AC S.A. — Annual Report 2020

Apr 29, 2021

IMC S.A. and its subsidiaries

Annual report For the year ended 31 December 2020

and Report of the réviseur d'entreprises agréé

Pages

CONTENTS

Statement of Board of Directors responsibilities	3
Management statement	4
Single management report	5
Corporate governance statement	23
Report of the Réviseur d'entreprises agréé	27
Consolidated financial statements For the year ended 31 December 2020
Consolidated statement of comprehensive income	33
Consolidated statement of financial position	34
Consolidated statement of changes in equity	35
Consolidated statement of cash flows	36
Notes to the Consolidated financial statements	38

Statement of Board of Directors responsibilities for preparation and approval of Consolidated financial statements for the year ended 31 December 2020

Board of Directors of the Group of companies "IMC" (the Group) is responsible for preparing the Consolidated financial statements which reflect in all material aspects the financial position of the Group as at 31 December 2020, as well as the results of its activities, cash flows and changes in equity for the year then ended in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

In preparing Consolidated financial statements the Group's Board of Directors is responsible for:

• selecting appropriate accounting policies and their consistent application;

• making reasonable measurement and calculation;

• following principles of IFRS as adopted by the European Union or disclosing all considerable deviations from IFRS in the notes to Consolidated financial statements;

• preparing Consolidated financial statements of the Group on the going concern basis, except for the cases when such assumption is not appropriate;

• accounting and disclosing in the Consolidated financial statements all the relations and transactions between related parties;

• accounting and disclosing in the Consolidated financial statements all subsequent events that would result in an adjustment or a disclosure;

• disclosing all claims related to previous or potential legal proceedings;

• disclosing in the Consolidated financial statements all the loans or guarantees to the Management.

The Group's Board of Directors is also responsible for:

• development, implementation and control over effective and reliable internal control system in the Group;

• keeping accounting records in compliance with the legislation and accounting standards of the respective country of the Group's registration;

• taking reasonable steps within its cognizance to safeguard the assets of the Group;

• detecting and preventing fraud and other irregularities.

These Consolidated financial statements as at 31 December 2020 prepared in compliance with IFRS as approved by the European Union are approved on behalf of the Group's Board of Directors on 27 April 2021.

On behalf of the Board of Directors:

Chief Executive Officer	ALEX LISSITSA	__signed______
Chief Financial Officer	DMYTRO MARTYNIUK	__signed______

Management statement

This statement is provided to confirm that, to the best of our knowledge, the Consolidated financial statements for the year ended 31 December 2020, and the comparable information, have been prepared in compliance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and as adopted by the European Union and give a true, fair and clear view of Group's assets, financial standing and net results, and that the directors' report on the operations truly reflects the development, achievements and position of the Group, including a description of the key risk factors and threats.

On behalf of the Board of Directors:

Chief Executive Officer	ALEX LISSITSA	__signed______
Chief Financial Officer	DMYTRO MARTYNIUK	__signed______

Single management report

• 1. Business and General Conditions
• 1. Operational and Financial Results
• 1. Risk management report
• 1. Selected Financial Data

1. Business and General Conditions

Macro-economic development

World economy

CORN

in ths tonnes

Corn	2019/20	2020/21	Y-o-Y,%
World Production	1 116,552	1 134,05	1,6%
World Consumption	1 133,659	1 150,523	1,5%
World Ending Stocks	303,007	286,534	-5,4%

Source: USDA report "Grain: World Markets and Trade", February 2021

According to USDA report "Grain: World Markets and Trade", November 2020 China's combined grain imports are forecast at a record level in 2020/21 driven by demand for feedstuffs. The rise for 2020/21 is supported by strong recovery in the swine sector, which has been driving feed demand higher. The upsurge has partially stimulated grain trade and elevated prices in the world market.

According to USDA report "Grain: World Markets and Trade", February 2021, China imports of corn in 2020/21 are forecast at a record 24 million tons (vs. 7 mln tons in 2019/20). If realized, China would become the largest importer of corn in the world by a sizable margin. Main suppliers of corn to China are the USA and Ukraine.

5

WHEAT

in ths tonnes

Wheat	2019/20	2020/21	Y-o-Y,%
World Production	763,925	773,435	1,2%
World Consumption	746,981	769,320	3,0%
World Ending Stocks	300,102	304,217	1,4%

Source: USDA report "Grain: World Markets and Trade", February 2021

According to USDA report "Grain: World Markets and Trade", February 2021, global consumption of wheat is boosted on higher feed consumption in China and increased food, seed, and industrial use in India.

China's demand for feedstuffs continues to rise as its swine herd recovers from African swine fever. High corn prices are supporting record feed use of wheat and rice. China's 2020/21 wheat nonfood use (feed and residual) is forecast at a record 30.0 million tons, more than 10 million higher than the previous year. China wheat imports are raised for the sixth consecutive month to 10.0 million tons (twice higher vs. 2019/20), the highest level in more than 25 years. Although most wheat imports are allocated towards human consumption, their relatively low import prices compared to China's domestic corn prices make wheat attractive for feed use in China's southern region.

Ukrainian economy

Despite the unprecedented conditions caused by the spread of the COVID-19 pandemic price dynamics in Ukraine during 2020 remained broadly projected. The consumer inflation rate was 5%, which is fully in line with the inflation target of the National Bank of Ukraine. For comparison previous years' inflation amounted to 4.1% in 2019; 9.8% in 2018; 13.7% in 2017; 12.4% in 2016; 43.3% in 2015 and 24.9% in 2014.

In 2020, hryvnia devaluated by 16,2% after two years of strengthening by 16,9% in 2019 and by 1,4% in 2018.

According to Economic Activity Overview (2020) prepared by Ministry for Development of Economy, Trade and Agriculture of Ukraine, GDP of Ukraine decreased by 4.2% in 2020 (in 2019 GDP grew by 3.2%).

In 2020, in contrast to the previous two years, the volume of agricultural production decreased significantly - by 11.5% ("plus" 1.4% in 2019).

The key reason was a significant deterioration of weather conditions, which essentially affected the results of crop production, that contributed the most to the decline in agricultural production in 2020. The pandemic factor affected agricultural activity to a relatively lesser extent than most other economic activities.

Following the results of 2020 crop production decreased by 13.9% ("plus" 1.8% in 2019).

Crop production is one of the few industries that has not experienced the negative impact of quarantine restrictions. And as in previous years, mainly depended on weather conditions, which in 2020 mainly characterized as unstable and difficult (warm and snowless winter, low soil moisture, frost in spring and drought during the growing season in some regions) and had a significant negative impact during overwintering of winter crops, as well as vegetation and maturation of the main agricultural crops. This, in turn, affected the decrease in yields of most agricultural crops compared to last year, in particular: grain crops - a decrease in yield by 14.7%, harvest - by 17.6% as of 01.12.2020, sunflower - by 20.8% and 14.6%, respectively, soybeans - by 12.9% and 32.9%, sugar beets - by 6% and 29.6%, open-ground vegetables - by 2.9% and 0.8%, as well as fruits and berries – harvest "minus" 8.3% as of 01.12.2020.

Due to high financial costs for raising cattle and increasing competition in the domestic market with imported dairy products, low purchase prices for milk from households (according to the State Statistics Committee for 10 months of 2020 purchase prices for milk from households compared to enterprises were lower by 22.2%), the cattle headcount in Ukraine as of January 1, 2021 decreased by 6.2% ("minus" 6.8% as of January 1, 2020) and milk production in 2020 decreased by 4.2% ("minus" 4% in 2019).

According to State Customs Service of Ukraine, in 2020, agricultural products remained the basis of Ukraine's foreign trade. The share of agricultural products and food in total Ukrainian exports amounted to 45% or \$ 22.2 billion (+0.2% vs. 2019). At the same time, imports of these products reached \$ 6.5 billion, which is 13% more than last year. Foreign trade balance of agri-food products amounted to \$ 15.7 billion.

In the general structure of exports, exports of fats and oils increased the most - by 22% to \$ 5.8 billion. Exports of finished products increased by 4% to \$ 3.4 billion. Exports of animal produce fell by 7% to \$ 1.2 billion. Exports of crop products decreased by 8% to \$ 11.9 billion.

Import of all categories of agricultural products increased in 2020:

• animal produce was imported for a total of \$ 1.3 billion (+ 17%).
• crop production \$ 1.9 billion (+ 11%),
• fats and oils \$ 280 million (+ 11%)
• finished products were imported for \$ 2.9 billion (+ 13%).

In 2020, Ukraine exported its agricultural products to 169 countries. The top 5 largest buyers of these products are China, Egypt, the Netherlands, Turkey and Spain. Together, these countries generated 41% of agricultural export revenue.

COVID-19 pandemic

In late 2019, news of the spread of the COVID-19 virus (coronavirus) from China first appeared. In the first few months of 2020, the virus spread around the world, causing disruptions in business and economic activity. In March 2020, the World Health Organization declared the coronavirus a pandemic.

Many governments are taking increasingly stringent steps to help contain, and in many jurisdictions, now delay, the spread of the virus, including requiring self-isolation/ quarantine by those potentially affected, implementing social distancing measures, and controlling or closing borders and "locking-down" cities/regions or even entire countries. These measures have slowed down the economies both in Ukraine but globally as well with the potential of having wider impacts on the respective economies as the measures persist for a greater period of time.

COVID-19 adversely affected global economic conditions in 2020 and the Company expects this will continue into 2021 and possibly longer. The situation surrounding COVID-19 remains fluid, and we are actively managing our response in collaboration with customers, government officials, team members and business partners and assessing potential impacts to our financial position and operating results, as well as developments in our business.

The pandemic outbreak in Ukraine forced us to quickly adapt our operations and support healthcare system in regions of our operations.

To prevent the spread of COVID-19 coronavirus since mid-February, the company has taken proactive preventative measures in accordance with an approved program of action aimed primarily at protecting the health of its employees and their families, our suppliers and consumers.

The administrative staff of the management company and about 95% of administrative personnel of enterprises have worked remotely to 1st of June 2020. After June 1, 2020, with the weakening of quarantine at the state level, the company's management created the opportunity to choose the way to work for employees - it is possible to stay at a remote work and possibly return to the office. As practice has shown, remote work not only preserved the health of employees, but also did not reduce their efficiency, which was a pleasant bonus from the implemented precautionary measures. We successfully applied the work model, and all business processes have been properly transformed to reflect new realities.

Field sowing works were carried out with minimized number of employees involved, all of them were provided with protective equipment. In general, the sowing campaign runs as usual.

Group works with big suppliers and there was no significant disruption in the supplying of materials, which allowed us to complete the production process of growing, collecting and storing products as usual.

Our operations and logistics were running quite smoothly and without any disruptions.

Despite all concerns, the Group has fulfilled its obligations under all contracts.

Summing up all the results, we can say that fortunately IMC is one of the companies which did not suffer much from COVID-19 pandemic.

We continue to closely monitor the impact of COVID-19 on our business and geographies, including how it is impacting our team members, customers, suppliers and business partners.

Business owerview of IMC S.A. and its Subsidiaries (the hereinafter "the Group" or "IMC")

Business model

Today IMC is the vertically integrated and high-technology group of companies operating in Sumy, Poltava and Chernihiv region (northern and central Ukraine) in three segments: crop farming, dairy farming, elevators and warehouses.

Crop farming

The land bank of the company consists of five clusters within which the fields are situated close to each other. This allows increasing extensively the operational efficiency, and decreasing the expenditure through optimizing of human and technical resources involvement, as well as promoting of effective operational management.

IMC applies modern manufacturing and management practice in agriculture, and constantly invests in acquisition of new farming machinery and equipment of the leading world brands.

On the fields of IMC the system of different depth soil cultivation is applied: deep ripping, ploughing, disking, and cultivation. Rotation of these cultivation methods allows creating the optimal conditions for growing and development of agricultural crops.

The IMC technology for crop farming anticipates using of seeds, fertilizers, and crop-protecting products only from the best national and foreign manufacturers.

The elements of precision farming are tested and introduced, such as: systems for GPS-monitoring of the machinery, auto-piloting, satellite monitoring, variable norms for seeding, and differentiated fertilization.

Dairy farming

Dairy farming supplies high quality milk for customers-processing enterprises and ensures working places in the regions.

The major portion of milk which IMC produces is rated as a milk of Extra category and the rest – as category I. IMC is one of the few industrialized milk producers which has an Operational permit for Baby Food Products, allowing it to sell milk to baby-food processing plants. This is another evidence of the high quality of the produced milk by the Company.

Elevators and warehouses

IMC owns and operates storage facilities with significant storage capacity situated in close proximity to its operations in each of its clusters.

The Company utilizes only its own storage facilities. The existing storage capacities satisfy 100% of the Company's storage needs with sufficient capacity to meet its projected increased production in the short-term.

The existing storage capacities enable IMC to sell its produce throughout the marketing season, to reduce negative impact of crop pressure on prices at harvest time and at the same time to mitigate risks related to physical security of stocks.

Corporate structure

The parent company of the Group of companies "IMC" is IMC S.A. It is a limited company registered in accordance with the legislation of Luxembourg.

Unigrain Holding Limited is a direct subsidiary company of IMC S.A. and the parent company of Burat-Agro LLC, Burat LLC, Chernihiv Industrial Milk Company LLC, PJSC Mlibor. In addition, PJSC PKZ belongs directly to Burat LLC.

In 2011 IMC S.A. purchased (indirectly, through its direct subsidiary company Unigrain Holding Limited) the silo PJSC Vyryvske HPP and the following agrarian companies:

• PAE Slavutich
• PE Progress 2010
• PAE Promin
• AF Kalynivska-2005, Ltd
• AF Zhovtneva, Ltd
• AF Shid-2005, Ltd
• AIE Vyrynske, Ltd
• Pisky, Ltd
• SE Vyry-Agro

On November 30, 2011 to decrease expenses and to improve management quality the agrarian companies PAE Slavutich and PE Progress 2010 were joined to Chernihiv Industrial Milk Company LLC, and PAE Promin was joined to Burat-Agro LLC.

On August 30, 2011 owing to increase of volumes of export sales of the Group the direct subsidiary company Unigrain Holding Limited established Aristo Eurotrading Ltd (BVI).

During the 12-month period ended 31 December 2012 IMC S.A. purchased (indirectly, through its direct subsidiary company Unigrain Holding Limited and Burat-Agro LLC belongs directly to Unigrain Holding Limited) the following agrarian companies:

• Ukragrosouz KSM, Ltd
• PAC Slobozhanschina Agro
• Bluerice Limited. The following companies became the part of the Group, as their owner is Bluerice Limited: Agroprogress Holding Ltd, Agroprogress PE, Bobrovitsky Hlebzavod Ltd, Plemzavod Noviy Trostyanets Ltd, PJSC ''Bobrovitske HPP", Losinovka-Agro Ltd, Parafiyivka-Progress Ltd, Nosovsky Saharny Zavod Ltd.

In November 2013 owing to increase of volumes of export sales of the Group IMC established Negoce Agricole S.A. (Luxembourg).

In December 2013 IMC S.A. purchased (indirectly, through its subsidiary companies Unigrain Holding Limited and PAC Slobozhanschina Agro) the agrarian company AgroKIM Ltd.

During 2014-2016 Group's structure was optimized by mergering of some companies.

On 26 April 2017 IMC S.A. (formally Industrial Milk Company S.A., hereinafter the Company) informs that official name of the Company has been changed from Industrial Milk Company S.A. to IMC S.A.

In June 2019 trading company Aristo Eurotrading HK Limited was formed (through Unigrain Holding Limited).

Group strategy

On 13 February 2018 the Board of Directors of IMC S.A. (hereinafter "the Company") published the updating of the Company's strategy for 2016 – 2020:

• Before the introduction of the agricultural land market in Ukraine, the Company does not plan to expand the land bank in large scale, as it was planned earlier in the strategy 2016-2020, published on 15 February 2016 (see current report 3/2016 as of 15 February 2016).
• Other strategic goals published on 15 February 2016 concerning storage capacities and crop mix are unchanged: 1) Storage capacity modernization; 2) Growing of limited number of highly profitable export-oriented crops (corn, sunflower, soybean, wheat). Corn is a key crop with the share in crop mix about 50%.
• Taking into account a strong focus on business efficiency, the Company has defined additional strategic goal till 2020 achievement of a leading position among agricultural companies in Europe in introduction of innovations.
• Profit received in 2017-2020, the Company plans to invest mainly in projects on operational efficiency improvement, debt reduction and payment of dividends to its shareholders.

The Company's strategy for the years 2021-2030 was approved by the Board of Directors of IMC S.A. at the Board meeting held on 27 April 2021:

For the next 10 years, IMC will remain a purely agricultural company engaged in the cultivation of highly profitable, export-oriented crops. The company will focus on operational efficiency and sustainable development in relation to people, land and the environment. The company's strategy provides for the annual payment of dividends to IMC shareholders.

Further likely development

Further likely development of the Group in 2021 is planned as follows:

• strong focus on business efficiency we expect that implementation of our Research & Development department results will increase production efficiency in 2021.
• focusing on three high-margin crops corn, sunflower and wheat area under these crops is planned as 58%, 22% and 18% of the total crop mix, respectively;
• preservation of the land bank of the Group by prolonging land lease agreements with landlords;
• debt maintenance at the level of USD 33 million at the end of 2021 (USD 33.2 million at the end of 2020);
• storage capacity modernization and purchase of new machinery CAPEX forecast of USD 6 million;
• distribution of profit for interim dividends in 2021 will be considered at a meeting of the Board of Directors.

Risk management, internal control system, anti-corruption measures

Risk management at IMC

Risk management is the process of reducing the possibility of adverse consequences either by reducing the likelihood of an event or its impact or taking advantage of the upside risk. The goal of the risk management at IMC is to provide a reasonable assurance that Group's business objectives will be achieved. This process encompasses such stages as risk identification, risk assessment, risk respond and risk mitigation, monitoring.

Risk identification. Managers of every department are responsible for tracking of potential risks concerning theirs functions. Risks must obviously be identified before they can be managed.

Risk assessment. List of risks should be prioritised according to the the likelihood of occurrence and impact on the organization (department) goals. The most essential risks need urgent attention.

Risk respond and risk mitigation. Management has to construct effective plan to deal with each significant risk identified. Tools aiming to mitigate risks are established at internal documents (instructions, rules, methods, etc.).

Monitoring. Risks are monitored on an ongoing basis. Where risks change or new risks are identified then those risks are added to the risk assessment for appropriate categorisation and action. Internal audit process is the main tool for risk monitoring.

IMC's management is responsible for day-to-day monitoring, identification, assessment and planning mitigation activities concerning operational risks in the course of its ordinary performance. Internal controls at IMC are the main tools of operational risks mitigation process. Established internal policies and internal regulatory documents are the primary mediums of internal controls implementation.

The Board of Directors currently maintains responsibility for overseeing enterprise risk management process and strategic risks. Major risk exposures are regularly discussed at the board meetings.

IMC's accounting-related risk management system

IMC's control system relies on daily resource planning analyses which are detailed by cost center and cost article, department, thus providing all the necessary information for controlling inventories and products.

IMC established internal controlling instruments to secure proper accounting in compliance with legal requirements.

IMC's accounting procedures are governed by standardized guidelines and rules as well as a clearly defined course of action in different situation. Therefore, standard account parameters and booking directions for various production operations were established. Another control tool is the clear allocation of functions regarding various accounting processes. For Group consolidation and accounting purposes all bookkeeping data of the consolidated companies may be accessed automatically.

The internal control system of IMC is based on the accounting database thus integrating all controlling processes. Accounting processes are carried out on a high-level basis and are monitored and adjusted by specialists.

IMC's accounting-related risk management system is set up in a way that the risk of misrepresentation could mainly ensue from new business processes or amendments to legal provisions. Risks are contained by transferring decisions on accounting-relevant data resulting from new business processes to the management level. Ongoing continuation training regarding the applicable accounting provisions from time to time is provided to the management.

The Group's internal control and risk management system in relation to the process for preparing consolidated financial statements is closely related to control mechanisms of accounting procedures. Consolidated accountes are prepared on the basis of verified and approved accounting system data, which cannot be corrected. Consolidated accounts are carried out by specialists, the level of which is maintained annually by training. The accounts are verified by the management by comparing of control points with management reports.

The Internal Control and Risk Management Department

The Internal Control and Risk Management Department was established as the separate unit in a corporate governance structure of the Group.

The Department is created with the aim of the regular independent monitoring and estimation of effectiveness of the IMC corporate governance, efficiency of separate business processes at the level of group and separate structural subdivisions, assessing of adequacy of the risk management process, providing with recommendations and participation during an improvement process. The Department participates in improvement of internal control, risk management and governance processes.

The Department regularly provides the management of IMC and the Audit Committee with independent and objective valuations and consultations. This involves an objective analysis of actual data with the aim of estimation and expression of an opinion on reliability of systems, processes, operations.

IMC Corporate Misconduct Hotline

Corporate hotline was launched at IMC to prevent and inform possible breaches of internal regulations, such as cases of discrimination, dishonest conduct, harassment, thefts, any type of corruption and bribery, etc. The hotline encompasses several anonymous channels for whistleblowers – call-center, email box, web-interface. IMC guarantees anonymity and protection for all informants, if this does not contradict the current legislation. All reasonable masseges via hotline are processed and feedback is sent to whistleblowers. More information concerning the hotline for stakeholders is available via web-link https://imc.ethicontrol.com/web/en/pages/about.

Anti-corruption and bribery matters

It is the policy of the Group not to engage in bribery or corruption and comply with applicable anti-corruption laws.

We adhere to the UN Global Compact principles of bribery and anti-corruption:

• We shall work against corruption in all its forms, including extortion and bribery.
• Making, promising or offering any payments, gifts or inducements with the purpose of influencing someone (incl. government officials,
• suppliers, clients, etc.) to act improperly is strictly forbidden; the same applies to accepting payments, gifts or inducements.
• All payments should be reasonable and fall within the acceptable commercial practice.
• All such expenses have to be properly recorded in the accounts.
• We do not tolerate so-called facilitating payments (for example small unofficial payments to officials in order to speed up processes).
• The Group does not make political contributions.
• When engaging in business relationships the Group chooses its partners with the same zero tolerance approach to corruption and bribery.
• The Group appreciates the risk of corruption and bribery in the countries it operates and continues to take measures to minimize this risk.
• All funds received and paid by the Group and its subsidiaries during the course of business are strictly accounted and handled via bank transfers exclusively to minimize the possibilities of cash being taken in or out for the purposes of bribery. In 2020, the Group continued to ensure its adherence to such cash management.

Personnel

The COVID-19 pandemic was confirmed to have spread to Ukraine when the country's first case was confirmed to be hospitalized on 3 March 2020. The first and main changes in IMC, which were connected with personnel, concerned the strengthening of safety and working conditions. Production staff was transferred to the brigade type of work with a minimum number of personal contacts, provided with all necessary means of protection (masks, disinfectants, gloves, etc.). The administrative staff of the management company and about 95% of administrative personnel of enterprises have worked remotely to 1st of June 2020. The ability to work remotely for this category of employers are remained to this day.

Also, throughout 2020 one the main challenge was to restructure the means of communication and means of informing employees, as well as to prevent panic among staff. Despite the difficult situation, IMC Group continues to pay full salaries to all employees. The IMC has been retained all programs of material support and guarantees, but it has postponed motivational and business trips, team building, sports tournaments, corporate evets from March to November 2020. All work meetings were moved to Zoom.

In 2019, the IMC improved Policy "On targeted help to employees", which allows to receive and fixes the amount of financial support to employees, in the case of difficult life circumstances, births of children, weddings, reimbursement of expenses for treatment of employees and close relatives. This Policy was one of the most important in Coronavirus crisis. In 2020, the IMC spent UAH 1,1 million on financial support to employees (+19,6% to the amount of 2019): 0,58 million - reimbursement of expenses for treatment of employees and compensation for test of coronavirus SARS-CoV-2; 0,17 million - reimbursement of expenses for treatment of close relatives; 0,16 million - in the case of difficult life circumstances; 0,19 million - births of children, weddings etc.

The IMC spent UAH 2,58 million on motivational events for staff in 2020 (-35% to the amount of 2019): motivational trips abroad (from January to early March 2020) – UAH 2,03 million, Christmas gifts for employees and children of employees – UAH 0,55 million. 132 employees of the enterprises of the IMC participated in motivational trips in 2019.

In 2019 IMC implemented Education's Regulations, which defines the process of planning, implementing, administering and evaluating the effectiveness of learning. IMC provides its personnel with training and learning opportunities aligned with strategic goals and values (professionalism, responsibility, team-work, effectiveness, initiative, honesty, respect) of the Company. Employees obtain knowledge and improve their skills through specialized training programs conducted by internal and external providers. Our learning and development offerings cover range of learnings goals: starting a career, expanding knowledge, personal growth and leaderships development.

Of course, The COVID-19 pandemic affected the company's field of study. Only 1/4 of the planned funds were used. 90% of all events were online. Throughout 2020, 402 employees of IMC's departments were trained by representatives of agribusiness and trainee companies. The Company spent a total of around UAH 0,53 million on training in 2020 (- 55,8% to the amount of 2019).

In 2016 IMC implemented crucial policies that are extremely important for staff to understand that the company they work in is respectful to its employees and human rights. IMC employs people based on principles of equal opportunity, without distinction to race, color, gender, sexual orientation, religion, descent or origin.

IMC standards related to employees and human rights are declared in the following documents:

• Non-discrimination and equal opportunities in employment Policy
• Non-discrimination on grounds of sexual orientation and gender identity Policy
• Policy of collective bargaining
• Policy on freedom for workers to form or join trade unions
• Policy of nursing and expectant mothers
• Policy on working hours and overtime
• Employment of young person under the age of 18 Policy.

Policies are freely available to all employees and guests of IMC. The company policy prohibited discrimination based on color, ethnic or social origin, sex, pregnancy, civil, family status or status of a person caring for, language, religion or other opinion, political or other opinion, national or social origin, citizenship, economic status, association with a national minority, gender identity, age, disability, state of health, genetic characteristics of a person, and other signs or combinations of any of these attributes, actual or imaginary, as well as prohibited discrimination on the basis of association for any of the above listed features. The number of IMC staff by gender in 2020: men – 1445 (73%); women – 534 (27%); total – 1979.

Our company has gained significant experience for over 10 years in the agrarian sector of Ukraine. Our work becomes more systematic and orderly with every year. Based on our own experience and knowledge gained, in 2017 we formulated 10 rules of the IMC that reflect the values of the Company and should determine the actions of each IMC employee in certain life situations.

In 2018, the IMC introduced a new format for working with proposals and complaints about the company's activities. Employees and shareholders can send their application in writing to e-mail cs@imcagro.com.ua. Also, the IMC began to work with the Ethicontrol portal (imc.ethicontrol.com), which makes the appeal to the company absolutely confidential.

The IMC is proud of its stable and well-coordinated team of professionals, which has proven its resilience before the difficult 2020 year.

	Y2020	Y2019	Change in %
Total number of employees	1 979	2 103	-6%
operating personnel	1 404	1 503	-7%
administrative personnel	555	580	-4%
sales personnel	18	18	0%
non-operating personnel	2	2	0%
Wages and salaries and related charges per employee (USD, for 12 months ended 31 December)	11 141	11 362	-2%

Personnel structure and wages and related charges were the following:

Diversity policy applied in relation to management

The Company believes in the benefits diversity can bring to its workforce and tends to maintain a workforce comprised of talented and dedicated individuals whose skills and backgrounds reflect the nature of the agricultural business environment. The Company's workforce is intended to reflect a diverse mix of skills, experience, knowledge and backgrounds. The Company is fully committed to being an equal opportunities employer and is opposed to all forms of unlawful and unfair discrimination. All employees, whether part time, full time or temporary, being treated fairly and equally and with respect. Selection for employment, promotion, training or any other practice being made on criteria free from unlawful bias.

Management Incentive plan

The Extraordinary shareholders meeting approved on 4 July 2017 a management incentive plan providing to Management Team Members and Eligible Employees as defined in the Management Incentive Plan an option to purchase in aggregate up to 1 878 000 new shares of IMC S.A., such number being equal to 6% of the issued stock of IMC S.A. as at the adoption date of such plan, at the price decided at the discretion of the Board of Directors of the Company which shall be equal to at least one euro cent EUR 0.01.

Performance period of the Management Incentive Plan is 3 years, starting from January 1, 2017 and ending on December 31, 2019. During the performance period, the Board of Directors of the Company may discretionarily decide when the shares shall be issued by the Company to the Participants at the Subscription Price.

As a part of this incentive plan, 1 878 000 new ordinary shares were issued with subscription price USD 0.00115. As at 31 December 2017 the purchase option was fully exercised, market share price was USD 2.73.

Health, Safety and Environment (HSE) management system

Based on the experience of the world's leading companies, in 2016 IMC has started formation of the Health, Safety and Environment (HSE) management system. HSE department was formed at IMC's headquarter, designed to assist top-management of IMC in development and implementation of the company's strategy in these areas. On June 10, 2016 IMC approved a 5-year strategy of the company on Occupational Health and Safety and Environmental Protection in 2016-2020, which determines the priority directions of development of the company in this area.

At all IMC's enterprises carry out on Monitoring in the areas: natural resource use and environmental legislation, occupational safety at production (compliance review of ІMС HSE principles against the requirements of Ukrainian regulatory documents).

IMC is committed to involving all employees in the management for issues of Environment, Health & Safety and Social Aspects at IMC and its subsidiaries.

IMC's enterprises annually implement a set of measures, where, along with traditional safety briefing instructions and control measures, the following are applied:

• Improvement of labor conditions;
• Identification and elimination of industrial hazards;
• Health and safety management systems improvement;
• Health and safety trainings in partnership with the leading training institutions;
• Provision of modern and high quality personal and mass protective equipment;
• Raising employee awareness and safe work methods promotion;
• Improvement of health care services for the employees;
• Work with contractor organizations.

All IMC's enterprises have the Emergency Preparedness and Response plans (EPRP) for localization and liquidation of emergencies and accidents. The availability of such plans is obligatory in Ukraine and is regulated by legal requirements & local legislation.

The focus of the work of IMC enterprises in 2020 was aimed at maintaining and implementing legislative requirements in the field of Health, Safety and Environment and introducing uniform corporate standards for IMC as well as prevention of hazards and risks associated with the consequences COVID-19.

Realising the risks and the hazards associated with COVID-19 both world- and Ukraine-wide, IMC Group cannot remain aloof from what is happening around. We understand that clear and thought-through actions on the part of large business are important as never before to show maximum care for our employees and help out the people in the cities where we operate. Therefore, we believe it is our primary objective to prepare for potential consequences of the virus spread. We intend to use all of the available resources to safeguard our enterprises that they can continue operate without interruptions while securing jobs.

Health and safety of employees is the unconditional priority of the company. Beginning February 28, special measures were introduced at all IMC enterprises to combat the spreading of the virus. All public events and business trips were cancelled. Throughout 2020, in order to monitor compliance with quarantine restrictions, additional measures regulated by the orders of the IMC Central Office and the corresponding orders at enterprises were introduced.

IMC is doing its best to provide employees with personal protective equipment necessary during this crisis period, despite the shortage in the market. Over 90 thousand safety masks and respirators, over 60 thousand gloves and more than 2745 liters of disinfectants have been purchased for the workers of Uenterprises of the Group. All employees are provided with hand sanitizers. The stock of the means of protection is continuously replenished. We look for every opportunity to buy them, and as soon as we find them, they are immediately delivered to the enterprises.

IMC allocates the funds to purchase personal protective and special equipment for hospital workers and ambulances, whose employees carefully watch the adherence to the quarantine measures and are exposed to risk on a daily basis.

Despite the difficult situation, IMC Group continues to pay full salaries to all employees. The administrative staff of the management company and about 95% of administrative personnel of enterprises have worked remotely to 1st of June 2020. Workers at risk are on paid leaves or work remotely. Amid economic uncertainty, IMC enterprises decided not to have a tax break for now to secure the stability of local and national budgets along with the efficiency of actions taken to combat COVID-19 in Ukraine.

Throughout 2020, the implementation of the Corporate Standard "Safety Analysis of Work Execution" and "Corporate Transport Security Standard" were continued. Key directions for the implementation of these projects have been developed in 2019. The concept was approved by managers and engineers for labor protection at enterprises. Since February 2019, training of linear managers and personnel using the cascade training method began at the enterprises using modern means of video communication. Safety Analysis of Work Execution (SAWE) is a mandatory sequence of actions that is performed by an employee (group of employees) independently or with the participation of a manager before starting and periodically during the execution of work. The purpose of the SAWE is to analyze the possibility of safely performing/continuing work and taking the necessary measures to protect people and nature. The "Corporate Transport Security Standard" describes the minimum requirements for the safe use, operation, maintenance and repair of vehicles at enterprises and describes the requirements for personnel, the implementation of a program to improve the culture of driving and driving skills, and also regulates the procedure for periodically conducting targeted safety audits using checklists on 2 topics: "Requirements for the technical condition of vehicles" and "Safety requirements for repairs and technical vehicle maintenance". The implementation of the requirements of this Standard will reduce potential risks during the transport of people and dangerous goods and as a result, reduce the number of accidents, the severity of their consequences, as well as improve the material and technical resources of enterprises.

The objectives of the implementation of the Safety Analysis of Work Execution are the following:

• Regulation of the actions of each employee (group of employees) before and during the execution of work.

• Developing the skills of employees to regularly assess existing sources of danger and apply adequate measures of protection against dangerous and harmful factors.

• Developing skills for elementary risk assessment in the workplace.

• Education in employees of a serious attitude to sources of danger, maintaining the level of attention before starting and in the process of performing work.

• Algorithmization of the process; application of protective measures: Source of danger - Possible consequences - Necessary protective measures.

• Education of workers in the discipline of the application of protective measures based on a constant awareness of the possibility of negative consequences for health, life and the environment.

In 2020, the HSE Motivation Program was continued. Since March of the reporting year, the process of promoting HSE projects has been launched to be awarded by the IMC CEO. 37 projects were submitted in three nominations: Occupational safety and industrial safety, Health protection and Environmental protection. Special Committees were formed to identify the best 3 projects in each nomination. In total, 28 of implemented projects were identifed, of which one winner and two prize winners in each nomination were selected. The winning projects will be implemented in companies of the Group.

"Safety Audits" Standard have been introduced at all the siloses belonging to IMC since 2016 according to which managers of all levels including top management of the headquarters of IMC and managers of regional branch offices attend regularly appropriate production areas in order to supervise conduction of the works and labour conditions. Despite the limitations associated with COVID-19 and realizing the importance and significance of safety audits, we did not cancel the safety audit process at enterprises even during a pandemic.

In 2020, the following was done in this direction:

• 399 behavioural safety audits were conducted by managers of all levels at the siloses belonging to IMC within those over 650 conversations were conducted related to hazardous situations; moreover, 467 hazardous situations were revealed and 249 of them were eliminated during appropriate audit itself, but for the rest of them managers were filling "Lists for recording LS measures" (these should be filled at IMC's internal web portal in order to develop corrective and preventive measures term of implementation of those exceeds 3 days).
• 592 target safety audits at the siloses belonging to IMC; number of non-conformities revealed at the time of their conduction was 487. Corrective and preventive measures were developed for each of the non-conformities revealed.
• The managers were spending 22 minutes of working time on the average for an audit.
• The total investment of time for conducting behavioral safety audits is 8647 minutes, and for target SA 14196 minutes.

Environmental policy

Operations and products of farming and grain storage have inherent elements that interact with the natural environment. The company's goal in the direction of environmental protection - keeping the integrity of the ecosystems the Company operates in, and minimization of the environmental footprint.

Maintaining this interaction in a way that prevents material harm to the atmosphere, water, land, biodiversity and climate is essential for Group's ability to operate in a long-term perspective. Therefore, IMC chooses a proactive approach to managing its environmental aspects.

We aim to efficiently produce best quality products with the lowest possible consumption of resources and in strict compliance with regulatory, safety and product quality standards, thus minimizing our environmental footprint. As one of the largest crop producers in Ukraine, we follow the best sustainable long-term agronomy practices.

Social policy

IMC's enterprises have been adhering to approved social policy.

Main principals are the following:

• The key target audience for social activities is a resident of a village living in the regions where IMC operates;
• Realization of social policy is carried out only according to certain priority directions;
• Financing of social activities is carried out exclusively within the framework of the annual budget approved;
• IMC does not provide assistance to religious organizations and political parties.

Priority directions of social policy:

• Targeted assistance to landlords of IMC's enterprises;
• Rural development and consumer services;
• Assistance to school and pre-school institutions;
• Health care, assistance in medical care of peasants (realization of medical projects);
• Assistance in the developments of the culture;
• Help in the development of sport in the countryside.

All investments and initiatives in social projects including personalized support and projects of local infrastructure maintenance and development (roads, water supply, public lighting, schools, kindergartens, FAPs and medical points etc.) that IMC conducts within the villages it operates are conducted on the principles of «IMC. Aid to People» program. The Program includes obligatory social consultations and PR efforts for all significant investments. Local communities are involved in projects prioritization, budgeting and planning of necessary actions.

The investments and initiatives for such projects in 2020 reached UAH 25.4 million (2019 – UAH 18.1 million):

• Targeted assistance to landlords UAH 19.0 mln (2019 UAH 12.6 mln);
• Rural development UAH 2.5 mln (2019 UAH 2,0 mln);
• Road repair UAH 0.4 mln (2019 UAH 2,8 mln);
• Cultural & Sport events sponsorship UAH 0.7 mln (2019 UAH 0.4 mln);
• Sponsorship of school and preschool institutions UAH 1.8 mln (2019 UAH 0.3 mln);
• Providing assistance to hospitals to combat coronavirus disease UAH 1.0 mln.

Innovative technologies and R&D

In 2017 the Precision Farming department and Research and development department were formed.

Innovative technologies used in operating activities:

• Autopilot systems with RTK accuracy allows to increase efficiency of carrying out of any field operations by 6-8% and corresponding saving of fuel.
• Section control systems on sowing and spraying a technology that allows to switch off sections at overlaps and save significantly on chemicals, seed and fertilizers.
• Row Sense system and Row Vision system on spraying machines technology that avoids trampling plants when spraying industrial crops.
• Monitoring the quality of field operations each seeder and sprayer machine has a controller, which records the actual work done.
• Wialon GPS monitoring system a software product that is used to organize the traffic control of machines, control fuel and record of work done.
• Satellite monitoring periodically, during the year, satellite monitoring of all crops in the fields of the IMC is carried out to identify deviations in the growing of crops.
• Carrying aerial photography by drones each of our enterprises is equipped with drones, which provides detailed aerial survey of fields, allowing quickly identification of the nature of heterogeneity and react to any deviations in the vegetation of plants.
• Yield sensors systems on each combine for yield mapping of each field.
• Implementation of Precision Planting equipment into sowing process extremely increases quality of sowing.
• NFC field data transmition between trucks & weighing system on each grain cart to control grain movement from field to storage.
• Agrogeoportal PreAgri it acts as the only platform for collecting, storing, processing and visualizing all geospatial data from fields.
• Meteo stations network within our fields
• Permanent field rout optimization and boundaries actualization with digital GIS tools

To improve the qualitative and quantitative characteristics of the activity, IMC conducts research on new technologies and products.

The elements of precision farming are tested and introduced by R&D department: systems for GPS-monitoring of the machinery, auto-piloting, satellite monitoring, variable rate for seeding and fertilization. Starting 2019 extensive field experiments were carried out - testing the optimal seeding rate (different from the recommendations of the seed producer), selecting the optimal protection products.

General amount of trials was done on winter wheat, sunflower, corn and soybean - 2060 plots (corn—768 plots, winter wheat—855 plots, sunflower—437 plots). General amount of fields is 131 (fields with trials on large production areas—74; demo fields with small plots—13; demo fields with hybrids and varieties—15; fields with differential rate trials—29).

Main types of experiments are connected with hybrids and varieties (seeding materials), plant protection products, plant fertilizer systems, precision farming systems, soil tillage systems, testing of agricultural equipment (drillers, planters, sprayers etc.).

Results for Y2020:

• Hybrids and varieties: 12% of tasted corn hibrids were recommended for growing on a large production area; 9% of tasted sunflower hibrids were recommended for growing on a large production area; 6% of tasted winter wheat hibrids were recommended for growing on a large production area;
• Precision planting equipment was tested on corn and sunflower and introduced to large scale production;
• R&D department created separate trial fields (Agropolygons) with small plots in all clusters of IMC. This approach helps us to concentrate big amount of trials in one location and to analyze the results of trials in equal conditions in more scientific way than previously (season 2018-2019 was only one demo field in AGROKIM);
• R&D department has successfully implemented the new approach to accounting trials using GIS technologies (joined project with OneSoil and ClimateFieldview), as a resul—creation of small plot trials
• Differential rate of spreading urea (CORN) were successfully tested during the season 2019-2020. According to our results, by proper management of urea on different zones of productivity of the field IMC can increase profit by 90\$/ha, using the same amount of fertilizer (taking in account the fields of corn on wich IMC can currently use this technology, additional annual profitability can be 460 000 USD);

• Differential rate of seeding corn, sunflower and winter wheat. According to the results of trials differential rate of seeding CORN can add profit 36 \$/ha (taking in account the fields of corn on wich IMC can currently use this technology, additional annual profitability can be 200 000 USD);
• Rates of planting (drilling) crops. According to the results of trials IMC has decreased the amount of seeding material of CORN, SUNFLOWER and WINTER WHEAT which caused costs economy: CORN—9.2 USD/ha (630 000 USD), SUNFLOWER—5,72 USD/ha (150 000 USD), WINTER WHEAT—8,92 USD/ha (190 000 USD);
• Chemical protection. According to the results of trials were changed: 1 fungicide and 1 herbicide on WINTER WHEAT; 2 fungicides on SUNFLOWER; 1 herbicide on CRNN.

There were no development costs capitalized in the accounts, the research is done internally and is consequently captured mainly in the costs of personnel and amounted USD 166 thousand for Y2020 (USD 216 thousand for Y2019).

2. Operational and Financial Results

The following table sets forth the Company's results of operations derived from the Consolidated financial statements:

(in thousand USD)	For the year ended
	Notes	31 December 2020	31 December 2019	Change in %
CONTINUING OPERATIONS
Revenue	6	161 387	169 601	-5%
Gain from changes in fair value of biological assets and agricultural produce, net	7	77 022	52 768	46%
Cost of sales	8	(159 170)	(170 927)	-7%
GROSS PROFIT		79 239	51 442	54%
Administrative expenses	9	(11 258)	(13 246)	-15%
Selling and distribution expenses	10	(15 839)	(21 247)	-25%
Other operating income	11	1 315	2 708	-51%
Other operating expenses	12	(2 056)	(4 176)	-51%
Write-offs of property, plant and equipment		(82)	(260)	-69%
Reversal of impairment of property, plant and equipment		120	-	100%
Impairment of property, plant and equipment		(1 090)	-	100%
OPERATING PROFIT		50 349	15 221	231%
Financial expenses, net	15	(2 137)	(3 476)	-39%
Effect of lease of right-of-use assets	19	(7 234)	(7 640)	-5%
Effect of additional return	29	(872)	(2 090)	-58%
Foreign currency exchange (loss)/gain, net	16	(7 918)	6 049	-231%
PROFIT BEFORE TAX FROM CONTINUING OPERATIONS		32 188	8 064	299%
Income tax expenses, net	17	(483)	(746)	-35%
NET PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS		31 705	7 318	333%

Earnings before interest, taxes, depreciation and amortisation (EBITDA) is calculated as revenue less expenses, the latter excluding tax, interest, depreciation and amortisation. Being a proxy to the operating cash flow before working capital changes, EBITDA is widely used as an indicator of a company's ability to generate cash flows, as well as its ability to service debt. Consequently, the management EBITDA serves as a measure to estimate financial stability of the Company. Besides, excluding the effect of depreciation and amortisation along with cost of capital and taxation provides to external users another measure comparable to similar companies regardless of varying tax environments, capital structures or accounting policies regarding depreciation and amortization.

The Company calculates Normalised EBITDA by adjusting Net profit for the expense items that are deemed to be substantially beyond the control of management, as well as items believed to be non-recurring. The Normalised EBITDA for the periods presented is calculated based on historical information derived from the Consolidated financial statements.

The reconciliation to Normalised EBITDA for the period (from continuing operations) is presented as follows:

(in thousand USD)	For the year ended
	31 December 2020	31 December 2019	Change in %
CONTINUING OPERATIONS
Net profit for the period	31 705	7 318
Write-offs of property, plant and equipment	82	260
Foreign currency exchange (loss)/gain, net	7 918	(6 049)
Financial expenses, net	2 137	3 476
Effect of lease of right-of-use assets	7 234	7 640
Income tax expenses, net	483	746
Depreciation and amortization	20 438	23 803
Reversal of impairment of property, plant and equipment	(120)	-
Impairment of property, plant and equipment	1 090	-
Non recurring items:
Effect of additional return	872	2 090
Normalised EBITDA	71 839	39 284	83%

Company's Normalised EBITDA increased in Y2020 in comparison with Y2019 mainly due to:

• higher crop prices, resulted in increase in gain from changes in fair value of biological assets and agricultural produce, net in Y2020;
• decrease in selling expenses due to the drop in prices for transportation; and lower yields compared to last year's record cropharvest.

Revenue

The Company's revenue from sales of finished products decreased by 5% in Y2020 in comparison with previous period.

The following table sets forth the Company's sales revenue by products indicated:

(in thousand USD)	For the year ended
	31 December 2020	31 December 2019	Change in %
Corn Sunflower	103 678 31 470	118 806 22 753	-13% 38%
Wheat	22 421	13 480	66%
Milk	1 304	1 547	-16%
Soy beans	440	10 817	-96%
Cattle	288	115	151%
Other	430	1 201	-64%
	160 031	168 719	-5%

The most significant portion of the Company's revenue comes from selling corn, which represented 64,8% in Y2020 and 70,4% in Y2019 of total revenue.

The following table sets forth the volume of the Company's main crops and revenues generated from the sales of such crops:

(in thousand USD)	For the year ended
	31 December 2020	31 December 2019
Corn
Sales of produced corn (in tonnes)	610 927	711 134
Realization price (U.S. \$ per ton)	170	167
Revenue from produced corn (U.S. \$ in thousands)	103 678	118 806
Wheat
Sales of produced wheat (in tonnes)	118 063	76 542
Realization price (U.S. \$ per ton)	190	176
Revenue from produced wheat (U.S. \$ in thousands)	22 421	13 480
Soy beans
Sales of produced soy beans (in tonnes)	1 308	32 819
Realization price (U.S. \$ per ton)	337	330
Revenue from produced soy beans (U.S. \$ in thousands)	440	10 817
Sunflower
Sales of produced sunflower (in tonnes)	86 831	81 001
Realization price (U.S. \$ per ton)	362	281
Revenue from produced sunflower (U.S. \$ in thousands)	31 470	22 753
Other (produced only)
Total sales volume (in tonnes)	5 698	9 738
Total revenues (U.S. \$ in thousands)	428	1 201
Total sales volume (in tonnes)	822 827	911 234
Total revenue from sale of crops (U.S. \$ in thousands)	158 437	167 057

Revenue relating to sales of corn decreased by 13% to USD 103,7 million in current period from USD 118,8 million in previous period due to decrease in realization volume in 2020.

Increase in wheat sowing areas in 2020 has led to an increase in revenue relating to sales of wheat by 66% - from USD 13,5 million in Y2019 to USD 22,4 million in Y2020.

Revenue relating to sales of sunflower increased by 38% to USD 31,5 million in current period from USD 22,8 million in previous period mainly due to increase in prices in 2020.

Cost of sales

The Company's cost of sales changed to USD 159,2 million in current period from USD 170,9 million in previous period. The following table sets forth the principal components of the Company's cost of sales for the periods indicated:

(in thousand USD)	For the year ended
	31 December 2020	31 December 2019	Change in %
Raw materials	(106 004)	(116 378)	-9%
Change in inventories and work-in-progress	(4 705)	457	-1130%
Depreciation and amortization	(18 973)	(20 311)	-7%
Wages and salaries of operating personnel and related charges	(12 726)	(13 233)	-4%
Fuel and energy supply	(7 642)	(10 676)	-28%
Third parties' services	(5 040)	(5 894)	-14%
Rent	(2 252)	(2 320)	-3%
Repairs and maintenance	(1 020)	(1 300)	-22%
Taxes and other statutory charges	(682)	(1 172)	-42%
Other expenses	(126)	(100)	26%
	(159 170)	(170 927)	-7%

A 7% decrease in cost of sales in Y 2020 is consistent with a decrease in revenues and is mainly related to changes in the number of products sold.

Gross profit

The Company's gross profit increased to USD 79,2 million in current period from USD 51,4 million in previous period, an 54% year-on-year increase. In relative terms, the gain from changes in fair value of biological assets and agricultural produce increased by 46%.

Administrative expenses

Administrative expenses decreased year-on-year to USD 11,3 million in current period from USD 13,2 million in previous period, reflecting an decrease in wages and salaries of administrative personnel and related charges to USD 9,0 million from USD 10,3 million.

Selling and distribution expenses

Selling and distribution expenses decreased year-on-year to USD 15,8 million in current period from USD 21,2 million in previous period, reflecting an decrease in sales volume and delivery costs in 2020.

Foreign currency exchange, net

Foreign currency exchange net loss increase to USD 7,9 million in current period from USD 6,0 million of net gain in previous period. This increase reflected the devaluation of UAH in 2020 in comparison with 2019 – 16,2% of devaluation as at 31 December 2020 in comparison with 16,9% of revaluation as at 31 December 2019; 4,2% of devaluation for the average rate 2020/2019 in comparison with 5,3% of revaluation for the average rate 2019/2018.

Cash flows

The following table sets out a summary of the Company's cash flows for the periods indicated:

(in thousand USD)	For the year ended
	31 December 2020	31 December 2019
Net cash flows from operating activities	59 963	54 117
Net cash flows from investing activities	(5 736)	(4 580)
Net cash flows from financing activities	(37 767)	(46 197)
Net increase in cash and cash equivalents	16 460	3 340

Net cash flow from operating activities

The Company's net cash inflow from operating activities increased to USD 60,0 million in current year from USD 54,1 million in previous year. The increase in 2020 was primarily attributable to changes in inventories.

Net cash flow from investing activities

The Company's net cash outflow from investing activities increased to USD 5,7 million in Y2020 from USD 4,6 million in Y2019, which is in line with the Group's CAPEX programm.

Net cash flow from financing activities

Net cash outflow from financing activities decreased to USD 37,8 million in current period from USD 46,2 million in previous period, reflecting the decrease in repayment of dividends.

3. Risk management report

Risks relating to the Industry

Grains prices volatility

Changes in market prices for grains can adversely influence on IMC's earnings and financial results.

To decrease an influence of this risk the Group, on permanent basis, researches the international and Ukrainian agricultural markets, monitoring price fluctuations and factors affecting these fluctuations (stocks, production, consumption, export, import, forecasts). Based on an analysis of the above-mentioned information, the management of the Group makes decisions regarding crop rotation structure and production plans.

Sound control over the grains production costs at IMC allows the Group to ensure sufficient level of marginality regardless of price fluctuations. The Group cooperates with large grain traders, which allows to sell large quantities of grain at the most favorable prices of the export market.

Operational risks

Adverse weather conditions

Poor and unexpected weather conditions may disrupt the Group's production of crops.

The land cultivated by the Group is spread between different climate zones of Ukraine. This allows to reduce the possible negative impact of adverse weather conditions. Additionally, to mitigate an influence of this risk IMC uses the following practices:

• On the fields of IMC the system of different depth soil cultivation is applied: deep ripping, ploughing, disking, and cultivation. Rotation of these cultivation methods allows creating the optimal conditions for growth and development of agricultural crops;
• Cultivation of relatively small share (10%) of winter crops in the general crop rotation structure enables to decrease the risk of disruption of a general production of crops during unfavorable winter conditions.
• Increase of inputs costs

The Group's operating costs could increase and adversely affect IMC's financial performance. The risk of the Group's operating costs increase is basically connected to a possible price growth for fuel, seeds, fertilizers and crop protection materials.

To reduce the risks mentioned above the Group:

• has implemented the fuel consumption and machinery usage controlling systems using GPS-trackers;
• follows the land bank development strategy based on principle of fields' close proximity to each other that allows to reduce fuel consumption;
• is focused on limited number of crops that allows to use and purchase seeds, fertilizers and crop protection materials more efficiently;
• has built long-term and mutually benefitted relationships with suppliers of seeds, fertilizers and crop protection materials.
• Customer concentration risk

Focusing on large wholesale world traders, the Group has a small pool of customers and could be influenced by customer concentration risk. But the work of the Group with a small number of customers is not due to the lack of other customers or the impossibility of entering new markets, but to the selected sales strategy - the best conditions for selling are ensured by relations with large traders. To control the risk before each sale, a tender is held among buyers to determine the best conditions of the transaction. Making a choice in the direction of the buyer, management understand the level of supply and demand for the products on the market with other participants and Group's capabilities in the event of a change of buyer.

Credit risk

Counterparties involved in transactions with IMC may fail to make scheduled payments, resulting in financial losses to IMC.

To decrease an influence of this risk the Group has implemented credit policy and monitoring practices. Police and operating guidelines include limits in respect of counterparties to ensure that there is no significant concentration of credit risk. Credit risks are managed by legal activities which include security paragraphs into agreements with customers. Also the financial department of the Group constantly carries out monitoring over payment terms deadlines according to goods selling contracts.

Risk of key personnel shortage

A lack of key personnel can threaten the overall performance of IMC.

The Group conducts series of activities to mitigate this risk. IMC offers competitive working conditions for potential employees. Performance related remuneration scheme exists to motivate and retain key staff. IMC cooperates with a number of Ukrainian educational institutions for selection and hiring talented students. Educational and professional trainings are regularly held for personnel at IMC.

Risk of land loss

Land is a key resourse in agricultural production and termination of essential number of land lease agreements can cause significant damage for the Group.

To mitigate this risk, the Group holds a number of social events for the local communities to make IMC's presence beneficial for Company's land lessors. The terms of land lease agreements have been revised and re-signed in the best interest of counterparties. As at 31 December 2020 91% of land lease agreement are valid for a period over 5 years and 21% of contracts are valid for a period of more than 10 years (as at 31 December 2019 90% and 40% correspondingly).

Risk of cybersecurity incidents

IMC's corporate information system can be corrupted by virus attack or external intrusion.

Operations of the Group are highly dependent on corporate IT system in all aspects. In 2017 companies of the Group have experienced a cybersecurity attack which has not had a material impact on our business. To prevent and mitigate this risk a series of actions has been done. The infrastructure of IMC's intranet has been improved in order to mitigate the risk of unauthorized external intrusion. A backup process was reconstructed to ensure a maximum possible safety of corporate business data. The riskiest points of unauthorized external intrusion have been isolated outside IMC's intranet.

Financial risks

Risk of capital deficiency

Failure to generate or raise sufficient capital may restrict the Group's development strategy

To decrease an influence of this risk the Group works on several sources of financing: bank crediting, financing by international financial organizations.

Risk of liquidity

It exists the risk of inability to meet financial obligations of the Group in due time.

To minimize such risk IMC maintains efficient budgeting and cash management processes to ensure that adequate funds are available to meet business requirements. IMC adopts a flexible CAPEX program enabling capital projects to be deferred if necessary.

Risk of interest rate volatility

Fluctuations of interest rates influence on the cost of IMC's borrowings.

The Group utilizes balancing strategy to mitigate interest rate risk. The portfolio of IMC's borrowings consists of 28% of float rate debt and 72% of fixed rate debt as at 31 December 2019 and 100% of fixed rate debt as at 31 December 2020.

IMC's creditors are well-known banks with a foreign capital or international financial institutions. As result, the cost of IMC's financial resources is lower than the market average.

Fluctuation in currency exchange rates

Unfavorable movements of currency exchange rates can lead to deteriorating of company's financial results.

The main functional currencies for IMC are Ukrainian hryvnia and US dollar. Since the Group is export oriented, most of regular financial planning cash inflows are matched in US dollar, when outflows are matched both in US dollar and Ukrainian hryvnia. Stable revenue in US dollar limits the risk resulting from national currency devaluation. In 2020, the Ukrainian hryvnia devaluated against the US dollar from the beginning to the end of the year, which was reflected on the one hand, in a increase in the Group's financial result for the year (due to the fact that the revenue was formed at a higher rate than the cost), on the other hand, net assets of the Group at the end of the year decreased in US dollar terms.

• No derivatives financial instruments are used.
• The Company does not own own shares.

Legal and regulatory risks

Risk of non-compliance

The Group's business is influenced by regulatory rules of each country where IMC operates. A breach of these rules can cause legal proceedings and additional costs for the Company.

The monitoring of legislation changes is constantly conducted by the Legal Department at IMC. Employees regularly visit specialized events on legal issues. Group's business operations are conducted in accordance with current legislation taking into account possible future regulatory development.

Risk of COVID-19 pandemic

Risk of personnel shortage

To prevent the spread of COVID-19 coronavirus, the company has taken proactive preventative measures in accordance with an approved program of action aimed primarily at protecting the health of its employees and their families, our suppliers and consumers.

The company has taken the following actions:

• trainings for the company employees to prevent spreading of the coronavirus by restricting movement, traveling abroad, visiting social gathering places and maintaining personal hygiene during the epidemic;
• updating of the business continuity plan during the pandemic. An action plan in case of force majeure circumstances was introduced to the company employees;
• organizing for all company employees the ability to work remotely (a remote access) using work computers and other technical devices (server equipment, etc.);
• developing of a control mechanism and establishing of a communication system in case the remote work of employees;
• the following preventive measures have been taken in premises and offices: disinfectants have been installed in sanitary areas and at entrances to office premises; daily wet cleaning with the use of disinfectants; hourly ventilated office space; dishwashing occurs only in the dishwasher with hot steam disinfection;
• to perform production tasks related with economic activities of the company (field works, loading-unloading works, etc.) to attract only the minimum number of workers providing them with appropriate personal protective equipment;

• cancel all foreign business trips;
• restrict business trips to the regions and to carry out them only in case of urgent necessity with the permission of the director;
• conduct conferences and meetings online; - cancel all corporate events.

Risk of violation of obligations by suppliers

Due to strict quarantine restrictions in the country, contractual obligations of suppliers may be violated, which may affect the smoothness of the company's operating process.

To ensure a smooth production process, the company's management revised the delivery time for materials (seeds, fertilizers, protective materials) in order to ensure a certain reserve of them in the company's warehouses before the start of field work. Ongoing negotiations are underway with suppliers to track operational information across supply chains and prevent operational disruptions. Company chooses big suppliers to prevent significant disruption in the supplying of materials.

To ensure a smooth logistics process, the carriage is booked in advance. Alternative service providers and delivery routes are also being explored.

Risk of underfunding

Within the framework of the pandemic, the risk of access to available sources of financing of working capital increases and, as a consequence, the risk of an increase in the cost of financing due to the general decline in the economy.

To prevent such situation, negotiations are being held with existing lenders on the terms of access to credit opportunities, new sources of additional financing are monitored, and cash flows are being adjusted depending on the current financing situation.

4. Selected Financial Data

(in thousand USD)

	For the year ended	31 December 2020	31 December 2019
I.	Revenue	161 387	169 601
II.	Operating profit/(loss)	50 349	15 221
III.	Profit/(loss) before income tax	32 188	8 064
IV.	Net profit/(loss)	31 705	7 318
V.	Net cash flow from operating activity	59 963	54 117
VI.	Net cash flow from investing activity	(5 736)	(4 580)
VII.	Net cash flow from financing activity	(37 767)	(46 197)
VIII.	Total net cash flow	16 460	3 340
IX.	Total assets	280 088	298 408
X.	Share capital	59	59
XI.	Total equity	138 427	133 193
XII.	Non-current liabilities	89 780	93 641
XIII.	Current liabilities	51 881	71 574
XIV.	Weighted average number of shares	33 178 000	33 178 000
XV.	Profit/(loss) per ordinary share (in USD)	0,96	0,22
XVI.	Book value per share (in USD)	4,17	4,01

On behalf of the Board of Directors:

Chief Executive Officer	ALEX LISSITSA	__signed______
Chief Financial Officer	DMYTRO MARTYNIUK	__signed______

IMC S.A.

Société anonyme Registered office: 16 rue Erasme L-1468Luxembourg, Grand Duchy of Luxembourg R.C.S Luxembourg: B 157843 (the Company)

Corporate governance statement

Corporate governance

Corporate governance within the Company is based on the Luxembourg law and the listing requirements of the Warsaw Stock exchange where the trading in the Company shares takes place. The Company follows New Code of Best Practices for WSE Listed Companies that entered into force on 1 January 2016 (the "2016 WSE Code", as amended on 13 October 2015).

The Company's corporate governance rules are based on the Company's Articles of Association (the "Articles"), and the corporate governance charter (the "Corporate Governance Charter"), and the Company's internal regulations.

Board of Directors

According to the Articles of Association, the Company shall be managed by the Board of Directors composed of at least five members, their number being determined by the general meeting of shareholders. Directors need not be shareholders of the Company. The Board of Directors is composed of executive and non-executive directors. At least two directors shall be independent non-executive directors.

The directors shall be elected by the general meeting of shareholders for a period not exceeding six (6) years and until their successors are elected, provided, however, that any director may be removed at any time by a resolution taken by the general meeting of shareholders. The directors shall be eligible for reappointment.

In the event of vacancy in the office of a director because of death, resignation or otherwise, the remaining directors elected by the general meeting of shareholders may elect a director to fill such vacancy until the next general meeting of shareholders.

Directors:

Name	Initial date of appointment	End of mandate
1.Mr. Alex Lissitsa, Executive Director, CEO	29 March 2012	2022
2.Mr. Dmytro Martyniuk, Executive Director, CFO	09 March 2011	2022
3.Mr. Oleksandr Petrov, Executive Director, Chairman	09 March 2011	2022
4.Mr. Oleksandr Verzhykhovskyi, Executive Director, COO	10 January, 2020	2022
5.Mrs. Krysenko Olena, Executive Director, Commercial Director	10 January, 2020	2022
6.Mr. Sergii Klimishyn, Executive Director, Legal Director	10 January, 2020	2022
7.Mr. Alfons Balman, Non-executive Director	10 September 2013	2022
8.Mr. Kamil Jan Gaworecki, Non-executive Director	01 June 2016	2022

With regard to the appointment and replacement of Directors, the Company is governed by its Articles of Association and with regards to Luxembourg Companies Law 1915. The Articles of Association may be amended from time to time by a general meeting of the shareholders under the quorum and majority requirement provided for by the law of 10 August 1915 on commercial companies in Luxembourg, as amended.

The present Board is composed of two independent directors and six directors who either are employed by subsidiaries of the Company or hold over 5% of votes in the Company.

Independency is assessed taking into consideration the criterias stated in Annex II of the European Commission Recommendation of 15 February 2005.

Powers of Directors

The Board is responsible for managing the business affairs of the Company within the clauses of the Article of Association. The directors may only act at duly convened meetings of the Board of Directors or by written consent in accordance with article 12 of Articles of Association.

The Board of Directors is vested with the broadest powers to act on behalf of the Company and to perform or authorize all acts of administrative or disposal nature, necessary or useful for accomplishing the Company's object. All powers, not expressly reserved by the Law to the sole shareholder or, as the case may be, to the general meeting of shareholders, fall within the competence of the Board of Directors.

Meetings of the Board of Directors

The Board of Directors meets upon notice given by the Chairman. A meeting of the Board of Directors must be convened if any two directors so require. The Chairman presides at all meetings of the Board of Directors. In case of chairman's absence, the Board of Directors may appoint another director as chairman pro tempore by vote of the majority present or represented at such meeting. Except in cases of urgency or with the prior consent of all those entitled to attend, there should be given a written notice of at least twenty-four hours before the meeting of the Board of Directors. Any such notice shall specify the place, the date, time and agenda of the meeting. The notice may be waived by unanimous written consent by all the directors at the meeting or otherwise. No separate notice is required for meetings held at times and places specified in a time schedule previously adopted by resolution of the Board of Directors.

Every board meeting shall be held in Luxembourg or at such other place indicated in the notice.

Decisions will be taken by a majority of the votes of the directors, present or represented at the relevant meeting. Each director has one vote. In case of a tied vote, the Chairman has a casting vote.

One or more directors may participate in a meeting by means of a conference call, by video conference or by any similar means of communication enabling several persons participating therein to simultaneously communicate with each other. Such methods of participation are to be considered equivalent to a physical presence at the meeting.

A written decision passed by circular means and transmitted by cable, facsimile or any other similar means of communication, signed by all the directors, is proper and valid as though it had been adopted at a meeting of the Board of Directors, which was duly convened and held. Such a decision can be documented in a single document or in several separate documents having the same content and each of them signed by one or several directors. Except as far as a written decision passed by circular means is concerned, the minutes of the meeting of the Board of Directors shall be signed by the Chairman of the relevant meeting or any two directors or as resolved at the relevant board meeting or a subsequent board meeting. Any proxies will remain attached thereto.

The Board has established processes regarding internal control and risk management systems to ensure its effective oversight of the financial reporting process. These include appointing an independent administrator (the "Administrator") to maintain the accounting records of the Company independent of IMC S. A. The Administrator has a duty of care to maintain proper books and records and prepare for review and approval by the Board the annual accounts intended to give a true and fair view. The Board has appointed LGL Corporate Services (Luxembourg) S.A. as Administrator. (previously known as Totalserve Management (Luxembourg) S.a.r.l.).

Committees

Audit Committee

The Audit committee has been established by the Board to assist the Board of directors with independent verifying and safeguard of the integrity of the company's financial reporting; and oversee the independence of the external auditors

The Committee has responsibility for the following:

• (a) Monitoring the establishment of an appropriate internal control framework;
• (b) Monitoring corporate risk assessment and compliance with internal controls;
• (c) Overseeing business continuity planning and risk mitigation arrangements;
• (d) Reviewing reports on any material defalcations, frauds and thefts from the Group;

(e) Monitoring compliance with relevant legislative and regulatory requirements (including continuous disclosure obligations) and declarations by the Secretary in relation to those requirements;

(f) Reviewing the nomination, performance and independence of the external auditors;

(g) Liaising with the external auditors and ensuring that the annual audit is conducted in an effective manner that is consistent with Committee members' information and knowledge and is adequate for shareholder needs;

(h) Reviewing management processes supporting external reporting;

(i) Reviewing annual accounts and consolidated financial statements and other financial information distributed externally; and

(j) Reviewing external audit reports to ensure that, where major deficiencies or breakdowns in controls or procedures have been identified, appropriate and prompt remedial action is taken by management.

The Committee has an advisory role, consistent with its purpose of assisting the Board in relation to the matters with which it is charged with responsibility, and does not have any power to commit the Board to any recommendation or decision made by it except for matters relating to the appointment, oversight, remuneration and replacement of the external auditors.

The Committee has unrestricted access to management and the external auditors as it may consider appropriate for the proper performance of its function.

The Board of Directors shall appoint the chairman and members of the Audit Committee from among the non-executive directors and external members which must be independent. The Audit Committee will comprise a minimum of two members. In any case the chairman of the Audit Committee must be appointed from among non-executive directors.

As of 31 December 2020 Audit committee consisted of two members, Alfons Balmann (chairman), a non-executive director and Kamil Jan Gaworecki (member), non-executive director. In the year 2020 the work of the Audit Committee was confined to reviewing the consolidated financial statements and annual accounts and audit reports thereon and appointment of external auditor. In addition, Audit Committee had held meetings as it is determined in the Corporate governance chart.

Remuneration Committee

The role of the Committee is to advise on remuneration and issues relevant to remuneration policies and practices for senior management.

The Responsibility of the Remuneration Committee includes issues regarding salaries, bonus programs and other employments terms of the CEO and senior management in conjunction with the Board.

Notably, the Remuneration Committee is responsible for:

• submitting proposals to the Board regarding the remuneration of directors and managers, ensuring that these proposals are in accordance with the remuneration policy adopted by the Company (not adopted yet)

• discussing with the chief executive officer the performance of executive management and of the individual executives at least once a year based on evaluation criteria clearly defined. The chief executive officer should not be present at the discussion of his own evaluation;

• ensuring that the remuneration of non-executive directors is proportional to their responsibilities and the time devoted to their functions.

The Board of Directors shall appoint the chairman and members of the Remuneration Committee from among the non-executive directors and external members which must be independent. The Remuneration Committee will comprise a minimum of two members. In any case the chairman of the Remuneration Committee must be appointed from among non-executive directors.

As of 31 December 2020 the Company hadn't adopted a remuneration policy. Principles of remuneration of the Board members shall be determined by the General Meeting of Shareholders and Board of Directors shall determine the remuneration of the Executives. Remuneration of the Board is related to the Company's financial results.

Personnel

IMC employs people based on principles of equal opportunity, without distinction to race, color, gender, sexual orientation, religion, descent or origin. IMC standards related to employees and human rights are declared in the following documents:

• Non-discrimination and equal opportunities in employment Policy
• Non-discrimination on grounds of sexual orientation and gender identity Policy
• Policy of collective bargaining
• Policy on freedom for workers to form or join trade unions
• Policy of nursing and expectant mothers
• Policy on working hours and overtime
• Employment of young person under the age of 18 Policy.

Policies are freely available to all employees and guests of IMC. The company's policy prohibits discrimination based on color, ethnic or social origin, sex, pregnancy, civil, family status or status of a person caring for, language, religion or other opinion, political or other opinion, national or social origin, citizenship, economic status, association with a national minority, gender identity, age, disability, state of health, genetic characteristics of a person, and other signs or combinations of any of these attributes, actual or imaginary, as well as prohibits discrimination on the basis of association for any of the above listed features.

Internal control and risk management

The Company's internal control over financial reporting includes those policies and procedures that pertain to the maintenance of financial records that, in reasonable detail, accurately and fairly reflect the transactions and disposals of the assets of the Company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of annual accounts and consolidated financial statements. In accordance with Luxembourg legal and regulatory requirements, that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company, and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposals of the Company's assets that could have a material effect on the financial statements.

External audit

In accordance with the Luxembourg law on commercial companies, an external auditor appointed by the annual general meeting of shareholders certifies the Company's annual and consolidated accounts.

The external audit functions for consolidated financial statements for Y2020 and Y2019 were carried by BDO Audit S.A.

Takeover bids Law statement

• The structure of the capital of the Company is represented in Note 28. The Company is a publicly listed company whose shares are owned primarily by investors and Agrovalley Limited whose beneficial owner is Mr. Oleksandr Petrov, chairman of the Board of Directors. As of 31 December 2020, Mr. Oleksandr Petrov held 26 424 213 shares in the Company, what is equal to 79,64%;
• The Company has no securities which are not admitted to trading on a regulated market;
• The Company has no restrictions on the transfer of securities, such as limitations on the holding of securities or the need to obtain the approval of the company or other holders of securities, without prejudice to article 46 of Directive 2001/34/EC;
• The details of those shareholders with an interest of 5% or more in the issued share capital of the Company, as notified to the Company, are set out in Note 28. The Company has no other significant direct or/and indirect shareholdings (including indirect shareholdings through pyramid structures and cross-shareholdings);
• The Company has no holders of any securities with special control rights. Transfer of shares is governing by the Articles of Association of the Company;
• The Company has no adopted system of control of any employee share scheme where the control rights are not exercised directly by the employees;
• The Company has no adopted 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;
• All of the issued and outstanding shares in the Company have equal voting rights and there are no special control rights attaching to the shares;
• The Company didn't receive the information about existence of any agreements between shareholders that may result any restrictions within the meaning of Directive 2001/34/EC;
• The Company has no any agreements to which the company is a party and which take effect, alter or terminate upon a change of control of the company following a takeover bid, and the effects thereof, except where their nature is such that their disclosure would be seriously prejudicial to the Company;
• The Company grants non-availability of any agreements between the company and its board members or/and employees providing for compensation if they resign or are made redundant without valid reason or if their employment ceases because of a takeover bid.

Insider Dealing

The Company follows Luxembourg Stock Exchange, Warsaw Stock Exchange and insider trading policy rules in regards to the disclosure of insider dealing, which require all Board Members to notify the Company with regards to all transactions in the shares in the Company. Following the rules of the notification, the Company notifies both stock exchanges via appropriate regulatory filings.

On behalf of the Board of Directors:
Chief Executive Officer	ALEX LISSITSA	__signed______
Chief Financial Officer	DMYTRO MARTYNIUK	__signed______

1, rue Jean Piret Boite Postale 351 L-2013 Luxembourg

REPORT OF THE REVISEUR D'ENTREPRISES AGREE

To the Sharehotders of rMc s.A. 16, Rue Erasme L-1468 Luxembourg

Report on the audit of the consolidated financial statements

Opinion

We have audited the consolidated financial statements of IMC S.A. and its subsidiaries (the "Group"), which comprise the consolidated statement of financia[ position as at 31 December 2020, and the consotidated statement of comprehensive income, consotidated statement of changes in equity and consotidated statement of cash ftows for the year then ended, and notes to the consotidated financial statements, inctuding a summary of significant accounting poticies.

ln our opinion, the accompanying consotidated financial statements give a true and fair view of the consotidated financial position of the Group as at 31 December 2020, and of its consotidated financial performance and its consotidated cash ftows for the year then ended in accordance with lnternationat Financial Reporting Standards (lFRSs) as adopted by the European Union.

Basis for Opinion

We conducted our audit in accordance with the EU Regutation N" 537/2014, the Law of 23 Juty 2016 on the audit profession ("Law of 23 Juty 2016"1and with lnternationat Standards on Auditing ("lSAs") as adopted for Luxembourg by the "Commission de Surveillance du Secteur Financier" ("CSSF"). Our responsibitities under the EU regutation No 537/2014, the Law of 23 Juty 2016 and lSAs as adopted for Luxembourg by the CSSF are further described in the . Responsibilities of "rdviseur d'entreprises agrdd" for the audit of the Consotidated financiaI statements " section of our report. We are atso independent of lhe Group in accordance with the lnternationaI Code of Ethics for Professionat Accountants, inctuding lnternationaI lndependence Standards, issued by the lnternationat Ethics Standards Board for Accountants (IESBA Code) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the consolidated financial statements, and have futfitted our other ethical responsibitities under those ethica[ requirements. We betieve that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professionat judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of the audit of the consotidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Existence and valuation of biological assets (notes 3,7,21and 23 to the consolidated financial statements)

Biotogicat assets (non-current and current) are vatued at initial recognition and at each batance sheet date at fair vatue tess estimated point-of'sale costs.

Estimating the fair vatue is a comptex process as it is based on discounted cash flows and invotves various inputs requiring significant judgments and estimates. As a consequence, we have determined the valuation of biotogicat assets as a key audit matter.

Our procedures were as foltows:

• Considering the appropriateness of the modet used by the Group and its consistency with prior periods;
• Reviewing the existence of Biotogical assets on a sample basis;
• Reviewing the inputs used in the catcutation, such as expected yietd, maturity and market price through comparison with internaI supporting documentation inctuding prior years' actual data and external data;
• Verifying whether the model is arithmeticalty correct;
• Reviewing the disctosures in the consotidated financial statements, including disctosures of key assumptions, judgments and sensitivity anatysis;

Existence and valuation of inventories - Work in progress - (notes 3, 8 and 22 to the consolidated financial statements)

lnventory contains a significant portion of work in progress linked to preparation of the lands for future harvest.

Estimating the costs to be a[tocated to the work in progress is a comptex process as it is based on judgments of management using the recommendations of scientific sources and agronomic calcutations of the internat seryices of the Group.

As a consequence, we have determined the existence and valuation of work in progress as a key audit matter.

Our procedures were as fottows:

• Confirming the existence of lands in preparation for future harvest through year end observation on a sampte basis;
• Reviewing the main assumptions undertying the costs attocation used by the Group (standard direct and indirect costs atlocated to hectares of land on the basis of different factors such as the type of crop and the geographical location of the land);
• Apptying a control on a sample basis of the input data used by the Group in their costs attocation model to internaI supporting information and documents;

• Reviewing the disctosures in the consotidated financial statements, including disctosures of key assumptions and judgments.

Going concern (note 2 - going concern and note 4 - operating environment)

As mentioned in note 4 to the consolidated financial statements, the Group is mainty active in Ukraine.

ln2014, Ukraine was faced with potitica[ and economic turmoit, including the annexation by the Russian Federation of Crimea and separatist movements in Lugansk and Donetsk regions.

Even though the Group has no assets in the regions mentioned above, the Group suffered from the consequences of these events on the Ukrainian economy.

The Group is to a significant extent financed by banks and financial institutions, through loan contracts with covenants. Loans and borrowings (excluding lease liabitities) represent as at 31 December 2020, 11.86% of total tiabitities and equity.

Assessment on going concern is targety dependent on forecasts and estimates made by management.

We therefore have considered going concern as a key audit matter.

Our procedures were as fottows:

• Obtaining and evatuating the assessment made by management on going concern;
• Chattenging the reasonabteness of the key assumptions undertying the business ptan and cash flow forecasts, through a review of past performance and comparison with prior forecasts, a review of the sensitivity anatyses of the modets, where possibte ^a comparison of the assumptions with externaI data;
• Verifying that based on the conditions of the contracts, the bank covenants are met as at 31 Decembe r 2020, and that these are expected to be met based on the forecast prepared by the management untit 31 December 2021;
• Evatuating whether events and devetopments since the beginning of the year 2021 may have an impact on the business ptan and forecasts;
• Obtaining assessment of management and evatuating the impact of the COVID ¹⁹ outbreak on the going concern ability of the Group.

Other information

The Board of directors is responsibte for the other information. The other information comprises the information stated in the singte management report and the Corporate Governance Statement but does not inctude the consotidated financiaI statements and our report of "reviseur d'entreprises agrdd" thereon.

Our opinion on the consotidated financiat statements does not cover the other information and we do not express any form of assurance conctusion thereon.

ln connection with our audit of the consotidated financial statements, our responsibitity is to read the other information and, in doing so, consider whether the other information is materialty inconsistent with the consotidated financiaI statements or our knowledge obtained in the audit or otherwise appears to be materiatty misstated. lf, based on the work we have performed, we conctude that there is a material misstatement of this other information, we are required to report this fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors and Those Charged with Governance for the consolidated financial statements

The Board of Directors is responsibte for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs as adopted by the European Union, and for such internal contro[ as the Board of Directors determines is necessary to enable the preparation of consolidated financiaI statements that are free from materiaI misstatement, whether due to fraud or error.

ln preparing the consotidated financiat statements, the Board of Directors is responsible for assessing the Group's abitity to continue as a going concern, disctosing, as applicable, matters retated io going concern and using the going concern basis of accounting untess the Board of Directors either intends to tiquidate the Group or to cease operations, or has no reatistic alternative but to do so.

Those charged with governance are responsibte for overseeing the Group's financiaI reporting process.

Responsibilities of the "riyiseur d'entreprises agri6" for the audit of the consolidated financial statements

The objectives of our audit are to obtain reasonabte assurance about whether the consolidated financial statements as a whote are free from material misstatement, whether due to fraud or error, and to issue a report of the "rrlviseur d'entreprises agrdd" that includes our opinion' Reasonabte assurance is a high tevet of assurance, but is not a guarantee that an audit conducted in accordance with the EU Regutation N" 537/2014, the Law of 23 Juty 2016 and with lSAs as adopted for Luxembourg by the CSSF wit[ atways detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individuatty or in the aggregate, they coutd reasonably be expected to influence the economic decisions of users taken on the basis of these consotidated financia[ statements.

As part of an audit in accordance with the EU Regutation N" 537/2014, the Law of 23 Juty ²⁰¹⁶ and with lSAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professionat skepticism throughout the audit. We atso:

• ldentify and assess the risks of materiaI misstatement of the consotidated financiaI statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resutting from fraud is higher than for one resutting from error, as fraud may invotve coltusion, forgery, intentionaI omissions, misrepresentations, or the override of internaI controt; a
• Obtain an understanding of internal control retevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal controt;

• Evatuate the appropriateness of accounting poticies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors;
• a Conclude on the appropriateness of Board of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists retated to events or conditions that may cast significant doubt on the Group's abitity to continue as a going concern. lf we conctude that a materia[ uncertainty exists, we are required to draw attention in our report of the "rdviseur d'entreprises agr66" to the related disctosures in the consolidated financiaI statements or, if such disctosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report of the "rdviseur d'entreprises agrdd". However, future events or conditions may cause the Group to cease to continue as a going concern;
• Evatuate the overatt presentation, structure and content of the consotidated financial statements, inctuding the disclosures, and whether the consotidated financiaI statements represent the underlying transactions and events in a manner that achieves fair presentation; a
• Obtain sufficient appropriate audit evidence regarding the financiaI information of the entities and business activities within the Group to express an opinion on the consotidated financiat statements. We are responsibte for the direction, supervision and performance of the Group audit. We remain sotety responsible for our audit opinion. a

We communicate with those charged with governance regarding, among other matters, the ptanned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We atso provide those charged with governance with a statement that we have comptied with retevant ethicat requirements regarding independence, and communicate to them at[ retationships and other matters that may reasonabty be thought to bear on our independence, and where appticabte, actions taken to eliminate threats or safeguards apptied.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consotidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our report untess law or regulation prectudes pubtic disctosure about the matter.

Report on Other Legal and Regulatory Requirements

We have been appointed as "rdviseur d'entreprises agrd6" by the General Meeting of the Sharehotders on 30 June 2020. As BDO Audit merged with HRT R6vision, which was appointed as "rdviseur d'entreprises agrdd" for year-end 2016, and the duration of our uninterrupted engagement, inctuding previous renewals and reappointments, is 5 years.

The singte management report is consistent with the consotidated financiaI statements and has been prepared in accordance with appticabte legat requirements.

The accompanying Corporate Governance Statement is presented on pages 23 to 26 of the annual report. The information required by Article 68ter paragraph (1) letters c) and d) of the law of 19 December 2002 on the commercial and companies register and on the accounting records and annuaI accounts of undertakings, as amended, is consistent with the consotidated financial statements and has been prepared in accordance with applicabte [ega[ requirements.

We confirm that the audit opinion is consistent with the additional report to the audit committee or equivatent.

We confirm that the prohibited non-audit services referred to in the EU Regutation No 537/2014 were not provided and that we remained independent of the Company in conducting the audit.

Luxembourg, 29 April 2021

BDO Audit Cabinet de J ppe Barret

BDO Audit, 5oci6t6 Anonyme R.C.s. Luxembourg B 147,570 TVA LU 23425810 BDO Audit, a societe anonyme incorporated in Luxembourg, is a member of BDO lnternationat Limited, a UK company timited by guarantee, and foms part of the intemationat 8DO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.

IMC S.A. AND ITS SUBSIDIARIES Consolidated financial statements

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2020

CONTINUING OPERATIONS Revenue 6 161 387 169 601 Gain from changes in fair value of biological assets and agricultural 7 77 022 52 768 produce, net Cost of sales 8 (159 170) (170 927) GROSS PROFIT 79 239 51 442 Administrative expenses 9 (11 258) (13 246) Selling and distribution expenses 10 (15 839) (21 247) Other operating income 11 1 315 2 708 Other operating expenses 12 (2 056) (4 176) Write-offs of property, plant and equipment (82) (260) Reversal of impairment of property, plant and equipment 120 - Impairment of property, plant and equipment (1 090) - OPERATING PROFIT 50 349 15 221 Financial expenses, net 15 (2 137) (3 476) Effect of lease of right-of-use assets 19 (7 234) (7 640) Effect of additional return 29 (872) (2 090) Foreign currency exchange (loss)/gain, net 16 (7 918) 6 049 PROFIT BEFORE TAX FROM CONTINUING OPERATIONS 32 188 8 064 Income tax expenses, net 17 (483) (746) NET PROFIT FOR THE PERIOD FROM CONTINUING 31 705 7 318 OPERATIONS Net profit/(loss) for the period attributable to: Owners of the parent company 31 788 7 482 Non-controlling interests (83) (164) Weighted average number of shares 33 178 000 33 178 000 Basic profit per ordinary share (in USD) 0,96 0,22 OTHER COMPREHENSIVE INCOME/(LOSS) Items that may be reclassified to profit or loss Effect of foreign currency translation (24 208) 21 513 Items that will no be reclassified to profit or loss Revaluation of property, plant and equipment 5 265 - Deferred tax charged directly to revaluation of property, plant and - (628) equipment Deferred tax charged directly to amortization of revaluation reserve 140 212 TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) (19 431) 21 725 TOTAL COMPREHENSIVE PROFIT 12 274 29 043 Comprehensive income/(loss) attributable to: Owners of the parent company 12 405 29 149 Non-controlling interests (131) (106)	(in thousand USD, unless otherwise stated)	Note	For the year ended 31 December 2020	For the year ended 31 December 2019

__________signed____________

Alex Lissitsa Chief Executive Officer Chief Financial Officer

Dmytro Martyniuk

__________signed____________

IMC S.A. AND ITS SUBSIDIARIES Consolidated financial statements

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2020

(in thousand USD, unless otherwise stated)	Note	31 December 2020	31 December 2019
ASSETS
Non-current assets
Property, plant and equipment	18	65 881	75 950
Right-of-use assets	19	93 963	101 203
Intangible assets	20	1 230	1 934
Non-current biological assets	21	2 027	2 590
Prepayments for property, plant and equipment		159	171
Total non-current assets		163 260	181 848
Current assets
Inventories	22	81 978	91 850
Current biological assets	23	11 269	13 224
Trade accounts receivable, net	24	202	277
Prepayments and other current assets, net	25	5 389	6 027
Cash and cash equivalents	27	17 990	5 182
Total current assets		116 828	116 560
TOTAL ASSETS		280 088	298 408
LIABILITIES AND EQUITY Equity attributable to the owners of parent company Share capital	28	59	59
Share premium		29 512	29 512
Revaluation reserve		40 151	39 654
Retained earnings		201 973	172 945
Effect of foreign currency translation		(133 458)	(109 298)
Total equity attributable to the owners of parent company		138 237	132 872
Non-controlling interests		190	321
Total equity		138 427	133 193
Non-current liabilities
Deferred tax liabilities	30	3 177	3 218
Long-term loans and borrowings	31	4 207	2 998
Long-term lease liabilities as to right-of-use assets	19	82 396	87 425
Total non-current liabilities		89 780	93 641
Current liabilities
Current portion of long-term borrowings	31	3 023	16 502
Current portion of long-term lease liabilities as to right-of-use assets	19	16 765	15 863
Short-term loans and borrowings	32	26 000	27 538
Trade accounts payable	33	963	2 867
Other current liabilities and accrued expenses	34	5 116	8 804
Income tax liabilities		14	-
Total current liabilities		51 881	71 574
Total liabilities		141 661	165 215
TOTAL LIABILITIES AND EQUITY		280 088	298 408

__________signed____________

Alex Lissitsa

Chief Executive Officer Chief Financial Officer

__________signed____________

Dmytro Martyniuk

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2020

(in thousand USD, unless otherwise stated)

	Share capital	Share premium	Revaluation reserve	Retained earnings	Effect of foreign currency translation	Total	Non controlling interests	Total equity
31 December 2018	59	29 512	48 603	172 822	(130 753)	120 243	427	120 670
Сomprehensive income/(loss) for the period
Profit/(loss) for the period Amortization of	-	-	-	7 482	-	7 482	(164)	7 318
revaluation reserve Deferred tax charged	-	-	(9 161)	9 161	-	-	-	-
directly to amortization of revaluation reserve Other comprehensive	-	-	212	-	-	212	-	212
income	-	-	-	-	21 455	21 455	58	21 513
Total comprehensive profit/(loss)	-	-	(8 949)	16 643	21 455	29 149	(106)	29 043
Contributions by and distributions to owners Distribution of dividends	-	-	-	(16 520)	-	(16 520)	-	(16 520)
31 December 2019	59	29 512	39 654	172 945	(109 298)	132 872	321	133 193
31 December 2019	59	29 512	39 654	172 945	(109 298)	132 872	321	133 193
Сomprehensive income/(loss) for the
period Profit/(loss) for the period Amortization of	-	-	-	31 788	-	31 788	(83)	31 705
revaluation reserve Deferred tax charged	-	-	(4 280)	4 280	-	-	-	-
directly to amortization of revaluation reserve	-	-	140	-	-	140	-	140
Revaluation of property, plant and equipment Deferred tax charged	-	-	5 265	-	-	5 265	-	5 265
directly to revaluation of property, plant and equipment	-	-	(628)	-	-	(628)	-	(628)
Other comprehensive income	-	-	-	-	(24 160)	(24 160)	(48)	(24 208)
Total comprehensive profit/(loss)	-	-	497	36 068	(24 160)	12 405	(131)	12 274
Contributions by and distributions to owners Distribution of dividends	-	-	-	(7 040)	-	(7 040)	-	(7 040)
31 December 2020	59	29 512	40 151	201 973	(133 458)	138 237	190	138 427

__________signed____________

Alex Lissitsa

Chief Executive Officer Chief Financial Officer

__________signed____________ Dmytro Martyniuk

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2020

(in thousand USD, unless otherwise stated)

	Note	For the year ended 31 December 2020	For the year ended 31 December 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit before tax from continuing operations		32 188	8 064
Adjusted to reconcile profit before tax with net cash used
in operating activities:
Gain from changes in fair value of biological assets and agricultural produce, net	7	(77 022)	(52 768)
Disposal of revaluation of biological assets and agricultural
produce in the cost of sales, net	8	67 260	72 193
Depreciation and amortization	13	20 438	23 803
Effect of lease of right-of-use assets		7 234	7 640
Interest expenses and other financial expenses	15	2 731	4 035
Foreign currency exchange loss/(gain), net		8 139	(6 328)
Gain on disposal of property, plant and equipment	11	(209)	(119)
Effect of additional return		872	2 090
Deferred expenses on options		851	1 702
Write-offs of property, plant and equipment		82	260
Gain on recovery of assets previously written off	11	(233)	(398)
Interest income	15	(594)	(559)
Accruals for unused vacations		1 629	736
Accruals for audit services		101	87
Write-offs of VAT	12	71	101
Shortages and losses due to impairment of inventories	12	82	56
Income from write-offs of accounts payable	11	(339)	(83)
Loss/(gain) on disposal of inventories	12	11	(29)
Allowance for doubtful accounts receivable	12	52	72
Government grants recognised as income	11	(34)	(147)
Reversal of impairment of property, plant and equipment		(120)	-
Impairment of property, plant and equipment		1 090	-
Cash flows from operating activities before changes in		64 280	60 408
working capital
Changes in trade accounts receivable		391	(18)
Changes in prepayments and other current assets		632	2 736
Changes in inventories		4 441	3 265
Changes in current biological assets		99	(1 906)
Changes in trade accounts payable		(1 495)	(633)
Changes in other current liabilities and accrued expenses		(4 257)	(3 741)
Cash flows from operations		64 091	60 111
Interest paid on loans and borrowings		(2 597)	(4 104)
Interest paid on lease liabilities as to right-of-use assets		(1 035)	(1 039)
Income tax paid		(496)	(851)
Net cash flows from operating activities		59 963	54 117

__________signed____________

Alex Lissitsa Chief Executive Officer Chief Financial Officer

__________signed____________ Dmytro Martyniuk

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

For the year ended 31 December 2020 (in thousand USD, unless otherwise stated)

	Note	For the year ended 31 December 2020	For the year ended 31 December 2019
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(7 126)	(6 546)
Purchase of intangible assets		(34)	(26)
Proceeds from disposal of property, plant and equipment		1 390	1 845
Proceeds from government grants		34	147
Net cash flows from investing activities		(5 736)	(4 580)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term and short-term borrowings		25 417	16 274
Repayment of long-term and short-term borrowings		(40 094)	(30 040)
Repayment of long-term and short-term lease liabilities as to right-of-use assets		(16 050)	(15 911)
Repayment of dividends		(7 040)	(16 520)
Net cash flows from financing activities		(37 767)	(46 197)
NET CASH FLOWS		16 460	3 340
Cash and cash equivalents as at the beginning of the period	27	5 182	3 920
Effect of translation into presentation currency		(3 652)	(2 078)
Cash and cash equivalents as at the end of the period	27	17 990	5 182

__________signed____________

Alex Lissitsa

Dmytro Martyniuk Chief Executive Officer Chief Financial Officer

__________signed____________

(in thousand USD, unless otherwise stated)

1. Description of formation and business

IMC S.A. (the "Parent company") is a limited liability company registered under the laws of Luxembourg on 28 December 2010 for an unlimited period of time. IMC S.A. was formed to serve as the ultimate holding company of Unigrain Holding Limited and its subsidiaries. The registered address of IMC S.A. is L-1468, 16 rue Erasme, Luxembourg, Grand Duchy Luxembourg, its register number within the Registre de Commerce et des Sociétés du Luxembourg is RCS B157843.

IMC S.A. and its subsidiaries (the "Group" or the "IMC") is an integrated agricultural company in Ukraine. The main areas of the Group's activities are:

• cultivation of grain and oilseeds crops, potato production;
• dairy farming;
• storage and processing of grain and oilseeds crops.

The Group is among Ukraine's top-10 industrial milk producers. The grain and oilseeds crops produced by the Group are sold in both the Ukrainian and export markets.

Until December 2010 there was no the holding company of the Group.

In June 2009 in the course of the corporate reorganization Unigrain Holding Limited was established as a sub-holding company of the Group. Through the series of transactions Unigrain Holding Limited became the immediate parent of Burat-Agro, Ltd., Burat, Ltd., Chernihiv Industrial Milk Company, Ltd., PRJSC Mlibor, PRJSC Poltava Kombikormoviy Zavod and Zemelniy Kadastroviy Centr SA.

In December 2010 IMC S.A. was registered as a holding company of the Group through the ownership of 100% of the voting shares in the company Unigrain Holding Limited.

In June 2011 Unigrain Holding Limited acquired 100% of the voting shares in the company PAE Promin, PE Progress 2010, PAE Slavutich. In November 2011 companies PAE Slavutich and PE Progress 2010 were merged to Chernihiv Industrial Milk Company, Ltd and the company PAE Promin was merged to Burat-Agro, Ltd.

In August 2011 trading company Aristo Eurotrading was formed.

In December 2011 Unigrain Holding Limited acquired 100% of the voting shares in the company AF Kalynivska 2005, Ltd, AF Zhovtneva, Ltd, AF Shid-2005, Ltd, APP Virynske, Ltd, Pisky, Ltd., SE "Viry-Agro" and 80,61% of the voting shares in the company PRJSC "Viryvske HPP".

In March 2012 Unigrain Holding Limited acquired 100% of the voting shares in the company Ukragrosouz KSM, Ltd.

In June 2012 Unigrain Holding Limited acquired 100% of the voting shares in the company PAC Slobozhanschina Agro.

In November 2012 the Group was restructured and 6 companies were joined to PAC Slobozhanschina Agro: AF Kalynivska-2005 Ltd, AF Zhovtneva Ltd, AF Shid-2005 Ltd, AIE Vyrynske Ltd, Pisky Ltd, SE Vyry-Agro.

In December 2012 Unigrain Holding Limited acquired 100% of the voting shares in the company Bluerice Limited. The following companies became the part of the Group, as their owner is Bluerice Limited: Agroprogress Holding Ltd, Agroprogress PE, Bobrovitsky Hlebzavod Ltd, Plemzavod Noviy Trostyanets Ltd, PRJSC "Bobrovitske HPP", Losinovka-Agro Ltd, Parafiyivka-Progress Ltd, Nosovsky Saharny Zavod Ltd.

In November 2013 trading company Negoce Agricole S.A. was formed.

In December 2013 Losinovka-Agro Ltd was joined to Agroprogress PE.

During the year 2013 the Group acquired the voting shares in the company AgroKIM Ltd and on 30 December 2013 the acquisition was completed and 100% of the voting shares were owned by the Group.

In April 2014 Parafiyivka-Progress Ltd was joined to AgroKIM Ltd.

In May 2015 Plemzavod Noviy Trostyanets Ltd was joined to AgroKIM Ltd.

In May 2016 Ukragrosouz KSM Ltd was joined to Burat-Agro Ltd.

In October 2016 Zemelniy Kadastroviy Centr PE and Agroprogress Holding Ltd left the Group.

In December 2016 Bluerice Limited left the Group.

On 26 April 2017 IMC S.A. (formally Industrial Milk Company S.A., hereinafter the Company) informs that official name of the Company has been changed from Industrial Milk Company S.A. to IMC S.A.

In June 2019 trading company Aristo Eurotrading HK Limited was formed.

All companies comprising the Group were under the control of the same beneficial owner Mr. Petrov O.L. as at all the reporting dates and have effectively operated as an operating group under common management.

(in thousand USD, unless otherwise stated)

The principal activities of the companies comprising the Group are as follows:

		Country of	Year	Cumulative ownership ratio, %
Operating entity	Principal activity	registration	established/ acquired	31 December 2020	31 December 2019
IMC S.A.	Holding company	Luxembourg	28.12.2010	100	100
Burat-Agro Ltd.	Agricultural and farming production	Ukraine	31.12.2007	100	100
Burat Ltd.	Grain elevator	Ukraine	31.12.2007	100	100
Chernihiv Industrial Milk Company Ltd.	Agricultural and farming production	Ukraine	31.12.2007	100	100
PrJSC Poltava Kombilormoviy Zavod	Granting of PPE into finance lease	Ukraine	31.12.2007	87,58	87,58
PrJSC Mlibor	Grain elevator	Ukraine	31.05.2008	74,28	74,08
Unigrain Holding Limited	Subholding company	Cyprus	02.06.2009	100	100
Aristo Eurotrading Limited	Trading company	British Virgin Islands	30.08.2011	100	100
PrJSC "Vyryvske HPP"	Grain elevator	Ukraine	28.12.2011	80,61	80,61
PAC Slobozhanschina Agro	Agricultural production	Ukraine	26.06.2012	100	100
Agroprogress PE	Agricultural and farming production	Ukraine	28.12.2012	100	100
Bobrovitsky Hlebzavod Ltd	Bakery production	Ukraine	28.12.2012	100	100
PrJSC "Bobrovitske HPP"	Grain elevator	Ukraine	28.12.2012	92,83	92,83
Nosovsky Saharny Zavod Ltd	Storage facilities	Ukraine	28.12.2012	99,9	99,9
Negoce Agricole S.a r.l.	Trading company	Luxembourg	19.11.2013	100	100
AgroKIM Ltd.	Agricultural and farming production, grain elevator	Ukraine	30.12.2013	100	100
Aristo Eurotrading HK Limited	Trading company	Hong Kong	21.06.2019	100	100

Today IMC is the vertically integrated and high-technology group of companies operating in Sumy, Poltava and Chernihiv region (northern and central Ukraine).

The Group controls 120,3 thousand ha (120,0 thousand ha under processing of high quality arable land). As at 31 December 2020 the Group operates in three segments: crop farming, dairy farming, elevators and warehouses.

The financial year of the Group begins on 01 January of each year and terminates on 31 December of each year.

The Group's Consolidated financial statements are public and available at:

http://www.imcagro.com.ua/en/investor-relations/financial-reports.

Stock information about the Company (company code name on WSE: IMCOMPANY (LU0607203980)):

https://www.gpw.pl/company-factsheet?isin=LU0607203980

(in thousand USD, unless otherwise stated)

2. Basis of preparation of the Consolidated financial statements

Statement of compliance

These Consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and as adopted by the European Union.

These Consolidated financial statements are based on principal accounting policies and critical accounting estimates and judgments that are set out below. These accounting policies and assumptions have been applied consistently to all periods presented in these Consolidated financial statements.

Companies comprising the Group which are incorporated in Ukraine maintain their accounting records in accordance with Ukrainian regulations. Ukrainian statutory accounting principles and procedures differ from those generally accepted under IFRS. Accordingly, the Consolidated financial statements, which have been prepared from the Ukrainian statutory accounting records for the entities of the Group domiciled in Ukraine, reflect adjustments necessary for such financial statements to be presented in accordance with IFRS.

Going concern

These Consolidated financial statements have been prepared on a going concern basis, which contemplates the disposal of assets and the settlement of liabilities in the normal course of business. The recoverability of Group's assets, as well as the future operations of the Group, may be significantly affected by the current and future economic environment. Management believes that Group has reliable access to sources of financing capable to support appropriate operating activity of Group entities. These Consolidated financial statements do not include any adjustments should the Group be unable to continue as going concern.

Basis of measurement

The Consolidated financial statements are prepared under historical cost basis except for the revalued amounts of property, plant and equipment, fair values of biological assets and agricultural produce.

The Group's management has decided to present and measure these Consolidated financial statements in United States Dollars ("USD") for the purposes of convenience of users of these financial statements.

Use of estimates

The preparation of these Consolidated financial statements involves the use of reasonable accounting estimates and requires the Management to make judgments in applying the Group's accounting policies. These estimates and assumptions are based on Management's best knowledge of current events, historical experience and other factors that are believed to be reasonable. Note 4 contains areas, related to a high degree of importance or complexity in decision-making, or areas where assumptions and estimates are important for amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the end of the reporting period.

Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the Group's companies are measured using the currency of the primary economic environment in which the company operates ("the functional currency"). For the companies of the Group operating in Ukraine the Ukrainian Hryvna ("UAH") is the functional currency. For the companies operating in Cyprus and Luxembourg the functional currency is Euro ("EUR").

These Consolidated financial statements are presented in the thousands of United States Dollars ("USD"), unless otherwise indicated.

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.

(in thousand USD, unless otherwise stated)

Currency	31 December 2020	Average for the year ended 31 December 2020	31 December 2019	Average for the year ended 31 December 2019	31 December 2018
UAH/USD	28,2746	26,9639	23,6862	25,83734	27,688264
EUR/USD	1,23	1,14	1,12	1,12	1,15

The principal exchange rates used in the preparation of these Consolidated financial statements are as follows:

Translation into presentation currency

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each balance sheet presented are translated at the official rate at the date of the balance sheet;

• income and expenses are translated at average exchange rate for the period, unless fluctuations in exchange rates during that period are significant, in which case income and expenses are translated at the rate on the dates of the transactions;

• all the equity and provision items are translated at the rate on the dates of the transactions;

• all resulting exchange differences are recognized as a separate component of other comprehensive income;

• in the consolidated statement of cash flows cash balances at the beginning and end of each presented period are translated at rates prevailing at corresponding dates. All cash flows are translated at average exchange rates for the periods presented. Exchange differences arising from the translation are presented as the effect of translation into presentation currency.

Principles of consolidation

Subsidiaries

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured at the fair value of the assets given up, equity instruments issued and liabilities incurred or assumed at the date of acquisition, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statement of comprehensive income.

Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Financial statements of parent company and its subsidiaries, which are used while preparing the Consolidated financial statements, should be prepared as at the same date on the basis of consistent application of accounting policy for all companies of the Group.

3. Summary of significant accounting policies

Property, plant and equipment

Property, plant and equipment are stated at their revalued amounts that are the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Any accumulated depreciation at the date of revaluation is restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals its revalued amount.

If there is no data about the market value of property, plant and equipment due to the nature of highly specialized machinery and equipment, such objects are evaluated according to acquisition expenses under present-day conditions, adjusted by an ageing percentage.

Property, plant and equipment of acquired subsidiaries are initially recognised at their fair value which is based on valuations performed by independent professionally appraisers.

Valuations are performed frequently enough to ensure that the fair value of a remeasured asset does not differ materially from its carrying amount as at reporting date.

Increases in the carrying amount arising on revaluation of property, plant and equipment are recognised in other comprehensive income and accumulated in equity under the line Revaluation reserve. Decreases in the carrying amount as a result of a revaluation are in profit or loss. However, the increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss. Decrease related to previous increase of the same asset is recognized against other reserves directly in equity.

(in thousand USD, unless otherwise stated)

The revaluation surplus included in equity in respect of an item of property, plant and equipment is transferred directly to retained earnings as the asset is used by an entity (in the amount that is the difference between depreciation based on the revalued carrying amount of the asset and depreciation based on the asset's original cost) and when the asset is derecognized (in the full amount).

Subsequent major costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that these replacements will materially extend the life of property, plant and equipment or result in future economic benefits. The carrying amount of the replaced part is derecognized. All other day-to-day repairs and maintenance are charged to the consolidated statement of comprehensive income during the financial period in which they are incurred.

Property, plant and equipment or their essential component are written-off in a case of their disposal or if future economic benefits from use or disposal of such asset are not expected. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the other incomes (expenses) in the consolidated statement of comprehensive income when the asset is derecognized.

Depreciation of an asset begins when it is available for use, i.e., when it is in the location and condition necessary for it to be capable of operating in the manner intended by Management. Depreciation of an asset ceases when the asset is derecognized. Depreciation does not cease when the asset becomes idle or is retired from active use and held for disposal unless the asset is fully depreciated.

Depreciation on assets is calculated using the straight-line method to allocate their revalued amounts to their residual values over their estimated useful lives, as follows:

• Buildings 15-55 years
• Machinery 5-30 years
• Motor vehicles 5-20 years
• Other assets 5-20 years

The assets' residual values and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.

Land is not depreciated.

Construction in progress comprises costs directly related to the construction of property, plant and equipment, as well as the relevant variable and fixed overhead costs related to the construction. These assets are depreciated from the moment when they are ready for operation.

Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the consolidated statement of comprehensive income in other income (expenses) when the asset is derecognized.

The Group determines whether the useful life of an intangible asset is finite or indefinite.

Useful life of intangible assets is indefinite if the Group suggests that the period during which it is expected that the object of intangible assets will generate net cash inflows to the organization has no foreseeable limit. Intangible assets with indefinite useful lives are not amortized, but reviewed for impairment.

Amortisation of intangible assets is charged to the consolidated statement of comprehensive income on a straight-line basis over the estimated useful lives of intangible assets from the date they are available for use. The following estimated useful lives, which are re-assessed annually, have been determined for classes of finite-lived intangible assets:

- Land lease rights	5-15 years
------------------------	------------

• Computer software 5 years

Impairment of property, plant and equipment and intangible assets

The carrying amounts of property, plant and equipment and intangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated in order to determine the extent of the impairment loss, if any. Where it is impossible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of a cash-generating unit to which the asset belongs.

The recoverable amount is the higher of the fair value of an asset less costs to sell and its value in use. Value in use is the net present value of expected future cash flows, discounted on a pre-tax basis, using a rate that reflects current market assessments of the time value of money.

(in thousand USD, unless otherwise stated)

An impairment loss is recognized whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognized in the consolidated statement of comprehensive income.

A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the consolidated statement of comprehensive income unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

Biological assets

The biological assets are classified as non-current and current depending on the expected pattern of consumption of the economic benefits embodied in the biological assets.

The following categories of biological assets are distinguished by the Group:

• Non-current biological assets of plant-breeding at fair value;
• Non-current biological assets of cattle-breeding at fair value;
• Current biological assets of plant-breeding measured at fair value;
• Current biological assets of cattle-breeding measured at fair value.

The Group assesses a biological asset at initial recognition and at each balance sheet date at fair value less estimated point-of-sale costs, except for the cases where the fair value cannot be determined with reasonable assurance.

Gains or losses from movements in the fair value of biological assets less estimated selling and distribution expenses of the Group are recorded in the period they are incurred in the consolidated statement of comprehensive income as Gain (loss) from changes in fair value of biological assets and agricultural produce, net.

The Group capitalizes expenses between the reporting dates into the cost of biological assets.

• Biological assets of plant-breeding
  • The capitalized expenses include all the direct costs and overhead costs related to the farming division. Such costs may include the following costs: raw materials (seeds, mineral fertilizers, fuel and other materials), wages and salaries expenses of production personnel and related charges, amortization and depreciation, land lease expenses and other taxes, third parties' services and other expenses related to the cultivation and harvesting of biological assets of plant-breeding.
• Biological assets of animal-breeding

The capitalized expenses include all the direct costs and overhead costs related to the livestock breeding. The types of costs that are capitalized in the current biological assets of animal breeding are the following: fodder, means of protection of animals and artificial insemination, fuel and other materials, wages and salaries expenses of production personnel and related charges, amortization and depreciation, third parties' services and other expenses related to the current biological assets of animal breeding.

All expenses related to the non-current biological assets of cattle breeding are included into the cost of milk. Respectively the Note of non-current biological assets does not include any capitalized costs.

The expenses on works connected with preparation of the lands for future harvest are included into the Inventories as work-in-progress. After works on seeding on these lands the cost of field preparation is reclassified to biological assets held at fair value.

Agricultural produce

The Group classifies the harvested product of the biological assets as agricultural produce. Agricultural produce is measured at its fair value less costs to sell at the point of harvest. The difference between the cost and fair value less costs to sell at the point of harvest of harvested agricultural produce is recognized in the consolidated statement of comprehensive income as Gain (loss) from changes in fair value of biological assets and agricultural produce, net.

After the initial recognising as at the date of harvesting agricultural produce is treated as inventories. Agricultural produce measurement as at the date of harvest becomes inventories' cost to account.

Inventories

Inventories are measured at the lower of cost or net realizable value.

The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

(in thousand USD, unless otherwise stated)

The cost of agriculture produce is its fair value less costs to sell at the point of harvesting.

The cost of work in progress and finished goods includes costs of direct materials and labor and other direct productions costs and related production overheads (based on normal operating capacity). Costs are capitalized in work in progress for preparing and treating land prior to seeding in the next period. Work in progress is transferred to biological assets once the land is seeded.

The cost of inventories is assigned by using FIFO method.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

The Group periodically analyses inventories to determine whether they are damaged, obsolete or slow-moving or if their net realizable value has declined, and makes an allowance for such inventories. If such situation occurred, the sum remissive the cost of inventories should be reflected as a part of other expenses in consolidated statement of comprehensive income.

Financial instruments

Financial assets and financial liabilities are regognised in the Group's consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets or financial liabilities (other than financial assets or financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

Financial assets

All regular way purchases or sales of financial assets are recognized on a trade date basis.

All recognized financial assets are measured subsequently in their entirety at their amortised cost or fair value, depending on the classification of the financial assets.

The Group's financial assets include cash and cash equivalents, trade receivables and other receivables and are classified as Financial assets at amortised cost.

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using the effective interest method of any different between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

The Group recognises a loss allowance for expected credit losses on financial assets and updates the allowance at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The expected credit losses are estimated using a provision matrix based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate. The expected credit loss is estimated as the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive, discounted at the original effective interest rate.

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration receives and receivable is recognised in consolidated statement of comprehensive income.

Financial liabilities

All financial liabilities are measures subsequently at amortised cost using the effective interest method or at fair value through profit or loss.

The Group's financial liabilities include trade payables and other payables, loans and borrowings, which are classified as Financial liabilities at amortised cost.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expenses over the relevant period. The effective interest rate is the rate that exactly discount estimated future cash payments (including all fees and points or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.

The Group derecognises a financial liability only when the Group's obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognized and the sum of the consideration paid and payable is recognised in consolidated statement of comprehensive income.

(in thousand USD, unless otherwise stated)

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in consolidated statement of comprehensive income.

Prepayments and other non-financial assets

Prepayments are reflected at nominal value less VAT and accumulated impairment losses, other non-financial assets are reflected at nominal value less accumulated impairment losses.

Prepayments are classified as non-current assets when the goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment relates to an asset which will itself be classified as non-current upon initial recognition.

An option on Management Incentive Plan is classified as deferred expenses in the amount of exceeding of quoted share price under subscription price with impact on share premium in equity. The deferred expenses are recognized as expenses of the period in the line Wages and salaries of administrative personnel and related charges during the term of exercising of the option.

If there is an indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the prepayment is written down accordingly and a corresponding impairment loss is recognised as a part of other expenses in statement of comprehensive income.

Cash and cash equivalents

Cash and cash equivalents include cash in bank and cash in hand, call deposits.

Leases

The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Group as a lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-ofuse assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received.

Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.

If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses (unless they are incurred to produce inventories) 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 its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases of property, plant and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). Lease payments on short-term leases and leases of low value assets are recognised as expense on a straight-line basis over the lease term.

(in thousand USD, unless otherwise stated)

Group as a lessor

Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned.

Taxation

Income tax

Income tax expense represents the amount of the tax currently payable and deferred tax.

Income tax expenses are recorded as expenses or income in the consolidated statement of comprehensive income, except when they relate to items directly attributable to other comprehensive income (in which case the amount of tax is taken to other comprehensive income), or when they arise at initial recognition of company acquisition.

i. Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, by the reporting date, in the countries where the Group operates and generates taxable income.

ii. Deferred income tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

• where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; - in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized except:

• where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

• in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Single tax 4th group (previously Fixed agricultural tax)

According to effective legislation, the Ukrainian consolidated companies of the Group involved in production, processing and sale of agricultural products may opt for paying single tax 4th group in lieu of income tax, land tax and some other local taxes if the revenues from sale of their own agricultural products constitute not less than 75% of their total (gross) revenues. The single tax 4th group is assessed at 0,95% on the deemed value of the land plots owned or leased by the entity (0,95% in 2019). As at 31 December 2020, 5 of the companies comprising the Group were elected to pay single tax 4th group (2019: 5).

Value added tax (VAT)

VAT output equals to the total amount of VAT collected within a reporting period, and arises on the earlier of the date of shipping goods to a customer or the date of receiving payment from the customer. VAT input is the amount that a taxpayer is entitled to offset against his VAT liability in a reporting period. Rights to VAT input arise on the earlier of the date of payment to the supplier or the date goods are received.

Revenue, expenses and assets are recognized less VAT amount, except cases, when VAT arising on purchases of assets or services, is not recoverable by tax authority; in this case VAT is recognized as part of purchase costs or part of item of expenses respectively. Net amount of VAT, recoverable by tax authority or paid, is included into accounts receivable and payable, reflected in consolidated statement of financial position.

Other taxes payable

Other taxes payable comprise liabilities for taxes other than above, accrued in accordance with legislation enacted or substantively enacted by the end of the reporting period.

(in thousand USD, unless otherwise stated)

Government grants

The Ukrainian legislation provides various benefits and grants for companies engaged in agriculture. Such benefits and grants are approved by the Supreme Council of Ukraine, the Ministry of Agrarian Policy, Ministry of Finance and local authorities. The Group recognizes this type of benefits upon the receipt of funds as other operating income in the consolidated statement of comprehensive income.

Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Contingent assets and liabilities

Contingent liabilities are not recognized in the consolidated financial statements. The Group discloses information about contingent liabilities in the Notes to the consolidated financial statements if any, except for the cases where fulfillment of contingent liabilities is unlikely; because of the remoteness of the event (possible repayment period is more than 12 months).

The Group constantly analyzes contingent liabilities to determine the possibility of their repayment. If the repayment of a liability, which was previously characterized as contingent, becomes probable, the Group records the provision for the period in which repayment of the obligation has become probable.

Contingent assets are not recognized in the consolidated financial statements, but disclosed in the Notes where there is a reasonable possibility of future economic benefits.

Share capital

Ordinary shares issued are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction. Any excess of the fair value of consideration received over the par value of shares issued is presented in consolidated financial statements as Share premium.

Dividends

Dividends are recognized as a liability and deducted from shareholders' equity at the balance sheet date only if they are declared before or on the balance sheet date. Dividends are disclosed when they are proposed before the balance sheet date or proposed or declared after the balance sheet date but before the Consolidated financial statements are authorized for issue.

Share based payment

Management Incentive Plan defined an option for a Management to purchase the Group's new shares under the subscription price. The issue of these new shares has an impact on Equity – it increases the line Share capital in the amount of subscription and the line Share premium in the amount that quoted share price exceeds subscription price. At the same time the deferred expenses were recognized in the amount of share premium. The deferred expenses are recognized as expenses of the period in the line Wages and salaries of administrative personnel and related charges during the term of exercising of the option.

Earnings per share

Earnings per share are determined by dividing the net profit or loss attributable to the owners of Parent company by the weighted average number of shares outstanding during the reporting period.

Income from the exchange of property certificates

When the items of property, plant and equipment are acquired in exchange for non-cash asset (property certificate), the initial value of such assets is estimated at fair value. The difference between the price paid for property certificates and the fair value of received items of property, plant and equipment is recognized as income in the period of the exchange operation.

(in thousand USD, unless otherwise stated)

Revenue recognition

Revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. A five-step model is established to account for revenue from contracts with customers.

The Group performed an analysis of five-step model as follows:

• the Group concludes contract with the customers in written form, where the parties and each party's rights are mentioned, all conditions relating goods or services, payments and delivery are described.

• the Group is in the business of crops cultivation, dairy farming and providing storage and processing services. Crops and services are sold on their own in separate identified contracts with customers. So the sale of crops and dairy farming products or providing of services is the only performance obligation in contracts with customers.

• the Group receives only short-term advances from its clients and they are presented as a part of Other current liabilities and accrued expenses. The contracts do not contain any variable considerations or warranty obligations. The transaction price is clearly stated in the contract.

• finished products and services transferred to customers at a point in time.

Therefore, the Group recognizes revenue as follows:

Sales of goods

Revenue from sales of goods is recognised at the point of transfer of all risks and rewards of ownership of the goods, normally when the goods are shipped. If the Group agrees to transport goods to a specified location, revenue is recognised when the goods are passed to the customer at the destination point. The Group uses standardised INCOTERMS which define the point of risks and reward transfers.

Rendering of services Revenue from rendering services is recognized at the moment of transfer to the customer control over the product or service.

Borrowing costs

Borrowing costs consist of interest and other costs that the Group incurs in connection with the borrowing of funds.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. Investment income resulting from temporary investment of received borrowing costs, until their expensing for the purchase of capital construction objects, shall be deducted from the cost of raising borrowing costs that may be capitalized.

All other borrowing costs are expensed in the period they occur.

4. Critical accounting estimates and judgments

The preparation of the Group's Consolidated financial statements requires Management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and the disclosure of contingent assets and liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Used estimates and assumptions are reviewed by the Management of the Group on a continuous basis, by reference to past experiences, current trends and all available information that is relevant at the time of preparation of consolidated financial statements. Adjustments to accounting estimates are recognized in the period in which the estimate is revised if the change affects only that period or in the period of the revision and subsequent periods, if both periods are affected.

In the process of applying the Group's accounting policies, Management has made the following judgments, estimates and assumptions which have the most significant effect on the amounts reflected in the consolidated financial statements.

(in thousand USD, unless otherwise stated)

Fair value of property, plant and equipment

The Group engages an independent appraiser to determine the fair value of property, plant and equipment on a regular basis.

The assessment is conducted in accordance with International Valuation Standards for property. The assessment procedure is carried out for all groups of property, plant and equipment. The fair value of items of property, plant and equipment is estimated on the basis of comparative and cost plus approaches.

The comparative approach is based on an analysis of sales prices and offers of similar items of property, plant and equipment, taking into account the appropriate adjustments for differences between the objects of comparison and assessment item. Based on the application of this approach, the fair value of property, plant and equipment is determined on the basis of their market value.

The cost approach involves the definition of present value of costs of reconstruction or replacement of the assessment item with their further adjustment by the depreciation (impairment) amount. Based on the application of this approach, the fair value of certain items of property, plant and equipment is determined in the amount of the replacement of these items. The cost plus method is adjusted by the income method data, which is based on the discounted cash flow model.

This model is most sensitive to the discount rate, as well as to the expected cash flows and growth rates used for the extrapolation purposes. Judgments of the Group in determining the indices used in the appraisers' calculations may have a significant effect on the determination of fair value of property, plant and equipment, and hence on their carrying amount.

The fair value of property, plant and equipment of all the Group's companies has been measured as at 31 December 2020 by an independent appraiser LLC "Asset Expertise" (ODS Certificate No.905/19 as of 28 November 2019 issued by State Property Fund of Ukraine).

Useful lives of property, plant and equipment

Items of property, plant and equipment owned by the Group are depreciated using the straight-line method over their useful lives, which are calculated in accordance with business plans and operating calculations of the Group's Management with respect to those assets.

The estimated useful life and residual value of non-current assets are influenced by the rate of exploitation of assets, servicing technologies, changes in legislation, unforeseen operational circumstances. The Group's management periodically reviews the applicable useful lives. This analysis is based on the current technical condition of assets and the expected period in which they will generate economic benefits to the Group.

Any of the above factors may affect the future rates of depreciation, as well as carrying and residual value of property, plant and equipment.

There were no changes in accounting estimates of remaining useful lives of items of property, plant and equipment during Y2020.

But as at 31 December 2020 an independent valuation of the Group's land, buildings, machinery and vehicles was performed in accordance with International Valuation Standards by an independent appraiser LLC "Asset Expertise" (ODS Certificate No.905/19 as of 28 November 2019 issued by State Property Fund of Ukraine). In the process of preparing data for the appraiser, a lot of information was collected regarding the current technical condition of assets. The engineers of each department in each cluster of the Group collected data on repairs and upgrades carried out, about methods of using of assets, analyzed the available information on plans for these assets. Also the analysis of existence of the facts of increased wear of structures, malfunctions, intensive or inadequate operating conditions and storage conditions was carried out. This work was carried out jointly with appraisers, who also expressed their opinion on the recommended remaining useful life terms for the fixed assets in the context of each object that was included in the assessment.

As a result of this work, a large amount of new information was obtained with respect to the existing assets, that became the basis for the revision of the fixed assets remaining useful life terms as at 31 December 2020. The Group's management believes that the newly applied estimates to the terms of use of PPE reflect in the best way both the technical condition of the assets and the consumption of the benefits from their use.

Impairment of property, plant and equipment and intangible assets

The Group carries out revaluations on a regular basis and conducts a full valuation exercise if there is an indication of impairment. An impairment review is conducted at the balance sheet date. To test property, plant and equipment and intangible assets for impairment, the Group's business is treated as three cash generating units: farming division, livestock breeding and storage and processing. The recoverable amount of the cashgenerating unit is determined on the basis of value in use. The amount of value in use for the cash-generating unit is determined on the basis of the most recent budget estimates prepared by management and application of the income approach of valuation.

(in thousand USD, unless otherwise stated)

Fair value of biological assets

Due to an absence of an active market for non-current biological assets for cattle-breeding and biological assets of plants-breeding in Ukraine, to determine the fair value of these biological assets, the Group used the discounted value of net cash flows expected from assets as at reporting date. Fair value is determined based on market prices and a current market-determinated pre-tax rate as at the date of valuation.

The fair value of current biological assets of cattle-breeding is measured using market prices as at reporting date. The fair value is determined based on market prices of milk, milk yields and discount rate.

Fair value of agricultural produce

The Group estimates the fair value of agricultural produce at the date of harvesting using the current quoted prices in an active market. Costs to sell at the point of harvest are estimated based on expected future selling costs that depend on conditions of sales agreements. The fair value less costs to sell becomes the carrying value of inventories at the date of harvesting.

Inventories

As at the reporting date the Group assesses the need to reduce the carrying amount of inventories to their net realizable value. The measurement of impairment is based on the analysis of market prices for similar inventories existing at the reporting date and published in official sources. Such assessments can have a significant impact on the carrying amount of inventories.

Besides, at each balance sheet date, the Group assesses inventories for surplus and obsolescence and determines the allowance for obsolete and slow moving inventories. Changes in assessment can influence the amount of required allowance for obsolete and slow moving inventories either positively or negatively.

At the reporting date the item Work-in-progress includes expenses on works connected with preparation of the lands for the future harvest obtained from the biological assets of plant growing. The cost of work in progress includes costs of direct materials and labor and other direct productions costs and related production overheads (based on normal operating capacity). Costs allocation to Work-in-progress includes a number of judgments of management based on the recommendations of scientific sources and agronomic calculations of the internal services of the Group.

Inventories as at the year-end are an estimate resulting in a surplus/decrease in inventories when stock take is performed in subsequent year.

Inventory balances at the reporting dates are confirmed by inventories. But the amount of grain at the elevators and the method of its storage do not allow weighing of the whole grain at the time of the inventory. Therefore, enterprises use other methods for determining the amount of grain at the elevator.

The method consists in the following:

• there is passport data of the volume of silo storage tanks
• the commission inventories each tank and determines the volume filled with grain
• there is an indicator "nature of grain", i.e. its weight in 1l
• the volume of grain is multiplied by its nature and the amount of grain in kg is obtained

But in fact, deviations are possible due to permissible errors in grain moisture, which resulting in a surplus/decrease in inventories when stock take is performed in subsequent year during the cleaning the elevator.

Fair value of financial instruments

The fair value of financial assets and liabilities is determined by applying various valuation methodologies. Management uses its judgment to make assumptions based on market conditions existing at each balance sheet date. Where the fair values of financial assets and financial liabilities recorded in the consolidated statement of financial position cannot be derived from active markets, they are determined using valuation techniques including the discounted cash flows model. Management uses discounted cash flow analysis for various loans and receivables as well as debt instruments that are not traded in active markets. The effective interest rate is determined by reference to the interest rates of instruments available to the Group in active markets. In the absence of such instruments, the effective interest rate is determined by reference to the interest rates of active market instruments available adjusted for the Group's specific risk premium estimated by management.

(in thousand USD, unless otherwise stated)

Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to the Group.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

• Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

• Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

Provision for expected credit losses

The Group uses a provision matrix to calculate expected credit losses for financial assets. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns. The provision matrix is initially based on the Group's historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

Impairment of non-financial assets

Management assesses whether there are any indicators of possible impairment of non-financial assets at each reporting date. If any events or changes in circumstances indicate that the current value of the assets may not be recoverable or the assets, goods or services relating to a prepayment will not be received, the Group estimates the recoverable amount of assets. If there is objective evidence that the Group is not able to collect all amounts due to the original terms of the agreement, the corresponding amount of the asset is reduced directly by the impairment loss in the consolidated statement of comprehensive income. Subsequent and unforeseen changes in assumptions and estimates used in testing for impairment may lead to the result different from the one presented in the consolidated financial statements.

Taxation

The Group mostly operates in the Ukrainian tax jurisdiction. The Group's management must interpret and apply existing legislation to transactions with third parties and its own activities. Significant judgment is required in determining the provision for direct and indirect taxes. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will affect the income tax and deferred tax provisions in the period in which such determination is made.

As a result of unstable economic situation in Ukraine, tax authorities in Ukraine pay more and more attention to the business cycles. In connection with it, tax laws in Ukraine are subject to frequent changes. Furthermore, there are cases of their inconsistent application, interpretation and execution. Non-compliance with laws and norms may lead to serious fines and penalties accruals.

Management at every reporting period reassessed the Group's uncertain tax positions. Liabilities are recorded for income tax positions that are determined by management as more likely than not to result in additional taxes being levied if the positions were to be challenged by the tax authorities. The assessment is based on the interpretation of tax laws that have been enacted or substantively enacted by the reporting period and any known Court or other rulings on such issues. Liabilities for penalties, interest and taxes other than on income are recognised based on management's best estimate of the expenditure required to settle the obligations at the reporting period.

The Group considers that it operates in compliance with tax laws of Ukraine.

Legal proceedings

The Group's Management makes significant assumptions in estimation and reflection of the risk of exposure to contingent liabilities related to current legal proceedings and other unliquidated claims, as well as other contingent liabilities. Management's judgments are required in assessing the possibility of a secured claim against the Group or material obligations, as well as in determining probable amounts of final payment or obligations. Due to the uncertainties inherent in the evaluation process, actual expenses may differ from the initial calculations.

These preliminary estimates are subject to changes as new information becomes available from the Group's internal specialists, if any, or from third parties, such as lawyers. Revisions of such estimates may have a significant impact on future operating results.

(in thousand USD, unless otherwise stated)

Operating environment

In 2014, Ukraine was faced with political and economic turmoil. Crimea, an autonomous republic of Ukraine, was effectively annexed by the Russian Federation. Ukraine also suffered from separatist movements and the collapse of law enforcement in Lugansk and Donetsk regions. The Group does not have assets in Crimea, Donetsk and Lugansk regions.

The Ukrainian economy is showing signs of stabilization after many years of political and economic tensions, which have led to deteriorating public financial systems, financial market instability, low liquidity in stock markets, rising inflation and the depreciation of the national currency against major foreign currencies. In 2019, Ukraine held presidential elections in late March and early parliamentary elections in July. In 2020, the Government of Ukraine had to make significant public debt payments, which required significant domestic and external financing in increasingly difficult conditions for emerging markets and further cooperation with the IMF, which depends on many factors, including the new government's willingness to comply. terms of the funding program.

According to statistics published by the National Bank of Ukraine, the inflation rate in Ukraine in 2020 was 5.0% (2019: 4.1%).

In late 2019, news of the spread of the COVID-19 virus (coronavirus) appeared from China for the first time. In the first few months of 2020, the virus spread around the world, causing disruptions in business and economic activity. In March 2020, the World Health Organization declared the coronavirus a pandemic.

With the recent and rapid development of the Coronavirus disease (COVID-19) outbreak the world economy entered a period of unprecedented health care crisis that has already caused considerable global disruption in business activities and everyday life. Many countries have adopted extraordinary and economically costly containment measures.

The financial effect of the current crisis on the global economy and overall business activities cannot be estimated with reasonable certainty at this stage, due to the pace at which the outbreak expands and the high level of uncertainties arising from the inability to reliably predict the outcome.

Management has considered the unique circumstances and the risk exposures of the Group and has concluded that there is no significant impact in the Group's profitability position. The event is not expected to have an immediate material impact on the business operations. Management will continue to monitor the situation closely and will reassess it in case the period of disruption becomes prolonged.

5. New and amended standards and interpretations

Applying of new standards

Amendments to References to Conceptual Framework in IFRS Standards

The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The purpose of the Conceptual Framework is to assist the IASB in developing standards, to help preparers develop consistent accounting policies where there is no applicable standard in place and to assist all parties to understand and interpret the standards. This will affect those entities which developed their accounting policies based on the Conceptual Framework. The revised Conceptual Framework includes some new concepts, updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts. These amendments had no impact on the consolidated financial statements of the Group.

Amendments to IFRS 3 – Definition of a business

The amendment to IFRS 3 Business Combinations clarifies that to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that, together, significantly contribute to the ability to create output. Furthermore, it clarifies that a business can exist without including all of the inputs and processes needed to create outputs. These amendments had no impact on the consolidated financial statements of the Group, but may impact future periods should the Group enter into any business combinations

Amendments to IAS 1 and IAS 8 – Definition of Material

The amendments provide a new definition of material that states, "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity." The amendments clarify that materiality will depend on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. These amendments had no impact on the consolidated financial statements of, nor is there expected to be any future impact to, the Group.

(in thousand USD, unless otherwise stated)

Amendments to IFRS 9, IAS 39 and IFRS17: Interest Rate Benchmark Reform

The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide a number of reliefs, which apply to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected if the reform gives rise to uncertainty about the timing and/or amount of benchmark-based cash flows of the hedged item or the hedging instrument. These amendments have no impact on the consolidated financial statements of the Group as it does not have any interest rate hedge relationships.

Amendments to IFRS 16 Covid-19 Related Rent Concessions

On 28 May 2020, the IASB issued Covid-19-Related Rent Concessions - amendment to IFRS 16 Leases The amendments provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the Covid-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a Covid-19 related rent concession from a lessor is a lease modification. The amendment applies to annual reporting periods beginning on or after 1 June 2020. Earlier application is permitted. This amendment had no impact on the consolidated financial statements of the Group.

At the date of authorization of these Consolidated financial statements the following interpretations and amendments to the Standards, were in issue but not yet effective:

Standards and Interpretations	Effective for annual period beginning on or after
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Classification of Liabilities as Current or Non-current - Deferral of Effective Date (issued on 23 January 2020 and 15 July 2020 respectively)	1 January 2023 (Not yet endorsed by EU)
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12 February 2021)	1 January 2023 (Not yet endorsed by EU)
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (issued on 12 February 2021)	1 January 2023 (Not yet endorsed by EU)
IFRS 17 Insurance Contracts	1 January 2023 (Not yet endorsed by EU)
Amendments to: IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent Liabilities and Contingent Assets; Annual Improvements 2018-2020 (All issued 14 May 2020)	1 January 2022 (Not yet endorsed by EU)
Amendments to IFRS 16 Leases: Covid-19-Related Rent Concessions beyond 30 June 2021(issued on 31 March 2021)	1 April 2021 (Not yet endorsed by EU)
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2 (issued on 27 August 2020)	1 January 2021

The management do not expect that the adoption of the Standards listed above will have a material impact on the consolidated financial statements of the Group in future periods.

(in thousand USD, unless otherwise stated)

6. Revenue

	Note	For the year ended 31 December 2020	For the year ended 31 December 2019
Revenue from sales of finished products	a	160 031	168 719
Revenue from services rendered	b	1 356	882
		161 387	169 601

Disaggregation of revenue from contracts with customers

The Group presented disaggregated revenue based on the type of finished products (a) and services provided to customers (b), the type of customers (c) and the timing of transfer of goods and services (d).

a) Revenue from sales of finished products was as follows:

	For the year ended 31 December 2020	For the year ended 31 December 2019
Corn	103 678	118 806
Sunflower	31 470	22 753
Wheat	22 421	13 480
Milk	1 304	1 547
Soy beans	440	10 817
Cattle	288	115
Other	430	1 201
	160 031	168 719

b) Revenue from services rendered was as follows:

	For the year ended 31 December 2020	For the year ended 31 December 2019
Transport	612	319
Storage	471	368
Drying	122	31
Processing	91	113
Other	60	51
	1 356	883

c) Revenue by the type of customers was as follows:

	For the year ended 31 December 2020	For the year ended 31 December 2019
Non-residental buyer	126 088	142 674
Residental buyer	35 299	26 927
	161 387	169 601

d) Finished products and services transferred to customers at a point in time.

Sales of goods

Revenue from sales of goods is recognised at the point of transfer of all risks and rewards of ownership of the goods, normally when the goods are shipped. If the Group agrees to transport goods to a specified location, revenue is recognised when the goods are passed to the customer at the destination point. The Group uses standardised INCOTERMS which define the point of risks and reward transfers.

Rendering of services

Revenue from rendering services is recognized at the moment of transfer to the customer control over the product or service.

Consolidated financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in thousand USD, unless otherwise stated)

7. Gain from changes in fair value of biological assets and agricultural produce, net

	Note	For the year ended 31 December 2020	For the year ended 31 December 2019
Agricultural produce	23	75 900	50 369
Current biological assets	23	1 441	2 264
Non-current biological assets	21	(319)	135
		77 022	52 768

8. Cost of sales

	Note	For the year ended 31 December 2020	For the year ended 31 December 2019
Raw materials	a	(106 004)	(116 378)
Change in inventories and work-in-progress	b	(4 705)	457
Depreciation and amortization	13	(18 973)	(20 311)
Wages and salaries of operating personnel and related charges	14	(12 726)	(13 233)
Fuel and energy supply		(7 642)	(10 676)
Third parties' services		(5 040)	(5 894)
Rent		(2 252)	(2 320)
Repairs and maintenance		(1 020)	(1 300)
Taxes and other statutory charges		(682)	(1 172)
Other expenses		(126)	(100)
		(159 170)	(170 927)

a) Raw materials for the year ended 31 December 2020 includes disposal of the gain recorded on initial recognition of realized agriculture produce and biological assets (both of current and non-current) in the amount of USD 67 260 thousand (USD 72 193 thousand for the year ended 31 December 2019).

b) Change in inventories and work-in-progress comprises changes in work-in-progress, agricultural produce and current biological assets.

9. Administrative expenses

	Note	For the year ended 31 December 2020	For the year ended 31 December 2019
Wages and salaries of administrative personnel and related charges	14	(8 963)	(10 300)
Depreciation and amortisation	13	(483)	(614)
Professional services	a	(417)	(430)
Third parties' services		(367)	(267)
Bank services		(313)	(331)
Repairs and maintenance		(189)	(235)
Transport expenses		(171)	(237)
Other expenses		(355)	(832)
		(11 258)	(13 246)

(in thousand USD, unless otherwise stated)

a) Professional services include the following audit and related fees:

	Fees billed by Luxembourg approved audit firm (BDO Audit SA)			Other fees billed by BDO Luxembourg (BDO)		Fees billed by other audit firms
	For the year ended 31 December 2020	For the year ended 31 December 2019	For the year ended 31 December 2020	For the year ended 31 December 2019	For the year ended 31 December 2020	For the year ended 31 December 2019
Audit fees	56	98	-	-	-	-
Audit related fees	27	12	-	-	40	44
Tax fees	-	-	3	2	-	-
	83	110	3	2	40	44

10. Selling and distribution expenses

	Note	For the year ended 31 December 2020	For the year ended 31 December 2019
Delivery costs		(15 129)	(20 595)
Wages and salaries of sales personnel and related charges	14	(216)	(232)
Depreciation	13	(95)	(156)
Other expenses		(399)	(264)
		(15 839)	(21 247)

11. Other operating income

	Note	For the year ended 31 December 2020	For the year ended 31 December 2019
Income from write-offs of accounts payable		339	83
Gain on recovery of assets previously written off		233	398
Gain on disposal of PPE		209	119
Government grants recognised as income		34	147
Gain on disposal of inventories		-	29
Other income	a	500	1 932
		1 315	2 708

a) Other income for the year ended 31 December 2019 comprises an amount USD 1 598 thousand of penalty received due to terms of the corn sale contracts.

(in thousand USD, unless otherwise stated)

12. Other operating expenses

	Note	For the year ended 31 December 2020	For the year ended 31 December 2019
Depreciation	13	(887)	(2 722)
Charity		(526)	(504)
Wages and salaries of non-operating personnel and related charges	14	(143)	(130)
Shortages and losses due to impairment of inventories		(82)	(56)
Write-offs of VAT		(71)	(101)
Allowance for doubtful accounts receivable	26	(52)	(72)
Loss on disposal of inventories		(11)	-
Other expenses		(284)	(591)
		(2 056)	(4 176)

13. Depreciation and amortisation

	Note	For the year ended 31 December 2020	For the year ended 31 December 2019
Depreciation
Cost of sales	8	(6 772)	(10 191)
Other operating expenses	12	(887)	(2 722)
Administrative expenses	9	(340)	(488)
Selling and distribution expenses	10	(95)	(156)
		(8 094)	(13 557)
Amortisation
Cost of sales	8	(12 201)	(10 120)
Administrative expenses	9	(143)	(126)
		(12 344)	(10 246)
		(20 438)	(23 803)

14. Wages and salaries expenses

	For the year ended 31 December 2020	For the year ended 31 December 2019
Wages and salaries	(18 684)	(20 483)
Related charges	(3 364)	(3 412)
	(22 048)	(23 895)
The average number of employees, persons	1 979	2 103
Remuneration of management	2 068	2 821

(in thousand USD, unless otherwise stated)

The distribution of wages and salaries and related charges was as follows:

		For the year ended 31 December 2020		For the year ended 31 December 2019
	Note	Wages and salaries and related charges, thousand USD	Average number of employees, persons	Wages and salaries and related charges, thousand USD	Average number of employees, persons
Operating personnel	8	(12 726)	1 404	(13 233)	1 503
Administrative personnel	9	(8 963)	555	(10 300)	580
Sales personnel	10	(216)	18	(232)	18
Non-operating personnel	12	(143)	2	(130)	2
		(22 048)	1 979	(23 895)	2 103

15. Financial expenses, net

	For the year ended 31 December 2020	For the year ended 31 December 2019
Interest income on bank deposits	594	559
Interest expenses on loans and borrowings	(2 584)	(3 932)
Other expenses	(147)	(103)
	(2 137)	(3 476)

16. Foreign currency exchange gain/(loss), net

As at 31 December 2020 Ukrainian Hryvnia depreciated against the USD by 16,2% compared 31 December 2019 (16,9% of revaluation as at 31 December 2019 compared 31 December 2018), 4,2% of devaluation for the average rate 2020/2019 in comparison with 5,3% of revaluation for the average rate 2019/2018. As a result, during the Y2020 the Group recognised net foreign exchange loss in the amount of USD 7 918 thousand (USD 6 049 thousand of net gain for the Y2019) in the Consolidated statement of comprehensive income.

17. Income tax expenses

The corporate income tax rate for the year ended 31 December 2020 was: 18% in Ukraine, 12,5% in Cyprus, 24,94% in Luxemburg.

The components of income tax expenses were as follows:

	For the year ended 31 December 2020	For the year ended 31 December 2019
Current income tax	(497)	(830)
Deferred tax	14	84
Income tax benefit (expenses) reported in the statement of comprehensive income	(483)	(746)
Consolidated statement of other comprehensive income Deferred tax related to item charged or credit directly to other comprehensive income during year: Net gain on revaluation of property, plant and equipment	(488)	212

(in thousand USD, unless otherwise stated)

No deferred tax asset has been set up on loss carry forwards of some enetities of the Group, as there are not sufficient profits foreseen on these entities to justify the set up of deferred tax assets.

	For the year ended 31 December 2020	For the year ended 31 December 2019
01 January	(3 218)	(3 027)
Income tax benefit (expenses) for the period recognized in other comprehensive income	(488)	212
Income tax benefit (expenses) for the period recognized in profit or loss	14	84
Effect of foreign currency translation	515	(487)
31 December	(3 177)	(3 218)

Reconciliation between tax expenses and the accounting value multiplied by tax rate was as follows:

	For the year ended 31 December 2020	For the year ended 31 December 2019
Profit before tax from continuing operations	32 188	8 064
Profit before tax from continuing operations of companies non-payers of incom tax	20 930	(4 468)
Profit before tax from continuing operations of companies payers of income tax	11 258	12 532
Profit before tax from continuing operations of companies payers of income tax:
Ukraine	(657)	(985)
Cyprus	(635)	428
Luxembourg	(3 377)	(6 890)
BVI	-	13 638
Hong Kong	15 927	6 341
	11 258	12 532
Tax at statutory tax rate:
Ukraine 18%	-	-
Cyprus 12,5%	-	53
Luxembourg 24,94%	-	-
BVI 0%	-	-
Hong Kong 0%	-	-
	-	53
Non-taxable items	483	693
Income tax benefit	483	746

(in thousand USD, unless otherwise stated)

18. Property, plant and equipment

	Land and buildings	Machinery	Motor vehicles	Other	Construction in progress	Total
INITIAL COST
31 December 2018	53 807	42 696	21 976	686	983	120 148
Additions	771	3 017	3 419	48	55	7 310
Disposals	(1 905)	(8 017)	(2 397)	(498)	-	(12 817)
Transfer	592	430	-	-	(1 022)	-
Effect from translation into	9 040	6 803	3 811	76	77	19 807
presentation currency
31 December 2019	62 305	44 929	26 809	312	93	134 448
31 December 2019	62 305	44 929	26 809	312	93	134 448
Additions	1 430	3 756	1 876	49	82	7 193
Disposals	(765)	(5 058)	(4 540)	(123)	(32)	(10 518)
Transfer	-	43	-	1	(44)	-
Revaluation	1 973	2 279	1 013	-	-	5 265
Reversal of impairment	81	38	1	-	-	120
Impairment	(702)	(316)	(72)	-	-	(1 090)
Elimination of depreciation	2 033	874	1 751	-	-	4 658
Effect from translation into presentation currency	(10 105)	(7 220)	(4 224)	(47)	(15)	(21 611)
31 December 2020	56 250	39 325	22 614	192	84	118 465
ACCUMULATED DEPRECIATION
31 December 2018	(11 974)	(21 293)	(13 607)	(626)	-	(47 500)
Depreciation for the period	(4 368)	(6 134)	(3 045)	(9)	-	(13 556)
Disposals	1 626	6 489	2 220	497	-	10 832
Effect from translation into presentation currency	(2 272)	(3 566)	(2 374)	(62)	-	(8 274)
31 December 2019	(16 988)	(24 504)	(16 806)	(200)	-	(58 498)
31 December 2019	(16 988)	(24 504)	(16 806)	(200)	-	(58 498)
Depreciation for the period	(2 253)	(3 594)	(2 230)	(17)	-	(8 094)
Disposals	721	4 233	4 158	114	-	9 226
Elimination of depreciation	(2 033)	(874)	(1 751)	-	-	(4 658)
Effect from translation into presentation currency	2 829	3 946	2 637	28	-	9 440
31 December 2020	(17 724)	(20 793)	(13 992)	(75)	-	(52 584)
Net book value 31 December 2018	41 833	21 403	8 369	60	983	72 648
31 December 2019	45 317	20 425	10 003	112	93	75 950
31 December 2020	38 526	18 532	8 622	117	84	65 881

(in thousand USD, unless otherwise stated)

As at 31 December 2020 an independent valuation of the Group's land, buildings, Machinery and vehicles was performed in accordance with International Valuation Standards by an independent appraiser LLC "Asset Expertise" (ODS Certificate No.905/19 as of 28 November 2019 issued by State Property Fund of Ukraine).

Most buildings and constructions were valued using cost approach. Other items of PPE were valued using the market approach. Market approach uses prices and other relevant information generated by market transactions involving identical or comparable (i.e. similar) assets.

Cost approach either determines the cost to construct the assets in their present state and considers their remaining useful life or identifies fair value as a depreciated replacement cost. Cost approach was used only in the cases where there was no possibility to use market approach.

The following factors were considered in determining the fair values of buildings under the depreciated replacement cost approach:

• the cost to construct the asset is based on the cost of the necessary materials and construction work as at the date of valuation;

• expected usage of the asset is assessed by reference to the asset's expected capacity or physical output;

• technical or commercial obsolescence arising from changes or improvements in production for the product or service output of the asset as well as physical deterioration.

Impairment test

As at 31 December 2020 and 31 December 2019 an impairment tests was conducted, according to the results of the tests impairment of PPE was not identified.

As at 31 December 2019 an impairment review was conducted by the management of the Group.

As at 31 December 2020, impairment test was performed by an independent appraiser, since impairment test is an integral part of valuation of property, plant and equipment wherein used the depreciated replacement cost method.

For the purpose of impairment testing, the Group identified 8 cash-generating units (CGUs) related to crop farming, dairy farming and elevators and warehouses.

Impairment testing was performed based on value in-use calculation using the DCF method. Cash flow projection is based on the long-term budget approved by management of the Group.

The key assumptions used for impairment testing are: discount rates, selling prices, amounts of revenue, cost of production, expenses, production and sales volumes. Discount rates were estimated based on weighted average cost of capital and comprised – 21,6%.

Production volume was estimated based on current production level; potential increase in land, crop yields, number of cows or milk yields is not taken into account. Cost of production was estimated based on current actual cost of production inflated by expected level of inflation, taking into account higher inflation levels for costs directly or indirectly pegged to USD (such as gas). When determining selling prices, the Group analyzed available forecasts for export and domestic markets, including forecasted supply and demand.

If PPE were measured at cost their book value would be the following:

Net book value	Land and buildings	Machinery	Motor vehicles	Other	Construction in progress	Total
31 December 2018	7 185	13 964	5 084	87	983	27 303
31 December 2019	9 008	15 197	7 899	143	93	32 340
31 December 2020	8 397	13 666	6 981	117	84	29 245

PPE in finance lease

Leased assets, where the Group is a lessee under finance lease agreements, comprise the following items:

	31 December 2020	31 December 2019
Machinery	-	33
Motor vehicles	-	-
	-	33

(in thousand USD, unless otherwise stated)

Pledged PPE

The amount of property, plant and equipment pledged to secure bank loans was as follows:

	31 December 2020	31 December 2019
Land and buildings	24 377	28 667
Machinery	10 726	9 979
Motor vehicles	4 462	5 048
Other	9	12
	39 574	43 706

Capitalized cost

There were no borrowing costs capitalized as a part of costs of property, plant and equipment during the year ended 31 December 2020 and 2019.

Assets under construction

Included in property, plant and equipment as at 31 December 2020 was an amount of USD 55 thousand (USD 93 thousand as at 31 December 2019) relating to expenditure for property, plant and equipment in the course of construction.

Capital commitments

As at 31 December 2020 the Group had capital commitments in the amount of USD 1 553 thousand (USD 2 349 thousand as at 31 December 2019).

19. Right-of-use assets

Amounts recognised in the consolidated statements of financial position:

	31 December 2020	31 December 2019
Right-of-use assets
Land	85 082	94 775
Office	34	171
Machinery	8 847	6 257
	93 963	101 203
Lease liabilities as to right-of-use assets
Long-term	82 396	87 425
Current portion	16 765	15 863
	99 161	103 288

(in thousand USD, unless otherwise stated)

Amounts recognised in the consolidated statements of comprehensive income:

	Note	For the year ended 31 December 2020	For the year ended 31 December 2019
Amortisation of right-of-use assets
Land	8	(9 254)	(8 800)
Office	9	(132)	(126)
Machinery	8	(2 515)	(819)
		(11 901)	(9 745)
Effect of lease of right-of-use assets		(7 234)	(7 640)

Following changes took place in the right-of-use assets:

	Land	Office	Machinery	Total
Deemed cost as at 1 January 2019	84 199	264	-	84 463
Additions	10 405	-	6 555	16 960
Amortisation	(8 800)	(126)	(819)	(9 745)
Disposals	(4 952)	-	-	(4 952)
Cost disposals	(5 256)	-	-	(5 256)
Accumulated amortisation disposals	304	-	-	304
Effect from translation into presentation currency	13 923	33	521	14 477
Cost as at 31 December 2019	104 042	308	7 151	- 111 501
Accumulated amortisation as at 31 December 2019	(9 267)	(137)	(894)	(10 298)
Net book value as at 31 December 2019	94 775	171	6 257	101 203
Net book value as at 31 December 2019	94 775	171	6 257	101 203
Cost as at 31 December 2019	104 042	308	7 151	111 501
Accumulated amortisation as at 31 December 2019	(9 267)	(137)	(894)	(10 298)
Additions	20 730	17	6 296	27 043
Amortisation	(9 254)	(132)	(2 515)	(11 901)
Disposals	(5 512)	-	-	(5 512)
Cost disposals	(6 522)	-	-	(6 522)
Accumulated amortisation disposals	1 010	-	-	1 010
Effect from translation into presentation currency	(15 657)	(22)	(1 191)	(16 870)
Cost as at 31 December 2020	100 707	275	11 994	112 976
Accumulated amortisation as at 31 December 2020	(15 625)	(241)	(3 147)	(19 013)
Net book value as at 31 December 2020	85 082	34	8 847	93 963

(in thousand USD, unless otherwise stated)

20. Intangible assets

	Computer software	Property certificates	Land lease rights	Total
INITIAL COST
31 December 2018	28	220	9 312	9 560
Additions	25	2	-	27
Effect from translation into presentation currency	5	37	1 575	1 617
31 December 2019	58	259	10 887	11 204
31 December 2019	58	259	10 887	11 204
Additions	33	-	-	33
Effect from translation into presentation currency	(10)	(42)	(1 768)	(1 820)
31 December 2020	81	217	9 119	9 417
ACCUMULATED DEPRECIATION 31 December 2018	(16)	(2)	(7 443)	(7 461)
Amortisation for the period	-	(1)	(501)	(502)
Effect from translation into presentation currency	(2)	-	(1 305)	(1 307)
31 December 2019	(18)	(3)	(9 249)	(9 270)
31 December 2019	(18)	(3)	(9 249)	(9 270)
Amortisation for the period	(10)	(1)	(432)	(443)
Effect from translation into presentation currency	-	1	1 525	1 526
31 December 2020	(28)	(3)	(8 156)	(8 187)
NET BOOK VALUE
31 December 2018	12	218	1 869	2 099
31 December 2019	40	256	1 638	1 934
31 December 2020	53	214	963	1 230

Property certificates represent deeds supporting ownership right for property units of members of agricultural entity, which are intended for exchange by the Group companies on the property objects of this agricultural entity.

Consolidated financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in thousand USD, unless otherwise stated)

21. Non-current biological assets
	31 December 2020	31 December 2019
Non-current biological assets - animal-breeding
Cattle	1 983	2 528
Non-current biological assets - plant-breeding
Perennial grasses	44	62
Total non-current biological assets	2 027	2 590

As at the reporting dates non-current biological assets of animal-breeding were presented as follows:

	31 December 2020	31 December 2019
Cattle
Cattle, units	654	835
Live weight, kg	274 620	336 026
Book value	1 983	2 528

Following changes took place in the non-current biological assets of animal-breeding:

	Cattle
31 December 2018	1 830
Transfer (from (to) current biological assets)	288
Change in fair value	135
Effect from translation into presentation currency	275
31 December 2019	2 528
31 December 2019	2 528
Transfer (from (to) current biological assets)	176
Change in fair value	(319)
Effect from translation into presentation currency	(402)
31 December 2020	1 983

As at the reporting dates non-current biological assets of plant-breeding were presented as follows:

	31 December 2020	31 December 2019
Perennial grasses
Area, ha	305	324
Book value	44	62

(in thousand USD, unless otherwise stated)

Following changes took place in the non-current biological assets of plant-breeding:

	Perennial grasses
31 December 2018	27
Capitalized expenses	28
Effect from translation into presentation currency	7
31 December 2019	62
31 December 2019	62
Capitalized expenses	4
Effect from translation into presentation currency	(22)
31 December 2020	44

22. Inventories

	Note	31 December 2020	31 December 2019
Agricultural produce	a	68 177	75 137
Work-in-progress	b	9 185	12 336
Agricultural materials		3 393	2 921
Spare parts		429	536
Fuel		431	601
Raw materials		263	242
Other inventories		100	77
		81 978	91 850

As at 31 December 2020 cost value of inventories amounts to USD 52 179 thousand (USD 67 966 thousand as at 31 December 2019).

a) As at the reporting dates agricultural produce was presented as follows:

	31 December 2020	31 December 2019
Corn	67 834	74 258
Wheat	90	31
Sunflower	63	-
Soya	-	438
Other	190	410
	68 177	75 137

The fair value of agricultural produce was estimated based on market price as at date of harvest and is within level 3 of the fair value hierarchy.

b) Work-in-progress includes expenses on works connected with preparation of the lands for the future harvest obtained from the biological assets of plant growing. The cost of work in progress includes costs of direct materials and labor and other direct productions costs and related production overheads (based on normal operating capacity).

As at the reporting dates loans and borrowings were secured by agricultural produce:

	31 December 2020	31 December 2019
Corn	8 311	13 831

(in thousand USD, unless otherwise stated)

23. Current biological assets

	31 December 2020	31 December 2019
Current biological assets of animal-breeding
Cattle	1 075	1 276
Other	1	1
	1 076	1 277
Current biological assets of plant-breeding
Wheat	10 193	11 947
Total current biological assets	11 269	13 224

As at the reporting dates current biological assets of animal-breeding were presented as follows:

	31 December 2020	31 December 2019
Cattle
Cattle, units	371	474
Live weight, kg	108 805	140 294
Book value	1 075	1 276
Other
Number of animals, units	3	3
Live weight, kg	1 241	1 241
Book value	1	1
Total book value	1 076	1 277

Following changes took place in the current biological assets of animal-breeding:

	Cattle	Other	Total
31 December 2018	920	2	922
Capitalized expenses	404	-	404
Transfer (from (to) non-current biological assets)	(288)	-	(288)
Sale	(920)	(2)	(922)
Slaughter	(136)	-	(136)
Change in fair value	651	-	651
Effect from translation into presentation currency	645	1	646
31 December 2019	1 276	1	1 277
31 December 2019	1 276	1	1 277
Capitalized expenses	395	-	395
Transfer (from (to) non-current biological assets)	(176)	-	(176)
Sale	(982)	-	(982)
Slaughter	(19)	-	(19)
Change in fair value	790	-	790
Effect from translation into presentation currency	(209)	-	(209)
31 December 2020	1 075	1	1 076

(in thousand USD, unless otherwise stated)

As at the reporting dates current biological assets of plant-breeding were presented as follows:

	31 December 2020	31 December 2019
Wheat
Area, ha	21 441	21 170
Book value	10 193	11 947

Following changes took place in the current biological assets of plant-breeding:

	Corn	Sunflower	Wheat	Soya	Grasses	Other	Total
31 December 2018	-	-	7 031	-	-	30	7 061
Capitalized expenses (harvest 2019)	56 715	15 409	5 687	7 962	150	419	86 342
Revaluation at fair value at the date of harvest (harvest 2019)	37 567	7 451	4 685	666	-	-	50 369
Harvesting (harvest 2019)	(94 273)	(22 803)	(12 961)	(8 489)	(162)	(434)	(139 122)
Capitalized expenses (harvest 2020)	-	-	4 416	-	-	-	4 416
Change in fair value (harvest 2020)	-	-	1 613	-	-	-	1 613
Effect from translation into presentation currency	(9)	(57)	1 476	(139)	12	(15)	1 268
31 December 2019	-	-	11 947	-	-	-	11 947
31 December 2019	-	-	11 947	-	-	-	11 947
Capitalized expenses (harvest 2020)	50 881	15 708	8 189	-	140	-	74 918
Revaluation at fair value at the date of harvest (harvest 2020)	52 755	15 110	8 035	-	-	-	75 900
Harvesting (harvest 2020)	(103 636)	(30 818)	(20 394)	-	(167)	-	(155 015)
Capitalized expenses (harvest 2021)	-	-	3 773	-	-	-	3 773
Change in fair value (harvest 2021)	-	-	651	-	-	-	651
Effect from translation into presentation currency	-	-	(2 008)	-	27	-	(1 981)
31 December 2020	-	-	10 193	-	-	-	10 193

As at 31 December 2020 and as at 31 December 2019 there were no pledged biological assets.

Due to the absence of an active market, the fair value of biological assets is estimated by present valuing the net cash flows expected to be generated from the assets discounted at a current market-determined rate. The fair value of biological assets is determined by the Group's own agricultural and IFRS experts. The forecast indicators of crop yields used in assessing crops are determined on the basis of the current history of crop yields. The indicators of past periods are taken as a basis and are adjusted taking into account the state of crops, climatic conditions, varietal characteristics of the crop, soil fertility, the application of new technologies.

Biological assets of the Group are measured at fair value within Level 3 of the fair value hierarchy. There were no transfers between any levels during the Y2019.

Description	Fair value as at 31 December 2020	Valuation Unobservable inputs technique		Range of unobservable inputs
		Crops yield - tonnes per hectare	5,9
Crops in fields - Wheat	10 193	Cash flows	Crops price	USD 159 per ton
			Milk yield - kg per cow	7 330 per year
Cattle	3 058	Discounted cash flows	Milk price	USD 0,31 per liter
			Discount rate	17,33%

(in thousand USD, unless otherwise stated)

Changes in key assumptions used to estimate biological assets fair value would have the following effect on the fair value of biological assets:

	Increase/decrease in assumption, %	Effect on fair value of biological assets, th USD
Crops yield	10	1 839
	(10)	(1 839)
Crops price	10	1 839
	(10)	(1 839)
Milk yield	10	305
	(10)	(305)
Milk price	10	924
	(10)	(924)
Discount rate	1	(27)
	(1)	27

24. Trade accounts receivable, net

	Note	31 December 2020	31 December 2019
Trade accounts receivable		213	289
Allowances for accounts receivable	26	(11)	(12)
		202	277

As at 31 December 2020 an amount of USD 193 thousand or 91% of the total amount of trade accounts receivable is due from the 10 most significant counterparties (as at 31 December 2019 – USD 268 thousand or 96%).

Distribution of trade accounts receivable on time frames is the following:

			Past due, not impaired
	Total	Neither past due nor impaired	Within 90 days	From 90 to 360 days	More than 1 year
31 December 2020	202	192	10	-	-
31 December 2019	277	213	52	12	-

On the basis of analysis of payments for the current period Financial Department of the Group considers that there is no need to form provision for overdue, but not impaired trade accounts receivable.

Consolidated financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in thousand USD, unless otherwise stated)

25. Prepayments and other current assets, net

	Note	31 December 2020	31 December 2019
Prepayments and other non-financial assets:
VAT for reimbursement		2 558	4 129
Advances to suppliers		2 298	713
Allowances for advances to suppliers	26	(15)	(3)
Deferred expenses		-	851
		4 841	5 690
Other financial assets:
Non-bank accommodations interest free		301	237
Other accounts receivable		284	143
Allowances for other accounts receivable	26	(37)	(43)
		548	337
		5 389	6 027

Deferred expenses relate to the purchase option according to the Management Incentive Plan (see Note 28).

As at 31 December 2020 an amount of USD 1 942 thousand or 85% of the total amount of advances to suppliers is due from the 10 most significant counterparties (as at 31 December 2019 – USD 449 thousand or 63%).

As at 31 December 2020 an amount of USD 294 thousand or 98% of the total amount of non-bank accommodations interest free is due from the 10 most significant counterparties (as at 31 December 2019 – USD 218 thousand or 92%).

26. Changes in allowances made

	Note	31 December 2020	31 December 2019
Allowances for trade accounts receivable	24	(11)	(12)
Allowances for advances to suppliers	25	(15)	(3)
Allowances for other accounts receivable	25	(37)	(43)
		(63)	(58)

The movements of the allowances were as follows:

	Note	For the year ended 31 December 2020	For the year ended 31 December 2019
As at the beginning of the period		(58)	(90)
Accrual	12	(52)	(72)
Use of allowances		36	94
Reverse of allowances		1	21
Effect from translation into presentation currency		10	(11)
As at the end of the period		(63)	(58)

(in thousand USD, unless otherwise stated)

27. Cash and cash equivalents

	Currency	31 December 2020	31 December 2019
Cash in bank and hand	USD	2 614	3 779
Cash in bank and hand	UAH	15 065	1 258
Cash in bank and hand	EUR	302	134
Cash in bank and hand	PLN	9	11
		17 990	5 182

There were no restrictions on the use of cash and cash equivalents during the reporting periods.

28. Equity

Share capital

IMC S.A. has one class of ordinary shares. The number of authorized, issued and fully paid shares as at 31December 2020 is 33 178 000 (as at 31 December 2019 – 33 178 000). All shares have equal voting rights. Par value of one share is USD 0,0018 (EUR 0,0018).

		31 December 2020		31 December 2019
	%	Amount	%	Amount
AGROVALLEY LIMITED	80	47	74	43
Other shareholders (each one less than 5% of the share capital)	20	12	26	16
	100	59	100	59

A reconciliation of the number of shares outstanding at the beginning and at the end of the period:

Number of authorized, issued and fully paid shares	For the year ended 31 December 2020	For the year ended 31 December 2019
As at the beginning of the period	33 178 000	33 178 000
Changes for the period	-	-
As at the end of the period	33 178 000	33 178 000

Share premium

In 2011 IMC S.A. completed initial public offering of own shares on Warsaw Stock Exchange. Issue of share capital of IMC S.A. brought to the increase of share capital equaling to USD 10 thousand and share premium in amount of USD 24 387 thousand.

In 2017 Management Incentive Plan was realized. Issue of new shares of IMC S.A. brought to the increase of share capital equaling to USD 3 thousand and share premium in amount of USD 5 125 thousand.

Revaluation reserve

The fair value of Group's property, plant and equipment has been measured as at 31 December 2020, 2017, 2015, 2010, 2009 by an independent appraiser. The related revaluation surplus was recognized in equity:

• as at 31 December 2009 USD 14 766 thousand was initially recognized in equity;
• as at 31 December 2010 USD 4 326 thousand was additionally recognized as increase in revaluation reserve;
• as at 31 December 2015 USD 40 390 thousand was additionally recognized as increase in revaluation reserve;
• as at 31 December 2017 USD 22 659 thousand was additionally recognized as increase in revaluation reserve;
• as at 31 December 2020 USD 5 265 thousand was additionally recognized as increase in revaluation reserve.

The revaluation surplus included in equity in respect of an item of property, plant and equipment is transferred directly to retained earnings as the asset is used by an entity (in the amount that is the difference between depreciation based on the revalued carrying amount of the asset and depreciation based on the asset's original cost) and when the asset is derecognized (in the full amount).

IMC S.A. AND ITS SUBSIDIARIES Consolidated financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in thousand USD, unless otherwise stated)

Effect of foreign currency translation

Effect of foreign currency translation comprises all foreign exchange differences arising from the translation of the financial statements into presentation currency.

Dividend policy

On 8 July 2016 the Board of Directors of IMC S.A. published its Dividend Policy: The Company intends to pay annual dividends starting from FY 2016 results with a dividend payout ratio up to 10% of Consolidated Net Profit of the Company and its Subsidiaries provided that the Company succeeds to receive dividend payment waivers from its creditors.

On 27 September 2017 the Company paid the interim dividend to the Company's shareholders for an aggregate amount of EUR 1 658 900 (EUR 0.05 per share).

On 14 September 2018 the Company paid the interim dividend to the Company's shareholders for an aggregate amount of EUR 11 280 520 (EUR 0.34 per share).

On 29 August 2019 the Company paid the interim dividend to the Company's shareholders for an aggregate amount of EUR 14 930 100 (EUR 0.45 per share).

On 28 August 2020 the Company paid the interim dividend to the Company's shareholders for an aggregate amount of EUR 5 972 040 (EUR 0.18 per share).

Legal reserve

From the annual net profits of the Parent company, 5% have to be allocated to the legal reserve. This allocation shall cease to be required as soon and as long as such surplus reserve amounts to 10% of the capital. This reserve may not be distributed to the shareholders.

Management Incentive Plan

The Extraordinary shareholders meeting approved on 4 July 2017 a management incentive plan providing to Management Team Members and Eligible Employees as defined in the Management Incentive Plan an option to purchase in aggregate up to 1 878 000 new shares of IMC S.A., such number being equal to 6% of the issued stock of IMC S.A. as at the adoption date of such plan, at the price decided at the discretion of the Board of Directors of the Company which shall be equal to at least one euro cent EUR 0.01.

Performance period of the Management Incentive Plan is 3 years, starting from January 1, 2017 and ending on December 31, 2019. During the Performance Period, the Board of Directors of the Company may discretionarily decide when the Shares shall be issued by the Company to the Participants at the Subscription Price.

As a part of this incentive plan, 1 878 000 new ordinary shares were issued with subscription price USD 0.00115. As at 31 December 2017 the purchase option was fully exercised, market share price was USD 2.73.

Options granted under the Plan are the following:

	For the year ended 31 December 2017
	Exercise price per share option	Number of options
01 January	-	-
Granted during the period	USD 0.00115	1 878 000
Exercised during the period	USD 2.73	(1 878 000)
31 December	-	-

IMC S.A. AND ITS SUBSIDIARIES Consolidated financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in thousand USD, unless otherwise stated)

29. Share purchase warrant

According to the Warrant Agreement entered into between the Group and International Finance Corporation (IFC) as at 20 December 2013, IFC had the right to purchase up to 3 098 700 shares of IMC S.A. (representing equivalent of 9,90% of issued share capital) for a total amount up to USD 20 000 thousand. The warrant was exercisable at any time up to 19 December 2018.

But according to the IFC Loan agreement dated 19 December 2013 if all of the warrants have not been exercised by 19 December 2018, and if only some of the warrants have been issued, the portion of the Additional return which shall be payable shall be calculated by multiplying USD 21 000 thousand by a fraction the numerator of which is equal to the number of warrant shares not subscribed for pursuant to IFC loan agreement during the exercise period and the denominator of which is equal to the total number of warrant shares. This obligation to pay the additional return is an unconditional and independent debt obligation according to the IFC loan agreement.

As at 30 June 2016 According to the Amendment to Loan agreement between IMC S.A. and International Financial Corporation the Additional Return had to be paid by IMC S.A. to International Financial Corporation. Amount of Additional Return had to be paid in a lump sum payment not later than 19 December 2018 in an amount USD 21 000 thousand or in two instalments as follows: USD 11 000 thousand on 19 December 2018 and USD 11 800 thousand on 19 December 2019. All the warrants according to the Warrant agreement dated 20 December 2013 were cancelled on 22 December 2016.

In its treatment until 2015 year-end, the Group determined fair value of the share purchase warrant by applying Black-Scholes model to determine its value as an option to purchase shares, embedded in the loan with the non-resident bank IFC of USD 30 000 thousand. The Group also treated this value separately from the host instrument, recognizing a separate loss in the amount of initial fair value of the option, and thereafter recognizing changes in that fair value at a fair value through profit and loss. At the same time, the Group considered the obligation to pay the additional return of USD 21 000 thousand, included in the Warrant Agreement, as a contingent liability since it expected the IFC to exercise its warrants to buy shares. This judgment represented an error. In its corrected treatment at year end 2016, the Group considers the additional return of USD 21 000 thousand as an obligation associated with the IFC loan. Accordingly, it has included it as an expected cash flow in calculation of the effective interest rate implicit in the loan, used in determining the amortized value of the loan instrument regarded as a whole. The effective interest rate thus determined is 17,46%.

In September 2017 new terms of payment of additional return were agreed. In accordance with new terms the amount of additional return is USD 19 742 708 and should be paid in 5 portions starting September 2017 till June 2020. The amortized value of the loan instrument was regarded with effective interest rate of 20,76% (in 2019 – 20,76%).

As at 31 December 2020 the IFC loan and related additional return are fully repaid.

30. Deferred tax assets and liabilities

The major components of deferred tax liabilities were as follows:

	Property, plant and equipment
31 December 2018	(3 027)
Considering profit (loss)	84
Considering equity	212
Effect of foreign currency translation	(487)
31 December 2019	(3 218)
31 December 2019	(3 218)
Considering profit (loss)	14
Considering equity	(488)
Effect of foreign currency translation	515
31 December 2020	(3 177)

Consolidated financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in thousand USD, unless otherwise stated)

31. Long-term loans and borrowings

	Currency	31 December 2020	31 December 2019
Secured
Long-term bank loans	USD	7 230	19 488
Finance lease liabilities	UAH	-	12
Total long-term loans including current portion		7 230	19 500
Current portion of long-term bank loans	USD	(3 023)	(16 490)
Current portion of finance lease liabilities	UAH	-	(12)
Total current portion		(3 023)	(16 502)
Total long-term loans and borrowings		4 207	2 998

Essential terms of credit contracts

Year of Nominal interest Creditor Currency maturity rate				31 December 2020
	Long-term liabilities	Including current portion
Ukrainian bank	2021	USD	6,00%	264	264
Ukrainian bank	2021	USD	4,75%	1 000	1 000
Ukrainian bank	2023	USD	5,00%	1 162	552
Ukrainian bank	2024	USD	4,90%	1 307	392
Ukrainian bank	2026	USD	4,98%	3 497	815
				7 230	3 023

Creditor	Year of maturity	Currency	Nominal interest rate	31 December 2019
				Long-term liabilities	Including current portion
Non-resident bank*	2020	USD	6M Libor+8,00%	12 871	12 871
Ukrainian bank	2021	USD	6,00%	1 056	528
Ukrainian bank	2021	USD	4,75%	2 000	2 000
Ukrainian bank	2023	USD	5,00%	1 862	699
Ukrainian bank	2024	USD	4,90%	1 699	392
				19 488	16 490

* Loan from non-resident bank consists of:

• Basic loan amount of USD 30 000 thousand with 6M Libor+8,00% interest rate;
• Additional return liabilities in the amount of USD 19 743 thousand payable in instalments till June 2020, interest free, discounted by 20,76%.

Long-term loans outstanding were repayable as follows:

	31 December 2020	31 December 2019
Within one year	3 023	16 490
In the second to fifth year inclusive	4 207	2 998
	7 230	19 488

(in thousand USD, unless otherwise stated)

The Group has committed to comply with loans covenants.

As at 31 December 2020 the Group was in compliance with all loans covenants.

As at 31 December 2019 as a result of increase in liabilities due to impact of new IFRS 16 a covenant on long-term loan in the amount USD 2 000 thousand from Ukrainian bank was violated by the Group. The Group received from the bank waiver of rights to require compliance with the breached covenant as at 31 December 2019, but after the end of reporting period. The loan was reclassified as current portion of longterm loan in the full amount.

Finance lease liabilities were presented as follows:

	31 December 2020		31 December 2019
	Minimum lease payments	Present value of minimum lease payments	Minimum lease payments	Present value of minimum lease payments
Within one year	-	-	12	12
In the second to fifth year inclusive	-	-	-	-
	-	-	12	12
Less future finance charges	-	-	-	-
Present value of minimum lease payments	-	-	12	12

32. Short-term loans and borrowings

	Currency	31 December 2020	31 December 2019
Secured
Short-term bank loans	USD	26 000	27 538

Essential terms of credit contracts

Creditor	Currency	Nominal interest rate	31 December 2020
Ukrainian bank	USD	3,85%	10 000
Ukrainian bank	USD	3,90%	5 000
Ukrainian bank	USD	3,90%	5 000
Ukrainian bank	USD	3,80%	4 100
Ukrainian bank	USD	3,80%	1 900
			26 000

Creditor	Currency	Nominal interest rate	31 December 2019
Ukrainian bank	USD	5,00%	10 000
Ukrainian bank	USD	5,50%	5 538
Ukrainian bank	USD	5,25%	5 100
Ukrainian bank	USD	5,25%	5 000
Ukrainian bank	USD	5,25%	1 900
			27 538

Loans and borrowings from Ukrainian banks are secured with property, plant and equipment in the amount USD 43 706 thousand (Note 18) and inventories in the amount USD 13 831 thousand (Note 22).

(in thousand USD, unless otherwise stated)

33. Trade accounts payable

	31 December 2020	31 December 2019
Trade accounts payable	963	2 867

As at 31 December 2020 an amount of USD 704 thousand or 73% of the total amount of trade accounts payable is due to the 10 most significant counterparties (as at 31 December 2019 – USD 2 566 thousand or 89%).

The table below summarizes the maturity profile of Group's liabilities on contractual payments on trade accounts payable:

	On demand	Within 30 days	From 30 to 90 days	From 90 to 180 days	From 180 to 360 days	From 1 to 5 years	Total
31 December 2020	-	692	81	7	183	-	963
31 December 2019	-	1 134	66	-	1 667	-	2 867

34. Other current liabilities and accrued expenses

	31 December 2020	31 December 2019
Other liabilities:
Advances from clients	2 582	5 394
	2 582	5 394
Other accounts payable:
Wages, salaries and related charges payable	1 029	1 102
Accruals for unused vacations	943	1 250
Interest payable on bank loans	91	152
Accounts payable for non-current tangible assets	271	289
Accruals for audit services	101	87
Taxes payable	78	482
Other accounts payable	21	48
	2 534	3 410
	5 116	8 804

As at 31 December 2020 an amount of USD 2 576 thousand or 99% of the total amount of advances from clients is due from the 10 most significant counterparties (as at 31 December 2019 – USD 5 388 thousand or 99%).

Distribution of other current liabilities and accrued expenses on time frames is the following:

	On demand	Within 30 days	From 30 to 90 days	From 90 to 180 days	From 180 to 360 days	From 1 to 5 years	Total
31 December 2020	943	4 072	-	101	-	-	5 116
31 December 2019	1 250	7 467	-	87	-	-	8 804

(in thousand USD, unless otherwise stated)

35. Related party disclosures

According to existing criteria of determination of related parties, the related parties of the Group are divided into the following categories:

a) Entities - related parties under common control with the Companies of the Group; b) Key management personnel.

The Group performs transactions with related parties in the ordinary course of business. During the reporting period the Group did not perform any related parties' transactions, except with key management personnel.

Remuneration of key management personnel was as follows:

	For the year ended 31	For the year ended 31
	December 2020	December 2019
Wages and salaries	1 513	2 094
Directors fees	520	694
Related charges	35	32
	2 068	2 820
The average number of employees, persons	6	6

36. Information on segments

A business segment is a separable component of a business entity that produces goods or provides services to individuals (or groups of related products or services) in a particular economic environment that is subject to risks and generates revenues other than risks and income of those components that are peculiar to other business segments.

For the purpose of Management, the Group is divided into the following business segments on the basis of produced goods and rendered services, and consists of the following 3 operating segments:

• Farming division a segment, which deals with cultivation and sale of such basic agricultural crops as corn and wheat;
• Livestock breeding a segment which deals with breeding and sale of biological assets and agricultural products of live farming. Basic agricultural product of live farming for sale in this segment is milk;
• Storage and processing a segment which deals with storage and processing of agricultural produce.

(in thousand USD, unless otherwise stated)

Information on business segments for the year ended 31 December 2020 was as follows:

	Crop farming	Dairy farming	Elevators and warehouses	Unallocated	Total
Revenue	269 768	1 592	8 044	-	279 404
Intra-group elimination	(111 329)	-	(6 688)		(118 017)
Revenue from external buyers	158 439	1 592	1 356	-	161 387
Gain from changes in fair value of biological assets and agricultural produce, net	76 551	471	-	-	77 022
Cost of sales	(155 436)	(1 229)	(2 505)	-	(159 170)
Gross income	79 554	834	(1 149)	-	79 239
Administrative expenses	-	-	-	(11 258)	(11 258)
Selling and distribution expenses	-	-	-	(15 839)	(15 839)
Other operating income	-	-	-	1 315	1 315
Other operating expenses	-	-	-	(2 056)	(2 056)
Write-offs of property, plant and equipment	-	-	-	(82)	(82)
Write-offs of property, plant and equipment	-	-	-	120	120
Write-offs of property, plant and equipment	-	-	-	(1 090)	(1 090)
Operating income of a segment	79 554	834	(1 149)	(28 890)	50 349
Financial expenses, net	-	-	-	(2 137)	(2 137)
Effect of lease of right-of-use assets	-	-	-	(7 234)	(7 234)
Effect of additional return	-	-	-	(872)	(872)
Foreign currency exchange (loss)/gain, net	-	-	-	(7 918)	(7 918)
Profit before tax	79 554	834	(1 149)	(47 051)	32 188
Income tax expenses, net	-	-	-	(483)	(483)
Net profit	79 554	834	(1 149)	(47 534)	31 705
Other segment information:
Depreciation and amortisation	18 383	127	1 928	-	20 438
Additions to non-current assets:
Property, plant and equipment	5 868	6	1 319	-	7 193
Intangible assets	33	-	-	-	33
Right-of-use assets	27 043	-	-	-	27 043

Revenues from the 10 most significant counterparties for the year ended 31 December 2020 were as follows:

	Business segment	% of revenue
Non-residental buyer	Crop farming	57,9%
Ukrainian buyer	Crop farming	13,0%
Non-residental buyer	Crop farming	7,2%
Ukrainian buyer	Crop farming	6,6%
Non-residental buyer	Crop farming	5,0%
Non-residental buyer	Crop farming	4,4%
Non-residental buyer	Crop farming	3,7%
Ukrainian buyer	Dairy farming	0,7%
Ukrainian buyer	Elevators and warehouses	0,3%
Ukrainian buyer	Dairy farming	0,1%
		98,9%

(in thousand USD, unless otherwise stated)

Information on business segments for the year ended 31 December 2019 was as follows:

	Crop farming	Dairy farming	Elevators and warehouses	Unallocated	Total
Revenue	294 864	1 662	7 789	-	304 315
Intra-group elimination	(127 808)	-	(6 906)	-	(134 714)
Revenue from external buyers	167 056	1 662	883	-	169 601
Gain from changes in fair value of biological assets and agricultural produce, net	51 982	786	-	-	52 768
Cost of sales	(166 784)	(1 112)	(3 031)	-	(170 927)
Gross income	52 254	1 336	(2 148)	-	51 442
Administrative expenses	-	-	-	(13 246)	(13 246)
Selling and distribution expenses	-	-	-	(21 247)	(21 247)
Other operating income	-	-	-	2 708	2 708
Other operating expenses	-	-	-	(4 176)	(4 176)
Write-offs of property, plant and equipment	-	-	-	(260)	(260)
Operating income of a segment	52 254	1 336	(2 148)	(36 221)	15 221
Financial expenses, net	-	-	-	(3 476)	(3 476)
Effect of lease of right-of-use assets	-	-	-	(7 640)	(7 640)
Effect of additional return	-	-	-	(2 090)	(2 090)
Foreign currency exchange gain, net	-	-	-	6 049	6 049
Profit before tax	52 254	1 336	(2 148)	(43 378)	8 064
Income tax expenses, net	-	-	-	(746)	(746)
Net profit	52 254	1 336	(2 148)	(44 124)	7 318
Other segment information:
Depreciation and amortisation	20 693	623	2 487	-	23 803
Additions to non-current assets:
Property, plant and equipment	5 451	146	1 713	-	7 310
Intangible assets	27	-	-	-	27
Right-of-use assets	16 960	-	-	-	16 960

Revenues from the 10 most significant counterparties for the year ended 31 December 2019 were as follows:

	Business segment	% of revenue
Non-residental buyer	Crop farming	57,8%
Non-residental buyer	Crop farming	13,7%
Ukrainian buyer	Crop farming	8,8%
Ukrainian buyer	Crop farming	4,8%
Non-residental buyer	Crop farming	4,5%
Non-residental buyer	Crop farming	2,8%
Non-residental buyer	Crop farming	1,9%
Non-residental buyer	Crop farming	1,9%
Non-residental buyer	Crop farming	1,4%
Ukrainian buyer	Dairy farming	0,6%
		98,2%

(in thousand USD, unless otherwise stated)

37. Lease of land

The Group leases land for agricultural purposes from private individuals. Lease payments are calculated on the basis of monetary valuation of the land considering the inflation factor. The average interest rate for lease of land of the Group is 5-13%% in 2020 (5-13%% in 2019) and depends on validity of the contract.

Areas of operating leased land were as follows:

	31 December 2020	31 December 2019
Location of land	Hectare	Hectare
Poltava region
Land under processing	19 824	20 231
Land for grazing, construction, other	140	140
Chernihiv region
Land under processing	76 829	78 648
Land for grazing, construction, other	130	130
Sumy region
Land under processing	23 371	24 166
Land for grazing, construction, other	7	7
	120 301	123 322

38. Financial instruments

Financial instruments as at 31 December 2020 were represented by the following categories:

Financial instrument	Category	Measurement
Financial assets
Accounts receivable	Financial assets at amortised cost	Amortised cost
Other financial assets	Financial assets at amortised cost	Amortised cost
Cash and cash equivalents	Financial assets at amortised cost	Amortised cost
Financial liabilities
Loans and borrowings	Financial liabilities at amortised cost	Amortised cost
Accounts payable	Financial liabilities at amortised cost	Amortised cost
Other financial liabilities	Financial liabilities at amortised cost	Amortised cost

The fair values of the Group's financial assets and financial liabilities listed hereinbefore reflect the amounts that would be received to sell the assets or paid to transfer the liabilities in an orderly transaction between market participants at the measurement date. The fair values are based on inputs other than quoted prices that are observable for the asset or liability. These inputs include foreign currency exchange rates and interest rates. The financial assets and financial liabilities are primarily valued using standard calculations/models that use as their basis readily observable market parameters. Industry standard data providers are the primary source for forward and spot rate information for both interest rates and currency rates, with resulting valuations periodically validated through third party or counterparty quotes.

The Group's non-derivative financial instruments included cash and cash equivalents, trade accounts receivable, other financial assets, trade accounts payable, other accounts payable, loans and borrowings. As at 31 December 2020 and 2019, the carrying value of these financial instruments, excluding long-term debt, approximates fair value because of the short-term maturities of these instruments. Loans and borrowings have fixed interest rates but they are corresponded to the market rate level.

(in thousand USD, unless otherwise stated)

39. Management of financial risks

One of the principal responsibilities of the Financial Department of the Group is to manage the financial risks arising from the Group's underlying operations. On an annual basis, the Financial Department approves a strategic plan that takes into account the opportunities and major risks of our business and mitigation factors to reduce these risks. The Financial Department also reviews risk management policies and procedures on an annual basis and sets upper limits on the transactional exposure to be managed and the time periods over which exposures may be managed. The objective of the policy is to reduce volatility in cash flow and earnings. Risks managed include:

Type of risk	Affected by	Risk management policies
Credit risk	Ability of counterparties to financial instrument to fulfill their contractual obligations	Credit approval and monitoring practices; counterparties policies
Liquidity risk	Balance of cash flow	Preparation of detailed forecasts of cash flow
Market risk	- Market prices on products sold, materials and services for production - Changes in interest rates - Fluctuation of foreign currency exchange rates	- Long-term cooperation with reliable suppliers - Maintaining a combination of fixed and floating interest rates; USD and UAH interest rates - USD and UAH interest rates

Depending on the type of risks faced by the Group, it is possible to use a single or several methods of minimizing or levelling their negative impact on Group.

The use of the following risk management methods is possible at the Group's companies:

1) risk pooling is a method aimed at reducing the risk by transferring accidental losses into the relatively small fixed expenses (this method is a basis for insurance);

2) limitation is a method involving the development of detailed strategic documentation, which sets the boundary level of risk in each area of the company's activities, as well as clear allocation of functions and responsibilities of personnel;

3) diversification is a method of risk control through the selection of assets, profit on which slightly correlates, if possible;

4) hedging is a balancing transaction, minimizing the negative impact of risk (e.g., selection of assets and liabilities by timing, by currency).

Credit risk

Credit risk is a risk of financial loss to the Group, which results from failure of a buyer or a contractor under the financial instrument to fulfill its contractual obligations. The risk is primarily related to the Group's accounts receivable, cash and cash equivalent.

Book value of financial assets reflects maximal extent that is subject to credit risk of the Group. Maximal level of credit risk is the following:

	31 December 2020	31 December 2019
Trade accounts receivable, net	202	277
Other financial assets:
Non-bank accomodations interest free	301	237
Other accounts receivable, net	247	99
Cash and cash equivalents	17 990	5 182
	18 740	5 795

The Group manages credit risk through rigorous credit approval and monitoring practices. Financial and Economic Department has developed the credit policy. In accordance with it, all contractors are subjected to careful analysis on ability to pay before the Group offers its standard terms of payment and delivery. If the Group sells goods to a contractor it has never dealt before, transactions are performed on terms of prepayment. Deferred payment is offered only to contractors with work experience with the Group more than 1 year without delays in payment terms established in sale contracts.

Group's management believes that companies comprising the Group are free in their choice of the customers, have close contacts with the leading global and Ukrainian traders, and may switch without risk to other customer offering better conditions of collaboration.

The Financial Directorate of the Group constantly carries out monitoring over payment terms deadlines according to goods selling contracts. In case of delay in payment, the personnel of the commercial department deals up with the customer and the decision whether to apply penalties or slightly extend the terms (within 90 days) is taken.

(in thousand USD, unless otherwise stated)

The Group forms estimated provision for trade and other accounts receivable. It corresponds with estimation of amount of already suffered credit losses. The main element of the provision is an element of certain loss, determined for assets considering already suffered but not fixed losses. Estimated amount of losses is determined on the basis of statistical data for previous periods for similar financial assets.

Distribution of trade accounts receivable on time-frames is the following:

			Past due, not impaired
	Total	Neither past due	Within 90	From 90 to 360	More than 1
		nor impaired	days	days	year
31 December 2020	202	192	10	-	-
31 December 2019	277	213	52	12	-

On the basis of analysis of payments for the current period Financial Director of the Group considers that there is no need to form provision for overdue, but not impaired trade accounts receivable.

Liquidity risk

Risk of liquidity - is the risk of inability to meet financial obligations of the Group in due time.

The way the Group manages the liquidity lies in providing the Group with constant availability of liquid facilities, enough to meet the obligation in due time, avoiding unforeseen losses and not to expose the reputation of the Group to risk.

There is system of management accounting and budgeting, which allows to plan and control covering all the expenses from operating activity and related with its financial expenses by means of profit.

The table below summarizes the maturity profile of Group's financial liabilities based on contractual payments as at 31 December 2020:

	On demand	Within 30 days	From 30 to 90 days	From 90 to 180 days	From 180 to 360 days	From 1 to 5 years	Over 5 years	Total
Bank loans and interest payable on bank loans	-	614	6 927	10 086	11 487	4 207	-	33 321
Lease liabilities as to right-of-use assets	-	211	408	2 491	13 655	46 238	36 158	99 161
Trade accounts payable	-	692	81	7	183	-	-	963
Other current liabilities and accrued expenses	943	4 072	-	101	-	-	-	5 116
	943	5 589	7 416	12 685	25 325	50 445	36 158	138 561

The table below summarizes the maturity profile of Group's financial liabilities based on contractual payments as at 31 December 2019:

	On demand	Within 30 days	From 30 to 90 days	From 90 to 180 days	From 180 to 360 days	From 1 to 5 years	Over 5 years	Total
Bank loans and interest payable on bank loans	2 000	439	13 113	16 871	11 757	2 997	-	47 176
Finance lease liabilities	-	4	-	8	-	-	-	12
Lease liabilities as to right-of-use assets	-	809	190	2 002	12 852	46 832	40 603	103 288
Trade accounts payable	-	1 134	66	-	1 667	-	-	2 867
Other current liabilities and accrued expenses	1 250	7 467	-	87	-	-	-	8 804
	3 250	9 853	13 369	18 968	26 276	49 829	40 603	162 147

IMC S.A. AND ITS SUBSIDIARIES Consolidated financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in thousand USD, unless otherwise stated)

Market risk

Market risk arises from fluctuations in market factors, including exchange rates, interest rates and commodity prices. Movements in these factors may affect the Group's income and expenses, or the value of its financial instruments. The objective of the Group's management of market risk is to maintain this risk within acceptable parameters, whilst optimizing returns.

Market risk is comprised of:

• Commodity price risk
  • i) Risk of changes in market prices of products for sale

The Group Sales Department makes continuous monitoring of market prices of products sold in order to manage exposure to changes in market prices for the products. According to the results of this analysis and subsequent prediction of prices for products, management pricing policy depending on the dynamics of market prices is formed.

ii) Risk of changes in prices of materials and services

The Group is exposed to changes in prices of materials and services that are used in the process of production. The Group manages these risks by working with reliable suppliers, business relationships with whom had developed over a long time, and the search for new, more affordable supply of resources.

• Currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group's exposure to the risk of changes in foreign exchange rates relates primarily to the Group's operating activities (when revenue or expense are denominated in a different currency from the Group's functional currency) and the Group's net investments in foreign subsidiaries.

The Group's companies manage their foreign currency risk by comparing the volumes of export revenues by currencies and loan portfolio by currencies. The Group avoids borrowing and production sales for export in any currency except for USD. The comparison is carried out as a part of the annual planning and budgeting.

When the amount of the expected export revenue is below the level of USD borrowing for the financial year, the decrease in foreign currency borrowings by repayment of such loans or conversion of foreign currency loans into national currency is performed.

Group avoided realization of risk transactions that are subject to foreign currency risk.

The table below summarizes the Group's exposure to foreign currency risk as at 31 December 2020:

	Note	UAH	USD	EUR	PLN	Total
Cash and cash equivalents	27	15 065	2 614	302	9	17 990
Loans and borrowings	31, 32	-	33 230	-	-	33 230
Lease liabilities as to right-of-use assets	19	89 502	40	9 619	-	99 161
Other current liabilities and accrued expenses	34	2 341	2 775	-	-	5 116
		106 908	38 659	9 921	9	155 497

The table below summarizes the Group's exposure to foreign currency risk as at 31 December 2019:

	Note	UAH	USD	EUR	PLN	Total
Trade accounts receivable, net	24	277	-	-	-	277
Cash and cash equivalents	27	1 258	3 779	134	11	5 182
Loans and borrowings	31, 32	12	47 026	-	-	47 038
Lease liabilities as to right-of-use assets	19	98 334	152	4 802	-	103 288
Other current liabilities and accrued expenses	34	3 172	5 633	-	-	8 804
		103 053	56 590	4 936	11	164 590

(in thousand USD, unless otherwise stated)

	31 December 2020	Increase/decrease in USD exchange rate, %	Effect on profit before tax
Loans and borrowings	33 230	10 (10)	(3 323) 3 323
Lease liabilities as to right-of-use assets	40	10 (10)	(4) 4
Other current liabilities and accrued expenses	193	10 (10)	(19) 19
General effect		10	(3 346)
	-	(10)	3 346

The Group's exposure to foreign currency risk, based on book value, as at 31 December 2020 was as follows:

	31 December 2020	Increase/decrease in EUR exchange rate, %	Effect on profit before tax
	9 619	10	(962)
Lease liabilities as to right-of-use assets		(10)	962

The Group's exposure to foreign currency risk, based on book value, as at 31 December 2019 was as follows:

	31 December 2019	Increase/decrease in USD exchange rate, %	Effect on profit before tax
Cash and cash equivalents	3 779	10	378
		(10)	(378)
Loans and borrowings	47 026	10	(4 703)
		(10)	4 703
Lease liabilities as to right-of-use assets	152	10	(15)
		(10)	15
	239	10	(24)
Other current liabilities and accrued expenses		(10)	24
General effect	-	10	(4 364)
		(10)	4 365

	31 December 2019	Increase/decrease in EUR exchange rate, %	Effect on profit before tax
Lease liabilities as to right-of-use assets		10	480
	4 802	(10)	(480)

(in thousand USD, unless otherwise stated)

• Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Change in interest rates influences the involved loans and borrowings and finance lease transactions. Management of the Group doesn't have formalized policy respecting proportion of interest risk's allocation between the loans with fixed interest rate and floating interest rate. However, when attracting new loans and borrowings, management solves the problem respecting which interest rate, fixed or floating, will be more profitable for the Group during the expected period till the maturity date, based on own professional judgments.

The Group's interest-bearing financial instruments were formed as follows:

	31 December 2020	31 December 2019
Loans and borrowings
Fixed rate instruments	33 230	34 155
Variable rate instruments	-	12 883
	33 230	47 038

The Group's exposure to interest rate risk due to variable rate of financial instruments, based on book value, as at 31 December 2019 was as follows:

	Note	31 December 2019	Increase/decrease in Libor rate, %	Effect on profit before tax
	32, 33 12 882		1	(129)
Loans and borrowings			(1)	129

Agro-industrial risks

Agro-industrial business is subject to risks of outbreaks of various diseases of cattle or crops. These diseases could result in losses. Disease control measures were adopted by the Group to minimise and manage this risk. The Group's management is satisfied that its current existing risk management and quality control processes are effective and sufficient to prevent any diseases and related losses.

Customer concentration risk

Focusing on large wholesale world traders, the Group has a small pool of customers and could be influenced by customer concentration risk. But the work of the Group with a small number of customers is not due to the lack of other customers or the impossibility of entering new markets, but to the selected sales strategy - the best conditions for selling are ensured by relations with large traders. To control the risk before each sale, a tender is held among buyers to determine the best conditions of the transaction. Making a choice in the direction of the buyer, management understand the level of supply and demand for the products on the market with other participants and Group's capabilities in the event of a change of buyer.

(in thousand USD, unless otherwise stated)

40. Capital management

The Group's objectives in the process of capital management are maintaining the Group's ability to follow the going concern principle to provide benefits to interested parties, and also maintaining the optimal structure of involved and own funds.

The management of the Group regularly analyzes the structure of its capital. On basis of results of this analysis the Group takes measures, which are aimed at maintenance of total structure of the capital balance.

The main financial liabilities of the Group are long-term loans and borrowings, current portion of long-term borrowings, short-term loans and borrowings, trade accounts payable, other current liabilities and accrued expenses. The main purpose of these financial instruments is to raise funds for the activities of the Group.

The Group's gearing ratio was as follows:

	Note	31 December 2020	31 December 2019
Long-term loans and borrowings	31	(4 207)	(2 998)
Long-term lease liabilities as to right-of-use assets	19	(82 396)	(87 425)
Current portion of long-term borrowings	31	(3 023)	(16 502)
Current portion of long-term lease liabilities as to right-of-use assets	19	(16 765)	(15 863)
Short-term loans and borrowings	32	(26 000)	(27 538)
Trade accounts payable	33	(963)	(2 867)
Other current liabilities and accrued expenses	34	(5 116)	(8 804)
Cash and cash equivalents	27	17 990	5 182
Net debt		(120 480)	(156 816)
Total equity		(138 4270	(133 193)
Total net debt and equity		(258 907)	(290 009)
Gearing ratio		47%	54%

The capital structure of the Group is based on management's judgments of the appropriate balancing of all key elements of its financial strategy in order to meet its strategic and day-to-day needs. The Management of the Group considers the amount of capital in proportion to risk and manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. The Group will take appropriate steps in order to maintain, or if necessary adjust, the capital structure.

41. Subsequent events

Conducting its normal operating activity, the Group considers important to highlight the following:

Loans and borrowings and interests are repaid in the amount of USD 1 991 thousand.

Loans and borrowings are received in the amount of USD 2 872 thousand.

VAT for reimbursement is received in the amount of USD 2 594 thousand.

There were no other material events after the end of the reporting date, which have a bearing on the understanding of the financial statements.