Annual Report (ESEF) • Sep 25, 2022
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8945006WNW5407G58156 2021-01-01 2021-12-31 ifrs-full:StatutoryReserveMember 8945006WNW5407G58156 2021-01-01 2021-12-31 ifrs-full:RevaluationSurplusMember 8945006WNW5407G58156 2021-01-01 2021-12-31 ifrs-full:ReserveOfRemeasurementsOfDefinedBenefitPlansMember 8945006WNW5407G58156 2021-01-01 2021-12-31 ifrs-full:SharePremiumMember 8945006WNW5407G58156 2021-01-01 2021-12-31 ifrs-full:RetainedEarningsMember 8945006WNW5407G58156 2021-01-01 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 8945006WNW5407G58156 2021-01-01 2021-12-31 ifrs-full:NoncontrollingInterestsMember 8945006WNW5407G58156 2021-01-01 2021-12-31 AGRIA GROUP HOLDING AD CONSOLIDATED FINANCIAL STATEMENTS ANNUALL CONSOLIDATED REPORT December 31, 2021 AGRIA GROUP HOLDING AD Consolidated financial statements December 31, 2021 2 CONTENTS: CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021….…...… 3 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.........................8 ANNUAL CONSOLIDATED REPORT……………..……………………….……… 39 CONSOLIDATED DECLARATION ON CORPORATE GOVERNANCE..……..88 CONSOLIDATED REPORT OF THE BOARD OF DIRECTORS OF AGRIA GROUP HOLDING AD ON THE APPLICATION OF THE REMUNERATION POLICY.................................................................................................................99 DECLARATION under Article 100n (4), Item. 4 of POSA…………………………… 108 AGRIA GROUP HOLDING AD Consolidated financial statements December 31, 2021 3 CONSOLIDATED FINACIAL STAEMENTS AS AT DECEMBER 31, 2021 AGRIA GROUP HOLDING AD _____________ Notes 31.12.2021 31.12.2020 BGN'000 BGN'000 ASSETS Non-current assets Property, plant and equipment 4 189 766 182 863 Intangible assets 5 128 176 Non-current investments 6 512 510 Non-current receivables 7 2 097 2 097 Total non-current assets 192 503 185 646 Current assets Inventories 8 118 742 68 313 Accounts receivable and loans granted 9 127 471 82 053 Cash and cash equivalents 10 1 852 2 030 Total current assets 248 065 152 396 Total assets 440 568 338 042 EQUITY AND LIABILITIES Equity Share capital 11 6 800 6 800 Reserves 12 65 494 65 734 Retained earnings 105 489 83 442 Total 177 783 155 976 Minority interest 519 477 Total equity 178 302 156 453 Non-current liabilities Interest bearing bank loans 13 38 104 38 514 Lease contracts obligations 14 12 067 7 826 Deferred tax liabilities, net 15 4 712 5 031 Trade loans 16 145 290 Other non-current liabilities 17 1 277 1 277 Total non-current liabilities 56 305 52 938 Current liabilities 18 205 961 128 651 Total liabilities 262 266 181 589 Total equity and liabilities 440 568 338 042 Emil Raykov Asya Yordanova (Executive Director) (Chief Accountant) Audit Company Marian Nikolov Primorska Audit Company Ltd. Registered auditor, Reg. N: 086 responsible for the audit Ilia Iliev Reg. N: 0601 Managing partner Auditor's report dated April 28, 2022 The accompanying notes are an integral part of these consolidated financial statements. CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at December 31, 2021 ____________ Consolidated financial statements as at December 31, 2021 4 ASYA STANCHEVA YORDANOVA Digitally signed by ASYA STANCHEVA YORDANOVA Date: 2022.04.28 16:40:22 +03'00' Emil Veselinov Raykov Digitally signed by Emil Veselinov Raykov Date: 2022.04.28 17:17:43 +03'00' MARIAN VASILEV NIKOLOV Digitally signed by MARIAN VASILEV NIKOLOV Date: 2022.04.28 18:22:49 +03'00' Iliya Nedelchev Iliev Digitally signed by Iliya Nedelchev Iliev Date: 2022.04.28 18:26:03 +03'00' AGRIA GROUP HOLDING AD _______________ Notes Year Year ended ended 31.12.2021 31.12.2020 BGN'000 BGN'000 Income from sales 19 430 825 338 290 Income from grovernment grants 20 6 190 5 961 Other income 21 3 221 3 688 Carrying amount of goods sold 309 547 259 067 Materials expenses 22 61 458 42 501 Hired services 23 12 571 9 908 Personnel expenses 24 14 061 11 555 Depreciation and amortization 4,5 10 753 10 103 Other expenses 25 820 642 Impairment 26 2 146 1 812 Changes in inventories (2 094) (750) Total operating expenses 409 262 334 838 Financial income 27 1 201 2 527 Financial expenses 28 (6 558) (4 013) Profit before tax 25 617 11 615 Income tax expense 29 2 738 1 610 Profit for the period 22 879 10 005 Other components of comprehensive income: Components not to be reclassified in proft or loss: Profit from revaluation of property, plant and equipment - - Revaluation of retirement benefit obligations (32) (19) Income tax expense, concerning other components of the comprehensive income 2 2 Other comprehensive income, net of tax (30) (17) Total comprehensive income for the period 22 849 9 988 Referring to: Owners of parent company 22 807 9 738 Minority interest 42 250 22 849 9 988 Earnings per share (BGN) 30 3,36 1,47 Emil Raykov Asya Yordanova (Executive Director) (Chief Accountant) Audit Company Marian Nikolov Primorska Audit Company Ltd. Registered auditor, Reg. N: 086 responsible for the audit Ilia Iliev Reg. N: 0601 Managing partner Auditor's report dated April 28, 2022 The accompanying notes are an integral part of these consolidated financial statements. CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year ended December 31, 2021 ________________ Consolidated financial statements as at December 31, 2021 5 ASYA STANCHEVA YORDANOVA Digitally signed by ASYA STANCHEVA YORDANOVA Date: 2022.04.28 16:40:40 +03'00' Emil Veselinov Raykov Digitally signed by Emil Veselinov Raykov Date: 2022.04.28 17:18:08 +03'00' MARIAN VASILEV NIKOLOV Digitally signed by MARIAN VASILEV NIKOLOV Date: 2022.04.28 18:23:18 +03'00' Iliya Nedelchev Iliev Digitally signed by Iliya Nedelchev Iliev Date: 2022.04.28 18:26:43 +03'00' AGRIA GROUP HOLDING AD ______________________ Attributable to the owners of the parent company Share Legal Revaluation Revaluation of Premium Retained Total Minority Total capital Reserves reserve defined benefit obligations reserves earnings equity interest BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 Balance at January 1, 2020 6 800 1 650 50 475 6 13 668 73 639 146 238 227 146 465 Profit for the period - - - - - 9 755 9 755 250 10 005 Other comprehensive income for the period, net of tax - - (17) - - (17) - (17) Total comprehensive income for the period - - - (17) - 9 755 9 738 250 9 988 Revaluation reserve written off - - (164) - - 164 - - - Increase of legal reserves - 116 - - - (116) - - - Balance at December 31, 2020 6 800 1 766 50 311 (11) 13 668 83 442 155 976 477 156 453 Profit for the period - - - - - 22 837 22 837 42 22 879 Other comprehensive income for the period, net of tax - - - (30) - - (30) - (30) Total comprehensive income for the period - - - (30) - 22 837 22 807 42 22 849 Revaluation reserve written off - - (230) - - 230 - - - Increase of legal reserves - 20 - - - (20) - - - Dividends dsitribution - - - - - (1 000) (1 000) - (1 000) Balance at December 31, 2021 6 800 1 786 50 081 (41) 13 668 105 489 177 783 519 178 302 Emil Raykov Asya Yordanova (Executive Director) (Chief Accountant) Audit Company Marian Nikolov Primorska Audit Company Ltd. Registered auditor, Reg. N: 086 responsible for the audit Ilia Iliev Reg. N: 0601 Managing partner Auditor's report dated April 28, 2022 The accompanying notes are an integral part of these consolidated financial statements. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended December 31, 2021 ___________________ Consolidated financial statements as at Deecmber 31, 2021 6 ASYA STANCHEVA YORDANOVA Digitally signed by ASYA STANCHEVA YORDANOVA Date: 2022.04.28 16:40:57 +03'00' Emil Veselinov Raykov Digitally signed by Emil Veselinov Raykov Date: 2022.04.28 17:18:28 +03'00' MARIAN VASILEV NIKOLOV Digitally signed by MARIAN VASILEV NIKOLOV Date: 2022.04.28 18:23:49 +03'00' Iliya Nedelch ev Iliev Digitally signed by Iliya Nedelchev Iliev Date: 2022.04.28 18:27:11 +03'00' AGRIA GROUP HOLDING AD _____________ Year Year ended ended 31.12.2021 31.12.2020 BGN'000 BGN'000 Cash and cash equivalents at January 1 2 030 2 860 Cash flows from operating activities Proceeds from clients and other debtors 422 598 398 820 Payments to suppliers and other creditors (439 332) (361 339) Payments, related to personnel (13 376) (11 388) Paid / refunded other taxes (1 852) (3 198) Other payments - (7) Net cash flows from operating activities (31 962) 22 888 Cash flows from investing activities Purchase of property, plant and equipment (6 219) (9 594) Sale of property, plant and equipment 853 3 495 Transactions with financial derivative instruments, net (2 541) 2 367 Payments, related to investments (2) - Dividends received - 60 Net cash flows from investing activities (7 909) (3 672) Cash flows from financing activities Interest bearing bank loans received, paid, net 52 289 (3 538) Trade loans granted and received, net (1 862) (5 490) Payments to lease contracts (7 060) (7 759) Interest paid (2 698) (2 877) Interest received 805 86 Dividends paid (1 000) - Bank taxes and comissions paid (711) (369) Net cash flows from financing activities 39 763 (19 947) Changes in cash and cash equivalents during the period (108) (731) Net effect of changes in exchange rates (70) (99) Cash and cash equivalents at period end 1 852 2 030 Emil Raykov Asya Yordanova (Executive Director) (Chief Accountant) Audit Company Marian Nikolov Primorska Audit Company Ltd. Registered auditor, Reg. N: 086 responsible for the audit Ilia Iliev Reg. N: 0601 Managing partner Auditor's report dated April 28, 2022 The accompanying notes are an integral part of these consolidated financial statements. CONSOLIDATED CASH FLOW STATEMENT for the year ended December 31, 2021 __________________ Consolidated financial statements as at December 31, 2021 7 ASYA STANCHEVA YORDANOV A Digitally signed by ASYA STANCHEVA YORDANOVA Date: 2022.04.28 16:41:17 +03'00' Emil Veselinov Raykov Digitally signed by Emil Veselinov Raykov Date: 2022.04.28 17:18:47 +03'00' MARIAN VASILEV NIKOLOV Digitally signed by MARIAN VASILEV NIKOLOV Date: 2022.04.28 18:24:15 +03'00' Iliya Nedelchev Iliev Digitally signed by Iliya Nedelchev Iliev Date: 2022.04.28 18:27:39 +03'00' AGRIA GROUP HOLDING AD Consolidated financial statements as of December 31, 2021 8 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, 2021 AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 9 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 1. Incorporation and registration. Legal status and legal framework “AGRIA GROUP HOLDING” (the parent company) is registered under Company File 3875 / 2007 of Varna District Court, with a seat and management address in the town of Varna, 111 Kniyaz Boris I Blvd., Business centre, floor 9. The parent company is registered in the Commercial Register at the Registry Agency, UIC 148135254. As of 2007 the shares of the parent company are listed for trading at Bulgarian Stock Exchange AD and thus, it has the status of a public company. With a decision of 2007 of the Financial Supervision Commission of Bulgaria the Group was entered in the register of public companies. The main activity of the parent company and its subsidiaries, together called the Group, consists in the production, storage, processing and sale of agricultural products. The parent company has one-tier management system and is managed by a Board of Directors and is represented by an Executive Director. These consolidated financial statements were approved for issue by the management of the Group on April 28, 2022. 2. Basis of preparation of the consolidated financial statements and accounting principles. 2.1. Applicable general framework for financial statements The Group manages its current accounting and prepares its financial statements in compliance with the requirements of the Bulgarian commercial and accounting legislation. These consolidated financial statements have been prepared in accordance with International Accounting Standards (IAS), an edition of the International Accounting Standards Board and adopted by the European Union. As at December 31, 2021, IASs include International Accounting Standards, International Financial Reporting Standards (IFRSs), Interpretations of the Standing Interpretations Committee and Interpretations of the Interpretations Committee of IFRSs. IASs are reissued every year and are valid only for the year of issue and include all changes, as well as new standards and interpretations. Many of them are not applicable to the activities of the Group due to the specific issues addressed in them. 2.2. Initial application of new and amended IFRSs effective for the current reporting period The management of the Group has complied with all standards and interpretations applicable to its operations and have been formally adopted by the EU at the date of preparation of these financial statements. The changes in the existing accounting standards, which came into force on January 1, 2021, have been reviewed and they do not require significant changes in the accounting policy applied during the current year. The Group’s management does not consider it necessary to disclose in its consolidated annual financial statements the title of these International Accounting Standards and the explanatory notes to them, which have been amended, formally approved or approved by the European Union and will enter into force in the future, without affecting or seriously affecting its activities. Such citation of names of standards and explanations to them, which are not applied in the company's activity, could lead to misunderstanding and misleading the users of information from the present consolidated financial statements. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 10 2. Basis of preparation of the consolidated financial statements and accounting principles (continued) 2.3. Accounting estimates and reasonable assumptions The application of IAS requires the group's management to make certain accounting estimates and reasonable assumptions in the preparation of these consolidated financial statements in order to determine the value of certain assets, liabilities, income and expenses. These estimates and assumptions are based on the best estimate of the management, considering historical experience and analysis of all factors influencing the circumstances at the date of preparation of the consolidated financial statements. The actual results could differ from those presented in these financial statements. 2.4. Consolidation The consolidated financial statements include the financial statements of the parent company and its subsidiaries as of December 31, 2021 represented as a whole. Subsidiaries are those entities in which the Group holds directly or indirectly more than 50% of the share capital or the management of the company and thus has the power to exercise control. Where necessary, adjustments have been made in the accounting policies of the subsidiaries so that they are in accordance with the accounting policies of the Group. All material internal transactions and balances between companies of the Group have been eliminated and the financial statements have been prepared by applying the full consolidation method. The results of the subsidiaries are included in the consolidated financial statements from the date of acquisition of control over them and cease to be consolidated from the date on which control is lost. In cases where the owners of the Group have a direct participation in a subsidiary as individuals, their share in the net assets of the company is treated as part of the reserves of the Group, and their share in the financial result for the period is presented in the financial result to the Group. 2.5. Subsidiaries As of December 31, 2021 and 2020 the parent company has direct ownership interests in the following subsidiaries which are included in the consolidated financial statements: Company Share of capital % Share of capital % 31.12.2021 BGN’000 31.12.2020 BGN’000 Korn Trading EOOD 100% 100% Korn security EOOD 100% 100% Agro EOOD 100% 100% Aris Agor EOOD 100% 100% Bora Invest EOOD 100% 100% Bora energy EOOD 100% 100% Toni M EOOD 100% 100% Kristera agro EOOD 100% 100% Kristera AD 99% 99% Elit-86 EOOD 100 % 100 % Gruver EOOD 100 % 100 % Tera Protect EOOD 100 % 100 % BD Pharma EOOD 100 % 100 % BD Agri EOOD 100 % 100 % Diasvet EOOD 100 % 100 % Agra EAD 100 % 100 % Kehlibar EOOD 100 % 100 % Silk Gas BG OOD 55 % 55 % AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 11 2. Basis of preparation of the consolidated financial statements and accounting principles (continued) 2.6. Non-controlling interest Minority (non-controlling) interest is that portion of the net assets and the financial result for the period that is not owned directly or indirectly by the group. 2.7. Business combinations. Company transformation According to the requirements of IFRS 3 Business Combinations, a business combination is a combination of individual companies or businesses into a single reporting entity. In the event that a company acquires control of another company that is not a separate business, the merger of these companies is not considered a business combination. Business combinations are accounted for using the purchase method in accordance with applicable standards. When in reporting periods after the acquisition of control of the subsidiary additional shares are purchased, the increase in investment is accounted for using the purchase method and the difference between the acquisition price and the share in the acquired identifiable assets, liabilities and contingent liabilities is recorded as goodwill, which is immediately reviewed for indicators of impairment. Where such indicators exist, the goodwill is impaired. Transformations of commercial entities which are carried out under the Bulgarian Commerce Act and relate to entities under common control are treated as restructuring within a business group. A merger of a company is not associated with cash and/or other payments and is presented in the statement of financial position of the receiving company or group at the historical cost of the identifiable assets, liabilities, and equity, which are consolidated line by line. Comparative data are restated as if the transformation is carried out at the beginning of the earliest comparative period. 2.8. Functional and presentation currency of the financial statements Functional currency is the currency of the primary economic environment in which the Group operates and in which cash is mainly generated and spent. It reflects the main transactions, events and conditions relevant to it. The Group keeps accounts and prepares its financial statements in the national currency of the Republic of Bulgaria - Bulgarian lev (BGN). This is the currency accepted as official in the main economic environment in which the Group operates. As of January 1, 1999, BGN has a fixed exchange rate against the EUR: BGN 1.95583 per EUR 1. The presentation currency in these consolidated financial statements is also BGN. Unless otherwise stated in the relevant place, the consolidated financial statements have been prepared and presented in thousands of BGN. 2.9. Foreign currency Transactions denominated in foreign currency are initially recorded at the official exchange rate of the Bulgarian National Bank (BNB) prevailing on the date of transaction. Exchange rate differences arising upon the settlement of monetary items or upon restatement of these items at rates, different from those that were initially recognized, are recognized in profit or loss and other comprehensive income for the period. Monetary items in foreign currencies as of December 31, 2021 and December 31, 2020, are translated using the closing exchange rates of BNB. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 12 2. Basis of preparation of the consolidated financial statements and accounting principles (continued) 2.9. Foreign currency (continued) The closing exchange rate of BGN to USD at the end of the current and prior reporting period is as follows: December 31, 2020: 1 USD = BGN 1.59386 December 31, 2021: 1 USD = BGN 1.72685 2.10. Comparative figures Under the Bulgarian accountancy legislation and IAS, the financial year ends on 31 December and companies are required to submit annual financial statements as at that date, together with comparative data as at this date the prior year. Where the group has made changes to its accounting policies which have been applied retrospectively and/or have adjusted and/or reclassifications of certain items, it presents comparative data for the two prior reporting periods in the consolidated statement of financial position and its accompanying notes as follows: - at the end of the prior reporting period; - at the beginning of the earliest comparative period. In other items of the consolidated financial statements and the accompanying notes, comparative data is presented only as at the end of the prior reporting period. 3. Definition and measurement of items of the financial statements 3.1. Property, plant and equipment and intangible assets Property, plant and equipment and intangible assets, excluding agricultural land, are presented in the consolidated statement of financial position at cost (acquisition cost) and reduced by the amount of amortization and any impairment. The agricultural land owned by the group is stated at revalued amount, which is determined as their fair value at the reporting date, less any impairment losses. Independent licensed appraisers who are appropriately qualified for such appraisals are used to determine fair value. A revaluation reserve was formed from the performed revaluations, presented as part of the capital. The revaluation reserve is recognized as retained earnings after the respective asset is written off. 3.1.1. Initial acquisition Upon initial acquisition, property, plant and equipment and intangible assets are measured at cost, which includes purchase price, customs fees and any other directly attributable costs of bringing the asset to working condition. Directly attributable costs are mainly: costs of site preparation, delivery and handling, installation, related professional fees of persons involved in the project, non-refundable taxes, etc. The group has set threshold value of BGN 700 (BGN seven hundred), under which the acquired assets, regardless of having the characteristics of non-current assets, are recognized as current expenses upon acquisition Property, plant, and equipment acquired through government grants are recognized at fair value at the date of acquisition. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 13 3. Definition and measurement of items of the financial statements (continued) 3.1. Property, plant and equipment and intangible assets (continued) 3.1.2. Subsequent costs and depreciation Repair and maintenance costs are recognized as current expenses when incurred. Subsequent expenses incurred in relation to property, plant and equipment that have the nature of replacement of certain components, significant parts and aggregates, or improvements and restructuring, and meet the requirements for asset recognition are capitalized in the carrying amount of the respective asset and its residual useful life is reviewed as at the capitalization date. At the same time, the non-depreciated amount of the components replaced is derecognised from the carrying amount of the assets and is recognised as current expenses for the period of restructure. Depreciation of property, plant and equipment and intangible assets is calculated by systematically applying the straight-line depreciation method. Depreciation rates are determined by the management of the group based on their estimated useful life. Depreciation is not charged on land, fully depreciated assets and assets in the process of acquisition or for assets classified as held for sale in accordance with the requirements of IFRS 5 Non-current Assets Held for Sale and The following rates in years of useful life have been applied by groups of assets: Group of assets; 2021 2020 Administrative and commercial buildings 25 25 Machinery and equipment 3,33- 10 3,33- 10 Transport vehicles 4 4 Computers, peripherals, software 2 2 Office equipment 6,67 6,67 Other tangible fixed assets 6,67 6,67 Intangible assets 6,67 6,67 3.2. Impairment of property, plant and equipment and intangible The carrying amounts of assets are reviewed at each year end to determine whether there is any indication of impairment. If any such indication exists, the group estimates the recoverable amount of the asset to determine the amount of impairment loss Where it is not possible to estimate the recoverable amount of an asset, the group estimates the recoverable amount of the cash-generating unit to which the class of assets belong. If the recoverable amount of an asset (or a cash generating unit) is lower than its carrying amount, the carrying amount shall be reduced to the recoverable amount of the asset (or a cash generating unit). Impairment loss is recognized as an expense in the statement of profit or loss and other comprehensive income when incurred. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognized as income in the statement of profit or loss and other comprehensive income when incurred, unless the relevant asset is carried at revalued amount, in which case the reversal of the impairment loss is treated as an increase in the revaluation reserve. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 14 3. Definition and measurement of items of the financial statements (continued) 3.3. Goodwill Goodwill represents the difference between the identifiable assets and liabilities measured at fair value and price actually paid for them in the course of a business combination. Goodwill is recognized as a non-depreciable asset and is tested annually for impairment. Impairment of goodwill cannot be reversed. 3.4. Investments in associates Non-current investments, representing shares and stakes in associates, are presented in the consolidated financial statements at cost, which is the fair value of the consideration paid, including direct costs of acquisition, less accumulated impairment losses. Investments in associates held by the group are subject to annual review for impairment. If conditions for impairment appear, it is recognized in the consolidated statement of profit or loss and other comprehensive income (in the profit or loss for the year). Upon purchase and sale of investments in associated, the entity applies the “closing date “of the transaction. Investments are derecognized when the rights deriving from them are transferred to other parties when the legal grounds for that occurred and thus the control over the economic benefits from the respective investments are considered lost. Profit/(loss) from the selling of such investments is presented respectively as “financial income “or “financial expenses” in the consolidated statement of profit or loss and other comprehensive income (in the profit or loss for the year). 3.5. Inventories Inventories on their acquisition are valued at acquisition cost, which includes all direct costs related to the delivery of the asset. Finished goods produced are valued at cost, including basic production costs. Work in progress is valued at the cost of basic production costs. The estimation of their consumption is performed by the method of weighted average price. At the end of the year, inventories are valued at the lower of cost and net realizable value, which is determined as the expected selling price in the course of the business, less the expected selling expenses. 3.6. Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The financial assets and financial liabilities are recognized in the statement of financial position when the entity becomes a party in the contractual relationship of the respective financial instrument generating this asset or liability. Financial assets are de-recognized from the statement of financial position after the contractual rights for receiving monetary flows have expired or the assets have been transferred and their transfer satisfies the requirements for derecognition in accordance with IFRS 9 Financial instruments. Financial liabilities are de-recognized from the Consolidated Statement of Financial Position only when they have been repaid, i.e., the obligation specified in the contract has been annulled, cancelled, or expired. The Group’s operations do not presuppose the existence of various financial instruments. The main financial instruments included in the Group’s Statement of Financial Position are presented further below. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 15 3. Definition and measurement of items of the financial statements (continued) 3.6. Financial instruments (continued) 3.6.1. Trade and other receivables Trade receivables are amounts due from customers for goods and services sold in the ordinary course of business. They are usually due for short-term settlement and are therefore classified as current. Trade receivables are initially recognized in the amount of unconditional remuneration due, unless they contain significant financing components. The Group holds trade receivables with the aim of collecting the contractual cashflows and therefore measures those at amortized cost using the effective interest method. Discounting is not performed in cases where its effect is insignificant. As at the date of preparing the financial statements, the Group assesses whether there is objective evidence for impairment with regard to the trade receivables, which are of individual significance. Impairment is being reported in case there is objective evidence that the company will not be able to collect all amounts, in accordance with the initial conditions, pertaining to the respective receivable. The amount of the impairment is the difference between the balance sheet value and the recoverable amount. The latter is the current value of the anticipated cashflows less the effective interest rate. The amount of the impairment of trade receivables during the current period is reported as income and expense. When a receivable is expected to be collected within a year, it is reported as a current asset. In all other cases, receivables are reported as non-current assets. Future cashflows determined for a group of financial assets, which are collectively measured for impairment, are determined on the basis of historical information pertaining to financial assets with credit risk features similar to the features of the group of financial assets. Assets for which individual impairment is applied are not included in an impairment group. The Group uses a simplified approach when reporting impairments of trade and other receivables and recognizes impairment losses as expected credit losses for the entire period. These represent the expected shortage of contractual cashflows, while considering the probability for non-performance at any moment of the financial instrument’s tenor. Significant financial difficulties of the liable person/entity, a probability for declaring it insolvent and in liquidation, financial restructuring, or impossibility for repayment of the debt (more than 30 days) are being regarded as an indicator that the trade receivable should be impaired. Upon measuring the anticipated credit losses under trade receivables, the Group has used a provision matrix, as well as its expertise in the field of credit losses under trade receivables and receivables from provided loans, to measure as estimates the expected credit losses over the financial assets’ entire tenor. The essential part of contracts with clients, as well as receivables under provided loans are concluded with trade companies, which are related parties, as a result of which the management assesses the probability of occurrence of credit losses as low. The performed analysis proves this assessment and as a result, no accrual of provisions for eventual credit losses is needed after the introduction of the new IFRS 9. 3.6.2. Cash and cash equivalents Cash and cash equivalents in BGN are stated at nominal value and cash denominated in foreign currency – at the closing exchange rate of BNB as of December 31 of the relevant year. For the purposes of preparing the cash flow statement, cash and cash equivalents are presented as non-restricted cash in hand and at banks. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 16 3. Definition and measurement of items of the financial statements (continued) 3.6. Financial instruments (continued) 3.6.3. Interest bearing loans Interest-bearing loans are initially recognised at fair value calculated through reduction of received cash proceeds by inherent transaction costs. After initial recognition, interest-bearing loans are measured at amortised cost where any difference between the initial value and the value at maturity date is reported in the profit or loss statement for the period of loan utilisation applying the effective interest rate method. No amortisation applies to received interest-bearing loans characterised with lack of transaction costs upon origination. Received bank overdrafts where the debtor may periodically utilise or repay the loan within a preliminary defined limit are treated in the same manner. Financial expenses, including direct loan attraction costs, are included in the profit or loss statement based on the effective interest method except for transaction costs related to bank overdrafts recognised in the profit or loss statement on a straight-line basis for the overdraft time period. Interest-bearing loans are classified as current when they are to be settled within twelve months after the end of the reporting period. 3.6.4. Payables to suppliers, other non-current payables and received advances Trade and other liabilities arise as a result of the received goods or services. No amortisation applies to short- term payables. Trade payables are recognized initially at fair value, while subsequently at amortized cost, using the effective interest rate method. 3.7. Share capital The share capital of the Group constitutes the parent company’s share capital as it is presented at nominal value and corresponds to its current legal registration. 3.8. Reserves Financial results, capitalized in prior periods, reserves of premiums associated with the issue of shares and reserves from the revaluation of some of the property, plant and equipment (see note 3.1.2), are presented as reserves in the consolidated statement of financial position of the Group. Group's shareholders may dispose of capital reserves upon decision of the General meeting. Revaluation reserves are recognized as realized by transferring them to retained earnings after the disposal of the respective asset. 3.9. Government grants Government grants for non-current assets and those to cover the costs incurred by the group are recognized as deferred income when there is reasonable certainty that they will be received and that the group will be able to meet all related requirements. Income from government grants for non-current assets is recognized in the statement of profit or loss and other comprehensive income on a systematic basis over the useful life of the asset. Government grants received as compensation for expenses incurred by the group are recognized in the statement of profit or loss and other comprehensive income in the period in which the costs associated with the grant were incurred. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 17 3. Definition and measurement of items of the financial statements (continued) 3.10. Leases On the effective date of the contract, the Group assesses whether the contract represents or contains a lease. Namely, whether the contract transfers the right to control the use of the identified asset for a certain period of time. The Group as a lesee The Group applies a single approach to the recognition and measurement of all leases, except for short-term leases (ie leases with a lease term of up to 12 months) and leases of low-value assets. The Group recognizes lease liabilities for the payment of lease payments and rights of use that represent the right to use the assets. Right-of-use assets The Group recognizes rights of use from the commencement date of the lease (ie the date on which the underlying asset is available for use). Assets with a right of use are measured at cost less accumulated depreciation and impairment losses and adjusted for any revaluation of lease obligations. The cost of an asset includes the sum of the recognized lease obligations, the incurred initial direct costs and the lease payments made on or before the commencement date of the lease, an estimate of the costs to be incurred by the lessee in dismantling and relocating the lease. the asset, the restoration of the site on which it is located or the restoration of the asset to the condition required under the terms of the lease, less any incentives received under the lease. Assets with a right of use are depreciated on a straight-line basis over the lease term. If, at the end of the lease term, ownership of the leased asset is transferred to the group, or the acquisition price reflects the exercise of a call option, the depreciation is calculated using the expected useful life of the asset. Lease obligations From the starting date of the lease, the Group recognizes lease liabilities measured at the present value of the lease payments that will be made over the lease term. Lease payments include flat-rate installments (including flat-rate payments) less any eligible lease incentives, variable lease payments that depend on an index or interest rate, and amounts that are expected to be paid under guarantees for residual value. Lease payments also include the cost of exercising a call option that is reasonably certain that it will be exercised by the group, as well as penalties for terminating the lease if the lease term reflects the group's exercise of the lease option termination. Variable lease payments that do not depend on an index or interest rate are recognized as an expense in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Group uses an intrinsic interest rate on loans at the commencement date of the lease, as the interest rate set in the lease cannot be reliably determined. After the commencement date, the amount of the lease obligations increases with the interest and decreases with the lease payments madeIn addition, the carrying amount of leased liabilities is revalued if there is a modification, change in lease term, change in lease payments (for example, changes in future payments as a result of a change in the index or interest rate used to determine those lease payments). or a change in the valuation of the option to purchase the underlying asset. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 18 3. Definition and measurement of items of the financial statements (continued) 3.10. Leases (continued) Short - term leases and leases of low - value assets The Group applies the exemption from recognition of short-term leases in respect of its short-term leases of buildings and vehicles (for example, leases with a lease term of 12 months or less from the starting date and which do not contain a purchase option). The Group also applies the exemption from recognizing leases of low-value assets to leases of office equipment that is considered to be of low value. Lease payments on short-term leases and leases of low-value assets are stated as an expense on a straight-line basis over the term of the lease. 3.11. Employee benefits 3.11.1. Defined contribution plans The Government of Bulgaria is responsible for providing pensions under defined contribution plans. The expenses related to the group’s obligation to make contributions under the defined contribution plans are recognized in the statement of profit or loss and other comprehensive income as they incur. 3.11.2. Annual paid leave The Group recognizes the undiscounted amount of the estimated costs related to annual leave expected to be paid to employees in return for their service for the past reporting period. 3.11.3. Defined retirement plans Pursuant to the requirements of the Labour Code, upon termination of the employment contract the employees are entitled to retirement benefits amounting to two gross monthly salaries when the overall length of service of the employee in the group is less than 10 years, or six gross monthly salaries, when the overall length of service is more than 10 consecutive years. The group recognizes as current expenses the discounted amount of the accrued employee retirement benefit payables, and current interest expense based on a valuation of a certified actuary. Valuations of long-term employee benefit obligations are carried out under the projected unit credit method and this assessment as at the date of statement of financial position shall be made by certified actuaries. The amount recognized in the statement of financial position represents the present value of the obligation and in the current period the effect of any liabilities to employees that refer to it was considered, and the effect of past years was reported in the periods to which it relates. 3.12. Income and expenses recognition 3.12.1. Income from sales of services and other income Income from sales and business expenses are accrued when incurred regardless of cash proceeds and payments. The reporting and recognition of income and expenses is performed in compliance with the requirements for a cause-and-effect relationship between them. Income is measured at the fair value of the consideration received or due to be received, less the amount of all granted discounts. The Group recognizes income, when the income amount can be reliably measured, in the cases when the Group can obtain future economic benefits, and also when it meets particular criteria for each activity of the Group, as specified further below. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 19 3. Definition and measurement of items of the financial statements (continued) 3.12. Income and expenses recognition (continued) 3.12.1. Income from sales of services and other income (continued) The amounts collected on behalf of third parties, such as sales taxes like the value added tax (VAT), are excluded from income. (a) Income from sales of goods and production Income from sales of goods and production are recognized when: The significant risks and rewards of ownership of the goods or products are transferred to the buyer; The company has not retained continuing managerial involvement or effective control over the goods (products) sold; It is likely that the company will receive economic benefits as a result of the transaction; Income and expenses directly related to the transaction can be reliably measured. (b) Income from rent of agricultural land and other assets Income from rents of assets is recognized for the reporting period for which the agricultural land or the other asset is rented. (c) Income from sales of services Income from sales of services (administrative and other) is recognized on monthly basis for the reporting period to which refers. Income from government grants, related to compensation of incurred expenses is recognized in current profits ot losses on a systematic basis for the same period during which expenses are recognized. Income from government grants, related to compensation for investment expenses for the acquisition of an asset are recognized in the current profit or loss on a systematic basis for the entire period of the asset’s useful life, usually in the amount of the amortization recognized as expense. Profit (loss) from sales of property, plant and equipment, intangbible assets and inventories are rcognized as other income (expenses). In case of an exchange of assets, income (expense) is being reported from the exchange transaction in the amount of the difference between the fair value of the received asset and the carrying amount of the exchanged asset. When economic benefits are expected to arise over several financial periods and their relatedness to the income may be defined only in general or indirectly, expenses are recognised in the profit or loss based on procedures for systematic and rational allocation 3.12.2. Financial income and expenses Borrowing costs that are directly attributable to an asset for which the acquisition, construction or production process necessarily takes a significant amount of time before it is ready for its intended use or sale should be capitalized as part of the cost of the asset. this asset. All other financial income and expense are recognized in profit or loss for all instruments measured at amortized cost using the effective interest method. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 20 3. Definition and measurement of items of the financial statements (continued) 3.12. Income and expenses recognition (continued) 3.12.2. Financial income and expenses (continued) The effective interest method is a method of calculating the amortised cost of a financial asset or liability and for allocating the profit or cost for interest rates during the respective period. The effective interest method is that where expected future cash payments or income are discounted during the life of the financial instrument or in certain cases for a shorter period, from the carrying amount of the financial asset or liability. During the calculation of the effective interest rate, the Group assesses the cash flows by taking into account all contractual conditions of the financial instrument, however, without including potential future credit losses resulting from impairment. The calculation includes fees, transaction costs, premiums or discounts paid or received between the parties to the contract, which are an integral part of the effective interest rate. All other financial income and expenses are reported through profit or loss for all instruments, measured at amortized cost using the effective interest rate method. 3.13. Income tax expense According to the Bulgarian tax legislation for 2021 and 2020, the companies owe corporate tax (corporate income tax), which is determined in the amount of 10% of the tax (taxable) profit. The tax rate for 2022 remains 10%. The taxation of the profit with current tax is based on the financial results of the individual subsidiaries, which are included in the consolidation and according to the requirements of the tax legislation in Bulgaria, no adjustments are made in connection with the preparation and presentation of consolidated financial statements. Up to 60% of the due corporate tax is transferred to the registered agricultural producers at the expense of investments and fulfillment of certain conditions. Income tax expenses represent the sum of current tax expense and tax effects on temporary differences. The current income tax expense is based on the taxable profit (tax loss) for the period using tax rates under the tax legislation as at the date of the financial statements. Deferred tax assets and/or liabilities are the amounts of taxes recoverable and payable in future periods in respect to deductible and taxable temporary differences. Temporary tax differences are differences between the carrying amount of an asset or liability recognized in the statements of financial position and its tax base, resulting from the application of the tax rules. Deferred income taxes are calculated under the liability method. Deferred tax liabilities are calculated and recognized for all taxable temporary differences while deferred tax assets are recognized only if reversal is probable and if the group will be able to generate enough income in the future from which they can be deducted. The effect of the recognition of deferred tax assets and/or liabilities is reported where the effect of the event that incurred them is reported. For events that affect the statement of profit or loss and other comprehensive income, the effect of deferred tax assets and liabilities is also recognized in the statement of profit or loss and other comprehensive income. For events that were recognized initially in equity (revaluation reserve), deferred tax assets and liabilities are also recognized at the expense of equity. Deferred tax assets and/or liabilities are offset in the financial statements when the income taxes are levied by the same tax authority. 3.14. Critical estimates for the application of the Group’s accounting policy. Key estimates and assumptions with high uncertainty. In the process of applying the accounting policy, the Group’s management makes estimates, which impact significantly these consolidated financial statements. Such estimates by definition are rarely equal to the actual results. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 21 3. Definition and measurement of items of the financial statements (continued) 3.14. Critical estimates for the application of the Group’s accounting policy. Key estimates and assumptions with high uncertainty (continued) As a result of their nature, they are subject to constant review and update, and they summarize the historical experience and other factors, including expectations about future events, which the management deems reasonable under the current circumstances. The estimates and assumptions entailing significant risk of material adjustment in the carrying amounts of assets and liabilities during the next financial year are stated further below. 3.14.1. Revaluation of property, plant and equipment The management has adopted a policy of appointing and using the professional services of independent licensed appraisers to determine the fair values of the agricultural lands. The following approaches and valuation methods for measuring the fair value of different types of property, plant and equipment have been applied in this valuation: Comparative market method – derives an indicative value by comparing the asset subject to valuation with identical or similar assets for which price information is available, which is accepted with greater weight due to the nature of the properties and their current use; Income approach – derives indictive value by presenting future cashflows to a single current capital amount. For application of this approach, it is necessary to determine the permanent generarated net annual income of the real estate (land rent), which is capitalized to present the net current value. Such revaluations should be made frequently enough in the cases when there are indications that the fair value of a certain asset class has changed considerably. 3.14.2. Retirement benefit obligations Retirement benefit obligation is determined by actuarial valuation. This valuation requires assumptions to be made about the discount rate, future wages growth, staff turnover and mortality rates. Due to the long-term nature of staff income at retirement, these assumptions are subject to significant uncertainty. 3.14.3. Useful life of property, plant and equipment and intangible assets The financial reporting of property, plant and equipment and intangible assets includes the use of estimates of their expected useful lives and transfer values, which are based on judgments by the management of the Company. 3.14.4. Impairment of accounts receivable The management estimates the amount and period of expected future cash flows associated with receivables based on experience with current circumstances in the following groups: individual accounts, households and other retail and receivables. Due to the inherent uncertainty of this assessment, actual results may differ from those expected. The Group's management reviews the estimates from previous years and the actual results from the previous year. 3.15. Determining fair values Some of the accounting policies and disclosures of the Group require an assessment of fair values for financial and non-financial assets and liabilities. When estimating the fair value of an asset or liability, the Group uses observable data, insofar as possible. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 22 3. Definition and measurement of items of the financial statements (continued) 3.15. Determining fair values (continued) The fair values are being categorized in various levels in the Fair Values Hierarchy based on input data in the valuation techniques, as follows: • Level 1: Quoted prices (non-adjusted) on active markets for similar assets or liabilities. • Level 2: Input data other than quoted prices included in Level 1, which directly (i.e. as prices) or indirectly (i e. obtained through prices), are accessible for asset or liability monitoring purposes. • Level 3: Input data about the asset or liability, which are not based on observable market data (non- observable input data). If the input data used for measuring the fair value of an asset or liability may be categorized in different levels in the Fair Values Hierarchy, then the assessment of the fair value is categorized in its entirety at that same level of the Fair Values Hierarchy, which input information is of significance for the overall assessment. The Group recognizes transfers between the levels of the Fair Values Hierarchy as at the end of the reporting period, during which the change has occurred. More information about the assumptions made based on the assessment of the fair values is included in the respective appendices. 4. Property, plant and equipment Land BGN’000 Buildings BGN’000 Machinery and equipment BGN’000 Transprort vehicles BGN’000 Right-of- use assets BGN’000 Construction in progress BGN’000 Total BGN’000 Cost: Balance on January 1, 2021 123,708 33,251 38,488 15,012 13,015 6,600 230,074 Additions 2,508 5,657 1,036 2,921 9,507 3,158 24,787 Disposals (537) (118) (489) (848) (2,406) (6,531) (10,929) Balance on December 31, 2021 125,679 38,790 39,035 17,085 20,116 3,227 243,932 Accumulated depreciation: - Balance on January 1, 2021 - 10,139 20,088 11,721 5,263 - 47,211 Charged for the period - 1,436 3,172 1,753 4,334 - 10,695 Disposals - (50) (483) (801) (2,406) - (3,740) Balance on December 31, 2021 - 11,525 22,777 12,673 7,191 - 54,166 Carrying amount on December 31, 2021 125,679 27,265 16,258 4,412 12,925 3,227 189,766 Carrying amount on December 31, 2020 123,708 23,112 18,400 3,291 7,752 6,600 182,863 The Group has lease agreements for land, office space and vehicles used in the ordinary activities. The terms are between 2 and 19 years with extension options. To secure investment and working capital loans received by the Group, the Group has established a pledge and mortgage in favor of the creditor banks on property, plant and equipment, with a carrying amount of BGN 127,583 thousand (see also notes 13 and 18). AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 23 4. Property, plant and equipment (continued) The Group has included in the property, plant and equipment assets acquired under financial lease agreements with a carrying amount of BGN 5,745 thousand (see also note 14). To determine the fair value of the land owned, the Group uses the services of a licensed appraiser with recognized professional qualifications and experience. Fair value is based on the market value, which is the expected amount for which a property can be exchanged on the valuation date between a willing buyer and seller in a market transaction after the relevant marketing in which the parties have acted with awareness The market value is determined as a weighted-average value of the results obtained by the individual methods and weights, expertly determined according to the reliability of the information used and the experience of the appraiser. The fair value of land is categorized as the fair value of Level 3 based on the inputs for the valuation technique used. Assets under construction presented in the consolidated statement of financial position represent expenses incurred by the Group for construction and acquisition of property, plant and equipment, which at the end of the reporting period have not been completed and have not been put into operation as follows: 31.12.2021 BGN’000 31.12.2020 BGN’000 Construction and modernization of warehouses, agricultural and production facilities 3,227 6,600 Total 3,227 6,600 5. Intangible assets Software BGN'000 Rights-of-use BGN'000 Intangible assets under construction BGN'000 Total BGN'00 0 Cost: Balance on January 1, 2021 366 107 93 566 Additions 6 - 4 10 Disposals - - - - Balance on December 31, 2021 372 107 97 576 Accumulated depreciation: Balance on January 1, 2021 305 85 - 390 Charged for the period 54 4 - 58 Disposals - - - - Balance on December 31, 2021 359 89 - 448 Carrying amount on December 31, 2021 13 18 97 128 Carrying amount on December 31, 2020 61 22 93 176 6. Non-curent investments The non-current investments presented in the consolidated statement of financial position represent the 50% of shares of Agro Oil Consult OOD and Korn Star OOD, held by the Group as of December 31, 2021 and 40% of the shares in Korn Star OOD, which are reported at acquisition price. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 24 7. Non-curent receivables During the previous period, the Group has agreed on the settlement of a trade receivable under deferred payment terms. The receivable is to be settled after 2022. The receivable is secured by a real estate, owned by the debtor. An interest of 5 % p.a. is accrued. 8. Invenotries December 31, 2021 BGN’000 December 31, 2020 BGN’000 Goods 84,718 37,546 Materials 20,600 18,950 Work in progress 9,206 8,329 Production 4,218 3,488 Total 118,742 68,313 8.1. Goods December 31, 2021 BGN’000 December 31, 2020 BGN’000 Sunflower 42,146 9,410 Wheat 21,214 8,574 Corn 20,989 17,526 Fertilizers 369 - Barley - 2,036 Total 84,718 37,546 8.2. Work in progress December 31, 2021 BGN’000 December 31, 2020 BGN’000 Wheat 4,016 4,134 Sunflower 2,366 1,516 Corn 2,039 2,121 Barley 785 558 Total 9,206 8,329 8.3. Production December 31, 2021 BGN’000 December 31, 2020 BGN’000 Raw sunflower oil 3,151 2,885 Refined oil 731 599 Cereals 333 - Useful waste 3 4 Total 4,218 3,488 AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 25 8. Invenotries (continued) In accordance with IAS 41 Agriculture, the Group should measure unprocessed agricultural produce at fair value at the point of harvest. The management of the Group has decided not to carry our such measurement on an ongoing basis during the reporting period, as in the ordinary course of business finished goods are sold on the market through their sale, and the amounts of agricultural produce in stock as at the reporting date are immaterial. The management also believes that the application of this policy does not lead to a change in the reported financial results of the group or a change of current stocks of inventories as compared to the results that would have been reported if the Group had measured unprocessed agricultural products at fair value at the date of production. As collateral the Group has established a pledge on inventories in relation to investment and working capital bank loans (see also note 13 and 18). 9. Accounts receivable and loans granted December 31, 2021 BGN’000 December 31, 2020 BGN’000 Trade loans receivables, incl. interests 43,577 40,688 Trade receivables 46,090 14,264 Impairment of trade receivables (3,183) (1,367) Trade receivables, net of impairment 42,907 12,897 Advances paid 35,739 23,577 Impairment of advances paid (575) - Advances paid, net of impairment 35,164 23,577 Receivables from gorernment grants 3,362 3,325 Taxes recoverable 1,463 241 Prepaid expenses 319 603 Receivables from employees 183 660 Other receivables 496 62 Total 127,471 82,053 9.1. The Group has provided trade loans to other trade companies amounting to BGN 43,577 (as of December 31, 2020 - BGN 40,688 thousand). Loan interest for 2021 is 3% p.a. Part of the loans are to be repaid till 2022 ut according to the conditions of the contracts signed, in which no repayment schedule has been provisioned, the amounts due may be repaid before the set term. Thus, the management of the Group treats the receivables according to these loan contracts as current. The short-term trade loans provided to related companies and trade counterparties are intended to support and finance the activities of these companies for common business and strategic purposes. 9.2. The receivables from clients as of December 31, 2021, 2020 are mainly from sales of grain, production, and sales of services. Typically, the Group negotiates the payment of receivables on sales of goods and products within 90 days with its clients The Group uses loans from commercial banks in order to offset the credit extended to customers. The credit periods agreed with customers on sales of services do not exceed 60 days. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 26 9. Accounts receivable and loans granted (continued) The aging analysis of receivables from clients is presented below: 31.12.2021 BGN’000 31.12.2020 BGN’000 Not overdue 6,869 3,224 Up to 90 days 32,350 5,030 90 – 180 days 2,405 3,610 180 – 360 days 819 833 Over 360 days 464 200 42,907 12,897 10. Cash and cash equivalents December 31, 2021 BGN’000 December 31, 2020 BGN’000 Cash and cash equivalents in BGN 1,656 1,847 Cash and cash equivalents in foreign currency 123 153 Blocked cash and cash equivalents 73 30 Total 1,852 2,030 The Group’s cash and cash equivalents are in bank accounts in banks with stable long-term ratings. The management has assessed the expected credit losses on cash and cash equivalents. The assessed amount is less than 0.3% of the cash gross value, deposited in financial institutions due to which it was deemed as immaterial and was not accrued in the financial statements of the Group as of December 31, 2021. Blocked cash and cash equivalents as of December 31, 2021, presented in the consolidated cashflow statement are in connection with blocked funds on a current bank account, which serve as collateral in connection with a precautionary measure imposed by a private bailiff in an upcoming enforcement case. 11. Share capital The fully paid-in share capital of the parent company amounting to BGN 6,800 thousand is presented at par value and corresponds to the court decision for registration. As at the end of the reporting period, shareholders in the Group are: As of December 31, 2021 Name Number of shares: % of capital „EMRA” EOOD 2 795 500 41.11% „KOMERS”EOOD 1 838 385 27.04% Svetlomir Iliev Todorov 692 434 10.18% UPF” DOVERIE” 338 624 4.98% Other individuals and companies with less than 5 % 1 135 057 16.69% Total 6 800 000 100.00% As of December 31, 2020 AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 27 11. Share capital (continued) Name Number of shares: % of capital „KOMERS”EOOD 2 795 500 41.11% Svetlomir Iliev Todorov 1 781 170 26.19% UPF” DOVERIE” 684 992 10.07% Other individuals and companies with less than 5 % 341 582 5.02% Total 1 196 756 17.61% Total 6 800 000 100.00% 12. Reserves The reserves presented in the consolidated statement of financial position include premiums, the accumulated gains of past years, reserves from subsequent evaluations of farmland and buildings, as well as reserves from revaluation of obligations to staff arising from defined benefit plans. 13. Interest bearing bank loans December 31, 2021 December 31, 2020 Type of currency Contracted loan amount Maturity Non- current portion Current portion Total Non- current portion Current portion Total BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Investment loans EUR 8,200 30.09.2028 9,815 1,784 11,599 11,593 1,800 13,393 BGN 6,000 30.08.2027 3,111 667 3,778 3,778 667 4,445 BGN 6,000 02.12.2026 5,288 668 5,956 - - - BGN 3,912 12.09.2026 1,564 428 1,992 1,992 428 2,420 BGN 5,867 20.02.2025 1,550 666 2,216 2,214 666 2,880 BGN 5,867 20.03.2024 978 653 1,631 1,630 653 2,283 EUR 2,000 29.02.2024 559 559 1,118 1,211 559 1,770 EUR 2,000 31.01.2024 698 559 1,257 1,164 559 1,723 EUR 2,000 30.12.2022 - 559 559 559 559 1,118 EUR 2,000 30.12.2021 - - - - 559 559 BGN 4,000 04.02.2027 3,670 330 4,000 - - - EUR 357 30.03.2022 - 36 36 37 145 182 BGN 10,000 30.04.2024 1,630 1,116 2,746 2,746 1,116 3,862 BGN 6,000 14.08.2025 1,901 713 2,614 2,613 713 3,326 BGN 10,000 01.12.2026 4,445 1,111 5,556 5,556 1,111 6,667 BGN 5,000 28.06.2028 2,895 526 3,421 3,421 527 3,948 Total 38,104 10,375 48,479 38,514 10,062 48,576 Interest on investment loans is payable on a monthly basis, with the agreed interest rates in the range of one- month and three-month EURIBOR, increased by 1,3 and 3,5 % points. Investment loan agreements also contain clauses for maintaining certain financial ratios, the implementation of which the Group's management currently controls and communicates with the creditor banks. The liabilities on the loans disclosed above have been secured for the benefit of bank creditors with: - Contracted mortgages on real estate owned by the Group (see note 4); - Pledges on plant and equipment owed by the Group (see note 4); - Pledges on trade accounts receivable. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 28 14. Lease contracts obligations Operating lease obligations The operating lease obligations presented in the Statement of Financial Position include the liabilities of the Group under leases of land, buildings and vehicles, which are recognized in accordance with the requirements of IFRS 16 Leasing (see also item 3.10 and item. 4). Finance lease obligations The Group has concluded finance lease contracts for the acquisition of cars, machinery, equipment and agricultural machinery with a deadline for repayment of the last installments on them in the period 2021 - 2026. According to the terms of the contracts, the group owes an annual interest rate of three-month EURIBOR, increased by a margin of 1.8 % to 6.51 % on the outstanding part of the contractual obligation. As of December 31, 2021 the financial leasing liabilities amounting to BGN 4,745 thousand (December 31, 2020- BGN 4,437 thousand). The short-term part of them, payable in the next 12 months after the reporting periods presented in this report, is presented in current liabilities (see item 18). 15. Deferred tax assets/(liabilities) December 31, 2021 BGN’000 December 31, 2020 BGN’000 Deferred tax assets: Tax effect of impairment of receivables 362 137 Tax effect of receivables written-off 75 24 Tax effect of current employee benefits 28 37 Tax effect of non-current employee benefits 23 16 Tax effect of unutlized paid leaves 15 11 Ttoal deferred tax assets 503 225 Deferred tax liabilities: Tax effect on revaluation reserve of non-depreciable assets (5,212) (4,986) Tax effect of non-current assets (3) (270) Total deferred tax liabilities (5,215) (5,256) Deferred tax assets (liabilities), net (4,712) (5,031) 16. Trade loans In November 2018 the Group entered into a loan agreement with a legal entity amounting to BGN 724 thousand. The amount was utilized in November 2018. The agreed interest rates are in the range of 3%. The deadline for repayment of the loan is April 2023. As of December 31, 2021 the loan has been fully utilized, the outstanding principal under the contract amounts to BGN 724 thousand (December 31, 2020 - BGN 724 thousand). The current partion as of December 31, 2021 amounts to BGN 579 thousand (December 31, 2020 - BGN 434 thousand). AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 29 17. Other non-current liabilities 17.1. Non-current liabilities to personnel The movement of non-current liabilities to employees is as follows: December 31, 2021 BGN’000 December 31, 2020 BGN’000 Opening balance 294 247 Current service cost 71 51 Expenses paid during the period (5) (22) Recognized actuarial gains/(losses) 2 (2) Financial expenses for future obligations 2 1 Expenses recognized in profit and loss 70 28 Revaluation of retirement benefit obligations regognized in other comprehemsive income 32 19 Closing balance 396 294 The main actuarial assumptions used in the calculations are as follows: December 31, 2021 BGN’000 December 31, 2020 BGN’000 Discount rate 0,6 % 0,5 % Expected increase of salaries 3 % 5 % Weighted-average retirement age for man 64 64 Weighted average retirement age for woman 61 61 In addition, in the event of early retirement due to incapacity for work, staff are entitled to benefits of up to two monthly salaries, increased by 100% for a minimum of five years of service and provided that no such benefits have been received in the last five years. The demographic statistical assumptions used are based on the following: - rate of staff turnover in the group during the past few years; - mortality rate of the population of Bulgaria for the period 2018 - 2020 according to the National Statistics Institute; - statistics of the National Health Information Centre on disability of the population and early retirement. 17.2. Government grants The Group has received financial assistance under the programme for rural development granted by the State Fund "Agriculture" during the period 2014-2020. The grant amounts to BGN 1,331 thousand. Government grants, presented in statement of financial position as of December 31, 2021, amounting to BGN 983 thousand (December 31, 2020 – BGN 1,085 thousand) represent deferred income for group of assets acquired, which should be recognized in statement of profit or loss and other comprehensive income on a systematic basis during the lifetime of assets. The current portion amounts to BGN 102 thousand (December 31, 2020 – BGN 102 thousand). AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 30 18. Current assets 18.1. Current interest-bearing bank loans Type of currency Contracted loan amount in BGN’000 Maturity December 31, 2021 December 31, 2020 BGN’000 BGN’000 Revolving working capital loans EUR 10,000 30.11.2022 19,560 19,560 BGN 6,000 30.06.2022 3,367 3,282 EUR 30,000 12.04.2022 54,535 41,844 BGN 2,000 30.01.2022 2,000 2,000 BGN 4,000 30.01.2022 3,504 2,550 EUR 5,000 31.01.2022 86 3,843 EUR 30,000 31.12.2022 43,319 - EUR 3,000 30.07.2022 65 - BGN 280 30.01.2022 280 277 BGN 1,500 30.01.2022 1,500 1,499 BGN 720 30.01.2022 585 720 EUR 10,000 12.04.2022 17,467 18,109 Total 146,268 93,684 Interest on working capital loans is due monthly, with the agreed interest rates in the range of one-month and three-month EURIBOR, increased by 1.20 and 3 percentage points. In favor of the creditor banks the following collaterals are established: - - Agreed mortgages on real estate owned by the Group (see note 4); - - Special pledge on machinery and equipment owned by the Group (see note 4); - - Special pledges on materials, goods and finished products owned by the Group (see note 8); - - Special pledges on trade receivables, as well as current and future receivables of the Group from State Fund "Agriculture" 18.2. Current trade loans In the previous year, the Group received loans from trade companies amounting to BGN 10,000 thousand. The loan interests are 3.2% per annum. As of December 31, 2021, the loan obligation amounts to BGN 4,300 thousand principle and BGN 1,402 thousand interest (December 31, 2020 – BGN 4,300 thousand principle and BGN 1,264 thousand interest). The loan is unsecured. 18.3. Trade and other liabilities December 31, 2021 BGN’000 December 31, 2020 BGN’000 Liabilities to suppliers 32,734 4,613 Current portion of non-current interest-bearing loans, incl. interests 10,375 10,062 Current portion of operating lease obligations 3,065 2,052 Tax obligations 2,821 560 Current portion of finance lease obligations 1,674 1,668 Liabilities to personnel 1,021 772 Current portion of non-current trade loans, incl. interest 647 480 Advances received 603 7,979 Social security 279 223 Current portion of government grants 102 102 Other liabilities 670 892 Total: 53,991 29,403 AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 31 19. Income from sales Year ended 31.12.2021 BGN’000 Year ended 31.12.2020 BGN’000 Income from sales of goods and materials 375,431 305,601 Income from sales of production 50,899 28,118 Income from sales of services 4,495 4,571 Total: 430,825 338,290 20. Income from government grants Year ended 31.12.2021 BGN’000 Year ended 31.12.2020 BGN’000 Income from grants, relate to expenses 6,190 5,961 Total: 6,190 5,961 21. Other income Year ended 31.12.2021 BGN’000 Year ended 31.12.2020 BGN’000 Penalty income 2,386 2,972 Profit from sales of non-current assets, net 345 344 Income from sales of non-current assets 891 558 Carrying amount of assets sold (546) (214) Other income 490 372 Total: 3,221 3,688 22. Materials expenses Year ended 31.12.2021 BGN’000 Year ended 31.12.2020 BGN’000 Main materials 51,587 34,308 Fuel and lubricants 6,039 4,745 Spare parts and materials for repairs 2,079 2,155 Electricity, gas and water 1,202 745 Office materials and consumables 76 48 Other 475 500 Total: 61,458 42,501 AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 32 23. Hired services Year ended 31.12.2021 BGN’000 Year ended 31.12.2020 BGN’000 Logistics, processing, and export expenses 5,080 4,507 Production related hired services 3,812 1,702 Insurances and subscriptions 853 853 Consulting services 755 1,093 Taxes 551 570 Rents 428 246 Maintenance and repairs 241 185 Notary, legal and administrative services 180 220 Communication expenses 102 71 Other 569 461 Total: 12,571 9,908 Production related hired services include all costs of rents, lease of agricultural machinery, as well as agricultural services. Logistics expenses are related to the transportation of finished goods and production. Insurances are made on non-current assets - agricultural machinery and attached equipment, owned by the Group. The expenses for audit services of the companies of the Group for 2021 and 2020 amounts to BGN 52 thousand (2020:BGN 52 thousand). The auditors of the Group did not provide other consulting services, except those for the independent financial audit. 24. Personnel expenses Year ended 31.12.2021 BGN’000 Year ended 31.12.2020 BGN’000 Salaries and wages 12,157 9,748 Social security 1,841 1,733 Unutilized paid leaves 63 74 Total: 14,061 11,555 25. Other expenses Year ended 31.12.2021 BGN’000 Year ended 31.12.2020 BGN’000 Receivables written-off 686 356 Advertising expenses and donations 68 44 Business trip expenses 31 21 Interests on tax liabilities and penatlies 3 120 Expenses for penalties and compensations - 1 Other 32 100 Total: 820 642 AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 33 26. Impairment Year ended 31.12.2021 BGN’000 Year ended 31.12.2020 BGN’000 Impairment of accounts receivable 2,146 1,281 Impairment of construction in progress expenses - 286 Receivables written-off - 245 Total 2,146 1,812 27. Financial income Year ended 31.12.2021 BGN’000 Year ended 31.12.2020 BGN’000 Interest income 985 969 Profit from operations with financial instruments 216 1,498 Income from dividends - 60 Total 1,201 2,527 28. Financial expenses Year ended 31.12.2021 BGN’000 Year ended 31.12.2020 BGN’000 Interest expenses on loans and finance leases 3,014 3,327 Loss from operations with financial assets 2,724 - Bank taxes and commissions 752 546 Expenses on foreign exchange transactions 68 140 Total 6,558 4,013 29. Income tax expense December 31, 2021 BGN’000 December 31, 2020 BGN’000 Accounting profit 25,617 11,615 Applicable tax rate 10% 10% Income tax at applicable tax rate 2,562 1,161 Net tax effect of permanent differences 176 449 Total income tax expense/(benefit) 2,738 1,610 30. Earnings per share and dividends Earnings per share are calculated using the net profit, which is subject to distribution among the shareholders of the Group. Year ended 31.12.2021 Year ended 31.12.2020 Profit attributable to shareholders (in BGN) 22,879,000 10,005,000 Weighted-average number of shares 6,800,000 6,800,000 Earnings per share (in BGN per share) 3.36 1,47 In 2021 and 2020 the Group has not distributed dividends. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 34 31. Financial instruments and financial risk management The carrying amounts of assets and liabilities as of December 31, 2021 and 2020 by categories in accordance with IFRS 9 Financial instruments are presented in the following tables: Financial assets December 31, 2021 BGN’000 December 31, 2020 BGN’000 Loans granted 43,577 40,688 Trade receivables 78,071 36,474 Cash and cash equivalents 1,852 2,030 Total 123,500 79,192 Financial liabilities December 31, 2021 BGN’000 December 31, 2020 BGN’000 Interest bearing loans liabilities 199,771 147,284 Finance lease obligaions 4,745 4,437 Operating lease obligations 12,061 7,109 Trade liabilities 33,337 12,592 Total 249,914 171,422 31.1. Financial risk factors The use of financial instruments exposes the group to market, credit and liquidity risk. These paragraphs provide information on the objectives, policies, and processes for managing these risks, as well as on the capital management. The financial risks are currently identified, measured, and monitored using various controlling mechanisms introduced for determining adequate prices of products and services, the cost of borrowings and the forms of maintaining free liquid funds without allowing an unreasonable concentration of a certain risk. Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk includes currency risks, interest rate risk and price risk. Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation to the terms of a contract. Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. 31.1.1. Currency risk The Group trades in a currency other than its functional currency, which is why it is exposed to risk related to possible changes in exchange rates. Such risk arises mainly from changes in the US dollar exchange rate, as the Group makes purchases denominated in US dollars. Transactions in euros do not expose the group to currency risk, as since January 1, 1999 BGN has been pegged to this currency. The sensitivity analysis to foreign exchange risk shows that the financial results of the Group would not change significantly due to changes in the exchange rate, as the group does not have significant foreign exchange risk exposures. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 35 31.1. Financial risk factors (continued) 31.1.2. Interest rate risk The Group is exposed to interest rate risk because some of the loans received have a variable interest rate agreed as a base interest rate (EURIBOR), increased by a certain margin. In 2021 and 2020, loans with variable interest rates are in EUR and BGN. The interest rates are specified in the respective notes. December 31, 2021 BGN’000 December 31, 2020 BGN’000 Instruments with fixed interest rate Financial assets 43,577 40,688 Financial liabilities 5,024 5,024 Instruments with floating interest rate Financial assets - - Financial liabilities 194,747 142,260 The sensitivity analysis to interest rate risk is based on the assumption that interest rate positions with variable interest rates at the date of the statement of financial position existed in the same amount throughout the year and reasonably possible increase/decrease in interest rates by 0.5%. If interest rates were higher/lower by 0.5%, provided that all other variables were constant, the financial result after taxes for the year would be BGN 974 thousand (December 31, 2020 - BGN 711 thousand) lower/higher. 31.1.3. Credit risk Credit risk is the risk that one party to a financial instrument will fail to meet its obligation and thereby cause a loss to the other. The financial assets that potentially expose the group to credit risk are mainly sales receivables and interest loans. The Group is mainly exposed to credit risk in the event that customers fail to meet their obligations. The Group's policy in this area is aimed at selling to customers with an appropriate credit reputation and the use of adequate collateral as a means of limiting the risk of financial losses. The credit quality of customers is assessed considering financial condition, past experience and other factors. Credit limits have been introduced, compliance with which is monitored regularly. 31.1.4. Liquidity risk Liquidity risk is the risk that the group will fail to pay its financial liabilities when they fall due. The policy in this area is aimed at ensuring the availability of sufficient liquid funds, which can be used to settle liabilities when they fall due, including in emergency and unforeseen situations. The following table presents the agreed maturities of financial liabilities based on the earliest date on which the Group may be required to pay them. The table shows the undiscounted cash flows, including principal and interest: AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 36 31.1. Financial risk factors (continued) 31.1.4. Liquidity risk (continued) December 31, 2021 BGN’000 Up to one year Between two and five years Over five years Total Interest bearing loans liabilities 157,222 41,656 893 199,771 Finance lease obligations 1,674 2,801 - 4,475 Trade and other liabilities 33,337 - - 33,337 192,233 44,457 893 237,583 December 31, 2020 BGN’000 Up to one year Between two and five years Over five years Total Interest bearing loans liabilities 108,480 30,355 8,449 147,284 Finance lease obligations 1,668 2,769 - 4,437 Trade and other liabilities 12,592 - - 12,592 122,740 33,124 8,449 164,313 31.2. Capital management The Group manages its capital to operate as a going concern while it seeks to maximize returns to shareholders through the optimization of the debt-to-equity ratio (return on capital invested). The aim of the management is to maintain the confidence of investors, creditors, and the market and to ensure the future development of the group. The group's management monitors the capital structure based on the net debt-to-equity ratio. Net debt includes non-current and current interest-bearing loans and non-current and current finance lease liabilities, less cash. Share capital, reserves and accumulated profits form the equity of the Group. December 31, 2021 BGN’000 December 31, 2020 BGN’000 Debt 204,246 151,721 Cash and cash equivalents (1,852) (2,030) Net debt 202,394 149,691 Equity 178,302 156,453 Debt to equity ratio 1.14 0.96 The management of the group determines the amount of required capital in proportion to the level of risk which characterize different activities. Maintenance and adjustment of the capital structure is carried out in relation with changes in economic conditions, as well as the level of risk inherent in the assets (projects) which are invested in. The main instruments used to manage the capital structure are selling assets to reduce the level of debt, etc. All decisions about changes in this direction consider the balance between the costs and risks inherent in the various sources of funding. AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 37 31.1. Financial risk factors (continued) 31.3. Fair value The Group's policy is to disclose in its financial statements the fair value of financial assets and liabilities, especially where quoted market prices exist. The concept of fair value assumes realisation of financial instruments by way of a sale. However, in many cases, particularly with respect to trade receivables and payables and loans, the group expects to realize these financial assets through their total payment or repayment over time. Therefore, they are presented at their nominal value or amortized cost. Most of the financial assets and liabilities are short-term trade receivables and payables and short-term loans, therefore their fair value approximates their carrying amount. The management of the group considers that in the current circumstances the estimates of financial assets and liabilities presented in the statement of financial position are as reliable, adequate, and reliable as possible for the purposes of financial reporting. 32. Disclosure of related parties transactions During the year, the following major transactions were made with related parties, key management personnel, shareholders, as well as with other companies treated as related parties. 32.1. Key management personnel remuneration Key management personnel of the Group include the Executive Director and the members of the Board of Directors. The key management personnel remuneration includes the following costs: 2021 2020 BGN’000 BGN’000 Current remmunerations: Salaries 564 474 Total 564 474 In connection with the signed contract on February 10, 2020, a loan was granted to the executive director of the company Emil Raykov. The company charges an annual interest rate of 3%. By the end of 2021, the due amounts related to this loan have been settled. The Group has entered into transactions with its shareholders as well as with other companies treated as related parties. 32.2. Transactions with shareholders The transactions and outstanding balances as of December 31, 2021 are as follows: Outstanding balance Name Type of transaction Turnover Receivable Liabilitiy BGN’000 BGN’000 Komers AD Trade transactions – sales 15 1 - Loans granted - 5,896 - Interest on loans granted 239 2,862 - Total: х 8,759 - AGRIA GROUP HOLDING AD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 2021 (continued) Consolidated financial statements as of December 31, 2021 38 32. Disclosure of related parties transactions (continued) 32.3. Transactions with other related parties Agro Oil Consult OOD Trade transactions – purchases 1,599 - 8 Loans granted - - 724 Interest on loans granted 22 - 68 Total: х - 800 All related party transactions are ongoing. The terms of the transactions do not differ from the market terms, which are applied between unrelated parties. 33. Events after the reporting period 33.1. On March 16, 2022, a change in the ownership structure of the subsidiary Silk Gas BG OOD was reflected in the Commercial Register at the Registry Agency. As a result, according to the entered circumstances, on February 24, 2022 a contract for sale of company shares was concluded, by virtue of which Agria Group Holding AD acquired the remaining 225 shares of the capital of this company. As of March 16, 2022, Silk Gas BG is a sole proprietorship with limited liability (EOOD), with the sole owner of the capital being Agria Group Holding AD. 33.2. On March 31, 2022, the associated company Korn Star OOD, according to a contract, acquired the commercial enterprise of ZKPU "Vedrina". The value that the Group paid for this acquisition amounts to BGN 1,300 thousand. 33.3. On April 7, 2022, the following changes related to the subsidiary Korn Security EOOD were reflected in the Commercial Register at the Registry Agency: - The share capital of the company was increased by a cash contribution of BGN 12,200 thousand. As a result, the share capital of the company amounts to BGN 12,205 thousand, distributed into 122,050 shares, with a nominal value of BGN 10 each, all owned by Agria Group Holding AD; - The name of the company was changed from “Korn Security” EOOD to „AG Property Invest” EOOD. - General manager of the Company is Emil Raykov; - The activity of the company will be focused on real estate projects, and for this purpose AG Property Invest EOOD has acquired the ownership of 10,031,430 ordinary, registered shares of AB Investments Group AD, representing 50% of the capital of the latter. 33.4. On April 13, 2022, the subsidiary Bora Energy EOOD acquired the right of ownership of 20,000 ordinary registered voting shares, representing 1/3 of the capital of the company Energy Solar Technologies AD, operating in the field of the production of energy from renewable sources, through the utilization of solar energy through investments in solar parks. Investments in energy projects from renewable sources are within the scope of the Group's activities, as part of the developed business model. 33.5. In February 2022, as a result of the military conflict between Russia and Ukraine, some countries announced new packages of sanctions against the state debt of the Russia Federation and a number of Russian Banks, as well as personal sanctions against certain number of indviduals. Due to growing geopolitical tensions, February 2022 has seen a significant increase in volatility in international markets, as well as a significant decrease of the ruble against the US dollar and the EUR. These events are expected to affect the activities of Russian and Ukrainian enterprises in various sectors of the economy. The Group has no direct exposures to related parties and / or key customers or suppliers from these countries. The Group considers these events as non-adjusting events after the reporting period, the quantitative effect of which cannot be estimated at the moment with a sufficient degree of confidence. urrently, the management of the Company is analyzing the possible impact of changing micro and macroeconomic conditions on the financial condition of the Group as a whole, and the results of operations. AGRIA GROUP HOLDING AD Annual consolidated report 2021 39 ANNUAL CONSOLIDATED REPORT AS AT DECEMBER 31, 2021 ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 40 AGRIA GROUP HOLDING JSC ANNUAL CONSOLIDATED ACTIVITY REPORT 2021 ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 41 ANNUAL CONSOLIDATED REPORT ON THE OPERATIONS OF AGRIA GROUP HOLDING AD, VARNA FOR THE 2021 FINANCIAL YEAR The present report has been drawn up in accordance with the provisions of Article 39, Article 44 and Article 45 of the Accountancy Act, Article 100n (7) and (8) of the Public Offering of Securities Act (POSA) and Appendix No. 2 to Article 10), item 1 Article 11), item 1 of Ordinance No. 2 of FSC on the initial and subsequent disclosure of information in public offering and admission of securities to trading on a regulated market. The report provides comments and analysis of the financial statements and other material information concerning the financial position and results of the operations of the Company and present fairly the position and the perspectives for development of the Company. The management of the Company, represented by the members of the Board of Directors of Agria Group Holding AD, believe that the circumstances that occurred during the past year of 2021 may be important for investors in deciding whether to invest in the securities of the Company. All circumstances that occurred have been disclosed in the terms and manners provided for in POSA to the investors, the regulated securities market and Financial Supervision Commission, and are available on the Company's website - www.agriabg.com ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 42 1. GENERAL INFORMATION ABOUT AGRIA GROUP HOLDING JSC COUNTRY OF ESTABLISHMENT: Republic of Bulgaria REGISTERED OFFICE AND BUSINESS ADDRESS: 111 Knyaz Boris I Blvd, Primorski District, Varna, Business Center, 9th floor. MAILING ADDRESS: 111 Knyaz Boris I Blvd, Primorski District, Varna, Business Center, 9th floor. TELEPHONE: 052/ 554000; FAX: 052/ 511602 INTERNET ADDRESS: www.agriabg.com E-MAIL ADDRESS: [email protected] , [email protected] LEGISLATION: The Company operates in compliance with the existing Bulgarian legislation. UNIFIED IDENTIFICATION CODE: 148135254 AGRIA GROUP HOLDING AD was established by transformation through change of the legal form under the terms and conditions of Article 264 and the following of the Commerce Act from limited liability company AGRIA GROUP HOLDING into joint-stock company with the same company name. The joint-stock company is registered and entered into the Company Register with Decision from 28 August 2007 under company case No.3875/2007 under the docket of Varna District Court. The same Decision also enters the winding up of the transformed limited liability company and the name of the newly registered joint-stock company is AGRIA GROUP HOLDING. The Company was re-registered by entry into the Commercial Register maintained by the Registry Agency under the terms and conditions stipulated in the Commercial Register Act. There have been no other changes in the legal and organisational form of the Company other than the transformation specified above. The life of the Company is not limited in time and there are no other conditions for its termination. The company has not been wound-up, it has not gone into liquidation, and has not been deleted from the Commercial Register. In December 2007 the Company increased its capital in an initial public offering through the successful issue of 1,700,000 shares with par value of BGN 1 each and issue value of BGN 9.04 each. As at 31.12.2021 the registered capital of the Company was BGN 6,800,000 (six million and eight hundred thousand leva), distributed in 6,800,000 (six million and eight hundred thousand) ordinary, registered, dematerialized, voting shares with par value of BGN 1 (one lev) each. The subscribed capital of the Company has been fully paid in and has been entered into the Commercial Register of the Registry Agency under the batch file of the Company. Trading in shares issued by the Company is carried out on a regulated securities market, in keeping with the requirements of the Public Offering of Securities Act, the Rules of BSE-Sofia AD and the other applicable legislation. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 43 Management body The Company has a single-tier management system - Board of Directors. As a holding company, AGRIA GROUP HOLDING AD depends on the activities and results of its subsidiaries. The main objective of the Company is to participate in any form in other commercial companies or in their management. The business policy of the Company, including investments, should be considered mainly in terms of the operations of its subsidiaries, because Agria Group Holding AD functions as a legal entity-holding company, carrying out investment activities as managing the stakes it holds in its subsidiaries. In its capacity of joint-stock company, which has issued shares in the initial share offering, which securities are allowed to be traded on the Regulated market, Agria Group Holding AD has fulfilled its obligation for entry in the Commercial Register under the order of the Commercial Register Act of the fact that the Company is public. The shares of the Company are listed on the Main Market Standard Equities Segment of the Bulgarian Stock Exchange-Sofia AD. The stock exchange ticker symbol attached is AGH. Shareholding structure of Agria Group Holding AD as at 31 December 2021 Name/Shareholder’s name Number of shares/votes in GM Percent of capital Emra EOOD, Varna 2 795 500 41.11 % of capital Komers EOOD, Targovishte 1 838 385 27.04 % of capital Svetlomir Iliev Todorov 692 434 10.18 % of capital Universal Pension Fund “Doverie”, Sofia 338 624 4.98 % of capital Other legal entities and natural persons 1 135 057 16.69 % of capital • • Agria Group Holding AD Board of Directors Други Investor Relations Director Кристера АД Financial Director Агрия Груп Холдниг АД Executive Director ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 44 Agria Group Holding AD is part of the following economic group Agria Group Holding AD holds shares in the capital of the following commercial companies: • Kristera AD, Popovo – 59,554 ordinary registered shares with a par value of BGN 100 each, representing 99.26% of the capital in the company; • Korn Trade EOOD, Varna – 68,000 shares of BGN 100 each, representing 100% of the capital in the company; • Agro EOOD, Varna – 50 shares of BGN 100 each, representing 100% of the capital in the company; • Kristera-Agro EOOD, Devnya – 76,000 shares of BGN 100 each, representing 100% of the capital in the company; • Korn Security EOOD, Sofia – 50 shares of BGN 100 each, representing 100% of the capital in the company; • Bora Invest EOOD, Varna – 11,000 shares of BGN 100 each, representing 100% of the capital in the company; • Bora Energy EOOD, Varna – 600,000 shares of BGN 10 each, representing 100% of the capital in the company; • Aris Agro EOOD, Varna – 500 shares of BGN 10 each, representing 100% of the capital in the company; • Toni-M EOOD, General Toshevo – 500 shares of BGN 10 each, representing 100% of the capital in the company. • Elit-86 EOOD, Varna - 500 shares of BGN 10 each, representing 100% of the capital in the company. • Gruvar EOOD, Varna – 50 shares of BGN 100 each, representing 100% of the capital in the company. • BD Agri EOOD, Varna - 50 shares of BGN 100,000 each, representing 100% of the capital in the company. • BD Farm EOOD, Varna - 50 shares of BGN 100,000 each, representing 100% of the capital in the company. • Diasvet EOOD, village of Pisanets, Russe region - 100 shares of BGN 50 each, representing 100% of the capital in the company. • Terra Protect EOOD, Sofia – 30,000 shares of BGN 10 each, representing 100% of the capital in the company. • Agra EAD, Varna – 119 545 ordinary registered shares with a par value of BGN 100 each, representing 100% of the capital in the company. • Kehlibar EOOD, Lyaskovets – 7,600 shares of BGN 1,000 each, representing 100% of the capital of the company. • Silk Gas BG OOD – 275 shares of BGN 10 each, representing 55% of the capital of the company. • Agro Oil Konsult OOD - 50,500 shares of BGN 10 each, representing 50% of the capital of the company • “Korn Star OOD” 200 shares of BGN 10 each, representing 40% of the capital of the company ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 45 Structure of AGRIA GROUP HOLDING AD EMRA EOOD Agria Group Holding AD OTHERS KOMERS EOOD Kristera AD Korn Trade EOOD Agro EOOD Kristera Agro EOOD Korn Security EOOD Bora Invest EOOD Bora Energy EOOD Aris Agro EOOD Toni-M EOOD Gruvar EOOD Elit-86 EOOD Diasvet EOOD Terra Protect EOOD BD Agri EOOD BD Farm EOOD Agra EAD Kehlibar EOOD Silk Gas BG OOD Agro Oil Konsult OOD Korn Star OOD ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 46 2. REVIEW OF THE OPERATIONS AND POSITION OF THE COMPANY Type of Operations of Agria Group Holding AD Agria Group Holding AD, through its subsidiaries, is engaged in the following types of business: ● Agribusiness in North-Eastern Bulgaria ● Processing industry (storage and processing of grain and oil-bearing cultures) centred in Lyaskovets. ● Trade/export operations near the Port of Varna. Main logistic centers – the towns of Popovo, Devnya and Varna. Besides these main activities, the holding also performs other auxiliary activities - trade in farming fertilisers, plant protection chemicals, fuels and lubricants, sowing seeds by world-renowned companies such as Korteva, Monsanto, KWC etc. The activity of part of the subsidiaries of Agria Group Holding AD is in the field of agribusiness. The Company’s agribusiness activities include: - Cultivation of agricultural land, production of grain and oil-bearing crops; - Services related to various agronomic techniques. Another type of business the holding is engaged in is processing industry and trade in grain and grain derivatives, including export operations. The total capacity of the storage facilities of Agria Group Holding JSC amounts to approx. 290,000 tonnes. The storage bases of the holding are concentrated in three main logistic centers located in the town of Popovo, town of Devnya and town of Lyaskovets There also are auxiliary warehouse capacities in the main agribusiness centers of the Company in the town of Targovishte, the village of Yankovo, village of Osenets, the town of Kardam, village of Rositsa, town of Provadia and the villages of Pisanets and Slavyanovo. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 47 Approx 800,000 tonnes of grain and oil-bearing crops are yearly stored and traded in the holding’s grain facilities. Devnya •The most recent of all storage facilties of the holding is the one located in Devnya, Varna municipilaty, whose constuction dates back to 2007 and currently consists of 12 metal silos and a flat warehouse. Its total storage capacity is 65 000 mt of grain, including wheat, corn, barley, rapeseed and sunflower seed. The storage facility has a key location and is in the immediate vicinity of Hemus Highway and very close to Port Varna West and Port Lesport. The base is equiped with modern laboratory in compliance with EU requirements. Popovo •The warehouse facility, which is a property of Kristera AD, with its storage capacity of 170,000 tons of grain forms the logistic center in the Industrial zone of the town Popovo. A modernly equipped laboratory guarantees the quality of the input and output of the traded grain and oil-bearing crops. Lyaskovets •An enterprise for sunflower seed production is based in the town of Lyaskovets, which is a property to the subsidiary Kehlibar EOOD, having a trade mark of the same name. The company’s trading list includes crude and refined sunflower oil, sunflower husk pallets and sunflower meal. The oil- bearing cultures and grain storage capacity is 20 000 tonnes and the annual processing capacity is 50 000 tonnes. Kehlibar EOOD is certified under the requirements of ISO 22000:2005. Main logistic centers ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 48 The Company has built a mature and effective market structure to procure the incoming raw materials (grain crops), a flexible logistic structure and good positioning of the main locations where grain is stored (grain facilities) near cargo terminals (Port of Varna, Port of Bourgas, Port of Constanta). The closed production cycle, which minimizes the effect of outside factors with regard to purchasing prices and the quality of the main raw materials, and the large quantity of cultivated farmland, including land owned or rented by companies from the holding structure engaging in agribusiness, help to largely secure the foreign trade operations of the company as well. The main clients for the export transactions of the of the Group’s companies are global leaders in grain trade, including Cofco International Romania S.R.L., Cofco International Bulgaria EOOD, ADM Bulgaria Trading EOOD, ADM – Germany, Glencore Agriculture Romania, Cargill Bulgaria, Lecureur France, Dimitriaki S.A. – Greece, Luis Dreyfus Commodities, Ameropa AG, SAIPOL France, Soya Hellas – Greece, Soya Mills- Greece, VAIT Austria, The Andersons INC USA. 3. INFORMATION ABOUT IMPLEMENTED INVESTMENTS PER TYPE OF OPERATION OF AGRIA GROUP HOLDING AD IN 2021 Agribusiness During the financial 2021 the subsidiaries continued the process of expanding their own agricultural land through purchase agreements at a total value of EUR 950,000. The lands purchased, which are about 165 hectares, are located in the regions where the companies cultivate agricultural lands, including the agricultural areas of Veliki Preslav, Targovishte, Varna, Provadia, Vetrino, Dobrich and Smyadovo. The investments implemented in augmentation of capacity, reconstruction and modernization of existing storage facilities in the different agricultural bases of the company amount to a total value of EUR 470,000 for the financial 2021. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 49 As at the end of 2021, the investments implemented in agricultural machinery are in the amount of EUR 509,000. Trade/export The investments implemented in the field of transportation, specifically in expanding the fleet of the company and improving the logistic structure amount to EUR 1 460,000. During 2021 the investments implemented in increasing the storage capacity of the warehouse facility, located in the Industrial zone of town of Popovo, which is a property of Kristera AD, amount to EUR 820,000. For 2021 Agria Group Holding AD have no direct investments in progress. 4. INVESTMENT PROGRAM FOR 2022 Sources of Financing - The Company plans to finance about 60% of the investment program of Agria Group Holding for 2022 with its own funds. - The remaining part of the investments will be financed with long-term debt financial instruments. - In view of the specialisation of the Company mainly in agribusiness sectors, one source of grants is the European Union in the form of grant schemes for supporting the agricultural producers under the Single payment per area scheme, Payment scheme for agricultural practices beneficial for the climate and environment / ‘green’ direct payments GDP /as well as subsidies under Measure 12 – Natura 2000. Investments per Type of Operations of Agria Group Holding AD Agribusiness Purchase of farmland in the areas where farming subsidiaries of the holding cultivate farmland. Due to the usual trading activity of the companies in the holding group, specializing in agricultural production, the effect of the land purchasing agreements meets the expectations of the Company referring to fulfilment of the Investment Program for expanding its agricultural lands. The lands purchased are located in regions where the companies are already cultivating agricultural lands which will lead to the consolidation of the total lands cultivated by the companies of the Group. For 2022 the Holding plans investments amounting to EUR 1,500,000. Augmentation of capacity, reconstruction and modernization of existing storage facilities in the different agricultural bases of the company. For 2022 the Holding plans investment amounting to EUR 300,000. Investments in agricultural machinery. For 2022 the company plans investments amounting to EUR 2 000,000. Trade/export operations The investments planned for 2022 in the field of transportation, specifically in expanding the fleet of the company and improving the logistic structure amount to EUR 1 850,000. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 50 In view of increasing the market presence in North-Eastern Bulgaria as well as sthrengtening the trading and exporting of the company, in the period 2022- 2023 the holding plans to establish a new logistic center in the area, which would have a storage capacity of 94 000m3. Based on inconclusive data the investment amounts to EUR 8,700,000, of which EUR 4,700,000 are planned to be invested in 2022. Investments in acquisition of assets and shares in legal entities, operating in the field of agricultural production and grain processing and in the design and construction of real estate. The planned investments for 2022 in the indicated directions from the companies of the holding structure amounts to about EUR 8,500 thousand. The economic policy and business goals of the Company, incl. investments are oriented towards sustainable development and strategic investment planning, operational efficiency and corporate social responsibility, contributing to the stable and sustainable development of the Company and the holding group in economic, social and environmental aspects. The company uses the potential of various mechanisms that creates prerequisites for sustainable development of the holding group companies through diversification of the risk of adverse climate change and realization of savings of scale in the direction of agricultural production, on one side and through efficiency and value of new business on the other. Taking into account the parameters of the investment program of the companies in the holding structure as well as the conducted analyses and researches, we believe that the impact of the planned investment would cover the Company’s expectations for optimization of the segment of own grain production as well as strengthening the export orientation of the holding. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 51 The parameters of the investment program of the companies in the holding structure have been developped in a situation of a stable market and in managing specific risks for the normal business environment and for the holding group. In compliance with the recommendations of the European Securities and Markets Authority on the impact on financial market participants of the distribution of COVID-19, considering the military conflict between Russia and Ukraine, and in compliance with the requirements of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse, the Company undertakes to promptly disclose information on the actual or potential impact of COVID-19 on its business, financial and economic position and on its planned investment intentions, as it include a quantitative and qualitative assessment of this impact in its financial reporting information as well as in the form of incidental information. 5. FINANCIAL INDICATORS AND FINANCIAL POSITION OF THE COMPANY OPERATING RESULTS A. Analysis of the Balance Sheet FINANCIAL CONSOLIDATED STANDING REPORT OF AGRIA GROUP HOLDING AD (BGN in thousands) ASSETS Current period Former period EQUITY, MINORITY INTERESTS AND LIABILITIES Current period Former period а 1 2 а 1 2 А. NON-CURRENT ASSETS А. EQUITY 8% 20% 27% 45% Planned investments for 2022 Agricultural land Agricultural machinery transportt and logistics Warhouse facilities Acquisitions Agricultural land 1 500 Agricultural machinery, transport and logistics 3 850 Warehouse facilities 5 000 Aquisitions 8 500 Total planned investments for 2020 (in BGN thousand) 18 850 ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 52 I. Property, machinery, equipment I. Equity 1. Land (terrain) 125,679 123,708 Subscribed and paid-in capital: 6,800 6,800 2. Buildings and construction 27,265 22,500 Ordinary shares 6,800 6,800 3. Machinery and equipment 13,355 19,007 Privileged shares - - 4. Installations 2,697 0 Redeemed ordinary shares - - 5. Vehicles 4,412 3,291 Redeemed privileged shares - - 6. Agricultural inventory 206 5 Unsubscribed capital - - 7. Acquisition and liquidation of long- term tangible assets costs 3,227 6,600 Total for group І: 6,800 6,800 8. Others 12,925 7,752 II. Reserves Total for group I: 189,766 182,863 1. Premium reserves from securities issuance 13,668 13,668 II. Investment property - - 2. Reserve from subsequent evaluations of assets and liabilities 50,040 50,300 III. Biological assets - - 3. Target reserves incl.: 1,786 1,766 IV. Non-tangible assets General reserves 1,786 1,766 1. Property rights 18 22 Special reserves 2. IT products 13 61 Other reserves 0 0 3. R&D products - - Total for group II: 65,494 65,734 4. Others 97 93 III. Financial results Total for group IV: 128 176 1. Accumulated profit (loss) incl.: Retained earnings 82,652 73,687 V. Goodwill Uncovered loss 1. Positive goodwill 0 0 A one-time effect from changes in the accounting policy 2. Negative goodwill 2. Current profit 22,837 9,755 Total for group V: 0 0 3. Current loss VI. Financial assets Total for group III: 105,489 83,442 1. Investments in: subsidiaries Joint ventures TOTAL FOR SECTION "А" (I+II+III): 177,783 155,976 Affiliated companies 507 505 Other companies 5 5 ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 53 2. Held until maturity: - - B. MINORITY INTEREST 519 477 Government securities - - Obligations incl..: - - C. NON-CURENT LIABILITES Municipality obligations - - I. Trading and other liabilities Other investments held until maturity - - 1. Liabilities toward affiliated companies - - 3. Others - - 2.Liabilities under received loans from banks and non- banking financial institutions 41,174 41,283 Total for group VI: 512 510 3. Liabilities under the Act of settling non-performing loans - - VII. Commercial and other receivables 4. Liabilities under received commercial loans 145 290 1. Receivables from affiliate companies 5. Liabilities under bond loans - - 2. Receivables under commercial loans - - 6. Others 8,997 5,351 3. Receivables under financial leasing - - Total for group I: 50,316 46,924 4. Others 2,097 2,097 Total for group VII: 2,097 2,097 II. Other non-current liabilities 396 0 III. Deferred income VIII. Deferred costs - - IV. Deferred tax liabilities 4,712 5,031 IX. Deferred tax assets - - V.Financing 881 983 TOTAL FOR SECTION "А" (I+II+III+IV+V+VI+VII+VIII+IX): 192 503 185 646 TOTAL FOR SECTION "C" (I+II+III+IV+V): 56,305 52,938 B. CURRENT ASSETS I. Inventory D. CURRENT LIABILITIES 1. Materials 20,600 18,950 I. Commercial and other liabilities 2. Production 4,218 3,488 1. Liabilities under received loans from banks and non- banking financial institutions 158,325 105,414 3. Goods 84,718 37,546 2. Current part of non-current liabilities 4. Work in progress 9,206 8,329 3. Current liabilities, incl.: 5. Bio assets - - Liabilities toward affiliate companies 6. Others - - Liabilities under commercial loans 6,349 6,047 ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 54 Total for group I: 118,742 68,313 Liabilities toward suppliers and clients 35,784 6,665 Received advances 603 7,979 II. Commercial and other receivables Liabilities toward personnel 1020 772 1. Affiliate companies receivables - - Liabilities toward insurance companies 280 223 2. Receivables from clients and suppliers 42,228 10,506 Tax liabilities 2827 560 3. Advances granted 35,256 23,577 4. Others 671 889 4. Receivables under granted commercial loans 43,570 40,688 5. Provisions 5. Litigation and claims 576 2 391 Total for group І: 205,859 128,549 6. Tax refund 1445 241 7. Personnel receivables 64 - 8. Others 4,133 4,650 II. Other current liabilities - - Total for group II: 127,272 82,053 III. Deferred income - - IV. Financing 102 102 III.Financial assets 1. Financial assets kept for trading incl. - - Debt securities - - TOTAL FOR SECTION "D" (I+II+III+IV): 205,961 128,651 derivatives - - other 2. Financial assets put up for sale - - 3. Others - - Total for group III: - - IV. Cash and cash equivalents 1. Cash 488 541 2. Cash in demand deposits 1,364 1,489 3. Blocked cash 4. Cash equivalents Total for group IV: 1.852 2,030 V. Deferred costs 199 - ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 55 TOTAL FOR SECTION "B"(I+II+III+IV+V) 248,065 152,396 ASSETS IN TOTAL (А + B): 440,568 338,042 EQUITY, MINORITY INTERESTS AND LIABILITIES (А+B+C+D): 440,568 338,042 1. Analysis of Assets The current assets in the issuer’s balance sheet comprise mainly its available inventory and commercial receivables in subsidiaries. As at 31.12.2021 their consolidated amount is BGN 248,065,000. The non-current consolidated assets as at 31.12.2021 amount to BGN 192,503,000. 2. Analysis of Liabilities The consolidated equity of the Holding as at 31.12.2021 is BGN 177,783,000. The group completed the reporting period with a profit after tax of BGN 22,837000. B. Analysis of the Consolidated statement of Comprehensive Income INCOME CONSOLIDATED STATEMENT FOR THE PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF AGRIA GROUP HOLDING AD (BGN IN THOUSAND) EXPENSES Current period Preceding period INCOME Current period Preceding period а 1 2 а 1 2 A. Operating expenses A. Operating income I. Expenses by nature I. Net sales of: 1. Materials 61,458 42,501 1. Production 50,889 28,118 2. External services 12,571 9,908 2. Merchandise 375,431 305,336 3. Depreciation 10,753 10,103 3. Services 4,495 4,598 4. Wages 12,210 9,823 4. Other 3,221 3,926 5. Social and health insurance 1,851 1,732 Group I total: 434,046 341,978 6. Carrying value of assets sold (excluding goods) 309,547 259,067 7. Changes in inventory of finished goods and work-in- progress -2,094 -750 II. Income from financing 6,190 5,961 8. Other, including: 2,966 2,454 including government financing 6,190 5,961 impairment of assets 2,146 1,812 provisions - - III. Financial income Group I total: 409,262 334,838 1. Interest income 985 965 2. Dividend income 0 60 II. Financial expenses 3. Gains from operations in financial assets and instruments 216 1,498 1. Interest expense 3,014 2,926 4. Gains from changes in foreign currency exchange rates 0 4 ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 56 2. Losses from operations in financial assets and instruments 2,724 0 5. Other 0 0 3. Losses from changes in foreign currency exchange rates 68 140 Group III total: 1,201 2,527 4. Other 752 947 Group II Total: 6,558 4,013 B. Total operating expenses (I + II): 415,820 338,851 B. Total operating income (I + II + III): 441,437 350,466 C. Operating profit 25,617 11,615 C. Operating loss - - III. Share of the profit of associates and joint ventures - - IV. Share of the loss of associates and joint ventures - - IV. Extraordinary expenses - - V. Extraordinary income D. Total expenses (B + III + IV) 415,820 338,851 D. Total income (B + IV + V) 441,437 350,466 E. Pre-tax profit 25,617 11,615 E. Pre-tax loss - - V. Tax 2.738 1.610 1. Corporate income tax for the current period 2,738 1,654 2. Expenses (economy) of deferred corporate income tax 0 -44 3. Other - - F. Profit after tax (E - V) 22,879 10,005 F. Loss after tax (E + V) - - incl. for minority interest 42 250 incl. for minority interest - - G. Net profit for the period 22,837 9,755 G. Net loss for the period - - Total (D+ V + F): 441,437 350,466 Total (D + F): 441,437 350,466 As a result of the economic activity carried out in 2021 by its subsidiaries Agria Group Holding AD closed its accounts as at 31.12.2021 with a positive net result from its activity on consolidated basis amounting to BGN 22,837,000. As at 31.12.2021 the equity of the Company group on a consolidated basis stood at BGN 177,783,000, and it is the Company’s main source of internal liquidity. Of it, BGN 6,800,000 is subscribed and fully paid in share capital. The table below presents the internal sources of liquidity of the company in accordance with the consolidated financial statements. BGN in thousands – on a consolidated basis 31.12.2021 31.12.2020 Share capital 6,800 6,800 Subscribed capital 6,800 6,800 Capital not paid in - - Reserves 65,494 65,734 ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 57 Financial result 105,489 83,442 Total equity 177,783 155,976 C. Liquidity The liquidity ratios are an indicator of the ability of the company to repay its debts in a timely manner. They are related to the liquidity risk, which is the risk for the issuer not to have sufficient funds available to meet maturing payables to creditors. The Company manages its assets and liabilities in such a way as to guarantee that it will cover its daily payments regularly and without delay. Cash in hand and in bank deposits as at 31.12.2021 stood at BGN 1,852,000 and represent 0,89% of the current payables. The liquidity ratios of Agria Group Holding AD, calculated on the basis of its consolidated financial statements, are shown in the following table: Liquidity indicators 31.12.2021 31.12.2020 Current ratio Current assets / current liabilities 1.20 1.18 Quick ratio (Cash + Cash equivalents + Receivables) / Current liabilities 0.62 0.65 Cash ratio (Cash + Cash equivalents) / Current liabilities 0.01 0.02 6. RISKS FACING THE COMPANY. GOALS AND POLICY OF THE COMPANY ON RISK MANAGEMENT The operation of each company is exposed to certain risks affecting its performance. The operation of Agria Group Holding AD is exposed to the risks listed below. The risk factors are listed consequentially in accordance with their significance to the operations of the issuer. A. Specific risks 1. Market risks Market risk is related to the changes in market conditions. It includes income risks, profit risks, interest rate, liquidity and currency risks. 2. Income risks The Company’s future sales are subject to normal market risks. The main future income depends on the possibility for AGRIA GROUP HOLDING AD to perform its market and investment strategy, as well as on the current market situation. To reduce those risks considerably, the Company relies on an increased intra-company capability of effective forecasting and planning, as well as on maintaining stable customer relations.. 3. Profit risks The market risk can also influence the Company’s expenses, particularly in cases when the rate of growth of expenses is faster than that of income. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 58 4. Interest rate risk The interest rate risk manifests itself in the possibility of a rise in the cost of financing the Company’s activities. Regarding fixed rate loans, in the case of a potential drop in market interest rates, the issuer may not succeed in obtaining resources at the available lower interest rates. If such circumstances arise, the Issuer would be operating under less advantageous conditions than its competitors. Such development would lead to higher interest payments by the Issuer in comparison to other companies which would finance their activities at the current market rates; consequently, this would lead to lower net profit. Regarding floating rate loans, in the case of a potential drop in market interest levels, the interest rate payable by the Company on its loans will also drop. An interest rate risk for floating rate loans exists in the case of a rise in market levels, when the resources used by the Issuer will become more expensive. In order to minimise the interest rate risk, the Issuer diversifies the sources through which it ensures the financing of its activity. 5. Liquidity risk Liquidity risk is a risk related to the ability for the Issuer to cover its trade payables to suppliers and creditors within the negotiated term and amount of payments. Agria Group Holding AD manages its assets and liabilities in such a way as to guarantee that it will cover its daily payments regularly and without delay. This risk component is minimised by accuracy and commitment in agreements with the trade counterparties with which cash revenue or payments are planned. 6. Currency risk Currency risk is the risk that the Issuer may suffer losses due to the fluctuation of market prices of the various currencies it uses. Agria Group Holding AD carries out its operations predominantly in Bulgarian leva (BGN) and Euro (EUR). The Euro is the main currency in which the Issuer settles its foreign trade relations – sales of goods/produce and purchase of materials necessary for its activity. Under the conditions of a currency board and a fixed rate of the BGN against the EUR, the management of the company consider that the Issuer is not exposed to a significant risk of changes in currency rates. B. Operational risks The chief operational risks and the measures taken to minimise those risks are to be considered in terms of the operations of the Issuer’s subsidiaries, because Agria Group Holding AD functions as a legal entity which is a holding company carrying out investment activities, which aims to manage the stake it holds in its subsidiaries, and which does not directly carry out any other production and/or commercial activity of its own. The operational risk is related to damage or loss suffered by the Company due to human error, technological imprecision, and impossibility for machines and equipment to perform a certain task, or to a mistake in the procedure or organisation. The probability that the Issuer may suffer damage or loss due to human error, technological imprecision, and impossibility for machines and equipment to perform a certain task, or to a mistake in the procedure or organisation via its subsidiaries is insignificant. Part of the chief operational risks is related to a potential load on capacities and to providing the necessary raw materials. Potential risks could arise ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 59 in relation to the workforce available in the regions where the subsidiaries of the Issuer perform their commercial activities. The operational risk is related to damage or loss suffered by the Company due to human error, technological imprecision, and impossibility for machines and equipment to perform a certain task, or to a mistake in the procedure or organisation. The probability that the Issuer may suffer damage or loss due to human error, technological imprecision, and impossibility for machines and equipment to perform a certain task, or to a mistake in the procedure or organisation via its subsidiaries is insignificant. Part of the chief operational risks is related to a potential load on capacities and to providing the necessary raw materials. Potential risks could arise in relation to the workforce available in the regions where the subsidiaries of the Issuer perform their commercial activities. The main risk for the Issuer’s subsidiaries which perform commercial activities related to growing and storing agricultural produce includes inclement weather conditions, diseases and other natural risks. In order to minimise those risks and any potential loss, the subsidiaries obtain insurance policies for all areas on the production in progress of all agro-technical activities against all main risks, together with storm, fire and hail, including insurance policies against freezing of all crops being grown. Insurance policies are obtained for all general risks, including earthquake risk for all real estate and production capacities owned by the companies in the group. Despite the tight competition, the Company considers that it has a competitive edge on the market owing to its experienced management staff and its established reputation. In this respect it should be noted that the management staff and the Company’s employees are highly qualified and motivated specialists, organised in relatively independent active structural units which maintain a maximally complete and up-to-date data base of the development and trends of the respective markets. C. Non-specific (systemic) risks The holding company and its subsidiaries are also exposed to systemic risks, mainly related to the macro environment in which they operate. These risks are not subject to supervision and under the control of Agria Group Holding’s management. The main systemic risk to the activity of the company and its subsidiaries could be determined by the impact of the COVID-19 epidemic on the global economy and in particular Bulgaria. Having regard to the declared state of emergency on 13 March 2020 in the Republic of Bulgaria and the related measures to combat the pandemic of COVID-19, the management policy aims to take measures to analyze and limit the impact of this non-systemic risk on the business and to ensure continuity of work and production processes with minimum disruption. The corporate management considers that currently the implementation of the company's business processes is not significantly affected by the spread of the virus and the restrictive measures taken by the governments in many countries. According to the management's assessment, the crisis with COVID-19 has different potential for direct or indirect effects on the development of the holding company depending on the duration of this crisis. The short to medium term of the pandemic could lead to delays in execution and, consequently, difficulties in the deliveries, but shall not lead to significant changes in trade turnover and liquidity. Longer duration would ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 60 lead to changes in the supply and demand, redistribution of markets, which in turn would delay the execution of the transactions significantly and would have a greater impact on liquidity and trade turnover. According to the management's valuation, the potential risks of the COVID-19 crisis and the possible effects can be summarized in the following courses: - Effects on the supply chain. In view of the specificity of the products offered by the group (cereals and oilseeds) in mid-term perspective, a disruption or termination of the supply chain, respectively a suspension of production, is not expected. The companies of Agria Group Holding AD’s group are not explicitly dependent on the receipt of goods and services from the affected regions. - Effects on the sales and customer operations. In view of the sector in which the companies of the Group develop their commercial activity, an interruption in the sales and downturns in demand are not expected. There may be a delay in the rhythm of execution of trade contracts (sales and purchases). As the portfolio of the Group's clients is limited to those which are multinational companies that have already taken measures to deal with the crisis, no liquidity shocks are expected. - Effects on the ability of the staff to fulfill their job responsibilities. The state of emergency and the precautions for preventing the spread of COVID-19 impose restrictions on the movement and gathering of people. In accordance with the recommendations made by international and European organizations and implemented nationwide, Agria Group Holding AD has reorganized its daily work. On the basis of the existing infrastructure, a distant mode of work is organized for the commercial and administrative staff of the company and its subsidiaries, while ensuring the effective implementation of the work process. Insofar in those subsidiaries whose business processes are related to agriculture and transport, which cannot be executed remotely, the management has taken measures to ensure the health and safety of the employees. At present, the company and the group are working full-time, with no redundancies being envisaged. Longer duration of the crisis, which is connected with the impact of COVID-19 on the business processes in the sector, may require to review the company’s policy in this sphere. - Effect on liquidity. The management concludes that there are no liquidity restrictions for the company and the group as a whole in short and medium term. To date, the holding group is supported by global financial institutions with which it works, such as BNP Paribas Geneva, European Investment Bank, DSK Bank, UniCredit Bulbank. - Other risks. The group's management expects that this current COVID-19 situation may lead to other risks, such as cyber-attacks, fraudulent attempts, or missing legal deadlines. The management has taken all possible measures to limit the dangers and minimize the effects of these risks. Despite the measures taken to ensure the sustainability and continuity of the business, the lack of clarity and predictability about the duration of this unusual situation, and the overall impact of COVID-19 on the economy worldwide and nationwide, the management considers that it impossible at this stage to assess with absolute accuracy the impact of COVID-19 on the operation and financial standing of the Company for 2022. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 61 As a major systemic non-specific risk conncected to the holding company's activities could be identified as the military conflict between Russia and Ukraine, which provoked a sharp increase of international prices for grain and oilseeds cultures. Since the beginning of the Russian invasion of Ukraine, grain and oilseeds cultures in international and representative local markets have shown unprecedented growth rates and extremely high volatility due to the shutdown of Ukrainian Black Sea and Azov Sea ports, as well as the EU sanctions list, which includes Russian grain. Even in a favorable scenario with the development of the military activities, it is expected increasing of grain prices due to the logistic problems that will remain in Ukraine and the sanctions imposed on Russia, requiring the termination of trade relations with a number of countries. In this case, Bulgarian grain remains an alternative to the suspended supplies from Ukraine and Russia, which will inevitably lead to demand increasing on international markets. A possible food crisis in the country and respectively in the European Union may lead to the adoption of protectionist policies by the Bulgarian government and / or the European Union. The corporate management considers that the implementation of the company's business processes will not be negatively affected due to the specifics of the market of grain and oilseed cultures. Bulgaria is a net exporter of grain, with large surpluses of crops produced, in an average ratio of 1 to 5 (domestic consumption / exports). The company does not have direct exposures to related parties, and / or key customers or suppliers from Russia and Ukraine Given that the company operates in the cereals and oilseeds (essential foods and raw materials) sectors, the plans and projections do not change negatively. The policy of Agria group holing AD is focused on the successful completion of the current season, namely the execution of the concluded trade contracts, and at the moment it is expected that this will happen without any difficulties and delays. The forecasts for the coming season are to maintain the turnover and market share, whereas it is also envisaged a slight increase in the traded volumes according to the initial forecasts made before the COVID-19 and the military conflict crisis. 7. CORPORATE SOCIAL RESPONSIBILITY The Company follows a consistent policy of Social Corporate Responsibility. Agria Group Holding AD is a public company and its social responsibility finds expression in all aspects of its corporate activities. The management of Agria Group Holding prioritizes environmental protection and people’s health in its corporate policy through its products, services and working conditions. The company’s social engagements in its capacity of employer toward workers and employees find expression in providing safe and healthy working conditions as well as following an environmental protection policy. Agria’s senior management encourages following business standards and practices for public social responsibility regarding the environmental and employee policies. The company assess regularly the impact of its activities on the environment and observe strictly the requirements and regulations for environmental protection, health and safety of the employees and the society in production of grains in the following aspects. Agricultural production is highly dependent on climate change, and at the same time is an important factor, influencing natural and climate conditions. The company has taken the necessary measures and activities to adapt grain production to the changing environment and to have a positive impact on climate change and to promote the sustainable development of agricultural holdings in the holding group. An essential priority of corporate management is environment protection. The company combines social, economic and environmental ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 62 approaches on the way to achieving sustainable agricultural practices and to the practice of reducing the carbon footprint in grain production. 1. Environmental protection The company develops practices in connection with soil nutrition and production of grains appropriate for particular soil type and adapted to the specifications of the soil. Compliance with the following principles and rules is endorsed when using pesticides. • Use of pesticides’ alternatives; use of selective pesticides, keeping biodiversity and fighting particular wreckers in particular timeframes taking in account the biology life and development; harvest of alternative crops resistant to wreckers; crop rotations; mechanic weed control. • Staff education for using pesticides, observing the quantities recommended by the producers. Pesticides declared by World Health Organization as dangerous are not used. • Storage in original packages in cool and dry places with active ventilation, which can be isolated and marked with appropriate signs. Mixing and moving pesticide can only be performed by educated staff in places with good lightening and ventilation wearing protective clothing/apparel. The access to the premises where the pesticides are stores is strongly restricted. Assessment of the necessity of crop nutrition is made, balancing utilization of food substances, rotating crop sowing, plowing organic waste in the soil; providing buffer zones around the water sources in order to diminish the loss of food substances. In order to prevent loss of genetic resources and in view of providing biodiversity are used plant waste of previous crops for nutritious soil preparation; observation of keeping the eco systems; certified seeds are used. Investments are being made in innovative agricultural machinery, equipped with smart farming software to reduce the use of pesticides and fertilizers. Agricultural equipment for harvesting of cereals is provided with devices for uniform dispersion of the crop residues which are plowed into the soil and thus recovering part of the nutrients in the soil horizon. Burning of vegetable waste is not performed, the use of nitrates is reduced. 2. Health and safety of the staff The company follows a consistent policy in order to minimize the risks of: • Physical danger – by qualified and experienced staff for the use of machinery and motor vehicles. • Work in closed spaces – silos, water basins, etc. The access to them is strongly restricted and it is allowed under the supervision of educated staff. • Chemical danger in case of contact with pesticides – a training is conducted for work with pesticides; following the hygiene and safety practices. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 63 • Fire and explosions risks – precautions are taken about minimizing the risk of fire in the warehouses for grain storage by using modern and quality production capacity and qualified and experienced staff. • Risk of spread of viruses and infections – the corporate management take precautions and solutions to safeguard the health of the employees and to prevent and limit the spread of viruses and infections. 8. REQUIREMENTS OF THE ACCOUNTANCY ACT FOR DRAWING UP AND PUBLISHING NON-FINANCIAL DECLARATION Requirements of the Accountancy Act for drawing up and publishing non-financial declaration and consolidated non-financial declaration by large enterprises which are public-interest entities in which the average number of employees exceeds 500 for the reporting period. According to the provisions of the Accountancy Act, when enterprises and parent companies of enterprise groups meet certain requirements and criteria, they should draw up and present a non-financial declaration as part of the annual report for the financial year. In particular, the requirements of the law in relation to non- financial declaration are as follows: “Art. 41. Large enterprises which are public interest enterprises and which, at 31 December of the reporting period, exceed the criterion of the average number of employees during the financial year of 500 people, shall include a non-financial declaration under Article 48 in their report on the operations.” The Accountancy Act defines criteria for categorization of the enterprises (art. 19) and group of enterprises (art. 21). In addition, according to provision § 4 of the additional provisions of the act, “Public interest enterprises for the purposes of this Act shall be treated as large enterprises, with the exception of the applicable accounting basis, regardless of the book value of the assets, the net sales revenue and the average number of employees.” Agria Group Holding AD is a public company which transferable securities – shares are admitted to trading and are traded on a regulated security market. In this capacity, according to the text of § 1, item 22 of the Additional provisions of the Accountancy Act (the act), for the purpose of the applicable basis of the act, the company is deemed an enterprise of public interest (Public Interest Enterprise). In 2021, on a non-consolidated basis, the company has the following indicators: - Book value of the assets: BGN 115,243,000; - Net sales revenue: BGN 444,000, and - Average number of employees (for the reporting year): 5 people. Although the company does not cover the requirements based on quantitative criteria according to the Accountancy Act, for the purpose of application scope of the law and in relation to the requirements for annual closure of accounts for 2021, Agria Group Holding should be considered a large enterprise. In 2021, on a consolidated basis, the group has the following preliminary indicators: ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 64 - Book value of the assets: BGN 440,568,000; - Net sales revenue: BGN 430,825,000, and - Average number of employees (for the reporting year): 411 people. For the purposes of the application scope of the Act and in relation to the requirements of annual reporting for 2021, at a group level Agria Group Holding should be deemed a large group. Applicability of the requirements of the Accountancy Act for preparing and publishing non-financial declaration and consolidated non-financial declaration by Agria Group Holding AD as part of the annual reporting for 2021 on a non-consolidated and consolidated basis. The requirements, which the Accounting Act prescribes in order to assess whether the requirement for preparation and publishing a non-financial declaration is applicable, are cumulative, namely: • The enterprise/Parent company in a large group/ to be a Public Interest Enterprise and to be a large enterprise/accordingly large group; • As at 31 December (of the corresponding year for which is assessed the presence or absence of a legal obligation) to exceed on an individual, respectively on a consolidated basis, the criteria for average number of employees 500 people. In 2021 on a non-consolidated basis, the company has a number of employees – 5 people, on a consolidated basis – 411 people. Therefore, there is no legal cumulative requirement, respectively as long as the requirements of the law are not covered at an individual and consolidated level (Art. 41, Art. 51), Agria Group Holding AD is not obliged to prepare and publish as part of the individual and consolidated activity report for 2021, non-financial declaration. 9. IMPORTANT EVENTS FOR AGRIA GROUP HOLDING AD THAT TOOK PLACE IN THE 2021 FINANCIAL YEAR DATE EVENT 31.12.2021 1. Agria Group Holding AD has generated consolidated income in the amount of BGN 434 046 thousand which represents 126.92% of the revenues for 2020. 2. Realized profits on a consolidated basis for 2021 amount to BGN 22 837 thousand. 3. The company’s equity on consolidated basis as at 31.12.2021 is BGN 177,783 thousand and it is with BGN 21,807 thousand more compared to 2020. 29.11.2021 The company presented a quarterly consolidated report for the third quarter of 2021 to the FSC, BSE-Sofia AD and the public. 29.10.2021 The company presented a quarterly non-consolidated report for the third quarter of 2021 to the FSC, BSE-Sofia AD and the public. 01.10.2021 – 31.12.2021 During the fourth quarter of 2021, the subsidiary of Agria Group Holding AD, “Diasvet” EOOD, has generated dividents income at the amount of BGN 1,829,094.92 and the subsidiary “Elit 86” EOOD at the amount of BGN 2,214,087.34. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 65 01.10.2021 – 31.12.2021 Pursuant to the planned construction of a new logistics center of the holding for 2021- 2023 in the region of Northeast Bulgaria, in order to increase market presence and strengthen the trade and export activities of the company in the fourth quarter of 2021. , the subsidiary of “Agria Group Holding AD’’ ‘’Silk Gas BG’’ OOD has acquired ownership of land properties on which a new silos for storage of grain culture is planned to be built with a storage capacity between 70,000 and 80,000 tons, with full automated processes, according to the provided capacity capabilities. The acquired land properties have access to the national railway network in order to improve the logistics of loading the goods. The silo farm construction investment is still in designing process. According to preliminary data, the investment amounts to approximately EUR 5,000 thousand, EUR 1,000 thousand from which are planned for 2021. 01.10.2021 – 31.12.2021 Pursuant to the Investment Program of the companies in the holding group, during the fourth quarter of 2021, the subsidiaries of Agria Group Holding AD continued the process of expanding their own agricultural land through purchase agreements. The purchased lands are located in the regions where the companies are already cultivating agricultural lands. Due to the usual commercial activity of the companies in the holding group, specializing in agricultural production, the fulfilment of the Investment Program of the holding for expanding its agricultural lands leads to consolidation of the total agricultural lands cultivated by the companies in the Group. 01.10.2021 – 31.12.2021 During the fourth quarter of 2021, Kehlibar EOOD, a subsidiary of Agria Group Holding AD, handled transactions related to its usual business activities of storing, processing and trading in grain crops and oilseeds and products thereof. 01.10.2021 – 31.12.2021 During the fourth quarter of 2021, Kristera AD, a subsidiary of Agria Group Holding AD, handled transactions related to its usual business activities of storing and trading in grain crops and oilseeds and products thereof. 01.10.2021 – 31.12.2021 During the fourth quarter of 2021, Kristera-Agro EOOD, Agro EOOD, Aris Agro EOOD, Toni-M EOOD, Elit-86 EOOD, Gruvar EOOD, Diasvet EOOD, BD Agri EOOD, BD Farm EOOD and Agra EAD, subsidiaries of Agria Group Holding AD, handled transactions related to their usual business activities of producing and trading in grains. 01.10.2021- 31.12.2021 During the fourth quarter of 2021, Korn Trade EOOD, subsidiary of Agria Group Holding AD, handled transactions related to the export of grain crops with counterparties in the EU. 27.08.2021 The company presented a half-yearly consolidated report for the first half of 2021 to the FSC, BSE-Sofia AD and the public. 29.07.2021 The company presented a half-yearly non-consolidated report for the first half of 2021 to the FSC, BSE-Sofia AD and the public. 02.07.2021 The company presented Minutes of the Ordinary General Meeting of shareholders of Agria Group Holding AD, Varna, held on 29 June 2021, to the FSC, BSE Sofia AD and the public. 02.07.2021 The company announced information on the terms and procedure of payment of cash dividend for 2020 to the FSC, BSE Sofia AD and the Central Depositary AD. 01.07.2021 – 30.09.2021 The subsidiary of Agria Group Holding AD, Kristera Agro” EOOD, applied in State Fund Agriculture – Paying Agency for a grant as a financial aid under sub-measure 4.1 "Investments in agricultural holdings" of measure 4 "Investments in tangible assets" of the Rural Development Program for a project proposal in construction of water utilities, buildings and agricultural machinery. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 66 01.07.2021 – 30.09.2021 Pursuant to the Investment Program of the companies in the holding group, during the third quarter of 2021, the subsidiaries of Agria Group Holding AD continued the process of expanding their own agricultural land through purchase agreements. The purchased lands are located in the regions where the companies are already cultivating agricultural lands. Due to the usual commercial activity of the companies in the holding group, specializing in agricultural production, the fulfilment of the Investment Program of the holding for expanding its agricultural lands leads to consolidation of the total agricultural lands cultivated by the companies in the Group. 01.07.2021 – 30.09.2021 During the third quarter of 2021, Kehlibar EOOD, a subsidiary of Agria Group Holding AD, handled transactions related to its usual business activities of storing, processing and trading in grain crops and oilseeds and products thereof. 01.07.2021 – 30.09.2021 During the third quarter of 2021, Kristera AD, a subsidiary of Agria Group Holding AD, handled transactions related to its usual business activities of storing and trading in grain crops and oilseeds and products thereof. 01.07.2021 – 30.09.2021 During the third quarter of 2021, Kristera-Agro EOOD, Agro EOOD, Aris Agro EOOD, Toni-M EOOD, Elit-86 EOOD, Gruvar EOOD, Diasvet EOOD, BD Agri EOOD, BD Farm EOOD and Agra EAD, subsidiaries of Agria Group Holding AD, handled transactions related to their usual business activities of producing and trading in grains. 01.07.2021 – 30.09.2021 During the third quarter of 2021, Korn Trade EOOD, subsidiary of Agria Group Holding AD, handled transactions related to the export of grain crops with counterparties in the EU. 29.06.2021 Ordinary General Meeting of shareholders of Agria Group Holding AD, Varna was held and the following resolutions were passed: 1. The General Meeting approves the Annual Report of the Board of Directors on the activity of the Company for 2020; 2. The General Meeting approves the annual consolidated report of the Board of Directors on the activity of the Company for 2020; 3. The General Meeting approves the audited annual separate financial report of the Company for 2020 and the auditor’s report; 4. The General Meeting approves the audited annual consolidated financial report of the Company for 2020 and the auditor’s report; 5. The General Meeting passes a resolution for distribution of cash dividend to the shareholders to the amount of BGN 1,000,000.00, representing a portion of the net profit generated by the Company for 2020, which amounts to a total of BGN 2,016,819.99. The persons entitled to receive dividend should be entered in the registers of the Central Depository as holders of dividend rights as of the 14th day following the General Meeting. The General Meeting of shareholders authorizes the Board of Directors to take all necessary factual and legal actions with regard to the dividend pay-off, including selection of servicing bank, initial and final date for payment.; 6. The General Meeting discharges from liability the members of the Board of Directors of the Company with regard to their activity in 2020; 7. The General Meeting approves the report of the Investor Relations Director of the Company for 2020.; 8. The General Meeting approves the report on the activity of the Auditing Committee of the Company for 2020.; 9. The General Meeting passes a resolution for re-election of the Audit Committee of Agria Group Holding AD in the following composition: Svetla Valentinova Gancheva, Milena Ivanova Gigova and Veselin Todorov Marinov.; 10. The General Meeting determines a mandate of 1 year for the Audit Committee of Agria Group Holding AD and remuneration of its members in the amount of BGN 100 for a participation in each session of the Audit Committee.; 11. The General Meeting passes a resolution for election of a registered auditor of the Company for 2021 in accordance with the proposal presented by the Auditing Committee; 12. The General Meeting ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 67 approves the report on the implementation of the Policy for remuneration of the members of the Board of Directors of Agria Group Holding AD for 2020.; 13. The General Meeting of Shareholders passes a resolution for buy-back of Company’s own shares under the following conditions: – Number of shares subject to buy-back– up to 3% of the total voting shares, issued by the company or up to 204 000 shares. – Minimum buy-back price – BGN 8.00 – Maximum buy-back price – BGN 14.00 – Initial date of buy-back – 30th June 2021 – Final date of buy-back – not later than 30th June 2022 – Payment term of buy-back shares – according to the legislation in force. The General Meeting of Shareholders authorizes the Board of Directors to conduct unlimited procedures for buy-back during the buy-back period; in the term of each procedure, depending on the market conditions, to change under their discretion the buy-back price within the price limits set by the General Meeting of shareholders; to determine an investment broker who shall be assigned to proceed the buy-back order; to determine all remaining parameters of the buy-back and take all necessary factual and legal actions pursuant to the resolution of the General Meeting. Buy-back goal – increase in the liquidity of the Company’s shares.; 14. The General Meeting of Shareholders passes a resolution to determine the amount of the regular monthly remuneration of the members of the Board of Directors and the Executive Director of the Company as follows: regular monthly remuneration of the members of the Board of Directors to the amount of BGN 4 000; regular monthly remuneration of the Executive Director to the amount of BGN 10 000.; 15. The General Meeting of Shareholders passes a resolution for amendments to the Remuneration policy of the members of the Board of Directors of Agria Group Holding AD.; 16. The General Meeting of Shareholders authorizes the Board of Directors of the Company to determine additional remuneration for 2020 for the members of the Board of Directors to a total amount of BGN 300 000 and to distribute additional remuneration to the members of the Board of Directors in the voted amount, in compliance with the approved Remuneration Policy for the members of the Board of Directors of Agria Group Holding AD and all approved amendments to the Policy.; 19. The General Meeting of Shareholders adopts rules on voting by proxy at the General Meeting of Shareholders. 28.06.2021 In the Commercial Register was entered a limited liablity company with company name Korn Star OOD. Agria Group Holding AD acquired shares in a newly established and entered in the Commercial Register limited liability company under the company name KORN STAR OOD by subscription and acquisition of 40% of the shares in the capital of the newly established company. Owner of 60% of the shares in the capital of the newly established company Korn Star OOD is Agro Oil Konsult OOD, in which Agria Group Holding AD holds 50% of the capital. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 68 25.06.2021 The Company announced INSIDE INFORMATION under Art. 7 of Regulation №596/2014 of the European Parliament and the Council from 16 April 2014 and in the scope of the exemplary list of facts and circumstances subject to disclosure in accordance with Appendix №9 of Ordinance №2 of FSC concerning the estalishment of a new limited liability company, in which Agria Group Holding AD and Agro Oil Konsult OOD are partners and owners of the capital. The aim of the newly established company is to optimize the processes of structuring of farmland properties by territories, consolidation of the total cultivated farmlands and right positioning of the farms with the scope of the territory in which the companies of the Holding develop commercial activity, which is a main priority in the strategy for development for the Group and is a next step to improving the structure of the production, supply and trade in grains. 15.06.2021 The Company determined the circle of members with voting rights in The Ordinary General Meeting of Shareholders, scheduled for 29 June 2021 on the basis of a list / book of shareholders of the Company, presented by the Central Depository. 27.05.2021 The company published the invitation for the Ordinary General Meeting of shareholders of Agria Group Holding AD on 29 June 2021 to the FSC, BSE-Sofia AD and the public. 27.05.2021 The company presented an invitation for the Ordinary General Meeting of shareholders of Agria Group Holding AD on 29 June 2021 and the General Meeting materials to the FSC, BSE-Sofia AD and the public. 21.05.2021 The company presented a quarterly consolidated report on the first quarter of 2021 to the FSC, BSE-Sofia AD and the public. 29.04.2021 The Company presented an annual consolidated report for 2020 to the FSC, BSE-Sofia AD and the public. 29.04.2021 The company presented a quarterly non-consolidated report for the first quarter of 2021 to the FSC, BSE-Sofia AD and the public. 31.03.2021 The Company presented an annual non-consolidated report for 2020 to the FSC, BSE- Sofia AD and the public. 23.02.2021 The company presented a quarterly consolidated report for the forth quarter of 2020 to the FSC, BSE-Sofia AD and the public. 29.01.2021 The company presented a quarterly non-consolidated report for the forth quarter of 2020 to the FSC, BSE-Sofia AD and the public. 01.01.2021 - 31.06.2021 In view of the projected for 2021-2022 increase in storage capacity of the warehouse facility and logistic base in Lyaskovets, through construction of new silos with total storage capacity of 50 000 m3, 1 300 m2 flat warehouse and plants for cleaning the raw material, during the first half of 2021 the subsidiary of “Agria Group Holding” AD – Kehlibar EOOD, has completed feasibility studies, received approvals from coordinating institutions and concluded contracts with companies for the design and technical supervision of the site. The company’s activity in the implementation of the investment intention is at the stage of technical project and organizing of a procedure for determinating the supplier and contractor of the site. Due to this investment the logistic center will reach a storage capacity of 40 000 tons of sunflower. 01.01.2021 - 30.06.2021 Pursuant to the Investment Program of the companies in the holding group, during the first half of 2021, the subsidiaries of Agria Group Holding AD continued the process of expanding their own agricultural land through purchase agreements. The lands purchased are located in the regions where the companies are already cultivating agricultural lands. Due to the usual trading activity of the companies in the holding ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 69 10. INFORMATION ON LARGE TRANSACTIONS ENTERED INTO BETWEEN RELATED PARTIES IN 2021 During the 2021 financial year Agria Group Holding AD entered into no large transactions with related parties, with the exception of ordinary economic activity transactions. 11. INFORMATION UNDER ART. 187E AND ART. 247 OF THE COMMERCIAL ACT The Company does not hold own shares. No own shares were acquired or transferred in the past 2021. Names, functions, remuneration and equity held in other companies of the members of the management and supervisory body Agria Group Holding AD, Varna, has a single-tier management system and is managed and represented by a Board of Directors, which operates under the supervision of the General Meeting. The remunerations of the members of the Board of Directors are determined in accordance with the Remuneration Policy for the members of the Board of Directors of Agria Group Holding AD approved by the General Meeting of Shareholders. Agria Group Holding AD pays the members of the Board of Directors a regular remuneration which is approved by the General Meeting of Shareholders of the company, taking into account the obligations and the contribution of each members of the Board of Directors to the activity and the results of the company , as well as the opportunity recruit and retain qualified and loyal members of the Board of Directors and compliance of the interests of the members of the Board of Directors with the long-term interests of the Company to coincide. In view of the financial and economic standing of the Company and the certain input of the members of the Board of Directors of AGRIA GROUP HOLDING AD, during the reporting 2021 the members of the Board of Directors received fixed remunerations, which certain amount was approved by the General Meeting of Shareholders of the Company. The amount of the permanent monthly remuneration of the members of the group, specializing in agricultural production, the fulfilment of the Investment Program of the holding for expanding its agricultural lands leads to consolidation of the total agricultural lands cultivated by the companies in the Group. 01.01.2021 – 30.06.2021 During the first half of 2021, Kehlibar EOOD, a subsidiary of Agria Group Holding AD, handled transactions related to its usual business activities of storing, processing and trading in grain crops and oilseeds and products thereof. 01.01.2021 – 30.06.2021 During the first half of 2021, Kristera AD, a subsidiary of Agria Group Holding AD, handled transactions related to its usual business activities of storing and trading in grain crops and oilseeds and products thereof. 01.01.2021 – 30.06.2021 During the first half of 2021, Kristera-Agro EOOD, Agro EOOD, Aris Agro EOOD, Toni- M EOOD, Elit-86 EOOD, Gruvar EOOD, Diasvet EOOD, BD Agri EOOD, BD Farm EOOD and Agra EAD, subsidiaries of Agria Group Holding AD, handled transactions related to their usual business activities of producing and trading in grains. 01.01.2021 – 30.06.2021 During the first half of 2021, Korn Trade EOOD, subsidiary of Agria Group Holding AD, handled transactions related to the export of grain crops with counterparties in the EU. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 70 Board of Directors, until the date of the resolution from Ordinary the General Meeting of Shareholders of AGRIA GROUP HOLDING AD, held on 29 th June 2021 is determined as follows: regular full monthly remuneration to each member of the Board of Directors who is executive member/executive director in the amount of BGN 6000 and equal regular full monthly remunerations to the remaining members of the Board in the amount of BGN 3000. During the General Meeting of Shareholders of the AGRIA GROUP HOLDING AD, held on 29 th June 2021, is adopted resolution for determinating the amount of permanent monthly remuneration of the memebers of the Board of Directors and the Executive Director of the Company, as follows: regular full monthly remuneration to each member of the Board of Directors in the amount of BGN 4000; regular full monthly remuneration Executive Director of the Company in the amount of BGN 10 000. Remunerations for the members of the Board of Directors of AGRIA GROUP HOLDING AD set by the General Meeting of Shareholders, held on 29th June 2021: Position Full monthly remuneration in BGN Executive member of BoD and Executive Director Emil Raykov BGN 10 000 Member of BOD Deyan Ovcharov BGN 4 000 Member of BOD Stanimir Buzhev BGN 4 000 Member of BOD Daniela Taneva BGN 4 000 Member of BOD Anna Belchinska BGN 4 000 During the reporting financial year AGRIA GROUP HOLDING AD have paid additional remuneration to the members of the Board of Directors,for 2020 in their capacity, determined by the General Meeting of Shareholders, held on June 29th 2021, in the total amount of BGN 300 000.00, which is distributed in the form of additional remuneration among the members of the Board of Directors of Agria Group Holding AD within the determined total voted amount, as follows: Emil Veselinov Raykov receives additional remuneration in the amount of BGN 250 000.00. ; Stanimir Rusev Buzhev receives additional remuneration in the amount of BGN 25 000.00; Anna Dimitrova Belchinska receives additional remuneration in the amount of BGN 25 000.00. For 2021 the following remunerations have been calculated from Agria Group Holding AD to the members of the company's Board of Directors: Position gross annual remuneration in BGN for 2021 Executive member of BoD and Executive Director Emil Raykov BGN 96 000 Member of BOD Deyan Ovcharov BGN 42 000 Member of BOD Stanimir Buzhev BGN 42 000 Member of BOD Daniela Taneva BGN 42 000 Member of BOD Anna Belchinska BGN 42 000 ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 71 Remuneration and other material and non-material incentives received by the person from companies belonging to the same group: Name Position gross remuneration in BGN for 2021 Anna Belchinska Manager of Korn Trade EOOD 117 160.00 Stanimir Buzhev Executive Director of Kristera AD 142 779.64 Gross remuneration of the members of the Board of Directors of AGRIA GROUP HOLDING AD for 2021 in BGN: Permanent remuneration Additional remuneration Total remuneration for 2021.: 1. EMIL VESELINOV RAYKOV 96000,00 250000,00 346000,00 2. DEYAN ROSENOV OVCHAROV 42000,00 42000,00 3. STANIMIR RUSEV BUZHEV 42000,00 25000,00 67000,00 4. DANIELA DIMITROVA TANEVA 42000,00 42000,00 5. ANNA DIMITROVA BELCHINSKA 42000,00 25000,00 67000,00 TOTAL: 264000,00 300000,00 564000,00 Note: The total amount of the additional remuneration of the members of the Board of Directors of the company does not include the payment of the independent directors, whose remuneration is a basic one without additional incentives. Emil Veselinov Raykov holds interests in the following companies as well: - Manager of Bora Invest EOOD, Varna; - Manager of Bora Energy EOOD, Varna; - Sole owner and manager of Emra EOOD, Varna; - Executive Director of RR Invest AD; - Member of the Board of Directors of Agra EAD - Member of the Board of Directors and Executive Director of Agri Grain AD - Holder of 223 shares in the capital of Kristera AD, Popovo. Anna Dimitrova Belchinska holds interests in the following companies as well: - Manager of Korn Trade EOOD, Varna. Stanimir Rusev Buzhev holds interests in the following companies as well: ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 72 - Executive Director of Kristera AD, Popovo. Daniela Dimitrova Taneva and Deyan Rosenov Ovcharov are independent members of the BoD within the meaning of POSA. They hold no interests in any form whatsoever neither in companies part of the group, nor in any other companies. The members of the BoD may freely acquire shares in the Company, as well as bonds of the Company. No contracts have been entered into with the Company by members of the BoD or related parties that are outside the ordinary operations of the Company or are materially diverging from market conditions. The members of the BoD may freely acquire shares in the Company, as well as bonds of the Company. No contracts have been entered into with the Company by members of the BoD or related parties that are outside the ordinary operations of the Company or are materially diverging from market conditions. Business policy of the Company planned for the next year, including expected investments and personnel development, expected income from investments and development of the Company, as well as forthcoming transactions of material importance for the Company The main objective of the Company is to participate in any form in other commercial companies or in their management. As a holding company, AGRIA GROUP HOLDING AD depends on the activities and results of its subsidiaries. The business policy of the Company, including investments, should be considered mainly in terms of the operations of its subsidiaries. 12. SUMMARY INFORMATION ABOUT IMPLEMENTED AND PLANNED INVESTMENTS AND BASIC TRENDS IN THEIR SPENDING Pursuant to the Investment program for 2021, Agria Group Holding AD has made the following investments: 1. Investments in purchase of agricultural land and acquisition of company equity shares –EUR 950,000. 2. Investments in the purchase of agricultural machinery and inventory – EUR 509,000. 3. Investments in storage facilities, transport and logistics – EUR 2,750,000. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 73 13. DECLARATION ON CORPORATE GOVERNANCE The Declaration on Corporate Governance aims to present information to the investors and interested parties referring to specific actions and measures undertaken by the management of Agria Group Holding AD for keeping the basic principles of the National Code for Corporate Governance and good practices in the field of corporate management. The declaration contains information and is based on the principles and norms for good corporate governance regulated by the Bulgarian legislation, laid down in the provisions of the National Code for Corporate Governance, Commercial Law, Law on public offering of securities, Accounting Act, Law on Independent Financial Audit and other laws and regulations and internationally accepted standards in the field of corporate management. In this relation, the requirement under Art. 100n (7) from POSA for the preparation and presentation of a Declaration for corporate governance as part of the Annual report on the operations of the Company for 2021 should be considered fulfilled. In accordance with Art. 100n (8) from POSA the Declaration on corporate governance contains: 1. Information regarding compliance, as appropriate, on part of the issuer Agria Group Holding AD with the National Code for Corporate Governance. 2. Information regarding practices of corporate governance which are applied by the issuer Agria Group Holding AD in accordance with the National Code for Corporate Governance. 3. Description of the main features of the measures for inside control and risk management of the issuer Agria Group Holding AD in relation to the financial reporting process. 0 500 1000 1500 2000 2500 3000 storage facilities, transport and logistics agricultural machinery and inventory agricultural land and acquisition of company equity shares Investments in 2021 in BGN thousand Investments in 2021 in BGN thousand ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 74 4. Information under Directive 2004/25/EO of the European Parliament and the Council from 21 April 2004 referring to take over propositions. 5. The composition and functioning of the administrative and managerial bodies of the issuer Agria Group Holding AD and their Committees. 6. Description of the diversity policy applied by the issuer Agria Group Holding AD to the administrative and managerial bodies in view of age, gender or education and professional experience, the targets of the diversity policy, manner of application and results during the reporting period and in case of non- application of such policy – explanation of the reasons why it is not applied. At a meeting of the Board of Directors of Agria Group Holding AD, Varna, conducted on 19 March 2008, a resolution was passed Agria Group Holding AD, Varna, in its capacity of public company registered for trade on the Parallel market of the Bulgarian Stock Exchange AD, Segment «А», with a BSE code AGR, to accept and follow the National Code for Corporate Governance approved by the Board of Directors of BSE-Sofia AD, by applying and following its main principles. By joining the National Code for Corporate Governance the Company expresses its engagement in keeping the principles of corporate governance which are part of the document. The Code’s application is based on the principle “observe and explain” which means that the Company observes the Code and in the event of deviation the corporate management of the Company shall clarify the reasons for that. The Company has announced its decision to adopt and comply with the National Corporate Governance Code in FSC’s E-REGISTER system for disclosure of regulated information to the commission by the public companies and other issuers of securities, in the EXTRI system used for disclosure and filing information, data and documents to BSE, as well as in the X3News system for disclosure and provision of information to the public. From the date of joining the National Code for Corporate Governance, the Company carries out its activity in accordance with the Code’s principles and decrees by conforming, applying and observing the corporate practices and internationally accepted standards for good corporate management in its activity. This is achieved by applying the principles for timely information disclosure; responsibility, independence and transparency of the activities of the corporate management; protecting shareholders’ rights and equality; respecting the interested parties. The Company has not deviated from the rules and norms in the Code and has observed and applied the good practices and principles of the corporate governance. In accordance with the principle for timely information disclosure, in 2021 the Company disclosed all regulated information in the time and manner provided for in the POSA and its regulations. The corporate management created preconditions for transparency in its relationships with investors, financial media and market analysts. There are rules for inside information and inside persons which regulate the obligations, manner and responsibility for public disclosure of inside information. In the website of the Company a section “For investors” can be found which facilitates the access to timely and up-to-date information for the Company’s investors (shareholders and potential investors), for the financial media and analysts and it also aims to create maximum transparency in their relationship with the management of Agria Group Holding AD. The management of the Company discloses its investment program for each financial year to its investors. Investors receive the information in a timely manner through the website of the company, email and via X3NEWS. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 75 The Company identifies as interested parties all persons who have interest in the economic prosperity of Agria Group Holding AD (shareholders, employees, clients, suppliers, banks and the public). The corporate management encourages the partnership between the Company and the interested parties aiming to achieve higher welfare for all parties and in view of the stable development of the Company while balancing the interests of all parties involved. The interested parties are presented with the necessary information regarding the Company’s activities, up-to-date data for its economic and financial condition and any other activity information that contributes for the right orientation and decision-making. In its policy with regard to the interested parties, the Company complies with the legal requirements based on the principles of transparence, accountancy and business ethics. In 2021 the corporate management activity is carried out in compliance with the legal requirements of POSA and its regulations, the Article of Association of the Company, as well as the National Code for Corporate Governance. Agria Group Holding AD is a public company with a single-tier management system. All members of the Board of Directors meet the legal requirements to hold such position, and have the required qualifications, knowledge and experience necessary to fulfil it. The functions and obligations of the corporate management, as well as its structure and competence, comply with the requirements of the Commerce Act, the Articles of Association of the Company, and the Code. The Board of Directors of the Company manages the Company in accordance with the goals and vision established by the Company and the interests of the shareholders. In performing their duties the members of the Board of Directors are guided by the generally accepted principles of integrity, managerial and professional competence, avoid and do not allow a real or potential conflict of interests. The annual report discloses the remuneration of the members of the Board of Directors as determined by the General Meeting, and this information is easily available to shareholders. The structure of the Board of Directors guarantees the independent and impartial actions and decisions of its members. The Board of Directors consists of five members, two of whom are independent within the meaning of POSA. The senior management of Agria Group Holding AD, represented by the corporate management, performs a key role and is responsible for the establishment of an internal control system and risk management and carries out routine monitoring in this direction. Agria Group Holding AD applies diversity policy regarding the administrative and managerial bodies of the Company in view of age, gender or education and professional experience. The persons in the administrative and managerial bodies of the issuer possess the required education, professional qualification, competency and experience to conduct the respective activity and meet the requirements of the Commercial Law, POSA and other legal norms and regulations referring to such position and they are selected/respectively hired with no restrictions on age and gender. Through encouraging diversity, the Company reveals its social engagement with the aim for sustainable development while observing the legal requirements. The diversity policy is instrumental in the effective distribution of the functions and obligations of the corporate management while its structure and competency follow the principles of diversification and diversity within the obligatory professional and managerial competence and contributes to the effective operation of the holding structure in the different type of operations of Agria Group Holding AD. As a company carrying out activities in the public interest, in accordance with the Independent Financial Audit Act, Agria Group Holding AD in its capacity of public company, has elected through its competent body (GMS) ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 76 an Audit Committee, whose members meet the legal requirements for performing this type of activity and whose activity, functions and reporting is in compliance with the decrees of the Independent Financial Audit Act. Guided by the principle of shareholders’ rights’ protection, the corporate management of Agria Group Holding AD guarantees the equal treatment of all the Company’s shareholders (including minority and foreign shareholders) and carries out a policy for protection of rights and assistance to shareholders in exercising their rights by facilitating their effective participation in the work of the General Meetings by means of timely announcement of the materials for the GMS; implementation of clear procedures with regard to the convening and carrying out of General Meetings of Shareholders; preparation of rules regarding the representation of shareholders in the General Meeting; possibility for participation in the distribution of profits by the Company in the event that the General Meeting of Shareholders adopts a specific resolution on the distribution of dividend. Through the Investor Relations Director of Agria Group Holding AD the company pursues its overall policy for assisting shareholders in the exercise of all their rights. Pursuant to the principles of the National Code for Corporate Government and the good practices in the field of corporate governance, the corporate management follows a policy of balanced interaction between shareholders, management and interested parties. Agria Group Holding AD has a working system for inside control and risk management in place, which guarantees correct identification of risks related to the Company’s activity and supports their effective management, ensures the adequate functioning of the accountancy and information disclosure systems. Inside control components Control environment Control environment covers the following elements: a) Communication and embracing honesty and ethical values. Embracing honesty and ethical values includes actions on behalf of the management to eliminate or diminish the incentives or temptations, which could suborn the personnel toward dishonest, unlawful or unethical actions. b) Competence. Competence means knowledge and skills necessary to execute the tasks determining the job description of an employee. c) Participation of the persons occupying operative management positions. The persons occupying operative management positions significantly influence control awareness in the company. The responsibilities of the persons working in management include supervision over the design of the model and the effective functioning of the warning procedures and processes for reviewing the efficiency of the Company’s inside control. d) Structure. The establishment of an adequate structure includes taking into consideration the main fields of competence and responsibilities and adequate hierarchy levels of accountancy and reporting. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 77 e) Attribution of responsibility and power. Attribution of responsibility and power includes the policy related to the relevant business practices, knowledge and experience of the main personnel and resources provided for performing their duties. It also includes the policies and communications guaranteeing that the personnel understands the goals of the company, understands how each individual’s actions are connected and contribute to these goals as well as who and in what manner is held accountable and responsible. f) Policy and practice related to human resources. The policy and practice related to human resources reveal important questions in view of Company control awareness. The standards for selecting the most qualified individuals – focusing on education, former professional experience, achievements and proof for honesty and ethical conduct, demonstrate the Company’s engagement to employ competent and promising employees. Promotions based on periodic assessments of results show Company’s engagement to promote qualified personnel to more responsible positions. Company’s risk assessment process 2. For the purposes of financial reporting the Company’s risk assessment process includes the manner of business risk identification by the management, which risks are essential for the preparation of a financial statement in accordance with the applicable for the company financial reporting framework; assesses their meaning and the likelihood of their occurrence and makes decisions how to meet and manage them and how to evaluate the results. 3. Risk related to dependable financial reporting including outside and inside events, transactions and circumstances, which can occur or have negative effect on the ability of the company to initiate, register, process and report financial data corresponding to the management statements for genuineness in the financial report. Risk can occur or change due to circumstances listed below: • Changes in the operational environment. Changes in legislation or in the operational environment can lead to change in pressure from the competition and different risks. • New personnel. New personnel can have different focus on inside control or different understanding on it. • New or renovated information systems. Substantial or fast changes in the information systems can change internal control related risks. • Fast growth. Substantial and fast expansions of business can limit control and increase the risk for defect in its operation. • New technologies. Introducing new technologies in the production processes or information systems can change internal control risks. • New business models, products and activities. Introducing new business fields or transactions and operations with which the company has little experience, can lead to new risks related to internal control ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 78 • Corporate reorganization. Reorganization can be followed by cuts in employments and changes in supervision and obligations distribution, which can change internal control risks. • Expanding business abroad. Expansion or acquisition of businesses abroad lead to new and often unique risks which can affect internal control, e.g. additional or changed risks in result of exchange operations. • New accountancy standards and clarifications. Introducing new accountancy principles or changes in the accountancy principles can affect risks related to preparation of the financial statements. The Company has developed information system including related business processes referring to financial reporting and communication. The information system includes infrastructure (physical and hardware components), software, people, procedures and data and actively uses IT. The information system related to financial reporting includes financial reporting system and consists of methods and documentation which: • Identify and reflect all valid transactions and operations; • Describe in a timely manner the transactions and operation and detailed enough to allow appropriate classification for the purposes of financial reporting; • Evaluate the transaction and operation in a manner allowing reflection in a fitting money value in the financial report; • Determine the timeframe during which the transactions and operation have arisen so that their reflection in the relevant financial report can be allowed; • Present in a fitting manner the transactions and operation and related disclosure in the financial report. Control measures 4. Control measures related to audit are categorized as policies and procedures and refer to the following: • Reviews on the execution and results. These control measures include reviews and analyses of the actual results in view of budgets, prognoses and results from previous periods; binding different data groups – operational or financial, together with analyses for interconnections and research and corrective measures; comparison of internal data with external sources of information; review on performance results grouped by functions and operations. • Information processing • Physical controls. They include: o Physical security of assets, including measures for safekeeping, e.g. secure facilities and conditions for access to assets and documentation; o Restricted access to computer programs and files; ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 79 o Periodic amount counting and comparing with the amounts reflected in the control documentation (e.g. comparing the cash counting results and the results from inventories with the accounting documents) Separation of duties. Allocating the responsibilities for transactions and operations approval, registry and responsibility for the assets to different persons. The separation of duties aims to decrease the possibilities for a certain person to be in position to conduct or cover mistakes or fraud in their usual line of duties. Information under Art. 10 Para 1 Letters ‘c’, ‘d’, ‘f’, ‘h’ and ‘i’ from Directive 2004/25/EC of the European Parliament and of the Council dated 21 April 2004 regarding takeover Para. 1, l. ‘c’ “Significant direct and indirect shareholdings (including indirect shareholdings through pyramid structures and cross-shareholdings) within the meaning of Article 85 of Directive 2001/34/EC” Agria Group Holding AD does not possess direct or indirect shareholdings under Article 85 of Directive 2001/34/EC Para. 1, l. ‘d’ “The holders of any securities with special control rights and a description of those rights” Agria group Holding AD does not have holders of securities with special control rights. Para. 1, l. ‘f’ “Any restrictions on voting rights, such as limitations of the voting rights of holders of a given percentage or number of votes, deadlines for exercising voting rights, or systems whereby, with the company’s cooperation, the financial rights attaching to securities are separated from the holding of securities” There are no restriction on voting rights in Agria Group Holding AD Para. 1, l. ‘h’ “The rules governing the appointment and replacement of board members and the amendment of the articles of association” The rules governing the appointment and replacement of board members and the amendment of the articles of association are described in the Charter of Agria Group Holding AD Para. 1., l. ‘i’ “The powers of board members, and in particular the power to issue or buy back shares” The powers of board members are settled in the Constitution documents of Agria Group Holding AD.. 14. ADDITIONAL INFORMATION UNDER APPENDIX NO. 2 TO ARTICLE 10, ITEM 1 OF ORDINANCE NO. 2 OF FSC ON THE PROSPECTUSES FOR PUBLIC OFFERING AND ADMISSION OF SECURITIES TO TRADING ON A REGULATED MARKET The information, in terms of quantity and quality, regarding the main categories of goods, products and/or services provided, as well as in connection with revenue by main types of activities, markets, sources of supply of raw materials, is to be considered in terms of the operations of the Issuer’s subsidiaries, because Agria Group Holding AD functions as a legal entity which is a holding company carrying out investment activities, which aims ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 80 to manage the stakes it holds in its subsidiaries, and which does not directly carry out any other production and/or commercial activity of its own. Information about the income dispersed by separate activity categories, inside and outside markets • Agribusiness – BGN 36,900 thousand; • Processing industry (storage and grain processing) – BGN 46,900 thousand; • Trading/export operations and services – BGN 387,200 thousand. During 2021 the realized sales of grain crops on the inside market and export sales are in the following proportion (in percent): 60% export transactions and 40% inside market transactions. During 2021 there were no direct investments in process. During the reporting period there were no large transactions and transactions of material importance to the issuer’s operations. Information on the loan agreements indicating conditions under them, concluded by the issuer and its subsidiaries, in their capacity as borrowers, , including the deadlines for repayment, as well information provided on guarantees and commitments. Information on loans granted by the issuer and its subsidiaries, providing guarantees or commitments in total to one person or its subsidiary, including related parties, indicating the name and title and UIC of the person, nature of the relationship between the issuer or its subsidiaries and the borrower, the amount of unpaid principal, interest rate, date of conclusion of the contract, deadline for repayment, amount of commitment, specific conditions and the purpose for which they are granted, if concluded as a target . ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 81 ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 82 ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 83 Transactions with related parties During the past year of 2021 Agria Group Holding AD entered into no large transactions with related parties, with the exception of ordinary economic activity transactions. The dealings with related parties were not carried out under special conditions and no guarantees were either provided or received. BGN thousand ASSET PER INVOICE LOANS AND PARTICIPATING INTEREST TOTAL RECEIVABLES, INCL..: 16 16,582 16,598 BORA INVEST EOOD 0 2,071 2,071 KRISTERA-AGRO EOOD 3 1,662 1,665 AGRO EOOD 3 113 116 KORN SECURITY EOOD 0 277 277 ELIT-86 EOOD EOOD 2 2,289 2,291 BORA ENERGY EOOD 0 7,148 7,148 BD AGRI EOOD 2 572 574 DIASVET EOOD 0 1,892 1,892 BD FARM EOOD 0 122 122 AGRA EAD 0 171 171 GRUVAR EOOD 2 28 30 TONI-M EOOD 2 135 137 ARIS-AGRO EOOD 2 102 104 LIABILITIES PER INVOICE LOAN TOTAL LIABILITIES, INCL..: 2 2,906 2,908 TONI-M EOOD 0 2,337 2,337 BORA ENERGY EOOD 0 286 286 TERA PROTEKT EOOD 2 0 2 KRISTERA AD 0 283 283 No related party transactions that are outside the usual scope of activity of the issuer or are materially diverging from market conditions have been entered into. No events or indicators of unusual nature with regard to the issuer exist. There is no off-balance-sheet reporting of transactions of Agria Group Holding AD. Information on the equity stakes held by Agria Group Holding AD in other companies is provided above in the present Report. ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 84 The management of the company’s financial resources is subject to the requirement for achieving maximum effectiveness, while at the same time meeting the terms of payment agreed with suppliers and clients. This includes a balanced approach with regard to own and attracted financial resources, which leads to lower financial costs. The result of such financial resources management policy is the faster reduction of the debt recovery period versus the debt payment period, which maintains a high liquidity of payments. This leads to the effective increase of the cash funds of the company and to the possibility of financing investment costs, without this always being at the expense of a financial resource extended by a bank, which optimises the payment of interest costs. The senior management of Agria Group Holding AD, represented by corporate governance, performs a key role and carries responsibility for the establishment of an internal control system and risk management and carries out routine monitoring in this direction. The company elaborated a risk management and internal audit system. The elected Audit Committee applies the principle of rotation in the election of auditor. In view of the dynamics As at 31.12.2021 Agria Group Holding AD has the following liabilities to bank loans in: Company Financing institution Type of loan Currency Authorized amount in KEUR Drawn amount in KEUR - 31.12.2021 Maturity Agria Group Holding DSK Bank Working Capital EUR 10 000 10 000 Nov 2022 Agria Group Holding DSK Bank Working Capital EUR 3 068 1 720 June 2022 Agria Group Holding DSK Bank Investment EUR 2 000 286 Dec 2022 Agria Group Holding DSK Bank Investment EUR 2 000 571 Jan 2024 Agria Group Holding DSK Bank Investment EUR 2 000 643 Feb 2024 Agria Group Holding DSK Bank Investment EUR 3 068 1 932 Aug 2027 Agria Group Holding Unikcredit Investment EUR 3 000 833 Mar 2024 Agria Group Holding Unicredit Investment EUR 3 000 1 132 Feb 2025 Agria Group Holding Unicredit Investment EUR 2 000 1 018 Sept 2026 Agria Group Holding Unicredit Investment/Working capital EUR 8 200 5 928 Oct 2028 Agria Group Holding DSK Bank Investment / Working capital EUR 3 068 3 042 Dec 2026 ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 85 of the market environment, the risk management system cannot be fully guaranteed, due to which all of the risks, facing any operating company, cannot be completely eliminated. Information about used by the company financial instruments as well as related to them risk management policy is presented in the attachment to the annual financial report of the company. In 2021 the Company has not issued any securities. No change has occurred in the basic management principles of the issuer during the reporting period. There are no arrangements known to the Company, as a result of which future changes may occur in the relative proportion of shares or bonds held by present shareholders or bondholders. As at 31.12.2021 the member of the Board of Directors Anna Dimitrova Belchinska owns 1600 shares from the capital of Agria Group Holding AD. In 2021 there were no changes in the members of the Board of Directors of Agria Group Holding AD. There are no pending judicial, administrative or arbitration proceedings, pertaining to liabilities or receivables of the issuer amounting to at least 10 per cent of its equity. Events that occurred after the end of the financial year 2021 On 16th March 2022 the transfer of 45% (forty-five percent) of the share capital of Silk Gas BG OOD to Agria Group Holding JSC have been entered in the Commercial register and register of NPLE at the Registry Agency. Silk Gas BG has been transformed from a limited liability company to a sole-owned limited liability company with sole owner of the capital Agria Group Holding JSC. On 29th of March 2022 the subsidiary of Agria Group Holding JSC, Korn Security Ltd., acquired the ownership of 10 031 430 ordinary registered shares with voting rights, representing 50% of the capital of the trading company AB INVESTMENTS GROUP JSC, developing activity in acquisition of real estate investments with exclusive locations. The ownership acquisition of the shares is executed in accordance with the required legislation procedure, by means of a giro of the temporary certificates representing the shares and entry in the shareholders register. The transaction is in line with the Company potential to create additional value by generating new business strands in the operations of the holding companies. The nature of such investment would lead to long-term cash flow security and sustainability as well as profitability on a group level, in line with investments in the agribusiness and grain trading sectors. On 31st of March 2022 the subsidiary of Agria Group Holding JSC. Korn Star LTD., concluded a contract for acquiring the right of ownership of the trading company ZKPU “Vedrina”, with headquarters and management address in the village of Vedrina, Dobrich Municipality, Dobrich Region, as a set of rights, obligations and factual relations within the meaning of Article 15 of the Commercial Law. The agreement is in line with the structure and scale of Agria Group Holding's investments, as well as with the holding's growing potential for development ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 86 in production of grain and trading. The purpose of the acquisition of the trading company is orientated towards the optimization of the processes of structuring the farmland properties by territories, consolidation of the total cultivated farmlands and right positioning of the farms with the scope of the territory in which the companies of the Holding develop commercial activity, which is a main priority in the strategy for development of the Group and is a next step to improving the structure of the production, supply and trade in grains. On 7th of April 2022, in the Commercial Register and in the Register of Legal Entities at the Registry Agency, the following changes were entered in the account of the subsidiary of Agria Group Holding AD Korn Security Ltd: 1.Increase of the capital of Korn Security LTD. from BGN 5,000 to BGN 12,205,000 or with the amount of BGN 12,200,000, by subscription of 122,000 new shares of BGN 100 each, the new shares of the capital being fully assumed by the sole owner of the capital Agria Group Holding JSC. 2.The former manager of Korn Security Ltd., Ilko Hristov Iliev, has been erased and Emil Veselinov Raykov, who has been elected and empowered as manager to represent the company, was registered. 3.The company name has been changed from Korn Security Ltd. to AG Property Invest Ltd. On 13th of April 2022, Agria Group Holding's subsidiary Bora Energy Ltd. acquired the ownership of 20,000 ordinary registered shares with voting rights, representing 1/3 of the capital of Energy Solar Technologies Ltd., developing activity in field of renewable energy production through the utilization of solar energy by investing in solar parks. Investments in renewable energy projects is within the scope of the business lines of Agria Group Holding JSC, as part of the holding's business model. Investments in renewable energy projects is within the scope of the business lines of Agria Group Holding JSC, as part of the holding's business model. The ownership acquisition of the shares is executed in accordance to the required legislation procedure, by means of a giro of the temporary certificates representing the shares and entry in the shareholders register. The nature of such investment would lead to long-term cash flow security and sustainability as well as profitability on a group level, in line with investments in the agribusiness and grain trading sectors. In February 2022, as a result of the military conflict between Russia and Ukraine, some countries announced new sanction packages against the state debt of the Russian Federation and a number of Russian banks, as well as personal sanctions against a number of individuals. Due to growing geopolitical tensions, since February 2022 there is a significant increase in the volatility of international grain markets, securities and currency, as well as a significant depreciation of the Russian ruble against the US dollar and the Euro. These events are expected to affect the activities of Russian and Ukrainian enterprises in various sectors of the economy. The Company has no direct exposures to related parties and / or key customers or suppliers from these countries. The Company considers these events as non-adjusting events after the reporting period, the quantitative effect of which cannot be evaluated at the moment with a sufficient degree of confidence. Currently, the management of the Company analyzes the possible impact of changing micro and macroeconomic conditions on the financial state of the Company and the group as a whole, and the results of operations. Information in accordance to Article 10, item 4 of Ordinance No. 2 of FSC ANNUAL CONSOLIDATED ACTIVITY REPORT FOR 2021 AGRIA GROUP HOLDING JSC 87 Link to the place on the website of the public company where the internal information under Art. 7 of Regulation (EU) № 596/2014 on the circumstances that occurred during the respective six months, or link to the news agency or other media selected by the issuer, through which the company publicly discloses inside information on market abuse (Regulation on market abuse) and repealing Directive 2003/6 / EC of the European Parliament and the Council and Directives 2003/124 / EC, 2003/125 / EC and 2004/72 / EC of the Commission (OJ, L) 173/1 of 12 June 2014) (Regulation (EU) № 596/2014) on the circumstances that occurred during the past year, or an electronic reference to the news agency or other media selected by the issuer through which the company discloses public inside information. The internal information under Art. 7 of Regulation (EU) № 596/2014 on the circumstances that occurred during the past year are available on the website of Extras (www.x3news.com), on the website of the Company (www.agriabg.com), "For investors” section, in the" Financial Statements " submenu and in the "News" section. Investor Relations Director: Teodora Ivanova Ivanova Tel.052/554000; 554014 E-mail [email protected] Address: 111 Knyaz Boris I Blvd., fl.9, Varna Emil Raykov – Executive member of the Board of Directors of Agria Group Holding AD Emil Veselinov Raykov Digitally signed by Emil Veselinov Raykov Date: 2022.04.28 17:19:48 +03'00' DECLARATION ON CORPORATE GOVERNANCE AGRIA GROUP HOLDING JSC 89 DECLARATION ON CORPORATE GOVERNANCE The Declaration on Corporate Governance aims to present information to the investors and interested parties referring to specific actions and measures undertaken by the management of Agria Group Holding AD for keeping the basic principles of the National Code for Corporate Governance and good practices in the field of corporate management. The declaration contains information and is based on the principles and norms for good corporate governance regulated by the Bulgarian legislation as laid down in the provisions of the National Code for Corporate Governance, Commercial Law, Law on public offering of securities, Accounting Act, Law on Independent Financial Audit and other laws and regulations and internationally accepted standards in the field of corporate management. In this relation the requirement under Art. 100n (7) from POSA for the preparation and presentation of a Declaration for corporate governance as part of the Annual report on the operations of the Company for 2021 should be considered fulfilled. In accordance with Art. 100n (8) from POSA the Declaration on corporate governance contains: 1. Information regarding compliance, as appropriate, on part of the issuer Agria Group Holding AD with the National Code for Corporate Governance. 2. Information regarding practices of corporate governance which are applied by the issuer Agria Group Holding AD in accordance with the National Code for Corporate Governance. 3. Description of the main features of the measures for inside control and risk management of the issuer Agria Group Holding AD in relation to the financial reporting process. 4. Information under Directive 2004/25/EO of the European Parliament and the Council from 21 April 2004 referring to take over propositions. 5. The composition and functioning of the administrative and managerial bodies of the issuer Agria Group Holding AD and their Committees. 6. Description of the diversity policy applied by the issuer Agria Group Holding AD to the administrative and managerial bodies in view of age, gender or education and professional experience, the targets of the diversity policy, manner of application and results during the reporting period and in case of non-application of such policy – explanation of the reasons why not applied. At a meeting of the Board of Directors of Agria Group Holding AD, Varna, conducted on 19 March 2008, a resolution was passed Agria Group Holding AD, Varna, in its capacity of public company registered for trade on the Parallel market of the Bulgarian Stock Exchange AD with a BSE code AGR, to accept and follow the National Code for Corporate Governance approved by the Board of Directors of BSE-Sofia AD, by applying and following its main principles. By joining the National Code for Corporate Governance the Company expresses its engagement in keeping the principles of corporate governance which are part of the document. The Code’s application is based on the principle “observe and explain” which means that the Company observes the Code and in case of lapse the corporate management of the Company is expected to clarify the reasons for that. 90 DECLARATION ON CORPORATE GOVERNANCE The Company has announced its decision to adopt and comply with the National Corporate Governance Code in FSC’s E-REGISTER system for disclosure of regulated information to the commission by the public companies and other issuers of securities, in the EXTRI system used for disclosure and filing information, data and documents to BSE, as well as in the X3News system for disclosure and provision of information to the public. From the date of joining the National Code for Corporate Governance, the Company carries out its activity in accordance with the Code’s principles and decrees by conforming, applying and observing the corporate practices and internationally accepted standards for good corporate management in its activity. This is achieved by applying the principles for timely information disclosure; responsibility, independence and transparency of the activities of the corporate management; protecting shareholders’ rights and equality; respecting the interested parties. The Company has not deviated from the rules and norms in the Code and has observed and applied the good practices and principles of the corporate governance. In accordance with the principle for timely information disclosure, in 2021 the Company disclosed all regulated information in the time and manner provided for in the POSA and its regulations. The corporate management created preconditions for transparency in its relationship with investors, financial media and market analysts. There are rules for inside information and inside persons which regulate the obligations, manner and responsibility for public disclosure of inside information. In the website of the Company a section “For investors” can be found which facilitates the access to timely and up-to-date information for the Company’s investors (shareholders and potential investors), for the financial media and analysts and also aims to create maximum transparency in their relationship with the management of Agria Group Holding AD. The management of the Company discloses its investment program for each financial year to its investors. Investors receive the information in a timely manner through the website of the company, email and via X3NEWS. The Company identifies as interested parties all persons who have interest in the economic prosperity of Agria Group Holding AD (shareholders, employees, clients, suppliers, banks and the public). The corporate management encourages the partnership between the Company and the interested parties aiming to achieve higher welfare for all parties and in view of the stable development of the Company while balancing the interests of all parties involved. The interested parties are presented with the necessary information regarding the Company’s activities, up-to-date data for its economic and financial condition and any other activity information which contributes for the right orientation and decision making. In its interested parties policy the Company complies with the legal requirements based on the principles of transparence, accountancy and business ethics. In 2021 the corporate management activity is carried out in compliance with the legal requirements of POSA and its regulations, the Article of Association of the Company, as well as the National Code for Corporate Governance. Agria Group Holding AD is a public company with a single- tier management system. All members of the Board of Directors meet the legal requirements to hold such a position, and have the required qualifications, knowledge and experience necessary to fulfil it. 91 DECLARATION ON CORPORATE GOVERNANCE The functions and obligations of the corporate management, as well as its structure and competence, comply with the requirements of the Commerce Act, the Articles of Association of the Company, and the Code. The Board of Directors of the Company manages the Company in accordance with the goals and vision established by the Company and the interests of the shareholders. In their activities the members of the Board of Directors are guided by the generally accepted principles of integrity and managerial and professional competence and avoid and do not allow a real or potential conflict of interests. The annual report discloses the remuneration of the members of the Board of Directors as determined by the General Meeting, and this information is easily available to shareholders. The membership of the Board of Directors guarantees the independent and impartial actions and decisions of its members. The Board of Directors consists of five members, two of whom are independent within the meaning of POSA. Management The Company has a single-tier management system - a Board of Directors. Names, functions and remuneration of the members of the corporate management Agria Group Holding AD, Varna, has a single-tier management system and is managed and represented by a Board of Directors, which operates under the supervision of the General Meeting. The remunerations of the members of the Board of Directors are determined in accordance with the Remuneration Policy for the members of the Board of Directors of Agria Group Holding AD approved by the General Meeting of Shareholders. Agria Group Holding AD pays the members of the Board of Directors a regular remuneration which is approved by the General Meeting of Shareholders of the company, taking into account the obligations and the contribution of each members of the Board of Directors to the activity and the results of the company , as well as the opportunity recruit and retain qualified and loyal members of the Board of Directors and compliance of the interests of the members of the Board of Directors with the long-term interests of the Company to coincide. In view of the financial and economic standing of the Company and the certain input of the members of the Board of Directors of AGRIA GROUP HOLDING AD, during the reporting 2021 the 92 DECLARATION ON CORPORATE GOVERNANCE members of the Board of Directors received fixed remunerations, which certain amount was approved by the General Meeting of Shareholders of the Company. The amount of the permanent monthly remuneration of the members of the Board of Directors, until the date of the resolution from Ordinary the General Meeting of Shareholders of AGRIA GROUP HOLDING AD,held on 29 th June 2021 is determined as follows: regular full monthly remuneration to each member of the Board of Directors who is executive member/executive director in the amount of BGN 6000 and equal regular full monthly remunerations to the remaining members of the Board in the amount of BGN 3000. During the General Meeting of Shareholders of the AGRIA GROUP HOLDING AD, held on 29 th June 2021, is adopted resolution for determinating the amount of permanent monthly remuneration of the memebers of the Board of Directors and the Executive Director of the Company, as follows: regular full monthly remuneration to each member of the Board of Directors in the amount of BGN 4000; regular full monthly remuneration Executive Director of the Company in the amount of BGN 10 000. Remunerations for the members of the Board of Directors of AGRIA GROUP HOLDING AD set by the General Meeting of Shareholders, held on 29th June 2021: Position Full monthly remuneration in BGN Executive member of BoD and Executive Director Emil Raykov BGN 10 000 Member of BOD Deyan Ovcharov BGN 4 000 Member of BOD Stanimir Buzhev BGN 4 000 Member of BOD Daniela Taneva BGN 4 000 Member of BOD Anna Belchinska BGN 4 000 During the reporting financial year AGRIA GROUP HOLDING AD have paid additional remuneration to the members of the Board of Directors,for 2020 in their capacity, determined by the General Meeting of Shareholders, held on June 29th 2021, in the total amount of BGN 300 000.00, which is distributed in the form of additional remuneration among the members of the Board of Directors of Agria Group Holding AD within the determined total voted amount, as follows: Emil Veselinov Raykov receives additional remuneration in the amount of BGN 250 000.00. ; Stanimir Rusev Buzhev receives additional remuneration in the amount of BGN 25 000.00; Anna Dimitrova Belchinska receives additional remuneration in the amount of BGN 25 000.00. For 2021 the following remunerations have been calculated from Agria Group Holding AD to the members of the company's Board of Directors: Position gross annual remuneration in BGN for 2021 Executive member of BoD and Executive Director Emil Raykov BGN 96 000 Member of BOD Deyan Ovcharov BGN 42 000 Member of BOD Stanimir Buzhev BGN 42 000 Member of BOD Daniela Taneva BGN 42 000 Member of BOD Anna Belchinska BGN 42 000 93 DECLARATION ON CORPORATE GOVERNANCE Remuneration and other material and non-material incentives received by the person from companies belonging to the same group: Name Position gross remuneration in BGN for 2021 Anna Belchinska Manager of Korn Trade EOOD 117 160.00 Stanimir Buzhev Executive Director of Kristera AD 142 779.64 Gross remuneration of the members of the Board of Directors of AGRIA GROUP HOLDING AD for 2021 in BGN: Permanent remuneration Additional remuneration Total remuneration for 2021.: 1. EMIL VESELINOV RAYKOV 96000,00 250000,00 346000,00 2. DEYAN ROSENOV OVCHAROV 42000,00 42000,00 3. STANIMIR RUSEV BUZHEV 42000,00 25000,00 67000,00 4. DANIELA DIMITROVA TANEVA 42000,00 42000,00 5. ANNA DIMITROVA BELCHINSKA 42000,00 25000,00 67000,00 TOTAL: 264000,00 300000,00 564000,00 Note: The total amount of the additional remuneration of the members of the Board of Directors of the company does not include the payment of the independent directors, whose remuneration is a basic one without additional incentives. The senior management of Agria Group Holding AD, represented by corporate management, performs a key role and carries responsibility for the establishment of an internal control system and risk management and carries out routine monitoring in this direction. Agria Group Holding AD applies diversity policy regarding the administrative and managerial bodies of the Company in view of age, gender or education and professional experience. The persons in the administrative and managerial bodies of the issuer possess the required education, professional qualification, competency and experience to conduct the respective activity and meet the requirements of the Commercial Law, POSA and other legal norms and regulations referring to such a position and they are selected/respectively hired with no restrictions on age and gender. Through encouraging diversity, the Company reveals its social engagement and aims for stable development while observing legal requirements. The diversity policy is instrumental in the effective distribution of the functions and obligations of the corporate management while its structure and competency follow the principles of diversification and diversity within the obligatory professional and managerial competence and contributes for the effective operation of the Holding structure in the different types of operation of Agria Group Holding AD. 94 DECLARATION ON CORPORATE GOVERNANCE Type of Operations of Agria Group Holding AD Agria Group Holding AD, through its subsidiaries, is engaged in the following types of business: ● Agribusiness in North-Eastern Bulgaria. ● Processing industry (storage and processing of grain and oil- bearing cultures) centred in Lyaskovets. ● Trade/export operations near the Port of Varna. Main logistic centers – the towns of Popovo, Devnya and Varna. As a company carrying out activities in the public interest, in accordance with the Independent Financial Audit Act, Agria Group Holding AD in its capacity of public company, has elected through its competent body (GMS) an Audit Committee, whose members meet the legal requirements for performing this type of activity and whose activity, functions and reporting is in compliance with the decrees of the Independent Financial Audit Act. Guided by the principle for protection of shareholders’ rights, the corporate management of Agria Group Holding AD guarantees the equal treatment of all the Company’s shareholders (including minority and foreign shareholders) and carries out a policy for protection of rights and assistance to shareholders in exercising their rights by facilitating their effective participation in the work of the General Meetings by means of timely announcement of the materials for the GMS; implementation of clear procedures with regard to the convening and carrying out of General Meetings of Shareholders; preparation of rules regarding the representation of shareholders in the General Meeting; possibility for participation in the distribution of profits by the Company in the event that the General Meeting of Shareholders adopts a specific resolution on the distribution of dividend. Through the Investor Relations Director of Agria Group Holding AD the company pursues its overall policy for assisting shareholders in the exercise of all their rights. Pursuant to the principles of the National Code for Corporate Government and the good practices in the field of corporate governance, the corporate management follows a policy of balanced interaction between shareholders, management and interested parties. Agria Group Holding AD has a working system for inside control and risk management in place, which guarantees correct identification of risks related to the Company’s activity and supports 95 DECLARATION ON CORPORATE GOVERNANCE their effective management, ensures the adequate functioning of the accountancy and information disclosure systems. Inside control components Control environment 1. Control environment covers the following elements: a) Communication and embracing honesty and ethical values. Embracing honesty and ethical values includes actions on behalf of the management to eliminate or diminish the incentives or temptations which could suborn the personnel toward dishonest, unlawful or unethical actions. b) Competence. Competence means knowledge and skills necessary to execute the tasks determining the job description of an employee. c) Participation of the persons occupying operative management positions. Control awareness in the company is significantly influenced by the persons occupying operative management positions. The responsibilities of the persons working in management include supervision over the design of the model and the effective functioning of the warning procedures and processes for reviewing the efficiency of the Company’s inside control. d) Structure. The establishment of an adequate structure includes taking into consideration the main fields of competence and responsibilities and adequate hierarchy levels of accountancy and reporting. e) Attribution of responsibility and power. Attribution of responsibility and power includes the policy related to the relevant business practices, knowledge and experience of the main personnel and resources provided for performing their duties. It also includes the policies and communications guaranteeing that the personnel understands the goals of the company, understands how each individual’s actions are connected and contribute to these goals as well as who and in what manner is held accountable and responsible. f) Policy and practice related to human resources. The policy and practice related to human resources reveal important questions in view of Company control awareness. The standards for selecting the most qualified individuals – focusing on education, former professional experience, achievements and proof for honesty and ethical conduct, demonstrate the Company’s engagement to employ competent and promising employees. Promotions based on periodic assessments of results show Company’s engagement to promote qualified personnel to more responsible positions. 96 DECLARATION ON CORPORATE GOVERNANCE Company’s risk assessment process 2. For the purposes of financial reporting the Company’s risk assessment process includes the manner of business risk identification by the management, which risks are essential for the preparation of a financial statement in accordance with the applicable for the company financial reporting framework; assesses their meaning and the likelihood of their occurrence and makes decisions how to meet and manage them and how to evaluate the results. 3. Risk related to dependable financial reporting including outside and inside events, transactions and circumstances which can occur or have negative effect on the ability of the company to initiate, register, process and report financial data corresponding to the management statements for genuineness in the financial report. Risk can occur or change due to circumstances listed below: - Changes in the operational environment. Changes in legislation or in the operational environment can lead to change in pressure from the competition and different risks. - New personnel. New personnel can have different focus on inside control or different understanding on it. - New or renovated information systems. Substantial or fast changes in the information systems can change internal control related risks. - Fast growth. Substantial and fast expansions of business can limit control and increase the risk for defect in its operation. - New technologies. Introducing new technologies in the production processes or information systems can change internal control risks. - New business models, products and activities. Introducing new business fields or transactions and operations with which the company has little experience, can lead to new risks related to internal control - Corporate reorganization. Reorganization can be followed by cuts in employments and changes in supervision and obligations distribution, which can change internal control risks. - Expanding business abroad. Expansion or acquisition of businesses abroad lead to new and often unique risks which can affect internal control, e.g. additional or changed risks in result of exchange operations. - New accountancy standards and clarifications. Introducing new accountancy principles or changes in the accountancy principles can affect risks related to preparation of the financial statements. The Company has developed information system including related business processes referring to financial reporting and communication. The information system includes hardware, software, people, procedures and data and actively uses IT. 97 DECLARATION ON CORPORATE GOVERNANCE The information system related to financial reporting includes financial reporting system and consists of methods and documentation which: - Identify and reflect all valid transactions and operations; - Describe in a timely manner the transactions and operation and detailed enough to allow appropriate classification for the purposes of financial reporting. - Evaluate the transaction and operation in a manner allowing reflection in a fitting money value in the financial report. - Determine the timeframe during which the transactions and operation have arisen so that their reflection in the relevant financial report can be allowed. - Present in a fitting manner the transactions and operations and related disclosure in the financial report. Control measures 4. Control measures related to audit are categorized as policies and procedures and refer to the following: - Reviews on the execution and results. These control measures include reviews and analyses of the actual results in view of budgets, prognoses and results from previous periods; binding different data groups – operational or financial, together with analyses for interconnections and research and corrective measures; comparison of internal data with external sources of information; review on performance results. - Information processing - Physical controls. These activities include: Physical security of assets, including measures for safekeeping, e.g. secure facilities and conditions for access to assets and documentation; Restricted access to computer programs and files; Periodic amount counting and comparing with the amounts reflected in the control documentation (e.g. comparing the cash counting results and the results from inventories with the accounting documents) - Separation of duties. Allocating the responsibilities for transactions and operations approval, registry and responsibility for the assets to different persons. The separation of duties aims to decrease the possibilities for a certain person to be in position to conduct or cover mistakes or fraud in their usual line of duties. Information under Art. 10 Para 1 Letters ‘c’, ‘d’, ‘f’, ‘h’ and ‘i’ from Directive 2004/25/EC of the European Parliament and of the Council dated 21 April 2004 regarding takeover. 98 DECLARATION ON CORPORATE GOVERNANCE Para. 1, l. ‘c’ “Significant direct and indirect shareholdings (including indirect shareholdings through pyramid structures and cross-shareholdings) within the meaning of Article 85 of Directive 2001/34/EC” Agria Group Holding AD does not possess direct or indirect shareholdings under Article 85 of Directive 2001/34/EC Para. 1, l. ‘d’ “The holders of any securities with special control rights and a description of those rights” Agria group Holding AD does not have holders of securities with special control rights. Para. 1, l. ‘f’ “Any restrictions on voting rights, such as limitations of the voting rights of holders of a given percentage or number of votes, deadlines for exercising voting rights, or systems whereby, with the company’s cooperation, the financial rights attaching to securities are separated from the holding of securities” There are no restriction on voting rights in Agria Group Holding AD Para. 1, l. ‘h’ “The rules governing the appointment and replacement of board members and the amendment of the articles of association” The rules governing the appointment and replacement of board members and the amendment of the articles of association are described in the Charter of Agria Group Holding AD Para. 1., l. ‘i’ “The powers of board members, and in particular the power to issue or buy back shares” The powers of board members are settled in the Constitution documents of Agria Group Holding AD. Agria Group Holding AD: Emil Raykov Executive Director Emil Veselinov Raykov Digitally signed by Emil Veselinov Raykov Date: 2022.04.28 17:20:26 +03'00' 99 REPORT OF THE BOARD OF DIRECTORS OF AGRIA GROUP HOLDING AD ON THE APPLICATION OF THE REMUNERATION POLICY FOR THE COMPANY'S MEMBERS OF THE BOARD OF DIRECTORS, DRAWN UP IN COMPLIANCE WITH THE REQUIREMENTS OF ORDINANCE NO 48 OF THE FINANCIAL SUPERVISION COMMISSION AS OF 20 MARCH 2013 ON THE REQUIREMENTS FOR THE REMUNERATIONS, ADOPTED BY A RESOLUTION OF THE ORDINARY GENERAL MEETING OF THE SHAREHOLDERS, HELD ON 29 JUNE 2021 The present report was prepared by the Board of Directors of AGRIA GROUP HOLDING AD in accordance with the provision of Art. 12 (1) and Art.13 of ORDINANCE №48 of the Financial Supervision Commission of 20 March 2013 on the Requirements for the Remunerations and constitutes a separate document to the company's annual financial statements as at 31.12.2021. The report contains a review of the way in which the Remuneration Policy was enacted during 2021 and herewith is also attached information on the application of the Remuneration Policy for the next financial year. 1. Information about the decision-making process in elaborating the Remuneration policy, including, if applicable, information about the term and members of the Remuneration Committee, the name of the external consultants, whose services have been used in elaborating the Remuneration policy. The Remuneration policy for the members of the Board of Directors of AGRIA GROUP HOLDING AD, as well as any amendments and supplements thereto, is elaborated by the Board of Directors and approved by the General Meeting of Shareholders. Proposals for the adoption of a remuneration policy, respectively for amendments and / or supplements therein or for its revision are included and voted as a separate item on the agenda of the General Meeting of the shareholders of the company. A description and explanation of the significant changes and the way in which the vote results of the General Meeting have been taken into account, the opinions of the shareholders and the minutes of the General Meetings at which the remuneration policy was considered and voted are presented in an Appendix, which is an integral part of the policy, containing a Protocol for amendments or supplements to the remuneration policy. The present Policy was developed by the Company's Board of Directors in accordance with the procedure for adoption of decisions by the corporate board set out in the Company's Articles of Association. Pursuant to the regulatory requirements, the Policy was adopted by the Extraordinary General Meeting of Shareholders of AGRIA GROUP HOLDING AD, held on 29 th June 2021. All legal requirements and recommendation of the National Corporate Governance Code were taken into account in the development of the Remuneration policy for the members of the Board of Directors of AGRIA GROUP HOLDING AD. Under the Remuneration policy in force for the members of the Board of Directors of AGRIA GROUP HOLDING AD, the company has not set up a remuneration committee. When developing the Remuneration policy, the Board of Directors of AGRIA GROUP HOLDING AD have not used external consultants. The Remuneration policy for the members of the Board of Directors of AGRIA GROUP HOLDING AD aims to provide objective criteria for determining the corporate board's remuneration of the company with a view to attracting and retaining qualified and loyal members of the board and motivating them to work for the benefit of the company and its shareholders, as to avoid potential and actual conflicts of interest. During the reporting financial year AGRIA GROUP HOLDING AD has implemented the Remuneration policy for the members of the Board of Directors pursuant to the regulatory requirements for public companies, the objectives, long-term interests and development strategy of the company, as well as its financial and economic standing in the context of the national and European economic environment, as taking into account the recommendations of the National Corporate Governance Code. 100 AGRIA GROUP HOLDING AD has disclosed the Remuneration policy for the members of the Board of Directors through publishing it on the corporate website of the company. 2. Information about the relative weight of the variable and fixed remuneration of the members of management and controlling bodies Pursuant to the Remuneration policy in force for the members of the Board of Directors of AGRIA GROUP HOLDING AD, during the reporting financial year the Company paid to the members of the Board of Directors fixed remuneration, which certain amount has been approved by the General Meeting of Shareholders of the Company and considered: 1.1. The obligations and contribution of each member of the Board of Directors in the operations and results of the company; 1.2. The opportunity of recruiting and retaining qualified and loyal members of the Board of Directors; 1.3. Compliance of the interests of the Board members with the long-term interests of the company. The fixed remuneration of the members of the Board of Directors of AGRIA GROUP HOLDING AD is not based on the accomplished results. The volume of the fixed remuneration is in line with main activity of AGRIA GROUP HOLDING AD and the income from it, and taking into account that as a holding under the meaning of art. 277 and art. 278 of the Commercial Act, the income of the company mainly comprise dividents from subsidiaries controlled by the latter. In view of the financial and economic standing of the Company and the certain input of the members of the Board of Directors of AGRIA GROUP HOLDING AD, during the reporting 2021 the members of the Board of Directors received fixed remunerations, which certain amount was approved by the General Meeting of Shareholders of the Company. The amount of the permanent monthly remuneration of the members of the Board of Directors, until the date of the resolution from Ordinary the General Meeting of Shareholders of AGRIA GROUP HOLDING AD,held on 29 th June 2021 is determined as follows: regular full monthly remuneration to each member of the Board of Directors who is executive member/executive director in the amount of BGN 6000 and equal regular full monthly remunerations to the remaining members of the Board in the amount of BGN 3000. During the General Meeting of Shareholders of the AGRIA GROUP HOLDING AD, held on 29 th June 2021, is adopted resolution for determinating the amount of permanent monthly remuneration of the memebers of the Board of Directors and the Executive Director of the Company, as follows: regular full monthly remuneration to each member of the Board of Directors in the amount of BGN 4000; regular full monthly remuneration Executive Director of the Company in the amount of BGN 10 000. Remunerations for the members of the Board of Directors of AGRIA GROUP HOLDING AD set by the General Meeting of Shareholders, held on 29th June 2021: Position Full monthly remuneration in BGN Executive member of BoD and Executive Director Emil Raykov BGN 10 000 Member of BOD Deyan Ovcharov BGN 4 000 Member of BOD Stanimir Buzhev BGN 4 000 Member of BOD Daniela Taneva BGN 4 000 Member of BOD Anna Belchinska BGN 4 000 101 During the reporting financial year AGRIA GROUP HOLDING AD have paid additional remuneration to the members of the Board of Directors for 2020 in their capacity, determined by the General Meeting of Shareholders, held on June 29th 2021, in the total amount of BGN 300 000.00, which is distributed in the form of additional remuneration among the members of the Board of Directors of Agria Group Holding AD within the determined total voted amount, as follows: Emil Veselinov Raykov receives additional remuneration in the amount of BGN 250 000.00. ; Stanimir Rusev Buzhev receives additional remuneration in the amount of BGN 25 000.00; Anna Dimitrova Belchinska receives additional remuneration in the amount of BGN 25 000.00. Gross remuneration of the members of the Board of Directors of AGRIA GROUP HOLDING AD for 2021 in BGN: Permanent remuneration Additional remuneration Total remuneration for 2021.: 1. EMIL VESELINOV RAYKOV 96000,00 250000,00 346000,00 2. DEYAN ROSENOV OVCHAROV 42000,00 42000,00 3. STANIMIR RUSEV BUZHEV 42000,00 25000,00 67000,00 4. DANIELA DIMITROVA TANEVA 42000,00 42000,00 5. ANNA DIMITROVA BELCHINSKA 42000,00 25000,00 67000,00 TOTAL: 264000,00 300000,00 564000,00 The percentage ratio of the total amount of the permanent remunerations compared to the total amount of the remunerations of the members of the Board of Directors of Agria Group Holding AD for 2021 (constants plus variables) is 46.80%. The percentage ratio of the total amount of variable remuneration compared to the total amount of remuneration of the members of the Board of Directors of Agria Group Holding AD for 2021 (constants plus variables) is 53.20%. Therefore, fixed remuneration represents a sufficiently large part of the total remuneration (fixed and variable). Note: The total amount of the additional remuneration of the members of the Board of Directors of the company does not include the payment of the independent directors, whose remuneration is a basic one without additional incentives. 3. Information about the criteria for accomplished results, based on which, stock options, stocks of the Company or other types of variable remuneration are provided and an explanation how the criteria under Art. 14, Para 2 and 3 from Ordinance №48 contribute to the long-term interests of the Company The Remuneration policy for the members of the Board of Directors of AGRIA GROUP HOLDING AD does not provide an option for granting company stocks, stock options and other appropriate financial instruments. The Remuneration policy of AGRIA GROUP HOLDING AD provide an option for additional variable remuneration to the members of the Board of Directors of Agria Group Holding AD. The total amount of the additional variable remuneration to the members of the Board of Directors (except for the independent directors who receive only base remuneration without additional incentives) is determed with a view to the financial- econonomic standing of the company, the input of the members of the Board of Directors and the accomplished results. 102 The criteria for achieved results are subject to encourage the stability of the Company in the long term and to also include non-financial indicators, which are essential for the long-term activity of the Company, for example compliance with the applicable rules and procedures. 4. Clarifications regarding the applied methods for assessment whether the criteria for accomplished results have been achieved According to the Remuneration policy for the members of the Board of Directors of AGRIA GROUP HOLDING AD, the members of the Board of Directors of Agria Group Holding AD can receive additional variable remunerations, which total amount depends on the financial-economic standing ot the company, the input of the members of BoD and the accomplished results of the activity. The variable remuneration is determined by the accomplished results of the activity on a consolidated basis. The total amount of the additional remuneration of the members of the Company’s Board of Directors (with the exception of the independent directors, whose remuneration is only fixed without additional incentives) is no more than 3% (three percent) of the net consolidated profit of Agria Group Holding AD for the corresponding financial year. The amount of the additional remuneration proposed as a maximum is based on the consolidated financial results, as the holding company does not directly engage in commercial activities but depends on the activity and results of its subsidiaries. The variable remuneration of the members of the Board of Directors is accrued and paid in compliance with financial and non-financial criteria for achieved results. The criteria for achieved results should promote the long-term stability of the company and include non-financial indicators that are relevant for the long-term activity of the company, such as compliance with applicable rules and procedures. The criteria related to financial indicators are selected in accordance with how they reflect the creation of value by the Company and how this relates to the market capitalization. Financial indicators may include criteria related to consolidated profit before taxes, interest and depreciation, growth in consolidated income, consolidated profit, efficiency and value of new business. The non-financial criteria are related to the clients egagements and employees of the company, operational efficiency and corporate social responsibility, contributing to the stable and sustainable development of the Company and the holding group in economic, social and environmental aspects. The regular remuneration must represent a sufficiently large proportion of the total remuneration so as to allow the company to apply a flexible policy on variable remuneration, including the option not to pay when the criteria for achieved results are not met and where there is a significant deterioration in the company's financial situation. 5. Clarification regarding the correlation between the remuneration and the accomplished results During the reporting financial year AGRIA GROUP HOLDING AD have paid additional remuneration to the members of the Board of Directors,for 2020 in their capacity, determined by the General Meeting of Shareholders, held on June 29 th 2021, in the total amount of BGN 300 000.00, which is distributed in the form of additional remuneration among the members of the Board of Directors of Agria Group Holding AD within the determined total voted amount, as follows: Emil Veselinov Raykov receives additional remuneration in the amount of BGN 250 000.00. ; Stanimir Rusev Buzhev receives additional remuneration in the amount of BGN 25 000.00; Anna Dimitrova Belchinska receives additional remuneration in the amount of BGN 25 000.00. The variable remuneration is formed on the basis of achieved consolidated financial results, as the holding company does not perform direct commercial activity as it depends on the activity and results of its subsidiaries, subject to the upper limit of not more than 3% (three percent) of net consolidated profit for the financial year 2021 of Agria Group Holding AD. 103 6. Base remunerations and justification of the annual scheme for bonus payments and/or all other non- monetary additional remunerations The General Meeting of Shareholders convened on 16 July 2014, the General Meeting of Shareholders convened on 16 July 2015, the General Meeting of Shareholders convened on 22 June 2016, the General Meeting of Shareholders convened on 27 June 2017, the General Meeting of Shareholders convened on 25 June 2018, the General Meeting of Shareholders convened on 19 June 2019 and the General Meeting of Shareholders convened on 29 July 2020 and the General Meeting of Shareholders convened on 29 June 2021, did not determine additional remuneration to the members of the Board of Directors of AGRIA GROUP HOLDING AD through payment of bonuses and/or other non-monetary additional remunerations to the members of the company's corporate board. 7. Description of the main characteristics of the scheme for additional voluntary retirement insurance and information about the paid and/or due contributions by the Company in favor of the Director for the respective financial year, when applicable In terms of members of the Board of Directors of AGRIA GROUP HOLDING AD, there is no commitment on the part of the company in respect of additional voluntary pension insurance for board members and the company does not have liabilities for payment of contributions in favour of the directors for the reporting financial year. 8. Information regarding the deferment period for payment of variable remunerations The option for deferred payment of variable remunerations is in accordance with the mandatory provisions of the regulatory framework in force. 9. Information about the compensation policy upon contract termination Under the Remuneration policy of Agria Group Holding AD, the maximum amount of compensation payable by the company, other than the compensation payable by law (where applicable) in event of early termination of the contract with a member of the Board of Directors of Agria Group Holding AD, representing the company according to an entry in the Commercial Register at the Registry Agency, may not exceed the total amount of gross monthly remuneration payabe to them for the remainder of the period, but not more than 12 months. The amount of the compensation shall be fixed in the contract or an agreement between the parties and shall not exceed the amount specified in Remuneration policy. The Company is not liable for compensation in event of termination of a contract with a member of the Board of Directors of Agria Group Holding AD due to expiration and non-renewal of the term the member was elected for. The Company is not liable for compensetaion in event of early termination of the contract with a member of the BoD of Agria Group Holding AD due to failure to comply with the clause, which forbids the carry out of a competitive activity, or other failure to fulfill an obligation under the contract with a member of the BoD. the Company. During the reporting financial 2021 year a contract with a member of the Board of Directors has not been terminated. 10. Information about the period, during which the stocks cannot be transferred and the options on stocks cannot be exercised, concerning variable remuneration, based on stocks The current Remuneration policy for the members of the Board of Directors of AGRIA GROUP HOLDING AD does not provide such option. 11. Information about the policy for retaining a definite number of shares until the end of the term of the members of the management and controlling bodies after expiration of the period under item 10 The Remuneration policy in force for the members of the Board of Directors of AGRIA GROUP HOLDING AD does not provide such option. 104 12. Information about the contracts of the members of the management and controlling bodies, including the term of each contract, the notice period for termination and details regarding the compensations and/or other due payments in the event of early termination The Contracts with all members of the Board of Directors are entered for a period of five years as of July 2020. Information on compensations and/or other payments due in the event of early termination are presented in Item 9 of the present Report 13. Full amount of the remuneration and other incentives of the members of the management and controlling bodies for the respective financial year For 2021 the following remunerations have been calculated from Agria Group Holding AD to the members of the company's Board of Directors: Position gross annual remuneration in BGN for 2021 Executive member of BoD and Executive Director Emil Raykov BGN 96 000 Member of BOD Deyan Ovcharov BGN 42 000 Member of BOD Stanimir Buzhev BGN 42 000 Member of BOD Daniela Taneva BGN 42 000 Member of BOD Anna Belchinska BGN 42 000 During the reporting financial 2021 year AGRIA GROUP HOLDING AD have paid additional remuneration to the members of the Board of Directors for 2020 in their capacity, determined by the General Meeting of Shareholders, held on June 29 th 2021, in the total amount of BGN 300 000.00, which is distributed in the form of additional remuneration among the members of the Board of Directors of Agria Group Holding AD within the determined total voted amount, as follows: Emil Veselinov Raykov receives additional remuneration in the amount of BGN 250 000.00. ; Stanimir Rusev Buzhev receives additional remuneration in the amount of BGN 25 000.00; Anna Dimitrova Belchinska receives additional remuneration in the amount of BGN 25 000.00. For 2021 the members of the Board of Directors of the Company have not received other material incentives from Agria Group Holding AD. 14. Information about the remuneration of each person, who has been a member of a management or controlling body of a public company for a certain period in the respective financial year: a) full amount of the paid and/or accrued remuneration of the person for the respective financial year For 2021 the following remunerations have been calculated from Agria Group Holding AD to the members of the company's Board of Directors: Position Gross annual remuneration in BGN Executive member of BoD and Executive Director Emil Raykov BGN 96 000 Member of BOD Deyan Ovcharov BGN 42 000 Member of BOD Stanimir Buzhev BGN 42 000 Member of BOD Daniela Taneva BGN 42 000 Member of BOD Anna Belchinska BGN 42 000 105 During the reporting financial year AGRIA GROUP HOLDING AD have paid additional remuneration to the members of the Board of Directors for 2020 in their capacity, determined by the General Meeting of Shareholders, held on June 29th 2021, in the total amount of BGN 300 000.00, which is distributed in the form of additional remuneration among the members of the Board of Directors of Agria Group Holding AD within the determined total voted amount, as follows: Emil Veselinov Raykov receives additional remuneration in the amount of BGN 250 000.00. ; Stanimir Rusev Buzhev receives additional remuneration in the amount of BGN 25 000.00; Anna Dimitrova Belchinska receives additional remuneration in the amount of BGN 25 000.00. In 2021 members of the Company' s Board of Directors have not received non-monetary benefits. The company does not have deferred or contingent liabilities arising during the year, even if the remuneration is due at a later stage As of 31.12.2021 AGRIA GROUP HOLDING AD does not owe amounts for payment of pensions or retirement benefits. b) remuneration and other material and non-material incentives received by the person from companies belonging to the same group Name Position gross remuneration in BGN for 2021 Anna Belchinska Manager of Korn Trade EOOD 117 160.00 Stanimir Buzhev Executive Director of Kristera AD 142 779.64 c) remuneration received by the person in the form of distribution of profit and/or bonuses and the reasons for their payment In 2021 no member of the Board of Directors of AGRIA GROUP HOLDING AD has received remuneration from the Company in the form of profit distribution and/or other bonuses from AGRIA GROUP HOLDING AD. d) any additional payments for services provided by the person beyond his usual functions when such payments are permitted under contract concluded with him The contracts with the members of the Board of Directors of AGRIA GROUP HOLDING AD do not provide payment for services beyond their usual functions. e) paid and/or accrued compensation on the occasion of termination of duties during the past financial year In 2021 compensations have not been paid and/or accrued on the occasion of termination of the functions of the Board of Directors of AGRIA GROUP HOLDING AD. f) overall assessment of all non-cash benefits, treated as remuneration, except for those pointed out under letters “a”- “e” In 2021 none of the member of the Board of Directors of AGRIA GROUP HOLDING AD has received non- cash benefits treated as remuneration than those specified under letters “a” – “e”. g) information on all loans granted, payments of welfare costs and guarantees on the part of the company or its subsidiaries or other companies subject to consolidation in the annual financial statements, including data on the remaining outstanding part and the interest As of the end of 2021, there are no active and unpaid cash loans from members of the Board of Directors of the company. In 2021, in respect of all of the members of the Board of Directors of AGRIA GROUP HOLDING AD, 106 owes no payments of social and household expenses and guarantees from the company or its subsidiaries or other companies that are subject to consolidation in the annual his financial statement. 15. Information about stocks and/or stock options and/or other incentive schemes based on stocks: The Remuneration policy in force for the members of the Board of Directors of AGRIA GROUP HOLDING AD does not provide an option for granting stock options, company shares or other types of incentive schemes based on stock for members of the corporate board, respectively, such have not been paid or provided. 16. Annual change in the remunerations, the results of the company and the average volume of the remunerations of full-time employees, who are not directors, during the last at least 5 financial years, presented altogether in a way that can be compared 17. Information on exercising the option to request a refund of the variable remuneration The Company applies a flexible policy on variable remuneration, including exercising the option for the same to be refunded, when there is no compliance with the clause prohibiting the carry out of competition, due to other culpable failure to comply with the provisions of the management contract by a member of the Board, including significant deterioration of the financial situation of the company as a result of actions and transactions by a member of the Board of Directors, which significantly deviate from the market conditions, as well as actions of any nature harmful to the company. 18. Information on any deviations from the procedure for the implementation of the remuneration policy in connection with exceptional circumstances referred to in Article 11, para 13, including the explanation of the nature of the exceptional circumstances and the indication of the specific elements derogated from. During 2021 there are no exceptional circumstances in which the company has temporarily suspended the implementation of the Remuneration policy. Information on application of the Remuneration Policy of the members of the Board of Directors of AGRIA GROUP HOLDING AD for the next financial year As of the date of preparation of the present report the Board of Directors of Agria group holding AD has not observed a need to adopt any amendments to the Remunartion policy for the members of the Board of Directors, adopted and endorsed by the General Meeting of the company. The Board of Directors shall discuss the Remunaration policy at a session and propose amendments to it, if deemed necessary, at the forthcoming annual General Meeting of shareholders in 2022. Year number of persons 2015 2016 Changes in 2016 from 2015 % 2017 Changes in 2017 from 2016 % 2018 Changes in 2018 from 2017 % 2019 Changеs in 2019 from 2018 % 2020 Chengеs in 2020 from 2019 % 2021 Changes in 2021 from 2020 % Total annual gross salaries of all members of Bod 5 146 674.44 216 000.00 47.26% 216 000.00 0.00% 216 000.00 0.00% 216 000.00 0.00% 216 000.00 0.00% 564 000.00 161.11% Average annual salary of a member of BoD 5 29 334.89 43 200.00 47.26% 43 200.00 0.00% 43 200.00 0.00% 43 200.00 0.00% 43 200.00 0.00% 112 800.00 161.11% Company's results - profit х 1 951 827.60 3 085 836.77 58.10% 4 732 937.79 53.38% 1 839 640.29 -61.13% 628 057.65 -65.86% 2 016 819.99 221.12% 2 086 000.43 3.43% Gross salaries of full-time employees who are not directors 10 120 797.89 301 944.82 149.96% 330 464.59 9.45% 336 509.95 1.83% 339 154.92 0.79% 136 526.78 -59.75% 157 949.18 15.69% Average gross salaries of full-time employees who are not directors 10 17 256.84 43 134.97 149.96% 47 209.23 9.45% 48 072.85 1.83% 48 450.70 0.79% 19 503.83 -59.75% 15 794.92 -19.02% 107 28 th April 2022 ………………………………………………. Emil Raykov – executive member of the Board of Directors Of Agria Group Holding AD Emil Veselinov Raykov Digitally signed by Emil Veselinov Raykov Date: 2022.04.28 17:20:58 +03'00' 108 DECLARATION under Article 100n (4), Item. 4 of POSA We, the undersigned Emil Veselinov Raykov, in the capacity of Chairman of the Board of Directors and Executive Director of Agria Group Holding AD, and Asya Stancheva Yordanova, in the capacity of Accountant of Agria Group Holding AD, hereby declare that to the best of our knowledge: 1. The set of annual financial statements of 2021, prepared in compliance with the applicable accounting standards, provides true and fair information on the assets and liabilities, the financial standing and profit of Agria Group Holding AD and the companies included in the consolidation. 2. The report on the operations of Agria Group Holding AD for 2021 contains an accurate overview of the development and activity outcome of Agria Group Holding AD along with the state of the Issuer and the companies included in the consolidation, together with a description of the main risks and insecurities the Issuer is facing. Declarants: Emil Raykov – Executive Director ................................................... Asya Yordanova – Accountant .................................................... ASYA STANCHEVA YORDANOVA Digitally signed by ASYA STANCHEVA YORDANOVA Date: 2022.04.28 16:42:33 +03'00' Emil Veselinov Raykov Digitally signed by Emil Veselinov Raykov Date: 2022.04.28 17:21:24 +03'00'
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