ANNUAL REPORT 2021

CHAIRMAN'S STATEMENT

Dear Investors and Partners,

The Board of Directors of KSG Agro is pleased to present its annual report together with the audited consolidated financial statements for the year ended 31 December 2021.

The year 2021 was a good year for the Group. Having successfully settled all overdue debts by the end of 2020, in 2021 we were able to fully focus on growth.

In May, the Board approved the allocation of up to USD 3 million to finance both ongoing and prospective investment projects during the year. USD 0.5 million from these funds were directed to purchase 900 new sows, as part of our herd rejuvenation efforts.

And in December, the Board approved the decision to fully consolidate our pig business through acquisition of the other 50% of its shares from its minority investor for the total price of USD 2.3 million.

We started the reconstruction of the second stage of the pig-breeding complex which will allow us to further increase our production capacity. The second stage includes 10 workshops which can accommodate up to 58 thousand heads. The breed reproducer, when finished, should also offer us a complete production cycle, providing independence from external factors and circumstances.

The year 2021 also gifted us exceptionally good harvest. Demand for our products is strong, both domestically and internationally. We are striving to bring down our operational costs and improve our results. We continue to conduct the necessary quarantine activities to help the global efforts of battling COVID. The Group stays loyal to its strategy of focusing on crop farming and pig breeding, and we continue developing these areas of business.

Despite the repeated geo-political turmoil around our country, especially the current crisis, I am still hopeful that Ukraine will overcome these hardships with honour and dignity.

We are truly confident that our efforts and hard work will pay off in the long-term, to bring us, our investors and our partners, prosperity and profitability. We are on the right track and are certain that the positive trend of the previous years will continue in 2022 to support our constant development.

Chairman of the Board, Sergiy Kasianov

KSG Agro S.A.

Société Anonyme 24, rue Astrid L-1143 Luxembourg R.C.S. B 156.864

CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF THE RÉVISEUR D'ENTREPRISES AGRÉÉ FOR THE YEAR ENDED 31 DECEMBER 2021

Management Report

Principal Activities	1
Strategy Implementation	1
Impact of the War Events in Ukraine	2
Financial and Operational Results	2
Subsequent Events	3
Business and Financial Risks	3
Corporate Governance	5
Corporate Responsibility and Diversity	8

Statement of the Board of Directors and management's responsibility for the preparation and approval of the consolidated financial statements
Report of the Réviseur d'Entreprises Agréé	15-20

Consolidated Financial Statements
Consolidated Statement of Financial Position	21
Consolidated Statement of Comprehensive Income	22
Consolidated Statement of Cash Flows	23
Consolidated Statement of Changes in Equity	24
Notes to the Consolidated Financial Statements	25-64

PRINCIPAL ACTIVITIES

KSG Agro S.A., separately referred to as "KSG Agro" or the "Company" and together with its subsidiaries referred to as the "Group", remains among the largest vertically integrated agricultural groups in the Dnipropetrovsk region of Ukraine, present in all major sectors of the agricultural market, including production, storage, processing and sale of agricultural products. Its key operating activities are breeding of pigs, processing of pork and production of wheat and sunflower.

STRATEGY IMPLEMENTATION

The Group continues to grow wheat, barley, rapeseed in the winter and sunflower, corn in the summer. Current year harvest was exceptionally good compared to the previous year:

Crops harvested, in tonnes	Season 2021		2020

Wheat	Winter	31,021	17,952
Barley	Winter	8,561	4,865
Rapeseed	Winter	760	2,734
Sunflower	Summer	18,210	11,745
Corn	Summer	9,334	2,744
Total		67,886	40,040

Although the weather conditions were favourable to other agricultural producers as well, higher overall production of crops in Ukraine did not affect the local demand for the Group. For 2022, the weather was less graceful and the yields are looking to be more in line with 2020.

Crop farming revenue for 2021 more than doubled as compared to 2020, while revenues from pig breeding, less affected by the weather conditions, keep growing at a steady pace and remain the Group's key strategic focus:

Segment revenue, in USD million	2021	2020	Y-O-Y increase in USD-equivalent	Y-O-Y increase in contract currency
Crop Farming	18.3	8.4	118%	120%
Pig Breeding	11.2	10.3	9%	10%

As for pig breeding, pig production and sales were also in line with the previous year:

Marketable Pigs, in units	2021	2020
As at 1 January	41,416	38,420
Farrow	108,158	113,634
Sales	(105,515)	(109,958)
Transfers to/from nucleus herd, net	(358)	(680)
As at 31 December	43,701	41,416

The construction of an additional fattening shop for 2,340 pigs and an additional sow house for 360 sows should provide the Group with another production facility for fattening pigs and will offer an opportunity to increase the birth rate of piglets and improve their performance even more. Construction works on both projects are still under way.

Furthermore, in 2021 the Group purchased 900 new sows as part of its herd rejuvenation efforts and started reconstruction of the second stage of the pig-breeding complex, which will allow the Group to further increase its production capacity. Plans for the second stage include 10 workshops for a total of 58 thousand heads.

Improving Key Financial Ratios

During the year 2021, the Group also worked on improving its key financial ratios, specifically the negative net current assets and negative shareholders equity. Both goals were achieved primarily through disposal of several subsidiaries, as disclosed in Note 7 to the consolidated financial statements.

Improvements in the Group's net current assets and working capital are as follows:

in USD million	As at 31 December 2021	As at 31 December 2020
Current Assets minus Current Liabilities	3.2	(6.3)
less: Other financial assets	(0.4)	(1.1)
less: Other financial liabilities	7.8	8.5
Adjusted Working Capital	10.6	1.1

In assessing day-to-day performance of the business, management excludes 'other financial assets' and 'other financial liabilities', as those mostly comprise old non-trade balances subject to restructuring, and analyses the change in the resulting 'adjusted working capital'. Based on management's assessment, the adjusted working capital is sufficient.

IMPACT OF THE WAR EVENTS IN UKRAINE

As disclosed in Note 27 to the consolidated financial statements, the Russian Invasion of Ukraine had started in late February 2022 and is ongoing as at the date of this report. Because the Group's key assets and operations are in Ukraine, the Group might be significantly affected by these events. Management's analysis of the risks and uncertainties surrounding the Invasion, as well as management's strategy and actions to mitigate those risks, are outlined in Note 3 to the consolidated financial statements. The outcome of the Invasion, however, is impossible to predict at this time.

Since the start of the Russian Invasion, no fighting occurred in close vicinity to the Group's assets. The Group's pig farm and its crop fields are located in the center of Ukraine, which hasn't seen any fighting yet.

As at the date of this report, the Group had successfully completed its spring sowing campaign, finished harvesting its winter crops and does not expect significant interruptions to its production cycle in the near future.

Additionally, the accompanying consolidated financial statements were compiled using pre-Invasion judgments and estimates, and do not take into account the subsequent war events. Both, because the Invasion started after the end of the reporting period and is, in itself, a non-adjusting event, and due to the inherent uncertainty regarding its outcome.

FINANCIAL AND OPERATIONAL RESULTS

The following table sets forth the Group's results of operations for the years ended 31 December 2021 and 2020 derived from the consolidated financial statements:

In thousands of US dollars	2021	2020	Change, %
Revenue	30,746	21,338	44%
Gain/(loss) on biological transformation, net	7,316	4,434	65%
Cost of sales	(25,116)	(19,524)	29%
Gross profit	12,946	6,248	107%
Selling, general and administrative expenses	(2,293)	(1,902)	21%
Operating profit	10,653	4,346	145%

Finance income	31	4	675%
Finance expenses	(2,610)	(2,071)	26%
Gain/(loss) on foreign currency exchange, net	(418)	(4,934)	(92)%
Gain/(loss) on debt restructuring	-	16,397	(100)%
Gain/(loss) on disposal of subsidiaries	16,820	(196)	(8,682)%
Other gains and losses	(4,421)	(12,063)	(63)%
Profit before tax	20,055	1,483	1,252%
Income tax expense	(5)	(211)	(98)%
Profit for the year	20,050	1,272	1,476%
Operating profit	10,653	4,346	145%
Depreciation and amortisation	1,625	1,676	(3)%
EBITDA	12,278	6,022	104%

Revenue and cost of sales are both higher by 44% and 29%, respectively, and primarily in the crop farming segment, due to the exceptionally good harvest of 2021.

Total revenue from crop farming for the year ended 31 December 2021 was USD 18.3 million as compared to USD 8.4 million for the year ended 31 December 2020. Net change in the fair value of crops was USD 7.5 million for the year ended 31 December 2021 and 3.3 million for the year ended 31 December 2020.

As an alternative revenue source to hedge against the unpredictability of weather conditions, the Group used its agricultural equipment and expertise to render land cultivation and similar land preparation services to other crop producers for a total amount of USD 1.8 million for the year ended 31 December 2021 as compared to USD 2.2 million for the year ended 31 December 2020.

Owing to the higher output of the crop farming segment, the Group managed to increase the margins in both of its main segments. Segment profits for the year ended 31 December 2021 from crop farming and pig breeding were, respectively, USD 9.1 million and USD 3.0 million as compared to, respectively, USD 3.7 million and USD 2.2 million for the year ended 31 December 2020.

Accordingly, overall cost of sales for 2021 is higher by 44% due to higher output of the crop farming segment, but cost of sales in the pig breeding segment has decreased to USD 8.1 million for 2021 as compared to USD 9.2 million for 2020. And this trend of the relative decrease in cost of sales towards revenue is expected to continue. Main contributing factors are that the Group continues to use self-produced feeds instead of purchasing them, success of the Group's previous investments into energy-saving projects, and other benefits of vertical integration.

As a consequence, the Group's EBITDA for the year ended 31 December 2021 increased by 104% to USD 12.3 million from USD 6.0 million for the year ended 31 December 2020.

Details by segment are disclosed in Note 18 to the consolidated financial statements.

SUBSEQUENT EVENTS

All significant events that occurred after the end of the reporting period are described in Note 27 to the consolidated financial statements.

BUSINESS AND FINANCIAL RISKS

Credit risk

The Group takes on exposure to credit risk, which is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Exposure to credit risk arises as a result of the Group's sales of products on credit terms and other transactions with counterparties giving rise to financial assets.

Credit risk concentration

The Group is exposed to the concentration of credit risk. Management monitors and discloses concentrations of credit risk by obtaining monthly reports with exposures to customers with individually material balances.

As at 31 December 2021, the Group had 5 customers (2020: 4 customers) with aggregate receivable balances above USD 150 thousand each. The total amount of these balances as at 31 December 2021 was USD 3,900 thousand (2020: USD 1,592 thousand) or 80% (2020: 84%) of trade receivables.

Market risk

The Group takes on exposure to market risks. Market risks arise from open positions in (a) foreign currencies, (b) interest bearing assets and liabilities, all of which are exposed to general and specific market movements. The Group does not have significant interest-bearing financial assets, while the Group's bank and other loans are interest-bearing.

Interest rate risk

Risk of changes in interest rates is generally related to interest-bearing loans. Loans and borrowings issued at variable rates expose the borrower to the 'cash flow' interest rate risk, while loans and borrowings issued at fixed rates expose the borrower to the 'fair value' interest rate risk.

Starting from the first quarter of 2021, in order to mitigate the associated currency risk, management have arranged for the change in currency of the loans from TASCOMBANK to the Group's functional currency at the cost of switching from a fixed interest rate to a variable rate. Refer to Note 16 for details.

Currency risk

Foreign currency exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity's functional currency. During the year ended 31 December 2020, the Group has been most susceptible to the currency risk with regard to its bank loans and intercompany loans.

As at 31 December 2020, the total amount of foreign-currency bank loans was USD 12,201 thousand. To mitigate the currency risk, management have arranged for the change in currency of the loans from TASCOMBANK to the Group's functional currency at the cost of switching from a fixed interest rate to a variable rate. From the fist quarter of 2021, the total amount of foreign-currency bank loans is USD nil. Refer to Note 16 for details.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is managed by monitoring monthly rolling forecasts of the Group's cash flows. The Group seeks to maintain a stable funding base mostly through proper management of its working capital and using short-term bank and company loans (as defined in Note 17) to cover the cash gaps.

The Group had very low liquidity indicators in the past which, to a considerable extent, were a result of unpaid and overdue loans. By August 2020, those loans had been fully settled and the new loans attracted from TASCOMBANK now have a reasonable repayment schedule (see Note 16).

Since September 2020, management have focused their efforts on further improving the Group's key financial ratios,

specifically its negative net current assets and negative shareholders equity. Both goals were achieved primarily through disposal of several subsidiaries in April of 2021, as disclosed in Note 7 to the consolidated financial statements.

Improvements in the Group's net current assets and working capital are as follows:

in USD million	As at 31 December 2021	As at 31 December 2020
Current Assets minus Current Liabilities	3.2	(6.3)
less: Other financial assets	(0.4)	(1.1)
less: Other financial liabilities	7.8	8.5
Adjusted Working Capital	10.6	1.1

Capital Risk Management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders as well as to provide financing of its operating requirements, capital expenditures and Group's development strategy. The Group's capital management policies aim to ensure and maintain an optimal capital structure to reduce the overall cost of capital and flexibility relating to Group's access to capital markets.

In thousands of US dollars	31 December 2021	31 December 2020

Bank and other loans	27,591	27,398
Less: cash and cash equivalents	(637)	(108)
Net debt	26,954	27,290
Total equity	23,040	5,382
Net Debt to Equity Ratio	1.17	5.07

Management monitors on a regular basis the Group's capital structure and may adjust its capital management policies and targets following changes in its operating environment, market sentiment or its development strategy.

Management believes it is responding appropriately to all the risks identified in order to support the sustainability of the Group's business in the current circumstances.

CORPORATE GOVERNANCE

The Board of Directors of the Company (the "Board") observes the corporate governance rules of the Warsaw Stock Exchange included in the "Code of Best Practice for WSE Listed Companies" in the form and to the extent determined by the Resolution No. 19/1307/2012 of the Exchange Supervisory Board dated 21 November 2012. Code of Best Practice for WSE Listed Companies is available at the official website of the Warsaw Stock Exchange

The Board of Directors consists of five members, three of each hold an executive role (Directors A), and two directors are non-executive ones (Directors B).

Mr. Sergiy Kasianov, Chairman of the Board of Directors, has a significant indirect holding of securities in the Company. No other person has a significant direct or indirect holding of securities in the Company. No person has any special rights of control over the Company's share capital.

There are no restrictions on voting rights.

Appointment and replacement of Directors and amendments to the Articles of Association

With regard to the appointment and replacement of Directors, its Articles of Association (hereinafter referred to as the "Articles of Association") and Luxembourg Law comprising the modified Law of 10 August 1915 on commercial companies (hereinafter referred to as the "Company Law") govern the Company. A general meeting of the shareholders under the quorum may amend the Articles of Association from time to time and majority requirement provided for by the Company Law.

Powers of Directors

The Board is responsible for managing the business affairs of the Company within the clauses of the Articles of Association. The Directors may only act at duly convened meetings of the Board of Directors or by written consent in accordance with article 9 of Articles of Association.

Rights of the shareholders

Articles of Association and national laws and regulations govern the operation of the shareholders meetings and their key powers and description of their rights.

Transfer of shares

Transfer of shares is governed by Articles of Association of the Company.

Meetings of the Board of Directors

In this regard the Company is governed by Article 9 of the Articles of Association.

Mr. Sergiy Kasianov has been appointed as Chairman of the Board of Directors.

The Board of Directors shall meet upon call by the Chairman, or any two Directors, at the place and time indicated in the notice of meeting, the person(s) convening the meeting setting the agenda.

Written notice of any meeting of the Board of Directors shall be given to all Directors at least five (5) calendar days in advance of the hour set for such meeting, except in circumstances of emergency where 24 hours prior notice shall suffice. The notice shall duly set out the reason for the urgency.

The Board of Directors may act validly and validly adopt resolutions if approved by the majority of Directors including at least one class A and one class B Director at least a majority of the Directors are present or represented at a meeting.

Audit Committee

The Audit Committee is composed of three members and is in charge of overseeing financial reporting and disclosure.

Internal Control

The Group's management is responsible for establishing and maintaining adequate controls over financial reporting process, which include the appropriate level of Board of Directors' involvement.

The Group maintains an effective internal control structure. It consists, in particular, of organizational arrangements with clearly defined lines of responsibility and delegation of authority, and comprehensive systems and control procedures. An important element of the control environment is an ongoing internal audit program. The Group's internal control system also contains monitoring mechanisms, and actions taken to correct deficiencies when they are identified.

To assure the effective administration of internal controls, the Group carefully selects employees, develops and disseminates oral and written policies and procedures, provides appropriate communication channels and fosters an environment conducive to the effective functioning of controls.

The Group's internal control over financial reporting includes those policies and procedures that:

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposals of the assets of the Group;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Ukrainian generally adopted accounting principles and transformation to International Financial Reporting Standards as adopted by European Union;
provide reasonable assurance that receipts and expenditures of the Group are being made only in accordance with authorizations of management and directors of the Group;
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposal of the Group's assets that could have a material effect on the financial statements.

We believe that it is essential for the Group to conduct its business affairs in accordance with the highest ethical standards.

Information With Respect To Article 11 Of The Law Of 19 May 2006 On Takeover Bids

Article 11 a) the structure of their capital, including securities which are not admitted to trading on a regulated market in a Member State, where appropriate with an indication of the different classes of shares and, for each class of shares, the rights and obligations attaching to it and the percentage of total share capital that it represents.

According to article 5.1 of the articles of association of the Company (the "Articles"), the Company's subscribed share capital amounts to one hundred fifty thousand two hundred United States Dollars (USD 150,200.00) represented by fifteen million twenty thousand (15,020,000) shares having a nominal value of one Cent (USD 0.01) each.

All the issued share capital of the Company is admitted to listing and trading on the main market of the Warsaw Stock Exchange.

On May 23, 2013, the Company bought back thirty-two thousand one hundred and seventy-two (32,172) own shares, representing 0.21% of share capital, that are accounted for as treasury shares.

Article 11 b) any 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 shares of the Company are transferred in accordance with customary procedures for the transfer of securities in book-entry form. Furthermore, there is no restriction in relation with the transfer of securities pursuant to article 7.5 of the Articles. The sole requirement is that any transfer shall be recorded in the register of shares of the Company.

In accordance with article 7.10 of the Articles, any shareholder, company or individual, who acquires or sells shares, including certificates representing shares of the Company, shall notify to the Company the percentage of the voting rights he/she/it will own pursuant to such acquisition or sale, in case such percentage reaches the thresholds of 5%, 10%, 15%, 20%, 33 1/3%, 50% and 66 2/3% or supersedes or falls under such thresholds. The shareholders shall also notify the Company should the percentage of their respective voting rights reach the above mentioned thresholds or supersede them or fall under such thresholds pursuant to certain events amending the voting rights repartition of the Company.

Those notification requirements apply also to certain situations as listed by article 9 of the law of 11 January 2008 on transparency obligations with respect to the information of companies which securities are listed on a regulated market.

Article 11 c) significant direct and indirect shareholdings (including indirect shareholdings through pyramid structures and cross-shareholdings) within the meaning of Directive 2004/109/EC.

The distribution of shares of the Company as at the reporting date is as follows:

OLBIS Investments LTD S.A. holds eight million seven hundred and five thousand five hundred (8,705,500) shares, representing 57.96% of the issued share capital of the Company.
KSG Agro S.A holds thirty-two thousand one hundred seventy-two (32,172) shares, representing 0.21% of the issued share capital of the Company.
In free float there are six million two hundred and eighty-two thousand three hundred twenty-eight (6,282,328) shares, representing 41.83% of the issued share capital of the Company.

The distribution of shares during the reporting period has changed. See Note 15 to the consolidated financial statements for details.

Article 11 d) the holders of any securities with special control rights and a description of those rights.

There are no special control rights.

Article 11 e) the system of control of any employee share scheme where the control rights are not exercised directly by the employees.

There is no employee share scheme.

Article 11 f) any restrictions on voting rights, such as limitations of the voting rights of holders of a given percentage or number of votes, deadlines for exercising voting rights, or systems whereby, with the Company's cooperation, the financial rights attaching to securities are separated from the holding of securities.

Pursuant to article 7.10 of the Articles, if a shareholder breaches the thresholds mentioned in point b) and fails to notify the Company within the period of four (4) listing days, as stated therein, the exercise of voting rights attached to the new participation exceeding the relevant threshold will be suspended.

Article 11 g) any agreements between shareholders which are known to the Company and may result in restrictions on the transfer of securities or voting rights within the meaning of Directive 2004/109/EC.

To the best of our knowledge there are no such agreements.

Article 11 h) the rules governing the appointment and replacement of board members and the amendment of the articles of association.

Pursuant to article 8 of the Articles, the Directors of the Company (the "Directors" or the "Board", as applicable) are to be appointed by the general meeting of the shareholders of the Company (the "General Meeting") for a period not exceeding six (6) years and until their successors are elected. Moreover, the decision to suspend or dismiss a Director must be adopted by the General Meeting with a majority of more than one-half (1/2) of all voting rights present or represented. When a legal person is appointed as Director, the legal entity must designate a permanent representative (représentant permanent) in accordance with article 441-3 of the Company Law.

In accordance with article 20 of the Articles, the Articles may be amended from time to time by a General Meeting under the quorum and majority requirements provided for by the Company Law.

Article 11 i) the powers of board members, and in particular the power to issue or buy back shares.

With respect to the acquisition of own shares, article 6 of the Articles establishes that the Company may acquire its own Shares to the extent permitted by law. To the extent permitted by Luxembourg law, the Board is irrevocably authorized and empowered to take any and all steps to execute any and all documents to do and perform any and all acts for and in the name and on behalf of the Company which may be necessary or advisable in order to effectuate the acquisition of the shares and the accomplishment and completion of all related actions.

According to article 11.2 of the Articles, the Board is vested with the broadest powers to perform all acts of administration and disposition in the Company's interests and within the objectives and purposes of the Company. All powers not expressly reserved by law or by the Articles to the General Meeting fall within the competence of the Board.

Article 11 j) any significant 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; this exception shall not apply where the Company is specifically obliged to disclose such information on the basis of other legal requirements.

To the extent of our knowledge there are no such agreements.

Article 11 k) any agreements between the Company and its board members or employees providing for compensation if they resign or are made redundant without valid reason or if their employment ceases because of a takeover bid.

To the extent of our knowledge there are no such agreements.

CORPORATE RESPONSIBILITY AND DIVERSITY

The following statement is prepared in observance of the requirements for publication of non-financial and diversity information for the year ended 31 December 2021. In preparation of this statement, where relevant, we have relied upon the Global Reporting Initiative framework and upon the Guidelines on non-financial reporting as issued by the European Commission.

We believe that the information provided within this non-financial statement is material for the purposes of this statement. Without proper care and respect for our employees we would not have achieved the results presented in the financial statements. Being an agricultural company, without proper care for the environment there would be no crops to harvest, without proper care and respect for the local communities we would not have access to the land which is owned by these communities as well as the workforce to help cultivate the lands, gather the crops, breed the pigs and process the meat.

From quarantines to bomb shelters. Our social response during wartime

KSG Agro has taken additional measures to motivate and protect the staff of the Group's farms during the period of hostilities in Ukraine. As the pig farm is one of the strategically important food security companies in the Dnipropetrovsk region, the contribution of its employees to the victory over the enemy is in the coordinated and efficient work of the team. In this regard, with the support of the Association of Pig Farmers of Ukraine (ACU) through the Dnipropetrovsk Regional State Administration, the Group submitted to the Ministry of Agrarian Policy lists of employees of the pig farm, which will be given exemption from mobilization.

KSG Agro continues to ship pork at the request of consumers, including into the Silpo and Varus retail chains. Deliveries are made not only in the Dnipropetrovsk region, where the share of the Group's pork market is 50%, but also in Zaporizhzhia. In Zaporizhzhia region today there is a difficult humanitarian situation, including with the provision of food. Our drivers, risking their lives, make deliveries to the Silpo stores in Zaporizhzhia and the Zaporizhzhia region.

With the start of the Invasion, all of the Group's employees received additional motivation in the form of a twofold increase in wages during wartime. In addition, they were paid double the advance and are now provided with free lunches in the canteen of the pig farm.

All employees are provided with food rations, which, in particular, include 3 kg of pork. For those who need official housing, apartments are additionally rented at the location of the pig farm at the Group's expense. To ensure the leisure of the children of the pig farm staff, a private kindergarten was opened in the administrative building so that mothers would not have to worry about their children.

Three bomb shelters were equipped at the location of the enterprise. In order to strengthen the security of the pig farm, protection is organized by local defence forces, who receive our support and regular meals. Furthermore, additional checkpoints have been set up to protect both the pig farm and the settlement in which it is located.

KSG Agro, together with Sergiy Kasianov's Charitable Foundation "Future", have ensured the delivery of three tons of humanitarian medical cargo from Germany to Ukraine. The cargo includes the most necessary medical equipment and supplies for the treatment of limb injuries of wounded Ukrainian servicemen, who demonstrate miracles of courage on the fronts of battles with the Russian occupiers.

The total cost of orthopedic materials and prostheses is about 300 thousand euros. These are medicines, bandages, external fixation devices of various modifications. And there are carts, crutches, orthopedic kits, hundreds of products collected for our country by German universities, hospitals, and pharmacies.

Orthopedic kits and medicine were delivered to the Dnipro Military Hospital, the Mechnikov Dnipro Regional Clinical Hospital, Kryvyi Rih Second Clinical Hospital, as well as the hospitals in Mykolayiv.

All expenses, logistical and organizational support of cargo delivery to Dnipropetrovsk region were borne by KSG Agro and the Charitable Foundation "Future".

Our courageous warriors are defending our homeland - bravely and to their last breath. And our task in the rear is to fully help them rehabilitate in case of injuries and loss of health, in order to return to the ranks of the Armed Forces as soon as possible. That is why, without hesitation, the Group took on all aspects of cargo delivery – transport, drivers, fuel, customs procedures, etc.

At this time, many individuals and companies in the rest of Europe offer various types of assistance to Ukraine. The Group is actively involved in the dialogue with them, has constant contacts with the Embassy of Ukraine in Switzerland, the Consulate in Milan and other diplomatic missions. Therefore, this humanitarian aid will not be the last, and the Group will continue to help our country receive humanitarian and medical cargo from different parts of Europe and the world.

General

Care about land and people underlies the corporate policy of the Group. This approach is a guarantee of high quality and environmental safety of the Group's products. The Group recognises that in order to improve life and common future, a business must be socially responsible, generating not only profits, but also social capital. The main quality that distinguishes a socially responsible business is the understanding of people's lives on the ground, their problems and opportunities, coupled with real action aimed at their support and assistance.

For several years, the Group undertakes various projects with "The Future", a charitable fund headed by the Group's Chairman of the Board Sergiy Kasianov. In partnership with the fund, within the framework of cooperation of socially responsible business and territorial communities, dozens of development projects have been implemented covering an array of issues:

local infrastructure and utilities
energy conservation projects
social programs in the field of medicine and education
programs of self-employment within the programs of support for veterans and their families
food subsidy programs that are provided to socially vulnerable groups of the population
assistance in attracting investments, grant programs, etc.

Areas of focus

Main areas of focus for the Group's corporate responsibility strategy comprise:

Employees
Support for local communities
Environmental protection and animal welfare
Respect for human rights, anti-corruption and bribery

Employees

The Group pledges to: value each employee; provide equality of opportunity; provide a workplace that is free of discrimination; prohibit forced and child labour; and permit freedom of association and collective bargaining.

The Group pledges to: providing a healthy and safe working environment; building trusting and mutually profitable partnerships with the Group's local communities. This includes the development of projects and initiatives leading to the improvement of local living standards whilst respecting the human rights and requirements of local stakeholders.

The Group strictly observes all statutory rules and guidelines related to occupational safety. The categories of employees potentially affected by health hazards undergo mandatory health checks. They are provided with special food, have the reduced working day and an additional holiday at the Group's expense.

Work safety program is an integral part of in-house training. When mastering new equipment and technologies the Group specifically orders training support from the supplier or from alternative research and development institutions.

The Group has implemented the standards of the learning organization. A system of in-house seminars has been introduced. The Group implements training programs enabling to optimize the accounting and management processes. There are training programs on team building and leadership as well.

Staff policy of the Group is directed towards maintaining and developing the skilled core staff. Qualified employees save their positions during off-season time and are entitled to 100% of the salary during this period. Off-season time is also utilised for further training.

The corporate newspaper "Our Land" is published monthly. It contains materials about the work of the Group, people working in the Group and other local news. On the Group's website news about the activities of the enterprise are posted. And in the Internet space there is a distribution of materials about the work of the Group.

Support for local communities

A vital part of the Group's corporate responsibility initiatives is the program for reconstruction of heating systems in local communities of the Dnipropetrovsk region of Ukraine. Investing in biofuel boiler houses is one of the strategic priorities of the Group.

The pilot project started back in October 2016 at Novopokrovka secondary school, where a new modern boiler-house was put into operation. Currently, as a result of the modernization of five boiler houses in the Tomakivsky, Soloniansky and Apostolivsky districts of rural schools, the total heat generation at the heat supply facilities transferred by the holding for use of pellets almost doubled – from 4.25 MW to 8.35 MW. At the same time, the raw material was produced by the pellet shop in the village of Novopokrovka of Solonyansky district of Dnipropetrovsk region, financed by the Group.

The conversion of boiler-houses to biofuels can significantly save rural budgets. We are talking not only about the energy independence of the Dnipropetrovsk region, but also about the substantial saving of resources for territorial communities. Savings are up to 40% compared to natural gas and coal.

In 2021, the Group helped with the purchase of construction materials and repairs in several churches in the Novopokrovka region. To help in the fight against coronavirus, the Group provided medical institutions in Solonyansky district, Tsarychansky district, Krynychansky district, and Apostolovsky district with antibacterial agents. The Group also financed the purchase of oxygen cylinders for Tsarychansk Hospital, Pidgorodne Hospital, Nyva Trudova Clinic, as well as personal protective equipment kits (masks, gloves, antibacterial agents).

The Group helps finance and organise various local holidays with the local communities, such as the Day of the Elderly, Women's Day, Veteran's Day and others.

For several years, a program of food subsidies in the form of food packages has been operating. So, over the course of 2021 many socially vulnerable families took part in the program. These are single mothers, people with disabilities and other categories. A social store works in the Niva Trudova village where meat is sold at almost its cost. Food packages, along with 200 kg of meat, were also delivered to the soldiers fighting in Donbas.

Among the most significant projects aimed at the development of local infrastructure is the work of the public organization "Svitla Oselya", uniting the work of 86 condominiums and providing them with consulting and legal assistance. With the active participation of the pig-breeding division of KSG Agro, the development strategy of the village of Niva Trudovaya was developed.

Annually, at the end of the year, the holding's enterprises provide assistance in organizing and holding the "Days of the Village", as well as the annual and traditional celebration of the professional holiday of the Day of agricultural workers. KSG Agro holds a festive event where the results of the year are summed up and the foremost workers are awarded. The Group is the main partner in holding the annual festival Kupala Fest. It hosts a competition of folklore groups of the Dnipropetrovsk region.

There is support for sports teams of communities. In Novopokrovka we support the football team. We bought them uniform and took part in the organization of the district tournament. Also, competitions in volleyball, strength sports and other sports events are supported, even though during quarantine they have become less frequent.

Environmental protection and animal welfare

The Group adheres in full to the laws related to protection of the environment, including those which regulate the hazardous substances' emissions. Production entities of the Group employ Labour Protection and Environmental Safety Engineers. It also observes all necessary preventive measures on localization of possible pollution and threats to flora and fauna.

Responsibilities of Environmental Safety Engineers include:

complying with the requirements of environmental legislation;
minimising the use of energy and resources;
minimising the effect of the Group's activities on the local environment and maintaining local biodiversity;
preventing accidents;
minimising spills, pollution and fugitive emissions;
minimising water use and discharges to water;
encouraging the use of recycling and reuse methods; and
reducing greenhouse gas emissions associated with the Group's activities.

The Group periodically undergoes obligatory scheduled inspections by government agencies. No significant violations were reported by the agencies as a result of such inspections in 2021.

In 2020, the Group commissioned a more environmentally-friendly carcass waste incinerator, aimed at further reducing environment emissions. Relevant permits were already obtained.

The Group uses only certified fertilizers and plant protecting agents which are purchased from leading world producers. The Group commits to ensure humane treatment of animals in line with applicable laws, regulations and best practice; and to supply appropriate training to employees to ensure that such commitment is maintained.

Respect for human rights, anti-corruption and bribery

The Group's commitment to respect human rights recognises the rights of children, women, persons with disabilities, local communities, smallholder farmers; as well as the rights of workers, including those working under temporary contracts, migrant workers, and their families.

One of the projects aiming to help disenfranchised people is a food subsidy program.

The project's goal is to provide social assistance to villages and small towns, socially unprotected parts of the population – lonely pensioners, families with many children, other socially disenfranchised groups.

Within the framework of the program are:

special pork sales at lower prices in rural and district stores of Dnipropetrovsk region of Ukraine
provision of food products to the most vulnerable groups of the population
charity help on the Day of the Elderly
assistance to disabled children.

Another project aims to support local business development via a program of population self-employment.

The program is to create conditions for people living in rural areas to earn extra income by organising family businesses for fattening pigs on individual farms. Simultaneously, consulting support and promotion of economic education for the residents of the region are provided. Preparatory work on putting together home mini pig farms has been carried out.

The Group's operations and main business functions are largely centralised, access to the pig breeding farm and the meat processing plant is restricted due to the nature of those production processes, so in terms of managing the risks of bribery or anti-corruption incidents, the Board mostly focuses on relations with the Group's customers and suppliers.

Main instruments employed to mitigate such risks are payment authorisation and new customer and supplier checks. And in order to identify potential threats, the internal audit monitors contract prices for both sales of produce and purchases of main supplies (fertilisers, crop protection products, fuel), as well as subsequent collection of receivables.

Diversity policy

The Group is committed:

To create an environment in which individual differences and the contributions of all team members are recognised and valued.
To create a working environment that promotes dignity and respect for every employee.
To not tolerate any form of intimidation, bullying, or harassment, and to discipline those that breach this policy.
To make training, development, and progression opportunities available to all staff.
To promote equality in the workplace, which the Group believes is good management practice and makes sound business sense.
To encourage anyone who feels they have been subject to discrimination to raise their concerns so we can apply corrective measures.
To encourage employees to treat everyone with dignity and respect.
To regularly review all our employment practices and procedures so that fairness is maintained at all times.

As a socially responsible business, the Group has zero tolerance to discrimination on any grounds, be it age, race, gender, religion, political affiliation or whatever it might be. The Group embraces diversity and ensures fair and equitable treatment of every individual that works for it and their families.

The Group is prepared to hire people with disabilities, people nearing retirement age as well as veterans and refugees from the conflict zone in the east of Ukraine.

The Group is dedicated to encouraging a supportive and inclusive culture amongst the whole workforce. It is within our best interest to promote diversity and eliminate discrimination in the workplace. Our aim is to ensure that all employees and job applicants are given equal opportunity and that our organisation is representative of all sections of society.

Each employee will be respected and valued and able to give their best as a result. This policy reinforces our commitment to providing equality and fairness to all in our employment and not provide less favourable facilities or treatment on the grounds of age, disability, gender, pregnancy and maternity, nationality, religion or belief.

We are opposed to all forms of unlawful and unfair discrimination. All employees, no matter whether they are part-time, full-time, or temporary, will be treated fairly and with respect. When selecting candidates for employment, promotion, training, or any other benefit, it will be on the basis of their aptitude and ability.

All employees will be given help and encouragement to develop their full potential and utilise their unique talents. Therefore, the skills and resources of our organisation will be fully utilised and we will maximise the efficiency of our whole workforce.

Management and Board diversity

Representation of top and middle management by age and gender in 2021 was as follows:

		Total top and middle management staff		Attended professional development programs or other training events in 2021 (*)
Age group	Men	Women	Men	Women
Less than 40	13	7	-	-
41 to 50	11	8	1	2
51 to 60	12	9	1	3
Over 60	2	2	1	-
Total	38	26	3	5

It is the Group's commitment to further increase representation of women in different age groups in top and middle management as well as the Board of Directors.

All of the management staff have higher education. Most of them participate in various professional training programs, both external and internal, as it is the Group's continuing commitment to invest in professional development of its employees.

(*) Due to COVID restrictions, indoor trainings were obviously limited and mostly held online.

In addition to attending professional development programs when available, some employees also choose to study to obtain recognised professional qualifications in their related fields.

Due diligence process

The Board regularly, and at least annually, reviews the staff policy, the diversity policy, and actively monitors the outcomes of the programs coordinated by the Future charitable fund and other similar programs to ensure that equality, diversity, support and fair treatment are continually promoted in the workplace.

This management report for the year ended 31 December 2021 was approved for issue on 13 October 2022.

________________________

Andrii Mudriievskyi Director A

________________________ Eric Tazzieri Director B

KSG Agro S.A. Statement of the Board of Directors and management's responsibility for the preparation and approval of the consolidated financial statements

The following statement is made with a view to clarify responsibilities of management and Board of Directors in relation to the consolidated financial statements of KSG Agro S.A. and its subsidiaries (further – the Group).

The Board of Directors and management of the Group are responsible for the preparation of the consolidated financial statements of the Group as of 31 December 2021 and for the year then ended in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

In preparing the consolidated financial statements, the Board of Directors and management are responsible for:

Selecting suitable accounting principles and applying them consistently;
Making reasonable assumptions and estimates;
Compliance with relevant IFRSs and disclosure of all material departures in the notes to the consolidated financial statements;
Compliance with ESMA Guidelines; and
Preparing the consolidated financial statements on a going concern basis, unless it is inappropriate to presume that the Group will continue in business for the foreseeable future.

The Board of Directors and management are also responsible for:

Designing, implementing and maintaining an effective and sound system of internal controls, throughout the Group;
Maintaining proper accounting records that disclose, with reasonable accuracy at any time, the consolidated financial position of the Group, and which enable them to ensure that the consolidated financial statements of the Group comply with IFRS as adopted by the European Union;
Taking such steps as are reasonably available to them to safeguard the assets of the Group; and
Preventing and detecting fraud and other irregularities.

In accordance with Article 3 (2) (c) of the Law of Luxembourg of 11 January 2008 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market, we declare that, to the best of our knowledge, the consolidated financial statements for the year ended 31 December 2021, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of KSG Agro S.A. and its subsidiaries included in the consolidation taken as a whole. In addition, the management report includes a fair review of the development and performance of the business and the position of KSG Agro S.A. and its subsidiaries included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

These consolidated financial statements as of 31 December 2021 and for the year then ended were approved for issue on 13 October 2022.

STATEMENT OF THE BOARD ________________________

Andrii Mudriievskyi Director A

________________________ Eric Tazzieri Director B

Valuation of biological assets
Why the matter was considered to be one of How the matter was addressed in our the most significant in our audit of the consolidated financial statements of the current period	l audit

-

KSG Agro S.A. Consolidated Statement of Financial Position

as at 31 December 2021

		31 December	31 December
In thousands of US dollars	Note	2021	2020
ASSETS
Non-current assets
Property, plant and equipment	9	15,398	15,568
Long-term biological assets	11	29,688	27,816
Right-of-use assets	10	460	716
Total non-current assets		45,546	44,100

Current assets
Current biological assets	11	9,670	6,306
Inventories and agricultural produce	12	9,250	7,952
Trade receivables	13	3,880	1,890
Other financial assets	14	442	1,132
Taxes recoverable		1,136	854
Prepaid assets		880	610
Cash and cash equivalents		637	108
Total current assets		25,895	18,852
TOTAL ASSETS		71,441	62,952
EQUITY
Share capital	15	150	150
Share premium		37,366	37,366
Treasury shares		(112)	(112)
Retained earnings		(9,149)	(43,156)
Currency translation reserve		(5,341)	(2,074)
Equity attributable to the owners of the Company		22,914	(7,826)
Non-controlling interests	8	126	13,208
TOTAL EQUITY		23,040	5,382

LIABILITIES
Non-current liabilities
Bank and other loans	16	24,944	24,520
Other financial liabilities	17	-	5,941
Lease liabilities	10	798	1,918
Total non-current liabilities		25,742	32,379
Current liabilities
		8,270	10,118
Trade payables	25	7,790	8,514
Other financial liabilities	17
Bank and other loans	16	2,647	2,878
Advances from customers		2,858	2,796
Lease liabilities	10	642	697
Tax liabilities		452	188
Total current liabilities		22,659	25,191
TOTAL LIABILITIES		48,401	57,570
TOTAL LIABILITIES AND EQUITY		71,441	62,952

Approved for issue and signed on behalf of the Board of Directors on 13 October 2022.

________________________

Andrii Mudriievskyi Director A

BALANCE SHEET

________________________ Eric Tazzieri Director B

KSG Agro S.A. Consolidated Statement of Comprehensive Income

for the year ended 31 December 2021

In thousands of US dollars	Note	2021	2020
Revenue	18	30,746	21,338
Gain/(loss) on biological transformation, net	11	7,316	4,434
Cost of sales	18, 19	(25,116)	(19,524)
Gross profit		12,946	6,248
Selling, general and administrative expenses	20	(2,293)	(1,902)
Operating profit		10,653	4,346
Finance income		31	4
Finance expenses	22	(2,610)	(2,071)
Gain/(loss) on foreign currency exchange, net	21	(418)	(4,934)
Gain/(loss) on debt restructuring	21	-	16,397
Gain/(loss) on disposal of subsidiaries	7	16,820	(196)
Other gains and losses	21	(4,421)	(12,063)
Profit before tax		20,055	1,483
Income tax expense	23	(5)	(211)
Profit for the year		20,050	1,272
Other comprehensive income/(loss), net of income tax Currency translation differences Total comprehensive income/(loss) for the year		305 20,355	(807) 465

Profit attributable to:
Owners of the Company		17,311	2,718
Non-controlling interest		2,739	(1,446)
Profit for the year		20,050	1,272
Total comprehensive income/(loss) attributable to:
Owners of the Company		16,547	4,790
Non-controlling interests		3,808	(4,325)
Total comprehensive income/(loss) for the year		20,355	465

Earnings per share
Weighted average number of common shares outstanding, thousand	15	15,020	15,020
Basic and diluted earnings per share, USD	15	1.15	0.18

Approved for issue and signed on behalf of the Board of Directors on 13 October 2022.

________________________

Andrii Mudriievskyi Director A

INCOME STATEMENT

________________________ Eric Tazzieri Director B

KSG Agro S.A.

Consolidated Statement of Cash Flows

for the year ended 31 December 2021

In thousands of US dollars	Note	2021	2020
Cash flow from operating activities
Profit before tax		20,055	1,483
Adjustments for:
Depreciation and amortisation	9, 10	1,625	1,676
(Gain)/loss on biological transformation, net	11	(7,316)	(4,434)
Finance income		(31)	(4)
Finance expenses	22	2,610	2,071
Exchange differences		117	5,700
(Gain)/loss on debt restructuring	21	-	(16,397)
Impairment of inventory	12, 21	(2,198)	4,132
Impairment and write-offs of financial assets and taxes recoverable	21	7,313	6,244
Write-off of financial liabilities	21	(706)	-
Reversal of provision for tax liabilities	21	-	(879)
Impairment and (gain)/loss on disposal of property, plant and equipment	21	8	2,543
(Gain)/loss on disposal of subsidiaries	7	(16,820)	196
Operating cash flow before working capital changes		4,657	2,331
Change in trade receivables and other financial assets		(10,319)	(4,652)
Change in current biological assets		3,309	(5,604)
Change in inventories and agricultural produce		990	3,910
Change in tax assets and liabilities		157	(1,126)
Change in trade payables and other financial liabilities		9,922	8,083
Cash generated from operations		8,016	2,942
Interest paid on loans and leases	16, 10	(2,187)	(1,426)
Income tax paid		(35)	(13)
Cash generated from / (used in) operating activities		5,794	1,503

Cash flow from investing activities Acquisition and disposal of property, plant and equipment	9, 21	(1,274)	(2,712)

Acquisition of long-term biological assets Interest received		(480) 31	(26) 4
Acquisition of non-controlling interests	7, 8	(2,295)	-
Disposal of subsidiaries, net of cash disposed	7	-	-
Cash generated from / (used in) investing activities		(4,018)	(2,734)

Cash flow from financing activities		7,388	8,805
Proceeds from bank and other loans	16	(7,842)	(7,724)
Repayment of bank and other loans	16	(797)	-
Repayment of leases	10
Cash generated from / (used in) financing activities		(1,251)	1,081
Net increase / (decrease) in cash and cash equivalents		525	(150)
Cash and cash equivalents at 1 January		108	299
Effect of exchange rate differences on cash and cash equivalents		4	(41)
Cash and cash equivalents at 31 December		637	108

Approved for issue and signed on behalf of the Board of Directors on 13 October 2022.

________________________

Andrii Mudriievskyi Director A

CASH FLOW

________________________ Eric Tazzieri Director B

KSG Agro S.A. Consolidated Statement of Changes in Equity

for the year ended 31 December 2021

		Attributable to owners of the Company
In thousands of US dollars	Note	Share capital	Share premium	Treasury shares	Currency translation reserve	Retained earnings	Total attributable to owners of the Company	Non controlling interest	Total equity
Balance as at 1 January 2020		150	37,366	(112)	(5,714)	(37,901)	(6,211)	17,533	11,322
Profit for the year Other comprehensive income/(loss) for the year		- -	- -	- -	- 2,072	2,718 -	2,718 2,072	(1,446) (2,879)	1,272 (807)
Total comprehensive income/(loss) for the year		-	-	-	2,072	2,718	4,790	(4,325)	465
Disposal of subsidiaries	7	-	-	-	1,568	-	1,568	-	1,568
Acquisition of subsidiaries	7	-	-	-	-	(7,973)	(7,973)	-	(7,973)
Balance as at 31 December 2020		150	37,366	(112)	(2,074)	(43,156)	(7,826)	13,208	5,382
Profit for the year Other comprehensive income/(loss) for the year		- -	- -	- -	- (764)	17,311 -	17,311 (764)	2,739 1,069	20,050 305
Total comprehensive income/(loss) for the year		-	-	-	(764)	17,311	16,547	3,808	20,355
Disposal of subsidiaries	7	-	-	-	(402)	-	(402)	-	(402)
Acquisition of non-controlling interests	7, 8	-	-	-	(2,101)	16,696	14,595	(16,890)	(2,295)
Balance as at 31 December 2021 EQUITY		150	37,366	(112)	(5,341)	(9,149)	22,914	126	23,040

Approved for issue and signed on behalf of the Board of Directors on 13 October 2022.

________________________

Andrii Mudriievskyi Director A

1. Corporate Information

KSG Agro S.A. (the "Company") was incorporated under the name Borquest S.A. on 16 November 2010 as a "Société Anonyme" under Luxembourg Company Law for an unlimited period. On 08 March 2011 the Company's name was changed to KSG Agro S.A.

The registered office of the Company is at 24, rue Astrid, L-1143 Luxembourg and the Company number with the Registre de Commerce is B 156 864.

The Company and its subsidiaries (together referred to as the "Group") produces, stores, processes and sells agricultural products, mostly crops, pork and pigs in live weight, and its business activities are conducted mainly in Ukraine.

Average number of staff employed by the Group in 2021 was 338, of which 64 were top and middle management and 274 were full-time employees (2020: 45 management and 305 employees).

2. Group Structure

The Company's immediate parent is OLBIS Investments LTD S.A., registered in Panama, and the ultimate controlling party is Mr. Sergiy Kasianov. OLBIS Investments LTD S.A. holds 57.96% of the issued share capital of the Company, 0.21% of shares are treasury shares and the remaining 41.83% are free float shares listed on the Warsaw Stock Exchange.

As at 31 December 2020, the stake of OLBIS Investments LTD. S.A. was 64.62%, but it decreased due to the sale of 1 million shares in August 2021 (Note 15).

Principal activities of the entities forming the Group and the Company's effective ownership interest in these entities as at 31 December 2021 and 2020 were as follows:

		Country of	Effective ownership ratio, %
Entity	Principal activity registration		31 December 2021	31 December 2020
KSG Agro S.A.	Holding company	Luxembourg
KSG Agricultural and Industrial Holding LTD	Subholding company	Cyprus	100%	100%
KSG Agro Polska (i)	In liquidation	Poland	100%	100%
KSG Energy Group LTD (i)	In liquidation	Cyprus	50%	50%
Parisifia Trading LTD (Note 7)	Intermediate holding company	Cyprus	100%	50%
Abbondanza SA	Trade of agricultural products	Switzerland	50%	50%
KSG Dnipro LLC	Crop farming	Ukraine	100%	100%
Agro Golden LLC	Crop farming	Ukraine	100%	100%
Souz-3 LLC (Note 7)	Disposed	Ukraine	-	100%
Agro-Trade House Dniprovsky LLC	Dormant	Ukraine	100%	100%
SPE Promvok LLC	Pig breeding	Ukraine	100%	100%
Scorpio Agro LLC	Dormant	Ukraine	100%	100%
Agrofirm Vesna LLC (Note 7)	Disposed	Ukraine	-	100%
Trade House of the Ukrainian Agroindustrial Holding LLC (Note 7)	Disposed	Ukraine	-	100%
Hlebna Liga LLC	Dormant	Ukraine		100%
Enterprise #2 of Ukrainian Agricultural and Industrial Holding LLC	Dormant	Ukraine	100%	100%
KSG Trade House LTD (Note 7)	Disposed	Ukraine	-	100%
Askoninteks LLC (Note 7)	Disposed	Ukraine	-	100%
Agroplaza LLC	Intermediate holding company	Ukraine	100%	50%
Kolosyste LLC	Dormant	Ukraine	100%	50%
Stepove LLC	Dormant	Ukraine	100%	50%
Dzherelo LLC	Dormant	Ukraine	100%	50%
Rantye LLC	Pig breeding	Ukraine	100%	50%
Strong-Invest LLC	Pig breeding	Ukraine	100%	50%
Modern Agricultural Investments LLC	Pig breeding	Ukraine	100%	50%

KSG Agro S.A. Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

(All amounts in thousands of US dollars, unless otherwise stated)

Entity			Effective ownership ratio, %
	Principal activity	Country of registration	31 December 2021	31 December 2020
Pererobnyk PE LLC (ii)	Disposed	Ukraine	-	25%
Ukrzernoprom - Prudy LLC (iii)	Dormant	Ukraine	100%	50%
Ukrzernoprom - Uyutne LLC (iii)	Dormant	Ukraine	100%	50%
Ukrzernoprom - Kirovske LLC (iii)	Dormant	Ukraine	100%	50%
Ukrzernoprom - Yelizavetove LLC (iii)	Dormant	Ukraine	100%	50%

(i) Not consolidated due to immateriality.

(ii) In 2021, the Group transferred its 25% share in Pererobnyk PE LLC to a third party for a nominal consideration. The Group had no operating control over the entity, previously accounted for under the equity method, but did not separately present it in the consolidated financial statements due to its immateriality.

(iii) Ukrzernoprom entities are located in Crimea and are not consolidated, as the Group has no operating control over them since October 2014. Carrying values of the associated investments had been written down to zero.

The Group consolidates all other subsidiaries, including those where it owns less than 51 per cent of the equity shares. Based on the contractual arrangements between the Group and other investors, the Group has the power to appoint and remove the majority of the board of directors of these subsidiaries. Relevant activities of the subsidiaries are determined by their boards of directors based on simple majority votes. Therefore, management of the Group concluded that the Group has control over the subsidiaries and the subsidiaries are consolidated in these financial statements.

3. Operating Environment and Going Concern

In determining the appropriate basis for preparation of the consolidated financial statements, the Board of Directors and management are required to consider whether the Group can continue in business for the foreseeable future. Those considerations are presented below.

KEY RISKS AND UNCERTAINTIES

Financial performance of the Group is naturally dependent upon weather conditions in areas of operation and the wider economic environment of Ukraine. To mitigate these risks, the Group continues to implement its strategy of focusing on more profitable segments, crop farming and pig breeding, and of restructuring its old and overdue liabilities.

As at the date these consolidated financial statements are being issued, management are not aware of any uncertainties which might jeopardize going concern, other than the outcome of the ongoing Russian Invasion, its impact on the security of the Group's assets and its long-lasting effects on Ukrainian economy.

RISKS AND UNCERTAINTIES: RUSSIA-UKRAINE WAR

The Group's operations are predominantly in Ukraine. Ukraine has been engaged in a lengthy war with Russia since as early as February 2014, a war still ongoing as at the date these consolidated financial statements are being issued.

2014-2021: Euromaidan, Annexation of Crimea, and the War in Donbas

In February 2014, after a series of anti-government protests (called 'Euromaidan') swept the country, the President of Ukraine fled, and the new Interim Government had been formed. In March 2014, using this political instability, Russia annexed the Crimean Peninsula, and then provoked and began actively supporting a continuing armed conflict between the Ukrainian army and Russian-backed separatists in the Donbas region of Ukraine. In May 2014, a new, pro-European, President of Ukraine was elected, and the country slowly started to recover.

The loss of Crimea, the conflict in Donbas, all resulted in radical market shifts for key export-oriented sectors. The Ukrainian economy suffered a deep slump throughout the whole of 2014 – 2016. As part of the government's stabilisation measures, the National Bank of Ukraine ("NBU") imposed numerous restrictions, including those on international money transfers. The Group lost a substantial chunk of its assets as a result of Russia's annexation of Crimea in 2014 and NBU's restrictions imposed significant difficulties with timely repayment of loans to the Group's international creditors.

Most of these loans also became immediately due, and so the Group had to negotiate restructuring of the loans to be able to make payments in the new conditions. Restructuring eventually started in 2017, when a letter of intent was signed with the Group's largest creditors to confirm preliminary restructuring terms. By summer of 2020, the Group had successfully settled all of its major loans.

By summer of 2020 the economy also mostly recovered. Overall macroeconomic stabilisation was evidenced by a rise in domestic investment, revival in household consumption, increase in agricultural and industrial production, construction activity and improved environment on external markets. Consumer price inflation has slowed down to, and was expected to remain around, 5% in future years.

As of 23 February 2022, political and economic situation in Ukraine remained relatively stable.

2022: Russian Invasion

On 24 February 2022, Russia started a full-scale invasion of Ukraine. After an initial series of air strikes, which targeted key military infrastructure, Russian ground troops moved in across the whole length of the state border between Russia and Ukraine (north-east and east), as well as south from the annexed Crimea.

Facing heavy resistance from both the regular Ukrainian Armed Forces and government-supported Territorial Defence Forces (which include civilians), Russian ground troops failed to gain a significant foothold in Ukraine fast enough and, after two weeks, their ground progress has essentially stalled. For details refer to Note 27.

Due to the slow progress of the Russian troops, and because the Group's locations are in the very center of Ukraine, management currently estimates the risk that any fighting will reach the Group's pig farm to be low. The Group has also set up a backup office in Chernivtsi, a city close to the western border of Ukraine and further away from the Russian aggression than the Group's main office in Dnipro.

Management's Assessment of the Impact of the War

As at the date these consolidated financial statements are being issued, the War has been going on for 8 years already. But even amidst this war, Ukraine's economy and army have only been getting stronger. From 2016 and onwards, the exchange rates for the Ukraine's national currency Hryvnya have stabilised (data below is from NBU):

	2021	2020	2019	2018	2017	2016	2015	2014	2013
UAH for 1 EUR	32.3	30.8	28.9	32.1	30.1	28.3	24.2	15.7	10.6
UAH for 1 USD	27.3	27.0	25.8	27.2	26.6	25.6	21.8	11.9	7.9

And key macro-economic indicators have also improved (data below is from World Bank):

	2021	2020	2019	2018	2017	2016	2015	2014	2013
GDP, USD billion	200	156	154	131	112	93	91	134	190
Inflation, %	n/a	2.7	7.8	10.9	14.4	13.9	48.6	12.1	(0.2)

All of the Group's major problems in the past 8 years were the result of the ongoing war, but despite the difficulties, the Group still managed to overcome the odds and continues to do so.

Table 1. The Group's total obligations under bank and other loans as at 31 December over the years were as follows:

in USD million	2021	2020	2019	2018	2017	2016	2015	2014	2013
Non-current portion	24.9	24.5	17.5	20.5	22.5	20.9	17.5	11.1	43.6
Current portion	2.7	2.9	11.8	23.8	24.7	24.4	28.9	55.6	59.8
Total bank and other loans	27.6	27.4	29.3	44.3	47.2	45.3	46.4	66.7	103.4

Table 2. Improvements in the Group's working capital as at 31 December over the years were as follows:

in USD million	2021	2020	2019	2018	2017	2016	2015	2014	2013
Current Assets	25.9	18.9	20.4	22.4	17.5	13.9	20.3	20.6	88.0
Current Liabilities	(22.7)	(25.2)	(43.9)	(49.1)	(42.1)	(41.8)	(53.5)	(82.2)	(112.8)
Working Capital	3.2	(6.3)	(23.5)	(26.7)	(24.6)	(27.9)	(33.2)	(61.6)	(24.8)

Table 3. The Group's annual revenue and EBITDA over the years were as follows:

in USD million	2021	2020	2019	2018	2017	2016	2015	2014	2013
Revenue	30.7	21.3	23.9	28.3	23.2	20.9	19.3	26.3	58.0
EBITDA	12.3	6.0	9.3	2.9	8.3	11.3	16.4	6.8	2.0

The above indicators suggest that the Group has an obvious track record of persevering through adversity. And, from the improvement in macro-economic indicators, we may further derive that other Ukrainian businesses exhibit the same trait. A trait that seems to be in the DNA of Ukrainian people, serving as a testament that the victory will be eventually ours.

Ukraine already received overwhelming international support, both politically and economically. In addition to receiving donations from sympathisers (major financial institutions and governments) across the globe, the Government of Ukraine also issued several rounds of war bonds to finance its military. Other financial aid packages from abroad are on their way. This aid should help the Government to stabilise and more or less secure its pre-Invasion financial position, as well as keep key macro-economic projections at their pre-Invasion levels.

For regions of Ukraine that are further away from the fighting, the current crisis feels in a way just like the continuation of COVID, people got used to movement restrictions and business lockdowns.

And, drawing further comparisons with COVID, we believe that the expected financial aid packages would serve as the much-needed vaccine booster shot, increasing the country's financial immunity against the devastating effects of a war.

A key priority, both for the Group and the country as a whole, was the spring sowing campaign. The Group itself was fully prepared: it had sufficient reserves of seeds, fuel, and fertiliser. Additionally, since the Russian Invasion started, TASCOMBANK, the Group's main lender, had already provided two tranches of UAH 40 million and UAH 60 million, respectively, (a total equivalent of USD 3.4 million of additional funds), to finance any cash gaps that the Group might incur during the sowing campaign. On a larger scale, smaller agricultural producers in Ukraine were receiving financial support from the Government; and the Government already estimates such support to be effective.

During the last several months, the prices for both crops and pork have increased substantially.

The recent droughts in various parts of Africa, a region which already greatly depends on imports of wheat from Russia and Ukraine, are projected to increase the price of wheat even higher. According to the United Nations, Russia and Ukraine produce more than a quarter of global wheat exports.

As a result, both the July harvest of winter crops, as well as the planned harvest of summer crops due around September, in addition to constant supply of pork, should maintain the Group's profitability at a sufficient level to both support its operational needs, as well as funding any scheduled repairs and maintenance of equipment, for at least the next twelve months from the date these consolidated financial statements are being issued.

RISKS AND UNCERTAINTIES: LONG-TERM FINANCING AND CASH GAPS

Most of the old loans were denominated in USD and EUR, while the Group's main revenue streams are in UAH. The new loans attracted from TASCOMBANK are, therefore, borrowed directly by the Group's Ukrainian operating subsidiaries, and are denominated in UAH.

According to management's five-year projections, the Group is expected to generate sufficient cash flow from operations to ensure overall repayment of the loans both in the long-term and in the next twelve-month period, while the unutilised loan capacity will be used to cover the occasional cash gaps. For their projections, where practical, management adopted a more conservative scenario, in order to account for various possible adverse effects of the Russian Invasion.

RISKS AND UNCERTAINTIES: CORONAVIRUS PANDEMIC

The Group created the headquarters for countering the coronavirus at its pig breeding complex. Its functions include providing practical assistance for the prevention of coronavirus infection to employees of the pig complex, their families, all villagers during the quarantine period, as well as providing information and psychological support.

Special attention is paid to the de-concentration of employees at production sites. All personnel of the pig complex are provided with protective masks, without which transportation and passage through the sanitary inspection room are impossible.

Employees with clinical signs of infection (fever, cough, malaise, etc.) are not allowed to work. Every day, before the start of the working day, a clinical examination of the staff is carried out.

DEVELOPMENT STRATEGY: CONTINUING FOCUS ON CROP FARMING AND PIG BREEDING

The Group continues to implement its simple strategy of focusing on three winter crops, two summer crops and pigs of a single breed. The Group's products, being basic food products, are always in demand, and remain in especially high demand in 2022, during war time.

Segment revenue, in USD million	2021	2020	Y-O-Y increase in USD-equivalent	Y-O-Y increase in contract currency
Crop Farming	18.3	8.4	118%	120%
Pig Breeding	11.2	10.3	9%	10%

Current year harvest was exceptionally good compared to the previous year:

Crops harvested, in tonnes	Season	2021	2020
Wheat	Winter	31,021	17,952
Barley	Winter	8,561	4,865
Rapeseed	Winter	760	2,734
Sunflower	Summer	18,210	11,745
Corn	Summer	9,334	2,744
Total		67,886	40,040

Although the weather conditions were favourable to other agricultural producers as well, higher overall production of crops in Ukraine did not affect the local demand for the Group. For next year, an area of 6 thousand hectares is currently under winter crops and is expected to yield a total of 18.3 thousand tonnes of wheat, barley and rapeseed at harvest.

As for pig breeding, pig production and sales were also in line with the previous year:

Marketable Pigs, in units	2021	2020
As at 1 January	41,416	38,420
Farrow	108,158	113,634
Sales	(105,515)	(109,958)
Transfers to/from nucleus herd, net	(358)	(680)
As at 31 December	43,701	41,416

Overall, operational performance is considered satisfactory. At the date these financial statements are being issued, management do not observe any internal or external indicators of events or circumstances which might hinder or otherwise impede the Group's progress in achieving its short-term operational goals.

DEVELOPMENT STRATEGY: IMPROVING KEY FINANCIAL RATIOS

Since September 2020, management have focused their efforts on further improving the Group's key financial ratios, specifically its negative net current assets and negative shareholders equity. Both goals were achieved primarily through disposal of several subsidiaries in April of 2021, as disclosed in Note 7.

Improvements in the Group's net current assets (i.e. working capital) over the years are presented in Table 2 above. The adjusted working capital in 2021 as compared to 2020 was as follows:

in USD million	As at 31 December 2021	As at 31 December 2020
Current Assets minus Current Liabilities	3.2	(6.3)
less: Other financial assets	(0.4)	(1.1)
less: Other financial liabilities	7.8	8.5
Adjusted Working Capital	10.6	1.1

IN CONCLUSION

The Board of Directors concluded that, based on the above analysis, and except for the uncertainty regarding the outcome of the ongoing Russian Invasion, its impact on the security of the Group's assets and its long-lasting effects on Ukrainian economy, there is reasonable expectation that the Group can continue as a going concern for the next twelve months from the date these financial statements are being issued. Therefore, these consolidated financial statements have been prepared on a going concern basis.

4. Adoption of New or Revised Standards and Interpretations

Accounting policies, amendments and interpretations endorsed by the European Union applicable from 1 January 2021 with effects on the Group Consolidated financial statements as at 31 December 2021.

The Group has adopted the following new and amended IFRS Standards and Interpretations that are effective for annual periods beginning on or after 1 January 2021:

Amendment to IFRS 16 'Leases' Covid-19 related rent concessions beyond 30 June 2021;
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform Phase 2;

The adoption of the above Standards and Interpretations has not had any material effect on the disclosures or on the amounts reported in these consolidated financial statements. Management have also reviewed the amendments to IFRS Standards and Interpretations that would be effective in future periods and concluded that adoption of those amendments in future periods is not expected to have a material effect on the disclosures or on the amounts reported in the Group's consolidated financial statements of future periods.

Accounting policies, amendments and interpretations endorsed by the European Union which will be applicable from 1 January 2022 or later and which have not been adopted early by the Group.

Below are the accounting standards, amendments and interpretations issued by the IASB and endorsed by the European Union for mandatory adoption in years beginning on or after 1 January 2022 that the Group did not choose to apply early in the 2021 financial statements:

Amendment to IFRS 3 "Business Combinations for the purpose of updating the reference in IFRS 3 to the revised version of the Conceptual Framework, with no material changes to the accounting standard;
Amendments to IAS 16 Property, Plant and Equipment, to prohibit the deduction from the cost of an item of property, plant and equipment any proceeds from the sale of items produced during the asset's testing phase. Such proceeds and the related costs will instead be recognized in profit or loss:
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, to clarify that all costs relating directly to a contract must be considered when determining whether the contract is onerous. Therefore, an entity should consider both incremental costs (e.g. materials) as well as any costs it cannot avoid because it is a party to the contract (e.g. the depreciation of machinery used to fulfill the contract):
Annual Improvements 2018-2020: the improvements concern IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture, and the Illustrative Examples of IFRS 16 Leases.

Accounting standards, amendments and interpretations published by the IASB but not yet endorsed by the European Union:

On 23 January 2020, the IASB published "Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current". These clarifying amendments will come into force on 1 January 2023:
On 12 February 2021 the IASB published two amendments: "Disclosure of Accounting Policies Amendments to IAS 1 and IFRS Practice Statement 2" and "Definition of Accounting Estimates - Amendments to IAS 8". The amendments improve the disclosure of accounting policies in order to provide more useful information to investors and to other primary users of financial statements, and help companies distinguish changes in accounting estimates from changes in accounting policies. They will be applicable as of 1 January 2023.

The standards listed herein are not applicable since they have not yet been endorsed by the European Union, which, during the endorsement process, may adopt only partially these standards or not adopt them at all.

5. Summary of Significant Accounting Policies

Basis of preparation

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 interpretations of IFRS issued by International Financial Reporting Interpretations Committee ("IFRIC") and as adopted by the European Union. These consolidated financial statements have been prepared under the historical cost convention, as modified by the recognition of biological assets and agricultural produce based on fair value less costs to sell.

These consolidated financial statements are presented in thousands of US Dollars ("USD"), unless otherwise stated.

Consolidated financial statements

Group recognises control over the subsidiary when the following criteria are met:

power over the investee;
exposure, or rights, to variable returns from its involvement with the investee;
the ability to use its power over the investee to affect the amount of the Group's returns.

Subsidiaries are consolidated from the date on which control is transferred to the Group (acquisition date) and are deconsolidated from the date on which control ceases.

The acquisition method of accounting is used to account for the acquisition of subsidiaries. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest.

The Group measures non-controlling interest that represents present ownership interest and entitles the holder to a proportionate share of net assets in the event of liquidation on a transaction by transaction basis, either at: (a) fair value, or (b) the non-controlling interest's proportionate share of net assets of the acquiree. Non-controlling interests that are not present ownership interests are measured at fair value.

Goodwill is measured by deducting the net assets of the acquiree from the aggregate of the consideration transferred for the acquiree, the amount of non-controlling interest in the acquiree and the fair value of an interest in the acquiree held immediately before the acquisition date. Any negative amount ("negative goodwill") is recognised in profit or loss after management reassesses whether it identified all the assets acquired and all liabilities and contingent liabilities assumed and reviews the appropriateness of their measurement.

The consideration transferred for the acquiree is measured at the fair value of the assets given up, equity instruments issued and liabilities incurred or assumed, including fair value of assets or liabilities from contingent consideration arrangements but excludes acquisition related costs such as advisory, legal, valuation and similar professional services. Transaction costs related to the acquisition and incurred for issuing equity instruments are deducted from equity and all other transaction costs associated with the acquisition are expensed.

Intercompany transactions, balances and unrealised gains on transactions between Group subsidiaries are eliminated. Unrealised losses are also eliminated unless the cost cannot be recovered. The Company and all of its subsidiaries use uniform accounting policies consistent with the Group's policies.

Non-controlling interest is that part of the net results and of the equity of a subsidiary attributable to interests which are not owned, directly or indirectly, by the Group. Non-controlling interest is recorded as a separate component of the Group's equity.

Goodwill. Goodwill on acquisitions of subsidiaries is presented within intangible assets in the consolidated statement of financial position. It is carried at cost less accumulated impairment, if any. The Group tests goodwill for impairment at least annually and whenever there are indications that goodwill may be impaired. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cashgenerating units that are expected to benefit from the business from which the goodwill arose. Such units or groups of units represent the lowest level at which the Group monitors goodwill and are not larger than an operating segment.

Share capital. Ordinary shares are classified as equity. Share premium is the difference between the fair value of consideration received for the issue of shares and the nominal value of shares. The share premium account can only be used for limited purposes, which do not include distribution of dividends, and is otherwise subject to the provisions of Luxembourg legislation on reduction of share capital.

Property, plant and equipment. Property, plant and equipment items are stated at cost less accumulated depreciation and, where applicable, accumulated impairment. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects, if the recognition criteria are met. All repair and maintenance costs are expensed as incurred. An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal.

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 profit or loss when the asset is derecognised.

The assets residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.

Construction-in-progress represents the cost of properties, plant and equipment which have not yet been completed less any accumulated impairment. This includes cost of construction works, cost of plant and equipment and other direct costs.

The Group does not own land, its agricultural land is leased under long-term lease agreements, mostly with individuals.

At each end of each reporting period management assesses whether there is any indication of impairment of property, plant and equipment. If any such indication exists, management estimates the recoverable amount, which is determined as the higher of an asset's fair value less costs to sell and its value in use. The carrying amount is reduced to the recoverable amount and the impairment is recognised in profit or loss. An impairment recognised for an asset in prior years is reversed where appropriate if there has been a change in the estimates used to determine the asset's value in use or fair value less costs to sell.

Depreciation. Depreciation of property, plant and equipment is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives:

	Useful lives in years
Buildings and structures	5-30
Agricultural equipment	3-15
Vehicles and office equipment	3-17

The residual value of an asset is the estimated amount that the Group would currently obtain from disposal of the asset less the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

Borrowing costs. General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Leases. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

the contract involves the use of an identified asset this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;
the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
the Group has the right to direct the use of the asset. The Group has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Group has the right to direct the use of the asset if either:
- o the Group has the right to operate the asset; or
- o the Group designed the asset in a way that predetermines how and for what purpose it will be used.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

(i) As a lessee

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable under a residual value guarantee; and
the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(ii) As a lessor

The Group did not act as a lessor in 2020 and 2021, but when it does, it determines at lease inception whether each lease is a finance lease or an operating lease.

Then, to classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease. If an arrangement contains lease and non-lease components, the Group applies IFRS 15 to allocate the consideration in the contract.

Biological assets. Biological assets include crops and swines and are measured at fair value less costs to sell.

Crops. The fair value of crops growing in the fields is determined by using valuation techniques, as there is no active market for winter crops or summer crops of the same physical condition. Fair value of crops is estimated as the present value of anticipated future cash flows for each type of crop and is based on the area sown, costs to date and the assessments regarding expected crop yields on harvest, time of harvest, future cultivation and harvest costs, and selling prices. The discount rate is determined by reference to weighted-average cost of capital based on the Group's risk profile.

Swines. The fair value of productive swines (sows) is determined by using valuation techniques, as there is no active market for sows of the same physical condition, such as weight, age and breed. Fair value of sows is based on expected litter of piglets (or "farrow"), expected volume of meat at the date of slaughter, expected meat prices, average expected productive lives of swines and future production costs. The discount rate is determined by reference to weighted-average cost of capital based on the Group's risk profile. The fair value of marketable swines (pigs and piglets) is determined with reference to local market prices for pigs and piglets sold in live weight. Local prices are used, as marketable swines are only sold domestically.

A gain or loss arising on initial recognition of a biological asset at fair value less costs to sell and from a change in fair value less costs to sell at each subsequent reporting date is recognised in profit or loss in the period in which it arises.

Biological assets are classified as current or non-current depending on the expected pattern of consumption of economic benefits embodied in those biological assets. Sows and boars are classified as non-current while marketable pigs and piglets, and winter and summer crops are classified as current biological assets.

Agricultural produce. Agricultural produce harvested from the Group's biological assets is measured at its fair value less estimated costs to sell at the date of harvest. This measurement is considered the cost of agricultural produce at that time. Agricultural produce is adjusted down to net realisable value in case it falls below cost.

Inventories. Inventories are recorded at the lower of cost and net realisable value. Cost of inventory is determined on the first in first out basis. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and costs to sell.

Where land cultivation works are performed on land plots which are "unsown" (i.e. do not contain biological assets), the costs of such works are capitalised as part of inventories as 'land cultivation and harvesting' until the seeds are planted, at which point the accumulated costs are reclassified as production costs of the related biological assets and remeasured at fair value. The cost of work in progress comprises fuel and other raw materials, direct labour, depreciation and amortization, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs.

Prepaid assets. Prepaid assets are carried at cost less allowance for impairment. A prepaid asset is classified as noncurrent 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.

Prepayments made to acquire assets are transferred to the carrying amount of the asset once the Group has obtained control of the asset and it is probable that future economic benefits associated with the asset will flow to the Group. Other prepayments are recognised in profit or loss when the services relating to the prepayment have been received. If there is an indication that the assets or services relating to a prepayment will not be received, the carrying value of the prepayment is written down accordingly and a corresponding impairment is recognised in profit or loss.

Income taxes. Current income tax charge is calculated on the basis of tax laws enacted or substantively enacted at the reporting date in the countries where the Group's subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

The income tax charge comprises current tax and deferred tax and is recognised in profit or loss for the year, except if it is recognised in other comprehensive income or directly in equity because it relates to transactions that are also recognised, in the same or a different period, in other comprehensive income or directly in equity.

Current tax is the amount expected to be paid to, or recovered from, the taxation authorities in respect of taxable profits or losses for the current and prior periods. Taxes other than taxes on income are recognised as administrative expenses.

Deferred income tax is provided using the balance sheet liability method for tax loss carry forwards and temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In accordance with the initial recognition exemption, deferred taxes are not recorded for temporary differences on initial recognition of an asset or a liability in a transaction other than a business combination if the transaction, when initially recorded, affects neither accounting nor taxable profit. Deferred tax liabilities are not recorded for temporary differences on initial recognition of goodwill, and subsequently for goodwill which is not deductible for tax purposes.

Deferred tax balances are measured at tax rates enacted or substantively enacted at the end of the reporting period, which are expected to apply to the period when the temporary differences will reverse or the tax loss carry forwards will be utilised. Deferred tax assets and liabilities are netted only within the individual entities of the Group. Deferred tax assets for deductible temporary differences and tax loss carry forwards are recorded only to the extent that it is probable that future taxable profit will be available against which the deductions can be utilised.

Special tax for agricultural producers. In Ukraine, entities engaged in the production, processing and sale of agricultural products may opt to pay a special Fixed Agricultural Tax ("FAT"), as defined in the Tax Code of Ukraine, in lieu of corporate income tax, land tax, duties for special use of water objects, municipal tax, vehicle tax, duties for geological survey works and duties for trade patents if the revenues from sale of their self-grown agricultural products constitute not less than 75% of their total gross revenues. The amount of FAT is assessed at 0.81% on the deemed value of the land plots owned or leased by the entity (as determined by the relevant State authorities). The Group's main operating entities KSG Dnipro LLC, Agro Golden LLC, Rantye LLC, Strong-Invest LLC are FAT payers.

Value added tax. In Ukraine, Value Added Tax ("VAT") is levied at two rates: 20% on sales and imports of goods within the country, works and services and 0% on the export of goods and provision of works or services to be used outside Ukraine.

Output VAT on the sale of goods and services is accounted for on the date the goods/services are delivered to a customer or the date the payment is received from the customer, whichever is earlier. Input VAT is accounted for as follows: entitlement to an input tax credit for purchases arises when VAT invoice is received, which is issued on the earlier of the date of payment to the supplier or the date on which the goods/services are received, or entitlement to an input tax credit for imported goods or services arises on the date the tax is paid.

VAT related to sales and purchases is recognised in the statement of financial position on a net basis and disclosed as an asset or a liability to the extent it has been declared in VAT returns. Prepayments to suppliers and advances from customers are disclosed in these consolidated financial statements net of the respective VAT balances as it is expected that such balances will be settled by delivery of the underlying product or service.

The Group's subsidiaries involved in the production and sale of agricultural produce and that meet certain other criteria are subject to a privileged VAT regime. For such qualifying entities, the net VAT payable is not transferred to the State authorities, but is retained in the business for use in agricultural production. Such net VAT liabilities are credited to profit and loss as 'Income from government grants' when significant.

Financial instruments

Key measurement terms

Depending on their classification financial instruments are carried at fair value or amortised cost as described below.

Fair value is 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.

Valuation techniques such as discounted cash flow models or models based on recent arm's length transactions or consideration of financial data of the investees are used to measure at fair value certain financial instruments for which external market pricing information is not available. Valuation techniques may require assumptions not supported by observable market data. Disclosures are made in these financial statements if changing any such assumptions to a reasonably possible alternative would result in significantly different profit, income, total assets or total liabilities.

Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial instrument. An incremental cost is one that would not have been incurred if the transaction had not taken place.

Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisors, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include debt premiums or discounts, financing costs or internal administrative or holding costs.

Amortised cost is the amount at which the financial instrument was recognised at initial recognition less any principal repayments, plus accrued interest, and for financial assets less any write-down for incurred impairment. Accrued interest includes amortisation of transaction costs deferred at initial recognition and of any premium or discount to maturity amount using the effective interest method. Accrued interest income and accrued interest expense, including both accrued coupon and amortised discount or premium (including fees deferred at origination, if any), are not presented separately and are included in the carrying values of related items in the statement of financial position.

The effective interest method is a method of allocating interest income or interest expense over the relevant period, so as to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts (excluding future credit losses) through the expected life of the financial instrument or a shorter period, if appropriate, to the net carrying amount of the financial instrument. The effective interest rate discounts cash flows of variable interest instruments to the next interest repricing date, except for the premium or discount which reflects the credit spread over the floating rate specified in the instrument, or other variables that are not reset to market rates. Such premiums or discounts are amortised over the whole expected life of the instrument. The present value calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate.

Initial recognition of financial instruments. Derivatives are initially recorded at fair value. All other financial instruments are initially recorded at fair value plus transaction costs. Fair value at initial recognition is best evidenced by the transaction price. A gain or loss on initial recognition is only recorded if there is a difference between fair value and transaction price which can be evidenced by other observable current market transactions in the same instrument or by a valuation technique whose inputs include only data from observable markets.

Derecognition of financial assets. The Group derecognises financial assets when (a) the assets are redeemed or the rights to cash flows from the assets otherwise expire or (b) the Group has transferred the rights to the cash flows from the financial assets or entered into a qualifying pass-through arrangement while (i) also transferring substantially all risks and rewards of ownership of the assets or (ii) neither transferring nor retaining substantially all risks and rewards of ownership but not retaining control. Control is retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated third party without needing to impose additional restrictions on the sale.

Classification of financial assets. The Group classifies all of its financial assets as loans and receivables. Loans and receivables are unquoted non-derivative financial assets with fixed or determinable payments other than those that the Group intends to sell in the near term. Loans and receivables are accounted for at amortised cost using the effective interest method, net of allowance for impairment after their initial evaluation. Loans and receivables that mature more than 12 months after the reporting date are classified as non-current assets. The Group's financial assets include 'trade receivables', 'cash and cash equivalents' and 'other financial assets'.

Classification of financial liabilities. All of the Group's financial liabilities are subsequently measured at amortised cost using the effective interest method. Financial liabilities that mature more than 12 months after the reporting date are classified as non-current liabilities. The Group's financial liabilities include 'bank and other loans', 'lease liabilities', 'trade payables' and 'other financial liabilities'.

Trade receivables. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment.

Impairment of financial assets carried at amortised cost. The Group has elected to measure loss allowances for trade receivables at an amount equal to lifetime expected credit losses (ECLs). The Group considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held). The maximum period considered when estimating expected credit losses is the maximum contractual period which the over Group is exposed to credit risk.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive). The following other principal criteria are also used to determine whether there is objective evidence that an impairment has occurred:

any portion or instalment is overdue and the late payment cannot be attributed to a delay caused by the settlement systems;
the counterparty experiences a significant financial difficulty as evidenced by its financial information that the Group obtains;
the counterparty considers bankruptcy or a financial reorganisation;
there is adverse change in the payment status of the counterparty as a result of changes in the national or local economic conditions that impact the counterparty; or
the value of collateral, if any, significantly decreases as a result of deteriorating market conditions.

If the terms of an impaired financial asset held at amortised cost are renegotiated or otherwise modified because of financial difficulties of the counterparty, impairment is measured using the original effective interest rate before the modification of terms.

Impairment is always recognised through an allowance account to write down the asset's carrying amount to the present value of expected cash flows (which exclude future credit losses that have not been incurred) discounted at the original effective interest rate of the asset. The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.

Uncollectible assets are written off against the related impairment allowance after all the necessary procedures to recover the asset have been completed and the amount of the loss has been determined. Subsequent recoveries of amounts previously written off are credited to impairment account within the profit or loss for the year.

Cash and cash equivalents. Cash and cash equivalents include cash on hand, cash in bank, and other short-term, highly liquid investments with original maturities of three months or less. For the purposes of the consolidated cash flow statement, cash and cash equivalents consist of cash as defined above, net of outstanding bank overdrafts, if any.

Bank and other loans. Loans are initially recognised at fair value, net of transaction costs incurred, and are subsequently carried at amortised cost using the effective interest method. Any difference between the proceeds, net of transaction costs, and the redemption value is recognised in profit or loss over the period of the loan using the effective interest method. Loans are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Trade payables. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Provisions for liabilities and charges. Provisions for liabilities and charges are non-financial liabilities of uncertain timing or amount. They are accrued when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

Functional and presentation currency. The currency of each consolidated entity is the currency of the primary economic environment in which the entity operates. The functional currency for the majority of the consolidated entities is the Ukrainian hryvnia. As the Group's management uses USD when monitoring operating results and financial conditions of the Group, the presentation currency of the financial statements is USD. All information in USD has been rounded to the nearest thousands, except when otherwise indicated.

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 as at each reporting date are translated at respective closing rates as at each of those dates;
income and expenses for each period are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
all resulting exchange differences on translation are recognised in other comprehensive income.

Transactions denominated in currencies other than the relevant functional currency are translated into the functional currency using the exchange rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from settlement of such transactions and from the translation of foreign currency denominated monetary assets and liabilities at year end, are recognised in profit or loss. Translation at year-end does not apply to non-monetary items.

When control over a foreign operation is lost, the previously recognised exchange differences on translation to a different presentation currency are reclassified from other comprehensive income to profit or loss for the year as part of the gain or loss on disposal. On partial disposal of a subsidiary without loss of control, the related portion of accumulated currency translation differences is reclassified to non-controlling interest within equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

The exchange rates used for translating foreign currency balances were:

	USD/UAH	EUR/UAH
As at 31 December 2021	27.2782	30.9226
Average for the year ended 31 December 2021	27.2835	32.3009
As at 31 December 2020	28.2746	34.7396
Average for the year ended 31 December 2020	26.9639	30.8011
As at the date these financial statements are being issued	36.5686	35.7970

Segment reporting. Operating segments are reported in a manner consistent with the internal reporting provided to the Group's chief operating decision maker. Segments whose revenue, result or assets constitute ten percent or more of all the segments are reported separately.

Revenue recognition. Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties.

The Group recognises revenue when it transfers control of a product or service to a customer.

Revenues from sales of goods are recognised when control of the goods has transferred. 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.

Revenues from rendering of services are recognised in the accounting period in which the services are rendered, by reference to stage of completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

Finance income and expenses. Finance income and expenses mainly comprise interest income on cash in bank, interest expense on loans and leases.

6. Critical Accounting Estimates and Judgements

The Group makes estimates and assumptions that affect the amounts recognised in the consolidated financial statements. Estimates and assumptions are continually evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management also makes certain judgements, apart from those involving estimations, in the process of applying the Group's accounting policies.

As disclosed in Note 27, the Russian Invasion of Ukraine had started in late February 2022 and is ongoing as at the date these consolidated financial statements are being issued. Because the Group's key assets and operations are in Ukraine, a number of the Group's estimates, assumptions and judgments used to compile these consolidated financial statements might be significantly affected by these events. Furthermore, some assumptions involve varying degrees of uncertainty and would even be impossible to formulate at this time; especially those relating to the outcome of the Russian Invasion.

These consolidated financial statements were compiled using pre-Invasion judgments and estimates, and do not take into account the subsequent war events. Both, because the Russian Invasion started after the end of the reporting period and is, in itself, a non-adjusting event, and due to the inherent uncertainty regarding its outcome.

Judgements that have the most significant effect on the amounts recognised in the consolidated financial statements and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities within the next year are:

Fair value measurement. Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date.

Fair value of biological assets. In the absence of observable market prices for biological assets of the same physical condition at the reporting dates, fair value of biological assets is estimated as follows:

Fair value of crops is estimated as the present value of anticipated future cash flows for each type of crop and is based on the area sown, costs to date and the assessments regarding expected crop yields on harvest, time of harvest, future cultivation and harvest costs, and selling prices.

Fair value of sows is based on expected litter of piglets (or "farrow"), expected volume of meat at the date of slaughter, expected meat prices, average expected productive lives of swines and future production costs.

For crops in the field, key assumptions are determined as follows:

expected crop yield on harvest is based on prior years results;
market prices for grains are obtained from external sources (commodity exchanges, independent industry statistics, purchase prices stipulated by the State Reserve Fund in Ukraine etc.);
cultivation, harvesting and other production costs, including land lease costs are projected based on historical information and adjusted, where necessary, to conform with new material requirements and production techniques currently in use;
time of harvest is estimated based on the historical data;
the discount rate is estimated as weighted average cost of capital based on the Group's risk profile.

For sows, key assumptions are determined as follows:

expected litter on farrow is based on prior years results;
the average productive life of swines is determined based on internal statistical information;
expected volume of meat at the date of slaughter is based on prior years results;
market prices for meat are obtained from external sources (independent industry statistics, purchase prices stipulated by the State Reserve Fund in Ukraine etc.);
production costs are projected based on historical information and adjusted, where necessary, to conform with new material requirements and production techniques currently in use;
the discount rate is estimated as weighted average cost of capital based on the Group's risk profile.

The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between estimates and actual numbers.

Fair value of agricultural produce. Agricultural produce harvested from the Group's biological assets is measured at its estimated fair value less costs to sell at the actual date of harvest. This measurement is considered the cost of agricultural produce at that time. Agricultural produce is adjusted down to net realisable value in case it falls below cost.

Fair value is estimated with reference to market prices for grains and meat, which are obtained from external sources (commodity exchanges, independent industry statistics, purchase prices stipulated by the State Reserve Fund in Ukraine etc.), but may still vary from the actual prices that would be achieved in an arm's length transaction at the reporting date.

Allowance for lifetime expected credit losses. The Group has elected to measure loss allowances for trade receivables at an amount equal to lifetime expected credit losses (ECLs). The Group considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held). The maximum period considered when estimating expected credit losses is the maximum contractual period over which the Group is exposed to credit risk. ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).

At each reporting period, the Group assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

Useful lives. Management estimates are necessary to identify the useful lives of property, plant and equipment. Management uses its expertise and judgment in reassessing the remaining useful lives of major items at each reporting date.

Subsidiaries. The Group consolidates Rantye LLC, Strong-Invest LLC and Abbondanza S.A. (Switzerland) although it only holds 50% of the voting rights in these subsidiaries, because it has the power to govern their financial and operating policies through arrangements with the other 50% shareholder(s). Majority of the supervisory and management board members are employees of other entities of the Group. Judgement is required to determine whether the substance of the relationship between the Group and a subsidiary indicates that the entity is controlled by the Group. In making this judgement management considered arrangements with the other shareholders of the subsidiaries.

7. Business Acquisitions and Disposals

Disposals in 2020. Effect of disposals for the year ended 31 December 2020 was as follows:

	Trade House Rantye LLC	Agro LLC	TOTAL
Effective ownership ratio, %	100%	100%
Other financial assets	44	-	44
Taxes recoverable	26	-	26
Trade payables	(1,350)	-	(1,350)
Other financial liabilities	(92)	-	(92)
Cash and cash equivalents	-	-	-
Net liabilities disposed	(1,372)	-	(1,372)
Currency translation reserve realised	60	1,508	1,568
Cash consideration received	-	-	-
Gain/(loss) on disposal of subsidiaries	1,312	(1,508)	(196)
Cash consideration received	-	-	-
Net cash disposed with the subsidiary	-	-	-
Net cash flow on disposal	-	-	-

In May 2020, the Group has disposed of its shares in Trade House Rantye LLC for a nominal consideration.

In July 2020, Agro LLC was liquidated. As part of the liquidation procedure, property, plant and equipment in the total amount of USD 646 thousand were auctioned off by the liquidator and purchased by one of the Group's related parties in February 2020. All other assets and liabilities were written off.

Acquisitions in 2020.

Modern Agricultural Investments LLC was principally established in May 2020 through transfer of property rights as capital contribution from Strong-Invest LLC. The transferred assets were the core infrastructure facilities later used as foundation for the construction of the new sow house, adjacent to the pig complex (Note 9).

In October 2020, mandated by the ruling of the Central Commercial Court of Appeal of Ukraine, control over 100% of shares of Souz-3 LLC was restored to the Group.

Souz-3 LLC was undergoing a bankruptcy procedure since 2015. The court had appointed a bankruptcy manager and the Group lost control over the subsidiary. Souz-3 LLC was removed from consolidation in 2015 and carrying value of the associated investment had been written down to zero.

In 2020, the bankruptcy manager negotiated a settlement agreement with the creditors of Souz-3 LLC as a means to end the bankruptcy procedure under the clause of 'financial reorganisation'. The Settlement Agreement defined the terms of the financial reorganisation. In October 2020, the Central Commercial Court of Appeal of Ukraine ruled to approve the Settlement Agreement and ended the bankruptcy procedure.

Effect of the acquisition (at fair value) was as follows:

	Souz-3 LLC
Effective ownership ratio, %	100%

Property, plant and equipment	557
Current biological assets	161
Intercompany balances	(2,720)
Other financial liabilities – non-current (i)	(5,941)
Other financial liabilities – current	(30)
Cash and cash equivalents	-
Net liabilities acquired	(7,973)
Cash consideration paid	-
Net liabilities acquired	(7,973)

(i) The terms of financial reorganisation of Souz-3 LLC mandate two stages for settlement of the restructured debts which cover the total of USD 1,926 thousand and USD 4,015 thousand of debts, respectively. 50% of the first stage debts have to be repaid in monthly instalments during the years 2022 to 2025. If Souz-3 LLC manages to successfully repay 50% of the first stage debts, the other 50% together with 100% of the second stage debts become eligible for write-off.

Souz-3 LLC has been disposed with effect as from 30 April 2021, as detailed below.

Disposals in 2021. Effect of disposals for the year ended 31 December 2021 was as follows:

	Souz-3 LLC	Agrofirm Vesna LLC	Trade House UAIH LLC	KSG Trade House LTD	Askoninteks LLC	TOTAL
Effective ownership ratio, %	100%	100%	100%	100%	100%
Property, plant and equipment	512	71	224	-	-	807
Current biological assets	517	-	-	-	-	517
Inventories and agricultural produce	201	-	-	-	-	201
Trade receivables	29	-	415	-	-	444
Other financial assets	143	616	450	-	-	1,209
Taxes recoverable	51	-	-	-	-	51
Prepaid assets	-	-	257	-	-	257
Liabilities to Group subsidiaries, net	(1,252)	-	(7,000)	-	-	(8,252)
Trade payables	(476)	-	(194)	-	-	(670)
Other financial liabilities	(7,785)	(1,766)	(972)	(410)	-	(10,933)
Tax liabilities	(49)	-	-	-	-	(49)
Cash and cash equivalents	-	-	-	-	-	-
Net liabilities disposed	(8,109)	(1,079)	(6,820)	(410)	-	(16,418)
Currency translation reserve realised	314	(958)	(1,448)	1,270	420	(402)
Cash consideration received	-	-	-	-	-	-
Gain on disposal of subsidiaries	(7,795)	(2,037)	(8,268)	860	420	(16,820)
Cash consideration received	-	-	-	-	-	-
Net cash disposed with the subsidiary	-	-	-	-	-	-
Net cash flow on disposal	-	-	-	-	-	-

With effect as from 30 April 2021, the Group disposed of its subsidiaries Souz-3 LLC, Agrofirm Vesna LLC, Trade House of the Ukrainian Agroindustrial Holding LLC ("Trade House UAIH LLC").

Because the three disposed subsidiaries had negative equity and substantial liabilities, their disposal helped the Group considerably improve its liquidity and other key financial indicators (Note 25), thereby achieving one of its top strategic priorities for 2021.

In September 2021, the Group disposed of its subsidiaries KSG Trade House LTD and Askoninteks LLC.

Agrofirm Vesna LLC, Trade House UAIH LLC, KSG Trade House LTD, Askoninteks LLC were all dormant entities.

Acquisitions in 2021.

On 28 December 2021, the Group acquired from minority investors their 50% of shares in Parisifia Trading LTD for the total price of USD 2,295 thousand, thereby increasing the Group's share in Parisifia Trading LTD, and, proportionately, the effective ownership ratio in all of the Group subsidiaries controlled through Parisifia Trading LTD (together referred to as "Parisifia LTD Group"), to 100%.

Because the Group had control over Parisifia Trading LTD both prior to and following the acquisition, this acquisition is accounted for as an equity transaction with owners.

8. Non-controlling Interests

Material non-controlling interests ("NCI") for the years ended 31 December 2021 and 2020 were represented by interests in Parisifia LTD Group and Abbondanza SA. Non-controlling interests in KSG Energy Group LTD are deemed immaterial.

For the years ended 31 December 2021(*) and 2020, Parisifia LTD Group comprised Parisifia Trading LTD itself and its subsidiaries Agroplaza LLC, Stepove LLC, Dzherelo LLC, Kolosyste LLC, Rantye LLC, Strong-Invest LLC and Modern Agricultural Investments LLC.

The summarised financial information of these subsidiaries as at and for the years ended 31 December 2021 and 2020, including the impact of consolidation adjustments was as follows:

	Portion	Voting rights	Profit or loss attributable to NCI	OCI attributable to NCI	Net assets attributable to NCI	Dividends paid to NCI
As at 31 December 2021(*)
Parisifia LTD Group	50%	50%	2,679	1,066	-	-
Abbondanza SA	50%	50%	60	3	126	-
Total			2,739	1,069	126	-
As at 31 December 2020
Parisifia LTD Group	50%	50%	(1,494)	(2,882)	13,145	-
Abbondanza SA	50%	50%	48	3	63	-
Total			(1,446)	(2,879)	13,208	-

	Current assets	Non-current assets	Current liabilities	Non-current liabilities	Net assets
As at 31 December 2021(*)
Parisifia LTD Group	13,448	43,858	(18,115)	(5,412)	33,779
Abbondanza SA	1,053	-	(801)	-	252
Total	14,501	43,858	(18,916)	(5,412)	34,031
As at 31 December 2020
Parisifia LTD Group	10,199	40,651	(20,840)	(3,720)	26,290
Abbondanza SA	973	-	(847)	-	126
Total	11,172	40,651	(21,687)	(3,720)	26,416

	Revenue	Profit or (loss)	Total comprehensive income/(loss)
For the year ended 31 December 2021
Parisifia LTD Group	11,468	5,354	7,489
Abbondanza SA	200	119	126
Total	11,668	5,473	7,615
For the year ended 31 December 2020
Parisifia LTD Group	10,064	(2,987)	(8,751)
Abbondanza SA	1,588	95	101
Total	11,652	(2,892)	(8,650)

(*) On 28 December 2021, the Group acquired from minority investors their 50% of shares in Parisifia Trading LTD and, as a result, in the Parisifia LTD Group. As at 31 December 2021, the Group held 100% of shares and 100% voting rights in the Parisifia LTD Group and so its 'net assets attributable to NCI' were nil.

9. Property, Plant and Equipment

Changes in property, plant and equipment were as follows:

	Buildings	Agricultural equipment	Vehicles and office equipment	Construction in progress	Total
As at 1 January 2020
Cost	18,436	5,517	681	1,941	26,575
Accumulated depreciation	(4,140)	(2,478)	(398)	-	(7,016)
Carrying amount as at 1 January 2020	14,296	3,039	283	1,941	19,559
Additions (i)	538	395	120	1,475	2,528
Disposals (ii)	(715)	(504)	-	-	(1,219)
Acquisition of subsidiaries (Note 7)	400	151	6	-	557
Transfers	798	99	8	(905)	-
Depreciation charge	(916)	(259)	(71)	-	(1,246)
Impairment charge (iii)	(306)	-	-	(1,195)	(1,501)
Translation differences	(2,298)	(471)	(55)	(286)	(3,110)
Carrying amount as at 31 December 2020	11,797	2,450	291	1,030	15,568
As at 31 December 2020
Cost	16,823	4,734	694	1,030	23,281
Accumulated depreciation	(5,026)	(2,284)	(403)	-	(7,713)
Carrying amount as at 31 December 2020	11,797	2,450	291	1,030	15,568
Additions	-	148	183	1,011	1,342
Disposals	-	(14)	-	-	(14)
Disposal of subsidiaries (Note 7)	(389)	(408)	(10)	-	(807)
Transfers	226	66	8	(300)	-
Depreciation charge	(1,019)	(168)	(75)	-	(1,262)
Translation differences	433	92	9	37	571
Carrying amount as at 31 December 2021	11,048	2,166	406	1,778	15,398
As at 31 December 2021
Cost	16,659	3,945	870	1,778	23,252
Accumulated depreciation	(5,611)	(1,779)	(464)	-	(7,854)
Carrying amount as at 31 December 2021	11,048	2,166	406	1,778	15,398

(i) For 2020, additions to construction in progress represent construction costs of an additional fattening shop and an additional sow house at the pig complex.

(ii) In February 2020, property, plant and equipment in the total amount of USD 664 thousand were transferred to a related party as part of the liquidation process of Agro LLC (Note 7).

(iii) As part of the annual impairment test, management have determined that carrying value for some of the uninstalled irrigation equipment has dropped way below the recoverable amount due to low prospects of land bank expansion in the near future and decided to recognise an impairment allowance on this asset in the amount of USD 1,195 thousand. Management have also determined that carrying value for some of the buildings, which exhibited indicators of physical obsolescence, dropped below the recoverable amount and recognised an impairment allowance on these assets in the amount of USD 306 thousand.

Included in agricultural equipment are assets held under finance leases with a carrying value of USD 83 thousand (2020: USD 108 thousand). The leased assets are used as collateral under these lease agreements.

For details on property, plant and equipment pledged to secure bank loans refer to Note 16.

No borrowing costs were capitalised during 2020 and 2021.

Management have determined that fair value of property, plant and equipment approximates the carrying amount as at 31 December 2021 and 2020.

The Group did not have any contingent liabilities for acquisition of property, plant and equipment as at 31 December 2021 and 2020.

10. Leases

The Group leases land plots, mostly from individuals, and agricultural equipment for producing crops. The Group does not own agricultural land and Ukrainian legislation provides for a ban on purchase of agricultural land plots by legal entities until 1 January 2024. As a result, the Group is forced to lease from individuals who hold land lease rights, rather than own the land itself.

Changes in right-of-use assets were as follows:

	2021	2020
Cost	1,555	1,810
Accumulated amortisation	(839)	(512)
Right-of-use assets as at 1 January	716	1,298
Recognition of lease liability	70	40
Write-off of lease liability	-	-
Amortisation charge	(363)	(430)
Translation differences	37	(192)
Right-of-use assets as at 31 December	460	716
Cost	1,668	1,555
Accumulated amortisation	(1,208)	(839)
Right-of-use assets as at 31 December	460	716

Changes in lease liabilities were as follows:

	2021	2020
Lease liabilities as at 1 January	2,615	2,742
Recognition of lease liability	70	40
Interest accrued (Note 22)	445	475
Leases repaid	(797)	-
Interest paid	(445)	(250)
Write-off of lease liability (Note 21)	(525)	-
Translation differences	77	(392)
Lease liabilities as at 31 December	1,440	2,615

Maturity of lease liabilities as at 31 December was as follows:

	2021		2020
	Future lease payments	Present value	Future lease payments	Present value
Within one year	723	642	771	697
Within two to five years	1,825	680	2,161	1,810
After five years	514	118	212	108
less: future interest expenses	(1,622)	-	(529)	-
Total lease liabilities	1,440	1,440	2,615	2,615

11. Biological Assets

		31 December 2021		31 December 2020
Non-current biological assets (swines)	Units	Amount	Units	Amount
Sows	5,560	29,656	5,404	27,808
Boars	38	32	39	8
Total non-current biological assets		29,688		27,816
Current biological assets (swines)	Units	Amount	Units	Amount
Pigs and piglets	43,701	3,960	41,416	1,904
Current biological assets (crops)	Hectares	Amount	Hectares	Amount
Wheat	4,166	3,126	7,061	3,295
Barley	1,354	1,277	1,176	565
Rapeseed	822	1,044	1,856	290
Other		263		252
Total current biological assets		9,670		6,306
Total biological assets		39,358		34,122

Most of the sows are Danish Landrace sows, initially purchased specifically to produce piglets of this breed, and a steady percentage of pigs were chosen each year as replacement sows in order to maintain the quality of the herd.

In 2021, the Group started the project to gradually renew its sow population to increase the birth rate of piglets. For this purpose, the Group is working with Genesus, a Canadian genetics company. During the year ended 31 December 2021, the Group purchased 900 sows from Genesus.

Changes in biological assets were as follows:

	Crops	Swines	Total
Carrying amount as at 1 January 2020	4,244	35,016	39,260
Purchases	-	32	32
Production costs (i)	5,895	11,686	17,581
Gain/(loss) on biological transformation, net (ii)	3,292	1,142	4,434
Farrow	-	133	133
Harvest (iii)	(8,445)	(474)	(8,919)
Sales	-	(12,116)	(12,116)
Acquisition of subsidiaries (Note 7)	161	-	161
Translation differences	(745)	(5,699)	(6,444)
Carrying amount as at 31 December 2020	4,402	29,720	34,122

Purchases	-	403	403
Production costs (i)	13,921	13,211	27,132
Gain/(loss) on biological transformation, net (ii)	7,474	(156)	7,318
Farrow	-	156	156
Harvest (iii)	(19,699)	(267)	(19,966)
Sales	-	(10,583)	(10,583)
Disposal of subsidiaries (Note 7)	(517)	-	(517)
Translation differences	129	1,165	1,294
Carrying amount as at 31 December 2021	5,710	33,648	39,358

(i) Costs incurred during the year ended 31 December 2020 on production of crops and swines were as follows:

	Crops	Swines	Total

Seeds, fertilisers, crop protection products	4,108	-	4,108
Fodder, medication	-	9,867	9,867
Land cultivation and harvesting	753	-	753
Utilities and veterinary services	-	661	661
Staff costs	227	329	556
Depreciation of property, plant and equipment	377	829	1,206
Amortisation of land lease rights	430	-	430
Total production costs	5,895	11,686	17,581

Costs incurred during the year ended 31 December 2021 on production of crops and swines were as follows:

	Crops	Swines	Total

Seeds, fertilisers, crop protection products	7,278	-	7,278
Fodder, medication	-	10,758	10,758
Land cultivation and harvesting	5,332	-	5,332
Utilities and veterinary services	-	1,221	1,221
Staff costs	481	444	925
Depreciation of property, plant and equipment	466	788	1,254
Amortisation of land lease rights	363	-	363
Total production costs	13,921	13,221	27,132

(ii) Gain or loss on biological transformation refers to the gains and/or losses on initial recognition of biological assets and agricultural produce and from the change in fair value less costs to sell of biological assets.

	2021	2020
Crops in the field	3,931	3,088
Agricultural produce	3,541	204
Sows	418	(809)
Pigs and piglets	(574)	1,951
Total gain on biological transformation, net	7,316	4,434

(iii) Volume of crops harvested (in bunker weight) was as follows:

	2021	2020
	in tonnes	in tonnes
Wheat	31,021	17,952
Barley	8,561	4,865
Rapeseed	760	2,734
Sunflower	18,210	11,745
Corn	9,334	2,744
Total harvest, tonnes	67,886	40,040

Unobservable inputs used to estimate fair value of biological assets and the respective valuation techniques applied as at 31 December 2021 were as follows:

Description	Fair value as at 31 December 2021	Valuation technique	Unobservable inputs	Range of unobservable
Winter wheat			Yield, tonnes per hectare	3.13
	3,126	Discounted cash	Price, USD per tonne	278
		flows	Discount rate	inputs 12.50% 3.73 265 12.50% 0.72 762 12.50% 117,161 1,403 – 1,705 12.50%
Winter barley			Yield, tonnes per hectare
	1,277	Discounted cash flows	Price, USD per tonne
			Discount rate
Winter rapeseed			Yield, tonnes per hectare
	1,044	Discounted cash	Price, USD per tonne
		flows	Discount rate
			Farrow, heads per year
Sows	Discounted cash 29,656 Price, USD per tonne flows
			Discount rate
Pigs	3,960	Market Price	Price, USD per tonne	1,838

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

	Effect on fair value of biological assets
10 % increase in price for meat	396
10 % decrease in price for meat	(396)
10 % increase in prices for crops	241
10 % decrease in prices for crops	(241)
10 % increase in yield for crops	773
10 % decrease in yield for crops	(773)
10 % increase in production costs until harvest	5,219
10 % decrease in production costs until harvest	(5,219)
1 pp increase in discount rate for sows	(1,481)
1 pp decrease in discount rate for sows	1,552
5 pp increase in discount rate for crops	(156)
5 pp decrease in discount rate for crops	168

12. Inventories and Agricultural Produce

	31 December 2021	31 December 2020
Agricultural produce	4,603	1,544
Land cultivation and harvesting (i)	988	1,903
Seeds, fertilisers, crop protection products	2,688	1,267
Construction materials (ii)	141	1,154
Fodder (raw materials)	145	860
Fodder (processed)	201	142
Fuel	344	758
Goods for resale	34	232
Other	106	92
Total inventories and agricultural produce	9,250	7,952

Agricultural produce is measured at fair value less costs to sell at the date of harvest while inventories are measured at the lower of cost and net realisable value. For inventories as at 31 December 2021, a reversal of a previous write-down to their net realisable value was recognised in a total amount of USD 2,198 thousand (2020: a write-down was recognised for USD 4,132 thousand).

(i) Where land cultivation works are performed on land plots which are "unsown" (i.e. do not contain biological assets), the costs of such works are capitalised as part of inventories until the seeds are planted, at which point the accumulated costs are reclassified as production costs of the related biological assets.

(ii) Significant stock of construction materials as at 31 December 2020 is related to the ongoing construction works on the additional fattening shop and the additional sow house at the pig complex (Note 9).

13. Trade Receivables

	31 December 2021	31 December 2020
Receivables from customers	4,875	7,482
Less: impairment	(995)	(5,592)
Total trade receivables	3,880	1,890

Changes in impairment of trade receivables were as follows:

	2021	2020

Carrying amount as at 1 January	5,592	4,272
Impairment charge	357	2,142
Impairment reversal	-	(31)
Impairment write-off	(5,157)	-
Translation differences	203	(791)
Carrying amount as at 31 December	995	5,592

Credit risk profile of trade receivables was as follows:

	Expected credit loss rate, %	31 December 2021	31 December 2020
Not past due		-	-
Less than 90 days past due	3%	3,538	1,254
91 to 180 days past due	16%	890	775
Over 180 days past due	100%	447	5,453
Total trade receivables, gross		4,875	7,482
Less: impairment		(995)	(5,592)
Total trade receivables		3,880	1,890

Trade receivables from third parties are generally settled within 90 days. All receivables past 90 days are impaired at their respective ECL rate, even when management allows certain customers (e.g. related parties) to delay payments. In May 2021, most receivables past 90 days have been disposed off together with the Group's dormant non-operating subsidiaries. The Group does not hold any collateral as security for overdue trade receivables.

Trade receivables include a net amount of USD 1,861 thousand due from related parties, net of impairment of USD 194 thousand (2020: USD 505 thousand, net of impairment of USD 462 thousand). Balances with related parties are disclosed in Note 24.

Maximum exposure to credit risk at the reporting date is equal to the fair value of trade receivables. The fair value of trade receivables as at 31 December 2021 and 2020 approximates their carrying amount as at these dates.

14. Other Financial Assets

	31 December 2021	31 December 2020
Company loans issued	284	3,885
Less: impairment of company loans issued	-	(3,039)
Other receivables (i)	162	784
Less: impairment of other receivables	(4)	(498)
Total other financial assets	442	1,132

Company loans are unsecured non-interest-bearing loans with maturities of twelve months or less intended to facilitate agricultural and trading activities. Company loans are mostly provided to, and obtained from, related parties, but are also arranged with the Group's trade partners.

As at 31 December 2021, there are no company loans issued to related parties (2020: USD 347 thousand, net of impairment of USD 1,231 thousand). Balances with related parties are disclosed in Note 24.

Changes in impairment of other financial assets were as follows:

	31 December 2021		31 December 2020
	Company loans issued	Other receivables	Company loans issued	Other receivables
Carrying amount as at 1 January	3,039	498	3,350	3,079
Impairment charge	-	-	1,193	-
Impairment reversal (i)	-	-	(1,044)	(2,183)
Impairment write-off	(3,149)	(512)	-	-
Translation differences	110	18	(460)	(398)
Carrying amount as at 31 December	-	4	3,039	498

(i) Other receivables as at 31 December 2020 include previously impaired receivables from Souz-3 LLC, a company which became part of the Group in 2020 (Note 7). Receivables from Souz-3 LLC as at 31 December 2020 therefore became intercompany receivables and were eliminated for consolidation purposes, while the associated impairment loss was reversed and recognised in profit or loss for the year 2020.

Ageing profile of other financial assets was as follows:

	Expected 2021		2020
	credit loss rate, %	Company loans issued	Other receivables	Company loans issued	Other receivables
Less than 90 days	3%	284	133	729	59
91 to 180 days	16%	-	-	151	-
Over 180 days	100%	-	29	3,005	725
Total other financial assets, gross		284	162	3,885	784
Less: impairment		-	(4)	(3,039)	(498)
Total other financial assets		284	158	846	286

As the Group's historical credit loss experience does not show significantly different loss patterns between trade receivables and other financial assets, impairment allowance for company loans issued and other receivables is charged at the same expected credit loss rates that are applied to trade receivables and is based on the ageing profile of other financial assets, irrespective of their maturity dates. The Group does not hold any collateral as security for overdue receivables.

In 2021, most amounts older than 90 days have either been disposed off together with the Group's dormant non-operating subsidiaries or written off.

Maximum exposure to credit risk at the reporting date is equal to the fair value of other financial assets. The fair value of other financial assets as at 31 December 2021 and 2020 approximates their carrying amount as at these dates.

15. Share Capital

As of 31 December 2021 and 2020, the registered share capital of KSG Agro S.A. was USD 150,200 and comprised of 15 020 thousand ordinary shares with a par value of USD 0.01 each. All issued shares were fully paid.

Earnings Per Share. Earnings per share were calculated by dividing profit for the year attributable to owners of the Company by the weighted average number of common shares outstanding during the year as follows:

	2021	2020
Profit for the year attributable to owners of the Company, USD thousand	17,311	2,718
Weighted average number of common shares outstanding, thousand	15,020	15,020
Basic and diluted earnings per share, USD	1.15	0.18

There are no options or instruments convertible into new shares, so basic and diluted earnings per share are the same.

Change in Direct Participation. On 5 August 2021, KSG Agro S.A. received a formal notification from its immediate parent OLBIS Investments LTD S.A. on the reduction in the number of shares OLBIS Investments LTD S.A. holds in the Company by more than 1%.

The change in direct participation was a result of the sale of its 1 million shares in the Company on 2 August 2021. As at 31 December 2021, OLBIS Investments LTD S.A. confirmed that the relevant share purchase agreements authorising the transfer of shares to the buyers have been signed.

Prior to the sale, OLBIS Investments LTD S.A. held 9.7 million shares, which amounted to 64.62% of of the issued share capital. After the sale, OLBIS Investments LTD S.A. holds 8.7 million shares, which is 57.96% of the issued share capital.

Buyers of the shares were parties not related to the Group.

16. Bank and Other Loans

	31 December 2021	31 December 2020
Bank loans	11,878	12,187
Loan from Parent	11,059	10,937
Interest payable	4,654	4,274
Total bank and other loans	27,591	27,398

As at 31 December 2021 and 2020, the Group's bank loans mainly included the long-term credit line with TASCOMBANK, which matures gradually from April 2021 to December 2024. As at 31 December 2020, the credit line was denominated in US Dollar, which made the Group highly susceptible to currency risk, since US Dollar is not the functional currency of the Group subsidiaries who received the loans.

To mitigate the currency risk, management have arranged for the change in currency of the loans to the functional currency at the cost of switching from a fixed interest rate to a variable rate. From the first quarter of 2021, as a result of the new arrangement, the total amount of foreign-currency bank loans is USD nil. The interest rate is 12.5% per annum.

As at 31 December 2021, bank loans were secured by collateral in the form of property, plant and equipment pledged by the Group with a total net book value of USD 9,505 thousand (2020: USD 9,762 thousand) and real estate pledged by related parties.

As at 31 December 2021, the ultimate controlling party and other related parties each pledged real estate of estimated value, according to the pledge agreement, of, respectively, USD 5,511 thousand and USD 8,647 thousand, as collateral for the Group's bank loans in the amount of USD 12,037 thousand (2020: respectively, USD 5,317 thousand and USD 8,342 thousand for the Group's bank loans in the amount of USD 12,201 thousand).

Loan from Parent, OLBIS Investments LTD S.A., becomes due in December 2026, together with all interest accrued up to that date. Interest rate on the loan is 3% per annum and interest accrued as at 31 December 2021 was USD 4,495 thousand (2020: USD 4,178 thousand). At the date these consolidated financial statements are being issued, OLBIS Investments LTD S.A. confirmed the ongoing negotiations to extend the maturity date past 2026, but no such extension, or any other change to the existing terms, have been formally agreed as of this date.

Contractual maturities of bank and other loans are presented in Note 25.

Bank and other loans were denominated in the following currencies:

	31 December 2021	31 December 2020
US Dollar (USD)	15,554	27,316
Ukrainian Hryvnia (UAH)	12,037	82
Total bank and other loans	27,591	27,398

Changes in bank and other loans were as follows:

	2021	2020
Carrying amount as at 1 January	27,398	29,260
Loans received (i)	7,388	8,805
Loans repaid (i)	(7,842)	(7,724)
Interest accrued (Note 22)	2,117	1,535
Interest paid	(1,742)	(1,176)
Loan write-off (ii)	-	(3,609)
Translation differences	272	307
Carrying amount as at 31 December (iii)	27,591	27,398

(i) During 2020, TASCOMBANK increased its credit line to the Group up to USD 12.2 million. The funds were used by the Group to fully refinance loans from Credit Dnipro Bank and Pivdennyi Bank in the total amount of USD 3.9 million which were maturing in 2020.

By March 2020, the remaining balance of USD 369 thousand on the loan from US EXIM bank has been fully repaid.

By August 2020, the Group has fully repaid its loan from LBBW in the total amount of USD 3,353 thousand, which was the Group's last overdue bank loan.

(ii) In January 2018, a third party purchased the Group's overdue debts under several loans from Credit Agricole Bank. Total remaining debt balance as at 31 December 2019 was USD 1,950 thousand, including interest of USD 450 thousand. In 2020, the Group negotiated a full write-off of these debts as part of a netting arrangement with that third party.

Total remaining loan balance payable to LBBW as at 31 December 2019 included a provision for non-timely repayment of the outstanding debt, in the form of additional interest accrued by the bank. Because the Group has managed to complete main repayments by August 2020 and fulfilled all other conditions precedent, the debt was fully settled, additional interest did not become due and was written off for a total amount of USD 1,659 thousand.

Based on management's assessment, fair value of the Group's bank and other loans as at 31 December 2021 amounted to USD 28,374 thousand while the carrying amount was USD 27,591 thousand (2020: USD 28,181 thousand while the carrying amount was USD 27,398 thousand).

17. Other Financial Liabilities

	31 December 2021	31 December 2020
Other payables	3,944	10,268
Short-term promissory notes issued (i)	1,999	2,344
Company loans received	1,619	1,683
Wages and salaries payable	228	160
Total other financial liabilities	7,790	14,455
Less: non-current portion of other payables (ii)	-	(5,941)
Total current portion	7,790	8,514

Balances with related parties are disclosed in Note 24.

The fair value of other financial liabilities as at 31 December 2021 and 2020 approximates their carrying amount as at these dates.

(i) In December 2021, the Group has reached a settlement agreement with one of its noteholders and made the first payment of EUR 265 thousand. As at 31 December 2021, the outstanding balance on these notes is USD 1,539 thousand. The Group is to make the second payment of EUR 265 thousand by July 2022 to settle the debt in full.

(ii) Non-current portion of other payables as at 31 December 2020 represents the carrying amount of liabilities assumed with the acquisition of Souz-3 LLC (Note 7). The terms of financial reorganisation of Souz-3 LLC mandate two stages for settlement of the restructured debts which cover the total of USD 1,926 thousand and USD 4,015 thousand of debts, respectively. 50% of the first stage debts have to be repaid in monthly instalments during the years 2022 to 2025. If Souz-3 LLC manages to successfully repay 50% of the first stage debts, the other 50% together with 100% of the second stage debts become eligible for write-off.

Souz-3 LLC has been disposed with effect as from 30 April 2021, as detailed in Note 7. The decrease in other payables in 2021 is largely attributable to the disposal of Souz-3 LLC and other subsidiaries.

18. Operating Segments

The Group has three reportable segments, as described below, which are the Group's strategic divisions. The strategic divisions offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic divisions, the Group's CEO reviews internal management reports on at least quarterly basis. The operations in each of the Group's reporting segments are:

Crop Farming. Covers production of summer crops (sunflower, corn) and winter crops (wheat, barley, rapeseed), as well as provision of land cultivation services. Main factors affecting crop production are climate conditions, land quality, plant nutrition and moisture levels in the arable land.
Pig Breeding. The segment which deals with breeding of pigs, own Danish purebreed sows, and sale of pigs and piglets in live and dead weight.
Other. This operating segment includes the production of fuel pellets, thermal energy, wholesale trading of crops and other goods, and rendering of other services to third parties.

Performance is measured based on segment profit or loss, as included in the internal management reports that are reviewed by the Board of Directors. Segment profit or loss is used to measure performance as management believes that such information is the most relevant in evaluating the results of the Group's segments relative to other entities that operate within these industries.

Seasonality of operations

Both winter and summer crops are harvested in the second half of the year, so segment results for Crop Farming in the first half of the year mainly reflect the sales of crops in stock from last season and revaluation of crops still growing in the field. Also, crop farming has seasonal requirements for working capital increase during November-May, to finance land cultivation work. Other segments are not significantly exposed to seasonal fluctuations.

Breakdown of revenue by geographical segments is based on the domicile of customers and is as follows:

	2021	2020
Ukraine	30,609	18,638
Switzerland	-	945
Poland	-	173
Singapore	-	94
Libya	137	677
Oman	-	208
Malaysia	-	603
Total revenue	30,746	21,338

Information about operating segments for the year ended 31 December 2021 is as follows:

	Note	Crop Farming	Pig Breeding	Other	Total
Revenue, including:
- total sales of goods		18,190	11,240	689	30,119
- less: inter-segment sales of goods		(1,750)	-	-	(1,750)
- rendering of services		1,845	-	532	2,377
Revenue from external customers		18,285	11,240	1,221	30,746
Gain/(loss) on biological transformation, net	11	7,472	(156)	-	7,316
Cost of sales, including:
- incurred costs		(11,317)	(10,120)	(331)	(21,768)
- fair value effects		(5,348)	2,000	-	(3,348)
Cost of sales		(16,665)	(8,120)	(331)	(25,116)
Segment profit		9,092	2,964	890	12,946
Other segment information:
Depreciation of property, plant and equipment		439	798	25	1,262
Amortisation of right-of-use assets		363	-	-	363
Capital expenditure		944	398	-	1,342

Information about operating segments for the year ended 31 December 2020 is as follows:

				21,946
				(3,000)
				2,392
				21,338
11	3,292	1,142	-	4,434

				(17,673)
				(1,851)
	(8,017)	(9,242)	(2,265)	(19,524)
	3,658	2,217	373	6,248

				1,246
				430
				2,528
		9,219 (3,000) 2,164 8,383 (8,232) 215 377 430 705	10,317 - - 10,317 (7,176) (2,066) 810 - 1,800	2,410 - 228 2,638 (2,265) - 59 - 23

Cost of sales by nature of expenses was as follows:

	2021	2020
Fodder, medication	8,488	7,688
Seeds, fertilisers, crop protection products	3,661	1,824
Goods for resale	2,066	4,026
Fuel and other materials	1,876	384
Depreciation of property, plant and equipment	1,237	1,187
Land cultivation and harvesting	1,206	564
Utilities and veterinary services	1,027	693
Staff costs	969	492
Maintenance of equipment	558	180
Amortisation of land lease rights	363	430
Slaughter and processing services	200	69
Taxes, other than income tax	117	136
Fair value effects	3,348	1,851
Total cost of sales	25,116	19,524

20. Selling, General and Administrative Expenses

	2021	2020
Staff costs	763	679
Professional services (i)	393	364
Delivery costs	390	204
Office maintenance costs	308	167
Storage costs	228	236
Fuel and other materials	61	30
Bank services	48	98
Taxes, other than income tax	46	29
Business trips	31	36
Depreciation of property, plant and equipment	25	59
Total selling, general and administrative expenses	2,293	1,902

(i) Audit fees accrued with respect to the auditors C-Clerc in Luxembourg comprise USD 10 thousand for the audit of statutory accounts and USD 63 thousand for the audit of consolidated accounts (2020: USD 10 thousand and USD 64 thousand). Audit fees accrued with respect to statutory auditors in other jurisdictions were USD 60 thousand (2020: USD 49 thousand).

21. Non-Operating Gains and Losses

	2021	2020
Gain/(loss) on foreign currency exchange, net	(418)	(4,934)

Foreign currency exchange gains and losses arise when commercial transactions or recognised assets or liabilities are denominated in a currency that is not the subsidiary's functional currency. Historically, the Group has been most susceptible to currency risk with regard to its bank loans and intercompany loans. To mitigate this risk, management have arranged to change the currency of its bank loans to the functional currency, starting from the fist quarter of 2021. Refer to Notes 16 and 25 for details on the new arrangement, the Group's net foreign currency position and the resulting exposure to currency risk.

	2020

Loan write-off (Note 16)	3,609
Trade payables write-off (Note 3) (i)	9,530
Reversal of impairment loss on financial assets (ii) (Notes 13, 14)	3,258
Gain/(loss) on debt restructuring	16,397

(i) As of 1 January 2020, the Group had a guarantee obligation accrued with respect to one of its related parties in the equivalent of USD 1,895 thousand payable to Agroscope Ukraine in the event of default of that related party. In 2020, the Company received a letter from Agroscope Ukraine, confirming that main obligations by the related party were executed in full and so the Group's relevant guarantee obligations were discharged.

In December 2020, one of the Group's subsidiaries had arranged with a number of its trade creditors to convert old balances payable to those creditors into promissory notes. Those promissory notes were then acquired by a third party and further sold to the Group's other subsidiaries at a significant discount, thereby making these debts intercompany debts and realising in a gain of USD 7,280 thousand.

(ii) In October 2020, the Group entered into a settlement agreement according to which overdue and impaired loans receivable amounting to USD 1,111 thousand and EUR 345 thousand from several related parties were netted off against prepayments received in 2020 from various third parties, amounting to EUR 1,121 thousand and USD 50 thousand, realising in a reversal of previous impairment of USD 1,012 thousand.

In October 2020, Souz-3 LLC became part of the Group (Note 7). Receivables from Souz-3 LLC therefore became intercompany receivables and were eliminated for consolidation purposes, while the associated impairment loss was reversed for the amount of USD 2,060 thousand.

	2021	2020
Disposal of property, plant and equipment	(8)	(1,042)
Impairment of property, plant and equipment (Note 9)	-	(1,501)
Impairment of inventories (Note 12)	2,198	(4,132)
Impairment of financial assets (Notes 13, 14)	(357)	(3,335)
Direct write-offs of financial and prepaid assets (iii)	(7,079)	(2,291)
Lease liabilities write-off (Note 10)	525	-
Other payables write-off	181	-
Impairment of VAT recoverable	123	(618)
Reversal of provision for tax liabilities (Note 26)	-	879
Fines and penalties	(4)	(23)
Total other gains and losses	(4,421)	(12,063)

(iii) For the years ended 31 December 2021 and 2020, direct write-offs of financial and prepaid assets mainly comprised both, write-offs of receivables from subsidiaries disposed during that particular year and the write-offs recognised by the disposed subsidiaries themselves in preparation for their respective disposals.

22. Finance Expenses

	2021	2020

Interest expense on loans (Note 16)	2,117	1,535
Interest expense on leases (Note 10)	445	475
Other finance expenses	48	61
Total finance expenses	2,610	2,071

23. Income Taxes

As at 31 December 2021, four Ukrainian subsidiaries of the Group (2020: four) elected to pay the special Fixed Agricultural Tax ("FAT") in lieu of corporate income tax. FAT replaces the following taxes for agricultural producers: Corporate Income Tax, Land Tax, Special Water Consumption Duty and Trade Patent. FAT is calculated by local authorities and depends on the area and valuation of land occupied. This tax regime is valid indefinitely. FAT does not constitute an income tax, and as such, is recognised on the income statement within cost of sales.

All other Group subsidiaries are subject to regular Corporate Income Tax ("CIT") in their respective jurisdictions. CIT rate in Ukraine for the years ended 31 December 2020 and 2021, and for the foreseeable future, was set at 18%.

Deferred income tax assets and liabilities are measured based on the tax rates expected to be applied to the periods when the temporary differences are expected to reverse.

Components of income tax expense were as follows:

	2021	2020
Current tax expense	(5)	(4)
Deferred tax expense	-	(207)
Income tax expense	(5)	(211)

Reconciliation between expected and actual income tax expense was as follows:

	2021	2020
Profit before tax	20,055	1,483
- Profit/(loss) attributable to Ukrainian FAT payers	7,072	(277)
- Profit/(loss) attributable to Ukrainian CIT payers	(3,864)	1,734
- Profit/(loss) attributable to other Group entities	27	222
- Gain/(loss) on disposal of subsidiaries (Note 7)	16,820	(196)
Income tax (expense) / benefit related to Ukrainian CIT payers	(696)	(312)
Income tax (expense) / benefit related to other Group entities	3	(3)
Adjusted for tax effects of:
• non-taxable income / (non-deductible expenses), net	688	311
Change in deferred taxes	-	(207)
Income tax expense	(5)	(211)

No deferred tax assets or liabilities were recognised as at 31 December 2021.

Change in deferred taxes for the year ended 31 December 2020 was as follows:

	1 January 2020	Charged to profit or loss	Translation differences	31 December 2020
Tax effect of deductible temporary differences
Trade receivables	236	(207)	(29)	-
Recognised deferred tax asset	236	(207)	(29)	-

24. Related Parties

Significant balances with related parties as at 31 December were as follows:

	2021		2020
	Parent and	Entities under	Parent and	Entities under
	owners	common control	owners	common control
Assets
Trade receivables	-	2,055	-	967
Less: impairment of trade receivables	-	(194)	-	(462)
Company loans issued	-	-	-	1,578
Less: impairment of company loans issued	-	-	-	(1,231)
Other receivables	-	-	-	-
Prepaid assets	-	20	-	10
Liabilities
Loan from Parent (i)	11,059	-	10,937	-
Interest on loan from Parent (i)	4,495	-	4,178	-
Trade payables	-	57	-	609
Company loans received	-	208	576	36
Other payables	25	702	25	848
Advances from customers	-	60	-	9

Significant transactions with related parties were as follows:

		2021	2020
	Parent and owners	Entities under common control	Parent and owners	Entities under common control
Income Sales of pigs and pork (ii) Other services	- -	5,034 89	- -	2,427 54
Expenses Interest expense on loans	317	-	311	-

'Parent and owners' include the Company's immediate parent, OLBIS Investments LTD S.A., and the ultimate controlling party, Mr. Sergiy Kasianov.

'Entities under common control' are other entities controlled by OLBIS Investments LTD S.A. and Mr. Sergiy Kasianov.

(i) 'Loan from Parent' and related interest refer to a loan from OLBIS Investments LTD S.A. The loan originated based on the transfer agreement from ICD Investments SA to OLBIS Investments LTD S.A., signed in November 2016, and becomes due in December 2026, together with all interest accrued up to that date. Interest rate on the loan is 3% per annum. At the date these consolidated financial statements are being issued, OLBIS Investments LTD S.A. confirmed the ongoing negotiations to extend the maturity date past 2026, but no such extension, or any other change to the existing terms, have been formally agreed as of this date.

(ii) Sales of pigs and pork to related parties are made at market prices.

In February 2020, property, plant and equipment of Agro LLC in the total amount of USD 646 thousand, which was being auctioned off by Agro LLC's liquidator, was purchased by one of the Group's related parties (Note 7).

Transactions with key management personnel. Key management personnel are those individuals that have the authority and responsibility for planning, organising and controlling the activities of the Group, directly or indirectly, and include the Board of Directors.

Remuneration of key management personnel for 2021 comprised short-term benefits totalling USD 155 thousand (2020: USD 157 thousand).

25. Risk Management

Agricultural risk. The Group is exposed to various risks related to agricultural activity. Agricultural operations are highly dependent on weather conditions: low rainfall, severe frost, which may have a negative effect on crop production. Adverse weather or climate changes can affect the yields, which in turn may result in decrease in margins.

Long-term reduction of prices for grain may also have a negative effect on operating results of the Group. Prices for agricultural products are influenced by various unpredictable factors beyond the control of the Group, such as weather conditions and changes in global supply and demand.

Management believes that the Group may resist to fluctuations of prices for crops, since the close proximity and the capacities of grain elevators and other storage facilities enable the Group to sell its crop products in those periods when prices are optimal.

Livestock diseases risk. The Group's pig breeding business is subject to risks of outbreaks of various diseases, which could be highly contagious and destructive to susceptible livestock, could result in mortality losses. Disease control measures were adopted by the Group to minimize 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 outbreak of livestock diseases and related losses.

Credit risk. The Group takes on exposure to credit risk, which is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Exposure to credit risk arises as a result of the Group's sales of products on credit terms and other transactions with counterparties giving rise to financial assets.

The Group's maximum exposure to credit risk by class of assets is reflected in the carrying amounts of financial assets in the consolidated statement of financial position and as summarised below:

	Note	2021	2020
Financial assets
Trade receivables	13	3,880	1,890
Other financial assets	14	442	1,132
Cash and cash equivalents		637	108
Total financial assets		4,959	3,130

Credit risk concentration. The Group is exposed to the concentration of credit risk. Management monitors and discloses concentrations of credit risk by obtaining monthly reports with exposures to customers with individually material balances.

Market risk. The Group takes an exposure to market risks. Market risks arise from open positions in (a) foreign currencies, (b) interest bearing assets and liabilities, all of which are exposed to general and specific market movements.

The Group does not have significant interest-bearing financial assets. Loans and borrowings issued at variable interest rates expose the Group to the interest rate risk. Loans and borrowings issued at fixed rates expose the Group to the fair value risk.

The sensitivities to market risks disclosed below are based on a change in one factor while holding all other factors constant. In practice this is unlikely to occur and changes in some of the factors may be correlated – for example, changes in interest rate and changes in foreign currency rates.

Interest rate risk. Risk of changes in interest rate is generally related to interest-bearing loans. Loans issued at variable rates expose the Group to cash flow interest rate risk. Loans issued at fixed rates expose the Group to fair value interest rate risk. The Group is currently developing its policy on structure of fixed and variable rates loan portfolio. The Group's management analyses market interest rates to minimize interest rate risk.

The Group analyses its interest rate exposure on a dynamic basis. As at 31 December 2021, if interest rates had been 5% higher or lower with all other variables held constant, both profit for the year and equity would have been, respectively, USD 1,238 thousand lower or higher (2020: USD 1,082 thousand).

Currency risk. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity's functional currency.

As of 31 December 2021, the Group's financial assets and liabilities denominated in foreign currency were as follows:

	USD	EUR	PLN	Total	Carrying amount
Financial assets
Trade receivables	317	-	-	317	3,880
Other financial assets	215	66	-	281	442
Cash and cash equivalents	97	-	-	97	637
Total financial assets	629	66	-	695	4,959
Financial liabilities
Trade payables	686	-	-	686	8,270
Bank and other loans (i)	-	-	-	-	27,591
Other financial liabilities	-	1,703	160	1,863	7,790
Total financial liabilities	686	1,703	160	2,549	43,651
Net foreign currency position	(57)	(1,637)	(160)	(1,854)	(38,692)

As of 31 December 2020, the Group's financial assets and liabilities denominated in foreign currency were as follows:

	USD	EUR	PLN	Total	Carrying amount
Financial assets
Trade receivables	149	-	-	149	1,890
Other financial assets	-	65	-	65	1,132
Cash and cash equivalents	23	5	-	28	108
Total financial assets	172	70	-	242	3,130
Financial liabilities
Trade payables	639	13	-	652	10,118
Bank and other loans	12,201	-	-	12,201	27,398
Other financial liabilities	2	2,029	160	2,191	14,455
Total financial liabilities	12,842	2,042	160	15,044	51,971
Net foreign currency position	(12,670)	(1,972)	(160)	(14,802)	(48,841)

Due to this exposure, if the US dollar were to strengthen or weaken by 10% against a functional currency, it would, respectively, decrease or increase the Group's profit before tax by USD 6 thousand (2020: USD 1,267 thousand).

Due to this exposure, if the Euro were to strengthen or weaken by 10% against a functional currency, it would, respectively, decrease or increase the Group's profit before tax by USD 164 thousand (2020: USD 197 thousand).

(i) To mitigate the currency risk, management have arranged for the change in currency of the loans from TASCOMBANK to the functional currency at the cost of switching from a fixed interest rate to a variable rate. From the fist quarter of 2021, the total amount of foreign-currency bank loans is USD nil. Refer to Note 16 for details.

Liquidity risk. Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is managed by monitoring monthly rolling forecasts of the Group's cash flows. The Group seeks to maintain a stable funding base mostly through proper management of its working capital and using short-term bank and company loans (as defined in note 17) to cover the cash gaps.

in USD million	As at 31 December 2021	As at 31 December 2020
Current Assets minus Current Liabilities	3.2	(6.3)
less: Other financial assets	(0.4)	(1.1)
less: Other financial liabilities	7.8	8.5
Adjusted Working Capital	10.6	1.1

The table below presents the maturity analysis of financial liabilities. Amounts disclosed in the maturity table are the contractual undiscounted cash flows. Such undiscounted cash flows differ from the amounts included in the consolidated statement of financial position, because the statement of financial position is based on discounted cash flows.

Remaining contractual maturity of financial liabilities as at 31 December 2021 was as follows:

	Within one year	Within two to five years	After five years	Total	Carrying amount
Bank and other loans	2,647	24,944	-	27,591	27,591
Future interest on loans	1,323	1,190	-	2,513	-
Lease liabilities	642	680	118	1,440	1,440
Future interest on lease liabilities	81	1,145	396	1,622	-
Trade payables	8,270	-	-	8,270	8,270
Other financial liabilities	7,790	-	-	7,790	7,790
Total	20,753	27,959	514	49,226	45,091

Remaining contractual maturity of financial liabilities as at 31 December 2020 was as follows:

	Within one year	Within two to five years	After five years	Total	Carrying amount
Bank and other loans	2,878	9,405	15,115	27,398	27,398
Future interest on loans	1,103	1,419	-	2,522	-
Lease liabilities	697	1,810	108	2,615	2,615
Future interest on lease liabilities	74	351	104	529	-
Trade payables	10,118	-	-	10,118	10,118
Other financial liabilities	8,514	1,926	4,015	14,455	14,455
Total	23,384	14,911	19,342	57,637	54,586

KSG Agro S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (All amounts in thousands of US dollars, unless otherwise stated)

Capital Risk Management. The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders as well as to provide financing of its operating requirements, capital expenditures and Group's development strategy. The Group's capital management policies aim to ensure and maintain an optimal capital structure to reduce the overall cost of capital and flexibility relating to Group's access to capital markets.

In thousands of US dollars	31 December 2021	31 December 2020

Bank and other loans	27,591	27,398
Less: cash and cash equivalents	(637)	(108)
Net debt	26,954	27,290
Total equity	23,040	5,382
Net Debt to Equity Ratio	1.17	5.07

Management believes it is responding appropriately to all the risks identified in order to support the sustainability of the Group's business in the current circumstances.

26. Contingencies and Commitments

As at 1 January 2020, tax liabilities in the consolidated statement of financial position included a provision for litigations in the amount of USD 1,001 thousand. Considering the results of ongoing proceedings and the age of the lawsuits, management's current assessment is that probability of an unfavourable outcome for the Group with regard to these lawsuits is low. A reversal of the provision in the amount of USD 879 thousand was therefore recognised in profit or loss for the year 2020.

As at 31 December 2021 and 2020, the Group had no other pending or ongoing litigation that could result in material outflow of economic benefits.

The Group did not have any other material contingent liabilities and/or commitments as at 31 December 2021 and 2020.

27. Events After the Reporting Period

More than 5.6 million Ukrainians (mostly women with children) fled the country to the neighbouring Poland, Romania, Moldova, Hungary and Slovakia within the first few weeks. A quarter of the Ukrainian population was internally displaced. The UN has described it as the fastest growing humanitarian crisis since World War II.

Ukraine's response

The President of Ukraine immediately enacted martial law and general mobilisation. Civilian volunteers who were not drafted into the regular Ukrainian Armed Forces were able to join the Territorial Defence Forces, which are local civilian defence militias officially recognised and supported by the Government of Ukraine. The President of Ukraine turned to the international community for support.

The Government of Ukraine issued USD 270 million worth of war bonds to finance its additional military spending.

The National Bank of Ukraine suspended currency markets, fixed the official exchange rate of Hryvnia against foreign currencies, limited cash withdrawals in Hryvnia and prohibited withdrawal in foreign currencies. As at the date these consolidated financial statements are being issued, some limitations were gradually loosened, but most are still in place.

The Government of Ukraine also initiated several programs to support local businesses, including direct financial aid, subsidies, and tax breaks. Most prominently, the Government:

introduced a single 2% turnover-based tax rate, as an option available to most Ukrainian businesses, in lieu of existing value-added tax and corporate income tax, effective from 1 April 2022.
specifically committed to provide financial support to smaller agricultural producers ahead of the spring sowing campaign, in an attempt to thwart a possible food crisis that the war could ensue.

International response

In response to Russian aggression, a large number of countries began applying sanctions with the aim of crippling the Russian economy. The sanctions were wide-ranging, targeting individuals, banks, businesses, monetary exchanges, bank transfers, exports, and imports.

Several countries that are historically neutral, such as Switzerland and Singapore, have agreed to sanctions.

Sanctions also included cutting off major Russian banks from SWIFT and freezing assets of the Russian Central Bank, which held USD 630 billion in foreign-exchange reserves. By 1 March 2022, the total amount of Russian assets being frozen by sanctions surpassed USD 1 trillion.

While sanctions are intended to weaken the Russian economy, financial support from governments and international financial institutions towards Ukraine are instead directed to support the Ukrainian economy and help it stay afloat. For that purpose, the frozen (or otherwise ceased) Russian assets could be provided to Ukraine as reparations.

In addition to having sanctions imposed on Russia, in addition to receiving political and financial support from countries across the globe, Ukraine is also receiving indirect military support from other countries, particularly its European allies, through supply of weapons to defend against the Russian aggression.

Major multinational companies from various sectors of the economy, including largest energy companies, major credit card networks, technology companies, have disengaged from Russia in support of Ukraine.

Group's response

The Group has increased security around the pig farm and set up a backup office in Chernivtsi, a city close to the western border of Ukraine and further away from the Russian aggression than the Group's main office in Dnipro.

Since most of the Group's production processes are vertically integrated, it is only dependable on suppliers of fertilizer, fuel, and pig feed. Therefore, during March and April of 2022, the Group:

fully stocked with fertilizer and fuel for both, the sowing campaign of 2022 summer crops and the subsequent harvesting campaign of 2021 winter crops, to mitigate any potential risk of future shortage or logistical hurdles;
procured a strategic three-month supply of raw materials for the production of compound feeds at its feed mill, to safeguard against the risk of temporary supply chain disruptions during wartime.

All these purchases were made in Ukrainian currency, so there is no foreign currency risk.

The Group also secured two tranches of additional financing from TASCOMBANK, the Group's main lender, in the amounts of UAH 40 million and UAH 60 million, respectively, (a total equivalent of USD 3.4 million of additional funds) These funds were used to prepay key production costs (fertiliser, fuel, feed components, and salaries) ahead of their anticipated price increases, as well as to fund the wartime reserve of key production supplies.

Current situation

Facing heavy resistance from both the regular Ukrainian Armed Forces and Territorial Defence Forces, Russian ground troops failed to gain a significant foothold in Ukraine fast enough and, after two weeks, their ground progress has essentially stalled. As of 1 April 2022, the Russian battalions attacking the northern regions of Ukraine ceased their assault and withdrew back to Russia, to join the other Russian forces in a unified attack on Donbas, in the east of Ukraine.

As at the date these consolidated financial statements are being issued, the Group had successfully completed its spring sowing campaign, finished harvesting its winter crops and does not expect significant interruptions to its production cycle in the near future.

AI Terminal

KSG Agro S.A.

5680_rns_2022-10-17_5cb8756b-e61d-44a7-9965-437cc3e2a91a.pdf

ANNUAL REPORT 2021

CHAIRMAN'S STATEMENT

KSG Agro S.A.

CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF THE RÉVISEUR D'ENTREPRISES AGRÉÉ FOR THE YEAR ENDED 31 DECEMBER 2021

TABLE OF CONTENTS

Management Report

PRINCIPAL ACTIVITIES

STRATEGY IMPLEMENTATION

Improving Key Financial Ratios

IMPACT OF THE WAR EVENTS IN UKRAINE

FINANCIAL AND OPERATIONAL RESULTS

SUBSEQUENT EVENTS

BUSINESS AND FINANCIAL RISKS

Credit risk

Credit risk concentration

Market risk

Interest rate risk

Currency risk

Liquidity risk

Capital Risk Management

CORPORATE GOVERNANCE

Appointment and replacement of Directors and amendments to the Articles of Association

Powers of Directors

Rights of the shareholders

Transfer of shares

Meetings of the Board of Directors

Audit Committee

Internal Control

Information With Respect To Article 11 Of The Law Of 19 May 2006 On Takeover Bids

Article 11 b) any 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.

Article 11 c) significant direct and indirect shareholdings (including indirect shareholdings through pyramid structures and cross-shareholdings) within the meaning of Directive 2004/109/EC.

Article 11 d) the holders of any securities with special control rights and a description of those rights.

Article 11 e) the system of control of any employee share scheme where the control rights are not exercised directly by the employees.

Article 11 g) any agreements between shareholders which are known to the Company and may result in restrictions on the transfer of securities or voting rights within the meaning of Directive 2004/109/EC.

Article 11 h) the rules governing the appointment and replacement of board members and the amendment of the articles of association.

Article 11 i) the powers of board members, and in particular the power to issue or buy back shares.

Article 11 k) any agreements between the Company and its board members or employees providing for compensation if they resign or are made redundant without valid reason or if their employment ceases because of a takeover bid.

CORPORATE RESPONSIBILITY AND DIVERSITY

From quarantines to bomb shelters. Our social response during wartime

General

Areas of focus

Employees

Support for local communities

Environmental protection and animal welfare

Respect for human rights, anti-corruption and bribery

Diversity policy

Management and Board diversity

Due diligence process

KSG Agro S.A. Statement of the Board of Directors and management's responsibility for the preparation and approval of the consolidated financial statements

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-

-

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KSG Agro S.A. Consolidated Statement of Financial Position

KSG Agro S.A. Consolidated Statement of Comprehensive Income

KSG Agro S.A.

Consolidated Statement of Cash Flows

KSG Agro S.A. Consolidated Statement of Changes in Equity

1. Corporate Information

2. Group Structure

KSG Agro S.A. Notes to the Consolidated Financial Statements

3. Operating Environment and Going Concern

KEY RISKS AND UNCERTAINTIES

RISKS AND UNCERTAINTIES: RUSSIA-UKRAINE WAR

2014-2021: Euromaidan, Annexation of Crimea, and the War in Donbas

2022: Russian Invasion

Management's Assessment of the Impact of the War

RISKS AND UNCERTAINTIES: LONG-TERM FINANCING AND CASH GAPS

RISKS AND UNCERTAINTIES: CORONAVIRUS PANDEMIC

DEVELOPMENT STRATEGY: CONTINUING FOCUS ON CROP FARMING AND PIG BREEDING

DEVELOPMENT STRATEGY: IMPROVING KEY FINANCIAL RATIOS

IN CONCLUSION

4. Adoption of New or Revised Standards and Interpretations

Accounting policies, amendments and interpretations endorsed by the European Union which will be applicable from 1 January 2022 or later and which have not been adopted early by the Group.

Accounting standards, amendments and interpretations published by the IASB but not yet endorsed by the European Union:

5. Summary of Significant Accounting Policies

Basis of preparation