therefore, creating shared value is an integral part of both – our daily operations as well as strategic long-term decisions. Acting in a responsible and sustainable way is a part of our culture and identity on every level of organization. We understand that there’s still a long way to go, but it is also important to appreciate the results reached so far. Last year, our biogas power plants generated 63,7 GWh of green energy, meanwhile solar power plants — 88 GWh. Such an amount of green energy could power an entire town of nearly 200,000 inhabitants for a year and equals to 176,000 tons of CO2 saved. That’s approximately the amount that 2.9 million 10-year-old trees could absorb in a year. But there’s more: our biogas power plants also helped to reduce odour emitted by landfills and animal farms. By processing animal and other organic waste, not only did we generated renewable power but also converted waste to odourless liquid

fertilizer. Investing into biogas plants provides us with the opportunity to improve the quality of life for the communities nearby. Our focus on green energy has also allowed us to make renewable energy more affordable for everyone. In 2018, by supplying and producing heat from renewable energy sources, we reduced the price of heat for the inhabitants of Vievis by 10-20%. Our customers in Lithuania and Italy can have instant savings on energy bills without the need to invest into their own solar panels – this was made possible by the Green Genius solar-as-a-service product offering. Thanks to our mobility solutions, during 2018 there were 10,000 less cars in the streets and parking lots due to the fact that one shared car replaces 12 privately owned ones. While reducing urban congestion, these mobility solutions also contributed to greenhouse gas savings. We give priority to CO2 efficient hybrid or electric cars in CityBee fleet. Hence, due to decreased fleet emissions and replaced cars, the environment was protected from 58,000 tons of CO2 — equivalent to the CO2 that 960,000 10-year-old trees could absorb. These numbers are a promising start, and we are committed to do more.

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WE DRIVE EVOLUTION 2019 www.modus.group


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