INVL Baltic Farmland

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Raimondas Rajeckas, Person authorised to conduct accounting of the Company signs the Consolidated and the Company‘s financial statements for the year 2021 and Confirmation of responsible persons with a qualified electronic signature. CONFIRMATION OF RESPONSIBLE PERSONS 28 February 2022 Following on Information Disclosure Rules of the Bank of Lithuania and the Law on Securities (article 12) of the Republic of Lithuania, management of INVL Baltic Farmland, AB hereby confirms that, to the best our knowledge, the attached Consolidated and Company‘s Financial Statements for 2021 are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, give true and fair view of the assets, liabilities, financial position and profit or loss of INVL Baltic Farmland and Consolidated Group. Presented Consolidated Annual Report for 2021 includes a fair review of the development and performance of the business and position of the company and the consolidated group in relation to the description of the main risks and contingencies faced thereby. ENCLOSURE: 1. Consolidated and Company‘s Financial Statements for 2021. 2. Consolidated Annual Report for 2021. Director Eglė Surplienė (The document is signed with a qualified electronic signature) Person authorised to conduct accounting Raimondas Rajeckas (The document is signed with a qualified electronic signature) 3 Translation note: This version of the financial statements has been prepared in Lithuanian and English languages. In all matters of interpretation of information, views or opinions, the Lithuanian language version of our report takes precedence over the English language version. CONTENTS CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS: DETAILS OF THE COMPANY ............................................................................................................................... 4 CONSOLIDATED AND COMPANY’S STATEMENTS OF COMPREHENSIVE INCOME .......................... 5 CONSOLIDATED AND COMPANY’S STATEMENTS OF FINANCIAL POSITION..................................... 6 CONSOLIDATED AND COMPANY’S STATEMENTS OF CHANGES IN EQUITY ...................................... 7 CONSOLIDATED AND COMPANY’S STATEMENTS OF CASH FLOWS ..................................................... 9 NOTES TO THE FINANCIAL STATEMENTS ................................................................................................... 10 1 GENERAL INFORMATION ............................................................................................................................... 10 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ....................................................................................... 11 3 FINANCIAL RISK MANAGEMENT .................................................................................................................... 19 3.1. Financial risk factors ........................................................................................................................................... 19 3.2. Capital management ............................................................................................................................................ 21 4 FAIR VALUE ESTIMATION .............................................................................................................................. 22 5 SUBSIDIARIES ................................................................................................................................................ 23 6 SEGMENT INFORMATION AND OPERATING LEASE COMMITMENTS .................................................................. 24 7 AGREEMENT ON THE ADMINISTRATION OF LAND PLOTS ................................................................................ 26 8 INCOME TAX .................................................................................................................................................. 26 9 EARNINGS PER SHARE ................................................................................................................................... 28 10 INVESTMENT PROPERTIES .............................................................................................................................. 28 11 FINANCIAL INSTRUMENTS BY CATEGORY ...................................................................................................... 29 12 LOANS GRANTED TO SUBSIDIARIES AT AMORTISED COST .............................................................................. 30 13 TRADE AND OTHER RECEIVABLES ................................................................................................................. 31 14 SHARE CAPITAL, ACQUISITION OF OWN SHARES AND RESERVES .................................................................... 32 15 DIVIDENDS .................................................................................................................................................... 33 16 RELATED PARTY TRANSACTIONS ................................................................................................................... 33 17 IMPACT OF COVID-19 .................................................................................................................................. 34 CONSOLIDATED ANNUAL REPORT ................................................................................................................ 35 INDEPENDENT AUDITOR’S REPORT ............................................................................................................ 101 AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 4 DETAILS OF THE COMPANY Board of Directors Mr. Alvydas Banys (chairman of the Board) Ms. Indrė Mišeikytė Mr. Darius Šulnis Management Ms. Eglė Surplienė (director) Address of registered office and company code Gynėjų str. 14, Vilnius, Lithuania Company code 303299781 Banks Luminor Bank AS Lithuanian branch AB Šiaulių Bankas Auditor UAB PricewaterhouseCoopers J. Jasinskio str. 16B, Vilnius, Lithuania The financial statements were approved and signed by the Management on 28 February 2022. The document is signed with a qualified electronic signature The document is signed with a qualified electronic signature Ms. Eglė Surplienė Mr. Raimondas Rajeckas Director Authorized person according to the agreement to conduct accounting AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 5 Consolidated and Company’s statements of comprehensive income Group Company Notes 2021 2020 2021 2020 Revenue 6 665 649 - - Interest income - - 163 177 Other income 24 16 - - Share of net profit of subsidiaries accounted for using the equity method 5 - - 1,313 776 Net gain from fair value adjustments on investment property 10 1,256 683 - - Land plots administration fees 7 (175) (206) - - Legal, professional and securities administration fees (72) (56) (35) (33) (Provision for) reversal of impairment of trade receivables 13 1 (1) - - Direct property operating expenses (23) (22) - - Employee benefits expense (10) (10) (2) (2) Other expenses (11) (4) (11) (2) Operating profit 1,655 1,049 1,428 916 Finance costs - - - - Profit before income tax 1,655 1,049 1,428 916 Income tax expense 8 (244) (154) (17) (21) NET PROFIT FOR THE YEAR 1,411 895 1,411 895 Other comprehensive income for the year, net of tax - - - - TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1,411 895 1,411 895 Attributable to: Equity holders of the parent 1,411 895 1,411 895 Basic and diluted earnings per share (in EUR) 9 0.44 0.28 AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 6 Consolidated and Company’s statements of financial position Group Company Notes As at 31 December 2021 As at 31 December 2020 As at 31 December 2021 As at 31 December 2020 ASSETS Non-current assets Investment properties 10 16,620 15,364 - - Investments into subsidiaries accounted for using the equity method 5 - - 11,436 10,123 Loans granted to subsidiaries at amortised cost 12 - - 3,529 3,920 Total non-current assets 16,620 15,364 14,965 14,043 Current assets Trade and other receivables 13 170 198 19 10 Loans granted to subsidiaries at amortised cost (accrued interest) 12 - - 18 10 Prepayments and deferred charges 1 2 1 2 Cash and cash equivalents 3.1 144 302 27 31 Total current assets 315 502 65 53 TOTAL ASSETS 16,935 15,866 15,030 14,096 EQUITY AND LIABILITIES Equity Equity attributable to equity holders of the parent Share capital 14 955 955 955 955 Own shares 14 (203) (203) (203) (203) Share premium 1,387 1,387 1,387 1,387 Reserves 14 3,237 3,237 3,211 3,211 Retained earnings 9,566 8,639 9,592 8,665 Total equity 14,942 14,015 14,942 14,015 Liabilities Non-current liabilities Deferred income tax liability 8 1,798 1,608 - - Total non-current liabilities 1,798 1,608 - - Current liabilities Trade payables 67 125 5 1 Income tax payable 54 57 17 21 Advances received 8 - - - Other current liabilities 66 61 66 59 Total current liabilities 195 243 88 81 Total liabilities 1,993 1,851 88 81 TOTAL EQUITY AND LIABILITIES 16,935 15,866 15,030 14,096 AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 7 Consolidated and Company’s statements of changes in equity Reserves Group Notes Share capital Own shares Share premium Legal reserve Reserve for purchase of own shares Retained earnings Total Balance as at 31 December 2019 955 (203) 1,387 158 3,079 8,067 13,443 Net profit for the year - - - - - 895 895 Total comprehensive income for the year - - - - - 895 895 Dividends approved 15 - - - - - (323) (323) Total transactions with owners of the Company, recognised directly in equity - - - - - (323) (323) Balance as at 31 December 2020 955 (203) 1,387 158 3,079 8,639 14,015 Net profit for the year - - - - - 1,411 1,411 Total comprehensive income for the year - - - - - 1,411 1,411 Dividends approved 15 - - - - - (484) (484) Total transactions with owners of the Company, recognised directly in equity - - - - - (484) (484) Balance as at 31 December 2021 955 (203) 1,387 158 3,079 9,566 14,942 AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 8 Consolidated and Company’s statements of changes in equity (cont’d) Reserves Company Notes Share capital Own shares Share premium Legal reserve Reserve for purchase of own shares Retained earnings Total Balance as at 31 December 2019 955 (203) 1,387 132 3,079 8,093 13,443 Net profit for the year - - - - - 895 895 Total comprehensive income for the year - - - - - 895 895 Dividends approved 15 - - - - - (323) (323) Total transactions with owners of the Company, recognised directly in equity - - - - - (323) (323) Balance as at 31 December 2020 955 (203) 1,387 132 3,079 8,665 14,015 Net profit for the year - - - - - 1,411 1,411 Total comprehensive income for the year - - - - - 1,411 1,411 Dividends approved 15 - - - - - (484) (484) Total transactions with owners of the Company, recognised directly in equity - - - - - (484) (484) Balance as at 31 December 2021 955 (203) 1,387 132 3,079 9,592 14,942 AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 9 Consolidated and Company’s statements of cash flows Group Company Notes 2021 2020 2021 2020 Cash flows from (to) operating activities Net profit for the year 1,411 895 1,411 895 Adjustments for non-cash items and non-operating activities: Net gains from fair value adjustments on investment property 10 (1,256) (683) - - Share of net profit of subsidiaries accounted for using the equity method 5 - - (1,313) (776) Interest income - - (163) (177) Deferred taxes 8 190 97 - - Current income tax expenses 8 54 57 17 21 Allowances 13 (1) 1 - - Changes in working capital: Decrease (increase) in trade and other receivables 29 103 (12) 4 Decrease (increase) in other current assets 1 - 1 - (Decrease) increase in trade payables (66) 68 (4) (7) (Decrease) increase in other current liabilities 13 10 7 9 Cash flows from (to) operating activities 375 548 (56) (31) Income tax paid (57) (81) (21) (22) Net cash flows from (to) operating activities 318 467 (77) (53) Cash flows from (to) investing activities Acquisition of investment properties - - - - Proceeds from sale of investment properties 10 - 38 - - Loans granted - - (50) (38) Repayment of granted loans 12 - - 464 268 Interest received 12 - - 135 153 Net cash flows from (to) investing activities - 38 549 383 Cash flows from (to) financing activities Cash flows related to Group owners Dividends paid to equity holders of the parent 15 (476) (316) (476) (316) Net cash flows from (to) financing activities (476) (316) (476) (316) Net increase (decrease) in cash and cash equivalents (158) 189 (4) 14 Cash and cash equivalents at the beginning of the period 302 113 31 17 Cash and cash equivalents at the end of the period 144 302 27 31 AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 10 Notes to the financial statements 1 General information AB INVL Baltic Farmland (hereinafter the Company) is a joint stock company registered in the Republic of Lithuania. It was established on 29 April 2014, following the split-off of 14.45% assets, equity and liabilities from AB Invalda INVL (company code 121304349). Entities, which business is investment into agricultural land and its rent, were transferred to the Company (hereinafter split-off). The Group consists of the Company and its directly owned subsidiaries (hereinafter the Group, Note 5). The address of the office is Gynėjų str. 14, Vilnius, Lithuania. The Company manages shares of entities investing into agricultural land and provides finance. Now the Company has 100% shares in 18 companies owning approximately 3 thousand hectares of agricultural land in Lithuania (detailed list of subsidiaries is presented in Note 5), that is rented to farmers and agricultural companies. The Company focuses on growth of quality of owned land and environmental sustainability. The Group operates in one segment – agricultural land segment. Investments into agricultural land are classified as long term and are recommended for investors who are satisfied with the return on rent and possible income from increase of agricultural land prices. Since prices of agricultural products are determined in the world markets, this investment allows participating in the world food supply chain. As at 31 December 2021 and 2020 the shareholders of the Company were: 2021 2020 Number of shares held Percentage Number of shares held Percentage UAB LJB Investments (controlling shareholder Mr. Alvydas Banys) 977,751 29.70 977,751 29.70 Mrs. Irena Ona Mišeikienė 931,831 28.31 931,831 28.31 UAB Lucrum Investicija (sole shareholder Mr. Darius Šulnis) 469,628 14.27 469,628 14.27 Mr. Alvydas Banys 252,875 7.68 252,875 7.68 Ms. Ilona Šulnienė 185,000 5.62 185,000 5.62 Ms. Greta Mišeikytė 65,758 2.00 65,758 2.00 Ms. Indrė Mišeikytė 64,450 1.96 64,450 1.96 The Company (own shares) 63,039 1.92 63,039 1.92 Other minor shareholders 281,217 8.54 281,217 8.54 Total 3,291,549 100.00 3,291,549 100.00 All the shares of the Company are ordinary shares with the par value of EUR 0.29, and were fully paid as at 31 December 2021 and 2020. Subsidiaries did not hold any shares of the Company as at 31 December 2021 and 2020. The Company’s shares are traded on the Baltic Secondary List of NASDAQ Vilnius from 4 June 2014. As at 31 December 2021 the number of employees of the Group and the Company was 2 and 1, respectively. As at 31 December 2020 the number of employees of the Group and the Company was 2 and 1, respectively. According to the Law on Companies of Republic of Lithuania, the annual financial statements prepared by the Management are authorised by the General Shareholders’ meeting. The shareholders hold the power not to approve the annual financial statements and the right to request new financial statements to be prepared. AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 11 2 Summary of significant accounting policies The principal accounting policies applied in preparing the Group’s and the Company’s financial statements for the year ended 31 December 2021 are as follows: 2.1. Basis of preparation Statement of compliance The financial statements of the Company and the consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (hereinafter the EU). These financial statements have been prepared on a historical cost basis, except for investment properties that have been measured at fair value. The financial statements are presented in thousands of euro (EUR) and all values are rounded to the nearest thousand except when otherwise indicated. From 1 January 2015 the euro became local currency of the Republic of Lithuania. Adoption of new and/or changed IFRSs and IFRIC interpretations The Group/Company has adopted the new and amended IFRS and IFRIC interpretations as of 1 January 2021: − Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest rate benchmark (IBOR) reform – phase 2 (effective for annual periods beginning on or after 1 January 2021); − Amendment to IFRS 4 Insurance Contracts – deferral of IFRS 9 (effective for annual periods beginning on or after 1 January 2021); − Amendments to IFRS 16 Covid-19-Related Rent Concessions – (effective for annual periods beginning on or after 1 January 2021). All amendments adopted as of 1 January 2021 had no impact on the Group’s and Company’s financial statements for the year ended 31 December 2021. Standards adopted by the EU but not yet effective and have not been early adopted Other amendments to existing standards and new standards, which are adopted by the EU, but not yet effective, are not relevant to the Group and the Company. Standards not yet adopted by the EU The Group/the Company is currently assessing the impact of the amendments, described below and not yet adopted by the EU, on its financial statements: Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies (effective for annual periods beginning on or after 1 January 2023 once adopted by the EU). IAS 1 was amended to require companies to disclose their material accounting policy information rather than their significant accounting policies. The amendment provided the definition of material accounting policy information. The amendment also clarified that accounting policy information is expected to be material if, without it, the users of the financial statements would be unable to understand other material information in the financial statements. The amendment provided illustrative examples of accounting policy information that is likely to be considered material to the entity’s financial statements. Further, the amendment to IAS 1 clarified that immaterial accounting policy information need not be disclosed. However, if it is disclosed, it should not obscure material accounting policy information. To support this amendment, IFRS Practice Statement 2, ‘Making Materiality Judgements’ was also amended to provide guidance on how to apply the concept of materiality to accounting policy disclosures. Amendments to IAS 8: Definition of Accounting Estimates (effective for annual periods beginning on or after 1 January 2023 once adopted by the EU). The amendments to IAS 8 clarified how companies should distinguish changes in accounting policies from changes in accounting estimates. Other amendments to existing standards and new standards, which are not yet adopted by the EU, are not relevant to the Group and the Company. AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 12 2 Summary of significant accounting policies (cont’d) 2.2. Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries. The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. Subsidiaries are all entities (including structured entities) over which the group has control. The Group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. All intra-group balances, transactions, income and expenses, unrealised gains and losses and dividends resulting from intra-group transactions that are recognised in assets, are eliminated in full. When the group ceases to have control, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss or retained earnings, as appropriate. 2.3. Functional and presentation currency From 1 January 2015 the euro became local currency of the Republic of Lithuania. The financial statements are prepared in euro (EUR), which is local currency of the Republic of Lithuania, and presented in EUR thousand. Euro is the Company’s and the Group’s functional and presentation currency. The exchange rates in relation to other currencies are set daily by the European Central Bank and the Bank of Lithuania. As these financial statements are presented in euro thousand, individual amounts were rounded. Due to the rounding, totals in the tables may not add up. 2.4. Business combinations and goodwill The Group applies the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss. 2.5. Investment properties Land that is held for long-term rental yields and for capital appreciation is classified as investment properties. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are carried at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the statement of comprehensive income within “Net gains (losses) from fair value adjustments on investment property” in the year of retirement or disposal. AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 13 2 Summary of significant accounting policies (cont’d) 2.6. Investments into subsidiaries (the Company) Investments in subsidiaries are accounted for using the equity method of accounting. Under the equity method, the investment in the subsidiary is carried in the statement of financial position at cost plus post acquisition changes in the Company’s share of net assets of the subsidiary. Goodwill relating to a subsidiary is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. The statement of comprehensive income reflects the share of the results of operations of the subsidiary. Where there has been a change recognised in the other comprehensive income of the subsidiary, the Company recognises its share of any changes and discloses this, when applicable, in the other comprehensive income. Company’s share in the changes in the net assets of the subsidiary that are not recognised in profit or loss or other comprehensive income (OCI) of the subsidiary, are recognised in equity. Unrealised gains and losses (unless the transaction provides evidence of the impairment of asset transferred) resulting from transactions between the Company and the subsidiary are eliminated to the extent of the interest in the subsidiary. The reporting dates of the subsidiary and the Company are identical and the subsidiary’s accounting policies conform to those used by the Company for like transactions and events in similar circumstances. After application of the equity method, the Company determines whether it is necessary to recognise an additional impairment loss of the Company’s investment in its subsidiaries. The Company determines at each reporting date whether there is any objective evidence that the investment in subsidiary is impaired. If this is the case the Company calculates the amount of impairment as being the difference between the recoverable amount of the subsidiary and its carrying value and recognises the amount in the statement of comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, including any other unsecured receivables, the Company does not recognise further losses, unless it has incurred obligations or made payments on behalf of the subsidiary. 2.7. Financial assets Financial assets within the scope of IFRS 9 are classified as either financial assets at fair value through profit or loss (either through other comprehensive income or through profit or loss) or financial assets measured at amortised cost. The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. As the business model for the Group‘s and the Company‘s financial assets are held to collect contractual cash flows and they are solely payments of principal and interest, the Group and the Company have only financial assets measured at amortised cost. They comprised trade and other receivables, loans granted, cash and cash equivalents. The Group and the Company reclassifies debt instruments when and only when its business model for managing those assets changes. Financial assets are recognised when the Group/the Company becomes party to the contractual provisions of the instrument. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group/the Company has transferred substantially all the risks and rewards of ownership. At initial recognition, the Group/the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is calculated using the effective interest rate method and presented as “interest income” in the statement of comprehensive income. Any gain or loss arising on derecognition is recognised directly in profit or loss. Impairment losses are presented as separate line item in the statement of comprehensive income. AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 14 2 Summary of significant accounting policies (cont’d) 2.8. Impairment of financial assets From 1 January 2018, the Group/the Company assesses on a forward-looking basis the expected credit losses associated with its financial assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. The Group/the Company follows a three-stage model for impairment for financial assets other than trade receivables: − Stage 1 – balances, for which the credit risk has not increased significantly since initial recognition, or that have low credit risk at the reporting date. For these assets, 12-month expected credit losses (‘ECL’) are recognised and interest revenue is calculated on the gross carrying amount of the asset (that is, without deduction for credit allowance). 12-month ECL are the expected credit losses that result from default events that are possible within 12 months after the reporting date. It is not the expected cash shortfalls over the 12-month period but the entire credit loss on an asset weighted by the probability that the loss will occur in the next 12 months; − Stage 2 – comprises balances for which there have been a significant increase in credit risk since initial recognition (unless they have low credit risk at the reporting date) but that do not have objective evidence of impairment. For these assets, lifetime ECL are recognised, but interest revenue is still calculated on the gross carrying amount of the asset. Lifetime ECL are the expected credit losses that result from all possible default events over the expected life of the financial instrument. Expected credit losses are the weighted average credit losses with the probability of default (‘PD’) as the weight; − Stage 3 – comprises balances with objective evidence of impairment at the reporting date. For these assets, lifetime ECL are recognised and interest revenue is calculated on the net carrying amount (that is, net of credit allowance). Loans granted are considered to be low credit risk when they have a low risk of default and the borrower has a strong capacity to meet its contractual cash flow obligations in the near term. The financial assets are considered as credit-impaired, if objective evidence of impairment exist at the reporting date. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in payments, the probability that they will enter bankruptcy or other financial reorganisation. Financial assets are written off, in whole or in part, when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, among others, the probability of insolvency or significant financial difficulties of the debtor. Impaired debts are derecognised when they are assessed as uncollectible. For trade and other receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Trade receivables are classified either to Stage 2 or Stage 3: − Stage 2 – comprises receivables for which there the simplified approach was applied to measure the expected lifetime credit losses, except for certain trade receivables classified in Stage 3; − Stage 3 – comprises trade receivables which are overdue more than 360 days or individually identified as impaired. The expected loss rates are based on the payment profiles of rent over a period of 36 months before reporting date and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the tenants to settle the receivable. Such forward- looking information would include: − changes in economic, regulatory, technological and environmental factors, (such as industry outlook, GDP, employment and politics); − external market indicators; and − tenant base. 2.9. Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less. For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand and in current bank account as well as deposit in bank with an original maturity of three months or less. AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 15 2 Summary of significant accounting policies (cont’d) 2.10. Financial liabilities The Group recognises a financial liability when it first becomes a party to the contractual rights and obligations in the contract. All financial liabilities are initially recognised at fair value, minus (in the case of a financial liability that is not at fair value through profit or loss) transaction costs that are directly attributable to issuing the financial liability. Financial liabilities are measured at amortised cost using the effective interest method. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Trade payables 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 classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). Financial liabilities included in trade payables are recognised initially at fair value and subsequently at amortised cost. The fair value of a non-interest bearing liability is its discounted repayment amount. If the due date of the liability is less than one year, discounting is omitted. 2.11. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are recognised in equity as a deduction, net of tax, from the proceeds. Where any group company purchases the company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the company’s equity holders. 2.12. Leases Group’s company is the lessor in an operating lease Leases in which a significant portion of the risks and rewards of ownership are retained by the Group’s company are classified as operating leases. Payments, including pre-payments, received under operating leases (net of any incentives granted to the lessee) are credited to the statement of comprehensive income on a straight-line basis over the period of the lease. The Group account for a modification to an operating lease as a new lease from the effective date of the modification, considering any prepaid or accrued lease payments relating to the original lease as part of the lease payments for the new lease. See Note 2.13 for the recognition of lease income. AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 16 2 Summary of significant accounting policies (cont’d) 2.13. Revenue recognition Revenue includes lease income, interest income and other income. Other income includes penalties from tenants for overdue payments. Lease income Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognised as expense over the lease term on the same basis as lease income. The Group elected to recognise lease income for variable payment that depends on an index or a rate in the periods in which changes of index or rate occur. Variable lease payments that do not depends on an index or a rate are recognised as lease income in the periods in which the event or condition that triggers those payments occurs. When the Group provides incentives to its tenants, the cost of the incentives is recognised over the lease term, on a straight-line basis, as a reduction of lease income. At the commencement date, the Group assesses whether the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. The Group considers all relevant facts and circumstances that create an economic incentive for the lessee to exercise, or not to exercise, the option, including any expected changes in facts and circumstances from the commencement date until the exercise date of the option. In the first quarter rental fee, except variable part related to land tax, is invoiced to the tenants. In the fourth quarter variable part of the rent related to land tax is invoiced to the tenants, when State tax authorities provide an estimate of the land tax and land tax expenses are recognised. Interest income Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For credit-impaired financial assets the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance). 2.14. Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions. All financial information, including the measure of profit, total assets and total liabilities, is analysed as single reporting segment - agricultural land segment, therefore is not further disclosed in these financial statements. AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 17 2 Summary of significant accounting policies (cont’d) 2.15. Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised directly in equity. In this case, the tax is also recognised directly in equity. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted by the end of the reporting period in Lithuania where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. The standard income tax rate in Lithuania was 15 % in 2020 and 2021. Starting from 2010, tax losses can be transferred at no consideration or in exchange for certain consideration between the group companies if certain conditions are met. Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. The deferred tax liability in relation to investment property that is measured at fair value is determined assuming the property will be recovered entirely through sale. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Following the provisions of Law on Corporate Income Tax the sale of shares of an entity, registered or otherwise organised in a state of the European Economic Area or in a state with which a treaty for the avoidance of double taxation has been concluded and brought into effect and which is a payer of corporate income tax or an equivalent tax, to another entity or a natural person shall not be taxed where the entity transferring the shares held more than 10% of voting shares in that entity for an uninterrupted period of at least two years. If mentioned condition is met or is expected to be met by the management of the Company, no deferred tax liabilities or assets are recognised in respect of temporary differences associated with carrying amounts of these investments. Tax losses can be carried forward for indefinite period, except for the losses incurred as a result of disposal of securities and/or derivative financial instruments. Such carrying forward is disrupted if the Company changes its activities due to which these losses incurred except when the Company does not continue its activities due to reasons which do not depend on the Company itself. The losses from disposal of securities and/or derivative financial instruments can be carried forward for 5 consecutive years and only be used to reduce the taxable income earned from the transactions of the same nature. From 1 January 2014 current year taxable profit could be decreased by previous year tax losses only up to 70%. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 18 2 Summary of significant accounting policies (cont’d) 2.16. Employee benefits Social security contributions The Company and the Group pay social security contributions to the state Social Security Fund (the Fund) on behalf of its employees based on the defined contribution plan in accordance with the local legal requirements. A defined contribution plan is a plan under which the Group pays fixed contributions into the Fund and will have no legal or constructive obligations to pay further contributions if the Fund does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior period. Social security contributions are recognised as expenses on an accrual basis and included in payroll expenses. Bonus plans The Company and the Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation. 2.17. Events after the reporting period Events after the reporting period that provide additional information about the Group’s position as at the end of the reporting period (adjusting events) are reflected in the financial statements. Events after the reporting period that are not adjusting events are disclosed in the notes when material. 2.18. Significant accounting judgements and estimates The preparation of financial statements requires management of the Group and the Company to make judgements and estimates that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities, at the end of reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Judgements In the process of applying the Group accounting policies, management has not made any judgements, which has most significant effect on the amounts recognised in these financial statements. Estimates and assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur. The significant areas of estimation used in the preparation of these financial statements are discussed below. Fair value of investment properties in consolidated financial statements Fair value of investment properties was based on the market approach by reference to sales in the market of comparable properties. Market approach refers to the prices of the analogues transactions in the market. These values are adjusted for differences in key attributes such as land size and productivity. The fair value of the investment properties as at 31 December 2021 was EUR 16,620 thousand (as at 31 December 2020 – EUR 15,364 thousand) (described in more details in Note 10). AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 19 3 Financial risk management 3.1. Financial risk factors The risk management function within the Group is carried out in respect of financial risks, operational risks and legal risks and managed on an overall Group level by the Management Board. After signing land administration agreement most of operational and legal risks, as well as credit risk are managed by the third party UAB INVL Farmland Management. The primary objectives of the financial risk management function are to establish risk limits, and then ensure that exposure to risks stays within these limits. The operational and legal risk management functions are intended to ensure proper functioning of internal policies and procedures to minimise operational and legal risks. To limit operational risk, annual documentation reviews are held. This helps to limit legal risks as well in case a dispute arises and all the documentation is in place and of appropriate quality and can be used to prove the rights. Legal risk is limited as well by the fact that counterparties do not grant guarantees on each other. The Group’s and the Company’s principal financial liabilities comprise trade and other payables. The main purpose of these financial liabilities is to finance the Group’s and the Company’s operations. The Group and the Company have various financial assets such as trade and other receivables, loans granted and cash which arise directly from their operations. The Company and the Group have not used any derivative instruments and borrowings so far, as management considered that there is no necessity for them. The main risks arising from the financial instruments are market risk (including currency risk, cash flow and fair value interest rate risk and price risk), liquidity risk and credit risk. The risks are identified and disclosed below. Credit risk Credit risk is the risk one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Credit risk arises from cash and cash equivalents, credit exposures to outstanding trade receivables and loans granted. As at 31 December 2020 the Group had a significant concentration of credit risk related to two tenants. The balance of trade receivable from tenant A comprise approximately 55% of the Group’s total trade receivables, gross (before write off and provision). Impairment loss of EUR 106 thousand for the trade receivable from tenant A was recognised as at 31 December 2020 (approximately 82% of the receivable). The lease agreement with tenant A was terminated in 2019. The balance of trade receivable from tenant B comprise approximately 19% of the Group’s total trade receivables, gross (before write off and provision). The trade receivable from tenant B was secured by pledge of land plots. The lease agreement with tenant B was expired in 2020.The trade receivable was settled by tenant B in 2021. As at 31 December 2021 the balance of trade receivable from tenant A comprise approximately 69% of the Group’s total trade receivables, gross (before write off and provision). Approximately 84% (EUR 106 thousand) of the receivable from tenant A was written-off as at 31 December 2021. The carrying amount of the receivable represents possibility to recovery of remaining amount by applying VAT credit from balance of bad debts. Other tenants did not expose the Group to a significant concentration of credit risk., The credit risk is managed by the third party UAB INVL Farmland Management according to the agreement (Note 7). The third party seeks to ensure that lease contracts are entered into only with lessees with an appropriate credit history. The maximum exposure to credit risk, impairment of financial assets is disclosed in Notes 12 and 13. In Note 13 is also disclosed credit risk exposure of trade receivable. There are no transactions of the Group or the Company that occur outside Lithuania. With respect to credit risk arising from cash and cash equivalents the Group’s and the Company’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. According to the European deposit insurance scheme, cash, cash equivalents and deposits of up to EUR 100 thousand of every legal entity in each bank are covered with insurance. All the Group’s and the Company’s balance of cash and cash equivalents are covered with the insurance. Therefore, all cash balances have a low credit risk at the reporting date and the impairment loss determined on 12-month expected credit losses is resulted in an immaterial amount. The credit quality of cash and cash equivalents can be assessed by reference to external credit ratings of the banks: Group Company 2021 2020 2021 2020 Moody’s short-term ratings Prime-1 - - - - Prime-2 144 302 27 31 Prime-3 - - - - Not Prime - - - - 144 302 27 31 AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 20 3 Financial risk management (cont’d) 3.1 Financial risk factors (cont’d) Market risk Cash flow and fair value interest rate risk The Group has no borrowings and loans granted. The Company has loans granted to its subsidiaries with fixed interest rates for one year. Therefore, the Group and the Company are not exposed to cash flow interest rate risk. Foreign exchange risk The Group and the Company holds assets and liabilities denominated only in the euro. Therefore, the Group and the Company are not exposed to foreign exchange risk. Price risk The Group is not exposed to price risk of financial instruments as it does not hold any equity securities or commodities. Liquidity risk The Group’s and the Company’s policy is to maintain sufficient cash and cash equivalents. The liquidity risk of the Group and the Company is controlled on an overall Group level. The Group and the Company have not been facing any liquidity issues so far. The proceeds from rent and cash balances are sufficient to settle all liabilities. The Group’s liquidity ratio (total current assets / total current liabilities) as at 31 December 2021 was approximately 1.62 (2.07 as at 31 December 2020). The Company’s liquidity ratio as at 31 December 2021 was approximately 0.74 (0.65 as at 31 December 2020). The table below summarises the maturity profile of the Group’s financial liabilities as at 31 December 2021 and 2020 based on contractual undiscounted payments. On demand Less than 3 months 4 to 12 months 2 to 5 years More than 5 years Total Trade and other payables - 67 - - - 67 Other liabilities 56 7 - - - 63 Balance as at 31 December 2021 56 74 - - - 130 - Trade and other payables - 125 - - - 125 Other liabilities 48 10 - - - 58 Balance as at 31 December 2020 48 135 - - - 183 AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 21 3 Financial risk management (cont’d) 3.1 Financial risk factors (cont’d) Liquidity risk (cont’d) The table below summarises the maturity profile of the Company’s financial liabilities as at 31 December 2021 and 2020 based on contractual undiscounted payments. On demand Less than 3 months 4 to 12 months 2 to 5 years More than 5 years Total Trade and other payables 5 - - - 5 Other liabilities 56 7 - - - 63 Balance as at 31 December 2021 56 12 - - - 68 - Trade and other payables - 1 - - - 1 Other liabilities 48 8 - - - 56 Balance as at 31 December 2020 48 9 - - - 57 3.2. Capital management The primary objective of the capital management is to ensure that the Group and the Company maintain a strong credit health and healthy capital ratios in order to support their business and maximise shareholder value. The Company‘s management supervises the investments so that they are in compliance with requirements applied to the capital, specified in the appropriate legal acts, as well as provide the Group’s management with necessary information. The Group‘s and the Company‘s capital comprises share capital, share premium, reserves and retained earnings. The Group and the Company manage their capital structure and make adjustments to it, in light of changes in economic conditions and specific risks of their activity. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the year 2021 and 2020. The Company is obliged to keep its equity ratio at not less than 50 % of its share capital, as imposed by the Law on Companies of Republic of Lithuania. The Company and the subsidiaries complied with this requirement as at 31 December 2021 and 2020, except one dormant subsidiary as at 31 December 2021 and 2020. There are no plans yet to rectify the situation. AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 22 4 Fair value estimation Assets carried at fair value The fair value hierarchy has the following levels: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). The following table provides the fair value measurement hierarchy of the Group’s assets measured at fair value in the statement of financial position as at 31 December 2021. Level 1 Level 2 Level 3 Total balance Assets of the Group Investment properties (Note 10) - 16,620 - 16,620 The following table provides the fair value measurement hierarchy of the Group’s assets measured at fair value in the statement of financial position as at 31 December 2020. Level 1 Level 2 Level 3 Total balance Assets of the Group Investment properties (Note 10) - 15,364 - 15,364 There were no transfers of assets between the levels of the fair value hierarchy during 2021 and 2020. There were no liabilities measured at fair value in the Group’s and the Company’s statements of financial position. Financial instruments that are not carried at fair value The Group’s and the Company’s principal financial instruments that are not carried at fair value in the statement of financial position are cash and cash equivalents, trade and other receivables, loans granted, trade and other payables. The carrying amount of the cash and cash equivalents, trade and other receivables, trade and other payables of the Group and the Company as at 31 December 2021 and 2020 reasonably approximated their fair value because they are short-term and the impact of discounting is immaterial. The carrying amount of loans granted by the Company approximates their fair value because the interest rates are reviewed at the end of each financial year and adjusted in line with market rates changes. Their fair value is based on cash flows discounted using 4.5 % interest rate as at 31 December 2021 and 2020 It is Level 3 fair value measurement. AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 23 5 Subsidiaries The Group had the following subsidiaries, owned directly by the Company, as at 31 December 2021 and 2020: Name Country of incorporation and place of business Proportion of shares (voting rights) directly held by the Company (%) Nature of business UAB Avižėlė Lithuania 100.00 Agricultural landowner and lessor UAB Beržytė Lithuania 100.00 Agricultural landowner and lessor UAB Dirvolika Lithuania 100.00 Agricultural landowner and lessor UAB Duonis Lithuania 100.00 Agricultural landowner and lessor UAB Ekotra Lithuania 100.00 Agricultural landowner and lessor UAB Kvietukas Lithuania 100.00 Agricultural landowner and lessor UAB Laukaitis Lithuania 100.00 Agricultural landowner and lessor UAB Lauknešys Lithuania 100.00 Agricultural landowner and lessor UAB Linažiedė Lithuania 100.00 Agricultural landowner and lessor UAB Pušaitis Lithuania 100.00 Agricultural landowner and lessor UAB Puškaitis Lithuania 100.00 Agricultural landowner and lessor UAB Sėja Lithuania 100.00 Agricultural landowner and lessor UAB Vasarojus Lithuania 100.00 Agricultural landowner and lessor UAB Žalvė Lithuania 100.00 Agricultural landowner and lessor UAB Žemgalė Lithuania 100.00 Agricultural landowner and lessor UAB Žemynėlė Lithuania 100.00 Agricultural landowner and lessor UAB Žiemkentys Lithuania 100.00 Agricultural landowner and lessor UAB Cooperor Lithuania 100.00 Dormant All subsidiary undertakings are included in the consolidation. The following table presents the movements of investments in subsidiaries of the Company: 2021 2020 At 1 January 10,123 9,347 Share of net profit of subsidiaries 1,313 776 Increase of share capital - - At 31 December 11,436 10,123 AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 24 6 Segment information and operating lease commitments Management of the Company has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. All financial information, including the measure of profit, total assets and total liabilities, is analysed as a single reporting segment - agricultural land segment, therefore is not further disclosed in these financial statements. The Company and its subsidiaries are domiciled in Lithuania. There are no transactions of the Group or the Company that occur outside Lithuania. Therefore, the management has neither analysed revenue, nor other financial indicators by geographical areas. All revenue of the Group is received from one type of service – rent of land. Therefore, the Group has not disclosed any breakdown of revenue by product and services type and by geographical areas. In 2021 and in 2020 there is no single customer from which the Group has received more than 10% of its revenue. Operating lease commitments – Group as a lessor The Group has entered into leases of the Group’s investment properties under operating lease agreements with rentals payable yearly in two parts. First part of rent is payable until 1 April according to the most Group’s lease agreements. Second part of rent related to land tax is payable in November – December. Most of the agreements have remaining terms of between 1 and 5 years. The most Group’s lease agreements have clause for indexation on consumer price index or unilaterally right to increase rent by notice. Approximately 37% of land plots is leased with clause of agreement that lessee could have to pay surcharge that depends on milling wheat futures price change. Although the Group is exposed to changes in the residual value at the end of the current leases, the Group typically enters into new operating leases and therefore will not immediately realise any reduction in residual value at the end of these leases. Expectations about the future residual values are reflected in the fair value of the land. Cancellable lease agreements can be cancelled under the following terms: • Tenants must notify the lessor 12 months in advance if they wish to cancel the rent agreement without any reason and have to pay annual rent fee for these 12 months. • The lessor has the right to unilaterally change the rent price for the coming year and must notify the tenant about the change till 1 May of the current year. If tenants do not agree with the new rent price, they can terminate the agreement with notification of 3 months in advance. In 2021 lease income relating to variable lease payments that do not depend on an index or a rate was EUR 23 thousand (2020: EUR 25 thousand). AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 25 6 Segment information and operating lease commitments (cont’d) Future lease receivable under operating leases as at 31 December were as follows: 2021 2020 Within one year - non-cancellable lease 692 617 - non-cancellable amount of cancellable lease 20 23 - minimum lease payments total 712 640 Between 1 and 2 years - non-cancellable lease 381 461 - minimum lease payments total 381 461 - cancellable amount of cancellable lease 3 19 384 480 Between 2 and 3 years - non-cancellable lease 352 232 - minimum lease payments total 352 232 - cancellable amount of cancellable lease 3 3 355 235 Between 3 and 4 years - non-cancellable lease 208 209 - minimum lease payments total 208 209 - cancellable amount of cancellable lease - 3 208 212 Between 4 and 5 years - non-cancellable lease 104 155 - minimum lease payments total 104 155 - cancellable amount of cancellable lease - - 104 155 After five years - non-cancellable lease 166 223 - minimum lease payments total 166 223 - cancellable amount of cancellable lease 3 3 169 226 Total 1,932 1,948 - non-cancellable lease 1,903 1,897 - non-cancellable of cancellable lease 20 23 - minimum lease payments total 1,923 1,920 - cancellable amount of cancellable lease 9 28 AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 26 7 Agreement on the administration of land plots The Group has signed land plot administration agreement with UAB INVL Farmland Management on 30 June 2015. UAB INVL Farmland Management, is a company owned by AB Invalda INVL. The agreement came into force on 1 July 2015. According to the agreement administration fees paid to UAB INVL Farmland Management will be 7% of annual rent revenues and 0,5% market capitalization of AB INVL Baltic Farmland. Success fee is also set, and it consists of 20% from the share of the return exceeding the pre-determined annual return of 5% plus inflation. If the carrying amount of past due trade receivables arising from the current year would exceed 5% of annual turnover (revenue plus VAT), the excess shall be fully compensated by UAB INVL Farmland Management. If the Group receive the compensated trade receivables, the compensation is returned to UAB INVL Farmland Management. The split of administration fees is presented in the table below: Group 2021 2020 Administration fees from rent revenues and market capitalisation 156 117 Compensation for past due trade receivables 19 50 Success fee - 39 Total 175 206 8 Income tax Group Company 2021 2020 2021 2020 Components of the income tax expenses Current year income tax (54) (57) (17) (21) Deferred income tax expenses (190) (97) - - Income tax expenses charged to profit or loss – total (244) (154) (17) (21) There is no income tax expense (credit) recognised in other comprehensive income or directly in equity. Deferred income tax asset and liability were estimated at 15% rates as at 31 December 2021 and 2020. The movement in deferred income tax assets and liabilities of the Group during 2021 is as follows: Balance as at 31 December 2020 Recognised in profit or loss during the year Balance as at 31 December 2021 Deferred tax asset Tax loss carry forward for indefinite period of time 5 (2) 3 Recognised deferred income tax asset 5 (2) 3 Asset netted with liability of the same legal entities (5) 2 (3) Deferred income tax asset, net - - - Deferred tax liability Investment properties (1,613) (188) (1,801) Deferred income tax liability (1,613) (188) (1.801) Liability netted with asset of the same legal entities 5 (2) 3 Deferred income tax liability, net (1,608) (190) (1.798) Deferred income tax, net (1,608) (190) (1.798) AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 27 8 Income tax (cont’d) The movement in deferred income tax assets and liabilities of the Group during 2020 is as follows: Balance as at 31 December 2019 Recognised in profit or loss during the year Balance as at 31 December 2020 Deferred tax asset Tax loss carry forward for indefinite period of time 5 - 5 Recognised deferred income tax asset 5 - 5 Asset netted with liability of the same legal entities (5) - (5) Deferred income tax asset, net - - - Deferred tax liability Investment properties (1,516) (97) (1,613) Deferred income tax liability (1,516) (97) (1,613) Liability netted with asset of the same legal entities 5 - 5 Deferred income tax liability, net (1,511) (97) (1,608) Deferred income tax, net (1,511) (97) (1,608) The Company has not any taxable temporary differences in 2021 and 2020 and has not recognised any deferred tax assets or liabilities. The Group’s deferred tax liability will be recovered after more than 12 months. The reconciliation of the total income tax to the theoretical amount that would arise using the tax rate of the Group and the Company is as follows: Group Company 2021 2020 2021 2020 Profit before income tax 1,655 1,049 1.428 916 Tax calculated at the tax rate of 15 % (248) (157) (214) (137) Tax effect of non-deductible expenses and non-taxable income 4 3 197 116 Income tax expenses recorded in the statement of comprehensive income (244) (154) (17) (21) In 2021 and 2020 non-taxable income of the Company was share of net profit of subsidiaries accounted for using the equity method. AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 28 9 Earnings per share Basic earnings per share amounts are calculated by dividing net profit 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 2021 and 2020 was 3,228 thousand. The following table reflects the income and share data used in the basic earnings per share computations: Group 2021 2020 Net profit (loss), attributable to the equity holders of the parent 1,411 895 Weighted average number of ordinary shares (thousand) 3,228 3,228 Basic earnings (deficit) per share (EUR) 0.44 0.28 For 2021 and 2020 diluted earnings per share of the Group and the Company are the same as basic earnings per share. 10 Investment properties The movements of investment properties during 2021 and 2020 were: 2021 2020 Fair value hierarchy Level 2 Balance as at 1 January 15,364 14,719 Gain from fair value adjustment 1,258 717 Loss from fair value adjustment (2) (34) Disposals (taken by the State for public needs) - (38) Balance as at 31 December 16,620 15,364 Unrealised gains and losses for the period included within ‘Net gains (losses) from fair value adjustments on investment property’ in the statement of comprehensive income 1,256 681 Investment properties are stated at fair value and are valued by accredited valuer UAB korporacija Matininkai using sales comparison method. The valuations were performed in December 2021 and in December 2020. The fair value represents the price that would be received selling an asset in an orderly transaction between market participants at the measurement date. An investment property’s fair value was based on the market approach by reference to sales in the market of comparable properties. Market approach refers to the prices of the analogues transactions in the market. These values are adjusted for differences in key attributes such as land plot size and productivity. The most significant input into this valuation approach is price per hectare. There were no changes to the valuation techniques during the period. In 2 nd Quarter 2019 the Group received letters from Ministry of Transport and Communications informing about possibility to take for the purpose of construction and reconstruction of local roads, related to project of Rail Baltica, 8 land plots owned by the Group (77.2 ha). The Group had no right to sell, pledge, restructure or in any other way restrict rights to those land plots. The Group was informed that 6.56 ha of above mentioned land plots would be taken for the public needs (the value of the land plots in the Group’s statement of financial position as at 31 December 2019 was EUR 36 thousand). The ownership of these land plots was transferred to the State in 2020. The State paid for these land plots EUR 38 thousand and, therefore, in 2020 was recognised additionally gain of fair value adjustment of EUR 2 thousand. On 1 May 2014 changes to the Agricultural Land Acquisition temporary law entered into force, providing restrictions of the purchase of agricultural land (including restriction of purchase of shares in the legal entity owning agricultural land). These restrictions mean that the Group cannot purchase additional agricultural land and/or acquire shares in entities owning agricultural land. As a result of restrictions the land sale market in Lithuania became less liquid. There were no other restrictions on the realisation of investment properties or the remittance of income and proceeds of disposals during 2021 and 2020. No contractual obligations to purchase investment properties existed at the end of the period. AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 29 11 Financial instruments by category Group Financial assets at amortised cost 2021 2020 Assets as per statement of financial position Trade and other receivables excluding tax prepayments 111 157 Cash and cash equivalents 144 302 Total 255 459 Company Financial assets at amortised cost 2021 2020 Assets as per statement of financial position Loans granted to subsidiaries – non-current assets 3,529 3,920 Loans granted to subsidiaries – interest 18 10 Trade and other receivables excluding tax prepayments 13 10 Cash and cash equivalents 27 31 Total 3,587 3,971 Group Financial liabilities at amortised cost 2021 2020 Liabilities as per statement of financial position Trade payables 67 125 Other current liabilities excluding taxes and employee benefits 63 58 Total 130 183 Company Financial liabilities at amortised cost 2021 2020 Liabilities as per statement of financial position Trade payables 5 1 Other current liabilities excluding taxes and employee benefits 63 56 Total 68 57 AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 30 12 Loans granted to subsidiaries at amortised cost The Company’s loans granted are described below: 2021 2020 Loans granted to subsidiaries 3,547 3,930 Total loans granted 3,547 3,930 The movements of loans granted to subsidiaries during the year were: Balance as at 31 December 2019 4,136 Loans granted during year 38 Loans repayment received (268) Interest charged 177 Interest received (153) Balance as at 31 December 2020 3,930 Loans granted during year 50 Loans repayment received (464) VAT receivable arising from interest on loans granted to subsidiaries converted to loans granted 3 Interest charged 163 Interest received (135) Balance as at 31 December 2021 3,547 The contractual maturity of loans granted to subsidiaries is 31 December 2022 according to the agreements, but the Company classifies them as long term, because intends to prolong them on maturity date. Effective interest rate of loans is 4.5 %. At each year end maturity of the loans granted is prolonged for one extra year and new market interest rate is determined. While the loans granted to the subsidiaries are the main liabilities of the subsidiaries and the fair values of investment properties owned by the subsidiaries are approximately 2.4 – 13.2 times higher than the carrying amounts of the loans granted, they were considered as low credit risk financial assets at the reporting date (attributable to Stage 1 financial assets). This is because even if loans granted were covered in the case of forced sale of investment properties, the Company considers that the loss given default would amount to zero. As at 31 December 2021 and 2020, the Company’s loans granted were neither overdue nor impaired and they had no history of counterparty defaults. The Company’s policy is to grant loans only to the subsidiaries controlled by it. The maximum credit risk as at the financial reporting date is the carrying amount of each category of amounts receivable as indicated above. The Company does not hold any collateral, but investment properties owned by the subsidiaries are not pledged to any other party and in fact secure loans granted. The carrying amount of loans granted by the Company approximates their fair value because the interest rates are reviewed at the end of each year and adjusted when market rates change. Their value is based on cash flows discounted using 4.5 % and interest rate as at 31 December 2021 and 2020. It is Level 3 fair value measurement. AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 31 13 Trade and other receivables Group 2021 2020 Trade receivables, gross 185 237 Accrued lease income, gross 81 79 Other receivables, gross - 2 Taxes receivable, gross 59 41 Total trade and other receivable, gross 325 359 Less: provision for impairment of trade and other receivables (2) (3) Less: Write off still subject to enforcement activity (153) (158) Trade and other receivable net of expected credit losses 170 198 As at 31 December 2021 and 2020 the Company had receivable of EUR 13 thousand and EUR 10 thousand, which was VAT receivable arising from interest on loans granted to subsidiaries (the Company has elected to calculate VAT from interest). The receivable was settled in January 2021 and 2020, respectively. As at 31 December 2021 the Company had also taxes receivables of 6 EUR thousand. Changes in provision for impairment of trade and other receivables for the year 2021 and 2010 have been included within ‘Provision for (reversal of) impairment of trade receivables’ in the statement of comprehensive income. The Group’s trade and other receivables are non-interest bearing and are generally with a credit term of 30 days. Movements in the accumulated impairment losses on credit impaired accounts receivable of the Group and in the write-off were as follows: Group Impairment losses Write off still subject to enforcement activity Total Balance as at 31 December 2019 110 57 167 Charge for the year 35 6 41 Enforcement activity ended - (7) (7) Recoveries of amounts previously impaired or written off (36) (4) (40) Reclassification to write-off (106) 106 - Balance as at 31 December 2020 3 158 161 Charge for the year 1 - 1 Enforcement activity ended - (5) (5) Recoveries of amounts previously impaired or written off (2) - (2) Reclassification to write-off - - - Balance as at 31 December 2021 2 153 155 AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 32 13 Trade and other receivables (cont’d) The credit risk exposure of trade receivables can be assessed on the ageing analysis disclosed below: Current Less than 30 days 30–90 days 91–180 days 181 – 365 days Credit impaired Total As at 31 December 2021 Trade receivables net of write off - 2 - - 6 24 32 Accrued lease income 81 - - - - - 81 Other receivables - - - - - - - Expected credit losses - - - - - (2) (2) Trade and other receivable net of expected credit losses 81 2 - - 6 22 111 As at 31 December 2020 Trade receivables net of write off - 2 - 45 6 26 79 Accrued lease income 79 - - - - - 79 Other receivables, gross 2 - - - - - 2 Expected credit losses - - - - (2) (1) (3) Trade and other receivable net of expected credit losses 81 2 - 45 4 25 157 As at 31 December 2020 trade receivables of EUR 45 thousand within aging group ’91-180’ days is secured by pledge of land plots of 11.3 hectare and they were settled in 2021. The ageing analysis of the credit impaired of trade receivables disclosed below: Current Less than 30 days 30–90 days 91–180 days 181 – 365 days More than 1 years Total Trade receivables net of write off as at 31 December 2021 - - - - 2 22 24 Trade receivables net of write off as at 31 December 2020 - - - - - 26 26 14 Share capital, acquisition of own shares and reserves The total authorised number of ordinary shares is 3,291,549 (as of 31 December 2020: 3,291,549 shares) with a par value of EUR 0.29 per share. All the shares of the Company were fully paid. The Company’s share capital and equity was formed in accordance with the procedure set forth in the terms of split-off on 29 April 2014. The Company holds 63,039 own shares (1.92% of share capital). There are not any changes in 2020 and 2021. Legal reserve Legal reserve is a compulsory reserve under Lithuanian legislation. Annual transfers of not less than 5 % of net profit, calculated in accordance with the statutory financial statements, are compulsory until the reserve reaches 10 % of the share capital. The reserve can be used only to cover the accumulated losses. Reserve for the acquisition of own shares Reserve for the acquisition of own shares is formed for the purpose of buying own shares in order to keep their liquidity and manage price fluctuations. It can be formed by shareholders’ decision at the Annual Shareholders Meeting from the profit available for distribution. The reserve cannot be used to increase the share capital. The reserve does not change when Company acquires own shares, but is utilised when own shares are cancelled. The shareholders can decide to transfer unused amounts of the reserve back to retained earnings at the Annual Shareholders Meeting. AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 33 15 Dividends A dividend in respect of the year ended 31 December 2020 of EUR 0.15 per share, amounting to a total dividend of EUR 484 thousand, was approved at the annual general meeting on 9 April 2021. A dividend in respect of the year ended 31 December 2019 of EUR 0.10 per share, amounting to a total dividend of EUR 323 thousand, was approved at the annual general meeting on 23 March 2020. Movement in dividends payable (presented within “Other current liabilities” in the statement of financial position) is presented in the table below: Group/Company Dividends payable 2021 2020 As at 1 January 48 41 Dividends paid to equity holders of the parent (476) (316) Approved dividends 484 323 As at 31 December 56 48 16 Related party transactions The related parties of the Group were the shareholders of the Company, who have significance influence (Note 1), key management personnel, including companies under control or joint control of key management and shareholders having significant influence. AB Invalda INVL and the entities controlled by AB Invalda INVL are also considered to be related parties, because the shareholders of the Company, having significance influence, also have a joint control over AB Invalda INVL group through shareholders’ agreement. The Group’s transactions with related parties during 2021 and related balances as at 31 December 2021 were as follows: 2021 Group Sales to related parties Purchases from related parties Receivables from related parties Payables to related parties AB Invalda INVL (accounting services) 34 2 UAB INVL Farmland Management (administration fees) 175 62 AB Invalda INVL group (reimbursement of expenses for insurance and webpage) 8 2 217 66 The Group’s transactions with related parties during 2020 and related balances as at 31 December 2020 were as follows: 2020 Group Sales to related parties Purchases from related parties Receivables from related parties Payables to related parties AB Invalda INVL (accounting services) - 15 - - UAB INVL Farmland Management (administration fees) - 206 2 124 - 221 2 124 AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 (all amounts are in EUR thousand unless otherwise stated) 34 16 Related party transactions (cont’d) The Company’s related parties are the subsidiaries (Note 5), shareholders, who have significance influence (Note 1), key management personnel and companies under control or joint control of key management and shareholders with significant influence. AB Invalda INVL and the entities controlled by AB Invalda INVL are also considered to be related parties, because the shareholders of the Company, having significance influence, also have a joint control over AB Invalda INVL group through shareholders’ agreement. Transactions of the Company with subsidiaries in 2021 and 2020 and related balances as at 31 December 2021 and 2020 were as follows: Company 2021 2020 Interest income from related parties Receivables from related parties Interest income from related parties Receivables from related parties Loans and borrowings 163 3,547 177 3,930 VAT receivable arising from interest - 13 - 10 163 3,560 177 3,940 The maturity of loans granted is till 31 December 2022, effective interest rate 4.5% (Note 12). As at 31 December 2020 the maturity of loans granted was till 31 December 2021, effective interest rate 4.5% (Note 12). The Company’s transactions with other related parties during 2021 and 2020 and related balances as at 31 December 2021 and 2020 were as follows: Company 2021 2020 Purchases from related parties Payables to related parties Purchases from related parties Payables to related parties AB Invalda INVL (accounting services) 5 2 3 1 AB Invalda INVL group (reimbursement of expenses for insurance and webpage) 8 2 - - 13 4 3 1 The management remuneration contains short-term employees’ benefits. Key management of the Company and the Group includes Board members and the Director of the Company, respectively. In 2021 and 2020 the Group’s key management compensation was EUR 2 thousand and EUR 2 thousand, respectively. In 2021 and 2020 the Company’s key management compensation was EUR 2 thousand and EUR 2 thousand, respectively. There were no loans granted during the reporting period or outstanding at the end of the reporting period. In 2021 to the Board members, which are shareholders of the Company, were paid EUR 40 thousand of dividends, net of tax. To the entities, which are controlled by the Board members, were paid EUR 217 thousand of dividends, net of tax. To the natural persons related to the Board members the Company paid EUR 128 thousand of dividends, net of tax. In 2020 to the Board members, which are shareholders of the Company, were paid EUR 27 thousand of dividends, net of tax. To the entities, which are controlled by the Board members, were paid EUR 146 thousand of dividends, net of tax. To the natural persons related to the Board members the Company paid EUR 85 thousand of dividends, net of tax. 17 Impact of COVID-19 The Group was not significantly affected by the COVID-19 virus pandemic. The Group's operations were not disrupted, as the Group can perform all the operations remotely. The Group did not request or received any financial support due to the COVID-19 virus pandemic, as this was not relevant taking into account Group's operations. The Group's customers are farmers who lease land from the Group and whose activities were effected only a little by the COVID-19 virus pandemic. Their ability to pay the lease to the Group is more determined by the meteorological conditions that affects the harvest. No discounts were granted to farmers renting the land from the Group due to the effects of the COVID-19 virus. The Group is not expected to be significantly affected in the future by the COVID-19 virus pandemic. . INVL Baltic Farmland, AB BALTIC FARMLAND CONSOLIDATED ANNUAL REPORT OF 2021 APPROVED BY THE BOARD OF INVL BALTIC FARMLAND, AB ON 28 FEBRUARY 2022 INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 36 CONTENT I. GENERAL INFORMATION .................................................................................................................... 38 1. Legal basis for preparation of the Annual Consolidated Report and content of information............................................... 38 2. Reporting period for which the report is prepared ...................................................................................................... 38 3. General information about the Issuer and other companies comprising the Issuer‘s group .............................................. 38 3.1. Information about the issuer ............................................................................................................................. 38 3.2. Information on company’s goals, philosophy and strategy ..................................................................................... 38 3.3. Information about the Issuer‘s group of companies .............................................................................................. 39 4. Agreements with intermediaries on public trading in securities .................................................................................... 41 5. Information on Issuer’s branches and representative offices ....................................................................................... 41 II. INFORMATION ABOUT SECURITIES ..................................................................................................... 42 6. The order of amendment of Issuer’s Articles of Association ......................................................................................... 42 7. Structure of the authorized capital ........................................................................................................................... 42 7.1. Information about the issuer’s treasury shares .................................................................................................... 42 8. Trading in Issuer’s securities as well as securities, which are deemed to be a significant financial investment to the Issuer on a regulated market ............................................................................................................................................... 43 9. Dividends ............................................................................................................................................................. 46 10. Shareholders ....................................................................................................................................................... 47 10.1. Information about company‘s shareholders ....................................................................................................... 47 10.2. Rights and obligations carried by the shares ...................................................................................................... 48 III. ISSUER’S MANAGING BODIES .......................................................................................................... 50 11. Structure, authorities, the procedure for appointment and replacement ...................................................................... 50 11.1. General Shareholders’ Meeting......................................................................................................................... 50 11.2. The Board ..................................................................................................................................................... 52 11.2.2. Procedure of work of the Board ..................................................................................................................... 53 11.3. The Director .................................................................................................................................................. 54 12. Information about members of the Board, Company providing accounting services ...................................................... 54 13. Information about the Audit Committee of the company ........................................................................................... 57 13.1. Procedure of work of the audit committee ......................................................................................................... 57 13.2. Members of the Audit Committee ..................................................................................................................... 57 14. Information on the Issuer’s payable management fee, the amounts calculated by the Issuer, other assets transferred and guarantees granted to the Managing bodies and company providing accounting services .................................................... 58 IV. INFORMATION ABOUT THE ISSUER’S AND ITS GROUP COMPANIES’ ACTIVITY ........................................... 60 15. Overview of the Issuer and its group activity ........................................................................................................... 60 15.1. Business environment ..................................................................................................................................... 60 15.2. Significant Issuer’s and its group events during the reporting period, affect on the financial statement ..................... 63 15.3. Employees .................................................................................................................................................... 64 15.4. Environmental Protection ................................................................................................................................ 64 15.5. Disclosure of the impact of the COVID-19 pandemic ........................................................................................... 64 16. A description of the principal advantages, uncertainties encountered, risks and uncertainties ........................................ 64 16.1. Advantages of investments.............................................................................................................................. 64 16.2. Risk factors ................................................................................................................................................... 65 16.3. The main indications about internal control and risk management systems related to the preparation of consolidated financial statements ................................................................................................................................................ 67 INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 37 17. Significant investments made during the reporting period ......................................................................................... 67 18. Information about significant agreements to which the issuer is a party, which would come into force, be amended or cease to be valid if there was a change in issuer‘s controlling shareholder ........................................................................ 67 19. Information on the related parties’ transactions ....................................................................................................... 67 20. Information on harmful transactions in which the issuer is a party ............................................................................. 69 21. Significant events since the end of the financial year ................................................................................................ 69 22. Estimation of Issuer’s and Group’s activity last year and activity plans and forecasts .................................................... 69 22.1. Evaluation of implementation of goals for 2021 .................................................................................................. 69 22.2. Activity plans and forecasts ............................................................................................................................. 69 V. OTHER INFORMATION ....................................................................................................................... 70 23. Additional non - financial information ..................................................................................................................... 70 24. References to and additional explanations of the data presented in the annual financial statements and consolidated financial statements................................................................................................................................................... 70 25. Information on financial risk management objectives used for hedging measures which hedge accounting and of price risk, credit risk, liquidity risk and cash flow risk where the company group uses financial instruments and is an important evaluation of the property, own capital, liabilities, revenue and expenses ......................................................................... 70 26. Information about activities of the Issuer and companies comprising the issuer’s group in the field of research and development ............................................................................................................................................................. 70 27. Information about agreements of the Company and its managing bodies, members of the formed committees, or the employees’ agreements providing for compensation in case of the resignation or in case they are dismissed without a due reason or their employment is terminated in view of the change of the control (official offering) of the Company. ................. 70 28. Information about any control systems in the employee share plan that are not exercised directly by employees............. 70 29. Information on audit company ............................................................................................................................... 70 30. Data on the publicly disclosed information.............................................................................................................. 71 APPENDIX 1. INFORMATION ABOUT GROUP COMPANIES, THEIR CONTACT DETAILS ....................................... 72 APPENDIX 2. CORPORATE GOVERNANCE CODE ......................................................................................... 74 APPENDIX 3. COMPANY'S MANAGEMENT REPORT ...................................................................................... 88 APPENDIX 4. COMPANY'S OPERATING AND FINANCIAL INDICATOR FORMULAS AND DEFINITIONS .................... 96 APPENDIX 5. REMUNERATION REPORT .................................................................................................... 99 INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 38 I. GENERAL INFORMATION 1. Legal basis for preparation of the Annual Consolidated Report and content of information The Annual Consolidated Report of the public joint-stock company INVL Baltic Farmland (hereinafter may be referred as the Company or INVL Baltic Farmland, AB) has been prepared by the Company in accordance with the Lithuanian Law on Securities of the Republic of Lithuania, the Law on Companies of the Republic of Lithuania, the Rules on the Disclosure of Information and the Guidelines on the Disclosure of Information approved by the Board of the Bank of Lithuania. The content of the consolidated annual report is disclosed according to Law on Consolidated Financial Statements of Enterprises of the Republic of Lithuania and Law on Corporate Financial Reporting of the Republic of Lithuania. The Company informs that information disclosing information about the Company presented in this Annual Report is divided into five (V) sections. These sections disclose information on Company's securities, the Management of the Company, the Company's and the Group's activities and other information, that Company’s Management values as important to disclose. The Company notes that the information presented in the Annual Report is relevant for understanding the Company's performance, condition and impact of operations. . 2. Reporting period for which the report is prepared The report covers the financial period of INVL Baltic Farmland, AB starting from 1 January 2021 and ending on 31 December 2021. The report also discloses information from the end of the reporting period to the release of the report. The report was audited. 3. General information about the Issuer and other companies comprising the Issuer‘s group 3.1. Information about the issuer Name of the Issuer The public joint-stock company INVL Baltic Farmland Code 303299781 Registered address Gynėjų str. 14, 01109, Vilnius, Lithuania Telephone +370 5 279 0601 Fax +370 5 279 0530 E-mail [email protected] Website www.invlbalticfarmland.lt LEI code 5299000AUE9M1W13ZQ36 Legal form public joint-stock company Date and place of registration 29 April 2014. Register of Legal Entities Register in which data about the Company are accumulated and stored Register of Legal Entities 3.2. Information on company’s goals, philosophy and strategy The main goal of INVL Baltic Farmland – to invest into agricultural land in Lithuania and, after renting it to farmers and agricultural companies, to ensure that income from rent will exceed inflation and make a profit from agricultural land price growth. Since prices of agricultural products are determined in the world markets, this investment allow to participate in the world food supply chain. The public joint-stock company INVL Baltic Farmland was established on 29 April 2014 on the basis of a part of assets split-off from one of the leading asset management groups in the Baltic region Invalda INVL. INVL Baltic Farmland manages shares of 18 companies investing into agricultural land that are owning about 3 thousand hectares of agricultural land in Lithuania. More than 98% of land is rented to farmers and agricultural companies. Shares of INVL Baltic Farmland are listed on Nasdaq Vilnius stock exchange since 4 June 2014. The administration of the INVL Baltic Farmland group owned land, according to the basic property administration agreement signed on 30 June 2015, is transmitted to the owned company INVL Farmland Management. Management fees paid for INVL Farmland Management are 7 percent of annual rental income of the companies - land owners as well as 0.5 percent of INVL Baltic Farmland market capitalization. Moreover there is a success fee which becomes valid only when consolidated equity of companies - land owners annual growth is higher than 5 percent plus inflation (High-Water Mark principle is applicable). Success fee is 20 percent of the consolidated equity in excess of the above mentioned benchmark. On 28 December 2020, the Basic Property Administration INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 39 Agreement’s Amendment No. 20150630/01 was concluded, based on which the term of the Basic Property Administration Agreement was extended until 31 December 2025. As the company has signed the property administration agreement it employs a minimum number of people. It is prohibited for one person to have more than 500 hectares of land in Lithuania since 2014. That‘s why INVL Baltic Farmland development is limited and the generated funds are directed to the payment of dividends to shareholders. Investments into agricultural land are classified as long term and are recommended for investors who are satisfied with the return on rent and possible income from increase of agricultural land prices. 3.3. Information about the Issuer‘s group of companies INVL Baltic Farmland has 100% in 18 companies owning about 3 thousand hectares of agricultural land in the most fertile regions of Lithuania. Companies - land owners and joint-stock company INVL Baltic Farmland, whose shareholder is Invalda INVL – one of the leading asset management groups in the Baltic region, on 30 June 2015 have signed a basic property administration agreement with INVL Farmland Management which administrates agricultural land owned by the companies to ensure steady growth of income for the shareholders and the value of the land. On 21 October 2020, the General Meeting of Shareholders of the Company approved the extension of the agreement with UAB INVL Farmland Management and its arrangement in a recast version. The agreement was extended until 31 December 2025. Fig. 3.3.1. Group structure of INVL Baltic Farmland, AB as of 31 December 2021 INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 40 Fig. 3.3.2. Agricultural land portfolio and agricultural land fertilisation of INVL Baltic Farmland, AB Plots belonging to the company are in the most fertile areas of Lithuania. They are highlighted in blue. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 41 Table 3.3.3. Information about companies of INVL Baltic Farmland group Company name District of company‘s activities Owned land plot, hectares Cultivated cropland area, hectares Avizele, UAB Rokiskis dist., Anyksciai dist. 113.82 107.51 Berzyte, UAB Birzai dist. 150.49 145.99 Dirvolika, UAB Akmene dist., Joniskis dist., Siauliai dist. 199.44 192.03 Duonis, UAB Jonava dist., Kedainiai dist., Ukmerge dist. 181.98 174.34 Ekotra, UAB Vilkaviskis dist. 238.76 228.70 Kvietukas, UAB Pakruojis dist., Pasvalys dist. 118.01 112.69 Laukaitis, UAB Pakruojis dist., Pasvalys dist., Siauliai dist. 204.10 193.44 Lauknesys, UAB Birzai dist., Pasvalys dist. 109.94 107.83 Linaziede, UAB Alytus dist., Jonava dist., Kaisiadorys dist., Prienai dist. 85.13 80.75 Pusaitis, UAB Radviliskis dist. 82.44 81.10 Puskaitis, UAB Marijampole dist., Prienai dist., Vilkaviskis dist. 210.74 204.20 Seja, UAB Kedainiai dist. 82.53 79.75 Vasarojus, UAB Anyksciai dist., Panevezys dist., Ukmerge dist. 375.73 364.85 Zalve, UAB Kupiskis dist. 216.88 201.73 Zemgale, UAB Birzai dist., Kupiskis dist., Panevezys dist. 241.76 232.00 Zemynele, UAB Sakiai dist., Vilkaviskis dist. 72.57 70.81 Ziemkentys, UAB Panevezys dist., Pasvalys dist. 414.14 401.62 3098.46 2979.34 4. Agreements with intermediaries on public trading in securities INVL Baltic Farmland, AB has signed the agreements with these intermediaries:  Šiaulių bank, AB (Tilžės str. 149, Šiauliai, Lithuania, tel. +370 41 595 607) – the agreement on investment services, the agreement on management of securities accounting and agreement on dividend distribution. 5. Information on Issuer’s branches and representative offices INVL Baltic Farmland, AB has no branches or representative offices. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 42 II. INFORMATION ABOUT SECURITIES 6. The order of amendment of Issuer’s Articles of Association The Articles of Association of INVL Baltic Farmland, AB may be amended by resolution of the General Shareholders’ Meeting, passed by more than 2/3 of votes (except in cases provided for by the Law on Companies of the Republic of Lithuania). Actual wording of the Articles of Association of the Company is dated as of 18 April 2018. The Company’s Articles of Association is published on the Company’s web page (Company‘s web site section „Investor Relations“ → „Articles of Association“. The link: https://invlbalticfarmland.com/en/investor-relations/legal-documents/). 7. Structure of the authorized capital Table 7.1. Structure of INVL Baltic Farmland, AB authorised capital as of 31 December 2021. Type of shares Number of shares and total voting rights granted by the issued shares, units Number of votes for the quorum of the General Shareholders Meeting, units Nominal value, EUR Total nominal Value and authorised capital, EUR Portion of the authorised capital, Ordinary registered shares 3,291,549 3,228,510 0.29 954,549.21 100 According to Article 27 (4) of the Law on Companies’ in determining the quorum of the General Meeting of Shareholders, it is considered that the acquired own shares do not grant voting rights. All shares are fully paid-up and no restrictions apply on their transfer. 7.1. Information about the issuer’s treasury shares The General Shareholders Meeting of the Company that was held on 28 October 2015 approved resolution to purchase its own shares. The period during which the company could acquire its own shares - 18 months from the day of this resolution. The maximum one share acquisition price – EUR 4.00, minimum one share acquisition price – EUR 2.87. During this period the Company initiated acquisition of own shares 1 time. On 21 June, the company announced about acquisition of 1.92 percent of own shares. 63,039 units of shares were offered. The settlement for the acquired shares happened on 22 June 2016. The General Shareholders Meeting of INVL Baltic Farmland, AB that was held on 22 March 2017 made decision to purchase its own shares. The period during which the company may acquire its own shares - 18 months from the day of this resolution. The maximum one share acquisition price – EUR 4.50, minimum one share acquisition price – EUR 3.16. Company not initiated acquisition of own shares in 2017. The General Shareholders Meeting of INVL Baltic Farmland, AB that was held on 10 April 2018 approved resolution to purchase its own shares. The period during which the company may acquire its own shares - 18 months from the day of this resolution. The maximum one share acquisition price – EUR 5.00, minimum one share acquisition price – EUR 3.00. Company not initiated acquisition of own shares in 2018. The General Shareholders Meeting of INVL Baltic Farmland, AB that was held on 22 March 2019 made decision to purchase its own shares. The period during which the company may acquire its own shares - 18 months from the day of this resolution. The maximum one share acquisition price – EUR 5.00, minimum one share acquisition price – EUR 3.00. Company not initiated acquisition of own shares in 2019. The General Shareholders Meeting of INVL Baltic Farmland, AB that was held on 23 March 2020 made decision to purchase its own shares. The period during which the company may acquire its own shares - 18 months from the day of this resolution. The maximum one share acquisition price – EUR 5.00, minimum one share acquisition price – EUR 3.00. Company not initiated acquisition of own shares in 2020. The General Shareholders Meeting of INVL Baltic Farmland, AB that was held on 9 April 2021 made decision to purchase its own shares. The period during which the company may acquire its own shares - 18 months from the day of this resolution. The maximum one share acquisition price – EUR 5.00, minimum one share acquisition price – EUR 3.00. At the end of the reporting period the amount of Company‘s acquired own shares stayed the same and amounted to 63,039 (units) or 1.92 percent of the Company’s Authorised capital. Subsidiaries of INVL Baltic Farmland have not implemented acquisition of shares in INVL Baltic Farmland directly or indirectly under the order of subsidiary by persons acting by their name. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 43 8. Trading in Issuer’s securities as well as securities, which are deemed to be a significant financial investment to the Issuer on a regulated market Table 8.1. Main characteristics of INVL Baltic Farmland, AB shares admitted to trading: Type of shares Ordinary registered shares ISIN code LT0000128753 LEI code 5299000AUE9M1W13ZQ36 Name INL1L Exchange Nasdaq Vilnius List Baltic Secondary list Authorised capital (EUR) 954,549.21 Nominal value of 1 share (EUR) 0.29 Shares issued, units 3,291,549 Total voting rights granted by the issued shares, units 3,291,549 Number of votes for the quorum of the General Shareholders Meeting, units 3,228,510 Date of the beginning of listing 4 June 2014 According to Article 27 (4) of the Law on Companies’ in determining the quorum of the General Meeting of Shareholders, it is considered that the acquired own shares do not grant voting rights. Company uses no services of liquidity providers. Table 8.2. Trading in the company’s shares 2017 – 2021 (quarterly) on NASDAQ Vilnius: Reporting period Price, EUR Turnover, EUR Last trading date Total turnover high low last high low last quantity EUR 2017 1st Q 4.30 3.15 4.30 2,557.04 26.08 301 31.03.2017 2,905 10,684.95 2017 2nd Q 4.01 3.75 3.88 4,516.05 7.56 0 30.06.2017 7,854 29,872.22 2017 3rd Q 4.20 3.69 3.80 1,668.16 41.36 0 29.09.2017 2,266 8,730.19 2017 4th Q 4.20 3.78 3.89 4,908.67 19.45 0 29.12.2017 3,039 12,246.93 2018 1st Q 4.32 3.96 4.32 2,572.64 3.96 0 29.03.2018 1,279 5,463.80 2018 2nd Q 4.80 3.90 4.08 1,697 23.40 0 29.06.2018 2,136 9,369.12 2018 3rd Q 4.34 3.80 3.80 1,414.08 8.00 380 28.09.2018 2,077 8,347.86 2018 4th Q 4.00 3.50 3.50 1,365 10.5 238 28.12.2018 1,295 4,623.38 2019 1st Q 4.00 3.42 3.58 5,982.34 10.74 0 29.03.2019 2,731 10,518.30 2019 2nd Q 3.80 3.48 3.58 887.04 54.30 662.30 28.06.2019 1,582 5,661.24 2019 3rd Q 4.10 3.42 4.00 2,455.80 7.4 72 30.09.2019 2,336 8,942.32 2019 4th Q 3.86 3.46 3.48 4,323.80 7.28 274.92 12.30.2019 3,610 13,022.18 2020 1st Q 4.18 3.5 4.00 6,883.64 33.84 0 31.03.2020 8,571 33,405.22 2020 2nd Q 5.00 3.74 4.44 6,046.44 4.02 0 30.06.2020 3,101 14,141.06 2020 3rd Q 5.20 4.20 5.00 2,530.8 4.78 0 30.09.2020 3,029 14,555.94 2020 4th Q 5.10 4.40 5.05 3,536.3 4.82 5.05 30.12.2020 3,444 16,871.20 INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 44 2021 1st Q 6.50 4.90 5.70 3,721.75 5.20 365.60 31.03.2021 4,846 26,706.11 2021 2nd Q 8.70 5.70 8.65 4,336.70 6.40 3,410.80 30.06.2021 5,650 38,375.60 2021 3rd Q 9.00 6.30 6.30 24,823 8.20 329.70 30.09.2021 9,892 78,273.90 2021 4th Q 7.95 6.90 7.70 5,188.45 7.05 1,084.40 30.12.2021 3,624 26,434.15 Table 8.3. Trading in INVL Baltic Farmland, AB shares 2017 - 2021: 2017 2018 2019 2020 2021 Share price, EUR - open 3.340 4.300 3.500 3.480 5.000 - high 4.300 4.800 4.100 5.200 9.000 - low 3.150 3.500 3.420 3.500 4.900 - medium 3.831 4.097 3.718 4.352 7.071 - last 3.890 3.500 3.480 5.050 7.700 Turnover, units 16,064 6,787 10,259 18,145 24,012 Turnover, EUR 61,534.29 27,804.16 38,144.04 78,973.42 169,789.76 Traded volume, units 179 105 105 471 861 Table 8.4. Capitalisation, 2017-2021. Last trading date Number of shares granted with voting rights, units Last price, EUR Capitalisation, EUR 31.03.2017 3,228,510 4.30 13,882,593 30.06.2017 3,228,510 3.88 12,526,619 29.09.2017 3,228,510 3.80 12,268,338 29.12.2017 3,228,510 3.89 12,558,904 31.03.2018 3,228,510 4.32 13,947,163 30.06.2018 3,228,510 4.08 13,172,321 29.09.2018 3,228,510 3.80 12,268,338 29.12.2018 3,228,510 3.50 11,299,785 29.03.2019 3,228,510 3.58 11,558,066 28.06.2019 3,228,510 3.58 11,558,066 30.09.2019 3,228,510 4.00 12,914,040 30.12.2019 3,228,510 3.48 11,235,215 31.03.2020 3,228,510 4.00 12,914,040 30.06.2020 3,228,510 4.44 14,334,584.4 30.09.2020 3,228,510 5.00 16,142,550 30.12.2020 3,228,510 5.05 16,303,975.5 31.03.2021 3,228,510 5,70 18,402,507 30.06.2021 3,228,510 8,65 27,926,611.5 30.09.2021 3,228,510 6,30 20,339,613 30.12.2021 3,228,510 7,70 24,859,527 INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 45 The Company publishes Alternative performance measures (AVR), that are in use of the Company, provides indicators definitions and calculation formulas. All the information is disclosed in Appendix 4 to this Consolidated Annual report and in Company‘s web site section „Investor Relations“ → „Reports“ → „Indicator formulas“. The link: https://invlbalticfarmland.com/en/investor-relations/financial-information-and-reports/) Fig. 8.1. INVL Baltic Farmland, AB change of share price and indexes 1 (resource: Nasdaq Baltic, Baltic market indexes) Fig. 8.2. Change of share price of INVL Baltic Farmland, AB 1 The OMX Baltic Benchmark index (OMXBB – PI, GI, CAP) tracks the largest and most traded shares from all the industry sectors represented on the Nasdaq Baltic Market. The OMX Baltic Real Estate GI index is available at the Baltic level. Based on the FTSE Group’s Industry Classification Benchmark (ICB), each shows the trend in a specific industry and enables the comparison of companies in that industry. Indexes for each ICB industry and supersector are calculated in euros for the stocks on the Main and Secondary lists of the Nasdaq Baltic exchanges is based on the Industry Classification Benchmark (ICB) developed by FTSE Group (FTSE). INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 46 9. Dividends The General Shareholders’ Meeting decides upon dividend payment and sets the amount of dividends. The company pays out the dividends within 1 month after the day of adoption of the resolution on profit distribution. The General Shareholders Meeting of the Company held on 10 April 2018 approved the new wording of the Dividend Payment Policy. According to the Policy, it is decided to allocate EUR 0.10 dividend per share (exceptions, which state decrease / increase of the allocated dividend is disclosed in the Company's dividend payment policy). Persons have the right to receive dividends if they were shareholders of the company at the end of the tenth working day after the day of the General Shareholders’ Meeting which issued the resolution to pay dividends. According to the Law on Personal Income Tax and the Law on Corporate Income Tax, 15 % tax is applied to the dividends since 2014. The company is responsible for calculation, withdrawn and transfer (to the benefit of the State) of applicable taxes 2 . The General Shareholders Meeting of INVL Baltic Farmland, AB held on 9 April 2021, decided to allocate EUR 0.15 dividend per share. Dividends were allocated to the shareholders, who at the end of the tenth business day following the day of the General Shareholders Meeting that adopted a decision on dividend payment, i.e., on 23 April 2021 were shareholders of INVL Baltic Farmland, AB. On 6 May 2021, the Company announced that will start to allocate dividends from 7 May 2021. Dividends were allocated to those shareholders of the Company, who has provided existing bank accounts. Information relevant to the dividends paid by the Company, as well as matter of dividend payments and valid Dividend payment policy is published on Company’s web page. Table 9.1. Indexes related with shares. Company’s 2017 2018 2019 2020 2021 Net Asset Value per share, EUR 3.72 3.91 4.16 4.34 4.63 Price to book value (P/Bv) 1.05 0.89 0.84 1.16 1.66 Dividend yield 1.8 4.3 2.9 2.0 1.9 Dividends/ Net profit 0.26 0.43 0.28 0.36 0.34 * The Company publishes Alternative performance measures (AVR), that are in use of the Company, provides indicators definitions and calculation formulas. All the information is disclosed in Appendix 4 to this Consolidated Annual report and in Company‘s web site section „Investor Relations“ → „Reports“ → „Indicator formulas“. The link: https://invlbalticfarmland.com/en/investor-relations/financial-information-and-reports/) Fig. 9.1. Dividends allocation per share 2 This information should not be treated as tax consultation. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 47 10. Shareholders 10.1. Information about company‘s shareholders The total number of shareholders in INVL Baltic Farmland was 3,363on 31 December 2021. There are no shareholders entitled to special rights of control. Table 10.1.1. Shareholders who held title to more than 5% of INVL Baltic Farmland, AB authorised capital, votes as of 31 December 2021. The votes, authorised capital held of the management of the Company (manager, members of the Board) is also be disclosed. Name of the shareholder or company Number of shares held by the right of ownership, units Share of the authorised capital held, % Share of votes given by the shares held by the right of ownership, % Indirectly held voting rights, % LJB Investments, UAB code 300822575, Juozapavičiaus str. 9A, Vilnius 977,751 29.70 29.70 0 Irena Ona Mišeikienė 931,831 28.31 28.31 0 Lucrum Investicija, UAB code 300806471, Gynėjų str. 14, Vilnius 469,628 14.27 14.27 0 Alvydas Banys 252,875 7.68 7.68 29.70 3 Ilona Šulnienė 185,000 5.62 5.62 0 Indrė Mišeikytė 64,450 1.96 1.96 0 Darius Šulnis 0 0 0 14.27 4 Eglė Surplienė 0 0 0 0 Fig. 10.1.1. Votes as of 31 December 2021 3 According to Paragraph 1 of Article 16 of the Law on Securities of the Republic of Lithuania, Alvydas Banys is deemed to hold the voting rights of LJB Investments, a company controlled by him. 4 According to Paragraph 1 of Article 16 of the Law on Securities of the Republic of Lithuania, Darius Šulnis is deemed to hold the voting rights of Lucrum investicija, a company controlled by him. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 48 Table 10.1.2. Distribution of securities by investors’ groups as of 31 December 2021 Investors Shareholders Share of votes given by the owned shares Amount Part, % Amount Part, % Private persons 3,345 99.46 1,770,580 53.79 Legal persons (private corporations, Financial institutions and insurance corporations and their clients) 18 0.54 1,523 242 46.21 Total 3,363 3,291 549 10.1.2. Fig. Distribution of securities by investors’ groups and share of votes given by the owned shares as of 31 December 2021 Table 10.1.3. Distribution of securities by investors’ groups as of 31 December 2021 Regions Shareholders Share of votes given by the owned shares Amount Part, % Amount Part, % Lithuania 3,247 96.55 3,207,796 97.45 Other EU members 87 2.59 13,693 0.42 Non- EU countries 29 0.86 70,060 2.13 Total 3,363 3,291,549 10.2. Rights and obligations carried by the shares 10.2.1. Rights of the shareholders The Company’s shareholders have the following property and non-property rights: 1) to receive a part of the Company's profit (dividend); 2) to receive the company’s funds when the authorised capital of the company is reduced with a view to paying out the company’s funds to the shareholders; 3) to receive a part of assets of the company in liquidation; 4) to receive shares without payment if the authorised capital is increased out of the Company funds, except in cases provided by the laws of the Republic of Lithuania; 5) to have the pre-emption right in acquiring shares or convertible debentures issued by the Company, except in cases when the General Shareholders’ Meeting in the manner prescribed in the Law on Companies of the Republic of Lithuania decides to withdraw the pre-emption right in acquiring the Company’s newly issued shares or convertible debentures for all the shareholders; INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 49 6) to lend to the company in the manner prescribed by law; however, when borrowing from its shareholders, the company may not pledge its assets to the shareholders. When the company borrows from a shareholder, the interest may not be higher than the average interest rate offered by commercial banks of the locality where the lender has his place of residence or business, which was in effect on the day of conclusion of the loan agreement. In such a case the company and shareholders shall be prohibited from negotiating a higher interest rate; 7) other property rights provided by laws; 8) to attend the General Shareholders’ Meetings; 9) to submit to the Company in advance the questions connected with the issues on the agenda of the General Meeting of Shareholders; 10) to vote at the General Shareholders’ Meetings according to voting rights carried by their shares; 11) to receive information on the Company specified in the Law on Companies of the Republic of Lithuania; 12) to appeal to the court for reparation of damage resulting from nonfeasance or malfeasance by the Company’s manager and the Board members of their obligations prescribed by the Law on Companies of Republic of Lithuania and other laws of the Republic of Lithuania and the Company’s Articles of Association as well as in other cases laid down by laws; 13) to receive information on a public company whose shares are admitted to trading on a regulated market as specified in the Law on Companies of Financial Instruments Markets in the Republic of Lithuania; 14) other non-property rights established by laws and the Company’s Articles of Association. 10.2.2. Obligations of the shareholders The shareholders have no property obligations to the Company, except for the obligation to pay up, in the established manner, all the shares subscribed for at their issue price. If the General Shareholders’ Meeting takes a decision to cover the losses of the Company from additional contributions made by the shareholders, the shareholders who voted "for" shall be obligated to pay the contributions. The shareholders who did not attend the General Shareholders’ Meeting or voted against such a resolution shall have the right to refrain from paying additional contributions. The person who acquired all shares or part of shares in the company from the Company’s sole shareholder must notify the company of the acquisition or transfer of shares within 5 days from the conclusion of the transaction. The notice shall indicate the number of acquired or transferred shares, including share number per class, when the different share class is acquired, the nominal share price and the particulars of the person who acquired or transferred the shares (the natural person's full name, personal number, personal code and address; the name, legal form it has taken, registration number, address of the registered office of the legal person.). A document confirming the acquisition of the shares or an acquisition extract must be added to the notice. If an acquisition extract is provided, it must include the parties to the transaction, the subject of the transaction and the date of acquisition of the shares. Contracts between the company and holder of all its share shall be executed in a simple written form, unless the Civil Code prescribes the mandatory notarised form. A shareholder shall repay the Company any dividend paid out in violation of the mandatory norms of the Law on Companies, if the Company proves that the shareholder knew or should have known thereof. Each shareholder shall be entitled to authorise a natural or legal person to represent him when maintaining contacts with the Company and other persons. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 50 III. ISSUER’S MANAGING BODIES 11. Structure, authorities, the procedure for appointment and replacement The governing bodies of INVL Baltic Farmland, AB are: the General Shareholders’ Meeting, sole governing body – the director and a collegial governing body – the Board. The Supervisory Board is not formed. 11.1. General Shareholders’ Meeting 11.1.1. Powers of the General Shareholders’ Meeting Persons who were shareholders of the Company at the close of the accounting day of the meeting (the 5th working day before the General Shareholders’ Meeting) shall have the right to attend and vote at the General Shareholders’ Meeting in person, unless otherwise provided for by laws, or may authorise other persons to vote for them as proxies or may conclude an agreement on the disposal of the voting right with third parties. The shareholder’s right to attend the General Shareholders’ Meeting shall also cover the right to speak and enquire. The General Shareholders’ Meeting may take decisions and shall be held valid if attended by the shareholders who hold the shares carrying not less than ½ of all votes. After the presence of a quorum has been established, the quorum shall be deemed to be present throughout the General Shareholders’ Meeting. If a quorum is not present, the General Shareholders’ Meeting shall be considered invalid and a repeat General Shareholders’ Meeting must be convened, which shall be authorised to take decisions only on the issues on the agenda of the General Shareholders’ Meeting that has not been held and to which the quorum requirement shall not apply. An Annual General Shareholders’ Meeting must be held every year at least within 4 months from the close of the financial year. The General Shareholders’ Meeting shall have the exclusive right to:  amend the Articles of Association of the Company, unless otherwise provided for by the Law on Companies of the Republic of Lithuania;  change the premises of the Company;  elect members of the Board;  dismiss the Board or its members;  elect and dismiss the firm of auditors, set the conditions for auditor remuneration;  determine the class, number, nominal value and the minimum issue price of the shares issued by the Company;  take a decision on the remuneration policy approval of public companies whose shares are admitted to trading on a regulated market;  take a decision regarding conversion of shares of one class into shares of another class, approve share conversion procedure;  take a decision to change the number of shares of the same class issued by the company and the nominal value per share without changing the authorized capital;  take a decision to replace private limited liability company share certificates by shares;  approve the annual financial statements report;  take a decision on profit/loss appropriation;  take a decision on the formation, use, reduction and liquidation of reserves; General Shareholder‘s Meeting (Shareholders more than 3300) The Board (3 members) Director INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 51  approve the financial statements for the purpose of deciding on the allocation of dividends for a period shorter than a financial year;  to decide on the allocation of dividends for a period shorter than a financial year;  take a decision on the issue of convertible debentures;  take a decision on withdrawal for all the shareholders the pre-emption right to acquire the Company’s shares or convertible debentures of the specific issue;  take a decision to increase the authorised capital;  take a decision to reduce the authorised capital, except the cases provided for by the Law on Companies of the Republic of Lithuania;  take a decision for the Company to purchase its own shares;  take a decision on the approval of the Rules for the Offering of Shares to Employees and / or Members of the Bodies (hereinafter referred to as the Share Allocation Rules);  take a decision on the reorganisation or split-off of the Company and approve the terms of reorganisation or split-off, except the cases provided for by the Law on Companies of the Republic of Lithuania;  take a decision on transformation of the Company;  to take decisions on the restructuring of the Company in the cases established by the Law on Insolvency of Legal Persons of the Republic of Lithuania;  take a decision to liquidate the Company, cancel the liquidation of the Company, except the cases provided by the Law on Companies of the Republic of Lithuania;  elect and dismiss the liquidator of the Company, except the cases provided by the Law on Companies of the Republic of Lithuania. The General Shareholders’ Meeting may also decide on other matters assigned within the scope of its powers by the Articles of Association of the Company, unless these have been assigned under the Law on Companies of the Republic of Lithuania within the scope of powers of other organs of the Company and provided that, in their essence, these are not the functions of the governing bodies. 11.1.2. Convocation of the General Shareholders’ Meeting of INVL Baltic Farmland, AB The documents related to the agenda, draft resolutions on every item of agenda, documents what have to be submitted to the General Shareholders Meeting and other information related to realization of shareholders rights are published on the Company ’s website www.invlbalticfarmland.com section For investors, also available in the office of INVL Baltic Farmland (Gyneju str. 14, Vilnius) during working hours. Phone for information +370 5 279 0601. The shareholders are entitled: (i) to propose to supplement the agenda of the General Shareholders Meeting submitting draft resolution on every additional item of agenda or, than there is no need to make a decision - explanation of the shareholder (this right is granted to shareholders who hold shares carrying at least 1/20 of all the votes). Proposal to supplement the agenda is submitted in writing sending the proposal by registered mail to the Company at Gyneju str. 14, Vilnius, Lithuania, or delivered in person to the representative of the Company on business hours or by sending proposal to the Company by email [email protected]. The agenda is supplemented if the proposal is received no later than 14 days before the General Shareholders Meeting. In case the agenda of the Meeting is supplemented, the Company will report on it no later than 10 days before the Meeting in the same way as on convening of the Meeting; (ii) to propose draft resolutions on the issues already included or to be included in the agenda of the General Shareholders Meeting at any time prior to the date of the General Shareholders meeting (in writing, sending the proposal by registered mail to the Company at Gyneju str. 14, Vilnius, Lithuania, or delivered in person to the representative of the Company on business hours or by sending proposal to the Company by email [email protected]) or in writing during the General Shareholders Meeting (this right is granted to shareholders who hold shares carrying at least 1/20 of all the votes); (iii) to submit questions to the Company related to the issues of agenda of the General Shareholders Meeting in advance but no later than 3 business days prior to the General Shareholders Meeting in writing sending the proposal by registered mail to the Company at Gyneju str. 14, Vilnius, Lithuania, or delivered in person to the representative of the Company on business hours or by sending proposal to the Company by email [email protected]. All answers related to the agenda of the General Shareholders Meeting to questions submitted to the Company by the shareholders in advance, are submitted in the General Shareholders Meeting or simultaneously to all shareholders of the Company prior to the General Shareholders Meeting. The company reserves the right to answer to those shareholders of the Company who can be identified and whose questions are not related to the company's confidential information or commercial secrets. The shareholder participating at the Meeting and having the right to vote, must submit the documents confirming personal identity. A person who is not a shareholder shall, in addition to this document, submit a document confirming the right to vote at the Meeting. The requirement to provide the documents confirming personal identity does not apply when voting in writing by filling in a general ballot paper. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 52 Each shareholder may authorize either a natural or a legal person to participate and to vote on the shareholder's behalf at the Meeting. An authorised person has the same rights as his represented shareholder at the Meeting unless the authorized person's rights are limited by the power of attorney or by the law. The authorized persons must have the document confirming their personal identity and power of attorney approved in the manner specified by law which must be submitted to the Company no later than before the commencement of registration for the Meeting. The Company does not establish special form of the power of attorney. A power of attorney issued by a natural person must be certified by a notary. A power of attorney issued in a foreign state must be translated into Lithuanian and legalised in the manner established by law. The persons with whom shareholders concluded the agreements on the disposal of voting right, also have the right to attend and vote at the Meeting. Shareholder is entitled to issue power of attorney by means of electronic communications for legal or natural persons to participate and to vote on its behalf at the Meeting. No notarisation of such authorization is required. The power of attorney issued through electronic communication means must be confirmed by the shareholder with a safe electronic signature developed by safe signature equipment and approved by a qualified certificate effective in the Republic of Lithuania. The shareholder shall inform the Company on the power of attorney issued through the means of electronic communication by e-mail [email protected] not later than on the last business day before the Meeting. The power of attorney and notification must be issued in writing and could be sent to the Company by electronic communication means if the transmitted information is secured and the shareholder's identity can be identified. By submitting the notification to the Company, the shareholder shall include the internet address from which it would be possible to download software to verify an electronic signature of the shareholder free of charge. The Company is not providing the possibility to attend and vote at the Meeting through electronic means of communication. Shareholder or its representative may vote in writing by filling general voting bulletin. The form of general voting bulletin is presented at the Company's webpage www.invlbalticrealestate.com section For Investors. If shareholder requests, the Company shall send the general voting bulletin to the requesting shareholder by registered mail or shall deliver it in person against signature no later than 10 days prior to the General Shareholders Meeting free of charge. The filled general voting bulletin must be signed by the shareholder or its authorized representative. Document confirming the right to vote must be added to the general voting bulletin if an authorized person is voting. The filled general voting bulletin must be sent by the registered mail to the Company at Gyneju str. 14, Vilnius, Lithuania, or delivered in person to the representative of the Company no later than the day before of the General Shareholders Meeting. Ballots will be considered as valid if they are properly filled-in and received by the Company prior the Meeting. For the convenience of the shareholders of INVL Baltic Farmland the company provides notifications about convocation of General Shareholders Meeting, draft resolutions as well as general voting bulletins and resolutions adopted in the Meetings on the company‘s website section For Investors (Shareholders' Meetings). There was 1 (one) General Shareholders Meeting of INVL Baltic Farmland, AB during the 2021. On 18 March 2021 INVL Baltic Farmland announced about convocation of the General Shareholders Meeting and published the draft resolutions of the General Shareholders Meeting. On 9 April 2021 the Company announced resolutions of the General Shareholders Meeting: during the meeting the Shareholders of the Company were presented with the consolidated annual report of the Company, Audit Committee activity report and independent auditor's report on the financial statements and annual report, approved the consolidated and companies financial statements for 2021, and approved the profit distribution (allocating EUR 0.15 dividend per share). The shareholders also made a decision regarding the purchase of own shares of the INVL Baltic Farmland and regarding the election of the Audit Committee members. . 11.2. The Board The Company has a collegial management body - the Board. The Supervisory Board is not formed in the Company. 11.2.1. Powers of the Board The Board shall continue in office for the 4 year period or until a new Board is elected and commences its activities, but not longer than until the date of the Annual General Shareholders’ Meeting to be held during the final year of the term of office of the Board. If individual members of the Board are elected, they shall serve only until the expiry of the term of office of the current Board. The Board or its members shall commence their activities after the close of the General Shareholders’ Meeting which elected the Board or its members. Where the Articles of Association of the Company are amended due to the increase in the number of its members, newly elected members of the Board may commence their activities solely from the date of registration of the amended Articles of Association. The Board shall elect the chairman of the Board from among its members. The General Shareholders’ Meeting may dismiss from the office the entire Board or its individual members (as well as the Chairman of the Board) before the expiry of their term of office. A member of the Board may resign from his post before the expiry of his term of office, notifying the Board in writing at least 14 calendar days in advance. The Board shall have all authorities provided for in the Articles of Association of the Company as well as those assigned to the Board by the laws. The activities of the Board shall be based on collegial consideration of issues and decision-making as well as shared responsibility to the General Shareholders’ Meeting for the consequences of the decisions made. Striving for as big benefit for the Company and shareholders as possible and in order to ensure the integrity and transparency of the control system, the Board closely cooperates with the manager of the Company. The procedure of work of the Board shall be laid down in the rules of procedure of the Board. The Board shall consider and approve:  Annual report of the Company;  Interim report of the Company; INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 53  the management structure of the Company and the positions of the employees;  the positions to which employees are recruited through competition;  regulations of branches and representative offices of the Company. The Board shall elect and dismiss from office the manager of the Company, fix his salary and set other terms of the employment contract, approve his job description, provide incentives for and impose penalties against him. The Board of a public company whose shares are admitted to trading on a regulated market shall determine the remuneration of the manager of the company in accordance with the remuneration policy, as stated on the Law on Companies of the Republic of Lithuania. The Board shall determine which information shall be considered to be the Company's commercial secret and confidential information. Any information which must be publicly available under the laws may not be considered to be the commercial secret and confidential information. The Board shall take the following decisions:  for the Company to become an incorporator or a member of other legal entities;  to open branches and representative offices of the Company;  to invest, dispose of or lease the fixed assets which book value exceeds 1/20 of the authorised capital of the Company (calculated individually for every type of transaction);  to pledge or mortgage the fixed assets which book value exceeds 1/20 of the authorised capital of the Company (calculated for the total amount of transactions);  to offer surety or guarantee for the discharge of obligations of third parties for the amount which exceeds 1/20 of the authorised capital of the Company;  to acquire the fixed assets for the price which exceeds 1/20 of the authorised capital of the Company;  other decisions assigned to the scope of powers of the Board by the Law on Companies of the Republic of Lithuania, Articles of Association or the decisions of the General Shareholders’ Meeting. The Board shall analyse and evaluate the information submitted by the manager of the Company on: 1) the organisation of the activities of the Company; 2) the financial status of the Company; 3) the results of business activities, income and expenditure estimates, the stocktaking data and other accounting data of changes in the assets. The Board shall analyse and assess a set of Company's and consolidated annual financial statements and draft of profit/loss appropriation and together with suggestions and proposals shall submit them to the General Shareholders’ Meeting together with the annual report of the Company. The Board shall analyze and evaluate the draft remuneration policy of the companies whose shares are admitted to trading on a regulated market and submit it to the General Shareholders Meeting together with proposals related to the policy. It shall be the duty of the Board to convene and organise the General Shareholders’ Meetings in due time. 11.2.2. Procedure of work of the Board The order of the formation of the Board of the company should ensure objective, impartial and fair representation of minority shareholders of the company: names and surnames of the candidates to become members of the Board of the company, information about their education, qualification, professional background, positions taken in supervisory and management Boards of other companies, owned block of shares in other companies, larger than 1/20, potential conflicts of interest, information on whether the candidates are applied to administrative sanctions or punishment for violations / crimes against the economy, business policy, property, property rights and property interests, or do they have no obligations neither functions which would threaten the safe and reliable operations of the company, or whether candidates meet the legal requirements made for the Managers, are disclosed not later than 10 days prior the General Shareholders’ Meeting in which the election of the Members of the Board is intended, so that the shareholders would have sufficient time to make an informed voting decision In order to maintain a proper balance in terms of the current qualifications possessed by its members, the desired composition of the Board of the company are determined with regard to the company’s structure and activities. The Board evaluates its performance once a year. No evaluation of the independence of the Board members has been carried out. Any Member of the Board of the company must confound companies property with its own property and do not use it or information which they received while holding position as the Members of the Board for personal benefit or for the benefit of third party on other way than the General Shareholders Meeting and the Board allows it. Any Member of the Board of the company within 5 (five) days must inform the Manager or the Chairman of the company on any subsequent changes in provided information that have been submitted for shareholders prior to the election of the Member of the Board. Changes in provided information are disclosed in the company's annual report. Each Member of the Board actively participates in the Meetings of Board and devotes sufficient time and attention to perform his duties as the Member of the Board. 5 Meetings of the Board of the company have been held in 2021. Since the start of the company, the composition of the Board has not changed and consisted from: Alvydas Banys, Indrė Mišeikytė and Darius Šulnis. Members of the Board Alvydas Banys, Darius Šulnis and Indrė Mišeikytė attended all the Meetings of the Board personally in 2021. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 54 11.3. The Director The manager of the Company (the Director) shall be elected and dismissed from office by the Board which shall also fix his salary, approve his job description, provide incentives and impose penalties. An employment contract shall be concluded with the Director. The Director shall assume office after the election, unless otherwise provided for in the contract concluded with him. If the Board adopts a decision on his removal from office, the employment contract therewith shall be terminated. In his activities, the Director shall be guided by laws and other legal acts, the Articles of Association of the Company, decisions of the General Shareholders’ Meeting and the Board, his job description. The Director is accountable to the Board. The Director shall organise daily activities of the Company, hire and dismiss employees, conclude and terminate employment contracts therewith, provide incentives and impose penalties. The Director shall act on behalf of the Company and shall be entitled to enter into transactions at his own discretion. The Director may conclude the transactions to invest, dispose of or lease the fixed assets for the book value which exceeds 1/20 of the authorised capital of the Company (calculated individually for every type of transaction), to pledge or mortgage the fixed assets for the book value which exceeds 1/20 of the authorised capital of the Company (calculated for the total amount of transactions), to offer surety or guarantee for the discharge of obligations of third parties for the amount which exceeds 1/20 of the authorised capital of the Company, to acquire the fixed assets for the price which exceeds 1/20 of the authorised capital of the Company, provided there is a decision of the Board to enter into these transactions. The Director shall be responsible for:  the organisation of activities and the implementation of objects of the company;  preparation of the draft remuneration policy, disclosure of the remuneration policy and the remuneration report publicly on the website of a Company;  the drawing up of the annual financial statements and preparation of the annual report of the Company;  preparation of a draft decision on dividend allocation for a period shorter than a financial year, preparation of the interim financial statements and also, preparation of an interim report, related to decision on dividend allocation for a period shorter than a financial year. The provisions of the Law on Financial Statements of the Company regulating the preparation and publication of the annual report shall apply mutatis mutandis to the interim report;  drafting of the Share Allocation Rules;  the conclusion of the contract with the firm of auditors where the audit is mandatory or required under the Statutes of the company;  the submission of information and documents to the General Shareholders Meeting and to the Board in cases stated in the Law on Companies or at their request;  the submission of documents and particulars of the company to the administrator of the Register of Legal Persons;  the submission of the documents of a public limited liability company to the Bank of Lithuania and the Central Securities Depository of Lithuania;  the publication of information referred to in this Law in the daily indicated in the Statutes;  notification to shareholders and the Board of the Company about key events relevant to the Company's operations;  the submission of information to shareholders;  the fulfilment of other duties laid down in this Law and other laws and legal acts as well as in the Statutes and the staff regulations of the manager of the company. The Director must keep commercial secrets and confidential information of the Company which he learned while holding this office. 12. Information about members of the Board, Company providing accounting services The Board of INVL Baltic Farmland, AB has been elected for the new four-year term of office during the General Shareholders Meeting held on 10 April 2018. The shareholders of the Company approved the Board of the same composition as the Board operating in 2014-2018. Mr. Banys was elected as the Chairman of the Board. Mr. Šulnis and Ms. Mišeikytė were elected as the Members of the Board. From 30 June 2015 Egle Surpliene holds position as a director of the company. Alvydas Banys - Chairman of the Board Main workplace – Invalda INVL, AB (code 121304349, Gynėjų str. 14, Vilnius) – Adviser, Chairman of the Board INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 55 The term of office From 2018 until 2022 Educational background and qualifications Vilnius Gediminas Technical University. Faculty of Civil Engineering. Master in Engineering and Economics. Junior Scientific co-worker. Economic‘s Institute of Lithuania‘s Science Academy. Work experience Since 1 July 2013 Invalda INVL, AB – Advisor Since 2007 LJB Investments, UAB – Director Since 2007 LJB Property, UAB – Director 1996 – 2006 Invalda, AB – Vice President 1996 – 2007 Nenuorama, UAB – President Owned amount of shares in INVL Baltic Farmland Personally: 252,875 units of shares, 7.68 % of authorised capital, 7.68 % of votes. Together with controlled company LJB Investments: 1,230,626 units of shares, 37.38 % of authorized capital, 37.38 % of votes. Participation in other companies Invalda INVL, AB (code 121304349, Gynėjų str. 14, Vilnius) – Chairman of the Board Litagra, UAB (code 304564478, Savanorių pr. 173, Vilnius) – Member of the Board INVL Asset Management, UAB (code 126263073, Gynėjų str. 14, Vilnius) managed fund INVL Baltic Sea Growth Fund - Member of the Investment Committee Indrė Mišeikytė - Member of the Board Main workplace – Invalda INVL, AB (code 121304349, Gynėjų str. 14, Vilnius) – Adviser, Member of the Board The term of office From 2018 until 2022 Educational background and qualifications Vilnius Gedimino Technical University. Faculty of Architecture. Master in Architecture Work experience Since May 2012 Invalda INVL, AB – Advisor 2013 - 2019 Invalda Privatus Kapitalas, AB – Advisor Since 2002 Inreal Valdymas, UAB – Architect 2000 - 2002 Gildeta, UAB – Architect Owned amount of shares in INVL Baltic Farmland Personally: 64,450 units of shares, 1.96 % of authorised capital and votes Participation in other companies Invalda INVL, AB (code 121304349, Gynėjų str. 14, Vilnius) – Member of the Board UTIB INVL Technology (code 300893533, Gynėjų str. 14, Vilnius) – Member of the Supervisory Board Darius Šulnis - Member of the Board Main workplace – Invalda INVL, AB (code 121304349, Gynėjų str. 14, Vilnius) – President, Member of the Board The term of office From 2018 until 2022 INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 56 Educational background and qualifications Duke University (USA). Business Administration. Global Executive MBA. Vilnius University. Faculty of Economics. Master in Accounting and Audit. Financial broker‘s license (General) No. A109. Work experience 2006 – 2011 Invalda, AB – President. 2011 – 2013 Invalda, AB – Advisor. Since May 2013 Invalda INVL, AB – President. 2002 – 2006 Invalda Real Estate, UAB (current name Inreal Valdymas) – Director 1994 – 2002 FBC Finasta, AB – Director Owned amount of shares in INVL Baltic Farmland Personally: 0 units of shares, 0.00 % of authorised capital and votes. Together with controlled company Lucrum Investicija: 469,628 units of shares, 14.27 % of authorised capital and votes. Participation in other companies Invalda INVL, AB (code 121304349, Gynėjų str. 14, Vilnius) – Member of the Board, the president INVL Asset Management, UAB (code 126263073, Gynėjų str. 14, Vilnius) – Chairman of the Board Litagra, UAB (code 304564478, Savanorių pr. 173, Vilnius) – Member of the Board Šiaulių bankas, AB (code112025254, Tilžės str. 149, Šiauliai) – Member of the Supervisory Board INVL Baltic Sea Growth Fund (code 126263073, Gynėjų str. 14, Vilnius) - Managing Partner, Investment Committee Member Eglė Surplienė – Director Main workplace - Gerovės valdymas, UAB FPĮ (code 302445450, Gedimino pr. 20-27, Vilnius) – director Educational background and qualifications Vilnius University, Faculty of Economic Cybernetics and Finance, Economic Cybernetics studies, Economics – mathematics diploma (equivalent of Master's degree) 2009 – Award in Financial Planning (CII program and exam) certificate. 2005 – OMX Vilnius dealer certificate 1996 – General financial broker license Work experience October 2009 - present – Wealth manager, UAB FPI Geroves Valdymas March 2009 - present – Director, UAB DIM investment September 2014 - June 2016 – Director, UAB Margio investicija August 2006 - October 2009 – Wealth manager, VIP Clients manager, AB FBC Finasta, AB bank Finasta June 2005 - July 2006 – Project manager, UAB Zabolis ir partneriai June 1999 - June 2005 – Member, Deputy Director of the Commission, Securities Commission of Lithuania June 1995 - June 1999 – Head of Issuer Division, UAB FMI Vilfima June 1993 - June 1995 - Member of Market Regulation Division, Securities Commission of Lithuania Owned amount of shares in INVL Baltic Farmland, AB Personally: 0 units of shares, 0.00 % of authorised capital and votes. Participation in other companies Atelier Investment Management, UAB (code 303335430, Žemaitijos str. 8-20, Vilnius) – Chairman of the Board Gerovės valdymas, UAB FPĮ (code 302445450, Gedimino pr. 20-27, Vilnius) – Director Gerovės partneriai, KŪB (code 304746185, Gedimino pr. 20, Vilnius) – Full member DIM investment, UAB (code 301145749, Pasakų str. 5, Vilnius ) – Director UTIB INVL Baltic Real Estate (code 152105644, Gynėjų str. 14, Vilnius) – Member of the Supervisory Board Invalda INVL, AB provides accounting services and preparation of the documents related with bookkeeping for INVL Baltic Farmland, AB according to an agreement signed on 30 April 2014 No. 20140430/03. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 57 13. Information about the Audit Committee of the company The Audit Committee consists of 2 independent members. The members of the Audit Committee are elected by the General Shareholders’ Meeting. The main functions of the Committee are the following:  provide recommendations for the Board of the company with selection, appointment, reappointment and removal of an external audit company as well as the terms and conditions of engagement with the audit company;  monitor the process of external audit;  monitor how the external auditor and audit company follow the principles of independence and objectivity;  observe the preparation process of company‘s financial reports;  monitor the efficiency of company’s internal control and risk management systems. Once a year review the need of the internal audit function;  monitor if the company‘s board and/or managers properly response to the audit firm‘s recommendations and comments. The Member of the Audit Committee of INVL Baltic Farmland, AB may resign from his post before the expiry of term of office, notifying the Board of the company in writing at least 14 calendar days in advance. When the Board of the Company receives the notice of resignation and estimates all circumstances related to it, the Board may pass the decision either to convene the Extraordinary General Shareholders Meeting to elect the new member of the Audit Committee or to postpone the question upon the election of the new member of the Audit Committee until the nearest General Shareholders Meeting. In any case the new member is elected till the end of term of office of the operating Audit Committee. 13.1. Procedure of work of the audit committee The Audit Committee is a collegial body, taking decisions during meetings. The Audit Committee may take decisions and its meeting should be considered valid, when both members of the Committee participate in it. The decision should be passed when both members of the Audit Committee vote for it. The Member of the Audit Committee may express his will – for or against the decision in question, the draft of which he is familiar with – by voting in advance in writing. Voting in writing should be considered equal to voting by telecommunication end devices, provided text protection is ensured and it is possible to identify the signature. The right of initiative of convoking the meetings of the Audit Committee is held by both Members of the Audit Committee. The other Member of the Audit Committee should be informed about the convoked meeting, questions that will be discussed there and the suggested drafts of decisions not later than 3 (three) business days in advance in writing (by e-mail or fax). The meetings of the Audit Committee should not be recorded, and the taken decisions should be signed by both Members of the committee. When both Audit Committee Members vote in writing, the decision should be written down and signed by the secretary of the Audit Committee who should be appointed by the Board of the Company. The decision should be written down and signed within 7 (seven) days from the day of the meeting of the Audit Committee. The Audit Committee should have the right to invite the Manager of the Company, Member(s) of the Board, the chief financier, and employees responsible for finance, accounting and treasury issues as well as external auditors to its meetings. Members of the Audit Committee may receive remuneration for their work in the committee at the maximum hourly rate approved by the General Shareholders’ Meeting. The Company's Audit Committee is guided by the Regulations of the Audit Committee (hereinafter referred to as the Regulations) approved by the General Shareholders Meeting of the Company held on 22 March 2017. The Regulations are published on the Company's website in the section For investors. 13.2. Members of the Audit Committee During the General Shareholders Meeting of INVL Baltic Farmland held on 9 April 2021, the decision to elect Dangutė Pranckėnienė, partner and auditor of Moore Stephens Vilnius, UAB and Tomas Bubinas, Chief Operating Officer at Biotechpharma, UAB for the Audit Committee for the 4 (four) years of office term has been adopted. Both members of the Audit Committee are independent, having submitted an notice certifying their independence. During the reporting period the composition of the Audit Committee remain unchanged. Tomas Bubinas – Independent Member of the Audit Committee The term of office Since 2021 till 2025 Educational background and qualifications 2004 - 2005 Baltic Management Institute (BMI), Executive MBA 1997 - 2000 Association of Chartered Certified Accountants. ACCA. Fellow Member INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 58 1997 Lithuanian Sworn Registered Auditor 1988 - 1993 Vilnius University, Msc. in Economics Work experience Since 2013 Chief Operating Officer at Biotechpharma, UAB 2010 - 2012 Senior Director, Operations. TEVA Biopharmaceuticals (USA) 2004 - 2010 CFO for Baltic countries, Teva Pharmaceuticals 2001 - 2004 m. CFO, Sicor Biotech 1999 - 2001 Senior Manager, PricewaterhouseCoopers 1994 - 1999 Senior Auditor, Manager, Coopers & Lybrand. Owned amount of shares in INVL Baltic Farmland - Dangutė Pranckėnienė – Independent Member of the Audit Committee The term of office Since 2021 till 2025 Educational background and qualifications 1995 - 1996 Vilnius Gediminas Technical University, Master of Business Administration. 1976 - 1981 Vilnius University, Master of Economics. The International Coach Union (ICU), professional coucher name, license No. E-51. Lithuanian Ministry of Finance, the auditor's name, license No. 000345. Work experience Since 1997 the Partner at Moore Mackonis, UAB (previous name Moore Stephens Vilnius and Verslo auditas) 1996 - 1997 Audit Manager, Deloitte & Touche 1995 - 1996 Lecturer, Vilnius Gediminas Technical University 1982 - 1983 Lecturer, Vilnius University Owned amount of shares in INVL Baltic Farmland - 14. Information on the Issuer’s payable management fee, the amounts calculated by the Issuer, other assets transferred and guarantees granted to the Managing bodies and company providing accounting services CEO of the company is entitled only to a fixed salary. The company does not have a policy concerning payment of a variable part of remuneration to the management. During the year 2021 to the Board members, which are shareholders of the Company, were paid EUR 40 thousand of dividends, net of tax. To the entities, which are controlled by the Board members, were paid EUR 217 thousand of dividends, net of tax. Natural persons, who are related to the Board members of the company, were paid EUR 128 thousand of dividends, net of tax. There were no assets transferred, no guarantees granted, no bonuses paid and no special pay-outs made by the company to its managers. The Members of the Board were not granted with bonuses by other companies of INVL Baltic Farmland, AB group. INVL Baltic Farmland, AB Group and the Company for the company providing accounting services respectively paid EUR 34 thousand and EUR 5 thousand during the reporting period (in 2020 - respectively EUR 15 thousand and EUR 3 thousand; in 2019 – respectively EUR 15 thousand and EUR 3 thousand; in 2018 – respectively EUR 15 thousand and EUR 3 thousand; in 2017 – respectively EUR 15 thousand and EUR 3 thousand). According to Article 23 (3) of the Law on Financial Statements of Enterprises of the Republic of Lithuania, the Company must publish the Remuneration Report from the year 2020. The Company’s Remuneration Report is provided in the Appendix 5 of the Annual Report. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 59 Table 14.1. Information about calculated remuneration for the CEO of the issuer for 2019- 2021 (EUR) 2019 2020 2021 For members of administration (the CEO) 2,043 2,044 2,044 INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 60 IV. INFORMATION ABOUT THE ISSUER’S AND ITS GROUP COMPANIES’ ACTIVITY 15. Overview of the Issuer and its group activity 15.1. Business environment According to the data of Statistics Lithuania, in 2021, the average annual inflation in Lithuania amounted to 4.7 %. (compared to 2020, the average annual inflation was 1.2 %). Average annual inflation was mainly driven by higher prices for fuels and oil, heat, solid fuels, vegetables, milk and dairy products, gas, bread and cereal products, restaurant and café services, vehicle maintenance and repair services, electricity, lottery tickets and decreased in the water supply prices. In 2021, the prices of consumer goods in Lithuania increased by 11.7%, while the prices for consumer services increased by 7.8 %. In 2021, the average annual inflation rate in the European Union was 2.9 % and 2.6 % in the euro area. In Lithuania, the average annual inflation in 2021 was calculated according to the consumer price index harmonised with the EU countries, which accounted for 4.6 %. In 2021, according to the data of the Statistics Lithuania, Lithuania’s gross domestic product (GDP) at current prices amounted to EUR 55.4 billion. Compared to 2020, the real change in GDP, seasonally and working day adjusted, was positive at 5.1 %. The change in GDP in 2021 was positively influenced by a significant increase in the performance of retail trade, except of motor vehicles and motorcycles, and results of activities of industrial enterprises. The GDP (seasonally and working-day adjusted and quarter on quarter) grew the most in the first (2.1 %) and second (2 %) quarters. The GDP grew by 0.04 % in the third quarter and by 0.5 % in the fourth quarter. According to the Bank of Lithuania, in 2021, the global economy recovered, but slowed at the end of the year. The slowdown in the global economy is mainly due to the high incidence of COVID-19 (which, even without severe restrictions, is worsening household expectations) and the continuing tensions in supply chains. Although the global COVID-19 vaccination population is increasing and the risk of restrictions that could have a significant negative impact on economic development is diminishing, the high number of COVID-19 cases and the rapid spread of Omicron variant have led some countries to renew their restrictions, and yet again increases uncertainty about when the pandemic will be overcome. In addition, there are still no signs of normalisation and tensions in supply chains, such as delivery times, remain relatively close to historic highs. At the same time, it should be noted that, in contrast to the beginning of the pandemic, when long delivery times were associated with supply-side restriction, they are now more associated with extremely high demand for goods. On the one hand, households are expected to increase their use of services in the near term as pandemic constraints ease. This would reduce the demand for goods and the tensions over their supply. On the other hand, growing labour shortages and rising energy prices on global markets are forcing the cessation of production of some goods, which poses an additional risk that tensions in supply chains will persist for longer than previously thought. At present, they are not expected to fully normalise until 2023. According to the Ministry of Finance of the Republic of Lithuania, in 2021, businesses were able to adapt to the changed conditions caused by the COVID-19 pandemic. As a result, changes in the value added generated by almost all economic activities in 2021 were positive and the country’s economic growth was one of the fastest in the European Union. However, the further development of a large number of enterprises is limited by staff shortages. Although labour force participation has increased with the lifting of quarantine and the easing of contact restrictions, and the unemployment rate has approached pre-pandemic levels, the level of job vacancies shows that the country's labour shortage is the highest since the beginning of 2008. Increasing competition for workers was one of the key factors behind a nearly 10 % annual wage growth in the country. Wage growth was recorded in all economic activities, including the accommodation and catering, leisure organisation and retail trade activities, which suffered the most during the pandemic, where wages grew at double-digit rates. The Ministry of Finance forecasts that in 2022, taking into account the situation in the labour market, rising salaries of public sector employees and increasing minimum monthly wage, the growth rate of wages in Lithuania will reach 9.3 %. The growing pressure to increase wages may contribute to the factors limiting the development of production, but according to the Bank of Lithuania, rapidly rising wages have not yet reduced the competitiveness of Lithuanian business abroad, and wages still lag behind the EU average more than productivity (-35 % and -29 % respectively). The Bank of Lithuania’s Review of the Development and Prospects of the Lithuanian Economy states that the further development of the Lithuanian economy will continue to be determined by the global management of the pandemic situation, the recovery of domestic demand and the development of export-oriented activities. The scale of the pandemic and adaptation to it both in Lithuania and abroad will continue to have a decisive impact on economic activity. Households should benefit from increased access to previously limited services. Although their purchasing power growth will be limited by rising inflation, household consumption in 2022 is still expected to grow significantly faster than was usual before the pandemic and to reach around 4 %, according to the Ministry of Finance. Such developments in household consumption should be driven by household disposable income growth higher than inflation and a gradual return to household savings to pre-pandemic levels. It is forecast that the development of household consumption of Lithuania’s most important trading partners will be similar, which will also favour the demand for Lithuanian goods and services and contribute to the further growth of Lithuanian exports of goods and services, which, according to the Ministry of Finance, could reach about 5.2 % per year. However, the development of exports in 2022 will be partially limited by unfavourable factors, such as the imposition of sanctions on Belarusian exports or the increase in capacity utilisation to the highest level since the release of the data. Nonetheless, due to the expected growth in investment, resulting from shortage of production capacity and labour, and the increased flow of EU support, some of the adverse effects will somewhat significantly limit exports only short term. All of these factors are expected to lead to a relatively significant economic growth in 2022. Lithuania’s real GDP in 2022 is projected to grow by 3.6 %. However, the continuing tensions in the supply chains, which may persist until 2023, expensive energy resources and various factors related to Lithuania’s domestic economic development, which are driving up service prices the most, will continue to affect inflation in Lithuania. It is estimated that in 2022, the average annual inflation will still rise to 5.1 %. Inflation will also be INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 61 affected by the increase in excise duties on alcoholic beverages and rising food prices. However, the Bank of Lithuania does not change its assessment that the increase in inflation is temporary: although inflation will remain high in the beginning of 2022, it should subside in the second half of the year. Despite all the challenges posed by the pandemic to the development of the Lithuanian economy, in 2020, the coordination of EU funds investment programmes for 2021-2027 period was completed. According to the European Union Support Center operating in Lithuania, a total of EUR 14.5 billion of EU assistance will be allocated to Lithuania in 2021-2027.(with EUR 12.8 billion allocated in 2014-2020), which is EUR 1.7 billion more than was allocated in the financial period 2014-2020. In the new financial period, Lithuanian farmers will receive higher direct payments, with EUR 4.9 billion allocated for this purposes, which is EUR 892 million more than in the previous financial period 2014-2020. From 2022, farmers will receive a payment of EUR 200 per hectare (currently receiving EUR 177), after which the payments will gradually increase. It is projected that in 2027, these payments will reach EUR 215 per hectare. This factor is especially important in order to ensure a level playing field for Lithuanian farmers in the EU internal market. According to the calculations of Statistics Lithuania, the value of agricultural production in 2021, compared to 2020, increased by 7.8 % at current prices. The value of crop production increased by 8.1 % and that of livestock production – by 7.2 %. The purchase prices of agricultural products increased by 15.6 %. The largest increases of purchase prices were in buckwheat (37.1 %), rapeseed (35.2 %) and potatoes (34.2%), and in livestock products – dairy products (16.9 %), cattle (14.7 %) and poultry (11.2%). According to the preliminary 2021 data of the Statistic Lithuania, the yields of sugar beets (16.7 %), legumes (13.1 %), cereals (8.6 %) and potatoes (7.8 %) decreased the most. The 4.2 % increase in rapeseed yield was due to the increased of rapeseed crop area. Livestock production volumes decreased by 0.9 % due to a lower production of poultry (5 %), sheep and goats (1.6 %) and lower milk produce (0.8 %). The direct payments for agricultural production increased by 10 %, up to EUR 387.8 million. Other subsidies on production decreased by 15.6 %, up to EUR 211 million. The value of agricultural services provided grew by 13 % over the year. The growth of prices of agricultural land in the past years was significantly affected by the consistently improving national economy, the growing incomes of the market players and the activity of the market players in more expensive territories provided with well- developed communications and road and services infrastructure. The prices of plots of agricultural land are also affected by the high profitability of agricultural activities supported by EU grants for agriculture as well as the increase in the sizes of farms resulting from acquisition or lease of additional agricultural land. The supply of plots of agricultural land in Lithuania is fairly active, but the selection of land plots suitable for farming is becoming scarce. Major farmers increase their facilities by purchasing small land plots, but the supply of these shrinks each year. Fertile land plots are sold very quickly. The restrictions on the acquisition of agricultural land enforced in Lithuania and the consistently growing purchase price of plots of agricultural land raise the demand for leased land and the lease rates. Young farmers, farmers with large farm areas and agricultural companies are very interested in the lease of land plots since after plots of agricultural land are leased a higher probability to subsequently purchase them appears in case land owners wish to sell their land plots. More stringent amendments to the Provisional Law on the Acquisition of Agricultural Land became effective in May 2014. These amendments do not allow related parties to acquire more than 500 hectares of land from the State or other persons. A new wording of the Law on the Acquisition of Agricultural Land became effective on 1 January 2018. The wording of the law enforced prior to 2018 only permitted the purchase of agricultural land to a person that has professional skills and competence, i.e. satisfies the eligibility requirements prescribed by the law. The new wording of the law enforced from 1 January 2018 does not contain any eligibility requirements. The list of persons that have the pre-emptive right to purchase private agricultural land was adjusted in the Law on the Acquisition of Agricultural Land. The new wording of the law ensures the right to purchase land for persons engaged in agricultural activities. The new wording of the law provides for the prohibition to land plot owners to set the condition of sale of a land plot providing that a person that enjoys the pre-emptive right only may avail of it if it acquires the land plot together with the other land plots offered for sale. This provision is no longer effective when land plots offered for sale have adjacent borders. The new wording of the Law on the Acquisition of Agricultural Land effective from 1 January 2018 provides that agreements of purchase and sale of land may only be executed with payments made via bank transfers. The new wording of the law also provides that related parties that manage in the Lithuanian territory by right of ownership agricultural land plots with an area greater than specified in the law (300 hectares, in certain cases 500 hectares) may conclude agreements of transfer of agricultural land plots with each other provided that the total area of the agricultural land acquired by such related parties does not increase as a result of such agreements and that the area of the agricultural land of each of these related parties does not exceed 500 hectares. INVL Baltic Farmland owns 100% of the shares of 18 private joint-stock companies, which, taken together, have purchased an approximately 3,000 hectares of agricultural land in Lithuania. Starting from 30 June 2015, when the simple administration agreement was signed with INVL Farmland Management, a company managed by Invalda INVL (one of the largest asset management group in the Baltic countries), the administration of land plots was assigned to this company. On 28 December 2020, an amendment to the Simple Property Administration Agreement No 20150630/01 was executed, on the basis of which the term of the agreement for property administration was extended until 31 December 2025. The enforced more stringent requirements for the acquisition of land have resulted in that companies of the INVL Baltic Farmland group are no longer able to directly invest in agricultural land in Lithuania and are unable to overtake the control of companies that manage agricultural land. INVL Baltic Farmland is seeking to earn in the long run from the increase in land rent and from the growth of the value of land. According to the data of the property valuation conducted in Q4 2021, the value of the land plots has increased in the course of the year by 8.2% and reached EUR 16.62 million. One hectare is valuated on average at EUR 5.36 thousand (divided by the total amount). The following graph shows the difference of prices of agricultural land in Lithuania by region: INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 62 Fig. 15.1.1. Map on values of land qualified as agricultural land in Lithuania. Source: the Centre of Registers (data as of 6 October 2021) https://www.registrucentras.lt/bylos/dokumentai/ntr/masvert/zem_zu2022.pdf Group key figures 31 December 2019 31 December 2020 31 December 2021 Controlled cultivated cropland area, ha 2,986 2,979 2,979 Book value of land, EUR thousand 14,719 15,364 16,620 Average rental income per hectare, EUR (not included the variable part of the rent, equal to the land lease payment payable to the state) 202 206 215 Consolidated equity, EUR thousand 13,443 14,015 14,942 Book value of one share, EUR 4.16 4.34 4.63 * Phase II of the Rail Baltica project was completed in 2020, 6.5556 ha of agricultural land was taken over for public use. Investment properties are stated at fair value and are valued by accredited valuer UAB korporacija Matininkai using sales comparison method. The valuation was performed in December 2019, 2020 and 2021. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 63 The balance sheet and profit (loss) summary reports Balance sheet, thousand EUR Group Company 31.12.2019 31.12.2020 31.12.2021 31.12.2019 31.12.2020 31.12.2021 Investment property 14,719 15,364 16,620 - - - Investments into subsidiaries - - - 9,347 10,123 11,436 Loans granted - - - 4,136 3,930 3,547 Trade receivables 302 198 170 14 10 18 Cash 113 302 144 17 31 27 Other assets 2 2 1 2 2 1 Deferred income tax liabilities 1,511 1,608 1,798 - - - Other liabilities 182 243 195 73 81 88 Consolidated equity 13,443 14,015 14,942 13,443 14,015 14,942 Profit (loss) 01.01.2019 – 31.12.2019 01.01.2020 – 31.12.2020 01.01.2021 – 31.12.2021 01.01.2019 – 31.12.2019 01.01.2020 – 31.12.2020 01.01.2021 – 31.12.2021 Revenue 645 649 665 - - - Revaluation of investment property 864 683 1,256 - - - Income before tax 1,341 1,049 1,655 1,158 916 1,428 Net profit 1,136 895 1,411 1,136 895 1,411 Indexes 2019 2020 2021 Return on Equity (ROE), % 8.71 6.52 9.75 Return on Assets (ROA), % 7.74 5.77 8.60 Liquidity ratio 2.29 2.07 1.62 Operating profit margin (pretax profit margin), % 207.91 161.63 248.87 Operating profit excluding revaluation of investment property margin, % 73.95 56.39 60.00 Earnings per share (EPS), EUR 0.35 0.28 0.44 Price earnings ratio (P/E) 9.94 18.04 17.50 Net profit margin (%) 176.12 137.90 212.18 EBITDA margin (%) 73.95 56.39 60.00 * The Company publishes Alternative performance measures (AVR), that are in use of the Company, provides indicators definitions and calculation formulas. All the information is disclosed in Appendix 4 to this Consolidated Annual report and in Company‘s web site section „For Investors“ → „Reports“ → „Indicator formulas“. The link: https://invlbalticfarmland.com/en/investor-relations/financial-information-and-reports/ 15.2. Significant Issuer’s and its group events during the reporting period, affect on the financial statement Financial results and information related to the dividends  On 18 March 2021, the Company announced an audited group results of 2020. The audited consolidated net profit of INVL Baltic Farmland, AB Group and the Company amounted to EUR 895 thousand, the revenue was EUR 649 thousand.  On 9 April 2021, the Company announced the approved audited annual financial information for 2020 together with the confirmation of responsible persons. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 64  On 18 March 2021, INVL Baltic Farmland informed that it is planning during 2021 to receive EUR 665 thousand of revenue and earn a consolidated net profit of EUR 385 thousand.  On 12 May 2021, the Company announced financial results for 3 months of 2021 - the unaudited consolidated net profit of the AB INVL Baltic Farmland group was EUR 106 thousand and the revenue was EUR 160 thousand.  On 6 May 2021, INVL Baltic Farmland to implement resolutions of the General Shareholders Meeting regarding allocation of Company’s profit, announced the procedure for the pay-out of dividends for 2020. On 9 April 2021, the General Shareholders Meeting of INVL Baltic Farmland, AB decided to allocate EUR 0.15 dividend per share. Dividends were paid to the shareholders who on 23 April 2021 were shareholders of INVL Baltic Farmland, AB. The Company informed that the dividends had been allocated from 7 May 2021.  On 26 July 021, the Company announced unaudited consolidated financial results of the INVL Baltic Farmland group: unaudited consolidated net profit amounted to EUR 203 thousand for 6 months of 2021 and the revenue was EUR 320 thousand. The Company published half year results for the 6 months of 2021, financial statements, factsheet and management statement.  On 3 November 2021, INVL Baltic Farmland announced unaudited results for 9 months of 2021: unaudited consolidated net profit of the AB INVL Baltic Farmland group was EUR 290 thousand and the revenue was EUR 481 thousand. General Shareholders Meeting  On 18 March 2021 INVL Baltic Farmland announced about convocation of the General Shareholders Meeting and published the draft resolutions of the General Shareholders Meeting. On 9 April 2021 the Company announced resolutions of the General Shareholders Meeting: during the meeting the Shareholders of the Company were presented with the consolidated annual report of the Company and independent auditor's report on the financial statements and annual report, approved the consolidated and companies financial statements for 2021, and approved the profit distribution (allocating EUR 0.15 dividend per share). The shareholders also decided regarding the purchase of own shares of the INVL Baltic Farmland and regarding the election of the Audit Committee members. The shareholders were presented also with the the Audit Committee activity report. . Management of the Company  On 10 December 2021 INVL Baltic Farmland published investor’s calendar for 2022: 28 February – audited financial reports and annual report; 10 May – factsheet for 3 months of 2022; 26 July – semi–annual report of 2022; 8 November – factsheet for 9 months of 2022. The group The companies during the reporting period rented agricultural land for farmers and agricultural companies and performed usual. 15.3. Employees There is only one employee (director) at INVL Baltic Farmland, AB. Invalda INVL, AB provides accounting services for the company. Employment agreements are concluded following requirements of the Labour Code of the Republic of Lithuania. Employees are employed and laid off following requirements of the Labour Code. There are no special employees’ rights and duties described in the employment agreements. There were 2 employees working at INVL Baltic Farmland and INVL Baltic Farmland subsidiary companies on 31 December 2021 (31 December 2020 – 2; 31 December 2019 – 2; 31 December 2018 – 2; 31 December 2017 - 2). 15.4. Environmental Protection Due to the corporate governance structure and the small amount of employees within the Company, it was considered inefficient to separately approve environmental policy. We seek to protect the productivity of the land while renting in land to the land tenants. By entering into contracts, the tenants are committed to ensure the timely and proper operation of the land, not to abandon it, to prevent it from being set aside and to carry out annual agricultural work. Actions which may have negative effect on fertility of the land, is prohibited. There is also an increase in certified organic and innovative farms in leased areas of the Company. 15.5. Disclosure of the impact of the COVID-19 pandemic In 2021 the Company’s operations were not be impacted or were be little impacted by the coronavirus because the agricultural land rental agreements which have been made are long-term and so far there are no announcements about disruptions of farming activity. The management of the Company informs that the effects of coronavirus in the agricultural sector are smaller than in the whole economy, therefore the coronavirus did not have a significant impact on the Company's results in 2021. 16. A description of the principal advantages, uncertainties encountered, risks and uncertainties 16.1. Advantages of investments Agricultural land in Lithuania is undervalued Agricultural land prices in Lithuania are among the lowest in the European Union, and much lower than in neighbouring Poland. This is caused by increased land fragmentation and other reasons. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 65 Land allows saving core capital and has a low risk After recent market turmoil, investors are paying more and more attention on capital preservation. Investment in agricultural land is backed by assets which has only a small possibility of devaluation. Historical data shows that land, in the long term, is characterized by strong core capital preservation features. Unlike investments in exhaustible metals, oil and gas resources, a well- managed agricultural land is a completely renewable resource, which remains productive forever. Land is a good protection against inflation Agricultural land, as an asset class, has a positive correlation with inflation. Historically, agricultural land values rose faster than inflation, therefore agricultural land is an effective insurance against inflation and a capital preservation tool. It may be attractive to investors, who are worried about governments' inflationary policies. Land generates stable income Unlike other popular insurance against inflation measures, such as precious metals, land provides a regular income to the investor, which, in the low interest environment, is often higher than the deposit or bond interest. Although land investment does not bring the highest income in the real estate sector, not depreciating assets with strong price growth potential and close to 100 % occupation (unlike commercial real estate, high-quality agricultural land demand is always high, regardless of the economic environment) generate the income. Investment in land is characterized by lower income volatility By placing agricultural land in a diversified portfolio, investors can reduce the risk of income shortage at a time when other assets generate little or no income. While the long-term rise in agricultural commodity prices positively affect the value of land, short-term fluctuations in the price of production are assumed by the farmer rather than the landowner. Historically, land had higher yield In developed countries agricultural land had higher profits than other asset classes, including equities, bonds and commercial real estate, despite the lower risk (measured as the standard deviation of the annual return). Land is an attractive diversification tool Agricultural land yield has a low or even negative correlation with traditional asset classes like stocks and bonds, and a small positive correlation with residential and commercial real estate. These features make farmland an attractive diversification tool that can reduce the impact of general market fluctuations on diversified portfolio. Agricultural land advantages compared with other real estate investments Investment in agricultural land is classified as a real estate, but has unique features. This allowed agricultural land to pr otect itself from extreme falls in the value of assets, which were experienced by residential and commercial property during the crisis. 16.2. Risk factors Information, provided in this section, should not be considered complete and covering all aspects of the risk factors associated with the activity and securities of the public joint-stock company INVL Baltic Farmland. Risk factors, associated with activities of INVL Baltic Farmland Restriction of the purchase of agricultural land The public joint-stock company INVL Baltic Farmland invests in agricultural land in Lithuania through its owned private companies. In 1 January 2014 changes to the Agricultural Land Acquisition temporary law (No. IX-1314) entered into force, providing restrictions of the purchase of agricultural land (including restriction of purchase of shares in the legal entity owning agricultural land). This law was changed from 1 January 2018 by Agricultural Land Acquisition law (No. XIII-801). These restrictions mean that the public joint- stock company INVL Baltic Farmland and its owned private companies will not be able to purchase agricultural land in Lithuania additionally and/or acquire shares in companies owning agricultural land. Prohibition stated in the law can reduce the amount of buyers of agricultural land, owned by subsidiaries of the public joint-stock company INVL Baltic Farmland, and thus the liquidity and price of the asset. The total investment risk The value of the investment in agricultural land can vary in the short term, depending on the harvest, prices of agricultural products, local demand and supply fluctuations, competition between farmers and financial situation. Investment in agricultural land should be carried out in the medium and long term, so that investor can avoid the short-term price fluctuations. Investing in real estate is connected with the long-term risks. After failure of investments or under other ill-affected circumstances (having been unable to pay for the creditors) the bankruptcy proceedings may be initiated. Agricultural production and other commodity price volatility risk Agricultural products and other commodities prices are historically characterized by very large fluctuations, on which, in many cases, depends the price of agricultural land. The main factor affecting profitability of agricultural business is the price of the crop (wheat, canola, etc.), but fuel, labour, fertilizers' and other commodity prices also affect the cost of agricultural activity, therefore their increase lowers profit margins and reduces the ability to pay higher prices for agricultural land leases. If high fuel, fertilizer INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 66 and labour costs coincide with the fall of agricultural output prices, farmers and investors in the agricultural sector may suffer a loss. Common agricultural risk The public joint-stock company INVL Baltic Farmland will seek to lease its owned agricultural land to farmers and agricultural companies for the highest price possible. Factors that could adversely affect the agricultural sector may be: weather conditions (floods, droughts, heavy rains, hail, frost, weeds, pests, diseases, fire, climate change related worsening conditions and others). Any of these factors, together or separately, could have a negative impact on farmers' incomes and farmland values. Part of the risks, not all, can be insured, but the insurance costs reduce agricultural profitability, thus not all Lithuanian farmers do it. Reliance on the European Union and national subsidies Lithuanian and the European Union farmers' activities and profits are highly dependent on the European Union's Common Agricultural Policy (CAP) - EU and national subsidies for agricultural activities. Recent changes to the CAP are valid for the period 2021-2027. Elimination of direct payments could have a negative impact on agricultural land rents and values. Land illiquidity risk Investments in agricultural land under certain market conditions are relatively illiquid, thus finding buyers for these lands can take time. Investors may consider the investment in agricultural land only if they do not have needs for the sudden liquidity. Risk of legislative and regulatory changes Lithuanian law, the European Union directives and other legislative changes may affect the income of farmers and agricultural land rents. For example, changes affecting agricultural products price controls, export restrictions, customs entry or withdrawal, more stringent environmental restrictions could adversely affect the profitability of agriculture. Tax increase risk Tax laws change may lead to a greater taxation of the public joint-stock company INVL Baltic Farmland and its group companies, which in turn may reduce the profits and assets of the company. Inflation and deflation risk It is likely that during its operational period the public joint-stock company INVL Baltic Farmland will face both inflation and deflation risks as investments in agricultural land are long term. If the profit from the agriculture land rent will be less than the inflation rate, it will result in loss of purchasing power. It is estimated that investment in agricultural land profitability is highly correlated with inflation. Credit risk The public joint-stock company INVL Baltic Farmland will seek to lease agricultural land plots in the highest price possible to farmers in Lithuania and agricultural companies. There is a risk that tenants of the land will not fulfil their obligations - it would adversely affect the profit of the public joint-stock company INVL Baltic Farmland. Large parts of liabilities not fulfilled in time may cause disturbances in activities of the public joint-stock company INVL Baltic Farmland, there might be a need to seek additional sources of financing, which may not always be available. The public joint-stock company INVL Baltic Farmland also bears the risk of holding funds in bank accounts or investing in short - term financial instruments. Liquidity risk The public joint-stock company INVL Baltic Farmland may be faced with a situation where it will not be able to settle with suppliers and other creditors in time. The company will seek to maintain adequate liquidity levels or secure funding in order to reduce this risk. Interest rate risk Interest rate risk mainly includes loans with a variable interest rate. The public joint-stock company INVL Baltic Farmland plans to use very small amount of debt. Rising interest rates worldwide may adversely affect the values of property - agricultural land. Large shareholders risk Three shareholders of the public joint-stock company INVL Baltic Farmland together with related parties hold more than 60 percent of shares and their voting will influence the election of the Members of the Boards of company, essential decisions regarding management of the public joint-stock company INVL Baltic Farmland, operations and financial position. There is no guarantee that the decisions made by the major shareholders' will always coincide with the opinion and interest of the minority shareholders. Large shareholders have the right to block the proposed solutions of other shareholders. Market-related risks INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 67 Market risk Shareholders of the public joint-stock company INVL Baltic Farmland bear the risk of incurring losses due to adverse changes in the market price of the shares. The stock price drop may be caused by negative changes in assets value and profitability of the company, general stock market trends in the region and the world. Trading of shares of the public joint-stock company INVL Baltic Farmland may depend on comments of the brokers and analysts and published independent analyzes of the company and its activities. The unfavourable analysts' outlook of the shares of the public joint-stock company INVL Baltic Farmland may adversely affect the market price of the shares. Non-professional investors assessing the shares are advised to seek the assistance of intermediaries of public trading or other experts in this field. Liquidity risk If demand for shares decreases or they are deleted from the stock exchange, investors will face the problem of realization of shares. If the financial situation of the public joint-stock company's INVL Baltic Farmland deteriorates, the demand for company's shares may drop, which will lead to fall in share price. Dividend payment risk Dividend payment to the shareholders of the public joint-stock company INVL Baltic Farmland is not guaranteed and will depend on the profitability, investment plans and the overall financial situation of the company. Tax and legal risk Changes in the equity-related legislation or state tax policy can change shares attractiveness of the public joint-stock company INVL Baltic Farmland. This may reduce the liquidity of the shares of the company and/or price. Inflation risk When inflation increases, the risk, that the stock price change may not offset the current rate of inflation, appears. In this case, the real returns from capital gain on market shares for traders may be less than expected. 16.3. The main indications about internal control and risk management systems related to the preparation of consolidated financial statements The Audit Committee supervises preparation of the consolidated financial statements. systems of internal control and financial risk management and how the company follows legal acts that regulate preparation of consolidated financial statements. The Company is responsible for the supervision and final review of the consolidated financial statements. To order to manage these functions properly, the Company is using an external provider of relevant services (Invalda INVL, AB). The Company, together with the accounting service provider constantly reviews International Financial Reporting Standards (IFRS) in order to implement in time IFRS changes, analyses company’s and group’s significant deals, ensures collecting information from the group’s companies and timely and fair preparation of this information for the financial statements, periodically informs the Board of the Company about the preparation process of financial statements. Accounting of all the Company Group‘s entities is provided by the same external accounting service provider (Invalda INVL AB) by using the unified accounting system, the standard chart of accounts and by applying unified accounting principles. Standardized data collection files prepared by Excel program are used for preparation of consolidated numbers. It also facilitates the automatic reconciliation and elimination of balances and transactions between subsidiaries in the preparation of consolidated accounts. Internal control of the financial numbers of the Group’s entities and of the Group financial statements is provided by CFO of external accounting service provider. 17. Significant investments made during the reporting period During the reporting period INVL Baltic Farmland, AB has not made any acquisitions. 18. Information about significant agreements to which the issuer is a party, which would come into force, be amended or cease to be valid if there was a change in issuer‘s controlling shareholder There are no significant agreements of the company which would come into force, be amended or cease to be valid if there was a change in issuer‘s controlling shareholder. 19. Information on the related parties’ transactions Information on the related parties’ transactions is disclosed in Notes 16 of consolidated financial statements for the year ended 31 December 2021. In addition, information regarding Transactions with Related Parties, according to the Law on Companies article 37 (2) , is published on the Company‘s web site – „For Investors“ → „Related parties transactions“. The link to the Company‘s web site: https://invlbalticfarmland.com/en/investor-relations/legal-documents/ At the time the report was published, the Company provides information about Company‘s Transactions with Related Parties in the Annex 3 part 5 of the consolidated annual report. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 68 Pursuant to paragraph 10 of Article 37 (2) of the Law on Companies of the Republic of Lithuania, the Company report the amounts of the Company's transactions with related parties, which were implemented in the ordinary course of business and with the same related party in the financial year. Name (Related party) Loan balance, EUR 01-01- 2021 Loans granted, EUR Repaid loans, EUR Interest calculated, EUR Repaid interests, EUR Amount of loan, EUR 31-03-2021 Avižėlė, UAB Code 303113077 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 138,562 0 -8,562 5,980 -2,050 133,930 Beržytė, UAB Code 30112915 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 306,794 15,000 -16,794 13,351 -12,196 306,155 Dirvolika, UAB Code 303112954 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 191,730 0 -21,000 7,969 -8,049 170,650 Duonis, UAB Code 303112790 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 253,967 0 -18,000 10,982 -11,047 235,902 Žemgalė, UAB Code 303112744 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 269,899 10,000 -29,899 11,284 -4,921 256,363 Linažiedė, UAB Code 303112922 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 82,738 5,000 -7,738 3,492 -3,492 80,000 Puškaitis, UAB Code 303112769 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 301,147 20,000 -100,000 10,684 -6,456 225,375 Kvietukas, UAB Code 303112687, Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 123,470 0 -13,000 5,147 -2,715 112,902 Laukaitis, UAB Code 303112694 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 246,843 1,258 -21,843 10,562 -4,572 232,248 Vasarojus, UAB Code 303112776 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 642,446 0 -35,000 27,804 -30,250 605,000 Lauknešys, UAB Code 303112655 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 134,512 0 -24,000 5,384 -2,958 112,938 Žiemkentys, UAB Code 303112648 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 446,701 0 -45,000 18,682 -20,383 400,000 Pušaitis, UAB Code 303113102 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 98,375 0 -3,000 4,320 -4,332 95,363 INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 69 Sėja, UAB Code 303113013 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 70,268 0 -30,000 2,523 -2,631 40,160 Žemynėlė, UAB Code 303112559, Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 119,431 609 -9,000 5,086 -2,615 113,511 Žalvė, UAB Code 303113045, Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 211,712 1 053 -21,712 8,879 -3,866 196,066 Ekotra, UAB Code 303112623 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 291,108 0 -60,000 11,260 -12,368 230,000 Total 3,546,563 * Company’s relationship with the other counterparty – the Companies are 100 percent managed by INVL Baltic Farmland, AB 20. Information on harmful transactions in which the issuer is a party There were no harmful transactions (those that are not in line with issuer‘s goals, not under usual market terms, harmful to the shareholders‘ or stakeholders‘ interests, etc.) made in the name of the issuer that had or potentially could have negative effects in the future on the issuer‘s activities or business results. There were also no transactions where a conflict of interest was present between the managing bodies of the Company, controlling shareholders‘ or other related parties‘ obligations to the issuer and their private interests. 21. Significant events since the end of the financial year There were no events since the end of the financial year. 22. Estimation of Issuer’s and Group’s activity last year and activity plans and forecasts 22.1. Evaluation of implementation of goals for 2021 The initial forecast of INVL Baltic Farmland for year 2021 was income of EUR 665 thousand and net profit of EUR 385 thousand. INVL Baltic Farmland had revenue of EUR 665 thousand in 2021 and earned unaudited net profit of EUR 1,411 thousand for the year. Profit was forecasted under the assumption that the value of agricultural land holdings in the balance sheet would not change and the change in the value of trade receivables by the buyers was not assessed, but a valuation conducted by the company Matininkai showed that land holding value had increased by 8.2% to EUR 16.62 million compared to previous year, or EUR 5.36 thousand per hectare. In addition, EUR 1 thousand reversal of impairment of trade receivables was recognized and due to decrease of overdue debts during the year the administration fee was increased by EUR 19 thousand. Excluding these non-estimated factors and the related income tax expense, INVL Baltic Farmland's profit would be EUR 359 thousand. Therefore, after assessing the favourable market trends that allowed to increase the value of assets, it can be stated that INVL Baltic Farmland has accomplished and exceeded the calculated profit forecasts for 2021. 22.2. Activity plans and forecasts At the time of issuing this report, the budget of 2022 year has not been approved. Upon approval, the Company will inform about the activity plans and forecasts in a separate notice. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 70 V. OTHER INFORMATION 23. Additional non - financial information As the Company has only one employee (director) (there were 2 employees working at INVL Baltic Farmland and INVL Baltic Farmland subsidiary companies on 31 December 2021), the Company is not subject to the requirements for the preparation of a non-financial statement. 24. References to and additional explanations of the data presented in the annual financial statements and consolidated financial statements All data is presented in consolidated and company’s financial statements explanatory notes of 2021. 25. Information on financial risk management objectives used for hedging measures which hedge accounting and of price risk, credit risk, liquidity risk and cash flow risk where the company group uses financial instruments and is an important evaluation of the property, own capital, liabilities, revenue and expenses The information is disclosed in Note 3 to the consolidated and the company's 2021 financial statements. 26. Information about activities of the Issuer and companies comprising the issuer’s group in the field of research and development INVL Baltic Farmland, AB did not deliver major researches and expansion projects in 2021. 27. Information about agreements of the Company and its managing bodies, members of the formed committees, or the employees’ agreements providing for compensation in case of the resignation or in case they are dismissed without a due reason or their employment is terminated in view of the change of the control (official offering) of the Company. There are no agreements of the company and the Members of the Board, or director providing for compensation in case of the resignation or in case they are dismissed without a due reason or their employment is terminated in view of the change of the control of the Company. 28. Information about any control systems in the employee share plan that are not exercised directly by employees The Issuer does not apply control systems to share-based payment schemes to its employees. 29. Information on audit company The company have not approved criteria for selection of the audit company, but normally ‘big 4’ audit firms (Deloitte, KPMG, PricewaterhouseCoopers and Ernst and Young) are invited to participate. In the General Extraordinary Shareholders’ Meeting of the company held 21 October 2020 the audit company PricewaterhouseCoopers, UAB was elected to provide audit services on annual financial statements of the company for the financial year of 2021. It was decided to conclude an agreement with the audit company to carry out of the audit of the annual financial statements of the AB INVL Baltic Farmland for 2020, 2021, 2022 financial years and establish the payment in the amount of EUR 11,100 per year (VAT will be calculated and paid additionally in accordance with the order established in legal acts). The amount of remuneration for audit services will be recalculated (increased) every year according to the average annual inflation of April month of the current year published by the Department of Statistics under the Government of the Republic of Lithuania, calculated according to the harmonized index of consumer prices (HICP). The Board of the INVL Baltic Farmland, AB reserves the right to increase the remuneration of the audit company by no more than 20 percent annually from the remuneration paid to the audit firm in the previous year in accordance with the terms of the audit services agreement. In 2021 the actual cost of audit services was EUR 11,189 after inflation indexation. Audit company PricewaterhouseCoopers, UAB Address of the registered office J. Jasinskio str. 16B, LT-03163, Vilnius Enterprise code 111473315 Telephone (+370 5) 239 2300 Fax (+370 5) 239 2301 E-mail [email protected] INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 71 Website www.pwc.com/lt No internal audit is performed in the company. 30. Data on the publicly disclosed information The information publicly disclosed of INVL Baltic Farmland, AB during 2021 is presented on the company’s website (Company‘s web site section „Investor Relations“ → „Regulated information“. The link: https://invlbalticfarmland.com/en/news/). Table 30.1. Summary of publicly disclosed information Date of disclosure Brief description of disclosed information 18.03.2021 Audited results of INVL Baltic Farmland group of 2020 18.03.2021 INVL Baltic Farmland plans to earn EUR 385 thousand net profit in 2021 18.03.2021 Convocation of the General Ordinary Shareholders Meeting of INVL Baltic Farmland and draft resolutions on agenda issue 18.03.2021 Regarding proposal of the Board of INVL Baltic Farmland to allocate dividends for the year 2020 09.04.2021 Resolutions of the General Shareholders Meeting of INVL Baltic Farmland 09.04.2021 Audited annual information of INVL Baltic Farmland for 2020 09.04.2021 Regarding approval of dividend allocation of INVL Baltic Farmland for the year 2020 06.05.2021 Procedure for the payout of dividends for the year 2020 12.05.2021 AB INVL Baltic Farmland factsheet for 3 months of 2021 26.07.2021 Unaudited results of INVL Baltic Farmland for 6 months of 2021 03.11.2021 AB INVL Baltic Farmland unaudited Interim information for 9 months of 2021 10.12.2021 INVL Baltic Farmland investor's calendar for 2022 Director Eglė Surplienė (The document is signed with a qualified electronic signature) INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 72 APPENDIX 1. INFORMATION ABOUT GROUP COMPANIES, THEIR CONTACT DETAILS Company Registration information Type of activity Contact details Ekotra, UAB Code 303112623 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 Investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Puskaitis, UAB Code 303112769 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 Investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Zemynele, UAB Code 303112559 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 Investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Kvietukas, UAB Code 303112678 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 Investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Lauknesys, UAB Code 303112655 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 Investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Vasarojus, UAB Code 303004626 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 Investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Laukaitis, UAB Code 303112694 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 Investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Ziemkentys, UAB Code 303112648 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 Investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Zemgale, UAB Code 303112744 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 Investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Avizele, UAB Code 303113077 Registration address Gyneju str. 14, Vilnius; Legal form – private limited liability company Registration date 01.08.2013 Investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Berzyte, UAB Code 303112915 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Duonis, UAB Code 303112790 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Pusaitis, UAB Code 3031131032 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 73 Zalve, UAB Code 303113045 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Seja, UAB Code 303113013 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Dirvolika, UAB Code 303112954 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Linaziede, UAB Code 303112922 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 01.08.2013 investments into agricultural land. Rent of the agricultural land. Telephone +370 5 279 0601 E-mail [email protected] Cooperor, UAB Code 303252162 Registration address Gyneju str. 14, Vilnius Legal form – private limited liability company Registration date 27.02.2014 Carries no activity Telephone +370 5 279 0601 E-mail [email protected] INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 74 APPENDIX 2. CORPORATE GOVERNANCE CODE INVL Baltic Farmland, AB (hereinafter - “the Company”), acting in compliance with Article 12 (3) of the Law on Securities of the Republic of Lithuania and paragraph 24.5 of the Listing Rules of AB Nasdaq Vilnius, hereby discloses how it complies with the Corporate Governance Code for the Companies listed on Nasdaq Vilnius as well as its specific provisions or recommendations. In case of non-compliance with this Code or some of its provisions or recommendations, the specific provisions or recommendations that are not complied with must be indicated and the reasons for such non-compliance must be specified. In addition, other explanatory information indicated in this form is provided. Although the form for filling in the Corporate Governance Code of Nasdaq Vilnius listed companies is based on the “comply or explain” principle, the Company provides an explanation in the “Comment” section in all cases, even if it fully complies with the principle. 1. Summary of the Corporate Governance Report: Short history: The public joint-stock company INVL Baltic Farmland was established on 29 April 2014 on the basis of a part of assets split-off from one of the leading asset management groups in the Baltic region Invalda INVL. INVL Baltic Farmland manages shares of 18 companies investing into agricultural land that are owning about 3 thousand hectares of agricultural land in Lithuania. More than 98% of land is rented to farmers and agricultural companies. Shares of INVL Baltic Farmland are listed on Nasdaq Vilnius stock exchange since 4 June 2014. About Company's activities: The administration of the INVL Baltic Farmland group owned land, according to the basic property administration agreement signed on 30 June 2015, is transmitted to the owned company INVL Farmland Management (for further information please see paragraph 3.3. “Information about the Issuer‘s group of companies” of this annual consolidated report). On 28 December 2020 the Basic Property Administration Agreement’s Amendment No. 20150630/01 was concluded, based on which the term of the Basic Property Administration Agreement was extended until 31 December 2025. As the Company has signed the property administration agreement it employs a minimum number of people. As of 31 December 2021 the Company and group had 2 employees, while Invalda INVL, AB provides accounting services and preparation of the documents related with bookkeeping for INVL Baltic Farmland, AB. About operating environment: It is prohibited for one person to have more than 500 hectares of land in Lithuania since 2014. That‘s why INVL Baltic Farmland development is limited and the generated funds are directed to the payment of dividends to shareholders. Corporate governance structure: - The Company’s managing bodies consists of the Board, elected for the 4 years term of office, and the manager, elected by the Board (for further information please about the Issuer's governing bodies and the composition of the committees in Chapter III "Issuer's bodies" of this consolidated annual report). The Board’s and the manager’s activities are concentrated on the fulfilment of the Company’s strategic objectives taking count of the shareholders’ equity value increase. - The Supervisory Board is not formed. Nevertheless, the Board and the Director acts in close cooperation seeking to obtain the maximum benefit for the Company and its shareholders. The Board periodically reviews and assesses Company’s activity results. - The Chairman of the Board is not and has not been the manager of the Company. His current or past office constitutes has no obstacles to conduct independent and impartial supervision. - Members of the Board are elected by the General Shareholders’ Meeting. They are independent and in their actions seek the benefit to the Company and its shareholders. The Board of the Company conducts an annual self-assessment of its activities. - The Company has an Audit Committee consisting of 2 independent members. Due to simplicity of the Company’s management structure and small number of employees, it is not expedient to form the Nomination and Remuneration committees. Accountability to the Company's shareholders: - The Company discloses and updates all information required for evaluation by the governing bodies of the Company: Information about the manager, composition of the Board, managers and Board members’ education, work experience and participation in other companies is disclosed in Company’s periodical reports and website. - The company discloses information via Nasdaq news distribution service so that the public in Lithuania and other EU countries should have equal access to the information. The information is disclosed in Lithuanian and English. The company publishes its information prior to or after the trade sessions on the Nasdaq Vilnius. The company does not disclose information that may have an effect on the price of shares in the commentaries, interview or other ways as long as such information is publicly announced via Nasdaq news distribution service. - Shareholders of the Company have equal opportunities to get familiarized and participate in adopting decisions important to the Company. The procedures of convening and conducting of the General Shareholders’ Meeting comply with the provisions of legal acts and provide the shareholders with equal opportunities to participate in the meetings get familiarized with the draft resolutions and materials necessary for adopting the decision in advance, also give questions to the Board members. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 75 2. Structured table for disclosure: Principles/ Recommendations Yes/No/ Not Applicable Commentary Principle 1: General meeting of shareholders, equitable treatment of shareholders, and shareholders’ rights The corporate governance framework should ensure the equitable treatment of all shareholders. The corporate governance framework should protect the rights of shareholders. 1.1. All shareholders should be provided with access to the information and/or documents established in the legal acts on equal terms. All shareholders should be furnished with equal opportunity to participate in the decision-making process where significant corporate matters are discussed. YES The Company discloses all regulated information (including notices on convening shareholders' meetings) through the news distribution platform of AB Nasdaq Vilnius. This ensures that this information is available to the widest possible audience in the Republic of Lithuania and other EU countries. Information is provided simultaneously in both Lithuanian and English. The Company publishes information before or after the trading session of Nasdaq Vilnius AB. 1.2. It is recommended that the company’s capital should consist only of the shares that grant the same rights to voting, ownership, dividend and other rights to all of their holders. YES The Company timely updates the information on its website and complies with the requirements of Part 5 of the Information Disclosure Guidelines “On the Publication of Regulated and Other Information on the Issuer's Website” approved by the decision of the Supervisory Authority of the Bank of Lithuania. 1.3. It is recommended that investors should have access to the information concerning the rights attached to the shares of the new issue or those issued earlier in advance, i.e. before they purchase shares. YES All shareholders have equal rights to participate in the general meetings of shareholders of the Company. 1.4. Exclusive transactions that are particularly important to the company, such as transfer of all or almost all assets of the company which in principle would mean the transfer of the company, should be subject to approval of the general meeting of shareholders. YES All shareholders of the Company have equal opportunities to get acquainted and participate in making decisions that are important for the Company. The approval of the General Meeting of Shareholders is obtained in the cases specified in Section V of the Law on Companies falling within the competence of the General Meeting of Shareholders. 1.5. Procedures for convening and conducting a general meeting of shareholders should provide shareholders with equal opportunities to participate in the general meeting of shareholders and should not prejudice the rights and interests of shareholders. The chosen venue, date and time of the general meeting of shareholders should not prevent active participation of shareholders at the general meeting. In the notice of the general meeting of shareholders being convened, the company should specify the last day on which the proposed draft decisions should be submitted at the latest. YES Shareholders are informed about convening of the General Meetings of Shareholders in accordance with the requirements of legislation and the Company’s articles of association – adhering to the notification deadlines and methods and means of announcement. The INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 76 opportunity to participate in the Meeting is supplemented by the option of voting by ballot or authorizing another person to represent the shareholder. The General Meeting of Shareholders is always held at the Company’s headquarters. In the notice of the General Meeting of Shareholders being convened, the Company does not restrict the right of shareholders to submit new draft decisions either before or during the meeting, and this is clearly stated in the notice of the General Meeting of Shareholders being convened in both Lithuanian and English. 1.6. With a view to ensure the right of shareholders living abroad to access the information, it is recommended, where possible, that documents prepared for the general meeting of shareholders in advance should be announced publicly not only in Lithuanian language but also in English and/or other foreign languages in advance. It is recommended that the minutes of the general meeting of shareholders after the signing thereof and/or adopted decisions should be made available publicly not only in Lithuanian language but also in English and/or other foreign languages. It is recommended that this information should be placed on the website of the company. Such documents may be published to the extent that their public disclosure is not detrimental to the company or the company’s commercial secrets are not revealed. YES All documents and information relevant to the Company's general meetings of shareholders, including the notice of the convened meeting, draft resolutions, draft resolutions of the meeting are public and simultaneously published in Lithuanian and English through the Nasdaq Vilnius regulated notice distribution system and additionally published on the Company's website in the Regulated Information sections. and Shareholders' Meetings. 1.7. Shareholders who are entitled to vote should be furnished with the opportunity to vote at the general meeting of shareholders both in person and in absentia. Shareholders should not be prevented from voting in writing in advance by completing the general voting ballot. YES Shareholders of the Company may exercise their right to vote in the General Meeting in person or through a representative upon issuance of proper proxy or having concluded an agreement on the transfer of their voting rights in the manner compliant with the legal regulations, also the shareholder may vote by completing the General Voting Ballot in the manner provided by the Law on Companies. 1.8. With a view to increasing the shareholders’ opportunities to participate effectively at general meetings of shareholders, it is recommended that companies should apply modern technologies on a wider scale and thus provide shareholders with the conditions to participate and vote in general meetings of shareholders via electronic means of communication. In such cases the security of transmitted information must be ensured and it must be possible to identify the participating and voting person. NO Shareholders can vote via an attorney or by completing the general voting bulletin, as for now shareholders cannot participate and vote in General Shareholders’ Meetings via electronic means of communication. 1.9. It is recommended that the notice on the draft decisions of the general meeting of shareholders being convened should specify new candidatures of members of the collegial body, their proposed remuneration and the proposed audit company if these issues are included into the agenda of the general meeting of shareholders. Where it is proposed to elect a new member of the collegial body, it is recommended that the information about his/her educational background, work experience and other managerial positions held (or proposed) should be provided. YES According to the Board’s rules of procedure, at least 10 days before the General Shareholders’ Meeting, where it is planned to elect Board members (member), the information about the candidates to the Board will be fully disclosed to the INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 77 Principle 2: Supervisory board 2.1. Functions and liability of the supervisory board The supervisory board of the company should ensure representation of the interests of the company and its shareholders, accountability of this body to the shareholders and objective monitoring of the company’s operations and its management bodies as well as constantly provide recommendations to the management bodies of the company. The supervisory board should ensure the integrity and transparency of the company’s financial accounting and control system. 5 For the purposes of this Code, heads of the administration are the employees of the company who hold top level management positions. 6 For the purposes of this Code, the criteria of independence of members of the supervisory board are interpreted as the criteria of unrelated parties defined in Article 31(7) and (8) of the Law on Companies of the Republic of Lithuania. shareholders with the indication of the candidates’ names, surnames, their membership in supervisory and management bodies of other companies, shareholding of other companies exceeding 1/20, and all other circumstances that can affect the independence of the candidate as well as the data on their education, qualifications, professional experience, other important information. 1.10. Members of the company’s collegial management body, heads of the administration 5 or other competent persons related to the company who can provide information related to the agenda of the general meeting of shareholders should take part in the general meeting of shareholders. Proposed candidates to member of the collegial body should also participate in the general meeting of shareholders in case the election of new members is included into the agenda of the general meeting of shareholders. YES The Board members inform the Chairman of the Board in case of the changes of the data. The information of these changes shall be disclosed to the shareholders in the Company’s periodical reports. 2.1.1. Members of the supervisory board should act in good faith, with care and responsibility for the benefit and in the interests of the company and its shareholders and represent their interests, having regard to the interests of employees and public welfare. NOT APPLICABLE Due to its size, it is not expedient to form the Supervisory Board. Considering that only collegial management body - the Board is formed in the Company. It performs all essential management functions and ensures accountability and control of the Director of the Company. 2.1.2. Where decisions of the supervisory board may have a different effect on the interests of the company’s shareholders, the supervisory board should treat all shareholders impartially and fairly. It should ensure that shareholders are properly informed about the company’s strategy, risk management and control, and resolution of conflicts of interest. 2.1.3. The supervisory board should be impartial in passing decisions that are significant for the company’s operations and strategy. Members of the supervisory board should act and pass decisions without an external influence from the persons who elected them. 2.1.4. Members of the supervisory board should clearly voice their objections in case they believe that a decision of the supervisory board is against the interests of the company. Independent 6 members of the supervisory board should: a) maintain independence of their analysis and decision-making; b) not seek or accept any unjustified privileges that might compromise their independence. 2.1.5. The supervisory board should oversee that the company’s tax planning strategies are designed and implemented in accordance with the legal acts in order to avoid faulty practice that is not related to the long- term interests of the company and its shareholders, which may give rise to reputational, legal or other risks. 2.1.6. The company should ensure that the supervisory board is provided with sufficient resources (including financial ones) to discharge their duties, including the right to obtain all the necessary information or to INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 78 seek independent professional advice from external legal, accounting or other experts on matters pertaining to the competence of the supervisory board and its committees. 2.2. Formation of the supervisory board The procedure of the formation of the supervisory board should ensure proper resolution of conflicts of interest and effective and fair corporate governance. 2.2.1. The members of the supervisory board elected by the general meeting of shareholders should collectively ensure the diversity of qualifications, professional experience and competences and seek for gender equality. With a view to maintain a proper balance between the qualifications of the members of the supervisory board, it should be ensured that members of the supervisory board, as a whole, should have diverse knowledge, opinions and experience to duly perform their tasks. NOT APPLICABLE Due to its size, it is not expedient to form the Supervisory Board. Considering that only collegial management body - the Board is formed in the Company. It performs all essential management functions and ensures accountability and control of the Director of the Company. 2.2.2. Members of the supervisory board should be appointed for a specific term, subject to individual re-election for a new term in office in order to ensure necessary development of professional experience. 2.2.3. Chair of the supervisory board should be a person whose current or past positions constituted no obstacle to carry out impartial activities. A former manager or management board member of the company should not be immediately appointed as chair of the supervisory board either. Where the company decides to depart from these recommendations, it should provide information on the measures taken to ensure impartiality of the supervision. 2.2.4. Each member should devote sufficient time and attention to perform his duties as a member of the supervisory board. Each member of the supervisory board should undertake to limit his other professional obligations (particularly the managing positions in other companies) so that they would not interfere with the proper performance of the duties of a member of the supervisory board. Should a member of the supervisory board attend less than a half of the meetings of the supervisory board throughout the financial year of the company, the shareholders of the company should be notified thereof. 2.2.5. When it is proposed to appoint a member of the supervisory board, it should be announced which members of the supervisory board are deemed to be independent. The supervisory board may decide that, despite the fact that a particular member meets all the criteria of independence, he/she cannot be considered independent due to special personal or company-related circumstances. 2.2.6. The amount of remuneration to members of the supervisory board for their activity and participation in meetings of the supervisory board should be approved by the general meeting of shareholders. 2.2.7. Every year the supervisory board should carry out an assessment of its activities. It should include evaluation of the structure of the supervisory board, its work organization and ability to act as a group, evaluation of the competence and work efficiency of each member of the supervisory board, and evaluation whether the supervisory board has achieved its objectives. The supervisory board should, at least once a year, make public respective information about its internal structure and working procedures. Principle 3: Management Board 3.1. Functions and liability of the management board The management board should ensure the implementation of the company’s strategy and good corporate governance with due regard to the interests of its shareholders, employees and other interest groups. 3.1.1. The management board should ensure the implementation of the company’s strategy approved by the supervisory board if the latter has been formed at the company. In such cases where the supervisory board is not formed, the management board is also responsible for the approval of the company’s strategy. NO The Company does not prepare or approve separate strategies of the Company. The Company's objectives are disclosed in the Company's annual reports, INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 79 7 Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oecd.org/daf/anti-bribery/44884389.pdf notices on material events, which are published on the Company's website, in Nasdaq Vilnius regulated notice distribution system, in the Central Regulated Information Database. 3.1.2. As a collegial management body of the company, the management board performs the functions assigned to it by the Law and in the articles of association of the company, and in such cases where the supervisory board is not formed in the company, it performs inter alia the supervisory functions established in the Law. By performing the functions assigned to it, the management board should take into account the needs of the company’s shareholders, employees and other interest groups by respectively striving to achieve sustainable business development. YES The Board's functions are discussed in the Consolidated Annual Report 11.2. section. 3.1.3. The management board should ensure compliance with the laws and the internal policy of the company applicable to the company or a group of companies to which this company belongs. It should also establish the respective risk management and control measures aimed at ensuring regular and direct liability of managers. YES The Management Board ensures that the Company complies with laws and internal policies of the Company and, it also ensures the accountability of the management in accordance with the established internal measures of governance and control. 3.1.4. Moreover, the management board should ensure that the measures included into the OECD Good Practice Guidance 7 on Internal Controls, Ethics and Compliance are applied at the company in order to ensure adherence to the applicable laws, rules and standards. YES The Management Board ensures compliance with applicable laws, regulations, and standards. 3.1.5. When appointing the manager of the company, the management board should take into account the appropriate balance between the candidate’s qualifications, experience and competence. YES When appointing the manager of the company, the management board takes into account the candidate’s qualifications, experience, and competence. 3.2. Formation of the management board 3.2.1. The members of the management board elected by the supervisory board or, if the supervisory board is not formed, by the general meeting of shareholders should collectively ensure the required diversity of qualifications, professional experience and competences and seek for gender equality. With a view to maintain a proper balance in terms of the current qualifications possessed by the members of the management board, it should be ensured that the members of the management board would have, as a whole, diverse knowledge, opinions and experience to duly perform their tasks. YES The Company follows the recommendations of this paragraph. The members of the management board have the necessary variety of knowledge, opinions, and experience to perform their tasks properly. 3.2.2. Names and surnames of the candidates to become members of the management board, information on their educational background, qualifications, professional experience, current positions, other important professional obligations and potential conflicts of interest should be disclosed without violating the requirements of the legal acts regulating the handling of personal data at the meeting of the supervisory board in which the management board or individual members of the management board are elected. In the event that the supervisory board is not formed, the information specified in this paragraph should be submitted to the general meeting of shareholders. The management board should, on yearly basis, collect data provided in this paragraph on its members and disclose it in the company’s annual report. YES The curriculum vitae of the candidates to become members of the management board and information on the candidates‘ participation in the activities of other companies is submitted at the shareholder meeting together with draft resolutions without violating the requirements of the legal acts regulating the handling of personal data. 3.2.3. All new members of the management board should be familiarized with their duties and the structure and operations of the company. YES After the election, all members of the management board shall be familiarized with their rights and obligations under the legal acts of the Republic of Lithuania and the Articles of Association of the Company. Members of the INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 80 8 For the purposes of this Code, the criteria of independence of the members of the board are interpreted as the criteria of unrelated persons defined in Article 33(7) of the Law on Companies of the Republic of Lithuania. management board are regularly informed at the Board meetings and individually, as required or per own request of the members, about the Company’s activities and its changes, material changes in the legal acts regulating the Company’s activities, and other circumstances affecting the Company’s activities. 3.2.4. Members of the management board should be appointed for a specific term, subject to individual re-election for a new term in office in order to ensure necessary development of professional experience and sufficiently frequent reconfirmation of their status. YES According to the Articles of Association of the Company, the members of the management board are elected for a term of four years, without limiting the number of their terms. The Articles of Association of the Company provide for the possibility of re-election of the entire management board or its individual member 3.2.5. Chair of the management board should be a person whose current or past positions constitute no obstacle to carry out impartial activity. Where the supervisory board is not formed, the former manager of the company should not be immediately appointed as chair of the management board. When a company decides to depart from these recommendations, it should furnish information on the measures it has taken to ensure the impartiality of supervision. YES The Chair of the Management Board is a person who has never been the manager of the Company. The Chair of the Company’s Management Board is not an employee of the Company and is a Company’s shareholder. It is the Company’s belief that these facts are sufficient to state that the Chair of the Management Board is capable of acting impartially and taking decisions which represent and protect the rights of shareholders. 3.2.6. Each member the management board should give sufficient time and attention to perform the duties of a member of the Board. If a member of the management Board participated in less than half of the board meetings during the financial year of the Company, the Company's Supervisory Board should be informed if the Supervisory Board is not formed in the Company - the General Shareholder Meeting. YES In 2021, the Management Board members attended the Management Board meetings (a quorum was present during all meetings), with each member devoting sufficient time to perform the duties of the Management Board member. 3.2.7. In the event that the management board is elected in the cases established by the Law where the supervisory board is not formed at the company, and some of its members will be independent 8 , it should be announced which members of the management board are deemed as independent. The management board may decide that, despite the fact that a particular member meets all the criteria of independence established by the Law, he/she cannot be considered independent due to special personal or company-related circumstances. NO The Board was re-elected until 2018, i.e. until the amendments to the Law enter into force. Therefore the evaluation of the independence of the Board members has not been carried out. 3.2.8. The general meeting of shareholders of the company should approve the amount of remuneration to the members of the management board for their activity and participation in the meetings of the management board. NOT APPLICABLE No remuneration is paid to the members of the Board. As the members of the Board are also shareholders of the Company, more detailed information on dividends paid to the members of the Board as well as other amounts of cash and guarantees provided is disclosed in paragraph 14 of the Annual Report. 3.2.9.The members of the management board should act in good faith, with care and responsibility for the benefit and the interests of the YES According to the information available to the Company, the INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 81 company and its shareholders with due regard to other stakeholders. When adopting decisions, they should not act in their personal interest; they should be subject to no-compete agreements and they should not use the business information or opportunities related to the company’s operations in violation of the company’s interests. members of the Management Board act in good faith with respect to the Company, following the interests of the Company and not their own or those of third parties, adhering to the principles of honesty, reasonableness, confidentiality, and responsibility, trying to remain independent during the decision-making. 3.2.10. Every year the management board should carry out an assessment of its activities. It should include evaluation of the structure of the management board, its work organization and ability to act as a group, evaluation of the competence and work efficiency of each member of the management board, and evaluation whether the management board has achieved its objectives. The management board should, at least once a year, make public respective information about its internal structure and working procedures in observance of the legal acts regulating the processing of personal data. YES The Board once a year conducts self-assessment of its activities. Principle 4: Rules of procedure of the supervisory board and the management board of the company The rules of procedure of the supervisory board, if it is formed at the company, and of the management board should ensure efficient operation and decision-making of these bodies and promote active cooperation between the company’s management bodies. 4.1. The management board and the supervisory board, if the latter is formed at the company, should act in close cooperation in order to attain benefit for the company and its shareholders. Good corporate governance requires an open discussion between the management board and the supervisory board. The management board should regularly and, where necessary, immediately inform the supervisory board about any matters significant for the company that are related to planning, business development, risk management and control, and compliance with the obligations at the company. The management board should inform he supervisory board about any derogations in its business development from the previously formulated plans and objectives by specifying the reasons for this. YES/NO The Supervisory Board is not formed. Nevertheless, the Board and the Director acts in close cooperation seeking to obtain the maximum benefit for the Company and its shareholders. The Board periodically reviews and assesses Company’s activity results. 4.2. It is recommended that meetings of the company’s collegial bodies should be held at the respective intervals, according to the pre-approved schedule. Each company is free to decide how often meetings of the collegial bodies should be convened but it is recommended that these meetings should be convened at such intervals that uninterruptable resolution of essential corporate governance issues would be ensured. Meetings of the company’s collegial bodies should be convened at least once per quarter. YES The Board meetings are held at least once per quarter. 4.3. Members of a collegial body should be notified of the meeting being convened in advance so that they would have sufficient time for proper preparation for the issues to be considered at the meeting and a fruitful discussion could be held and appropriate decisions could be adopted. Along with the notice of the meeting being convened all materials relevant to the issues on the agenda of the meeting should be submitted to the members of the collegial body. The agenda of the meeting should not be changed or supplemented during the meeting, unless all members of the collegial body present at the meeting agree with such change or supplement to the agenda, or certain issues that are important to the company require immediate resolution. YES The Board meetings are being convened by the Chairman. The Chairman of the Board informs members about the meeting by phone or by email. 4.4. In order to coordinate the activities of the company’s collegial bodies and ensure effective decision-making process, the chairs of the company’s collegial supervision and management bodies should mutually agree on the dates and agendas of the meetings and close cooperate in resolving other matters related to corporate governance. Meetings of the company’s supervisory board should be open to members of the management board, particularly in such cases where issues concerning the removal of the management board members, their responsibility or remuneration are discussed. NO The Company may not implement this recommendation since only the Board is formed. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 82 9 The legal acts may provide for the obligation to form a respective committee. For example, the Law on the Audit of Financial Statements of the Republic of Lithuania provides that public-interest entities (including but not limited to public limited liability companies whose securities are traded on a regulated market of the Republic of Lithuania and/or of any other Member State) are under the obligation to set up an audit committee (the legal acts provide for the exemptions where the functions of the audit committee may be carried out by the collegial body performing the supervisory functions). Principle 5: Nomination, remuneration and audit committees 5.1. Purpose and formation of committees The committees formed at the company should increase the work efficiency of the supervisory board or, where the supervisory board is not formed, of the management board which performs the supervisory functions by ensuring that decisions are based on due consideration and help organise its work in such a way that the decisions it takes would be free of material conflicts of interest. Committees should exercise independent judgment and integrity when performing their functions and provide the collegial body with recommendations concerning the decisions of the collegial body. However, the final decision should be adopted by the collegial body. 5.1.1. Taking due account of the company-related circumstances and the chosen corporate governance structure, the supervisory board of the company or, in cases where the supervisory board is not formed, the management board which performs the supervisory functions, establishes committees. It is recommended that the collegial body should form the nomination, remuneration and audit committees 9 . YES/NO Due to the Company’s management type, transfer of the management of the Company and an absence of employees, the Nomination and Remuneration Committees are not formed. Audit Committee members are elected by the General Shareholders Meeting. 5.1.2. Companies may decide to set up less than three committees. In such case companies should explain in detail why they have chosen the alternative approach, and how the chosen approach corresponds with the objectives set for the three different committees. 5.1.3. In the cases established by the legal acts the functions assigned to the committees formed at companies may be performed by the collegial body itself. In such case the provisions of this Code pertaining to the committees (particularly those related to their role, operation and transparency) should apply, where relevant, to the collegial body as a whole. 5.1.4. Committees established by the collegial body should normally be composed of at least three members. Subject to the requirements of the legal acts, committees could be comprised only of two members as well. Members of each committee should be selected on the basis of their competences by giving priority to independent members of the collegial body. The chair of the management board should not serve as the chair of committees. 5.1.5. The authority of each committee formed should be determined by the collegial body itself. Committees should perform their duties according to the authority delegated to them and regularly inform the collegial body about their activities and performance on a regular basis. The authority of each committee defining its role and specifying its rights and duties should be made public at least once a year (as part of the information disclosed by the company on its governance structure and practice on an annual basis). In compliance with the legal acts regulating the processing of personal data, companies should also include in their annual reports the statements of the existing committees on their composition, the number of meetings and attendance over the year as well as the main directions of their activities and performance. 5.1.6. With a view to ensure the independence and impartiality of the committees, the members of the collegial body who are not members of the committees should normally have a right to participate in the meetings of the committee only if invited by the committee. A committee may invite or request that certain employees of the company or experts would participate in the meeting. Chair of each committee should have the possibility to maintain direct communication with the shareholders. Cases where such practice is to be applied should be specified in the rules regulating the activities of the committee. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 83 5.2. Nomination committee 5.2.1. The key functions of the nomination committee should be the following: 1) to select candidates to fill vacancies in the membership of supervisory and management bodies and the administration and recommend the collegial body to approve them. The nomination committee should evaluate the balance of skills, knowledge and experience in the management body, prepare a description of the functions and capabilities required to assume a particular position and assess the time commitment expected; 2) assess, on a regular basis, the structure, size and composition of the supervisory and management bodies as well as the skills, knowledge and activity of its members, and provide the collegial body with recommendations on how the required changes should be sought; 3) devote the attention necessary to ensure succession planning. NOT APPLICABLE Due to simplicity of the Company’s management structure and small number of employees, it is not expedient to form the Nomination and Remuneration committees. 5.2.2. When dealing with issues related to members of the collegial body who have employment relationships with the company and the heads of the administration, the manager of the company should be consulted by granting him/her the right to submit proposals to the Nomination Committee. 5.3. Remuneration committee The main functions of the remuneration committee should be as follows: 1) submit to the collegial body proposals on the remuneration policy applied to members of the supervisory and management bodies and the heads of the administration for approval. Such policy should include all forms of remuneration, including the fixed-rate remuneration, performance-based remuneration, financial incentive schemes, pension arrangements and termination payments as well as conditions which would allow the company to recover the amounts or suspend the payments by specifying the circumstances under which it would be expedient to do so; 2) submit to the collegial body proposals regarding individual remuneration for members of the collegial bodies and the heads of the administration in order to ensure that they would be consistent with the company’s remuneration policy and the evaluation of the performance of the persons concerned; 3) review, on a regular basis, the remuneration policy and its implementation. NOT APPLICABLE Due to simplicity of the Company’s management structure and small number of employees, it is not expedient to form the Nomination and Remuneration committees. 5.4. Audit committee 5.4.1. The key functions of the audit committee are defined in the legal acts regulating the activities of the audit committee . YES In its activities, the Audit Committee of the Company follows the legal acts regulating the activities of the Audit Committee, as well as the regulations of the Audit Committee approved by the General Meeting of Shareholders of the Company. 5.4.2. All members of the committee should be provided with detailed information on specific issues of the company’s accounting system, finances and operations. The heads of the company’s administration should inform the audit committee about the methods of accounting for significant and unusual transactions where the accounting may be subject to different approaches. YES The members of the Committee shall be provided with all the detailed information necessary for the performance of its functions. 5.4.3. The audit committee should decide whether the participation of the chair of the management board, the manager of the company, the chief finance officer (or senior employees responsible for finance and accounting), the internal and external auditors in its meetings is required (and, if required, when). The committee should be entitled, when needed, YES After the members of the Audit Committee decide who must attend the meeting of the Committee, these persons shall be invited, ensuring that the INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 84 to meet the relevant persons without members of the management bodies present. members of the managerial bodies would not be present at the same meeting. 5.4.4. The audit committee should be informed about the internal auditor’s work program and should be furnished with internal audit reports or periodic summaries. The audit committee should also be informed about the work program of external auditors and should receive from the audit firm a report describing all relationships between the independent audit firm and the company and its group. NOT APPLICABLE Due to the size of the Company, the Company does not have an internal audit function 5.4.5. The audit committee should examine whether the company complies with the applicable provisions regulating the possibility of lodging a complaint or reporting anonymously his/her suspicions of potential violations committed at the company and should also ensure that there is a procedure in place for proportionate and independent investigation of such issues and appropriate follow-up actions. NOT APPLICABLE Due to the size of the Company, the audit committee does not examine paragraph 5.4.5. 5.4.6. The audit committee should submit to the supervisory board or, where the supervisory board is not formed, to the management board its activity report at least once in every six months, at the time that annual and half-yearly reports are approved. YES/NO The activity report is submitted once a year, together with the annual ordinary shareholders meeting. Principle 6: Prevention and disclosure of conflicts of interest The corporate governance framework should encourage members of the company’s supervisory and management bodies to avoid conflicts of interest and ensure a transparent and effective mechanism of disclosure of conflicts of interest related to members of the supervisory and management bodies. Any member of the company’s supervisory and management body should avoid a situation where his/her personal interests are or may be in conflict with the company’s interests. In case such a situation did occur, a member of the company’s supervisory or management body should, within a reasonable period of time, notify other members of the same body or the body of the company which elected him/her or the company’s shareholders of such situation of a conflict of interest, indicate the nature of interests and, where possible, their value. YES Management board members avoid situations where their personal interests may be in conflict with the Company’s interests. Principle 7: Remuneration policy of the company The remuneration policy and the procedure for review and disclosure of such policy established at the company should prevent potential conflicts of interest and abuse in determining remuneration of members of the collegial bodies and heads of the administration, in addition it should ensure the publicity and transparency of the company’s remuneration policy and its long-term strategy. 7.1. The company should approve and post the remuneration policy on the website of the company; such policy should be reviewed on a regular basis and be consistent with the company’s long-term strategy. YES The remuneration policy is published on the Company's website. 7.2. The remuneration policy should include all forms of remuneration, including the fixed-rate remuneration, performance-based remuneration, financial incentive schemes, pension arrangements and termination payments as well as the conditions specifying the cases where the company can recover the disbursed amounts or suspend the payments. YES/NO The Manager of the Company receives only a fixed-rate remuneration . 7.3. With a view to avoid potential conflicts of interest, the remuneration policy should provide that members of the collegial bodies which perform the supervisory functions should not receive remuneration based on the company’s performance. YES The members of the Board of the Company may only be paid up with annual bonuses, which shall be granted by the decision of the General Meeting of Shareholders of the Company in accordance with the procedure established by legal acts and appointment thereof shall be disclosed in the consolidated annual report of the Company. 7.4. The remuneration policy should provide sufficient information on the policy regarding termination payments. Termination payments should not exceed a fixed amount or a fixed number of annual wages and in general NOT APPLICABLE The Company’s Remuneration Policy does INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 85 should not be higher than the non-variable component of remuneration for two years or the equivalent thereof. Termination payments should not be paid if the contract is terminated due to inadequate performance. 7.5. In the event that the financial incentive scheme is applied at the company, the remuneration policy should contain sufficient information about the retention of shares after the award thereof. Where remuneration is based on the award of shares, shares should not be vested at least for three years after the award thereof. After vesting, members of the collegial bodies and heads of the administration should retain a certain number of shares until the end of their term in office, subject to the need to compensate for any costs related to the acquisition of shares. NOT APPLICABLE The Company has no system of employee incentivisation or remuneration with Company shares. 7.6. The company should publish information about the implementation of the remuneration policy on its website, with a key focus on the remuneration policy in respect of the collegial bodies and managers in the next and, where relevant, subsequent financial years. It should also contain a review of how the remuneration policy was implemented during the previous financial year. The information of such nature should not include any details having a commercial value. Particular attention should be paid on the major changes in the company’s remuneration policy, compared to the previous financial year. YES The remuneration policy is published on the Company's website. 7.7. It is recommended that the remuneration policy or any major change of the policy should be included on the agenda of the general meeting of shareholders. The schemes under which members and employees of a collegial body receive remuneration in shares or share options should be approved by the general meeting of shareholders. YES The Company's remuneration policy and its amendments are approved by the Company's General Meeting of Shareholders. Principle 8: Role of stakeholders in corporate governance The corporate governance framework should recognize the rights of stakeholders entrenched in the laws or mutual agreements and encourage active cooperation between companies and stakeholders in creating the company value, jobs and financial sustainability. In the context of this principle the concept “stakeholders” includes investors, employees, creditors, suppliers, clients, local community and other persons having certain interests in the company concerned. 8.1. The corporate governance framework should ensure that the rights and lawful interests of stakeholders are protected. YES The Company respects the rights of stakeholders and their legitimate interests. 8.2. The corporate governance framework should create conditions for stakeholders to participate in corporate governance in the manner prescribed by law. Examples of participation by stakeholders in corporate governance include the participation of employees or their representatives in the adoption of decisions that are important for the company, consultations with employees or their representatives on corporate governance and other important matters, participation of employees in the company’s authorized capital, involvement of creditors in corporate governance in the cases of the company’s insolvency, etc. YES All stakeholders are provided with the possibility to participate in corporate governance in the manner prescribed by law. 8.3. Where stakeholders participate in the corporate governance process, they should have access to relevant information. YES The stakeholders involved in the corporate governance process shall be granted access to the necessary information, without prejudice to the interests of the Company and other related parties. 8.4. Stakeholders should be provided with the possibility of reporting confidentially any illegal or unethical practices to the collegial body performing the supervisory function. NO The Company does not provide possibility of reporting confidentially any illegal or unethical practices Principle 9: Disclosure of information The corporate governance framework should ensure the timely and accurate disclosure of all material corporate issues, including the financial situation, operations and governance of the company. 9.1. In accordance with the company’s procedure on confidential information and commercial secrets and the legal acts regulating the processing of personal data, the information publicly disclosed by the company should include but not be limited to the following: YES The information referred to below in this recommendation is disclosed in notifications of material events published INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 86 through the Nasdaq Vilnius Information Disclosure System, the Company’s website, and the Company’s annual and interim information documents, to the extent required by legislation and the International Financial Reporting Standards applicable in the European Union. The information is also disclosed in presentations to investors of the Company. 9.1.1. operating and financial results of the company; YES Company publishes interim and annual reports. 9.1.2. objectives and non-financial information of the company; YES Company publishes interim and annual reports. 9.1.3. persons holding a stake in the company or controlling it directly and/or indirectly and/or together with related persons as well as the structure of the group of companies and their relationships by specifying the final beneficiary; YES Published on the Company's website. 9.1.4. members of the company’s supervisory and management bodies who are deemed independent, the manager of the company, the shares or votes held by them at the company, participation in corporate governance of other companies, their competence and remuneration; YES Information is provided on the Company’s website and in its interim and annual reports 9.1.5. reports of the existing committees on their composition, number of meetings and attendance of members during the last year as well as the main directions and results of their activities; NO The Company does not provide information related to this item. 9.1.6. potential key risk factors, the company’s risk management and supervision policy; YES The Company does not provide information related to this item. 9.1.7. the company’s transactions with related parties; YES The Company publishes on its website the general risk factors of the business area in which the Group operates; group-specific risk factors; risk factors related to the Company's shares. 9.1.8. main issues related to employees and other stakeholders (for instance, human resource policy, participation of employees in corporate governance, award of the company’s shares or share options as incentives, relationships with creditors, suppliers, local community, etc.); YES The Company publishes the Company's transactions with related parties on its website. 9.1.9. structure and strategy of corporate governance; YES The information is provided in interim and annual reports. 9.1.10. initiatives and measures of social responsibility policy and anti- corruption fight, significant current or planned investment projects. This list is deemed minimum and companies are encouraged not to restrict themselves to the disclosure of information included into this list. This principle of the Code does not exempt companies from their obligation to disclose information as provided for in the applicable legal acts. NOT APPLICABLE Due to the size of the Company, minimum information related to the environment, employees, research and development is published. 9.2. When disclosing the information specified in paragraph 9.1.1 of recommendation 9.1, it is recommended that the company which is a parent company in respect of other companies should disclose information about the consolidated results of the whole group of companies. YES The Company prepares a consolidated report and consolidated financial statements 9.3. When disclosing the information specified in paragraph 9.1.4 of recommendation 9.1, it is recommended that the information on the professional experience and qualifications of members of the company’s supervisory and management bodies and the manager of the company as well as potential conflicts of interest which could affect their decisions should be provided. It is further recommended that the remuneration or other income of members of the company’s supervisory and management YES The Company discloses in its consolidated annual report information on the total amount of annual remuneration and other income paid to the Company’s key management and members of the managerial bodies, as well as INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 87 bodies and the manager of the company should be disclosed, as provided for in greater detail in Principle 7. education, qualifications and participation in the activities and capital of other companies. 9.4. Information should be disclosed in such manner that no shareholders or investors are discriminated in terms of the method of receipt and scope of information. Information should be disclosed to all parties concerned at the same time. YES The Company publishes all information through the information disclosure system of the Nasdaq Vilnius Stock Exchange and on the Company's website so that it is accessible to everyone and at the same time. Principle 10: Selection of the company’s audit firm The company’s audit firm selection mechanism should ensure the independence of the report and opinion of the audit firm. 10.1. With a view to obtain an objective opinion on the company’s financial condition and financial results, the company’s annual financial statements and the financial information provided in its annual report should be audited by an independent audit firm. YES The Company is audited by an independent audit company UAB PricewaterhouseCoopers 10.2. It is recommended that the audit firm would be proposed to the general meeting of shareholders by the supervisory board or, if the supervisory board is not formed at the company, by the management board of the company. YES The management board of the Company (manager in AB Pieno logistika of the Company Group) submits the candidacy of the audit company to the meeting of shareholders. The Audit Company shall be approved by the general meeting of shareholders of the Company. 10.3. In the event that the audit firm has received remuneration from the company for the non-audit services provided, the company should disclose this publicly. This information should also be available to the supervisory board or, if the supervisory board is not formed at the company, by the management board of the company when considering which audit firm should be proposed to the general meeting of shareholders. YES In 2021 the audit firm did not provided non audit services. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 88 APPENDIX 3. COMPANY'S MANAGEMENT REPORT (Prepared in accordance with the Law of the Republic of Lithuania on Financial Reporting by Undertakings (IX-575) in force from 1 January 2021) 1. reference to the applicable corporate governance code and the place of its publication, and (or) reference to the all necessary published information regarding management practices of the entity The Company discloses the information regarding the compliance with the applicable Corporate Governance Code in Appendix 2 of the consolidated report of 2021. The Company publishes its annual reports in the website of the Company (Company‘s web site section „Investor Relations“ → „Reports“. The link: https://invlbalticfarmland.com/en/investor-relations/financial- information-and-reports/). 2. in case of derogation from the provisions of the applicable corporate governance code and (or) when the provisions are not complied with, such provisions and the reasons thereof shall be indicated The Company discloses such information in 2 table sections “Yes/No/Irrelevant” and “Commentary” of Appendix 2 of the consolidated report of 2021 “Corporate Governance Code“. The company will provide an explanation in the " Commentary" section in all cases follow the recommendations. 3. information regarding the level of risk and risk management – management of risks related to the financial reporting, risk mitigation measures, and internal control systems implemented at the entity shall be described The Company provides information regarding the level of risk, risk management, and implemented internal control systems, as well as the measures, in Clause 16.3. of the consolidated report of 2021. 4. information regarding significant directly or indirectly managed holdings The Company provides information regarding the significant directly or indirectly managed holdings in Note 5 of the explanatory note of the financial statements of 2021. 5. Information regarding transactions with related parties, according to the Law on Companies article 37 2 (by specifying the counterparty (legal form, name, code, register of the legal entity in which the person is stored, premises (address); name, surname, address of the natural person and the value of the transaction); Information regarding Transactions with Related Parties, according to the Law on Companies article 372 , is published on the Company‘s web site – „For Investors“ → „Related parties transactions“. The link to the Company‘s web site: https://invlbalticfarmland.com/en/investor-relations/legal-documents/ The Company provides information about Transactions with Related Parties at the moment of the release of the Annual report: At the time the report was published, the Company provides information about Company‘s Transactions with Related Parties published on the Company's web site: Related party Company’s relationship with the other counterparty Date and value of the transaction Other information Avižėlė, UAB Code 303113077 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/161230/01 of 30-12-2016 for the amount of EUR 136 thousand. The loan was repaid on 31-12-2019. On 29th January 2019 loan agreement No. BFARM/190129/01 for the amount of EUR 4 thousand. The loan was repaid on 31-12- 2019. On 31st December 2019 loan agreement No. BFARM/191231/01 for the amount of EUR 139,586.90 The loan was repaid on 31-12-2020. On 31st December 2020 loan agreement No. BFARM /201231/01 for the amount of EUR 138,561.80. The loan was repaid on 31-12- 2021. On 31st December 2021 loan agreement No. BFARM/211231/06 for the amount of EUR 133,929.88. Beržytė, UAB Code 30112915 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/171229/01 of 29-12-2017 for the amount of EUR 305 thousand. The loan was repaid on 31-12-2019. On 29th January 2019 loan agreement No. BFARM/190129/02 for the amount of EUR 15 thousand. The loan was repaid on 31-12- 2019 INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 89 On 31st December 2019 loan agreement No. BFARM/191231/02 for the amount of EUR 310,210.71. The loan was repaid on 31-12- 2020. On 28th December 2020 loan agreement No. BFARM/201228/01 for the amount of EUR 10 thousand. The loan was repaid on 31-12- 2020. On 31st December 2020, loan agreement No. BFARM /201231/02 for the amount of EUR 306,794.28. On 6th December 2021 loan agreement No. BFARM/211206/02 for the amount of EUR 15 thousand. On 31st December 2021 partial modification of the loan agreement No. BFARM/201231/02 of 31-12-2020 for the amount of EUR 290 thousand. Dirvolika, UAB Code 303112954 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/141231/03 of 31-12-2014 for the amount of EUR 215 thousand. On 31st December 2019 partial modification of the loan agreement No. BFARM/141231/03 of 31-12-2014 for the amount of EUR 205 thousand. On 31st December 2020, loan agreement No. BFARM /141231/03 for the amount of EUR 191 thousand. On 31st December 2021 partial modification of the loan agreement No. BFARM/141231/03 of 31-12-2014 for the amount of EUR 170 thousand. Duonis, UAB Code 303112790 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/161230/03 of 30-12-2016 for the amount of EUR 270 thousand. The loan was repaid on 31-12-2019. On 29th January 2019 loan agreement No. BFARM/190129/03 for the amount of EUR 10 thousand. The loan was repaid on 31-12- 2019. On 19th December 2019 loan agreement No. BFARM/191219/01 for the amount of EUR 5 thousand. The loan was repaid on 31-12- 2019. On 31st December 2019 loan agreement No. BFARM/191231/03 for the amount of EUR 263,028.03. On 31st December 2020 partial modification of the loan agreement BFARM / 191231/03 of 31-12-2019 for the loan amount of EUR 253 thousand. On 31st December 2021 partial modification of the loan agreement BFARM / 191231/03 of 31-12-2019 for the loan amount of EUR 235 thousand. Žemgalė, UAB Code 303112744 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/161230/04 of 30-12-2016 for the amount of EUR 297 thousand. The loan was repaid on 31-12-2019. On 29th January 2019 loan agreement No. BFARM/190129/04 for the amount of EUR 8 thousand. The loan was repaid on 31-12- 2019. On 31st December 2019 loan agreement No. BFARM/191231/04 for the amount of EUR 283,842.84. The loan was repaid on 31-12- 2020. On 30th December 2020 loan agreement No. BFARM / 200630/01 for the amount of EUR 1,000. The loan was repaid on 31-12-2019. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 90 On 31st December 2020 loan agreement No. BFARM / 201231/03 for the amount of EUR 269,899.47. On 6th December 2021 loan agreement No. BFARM/211206/01 for the amount of EUR 10 thousand. On 31st December 2021 partial modification of the loan agreement No. BFARM/201231/03 of 31-12-2020 for the amount of EUR 240 thousand. Linažiedė, UAB Code 303112922 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/141231/06 of 31-12-2014 for the amount of EUR 88 thousand. On 29th January 2019 loan agreement No. BFARM/190129/05 for the amount of EUR 7 thousand. On 31st December 2019 partial modification of the loan agreement No. BFARM/141231/06 of 31-12-2014 for the amount of EUR 83 thousand. The loan was repaid on 31-12-2020. On 31st December 2019 partial modification of the loan agreement No. BFARM/190129/05 of 29-01-2019 for the amount of EUR 7 thousand. The loan was repaid on 31-12-2020. On 31st December 2020, loan agreement No. BFARM /201231/04 for the amount of EUR 82,738.20. On 31st December 2021, loan agreement No. BFARM/211231/01 for the amount of EUR 5 thousand. On 31st December 2021 partial modification of the loan agreement No. BFARM/201231/04 of 31-12-2020 for the amount of EUR 75 thousand. Puškaitis, UAB Code 303112769 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/141231/07 of 31-12-2014 for the amount of EUR 320 thousand. On 31st December 2019 partial modification of the loan agreement No. BFARM/141231/07 of 31-12-2014 for the amount of EUR 300 thousand. On 31st December 2020 partial modification of the loan agreement No. BFARM/141231/07 of 31-12-2014 for the amount of EUR 300 thousand. On 6th December 2021, loan agreement No BFARM/211206/03 for the amount of EUR 20 thousand. On 31st December 2021 partial modification of the loan agreement No. BFARM/141231/07 of 31-12-2014 for the amount of EUR 200 thousand. Kvietukas, UAB Code 303112687, Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/161230/05 of 30-12-2016 for the amount of EUR 179 thousand. On 29th January 2019 loan agreement No. BFARM/190129/06 for the amount of EUR 11 thousand. On 31st December 2019 partial modification of the loan agreement No. BFARM/161230/05 of 30-12-2016 for the amount of EUR 139 thousand. On 31st December 2019 partial modification of the loan agreement No. BFARM/190129/06 of 29-01-2019 for the amount of EUR 11 thousand. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 91 On 31st December 2020 partial modification of the loan agreement No. BFARM/161230/05 of 30-12-2016 for the amount of EUR 112 thousand. On 31th December 2020 partial modification of the loan agreement No. BFARM/190129/06 of 29-01-2019 for the amount of EUR 11 thousand. On 31th December 2021 partial modification of the loan agreement No. BFARM/161230/05 of 31-12-2021 for the amount of EUR 99 thousand. On 31th December 2021 partial modification of the loan agreement No. BFARM/190129/06 of 29-01-2019 for the amount of EUR 11 thousand. Laukaitis, UAB Code 303112694 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/161230/06 of 30-12-2016 for the amount of EUR 259 thousand. The loan was repaid on 31-12-2019. On 29th January 2019 loan agreement No. BFARM/190129/07 for the amount of EUR 11 thousand. The loan was repaid on 31-12- 2019. On 19th December 2019 loan agreement No. BFARM/191219/02 for the amount of EUR 10 thousand. The loan was repaid on 31-12- 2019. On 31st December 2019 loan agreement No. BFARM/191231/05 for the amount of EUR 258,210.94. The loan was repaid on 31-12- 2020. On 28th December 2020 loan agreement No. BFARM / 201228/02 for the amount of EUR 10 thousand. The loan was repaid on 31-12- 2020. On 31st December 2020 loan agreement No. BFARM / 201231/05 for the amount of EUR 246.843,39. The loan was repaid on 31-12- 2021. On 31st January 2021 loan agreement No. BFARM/211231/02 for the amount of EUR 232,247.82. Vasarojus, UAB Code 303112776 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/171229/02 of 23-12-2017 for the amount of EUR 645 thousand. On 31st December 2019 partial modification of the loan agreement No. BFARM/171229/02 of 23-12-2017 for the amount of EUR 640 thousand. On 31th December 2020 partial modification of the loan agreement No. BFARM / 171229/02 of 29-12-2017 for the amount of EUR 640 thousand. On 31th December 2021 partial modification of the loan agreement No. BFARM/171229/02 of 29-12-2017 for the amount of EUR 605 thousand. Lauknešys, UAB Code 303112655 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/141231/11 of 31-12-2014 for the amount of EUR 147 thousand. The loan was repaid on 31-12-2019. On 31st December 2019 loan agreement No. BFARM/191231/06 for the amount of EUR 134,437.12. On 31st December 2020 partial modification of the loan agreement No. BFARM / 191231/06 of 31-12-2019 for the amount of EUR 134 thousand. The loan was repaid on 31-12-2021. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 92 On 31st December 2021 loan agreement No. BFARM/211231/03 for the amount of EUR 112,937.94. Žiemkentys, UAB Code 303112648 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/141231/12 of 31-12-2014 for the amount of EUR 498 thousand. On 25th March 2019 loan agreement No. BFARM/190325/01 for the amount of EUR 5 thousand. On 31st December 2019 partial modification of the loan agreement No. BFARM/141231/12 of 31-12-2014 for the amount of EUR 465 thousand. On 31st December 2019 partial modification of the loan agreement No. BFARM/190325/01 of 25-03-2019 for the amount of EUR 5 thousand. On 31st December 2020 partial modification of the loan agreement No. BFARM / 141231/12 of 31.12.2014 for the amount of EUR 440 thousand. On 31st December 2020 partial modification of the loan agreement No. BFARM / 190325/01 of 25/03/2019 for the amount of EUR 5 thousand. On 31st December 2021 partial modification of the loan agreement No. BFARM/141231/12 of 31/12/2014 for the amount of EUR 395 thousand. On 31st December 2021 partial modification of the loan agreement No. BFARM/190325/01 of 25/03/2019 for the amount of EUR 5 thousand. Pušaitis, UAB Code 303113102 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/141231/13 of 31-12-2014 for the amount of EUR 112 thousand. On 31st December 2019 partial modification of the loan agreement No. BFARM/141231/13 of 31-12-2014 for the amount of EUR 110 thousand. On 31st December 2020 partial modification of the loan agreement No. BFARM / 141231/13 of 31-12-2014 for the amount of EUR 98 thousand. On 31st December 2021 partial modification of the loan agreement No. BFARM/141231/13 of 31-12-2014 for the amount of EUR 95 thousand. Sėja, UAB Code 303113013 Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/171229/03 of 29-12-2017 for the amount of EUR 100 thousand. On 29th January 2019 loan agreement No. BFARM/190129/08 for the amount of EUR 10 thousand. On 31st December 2019 partial modification of the loan agreement No. BFARM/171229/03 of 29-12-2017 for the amount of EUR 100 thousand. On 31st December 2019 partial modification of the loan agreement No. BFARM/190129/08 of 29-01-2019 for the amount of EUR 10 thousand. On 31st December 2020 partial modification of the loan agreement No. BFARM / 171229/03 of 29-12-2017 for the amount of EUR 60 thousand. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 93 On 31st December 2020 partial modification of the loan agreement No. BFARM / 190129/08 of 29-01-2019 for the amount of EUR 10 thousand. On 31st December 2021 partial modification of the loan agreement No. BFARM/171229/03 of 29-12-2017 for the amount of EUR 30 thousand. On 31st December 2021 partial modification of the loan agreement No. BFARM / 190129/08 of 29-01-2019 for the amount of EUR 10 thousand. Žemynėlė, UAB Code 303112559, Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 14th November 2018 loan agreement No. BFARM/181114/02 for the amount of EUR 7 thousand. On 31st December 2018 partial modification of the loan agreement No. BFARM/161230/07 of 30-12-2016 for the amount of EUR 120 thousand. The loan was repaid on 31-12-2019. On 31st December 2018 partial modification of the loan agreement No. BFARM/181114/02 of 14-11-2018 for the amount of EUR 7 thousand. The loan was repaid on 31-12-2019. On 31st December 2019 loan agreement No. BFARM/191231/07 for the amount of EUR 124,082.31. On 28th December 2020 loan agreement No. BFARM / 201228/03 for the amount of EUR 7 thousand. The loan was repaid on 31-12- 2021. On 31st December 2020 partial modification of the loan agreement No. BFARM / 191231/07 of 31-12-2019 for the amount of EUR 112 thousand. The loan was repaid on 31-12-2021. On 31st December 2021 loan agreement No. BFARM/211231/04 for the amount of EUR 113,511.67. Žalvė, UAB Code 303113045, Gynėjų str. 14, Vilnius, Lithuania Register of Legal Entities 100 percent managed by INVL Baltic Farmland, AB On 14th November 2018 loan agreement No. BFARM/181114/01 for the amount of EUR 18 thousand. On 31st December 2018 partial modification of the loan agreement No. BFARM/171229/04 of 29-12-2017 for the amount of EUR 232 thousand. The loan was repaid on 31-12-2019. On 31st December 2018 partial modification of the loan agreement No. BFARM/181114/01 of 14-11-2018 for the amount of EUR 18 thousand. The loan was repaid on 31-12-2019. On 31st December 2019 loan agreement No. BFARM/191231/03 for the amount of EUR 10 thousand. The loan was repaid on 31-12- 2019. On 31st December 2019 loan agreement No. BFARM/191231/08 for the amount of EUR 232,373.22 The loan was repaid on 31-12-2020. On 28th December 2020 loan agreement No. BFARM / 201228/04 for the amount of EUR 10 thousand. The loan was repaid on 31-12- 2020. The loan was repaid on 31-12-2021. On 31st December 2020 loan agreement No. BFARM / 201231/06 for the amount of EUR 211,711.73. The loan was repaid on 31-12- 2021. On 31st December 2021 loan agreement No. BFARM/211231/05 for the amount of EUR 196,065.56. Ekotra, UAB Code 303112623 Gynėjų str. 14, Vilnius, Lithuania 100 percent managed by INVL Baltic Farmland, AB On 31st December 2018 partial modification of the loan agreement No. BFARM/151231/01 of 31-12-2015 for the amount of EUR 312 thousand. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 94 Register of Legal Entities On 19th December 2019 loan agreement No. BFARM/191219/04 for the amount of EUR 10 thousand. On 31st December 2019 partial modification of the loan agreement No. BFARM/151231/01 of 31-12-2015 for the amount of EUR 280 thousand. On 31st December 2019 partial modification of the loan agreement No. BFARM/191219/04 of 19-12-2019 for the amount of EUR 10 thousand. On 31st December 2020 partial modification of the loan agreement No. BFARM/151231/01 of 31-12-2015 for the amount of EUR 280 thousand. On 31st December 2020 partial modification of the loan agreement No. BFARM/191219/04 of 19-12-2019 for the amount of EUR 10 thousand. On 31st December 2021 partial modification of the loan agreement No. BFARM/151231/01 of 31-12-2015 for the amount of EUR 220 thousand. On 31st December 2021 partial modification of the loan agreement No. BFARM/191219/04 of 19-12-2019 for the amount of EUR 10 thousand. 1. information regarding the shareholders who have special rights of control and the description of such rights There are no shareholders having special rights of control in the Company. 2. information regarding all current restrictions on voting rights (such as the restrictions on voting rights of persons having a certain percentage or number of the votes, the deadlines by which voting rights may be exercised or systems, according to which the property rights granted by the securities are to be separated from the holder of those securities) No restrictions on voting rights are applied in the Company. 3. information regarding the rules governing the appointment and dismissal of board members, as well as the amendment of the company’s articles of association The Board members of the Company act in accordance with the Law on Companies of the Republic of Lithuania, Articles of Association of the Company, Rules of Procedure of the Board, as well as other applicable legislation. The Board members of the Company always act for the benefit of the Company and its shareholders. The procedure for changing the Articles of Association of INVL Baltic Farmland is no different from stated in the Law on Companies of the Republic of Lithuania. 4. information regarding the powers of the board members The Board members of the Company act in accordance with the Law on Companies of the Republic of Lithuania, Articles of Association of the Company, Rules of Procedure of the Board, as well as other applicable legislation, and have no special powers. The Board members of the Company always act for the benefit of the Company and its shareholders. 5. information regarding the competence of the general meeting of shareholders, the rights of shareholders and implementation thereof, if such information is not established in the applicable legislation The company provides information regarding the competence of the general meeting of shareholders, the rights of shareholders, and implementation thereof, as well as the procedure for convening the meetings of shareholders, in Clause 11.1.2. of the consolidated annual report of 2021. 6. information regarding the composition of the management, supervisory bodies, and the committees thereof, as well as the fields of activity of the aforesaid bodies and the manager of the company The company provides information on the Board members of the Company, the director, Audit Committee Members of the Company in Clauses 11.2, 11.3. and 13 of the consolidated annual report of 2021, defining the boundaries of the management's activities, also mentions other important information related to the positions held. 7. description of diversity policy applicable in appointing the manager of the company, management, and supervisory bodies, related to the aspects such as age, gender, education, professional experience; objectives of such policy, methods of implementation thereof, and results of the reference period. if the diversity policy is not applied, the reasons thereof shall be indicated Taking into account the current organizational structure of the company and the fact that the administration of the INVL Baltic Farmland group owned land, according to the basic property administration agreement signed on 30 June 2015, is transmitted to the owned company INVL Farmland Management, INVL Baltic Farmland, as the company has signed the property administration agreement it employs a minimum number of people; election of the members of the Board the Company as well INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 95 as the manager of the Company is not subject to diversity policies. On 28 December 2020 December 28 the Basic Property Administration Agreement’s Amendment No. 20150630/01 was concluded, based on which the term of the Basic Property Administration Agreement was extended until 31 December 2025. 8. Information on all agreements between shareholders (their terms and conditions) The Company's shareholders do not have mutual agreements. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 96 APPENDIX 4. COMPANY'S OPERATING AND FINANCIAL INDICATOR FORMULAS AND DEFINITIONS In according with the guidelines on Alternative Performance Indicators which were published by the European Securities and Markets Authority in 2015 and came into force on 3 July 2016, the Company provide definitions and formulas (below) of the company's operating and financial indicators. The Company's performance and financial indicators are used to evaluate the Company's financial position or status. For these indicators, the Company's investor can obtain additional information to help understand the Company's financial position and strategy. All the information stated in Appendix 4 is provided on the website of the Company (Company‘s web site section „For Investors“ → „Reports“ → „Indicator formulas“. The link: https://invlbalticfarmland.com/en/investor-relations/financial-information-and- reports/)  Dividend yield – the set value of dividends paid per share for the last financial year divided by the price per share at the end of a financial period. The set value of dividends paid per share for the last financial year Dividend yield = ——————————————————————————————————————— The price per share at the end of a financial period This is a particularly an important valuation measure for investors seeking regular income. The higher the yield, the higher the payout for the shareholder compared to the price of the share.  Book value per share – the Group's equity divided by the number of shares, excluding the Group's own shares, at the end of a financial period. The Group's equity Book value per share = ————————————————————————————————————————————————— The number of shares, excluding the Group's own shares, at the end of a financial period The book value per common share indicates the euro value remaining for common shareholders after all assets are liquidated and all debtors are paid.  Price to Book ratio – the ratio of the share price at the end of a financial period to the book value per share. The share price at the end of a financial period Price to Book ratio = ———————————————————————————— The book value per share Price-to-book ratio compares a firm's market to book value by dividing price per share by book value per share. This shows how the valuation is covered by equity.  Dividends/Net profit – Ratio between the dividends allocated at the ongoing year for the year before and ongoing year net profit of the Company. Ratio between the dividends allocated at the ongoing year for the year before Dividends/Net profit = ——————————————————————————————————————————— Ongoing year net profit of the Company The dividend payout ratio is the ratio of the total amount of dividends paid out to shareholders relative to the net income of the company. It is the percentage of earnings paid to shareholders in dividends.  Return on Equity (ROE) – the ratio of net income to average equity for a financial period, measured in percentage terms. Net income Return on Equity (ROE) (measured in percentage terms) = ———————————————————————— Average equity for a financial period Return on equity excludes debt in the denominator and compares net profit for the period with total average shareholders’ equity. It measures the rate of return on shareholders’ investment and is, therefore, useful in comparing the profitability of the Group with its competitors. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 97  Average equity is an arithmetical average of the beginning equity and ending equity for the financial period. Average equity = (The beginning equity for the financial period + The ending equity for the financial period) / 2  Return on Assets (ROA) – the ratio of net income to average total assets for a financial period, measured in percentage terms. Net income Return on Assets (ROA) (measured in percentage terms) = —————————————————————————— Average total assets for a financial period Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets. ROA gives a manager, investor, or analyst an idea as to how efficient a company's management is at using its assets to generate earnings.  Average total equity is an arithmetical average of the beginning total assets and ending total assets for the financial period. Average total equity = (The beginning total assets for the financial period + The ending total assets for the financial period) / 2  Liquidity ratio – the ratio of current assets to current liabilities. Current assets Liquidity ratio = ——————————————— Current liabilities Liquidity ratio is a financial metric used to determine a debtor's ability to pay off current debt obligations without raising external capital.  Operating profit margin – the ratio of operating profit to sales, measured in percentage terms. Operating profit Operating profit margin (measured in percentage terms) = ————————————————— Sales Operating margin measures how much profit a company makes on a euro of sales, after paying for variable costs of production such as wages and raw materials, but before paying interest or tax. It is calculated by dividing a company’s operating profit by its net sales.  Pretax profit margin – the ratio of pretax profit to sales, measured in percentage terms. Pretax profit Pretax profit margin (measured in percentage terms) = —————————————————— Sales The pretax profit margin is the ratio of a company's pre-tax earnings to its total sales. The higher the pretax profit margin, the more profitable the company.  Operating profit excluding revaluation of investment property margin – the ratio of operating profit excluding net gain from fair value adjustments on investment property to sales, measured in percentage terms. Operating profit excluding revaluation of investment property margin (measured in percentage terms) = (Operating profit - The net gain from fair value adjustments on investment property) / Sales Operating profit excluding revaluation of investment property margin measures how much profit a company makes on a euro of sales, after paying for variable costs of production such as wages and raw materials, but before paying interest or tax and excluding effects of investment property revaluation. It is calculated by dividing a company’s operating profit by its net sales.  Price earnings ratio (P/E) – the share price at the end of a financial period divided by earnings per share (EPS). The share price at the end of a financial period Price earnings ratio (P/E) = ————————————————————————————— Earnings per share (EPS) To determine the P/E value, one simply must divide the current stock price by the earnings per share (EPS). It is used to compare a company against its own historical record or to compare aggregate markets against one another or over time. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 98  Net profitability – net profit divided by sales, expressed in percentage terms. Net profit Net profitability (expressed in percentage terms) = —————————————— Sales The net profitability is equal to how much net income or profit is generated as a percentage of revenue. It illustrates how much of each euro in revenue collected by a company translates into profit.  EBITDA (earnings before interest tax depreciation and amortization) profitability – operating profit excluding net profit from a revaluation of investment assets with depreciation and amortization added back divided by sales, expressed in percentage terms. EBITDA (earnings before interest tax depreciation and amortization) profitability (expressed in percentage terms) = (Operating profit - Net profit from a revaluation of investment assets + Depreciation and amortization) / Sales Earnings before interest tax depreciation and amortization as a percentage of revenue. EBITDA margin can provide an investor, business owner or financial professional with a clear view of a company's operating profitability and cash flow.  Capitalization – the market value of a company’s equity. Capitalization (EUR) = (Amount of shares (units) – Amount of company’s owned shares (units) * Share Price (EUR) Capitalization defines the market value of a company which depends on the price and volume of the company’s stock at a given time. Capitalization shows the net worth of a company at a given time by market participants. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 99 APPENDIX 5. REMUNERATION REPORT The Remuneration Report 2021 (hereinafter referred to as the Report) of the public limited liability company INVL Baltic Farmland (hereinafter referred to as the Company or AB INVL Baltic Farmland) was prepared in compliance with the provisions of the Remuneration Policy approved by the decision of the Company’s General Meeting of Shareholders dated 23 March 2020. The Remuneration Policy of the Company is applicable to the Managers of the Company (the Chief Executive Officer and the members of the Board of the Company). Brief overview of the Company’s activities in 2021 AB INVL Baltic Farmland holds the shares of the private limited liability companies that invest in agricultural land. AB INVL Baltic Farmland holds a 100 % stake in 18 private limited liability companies which own approximately 3,000 ha of agricultural land in Lithuania. More than 98 % of the land holdings is leased to farmers and agricultural businesses. On 30 June 2015, the companies, the land owners, and AB INVL Baltic Farmland signed a property administration agreement with INVL Farmland Management which administers the land plots owned by the companies in order to ensure the growth of income for the shareholders and to raise the value of the land holdings. On 28 December 2020, an amendment to the agreement was signed and the validity period of the property administration agreement was extended until 31 December 2025. In 2021, AB INVL Baltic Farmland received income totalling EUR 665 thousand, whereas its audited net profit amounted to EUR 1,411 thousand. (in 2019, the consolidated net profit of the Company amounted to EUR 895 thousand and the Group’s income totalled EUR 649 thousand). In the long-term, the Company seeks to earn a profit from the growth in land lease revenue and an increase in the land value. Based on the data of the property valuation carried out in the last quarter of 2021, the value of the land plots grew by 8.2 % during the year, up to EUR 16.62 million. The average value per hectare is EUR 5.36 thousand. Corporate governance AB INVL Baltic Farmland has a single-person management body – the Chief Executive Officer (Director) of the Company and a collegial management body – the Board. No Supervisory Council is formed at the Company. Report on the remuneration of the Chief Executive Officer of the Company in 2021 The Chief Executive Officer (CEO) of the Company was paid a fixed monthly salary of EUR 170.15 under the employment contract. The norm of working time is 1 hour per day. The salary of the CEO of the Company was determined by the decision of the Board of 1 July 2015 and it has not been changed. Accordingly, in 2021, the CEO of the Company was paid a fixed salary of EUR 2044. The fixed salary of the CEO of the Company accounted for 100 per cent of the remuneration since the appointment in 2015. No other agreements on additional pension or retirement conditions were concluded with the CEO of the Company, the termination terms of the employment contract were not amended, and the payments related to the termination of the employment contract do not differ from those established in the applicable legislation. No postponement of the remuneration was applied to the CEO of the Company, and the possibility of recovering the variable portion of the remuneration was not exercised. The CEO of the Company did not obtain any indirect benefit from the Company, and no stock options were granted by the Company to the CEO. The CEO of the Company did not receive remuneration from any company in which the Company holds more than 50 % of the shares. In 2021, the salary to the CEO of the Company was paid without any derogation from the approved Remuneration Policy. Report on the remuneration of the members of the Company’s Board in 2021 The members of the Board of the Company may receive only the shares of profit allocated by the decision of the General Meeting of Shareholders under the procedure established by the law and the allocation of which is disclosed in the consolidated annual report of the Company. Upon the allocation of the Company’s profit for 2020 by the decision of the General Meeting of Shareholders dated 9 April 2021, no shares of profit were allocated to the members of the Company’s Board. The members of the Company’s Board or the companies controlled by them are the shareholders of the Company and together with other shareholders they receive dividends either directly or through the controlled companies. No agreements were concluded with the members of the Company’s Board on the basis of which they perform their duties. The members of the Company’s Board did not obtain any indirect benefit from the Company and they were not granted any stock options by the Company. The members of the Company’s Board did not receive any remuneration from any company in which the Company holds more than 50 % of its shares. INVL BALTIC FARMLAND, AB ANNUAL REPORT OF 2021 | 100 In 2021, no other payouts were made to the members of the Company’s Board, and there were no derogations from the Remuneration Policy. Information on the remuneration paid in 2017-2021, the operating results of the Company and their changes During the period from 1 January 2017 until 31 December 2021, there were no other employees in the Company, except for the Chief Executive Officer of the Company who was paid a fixed salary; therefore, the Company is unable to provide information on the average salary of its employees or its changes. The table below contains the remuneration of the Company’s management bodies and the Company’s annual operating results and their changes over the last five years: 2017 2018 2019 2020 2021 Amount of CEO remuneration, EUR 1,969 2,046 2,043 2,044 2,044 Change in CEO remuneration, % 2.71 3.91 -0.15 0.05 0.00 Annual bonuses to members of the board - - - - - Net profit of the Company, thousand. EUR 885 1,113 1,136 895 1,411 Change in the Company’s net profit, % -25.8 25.8 2.1 -21.2 57.7 * Since 2019 the gross salary amount was increased by 1.289 times because the employer’s taxes were transferred to the employee under the requirements of the applicable legislation of the Republic of Lithuania. For the sake of comparability, the 2017-2018 amounts were recalculated using the coefficient. The differences in remuneration were caused by the time off work (vacation, sick leave). Other important information The Chief Executive Officer of the Company is paid a stable monthly salary. The Company has no approved policy under which the variable portion of the remuneration would be paid to its Managers. The Remuneration Policy of the Company does not provide for any severance pay policy. The Company complies with the respective requirements of the applicable legislation related to severance pay. The Company has no system establishing employee incentives or remuneration with the Company’s shares. By implementing the Remuneration Policy in 2021, the Company sought to achieve the following objectives: i. To ensure a competitive salary of the Managers corresponding with the Company’s financial results; ii. To increase the Company’s transparency and the accountability of its Managers and to provide conditions for its shareholders, potential investors and stakeholders to have a detailed and reliable view of the remuneration assigned to each Manager; iii. To avoid conflicts of interest and to ensure the proper implementation of the principles laid down in the Remuneration Policy. PricewaterhouseCoopers UAB, J. Jasinskio str. 16B, 03163 Vilnius, Lithuania +370 (5) 239 2300, [email protected], www.pwc.lt Company code 111473315, registered with the Legal Entities’ Register of the Republic of Lithuania Independent auditor’s report To the shareholders of INVL Baltic Farmland AB Report on the audit of the separate and consolidated financial statements Our opinion In our opinion, the separate and consolidated financial statements give a true and fair view of the separate and consolidated financial position of INVL Baltic Farmland AB (the “Company”) and its subsidiaries (together - the “Group”) as at 31 December 2021, and of the Company’s and of the Group’s separate and consolidated financial performance and separate and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union. Our opinion is consistent with our additional report to the Audit Committee dated 28 February 2022. What we have audited The Company’s and the Group’s separate and consolidated financial statements comprise: ● the consolidated and Company’s statements of financial position as at 31 December 2021; ● the consolidated and Company’s statements of comprehensive income for the year then ended; ● the consolidated and Company’s statements of changes in equity for the year then ended; ● the consolidated and Company’s statements of cash flows for the year then ended; and ● the notes to the consolidated and Company’s financial statements, which include significant accounting policies and other explanatory information. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Company and the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and the Law of the Republic of Lithuania on the Audit of Financial Statements that are relevant to our audit of the Company’s and consolidated financial statements in the Republic of Lithuania. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the Law of the Republic of Lithuania on the Audit of Financial Statements. To the best of our knowledge and belief, we declare that non-audit services that we have provided to the Company and the Group are in accordance with the applicable law and regulations in the Republic of Lithuania and that we have not provided non-audit services that are prohibited under Article 5(1) of Regulation (EU) No 537/2014 considering the exemptions of Regulation (EU) No 537/2014 endorsed in the Law of the Republic of Lithuania on the Audit of Financial Statements. Our audit approach Overview • Overall Company and Group materiality: €149 thousand and €149 thousand, representing 1% of total equity of the Company and the Group, respectively. • Our audit covered all reporting units within the Group. • Our audit scope covered all of the Group's revenues and all the Group's total assets. • Valuation of investment properties As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the Company's and consolidated financial statements (together “ the financial statements ” ). In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including, among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Company and Group materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, if any, both individually and in aggregate on the financial statements as a whole. Overall Company and Group materiality Overall materiality applied to the Company and the Group amounted to € 149 thousand and € 149 thousand (2020: € 140 thousand and € 140 thousand), respectively. How we determined it 1% of total equity of the Company and the Group, respectively. Rationale for the materiality benchmark applied We chose the Company's and Group's equity as the benchmark because, in our view, it is an appropriate measure of underlying performance, and it is the benchmark against which the performance of the Company, the Group and other companies in this industry is most commonly measured by users, and it is a generally accepted benchmark. The key driver of the business and determinant of the Company’s and the Group’s value is investments into various properties. For this reason, the key area of focus in the audit of the financial statements of the Company and the Group is the valuation of investment properties. Accordingly, an overall Company and Group materiality was based on total equity. We chose 1 %, which is within the range of acceptable quantitative materiality thresholds. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above € 14,9 thousand, the same for the Company and the Group, as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How our audit addressed the key audit matter Valuation of investment properties Refer to Notes 2.18 and 10 to the financial statements on pages 18 and 28, respectively. The Group’s investment properties represent the most significant category of the Group’s assets. Investment properties are accounted at fair value. Management estimated the fair value of the Group’s investment properties to be € 16,620 thousand at 31 December 2021, as compared to € 15,364 thousand at 31 December 2020. Net gain from fair value adjustments on investment property amounts to € 1,256 thousand (2020: € 683 thousand) in the consolidated statement of comprehensive income. The valuation of all of the Group‘s investment properties was based on the independent external valuations. Valuations took into account evidence of market transactions for properties and locations comparable to those of the Group. Given the materiality of investment properties, the net gain from fair value adjustments had a significant impact on the consolidated financial statements. We also focused on this area as the conclusions are dependent upon significant Our procedures in relation to management expert’s valuation of investment properties included: • evaluation of the independent external valuers’ competence, capabilities and objectivity; • assessing the methodology used and the appropriateness of the key assumptions based on our knowledge of the agricultural land market; • checking the accuracy and relevance of the input data used; • examining selected independent valuations by obtaining market prices of agricultural land plots in the same geographical area from independent source, adjusting those for productivity parameters and comparing price per hectare of selected land plots to those used by management expert. Because of the subjectivity involved in determining valuations for investment properties, we determined a range of values that were considered reasonable to evaluate the independent property valuations used by management. The valuations used by the Group were within an acceptable range. We also considered whether or not there was bias in determining individual valuations and found no evidence of bias. judgement involved in performing the valuation and they are most sensitive to the assumptions underlying those valuations. In particular, the most significant inputs into this valuation approach are price per hectare and adjustments for differences in key attributes such as land size and productivity. For this reason, due to existence of significant estimation uncertainty, we have given specific audit focus and attention to this area. We found the key assumptions were supported by the available evidence and the disclosures in Note 10 to be appropriate. How we tailored our Group audit scope We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated the financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates. The group comprises of 18 entities: the Company and its subsidiaries, all located in Lithuania. All entities were audited by one engagement team in Lithuania. The group audit team performed full scope audit procedures on the financial statements of the Company and its subsidiaries. Reporting on other information including the consolidated annual report Management is responsible for the other information. The other information comprises the consolidated annual report, including the corporate governance report and the remuneration report (but does not include the financial statements and our auditor’s report thereon). Our opinion on the financial statements does not cover the other information, including the consolidated annual report. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to the consolidated annual report, we considered whether the consolidated annual report includes the disclosures required by the Law of the Republic of Lithuania on Consolidated Financial Reporting by Groups of Undertakings, the Law of the Republic of Lithuania on Financial Reporting by Undertakings. Based on the work undertaken in the course of our audit, in our opinion: ● the information given in the consolidated annual report for the financial year for which the financial statements are prepared, is consistent with the financial statements; and ● the consolidated annual report has been prepared in accordance with the Law of the Republic of Lithuania on Consolidated Financial Reporting by Groups of Undertakings and the Law of the Republic of Lithuania on Financial Reporting by Undertakings. In addition, in light of the knowledge and understanding of the Company and the Group and their environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the consolidated annual report which we obtained prior to the date of this auditor’s report. We have nothing to report in this regard. Responsibilities of management and those charged with governance for the financial statements Management is responsible for the preparation of the financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s and the Group’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 management either intends to liquidate the Company and the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s and the Group’s financial reporting process. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: ● Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. ● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s and the Group’s internal control. ● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. ● Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s and the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern. ● Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. ● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and have communicated with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on other legal and regulatory requirements Report on the compliance of the format of the separate and consolidated financial statements with the requirements of the European Single Electronic Reporting Format We have been engaged based on the amendment to our audit agreement by the management of the Company to conduct a reasonable assurance engagement for the verification of compliance with the applicable requirements of the European single electronic reporting format of the Company’s and the Group’s separate and consolidated financial statements, including the consolidated annual report, for the year ended 31 December 2021 (the “Single Electronic Reporting Format of the separate and consolidated financial statements”). Description of a subject matter and applicable criteria The Single Electronic Reporting Format of the separate and consolidated financial statements has been applied by the management of the Company to comply with the requirements of art. 3 and 4 of the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (the “ESEF Regulation”). The applicable requirements regarding the Single Electronic Reporting Format of the separate and consolidated financial statements are contained in the ESEF Regulation. The requirements described in the preceding sentence determine the basis for application of the Single Electronic Reporting Format of the separate and consolidated financial statements and, in our view, constitute appropriate criteria to form a reasonable assurance conclusion. Responsibility of the management and those charged with governance The management of the Company is responsible for the application of the Single Electronic Reporting Format of the separate and consolidated financial statements that complies with the requirements of the ESEF Regulation. This responsibility includes the selection and application of appropriate markups in iXBRL using ESEF taxonomy and designing, implementing and maintaining internal controls relevant for the preparation of the Single Electronic Reporting Format of the separate and consolidated financial statements which is free from material non-compliance with the requirements of the ESEF Regulation. Those charged with governance are responsible for overseeing the financial reporting process, which should also be understood as the preparation of financial statements in accordance with the format resulting from the ESEF Regulation. Our responsibility Our responsibility was to express a reasonable assurance conclusion whether the Single Electronic Reporting Format of the separate and consolidated financial statements complies, in all material aspects, with the ESEF Regulation. We conducted our engagement in accordance with International Standard on Assurance Engagements 3000 (Revised) ‘Assurance Engagements other than Audits and Reviews of Historical Financial Information’ (“ISAE 3000 (R)”). This standard requires that we comply with ethical requirements, plan and perform procedures to obtain reasonable assurance whether the Single Electronic Reporting Format of the separate and consolidated financial statements complies, in all material aspects, with the applicable requirements. Reasonable assurance is a high level of assurance, but it does not guarantee that the service performed in accordance ISAE 3000 (R) will always detect the existing material misstatement (significant non-compliance with the requirements). Summary of the work performed Our planned and performed procedures were aimed at obtaining reasonable assurance that the Single Electronic Reporting Format of the separate and consolidated financial statements was applied, in all material aspects, in accordance with the applicable requirements and such application is free from material errors or omissions. Our procedures included in particular: • obtaining an understanding of the internal control system and processes relevant to the application of the Single Electronic Reporting Format of the separate and consolidated financial statements, including the preparation of the XHTML format and marking up the separate and consolidated financial statements; • verification whether the XHTML format was applied properly; • evaluating the completeness of marking up the separate and consolidated financial statements using the iXBRL markup language according to the requirements of the implementation of single electronic format as described in the ESEF Regulation; • evaluating the appropriateness of the Company’s and the Group’s' use of XBRL markups selected from the ESEF taxonomy and the creation of extension markups where no suitable element in the ESEF taxonomy has been identified; and • evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Conclusion In our opinion, the Single Electronic Reporting Format of the separate and consolidated financial statements for the year ended 31 December 2021 complies, in all material aspects, with the ESEF Regulation. Appointment We were first appointed as auditors of the Company and the Group as at 1 December 2014. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 8 years. The key audit partner on the audit resulting in this independent auditor’s report is Rasa Selevičienė On behalf of PricewaterhouseCoopers UAB /signed with electronic signature/ Rasa Selevičienė Assurance Director Auditor's Certificate No.000504 Vilnius, Republic of Lithuania 28 February 2022 The auditor's electronic signature is used herein to sign only the Independent Auditor's Report

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