INVL Baltic Farmland

Annual / Quarterly Financial Statement • Mar 19, 2018

AB INVL Baltic Farmland Consolidated Annual Report, Consolidated and Company's Financial Statements for the year ended 31 December 2017

prepared in accordance with International Financial Reporting Standards as adopted by the European Union presented together with independent auditor's report

	INDEPENDENT AUDITOR'S REPORT 3
	CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS:
	DETAILS OF THE COMPANY 10
	CONSOLIDATED AND COMPANY'S STATEMENTS OF COMPREHENSIVE INCOME 11
	CONSOLIDATED AND COMPANY'S STATEMENTS OF FINANCIAL POSITION 12
	CONSOLIDATED AND COMPANY'S STATEMENTS OF CHANGES IN EQUITY 13
	CONSOLIDATED AND COMPANY'S STATEMENTS OF CASH FLOWS 15
	NOTES TO THE FINANCIAL STATEMENTS 16
1 2 3 4 5 6 7 8 9 10 11	GENERAL INFORMATION 16 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 17 FINANCIAL RISK MANAGEMENT 26 3.1. Financial risk factors 26 3.2. Capital management 28 FAIR VALUE ESTIMATION 29 SUBSIDIARIES 30 SEGMENT INFORMATION AND OPERATING LEASE COMMITMENTS 31 AGREEMENT ON THE ADMINISTRATION OF LAND PLOTS 32 INCOME TAX 32 EARNINGS PER SHARE 34 INVESTMENT PROPERTIES 35 FINANCIAL INSTRUMENTS BY CATEGORY 36
12 13	LOANS GRANTED TO SUBSIDIARIES 37 TRADE AND OTHER RECEIVABLES 38
14 15 16	SHARE CAPITAL, ACQUISITION OF OWN SHARES AND RESERVES 39 DIVIDENDS 39 RELATED PARTY TRANSACTIONS 40
17	EVENTS AFTER THE REPORTING PERIOD 41

CONSOLIDATED ANNUAL REPORT 42

Overall Company and Group materiality	Overall materiality applied to the Company and the Group amounted to € 112 thousand (2016: €104 thousand).
How we determined it	1% of total equity of the Company and the Group, respectively.
Rationale for the materiality benchmark applied	We have chosen the Group's and Company's equity as the benchmark because, in our view, it is an appropriate measure of underlying performance and the benchmark against which the performance of the Group, the Company and other companies in this industry is most commonly measured by users, and is a generally accepted benchmark. The key driver of the business and determinant of the Group's value is investments into agricultural land, whereas the Company's value represents investments into subsidiaries. Due to this, the key area of focus in the audit of the Group and in the audit of the Company is the valuation of investment property and investments into subsidiaries, respectively. Accordingly, an overall Group and Company materiality level is based on total equity. We chose 1%, which is within the range of acceptable quantitative materiality thresholds.

Key audit matter	How our audit addressed the key audit matter
Valuation of Investment Properties Refer to Note 2.18, Note 10 to the financial statements on pages 25 and 35, respectively. The Group's investment properties represent the most significant class of the Group's assets. The investment properties are accounted for at fair value as at the financial reporting date. Management has estimated the fair value of	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
the Group's investment properties to be equal to € 12,964 thousand at 31 December 2017 as compared to $\epsilon$ 12,335 thousand as at 31 December 2016. The revaluation gain of $\epsilon$ 629 thousand (2016: $\epsilon$ 1,098 thousand) was recorded as fair value	our knowledge of the agricultural land market; • checking the accuracy and relevance of the input data used; • examining independent valuations by obtaining market prices of agricultural land plots in the same geographical area from independent source, adjusting those for productivity parameters and

AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (all amounts are in EUR thousand unless otherwise stated)

Consolidated and Company's statements of comprehensive income

		Group		Company
	Notes	2017	2016	2017	2016
Revenue	6	575	531	-	-
Interest income		-	-	206	211
Other income		6	15	-	-
Share of net profit of subsidiaries accounted for using the equity method	5	-	-	736	1,040
Net gain from fair value adjustments on investment property	10	629	1,098	-	-
Land plots administration fees	7	(55)	(174)	-	-
Legal, professional and securities administration fees		(47)	(47)	(27)	(27)
(Allowance for) reversal of impairment of trade receivables	13	(32)	6	-	-
Direct property operating expenses		(15)	(16)	-	-
Employee benefits expense		(9)	(7)	(2)	(2)
Other expenses		(8)	(8)	(2)	(2)
Operating profit		1,044	1,398	911	1,220
Finance costs		-	-	-	-
Profit before income tax		1,044	1,398	911	1,220
Income tax expense	8	(159)	(205)	(26)	(27)
NET PROFIT FOR THE YEAR		885	1,193	885	1,193
Other comprehensive income for the year, net of tax		-	-	-	-
TOTAL COMPREHENSIVE INCOME FOR THE YEAR		885	1,193	885	1,193
Attributable to:
Equity holders of the parent		885	1,193	885	1,193
Basic and diluted earnings per share (in EUR)	9	0.27	0.37

Consolidated and Company's statements of financial position

			Group	Company
	Notes	As at 31 December 2017	As at 31 December 2016	As at 31 December 2017	As at 31 December 2016
ASSETS
Non-current assets
Investment properties	10	12,964	12,335	-	-
Investments into subsidiaries accounted for using the equity method	5	-	-	7,360	6,624
Loans granted to subsidiaries	12	-	-	4,538	4,656
Total non-current assets		12,964	12,335	11,898	11,280
Current assets
Trade and other receivables	13	195	82	5	5
Prepayments and deferred charges		1	6	1	6
Cash and cash equivalents	3.1	199	209	154	101
Total current assets		395	297	160	112
TOTAL ASSETS		13,359	12,632	12,058	11,392
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	3,232	3,231	3,211	3,211
Retained earnings		6,631	5,973	6,652	5,993
Total equity		12,002	11,343	12,002	11,343
Liabilities
Non-current liabilities
Deferred income tax liability	8	1,235	1,121	-	-
Advances received		21	-
Total non-current liabilities		1,256	1,121	-	-
Current liabilities
Trade payables		28	118	4	2
Income tax payable		45	31	25	25
Other current liabilities		28	19	27	22
Total current liabilities		101	168	56	49
Total liabilities		1,357	1, 1,289	56	49
TOTAL EQUITY AND LIABILITIES		13,359	12,632	12,058	11,392

Consolidated and Company's statements of changes in equity

					Re se rve s
Gr ou p	No tes	Sh ita l are ca p	Ow ha n s res	S ha ium re p rem	Le al g res erv e	Re fo se rve r rch f o pu as e o wn sh are s	Re tai d e ing ne arn s	To tal
Ba lan De mb at 31 20 15 ce as ce er		95 5	-	1, 38 7	144	3, 07 9	5, 00 5	10 57 0 ,
Ne rof it fo r th t p e y ea r		-	-	-	-	-	1, 193	1, 193
To tal reh siv e i e f the co mp en nc om or y ea r		-	-	-	-	-	1, 193	1, 193
Ow ha bu ba ck n s res y	14	-	( 20 3)	-	-	-	-	( 20 3)
Tra nsf to er res erv es		-	-	-	8	-	( 8)	-
Div ide nds d ap pro ve	15	-	-	-	-	-	( 7) 21	( 21 7)
To tal ion ith of the Co tra act ns s w ow ne rs mp an y, nis ed di tly in uit rec og rec eq y		-	( 20 3)	-	8	-	( 22 5)	( 42 0)
Ba lan 31 De mb 20 16 at ce as ce er		95 5	( 20 3)	1, 38 7	152	3, 07 9	5, 97 3	11 34 3 ,
Ne rof it fo r th t p e y ea r		-	-	-	-	-	88 5	88 5
To tal reh siv e i e f the co mp en nc om or y ea r		-	-	-	-	-	88 5	88 5
Tra nsf to er res erv es		-	-	-	1	-	( 1)	-
Div ide nds d ap pro ve	15	-	-	-	-	-	( 22 6)	( 22 6)
To tal ion ith of the Co tra act ns s w ow ne rs mp an y, nis ed di tly in uit rec og rec eq y		-	-	-	1	-	( 22 7)	( 22 6)
Ba lan 31 De mb 20 17 at ce as ce er		95 5	( 20 3)	1, 38 7	153	3, 07 9	6, 63 1	12 00 2 ,

Consolidated and Company's statements of changes in equity (cont'd)

					Re se rve s
Co mp an y	No tes	Sh ita l are ca p	Ow ha n s res	S ha ium re p rem	Le al g res erv e	Re fo se rve r rch f o pu as e o wn sh are s	Re tai d e ing ne arn s	To tal
Ba lan 31 De mb 20 15 at ce as ce er		95 5	-	1, 38 7	132	3, 07 9	5, 01 7	10 57 0 ,
Ne rof it fo r th t p e y ea r		-	-	-	-	-	1, 193	1, 193
To tal reh siv e i e f the co mp en nc om or y ea r		-	-	-	-	-	1, 193	1, 193
Ow ha bu ba ck n s res y	14	-	( 20 3)	-	-	-	-	( 20 3)
Div ide nds d ap pro ve	15	-	-	-	-	-	( 7) 21	( 21 7)
To tal ion ith of the Co tra act ns s w ow ne rs mp an y, nis ed di tly in uit rec og rec eq y		-	( 20 3)	-	-	-	( 21 7)	( 42 0)
Ba lan 31 De mb 20 16 at ce as ce er		95 5	( 20 3)	38 1, 7	132	3, 07 9	99 3 5,	34 3 11 ,
Ne rof it fo r th t p e y ea r		-	-	-	-	-	88 5	88 5
To tal reh siv e i e f the co mp en nc om or ea r y		-	-	-	-	-	88 5	88 5
Div ide nds d ap pro ve	15	-	-	-	-	-	( 6) 22	( 22 6)
To tal ion ith of the Co tra act ns s w ow ne rs mp an y, nis ed di tly in uit rec og rec eq y		-	-	-	-	-	( 22 6)	( 22 6)
Ba lan 31 De mb 20 at 17 ce as ce er		95 5	( 20 3)	38 1, 7	132	3, 07 9	6, 65 2	12 00 2 ,

AB INVL BALTIC FARMLAND, company code 303299781, Gynėjų str. 14, Vilnius, Lithuania CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017

(all amounts are in EUR thousand unless otherwise stated)

Consolidated and Company's statements of cash flows

		Group		Company
	Notes	2017	2016	2017	2016
Cash flows from (to) operating activities
Net profit for the year Adjustments for non-cash items and non-operating activities:		885	1,193	885	1,193
Net gains from fair value adjustments on investment property Share of net profit of subsidiaries accounted for using the equity	10	(629)	(1,098)	-	-
method	5	-	-	(736)	(1,040)
Interest income		-	-	(206)	(211)
Deferred taxes	8	114	174	-	-
Current income tax expenses	8	45	31	26	27
Allowances	13	32	(6)	-	-
Changes in working capital:
Decrease (increase) in trade and other receivables		(151)	(22)	-	(1)
Decrease (increase) in other current assets		5	1	5	1
(Decrease) increase in trade payables		(94)	8	(2)	(5)
(Decrease) increase in other current liabilities		28	2	2	1
Cash flows from (to) operating activities		235	283	(26)	(35)
Income tax paid		(25)	(27)	(25)	(22)
Net cash flows from (to) operating activities		210	256	(51)	(57)
Cash flows from (to) investing activities
Acquisition of investment properties		-	-	-	-
Loans granted		-	-	-	-
Additional investments into subsidiaries	5	-	-	-	(3)
Repayment of granted loans	12	-	-	151	311
Interest received	12	-	-	173	128
Net cash flows from (to) investing activities		-	-	324	436
Cash flows from (to) financing activities Cash flows related to Group owners
Acquisition of own shares	14	-	(203)	-	(203)
Dividends paid to equity holders of the parent	15	(220)	(211)	(220)	(211)
		(220)	(414)	(220)	(414)
Net cash flows from (to) financing activities		(220)	(414)	(220)	(414)
Net increase (decrease) in cash and cash equivalents		(10)	(158)	(53)	(35)
Cash and cash equivalents at the beginning of the period		209	367	101	136
Cash and cash equivalents at the end of the period		199	209	154	101

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 more than 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 2017 and 2016 the shareholders of the Company were (by votes)*:

	2017		2016
	Number of votes held	Percentage	Number of votes held	Percentage
UAB LJB Investments (controlling shareholder Mr.
Alvydas Banys)	977,751	30.29	977,751	30.29
Mrs. Irena Ona Mišeikienė	931,831	28.86	931,831	28.86
UAB Lucrum Investicija (sole shareholder Mr. Darius
Šulnis)	730,068	22.61	730,068	22.61
Mr. Alvydas Banys	252,875	7.83	252,875	7.83
Ms. Indrė Mišeikytė	64,450	2.00	64,450	2.00
Other minor shareholders	271,535	8.41	271,535	8.41
Total	3,228,510	100.00	3,228,510	100.00

* One shareholder sold part of his shares under repo agreement (so did not hold the legal ownership title of shares), but he retained the voting rights of transferred shares.

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 2017 and 2016. Subsidiaries did not hold any shares of the Company as at 31 December 2017 and 2016.

The Company's shares are traded on the Baltic Secondary List of NASDAQ Vilnius from 4 June 2014.

As at 31 December 2017 the number of employees of the Group and the Company was 2 and 1, respectively. As at 31 December 2016 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.

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 2017 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 2017:

• − Amendments to IAS 7: Disclosure Initiative effective 1 January 2017;
• − Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses effective 1 January 2017;
• − Annual Improvements to IFRSs 2014-2016 Cycle (changes to IFRS 12) effective 1 January 2017.

The principal effects of these changes are as follows:

Amendments to IAS 7: Disclosure Initiative

The amended IAS 7 will require disclosure of a reconciliation of movements in liabilities arising from financing activities. The amendments did not have any impact on the Group's financial position or performance, but the additional disclosures were added in Note 15.

The all other amendments adopted as of 1 January 2017 had no impact on the Group's/Company's financial statements for the year ended 31 December 2017.

2 Summary of significant accounting policies (cont'd)

2.1 Basis of preparation (cont'd)

Standards adopted by the EU but not yet effective and have not been early adopted

IFRS 9 Financial Instruments (effective for annual periods beginning on or after 1 January 2018)

Key features of the new standard are:

• − Financial assets are required to be classified into three measurement categories: those to be measured subsequently at amortised cost, those to be measured subsequently at fair value through other comprehensive income (FVOCI) and those to be measured subsequently at fair value through profit or loss (FVPL).
• − Classification for debt instruments is driven by the entity's business model for managing the financial assets and whether the contractual cash flows represent solely payments of principal and interest (SPPI). If a debt instrument is held to collect, it may be carried at amortised cost if it also meets the SPPI requirement. Debt instruments that meet the SPPI requirement that are held in a portfolio where an entity both holds to collect assets' cash flows and sells assets may be classified as FVOCI. Financial assets that do not contain cash flows that are SPPI must be measured at FVPL (for example, derivatives). Embedded derivatives are no longer separated from financial assets but will be included in assessing the SPPI condition.
• − Investments in equity instruments are always measured at fair value. However, management can make an irrevocable election to present changes in fair value in other comprehensive income, provided the instrument is not held for trading. If the equity instrument is held for trading, changes in fair value are presented in profit or loss.
• − Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The key change is that an entity will be required to present the effects of changes in own credit risk of financial liabilities designated as at fair value through profit or loss in other comprehensive income.
• − IFRS 9 introduces a new model for the recognition of impairment losses the expected credit losses (ECL) model. There is a 'three stage' approach which is based on the change in credit quality of financial assets since initial recognition. In practice, the new rules mean that entities will have to record an immediate loss equal to the 12-month ECL on initial recognition of financial assets that are not credit impaired (or lifetime ECL for trade receivables). Where there has been a significant increase in credit risk, impairment is measured using lifetime ECL rather than 12-month ECL. The model includes operational simplifications for lease and trade receivables.
• − Hedge accounting requirements were amended to align accounting more closely with risk management. The standard provides entities with an accounting policy choice between applying the hedge accounting requirements of IFRS 9 and continuing to apply IAS 39 to all hedges because the standard currently does not address accounting for macro hedging.

The Group and the Company have only financial assets attributed to the category of financial assets 'Loans and receivables' and have only financial liabilities attributed to the category 'Other financial liabilities'. Therefore, there will be no impact on the Group's and the Company's accounting for financial liabilities. The business model for the Group's and the Company's financial assets is held to collect contractual cash flows and they are SPPI. Therefore, the financial assets would be measured at amortised cost as before. The changes in hedge accounting would not have impact on the Group's and the Company's financial statements as the Group and the Company has not hedge accounting. The new impairment model requires the recognition of impairment provisions based on ECL rather than only incurred credit losses as is the case under IAS 39. It applies to financial assets classified at amortised cost, lease receivables. Based on the assessments undertaken to date, it may result in an earlier recognition of credit losses in future, but at the date of initial application the Group and the Company assessed that there will be no significant impact on allowance of trade receivables, loans granted to subsidiaries, cash and cash equivalents. Therefore, there will be no material impact on the Group's/Company's financial position or performance due to application of IFRS 9. The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of the Group's and the Company's disclosures about its financial instruments particularly in the year of the adoption of the new standard - 2018. The Group/the Company will apply the new rules retrospectively from 1 January 2018, with the practical expedients permitted under the standard. Comparatives for 2017 will not be restated.

2 Summary of significant accounting policies (cont'd)

2.1 Basis of preparation (cont'd)

Standards adopted by the EU but not yet effective and have not been early adopted (cont'd)

IFRS 15 Revenue from Contracts with Customers (effective for annual periods beginning on or after 1 January 2018) Amendments to IFRS 15 Revenue from Contracts with Customers (effective for annual periods beginning on or after 1 January 2018)

The new standard introduces the core principle that revenue must be recognised when the goods or services are transferred to the customer, at the transaction price. Any bundled goods or services that are distinct must be separately recognised, and any discounts or rebates on the contract price must generally be allocated to the separate elements. When the consideration varies for any reason, minimum amounts must be recognised if they are not at significant risk of reversal. Costs incurred to secure contracts with customers have to be capitalised and amortised over the period when the benefits of the contract are consumed.

The amendments do not change the underlying principles of the standard but clarify how those principles should be applied. The amendments clarify how to identify a performance obligation (the promise to transfer a good or a service to a customer) in a contract; how to determine whether a company is a principal (the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided); and how to determine whether the revenue from granting a licence should be recognised at a point in time or over time. In addition to the clarifications, the amendments include two additional reliefs to reduce cost and complexity for a company when it first applies the new standard.

The Group and the Company assessed that the impact of the standard on its financial statements would be non-material, because the main revenue of the Group is rental income.

IFRS 16 Leases (effective for annual periods beginning on or after 1 January 2019)

The new standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. All leases result in the lessee obtaining the right to use an asset at the start of the lease and, if lease payments are made over time, also obtaining financing. Accordingly, IFRS 16 eliminates the classification of leases as either operating leases or finance leases as is required by IAS 17 and, instead, introduces a single lessee accounting model. Lessees will be required to recognise: (a) assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value; and (b) depreciation of lease assets separately from interest on lease liabilities in the income statement. IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. The Group and the Company are currently assessing the impact of the standard on their financial statements, but are not expecting that impact would be material. The Group and the Company are not parties to any agreements as lessees. The Group and the Company do not intend to adopt IFRS 16 before its mandatory date.

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

Amendments to existing standards and new standards, which are not yet adopted by the EU, are not relevant to the Group and the Company.

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 Summary of significant accounting policies (cont'd)

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.

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 IAS 39 are classified as either financial assets at fair value through profit or loss, loans and receivables, held to maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The classification depends on the purpose for which the financial assets were acquired. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial asset or financial liability not at fair value through profit or loss, directly attributable transaction costs.

The Group determines the classification of its financial assets at initial recognition.

Loans and receivables

Financial assets recognised in the statement of financial position as loans granted, trade and other receivables and cash and cash equivalents are classified as loans and receivables. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement loans and receivables are subsequently carried at amortised cost using the effective interest method less any allowance for impairment. Amortised cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transaction costs. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through amortisation process. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets.

2 Summary of significant accounting policies (cont'd)

2.8. Impairment of financial assets

Assets carried at amortised cost

The Group assesses at each reporting date whether is any objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The Group assesses whether objective evidence of impairment exists individually for financial assets. 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. When financial asset is assessed as uncollectible the impaired asset is derecognised. In relation to trade receivables, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all of the amounts due under the original terms of the invoice.

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the carrying amount of the asset is reduced through use of an allowance account. The amount of the loss is recognised in profit or loss within "Allowance for (reversal of) impairment of trade receivables".

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in profit or loss within "Allowance for (reversal of) impairment of trade receivables", to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

Impaired debts are derecognised entirely when they are assessed as uncollectible.

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.

2.10. Financial liabilities

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, other financial liabilities, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and in the case of other financial liabilities, net of directly attributable transaction costs.

The measurement of financial liabilities depends on their classification as follows:

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). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2 Summary of significant accounting policies (cont'd)

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.

See Note 2.13 for the recognition of rental income.

2.13. Revenue recognition

The group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the group's activities as described below. The group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, and other sales taxes or duty. The following specific recognition criteria must also be met before revenue is recognised.

Rental income

Rental income arising from operating leases of land is accounted for on a straight-line basis over the lease terms. When the Group provides incentives to its tenants, the cost of incentives is recognised over the lease term, on a straight-line basis, as a reduction of rental income.

According to agreements land rent consists of two parts – a fixed rent for a year and a variable part equal to land tax paid to the State for the year. In the first quarter fixed rental fee is invoiced to the tenants. In the fourth quarter variable part of the rent is invoiced to the tenants, when State tax authorities provide an estimate of the land tax and the rental income equal to the variable rent amount as well as land tax expenses are recognised.

Interest income

Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables is recognised using the original effective interest rate.

2 Summary of significant accounting policies (cont'd)

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.

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 2016 and 2017. 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.

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 25% 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.

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 2017 was EUR 12,964 thousand (as at 31 December 2016 – EUR 12,335 thousand) (described in more details in Note 10).

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 arises from cash and cash equivalents, credit exposures to outstanding trade receivables and loans granted. The Group has no significant concentrations 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 rental contracts are entered into only with lessees with an appropriate credit history, from some of lessees advance lease payments are required.

At the date of financial statements there are no indications of worsening credit quality of trade and other receivables, which are neither due, nor impaired, due to constant control by the Group of receivable balances. The maximum exposure to credit risk is disclosed in Notes 12 and 13. 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.

For banks and financial institutions, only independently rated parties with high credit ratings are accepted.

The credit quality of cash and cash equivalents can be assessed by reference to external credit ratings of the banks:

		Group		Company
	2017	2016	2017	2016
Moody's short-term ratings
Prime-1	197	208	152	100
Prime-3	2	-	2	-
Not Prime	-	1	-	1
	199	209	154	101

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 2017 was approximately 3.91 (1.77 as at 31 December 2016). The Company's liquidity ratio as at 31 December 2017 was approximately 2.86 (2.29 as at 31 December 2016).

The table below summarises the maturity profile of the Group's financial liabilities as at 31 December 2017 and 2016 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	-	28	-	-	-	28
Other liabilities	19	6	-	-	-	25
Balance as at 31 December 2017	19	34	-	-	-	53
Trade and other payables	-	118	-	-	-	118
Other liabilities	13	3	-	-	-	16
Balance as at 31 December 2016	13	121	-	-	-	134

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 2017 and 2016 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	-	4	-	-	-	4
Other liabilities	19	5	-	-	-	24
Balance as at 31 December 2017	19	9	-	-	-	28
Trade and other payables	-	2	-	-	-	2
Other liabilities	13	6	-	-	-	19
Balance as at 31 December 2016	13	8	-	-	-	21

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 2017 and 2016.

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 2017 and 2016, except one dormant subsidiary as at 31 December 2017. There are no plans yet to rectify the situation.

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 2017.

	Level 1	Level 2	Level 3	Total balance
Assets of the Group
Investment properties (Note 10)	-	12,964		- 12,964

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 2016.

	Level 1	Level 2	Level 3	Total balance
Assets of the Group
Investment properties (Note 10)	-	12,335		- 12,335

There were no transfers of assets between the levels of the fair value hierarchy during 2017 and 2016.

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 2017 and 2016 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 2017 and 2016. It is Level 3 fair value measurement.

5 Subsidiaries

The Group had the following subsidiaries, owned directly by the Company, as at 31 December 2017 and 2016:

Country of incorporation and place of business	Proportion of shares (voting rights) directly held by the Company (%)	Nature of business
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Agricultural land owner and lessor
Lithuania	100.00	Dormant

All subsidiary undertakings are included in the consolidation.

In December 2016 the Company has additionally invested EUR 3 thousand increasing the share capital of one dormant subsidiary by cash instalments.

The following table presents the movements of investments in subsidiaries of the Company:

	2017	2016
At 1 January	6,624	5,581
Share of net profit of subsidiaries	736	1,040
Increase of share capital	-	3
At 31 December	7,360	6,624

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.

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. The majority of the agreements have remaining terms of between 1 and 5 years.

Future rentals receivable under operating leases as at 31 December were as follows:

		2017	2016
Within one year
	- non-cancellable lease	323	146
	- non-cancellable amount of cancellable lease	207	382
	- minimum lease payments total	530	528
From one to five years
	- non-cancellable lease	1,113	534
	- minimum lease payments total	1,113	534
	- cancellable amount of cancellable lease	426	663
		1,539	1,197
After five years
	- non-cancellable lease	22	-
	- minimum lease payments total	22	-
	- cancellable amount of cancellable lease	30	73
		52	73
Total		2,121	1,798
	- non-cancellable lease	1,458	680
	- non-cancellable of cancellable lease	207	382
	- minimum lease payments total	1,665	1,062
	- cancellable amount of cancellable lease	456	736

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.

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
	2017	2016
Administration fees from rent revenues and market capitalisation	99	88
Compensation for past due trade receivables	(44)	(15)
Success fee	-	101
Total	55	174

8 Income tax

	Group		Company
	2017	2016	2017	2016
Components of the income tax expenses
Current year income tax	(45)	(31)	(26)	(27)
Deferred income tax expenses	(114)	(174)	-	-
Income tax expenses charged to profit or loss – total	(159)	(205)	(26)	(27)

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 2017 and 2016.

The movement in deferred income tax assets and liabilities of the Group during 2017 is as follows:

	Balance as at 31 December 2016	Recognised in profit or loss during the year	Balance as at 31 December 2017
Deferred tax asset
Tax loss carry forward for indefinite period of time	36	(20)	16
Recognised deferred income tax asset	36	(20)	16
Asset netted with liability of the same legal entities	(36)	20	(16)
Deferred income tax asset, net	-	-	-
Deferred tax liability
Investment properties	(1,157)	(94)	(1,251)
Deferred income tax liability	(1,157)	(94)	(1,251)
Liability netted with asset of the same legal entities	36	(20)	16
Deferred income tax liability, net	(1,121)	(114)	(1,235)
Deferred income tax, net	(1,121)	(114)	(1,235)

8 Income tax (cont'd)

The movement in deferred income tax assets and liabilities of the Group during 2016 is as follows:

			Transfer of tax
	Balance as at 31 December 2015	Recognised in profit or loss during the year	losses within group	Balance as at 31 December 2016
Deferred tax asset
Tax loss carry forward for indefinite period of time	46	(9)	(1)	36
Recognised deferred income tax asset	46	(9)	(1)	36
Asset netted with liability of the same legal entities	(46)	9	1	(36)
Deferred income tax asset, net	-	-	-	-
Deferred tax liability
Investment properties	(992)	(165)	-	(1,157)
Deferred income tax liability	(992)	(165)	-	(1,157)
Liability netted with asset of the same legal entities	46	(9)	(1)	36
Deferred income tax liability, net	(946)	(174)	(1)	(1,121)
Deferred income tax, net	(946)	(174)	(1)	(1,121)

The Company has not any taxable temporary differences in 2017 and 2016 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
	2017	2016	2017	2016
Profit before income tax	1,044	1,398	911	1,220
Tax calculated at the tax rate of 15 %	(157)	(210)	(137)	(183)
Tax effect of non-deductible expenses and non-taxable income Income tax expenses recorded in the statement of comprehensive	(2)	5	111	156
income	(159)	(205)	(26)	(27)

In 2017 and 2016 non-taxable income of the Company was share of net profit of subsidiaries accounted for using the equity method.

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 2017 was 3,228 thousand.

The weighted average number of shares for 2016 was as follows:

Calculation of weighted average for the year 2016	Number of shares (thousand)	Par value (EUR)	Issued/366 (days)	Weighted average (thousand)
Shares issued as at 31 December 2015	3,291	0.29	366/366	3,291
Acquired own shares as at 22 June 2016	(63)	0.29	192/366	(33)
Shares issued as at 31 December 2016	3,228	0.29		3,258

The following table reflects the income and share data used in the basic earnings per share computations:

	Group
	2017	2016
Net profit (loss), attributable to the equity holders of the parent	885	1,193
Weighted average number of ordinary shares (thousand)	3,228	3,258
Basic earnings (deficit) per share (EUR)	0.27	0.37

For 2017 and 2016 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 2017 and 2016 were:

	2017	2016
Fair value hierarchy	Level 2
Balance as at 1 January	12,335	11,237
Additions	-	-
Subsequent expenditure	-	-
Disposals	-	-
Gain from fair value adjustment	630	1,107
Loss from fair value adjustment	(1)	(9)
Balance as at 31 December	12,964	12,335
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	629	1,098

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 2017 and in December 2016.

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 January 2017 the Group received letters from Ministry of Transport and Communications informing about possibility to take for the purpose of Rail Baltica project 6 land plots owned by the Group. The Group has no right to sell, pledge, restructure or in any other way restrict rights to those land plots. Cumulative area of the above mentioned land plots is 91.8 ha, while the value of the plots in the statement of financial position was EUR 467 thousand and EUR 448 thousand as at 31 December 2017 and 2016, respectively. The Republic of Lithuania plans to finalize procedures of land redemption for public needs in the second half of 2018. Only after the procedures have been finalized will be clear how much of the land owned by the Group will be taken for the public needs and the size of the compensation received by the Group. The Group was informed that according to the preliminary results 11.47 ha of above mentioned land plots might possibly be taken for the public needs.

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 2017 and 2016. No contractual obligations to purchase investment properties existed at the end of the period.

11 Financial instruments by category

Group	Loans and receivables
	2017	2016
Assets as per statement of financial position
Trade and other receivables excluding tax prepayments	129	43
Cash and cash equivalents	199	209
Total	328	252
Company
	Loans and receivables
	2017	2016
Assets as per statement of financial position
Loans granted to subsidiaries – non-current assets	4,538	4,656
Trade and other receivables excluding tax prepayments	5	5
Cash and cash equivalents	154	101
Total	4,697	4,762
Group	Financial liabilities at amortised cost
	2017	2016
Liabilities as per statement of financial position
Trade payables	28	118
Other current liabilities excluding taxes and employee benefits	25	16
Total	53	134
Company	Financial liabilities at amortised cost
	2017	2016
Liabilities as per statement of financial position
Trade payables	4	2
Other current liabilities excluding taxes and employee benefits	24	19
Total	28	21

12 Loans granted to subsidiaries

The Company's loans granted are described below:

	2017	2016
Loans granted to subsidiaries	4,538	4,656
Total loans granted	4,538	4,656
The movements of loans granted to subsidiaries during the year were:
Balance as at 31 December 2015		4,880
Loans granted during year		-
Loans repayment received		(311)
VAT receivable arising from interest on loans granted to subsidiaries converted to loans granted		4
Interest charged		211
Interest received		(128)
Balance as at 31 December 2016		4,656
Loans granted during year		-
Loans repayment received		(151)
Interest charged		206
Interest received		(173)
Balance as at 31 December 2017		4,538

The contractual maturity of loans granted to subsidiaries is 31 December 2018 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.

As at 31 December 2017 and 2016, the Company loans granted were neither overdue, nor impaired and 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.

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 2017 and 2016. It is Level 3 fair value measurement.

13 Trade and other receivables

	Group
	2017	2016
Trade receivables, gross	141	94
Accrued lease income, gross	23	-
Other receivables, gross	39	-
Taxes receivable, gross	66	39
Less: allowance for doubtful trade and other receivables	(74)	(51)
	195	82

Other receivables are receivables from UAB INVL Farmland Management for compensation of past due trade receivables.

As at 31 December 2017 and 2016 the Company had receivable of EUR 5 thousand and EUR 5 thousand, which was VAT receivable arising from interest on loans granted to subsidiaries (the Company has elected to calculate VAT from interest). The receivable is neither past due nor impaired and has to be settled until 31 March 2018.

Changes in allowance for doubtful trade and other receivables for the year 2017 and 2016 have been included within 'Allowance 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.

As at 31 December 2017 and 2016 the Group's trade and other receivables with nominal value of EUR 101 thousand and EUR 64 thousand, respectively, were past due and impaired. The net amount of EUR 27 thousand and EUR 13 thousand is presented in the statement of financial position of the Group as at 31 December 2017 and 2016, respectively.

Movements in the allowance for accounts receivable of the Group (assessed individually) were as follows:

	Individually impaired Group
Balance as at 31 December 2015	67
Charge for the year	6
Write-offs charged against the allowance	(10)
Recoveries of amounts previously written-off	(12)
Balance as at 31 December 2016	51
Charge for the year	38
Write-offs charged against the allowance	(9)
Recoveries of amounts previously written-off	(6)
Balance as at 31 December 2017	74

The ageing analysis of trade and other receivables of the Group as at 31 December 2017 and 2016 is as follows:

	Trade and other receivables past due but not impaired
Trade and other receivables neither past due nor impaired		Less than 30 days	30–90 days	90–180 days	More than 180 days	Total
	67	-	30	-	5	102
	-	3	-	22	5	30

13 Trade and other receivables (cont'd)

Credit quality of financial assets neither past due nor impaired

Trade receivables neither past due nor impaired from the counterparties whose other trade receivables are past due but not impaired amounted to EUR 2 thousand as at 31 December 2017. All other trade receivables neither past due nor impaired as at 31 December 2017 have no history of counterparty defaults. With respect to trade and other receivables that are neither past due nor impaired, there are no indications as at the reporting date that the debtors will not meet their payment obligations. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above.

14 Share capital, acquisition of own shares and reserves

The total authorised number of ordinary shares is 3,291,549 (as of 31 December 2016: 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.

Changes during 2016

From 25 April 2016 until 20 June 2016 the Company implemented share buy-back through the tender offer market. Maximum number of shares to be acquired was 70,000. Share acquisition price established at EUR 3.21 per share. During buy-back 63,039 shares (1.92% of share capital) were acquired for EUR 203 thousand, including brokerage fees. The acquired shares were settled on 22 June 2016. Acquired own shares do not have voting rights.

Changes during 2017

There are not any changes in 2017.

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.

15 Dividends

A dividend in respect of the year ended 31 December 2016 of EUR 0.07 per share, amounting to a total dividend of EUR 226 thousand, was approved at the annual general meeting on 22 March 2017.

A dividend in respect of the year ended 31 December 2015 of EUR 0.066 per share, amounting to a total dividend of EUR 217 thousand, was approved at the annual general meeting on 25 March 2016.

Changes in liabilities arising from financing activities are presented in the table below:

	Group/Company
	Dividends payable
As at 31 December 2016	13
Dividends paid to equity holders of the parent	(220)
Approved dividends	226
As at 31 December 2017	19

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 2017 and related balances as at 31 December 2017 were as follows:

2017 Group	Sales to related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
AB Invalda INVL (accounting services) UAB INVL Farmland Management	-	15	-	-
(administration fees)	-	55	39	24
	-	70	39	24

The Group's transactions with related parties during 2016 and related balances as at 31 December 2016 were as follows:

2016 Group	Sales to related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
AB Invalda INVL (accounting services) UAB INVL Farmland Management	-	15	-	-
(administration fees)	-	174	-	116
	-	189	-	116

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 2017 and 2016 and related balances as at 31 December 2017 and 2016 were as follows:

	2017		2016
Company	Interest income from related parties	Receivables from related parties	Interest income from related parties	Receivables from related parties
Loans and borrowings	206	4,538	211	4,656
VAT receivable arising from interest	-	5	-	5
	206	4,543	211	4,661

The maturity of loans granted is till 31 December 2018, effective interest rate 4.5% (Note 12). As at 31 December 2016 the maturity of loans granted was till 31 December 2017, effective interest rate 4.5% (Note 12).

16 Related party transactions (cont'd)

The Company's transactions with other related parties during 2017 and 2016 and related balances as at 31 December 2017 and 2016 were as follows:

	2017		2016
Company	Purchases from related parties	Payables to related parties	Purchases from related parties	Payables to related parties
AB Invalda INVL (accounting services)	3	-		3 -
	3	-		3 -

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 2017 and 2016 the Group's key management compensation was EUR 2 thousand and EUR 2 thousand, respectively. In 2017 and 2016 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 2017 to the Board members, which are shareholders of the Company, were paid EUR 19 thousand of dividends, net of tax. To the entities, which are controlled by the Board members, were paid EUR 120 thousand of dividends, net of tax. To the natural persons related to the Board members the Company paid EUR 55 thousand of dividends, net of tax.

In 2016 to the Board members, which are shareholders of the Company, were paid EUR 18 thousand of dividends, net of tax. To the entities, which are controlled by the Board members, were paid EUR 115 thousand of dividends, net of tax. To the natural persons related to the Board members the Company paid EUR 53 thousand of dividends, net of tax.

17 Events after the reporting period

A dividend in respect of the year ended 31 December 2017 of EUR 0.15 per share, amounting to a total dividend of EUR 484 thousand, is to be proposed at the annual general meeting on 10 April 2018. These financial statements do not reflect this dividend payable.

INVL Baltic Farmland, AB Consolidated Annual Report for the year of 2017

Prepared in accordance with The Information Disclosure Rules approved by the decision No. 03-127 of the Board of the Bank of Lithuania passed on 22 August 2017.

Approved by the Board of INVL Baltic Farmland, AB on 19 March 2018.

Translation note:

This version of the Consolidated Annual Report of 2017 is a translation from the original, which was prepared in Lithuanian language. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version takes precedence over this translation.

CONTENTS

	I. GENERAL INFORMATION45
1	Reporting period for which the report is prepared 45
2	General information about the Issuer and other companies comprising the Issuer's group45
	2.1. Information about the Issuer 45
	2.2. Information on company's goals, philosophy and strategy45
	2.3. Information about the Issuer's group of companies 46
3	Agreements with intermediaries on public trading in securities 48
4	Information on Issuer's branches and representative offices 48
	II. INFORMATION ABOUT SECURITIES 49
5	The order of amendment of Issuer's Articles of Association 49
6	Structure of the authorized capital 49
	6.1. Information about the Issuer's treasury shares 49
7	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 49
8	Dividends52
9	Shareholders53
	9.1. Information about company's shareholders53
	9.2. Rights and obligations carried by the shares55
	9.2.1. Rights of the shareholders 55
	9.2.2. Obligations of the shareholders55
	III. ISSUER'S MANAGING BODIES 56
	10 Structure, authorities, the procedure for appointment and replacement 56
	10.1. General Shareholders' Meeting56
	10.1.1. Powers of the General Shareholders' Meeting 56
	10.1.2. Convocation of the General Shareholders' Meeting of INVL Baltic Farmland, AB57
	10.2. The Board58
	10.2.1. Powers of the Board 58
	10.2.2. Procedure of work of the Board 59
	10.3. The Director 60
	11 Information about members of the Board, Company providing accounting services 60
	12 Information about the Audit Committee of the company63
	12.1. Procedure of work of the audit committee 63
	12.2. Members of the Audit Company 64
	13 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 services65
	IV. INFORMATION ABOUT THE ISSUER'S AND ITS GROUP COMPANIES' ACTIVITY 66

14	Overview of the Issuer and its group activity 66
	14.1. Business environment 66
	Group key figures 68
	The balance sheet and profit (loss) summary reports 68
	Indexes 69
	14.2. Significant Issuer's and its group events during the reporting period, affect on the financial statement 69
	The Company 69
	The group 70
	14.3. Employees70
	14.4. Information about agreements of the Company and the members of the Board, 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 of the Company70
15	A description of the principal advantages, risks and uncertainties70
	15.1. Advantages of investments70
	15.2. Risk factors 71
	Market-related risks 73
	15.3. Information about the extent of risk and its management in the Company74
	15.4. The main indications about internal control and risk management systems related to the preparation of consolidated financial statements 74
16	Significant investments made during the reporting period 74
17	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 shareholder74
18	Information on the related parties' transactions 74
19	Information on harmful transactions in which the issuer is a party74
20	Significant events since the end of the financial year 74
21	Estimation of Issuer's and Group's activity last year and activity plans and forecasts75
	21.1. Evaluation of implementation of goals for 2017 75
	21.2. Activity plans and forecasts 75
	V. OTHER INFORMATION 76
22	References to and additional explanations of the data presented in the annual financial statements and consolidated financial statements76
23	Information on audit company 76
24	Data on the publicly disclosed information 76
	APPENDIX 1. INFORMATION ABOUT GROUP COMPANIES, THEIR CONTACT DETAILS 77
	APPENDIX 2. DISCLOSURE CONCERNING THE COMPLIANCE WITH THE GOVERNANCE CODE 80
	APPENDIX 3. COMPANY'S MANAGEMENT REPORT 102

I. GENERAL INFORMATION

1 Reporting period for which the report is prepared

The report covers the financial period of INVL Baltic Farmland, starting from 1 January 2017 and ending on 31 December 2017. The report also discloses information from the end of the reporting period to the release of the report.

2 General information about the Issuer and other companies comprising the Issuer's group

Name of the Issuer	The public joint-stock INVL Baltic Farmland, hereinafter INVL Baltic Farmland, AB
Code	303299781
Registered address	Gynėjų str. 14, 01109, Vilnius, Lithuania
Telephone	+370 5 279 0601
Fax	+370 5 279 0530
E-mail	farmland@invaldainvl.com
Website	www.invlbalticfarmland.lt
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

2.1. INFORMATION ABOUT THE ISSUER

2.2. 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 splitoff 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 more than 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.

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.

2.3. INFORMATION ABOUT THE ISSUER'S GROUP OF COMPANIES

INVL Baltic Farmland has 100% in 18 companies owning more than 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 in order to ensure steady growth of income for the shareholders and the value of the land.

Fig. 2.3.2. 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.

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.	183.63	178.44
Ekotra, UAB	Vilkaviskis dist.	238.76	228.70
Kvietukas, UAB	Pakruojis dist., Pasvalys dist.	124.59	118.94
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.	91.40	88.67
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.	241.80	232.06
Zemynele, UAB	Sakiai dist., Vilkaviskis dist.	72.57	70.81
Ziemkentys, UAB	Panevezys dist., Pasvalys dist.	414.83	402.31
		Total: 3,116.29	2,999.36

Table 2.3.3. Information about companies of INVL Baltic Farmland group.

3 Agreements with intermediaries on public trading in securities

INVL Baltic Farmland 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.

4 Information on Issuer's branches and representative offices

INVL Baltic Farmland, AB has no branches or representative offices.

II. INFORMATION ABOUT SECURITIES

5 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 5 June 2015. The Company's Articles of Association is published on the Company's web page.

6 Structure of the authorized capital

Table 6.1. Structure of INVL Baltic Farmland, AB authorised capital as of 31 December 2017.

Type of shares	Number of shares, units	Total voting rights granted by the issued shares, units	Nominal value, EUR	Total nominal value, EUR	Portion of the authorised capital, %
Ordinary registered shares	3,291,549	3,228,510	0.29	954,549.21	100

All shares are fully paid-up and no restrictions apply on their transfer.

6.1. 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.

During the reporting period the Company has not implemented purchase of own shares.

At the end of the reporting period the amount of company's acquired own shares stayed the same and amounted to 63,039 (units). 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.

7 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 7.1. Main characteristics of INVL Baltic Farmland, AB shares admitted to trading

Shares issued, units	3,291,549
Shares with voting rights, units	3,228,510
Nominal value, EUR	0.29
Total nominal value, EUR	954,549.21
ISIN code	LT0000128753
Name	INL1L
Exchange	Nasdaq Vilnius
List	Baltic Secondary list
Listing date	4 June 2014

Company uses no services of liquidity providers.

		Price, EUR			Turnover, EUR		Last trading	Total turnover
Reporting period	high	low	last	high	low	last	date	quantity	EUR
2014 2nd Q*	3.450	3.000	3.240	2,505	7	142	30.06.2014	2,436	7,983
2014 3rd Q	3.450	2.620	2.750	1,402	3	131	30.09.2014	3,148	9,384
2014 4th Q	3.150	2.750	2.800	1,750	3	17	30.12.2014	2,292	6,625
2015 1st Q	2.86	2.58	2.82	1,799.56	2.69	42.3	31.03.2015	2,455	6,647.69
2015 2nd Q	3.01	2.61	2.79	5,499.57	5.4	22.32	30.06.2015	5,086	14,277.25
2015 3rd Q	3.38	2.65	2.81	2,056.53	3.12	367.55	30.09.2015	3,346	10,215.73
2015 4th Q	3.25	2.73	2.9	1,235	8.76	0	30.12.2015	1,970	5,831.7
2016 1st Q	2.95	2.81	2.9	1,888.41	2.83	388.6	31.03.2016	7,230	20,750.74
2016 2nd Q	3.25	2.81	2.96	9,610.52	5.62	0	30.06.2016	6,943	22,061.49
2016 3rd Q	3.5	2.97	3.5	2,440.7	5.96	2,440.7	30.09.2016	2,158	6,844.82
2016 4th Q	3.65	3.15	3.34	9,074.36	3.35	66.8	30.12.2016	6,714	23,658.84
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

Table 7.2. Trading in the company's shares 2014* - 2017 (quarterly) on NASDAQ Vilnius:

* The data is provided since 4 June 2014, from the beginning of the listing of the company in the Stock Exchange.

Table 7.3. Trading in INVL Baltic Farmland, AB shares 2014* - 2017

	2014*	2015	2016	2017
Share price, EUR
- open	3.000	2.800	2.950	3.340
- high	3.450	3.380	3.700	4.300
- low	2.620	2.580	2.810	3.150
- medium	2.969	2.876	3.181	3.754
- last	2.800	2.900	3.340	3.890
Turnover, units	7,876	12,857	23,045	16,064
Turnover, EUR	23,992.4	36,972.37	73,315.89	61,534.29
Traded volume, units	133	199	219	179

* The data is provided since 4 June 2014, from the beginning of the listing of the company in the Stock Exchange.

Last trading date	Number of shares granted with voting rights, units	Last price, EUR	Capitalisation, EUR
30.06.2014	3,294,209	3.24	10,673,237
30.09.2014	3,294,209	2.75	9,059,075
30.12.2014	3,292,259	2.80	9,218,325
31.03.2015	3,291,549	2.82	9,282,168
30.06.2015	3,291,549	2.79	9,183,422
30.09.2015	3,291,549	2.81	9,249,252
30.12.2015	3,291,549	2.90	9,545,492
31.03.2016	3,291,549	2.90	9,545,492
30.06.2016	3,228,510	2.96	9,556,390
30.09.2016	3,228,510	3.50	11,299,785
30.12.2016	3,228,510	3.34	10,783,223
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

Table 7.4. Capitalisation, 2014*-2017

* The data is provided since 4 June 2014, from the begining of the listing of the company in the Stock Exchange.

Fig. 7.1. Turnover of INVL Baltic Farmland, AB shares, change of share price and indexes¹

¹ OMX index is an all-share index which includes all the shares listed on the Main and Secondary lists on the NASDAQ Vilnius with exception of the shares of the companies where a single shareholder controls at least 90% of the outstanding shares. The OMX Baltic Real Estate GI index is based on the Industry Classification Benchmark (ICB) developed by FTSE Group (FTSE).

Fig. 7.2. Change of share price of INVL Baltic Farmland, AB

8 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 dividend payment policy was approved on 24 March 2015 by the General Shareholders Meeting of INVL Baltic Farmland, AB.

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 taxes² .

On 22 March 2017, the General Shareholders Meeting of INVL Baltic Farmland, AB decided to allocate EUR 0.07 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 5 April 2017 were shareholders of INVL Baltic Farmland, AB.

On 21 April 2017 INVL Baltic Farmland announced that the company will start to allocate dividends from 21 April 2017. 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.

²This information should not be treated as tax consultation.

Table 8.1. Indexes related with shares

Company's	2014	2015	2016	2017
Net Asset Value per share, EUR	3.02	3.21	3.51	3.72
Price to book value (P/Bv)	0.93	0.90	0.95	1.05
Dividend yield	-	2.1	2.0	1.8
Dividends/ Net profit	-	0.24	0.18	0.26

\*https://www.invlbalticfarmland.com/lit/en/investor-relations/indicator-formulas

9 Shareholders

9.1. INFORMATION ABOUT COMPANY'S SHAREHOLDERS

The total number of shareholders in INVL Baltic Farmland was 3,376 on 31 December 2017. There are no shareholders entitled to special rights of control.

Table 9.1.1. Shareholders who held title to more than 5% of INVL Baltic Farmland, AB authorised capital and/or votes as of 31 December 2017.

				Share of the votes, %
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, %	Total voting rights, %
LJB Investments, UAB code 300822575, Juozapavičiaus str. 9A, Vilnius	977,751	29.70	30.29	0	30.29
Irena Ona Mišeikienė	931,831	28.31	28.86	0	28.86
Lucrum Investicija, UAB code 300806471, Šeimyniškių str. 3, Vilnius	664,310	20.18	20.57	2.043	22.61
Alvydas Banys	252,875	7.68	7.83	54.904	62.73
Darius Šulnis	0	0.00	0.00	62.735	62.73
Indrė Mišeikytė	64,450	1.96	2.0	60,736	62.73
Eglė Surplienė	0	0.00	0.00	62,737	62.73

³ Lucrum Investicija, UAB has 2.04% of votes according to a repurchase agreement.

⁴ According to Part 6 of Paragraph 1 of Article 24 and Paragraph 2 of Article 24 of the Law on Securities of the Republic of Lithuania, it is considered that Alvydas Banys has votes of LJB Investments, a company controlled by him, and also votes of Darius Sulnis and Indre Miseikyte, managers of INVL Baltic Farmland.

⁵ According to Part 6 of Paragraph 1 of Article 24 and Paragraph 2 of Article 24 of the Law on Securities of the Republic of Lithuania, it is considered that Darius Sulnis has votes of Lucrum Investicija, a company controlled by him, and also votes of Alvydas Banys and Indre Miseikyte, managers of INVL Baltic Farmland. According to Paragraph 2 of Article 24 of the Law on Securities of the Republic of Lithuania, it is considered that Indre Miseikyte has votes of Alvydas Banys and Darius Sulnis, managers of INVL Baltic Farmland.

⁶ According to Paragraph 2 of Article 24 of the Law on Securities of the Republic of Lithuania, it is considered that Indre Miseikyte has votes of Alvydas Banys and Darius Sulnis, managers of INVL Baltic Farmland.

⁷ According to Paragraph 2 of Article 24 of the Law on Securities of the Republic of Lithuania, it is considered that Egle Surpliene has votes of Alvydas Banys, Darius Sulnis and Indre Miseikyte, managers of INVL Baltic Farmland.

Fig. 9.1.1. Votes as of 31 December 2017

					Table 9.1.2. Distribution of securities by investors' groups as of 31 December 2017
--	--	--	--	--	-------------------------------------------------------------------------------------

	Shareholders		Share of votes given by the owned shares
Investors	Amount	Part, %	Amount	Part, %
Private persons	3,357	99.44	2,057,459	63.73
Legal persons (private corporations, Financial institutions and insurance corporations and their clients)	19	0.56	1,171,051	36.27
Total	3,376		3,228,510

9.1.2. Fig. Distribution of securities by investors' groups as of 31 December 2017

Table 9.1.3. Distribution of securities by investors' groups as of 31 December 2017

		Shareholders	Share of votes given by the owned shares
Regions	Amount	Part, %	Amount	Part, %
Lithuania	3,340	98.93	3,223,010	99.83
Other EU members	21	0.63	4,400	0.14
Non- EU countries	15	0.44	1,100	0.03
Total	3,376		3,228,510

9.2. RIGHTS AND OBLIGATIONS CARRIED BY THE SHARES

9.2.1. 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;
• 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) other non-property rights established by laws and the Company's Articles of Association.

9.2.2. 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 in the company or the holder of all shares in the company who transferred a part of his shares to another person 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, the nominal share price and the particulars of the person who acquired or transferred the shares (the natural person's full name, personal number and address; the name, legal form it has taken, registration number, address of the registered office of the legal person.)

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.

III. ISSUER'S MANAGING BODIES

10 Structure, authorities, the procedure for appointment and replacement

General Shareholder's Meeting
The Board (3 members)
Director

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.

10.1. GENERAL SHAREHOLDERS' MEETING

10.1.1. 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;
• 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 regarding conversion of shares of one class into shares of another class, approve share conversion procedure;
• take a decision to replace private limited liability company share certificates by shares;
• approve the annual accounts and the report on company operations;
• take a decision on profit/loss appropriation;
• take a decision on the formation, use, reduction and liquidation of reserves;
• 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 reorganisation or split-off of the Company and approve the terms of reorganisation or split-off;
• take a decision on transformation of the Company;
• take a decision on restructuring of the Company;
• 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.

10.1.2. 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 available at the registered office of the Company during working hours.

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 or by sending proposal to the Company by email farmland@invaldainvl.com. The agenda is supplemented if the proposal is received no later than 14 before the General Shareholders 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 or by sending proposal to the Company by email farmland@invaldainvl.com) 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 or by sending proposal to the Company by email farmland@invaldainvl.com. 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.

Shareholder participating at the General Shareholders Meeting and having the right to vote must submit documents confirming personal identity. Each shareholder may authorize either a natural or a legal person to participate and to vote on the shareholder's behalf at the General Shareholders Meeting. A power of attorney issued by a natural person must be certified by a notary. The representative has the same rights as his represented shareholder at the General Shareholders Meeting. The authorized persons must have documents 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 General Shareholders Meeting. A power of attorney issued in a foreign state must be translated into Lithuanian and legalised in the manner established by law. The Company does not establish special form of power of attorney.

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 General Shareholders 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 farmland@invaldainvl.com not later than on the last business day before the General Shareholders Meeting. The power of attorney and notification must be issued in writing and could be sent to the Company by communication means, if the transmitted information is secured and the shareholder's identity can be identified.

The Company is not providing the possibility to attend and vote at the General Shareholders Meeting through electronic means of communication.

Shareholder or its representative may vote in writing by filling general voting bulletin, in such a case the requirement to deliver a personal identity document does not apply. The form of general voting bulletin is presented at the Company's webpage

www.invlbalticfarmland.lt 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 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.

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 2017.

The General Shareholders Meeting was held on 22 March 2017. All questions of agenda were voted in writing in advance. The decisions were made unanimously. During the General Shareholders Meeting of 22 March 2017 INVL Baltic Farmland, AB the Shareholders of the Company were presented with the consolidated annual report and independent auditor's report on the financial statements, also approved the consolidated and companies financial statements for 2016, distribution of the profit (loss) of the Company. Shareholders made decisions regarding the withdraw of INVL Baltic Farmland Audit Committee members and election of the new members of the Audit Committee, remuneration questions regarding Audit Committee members. Also, the resolution to purchase own shares of the Company has been made.

10.2. THE BOARD

10.2.1. 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:

• the operating strategy of the Company;
• 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 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;
• to restructure the Company in the cases laid down by the Law on Restructuring of Enterprises of the Republic of Lithuania;
• 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 implementation of the operating strategy of the Company;
• 1. the organisation of the activities of the Company;
• 1. the financial status of the Company;
• 1. 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 shall submit them to the General Shareholders' Meeting together with the annual report of the Company.

It shall be the duty of the Board to convene and organise the General Shareholders' Meetings in due time.

10.2.2. 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 plans to evaluate its performance once a year.

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.

6 Meetings of the Board of the company have been held in 2017. Since the start of the company, the composition of the Board has not changed and consisted from: Alvydas Banys, Indrė Mišeikytė and Darius Šulnis. Avydas Banys and Indre Miseikyte attended all the Meetings of the Board personally. Darius Šulnis attended all the Meetings of the Board: one of which attended by distance.

10.3. 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
• the drawing up of the annual accounts;
• 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 Meeting, the Supervisory Board and the Board in cases laid down in this Law 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 Securities Commission and the Central Securities Depository of Lithuania;
• the publication of information referred to in this Law in the daily indicated in the Statutes;
• 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.

11 Information about members of the Board, Company providing accounting services

The Board of INVL Baltic Farmland, AB was elected during the General Shareholders' Meeting of INVL Baltic Farmland, AB the company split-off from Invalda LT, AB (current name – Invalda INVL) on 28 April 2014. Mr. Banys was elected as the Chairman of the Board. Mr. Šulnis and Ms. Mišeikytė were elected as the Members of the Board. Mr. Sulnis were appointed as a director of the company since the establishment of the company, he held this position until 29 June 2015. From 30 June 2015 Egle Surpliene holds position as a director of the company.

	Alvydas Banys – Chairman of the Board
The term of office	From 2014 until 2018
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, AB	Personally: 252,875 units of shares, 7.68 % of authorised capital, 7.83 % of votes. Together with controlled company LJB Investments: 1,230,626 units of shares, 37.38 % of authorized capital, 38.12 % of votes. Total votes (together with Members of the Board of INVL Baltic Farmland) – 62.73 %.
Participation in other companies	Invalda INVL, AB – Chairman of the Board Litagra, UAB – Member of the Board CEF INVL Technology – Member of the Advisory Committee

	Indrė Mišeikytė – Member of the Board
The term of office	From 2014 until 2018
Educational background and qualifications	Vilnius Gedimino Technical University. Faculty of Architecture. Master in Architecture
Work experience	Since May 2012 Invalda INVL, AB – Advisor Since June 2013 Invalda Privatus Kapitalas, AB – Advisor Since 2002 Inreal Valdymas, UAB – Architect Since 2002 Gildeta, UAB – Architect
Owned amount of shares in INVL Baltic Farmland, AB	Personally: 64,450 units of shares, 1.96 % of authorised capital, 2 % of votes. Total votes (together with Members of the Board of INVL Baltic Farmland) – 62.73 %.
Participation in other companies	Invalda INVL, AB – Member of the Board Invalda Privatus Kapitalas, AB – Member of the Board CEF INVL Technology – Member of the Advisory Committee

	Darius Šulnis – Member of the Board
The term of office	From 2014 until 2018
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, AB	Personally: 0 units of shares, 0.00 % of authorised capital and votes. Together with controlled company Lucrum Investicija: 664,310 units of shares, 20.18 % of authorised capital, 22.61 % of votes (including votes granted by the shares transferred by the repurchase agreement). Total votes (together with Members of the Board of INVL Baltic Farmland) – 62.73 %.
Participation in other companies	Invalda INVL, AB – Member of the Board, the president Since 2015 – Chairman of the Board of INVL Asset Management, UAB (until October 2017 - General manager of the Company) Litagra, UAB – Member of the Board IPAS INVL Asset Management (Latvia) – Member of the Supervisory Board (till 12.03.2018) AS INVL atklātajs pensiju fonds (Latvia) – Member of the Supervisory Board (till 12.03.2018) Šiaulių bankas, AB – Member of the Supervisory Board

Eglė Surplienė – Director

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

Continued of the next page

The beginning of the information is on the previous page

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. Total votes (together with Members of the Board of INVL Baltic Farmland) – 62.73 %.
Participation in other companies	Atelier investment management, UAB (till January 2018 operated under the name Gerovė kūrimas, UAB) – Chairman of the Board Ars Lab limited IE – Member of the 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.

12 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.

12.1. 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.

12.2. MEMBERS OF THE AUDIT COMPANY

The General Shareholders Meeting held on 23 December 2014 elected Danutė Kadanaitė, the lawyer at Legisperitus, UAB and Tomas Bubinas (independent member), Chief Operating Officer at Biotechpharma, UAB to the Audit Committee of INVL Baltic Farmland.

Audit Committee members D. Kadanaitė and T.Bubinas was withdrawed from the Company's Audit Committee by the decision of the General Shareholders Meeting held on 22 March 2017. During the same General Shareholders Meeting, the decision to elect Dangutė Pranckėnienė, partner and auditor of Moore Stephens Vilnius, UAB and T. Bubinas 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.

	Tomas Bubinas – Independent Member of the Audit Committee
The term of office	Since 2017 till 2021 (withdrawn and re-elected by the decision of the General Shareholders Meeting held on 22 March 2017)
Educational background and qualifications	2004 - 2005 Baltic Management Institute (BMI), Executive MBA 1997 - 2000 Association of Chartered Certified Accountants. ACCA. Fellow Member 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 2017 till 2021 (elected by the decision of the General Shareholders Meeting held on 22 March 2017)
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 Stephens Vilnius, UAB 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	-

13 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 2017 to the Board members, which are shareholders of the Company, were paid EUR 19 thousand of dividends, net of tax. To the entities, which are controlled by the Board members, were paid EUR 120 thousand of dividends, net of tax. Natural persons, who are related to the Board members of the company, were paid EUR 55 thousand of dividends, net of tax. There were no assets transferred, no guarantees granted, no bonuses paid and no special payouts 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 15 thousand and EUR 3 thousand during the reporting period (in 2016 – respectively EUR 15 thousand and EUR 3 thousand, in 2015 – respectively EUR 16 thousand and EUR 4 thousand; in 2014 – respectively EUR 10 thousand and EUR 2 thousand).

Table 13.1. Information about calculated remuneration for the CEO of the issuer for 2016, 2017
------------------------------------------------------------------------------------------------	--	--

	2016	2017
For members of administration (the CEO)	1,487	1,527

IV. INFORMATION ABOUT THE ISSUER'S AND ITS GROUP COMPANIES' ACTIVITY

14 Overview of the Issuer and its group activity

14.1. BUSINESS ENVIRONMENT

The Lithuanian economic growth was gathering pace in 2017, resulting in the GDP growth of 3.7 per cent. The growth rate is expected to be around 3 per cent in the next two years. Last year economy was mostly driven by the demand in the major export markets and the intensified allocation of resources from the EU Structural Funds. The positive impact is also due to domestic consumption supported by the lowering unemployment rate and the rising revenues.

The value of the crop yield produced in 2017 amounted to EUR 1.4 billion (+0.5 per cent), while the value of livestock products rose to EUR 0.9 billion (+17.5 per cent). According to the figures of Statistics Lithuania, last year the cereal harvest was 0.4 per cent higher, totalling 5.8 million tonnes. Though the first half of the year ended on a rather optimistic note, the excessive rainfall which occurred in individual districts afterwards prevented from harvesting all crops, resulting in the lower quality cereal harvest than expected. The effect of weather conditions was most profound on the harvest of spring cereals. The year was more favourable to dairy farms. The recovery in dairy markets enabled the rise in milk purchase prices. In 2017, the average milk purchase price was 39 per cent higher compared to 2016.

Longer-term trends show that the situation in the agricultural sector is improving, while efficiency in the country is growing. Cereal yields have nearly doubled over the last 10 years. The added value generated by the sector has also increased considerably. It is due to investments in agricultural machinery, the growth of farms in size, improved knowledge and its practical application. According to the latest data of Statistics Lithuania, there were 150.3 thousand farms in Lithuania in 2016, with 2.9 million ha of the utilised agricultural area. Over the past three years, the number of farms has slumped by 12.5 per cent, but the utilised agricultural area has risen by 2 per cent. It best reflected in case of small farms, i.e. those which cultivate 1–2 ha (15 per cent decrease), 2–5 ha (21 per cent decrease) and 5–10 ha (15 per cent decrease). Since 2013, the average farm size has grown from 16.8 ha to 19.6 ha. Support to agriculture serves as a strong back-up for the sector. Around EUR 8 billion has been allocated to the agricultural and food sector and rural development over the past ten years. The growth in support usually results in the increase in land prices and land rental rates. Farm consolidation is one of the reasons for efficiency growth.

The liquidity in the land market has slowed down, but the rent segment remains active. According to the latest data of State Enterprise Centre of Registers, which are so far only available for 2016, 41,555 agreements comprising the area of 99.0 thousand ha were registered in the Real Property Register, of which 33,852 were private land (88.7 thousand ha) and 7,703 were state land (10.3 thousand ha) agreements. In comparison, the total utilised agricultural area (excluding allotments) in Lithuania accounted for 3.4 million ha in the respective period, meaning that the volume of transactions was minimal. The applicable restrictions on land acquisition reinforce the need for land rent. Payments made to farmers cause the rise in rental prices. Farmers cultivating large land plots or agricultural companies are additionally interested in land rent, as it provides the pre-emption right in acquiring the rented land plots at the earliest possible opportunity.

In May 2014, stricter amendments to the Provisional Law on the Acquisition of Agricultural Land took effect; according to them, related persons shall not acquire more than 500 ha from the State or other persons. The restrictions define that related persons are persons managing more than 25 per cent of shares in agricultural companies and persons holding more than 25 per cent of shares in several companies. The Provisional Law on the Acquisition of Agricultural Land provoked considerable criticism, leading to a more liberal Law Amending the Law on the Acquisition of Agricultural Land No IX-1314 in November 2017. It no longer provides for safeguards for the acquisition of agricultural land, such as mandatory education in agriculture or the requirement to have a 3-year experience in agricultural activities over the past 10 years. At the same time, the group of persons having a pre-emption right in acquiring a land plot was expanded. In addition to co-owners, land tenants and neighbours, a new group emerged – farmers of the municipality where the land plot on sale is located or farmers from bordering municipalities as well as companies registered there which receive at least 50 per cent of their revenues from agricultural activities. INVL Baltic Farmland owns 100 per cent of shares of 18 private limited liability companies with combined holdings of more than 3,000 ha of agricultural land in Lithuania.

From 30 June 2015, when a basic property administration agreement with INVL Farmland Management owned by one of the leading asset management groups in the Baltic region Invalda INVL was signed, this company took the administration of land plots into its hands.

The applicable safeguards for the acquisition of land mean that the companies of the INVL Baltic Farmland group can no longer directly invest in agricultural land in Lithuania and cannot take control of the companies holding agricultural land. In the long term, INVL Baltic Farmland seeks to make profit from the growth in land rental prices and the increase in land value. According to the asset valuation carried out in the final quarter of 2017, the value of land plots rose by 5.1 per cent per year, totalling EUR 12.96 million. The price per ha is EUR 4.3 thousand on the average.

In the graph bellow it can be observed how the price of agricultural land varies geographically:

14.1.1. Fig. Agricultural land prices in Lithuania Source: Centre of Registers

GROUP KEY FIGURES

	31 December 2015	31 December 2016	31 December 2017
Controlled cultivated cropland area, ha	3,003	2,999	2,999
Book value of land*, EUR thousand	11,237	12,335	12,964
Average rental income per hectare, EUR (not included the variable part of the rent, equal to the land lease payment payable to the state)	149	172	179
Consolidated equity, EUR thousand	10,570	11,343	12,002
Number of votes, units	3,291,549	3,228,510	3,228,510
Book value of one share, EUR	3.21	3.51	3.72

*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 November 2015, and December 2016 and 2017.

THE BALANCE SHEET AND PROFIT (LOSS) SUMMARY REPORTS

Balance sheet,		Group		Company
thousand EUR	31.12.2015	31.12.2016	31.12.2017	31.12.2015	31.12.2016	31.12.2017
Investment property	11,237	12,335	12,964	-	-	-
Investments into subsidiaries	-	-	-	5,581	6,624	7,360
Loans granted	-	-	-	4,880	4,656	4,538
Trade receivables	54	82	195	8	5	5
Cash	367	209	199	136	101	154
Other assets	7	6	1	7	6	1
Deferred income tax liabilities	946	1,121	1,235	-	-	-
Other liabilities	149	168	122	42	49	56
Consolidated equity	10,570	11,343	12 002	10,570	11,343	12,002
Profit (loss)	01.01.2015 – 31.12.2015	01.01.2016 – 31.12.2016	01.01.2017 – 31.12.2017	01.01.2015 – 31.12.2015	01.01.2016 – 31.12.2016	01.01.2017 – 31.12.2017
Revenue	460	531	575	-	-	-
Revaluation of investment property	678	1,098	629	-	-	-
Income before tax	979	1,398	1,044	866	1,220	911
Net profit	838	1,193	885	838	1,193	885

INDEXES

	2015	2016	2017
Return on Equity (ROE), %	8.18	10.89	7.58
Return on Assets (ROA), %	7.46	9.82	6.81
Liquidity ratio	2.87	1.77	3.91
Operating profit margin (pretax profit margin), %	212.83	263.28	181.57
Operating profit excluding revaluation of investment property margin, %	65.43	56.50	72.17
Earnings per share (EPS), EUR	0.25	0.37	0.27
Price earnings ratio (P/E)	11.60	9.03	14.41
Net profit margin (%)	182.17	224.67	153.91
EBITDA margin (%)	65.87	56.50	72.17

\*https://www.invlbalticfarmland.com/lit/en/investor-relations/indicator-formulas

14.2. SIGNIFICANT ISSUER'S AND ITS GROUP EVENTS DURING THE REPORTING PERIOD, AFFECT ON THE FINANCIAL STATEMENT

THE COMPANY

• On 28 February 2017 the Company announced an audited group results of 2016. The audited consolidated net profit of INVL Baltic Farmland, AB Group and the Company amounted to EUR 1,193 thousand, the revenue was EUR 531 thousand for the period of 2016 (for 2015 – consolidated net profit was EUR 838 thousand, revenue was EUR 460 thousand).
• On 28 February 2017 the Board of INVL Baltic Farmland approved its activity forecasts for 2017. Consolidated revenues of INVL Baltic Farmland were forecasted at EUR 575 thousand and net profit would amount to EUR 350 thousand in 2017.
• On 28 February 2017 the Company announced about convocation and draft resolutions of the General Shareholders Meeting. The draft resolutions were: presentation with the consolidated annual report of the Company and independent auditor's report on the financial statements, approval of the consolidated and companies financial statements for 2016, dividend payment and distribution of the profit (loss) of the Company. The shareholders also were able to make a decision regarding the purchase of own shares the Company, to approve the new wording of the regulations of the Audit Committee, to elect new members of the Audit Committee and to approve the remuneration for them.
• On 22 March 2017 INVL Baltic Farmland announced decisions of the General Shareholders Meeting. During the meeting the Shareholders were presented with the consolidated annual report of the Company and independent auditor's report on the financial statements, approved the consolidated and companies financial statements for 2016, dividend payment and distribution of the profit (loss) of the Company (dividend allocation – EUR 0.07 per share). The shareholders also made a decision regarding the purchase of own shares of the Company, approved the new wording of the regulations of the Audit Committee, elected the new members of the Audit Committee and approved the remuneration for them. It was also announced that persons, who were shareholders of INVL Baltic Farmland at the end of 5 April 2017, the tenth day after the general shareholders meeting to approve the resolution to allocate part of companys profit for the payment of dividends, were entitled to receive dividends.
• On 22 March 2017 the announced the annual information for 2016 (consolidated and Company's financial statements, consolidated annual report, together with the confirmation of responsible persons.

• On 21 April 2017 the Company announced about the procedure for the payout of dividends for the year 2016. General Shareholders Meeting of INVL Baltic Farmland held on 22 March 2017 decided to allocate EUR 0.07 dividend per share. Dividends were be paid 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 5 April 2017 were shareholders of INVL Baltic Farmland. Also, procedures of dividend payment and tax arrangements were also mentioned.

• On 3 May 2017 the Company announced that for 3 months of 2017 the unaudited consolidated net profit of the AB INVL Baltic Farmland group was EUR 82 thousand, and the revenue was EUR 134 thousand (for 3 months of 2016 consolidated net profit was EUR 92 thousand, revenue was EUR 129 thousand).

• On 21 July 2017 INVL Baltic Farmland announced that unaudited consolidated net profit of the INVL Baltic Farmland group amounted to EUR 162 thousand for 6 months of 2017 and the revenue was EUR 269 thousand (for 6 months of 2016 consolidated net profit was EUR 177 thousand, revenue was EUR 258 thousand).
• On 7 November 2017 the Company announced that for 9 months of 2017, the unaudited consolidated net profit of the AB INVL Baltic Farmland group was EUR 245 thousand and the revenue was EUR 403 thousand (for 9 months of 2016 consolidated net profit was EUR 257 thousand, revenue was EUR 387 thousand).
• On 28 December 2017 INVL Baltic Farmland INVL Baltic Farmland announced to publish information to investors in 2018 in accordance with the following calendar: 19 March 2018 – audited financial reports and annual report; 19 March 2018 - notice on convocation of the ordinary general shareholders meeting, draft resolutions for the convened general shareholders meeting; 10 April 2018 - resolutions of the general shareholders meeting; 8 May 2018 preliminary operating results and factsheet for 3 months of 2018; 26 July 2018 - semi-annual report of 2018; 7 November 2018 - preliminary operating results and factsheet for 9 months of 2018.

THE GROUP

The companies during the reporting period rented agricultural land for farmers and agricultural companies and performed usual.

14.3. 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 2017 (31 December 2016 – 2, 31 December 2015 – 2, 31 December 2014 – 5).

14.4. INFORMATION ABOUT AGREEMENTS OF THE COMPANY AND THE MEMBERS OF THE BOARD, 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 OF THE COMPANY.

There are no agreements of the company and the Members of the Board, 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 of the company.

15 A description of the principal advantages, risks and uncertainties

15.1. 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.

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 protect itself from extreme falls in the value of assets, which were experienced by residential and commercial property during the crisis.

15.2. 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 will invest 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). 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 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 jointstock 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, labor, 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 and labor 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 2014 – 2020.

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

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 unfavorable 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.

15.3. INFORMATION ABOUT THE EXTENT OF RISK AND ITS MANAGEMENT IN THE COMPANY

Information on the extent of risks and management of them is disclosed in the Note 3 of consolidated and company's financial statements in 2017.

15.4. 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. 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.

16 Significant investments made during the reporting period

During the reporting period INVL Baltic Farmland, AB has not made any acquisitions.

17 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.

18 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 2017.

19 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.

20 Significant events since the end of the financial year

There were no events since the end of the financial year.

21 Estimation of Issuer's and Group's activity last year and activity plans and forecasts

21.1. EVALUATION OF IMPLEMENTATION OF GOALS FOR 2017

The initial forecast of INVL Baltic Farmland for year 2017 was income of EUR 575 thousand and net profit of EUR 350 thousand.

INVL Baltic Farmland had revenue of EUR 575 thousand in 2017 and earned unaudited net profit of EUR 885 thousand for the year. Profit was forecasted under the assumption that the value of agricultural land holdings in the balance sheet would not change, but a valuation conducted by the company Matininkai showed that it had increased by 5.1% to EUR 12.96 million compared to previous year, or EUR 4.3 thousand per hectare. Excluding the effects of the property revaluation and related deferred profit tax and management fees, INVL Baltic Farmland's profit would have been EUR 350 thousand.

According to this, it can be said that INVL Baltic Farmland accomplished the revenue and profit forecasts for 2017.

21.2. ACTIVITY PLANS AND FORECASTS

INVL Baltic Farmland will continue focusing on enhancing the quality of owned land and environmental sustainability.

Taking into consideration the lease agreements, total income should be around EUR 609 thousand in 2018. Net profit for the year is expected to be around EUR 360 thousand. These predictions are based on the assumption that there will be no changes in land value and no transactions in 2018.

INVL Baltic Farmland's dividend policy stipulates that dividend payments to shareholders should be no less than EUR 0.06 per share, in case net profit of the reporting period is larger than previously described share of the profit attributable for dividends, the Board of the Company taking into consideration a need for investments and working capital as well as market conditions, projected cash flows and other in the opinion of the Board significant conditions can propose to the General Shareholders Meeting to pay as dividends higher share of the profit than described earlier.

Audit company	PricewaterhouseCoopers, UAB
Address of the registered office	J. Jasinskio str. 16B, LT-03163, Vilnius
Enterprise code	111473315
Telephone	$(+3705)$ 239 2300
Fax	$(+3705)$ 239 2301
E-mail	vilnius@lt.pwc.com
Website	www.pwc.com/lt

Table 24.1. Summary of publicly disclosed information
-------------------------------------------------------	--	--	--	--

Date of disclosure	Brief description of disclosed information
28.02.2017	Audited results of INVL Baltic Farmland group of 2016
28.02.2017	Convocation of the Shareholders Meeting of INVL Baltic Farmland and draft resolutions
28.02.2017	INVL Baltic Farmland plans to earn EUR 350 thousand net profit in 2017
22.03.2017	Resolutions of the Shareholders Meeting of INVL Baltic Farmland, AB
22.03.2017	Annual information of the public joint - stock company INVL Baltic Farmland
21.04.2017	Procedure for the payout of dividends for the year 2016
03.05.2017	AB INVL Baltic Farmland unaudited results and factsheet for 3 months of 2017
21.07.2017	Unaudited results of INVL Baltic Farmland for 6 months of 2017
07.11.2017	AB INVL Baltic Farmland unaudited results and factsheet for 9 months of 2017
28.12.2017	INVL Baltic Farmland investor's calendar for 2018

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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com

Company	Registration information	Type of activity	Contact details
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com

Company	Registration information	Type of activity	Contact details
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com
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 Fax +370 5 279 0530 E-mail farmland@invaldainvl.com

APPENDIX 2. DISCLOSURE CONCERNING THE COMPLIANCE WITH THE GOVERNANCE CODE

INVL Baltic Farmland, AB, following Article 21 paragraph 3 of the Law on Securities of the Republic of Lithuania and item 24.5 of the Listing Rules Nasdaq Vilnius, discloses its compliance with the Governance Code, approved by Nasdaq Vilnius for the companies listed on the regulated market, and its specific provisions.

Principles/ Recommendations	Yes / No / Not Appli	Commentary
	Cable

Principle I: Basic Provisions

The overriding objective of a Company should be to operate in common interests of all the shareholders by optimizing over time shareholder value.

1.1. A company should adopt and make public the company's development strategy and objectives by clearly declaring how the company intends to meet the interests of its shareholders and optimize shareholder value.	Yes	The Company constantly discloses information about group's activities and objectives including performance forecasts in notifications on material event, annual information.
1.2. All management bodies of a company should act in furtherance of the declared strategic objectives in view of the need to optimize shareholder value.	Yes	The Board's and the President's activities are concentrated on the fulfilment of the Company's strategic objectives taking count of the shareholders' equity increase.
1.3. A company's supervisory and management bodies should act in close co-operation in order to attain maximum benefit for the company and its shareholders.	Yes	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 Director may conclude the transactions referred to in subparagraphs 3, 4, 5 and 6, paragraph 4, Article 34 of the Law on Companies of the Republic of Lithuania, provided that there is a decision of the Board to enter into these transactions.
1.4. A company's supervisory and management bodies should ensure that the rights and interests of persons other than the company's shareholders (e.g. employees, creditors, suppliers, clients, local community), participating in or connected with the company's operation, are duly respected.	Yes	The Company respects all rights and interests of the persons other than the Company's shareholders participating in or connected with the Company's operation.

Principle II: The corporate governance framework

The corporate governance framework should ensure the strategic guidance of the Company, the effective oversight of the Company's management bodies, an appropriate balance and distribution of functions between the Company's bodies, protection of the shareholders' interests.

2.1. Besides obligatory bodies provided for in the Law	No	Due to its size, it is not expedient to form the Supervisory
on Companies of the Republic of Lithuania – a General		Board. Considering that only collegial management
Shareholders' Meeting and the Chief Financial Officer,		body - the Board is formed in the Company. The Director
it is recommended that a company should set up both		of the Company is accountable to the Board.
a collegial supervisory body and a collegial
management body. The setting up of collegial bodies
for supervision and management facilitates clear
separation of management and supervisory functions
in the company, accountability and control on the part
of the Chief Executive Officer, who, in its turn, facilitate
a more efficient and transparent management
process.

2.2. A collegial management body is responsible for the strategic management of the company and performs other key functions of corporate governance. A collegial supervisory body is responsible for the effective supervision of the company's management bodies.	Yes	The functions set forth in this recommendation are performed by the collegial management body – the Board.
2.3. When a company chooses to form only one collegial body, it is recommended that it should be a supervisory body, i.e. the Supervisory Board. In such a case, the Supervisory Board is responsible for the effective monitoring of the functions performed by the company's Chief Financial Officer.	No	Only one collegial body is formed in the Company - the Board. It performs all essential management functions and ensures accountability and control of the Director of the Company. The Supervisory Board is not formed in the Company.
2.4. The collegial supervisory body to be elected by the General Shareholders' Meeting should be set up and should act in the manner defined in Principles III and IV. Where a company should decide not to set up a collegial supervisory body but rather a collegial management body, i.e. the Board, Principles III and IV should apply to the Board as long as that does not contradict the essence and purpose of this body.	Yes	The provisions set forth in III and IV principles are applied on the Board's formation and activity as long as that does not contradict with the essence and purpose of this body.
2.5. Company's management and supervisory bodies should comprise such number of Board (executive directors) and Supervisory (non-executive directors) Board members that no individual or small group of individuals can dominate decision-making on the part of these bodies.	Yes	There are 3 independent Board members in the Company who are seeking benefit to the Company and its shareholders.
2.6. Non-executive directors or members of the Supervisory Board should be appointed for specified terms subject to individual re-election, at maximum intervals provided for in the Lithuanian legislation with a view to ensuring necessary development of professional experience and sufficiently frequent reconfirmation of their status. A possibility to remove them should also be stipulated however this procedure should not be easier than the removal procedure for an executive director or a member of the Management Board.	No	The Supervisory Board is not formed in the Company, and there are no non–executive directors either.
2.7. Chairman of the collegial body elected by the General Shareholders' Meeting may be a person whose current or past office constitutes no obstacle to conduct independent and impartial supervision. Where a company should decide not to set up a Supervisory Board but rather the Board, it is recommended that the chairman of the Board and Chief Financial Officer of the company should be a different person. Company's Chief Financial Officer should not be immediately nominated as the chairman of the collegial body elected by the General Shareholders' Meeting. When a company chooses to departure from these recommendations, it should furnish information on the measures it has taken to ensure impartiality of the supervision.	Yes	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.

Principle III: The order of the formation of a collegial body to be elected by a General Shareholders' Meeting. The order of the formation a collegial body to be elected by a General Shareholders' Meeting should ensure representation of minority shareholders, accountability of this body to the shareholders and objective monitoring of the Company's operation and its management bodies.

3.1. The mechanism of the formation of a collegial body to be elected by a General Shareholders' Meeting (hereinafter in this Principle referred to as the 'collegial body') should ensure objective and fair monitoring of the company's management bodies as well as representation of minority shareholders.	Yes	The Board operates impartially, objectively and represents the interests of all shareholders equally.
3.2. Names and surnames of the candidates to become members of a collegial body, information about their education, qualification, professional background, positions taken and potential conflicts of interest should be disclosed early enough before the General Shareholders' Meeting so that the shareholders would have sufficient time to make an informed voting decision. All factors affecting the candidate's independence, the sample list of which is set out in Recommendation 3.7, should be also disclosed. The collegial body should also be informed on any subsequent changes in the provided information. The collegial body should, on yearly basis, collect data provided in this item on its members and disclose this in the company's annual report.	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 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. 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. Information about current members of the Board, their educational background, qualification, professional experience, participation in other companies is disclosed in Company's website.
3.3. Should a person be nominated for members of a collegial body, such nomination should be followed by the disclosure of information on candidate's particular competences relevant to his/her service on the collegial body. In order shareholders and investors are able to ascertain whether member's competence is further relevant, the collegial body should, in its annual report, disclose the information on its composition and particular competences of individual members which are relevant to their service on the collegial body.	Yes	Information about the composition of the Board, members' education, work experience and participation in other companies is disclosed in Company's periodical reports and website.
3.4. In order to maintain a proper balance in terms of the current qualifications possessed by its members, the desired composition of the collegial body shall be determined with regard to the company's structure and activities, and have this periodically evaluated. The collegial body should ensure that it is composed of members who, as a whole, have the required diversity of knowledge, judgment and experience to complete their tasks properly. The members of the Audit Committee, collectively, should have a recent knowledge and relevant experience in the fields of finance, accounting and/or audit for the stock exchange listed companies. At least one of the members of the Remuneration Committee should have knowledge of and experience in the field of remuneration policy.	Yes	The company operates in the market less than one year. In the future the company will regularly assess the composition of the Board with consideration to the nature of Company's activity and structure. The Board members have sufficient experience to perform its functions and the required diversity of knowledge to complete their tasks properly. The Audit Committee members have the required experience. The Remuneration Committee is not formed.
3.5. All new members of the collegial body should be offered a tailored program focused on introducing a member with his/her duties, corporate organization and activities. The collegial body should conduct an	No	Presently, members of the Board do not perform the assessment of their skills and knowledge.

annual review to identify fields where its members need to update their skills and knowledge. 3.6. In order to ensure that all material conflicts of interest related with a member of the collegial body are resolved properly, the collegial body should comprise a sufficient number of independent members.	No	The Board members are delegated by the largest shareholders, but represents the interests of all shareholders. Independent board members are not elected.
3.7. A member of the collegial body should be considered to be independent only if he is free of any business, family or other relationship with the company, its controlling shareholder or the management of either, that creates a conflict of interest such as to impair his judgment. Since all cases when member of the collegial body is likely to become dependent are impossible to list, moreover, relationships and circumstances associated with the determination of independence may vary amongst companies and the best practices of solving this problem are yet to evolve in the course of time, assessment of independence of a member of the collegial body should be based on the contents of the relationship and circumstances rather than their form. The key criteria for identifying whether a member of the collegial body can be considered to be independent are the following: he/ she is not an executive director or member of the Board (if a collegial body elected by the General Shareholders' Meeting is the Supervisory Board) of the company or any associated company and has not been such during the last five years; he/ she is not an employee of the company or some any company and has not been such during the last three years, except for cases when a member of the collegial body does not belong to the senior management and was elected to the collegial body as a representative of the employees; he/ she is not receiving or has been not receiving significant additional remuneration from the company or associated company other than remuneration for the office in the collegial body. Such additional remuneration includes participation in share options or some other performance based pay systems; it does not include compensation payments for the previous office in the company (provided that such payment is no way related with later position) as per pension plans (inclusive of deferred compensations); he/she is not a controlling shareholder or representative of such shareholder (control as defined in the Council Directive 83/349/EEC Article 1 Part 1); he/ she does not have and did not have any material	No	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, however fail to meet the recommendation on independency.
business relations with the company or associated companies within the past year directly or as a partner, shareholder, director or superior employee of the subject having such relationship. A subject is considered to have business relations when it is a major supplier or service provider (inclusive of

financial, legal, counselling and consulting services),

major client or organization receiving significant payments from the company or its group; he/she is not and has not been, during the last three years, partner or employee of the current or former external audit company of the company or associated companies; he/she is not an executive director or member of the Board in some other company where executive director of the company or member of the Board (if a collegial body elected by the General Shareholders' Meeting is the Supervisory Board) is non-executive director or member of the Supervisory Board, he/she may not also have any other material relationships with executive directors of the company that arise from their participation in activities of other companies or bodies; he/she has not been in the position of a member of the collegial body for over than 12 years; he/ she is not a close relative to an executive director or member of the Board (if a collegial body elected by the General Shareholders' Meeting is the Supervisory Board) or to any person listed in above items 1 to 8. Close relative is considered to be a spouse (common law spouse), children and parents.
3.8. The determination of what constitutes independence is fundamentally an issue for the collegial body itself to determine. The collegial body may decide that, despite a particular member meets all the criteria of independence laid down in this Code, he can not be considered independent due to special personal or company-related circumstances.	No	No Board members' independency assessment and announcement practice is applicable in the Company.
3.9. Necessary information on conclusions the collegial body has come to in its determination of whether a particular member of the body should be considered to be independent should be disclosed. When a person is nominated to become a member of the collegial body, the company should disclose whether it considers the person to be independent. When a particular member of the collegial body does not meet one or more criteria of independence set out in this Code, the company should disclose its reasons for nevertheless considering the member to be independent. In addition, the company should annually disclose which members of the collegial body it considers to be independent.	No	No Board members' independency assessment and announcement practice is applicable in the Company.
3.10. When one or more criteria of independence set out in this Code has not been met throughout the year, the company should disclose its reasons for considering a particular member of the collegial body to be independent. To ensure accuracy of the information disclosed in relation with the independence of the members of the collegial body, the company should require independent members to have their independence periodically re-confirmed.	No	No Board members' independency assessment and announcement practice is applicable in the Company.
3.11. In order to remunerate members of a collegial body for their work and participation in the meetings of the collegial body, they may be remunerated from the	Not applicable	The Board members are not remunerated for their work and participation in the meeting of the Board from the Company's funds.

company's funds. The General Shareholders' Meeting
should approve the amount of such remuneration.
Principle IV: The duties and liabilities of a collegial body elected by the General Shareholders' Meeting
		The corporate governance framework should ensure proper and effective functioning of the collegial body elected by the
		General Shareholders' Meeting, and the powers granted to the collegial body should ensure effective monitoring of the
Company's management bodies and protection of interests of all the Company's shareholders.
4.1. The collegial body elected by the General	Yes	The Board submits Company's annual financial
Shareholders' Meeting (hereinafter in this Principle		statement and consolidated annual financial statement,
referred to as the 'collegial body') should ensure		profit distribution drafts to the General Shareholders'
integrity and transparency of the company's financial		Meeting, delivers consolidated annual report, also
statements and the control system. The collegial body		performs all other functions set forth in the legal acts of
should issue recommendations to the company's		the Republic of Lithuania.
management bodies and monitor and control the
company's management performance.
4.2. Members of the collegial body should act in good	Yes	According to the information held with the Company, all
faith, with care and responsibility for the benefit and in		Board members act in good will with respect to the
the interests of the company and its shareholders with		Company, are guided by the interests of the Company,
due regard to the interests of employees and public		not by the personal or third parties' interests, and seek
welfare. Independent members of the collegial body		to preserve their independency while adopting the
should (a) under all circumstances maintain independence of their analysis, decision-making and		decisions.
actions (b) do not seek and accept any unjustified
privileges that might compromise their independence,
and (c) clearly express their objections should a
member consider that decision of the collegial body is
against the interests of the company. Should a
collegial body have passed decisions independent
member has serious doubts about, the member should
make adequate conclusions. Should an independent
member resign from his office, he should explain the
reasons in a letter addressed to the collegial body or
Audit Committee and, if necessary, respective
company-not-pertaining body (institution).
4.3. Each member should devote sufficient time and	Yes	The Board members perform their functions properly:
attention to perform his duties as a member of the		they actively participate in the Board meetings and
collegial body. Each member of the collegial body		devote sufficient time for the performance of their duties
should limit other professional obligations of his (in		as Board members.
particular any directorships held in other companies)
in such a manner they do not interfere with proper
performance of duties of a member of the collegial
body. In the event a member of the collegial body
should be present in less than a half of the meetings
of the collegial body throughout the financial year of
the company, shareholders of the company should be
notified.
4.4. Where decisions of a collegial body may have a	Yes	The Board treats all shareholders honestly and
different effect on the company's shareholders, the		impartially.
collegial body should treat all shareholders impartially
and fairly. It should ensure that shareholders are
properly informed on the company's affairs, strategies,
risk management and resolution of conflicts of interest.
The company should have a clearly established role of
members of the collegial body when communicating
with and committing to shareholders.
4.5. It is recommended that transactions (except	No	There were no significant transactions concluded
insignificant ones due to their low value or concluded		between the company and its shareholders, members of
when carrying out routine operations in the company		the managing bodies. According to the company's

under usual conditions), concluded between the company and its shareholders, members of the supervisory or managing bodies or other natural or legal persons that exert or may exert influence on the company's management should be subject to approval of the collegial body. The decision concerning approval of such transactions should be deemed adopted only provided the majority of the independent members of the collegial body voted for such a decision. 4.6. The collegial body should be independent in passing decisions that are significant for the company's operations and strategy. Taken separately, the collegial body should be independent of the company's management bodies. Members of the collegial body should act and pass decisions without an outside influence from the persons who have elected it. Companies should ensure that the collegial body and its committees are provided with sufficient administrative and financial resources to discharge their duties, including the right to obtain, in particular from employees of the company, all the necessary information or to seek independent legal, accounting or any other advice on issues pertaining to the competence of the collegial body and its committees. When using the services of a consultant with a view to obtaining information on market standards for remuneration systems, the remuneration committee should ensure that the consultant concerned does not	Yes	Board Rules of Procedure it is necessary to inform the members of the Board if any of such transactions are concluded, but it is not provided that the Board have to consider or approve such transactions before they are concluded. The Board is independent while adopting decisions which are significant for the activity and strategy of the Company.
at the same time advice the human resources department, executive directors or collegial management organs of the company concerned. 4.7. Activities of the collegial body should be organized in a manner that independent members of the collegial body could have major influence in relevant areas where chances of occurrence of conflicts of interest are very high. Such areas to be considered as highly relevant are issues of nomination of company's directors, determination of directors' remuneration and control and assessment of the company's audit. Therefore when the mentioned issues are attributable to the competence of the collegial body, it is recommended that the collegial body should establish Nomination, Remuneration, and Audit Committees. Companies should ensure that the functions attributable to the Nomination, Remuneration, and Audit Committees are carried out. However they may decide to merge these functions and set up less than three committees. In such case a company should explain in detail reasons behind the selection of alternative approach and how the selected approach complies with the objectives set forth for the three different committees. Should the collegial body of the company comprise small number of members, the functions assigned to the three committees may be performed by the collegial body itself, provided that it meets composition requirements advocated for the	No	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.

committees and that adequate information is provided in this respect. In such case provisions of this Code relating to the committees of the collegial body (in particular with respect to their role, operation, and transparency) should apply, where relevant, to the collegial body as a whole.

4.8. The key objective of the committees is to increase efficiency of the activities of the collegial body by ensuring that decisions are based on due consideration, and to help organize its work with a view to ensuring that the decisions it takes are free of material conflicts of interest. Committees should exercise independent judgment and integrity when exercising its functions as well as present the collegial body with recommendations concerning the decisions of the collegial body. Nevertheless the final decision shall be adopted by the collegial body. The recommendation on creation of committees is not intended, in principle, to constrict the competence of the collegial body or to remove the matters considered from the purview of the collegial body itself, which remains fully responsible for the decisions taken in its field of competence.

4.9. Committees established by the collegial body should normally be composed of at least three members. In companies with small number of members of the collegial body, they could exceptionally be composed of two members. Majority of the members of each committee should be constituted from independent members of the collegial body. In cases when the Company chooses not to set up a Supervisory Board, Remuneration and Audit Committees should be entirely comprised of nonexecutive directors. Chairmanship and membership of the committees should be decided with due regard to the need to ensure that committee membership is refreshed and that undue reliance is not placed on particular individuals.

4.10. Authority of each of the committees should be determined by the collegial body. Committees should perform their duties in line with authority delegated to them and inform the collegial body on their activities and performance on regular basis. Authority of every committee stipulating the role and rights and duties of the committee should be made public at least once a year (as part of the information disclosed by the company annually on its corporate governance structures and practices). Companies should also make public annually a statement by existing committees on their composition, number of meetings and attendance over the year, and their main activities. Audit Committee should confirm that it is satisfied with the independence of the audit process and describe briefly the actions it has taken to reach this conclusion. 4.11. In order to ensure independence and impartiality of the committees, members of the collegial body that are not members of the committee should commonly

have a right to participate in the meetings of the committee only if invited by the committee. A committee may invite or demand participation in the meeting of particular officers or experts. Chairman of each of the committees should have a possibility to maintain direct communication with the shareholders. Events when such are to be performed should be specified in the regulations for committee activities.

4.12. Nomination Committee.

4.12.1. Key functions of the Nomination Committee should be the following:

1) identify and recommend, for the approval of the collegial body, candidates to fill Board vacancies. The Nomination Committee should evaluate the balance of skills, knowledge and experience on the management body, prepare a description of the roles and capabilities required to assume a particular office, and assess the time commitment expected. Nomination Committee can also consider candidates to members of the collegial body delegated by the shareholders of the company;

2) assess on regular basis the structure, size, composition and performance of the supervisory and management bodies, and make recommendations to the collegial body regarding the means of achieving necessary changes;

3) assess on regular basis the skills, knowledge and experience of individual directors and report on this to the collegial body;

4) properly consider issues related to succession planning;

5) review the policy of the management bodies for selection and appointment of senior management.

4.12.2. Nomination Committee should consider proposals by other parties, including management and shareholders. When dealing with issues related to executive directors or members of the Board (if a collegial body elected by the General Shareholders' Meeting is the Supervisory Board) and senior management, Chief Financial Officer of the company should be consulted by, and entitled to submit proposals to the Nomination Committee.

4.13. Remuneration Committee.

4.13.1. Key functions of the Remuneration Committee should be the following:

1) make proposals, for the approval of the collegial body, on the remuneration policy for members of management bodies and executive directors. Such policy should address all forms of compensation, including the fixed remuneration, performance-based remuneration schemes, pension arrangements, and termination payments. Proposals considering performance-based remuneration schemes should be accompanied with recommendations on the related objectives and evaluation criteria, with a view to properly aligning the pay of executive director and members of the management bodies with the long-

term interests of the shareholders and the objectives set by the collegial body;

2) make proposals to the collegial body on the individual remuneration for executive directors and member of management bodies in order their remunerations are consistent with company's remuneration policy and the evaluation of the performance of these persons concerned. In doing so, the Committee should be properly informed on the total compensation obtained by executive directors and members of the management bodies from the affiliated companies;

3) ensure that remuneration of individual executive directors or members of management body is proportionate to the remuneration of other executive directors or members of management body and other staff members of the company;

4) periodically review the remuneration policy for executive directors or members of management body, including the policy regarding share-based remuneration, and its implementation;

5) make proposals to the collegial body on suitable forms of contracts for executive directors and members of the management bodies;

6) assist the collegial body in overseeing how the company complies with applicable provisions regarding the remuneration-related information disclosure (in particular the remuneration policy applied and individual remuneration of directors);

7) make general recommendations to the executive directors and members of the management bodies on the level and structure of remuneration for senior management (as defined by the collegial body) with regard to the respective information provided by the executive directors and members of the management bodies.

4.13.2. With respect to stock options and other sharebased incentives which may be granted to directors or other employees, the Committee should:

1) consider general policy regarding the granting of the above mentioned schemes, in particular stock options, and make any related proposals to the collegial body; 2) examine the related information that is given in the company's annual report and documents intended for the use during the General Shareholders' Meeting;

3) make proposals to the collegial body regarding the choice between granting options to subscribe shares or granting options to purchase shares, specifying the reasons for its choice as well as the consequences that this choice has.

4.13.3. Upon resolution of the issues attributable to the competence of the Remuneration Committee, the Committee should at least address the chairman of the collegial body and/or Chief Financial Officer of the company for their opinion on the remuneration of other executive directors or members of the management bodies.

4.13.4. The Remuneration Committee should report
on the exercise of its functions to the shareholders and
be present at the Annual General Shareholders'
Meeting for this purpose.
4.14. Audit Committee.	Yes	The members of the Audit Committee are elected by the
4.14.1. Key functions of the Audit Committee should		General Shareholders' Meeting. The main functions of
be the following:		the Audit Committee should be the following:
1) observe the integrity of the financial information		- provide recommendations with selection, appointment,
provided by the company, in particular by reviewing		reappointment and removal of an external Audit
the relevance and consistency of the accounting		Company as well as the terms and conditions of
methods used by the company and its group (including		engagement with the Audit Company;
the criteria for the consolidation of the accounts of		- monitor the process of external audit;
companies in the group);		- monitor how the external auditor and Audit Company
2) at least once a year review the systems of internal		follow the principles of independence and objectivity;
control and risk management to ensure that the key		- observe the process of preparation of financial reports
risks (inclusive of the risks in relation with compliance		of the Company;
with existing laws and regulations) are properly		- monitor the efficiency of the internal control and risk
identified, managed and reflected in the information		management systems of the Company; once a year
provided;		review the need of the internal audit function;
3) ensure the efficiency of the internal audit function,		monitor the implementation of the audit firm's
among other things, by making recommendations on		recommendations and comments imposed by the Board
the selection, appointment, reappointment and		and the manager of the company.
removal of the head of the internal audit department
and on the budget of the department, and by		In conducting of the mentioned above functions, the
monitoring the responsiveness of the management to		Audit committee supervises the process of preparation
its findings and recommendations. Should there be no		of annual accounts and gives recommendations to the
internal audit authority in the company, the need for		Board on provision of the annual accounts for the
one should be reviewed at least annually;		approval of the shareholders.
4) make recommendations to the collegial body		Furthermore, the Audit committee analyzes the
related with selection, appointment, reappointment		independence and other criterias of the potential
and removal of the external auditor (to be done by the		auditors and gives the necessary conclusions to the
General Shareholders' Meeting) and with the terms		management.
and conditions of his engagement. The Committee		The Audit committee prepares activity report on the
should investigate situations that lead to a resignation		main conclusions regarding Company's activity.
of the audit company or auditor and make
recommendations on required actions in such
situations;
5) monitor independence and impartiality of the
external auditor, in particular by reviewing the audit
company's compliance with applicable guidance
relating to the rotation of audit partners, the level of
fees paid by the company, and similar issues. In order
to prevent occurrence of material conflicts of interest,
the Committee, based on the auditor's disclosed inter
alia data on all remunerations paid by the company to
the auditor and network, should at all times monitor
nature and extent of the non-audit services. Having
regard to the principals and guidelines established in
the May 16, 2002 Commission Recommendation
2002/590/EC, the Committee should determine and
apply a formal policy establishing types of non-audit
services that are (a) excluded, (b) permissible only
after review by the Committee, and (c) permissible
without referral to the Committee;
6) review efficiency of the external audit process and
responsiveness of management to recommendations

made in the external auditor's management letter.

4.14.2. All members of the Committee should be furnished with complete information on particulars of accounting, financial and other operations of the company. Company's management should inform the Audit Committee of the methods used to account for significant and unusual transactions where the accounting treatment may be open to different approaches. In such case a special consideration should be given to company's operations in offshore centers and/or activities carried out through special purpose vehicles (organizations) and justification of such operations.

4.14.3. The Audit Committee should decide whether participation of the chairman of the collegial body, Chief Financial Officer (or superior employees in charge of finances, treasury and accounting), or internal and external auditors in the meetings of the Committee is required (if required, when). The Committee should be entitled, when needed, to meet with any relevant person without executive directors and members of the management bodies present.

4.14.4. Internal and external auditors should be secured with not only effective working relationship with management, but also with free access to the collegial body. For this purpose the Audit Committee should act as the principal contact person for the internal and external auditors.

4.14.5. The Audit Committee should be informed of the internal auditor's work program, and should be furnished with internal audit's reports or periodic summaries. The Audit Committee should also be informed of the work program of the external auditor and should be furnished with report disclosing all relationships between the independent auditor and the company and its group. The Committee should be timely furnished information on all issues arising from the audit.

4.14.6. The Audit Committee should examine whether the company is following applicable provisions regarding the possibility for employees to report alleged significant irregularities in the company, by way of complaints or through anonymous submissions (normally to an independent member of the collegial body), and should ensure that there is a procedure established for proportionate and independent investigation of these issues and for appropriate follow-up action.

4.14.7. The Audit Committee should report on its activities to the collegial body at least once in every six months, at the time the yearly and half-yearly statements are approved.

4.15. Every year the collegial body should conduct the assessment of its activities. The assessment should include evaluation of collegial body's structure, work

Committee's competence and work efficiency and

During 2017 the Board structure and composition remained unchanged. The Board assesses its organization and the minutes of the Board meetings positively. The Board members actively participate in

assessment whether the collegial body has achieved its objectives. The collegial body should, at least once a year, make public (as part of the information the company annually discloses on its management structures and practices) respective information on its internal organization and working procedures, and specify what material changes were made as a result of the assessment of the collegial body of its own activities.

Board meetings and devote sufficient time and attention to the board member's duties. Members of the Board attend the meetings in person or remotely. In 2017 the Board analyzed available information,

discussed and adopted decisions on all main issues concerning the activities of INVL Baltic Farmland and its group.

In 2017 the Board initiated one shareholders meeting.

Principle V: The working procedure of the Company's collegial bodies.

The working procedure of supervisory and management bodies established in the Company should ensure efficient operation of these bodies and decision-making and encourage active co-operation between the Company's bodies.

5.1. The company's supervisory and management bodies (hereinafter in this Principle the concept 'collegial bodies' covers both the collegial bodies of supervision and the collegial bodies of management) should be chaired by chairpersons of these bodies. The chairperson of a collegial body is responsible for proper convocation of the collegial body meetings. The chairperson should ensure that information about the meeting being convened and its agenda are communicated to all members of the body. The chairperson of a collegial body should ensure appropriate conducting of the meetings of the collegial body. The chairperson should ensure order and	Yes	The activity of the Board is chaired by the chairman who is also responsible for convocation of the meetings as well as preparation of the agenda. Frequency of the meetings and questions of the agenda depend on the particular events or projects or they are related with ordinary functions of the Board prescribed by legal acts.
working atmosphere during the meeting. 5.2. It is recommended that meetings of the company's collegial bodies should be carried out according to the schedule approved in advance at certain intervals of time. Each company is free to decide how often to convene meetings of the collegial bodies, but it is recommended that these meetings should be convened at such intervals, which would guarantee an interrupted resolution of the essential corporate governance issues. Meetings of the company's Supervisory Board should be convened at least once in a quarter, and the company's Board should meet at least once a month8.	Yes	The Board meetings are held at least once per quarter.
5.3. Members of a collegial body should be notified about the meeting being convened in advance in order to allow sufficient time for proper preparation for the issues on the agenda of the meeting and to ensure fruitful discussion and adoption of appropriate decisions. Alongside with the notice about the meeting being convened, all the documents 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	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.

⁸ The frequency of meetings of the collegial body provided for in the recommendation must be applied in those cases when both additional collegial bodies are formed at the company, the board and the supervisory board. In the event only one additional collegial body is formed in the company, the frequency of its meetings may be as established for the supervisory board, i.e. at least once in a quarter.

of the collegial body are present or certain issues of
great importance to the company require immediate
resolution.
5.4. In order to co-ordinate operation of the company's	No	The Company may not implement this recommendation
collegial bodies and ensure effective decision-making		since only the Board is formed.
process, chairpersons of the company's collegial
bodies of supervision and management should closely
co-operate by co-coordinating dates of the meetings,
their agendas and resolving other issues of corporate
governance. Members of the company's Board should
be free to attend meetings of the company's
Supervisory Board, especially where issues
concerning removal of the Board members, their
liability or remuneration are discussed.

Principle VI: The equitable treatment of shareholders and shareholder rights.

The corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. The corporate governance framework should protect the rights of the shareholders.

6.1. 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 their holders.	Yes	Shares which compose the authorized capital of the Company grant equal rights to all shareholders.
6.2. 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	The Company informs shareholders about the rights of newly issued shares. Information about the rights of already issued shares is provided in the Shareholders' Policy approved by the Board, the Articles of the Association, Company's annual report.
6.3. Transactions that are important to the company and its shareholders, such as transfer, investment, and pledge of the company's assets or any other type of encumbrance should be subject to approval of the General Shareholders' Meeting. All shareholders should be furnished with equal opportunity to familiarize with and participate in the decision-making process when significant corporate issues, including approval of transactions referred to above, are discussed.	Yes	Shareholders of the Company have equal opportunities to get familiarized and participate in adopting decisions important to the Company. Approval of the General Shareholders' Meeting is also necessary in cases stipulated in Chapter V of the Law on Companies of the Republic of Lithuania. No other cases when the approval of the General Shareholders' Meeting should be obtained are foreseen, since it would impair Company's business considering the nature of the Company's activity.
6.4. Procedures of convening and conducting a General Shareholders' Meeting should ensure equal opportunities for the shareholders to effectively participate at the meetings and should not prejudice the rights and interests of the shareholders. The venue, date, and time of the shareholders' meeting should not hinder wide attendance of the shareholders. Prior to the shareholders' meeting, the Company's supervisory and management bodies should enable the shareholders to lodge questions on issues on the agenda of the General Share-holders' Meeting and receive answers to them.	Yes	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.
6.5. If is possible, in order to ensure shareholders living abroad the right to access to the information, it is recommended that documents on the course of the General Shareholders' Meeting, should be placed on the publicly accessible website of the company not only in Lithuanian language, but in English and /or other foreign languages in advance. It is	Yes	The information about General Shareholders' Meetings are published in Lithuanian and English on the Company's website.

recommended that the minutes of the General Shareholders' Meeting after signing them and/or adopted resolutions should be also placed on the publicly accessible website of the company. Seeking to ensure the right of foreigners to familiarize with the information, whenever feasible, documents referred to in this recommendation should be published in Lithuanian, English and/or other foreign languages. Documents referred to in this recommendation may be published on the publicly accessible website of the company to the extent that publishing of these documents is not detrimental to the company or the company's commercial secrets are not revealed.
6.6. Shareholders should be furnished with the opportunity to vote in the General Shareholders' Meeting in person and in absentia. Shareholders should not be prevented from voting in writing in advance by completing the general voting ballot.	Yes	The Company's shareholders are furnished with the opportunity to participate in the General Shareholders' Meeting both personally and via an attorney, if such a person has a proper authorization or if an agreement on the transfer of voting rights was concluded in the manner set forth in the legal acts. The Company provides the shareholders with conditions to vote by completing the general voting ballot.
6.7. With a view to increasing the shareholders' opportunities to participate effectively at General Shareholders' Meetings, the companies are recommended to expand use of modern technologies by allowing the shareholders to participate and vote in General Shareholders' Meetings via electronic means of communication. In such cases security of transmitted information and a possibility to identify the identity of the participating and voting person should be guaranteed. Moreover, companies could furnish its shareholders, especially shareholders living abroad, with the opportunity to watch shareholder meetings by means of modern technologies. Principle VII: The avoidance of conflicts of interest and their disclosure	No	Shareholders can vote via an attorney or by completing the general voting ballot but shareholders can not participate and vote in General Shareholders' Meetings via electronic means of communication.

The corporate governance framework should encourage members of the corporate bodies to avoid conflicts of interest and assure transparent and effective mechanism of disclosure of conflicts of interest regarding members of the corporate bodies.

7.1. Any member of the company's supervisory and	Yes	The	Board	members	fully	comply	with	these
management body should avoid a situation, in which			recommendations.
his/her personal interests are in conflict or may be in
conflict with the company's interests. In case such a
situation did occur, a member of the company's
supervisory and management body should, within
reasonable time, inform other members of the same
collegial body or the company's body that has elected
him/her, or to the company's shareholders about a
situation of a conflict of interest, indicate the nature of
the conflict and value, where possible.
7.2. Any member of the company's supervisory and
management body may not mix the company's assets,
the use of which has not been mutually agreed upon,
with his/her personal assets or use them or the
information which he/she learns by virtue of his/her
position as a member of a corporate body for his/her
personal benefit or for the benefit of any third person
without a prior agreement of the General

Shareholders' Meeting or any other corporate body authorised by the meeting.

7.3. Any member of the company's supervisory and management body may conclude a transaction with the company, a member of a corporate body of which he/she is. Such a transaction (except insignificant ones due to their low value or concluded when carrying out routine operations in the company under usual conditions) must be immediately reported in writing or orally, by recording this in the minutes of the meeting, to other members of the same corporate body or to the corporate body that has elected him/her or to the company's shareholders. Transactions specified in this recommendation are also subject to recommendation 4.5.

7.4. Any member of the company's supervisory and management body should abstain from voting when decisions concerning transactions or other issues of personal or business interest are voted on.

Principle VIII: Company's remuneration policy

Remuneration policy and procedure for approval, revision and disclosure of directors' remuneration established in the Company should prevent potential conflicts of interest and abuse in determining remuneration of directors, in addition it should ensure publicity and transparency both of Company's remuneration policy and remuneration of directors.

8.1. A Company should make a public statement of the company's remuneration policy (hereinafter the remuneration statement) which should be clear and easily understandable. This remuneration statement should be published as a part of the company's annual statement as well as posted on the company's website.

No The Company does not prepare a remuneration policy since the majority of VIII principle items are not relevant for the present structure of the Company. Information about the benefits and loans for the members of the management bodies is provided in the periodical reports, financial statements.

8.2. Remuneration statement should mainly focus on directors' remuneration policy for the following year and, if appropriate, the subsequent years. The statement should contain a summary of the implementation of the remuneration policy in the previous financial year. Special attention should be given to any significant changes in company's remuneration policy as compared to the previous financial year. 8.3. Remuneration statement should leastwise include the following information: 1) explanation of the relative importance of the variable and non-variable components of directors' remuneration; 2) sufficient information on performance criteria that entitles directors to share options, shares or variable components of remuneration; 3) an explanation how the choice of performance criteria contributes to the long-term interests of the company;

4) an explanation of the methods, applied in order to determine whether performance criteria have been fulfilled;

5) sufficient information on deferment periods with regard to variable components of remuneration;

6) sufficient information on the linkage between the remuneration and performance;

7) the main parameters and rationale for any annual bonus scheme and any other non-cash benefits;

8) sufficient information on the policy regarding termination payments;

9) sufficient information with regard to vesting periods for share-based remuneration, as referred to in point 8.13 of this Code;

10) sufficient information on the policy regarding retention of shares after vesting, as referred to in point 8.15 of this Code;

11) sufficient information on the composition of peer groups of companies the remuneration policy of which has been examined in relation to the establishment of the remuneration policy of the company concerned;

12) a description of the main characteristics of supplementary pension or early retirement schemes for directors;

13) remuneration statement should not include commercially sensitive information.

8.4. Remuneration statement should also summarize and explain company's policy regarding the terms of the contracts executed with executive directors and members of the management bodies. It should include, inter alia, information on the duration of contracts with executive directors and members of the management bodies, the applicable notice periods and details of provisions for termination payments linked to early termination under contracts for executive directors and members of the management bodies.

8.5. Remuneration statement should also contain detailed information on the entire amount of remuneration, inclusive of other benefits, that was paid to individual directors over the relevant financial year. This document should list at least the information set out in items 8.5.1 to 8.5.4 for each person who has served as a director of the company at any time during the relevant financial year.

8.5.1. The following remuneration and/or emolumentsrelated information should be disclosed:

• the total amount of remuneration paid or due to the director for services performed during the relevant financial year, inclusive of, where relevant, attendance fees fixed by the Annual General Shareholders' Meeting;

• the remuneration and advantages received from any undertaking belonging to the same group;

• the remuneration paid in the form of profit sharing and/or bonus payments and the reasons why such bonus payments and/or profit sharing were granted;

• if permissible by the law, any significant additional remuneration paid to directors for special services outside the scope of the usual functions of a director; - compensation receivable or paid to each former executive director or member of the management body as a result of his resignation from the office during the previous financial year;

• total estimated value of non-cash benefits considered as remuneration, other than the items covered in the above points.

8.5.2. As regards shares and/or rights to acquire share options and/or all other share-incentive schemes, the following information should be disclosed:

• the number of share options offered or shares granted by the company during the relevant financial year and their conditions of application;

• the number of shares options exercised during the relevant financial year and, for each of them, the number of shares involved and the exercise price or the value of the interest in the share incentive scheme at the end of the financial year;

• the number of share options unexercised at the end of the financial year; their exercise price, the exercise date and the main conditions for the exercise of the rights;

• all changes in the terms and conditions of existing share options occurring during the financial year.

8.5.3. The following supplementary pension schemesrelated information should be disclosed:

• when the pension scheme is a defined-benefit scheme, changes in the directors' accrued benefits under that scheme during the relevant financial year;

• when the pension scheme is defined-contribution scheme, detailed information on contributions paid or payable by the company in respect of that director during the relevant financial year.

8.5.4. The statement should also state amounts that the company or any subsidiary company or entity included in the consolidated annual financial report of the company has paid to each person who has served as a director in the company at any time during the relevant financial year in the form of loans, advance payments or guarantees, including the amount outstanding and the interest rate.

8.6. Where the remuneration policy includes variable components of remuneration, companies should set limits on the variable component(s). The non-variable component of remuneration should be sufficient to allow the company to withhold variable components of remuneration when performance criteria are not met.

8.7. Award of variable components of remuneration should be subject to predetermined and measurable performance criteria.

8.8. Where a variable component of remuneration is awarded, a major part of the variable component should be deferred for a minimum period of time. The part of the variable component subject to deferment should be determined in relation to the relative weight of the variable component compared to the nonvariable component of remuneration.

8.9. Contractual arrangements with executive or managing directors should include provisions that permit the company to reclaim variable components of remuneration that were awarded on the basis of data which subsequently proved to be manifestly misstated. 8.10. Termination payments should not exceed a fixed amount or fixed number of years of annual remuneration, which should, in general, not be higher than two years of the non-variable component of remuneration or the equivalent thereof.

8.11. Termination payments should not be paid if the termination is due to inadequate performance.

8.12. The information on preparatory and decisionmaking processes, during which a policy of remuneration of directors is being established, should also be disclosed. Information should include data, if applicable, on authorities and composition of the remuneration committee, names and surnames of external consultants whose services have been used in determination of the remuneration policy as well as the role of Annual General Shareholders' Meeting.

8.13. Shares should not vest for at least three years after their award.

8.14. Share options or any other right to acquire shares or to be remunerated on the basis of share price movements should not be exercisable for at least three years after their award. Vesting of shares and the right to exercise share options or any other right to acquire shares or to be remunerated on the basis of share price movements, should be subject to predetermined and measurable performance criteria.

8.15. After vesting, directors should retain a number of shares, until the end of their mandate, subject to the need to finance any costs related to acquisition of the shares. The number of shares to be retained should be fixed, for example, twice the value of total annual remuneration (the non-variable plus the variable components).

8.16. Remuneration of non-executive or supervisory directors should not include share options.

8.17. Shareholders, in particular institutional shareholders, should be encouraged to attend General Shareholders' Meetings where appropriate and make considered use of their votes regarding directors' remuneration.

8.18. Without prejudice to the role and organization of the relevant bodies responsible for setting directors' remunerations, the remuneration policy or any other significant change in remuneration policy should be included into the agenda of the Annual General Shareholders' Meeting. Remuneration statement should be put for voting in Annual General

Shareholders' Meeting. The vote may be either
mandatory or advisory.
8.19. Schemes anticipating remuneration of directors	Not	In 2017 the schemes, on which basis the managers
in shares, share options or any other right to purchase	applicable	were remunerated in shares, share selection
shares or be remunerated on the basis of share price		transactions or other rights to acquire the shares or be
movements should be subject to the prior approval of		remunerated based on the share price movements were
Annual General Shareholders' Meeting by way of a		not applied in the Company.
resolution prior to their adoption. The approval of
scheme should be related with the scheme itself and
not to the grant of such share-based benefits under
that scheme to individual directors. All significant
changes in scheme provisions should also be subject
to shareholders' approval prior to their adoption; the
approval decision should be made in Annual General
Shareholders' Meeting. In such case shareholders
should be notified on all terms of suggested changes
and get an explanation on the impact of the suggested
changes.
8.20. The following issues should be subject to
approval by the Annual General Shareholders'
Meeting:
1) grant of share-based schemes, including share
options, to directors;
2) determination of maximum number of shares and
main conditions of share granting;
3) the term within which options can be exercised;
4) the conditions for any subsequent change in the
exercise of the options, if permissible by law;
5) all other long-term incentive schemes for which
directors are eligible and which are not available to
other employees of the company under similar terms.
Annual General Shareholders' Meeting should also set
the deadline within which the body responsible for
remuneration of directors may award compensations
listed in this article to individual directors.
8.21. Should national law or company's Articles of
Association allow, any discounted option arrangement
under which any rights are granted to subscribe the
shares at a price lower than the market value of the
share prevailing on the day of the price determination,
or the average of the market values over a number of
days preceding the date when the exercise price is
determined, should also be subject to the
shareholders' approval.
8.22. Provisions of Articles 8.19 and 8.20 should not
be applicable to schemes allowing for participation
under similar conditions to company's employees or
employees of any subsidiary company whose
employees are eligible to participate in the scheme
and which has been approved in the Annual General
Shareholders' Meeting.
8.23. Prior to the Annual General Shareholders'
Meeting that is intended to consider decision
stipulated in Article 8.8, the shareholders must be
provided an opportunity to familiarize with draft
resolution and project-related notice (the documents should be posted on the company's website). The

notice should contain the full text of the share-based remuneration schemes or a description of their key terms, as well as full names of the participants in the schemes. Notice should also specify the relationship of the schemes and the overall remuneration policy of the directors. Draft resolution must have a clear reference to the scheme itself or to the summary of its key terms. Shareholders must also be presented with information on how the company intends to provide for the shares required to meet its obligations under incentive schemes. It should be clearly stated whether the company intends to buy shares in the market, hold the shares in reserve or issue new ones. There should also be a summary on scheme-related expenses the company will suffer due to the anticipated application of the scheme. All information given in this article must be posted on the company's website.

Principle IX: The role of stakeholders in corporate governance

The corporate governance framework should recognize the rights of stakeholders as established by law and encourage active co-operation between companies and stakeholders in creating the Company value, jobs and financial sustainability. For the purposes of this Principle, the concept "stakeholders" includes investors, employees, creditors, suppliers, clients, local community and other persons having certain interest in the Company concerned.

9.1. The corporate governance framework should	Yes	The Company respects the rights of interest holders and
assure that the rights of stakeholders that are		allows the interest holders to participate in the
protected by law are respected.		management of the Company in the manner set forth by
9.2. The corporate governance framework should		the laws. The detailed information about planned events
create conditions for the stakeholders to participate in		has been constantly disclosed in line with requirements
corporate governance in the manner prescribed by		of legal acts; therefore, the investors (shareholders)
law. Examples of mechanisms of stakeholder		have enough opportunities to familiarize with necessary
participation in corporate governance include:		information as well as vote on decisions. More detailed
employee participation in adoption of certain key		explanation about disclosure procedure is provided
decisions for the company; consulting the employees		below in the part 10.
on corporate governance and other important issues;
employee participation in the company's share capital;
creditor involvement in governance in the context of
the company's insolvency, etc.
9.3. Where stakeholders participate in the corporate
governance process, they should have access to
relevant information.

Principle X: Information disclosure and transparency

The corporate governance framework should ensure that timely and accurate disclosure is made on all material information regarding the Company, including the financial situation, performance and governance of the Company.

10.1. The company should disclose information on:	Yes	Information set forth in this recommendation is disclosed
the financial and operating results of the company;		in the notifications on material event, periodical reports.
company objectives;		This information is also published on Company's
persons holding by the right of ownership or in control		website.
of a block of shares in the company;
members of the company's supervisory and
management bodies, Chief Financial Officer of the
company and their remuneration;
material foreseeable risk factors;
transactions between the company and connected
persons, as well as transactions concluded outside the
course of the company's regular operations;
material issues regarding employees and other
stakeholders;
governance structures and strategy.

This list should be deemed as a minimum recommendation, while the companies are encouraged not to limit themselves to disclosure of the information specified in this list. 10.2. It is recommended to the company, which is the parent of other companies, that consolidated results of the whole group to which the Company belongs should be disclosed when information specified in item 1 of Recommendation 10.1 is under disclosure. 10.3. It is recommended that information on the professional background, qualifications of the members of supervisory and management bodies, Chief Financial Officer of the company should be disclosed as well as potential conflicts of interest that may have an effect on their decisions when information specified in item 4 of Recommendation 10.1 about the members of the company's supervisory and management bodies is under disclosure. It is also recommended that information about the amount of remuneration received from the company and other income should be disclosed with regard to members of the company's supervisory and management bodies and Chief Financial Officer as per Principle VIII. 10.4. It is recommended that information about the links between the company and its stakeholders, including employees, creditors, suppliers, local community, as well as the company's policy with regard to human resources, employee participation schemes in the company's share capital, etc. should be disclosed when information specified in item 7 of Recommendation 10.1 is under disclosure. 10.5. Information should be disclosed in such a way that neither shareholders nor investors are discriminated with regard to the manner or scope of access to information. Information should be disclosed to all simultaneously. It is recommended that notices about material events should be announced before or after a trading session on the NASDAQ Vilnius, so that all the company's shareholders and investors should have equal access to the information and make informed investing decisions. 10.6. Channels for disseminating information should provide for fair, timely and cost-efficient access to relevant information by users. It is recommended that information technologies should be employed for wider dissemination of information, for instance, by placing	Yes Yes	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. The information is disclosed in Lithuanian and English simultaneously via NASDAQ news distribution service. It is also published on company's website.
the information on the company's website. It is recommended that information should be published
and placed on the company's website not only in Lithuanian, but also in English, and, whenever possible and necessary, in other languages as well. 10.7. It is recommended that the company's annual reports and other periodical accounts prepared by the company should be placed on the company's website. It is recommended that the company should announce	Yes	The company publishes all information indicated in this recommendation on its website.
information about material events and changes in the

price of the company's shares on the Stock Exchange
on the company's website too.

Principle XI: The selection of the Company's auditor

The mechanism of the selection of the Company's auditor should ensure independence of the firm of auditor's conclusion and opinion.

11.1. An annual audit of the company's financial reports and interim reports should be conducted by an independent firm of auditors in order to provide an external and objective opinion on the company's financial statements.	Yes	The annual Company's and consolidated financial statements and consolidated annual report are conducted by the independent audit company. The interim financial statements are not conducted by the audit company.
11.2. It is recommended that the company's	Yes	The candidate audit company is suggested to the
Supervisory Board and, where it is not set up, the		General Shareholders' Meeting by the Board.
company's Board should propose a candidate firm of
auditors to the General Shareholders' Meeting.
11.3. It is recommended that the company should	Not	The audit company does not provide non-audit services
disclose to its shareholders the level of fees paid to the	applicable	to the Company.
firm of auditors for non-audit services rendered to the
company. This information should be also known to
the company's Supervisory Board and, where it is not
formed, the company's Board upon their consideration
which firm of auditors to propose for the General
Shareholders' Meeting.

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 29 November 2017 and applicable to the annual reports of entities covering periods beginning on or after 1 January 2017)

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 2017. The Company publishes its annual reports in the section For Investors on the website.

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 sections "Yes/No/Irrelevant" and "Commentary" of Appendix 2 of the consolidated report of 2017 "Information regarding the compliance with Corporate Governance Code.

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 15.4. of the consolidated report of 2017.

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 financial statements of 2017.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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 10.1.2. of the consolidated annual report of 2017.

10. 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 and the director of the Company in Clauses 10.2, 10.3. and 11 of the consolidated annual report of 2017, defining the boundaries of the management's activities, also mentions other important information related to the positions held.

11. 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 as the manager of the Company is not subject to diversity policies.