Consolidated and the parent
company’s separate financial
statements for the year ended
31 December 2021
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
Translation note:
This version of the accompanying documents is a translation from the original, which was prepared in
Lithuanian. All possible care has been taken to ensure that the translation is an accurate representation of
the original. However, in all matters of interpretation of information, views or opinions, the original
language version of the accompanying documents takes precedence over this translation.
Table of contents
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
1
Company details
Telephone: +370 441 55330
Telefax number: +370 441 55242
Company code: 277160980
Registered office address: P. Lukošaičio g. 14, Vilkyškiai, LT-99254 Pagėgiai
Board
Gintaras Bertašius (Chairman)
Sigitas Trijonis
Rimantas Jancevičius
Vilija Milaševičiutė
Andrej Cyba
Linas Strėlis
Management
Gintaras Bertašius, General Manager
Vaidotas Juškys, Executive Director
Sigitas Trijonis, Technical Director
Rimantas Jancevičius, Director for Purchasing Raw Materials
Arvydas Zaranka, Production Director
Vilija Milaševičiutė, Director for Economic and Financial Affairs
Rita Juodikienė, Director for Corporate Governance and Quality
Auditor
PricewaterhouseCoopers UAB
Banks
SEB Bankas AB
Swedbank AB
Luminor Bank AB
Šiaulių Bankas AB
OP Corporate Bank plc Lithuania branch
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
2
Management’s statement on the consolidated and parent
company’s separate annual financial statements
On this day the management has discussed and authorised for issue the following set of separate
and consolidated annual financial statements.
The separate and consolidated annual financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the European Union. In our opinion, the
accounting policies applied are appropriate and the separate and consolidated annual financial
statements give a true and fair view, in all material respects, in accordance with International
Financial Reporting Standards as adopted by the European Union.
We recommend that the General Meeting of Shareholders approve the separate and consolidated
annual financial statements.
Vilkyškiai, 8 April 2022
Gintaras Bertašius
General Manager
(The document is signed by a qualified electronic signature)
Vilija Milaševičiutė
Director for Economic and Financial Affairs
(The document is signed by a qualified electronic signature)
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
3
Consolidated and separate statements of financial position
EUR ‘000
GROUP
At 31 December
Note
COMPANY
At 31 December
2021
2020
Assets
2021
2020
Investment property
12,14
Property, plant and equipment
12
Right-of-use assets
12,13
Intangible assets
15
Investments in subsidiaries
16
Non-current amounts receivable
17
Deferred income tax assets
26
Non-current assets
Inventories
18
Trade and other receivables
19
Prepayments
20
Cash and cash equivalents
21
Current assets
Total assets
Equity
Share capital
Share premium
Reserves
Retained earnings
Equity attributable to owners of the
Company
22
Non-controlling interest
Equity
22
Liabilities
Borrowings
23
Lease liabilities
23
Government grants
24
Trade and other payables
25
___
____
____
____
Non-current liabilities
Borrowings
23
Lease liabilities
23
Income tax payable
Trade and other payables
27
Current liabilities
Liabilities
Total equity and liabilities
The notes on pages 10 to 74 are an integral part of these separate and consolidated financial statements.
General Manager Gintaras Bertašius
Director for Economic and Financial Affairs Vilija Milaševičiutė
8 April 2022
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
4
Consolidated and separate statements of profit or loss
EUR ‘000
The notes on pages 10 to 74 are an integral part of these separate and consolidated financial statements.
Gintaras Bertašius Vilija Milaševičiutė
General Manager Director for Economic and Financial Affairs
GROUP
COMPANY
2021
2020
EUR ’000
Note
2021
2020
Revenue
1
-138,849
-110,244
Cost of sales
2
-187,411
-147,825
Gross profit
Other operating income
3
-3,167
-3,182
Distribution expenses
6
-2,987
-3,182
-4,301
-3,185
Administrative expenses
7
-3,064
-2,320
-2,749
Impairment of goodwill
15
-118
-79
Other operating expenses
4
-2,908
-1,516
-48
Other gain (loss) – net
5
-170
Results of operating activities
Finance income
-1,187
-1,216
Finance costs
-464
-768
-978
-1,190
Finance costs, net
9
-256
-754
Profit (loss) before income tax
-656
Income tax
10
-420
Profit (loss) for the reporting year
Attributable to:
Shareholders of the Company
-36
Non-controlling interest
Profit (loss) for the reporting year
Basic and diluted earnings per share (in EUR)
11
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
5
Consolidated and separate statements of other comprehensive income
EUR ‘000
GROUP
COMPANY
2021
2020
EUR ‘000
2021
2020
Profit (loss) for the reporting year
Other comprehensive income
Items that will not be reclassified to profit or loss
Items that are or may be subsequently reclassified to
profit or loss
Other comprehensive income for the year, net of
income tax
Total comprehensive income for the year
Attributable to:
Shareholders of the Company
-36
Non-controlling interest
Total comprehensive income for the year
The notes on pages 10 to 74 are an integral part of these separate and consolidated financial statements.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
6
Separate statement of changes in equity
EUR ‘000
Note
Share
capital
Share
premium
Revaluation
reserve
Legal
reserve
Retained
earnings
Total
Balance at 1 January 2020
Profit for the year
Other comprehensive income
Depreciation, write-off of
revalued assets
12
-72
Total other comprehensive
income
-72
Total comprehensive income
for the year
-72
Transactions with owners
recognised directly in equity
,
Total transactions with owners
Balance at 31 December 2020
22
Balance at 1 January 2021
22
Profit (loss) for the period
Other comprehensive income
Depreciation, write-off of
revalued assets
12
-68
Total other comprehensive
income
-68
Total comprehensive income
for the year
-68
Transactions with owners
recognised directly
in equity
-
-
Total transactions with owners
-955
-955
Balance at 31 December 2021
22
The notes on pages 10 to 74 are an integral part of these separate and consolidated financial statements.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
7
Consolidated statement of changes in equity
Equity attributable to owners of the Company
EUR ‘000
Note
Share
capital
Share
premium
Revalua-
tion re-
serve
Legal
reserve
Retained
earnings
(deficit)
Total
Non-
con-
trolling
inte-
rest
Total equity
At 1 January 2020
22
Comprehensive income for the year
Net profit (loss)
Other comprehensive income
Depreciation, write-off of revalued assets
-108
Total other comprehensive income
-108
Total comprehensive income for the year
-108
Contributions by and distributions to
owners:
Total contributions by and distributions to
owners
Changes in the Group
not resulting in a loss of control
Total transactions with shareholders
At 31 December 2020
22
At 1 January 2020
22
Comprehensive income for the year
Net profit (loss)
-36
Other comprehensive income
Depreciation, write-off of revalued
assets
-173
Total other comprehensive income
-173
Total comprehensive income for the
year
-173
-36
Contributions by and distributions to
owners:
Total contributions by and distributions to
owners
-955
-955
-955
Change in fair value of put option
-53
-53
-53
Total contributions by and distribution
to owners
-
-1,008
-
Changes in the Group
not resulting in a loss of control
Non-controlling interests on acquisition of
subsidiary
16
Total transactions with shareholders
-1,008
-1,008
-892
At 31 December 2021
22
The notes on pages 10 to 74 are an integral part of these separate and consolidated financial statements.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
8
Consolidated and separate statements of cash flows
EUR ‘000
GROUP
COMPANY
2021
2020
EUR ‘000
2021
2020
Cash flows from operating activities
Profit (loss) for the year
Adjustments for:
Depreciation of property, plant and equipment
Loss (gain) on change in fair value of investment
property
-375
Amortisation of intangible assets
-590
-579
Amortisation and write-off of grants
-188
-198
-39
Change in inventory write-down allowance
-4
Impairment of goodwill
-11
-13
Loss (gain) from disposal and write-off of property,
plant and equipment
-71
Other operating income
-7,373
-5,651
-730
Income tax expenses
-731
Finance costs, net
-2,477
-5,755
-497
Change in inventories
-1,648
-289
-62
Change in non-current amounts receivable
-890
-3,396
-418
Change in trade and other receivables and prepayments
-5,984
Change in trade and other payables
-687
-908
Interest paid
-321
-477
Income tax paid
Net cash flows generated from operating activities
Cash flows from investing activities
-1,474
-2,121
Payments for acquisition of property, plant and
equipment
-750
-1,113
-17
-12
Payments for acquisition of intangible assets
-7
-12
Proceeds from sale of property, plant and equipment
Acquisition of ownership interest in subsidiary
-271
-2,125
-210
Loans granted
-2,955
-210
Government grants received
Dividends received
Repayment of loans
-271
Outflow of cash to acquire subsidiary, net of cash
acquired
-2,392
-2,203
Net cash flows generated used in investing activities
-27
-1,248
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
9
Consolidated and separate statements of cash flows (continued)
EUR ‘000
GROUP
Note
COMPANY
2021
2020
EUR ‘000
2021
2020
Cash flows from financing activities
Proceeds from borrowings
23
-7,058
-13,303
Repayments of borrowings
23
-2,500
-9,664
-535
-407
Lease payments
-533
-390
-914
Payment of dividends
-914
-4,032
-5,823
Net cash flows generated from (used in)
financing activities
-1,996
-3,855
-
Net increase (decrease) in cash and cash
equivalents
-76
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
21
The notes on pages 10 to 74 are an integral part of these separate and consolidated financial statements.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
10
Notes to the consolidated and separate financial statements
General information
The following companies are part of the Vilvi Group (hereinafter the “Group”):
x VILKYŠKIŲ PIENINĖ AB , a parent company (hereinafter the “Parent” or the “Company”);
x Modest AB, a subsidiary (hereinafter the “subsidiary Modest AB” or “Modest AB”);
x Kelmės Pieninė AB, a subsidiary (hereinafter the “subsidiary Kelmės Pieninė AB” or “Kelmės Pieninė
AB“).
x Kelmės Pienas UAB, a subsidiary (hereinafter the “Kelmės Pienas UAB).
x Pieno Logistika AB, a subsidiary (hereinafter the “subsidiary Pieno Logistika AB” or “Pieno Logistika
AB”).
x Baltic Dairy Board SIA, a subsidiary (hereinafter the “subsidiary Baltic Dairy Board SIA“ or “Ba
ltic
Dairy Board SIA“).
VILKYŠKIŲ PIENINĖ AB was established in 1993. The Parent has no branches or representative offices.
VILKYŠKIŲ PIENINĖ AB is a Lithuanian company listed on Nasdaq OMX Vilnius AB stock exchange.
As at 31 December 2021, the Company’s shareholder structure was as follows:
Shareholder
Number of shares
held
Nominal value,
EUR
Total value, EUR
Swisspartners Versicherung AG
Zweigniederlassung Österreich
6,067,206
0.29
1,759,490
Multi Asset Selection Fund
2,035,729
0.29
590,361
Mr. Gintaras Bertašius
927,110
0.29
268,862
Other minority shareholders
2,912,955
0.29
844,757
Total capital
11,943,000
0.29
3,463,470
As at 31 December 2020, the Company’s shareholder structure was as follows:
Shareholder
Number of
shares held
Nominal value,
EUR
Total value, EUR
Swisspartners Versicherung AG
Zweigniederlassung Österreich
6,067,206
0.29
1,759,490
Multi Asset Selection Fund
2,035,729
0.29
590,361
Other minority shareholders
3,840,065
0.29
1,113,619
Total capital
11,943,000
0.29
3,463,470
As from April 2018, Mr Gintaras Bertašius, the main shareholder of Vilkyškių Pieninė AB, together with
related persons concluded a joint life insurance policy with Swisspartners Versicherung AG
Zweigniederlassung Österreich, by contributing in total 6,067,206 (50.8%) of ordinary registered shares held
in Vilkyškių Pieninė AB. The insurance company had irrevocably granted powers to exercise all non-
property rights of a shareholder, including the right to vote at the meeting of shareholders of the issuer, to Mr
Gintaras Bertašius and the related persons for the entire validity period of the insurance policy.
The Company’s ultimate controlling party is Mr Gintaras Bertašius and persons related to him .
Business activities are carried out at the main production facilities located in Vilkyškiai, Pagėgiai region
municipality. The Parent also has a milk distribution centre located in Eržvilkas, Jurbarkas region
municipality.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
11
Notes to the consolidated and separate financial statements
General information (continued)
The Parent controls the subsidiary Modest AB, which is engaged in milk processing and production of milk
products. The Company owns 99.7% of shares with voting rights in the subsidiary Modest AB. Modest AB
produces Mozzarella cheese, blue-veined cheese, other cheese products.
The Parent also controls the subsidiary Kelmės Pieninė AB, which is engaged in whey processing and
production of dried milk products. The Company owns 100% of shares with voting rights in the subsidiary
Kelmės Pieninė AB.
Before 28 February 2021, Kelmės Pieninė AB was engaged in two types of activities: production of fresh
milk products; whey processing and production of dried milk products. For the purpose of ensuring a more
efficient operation of those two types of activities, at the end of 2020 Kelmės Pieninė AB founded the
subsidary Kelmės Pienas UAB, which acquired the business of production of fresh milk products (curd,
yougurt, sour cream, cream, butter) as continued business activities and a complex. Kelmės Pieninė AB
transferred to Kelmės Pienas UAB the agreements, assets and related rights and obligations solely pertaining
to fresh milk products. The transfer was completed on 28 February 2021. Kelmės Pieninė AB owns 100% of
shares of Kelmės Pienas UAB.
The Parent also controls the subsidiary Pieno Logistika AB, which is engaged in lease of buildings. The
Company owns 58.9% of shares with voting rights in the subsidiary Pieno Logistika AB.
Since 1 April 2021, the group also includes the subsidiary Baltic Dairy Board SIA, which is engaged in
production of milk products with high value-added dairy ingredients (GOS), as well as in milk and whey
separation, which involves separation of proteins and lactose, resulting in two different types of products.
The Company owns 70% of shares with voting rights in the subsidiary Baltic Dairy Board SIA.
As at 31 December 2021, the Group had 867 (31 December 2020: 830) employees.
As at 31 December 2021, the Company had 440 (31 December 2020: 459) employees.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
12
Notes to the consolidated and separate financial statements
Basis of preparation
Statement of compliance
The Group’s consolidated and the Company’s separate financial statements (hereinafter the “financial
statements” or the “consolidated and separate financial statements”) have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European Union (hereinafter “the
EU”).
Pursuant to the Law on Companies of the Republic of Lithuania, the annual financial statements prepared by
management have to be approved by the General Meeting of Shareholders. The shareholders of the Company
have a statutory right to approve these financial statements or not to approve and to require preparation of a
new set of the annual financial statements.
These financial statements include the consolidated financial statements of the Group and the separate
financial statements of the Company.
Measurement basis
The financial statements have been prepared on a historical cost basis except for:
x buildings that are a part of property, plant and equipment and measured at fair value, less any
subsequent accumulated depreciation and impairment losses;
x buildings that a part of investment property and measures at fair value.
Functional and presentation currency
All amounts in these financial statements are presented in the euros (EUR) and they have been rounded to
the nearest thousand.
Foreign currency transactions
Foreign currency transactions are translated into the euros using the exchange rate prevailing at the date of
the transaction. Monetary assets and liabilities denominated in a foreign currency are translated in the euros
using the exchange rate prevailing at the date of the preparation of the statement of financial position. All
foreign currency transactions have been translated in accordance with the provisions of the Law on
Accounting using the exchange rate of the euro against the foreign currency prevailing at the date of the
transaction.
Foreign exchange differences arising from the settlement of such transactions are recognised in the statement
of profit or loss. Non-monetary assets and liabilities that are measured at historical cost in a foreign currency
are translated into the euros using the official exchange rate prevailing at the date of the transaction.
Consolidation
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group
c
ontrols an entity when the Group is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. The financial statements
of the subsidiaries are included
in the Group’s consolidated financial statements from the date on which the
Group obtains control, and continue to be included until the date that such control ceases
All intra-group transactions and balances are eliminated for the purpose of the consolidated financial
statements.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
13
Notes to the consolidated and separate financial statements
Basis of preparation (continued)
Consolidation (continued)
The acquisition method is used to account for business combinations. The consideration transferred in return
for the acquisition of the subsidiary is the fair value of the assets transferred, the liabilities assumed and the
Group‘s equity interest. The consideration transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Acquisition-related costs are expensed when incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. Under the acquisition method, the Group
recognises the non-controlling interest in the acquiree either at the fair value or at the non-controlling
interest’s proportionate share of net assets in the acquiree.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and
the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the
Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less
than the fair value of the Group’s share of net assets in the acquiree, the difference is recognised directly in
the statement of profit and loss as negative goodwill.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
14
Notes to the consolidated and separate financial statements
Summary
of significant accounting policies
The accounting policies, set out below, have been consistently applied by the Group and the Company to all
the periods presented in these financial statements, except for those which have changed due to the IFRS
amendments and the new IFRS, as presented in the section below ‘Effect on financial statements of
application of new standards and amendments and new interpretations to standards’.
Property, plant and equipment
Property, plant and equipment, excluding buildings, is stated at acquisition cost, less subsequent accumulated
depreciation and impairment losses.
Costs related to the acquisition of the assets are included in the acquisition
cost. The cost of assets pro
duced internally by the Parent and the subsidiaries comprises the cost of materials,
direct labour costs and indirect labour costs allocated on a proportionate basis. When parts of the items of
property, plant and equipment have different useful lives, the
y are accounted for as separate items of property,
plant and equipment.
The net book value of the item of property, plant and equipment of the Group and the Company includes the
cost of the replaced parts of such asset, only when it is probable that futur
e economic benefits associated with
the item will flow to the Group and the Company and the cost of the item can be measured reliably. Other
expenses related to property, plant and equipment are recognised in the statement of profit or loss during the
reporting period in which they are incurred.
Buildings are recorded at revalued amounts, being their fair value at the date of the revaluation less any
subsequent accumulated depreciation and impairment. Revaluations are carried out at regular intervals, i.e. at
least every five years, to ensure that the carrying amount of buildings does not materially differ from their
fair value at the date of the preparation of the statement of financial position. The fair value of buildings is
determined by certified independent property valuers. Depreciation is calculated on a straight-line basis over
the estimated useful lives of assets. The revaluation reserve for buildings is transferred to retained earnings
in proportion to the depreciation of revalued buildings.
In case of revaluation, when the estimated fair value of an asset is lower than its net book value, the net book
value of the asset is immediately reduced to the fair value and such impairment is recognised as expenses.
However, such impairment is deducted from the previous revaluation increase of the asset accounted for in
the revaluation reserve, to the extent it does not exceed the amount of such increase.
In case of revaluation, when the estimated fair value of an asset is higher than its net book value, the net
book value of the asset is increased to the fair value and such increase is recorded in the revaluation reserve
of property, plant and equipment under the shareholder’s equity in the statement of other comprehensive
income. Depreciation is recognised on a straight-line basis to write down the cost of the asset over its useful
life, less its residual amount.
Depreciation is recognised in the statement of profit or loss on a straight-line basis over the estimated useful
lives of each part of an item of property, plant and equipment, since this most closely reflects the expected
pattern of consumption of the future economic benefits embodied in the asset.
The estimated useful lives are as follows:
Buildings 8-40 years
Plant and machinery 4-20 years
Other assets 3-15 years
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
15
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Property, plant and equipment (continued)
The useful lives, residual values and depreciation methods are reviewed regularly to ensure that the
deprecation period and other estimates are consistent with the expected pattern of economic benefits from
property, plant and equipment.
Investment property
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied
by the Company, is classified as investment property. Investment property also includes property that is
being constructed or developed for future use as investment property.
Investment property is measured initially at its cost, including related transaction costs and where applicable
borrowing costs.
After initial recognition, investment property is carried at fair value. Investment property that is being
redeveloped for continuing use as investment property, or for which the market has become less active,
continues to be measured at fair value. Investment property under construction is measured at fair value if
the fair value is considered to be reliably determinable. Investment properties under construction for which
the fair value cannot be determined reliably, but for which the Company expects the fair value of the
property will be reliably determinable when construction is completed, are measured at cost less impairment
until the fair value becomes reliably determinable or construction is completed - whichever is earlier.
It may sometimes be difficult to determine reliably the fair value of the investment property under
construction. In order to evaluate whether the fair value of an investment property under construction can be
determined reliably, management considers the following factors, among others:
x the provisions of the construction contract;
x the stage of completion;
x whether the project/property is standard (typical for the market) or non-standard;
x the level of reliability of cash inflows after completion;
x the development risk specific to the property;
Fair value is based on active market prices, adjusted, if necessary, for differences in the nature, location or
condition of the specific asset. If this information is not available, the Company uses alternative valuation
methods, such as recent prices on less active markets or discounted cash flow projections. Valuations are
performed as at the financial position date by professional valuers who hold recognised and relevant
professional qualifications and have recent experience in the location and category of the investment
property being valued. These valuations form the basis for the carrying amounts in the Company’s financial
statements.
The fair value of investment property reflects, among other things, rental income from current leases and
other assumptions market participants would make when pricing the property under current market
conditions.
Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future
economic benefits associated with the expenditure will flow to the Company and the cost of the item can be
measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an
investment property is replaced, the cost of the replacement is included in the carrying amount of the
property, and the fair value is reassessed.
Changes in fair values are recognised in the statement of profit and loss. Investment properties are
derecognised when they have been disposed of.
Where the Company disposes of a property at fair value in an arm’s length transaction, the carrying value
immediately prior to the sale is adjusted to the transaction price, and the adjustment is recorded in the
income statement within net gain from fair value adjustment on investment property.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
16
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Investment property (continued)
If an investment property becomes owner occupied, it is reclassified as property, plant and equipment. Its
fair value as at the date of reclassification becomes its cost for subsequent accounting purposes.
If an item of owner-occupied property becomes an investment property because its use has changed, any
difference resulting between the carrying amount and the fair value of this item as at the date of transfer is
treated in the same way as a revaluation under IAS 16. Any resulting increase in the carrying amount of the
property is recognised in the income statement to the extent that it reverses a previous impairment loss, with
any remaining increase recognised in other comprehensive income and increased directly to equity in
revaluation surplus within equity. Any resulting decrease in the carrying amount of the property is initially
charged in other comprehensive income against any previously recognised revaluation surplus, with any
remaining decrease charged to the income statement.
Where an investment property undergoes a change in use, such as commencement of development with a
view to sell, the property is transferred to inventories. A property’s deemed cost for subsequent accounting
as inventories is its fair value at the date of change in use.
Goodwill
Goodwill is an asset representing the future economic benefits arising from assets that cannot be separated
from other assets and recognised on a business combination.
Goodwill arising on acquisition of subsidiaries is recognised as intangible assets.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses (tested
on an annual basis). For the purposes of impairment testing, goodwill acquired in a business combination is,
from the acquisition date, allocated to each of the Group's cash-generating units that are expected to benefit
from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are
assigned to those units. Cash-generating units are operations of Modest AB relating to production and sale of
cheese and cheese products, and operations of Kelmės Pienas UAB relating to production and sale of fresh
milk products.
Where goodwill is a portion of a cash-generating unit, and a portion of an operation within that unit is
disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the
operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this
circumstance is measured based on the carrying amounts of the operation disposed of and the portion of the
cash-generating unit retained.
Non-controlling interest
Non-controlling interest is the equity in a subsidiary not attributable directly or indirectly to the Parent.
Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as
owners and therefore no goodwill is recognised as a result of such transactions. Adjustments to non-
controlling interest not resulting in a loss of control are based on a proportionate amount of the controlled net
assets of the subsidiary.
Non-controlling interest in Baltic Dairy Board SIA is measured at fair value. The Group decided to recognise
non-controlling interest in proportion to its share of net identifiable assets acquired.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
17
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Non-controlling interest (continued)
Non-controlling interest’s put option
The Group has signed a written put option, under which the non-controlling shareholders of Baltic Dairy
Board SIA have a right to sell the shares of Baltic Dairy Board SIA to AB Vilkyškių Pieninė AB as from 1
April 2023. The transaction price was determined with reference to the fair value estimated by an
independent expert at the date of execution. The terms do not provide a present ownership interest in the
shares subject to the put.
The amount that may become payable upon exercising the put option is initially recognised at the present
value of redemption amount and accounted for in the Parent’s liabilities and equity. For as long as the put
option remains not exercised, the non-controlling interest is recognised at the end of each reporting period,
whereas the changes in liabilities relating to non-controlling interest’s put option are accounted for in the
Parent’s equity.
In case the put option remains not exercised, the liability is derecognised and the Parent‘s equity is adjusted
accordingly.
Investments in subsidiaries
Investments in the subsidiaries in the separate financial statements are stated at acquisition cost, less
impairment losses.
Inventories
Inventories comprise finished products, work in progress, and goods and materials.
Inventories are initially measured at acquisition or production cost. The production cost includes direct labour
costs, costs of materials and conversion costs incurred during the production period.
Production costs also
include a systematic allocation of fixed and variable production overheads. At the end of the reporting period
inventories are measured at the lower of cost or net realisable value, less any write-
downs. Net realisable value
is the estimated selling price, less the estimated costs of completion and selling expenses. Write-
downs of
inventories to net realisable value are included in the cost of sales.
The utilisation of inventories is determined using the first-in, first-out (FIFO) method.
Financial assets and liabilities
The Group and the Company classify their financial assets into the following categories:
x financial assets subsequently measured at fair value (either at fair value through other
comprehensive income or at fair value through profit or loss), and the Group and the Company have
no such assets;
x financial assets measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows. The Group reclassifies debt instruments when and only when its
business model for managing those assets changes.
All regular way purchases and sales of financial assets are recognised on trade-date, the date on which the
group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash
flows from the financial assets have expired or have been transferred and the group has transferred
substantially all the risks and rewards of ownership.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
18
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Financial assets and liabilities (continued)
On initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the
acquisition of the financial asset.
Financial assets measured at amortised cost: Assets that are held for collection of contractual cash flows
where those cash flows represent solely payments of principal and interest are measured at amortised cost.
Interest income from these financial assets is included in finance income using the effective interest rate
method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in
other gains/(losses) together with foreign exchange gains and losses.
Trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary
course of business. They are generally due for settlement within 30 to 60 days, and therefore, are all
classified as current. Trade receivables are recognised initially at the amount of consideration that is
unconditional. The Group and Company holds the trade receivables with the objective to collect the
contractual cash flows and therefore measures them subsequently at amortised cost using the effective
interest method.
The carrying amounts of the trade receivables include receivables which are subject to a factoring
arrangement. Under this arrangement, Group and Company has transferred the relevant receivables to the
factor in exchange for cash and is prevented from selling or pledging the receivables. Under factoring with
recourse agreements, Group and Company has retained late payment and credit risk. The Group and
Company therefore continues to recognise the transferred assets in their entirety in its statement of financial
position. The amount repayable under the factoring agreement is presented as secured borrowing. The Group
and Company considers the held to collect business model to remain appropriate for these receivables and
hence continues measuring them at amortised cost. Under factoring without recourse agreements Group and
Company does not retain any risks, therefore these assets are derecognised from statement of financial
position and at year-end there is no balances outstanding.
Impairment
The Group and Company assess on a forward-looking basis the expected credit losses associated with its
debt instruments measured at amortised cost. The impairment methodology applied depends on whether
there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires
expected lifetime losses to be recognised from initial recognition of the trade receivables and contract assets.
To measure the expected credit losses, trade and other receivables have been grouped based on shared credit
risk characteristics and the days past due. The expected loss rates are based on the profiles of receivables
from sale of goods over the period of 48 months before 31 December 2021 or 31 December 2020,
respectively, and the corresponding historical credit losses experienced within this period. The historical loss
rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the
ability of the customers to the amounts due.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is
no reasonable expectation of recovery include, amongst others, failure of a debtor to engage in a repayment
plan with the Group, and contractual payments past due more than 180 days.
Impairment losses on trade receivables are presented as net impairment losses within operating profit.
Subsequent recoveries of amounts previously written off are credited against the same line item.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
19
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Trade and other payables
These amounts represent outstanding liabilities for goods and services provided to the Group prior to the end
of financial year. The amounts payable are unsecured and are usually paid within 30 days after their
recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12
months after the reporting period. They are recognised initially at their fair value and subsequently measured
at amortised cost using the effective interest method.
Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset are capitalised during the period of time that is required to complete and
prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial
period of time to get ready for their intended use or sale. Other borrowing costs are expensed in the period in
which they are incurred.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and
the redemption amount is recognised in profit or loss over the period of the borrowings using the effective
interest rate method. Costs incurred in relation to collateralisation of borrowing facilities are recognised as
transaction costs of the borrowings to the extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence
that it is probable that some or all of the facility will be drawn down, the related costs are capitalised as a
prepayment for liquidity services and amortised over the period of the loan facility to which it relates.
Financial assets or financial liabilities at fair value through profit or loss
Financial assets and financial liabilities at fair value through profit or loss are recorded at fair value in the
statement of financial position. Gains or losses on reassessment are recognised directly in profit or loss.
Interest income and expense and di
vidends on such investments are recognised as interest income and
dividend income or interest expenses, respectively.
Interest-bearing amounts
Interest-bearing amounts are recognised initially at fair value, plus transaction costs. Subsequently, interest
-
bearing amounts are recognised at amortised cost using the effective interest method.
Reversal of impairment
An impairment loss on amounts receivable carried at amortised cost is reversed, if, in a subsequent period, the
increase in the recoverable amount c
an be related to an event occurring after the impairment loss was
recognised.
The impairment loss is reversed to the extent that the carrying value of the asset does not exceed its value that
would have been determined had no impairment loss been recognised.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
20
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Fair value measurement
The fair value of investments traded in an active market is based on quoted market prices at the reporting date.
If the market for a financial asset is not active (and for unlist
ed securities), the Group and the Parent establish
fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to
other instruments that are substantially the same, discounted cash flow analysis or other valuation models.
In determining the fair value of assets or liabilities the Group and the Company use as much as possible inputs
that are observable in the market. A fair value hierarchy categorises into three levels the inputs to valuation
techniques used to measure fair value:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices);
Level 3: inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs).
The inputs used to measure the fair value of an asset or a liability might be categorised within d
ifferent levels
of the fair value hierarchy. In those cases, the fair value measurement is categorised in its entirety in the same
level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group and the
Company recognise the amounts transferred within the fair value hierarchy levels at the
end of the reporting period in which the change occurred.
Fair values measured for the purposes of assessment and (or) disclosure are calculated using the below
presen
ted methods. When applicable, further information on assumptions used in determining fair values is
disclosed in the note related to specific assets or liabilities.
Derecognition of financial assets and financial liabilities
Financial assets
A financial asset (or a part of a financial asset or part of a group of similar financial assets) is derecognised
when:
the rights to receive cash flows from the asset have expired; or
the Group and the Company have retained the right to receive cash inflows from the asset, but have
assumed an obligation to pay them in full without material delay to a third party under a “pass
through” arrangement; or
the Group and the Company have transferred their rights to receive cash flows from the asset and/or
(a) have transferred all the risks and rewards of the asset, or (b) have neither transferred nor retained
all the risks and rewards of the asset, but have transferred control of the asset.
Where the Group and the Company have transferred their rights to receive cash flows from the asset and
have neither transferred nor retained all the risks and rewards of the asset nor transferred control of the asset,
the asset is recognised to the extent of the Parent’s/subsidiary’s continuing involvement in the asset.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is settled, cancelled or expires.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
21
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash at bank. Cash equivalents are short-term, highly
liquid investments that are readily convertible to known amounts of cash with original maturities of three
months or less and that are subject to an insignificant risk of change in value.
For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand, demand
deposits in bank accounts and other short-term liquid investments. Bank overdrafts are recognised in the
statement of financial position as current borrowings and are not attributed to cash equivalents in the
statement of cash flows as usually their balance is negative. Interest and dividends received are attributed to
cash flows of investing activities, interest paid are attributed to cash flows from operating activities, whereas
dividends paid – to cash flows from financing activities.
Impairment
Non-financial assets
Non-
financial assets, except for inventories and deferred tax assets, are reviewed for impairment whenever
events or changes in circumstance indicate that the asset may be impaired. If such an indication exists, the
asset's recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the higher of its value in use and its fair value,
less costs to sell. The asset’s value in use is calculated by discounting future cash flows to their present value
using a pre-tax discount rate reflecting current market assumptions regarding time value of money and risk
specific to the asset concerned.
For the purpose of impairment testing, assets that cannot be tested individually are grouped into the smallest
group of assets that generates ca
sh inflows through the asset’s continuous use and is independent from cash
flows generated by other assets or the groups of assets (“the cash generating unit” or “CGU”).
Whenever the net book value of an asset exceeds its recoverable amount, an impairment
loss is recognised in
the statement of profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce
the carrying amount of goodwill allocated to the unit and then to reduce the carrying amount of the other
assets in the unit (group of units) on a pro rata basis.
Reversal of impairment losses recognised in prior years is recorded when there is an indication that the
impairment losses recognised for the asset no longer exist or have decreased. Reversal is accounted for in
the statement of profit or loss under the same caption as impairment loss. An impairment loss allocated to
goodwill is not reversed.
Provisions
Provisions for liabilities are recognised in the statement of financial position when there are commitments as
a result of past events and it is probable that additional funds will be required to settle these obligations. If
the impact is material, provisions are estimated by discounting future cash flows to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the liability.
Leases
Where the Group/Company is a lessee
The Group and the Company lease out buildings, motor vehicles, plant and machinery, and other assets. The
Group‘s term of lease ranges up to 8 years, but they contain an extension option.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
22
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Leases (continued)
As the management determines the lease term, it considers all relevant facts and circumstances that create an
economic incentive for the lessee to exercise the option to extend the lease, or not to exercise the option to
terminate the lease. The extension option is included in the lease term only when it is reasonably certain that
the lease will be extended (or will not be terminated).
The lease terms and conditions are negotiated individually, however, there are no non-standard terms and
conditions. The lease contracts do not stipulate any financial performance covenants that the Group and the
Company would be required to comply with.
The lease liabilities arising from a lease are measured by a lessee at the commencement date on a present
value basis, including the following payments:
x fixed payments (including in-substance fixed payments), less any lease incentives receivable
x variable lease payment that are based on an index or a rate, initially measured using the index or rate as
at the commencement date
x amounts expected to be payable by the group under residual value guarantees
x payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, the lessee’s incremental borrowing rate is used.
The interest rate implicit in the lease is the interest rate as a result of which the present value of the lease
payments and unguaranteed residual value is equal to the sum of fair value of leased assets and any other
initial direct costs of the lessor.
The lease liability is measured at amortised cost using the effective interest rate, which represents the
discount rate used in discounting of lease payments. Interest expenses relating to the lease liability are
allocated over the lease period and recognised through profit or loss.
Right-of-use assets are initially measured at cost comprising the following:
x the amount of the initial measurement of lease liability;
x any lease payments made at or before the commencement date less any lease incentives received;
x any initial direct costs incurred by a lessee; and
x restoration costs.
Subsequently the right-of-use assets are recognised by the lessee at cost less accumulated depreciation and
impairment losses. When the title of ownership is transferred to the lessee at the end of the lease period or
when the price of the right-of-use assets shows that the lessee will exercise the buy option, then the lessee
estimates depreciation of right-of-use assets from the commencement date to the end of the useful life of the
leased assets. Otherwise, the lessee estimated depreciation for right-of-use assets from the commencement
date to the end of the useful life of the right-of-use assets or the end of the lease period, depending on which
occurs earlier.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line
basis as an expense in profit or loss. Short-term leases are leases that, at the commencement date, have a
lease term of 12 months or less, and that do not contain a purchase option. Low-value assets mostly represent
milk products.
Operating lease -– where the Group/Company is a lessee
Operating lease payments are recognised as expenses in profit or loss using the straight-line method over the
lease term.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
23
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Dividends
Dividends are recorded as a liability or an amount receivable in the period in which they are declared.
Government grants
Grants received as a compensation for the costs incurred are recognised in profit or loss over the period in
which the costs are incurred.
Government and the European Union grants and third-party compensations received in the form of non-
current assets or intended for the purchase of non-current assets are considered as asset-related grants. Grants
are initially recorded at the fair value of the asset received and subsequently amortised. Amortisation costs of
grants are included in the cost of production or administrative expenses as well as in the depreciation charge
of property, plant and equipment for which the grant was received.
Revenue
The Group and Company manufactures and sells a range of cheese and milk products in the wholesale
market. Sales are recognised when control of the products has been transferred, being when the products are
delivered to the wholesaler, the wholesaler has full discretion over the channel and price to sell the products,
and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of the products. Delivery
occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have
been transferred to the wholesaler, and either the wholesaler has accepted the products in accordance with
the sales contract, the acceptance provisions have lapsed, or the Group and the Company has objective
evidence that all criteria for acceptance have been satisfied.
Income from transport services is recognised in the period in which the services are rendered.
The goods are sometimes sold with retrospective volume discounts based on aggregate sales over a month or
a 12-months period. Revenue from these sales is recognised based on the price specified in the contract, net
of the estimated volume discounts. Accumulated historical experience is used to estimate and provide for the
discounts, using the expected value method, and revenue is only recognised to the extent that it is highly
probable that a significant reversal will not occur. A refund liability is recognised for expected volume
discounts payable to customers in relation to sales made until the end of the reporting period. It is considered
that there is no significant financing component, since customers are offered a credit period of 30 days to
settle their obligations, which is in line with the market practice.
Receivable is recognised when the goods are delivered as this is the point in time that the consideration is
unconditional because only the passage of time is required before the payment is due.
The Group and Company does not expect to have any contracts where the period between the transfer of the
promised goods or services to the customer and payment by the customer exceeds one year. As a
consequence, the Group does not adjust any of the transaction prices for the time value of money.
Contract liabilities are recognised and presented as advance amounts received.
Cost of sales
Cost of sales consists of direct and indirect costs, including depreciation and remuneration expenses incurred
in order to achieve the turnover set for a respective year. Expenses are reco
gnised on an accrual basis and
matching principle.
Distribution and administrative expenses
Distribution and administrative expenses comprise expenses related to transportation, administrative staff,
coordination activities, office supplies, etc. and als
o comprise depreciation and amortisation expenses.
Operating expenses are recognised on an accrual basis.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
24
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Other operating income and expenses
Other operating income and expenses comprise gain or loss from the disposal of non-current assets as well as
other income and expenses not directly related to the principal activities of the Group and the Company.
Finance income and costs
Income and expenses of financing activities include interest receivable and payable, realised and unrealised
foreign exchange gain and loss related to borrowings and financial liabilities denominated in foreign
currencies.
Interest income is recognised in profit or loss using the effective interest method. Interest expenses on leases
is recognised in profit or loss using the effective interest method.
Employee benefits
Short-term employee benefits are recognised as current expenses of the period in which the services have
been rendered. Such employee benefits include wages and salaries, social security contributions, extra pays,
paid vacation, contributions to pension funds, and other benefits. There are no long-term employee benefits.
The Group and the Company pay social security contributions to the state Social Security Fund (the Fund)
on behalf of its employees based on the defined contribution plan in accordance with the local legal
requirements. A defined contribution is a plan under which the Group and the Company pay fixed
contributions into the Fund and will have no legal or constructive obligations to pay further contributions if
the Fund does not hold sufficient assets to pay all employees benefits relating to employee service in the
current and prior period. Social security contributions are recognised as expenses on an accrual basis and
included in payroll expenses.
The Group and the Company also pay contributions to Pillar III investment fund on behalf of its employees
based on the defined contribution plan. The contributions are recognised as expenses on an accrual basis and
included in general and administrative expenses.
Income tax
Income tax comprises current and deferred tax. Income tax is recogni
sed in the statement of profit or loss,
except to the extent that it relates to line items recognised directly in equity or through other comprehensive
income, in which case the tax is recognised in equity through other comprehensive income.
Current income tax is calculated in accordance with the tax legislation,
using the tax rates enacted and
effective as at the reporting date in the countries where the Company and its subsidiaries generate revenue.
A standard income tax rate of 15% is applied to companies registered in the Republic of Lithuania. Tax
losses, except for those arising on disposal of securities and/or derivative financial instruments, can be
carried forward for unlimited period, provided the entity continues the operations, which generated these tax
losses. Tax losses available for carry forward cannot exceed 70% of income for the tax period, calculated by
deducting non-taxable income, allowable deductions and limited allowable deductions.
The procedure of carrying forward losses arising on disposal of securities and/or derivative financial
instruments has not changed, therefore, these losses can be carried forward for the period of 5 years and can
only be used to reduce taxable income earned from transactions of the similar nature.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
25
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Income tax (continued)
The Group companies operating in the Republic of Latvia pay income tax upon distribution of profit for the
reporting year.
Income tax rate of 20% is payable on distributed profit (calculated dividends, dividend equivalent income
and conditional dividends) and conditional distributed profit (non-operating expenses, etc.). Income tax rate
of 20% is applied to gross taxable amount. Gross tax base for the tax period is calculated as net tax base
(distributed profit and conditionally distributed profit) divided by 0.8 coefficient.
Deferred income tax is calculated on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts reported in the financial statements. Deferred income tax is not
calculated on temporary differences arising on initial recognition of an asset or liability, which at the time of
the transaction affect neither accounting nor taxable profit. Deferred income tax is determined using the tax
rates that are expected to apply when the related temporary differences are expected to reverse and that are
known at the date of the preparation of the statement of financial position. Deferred income tax assets are
recognised only when the Group and the Company and expect that future taxable profit will be available
against which tax assets can be utilised. Deferred income tax is reviewed at each date of the statement of
financial position and reduced by the amount of tax assets that will not be utilised.
Earnings per share
The Group and the Company disclose information on basic and diluted earnings per share. Basic earnings
per share are calculated by dividing profit or loss attributable to the shareholders of the Parent by the
weighted average number of ordinary shares during the period. Diluted earnings per share are calculated by
adjusting profit or loss attributable to the shareholders, and the weighted average number of ordinary shares
during the year, for the effects of all potential ordinary shares. During the reporting periods the Group and
the Company did not issue potential ordinary shares.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources
and assessing performance of the operating segments, has been identified as the Board making strategic
decisions, and the General Manager. An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur expenses, including intra-segment revenues
and expenses. The Group has three reportable segments established on the basis of different groups of
products (cheese, cheese products and other, dry milk products, fresh milk products).
Impact on the financial statements of adoption of new standards, amendments and
interpretations
Except for the changes described below, accounting policies applied in the current financial year are
consistent with those of the previous financial year. The accounting policies set out below have been
consistently applied by the Group and the Company to all the periods presented in these consolidated
financial statements.
The Group and the Company adopted the following new standards and amendments, including the respective
amendments to the existing standards with effect from 1 January 2021:
- Interest rate benchmark (IBOR) reform – phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4
and IFRS 16 (issued on 27 August 2020 and effective for annual periods beginning on or after 1
January 2021). IBOR reform had no impact for the Group, as all borrowings are either EURIBOR
linked, or have fixed interest rates, therefore there was no need to transition to alternative benchmark
interest rates.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
26
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Impact on the financial statements of adoption of new standards, amendments and
interpretations (continued)
Changes in how EURIBOR is determined (determination has shifted from a quotes-based to a transactions-
based methodology) had no impact on interest rates applied, as for all EURIBOR linked borrowings
overnight (EONIA), three months and six months EURIBOR is subject to a 0% floor. Before and after the
changes in how EURIBOR is determined EURIBOR was negative, therefore 0% floor was applicable to
arrive at interest rate and therefore those changes had no impact on interest rate itself and no effect on future
cash flows. The financial liabilities denominated at EURIBOR based interest rate are disclosed in Note 23.
- Covid-19-Related Rent Concessions – Amendments to IFRS 16 (issued on 28 May 2020 and effective
for annual periods beginning on or after 1 June 2020). The Company and the Group have assessed the
impact of the amendments and concluded that they have no impact on their financial statements.
Standards, interpretations and amendments to existing standards that are not yet effective
A number of amendments to new standards and interpretations are effective for annual periods beginning on
1 January 2022 and have not been adopted in the preparation of th
ese consolidated financial statements.
Standards, interpretations and amendments that may be relevant to the Group and the Company are presented
below. The Group and the Company do not intend to early adopt these standards.
- Classification of liabilities as current or non-current – Amendments to IAS 1 (issued on 23 January
2020 and effective for annual periods beginning on or after 1 January 2022). The Company and the
Group have preliminary assessed the impact of the amendments and concluded that they have no impact
on their financial statements.
- Proceeds before intended use, Onerous contracts – cost of fulfilling a contract, Reference to the
Conceptual Framework – narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual
Improvements to IFRSs 2018-2020 – amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 (issued on
14 May 2020 and effective for annual periods beginning on or after 1 January 2022). The Company
and the Group have preliminary assessed the impact of the amendments and concluded that they have no
impact on their financial statements.
There are no other amended IFRSs, IASs, or IFRIC interpretations that are not yet effective and that would
be expected to have a significant impact on the Company and the Group.
Contingencies
Contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility
of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognised in
the financial statements but disclosed when an inflow of economic benefits is probable.
Events after the reporting period
Events after the reporting period that provide additional information about the Group’s and the Company’s
position at the reporting date (adjusting events) are reflected in the financial statements. Events after the
reporting period that are not adjusting events are disclosed in the notes to the financial statements when
material.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
27
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Offsetting financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a
legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or
realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent
on future events and must be enforceable in the normal course of business and in the event of default,
insolvency or bankruptcy of the company or the counterparty.
Accounting estimates and assumptions
The preparation of financial statements in conformity with IFRS as adopted by the European Union requires
the use of accounting estimates and assumption by management that affect the application of accounting
policies and the reported amounts of assets and liabilities, income and expenses. The accounting estimates
and the related assumptions are based on historical experience and other factors that are believed to be
reasonable under the circumstances, the results of which form the basis for making judgements about the net
book amounts of assets and liabilities that are not readily apparent from other sources. The actual results may
ultimately differ from those estimates. The accounting estimates and underlying assumptions are regularly
reviewed and are based on historical experience, other factors reflecting a current situation and reasonably
possible future events.
The Group and the Company make estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant effect on the amounts of assets and liabilities and can cause a significant
adjustment to these amounts within the next financial year are addressed below.
Impairment losses on property, plant and equipment
The Company and the Group did not identify any impairment indications in respect of property, plant and
equipment as at 31 December 2021 and 2020, and therefore, no impairment test was performed.
Assumptions and results of impairment test performed by the Group in respect of goodwill as at 31
December 2021 and 2020 are disclosed in Note 15.
Measurement of inventories
The Group and the Company review the movement in the inventory account, assess carrying amount on a
quarterly basis. The carrying amount of inventories should not exceed future economic benefits expected to
be received from the disposal or use of inventories.
Loss of inventory write-down to net realisable value is recognised in the statement of profit or loss during the
period in which the inventory measurement, write-down were performed. Inventory write-down is assessed
taking into account historical data and actual sales of inventories below cost. For more information refer to
Note 18 ‘Inventories’.
Useful life of property, plant and equipment
Useful lives of the assets are reviewed annually and revised when there are grounds for believing that the
remaining useful lives do not reflect technical conditions, economic utilisation or physical conditions of the
assets.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
28
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Financial risk management
The use of the financial instruments exposes the Group and the Company to the following risks:
x
credit risk;
x
liquidity risk;
x
market risk.
Information on each type of the above-mentioned risks to which the Group and the Company are exposed,
objectives, policies and processes for managing the risk and the methods used to measure the risk is set out
in this section. Note 30 ‘Financial instruments and risk management’ discloses quantitative information on
each type of the above-mentioned risks and on the Group’s and the Company’s capital management.
Risk management framework
The Board is responsible for the development and monitoring of the Group’s and the Company’s overall risk
management programme. The Group’s and the Company’s risk management policy defines and analyses
risks to which the companies are exposed, establishes appropriate risk limits, controls risks and adherence to
risk limits. The risk management policy and systems are reviewed on a regular basis to reflect market
conditions and the Group’s and the Company’s operational changes. The Group and the Company, through
training and management standards and procedures, aim to develop a disciplined and constructive control
environment in which all employees understand their roles and obligations.
Credit risk
In conducting trading activities, the Group and the Company apply deferred payment in respect of sale of
products and services, and therefore, a risk may arise that clients will not pay for products and services
provided by the Group and the Company. The Group and the Company aim to minimise credit risk through
credit limit approach, based on which the amounts of credits granted to clients and the types of credit
enhancements are established as follows:
x limit,
x guarantees,
x insurance.
At the end of 2017, the Group and the Company insured its sales to foreign clients under the credit insurance
agreement concluded with the company Euler Hermes for the term of two years. On November 2021, the
insurance was extended for additional two years.
For each client, the credit risk is assessed individually. Trade receivables are regularly monitored by the
Finance Department. In the event of overdue amounts receivable, the sale is suspended and debt recovery
procedures are initiated.
Liquidity risk
Liquidity risk is a risk that the Group and the Company will not be able to meet their financial liabilities in
due time. The Group and the Company manage liquidity risk with the aim to achieve the best possible
liquidity of the Group and the Company which enables to settle obligations both in the ordinary course of
business and under complicated operating conditions and prevents from incurring unacceptable losses and
damaging the Group’s and the Company’s reputation.
The Group’s and the Company’s policy is aimed at maintaining sufficient cash and cash equivalents or
ensuring funding through an adequate amount of committed credit facilities in order to meet their
commitments at a given date in accordance with the strategic plans.
The Group’s and the Company’s objective is to maintain balance between the continuity and flexibility of
funding. The Group and the Company generate a sufficient amount of cash form their activities, therefore
management is responsible for ensuring a sufficient level of the Group’s and the Company’s liquidity.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
29
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
Market risk
Market risk is a risk that changes in market prices, e.g. foreign exchange rates and interest rates, will affect the
Group’s and the Company’s results of operations or the value of financial instruments held. The aim of market
risk management is to manage open risk positions in order to optimise rate of return.
The Group and the Company manage foreign exchange risk by minimising the open position in a foreign
currency. Further information on hedging against foreign exchange risk is disclosed in Note 30 ‘Fin
ancial
instruments and risk management’.
The Group’s and the Company’s income and operating cash flows are substantially independent of market
interest rates.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
30
Notes to the consolidated and separate financial statements
Notes
1 Segment information
The Group consists of 6 legal entities: Vilkyškių Pieninė AB, Kelmės Pieninė AB, Kelmės Pienas UAB,
Modest AB, Baltic Dairy Board SIA, and Pieno Logistika AB. The principal activity of each entity
(operating segment) is the production of milk products, except for Pieno Logistika AB, which is engaged in
lease of buildings.
The Group has several operating segments which are as described below.
The segments represent different product groups, which are managed separately because they require
different technology and marketing strategies. Since Baltic Dairy Board SIA became part of the Group with
effect from 1 April 2021 and its revenue from GOS activities was immaterial and accounted for less than 5%
of total revenue, therefore, no new operating segment was distinguished. Revenue was added to the operating
segment – Cheese, cheese products, etc.
The Board and the General Manager review internal management reports prepared for each operating
segment on a monthly basis.
The following summary describes the products in each operating segment of the Group:
x Cheese, cheese products and other.
The segment comprises cheese, cheese products, cream, and liquid
whey that stays during the process of cheese production, GOS products;
x Dried milk products. The segment comprises WPC, skimmed-milk, permeate and whey powder
produced by the subsidiaries;
x Fresh milk products. The segment comprises fresh milk products produced by the subsidiaries
(kephir, yoghurt, sour cream, butter, curd products);
Information on the results of each operating segment is presented below. Performance is assessed based on
the gross profit of the segments, which is presented in the internal management reports reviewed by the
Board and the General Manager. The segment’s gross profit is used to assess performance as management
believes that this indicator is the most appropriate for the assessment of the results of operations.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
31
Notes to the consolidated and separate financial statements
Notes (continued)
1 Segment reporting (continued)
Results of operations of the operating segments at 31 December 2021:
GROUP
EUR ‘000
Cheese, cheese
products and
other
Dried milk
products
Fresh milk
products
Total
Revenue
109,199
28,136
18,710
156,045
Cost of sales
-99,370
-22,628
-16,851
-138,849
Gross profit
9,829
5,508
1,859
17,196
Other operating income
228
Distribution, administrative and other
operating expenses
-
7,586
Impairment of goodwill
-2,749
Other gain (loss) – net
45
Operating result
7,134
Finance income
209
Finance costs
-1,187
Finance costs, net
-978
Profit (loss) before income tax
6,156
In 2021, gross profit of the Group‘s operating segment Cheese, cheese products and other
increased by EUR
8,056 thousand compared to 2020 due to higher demand and price for cream and overall growth of prices.
Results of operations of the operating segments at 31 December 2020:
EUR ‘000
Cheese, cheese
products and
other
Dried milk
products
Fresh milk
products
Total
Revenue
84,134
20,487
16,252
120,873
Cost of sales
-82,361
-14,675
-13,208
-110,244
Gross profit
1,773
5,812
3,044
10,629
Other operating income
197
Distribution, administrative and other
operating expenses
-
6,446
Other gain (loss) – net
-48
Operating result
4,332
Finance income
26
Finance costs
-1,216
Finance costs, net
-1,190
Profit (loss) before income tax
3,142
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
32
Notes to the consolidated and separate financial statements
Notes (continued)
1 Segment reporting (continued)
Information on the segments’ assets, liabilities, interest income and interest expenses, depreciation, results of
operations before tax, income tax and other non-cash line items is not provided to the Board and the General
Manager. In management’s opinion the allocation of these line items to the operating segments is not
reasonable. Revenue, cost of sales and gross profit are the same as reported in the financial statements. All
revenue in 2021 and 2020 was recognised at the point in time.
For the purpose of disclosure by geographical location, revenue is recognised with reference to the place of
registration of a client. Assets are allocated according to their geographical location.
Disclosure by geographical location in 2021:
EUR ‘000
Revenue
Assets
21,748
73,288
European Union (excluding Lithuania)
80,647
10,237
Other countries
53,650
4,449
156,045
87,974
Disclosure by geographical location in 2020:
EUR ‘000
Revenue
Assets
20,234
70,248
European Union (excluding Lithuania)
63,745
3,783
Other countries
36,894
2,867
120,873
76,898
Information on major clients. The Group had no clients with sales revenue representing more than 10% of
its total revenue.
2 Cost of sales (EUR ’000)
GROUP
COMPANY
2021
2020
2021
2020
-107,460
-86,930
Raw materials
-95,156
-76,247
-
-
Resale cost of goods produced by the subsidiaries
-77,455
-59,245
-8,213
-5,688
Employee expenses, including social security contributions
-2,855
-2,516
-3,818
-3,298
Depreciation and grants’ amortisation
-1,148
-1,177
-4,872
-4,575
Milk collection and transportation costs
-4,853
-4,575
-8,150
-4,292
Gas, electricity, water
-2,227
-1,230
-1,590
-1,180
Transport costs
-1,590
-1,180
-4,746
-4,281
Other
-2,127
-1,655
-138,849
-110,244
-187,411
-147,825
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
33
Notes to the consolidated and separate financial statements
Notes (continued)
3 Other operating income (EUR ’000)
GROUP
COMPANY
2021
2020
2021
2020
119
42
Income from rendering of services
3,341
1,841
-
-
Dividends
7,371
5,651
16
15
Income from accounting services
183
112
32
71
Income from transport services rendered to other entities
18
7
32
27
Amounts due not yet claimed
32
-
29
42
Other income
14
58
228
197
10,959
7,669
4 Other operating expenses (EUR ’000)
GROUP
COMPANY
2021
2020
2021
2020
-41
-78
Cost of services rendered
-2,907
-1,515
-77
-1
Other expenses
-1
-1
-118
-79
-2,908
-1,516
5 Other gain (loss) – net (EUR ’000)
GROUP
COMPANY
2021
2020
2021
2020
45
-48
Gain (loss) from disposal of raw materials, non-current
assets
44
3
-
-
Gain (loss) from fair value change of investment property
375
-173
45
-48
419
-170
6 Distribution expenses (EUR ’000)
GROUP
COMPANY
2021
2020
2021
2020
-1,197
-1,352
Logistics and transport services
-1,064
-1,411
-342
-177
Marketing and advertising services
-326
-177
-967
-808
Personnel expenses, including social security contributions
-967
-808
-46
-54
Depreciation expenses
-29
-34
-615
-791
Other selling expenses
-601
-752
-3,167
-3,182
-2,987
-3,182
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
34
Notes to the consolidated and separate financial statements
Notes (continued)
7 Administrative expenses (EUR ’000)
GROUP
COMPANY
2021
2020
2021
2020
-
1,802
-
1,416
Personnel expenses, including social security
contributions and change in vacation reserve
-
1,376
-
1,196
-123
-192
Depreciation and amortisation, including amortisation
of subsidies
-126
-133
-458
-266
Services received
-201
-119
-193
-123
Taxes, other than income tax
-168
-105
-125
-118
Veterinary services
-79
-81
-235
-154
Consultation services
-150
-117
-37
-33
Inventory write-down, reversal
-37
-43
-123
-113
Security
-47
-45
-86
-15
Fines and interest paid on late payments
-10
-16
-94
-1
Write-off of bad debt expenses
-94
-1
-145
-63
Computer expenses
-133
-54
-59
-38
Fuel
-31
-28
-35
-30
Repair expenses
-25
-20
-36
-26
Fee for membership in association
-36
-26
-30
-33
Stock exchange expenses
-27
-30
-65
-32
New product development expenses
-2
-7
-45
-44
Insurance
-21
-23
-21
-30
Bank charges
-18
-18
-589
-458
Other
-483
-258
-4,301
-3,185
-3,064
-2,320
In 2021, the Group’s and the Company’s social security contributions payable by an employer amounted to
EUR 307 thousand and EUR 135 thousand, respectively (2020: EUR 181 thousand and EUR 122 thousand,
respectively). Social security amount includes social security contributions for vacation and pension
reserves.
8 Services provided by the audit firm to the Company and the Group in 2021 (EUR ’000)
GROUP
COMPANY
Audit of the financial statements under the agreements
93
55
Other services
1
1
Total
94
56
9 Finance costs, net (EUR ’000)
GROUP
COMPANY
2021
2020
2021
2020
Finance income
178
13
Dividends
179
13
31
13
Other
29
1
209
26
Total finance income
208
14
Finance costs
-987
-822
Interest
-299
-386
-15
-16
Interest on lease
-15
-17
-121
-144
Factoring charges
-121
-144
-
-164
Foreign exchange loss
-
-164
-64
-70
Other
-29
-57
-1,187
-1,216
Total finance costs
-464
-768
-978
-1,190
-256
-754
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
35
Notes to the consolidated and separate financial statements
Notes (continued)
10 Income tax expenses (EUR ’000)
Recognised in profit or loss
GROUP
COMPANY
2021
2020
2021
2020
Current year income tax expenses
-179
-1
Reporting period
-
-
Deferred income tax expenses
-477
731
Change in deferred income tax
-420
731
-656
730
-420
731
Reconciliation of effective income tax rate (EUR ’000)
GROUP
COMPANY
2021
2020
2021
2020
6,156
3,142
Profit for the year
11,194
640
923
471
Income tax calculated at a rate of 15%
1,679
96
443
-
Gain from inter-company disposal of business
-
-
-
-
Dividend income
-1,106
-848
-246
-53
Other non-taxable income
-8
-2
412
-
Impairment of goodwill
-
-
-5
-1
Charity expenses deductible twice for tax
purposes
-4
-
-
56
-
25
R&D expenses deductible thrice for tax
purposes
-
-
-727
-1,167
Investment project relief
-174
-
-107
-
Tax loss carry forward
-
-
93
58
Other expenses not deductible for tax purposes
33
23
-74
-13
Other expenses deductible for tax purposes
-
-
656
-730
Income tax expenses (benefit)
420
-731
Pursuant to the effective laws, the State Tax Inspectorate may at any time inspect the books and accounting
records of the Group/Company for 3 years preceding the reporting tax period and may assess additional taxes
or fines (a 5-year period is applied to
some types of transactions). The Company’s management is not aware of
any circumstances that might result in a potential material tax liability in this respect for the Group/Company.
11 Earnings per share
GROUP
COMPANY
2021
2020
2021
2020
11,943
11,943
Number of issued shares calculated based
on the weighted average unit cost method,
in thousands
11,943
11,943
5,500
3,872
Net profit attributable to holders of ordinary
shares of the Parent, EUR ‘000
10,774
1,371
0.46
0.32
Basic earnings (loss) per share (EUR)
0.90
0.11
The diluted earnings per share are the same as basic earnings per share.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
36
Notes to the consolidated and separate financial statements
Notes (continued)
12 Property, plant and equipment
GROUP
EUR ‘000
Right-of-
use assets*
Land and
buildings
Plant and
machinery
Other
assets
Construction
in progress
Total
Cost/revalued amount
Balance at 1 January 2020
1,920
15,183
55,494
3,403
3,006
79,006
Additions
-
4
260
115
1,621
2,000
Disposals
-
-
-1008
-115
-
-1,123
Reclassifications
-119
1,882
2,411
49
-4,227
-4
(a)
Balance at 31 December 2020
1,801
17,069
57,157
3,452
400
79,879
Balance at 1 January 2020
1,801
17,069
57,157
3,452
400
79,879
Additions
519
2,369
4,474
316
246
7,924
Disposals
-
-
-692
-171
-
-863
Reclassifications
-334
-
531
87
-291
-7
(b)
Balance at 31 December 2021
1,986
19,438
61,470
3,684
355
86,933
Depreciation and impairment losses
Balance at 1 January 2020
617
2,822
23,800
2,012
-
29,251
Depreciation charge for the year
Impairment
241
17
531
-
3,382
-
351
-
-
-
4,505
17
Disposals
-
-
-958
-111
-
-1,069
Reclassifications
-42
-
42
-
-
-
Balance at 31 December 2020
833
3,353
26,266
2,252
-
32,704
Balance at 1 January 2021
833
3,353
26,266
2,252
-
32,704
Depreciation charge for the year
214
672
3,527
375
-
4,788
Impairment
28
-
-
-
-
28
Disposals
-
-
-315
-151
-
-466
Reclassifications
-197
-
197
-
-
-
Balance at 31 December 2021
878
4,025
29.675
2,476
-
37,054
Net book amounts
At 1 January 2020
1,303
12,361
31,694
1,391
3,006
49,755
At 31 December 2020
968
13,716
30,891
1,200
400
47,175
At 31 December 2021
1,108
15,413
31,795
1,208
355
49,879
* For more details on right-of-use assets, see Note 13.
(a) Amount of EUR 4 thousand is related to the completed project of intangible
assets, which was reclassified
directly from construction in progress to intangible assets.
(b) Amount of EUR 7 thousand was reclassified from construction in progress to repair expenses in the
statement of profit and loss.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
37
Notes to the consolidated and separate financial statements
Notes (continued)
12 Property, plant and equipment (continued)
COMPANY
EUR ‘000
Right-of-use
assets*
Land and
buildings
Plant and
machinery
Other
assets
Construction
in progress
Total
Cost/revalued amount
Balance at 1 January 2020
1,892
5,998
22,000
1,395
1,21
32,406
Additions
-
4
120
46
1,019
1,189
Disposals
-
-
-397
-87
-
-484
Reclassifications
-119
1,800
196
17
-1,898
-4
(a)
Balance at 31 December 2020
1,773
7,802
21,919
1,371
242
33,107
Balance at 1 January 2021
1,773
7,802
21,919
1,371
242
33,107
Additions
549
-
406
67
182
1,204
Increase in value
1
-
-
-
-
1
Disposals
-53
-
-634
-65
-
-752
Reclassifications
-255
-1,010
442
-
-187
-1,010
(b)
Balance at 31 December 2021
2,015
6,792
22,133
1,373
237
32,550
Depreciation and impairment losses
Balance at 1 January 2020
600
1,065
14,718
1,230
-
17,613
Depreciation charge for the year
Impairment
238
17
250
-
1,228
-
69
-
-
-
1,785
17
Disposals
-
-
-379
-85
-
-464
Reclassifications
-42
-
42
-
-
-
Balance at 31 December 2020
813
1,315
15,609
1,214
-
18,951
Balance at 1 January 2021
813
1,315
15,609
1,214
-
18,951
Depreciation charge for the year
217
311
1,226
50
-
1,804
Impairment
28
-
-
-
-
28
Disposals
-23
-
-364
-65
-
-452
Reclassifications
-149
-
149
-
-
-
Balance at 31 December 2021
886
1,626
16,620
1,199
-
20,331
Net book amounts
At 1 January 2020
1,292
4,933
7,282
165
1,121
14,793
At 31 December 2020
960
6,487
6,310
157
242
14,156
At 31 December 2021
1,129
5,166
5,513
174
237
12,219
* For more details on right-of-use assets, see Note 13.
(a) Amount of EUR 4 thousand is related to the completed project of intangible assets, which was reclassified
directly from construction in progress to intangible assets.
(b) Amount of EUR 1,010 thousand is related to reclassification of assets to investment property (Note 14).
Prepayments made for non-current assets are classified under additions.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
38
Notes to the consolidated and separate financial statements
Notes (continued)
12 Property, plant and equipment (continued)
Pledges of assets
To secure the repayment of its bank borrowings, the Group has pledged the following PP&E:
- buildings with the carrying amount of EUR 11,503 thousand as at 31 December 2021 (31 December
2020: EUR 10,809 thousand);
- production plant and machinery, fixtures and equipment with the net book amount of EUR 28,561
thousand as at 31 December 2021 (31 December 2020: EUR 29,916 thousand) (Note 23).
To secure the repayment of its bank borrowings, the Company has pledged the following PP&E:
- buildings with the carrying amount of EUR 3,344 thousand as at 31 December 2021 (31 December
2020: EUR 4,062 thousand);
- production plant and machinery, fixtures and equipment with the net book amount of EUR 4,786
thousand as at 31 December 2021 (31 December 2020: EUR 5,773 thousand) (Note 23).
The acquisition cost of the Group’s property, plant and equipment fully depreciated but still in use amounted
to EUR 14,002 thousand as at 31 December 2021 (31 December 2020: EUR 10,936 thousand).
The acquisition cost of the Company’s property, plant and equipment fully depreciated but still in use
amounted to EUR 8,281 thousand as at 31 December 2021 (31 December 2020: EUR 7,834 thousand).
Depreciation
Depreciation was included in the following line items:
GROUP
COMPANY
2021
2020
EUR ‘000
2021
2020
4,583
4,259
Cost of finished products
1,525
1,568
205
246
Distribution and administrative expenses
159
176
-
-
Other operating expenses
120
41
4,788
4,505
1,804
1,785
Valuation of buildings
The Group and the Company account for the buildings at a revalued amount, less subsequent accumulated
depreciation and impairment.
In 2021, the Group and the Company evaluated part of their buildings, as a result of which it was concluded
that the value of the assets included in the Group’s and the Company’s valuation did not differ significantly
from the potential market price of the assets
. On 1 December 2021, the independent property valuation
corporation Matininkai UAB performed a valuation
of the Group‘s and the Company‘s buildings with the net
book amount of EUR 3,827 thousand as at 31 December 2021. The value of general-purpose buildin
gs was
determined using the market approach (based on analogous sales prices). The value of assets included in the
special-purpose category was determined using the cost approach. Based on the evaluation as at 1 December
2021, the fair value of the evaluated buildings did not differ significantly from their carrying amounts, and
accordingly, no revaluation of assets was performed.
The fair value of the Group‘s buildings acquired
in the course of business combination (Note 16) was
determined on 1 April 2021. As at 31 December 2021, the net book amount of those buildings was EUR
5,777 thousand. The fair value was determined by an independent property valuer Newsec.
The value of the
buildings was determined using the discounted cash flow approach. Cash flows ov
er the period of 2 years,
discount rate of 11.0% and capitalisation rate (yields) of 10.20% were used to determine the value. In the
opinion of the Group’s management, there were no significant changes in the fair value of buildings until 31
December 2021. The valuation of other buildings of the Group and the Company, the fair value of which was
not determined in 2021, was performed on 23 September 2020 (the Group‘s buildings attributed to the
operating segment of dried milk products) and on 1 December 2019.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
39
Notes to the consolidated and separate financial statements
Notes (continued)
12 Property, plant and equipment (continued)
The revaluation of the Group’s and the Company’s buildings was performed on 1 December 2019. In 2021,
no revaluation was performed for the Group’s and the Company’
s assets because, in the management‘s
opinion, there were no significant changes in the domestic real estate market and in the Group‘s and the
Company‘s operations, nor were there any significant changes in the fair value of buildings.
As at 31 December 2021, the net value of the Group’s revaluation reserve amounted to EUR 1,828 thousand
(31 December 2020: EUR 2,001 thousand). As at 31 December 2021, the net value of the Company’s
revaluation reserve amounted to EUR 1,099 thousand (31 December 2020: EUR 1,167 thousand).
If the Group’s buildings were stated at cost, their net book amount would be EUR 9,388 thousand (revalued
amount would be EUR 11,473 thousand) as at 31 December 2021 (31 December 2020: net book amount –
EUR 9,722 thousand, revalued amount – EUR 11,924 thousand).
If the Company’s buildings were stated at cost, their net book amount would be EUR 2,776 thousand
(revalued amount would be EUR 3,978 thousand) as at 31 December 2021 (31 December 2020: net book
amount – EUR 3,902 thousand, revalued amount – EUR 5,177 thousand).
13 Leases
Amounts recognised in profit or loss were as follows:
EUR ‘000
GROUP
COMPANY
202
1
2020
202
1
20
20
214
241
Depreciation of right-of-use assets
217
238
28
-
Impairment of right-of-use assets
28
-
15
16
Interest expenses (included in finance costs)
15
17
46
56
Expenses related to short-term leases (included in cost of
sales and general and administrative expenses)
46
23
13
48
Expenses related to leases of low-value assets not
included in the above short
-term leases (included in cost
of sales, general and administrative expenses, other
operating expenses)
13
19
40
53
Expenses related to variable lease payments not included
in lease liabilities (included in cost of sales, general and
administrative expenses, other operating expenses)
40
40
356
414
359
337
Movements in right-of-use assets during 2021 and 2020 are disclosed in Note 13.
Lease liabilities, including the breakdown of lease liabilities by maturity are disclosed in Note 23.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
40
Notes to the consolidated and separate financial statements
Notes (continued)
14 Investment property
EUR ‘000
2021
2020
Balance at 1 January
5,395
5,568
Additions
-
-
Disposals
-
-
Net gain/(loss) on fair value adjustment
375
-173
Reclassification from/(to) inventories and owner-occupied PP&E
1,010*
-
Balance at 31 December
6,780
5,395
(*) Amount of EUR 1,010 thousand is related to reclassification of investment property from owner-
occupied
PP&E (Note 12).
Investment property is leased out to tenants under operating lease contracts. The costs
incurred in relation to
maintenance of investment property are covered by the tenants. The lease payments are fixed. The contracts
do not contain variable lease payments that depend on an index or a rate. Investment property consists of
production facilities leased out to the subsidiaries. Based on the terms and conditions of the lease contracts,
the assets have been leased for the term of 5 to 8 years, and the lease term expires by 31 December 2023-
2026. The fulfilment of lease contracts has not been secured with any collateral, guarantees or other pledges.
Fair value of investment property
Below is allocation of the Company‘s investment property to hierarchy levels for fair value measurement
purposes:
EUR ‘000
At 31
December 2021
At 31
December 2020
Hierarchy level 2 (a)
1,546
1,649
Hierarchy level 3 (b)
4,161
3,655
5,707
5,304
Assets with no fair value determined (c)
1,073
91
6,780
5,395
(a) The Company‘s investment property, the fair value of which was determined using the market approach
are attributed to level 2 in the fair value measurement hierarchy. The fair value was determined with
reference to the valuation performed on 1 December 2021 by an independent property valuation corporation
Matininkai UAB. The market approach was used to evaluate the general-purpose buildings. The market
approach was used to evaluate the differences between the subject asset and analogous or similar asset to
which the subject asset is being compared, and to make adjustments (if necessary) to the transaction prices
of analogous or similar asset in terms of timing, location, and other circumstances conveying the differences
between the subject asset and analogous or similar comparable asset. For the purpose of valuation, the assets
selected were similar to the specific subject asset. The inputs used included data on the purchase and sale
transactions that occurred over the last thirty-six months.
(b) The Company’s buildings leased to produce
processed whey products (whey protein concentrate WPC80
and permeate) are evaluated using the income approach and attributed to level 3 in the fair value
measurement hierarchy. The fair value was determined with reference to the valuati
on performed on 1
December 2021 by an independent property valuation corporation Matininkai UAB.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
41
Notes to the consolidated and separate financial statements
Notes (continued)
14 Investment property
The valuation of assets encompasses fair value measurement of a complex of assets of whey processing
facilities (including buildings, plant and machinery, and other assets) constituting a cash-
generating unit. The
measured fair value is attributed to each item of property, plant and equipment, and accordingly, the fair
value of buildings is known. The value of assets is determined using a discounted cash flow model. The
value in use is determined by discounting the post-tax future cash flows to their presen
t value based on a
discount rate that reflects current market conditions, the existing time value of money and the risks specific
to the asset, which was not taken into consideration. The adjusted weighted average cost of capital (pre-
tax)
was 12.19%. Key assumptions used in calculation of value of in use were as follows:
• Future cash flows are estimated based on historical experience and 2021-
2026 business forecasts based on
the existing long-term contracts with the consumers of the products, and the expe
cted expansion of sales
(production) in view of growth in demand for whey processing products on a domestic and global markets.
The forecasts covering later periods 2027-2036 include the expected average annual
production decline rate
of 2% (in non-monetary measures) in view of the probable deterioration of production efficiency
due to
technological obsolescence and based on the prudential principle.
• Forecasts of production costs are estimated on the basis of
factual production, including the expected
fluctuations therein due to growth of production.
• Depending on the current physical condition of the assets (expected intensity of use of equipment –
utilisation of production capacity), capital expenditures will be up to 40% from
depreciation expenses (EUR
511 thousand) annually during 2022-2026, and up to 80% (EUR 1,033 thousand) -
starting from 2027 to
support the business activities (equipment repairs, reconstruction).
(c) The value at the valuation date of the Company’s investment property that has or has not
been
acquired/created recently, approximated the fair value of the assets
. As at 31 December 2021, the fair value
was not determined for the Company’s investment property that had been acquired/created
during 2021,
because in the opinion of management, there were no significant changes either in the domestic real estate
market or the Company’s operations, nor were there any significant changes in the fair value of investment
property.
Minimum lease payments receivable on lease of investment property:
EUR ‘000
31 12 2021
31 12 2020
Within one year
292
195
Between 1 and 5 years
832
600
After 5 years
-
105
1,124
900
In 2021, the Company‘s rental income amounted to EUR 292 thousand (2020: EUR
195 thousand). Rental
income is included in other operating income.
There were no direct operating expenses from investment property that generated rental income during 2021
and 2020.
The Company‘s investment property with the carrying amount of EUR 6,780
thousand as at 31 December
2021 (31 December 2020: EUR 5,395 thousand) was pledged to the banks as a security for bank borrowings.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
42
Notes to the consolidated and separate financial statements
Notes (continued)
15 Intangible assets
GROUP
EUR ‘000
Goodwill
Computer
software
Other intangible
assets
Total
Cost
Balance at 1 January 2020
6,915
545
12
7,472
Additions
-
8
-
8
Disposals
-
-
-
-
Reclassifications
-
4
-
4
(a)
Balance at 31 December 2020
6,915
557
12
7,484
Balance at 1 January 2021
6,915
557
12
7,484
Additions
-
11
5
16
Disposals
-
-22
-
-22
Reclassifications
-
-
-
-
Balance at 31 December 2021
6,915
546
17
7,478
Amortisation and impairment
Balance at 1 January 2020
-
532
4
536
Amortisation charge for the year
-
10
3
13
Disposals
-
-
-
-
Balance at 31 December 2020
-
542
7
549
Balance at 1 January 2021
-
542
7
549
Amortisation charge for the year
-
13
3
16
Disposals
-
-22
-
-22
Impairment
2,749
-
-
2,749
Balance at 31 December 2021
2,749
533
10
3,292
Net book amounts
At 1 January 2020
6,915
13
8
6,936
At 31 December 2020
6,915
15
5
6,935
At 31 December 2021
4,166
13
7
4,186
(a)
Amount of EUR 4 thousand is related to the completed project of intangible assets, which was reclassified
directly from PP&E category construction in progress.
Amortisation charge for the year was included in administrative expenses.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
43
Notes to the consolidated and separate financial statements
Notes (continued)
15 Intangible assets (continued)
BENDROVĖ
EUR ‘000
Goodwill
Computer
software
Other intangible
assets
Total
Cost
Balance at 1 January 2020
-
642
12
654
Additions
-
8
-
8
Disposals
-
-
-
-
Reclassifications
-
4
-
4
(a)
Balance at 31 December 2020
-
654
12
666
Balance at 1 January 2020
-
654
12
666
Additions
-
2
5
7
Disposals
-
-
-
-
Reclassifications
-
-
-
-
Balance at 31 December 2021
-
656
17
673
Amortisation and impairment
Balance at 1 January 2020
-
626
7
633
Amortisation charge for the year
-
10
3
13
Disposals
-
-
-
-
Balance at 31 December 2020
-
636
10
646
Balance at 1 January 2021
-
636
10
646
Amortisation charge for the year
-
10
3
13
Disposals
-
-
-
-
Balance at 31 December 2021
-
646
13
659
Net book amounts
At 1 January 2020
-
16
5
21
At 31 December 2020
-
18
2
20
Balance at 31 December 2021
-
10
4
14
(a)
Amount of EUR 4 thousand is related to the completed project of intangible assets, which was reclassified
directly from PP&E category construction in progress.
Amortisation charge for the year was included in administrative expenses.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
44
Notes to the consolidated and separate financial statements
Notes (continued)
15 Intangible assets (continued)
Recoverable amount of cash-generating units to which goodwill is attributed
Goodwill is attributed to the following cash-generating units of the Group
(Modest AB‘s business activities
relating to production and sale of cheese and cheese products; Kelmės Pienas UAB‘s business activities
relating to production and sale of fresh milk products), as specified below:
EUR ‘000
31 12 2021
31 12 2020
Kelmės Pienas UAB (fresh milk products)*
3,867
6,616
Modest AB (cheese, cheese products)
299
299
4,166
6,915
* Before 1 March 2021, the business activities of fresh milk products were conducted by the subsidiary Kelmės Pieninė
AB. As from 1 March 2021, the business activities of fresh milk products have been transferred to Kelmės Pienas UAB.
Goodwill arising on business combination is attributable mostly to synergy, which has resulted from the
integration of the Companies into the existing operations of the Group relating to production of milk
products. These cash-generating units were tested for impairment when calculating the recoverable amount.
Recoverable amount of cash-generating unit of Kelmės Pienas UAB
The recoverable amount of cash-generating unit (production of fresh milk products) of Kelmės Pienas UAB
was determined by an independent property valuation corporation Matininkai UAB. The date of valuation
was 31 December 2021. The recoverable amount was calculated by discounting future cash flows to their
present value based on a five-year financial forecast approved by the management.
Key assumptions used in the calculation of the recoverable amount were as follows:
x The future cash flows were calculated based on historical experience and a 5-year business plan.
Cash flows in a long-term perspective were estimated by extrapolating the fifth-year cash flows at a
projected long-term growth rate of 1% (2020: growth rate of 1%).
x The recoverable amount was calculated using a pre-tax discount rate that reflects current market
conditions, the existing time value of money and the risks specific to the asset, which was not taken
into consideration. Pre-tax rate of weighted average cost of capital was 12.18% (2020: 14.38%).
x The projected revenue decline by 1% in 2022 compared to 2021 (see table below). The decline in
revenue is related to projected decrease in the volume of processed milk in 2022 (projected decrease
in the volume of processed milk by 2.8%). As the Lithuanian and global economy started recovering
after the Covid-19 pandemic, the demand for fresh milk products increased in 2021: sales of fresh
milk products increased by 28% in 2021 compared to 2020 (23,064 tons sold in 2021; 18,009 tons
sold in 2020). In the opinion of the management, in case of a moderate economic growth the sales
will decrease by 2-3% in 2022. Nevertheless, the continuing growth of prices of fresh milk products
will offset the negative impact of decline in projected sales on revenue.
The projected revenue growth rate is 4.4% in 2023, and 3.7-3.8% in subsequent years. Revenue is
projected to increase due to the growing prices of products, placing of new products on the market,
and expansion to new markets.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
45
Notes to the consolidated and separate financial statements
Notes (continued)
15 Intangible assets (continued)
The projected revenue from sales of fresh milk products (EUR ‘000):
Financial year
2021
2022
2023
2024
2025
2026
Revenue
19,693
19,500
20,359
21,119
21,898
22,723
Projected growth rate
-1.0%
4.4%
3.7%
3.7%
3.8%
x The projected decline in gross profit margin in 2022 is 1.51% (down to 7.06%). The gross profit
margin is expected to decrease due to further growing prices of raw materials, payroll and energy
costs, and inflation:
- Milk is the basic raw material, and therefore, the company’s performance depends and is sensitive
to the fluctuations in the market price of raw milk. Based on the market forecast, the price of milk is
expected to growth in 2022.
- Growth of energy costs. Energy costs (electricity, water, gas) have increased since September
2021. Because the growth in energy costs started only in the third quarter of 2021, a higher growth
of energy costs is expected in 2022. Based on the forecast, no decline in energy tariffs is expected in
2022.
- Growth of payroll costs. Based on the market forecast, salaries are expected to grow by 6% in
2022.
In the opinion of the management, the growth of sale prices of products will be slower than the projected
growth of the costs, and therefore, the gross profit margin is expected to decline in 2022.
During 2023-2026, gross profit margin is projected to grow by 0.47–1.34% annually. The growth of gross
profit margin is related to the increasing sale prices of products and projected lower growth of raw material
and energy costs and tariffs.
The projected gross profit from sales of fresh milk products (EUR ‘000):
Financial year
2021
2022
2023
2024
2025
2026
Gross profit
1,688
1,377
1,710
1,873
2,142
2,434
Pross profit margin, %
8.6%
7.06%
8.40%
8.87%
9.78%
10.71%
Change in gross profit margin
-1.51%
1.34%
0.47%
0.91%
0.93%
x During 2022-2026, capital expenditures of EUR 180 thousand are projected annually to support
production-technological assets. When calculating the terminal value (capitalising the last cash
inflows), the amount of deducted capital expenditures is equal to the aggregate amount of
depreciation of capital expenditures.
x The basic components of working capital: required inventory, trade receivables and payables are
taken as the factual amounts at the end of 2021. Subsequently (starting from 2022), the required
working capital is calculated in view of the production growth and the required inventory, trade
receivables and payables, as a proportionate share of the cost of sale and revenue.
Based on the above assumptions, the calculated recoverable amount of the cash-generating unit was EUR
2,749 thousand lower than the carrying amount, and therefore, impairment of goodwill in amount of EUR
2,749 thousand was recognised in 2021.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
46
Notes to the consolidated and separate financial statements
Notes (continued)
15 Intangible assets (continued)
The sensitivity analysis of the recoverable amount of investment in Kelmės Pienas UAB shows the impact of
changes in assumptions used in the impairment test on the result of calculation:
EUR ‘000
Impact on recoverable amount
Discount rate – 1% increase
-788
Discount rate – 1% decrease
943
Long-term growth rate – 1% increase
619
Long-term growth rate – 1% decrease
-517
In the event of the above changes in assumptions, the recoverable amount of goodwill becomes lower than
the carrying amount.
The recoverable amount test performed at 31 December 2020 showed that the recoverable amount of the
cash-generating unit was higher than the carrying amount and no impairment of goodwill was recognised as
at 31 December 2020. The change in the calculated recoverable amount was mostly affected by the projected
gross profit margin updated by the company. During 2021-2025, gross profit margin of 13-14% was
projected. In the financial forecast for 2020, the Group‘s management expected no significant changes in the
sale prices of fresh milk products compared to 2020. In addition, no significant changes were expected in
the price of raw milk compared to second half of 2020.
The targets for the fresh milk product business activities were not achieved in 2021: even though the factual
revenue was EUR 1,981 thousand or 10% higher than the budgeted (due to increased volume of sales), the
factual gross profit margin was 5.63% lower. The results for 2021 showed that the sale prices of fresh milk
products decreased compared to 2020, and the price of the basic raw material used in the production (raw
milk) increased significantly. Compared to 2020, decrease in sale price of cream was 5%, curd products –
12%, and yogurts – 5%. In 2021, the price of raw milk increased by 17% compared to 2020. Based on the
market outlooks, the management expects no decline in the price of the raw material, and that the pace of
growth of the sale price of products will not be like that of the price of raw material. Accordingly, gross
profit margin is expected to be lower than projected as at 31 December 2020. Decline in gross profit margin
was also caused by significant growth of energy costs (electricity, water, gas). Compared to 2020, energy
costs increased by 64% in 2021. For the purpose of the cash flow forecast as at 31 December 2020, the
management did not take into account the significant increase in energy costs.
Recoverable amount of cash-generating unit of Modest AB
For Modest AB, the value in use was calculated using the future cash flows discounted to their present value.
Key assumptions used in the calculation of the value in use were as follows:
x The future cash flows were calculated based on historical experience and a 5-year business plan.
Cash flows in a long-term perspective were estimated by extrapolating the fifth-year cash flows at a
projected long-term growth rate of 1% (2020: growth rate of 1%).
x The value in use was calculated using a pre-tax discount rate that reflects current market conditions,
the existing time value of money and the risks specific to the asset, which was not taken into
consideration. Pre-tax rate of weighted average cost of capital was 12.18% (2020: 14.38%).
x Based on the budget prepared by management for Modest AB, revenue budgeted for 2022 amounts to
EUR 31,500 thousand. Compared to 2021, revenue is expected to decrease by 4%. Annual revenue
growth of 1-3% is expected during 2023-2026.
x During 2022-2025, gross profit margin is expected to remain at a level similar to 2021 and will range
between 5.08% and 5.71%. The projected EBITDA margin ranges between 5.13% and 5.38% during
the entire project period.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
47
Notes to the consolidated and separate financial statements
Notes (continued)
15 Intangible assets (continued)
x During 2022-2026, capital expenditures of EUR 100 thousand are projected annually to support
production-technological assets. When calculating the terminal value (capitalising the last cash
inflows), the amount of deducted capital expenditures is equal to the aggregate amount of
depreciation of capital expenditures.
x The required working capital is calculated in view of the production growth and the required
inventory, as a proportionate share of the cost of sale. This results in an assumption that the impact of
amounts receivable and payable on the working capital is neutral.
Based on the above assumptions, the value in use of cash-generating unit of Modest AB was higher than the
carrying amount, and accordingly, no impairment was recognised. The analysis of sensitivity to key
assumptions was not presented since a probable shift in those assumptions would have no significant impact
on the estimated value of goodwill.
16 Investments in subsidiaries
EUR ‘000
31 12 2021
31 12 2020
Cost of shares of Modest AB
1,991
1,991
Cost of shares of Kelmės Pieninė AB
8,656
8,656
Cost of shares of Pieno Logistika AB
66
66
Cost of shares of Baltic Dairy Board SIA
271
-
10,984
10,713
The Company acquired control over Modest AB in 2006. The ownership interest held by the Company was
99.7% as at 31 December 2021 (31 December 2020: 99.7%).
On 30 April 2008, the Company acquired the shares of Kelmės Pieninė AB. The ownership interest held by
the Company was 100% as at 31 December 2021 (31 December 2020: 100%).
As at 31 December 2021, the Company owned 58.9% (31 December 2020: 58.9%) of shares with voting
rights in subsidiary Pieno Logistika AB.
On 1 April 2021, Vilkyškių Pieninė AB completed the acquisition transaction of 70% of shares in Baltic
Dairy Board SIA.
Transaction of acquisition of Baltic Dairy Board SIA
In order to strengthen and expand the Group’s range of high value-added milk ingredients, the decision was
made to acquire Baltic Dairy Board SIA operating in Latvia. Baltic Dairy Board SIA one of the few
companies in Northern Europe engaged in the development and production of products intended for baby
food (galacto-oligosaccharides - GOS). The Group will also benefit from the emerging synergies between
the current Group companies and Baltic Dairy Board SIA in the processes of whey separation and
procurement of raw materials.
Overall, 544,446 shares were acquired for the total acquisition cost of EUR 271 thousand. The shares were
acquired from a number of former shareholders in 3 stages during a short period. The acquisition of shares
was completed on 1 April 2021, and from that date the Company became a controlling shareholder of Baltic
Dairy Board SIA.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
48
Notes to the consolidated and separate financial statements
Notes (continued)
16 Investments in subsidiaries (continued)
The non-controlling interest of Baltic Dairy Board SIA was measured at fair value. The fair value of the non-
controlling interest was determined as a proportionate share of consideration paid by the Company for 70%
of shares. In the opinion of the Company’s management, the consideration paid by the Company for
acquisition of 70% of shares approximated the fair value at the business acquisition date. The fair value of
the non-controlling interest amounted to EUR 116 thousand.
An agreement was signed between the Company and non-controlling shareholder of Baltic Dairy Board SIA,
under which the controlling shareholder had a right to call option, whereas the non-controlling shareholder
had a right to put option. Information on put option is provided in Note 25.
Assets and liabilities recognised on acquisition of Baltic Dairy Board SIA were as follows:
Acquisition-related costs of EUR 50 thousand were included in administrative expenses in the statement of
profit and loss, and cash flows from operating activities in the cash flow statement.
As at 31 December 2021, there were no indications of impairment for investments in subsidiaries.
Key financial indicators of Pieno Logistika AB:
EUR ’000
31 12 2021
31 12 2020
Total assets
177
179
Shareholders’ equity
109
111
Net profit (loss)
-2
2
Key financial indicators of Modest AB:
EUR ’000
2021.12.31
2020.12.31
Total assets
10,746
7,745
Shareholders’ equity
3,702
2,458
Net profit (loss)
1,244
422
Fair value
EUR ’000
31 12 2021
Property, plant and equipment
6,033
Inventories
214
Trade and other receivables
199
Prepayments
74
Cash and cash equivalents
1
Borrowings
-4,793
Income tax payable
-1
Trade and other payables
-1,231
Deferred income tax liability
-109
Net identifiable assets acquired
387
Less: non-controlling interest
-116
Added: goodwill
-
Net assets acquired
271
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
49
Notes to the consolidated and separate financial statements
Notes (continued)
16 Investments in subsidiaries (continued)
Key financial indicators of Kelmės Pieninė AB:
EUR ’000
2021.12.31
2020.12.31
Total assets
29,193
31,381
Shareholders’ equity
8,473
8,951
Net profit (loss)
6,893
7,720
Key financial indicators of Baltic Dairy Board SIA:
EUR ’000
31 12 2021
Total assets
7,760
Shareholders’ equity
510
Net profit (loss) for 01 04 2021 – 31 12 2021
-185
17 Non-current amounts receivable (EUR ’000)
GROUP
COMPANY
31 12 2021
31 12 2020
Note
31 12 2021
31 12 2020
Financial instruments
13
-
29
Loans granted to related parties (a)
843
-
13
-
843
-
Non-financial assets
214
127
29
Prepayments made to related parties (b)
214
127
59
98
Non-current amounts receivable
from farmers (c)
59
98
2
1
Other non-current amounts receivable
-
1
275
226
273
226
288
226
1,116
226
(a) The loan (EUR 830 thousand) was granted to the subsidiary Baltic Dairy Board SIA, to be repaid by 31
January 2024.
The loan (EUR 13 thousand) was granted to other related party, to be repaid by 31 December 2023.
(b) The prepayment to be settled in full by 31 December 2023. Administration fee is charged on the
outstanding balance of the prepayment.
(c) Non-current amounts receivable from farmers comprise prepayments made to milk suppliers for milk.
An administration fee is charged on these prepayments.
The Group’s and the Company’s exposure to credit and foreign exchange risks, impairment losses related to
trade and other amounts receivable are disclosed in Note 30.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
50
Notes to the consolidated and separate financial statements
Notes (continued)
18 Inventories (EUR ’000)
GROUP
COMPANY
31 12 2021
31 12 2020
31 12 2021
31 12 2020
13,656
8,724
Finished products
6,662
5,343
13,656
8,724
6,662
5,343
349
263
Raw materials
64
43
3,208
2,507
Consumables
1,251
1,050
343
199
Work in progress
-
-
69
-
Non-current assets held
for sale
69
-
17,625
11,693
8,046
6,436
Raw materials include milk and other materials used in the production.
As at 31 December 2021, the Group’s materials (packaging, auxiliary materials, etc.) written down to net
realisable value amounted to EUR 37 thousand (31 December 2020: none). As at 31 December 2021, the
Company’s materials (tare, packaging, auxiliary materials, etc.) written down to net realisable value
amounted to EUR 37 thousand (31 December 2020: none).
The write-down of inventories (finished products) to net realisable value and its reversal are accounted for in
the cost of sales. In 2021, there was no write-down of inventories (finished products) to net realisable value
or reversal for the Group and the Company.
As at 31 December 2021, the Group’s inventories (cheese, cheese products and other, dried milk products
and fresh milk products) with the net book amount of up to EUR 7,404 thousand (2020: up to EUR 7,418
thousand) were pledged to the financial institutions (Note 23).
As at 31 December 2021, the Company’s inventories (cheese, cheese products and other) with the net book
amount of up to EUR 4,448 thousand (2020: up to EUR 5,948 thousand) were pledged to the financial
institutions (Note 23).
19 Trade and other receivables (EUR ’000)
GROUP Note
31 12 2021
31 12 2020
Trade receivables
10,630
7,607
Impairment losses
-59
-95
Trade receivables from related parties
-
-
Loans granted to related parties, including interest
charged and administration fee
29
1,640
415
Financial assets
12,211
7,927
Taxes receivable (other than income tax)
2,025
1,073
Other receivables from related parties
12
12
Other receivables
23
50
Total trade and other receivables
14,271
9,062
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
51
Notes to the consolidated and separate financial statements
Notes (continued)
19 Trade and other receivables (continued)
COMPANY
31 12 2021
31 12 2020
Trade receivables
10,498
7,573
Impairment losses
j
-59
-95
Trade receivables from related parties
29
4,556
1,180
Loans granted to related parties, including interest
charged and administration fee
29
1,639
415
Financial assets
16,634
9,073
Taxes receivable (other than income tax)
1,954
1,042
Other receivables from related parties
29
12
17
Other receivables
-
15
Total trade and other receivables
18,600
10,147
Trade and other receivables are non-interest bearing and their settlement term is 30 days.
Taxes receivable consist of VAT receivable.
As at 31 December 2021, the Group’s and the Company’s receivables in amount of EUR 50 thousand (31
December 2020: EUR 115 thousand) were pledged (Note 28).
The Group’s and the Company’s exposure to credit and foreig
n exchange risks, impairment losses related to
trade and other receivables are disclosed in Note 30.
The ageing analysis of trade receivables is disclosed in Note 30.
20 Prepayments (EUR ’000)
GROUP
COMPANY
31 12 2021
31 12 2020
Note
31 12 2021
31 12 2020
600
545
(a)
Prepayments
434
514
22
191
29
Prepayments to related
parties
22
191
622
736
456
705
(a)
Prepayments consist of prepayments made to the companies for goods and services and to the farmers for
milk.
21 Cash and cash equivalents (EUR ’000)
GROUP
COMPANY
31 12 2021
31 12 2020
31 12 2021
31 12 2020
764
135
Cash at bank
545
110
35
46
Cash on hand
34
45
799
181
579
155
As at 31 December 2021, all cash balances on bank accounts were pledged to secure repayment of bank
borrowings (Note 28). In addition, cash inflows to bank accounts were pledged to secure repayment of bank
borrowings (Note 28). The Group’s and the Company’s exposure to interest rate risk arising from cash and
cash equivalents is disclosed in Note 30.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
52
Notes to the consolidated and separate financial statements
Notes (continued)
22 Capital and reserves
As at 31 December 2021 and 2020, the Company’s authorised share capital was divided into 11,943,000
ordinary shares with the nominal value of EUR 0.29 each. All the shares are fully paid.
Ordinary shares are stated at their nominal value. Consideration received for the shares sold in excess over
their nominal value is shown as share premium. Incremental external costs directly attributable to the issue
of new shares are accounted for as a deduction from share premium. Pursuant to the Law on Companies, the
holders of ordinary shares have one vote per share at the Company's shareholders' meeting, the right to
receive dividends, and the right to receive payments in the event of liquidation of a company.
Legal reserve
Pursuant to the Law on Companies of the Republic of Lithuania, annual transfers of 5% from distributable
profit are required until the legal reserve reaches 10% of the authorised share capital. Pursuant to the Law the
legal reserve may be used to cover accumulated losses only. As at 31 December 2021, the Company’s and
the Group’s legal reserve amounted to EUR 346 thousand (31 December 2020: EUR 346 thousand).
Share premium
Share premium is the difference between the nominal value and issue price of the shares.
Revaluation reserve
Revaluation reserve is related to the revaluation of the buildings and is stated net of deferred income tax
liability. The reserve is reduced in proportion to the depreciation and disposal of the revalued assets.
Transfers from the revaluation reserve to retained earnings are performed when the revalued buildings are
being depreciated. The amount transferred is determined as a difference between depreciation calculated
from the revalued amount and depreciation calculated from the initial cost of the buildings. Revaluation
reserve can be used to increase the share capital.
Other reserves
Other reserves are formed by the decision of the annual meeting of shareholders on profit appropriation, and
they are established in the Company‘s Articles of Association. These reserves can be used only for the
purposes approved by the general meeting of shareholders.
The Group and the Company have no other reserves.
Dividends
In 2021, dividends of EUR 0.08 per share were paid out to the shareholders (2020: no dividends were paid
out to the shareholders).
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
53
Notes to the consolidated and separate financial statements
Notes (continued)
23 Borrowings and lease liabilities
GROUP
COMPANY
31 12 2021
31 12 2020
Note
31 12 2021
31 12 2020
17,050
2,951
Non-current borrowings 28, 29
2,285
2,779
403
323
Lease liabilities 13
414
345
17,453
3,274
Non-current
2,699
3,124
6,420
18,083
Current bank borrowings and other
borrowings 28, 29
3,941
3,996
290
303
Lease liabilities 13
301
312
6,710
18,386
Current
4,242
4,308
24,163
21,660
Total borrowings and lease liabilities
6,941
7,432
As at 31 December 2021, under the agreements signed with the banks the Company’s and the Group’s
balance of undrawn short-term credit limits amounted to EUR 1,134 thousand (2020: the Company’s EUR
1,628 thousand and the Group’s EUR 4,128 thousand). As at 31 December 2021, the Company and the
Group had no long-term credit limits, but the Group had an undrawn balance of a long-term credit limit OP
Corporate bank plc amounting to EUR 1,600 thousand. Under the agreements signed with the banks, the
Company’s and the Group’s credits are subject to the following interest rates: 6-month EURIBOR + margin
and 3-month EURIBOR + margin; the interest rates set for overdrafts are as follows: 3-month EURIBOR +
margin and EONIA + margin.
Under the agreements signed with the banks, the Company and the Group have committed to comply with
certain covenants, such as financial debt and net financial debt to EBITDA ratio, debt service coverage ratio
and equity ratio. These ratios are calculated according to the data reported in the consolidated financial
statements.
Borrowings by maturity (EUR ’000):
GROUP
COMPANY
31 12 2021
31 12 2020
31 12 2021
31 12 2020
6,420
18,083
Within 1 year
3,941
3,996
17,050
2,951
Between 1 and 5 years
2,285
2,779
23
,470
21,034
6,226
6,775
In 2021, the Group’s borrowings were subject to annual effective interest rate of 4.15% (2020: 3.86%).
In 2021, the Company’s borrowings were subject to annual effective interest rate of 4.52% (2020: 5.36%).
Lease liabilities (EUR ‘000):
GROUP
COMPANY
31 12 2021
31 12 2020
31 12 2021
31 12 2020
290
303
Within 1 year
301
312
403
323
Between 1 and 5 years
414
345
693
626
715
657
The right-of-use assets recognised in relation to lease liabilities is disclosed in Notes 12 and 13.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
54
Notes to the consolidated and separate financial statements
Notes (continued)
23 Borrowings and lease liabilities (continued)
Cash flows from financing activities
COMPANY
Liabilities arising from financing activities
Total
Current
portion of
lease
liabilities
Non
-
current
portion of
lease
liabilities
Current portion of
non-
current
borrowings, current
borrowings
Credit lines
and over-
drafts
Non
-
current
portion of
non
-
current
borrowings
At 1 January 2021
312
345
2,754
1,242
2,779
7,432
Cash inflows - proceeds from
borrowings
- - 1,166 493
292
1,951
Cash outflows - repayments of
borrowings
- - -2,500 - - -
2,500
Additions - lease
-
651
-
-
-
651
Repayments – lease
-533
-
-
-
-
-533
Other non-cash changes
(reclassification of current/non
-
current
portion, impairment, write-offs)
522
-582
786
-
-786
-
60
At 31 December 2021
301
414
2,206
1,735
2,285
6,941
GROUP
Liabilities arising from financing activities
Total
Current
portion of
lease
liabilities
Non-current
portion of
lease
liabilities
Current portion of
non-
current
borrowings, current
borrowings
Credit lines
and over-
drafts
Non-current
portion of
non
-
current
borrowings
At 1 January 2021
303
323
16,841
1,242
2,951
21,660
Cash inflows - proceeds from
borrowings
- - 1,166 493
2,816
4,475
Cash inflows – loan offsetting
-
-
-
-
226
226
Cash outflows - repayments of borrowings
-
-
-6,308
-
-750
-7,058
Additions - lease
-
630
-
-
-
630
Repayments – lease
-535
-
-
-
-
-535
Outstanding balance of borrowings of
subsidiary at 1 April 2021*
- - - - 4,793
4,793
Other non-cash changes
(reclassification of
current/non-
current
portion, impairment, write-offs)
522
-550
-7,014
-
7,014
-28
At 31 December 2021
290
403
4,685
1,735
17,050
24,163
*Borrowings acquired on business combination
(Note 16).
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
55
Notes to the consolidated and separate financial statements
Notes (continued
)
23 Borrowings and lease liabilities (continued)
COMPANY
Lease liabilities
Current
portion of
lease
liabilities
Non
-
current
portion of
lease
liabilities
Current portion of
non-
current
borrowings, current
borrowings
Credit lines
and over-
drafts
Non
-
current
portion of
non
-
current
borrowings
Total
At 1 January 2020
375
672
7,392
2,768
80
11,287
Cash inflows - proceeds from
borrowings
- - 3,420 - 2,779
6,199
Cash outflows - repayments of
borrowings
- - -8,138 -1,526
-
-9,664
Additions - lease
-
-
-
-
-
-
Repayments – lease
-390
-
-
-
-
-390
Other non-cash changes (loan
repayment offset against amounts
receivable)
327
-327
80 - -80
-
At 31 December 2020
312
345
2,754
1,242
2,779
7,432
GROUP
Lease liabilities
Total
Current
portion of
lease
liabilities
Non
-
current
portion of
lease
liabilities
Current portion of
non-current
borrowings, current
borrowings
Credit lines
and over-
drafts
Non
-
current
portion of
non
-
current
borrowings
At 1 January 2020
391
642
9,721
4,421
12,308
27,483
Cash inflows - proceeds from
borrowings
- - 5,108 - 2,779
7,887
Cash outflows - repayments of
borrowings
- - -8,220 -
3,179
-
1,904
-13,303
Additions - lease
-
-
-
-
-
-
Repayments – lease
-407
-
-
-
-
-407
Other non-cash changes (loan
repayment offset against amounts
receivable)
319
-319
10,232 - -
10,232
-
At 31 December 2020
303
323
16,841
1,242
2,951
21,660
24 Government grants
EUR ’000
GROUP
COMPANY
31 12 2021
31 12 2020
31 12 2021
31 12 2020
4,664
5,243
Opening net book amount
873
1,071
51
-
Grants received
-
-
-
34
Grant receivable
-
-
-486
-607
Amortisation recognised in profit or loss and
write-off of grants
-188
-198
-104
-6
Write-off of grants upon disposal of assets
-
-
4,125
4,664
Closing net book amount
685
873
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
56
Notes to the consolidated and separate financial statements
Notes (continued)
24 Government grants (continued)
During 2007-2014, the Group and the Company received support from the EU funds under the Lithuanian
Rural Development Programmes from the National Paying Agency under the Ministry of Agriculture. The
support was received for the acquisition of non-current assets. The support is amortised in proportion to the
depreciation of the related assets.
Under the 2014-2020 programme financed from the EU funds, the Group received support of EUR 3.98
thousand during 2017-2019 for the acquisition of the technological lines intended for the production of dried
whey milk products. The support is amortised in proportion to the depreciation of the related assets.
On 8 July 2020, Kelmės Pieninė AB and public enterprise Lithuanian Business Support Agency signed an
agreement for the project No. 01.2.1-LVPA-K-856-02-0037 for the Development of an innovative food
supplement for the elderly to prevent senile weakness syndrome and malnutrition. For the implementation of
the project, the Company will receive support in total amount of EUR 277 thousand during the period of 36
months. During 2020–2021, the amount used from the support was EUR 123 thousand (out of which EUR
101 thousand was used in 2021), whereof the grant for non-current assets amounted to EUR 51 thousand.
25 Non-current trade and other amounts payable
GROUP
COMPANY
31 12 2021
31 12 2020
EUR ‘000
31 12 2021
31 12 2020
53
-
Put option
-
-
The Group has signed a put option, under which the non-controlling shareholders of Baltic Dairy Board SIA
have a right to sell the shares of Baltic Dairy Board SIA to the Company as from 1 April 2023. The
transaction price will be determined with reference to the fair value estimated by an independent expert at
the date of exercise. The terms do not provide a present ownership interest in the shares subject to the put. It
was determined that the fair value of put option amounted to EUR 53 thousand as at 31 December 2021. The
put option was accounted for at the present value of redemption amount within non-current liabilities and
equity of the Company.
26 Deferred income tax assets (liabilities)
Deferred income tax assets and liabilities calculated using a 15% tax rate in 2021 (2020: 15%) relate to the
following line items:
COMPANY
Assets
Liabilities
Net value
EUR ‘000
31 12 2021
31 12 2020
31 12 2021
31 12 2020
31 12 2021
31 12 2020
Property, plant and
equipment
-
-
1,832
1,820
1,832
1,820
Vacation reserve
-117
-98
-
-
-117
-98
Inventories
-6
-
-
-
-6
-
Government grants
-103
-131
-
-
-103
-131
Tax loss carry forward
-2,076
-2,481
-
-
-2,076
-2,481
Deferred income tax
(assets)/liabilities
-2,302
-2,710
1,832
1,820
-470
-890
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
57
Notes to the consolidated and separate financial statements
Notes (continued)
26 Deferred income tax assets (liabilities) (continued)
In the Company‘s statement of profit and loss, decrease in deferred income tax assets amounted to EUR 420
thousand.
The Group’s deferred income tax assets and liabilities were calculated at the effective tax rate of 15% in
accordance with the Lithuanian laws and the effective tax rate of 25% in accordance with the Latvian laws.
Tax rate 25% is applicable to deferred tax assets and liabilities relating to Baltic Dairy Board SIA.
The Group‘s deferred tax assets and liabilities relate to the following line items:
GROUP
Asset
Liabilities
Net value
EUR ‘000
31 12 2021
31 12 2020
31 12 2021
31 12 2020
31 12 2021
31 12 2020
Property, plant and
equipment
-
-
1,903
1,820
1,903
1,820
Vacation reserve
-145
-98
-
-
-145
-98
Inventories
-6
-
-
-
-6
-
Government grants
-103
-131
-
-
-103
-131
Tax loss carry forward
-2,076
-2,481
-
-
-2,076
-2,481
Fair value adjustment to
assets and liabilities of
Baltic Dairy Board SIA
-
-
123
-
123
-
Deferred income tax
(assets)/liabilities
-2,330
-2,710
2,026
1,820
-304
-890
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
58
Notes to the consolidated and separate financial statements
Notes (continued)
26 Deferred income tax assets (liabilities) (continued)
COMPANY
EUR ‘000
01 01 2021
Recognised in
profit or loss
Recognised in
equity
31 12 2021
Property, plant and equipment
1,820
12
-
1,832
Vacation reserve
-98
-19
-
-117
Inventories
-
-6
-
-6
Government grants
-131
28
-
-103
Tax loss carry forward
-2,481
405
-
-2,076
Deferred income tax (assets)/liabilities
-890
420
-
-470
EUR ‘000
01 01 2020
Recognised in
profit or loss
Recognised in
equity
31 12 2020
Property, plant and equipment
1,867
-47
-
1,820
Vacation reserve
-90
-8
-
-98
Inventories
-1
1
-
0
Government grants
-159
28
-
-131
Tax loss carry forward
-1,776
-705
-
-2,481
Deferred income tax (assets)/liabilities
-159
-731
-
-890
The difference between the tax base and the reported net book amount of property, plant and equipment
occurred mainly due to revaluation of the buildings, different depreciation periods and recognition of tax
losses as at 31 December 2021.
GROUP
EUR ‘000
01 01 2021
Recognised in
profit or loss
Recognised in
equity
31 12 2021
Property, plant and equipment
1,820
83
-
1,903
Vacation reserve
-98
-47
-
-145
Inventories
-
-6
-
-6
Government grants
-131
28
-
-103
Tax loss carry forward
-2,481
405
-
-2,076
Adjustment to assets and liabilities of Baltic
Dairy Board SIA
-
14
109
123
Deferred income tax (assets)/liabilities
-890
477
109
-304
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
59
Notes to the consolidated and separate financial statements
Notes (continued)
26 Deferred income tax assets (liabilities) (continued)
GROUP
COMPANY
31 12 2021
31 12 2020
EUR ‘000
31 12 2021
31 12 2020
Deferred income tax assets/(liability)
254/ -206
181/ -47
Deferred income tax assets (liability), which
will be realised within 12 months
157 /-12
181 /-47
2,076 /
-
1,820
2,529 /
-
1,773
Deferred income tax assets (liability), which
will be realised after 12 months
2,145 /
-
1,820
2,529 /
-
1,773
304
890
Net deferred income tax assets (liability)
470
890
The Group and the Company do not recognise deferred income tax assets on income tax relief for investment
projects. As at 31 December 2021, the amounts of such income tax reliefs not utilised were EUR 1,433
thousand and EUR 305 thousand, respectively.
27 Trade and other amounts payable
GROUP
COMPANY
31 12 2021
31 12 2020
EUR ‘000
31 12 2021
31 12 2020
Financial instruments Note
12,980
8,547
Trade payables
10,238
6,696
47
32
Trade payables to related parties
29
2,428
4,951
13,027
8,579
12,666
11,647
Non-financial instruments
2,600
2,900
Employment-related liabilities
1,547
1,422
302
175
Advance amounts received
225
175
74
74
Dividends payable
-
-
3,599
3,097
Taxes payable (other than income tax)*
56
39
271
40
Accrued expenses and provisions
94
24
-
735
Other amounts payable
-
-
6,846
7,021
1,922
1,660
19,873
15,600
14,588
13,307
* Based on Order of 26 March 2020 of the State Tax Inspectorate under the Lithuanian Ministry of Finance
(the “Tax Authority“) On support measures for the taxpayers affected by the negative impact of the
coronavirus, in 2020 the Group was eligible to tax-related measures as a businesses affected by COVID-19
pandemic. Those measures encompassed deferral of tax payments by entering into a tax credit (interest-free)
agreement.
In 2021, the Group received the Tax Authority‘s resolution regarding entering into a tax credit agreement for
the amount of EUR 3,807 thousand (whereof: personal income tax of EUR 487 thousand; value added tax of
EUR 3,311 thousand, and other taxes of EUR 9 thousand). The credit repayment dates are during the period
between 25 March 2021 and 25 December 2022.
As at 31 December 2021, the Group‘s outstanding balance of the tax credit amounted to EUR 2,945
thousand (31 December 2020: EUR 3,807 thousand).
The Group‘s and the Company‘s foreign exchange and liquidity risks arising from trade and other amounts
payable are disclosed in Note 30.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
60
Notes to the consolidated and separate financial statements
Notes (continued)
28 Contingent liabilities
Significant contractual commitments as at 31 December 2021:
GROUP
COMPANY
31 12 2021
31 12 2020
EUR ‘000
31 12 2021
31 12 2020
428
206
Acquisition of property, plant and
equipment
428
62
6,809
6,262
Purchase of raw materials
6,809
6,262
7,237
6,468
7,237
6,324
As at
31 December 2021, the Group’s and the Company’s assets pledged to secure the repayment of bank
borrowings and other collaterals were as follows (Note 23):
GROUP:
x cash inflows to bank accounts with Luminor Bank AS;
x immovable property with the carrying amount of EUR 11,503 thousand;
x movable property with the carrying amount of EUR 28,561 thousand;
x inventories with the carrying amount of up to EUR 7,404 thousand;
x amounts receivable from one retail chain;
x lease rights to state-owned land
x Based on agreement signed on 29 December 2021 between Baltic Dairy Board SIA and Citadele bank,
all movable and immovable property of Baltic Dairy Board SIA must be pledged in 2022 with the carrying
amounts of EUR 2,402 thousand and EUR 4,723 thousand as at 31 December 2021, respectively.
COMPANY:
x cash inflows to bank accounts with Luminor Bank AS;
x the Company’s immovable property located at address: P. Lukošaičio g. 14, Vilkyškiai, P. Lukošaičio g.
3, Vilkyškiai and Sodų g, 13, Eržvilkas, Jurbarko r. sav., with the carrying amount of EUR 3,194 thousand –
to secure fulfilment of the Company‘s obligations to Swedbank AB;
x the Company‘s immovable property located at address: Gaurės g. 23, Tauragė, with the carrying amount
of EUR 150 thousand, to secure fulfilment of obligations of Kelmės Pieninė AB to OP Corporate Bank plc.
x the Company‘s investment property located at address: Gaurės g. 23, Tauragė, with the carrying amount
of EUR 6,780 thousand, to secure fulfilment of obligations of Kelmės Pieninė AB to OP Corporate Bank plc
and to secure fulfilment of obligations of Modest AB to Luminor Bank AS;
x the Company‘s lease rights to state-owned land;
x the Company‘s movable property located at address: P. Lukošaičio g. 14, Vilkyškiai, with the carrying
amount of EUR 4,786 thousand to secure fulfilment of the Company‘s obligations to Swedbank AB;
x the Company‘s inventories with the carrying amount of up to EUR 4,448 thousand to secure fulfilment
of the Company‘s obligations to Swedbank AB and Luminor Bank AS;
x the Company‘s amounts receivable from one retail chain.
Other collaterals:
x sureties issued by Kelmės Pieninė AB, Modest AB and Kelmės Pienas UAB to Luminor Bank AS to secure
fulfilment of overdraft obligations in amount of EUR 1,736 thousand as at 31 December 2021 (the surety
agreements were signed in 2021);
x sureties issued by Kelmės Pieninė AB, Modest AB and Kelmės Pienas UAB to secure a proper fulfilment of
obligations of the Company under a loan agreement with Swedbank AB. The outstanding balance of the loan was
EUR 3,071 thousand as at 31 December 2021 (the surety agreements were signed in 2021);
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
61
Notes to the consolidated and separate financial statements
Notes (continued)
28 Contingent liabilities (continued)
x sureties issued by Kelmės Pieninė AB and Modest AB to UAB OP Finance leasing company to secure
fulfilment of finance lease obligations in amount of EUR 105 thousand (the net book amount of leased
assets was EUR 362 thousand as at 31 December 2021);
x a complex of property pledged by Pieno Logistika AB and Kelmės Pieninė AB and equipment and motor
vehicles pledged by Modest AB to Luminor Bank AS to secure fulfilment of the Company‘s overdraft
liabilities.
Sureties and guarantees issued:
x surety issued to OP Corporate Bank plc to secure fulfilment of financial liabilities of Kelmės Pieninė AB
in amount of EUR 12,779 thousand as at 31 December 2021 (31 December 2020: EUR 12,248
thousand);
x surety issued to Luminor Bank to secure fulfilment of financial liabilities of Modest AB in amount of
EUR 171 thousand as at 31 December 2021 (the surety agreements were signed in 2020).
The Group’s and the Company’s management is aware that pursuant to the effective laws, the State Tax
Inspectorate may at any time inspect the books and accounting records of the Group and the Company for 5
years preceding the reporting tax period and may assess additional taxes or fines. The Group’s and the
Company’s management is not aware of any circumstances that might result in a potential material tax
liability in this respect.
29 Transactions with related parties and management personnel
The parties of the Group and the Company are related when one party has a power to exercise control over
the other party or make significant influence on its financial and operation decisions.
The main related parties of the Group and the Company are as follows:
Kelmės Pieninė AB,
Modest AB,
Kelmės Pienas UAB,
Pieno Logistika AB,
Baltic Dairy Board SIA,
Management personnel,
Other related parties.
In 2021, one of the related parties bought up the debts of Baltic Dairy Board SIA. At the end of 2021,
Baltic
Dairy Board SIA entered into agreements with the Parent and AS „Citadele banka“
regarding the issue of
loans to refinance the debts to the related party. The Parent issued the loan to SIA „Baltic Dairy Board“
at the
end of 2021, and AS „Citadele banka“ issued loan to SIA „Baltic Dairy Board“ in 2022.
(i) Transactions with related parties:
Purchases of raw materials, products, non-current assets and services, interest expenses
GROUP
COMPANY
2021
2020
EUR ‘000
2021
2020
-
-
Kelmės Pieninė AB
29,756
35,215
-
-
Kelmės Pienas UAB
15,595
-
-
-
31
-
-
64
Modest AB
Baltic Dairy Board
SIA
Management personnel
32,316
79
31
24,656
-
64
2,971
2,300
Other related parties
2,678
2,300
3,002
2,364
80,455
62,235
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
62
Notes to the consolidated and separate financial statements
Notes (continued)
29 Transactions with related parties and management personnel (continued)
(ii) Transactions with related parties:
Sale of raw materials, products, non-current assets and services, interest income
GROUP
COMPANY
2021
2020
EUR ‘000
2021
2020
-
-
Kelmės Pieninė AB
10,764
11,196
-
-
Kelmės Pienas UAB
7,277
-
-
-
-
6
-
-
-
11
Modest AB
Pieno Logistika AB
Baltic Dairy Board
SIA
Management personnel
30,321
1
126
6
20,795
1
-
11
204
61
Other related parties
204
61
206
72
48,699
32,064
(iii) Year-end balances of transactions with related parties:
GROUP
COMPANY
31 12 2021
31 12 2020
EUR ‘000
31 12 2021
31 12 2020
-
-
Loan payable (Kelmės Pieninė AB)
-
80
-
-
-
-
Trade and other amounts payable
(Kelmės Pieninė AB)
2,381
-
4,919
4,919
-
-
(Kelmės Pienas UAB)
2,381
-
-
-
Trade and other amounts receivable
4,555
1,185
-
-
(Kelmės Pieninė AB)
-
5
-
-
(Modest AB)
4,365
1,180
-
-
(Baltic Dairy Board SIA)
189
-
-
-
Loan receivable (Baltic Dairy Board
SIA, including interest)
831
-
-
500
Loan payable (including interest to
management personnel)
-
500
23
301
Loan receivable (including interest from
management personnel)
23
301
12
12
Other amounts receivable (from
management personnel)
12
12
47
32
Trade and other amounts payable (to
other related parties)
47
32
236
318
Advance amounts receivable (from
other related parties)
236
318
1,631
114
Loan receivable (including interest and
administration fee from other relatd
parties)
1,631
114
4,567
-
Loan payable (including interest to
other related parties)
-
-
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
63
Notes to the consolidated and separate financial statements
Notes (continued)
29 Transactions with related parties and management personnel (continued)
Assets pledged, guarantees/sureties issued by the Group and the Company to secure the fulfilment of
financial liabilities of related parties, and assets pledged, guarantees/sureties issued by related parties to
secure the fulfilment of financial liabilities of the Company are disclosed in Note 28.
The main terms and conditions for the Group‘s and the Company‘s amounts payable and receivable under
the loan agreements are as follows:
- In 2021, the Company granted a loan of EUR 830 thousand to the subsidiary Baltic Dairy Board SIA. The
loan has to be repaid by 31 January 2024. The outstanding balance of the loan was EUR 830 thousand as at
31 December 2021. Interest is charged on the outstanding balance of the loan.
- In 2020, the Group and the Company granted a loan of EUR 210 thousand to a member of management
personnel. The outstanding balance of the loan was EUR 21 thousand and interest receivable was EUR 2
thousand as at 31 December 2021. Interest is charged on the outstanding balance of the loan.
- The Group‘s and the Company‘s loans receivable from other related parties amounted to EUR 1,631
thousand as at 31 December 2021.
Loan of EUR 13 thousand has to be repaid by 31 December 2023. Interest is charged on the outstanding
balance of the loan. Administration fee and interest receivable amount to EUR 101 thousand.
Loan of EUR 1,517 thousand has to be repaid by 31 December 2022. Interest is charged on the outstanding
balance of the loan.
- The Group‘s outstanding balance of loans payable to other related parties amounted to EUR 4,567 thousand
as at 31 December 2021. The loan repayment date is 31 December 2023. Interest is charged on the
outstanding balance of the loan.
In 2021, personnel expenses included payments of EUR 943 thousand and EUR 564 thousand to the Group‘s
and the Company‘s management personnel, including social security contributions (2020: EUR 755
thousand and EUR 497 thousand, respectively
In 2021, the Group‘s and the Company‘s payments for personnel under the defined plan for contributions to
Pillar III investment funds amounted to EUR 253 thousand and EUR 231 thousand, respectively (2020: EUR
118 thousand and EUR 68 thousand, respectively).
30 Financial instruments and risk management
Credit risk
The maximum exposure to credit risk is the net book amount of financial assets designated as at
31 December
2021 as financial assets measured at amortised cost. The maximum exposure to credit risk as at the reporting
date was as follows:
GROUP
EUR ‘000
Net book amount
Note
31 12 2021
31 12 2020
Non-current amounts receivable
17
13
-
Trade and other amounts receivable, net of tax
19
12,211
7,927
Cash and cash equivalents
21
799
181
13,023
8,108
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
64
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
The table below analyses by geographical region the maximum exposure to credit risk as at the reporting date
arising from trade receivables:
EUR ‘000
Net book amount
31 12 2021
31 12 2020
Lithuania
2,706
856
Great Britain
319
1,571
Israel
859
576
Saudi Arabia
2,174
1,464
Portugal
408
355
Italy
497
276
Poland
975
596
Latvia
91
147
Estonia
312
376
Republic of Korea
157
73
Kazakhstan
101
103
China
-
146
Taiwan
-
273
Albania
104
109
Denmark
138
40
The Netherlands
794
126
Azerbaijan
78
1
Cameroon
3
4
Croatia
-
89
Thailand
69
53
Germany
1,019
387
Libya
146
-
Lebanon
70
-
Ireland
2
2
Greece
160
15
Bosnia-Herzegovina
250
-
Slovakia
-
75
Finland
61
63
Spain
50
17
Czech
224
68
South Africa
140
58
Malta
68
-
Norway
20
-
Georgia
58
-
UAE
87
-
Vietnam
63
-
Other
8
8
12,211
7,927
As at 31 December 2021, significant credit risk concentration was related to five customers, the receivables
from which accounted for 31% of total trade receivables (31 December 2020: 33%).
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
65
Notes to the consolidated and separate financial statements
30 Financial instruments and risk management (continued)
COMPANY
EUR ‘000
Net book amount
Note
31 12 2021
31 12 2020
Non-current amounts receivable
17
843
-
Trade and other receivables
19
16,634
9,073
Cash and cash equivalents
21
579
155
18,056
9,228
The table below analyses the maximum exposure to credit risk at the reporting date arising from trade
receivables by geographical regions:
EUR ‘000
Net book amount
31 12 2021
31 12 2020
Lithuania
6,950
2,422
Great Britain
319
1,151
Israel
859
576
Saudi Arabia
2,174
1,464
Portugal
408
355
Italy
497
276
Poland
975
596
Latvia
279
147
Estonia
312
376
Republic of Korea
157
73
Kazakhstan
101
103
China
-
146
Taiwan
-
273
Albania
104
109
Denmark
138
40
The Netherlands
794
126
Azerbaijan
78
1
Cameroon
3
4
Croatia
-
89
Thailand
69
53
Germany
1,019
387
Libya
146
-
Lebanon
70
-
Ireland
-
2
Greece
160
15
Bosnia-Herzegovina
250
-
Slovakia
-
75
Finland
61
63
Spain
50
17
Czech
224
68
South Africa
140
58
Malta
68
-
Norway
20
-
Georgia
58
-
Vietnam
63
-
UAE
87
-
Other
1
8
16,634
9,073
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
66
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
As at
31 December 2021, a significant credit risk concentration was related to three customers, the receivables
from which accounted for 36% of total trade receivables (31 December 2020: 35%).
Impairment losses
The Group and the Company establish the provision
for impairment losses which represents estimate of
incurred losses in respect of trade and other receivables. Such a provision includes only specific losses
associated with individual significant items of trade and other receivables. The ageing analysis o
f trade and
other receivables and non-current amounts receivable as at the reporting date is as follows:
GROUP
Total amount
Impairment
Total amount
Impairment
EUR ‘000
31 12 2021
31 12 2021
31 12 2020
31 12 2020
Related parties:
Not past due
1,559
-
307
-
Past due 0-30 days
-
-
-
-
Past due 31-60 days
-
-
1
-
More than 60 days
94
-
107
-
1,653
-
415
-
Not past due
9,598
-
6,462
-
Past due 0-30 days
902
-
709
-
Past due 31-60 days
55
-
90
-
More than 60 days
75
-59
346
-95
10,630
-59
7,607
-95
12,283
-59
8,022
-95
Impairment losses related to trade and other receivables amounted to EUR 59 thousand as at 31 December
2021 (2020: EUR 95 thousand).
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
67
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
COMPANY
Total amount
Impairment
Total amount
Impairment
EUR ‘000
31 12 2021
31 12 2021
31 12 2020
31 12 2020
Related parties:
Not past due
6,357
-
1,487
-
Past due 0-30 days
419
-
-
-
Past due 31-60 days
168
-
1
-
More than 60 days
94
-
107
-
7,038
-
1,595
-
Other parties:
Not past due
9,474
-
6,431
-
Past due 0-30 days
899
-
706
-
Past due 31-60 days
52
-
90
-
More than 60 days
73
-59
346
-95
10,498
-59
7,573
-95
17,536
-59
9,168
-95
Impairment losses related to trade and other receivables amounted to EUR 59 thousand as at 31 December
2021 (2020: EUR 95 thousand).
Movements on the account of provision for
impairment of trade and other receivables during the year were as
follows:
GRUOP
EUR ‘000
Net book amount
2021
2020
Balance at 1 January
-95
-98
Impairment losses recognised
-59
-1
Write-off of bad debts
95
1
Impairment losses reversed
-
3
Balance at 31 December
-59
-95
COMPANY
EUR ‘000
Net book amount
2021
2020
Balance at 1 January
-95
-98
Impairment losses recognised
-59
-1
Write-off of bad debts
95
1
Impairment losses reversed
-
3
Balance at 31 December
-59
-95
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
68
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
Based on historical payment statistics and detailed analysis of customer solvency, the Company’s
management considers that the amounts which are past due more than 30 days and not impaired are still
recoverable. During the recent five years, the Company recognised amounts receivable of EUR 95 thousand
as bad debts.
Liquidity risk
The table below analyses financial liabilities, including interest charged thereon, based on their contractual
maturities:
GROUP
At 31 December 2021
Net book
amount
Contractual
cash flows
Less than
6 months
6-
12
months
1-2 years
2-5 years
EUR ’000
Financial liabilities
Bank borrowings
17,758
-18,864
-1,391
-3,113
-2,496
-11,864
Other borrowings
4,293
-5,036
-648
-628
-3,760
-
Lease liabilities
693
-716
-161
-141
-217
-197
Factoring
1,419
-1,426
-1,426
-
-
-
Trade payables
13,027
-13,027
-13,027
-
-
-
37,190
-39,069
-16,653
-3,882
-6,473
-12,061
At 31 December 2020
Net book
amount
Contractual
cash flows
Less than
6 months
6-
12
months
1-2 years
2-5 years
EUR ’000
Financial liabilities
Bank borrowings
Other borrowings
17,394
500
-18,001
-525
-1,671
-13
-13,172
-512
-1,910
-
-1,249
-
Lease liabilities
626
-641
-164
-150
-324
-5
Factoring
3,140
-3,171
-3,171
-
-
-
Trade payables
8,579
-8,579
-8,579
-
-
-
30,239
-30,917
-13,598
-13,834
-2,234
-1,254
COMPANY
At 31 December 2021
Net book
amount
Contractua
l cash
flows
Less than 6
months
6-
12
months
1-2 years
2-5 years
EUR ’000
Financial liabilities
Bank borrowings
4,807
-5,039
-460
-2,190
-845
-1,544
Lease liabilities
715
-737
-167
-146
-227
-197
Factoring
1,419
-1,426
-1,426
-
-
-
Trade payables
12,666
-12,666
-12,666
-
-
-
19,607
-19,868
-14,719
-2,336
-1,072
-1,741
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
69
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
At 31 December 2020
Net book
amount
Contractu
al cash
flows
Less than 6
months
6-
12
months
1-2 years
2-5 years
EUR ’000
Financial liabilities
Bank borrowings
Other borrowings
Borrowings from Kelmės
Pieninė AB
4,743
500
80
-5,116
-
526
-
80
-4,16
-13
-80
-1,716
-
513
-
-1,735
-
-
-1,249
-
-
Lease liabilities
657
-673
-167
-155
-346
-5
Factoring
1,452
-1,466
-1,466
-
-
-
Trade payables
11,647
-11,647
-11,647
-
-
-
19,079
-19,508
-13,789
-2,384
-2,081
-1,254
As at 31 December 2021, the Group‘s and the Company‘s current assets exceeded the current liabilities by
EUR 6,555 thousand and EUR 8,851 thousand, respectively. As at 31 December 2021, the Group‘s
borrowings and lease liabilities totalled EUR 24,164 thousand and EUR 6,941 thousand, respectively. Under
the currently effective loan and other agreements with the banks, the outstanding balances of the Group and
the Company to be repaid in 2021 amounted to EUR 5,852 thousand and EUR 4,242 thousand, respectively
(see Note 23).
The export is particularly important for the Group, since it accounts for 86% of total annual turnover. During
the quarantine period due to COVID-19 in 2020 many countries in Europe suspended the activities of hotels,
restaurants and public catering, which resulted in decline in consumption of milk products in this industry.
The Hotel, Restaurant and Cafe (HoReCa) industry recovered in 2021 due to recovery of tourism in the
beginning of summer, and accordingly, the focus will be further given to the following areas:
- geographical expansion of export in HoReCa industry;
- increasing the sales of cheese and cheese products;
- geographical expansion of export of industrial products and increasing the number of customers.
It is expected that in 2022 the sale prices of products will remain at the same level as in 2021. The increase
in prices is likely to continue, which will amortise the higher prices of raw materials and energy. Borrowings
and lease liabilities are expected to amount to EUR 21,867 thousand as at 31 December 2022. In view of all
the projections for 2022, the Group’s net debt to EBITDA ratio will be 1.8 as at 31 December 2022.
In 2022 the Group’s management expects to repay its non-current borrowings in amount of EUR 2,996
thousand.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
70
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
Foreign exchange risk
Exposure to foreign exchange risk, at the exchange rates effective as at 31 December 2021, was as follows:
Exposure to foreign exchange risk, at the exchange rates effective as at 31 December 2020, was as follows:
During the year the exchange rates against the euro were as follows:
Average
2021
2020
USD
1.1831
1.1418
PLN
4.5650
4.4419
The exchange rates applied against the euro as at 31 December were as follows:
2021
2020
USD
1.1334
1.2281
PLN
4.596
4.5565
Analysis of sensitivity to changes in the exchange rates
The Company’s foreign exchange risk arises from purchases and sales denominated in currencies other than
the euro. In 2021, the major portion of the Company’s transactions were conducted in the euros, and
therefore, the Company was not exposed to significant foreign exchange risk.
GROUP (COMPANY) ( EUR ‘000)
USD
PLN
Trade and other receivables, net of tax
2,174
121
Cash and cash equivalents
4
1
Trade payables
-
-2
Net exposure
2,178
120
GROUP (COMPANY) ( EUR ‘000)
USD
PLN
Trade and other receivables, net of tax
1,612
127
Cash and cash equivalents
-
22
Trade payables
-2
-1
Net exposure
1,610
148
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
71
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
Interest rate risk
The Group’s and the Company’s borrowings bear variable interest rates linked to EURIBOR + margin.
Interest rates applied to the Group’s and the Company’s financial instruments as at 31 December 2021 were
as follows:
GROUP
COMPANY
Net book amount
EUR ‘000
Net book amount
31 12 2021
31 12 2020
31 12 2021
31 12 2020
Financial instruments with fixed interest
rates
-
-
Loan granted to Baltic Dairy Board SIA
830
-
1,350
-
Current portion of loan granted
1,350
-
21
290
Short-term loan granted to management
personnel
21
290
-
-500
Current borrowings of management
personnel
-
-500
1,371
-210
2,201
-210
GROUP
COMPANY
Net book amount
EUR ‘000
Net book amount
31 12 2021
31 12 2020
31 12 2021
31 12 2020
Financial instruments with variable
interest rates
-22,051
-17,394
Bank borrowings
-4,807
-4,743
-
-
Kelmės Pieninė AB
-
-80
-1,419
-3,140
Factoring
-1,419
-1,452
-693
-626
Lease liabilities
-715
-657
-24,163
-21,160
-6,941
-6,932
-22,792
-21,370
-4,740
-7,142
Analysis of sensitivity of cash flows to instruments bearing variable interest rates
A shift in interest rates by +/- 100 basis points (bps) would increase/decrease equity and profit/(loss) by the
amounts set out in the table below. This analysis assumes that all other variables, in particular exchange
rates, are held constant. The analysis for 2020 was performed using the same basis.
GROUP
COMPANY
Profit (loss)
Impact (EUR ’000)
Profit (loss)
100 bp
increase
100 bp
decrease
100 bp
increase
100 bp
decrease
At 31 December 2021
-228
228
Financial instruments bearing variable
interest rates
-47
47
At 31 December 2020
-214
214
Financial instruments bearing variable
interest rates
-71
71
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
72
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
Fair value of financial instruments / Fair value hierarchy
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction in the main (or most advantageous) market between market participants at the
measurement date, regardless of whether the price is directly observed or determined using a valuation
methodology.
The table below analyses financial instruments carried at fair value, by valuation method.
The following methods and assumptions are used by the Group and the Company to determine the fair value
of these financial instruments:
Financial instruments that are not measured at fair value
The main financial instruments of the Group and the Company that are not measured at fair value are trade
and other amounts receivable, term deposits, trade and other amounts payable, non-current and current
borrowings. The Group’s and the Company’s management is of the opinion that the carrying amounts of
these financial instruments approximate their fair values because borrowing costs are linked to an interbank
lending rate EURIBOR, and other financial assets and liabilities are of short-term nature; therefore, their fair
value variation is not significant. Fair value is defined as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the measurement date. The
fair value measurement hierarchy has three levels:
Level 1 includes fair value of assets based on quoted prices (unadjusted) in active markets for identical
assets or liabilities;
Level 2 includes fair value of assets based on directly or indirectly observable inputs;
Level 3 includes fair value of assets based on unobservable inputs.
Financial instruments measured at fair value
The Group and the Company have no financial instruments measured at fair value.
GROUP
At 31 December 2021
EUR ’000
Level 1
Level 2
Level 3
Total
Non-current amounts receivable
-
-
13
13
Trade and other receivables
-
-
12,211
12,211
Cash and cash equivalents
799
-
-
799
Borrowings and lease liabilities
-
-
-24,163
-24,163
Trade and other payables
-
-
-13,027
-13,027
799
-
-24,966
-24,167
At 31 December 2021
EUR ’000
Level 1
Level 2
Level 3
Total
Non-current amounts receivable
-
-
-
-
Trade and other receivables
-
-
7,927
7,927
Cash and cash equivalents
181
-
-
181
Borrowings and lease liabilities
-
-
-21,660
-21,660
Trade and other payables
-
-
-8,579
-8,579
181
-
-22,312
-22,131
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
73
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
BENDROVĖ
At 31 December 2021
EUR ’000
Level 1
Level 2
Level 3
Total
Non-current amounts receivable
-
-
843
843
Trade and other receivables
-
-
16,634
16,634
Cash and cash equivalents
579
-
-
579
Borrowings and lease liabilities
-
-
-6,941
-6,941
Trade and other payables
-
-
-12,666
-12,666
579
-
-2,130
-1,551
At 31 December 2020
EUR ’000
Level 1
Level 2
Level 3
Total
Non-current amounts receivable
-
-
-
-
Trade and other receivables
-
-
9,073
9,073
Cash and cash equivalents
155
-
-
155
Borrowings and lease liabilities
-
-
-7,432
-7,432
Trade and other payables
-
-
-11,647
-11,647
155
-
-10,006
-9,851
Capital management
The Board's policy is aimed at maintaining a significant portion of equity compared to borrowed funds in
order to avoid damaging trust of investors, creditors and the market and ensuring the development of
operations in the future and compliance with externally imposed capital requirements.
Capital is defined as
equity attributable to equity holders
The Board also aims to maintain balance between a higher rate of return, which could be achieved by
obtaining more borrowed funds, and security, which is ensured by a larger amount of equity.
The Group and the Company manage the capital structure and make adjustments to
it in the light of changes in
economic conditions and the risk characteristics of their activities. To maintain or adjust the capital structure,
the Group and the Company may adjust the dividend payment to shareholders, return capital to the
shareholders
or issue new shares. There were no changes in the objectives, policies or processes during the
financial years ended 31 December 2021 and 31 December 2020.
The Law on Companies of the Republic of Lithuania require that the Group and the Company keep equity
at
no less than 50% of the share capital.
The Group has a commitment to comply with the external capital requirements set by the banks. Based on the
requirements of the banks (equity – revaluation reserve) / (total assets) ratio should not be less than 30
%.
Management monitors the compliance with the requirements set for the Group. Further details are given in
Note 22.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2021
74
Notes to the consolidated and separate financial statements
Notes (continued)
31 Events after the reporting period
At the end of February 2022, the Russian Federation announced a military operation in Eastern Ukraine. The
regimes of Russia and Belarus were subject to economic and financial sanctions. The Group‘s and the
Company's management performed a preliminary assessment of the potential effects of the invasion of
Ukraine on the Group‘s and the Company's operations.
In the opinion of the Group‘s and the Company‘s management, the geopolitical changes will have no
significant impact on the Group‘s and the Company's operations. In 2021, the Group‘s and the Company‘s
revenue from sales in the markets of Russia, Belarus and Ukraine accounted for 1.84% and 1.44% of the
Group’s and the Company’s total revenue, respectively. The Group’s and the Company’s revenue from sales
in Russia amounted to EUR 1,771 thousand, Belarus – EUR 87 thousand, Ukraine – EUR 973 thousand. In
2022 the Group and the Company terminated sales in the markets of Russia and Belarus, and sales in the
market of Ukraine decreased due to the current situation. The expansion of the range of products planned in
Ukraine in 2022 will be suspended. Since 2020, the Group and the Company have been working in this
market with the distribution company, and have been supplying yogurts and sour cream. One of the largest
shopping centres in Ukraine expressed interest in the Group and the Company. It was agreed to expand the
range of products and supply not only edible yogurts, drinkable yogurts and sour cream. When the situation
changes, the project will be renewed. At the date of issue of the financial statements, sales to Ukraine were
restored.
Since the Group‘s and the Company‘s sales in those markets are insignificant and demand for milk products
has increased, it‘s been possible to diversify promptly the markets, and accordingly, the management does
not expect any significant impact on the Group‘s and the Company‘s operations.
The management has not identified any additional threats for the Group‘s and the Company's ability to
continue on a going concern basis. The management monitors on a daily basis the developing situation, and
makes decisions, if necessary, to ensure stable operation of the Group and the Company. In the opinion of
the management, it is a non-adjusting post-balance sheet event. There were no other significant events after
the end of the financial year.
“Vilvi Group”
annual report for 2021
75
Annual report of “Vilvi Group” for 2021
I. ISSUER OVERVIEW
1. Reporting Period for this Report
This consolidated Report is for 2021.
2. Issuer Information and Contact Details
Name of Issuer
Vilkyškių pieninė AB (hereinafter – Company or Issuer)
Legal Form
Public limited company (Lith. Akcinė bendrovė)
Date and place of registration
18 May 1993, VĮ Registrų centras
Date and place of re-registration
30 December 2005, VĮ Registrų centras
Head office address
P.Lukošaičio str. 14, Vilkyškiai, LT-99254, Pagėgių savivaldybė
Registration No.
060018
Company Register Code
277160980
Telephone
+370 441 55330
Fax
+370 441 55242
E-mail
info@vilvi.eu
Website
www.vilvigroup.lt
3. Information on Subsidiaries and Contact Details:
“Modest” AB
Name of subsidiary
“Modest” AB (hereinafter – “Modest” AB)
Legal form
Public limited company
Date of registration
25 March 1992
Date of re-registration
31 December 2009, VĮ Registrų centras
Registration No.
017745
Company register code
121313693
Head office
Gaurės str. 23, LT-72340 Tauragė
Telephone
+370 446 72693
Fax
+370 446 72734
E-mail
modest@vilvi.eu
Website
www.vilvigroup.lt
Kelmės pieninė AB
Name of subsidiary
Kelmės pieninė AB (hereinafter – Kelmės pieninė AB)
Legal form
Public limited company
Date of registration
3 August 1993, VĮ Registrų centras
Date of re-registration
4 July 2007
Head office
Gaurės g. 23, LT-72340 Tauragė
Registration No.
110109
Company register code
162403450
Telephone
+370 427 61246
Fax
+370 427 61235
E-mail
kelmespienine@vilvi.eu
Website
www.vilvigroup.lt
“Vilvi Group”
annual report for 2021
76
“Kelmės pienas” UAB
Name of Kelmės pieninė AB
subsidiary
“Kelmės pienas” UAB (hereinafter – “Kelmės pienas” UAB)
Legal form
Public limited company
Date of registration
17 November 2020, VĮ Registrų centras
Date of re-registration
4 July 2007
Head office
Raseinių str. 2, LT-86160 Kelmė
Company register code
305658215
Telephone
+370 427 61246
E-mail
kelmespienas@vilvi.eu
Website
www.vilvigroup.lt
“Pieno logistika” AB
Name of subsidiary
“Pieno logistika” AB (hereinafter – “Pieno logistika” AB)
Legal form
Public limited company
Data and place of registration
10 December 2013, Šiauliai Division of VĮ Registrų centras
Head office
Pagojo str. 1, Pagojo km., Kelmės raj.
Company register code
303203457
Telephone
+370 427 61246
Fax
+370 427 61235
E-mail
stasys.stanevicius@vilkyskiu.lt
Website
www.vilvigroup.lt
“Baltic Dairy Board” SIA
Name of subsidiary
“Baltic Dairy Board” SIA (hereinafter – “Baltic Dairy Board”
SIA)
Legal form
Public limited company
Data and place of registration
21 July 2008, Commercial register of Republic of Latvia
Head office
Stacijas str. 1, Bauska, LV-3901, Latvia
Company register code
43603036823
Telephone
+371 63026899
E-mail
info@bdb.lv
Website
http://www.bdb.lv/
4. Main Types of Activity
The main business activity of “Vilvi Group” is production and sale of dairy products (EVRK 10.51).
The main business activity of Vilkyškių pieninė AB is production and sale of fermented cheese, cream and
whey products.
Subsidiary company “Modest” AB makes mozzarella cheese, mould cheese, smoked, melt cheese and other
cheese products.
Subsidiary company Kelmės pieninė AB produces dry milk products – WPC, SMP, permeate and whey
powder.
“Kelmės pienas” UAB produces fresh dairy products: kefir, sour cream, yogurts, cottage cheese, glazed curd
bars, butter.
Subsidiary company “Pieno logistika” AB mainly engages in the lease of buildings.
Subsidiary company “Baltic Dairy Board“ SIA specializes in production of high value-added components of
milk – GOS (Galactooligosaccharides) and processing of whey and milk, which separates protein and lactose
into two separate products.
“Vilvi Group”
annual report for 2021
77
5. Agreements with Brokerages for Securities Public Turnover
“Vilvi Group” has an underwriting agreement with FMĮ Orion Securities UAB brokerage (address A.
Tumėno str. 4, B korp., LT-01109, Vilnius) on the accounting of Vilkyškių pieninė AB, Modest AB, Kelmės
pieninė AB. AB shareholders and services associated with the accounting of the Company’s securities. FMĮ
Finasta AB brokerage manages shareholder accounts for “Pieno logistika” AB.
6. Trading in the Issuer’s Securities on Regulated Exchanges
The name of securities: Vilkyškių pieninė AB common registered shares. The number of securities issued:
11,943,000 units. Share face value: EUR 0.29 per share.
The Company’s issue is included in the Official List of AB NASDAQ OMX Vilnius. The ISIN code of the
securities: LT0000127508, Ticker symbol: VLP1L.
The Company’s shares have been listed since 17 May 2006.
The securities of the subsidiary companies are not publicly traded.
II. OVERVIEW OF OPERATIONS
“Vilvi Group” produces a wide range of delicious dairy products based on original recipes, many of them
acknowledged for their taste and quality at international trade fairs. We are proudly continuing the long-
standing traditions of cheese production that originated in the picturesque region of Lithuania surrounded by
wonderful nature. The lush flood-meadows of the Nemunas River inspire us to create and share what nature
has so generously bestowed on us.
Our mission is to provide people across the whole world more opportunities to enjoy dairy products.
Our Values:
Quality – we produce high-quality dairy products and abide by the highest standards.
Innovations – we continually delight our consumers by introducing new products and providing
opportunities to experience new taste sensations. We constantly invest in new technologies and expand our
product range. We are interested in creating and sharing the results of our work. After all, it is how new
traditions are being born, is not it?
Competence – in the hands of our dairy masters dairy foods turn into exclusive and original high-quality
products.
Honesty – we are open and reliable. Our customers’ trust and respect are extremely important to us. The
basis of our activity includes the time-proved relations with our business partners and professionalism of our
employees.
7.
Issuer’s Jurisdiction
In its operations, “Vilvi Group” follows the Lithuanian law, government resolutions and legal acts on
companies, in particular the Lithuanian law on the securities market, as well as the Company’s own Statutes.
8. Brief History of Issuer
Vilkyškių pieninė AB was revived in 1993, when a limited liability company called Vilkyškių pieninė was
founded in the premises of an old dairy bearing the same name, built in 1934. The old dairy had stopped
production in 1985, and all equipment had been dismantled. In 1993, the new owners of the dairy privatised
the buildings and brought new production equipment from Eastern Germany.
Initially, there was no other owners’ equity apart from the privatized buildings, and bank loans were taken to
provide with the needed working capital.
“Vilvi Group”
annual report for 2021
78
Key Events in Issuer’s History
1993 – 1995: the dairy’s water tower, boiler house and milk separation unit were renovated, and milk
separation was launched. The cheese production department started making of low-fat fermented cheese
Peptatas. A butter production unit was also launched. Since 1997, the cheese production department started
making the Tilsit-type cheese, also launching production of Gouda-type fermented cheese a year later.
1997-2000: buildings and production equipment were renovated, boiler house BWE and cold warehouse
were built, also renovated electricity power substation.
1999- 2000: 2.5 MEUR was invested into the new TetraPakTebel cheese production facility. As a result, new
fully computerised and automated cheese production line was installed, enabling the company to make EU-
compliant products.
In the same year, the Company was issued with a license to export its products to the European Union.
2001
: The Company acquired the Tauragė dairy facility of the Mažeikiai branch of Pieno žvaigždės AB.
Since 2007, it houses the head office of “Modest” AB, a subsidiary of Vilkyškių pieninė AB.
2003-2005: The Company adopted accounting and enterprise resource planning solution Microsoft
Dynamics Nav. An EU-compliant wastewater treatment facility, made by the Dutch company
NewWaterTechnology, was installed, and investments were made into cheese packaging equipment in the
same year. Boiler house of Tauragė production facilities was reconstructed to use new fuel type.
As of 17 May 2006, a total of 9,353,000 common registered shares of Vilkyškių pieninė AB were listed on
the Current List of the NASDAQ OMX Vilnius exchange. As of 1 January 2008, the shares are listed in the
Official list of NASDAQ OMX Vilnius exchange.
In 2006, the Issuer acquired an 80.25 percent stake in “Modest” AB. Now Vilkyškių pieninė AB holds 99.7
percent of the “Modest” AB stock. In 2009, the share capital of “Modest” AB was increased from EUR
37,190 up to EUR 178,730 through the issue of 488,710 new common registered shares. Meanwhile, the
share capital of “Modest” AB was raised from EUR 178,730 to EUR 1,626,830 by Vilkyškių pieninė AB
contribution in cash in 2010.
In 2006, the Company’s cheeses production facility was expanded significantly. Maximum production
capacities of the Company increased from 10,000 to 14,000 tonnes per year. The Company used the support
from the EU funds.
In 2007, a new modern whey processing facility was launched. The total value of the whey processing
facility was more than 2.3 MEUR. The investment increased the Company’s productivity, improved quality
controls and reduced waste considerably. The Company had no whey processing until then. The Company
used the support from the EU funds.
2007: “Modest” AB was allocated 0.6 MEUR in support from EU structural funds. “Modest” AB used the
funds to upgrade its fleet of refrigerated vans for product transportation and to modernise its production
processes. It installed new milk processing technologies and packaging line for its main product Mozzarella
cheese.
2008: Vilkyškių pieninė AB took over Kelmės pieninė AB by acquiring 99.09 percent of the company’s
stock. At present Vilkyškių pieninė AB controls 100 percent of the Kelmės pieninė AB stock. As a result of
the acquisition, “Vilvi Group” entered the market of fresh dairy products.
2009: 9.5 MEUR in EU support was under an agreement with the Lithuanian National Paying Agency/ The
support was awarded under the Lithuanian Rural Development Programme for 2007-2013, measure “Adding
Value to Agricultural and Forestry Products”, activity “Processing and Marketing of Agricultural Products”.
2011: was invested into new cold storage equipment, expand the existing wastewater treatment and
equipment washing capacities. Also, investments were mainly made into refrigeration equipment, a cheese
cutting and packaging line. The installation of the Equinox warehouse management system was also started.
2012: a new cheese production line was assembled (4.6 MEUR in value), increasing output by 30 percent. In
addition, 2.7 MEUR packaging and plastic-coating line was installed.
“Vilvi Group”
annual report for 2021
79
2013: the trademark of Vilkyškiai was recognized as Brand of the year 2013 in Lithuania.
2013: among other investments, about 1.5 MEUR was invested to expand the whey processing unit’s daily
capacity to 600 tonnes. By the end of the year, the whey ultrafiltration project was also completed — it is a
technology that breaks whey proteins into their basic components.
In 2013 Kelmės pieninė AB installed a new TetraTop packaging line for liquid dairy products. This
packaging is innovative and preserving environment. Reliable carton packaging protects product from
environmental effects – light, air, microorganizms and it is more comfortable to use.
2013: after “Modest” AB completed the modernisation of its blue cheese production facility, its output is
about 300 tonnes per year.
2014: Vilkyškių pieninė AB launched a new cheese-slicing line, allowing to cut the cheese in slices, and
acquired new storage tanks for milk products. The project was financed from the EU funds.
In 2014- 2015, Kelmės pieninė AB and “Modest” AB renovated its compressor station.
In 2015, Vilkyškių pieninė AB signed a contract to connect to a gas distribution system with Lietuvos dujos
AB as dry milk products production factory need gas.
In 2015 the trademark of Vilkyškiai was recognized as Brand of the year 2015 in Lithuania.
In 2016 Kelmės pieninė AB started the Project of dry milk products factory. For the implementation of it,
Kelmės pieninė AB signed a support agreement with the National Paying Agency under the Ministry of
Agriculture of the Republic of Lithuania for 4 million EUR support.
On April 2017, Vilkyškių pieninė AB has been announced as the Lithuanian investor of the year 2016. The
title has been gained for investing to the whey processing factory in Tauragė.
In the end of 2017 production was started in the new dry milk products factory in Tauragė. Over the past two
years the company invested about 28 million EUR to this project. The project was also funded by EU funds,
with a budget of 4 MEUR. Kelme Pieninė AB dry milk products factory is currently the most modern in the
region, with a fully automated production process and packaging line.
2017: Vilkyškių pieninė AB was awarded as “Lithuanian Export Prize 2017” winner. The Company was
recognized as the most contributing to the growth of the economy and exports.
2018 Vilkyškių
pieninė AB was announced as winner of prestigious award “Golden Phenix” and received
nomination “Sponsor of Culture of the Year” for cultural activities.
2019 “Modest” AB has implemented the Mozzarella cheese grating line, which allows to produce large
quantities of grated Mozzarella and to meet customers’ needs both in Europe and in other world markets.
Company invested 0.55 MEUR.
2019 Kelmės pieninė AB has reconstructed boiler house to use natural gas instead of diesel fuel. The new
boiler house is fully automated and more energy efficient therefore it is more economical and ecological.
2020: In order to strengthen the brand's global recognizability, it was decided to unify the business group’s
identity in all of the markets across the world. Since September 15, 2020 AB Vilkyskiu Pienine Group
begins operations under the “Vilvi Group” brand name uniting the whole group.
2020: In the largest Europe’s brand study on sustainability – Sustainable Brand Index Vilkyškių pieninė
brand was 12
th
in overall ranking among Lithuanian brands. It was ranked among top 5 out of 19 brands in
the food and beverage category in Lithuania.
2020: In order to better manage Kelmės pieninė AB activities, its subsidiary company “Kelmės pienas” UAB
(in Kelmė town) was founded which in 2021 took over fresh milk products (cottage cheese, yogurts, sour
cream, cream, butter and other) business. Kelmės pieninė AB after transfer of the business segment continue
production of dry milk products in Tauragė.
2020: Kelmės pieninė AB started research and experimental development project Creation of innovative
food supplement for elderly people to prevent senescence weakness and insufficient nutrition. The project is
carried out in cooperation with Lithuanian University of Health Sciences. Successful research and significant
results are ensured by long-term experience and partnership of the Company and the University. The project
“Vilvi Group”
annual report for 2021
80
is financed according to 2014 – 2020 European Union investment programme Research and experimental
development and innovation promotion No 01.2.1-LVPA-K-856 Experiment.
In 2021 Vilkyškių pieninė AB completed the acquisition of 70% equity share stake of “Baltic Dairy Board”
SIA. The investment of Vilkyškių pieninė AB to “Baltic Dairy Board” SIA share capital strengthens and
develops current “Vilvi Group” high value-added product basket of milk components. “Baltic Dairy Board”
SIA is company based in Latvia which specializes in production and sale of high value-added components of
milk and processing of whey and milk, which separates protein and lactose into two separate products, joined
the group. It also develops and produces products that are used in production of baby food –
galactooligosaccharides.
2021: In the largest Europe’s brand study on sustainability – Sustainable Brand Index – Vilkyškių pieninė
brand was among the most sustainable in Lithuania and was 10
th
in overall ranking, and 3
rd
in food category.
9. Main Investments of “Vilvi Group” During Reporting Period
During 2021 the Group of companies invested 1.87 MEUR.
10. Patents & Licenses
Product quality, customer needs satisfaction and food safety requirements are priorities at “Vilvi Group”. To
maintain high product quality, Quality management and Food safety systems are constantly monitored,
revised and improved.
On 8 May 2000, Vilkyškių pieninė AB received a license to export its products to the European Union
member states. The Company operates a quality management system (HACCP system).
Vilkyškių pieninė AB has obtained certification of its Quality Management and Food Safety systems under
the international standard ISO 22000/ FSSC 22000. This certification scheme is part of the Global Food
Safety Initiative (GFSI) and is equivalent to such internationally recognised standards as BRC and IFS.
Since 2013 Kelmės pieninė AB worked in accordance with ISO 22000/ FSSC 22000 standards, but in 2015 it
extended the scope of certification and now covers the processing of all products. Kelmės pieninė AB in
2021 transferred fresh products business part consequently food safety management system certificates ISO
22000/FSSC 22000 related to fresh products production were transferred as well.
“Modest” AB is also certified under iso 22000/FSSC 22000 certification scheme for product development,
production and sale.
The quality management and food safety systems are subject to continuous monitoring, review and
improvements with a view to maintaining the high quality of the Company’s products. Every year “Vilvi
Group” audits according to ISO 22000 / FSSC 22000 certification schemes.
In order to attract buyers in Islamic countries, Vilkyškių pieninė AB, “Modest” AB and Kelmės pieninė AB
(dry milk products) have been certified according to Halal rules. From year 2015 certification for Halal
products continues every year. Halal products are associated with product safety, health, quality, ecology.
These products are used by people of other religions as well.
In 2017, factory of dry milk products of Kelmės pieninė was registered and started to operating. It received
the veterinary approval number, which granted the right to export production to all EU and other third
countries. The factory has established a physicochemical research laboratory equipped with state-of-the-art
ultra-reliable equipment for ensuring the quality control of products. The laboratory carries out research
using analyzers operating on the basis of infra-red analyzers and using reference (classical) methods of
investigation.
In 2018 Kelmės pieninė AB, dry milk products certified according to ISO 22000/FSSC 22000 Certification
Scheme.
In 2019 the laboratory of Vilkyškių pieninė AB received Food business operator laboratory approval permit.
In 2020, Kelmės pieninė AB dry milk products production was certified according Kosher certificate. In
2021 the certificate was renewed.
“Vilvi Group”
annual report for 2021
81
To maintain high product quality, Quality management and Food safety systems are constantly monitored,
revised and improved. Every year all “Vilvi Group” companies are certified according to ISO 22000/FSSC
22000 certification schemes. In 2021 Kelmės pieninė AB renewed certificates with updated versions ISO
22000:2018, FSSC 22000 and the scope of certificates was expanded including protein drink production.
Vilkyškių pieninė AB, Modest AB, “Kelmės pienas” UAB were certified by updated FSSC 22000
certification scheme.
11. Human Resources
One of the foundations of success of “Vilvi Group” are employees therefore in the companies of the Group
exceptional focus is on their health, development of competencies, career planning. Human resource policy
is oriented to fostering cooperation, openness, personal and professional development. The Group's
companies create conditions for knowledge sharing and skills development through internal and external
training, create a supportive, open environment, and encourage employees to come up with ideas and
participate in improving business processes.
In order to attract employees with the necessary qualifications, intensive cooperation is established with
educational and employment institutions, presentations of vocational information and career planning are
organized, participation in career fairs, thematic lectures are given, and cognitive excursions to the factories
of the group companies are organized.
The Group is implementing a Career Management System (QMS) project with a sample of more than 200
administrative staff. The aim of the project is to assess the prospects of existing employees to pursue a career
within the company
In order to ensure the health and well-being of employees, every year employees are provided with the
opportunity to have a free health check, vision, use of a gym, dentist, rehabilitation services, and get
vaccinated against the flu. The occupational safety specialist and the medical specialist constantly monitor
and ensure that workplaces comply with safety and health requirements in accordance with legislation and
regulations.
Special attention is paid to the analysis of psychosocial risk factors and reduction of stress at work. In the
event of the spread of coronavirus (COVID-19) infection in the country, “Vilvi Group” companies regularly
examine and monitor their health in order to protect their employees from the threat of the virus, frequent
cleaning, ventilation and surface disinfection in all production and administrative premises. protective face
masks and other personal protective equipment are worn at all times.
“Vilvi Group” has an approved “Remuneration Policy”, which ensures equal and transparent remuneration
conditions.
In order to ensure appropriate compliance of the processing of confidential information and personal data of
employees with the provisions of the General Data Protection Regulation (BDAR), the "IT Security Policy",
"Rules for the Processing of Personal Data", etc. have been approved.
12. Environmental Protection
“Vilvi Group” has an environmental protection policy aimed at reducing the environmental impact of its
operations, ensuring integrated pollution prevention measures, minimizing the use of resources and waste
generation, so that its operations do not affect air, water and soil. “Vilvi Group” performs regular
environmental impact analysis and assessment.
Based on the European Parliament and Council IPPC Directive 2008/1/EC, Vilkyškių pieninė AB is
attributable to the Annex I installations and is required to have an IPPC permit. The Company obtained its
first IPPC permit from the Klaipėda Regional Environmental Protection Department on 10 August 2004,
which was renewed on 4 December 2020.
Kelmės pieninė AB IPPC permit was revoked according to the criteria of the Order of the Minister of the
Environment of the Republic of Lithuania D1-330 "On the Rules for Updating and Eliminating the Issues of
Integrated Pollution Prevention and Control Authorization". The activities performed by the company do not
meet the criteria specified in the annexes to the order, therefore the IPPC permit is revoked, instead of it was
“Vilvi Group”
annual report for 2021
82
issued boiler pollution permit No. (30.3) - A4-33. in accordance with the provisions of Paragraphs 40 and 41
of the Rules. In 2021 Kelmės pieninė AB transferred fresh products business part to “Kelmės pienas” UAB,
consequently Environment Protection Agency transferred boiler pollution permit to “Kelmės pienas” UAB.
“Modest” AB IPPC permit was revoked according to the criteria of the Order of the Minister of the
Environment of the Republic of Lithuania D1-330 "On the Rules for Updating and Eliminating the Issues of
Integrated Pollution Prevention and Control Authorization". The activities performed by the company do not
meet the
Based on the existing legal requirements, programmes have been put in place at Vilkyškių pieninė AB to
monitor the impact of water source and fuel storage on underground waters and to monitor air pollutant
emissions and sources of wastewater.
In 2015 Vilkyškių pieninė AB finished modernisation of its wastewater treatment plant in order to boost
treatment efficacy. This is being done in line with the main national strategies and legal acts on wastewater
treatment: the Baltic Marine Environment Protection Strategy, the Lithuanian Law on Waters, the National
Long-Term Development Strategy and the National Sustainable Development Strategy.
Production wastewater is treated at the Company’s own combined biomechanical treatment facility. In 2021,
Vilkyškių pieninė AB treated 436 tho m3 of wastewaters. The resulting sludge is given to local waste
management bodies and is used as fertiliser in agriculture. Wastewater treatment efficacy has been estimated
to be up to 99 percent. In 2020, an automatic wastewater disposal control system was installed to prevent
excess sewage sludge from entering the environment together with treated waste water.
“Kelmės pienas” UAB wastewater occurring during production of fresh milk products is discharged to
Kelmės vanduo UAB water treatment facilities. In 2021, 94,813 m3 wastewater was discharged.
Kelmės pieninė AB Tauragė Division produces powdery, dusty products therefore it is very important to
minimize hard particle and waste emissions to air and environment. Air polluted with hard particles is
directed towards filters and cleaned there is emitted to environment. According to drying factory equipment
manufacturers’ data whey, permeate, skimmed milk are odorless materials therefore no odors are released
into environment. Wastewater generated during the production is discharged to Tauragės vandenys UAB
water treatment facilities. In 2021, 266,572 m3 wastewater was discharged
“Modest” AB has implemented the best available techniques (BAT), and its running costs and emissions are
in line with the prescribed EU levels. Wastewater of “Modest” AB is discharged into the urban wastewater
system operated by Tauragės vandenys UAB. Monitoring is carried out by Tauragės vandenys UAB.
Wastewater meter was installed in order to account wastewater more accurately. Rain water is collected and
cleaned with oil product filter and afterwards released to Beržė river.
The Companies of the “Vilvi Group” invest in environment-friendly solutions. In production we responsibly
choose packaging designs and materials. We encourage consumers to sort packaging of milk products by
clearly labelling the type of waste it is. Also sorting of packaging is facilitated by marking places of
multilayer packaging by perforations.
Production waste is managed and accounted according to approved environment requirements in GPAIS
(product, packaging, and waste accounting information system).
In all Companies of the Group waste is disposed according to Republic of Lithuania regulatory norms
therefore there is no negative impact on environment.
13.
Company Results of Operations
In addition to the key indicators defined and applied in the financial statements in accordance with
International Financial Reporting Standards (IFRS), AB Vilkyškių Pieninė also presents financial
performance indicators not provided for in IFRS - alternative performance indicators (API), which the
Company considers important, provide additional information to investors and other users of the financial
statements. Alternative performance indicators should be treated as additional information prepared in
accordance with IFRS. Taking into account the Guidelines on Alternative Performance Indicators published
by the European Securities and Markets Authority (ESMA/2015/1415), AB Vilkyškių pieninė provides
comparable historical API data, the procedure for their calculation and what useful information they provide.
“Vilvi Group”
annual report for 2021
83
2017 m.
2018 m.
2019 m.
2020 m.
2021 m.
Revenue (EUR tho)
130,325
126,242
140,492
148,738
196,442
Gross profit (EUR tho)
13,088
3,282
325
913
9,031
Gross profit margin, pct
10.0%
2.6%
0.2%
0.6%
4.6%
EBITDA (EUR tho)
7,124
-1,055
-2,504
2,994
13,079
EBITDA margin, pct
5.5%
-0.8%
-1.8%
2.0%
6.7%
EBIT (operating profit) (EUR tho)
5,272
-2,974
-4,322
1,394
11,450
EBIT margin, pct
4.0%
-2.4%
-3.1%
0.9%
5.8%
EBT (profit before tax) (EUR tho)
7,044
-2,712
-5,061
640
11,194
EBT margin, pct
5.4%
-2.1%
-3.6%
0.4%
5.7%
Net profit (EUR tho)
6,202
-2,028
-4,059
1,371
10,774
Net profit margin, pct
4.8%
-1.6%
-2.9%
0.9%
5.5%
Net profit per share (EUR)
0.52
-0.17
-0.34
0.11
0.90
Share market price and net profit per share
ratio - P/E ratio
- - - - -
Return on equity (ROE), pct
20.0%
-6.4%
-14.6%
5.2%
33.5%
Return on assets (ROA), pct
7.6%
-3.7%
-7.7%
2.8%
19.9%
Return on Capital employed (ROCE), pct
13.0%
-9.1%
-15.6%
4.5%
28.3%
Debt ratio
0.39
0.45
0.49
0.44
0.37
Debt to equity ratio
0.26
0.32
0.44
0.27
0.19
The liquidity ratio
1.53
1.04
0.83
0.99
1.47
Turnover of assets
2.38
2.32
2.77
3.05
3.31
The capital to assets ratio
0.61
0.55
0.51
0.56
0.63
Financial debt (EUR tho)
8,648
9,430
11,287
7,432
6,941
Net debt (EUR tho)
8,417
9,093
11,056
7,277
6,362
Net debt /EBITDA
1.18
-8.62
-4.42
2.43
0.49
Gross profit is indicator that is in company‘s profit/loss statement. It is sales revenue minus cost of goods
sold. Usually, this profit is biggest among other profit types.
Gross profit margin shows how much profit is for one unit of sales revenue. Indicator is calculated by
dividing gross profit by sales revenue.
EBITDA – earnings before interest, taxes, depreciation and amortization, it shows company‘s earnings
before evaluating the effect of company‘s financial policies as well as profit tax. Vilkyškių pieninė AB
calculates this indicator by adding long-term assets depreciation, amortization to and subtracting subsidies
from operating profit. When calculating EBITDA elements that are not directly influenced by activities of
the company may be eliminated.
EBITDA margin is a profitability indicator that can be used to compare the profitability of companies (in
the same sector), to monitor changes in the profitability of the same company. The higher the value of the
indicator is, the higher the profitability of the company is. The indicator is calculated by dividing EBITDA
by revenue.
EBIT (operating profit) is profit before interest and taxes. It shows the company's profit earned during the
operating and investment cycle (before assessing the impact of the company's financing policy on profit and
before deducting the income tax). This indicator reflects the company's ability to generate cash flow. The
indicator is calculated by adding financial operating expenses to pre-tax profit and deducting the financial
activity income
“Vilvi Group”
annual report for 2021
84
EBIT margin is indicator that shows operating effectiveness, it is calculated by dividing operating profit by
sales revenue.
EBT (profit before tax) is profit before taxation. The indicator is calculated by adding profit tax expense to
net profit.
EBT margin is calculated by dividing EBT by income. Shows the company's profit before taxes to sales
ratio. A higher value of the indicator indicates a higher profitability of the company.
Net profit (loss)
is the financial indicator which is calculated by deducting all expenses and taxe
s from
income.
Net profit margin is indicator of a company's profitability. Calculated by dividing net profit by income.
Net profit per share
is one of the most popular stock valuation indicators that shows the company's profit per
share. The indicator is calculated by dividing net profit by the number of shares in the stock turnover.
The P / E ratio
is the ratio of the stock market price to pr
ofit per share. The indicator shows how much the
company’s shares cost as compared to the net profit. The P / E indicator provides information on whether a
company is expensive as compared to its earned profits. The higher the net profit is, the lower the
P / E ratio
is, and, therefore, the more attractive such shares are for investment. The indicator is calculated by dividing
the market price of the share by the net profit per share.
Return on equity (ROE)
is the net profit to equity ratio. The indicator s
hows how efficiently the company
uses shareholders' assets to earn profit. This indicator is important for shareholders in assessing the return on
their investment in the company in the previous period. The higher the return on equity is, the more efficien
t
the company's operations are, the more profit it earns for its shareholders. The ratio is calculated by dividing
net profit by the average of equity at the beginning and end of the reporting period.
Return on assets (ROA)
is the net profit to assets rati
o. Return on assets shows how much net profit a
company earns per euro of assets. This value can be used as a measure of the efficiency of the use of a
company's assets. The higher the ROA value is, the more efficiently the assets are employed, the more pr
ofit is
earned. The indicator is calculated by dividing the net profit by the average of the assets at the beginning and
end of the reporting period.
Return on capital employed (ROCE) is the profitability indicator measuring the return on funds necessary
for the company's continuous operations. It is often compared to the interest rates on loans in the market at
that time. The company’s ROCE ratio is considered to be higher than the price of borrowed capital at that
time. The indicator is calculated by dividing EBIT by the difference between total assets and short-term
liabilities
Debt ratio
reflects the part of the company’s assets that has acquired with borrowed funds. The indicator is
calculated by dividing all liabilities of the company by assets.
Debt to equity ratio.
This is one of the key indicators of financial leverage. The debt to equity ratio shows the
amount of short-term and long-term debt in euros per euro of equity. The ind
icator is calculated by dividing
the financial debt by the equity.
The liquidity ratio
shows the company's ability to meet its short-term liabilities by using its owned short-
term
assets. The higher the ratio is, the better the liquidity position is. The indicator is calculated by dividing short
-
term assets by short-term liabilities.
Turnover of assets
. It is an efficiency indicator that shows the sales revenue to assets ratio. This indicator
shows how efficiently a company uses its capital. A higher value
indicates a higher degree of overall asset
management efficiency and vice versa. The indicator is calculated by dividing the sales revenue by total
assets.
The capital to assets ratio
shows the proportion between private capital and total assets. This indi
cator shows
the share of private capital in the capital structure. The lower this ratio is, the more the company is dependent
on borrowed funds. The ratio is calculated by dividing private capital by total assets.
Financial debt
is the sum of short-term and long-
term debt, which shows the amount of indebtedness of the
“Vilvi Group”
annual report for 2021
85
company. The indicator is calculated by adding long-term and short-term lease liabilities to long-
term and
short-term loans.
Net debt
is all the financial liabilities of the company with the d
eduction of the available cash and cash
equivalents. This indicator can be used during in a credit rating review. The indicator is calculated by
deducting cash and cash equivalents from financial debt.
Net debt / EBITDA
shows the company's ability to repay
debts from earned profits. This indicator can also be
used in a credit rating review. The indicator is calculated by dividing net debt by EBITDA.
14. “Vilvi Group” Results of Operations
Key financial consolidated indicators of “Vilvi Group”:
2017 m.
2018 m.
2019 m.
2020 m.
2021 m.
Revenue (EUR tho)
113,939
103,162
114,581
120,873
156,045
Gross profit (EUR tho)
16,488
5,773
7,096
10,629
17,196
Gross profit margin, pct
14.5%
5.6%
6.2%
8.8%
11.0%
EBITDA (EUR tho)*
10,882
3,140
3,698
8,271
14,122
EBITDA margin, pct
9.6%
3.0%
3.2%
6.8%
9.0%
EBIT (operating profit) (EUR tho)
8,113
-884
-206
4,332
7,134
EBIT margin, pct
7.1%
-0.9%
-0.2%
3.6%
4.6%
EBT (profit before tax) (EUR tho)
7,560
-1,870
-1,448
3,142
6,156
EBT margin, pct
6.6%
-1.8%
-1.3%
2.6%
3.9%
Net profit (EUR tho)
6,686
-1,186
-446
3,872
5,500
Net profit margin, pct
5.9%
-1.1%
-0.4%
3.2%
3.5%
Net profit per share (EUR)
0.56
-0.10
-0.04
0.32
0.46
Share market price and net profit per
share ratio - P/E ratio
6.70
- - 7.59
7.95
Return on equity (ROE), pct
21.2%
-3.6%
-1.4%
11.7%
14.8%
Return on assets (ROA), pct
8.6%
-1.5%
-0.6%
5.0%
6.7%
Return on capital employed (ROCE), pct
13.2%
-1.7%
-0.4%
10.1%
11.7%
Debt ratio
0,58
0.62
0.60
0.55
0.55
Debt to equity ratio
0.82
0.88
0.88
0.62
0.61
The liquidity ratio
1.00
0.81
0.72
0.64
1.24
Turnover of assets
1.40
1.25
1.47
1.57
1.77
The capital to assets ratio
0.42
0.38
0.40
0.45
0.45
Financial debt (EUR tho)
28,097
27,824
27,483
21,660
24,163
Net debt (EUR tho)
27,780
27,417
27,185
21,479
23,364
Net debt /EBITDA
2.55
8.73
7.35
2.60
1.65
* 2021 The amount of goodwill impairment was eliminated in the calculation of EBITDA - 2,749 thousand. Eur.
“Vilvi Group” production output, tonnes:
2017
2018
2019
2020
2021
Cheese, cheese products and other
87,370
86,702
112,877
109,266
104,978
Fresh milk products
14,576
15,120
12,277
12,696
14,048
Dry milk products
2,966
8,321
15,310
19,006
21,416
“Vilvi Group”
annual report for 2021
86
In 2021 cheese, cheese product and other production output 105 tho tonnes, down by 3.9 percent comparing
to 2020. Production of fresh milk products 14 tho tonnes, up by 10.6 percent comparing to 2020. Production
of dry milk products 21.4 tho tonnes in 2021 up by 12.7 percent comparing to 2020.
Basic indicators milk purchases by “Vilvi Group”:
2017
2018
2019
2020
2021
Basic indicators milk, tonnes
249,992
267,785
268,555
287,370
309,474
Cost of basic indicators milk, EUR
tho
65,713
67,695
68,720
70,747
88,938
Milk price, EUR/t
262.9
252.8
255.9
246.2
287.4
In 2021, a total of 309 tho tonnes of basic indicators milk was purchased, an increase by 7.7 percent as
compared with 2020. The price of milk in 2021 increased by 16.7 percent from the year 2020.
15. Sales and Marketing
“Vilvi Group” sales by product segment, EUR thousand:
2017 m.
2018 m.
2019 m.
2020 m.
2021 m.
Cheese, cheese products and other
94,111
76,870
81,909
84,134
109,199
Fresh milk products
18,731
18,721
17,803
16,252
18,710
Dry milk products
1,097
7,571
14,869
20,487
28,136
Total revenue
113,939
103,162
114,581
120,873
156,045
In 2021 “Vilvi Group” sales revenue grew by 33.4 % in export markets and by 7.5% in Lithuania market
compared to year 2020. In 2021 exports amounted to 86% of total group sales, which is 3% more than in
previous year.
As in the previous years the largest part of export are sales of cheese, cheese products, cream and dry milk
products.
The main reasons for sales growth:
- Cheese category. In 2021, sales of cheese and cheese products remained very similar in terms of volume,
and sales revenue increased by 9.3% compared to 2020.
In 2020, “Vilvi Group” refined strategy to work only with a diversified portfolio in the HoReCa segment.
The Group followed this strategy consistently in 2021 as well, as the demand for cheese and cheese products
remained high in the HoReCa sector due to the recovery in tourism in early summer. Market diversification
also yielded particularly good results in the last quarter of 2021, when global dairy prices began to rise in the
markets. The crisis in China, which did not have a significant impact on sales volumes, as the activity in
other markets was sufficient to control the situation, is also worth mentioning.
54,4
57,9
63,3
21
22
22
2019 m. 2020 m. 2021 m.
Turnover, million
Eur
Turnover, thous.
tons
“Vilvi Group”
annual report for 2021
87
The condition for market diversification is further maintained at no more than 15% of total sales to a single
market. The optimal number of markets (~ 60 different countries) to which the Group-produced cheeses and
cheese products were exported in 2020 remained stable in 2021. There were also no major changes in key
customers, except China, and, under the situation developed, only sales volumes from one country to another
are changing.
-
Dry dairy products
. The production volumes, which increased in 2
020, remained similar in 2021. Although
sales increased by only 5% in quantity terms, they increased by 37.3% in monetary terms. This was due to the
already mentioned global rise in prices and the shortage of products in the market. This has kept sales of
dry
dairy products stable and regular. The number of markets remained the same, with the largest sales going to
the European Union region (the activities of one of the largest buyers of dry dairy products from the Vilvi
Group as a raw material for further
production also moved to Poland from the United Kingdom). The sales to
China were increasing in the first six months of 2021 pretty rapidly, but were closed down due to the political
situation and therefore other directions had to be searched for and temporary problems had to be dealt with.
-
Industrial cream
. The increased demand for cream resulted in that the amount of cream sold during the
reporting period was higher by 4.6 thousand tons. The sales price also increased -
in 2021, the average price of
cream was by 28.4% or 0.46 EUR / kg higher than that of the previous year. This generated MEUR 9.6 more
sales revenue.
“Vilvi Group” sales revenue by geographical segments, EUR thousand:
2017 m.
2018 m.
2019 m.
2020 m.
2021 m.
European Union
63,531
55,865
61,591
63,745
80,647
Lithuania
24,891
24,585
22,526
20,234
21,748
Other countries
25,517
22,712
30,464
36,894
53,650
Total revenue
113,939
103,162
114,581
120,873
156,045
15
19
20
14,9
20,5
28,1
2019 m. 2020 m. 2021 m.
Turnover,
million Eur
Turnover,
thous. tons
0%
20%
40%
60%
80%
100%
2017 m. 2018 m. 2019 m. 2020 m. 2021 m.
56%
54%
54%
53%
52%
22%
22%
26%
30%
34%
22%
24%
20%
17%
14%
Lithuania
Other countries
European Union
“Vilvi Group”
annual report for 2021
88
16. Exhibitions and Awards
Since 2011, the Company takes part in one of the largest exhibitions ANUGA in Germany, SIAL in France
and Gulfood in United Arab Emirates, where the products presented have repeatedly been among the most
innovative, i.e. they have won the SIAL Innovation Award.
In 2014 Vilkyškių pieninė AB named as Exporter of the Year 2014 in the Lithuanian Business Leaders 2014
contest.
In 2015 Company participated in the exhibitions Food Ingredients Beijing 2015 took place in China and
Food Ingredients Paris 2015. The Company introduced whey powder products (protein concentrate (WPC
80) and the permeate) in both exhibitions. Our participation in this trade fair coincided with an important
event of Lithuania and China signing a protocol that permits the export of dairy products.
Since 2016 Vilkyškių Pieninė AB participated in the exhibition SIAL China. It is the largest exhibition of
food innovations held in Asia. The Company introduce cheese products, the whey protein concentrate (WPC
80), permeate and other dry milk products.
Since 2016 Vilyškių pieninė AB participated in the exhibition Summer Fancy Food Show in New York,
where presented its cheese products. The main purpose of participation was to analyse the US retail market
and to establish new business contacts.
In 2017-2018 Dry milk products and GymON protein powder were presented at the international sports
exhibitions in Germany, Frankfurt – FIBO and Food Ingredients, GymOn products were presented and
tasted, new customer search was conducted. GymON star Žydrūnas Savickas met with fans.
In 2018 Vilkyškių pieninė AB participated in exhibition Food West Africa for the first time. The company
was searching for new partners during it, Company also participated for the first time in Amsterdam at
PLMA's World of Private Label private label exhibition and Food Taipei 2018exhibition in Taiwan, where
presented mozzarella cheese.
In 2019 Vilkyškių pieninė AB traditionally participated in the food exhibitions Gulfood 2019 in Dubai,
United Arab Emirates and ANUGA 2019 in Cologne, Germany. In both exhibitions the Company presented
cheese and dry milk products.
In 2019 Vilkyškių pieninė AB took part in Gulfood Manufacturing, in Dubai, The United Arab Emirates and
Food Ingredients 2019 in Paris, France and presented its industrial products.
In November 2019 Vilkyškių pieninė AB participated in the exhibition FHC China 2019 in Shanghai in
China. The mozzarella cheese and dry milk products were presented to Chinese market.
In February 2020 Vilkyškių pieninė AB traditionally took part in the international exhibition of food industry
“Gulfood 2020” in Dubai, The United Arab Emirates. The main focus was on mozzarella cheese and
milk/whey powder. The Company did not take part in other exhibitions because of Covid-19 pandemic.
In October 2021 “Vilvi Group” traditionally participated in the "ANUGA" exhibition in Germany and took
part in the international exhibition of food industry "Gulfood 2021" in Dubai, The United Arab Emirates.
The main focus was on mozzarella cheese and milk/whey powder, met with a customer.
In November 2021 “Vilvi Group” participated in "WorldFood Ukraine", the largest annual food and
beverage exhibition in Ukraine, where we presented products of the Vilkyški
ų black cat line and Memel blue
melted cheese.
In November 2021 “Vilvi Group” participated in the largest exhibition of food industry, equipment,
processing and packaging and food logistics "Gulfood Manufacturing" in Dubai, United Arab Emirates. We
delivered dry milk products.
In November 30-December 2 2021 “Vilvi Group” participated in the international exhibition "Food
ingredients Europe" in Frankfurt. Dry milk products and cheese products with vegetable fat were presented
at the exhibition.
“Vilvi Group”
annual report for 2021
89
17. Risk Factors Associated with Issuer ‘s Business
The core activity of the group of companies is milk processing. The main factors that could adversely affect
the Group's cash flows and activity results and create business risk for the company are possible changes in
the raw materials and products markets, as well as other economic, technological, social and business
environment changes directly or indirectly related to Vilvi Group's business.
The Group companies operate in accordance with the approved ISO standards and the requirements of the
regulatory enactments of the Republic of Lithuania, which help to identify risks and establish risk
management procedures. Within the group of companies, risk identification, preventive and corrective
actions are the responsibility of the company's employees involved in the respective activities, who are each
responsible for their own area. Risks are assessed in internal and external aspects, taking into account
stakeholders. Depending on the type, origin and complexity of the risk, preventive and / or corrective actions
are identified, which are integrated into the business plan and their outcome is monitored.
Supply of raw materials:
Raw milk. The main raw material in the production of the Group's companies is cow milk, the supply of
which is relatively limited due to its short shelf life. The Group confronts with the seasonality of raw milk –
small dairy farms produce more milk in summer than in winter, and there is also competition to purchase
milk, which affects milk purchase prices and the amount of milk purchased.
¾ Risk management. This risk is managed by diversifying the purchase of raw milk from suppliers of
different sizes in Lithuania and by importing additional raw milk from Latvia. The company enters
into purchase and sale agreements with suppliers for raw milk. Milk suppliers are paid a bonus to the
basic milk purchase price.
Whey concentrate. Kelmės pieninė AB main raw material is whey concentrate which further is processed
into whey protein concentrate and whey permeate concentrate which subsequently are processed into dry
milk products. Since whey concentrate is made of milk whey and milk supply quantity is seasonally affected,
the supply quantity of whey concentrate decreases in winter. As supply of whey concentrate decreases,
competition on buying side increases that has effect on prices and quantity for it.
¾ Risk management. Risk is managed by diversifying purchasing of whey concentrate from suppliers
in Latvia and Estonia. 50 per cent of the raw material necessary for production of dry milk products
provides Vilkyškių pieninė AB.
Product (non) sales risk:
The production of matured cheese is a long process that can take 1-18 months. This specificity of production
does not allow us to react quickly to sudden changes in the cheese market, which may adversely affect the
Company's cash flow and activity results. However, this category accounts for a small share of sales.
Cheese and cheese product. Sales channels cover all regions of the world. There are dominant markets, but if
necessary, the Vilvi group can relocate sales to other countries, which are over 60 at this moment. In this
case, the prices would have to be reduced. There is a risk of adverse changes in the demand for and / or price
of the cheese on the cheese market. As the cheese-making process is short, taking up to 1 month, it is
possible to switch to the production of another type of cheese very quickly once sales of this product have
stopped.
The risk of sales of fresh milk products arises from keeping both excessive and deficient stocks of products
in storage. In the first case, a product with a shorter validity period may have to be sold cheaper, in the
second case, penalties may be paid for non-delivery.
The risk of sales of dry dairy products is that the products may become down on demand in the markets
where they are currently sold. At this moment, the level of diversification in the category of dry dairy
products is not extremely high.
MANAGEMENT OF ECONOMIC RISK FACTORS
“Vilvi Group”
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¾ Risk management. The Group is constantly looking for new customers in both Lithuanian and
foreign markets. The risk that partners will not meet their obligations for the purchased goods is
controlled by establishing control procedures. Only guaranteed payment terms are used with all
customers. Deferred payment applies only to customers to whom our partner - credit insurance
company Euler Hermes - grants credit limits. Those who do not have credit limits make advance
payments, we also work with such solvency risk management instruments as letters of credit, CAD,
incaso, factoring, and we also have pledge of property cases.
The increase in the price of energy (natural gas, fuel, electricity) increases not only the production costs
of the Group companies, but also the costs of transportation of products, resulting in that the final product
cost increases. In the final product cost, energy costs are up to 10%.
¾ Risk management. The Group's companies are streamlining production to maximize
equipment utilization, as well as plan logistics routes efficiently.
Noise. Non-compliance with minimum general requirements for work equipment.
¾ Risk management. In the Group's companies, work equipment is installed and designed to minimize
the risk to the employee. Constant maintenance of such facilities is carried out. Collective protective
equipment that can reduce the level of noise emitted is applied, protective, sound-insulating
enclosures and partitions are made. Employees use personal protective equipment. Constant health
examinations of employees are carried out. Staff training is organized.
Lighting. Insufficient or poorly equipped, poorly maintained lighting in the workplace is one of the main
factors of occupational risk, which directly affects the employee's emotional state, work efficiency, the
number of accidents at work.
¾ Risk management. A professional workplace risk assessment has been performed in all Vilvi Group
companies. Measurements of natural and artificial lighting have been performed. In order to improve
the working conditions of employees, old luminaires have been replaced by new LED luminaires
after the measurements. Their advantage is lower energy consumption, longer service life and higher
efficiency.
Chemical factors. Use of chemicals in manufacturing, washing processes and laboratory testing. All the
specifics of the production of dairy products are inextricably linked to the use of chemicals in cleaning,
washing and disinfection processes.
¾ Risk management. All production workshops are equipped with high-pressure cleaning equipment,
which feeds, doses and controls the supply of chemicals for disinfection and room washing, thus
improving and facilitating the working conditions of employees. Health examinations and use of
personal protective equipment are mandatory for all employees at whose workplaces chemicals are
used. Employees are trained to handle hazardous chemicals and are familiar with SDLs (safety data
sheets). Wherever chemicals are used, an artificial ventilation system is installed.
Ergonomic factors. Work of staff involved in manual handling of loads.
¾ Risk management. An occupational risk assessment of all workplaces has been performed to assess
ergonomic risk factors. Production department managers constantly make suggestions to reduce
ergonomic risk factors. Where manual work is predominant, efforts are made to use machinery
(manual, electric hoists-trucks for transporting products). A robotic cheese head pallet line has been
installed to prevent lifting heavy weights. A new strip packaging line for cheese blocks is being
installed. All the listed measures allow avoiding heavy manual work, increase productivity and
reduce the risk of accidents at work. All staff involved in manual handling of loads are trained and
subjected to a mandatory medical examination
Information security. Information assets are stored in physical facilities that may be lost or damaged.
MANAGEMENT OF OCCUPATIONAL RISK FACTORS
MANAGEMENT OF INFORMATION SECURITY RISK FACTORS
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¾ Risk management. All devices use legal software that is constantly updated. Changes to the business
management system are tested first, and only then they are transferred to the production base. Access
to company systems and data is limited to the rights that are necessary to perform the work. To
protect the data from loss, we do backups that we store for 1-2 weeks, depending on the priority of
the software. All computers and servers have a centrally managed antivirus software that is
constantly updated. All personal data of employees is processed and stored in accordance with the
general data protection regulation (GDPR).
There is a risk of cyber-attacks.
¾ Risk management. A firewall is used to protect against unauthorized access from the outside.
Its maintenance and constant updating is performed by certified specialists.
Damage to reputation / image. Reputation and trademark risk are mainly related to the activities of
employees and the decisions they make. Reputation can be damaged by low-quality dairy products, for the
production and quality control of which decisions are made by employees, wrong word in public or
cooperation with partners, as well as inadequate communication / advertising actions, etc.
¾ Risk management. Food safety and management standards (ISO 22000 / FSSC 22000) are used to
manage product quality risks. The position of the group of companies may be expressed publicly
only by the general director or, in financial matters, by the economics-financial director. All other
announcements in the public space shall be coordinated with the general director in accordance with
the established procedure. Cooperation with external partners is based on the strategy and values of
the group of companies, which act as the basis for business relations. Communication and
advertising activities are coordinated with the responsible employees in advance, thus avoiding
conflict with the group's goals, activities and vision.
Staff shortage. The risk of staff shortage is related to the shortage of employees in the regions (where the
group companies are established: in Tauragė, Vilkyškiai, Kelmė) which are far from the big cities. The
shortage in highly qualified (engineering) employees is particularly apparent.
¾ Risk management. The shortage of employees is directly related to ensuring the smooth operation of
the company, therefore various measures are applied and special attention is paid to managing staff
shortages: close cooperation with the Employment Service, educational institutions (participation in
career fairs, thematic lectures) takes place, various employee search channels are used. Much
attention is paid to the process of selection and introduction of employees. The company's internal
resources are used: existing employees are given the opportunity to improve, acquire new
competencies by organizing internal and external training, and employees' careers are planned.
Employees are additionally motivated by various health measures. Employee loyalty is valued in the
company - long-term employees are given additional incentives.
Unfair work / corruption and bribery.
¾ Risk management. Vilvi Group does not tolerate any corruption, including bribery, and follows the
principles of fair business and transparent cooperation with state institutions and other stakeholders.
Vilvi Group pays all taxes transparently, keeps records fairly and follows a transparent payroll
policy. The group of companies trades its products in accordance with the principle of transparency,
does not participate in any transactions where bribes are requested or it is offered to act in a non-
transparent manner. The group evaluates the observations and suggestions of the responsible
authorities, takes this into account and improves the processes. It is also politically neutral and does
not provide any financial support to political parties, groups or politicians.
Ensuring human rights.
¾ Risk management. Vilvi Group does not tolerate human rights violations and discrimination.
Equality and non-discrimination of employees are ensured by the company's internal equal
opportunities policy - every employee is given equal opportunities for employment, professional
development and career, regardless of their gender, age, social status or other circumstances
unrelated to the employees' business qualities.
MANAGEMENT OF SOCIAL RISK FACTORS
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The Group's companies use a lot of energy and natural resources in their operations, which poses a risk of
environmental pollution. There is also a risk that the activities carried out may cause undesired noise and
odours for the surrounding population or businesses. As the wastewater generated during the production at
AB Vilkyškių pieninė is treated in the own treatment facilities, there is a risk that in case of technical
problems pollutants will be emitted into the environment. Improper management of operational waste poses
a threat of environmental pollution.
¾ Risk management. Vilvi Group companies are analysed and assessed for the environmental impact
from time to time. In accordance with the established procedure, AB Vilkyškių pieninė has prepared
a monitoring programme for the impact of the reservoir on groundwater and is carrying out
observations and, under the monitoring programme, controls the potential impact of the own filling
station on groundwater, carries out the monitoring of the pollutants emitted into the ambient air and
pollution sources with wastewater. AB Vilkyškių pieninė has an automatic wastewater control
system for emitted wastes, which prevents the release of excess wastewater sludge into the
environment together with the treated wastewater. From AB Kelmės pieninė dryers, the air
contaminated with solid particles is directed to the cyclones and then, purified, is emitted into the
environment. Waste generated during production is managed and accounted for in accordance with
the established environmental requirements in the product, packaging and waste accounting
information system - GPAIS.
Politics of the country and surrounding countries, unrest. Potential financial losses that may result from
the loss of sales revenue due to certain political decisions or political events.
¾ Risk management. The company maintains a sufficiently wide range of markets without
focusing on one market. A sufficiently wide geography of markets can protect against adverse
effects in any given country. We constantly monitor the percentage distribution of markets. Due to
the diversification of markets, the loss of a market, such as China, did not result in a large loss for
the “Vilvi Group”, as sales were reallocated to other markets fairly quickly.
When using financial instruments, the Group companies are exposed
to credit, liquidity and market risks
,
the management of which is presented in the summary of the Significant Accounting Principles – Financial
Risk Management, given in the Financial Statem
ents of AB Vilkyškių pieninė as of 31 December 2021, and in
para 30 thereof.
18. Competition
Vilkyškių pieninė AB estimates that it has a 16 percent share of the Lithuanian market as measured by
quantity of processed milk, i.e. it is in fourth place behind competitors Rokiškio sūris AB, Pieno žvaigždės
AB and Žemaitijos pienas AB.
On foreign markets, “Vilvi Group” has to compete against local manufacturers, who have the advantage of
lower transportation costs. However, “Vilvi Group” compensates it by offering a range of higher value-
added cheese products.
“Vilvi Group” offers industrial products in dry milk product segment, which are oriented to exports.
Company has developed its own brand GymOn of whey protein powder concentrate for athletes that is
offered to end-consumer. This product is distributed to supermarkets, sports shops, pharmacies and sold via
own internet shop www.gymon.lt. It is also sold via Amazon online platform to reach Western European
consumers, it is offered in German, Spanish, Italian and French Amazon platforms.
UNCERTAINTY IN THE BUSINESS ENVIRONMENT
FINANCIAL RISK MANAGEMENT
MANAGEMENT OF ENVIRONMENTAL PROTECTION RISK FACTORS
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19. Key Events After Fiscal Year-End
Information regarding key events after the end of fiscal year is provided in the Vilkyškių pieninė AB
financial statements for the year ended 31 December 2021, in Chapter 31.
20. Business Plans and Forecasts
In 2021, facing global pandemic, “Vilvi Group” successfully achieved its tasks. The Group managed to
increase sales volume and gain strong positions in new markets, and expand markets for dry milk products
and shredded cheese. All these actions allowed for creation of greater value for shareholders of the
Company. In 2022 the main goal is further create greater value for company shareholders. To achieve this
goal main tasks are as follows:
• To keep the same level of sales volume as 2021 and to seek 3% growth in volume;
• To keep production facilities at maximum utilization rate;
• To deepen knowledge of the most modern milk processing technologies that can be applied in production
of healthier products with higher value-added;
•Internally seek for greater effectiveness of activities;
• Keep and further develop markets diversified;
• In “Baltic Dairy Board” SIA to develop production and sales of GOS products.
A lot of attention in the Companies of the Group will be in the area of innovative product development,
environment protection, personnel management, safe and healthy working conditions and risk management.
III. OTHER INFORMATION ABOUT ISSUER
21. Structure of Issuer‘s Share Capital
„Vilvi Group“ Share Capital:
Type of share Number of share
Share face
value, EUR
Total face
value, EUR
Type of
share
Vilkyškių pieninė AB
Common registered shares
11,943,000
0.29
3,463,470
Kelmės pieninė AB
Common registered shares
2,457,070
0.29
712,550
“Modest” AB
Common registered shares
5,617,118
0.29
1,628,964
“Pieno logistika” AB
Common registered shares
371,333
0.29
107,687
“Kelmės pienas” UAB
Common registered shares
2,500
1.00
2,500
“Baltic Dairy Board” SIA
Common registered shares
777,778
1.00
777,778
22. Information on Treasury Stock
The Company does not hold its own shares.
23.
Rights of Shareholders
Shareholders have these non-proprietary rights:
- to attend and vote in general meetings of shareholders;
- to receive information about the Company as set out in Article 18 (1) of the Law on Public
Companies;
- to lodge a claim in a court of law for compensation of damages caused to the Company through
inaction or inappropriate actions of the Company‘s director, also in other cases set out by the law;
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94
- other non-proprietary rights stipulated by legal acts.
Shareholders have the following proprietary rights:
- to receive a share of the Company‘s profit (dividend);
- to receive a share of the assets of the Company in liquidation;
- to be granted shares free of charge where the Company‘s share capital is increased from its own
capital, save exceptions set out by the Law on Public Companies;
- to have priority to buy new shares and share options in the Company, except for cases where a general
meeting of shareholder has legitimately voted to revoke this right for all;
- to transfer all or part of their shares to other persons, using a procedure set out in the Law on Public
Companies;
- other proprietary rights granted by the law.
None of the Company‘s shareholders has any special control rights. The rights of all shareholders are equal.
One common registered share grants one vote in a general meeting of shareholders.
24. Restrictions on Transfer of Securities
There are no restrictions on the transfer of securities.
25. Information About Shareholders
The total number of shareholders of Vilkyškių pieninė AB on 31 December 2021 was 1316. The following
are the major shareholders, who own more than 5 percent of the Issuer‘s stock:
Shareholder
Number of
shares held,
units
Percent
of share
capital,
pct
Share of votes at shareholder
meetings, pct
Swisspartners Versicherung AG
Zweigniederlassung Österrreich
6,067,206
51%
51%
Multi Asset Selection Fund
2,035,729
17%
17%
Gintaras Bertašius
927,110
8%
8%
Minority shareholders
2,912,955
24%
24%
Total stock
11,943,000
100%
100%
Vilkyškių pieninė AB shareholder structure by legal subject
Natural
person
27%
Legal person,
funds
73%
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Kelmės pieninė AB shareholders
The total number of shareholders of Kelmės pieninė AB on 31 December 2021 was 1. The major
shareholder, who owns more than 5 percent of the Issuer‘s stock was 1:
Shareholder
Number of
shares held,
units
Percent
of share
capital,
pct
Share of votes at shareholder
meetings, pct
Vilkyškių pieninė AB
2,457,070
100%
100%
Total stock
2,457,070
100%
100%
“Kelmės pienas” UAB shareholders
The total number of shareholders of “Kelmės pienas” UAB on 31 December 2021 was 1. The major
shareholder, who owns more than 5 percent of the Issuer‘s stock was 1:
Shareholder
Number of
shares held,
units
Percent
of share
capital,
pct
Share of votes at shareholder
meetings, pct
Kelmės pieninė AB
2,500
100%
100%
Total stock
2,500
100%
100%
“Modest” AB shareholders
The total number of shareholders of “Modest” AB on 31 December 2021 was 85. The major shareholder,
who owns more than 5 percent of the Issuer‘s stock was 1:
Shareholder
Number of
shares held,
units
Percent
of share
capital,
pct
Share of votes at shareholder
meetings, pct
Vilkyškių pieninė AB
5,601,277
99.7%
99.7%
Minority shareholders
15,841
0.3%
0.3%
Total stock
5,617,118
100%
100%
“Pieno logistika” AB shareholders
The total number of shareholders of “Pieno logistika” AB on 31 December 2021 was 169. The major
shareholder, who owns more than 5 percent of the Issuer‘s stock was 2:
Shareholder
Number of
shares held,
units
Percent
of share
capital,
pct
Share of votes at shareholder
meetings, pct
Vilkyškių pieninė AB
218,781
58.9%
58.9%
ŽŪB „Repšiai“
35,032
9.4%
9.4%
Minority shareholders
117,520
31.7%
31.7%
Total stock
371,333
100%
100%
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“Baltic Dairy Board” SIA shareholders
The total number of shareholders of “Baltic Dairy Board” SIA on 31 December 2021 was 2. The major
shareholder, who owns more than 5 percent of the Issuer‘s stock was 2:
Shareholder
Number of
shares held,
units
Percent of
share capital,
pct
Share of votes at
shareholder meetings,
pct
AB Vilkyškių pieninė
544,446
70.0%
70.0%
KIK Asset Management SIA
233,332
30.0%
30.0%
Total stock
777,778
100%
100%
26. Agreements Between Shareholders, Known to Issuer, Which May Lead to Restrictions on
Securities Transfers or Voting Rights
The Company is not aware of any direct agreements between shareholders that might result in restrictions on
the transfer of securities and/or on voting rights.
27. Trading in Issuer‘s Securities on Regulated Markets
The change of price of Vilkyškių pieninė AB shares and trade volume in 2019-2021.
0
20
40
60
80
100
120
0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
4,00
Share price, EUR
Turnover, thsd., EUR
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Comparison of Vilkyškių pieninė AB share price and Nasdaq OMX Vilnius Index, 2019-2021.
Security trading history of Vilkyškių pieninė AB during 2017-2021:
Price
2017 m.
2018 m.
2019 m.
2020 m.
2021 m.
Open
2.34
3.72
2.09
2.26
2.46
High
3.94
3.76
3.13
2.48
3.68
Low
2.25
1.95
2.07
1.39
2.40
Average
3.12
3.09
2.47
1.93
2.90
Last
3.75
2.05
2.24
2.46
3.66
Traded volume
1,045,396
472,421
762,071
1,138,435
1,060,431
Turnover, million
3.26
1.46
1.88
2.20
3.08
Capitalisation, million
44.79
24.48
26.75
29.38
43.71
28. Dividend
Vilkyškių pieninė AB approved a dividend policy in 2012. The following is an extract from that dividend
policy:
Dividends and the size of them
1. The Law on Public Companies of the Republic of Lithuania stipulates that the dividend constitutes a share
of profit payable to a shareholder in proportion to the face value of the stock held by the shareholder.
2. The Company‘s shareholders cannot vote to pay a dividend at a general meeting of shareholders, if 1) the
Company is insolvent 2) the distributed result for the fiscal year ended is negative 3) the Company‘s equity
is smaller than the sum of its authorised capital and reserves, or in cases where it would become smaller
following a dividend payout.
3. The Company‘s Board shall submit to the General Meeting of Shareholders an amount of dividend based
on the audited net profit result for the fiscal year ended.
4. If the Company has been profitable, the Company‘s board shall allocate a certain part of revenue for
dividend as set out in Clause 2.6, reinvesting the rest of the revenue so as to increase the Company‘s
capitalisation.
40%
60%
80%
100%
120%
140%
160%
180%
200%
OMX Vilnius VLP1L
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98
5. The Company shall pay dividend in cash.
6. The Company‘s Board should establish the amount of dividend after taking into account the consolidated
net profit of the Company for the year ended. The dividend amount must be not less than 25 percent of the
consolidated net profit of the Company for the year ended, but not larger than the Company‘s annual
consolidated net profit
7. The Company reserves the right to diverge from the criteria for the amount of dividend, provided it gives
reasons for such divergence.
Vilkyškių pieninė AB dividend payments in the past 5 years:
Dividends
2017
(for 2016)
2018
(for 2017)
2019
(for 2018)
2020
(for 2019)
2021
(for 2020)
Dividend (EUR)
1,433,000
1,672,020
-
-
955,440
Dividend per share (EUR)
0.12
0.14
-
-
0.08
Number of shares
11,943,000
11,943,000
11,943,000
11,943,000
11,943,000
Kelmės pieninė AB dividend payments in the past 5 years:
Dividends
2017
(for 2016)
2018
(for 2017)
2019
(for 2018)
2020
(for 2019)
2021
(for 2020)
Dividend (EUR)
2,285,075
786,262
1,719,949
5,651,261
7.371.210
Dividend per share (EUR)
0.93
0.32
0,70
2.30
3.00
Number of shares
2,457,070
2,457,070
2,457,070
2,457,070
2,457,070
“Modest” AB and “Pieno logistika” AB did not pay any dividend in the last five years.
29. Employees
On 31 December 2021, there were 867 employees working at “Vilvi Group”.
Employee category
Number of
employees
Education
Average
monthly
salary (EUR)
higher
vocational
secondary
secondary
incomplete
Managers
30
23
7
-
-
4,261
Specialists
310
119
89
98
4
1,434
Workers
527
18
164
298
47
1,020
867
160
260
396
51
1,281
On 31 December 2020, there were 830 employees working at “Vilvi Group”.
Employee category
Number of
employees
Education
Average
monthly
salary (EUR)
higher
vocational
secondary
secondary
incomplete
Managers
29
24
5
-
-
3,997
Specialists
301
112
83
99
7
1,311
Workers
500
13
148
297
42
924
830
149
236
396
49
1,166
Employees work on the basis of labour contracts, while their rights and duties are set out in their job
descriptions. Employees do not have any special rights or duties, and all work is organised in compliance
with the Labour Code of the Republic of Lithuania.
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30. “Vilvi Group” Governing Bodies
According to the Articles of Association of Vilkyškių pieninė AB, the Company‘s governing bodies are the
General Meeting of Shareholders, the Board and the Chief Executive Officer. No supervisory council is set
up. The Board of the Company represents the shareholders and performs oversight and control functions.
The decisions taken by the General Meeting of Shareholders, where they concern issues falling within the
remit of the General Meeting of Shareholders as specified in the Articles of Association, are binding to all
shareholders, the Board, the CEO and other employees of the Company.
Board members are elected for a term of four years. The Chairman of the Board is elected for a tenure of
four years by the Board from among its own members. Members of the Board are elected by a General
Meeting of Shareholders in accordance with the Law on Public Companies.
The Board sets up two committees – Audit Committee and Salaries Committee – each consisting of three
members.
The Board elects and dismisses the Chief Executive Officer. The CEO is the head of the Company. The head
of the Company is a single governing body in charge of organising the current business operations of the
Company
Under the Articles of association of Kelmės pieninė AB, „Kelmės pienas“ UAB, “Baltic Dairy Board” SIA
AB and “Modest” AB, both companies are governed by a general meeting of shareholders, the Board and
CEO.
The structure of “Vilvi Group” management
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“Vilvi Group”
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One-person management body “Pieno logistika” AB - Director
31. Procedure of Amendments to “Vilvi Group” Articles
Amendments to the Group‘s Articles of Association can be adopted at a General Meeting of Shareholders.
Decisions on changes to the Articles are considered adopted, if approved by two-thirds of shareholder votes.
32. Activities of the Board
In 2021, Board meetings were held regularly according to the schedule, required quorum was present at each
of them. During 2021, 11 ordinary board meetings took place. The Board approved the 12-month financial
statements for 2020, the 2021 three-month, six-month and nine-month interim financial statements, the 2020
annual financial statements and annual report; it also called an ordinary meeting of shareholders, offered the
distribution of the 2020 profit (loss) for an ordinary meeting of shareholders.
In regular meetings the Board discussed separation of business activities of Kelmės pieninė AB, acquisition
of “Baltic Dairy Board” SIA, investment opportunities, granting/extension of loans, and other current issues.
Kelmės pieninė AB, “Kelmės pienas” UAB, “Baltic Dairy Board” SIA and “Modest” AB hold their board
meetings regularly to discuss issues that are within their scope.
33. Board & Administration Members
Vilkyškių pieninė AB Board Members
Gintaras Bertašius – a Board Chairman since 30 January 2006, re-elected for a four-year term on 27 April
2018, CEO of Vilkyškių pieninė AB. Has higher education diploma in mechanical engineering. Membership
in other companies’ governing bodies: board chairman of “Modest” AB, Kelmės pieninė AB and “Kelmės
pienas” UAB, “Baltic Dairy Board” SIA member of the board. On 31 December 2021 had 927,110 shares in
Vilkyškių pieninė AB, however he had 58.55 percent voting rights in shareholder’s meetings (since April
2018, ownership rights of 6 067 206 shares (50.8 per cent of total) of Vilkyškių pieninė AB have been taken
by Swisspartners Versicherung AG Zweigniederlassung Österreich).
Sigitas Trijonis – a Board Member since 30 January 2006, re-elected for a four-year term on 27 April 2018,
Chief Technology Officer of Vilkyškių pieninė AB. Has higher education degree in mechanical engineering.
As of 31 December 2021, he held 425,607 shares of Vilkyškių pieninė AB, 3.56 percent of the stock and
voting rights. Has no seats in other companies’ governing bodies.
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Rimantas Jancevičius – a Board Member since 30 January 2006, re-elected for a four-year term on 27 April
2018. Has college diploma in livestock engineering. Chief Purchasing Officer at Vilkyškių pieninė AB. As
of 31 December 2021, he held 339,863 shares of Vilkyškių pieninė AB, 2.85 percent of the stock and voting
rights. Has no seats in other companies’ governing bodies.
Vilija Milaševičiutė – a Board Member since 30 April 2009, re-elected for a four-year term on 27 April
2018. Has higher education in finance and credit. Chief Economics and Financial Officer of Vilkyškių
pieninė AB. Membership in other companies’ governing bodies: A board member of “Modest” AB, Kelmės
pieninė AB, “Kelmės pienas” UAB and Šilumos tinklai UAB (CRN 179478621, address: Paberžių g. 16,
72324 Tauragė). As of 31 December 2021, she held 9,588 shares of Vilkyškių pieninė AB, 0.08 percent of
the stock and voting rights
Linas Strėlis – a Board Member since 7 March 2008, re-elected for a four-year term on 27 April 2018. Has
higher education. Membership in other companies’ governing bodies: Director of LS Capital UAB (CRN
133118295, address: V. Kudirkos g. 9, Kaunas) and Biglis UAB (CRN 133688345, address: V. Kudirkos g.
9, LT-50283 Kaunas), council chairman of Association of Social Enterprises (Socialinių imonių asociacija)
(CRN 300542018, address: Raudondvario pl. 107, Kaunas), board member of Umega AB (CRN 126334727,
address: Metalo g. 5, LT-28216 Utena) and East West Agro AB (CRN 300588407, adrdress: Tikslo g. 10,
Kumpiai, LT-54311 Kauno r.), a member of the supervisory board in SIA Preses nams. A member of EISME
fund committee of Lords LB Asset Management UAB (CRN 301849625, address: Jogailos g. 4, LT-01116
Vilnius.). As of 31 December 2021, did not have any shares in Vilkyškių pieninė AB.
Andrej Cyba – a Board Member since 7 March 2008, re-elected for a four-year term on 27 April 2018. Has
higher degree in business administration and management. Membership in other companies’ governing
bodies: Chief Business Development Officer of INVL Asset Management UAB (CRN 126263073, address:
Gynėjų g. 14, LT-01109 Vilnius); chairman of the Board in FMĮ INVL Finasta UAB (CRN 304049332,
address: Gynėjų g. 14, LT
-01109 Vilnius); chairman of the board of “Baltic Dairy Board” SIA chairman of
the supervisory Board at IPAS INVL Asset Management (CRN 40003605043, address: Smilšu iela 7-1,
LV1050, Rīga) and AS Pirmais atklātais pensiju fonds (CRN 40003377918, address: Rīga, Smilšu iela 7-1,
LV-1050); board member and audit committee chairman of Auga Group AB (CRN 126264360, address:
Konstitucijos pr. 21C, Quadrum North, LT-08130 Vilnius); CEO of PEF GP1 UAB (CRN 302582709,
address: Maironio g. 11, Vilnius), PEF GP2 UAB (CRN 302582716, address: Maironio g. 11, Vilnius),
Piola UAB (CRN 120974916, address: Mindaugo g. 16-52, LT-03225 Vilnius) and Ymmalu UAB (CRN
305765142, address: Šaltinių g. 24-10, LT-03233, Vilnius). As of 31 December 2021, did not have any
shares in Vilkyškių pieninė AB.
Vilkyškių pieninė AB Members of Administration
Gintaras Bertašius – CEO and Chairman of the Board. Works at the Company since 1993. Has higher
education diploma in mechanical engineering. Membership in other companies’ governing bodies: board
chairman of “Modest” AB, Kelmės pieninė AB and “Kelmės pienas” UAB, member of the board of “Baltic
Dairy Board” SIA. On 31 December 2021 had 927,110 shares in Vilkyškių pieninė AB, however he had
58.55 percent voting rights in shareholder’s meetings (since April 2018, ownership rights of 6 067 206
shares (50.8 per cent of total) of Vilkyškių pieninė AB have been taken by Swisspartners Versicherung AG
Zweigniederlassung Österreich).
Vilija Milaševičiutė – Chief Economics and Financial Officer, a Board Member, working at the Company
since 2000. Has higher education in finance and credit. Membership in other companies’ governing bodies: a
board member of “Modest” AB, Kelmės pieninė AB, “Kelmės pienas” UAB and Šilumos tinklai UAB (CRN
179478621, address: Paberžių g. 16, 72324 Tauragė). As of 31 December 2021, she held 9,588 shares of
Vilkyškių pieninė AB, 0.08 percent of the stock and voting rights.
Vaidotas Juškys – Executive Officer, working at the Company since 2010. Has higher education in
information technology. As of 31 December 2021, he held 12,279 shares of Vilkyškių pieninė AB, 0.10
percent of the stock and voting rights. Has no seats in other companies’ governing bodies.
Sigitas Trijonis – Chief Technology Officer, a Board Member, working at the Company since 1993. Has
higher education in mechanical engineering. As of 31 December 2021, held 425,607 shares of Vilkyškių
pieninė AB, 3.56 percent of the stock and voting rights. Has no seats in other companies’ governing bodies.
“Vilvi Group”
annual report for 2021
103
Rimantas Jancevičius – Chief Purchasing Officer, a Board Member, working at the Company since 1996.
Has college diploma in livestock engineering. As of 31 December 2021, held 339,863 shares of Vilkyškių
pieninė AB, 2.85 percent of the stock and voting rights. Has no seats in other companies’ governing bodies.
Arvydas Zaranka – Chief Production Officer, working at the Company since 1995. Has college degree in
dairy technology. Membership in other companies’ governing bodies: a board member of “Modest” AB,
CEO of Kelmės pieninė AB. As of 31 December 2021, held 1,933 shares of Vilkyškių pieninė AB, 0.02
percent of the stock and voting rights.
Rita Juodikienė – Management and quality director. Woking at the company since 2002. Has a master
degree in business management. Membership in other companies’ governing bodies: a board member of
Kelmės pieninė AB and “Kelmės pienas” UAB. As of 31 December 2021, held 2,175 shares of Vilkyškių
pieninė AB, 0.02 percent of the stock and voting rights.
The bonuses to the CEO and CFO totaled in 2021 137,0 tEUR, or 68,5 tEUR per person on average.
The salaries were paid out to Vilkyškių pieninė AB board members in 2021:
Board members (4 members),
EUR tho
Average size per month, EUR
salary
322,9
6,727
In 2021, the Company did not issue any loans, guarantees or letters of credit to members of its governing
bodies which would ensure their duties. Also, the Company did not pay its board members or employees any
salaries, bonuses or other payments from the profits of the Company’s subsidiaries.
Members of Kelmės pieninė AB board and administration
Gintaras Bertašius – Chairman of the Board, re-elected for a four-year term on 29 April 2020. Participation
in the governing bodies of other companies: board chairman and CEO of Vilkyškių pieninė AB; board
chairman of “Modest” AB, and “Kelmės pienas” UAB; board member of “Baltic Dairy Board” SIA. Holds
higher education degree in mechanical engineering. On 31 December 2021 had 927,110 shares in Vilkyškių
pieninė AB, however he had 58.55 percent voting rights in shareholder’s meetings (since April 2018,
ownership rights of 6 067 206 shares (50.8 per cent of total) of Vilkyškių pieninė AB have been taken by
Swisspartners Versicherung AG Zweigniederlassung Österreich).
Vilija Milaševičiutė – a member of the board, re-elected for a four-year term on 29 April 2020. Holds higher
degree in finance and credit. Participation in the governing bodies of other companies: Chief Economics and
Financial Officer and a board member of Vilkyškių pieninė AB, a board member of “Modest” AB, “Kelmės
pienas” UAB and Šilumos tinklai UAB (CRN 179478621, address: Paberžių g. 16, 72324 Tauragė). As 31
December 2021, held 9,588 shares in Vilkyškių pieninė AB, i.e., 0.08 percent of the stock and voting rights.
Rita Juodikienė – a member of the Board, re-elected for a four-year term on 29 April 2020. Has master
degree in business management. Participation in the governing bodies of other companies: Quality and
management director of Vilkyškių pieninė AB and a board member of “Kelmės pienas” UAB. As of 31
December 2021, held 2,175 shares of Vilkyškių pieninė AB, 0.02 percent of the stock and voting rights.
Arvydas Zaranka - CEO of Kelmės pieninė AB. Has college degree in dairy technology. Membership in
other companies’ governing bodies: Chief Production Officer of Vilkyškių pieninė AB, a board member of
“Modest” AB. As of 31 December 2021, held 1,933 shares of Vilkyškių pieninė AB, 0.02 percent of the
stock and voting rights.
In 2021, Kelmės pieninė AB did not allocate any bonuses, loans, guarantees or letters of credit to members
of its governing bodies which would ensure their duties.
Members of “Kelmės pienas” UAB board and administration
Gintaras Bertašius – Chairman of the Board, elected for a four-year term on 17 November 2020.
Participation in the governing bodies of other companies: board chairman and CEO of Vilkyškių pieninė AB,
board chairman of “Modest” AB and Kelmės pieninė AB; board member of “Baltic Dairy Board” SIA.
Holds higher education degree in mechanical engineering. On 31 December 2021 had 927,110 shares in
“Vilvi Group”
annual report for 2021
104
Vilkyškių pieninė AB, however he had 58.55 percent voting rights in shareholder’s meetings (since April
2018, ownership rights of 6 067 206 shares (50.8 per cent of total) of Vilkyškių pieninė AB have been taken
by Swisspartners Versicherung AG Zweigniederlassung Österreich).
Vilija Milaševičiutė – a member of the Board, elected for a four-year term on 17 November 2020. Holds
higher degree in finance and credit. Participation in the governing bodies of other companies: Chief
Economics and Financial Officer and a board member of Vilkyškių pieninė AB, a board member of
“Modest” AB, Kelmės pieninė AB and Šilumos tinklai UAB (CRN 179478621, address: Paberžių g. 16,
72324 Tauragė). As 31 December 2021, held 9,588 shares in Vilkyškių pieninė AB, i.e., 0.08 percent of the
stock and voting rights.
Rita Juodikienė – a member of the Board, elected for a four-year term on 17 November 2020. Has master
degree in business management. Participation in the governing bodies of other companies: Quality and
management director of Vilkyškių pieninė AB and a board member of Kelmės pieninė AB. As of 31
December 2021, held 2,175 shares of Vilkyškių pieninė AB, 0.02 percent of the stock and voting rights.
Jolita Valantinienė - CEO of “Kelmės pienas” UAB. Has master degree in management and business
administration. As of 31 December 2021, did not have any shares in Vilkyškių pieninė AB. Has no seats in
other companies’ governing bodies.
In 2021, “Kelmės pienas” UAB did not allocate any bonuses, loans, guarantees or letters of credit to
members of its governing bodies which would ensure their duties.
Members of “Modest” AB board and administration
Gintaras Bertašius – Chairman of the Board, re-elected for a four-year term on 29 April 2021. Holds higher
education degree in mechanical engineering. Participation in the governing bodies of other companies: board
chairman and CEO of AB Vilkyškių pieninė AB, a board chairman at Kelmės pieninė AB and “Kelmės
pienas” UAB; board member of “Baltic Dairy Board” SIA. On 31 December 2021 had 927,110 shares in
Vilkyškių pieninė AB, however he had 58.55 percent voting rights in shareholder’s meetings (since April
2018, ownership rights of 6 067 206 shares (50.8 per cent of total) of Vilkyškių pieninė AB have been taken
by Swisspartners Versicherung AG Zweigniederlassung Österreich).
Arvydas Zaranka – a member of the board, re-elected for a four-year term on 29 April 2021. Has college
degree in dairy technology. Participation in the governing bodies of other companies: Chief Production
Officer of AB Vilkyškių pieninė; CEO of Kelmės pieninė AB. As of 31 December 2021, held 1,933 shares
in Vilkyškių pieninė AB, i.e., 0.02 percent of share capital and voting rights.
Vilija Milaševičiutė – a member of the board, re-elected for a four-year term on 29 April 2021. Participation
in the governing bodies of other companies: Chief Economics and Financial Officer and board member in
Vilkyškių pieninė AB, Kelmės pieninė AB, “Kelmės pienas” UAB and Šilumos tinklai UAB (CRN
179478621, address: Paberžių g. 16, 72324 Tauragė). Has higher education in finance and credit. As of 31
December 2021, held 9,588 shares in AB Vilkyškių pieninė, i.e., 0.08 percent of the stock and voting rights.
Matas Pozingis – CEO of “Modest” AB, working at the company since 2020. Has higher education degree
in management and business administration. As of 31 December 2021, did not have any shares in Vilkyški
ų
pieninė AB. Has no seats in other companies’ governing bodies.
In 2021, “Modest” AB did not allocate any bonuses, loans, guarantees or letters of credit to members of its
governing bodies which would ensure their duties.
Members of “Baltic Dairy Board” SIA board and administration
Andrej Cyba – Chairman of the Board. Has higher degree in business administration and management.
Participation in other companies’ governing bodies: board member of Vilkyškių pieninė AB; Chief Business
Development Officer of INVL Asset Management UAB (CRN 126263073, address: Gynėjų g. 14, LT-01109
Vilnius); Chairman of the Board in FMĮ INVL Finasta UAB (CRN 304049332, address: Gynėjų g. 14, LT-
01109 Vilnius); chairman of the supervisory Board at IPAS INVL Asset Management (CRN 40003605043,
address: Smilšu iela 7-1, LV1050, Rīga) and AS Pirmais atklātais pensiju fonds (CRN 40003377918,
address: Rīga, Smilšu iela 7-1, LV-1050); board member and audit committee chairman of Auga Group AB
(CRN 126264360, address: Konstitucijos pr. 21C, Quadrum North, LT-08130 Vilnius); CEO of PEF GP1
“Vilvi Group”
annual report for 2021
105
UAB (CRN 302582709, address: Maironio g. 11, Vilnius), PEF GP2 UAB (CRN 302582716,
address:
Maironio g. 11, Vilnius), Piola UAB (CRN 120974916, address: Mindaugo g. 16-52, LT-03225 Vilnius) and
Ymmalu UAB (CRN 305765142, address: Šaltinių g. 24-10, LT-03233, Vilnius). As of 31 December 2021,
did not have any shares in Vilkyškių pieninė AB.
Gintaras Bertašius – Member of the Board. Participation in the governing bodies of other companies: board
chairman and CEO of Vilkyškių pieninė AB, board chairman of “Modest” AB, Kelmės pieninė AB and
“Kelmės pienas” UAB. Holds higher education degree in mechanical engineering. On 31 December 2021
had 927,110 shares in Vilkyškių pieninė AB, however he had 58.55 percent voting rights in shareholder’s
meetings (since April 2018, ownership rights of 6 067 206 shares (50.8 per cent of total) of Vilkyškių
pieninė AB have been taken by Swisspartners Versicherung AG Zweigniederlassung Österreich).
Kaspars Kazāks – CEO and board member, manages company since 2008. Participation in the governing
bodies of other companies: board member of SIA „KIK Asset Management“ (CRN. 43603083832, address:
Mazā Salātu g. 4-7, Bauska, Latvija). As of 31 December 2021, did not have any shares in Vilkyškių pieninė
AB.
34.
Committees
Members of the Audit Committee: Aušra Lobinienė (The Head of Internal Audit of Tauragė Credit Union),
Vilma Morkaitienė (chief accountant of Bonus Modus UAB) and Milana Buivydienė (Vilkyškių pieninė AB
employee). None of the Committee members hold senior positions in the Company’s administration or have
shares in the Company.
In 2021, 5 meetings of the Audit Committee were held. The Audit Committee discussed and approved the
following: the Company’s 2020 financial statements, the draft 2020 annual report, the draft 2020 profit (loss)
distribution report, the 2021 internal audit plan and the 2021 budget, 2 times reviewed the salaries of the
company's employees. Each meeting was attended by all members of the Committee.
No committees are formed in subsidiary companies.
35. Agreements Enacted by Change of Control, Where Issuer is a Party
There are no agreements, to which the Issuer is a party, that would take effect if control of the Issuer
changed.
36. Information about Agreements Between the Issuer and its Governing Members or Employees on
Compensation Payouts in Case of Their Resignation, Unfair Dismissal or Discharge Upon Change in
the Control of the Issuer
The Board Rules of Procedure do not provide for any compensation or payouts if a member of the Board
resigns before the Board’s term has expired. All employees are employed and dismissed in conformity with
the provisions of the Lithuanian Labour Code.
37. Information About the Company’s Transactions With Related Parties
Information about transactions with parties that are related to the Company has been included in the
Vilkyškių pieninė AB financial statements for the year ended 31 December 2021, in Chapter 29.
38. Information About Detrimental Acts Concluded by the Issuer that Could Affect Issuer’s
Operations
The Issuer has not concluded any detrimental transactions that had or could in the future have any negative
impact on the Issuer’s operations or results. Nor has the Issuer concluded any transactions involving conflict
of interest on behalf of the Issuer’s top management, major shareholders or other
39. Social responsibility report
“Vilvi group“ 2021 social responsibility report is available on the company's website (link:
https://vilvigroup.lt/wp-content/uploads/2022/03/EN-Socialines-atsakomybes-ataskaita-2021.pdf)
“Vilvi Group”
annual report for 2021
106
AB VILKYŠKIŲ PIENINĖ REMUNERATION REPORT FOR 2021
General information
AB Vilkyškių pieninė remuneration report has been prepared for the reporting financial period of 2021,
which coincides with the calendar year. The remuneration report (hereinafter referred to as
- the Report) was
drawn up in accordance with the Law of the Republic of Lithuania on Financial Statements of Companies,
the Employee Remuneration Policy of joint
-stock company “Vilvi Group” group of companies (hereinafter
referred to as
- the Remuneration Policy) and other regulatory enactments.
The Employee Remuneration Policy of “Vilvi Group” group of companies was approved at the general
meeting of shareholders on 30 April 2020. The remuneration report contains information about the
remuneration of each member of the management and supervisory
bodies, as well as information on other
(non
-)received benefits and other data.
Remuneration principles
Members of the Board of the Company may be paid shares of profits, which are granted by the decision of
the General Meeting of Shareholders of the Company in accordance with the procedure established by
regulatory enactments. Following the decision of the General Meeting of Shareholders on the payment of a
share of profits, the share of profits due to a particular member of the Board is determined by the decision of
the Board, taking into account the contribution of a particular member of the Board to the Company's
activities.
The remuneration of the manager of the Company, i.e. the General Director, is determined by the decision of
the Board of the Company. When determining the amount of salary, the level of remuneration of the
managers of companies of a similar size is assessed, taking into account the level of the position, as well as
the personal competence, experience, knowledge and abilities of the manager.
The remuneration of “Vilvi Group” group of companies: top management, II-tier management, middle-tier
management and other employees
- consists of two main parts: fixed and variable. Incentives may also be
paid.
Employees of the Company are paid: fixed part of remuneration (FPR) - the basic or hourly monthly cash
salary of the employee specified in the employment contract, variable part of remuneration (VPR) -
additional employee cash remuneration, determined based on the quality and results of work, achievement of
goals raised by the Company and individual goals of the employee, level of competencies
and compliance
with the values of the Company and the Group of Companies. Other benefits (OB) are other potential
benefits provided to employees as incentives.
Remuneration of the members of the Board for 2020 - 2021
In AB Vilkyškių pieninė, two members of the Board do not work at the company and four members of the
Board work under employment contracts; during 2021, no permanent or additional remuneration was paid to
them for their work in the Board. The members of the Board working under an employment contract
received remuneration only on the basis of employment.
Salaries accrued and paid during 2021 correspond to the amounts provided for in the remuneration policy
approved by the company.
“Vilvi Group”
annual report for 2021
107
Annual pre
-tax remuneration of the members of the Board
working under an employment contract,
in thousand euros.
Name, surname, position
Year of 2020
Year of 2021
Fixed
salary
Variable
salary
In
total
Fixed
salary
Variable
salary
In
total
Gintaras Bertašius, general
director
98,3
98,3
101,3
101,3
Vilija Milaševičiūtė,
director for economy and
finance
58,7
10,9
69,6
62,9
11,0
73,9
Sigitas Trijonis, technical
director
58,8
10,8
69,6
62,8
11,1
73,9
Rimantas Jancevičius,
director for procuring raw
materials
58,5
11,2
69,7
62,5
11,3
73,8
The manager of the company, i.e. the General Director, and the members of the Board did not receive any
remuneration from the companies belonging to the group of companies. The salary was paid in accordance
with the procedure, scope and terms provided for in the employment contract; they did not receive any other
property benefits during 2021, including the award of shares or other concluded transactions in favour of and
in the interests of the managers.
During the period reported on (year of 2021), no guarantees or sureties were given to the members of the
Board, the manager of the Company, no assets or other property rights were transferred.
Remuneration of employees of the parent company and the group of companies
The salary fund of the group of companies in 2021 was equal to EUR 12.966
million (in 2020 -
EUR 11.418
mi
llion). The table below shows the average monthly salary of employees in 2017-
2021 before taxes, in euros.
The average monthly salary of corporate group‘s employees before taxes, in euros.
Employee
group
Year of 2017
Year of 2018
Year of 2019
Year of 2020
Year of 2021
Number
of
employe
es
Average
salary
Number
of
employ
ees
Average
salary
Number
of
employ
ees
Average
salary
Number
of
employ
ees
Average
salary
Numbe
r of
employ
ees
Average
salary
Managers
27
3.425
30
3.616
28
3.919
29
3.997
30
4.261
Specialists
310
1.070
332
1.166
298
1.258
301
1.311
310
1.434
Workers
593
768
572
822
502
872
500
924
527
1.020
930
937
934
1.026
828
1.107
830
1.166
867
1.281
“Vilvi Group”
annual report for 2021
108
The average monthly salary of AB “Vilkyškių pieninė” employees before taxes, in euros.
Employee
group
Year of 2017
Year of 2018
Year of 2019
Year of 2020
Year of 2021
Number
of
employe
es
Average
salary
Number
of
employ
ees
Average
salary
Number
of
employ
ees
Average
salary
Number
of
employ
ees
Avera
ge
salary
Number
of
employee
s
Average
salary
Managers
22
3.502
23
3.693
22
4.020
21
4.198
19
4.565
Specialists
165
1.139
183
1.215
170
1.304
155
1.338
147
1.506
Workers
343
804
319
890
285
930
283
948
274
1.059
530
1.010
525
1.125
477
1.197
459
1.228
440
1.365
The remuneration paid to the members of the Board and employees of AB Vilkyškių pieninė in 2021 was in
accordance with the principles, grounds and conditions approved in the Remuneration Policy. No fixed or
additional remuneration was paid to the members of the Company's Audit Committee and Remuneration
Committee for their work in the committees.
Final Provisions
The remuneration report for 2021 is an integral part of the consolidated annual report and is published on the
Company's website https://vilvigroup.lt and https://nasdaqbaltic.com in accordance with the procedure
established by regulatory enactments.
“Vilvi Group”
annual report for 2021
109
AB VILKYŠKIŲ PIENINĖ MANAGEMENT REPORT
The Companies’ management report has been compiled according to the Law on Financial Reporting by
Undertakings of the Republic of Lithuania.
1. Reference to the applicable code of corporate management and where it has been published and/or
a reference to a public source of all the necessary information on corporate management practice:
The Company’s management report for 2021, audited financial statements of the Company and its group,
consolidated annual report, are published on the Company’s website www.vilvigroup.lt and on AB Nasdaq
Vilnius securities exchange website www.nasdaqbaltic.com.
2. In case of deviations from and (or) non-compliance to the provisions of the applicable code of
corporate management, the said provisions and the reasons for deviations and (or) non-compliance:
Information on the Company’s non-compliance to the provisions of the code of the corporate management is
provided in clauses 1.8 and 3.2.5.
3. Information on the scale of the risk and risk management – description of management of the risk,
related to financial accountability, risk mitigation measures and internal control system, applicable at
the company:
The Company’s information on the scale of the risk and risk management, risk mitigation measures and the
internal control system, applicable at the company, is provided in the clause 17 of the consolidated annual
statement for 2021 and the note 30 of the financial statement.
4. Information on significant directly or indirectly managed shareholdings:
Information on significant directly or indirectly managed shareholdings is provided in clause 25 of the
consolidated annual statement for 2021.
5. Information on transactions with related parties, as established in the article 37
2
of the Law on Joint
Stock Companies (indicating the parties of the transaction (legal form, title and code of the legal entity
register, which collects and stores data on the said entity, domicile (address); name, surname and
address for correspondence of a natural person) and the value of the transaction):
In 2021, the company has not had any transactions with related parties, based on the criteria, indicated in the
article 37
2
. More detailed information on transactions with related parties and financial relations with the
company’s managers, is provided in note 29 of the financial statement for 2021.
6. Information on shareholders with special rights of control and description of these rights:
The company has no shareholders with special rights of control.
7. Information on all current voting rights’ limitations, such as a limitation of voting rights for persons
that have a certain percentage or number of votes, terms, when the voting rights can be used, or
systems, based on which the material rights, granted by securities, are separated from the holder of
the securities:
The company does not apply any voting rights’ limitations. All shareholders have equal material and
immaterial rights.
8. Information on rules on election and replacement of board members, also amendments of the
company’s articles of association:
The company has no rules on amendments of the Company’s articles of association, or election and
replacement of the Company’s board members. The Company conducts its business in accordance with the
Law on Joint Stock Companies of the Republic of Lithuania, the Company’s articles of association and other
“Vilvi Group”
annual report for 2021
110
legislation. The Company’s articles of association are amended in accordance with the law of the Republic
of Lithuania.
9. Information on the power of attorney of the board members:
Board members have not granted any powers of attorney to other persons with the purpose to conduct the
functions, attributable to the competence of the board. The Company’s board members act in accordance
with the Law on Joint Stock Companies, the Company’s articles of association and the board’s work
regulations.
10. Information on the competence of the general meeting of shareholders, the shareholders’ rights
and their implementation, if this information has not been established by the law:
The competence of the general meeting of shareholders, the shareholders’ rights and duties are established in
the legislation and the Company’s articles of association.
11. Information on the composition of the management, control bodies and their committees, also their
fields of activity and that of the head of the company:
General meeting of shareholders. The competence, rights and obligations of the general meeting of
shareholders virtually does not differ from the competence, rights and duties of a general meeting of
shareholders, established in the Law on Joint Stock Companies of the Republic of Lithuania and other
legislation, as well as the Company’s articles of association.
Board – a collegial management body, representing the Company’s shareholders for a period between their
meetings, making decisions on the major issues of the Company’s economic activity, and implementing the
company’s control. The board members act in accordance with the Law on Joint Stock Companies of the
Republic of Lithuania and the Company’s articles of association. Currently, the board consists of 6 (six)
members, the number of their terms of office is unlimited. Board members are elected by the General
meeting of shareholders for no more than four years. There is no applicable rule on the election of the board
members of the Company, the Company follows the provisions of the Law on Joint Stock Companies and
the Company’s articles of association. There is no policy, related to age, gender, education, professional
experience, applicable to the elections of the board members – they are elected based on their competence.
The head of the Company is a director general, who follows the Company’s articles of association,
decisions of the general meeting of shareholders and decisions of the board. The head of the Company is
elected by the board of the Company. The head of the Company organises the Company’s daily operations
and conducts actions, necessary to ensure its functions, the implementation of the decisions, adopted by the
Company's bodies and to ensure the Company’s business.
12. Description of the diversity policy, applicable to the election of the head of the Company,
management and control bodies in terms of such aspects as, for example, age, gender, education,
professional experience, methods of implementation and results in the reporting period. If a diversity
policy is not applicable, reasons for non-application:
The Company does not have a diversity policy, applicable to the election of the head of the Company,
management and control bodies. Candidates to members of the Company’s management bodies are not
subject to discrimination for their age, gender, education or professional experience. The Company draws no
limitations for candidates in terms of gender or age. The major criterion in the election of the members of
the management bodies is the candidate's competence.
13. Information on the salary of each member of the management, control body (average salaries, paid
during the reporting period, indicating premiums, allowances, bonuses and other payments
individually):
Information on average salaries, paid to the management bodies during the reporting period is provided in
the Company’s remuneration report.
“Vilvi Group”
annual report for 2021
111
14. Information on all mutual agreements between shareholders (their essence and conditions):
The Company has no data on mutual agreements between its shareholders. In 2021, the Company has not
entered into any agreements with its body members or employees that would result in compensations should
they resign or be dismissed without a reasonable cause, or if their employment would cease due to a change
in control of the issuer. During the reporting period there were no harmful transactions that do not comply
with the goals of the Company or the Group, common market conditions, violate the interests of the
shareholders or other persons, or that had or could have a negative impact on the Company's business or
results in the future.
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2021
112
AB VILKYŠKIŲ PIENINĖ CORPORATE GOVERNANCE REPORT FORM FOR THE YEAR
THAT ENDED ON 31 DECEMBER 2021
The public limited liability company AB”Vilkyškių pieninė” (hereinafter referred to as the “Company”),
acting in compliance with Article 22 (3) of the Law of the Republic of Lithuania on Securities and paragraph
24.5 of the Listing Rules of AB Nasdaq Vilnius, hereby discloses how it complies with the Corporate
Governance Code for the Companies listed on Nasdaq Vilnius as well as its specific provisions or
recommendations. In case of non-compliance with this Code or some of its provisions or recommendations,
the specific provisions or recommendations that are not complied with must be indicated and the reasons for
such non-compliance must be specified. In addition, other explanatory information indicated in this form
must be provided.
1. Summary of the Corporate Governance Report:
According to the Articles of Association of the Company, the bodies of the Company are the General
Meeting of Shareholders, the Management Board, and the Manager of the Company. The Company does not
have a Supervisory Board, but the supervisory functions, provided for in the Law on Companies of the
Republic of Lithuania (hereinafter referred to as the ,,Law”), are actually performed by the Management
Board (although at the moment these supervisory functions is not legalized in the Articles of Association of
AB Vilkyškių Pieninė, however, this issue will be resolved at this year's ordinary annual general meeting of
shareholders), which is not an executive body of the Company and consists of four representatives of the
Company and two independent members. The Management Board elects and removes the Manager of the
Company, determines his/her remuneration and other terms of the employment agreement. The company is
managed by the Manager of the Company. The Company has two committees - Audit Committee and
Nomination and Remuneration Committee. The Nomination and Remuneration Committee shall perform the
functions of the Remuneration and Nomination Committees.
The Company does not currently comply with the requirement established by Paragraph 1.8 of the Corporate
Governance Code, because does not provide the possibility for the shareholders to participate and vote in the
general meeting of shareholders by means of electronic communication, the Company also does not comply
with the requirement established by Paragraph 3.2.5., because the Chairman of the Management Board is the
Manager of the Company. Also, the Articles of Association of the Company do not establish the supervisory
functions performed by the Management Board laid down by Law (the term of the Board has not expired).
These requirements will be taken into account during the election of the new management bodies of the
Company and amending the Articles of Association of the Company at this year's ordinary annual general
meeting of shareholders.
More information on the Company’s Governance, shareholders’ rights, activities of the Management Board
and Committees, Management Board members, as well as systems of internal control and risk management
is provided in the Company’s Consolidated Annual Report for the year that ended on 31 December 2021.
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2021
113
2. Structured table for disclosure:
PRINCIPLES/ RECOMMENDATIONS
YES/N
O/
NOT
APPLI
CABLE
COMMENTARY
Principle 1: General meeting of shareholders, equitable treatment of shareholders, and
shareholders’ rights
The corporate governance framework should ensure the equitable treatment of all shareholders.
The corporate governance framework should protect the rights of shareholders.
1.1.
All shareholders should be provided
with access to the information and/or
documents established in the legal acts on
equal terms. All shareholders should be
furnished with equal opportunity to
participate in the decision
-
making process
where significant corporate matters are
discussed.
Yes
Shareholders are furnished with equal
opportunity to access the and documents
established in the legal acts, as well as to
participate in the corporate decision
-
making
process.
The Company’s documents and information
established in the legal acts are publicly
available on the Company’s website and
through the information disclosure system
used by Nasdaq Vilnius in Lithuanian and
English.
1.2.
It is recommended that the company’s
capital should consist only of the shares that
grant the same rights to voting, ownership,
dividend and other rights to all of their
holders.
Yes
The capital of the Company consists of
ordinary registered shares, which
grant their
owners equal personal property and non-
property rights. Each share grants one vote at
the general meeting of shareholders.
1.3.
It is recommended that investors
should have access to the information
concerning the rights attached to the shares
of the new issue or those issued earlier in
advance, i.e. before they purchase shares.
Yes
The Articles of Association of the Company,
which set out the rights conferred to the
holders of Company’s shares, are publicly
available on the Company’s website.
1.4.
Exclusive transactions that are
particularly important to the company, such
as transfer of all or almost all assets of the
company which in principle would mean
the transfer of the company, should be
subject to approval of the general meeting
of shareholde
rs.
Yes
Transactions shall be approved in accordance
with the procedure set forth in the Law on
Companies of the Republic of Lithuania and
the Articles of Association of the Company.
Where necessary, important transactions are
subject to approval of the general meeting of
shareholders, despite the fact that such a
procedure is not established in the Articles of
Association of the Company. We plan to
clearly establish this during the amendment of
the articles of association of the Company.
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2021
114
1.5. Procedures for convening and
conducting a general meeting of
shareholders should provide shareholders
with equal opportunities to participate in
the general meeting of shareholders and
should not prejudice the rights and interests
of shareholders. The chosen venue, date
and time of the general meeting of
shareholders should not prevent active
participation of shareholders at the general
meeting. In the notice of the general
meeting of shareholders being convened,
the company should specify the last day on
which the proposed draft decisions should
be submitted at the latest.
Yes
The Articles of Association of the Company
provide that all persons, who on the day of the
meeting are the shareholders of the Company,
their authorized representatives, or persons
with whom the voting rights transfer
agreement has been concluded shall have the
right to participate and vote in the general
meeting of shareholders. A shareholder who
has the right to vote and is familiar with the
agenda may also inform the general meeting of
shareholders in writing about his or her “for”
or “against” choice with respect to each
resolution individually. These notifications
shall be credited to the quorum of the general
meeting of shareholders as well as the voting
results.
Meetings of the Company’s shareholders are
held at the registered office of the respective
company of the Company Group (during
quarantine shareholders are encouraged to vote
in writing). Ordinary meetings of shareholders
are held in the second half of April.
The notice convening the general meeting of
shareholders shall state that the proposed new
draft resolutions must be submitted in writing
at any time before the general meeting of
shareholders.
1.6.
With a view to ensure the right of
shareholders living abroad to access the
information, it is recommended, where
possible, that documents prepared for the
general meeting of shareholders in advance
should be announced publicly not only in
Lithuanian language but also in English
and/or other foreign languages in advance.
It
is recommended that the minutes of the
general meeting of shareholders after the
signing thereof and/or adopted decisions
should be made available publicly not only
in Lithuanian language but also in English
and/or other foreign languages. It is
recommended that this information should
be placed on the website of the company.
Such documents may be published to the
extent that their public disclosure is not
detrimental to the company or the
company’s commercial secrets are not
revealed.
Yes
All documents and information related to the
general meeting of shareholders, including
notice of the meeting convened, draft
resolutions, resolutions and minutes of the
meeting, are announced publicly and at the
same time in two languages
-
Lithuanian and
English
-
through the Nasdaq regulated notice
distribution system and on the Company’s
website
1.7.
Shareholders who are entitled to vote
should be furnished with the opportunity to
vote at the general meeting of shareholders
both in person and in absentia. Shareholders
should not be prevented from voting in
Yes
Shareholders of the Company may exercise
the right to participate in the shareholders’
meeting either in person or through a
representative, if the person has a proper
Power of Attorney or a voting rights transfer
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2021
115
writing in advance by completing the
general voting ballot.
agreement has been concluded in accordance
with the procedure established by legal acts.
The Company shall also furnish the
opportunity to shareholders to vote by filling
out a genera
l ballot as required by law.
1.8.
With a view to increasing the
shareholders’ opportunities to participate
effectively at general meetings of
shareholders, it is recommended that
companies should apply modern
technologies on a wider scale and thus
provide shareholders with the conditions to
participate and vote in general meetings of
shareholders via electronic means of
communication. In such cases the security
of transmitted information must be ensured
and it must be possible to identify the
participating and voting person.
No
The Company
does not comply with the
provisions of this recommendation as the
Company does not provide the possibility for
the shareholders to participate and vote in the
general meeting of shareholders by means of
electronic communication.
The company is considering
this issue and the
need for its implementation, possibilities, etc.
1.9.
It is recommended that the notice on
the draft decisions of the general meeting of
shareholders being convened should specify
new candidatures of members of the
collegial body, their proposed remuneration
and the proposed audit company if these
issues are included into the agenda of the
general meeting of shareholders. Where it is
proposed to elect a new member of the
collegial body, it is recommended that the
information about his/her educational
background, work experience and other
managerial positions held (or proposed)
should be provided.
Yes
The Company informs about the educational
background, work experience, and position of
the candidates to the members of the collegial
body during the general meeting of
shareholders by submitting the curriculum
vitae of the candidates in the material of the
meeting.
The name of the proposed audit firm shall be
submitted to the general meeting in advance as
a draft resolution.
During the election a new member to the
collegial body, the Company will publish the
above information on each member in the draft
resolutions of the general meeting.
1.10.
Members of the company’s collegial
management body, heads of the
administration or other competent persons
related to the company who can provide
information related to the agenda of the
general meeting of shareholders should take
part in the general meeting of shareholders.
Proposed candidates to member of the
collegial body should also participate in the
general meeting of shareholders in case the
election of new members is included into
the agenda of the general
meeting of
shareholders.
Yes
Members of the company’s collegial
management body, heads of the administration
or other competent persons related to the
company who can provide information related
to the agenda of the general meeting of
shareholders, as well as candidates proposed to
members of the collegial body participate in
the general meeting of shareholders.
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2021
116
Principle 2: Supervisory board
2.1. Functions and liability of the supervisory board
The supervisory board of the company should ensure representation of the interests of the
company and its shareholders, accountability of this body to the shareholders and objective
monitoring of the company’s operations and its management bodies as well as constantly provide
recommendations to the
management bodies of the company.
The supervisory board should ensure the integrity and transparency of the company’s financial
accounting and control system.
2.1.1.
Members of the supervisory board
should act in good faith, with care and
responsibility for the benefit and in the
interests of the company and its
shareholders and represent their interests,
having regard to the interests of employees
and public welfare.
Not
applic
able
The Supervisory board is not formed in the
Company.
2.1.2.
Where decisions of the supervisory
board may have a different effect on the
interests of the company’s shareholders, the
supervisory board should treat all
shareholders impartially and fairly. It
should ensure that shareholders are properly
informed about the company’s strategy, risk
management and control, and resolution of
conflicts of interest.
Not
applic
able
2.1.3.
The supervisory board should be
impartial in passing decisions that are
significant for the company’s operations
and strategy. Members of the supervisory
board should act and pass decisions without
an external influence from the persons who
elected them.
Not
applic
able
2.1.4.
Members of the supervisory board
should clearly voice their objections in case
they believe that a decision of the
supervisory board is against the interests of
the company. Independent members of the
supervisory board should: a) maintain
independence of their analysis and
decision
-
making; b) not seek or accept any
unjustified privileges that might
compromise their independence.
Not
applic
able
2.1.5.
The supervisory board should
oversee that the company’s tax planning
strategies are designed and implemented in
accordance with the legal acts in order to
avoid faulty practice that is not related to
the long
-
term interests of the company and
its shareholders, which may give rise to
reputational, legal or other risks.
Not
applic
able
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2021
117
2.1.6. The company should ensure that the
supervisory board is provided with
sufficient resources (including financial
ones) to discharge their duties, including
the right to obtain all the necessary
information or to seek independent
professional advice from external legal,
accounting or other experts on matters
pertaining to the competence of the
supervisory board and its committees.
Not
applic
able
2.2. Formation of the supervisory board
The procedure of the formation of the supervisory board should ensure proper resolution of
conflicts of interest and effective and fair corporate governance.
2.2.1.
The members of the supervisory
board elected by the general meeting of
shareholders should collectively ensure the
diversity of qualifications, professional
experience and competences and seek for
gender equality. With a view to maintain a
proper balance between the qualifications
of the members of the supervisory board, it
should be ensured that members of the
supervisory board, as a whole, should have
diverse knowledge, opinions and
experience to duly perform their tasks.
Not
applica
ble
The Supervisory board is not formed in the
Company.
2.2.2.
Members of the supervisory board
should be appointed for a specific term,
subject to individual re
-
election for a new
term in office in order to ensure necessary
development of professional experience.
Not
applica
ble
2.2.3.
Chair of the supervisory board
should be a person whose current or past
positions constituted no obstacle to carry
out impartial activities. A former manager
or management board member of the
company should not be immediately
appointed as chair of the supervisory board
either. Where the
company decides to
depart from these recommendations, it
should provide information on the measures
taken to ensure impartiality of the
supervision.
Not
applica
ble
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2021
118
2.2.4. Each member should devote
sufficient time and attention to perform his
duties as a member of the supervisory
board. Each member of the supervisory
board should undertake to limit his other
professional obligations (particularly the
managing positions in other companies) so
that they would not interfere with the
proper performance of the duties of a
member of the supervisory board. Should a
member of the supervisory board attend
less than a half of the meetings of the
supervisory board throughout the financial
year of the company, the shareholders of
the company should be notified thereof.
Not
applica
ble
2.2.5.
When it is proposed to appoint a
member of the supervisory board, it should
be announced which members of the
supervisory board are deemed to be
independent. The supervisory board may
decide that, despite the fact that a particular
member meets all the criteria of
independence, he/she cannot be considered
independent due to special personal or
company-related circumstances.
Not
applica
ble
2.2.6.
The amount of remuneration to
members of the supervisory board for their
activity and participation in meetings of the
supervisory board should be approved by
the general meeting of shareholders.
Not
applica
ble
2.2.7.
Every year the supervisory board
should carry out an assessment of its
activities. It should include evaluation of
the structure of the supervisory board, its
work organization and ability to act as a
group, evaluation of the competence and
work efficiency of each member of the
supervisory board, and evaluation whether
the supervisory board has achieved its
objectives. The supervisory board should,
at least once a year, make public respective
information about its internal structure and
working procedures.
Not
applica
ble
Principle 3: Management Board
3.1.
Functions and liability of the management board
The management board should ensure the implementation of the company’s strategy and good
corporate governance with due regard to the interests of its shareholders, employees and other
interest groups.
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2021
119
3.1.1.
The management board should
ensure the implementation of the
company’s strategy approved by the
supervisory board if the latter has been
formed at the company. In such cases
where the supervisory board is not formed,
the management board is also responsible
for the approval of the company’s strategy.
Yes
As the supervisory board is not formed in the
Company, the Company’s strategy is approved
by the management board.
3.1.2.
As a collegial management body of
the company, the management board
performs the functions assigned to it by the
Law and in the articles of association of the
company, and in such cases where the
supervisory board is not formed in the
company, it performs
inter alia
the
supervisory functions established in the
Law. By performing the functions assigned
to it, the management board should take
into account the needs of the company’s
shareholders, employees and other interest
groups by respectively striving to achieve
sustainable business development.
Yes
The functions specified in the
recommendation are performed by the
management board (except for AB Pieno
logistika of the Company Group, where the
management board is not formed), taking into
account the needs of the Company,
shareholders, employees, and other interest
groups.
The Management Board of Vilkyškių Pieninė
AB actually performs the supervisory
functions provided for in the Law on
Companies of the Republic of Lithuania.
Although at present these supervisory
functions is not established for the
Management Board in the Articles of
Association of Vilkyškių Pieninė AB,
however, this issue will be resolved
during the
election of the new management bodies of the
Company and amending the Articles of
Association of the Company
at this year's
ordinary annual general meeting of
shareholders.
The Management Board of LTD ,,Baltic dairy
board“ of the Company Group, located in
Latvia, performs the functions provided for by
the laws of Latvia and the Articles of
Association of this company.
3.1.3.
The management board should
ensure compliance with the laws and the
internal policy of the company applicable to
the company or a group of companies to
which this company belongs. It should also
establish the respective risk management
and control measures
aimed at ensuring
regular and direct liability of managers.
Yes
The management board ensures that the
Company complies with laws and internal
policies of the Company (e.g. Remuneration
Policy, Procurement Process and Procedures,
Equal Opportunities Policy, Personal Data
Processing Rules, etc.), and, it also ensures the
accountability of the management in
accordance with the established internal
measures of governance and control.
3.1.4. Moreover, the management board
should ensure that the measures included
into the OECD Good Practice Guidance
on Internal Controls, Ethics and
Compliance are applied at the company in
order to ensure adherence to the applicable
laws, rules and standards.
Yes
The management board ensures compliance
with applicable laws, regulations, and
standards.
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2021
120
3.2. Formation of the management board
3.2.1.
The members of the management
board elected by the supervisory board or,
if the supervisory board is not formed, by
the general meeting of shareholders should
collectively ensure the required diversity of
qualifications, professional experience and
competences and seek for gender equality.
With a view to maintain a proper balance in
terms of the current qualifications
possessed by the members
of the
management board, it should be ensured
that the members of the management board
would have, as a whole, diverse knowledge,
opinions and experience to duly perform
their tasks.
Yes
The Company follows the recommendations of
this paragraph. The members of the
management board have the necessary variety
of knowledge, opinions, and experience to
perform their tasks properly (2 board members
have economic education, 2 board members
have technical education, 1 board member has
management education and one board member
has education related to agriculture.)
There is one woman on the management board
of AB Vilkyškių pieninė and one on the
management board of AB Modest of the
Company Group; and two women on the
management board of AB Kelmės pieninė and
on the management board UAB Kelmės pienas
of the Company Group and there are no
women on the management board of LTD
,,Baltic dairy board“ of the Company Group.
3.2.2.
Names and surnames of the
candidates to become members of the
management board, information on their
educational background, qualifications,
professional experience, current positions,
other important professional obligations
and potential conflicts of interest should be
disclosed without violating the
requirements of the legal acts regulating the
handling of personal data at the meeting of
the supervisory board in which the
management board or individual members
of the management board are elected. In the
event that the supervisory board is not
formed, the information specified in this
paragraph should be submitted to the
general meeting of shareholders. The
management board should, on yearly basis,
collect data provided in this paragraph on
its members and disclose it in the
company’s annual report.
Yes
The curriculum vitae of the candidates to
become members of the management board
and information on the candidates‘
participation in the activities of other
companies is submitted at the shareholder
meeting together with draft resolutions without
violating
the requirements of the legal acts
regulating the handling of personal data.
In the annual report, the company indicates the
necessary information about the members of
the Management Board: education,
qualifications, professional experience, current
posit
ion, etc.
3.2.3.
All new members of the management
board should be familiarized with their
duties and the structure and operations of
the company.
Yes
After the election, all members of the
management board shall be familiarized with
their rights and obligations under the legal acts
of the Republic of Lithuania and the Articles
of Association of the Company. Members of
the management board are regularly informed
3.1.5. When appointing the manager of the
company, the management board should
take into account the appropriate balance
between the candidate’s qualifications,
experience and competence.
Yes
When ppointing the manager of the company,
the management board takes into account the
candidate’s qualifications, experience, and
competence.
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2021
121
at the Board meetings and individually, as
required or per own request of the members,
about the Company’s activities and its
changes, material changes in the legal acts
regulating the Company’s activities, and other
circumstances affecting the Company’s
activities.
3.2.4.
Members of the management board
should be appointed for a specific term,
subject to individual re
-
election for a new
term in office in order to ensure necessary
development of professional experience and
sufficiently frequent reconfirmation of their
status
.
Yes
According to the Articles of Association of the
Company, the members of the management
board are elected for a term of four years,
without limiting the number of their terms.
The Articles of Association of the Company
provide for the possibility of r
e-
election of the
entire management board or its individual
member.
3.2.5.
Chair of the management board
should be a person whose current or past
positions constitute no obstacle to carry out
impartial activity. Where the supervisory
board is not formed, the former manager of
the company should not be immediately
appointed as chair of the management
board. When a company decides to depart
from these recommendations, it should
furnish information on the measures it has
taken to ensure the impartiality of
supervision.
No
AB Vilkyškių pieninė
does not comply with
the recommendation of Paragraph 3.2.5. as the
chairman of its management board is the
manager of the company. The impartiality of
supervision is ensured by other five members
of the management board.
3.2.6.
Each member should devote
sufficient time and attention to perform his
duties as a member of the management
board. Should a member of the
management board attend less than a half of
the meetings of the management board
throughout the financial year of the
company, the supervisory board of the
company or, if the supervisory board is not
formed at the company, the general meeting
of shareholders should be notified thereof.
Yes
In 2021, the management board members
attended the management board meetings
(a quorum was present during all meetings),
with each member devoting sufficient time to
perform the duties of the management board
member. Most board meetings were held
remotely (due to quarantine restrictions).
There were no management board members
who attended less than half of the management
board meetings during fiscal year of 2021.
3.2.7.
In the event that the management
board is elected in the cases established by
the Law where the supervisory board is not
formed at the company, and some of its
members will be independent, it should be
announced which members of the
management board are deemed as
independent. The management board may
decide that, despite the fact that a particular
member meets all the criteria of
independence established by the Law,
he/she cannot be considered independent
due to special personal or company
-
related
circumstances.
Yes
Currently the management board of the
Company (the term of which will expire in
2022) has 2 independent members.
The election of a new management board will
take into account the
independence criteria set
out in the Law.
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2021
122
3.2.8.
The general meeting of shareholders
of the company should approve the amount
of remuneration to the members of the
management board for their activity and
participation in the meetings of the
management
board.
Yes
Members of the management board of AB
Vilkyškių pieninė, AB Modest, AB Kelmės
pieninė, UAB Kelmės pienas and LTD ,,Baltic
dairy board“ may be compensated for their
work in the management board with tantiemes
approved by the general meeting of
shareholders. No tantiemes were paid to
management board members in 2021.
3.2.9.
The members of the management
board should act in good faith, with care
and responsibility for the benefit and the
interests of the company and its
shareholders with due regard to other
stakeholders. When adopting decisions,
they should not act in their personal
interest; they should be subject to no-
compete agreements and they should not
use the business information or
opportunities related to the company’s
operations in violation of
the company’s
interests.
Yes
According to the information available to the
Company, the members of the management
board act in good faith with respect to the
Company, following the interests of the
Company and not their own or those of third
parties, adhering to the principles of honesty,
reasonableness, confidentiality, and
responsibility, trying to remain independent
during the decision
-making.
3.2.10.
Every year the management
board should carry out an assessment of its
activities. It should include evaluation of
the structure of the management board, its
work organization and ability to act as a
group, evaluation of the competence and
work efficiency of each member of the
management board, and evaluation whether
the management board has achieved its
objectives. The management board should,
at least once a year, make public respective
information about its internal structure and
working procedures in observance of the
legal acts regulating the processing of
personal data.
Yes
Every year the management board is carry out
an assessment of its activities, review the
management board’s annual performance goals
and evaluate their achievement. The
management structure of the Company is
published annually in the annual report of the
Company.
Principle 4: R
ules of procedure of the supervisory board and the management board of the
company
The rules of procedure of the supervisory board, if it is formed at the company, and of the
management board should ensure efficient operation and
decision-
making of these bodies and
promote active cooperation between the company’s management bodies.
4.1.
The management board and the
supervisory board, if the latter is formed at
the company, should act in close
cooperation in order to attain benefit for the
company and its shareholders. Good
corporate governance requires an open
discussion between the management board
and the supervisory board. The
management board should regularly and,
where necessary, immediately inform the
supervisory board about any matters
Not
applica
ble
The Supervisory board is not formed in the
Company.
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significant for the company that are related
to planning, business development, risk
management and control, and compliance
with the obligations at the company. The
management board should inform he
supervisory board about any derogations in
its business development from the
previously formulated plans and objectives
by specifying the reasons for this.
4.2.
It is recommended that meetings of the
company’s collegial bodies should be held
at the respective intervals, according to the
pre
-
approved schedule. Each company is
free to decide how often meetings of the
collegial bodies should be convened but it
is recommended that these meetings should
be convened at such intervals that
uninterruptable resolution of essential
corporate governance issues would be
ensured. Meetings of the company’s
collegial bodies should be convened at least
once per quarter.
Yes
Management board meetings are held at least
once a month at the end of the month, and
more frequently if the need arises.
4.3.
Members of a collegial body should be
notified of the meeting being convened in
advance so that they would have sufficient
time for proper preparation for the issues to
be considered at the meeting and a fruitful
discussion could be held and appropriate
decisions could be adopted. Along with the
notice of the meeting being convened all
materials relevant to the issues on the
agenda of the meeting should be submitted
to the members of the collegial body. The
agenda of
the meeting should not be
changed or supplemented during the
meeting, unless all members of the collegial
body present at the meeting agree with such
change or supplement to the agenda, or
certain issues that are important to the
company require immediate resolution.
Yes
The members of the management board shall
be provided in advance with the information of
the meeting convened, the agenda of the
meeting, and any material related to the issues
to be discussed at the meeting. Each member
of the governing body shall have access to the
materials of the meeting before the date of the
meeting. As a general rule, the published
agenda of a meeting shall not be changed,
unless otherwise decided at a meeting where
all the members of the management board of
the Company are present,
and the material
submitted for the meeting shall be sufficient
for the additional issue to reach a decision on
the issue that is not announced in the agenda.
4.4.
In order to coordinate the activities of
the company’s collegial bodies and ensure
effective dec
ision-
making process, the
chairs of the company’s collegial
supervision and management bodies should
mutually agree on the dates and agendas of
the meetings and close cooperate in
resolving other matters related to corporate
governance. Meetings of the company’s
supervisory board should be open to
members of the management board,
particularly in such cases where issues
concerning the removal of the management
board members, their responsibility or
Not
applic
able
The recommendations of paragraph 4.4. cannot
be applicable in the Company as no
supervisory board is formed.
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remuneration are discussed.
Principle 5: Nomination, remuneration and audit committees
5.1.
Purpose and formation of committees
The committees formed at the company should increase the work efficiency of the supervisory
board or, where the supervisory board is not formed, of the management board which performs
the supervisory functions by ensuring that decisions are based on due consideration and help
organise its work in such a way that the decisions it takes would be free of material conflicts of
interest.
Committees should exercise independent judgment and integrity when performing their
functions and provide the collegial body with recommendations concerning the decisions of the
collegial body. However, the final decision should be adopted by the collegial body.
5.1.1.
Taking due account of the
company
-
related circumstances and the
chosen corporate governance structure, the
supervisory board of the company or, in
cases where the supervisory board is not
formed, the management board which
performs the supervisory functions,
establishes committees. It is recommended
that the collegial body should form the
nomination, remuneration and audit
committees.
Yes
AB Vilkyškių pieninė has 2 committees:
Nomination and Remuneration Committee and
Audit Committee.
Nomination and Remuneration Committee is
formed by the management board.
The members of the Audit Committee and the
Regulations of the Committee is approved by
the general meeting of shareholders on the
recommendation of the management board.
AB Modest, AB Kelmės pieninė, AB Pieno
logistika, UAB Kelmės pienas and LTD
,,Baltic dairy board“ have no committees.
The functions of the Nomination and
Remuneration Committee shall be carried out
by a formed single Nomination and
Remuneration Committee.
5.1.2.
Companies may decide to set up
less than three committees. In such case
companies should explain in detail why
they have chosen the alternative approach,
and how the chosen approach corresponds
with the objectives set for the three
different committees.
Yes
5.1.3.
In the cases established by the legal
acts the functions assigned to the
committees formed at companies may be
performed by the collegial body itself. In
such case the provisions of this Code
pertaining to the committees (particularly
those related to their role, operation and
transparency) should apply, where relevant,
to the collegial body as a whole.
Not
applic
able
5.1.4.
Committees established by the
collegial body should normally be
composed of at least three members.
Subject to the requirements of the legal
acts, committees could be comprised only
of two members as well. Members of each
committee should be selected on the basis
of their competences by giving priority to
independent members of the collegial body.
The chair of the management board should
not serve as the chair of committees.
Yes
Each committee of AB Vilkyškių pieninė is
composed of 3 members.
All members of
the Audit Committee have
financial education, and 2 of them are
independent members.
All members of the Nomination and
Remuneration Committee shall have
managerial experience and one of them shall
be an independent member.
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5.1.5. The authority of each committee
formed should be determined by the
collegial body itself. Committees should
perform their duties according to the
authority delegated to them and regularly
inform the collegial body about their
activities and performance on a regular
basis. The authority of each committee
defining its role and specifying its rights
and duties should be made public at least
once a year (as part of the information
disclosed by the company on its governance
structure and practice on an annual basis).
In compliance with the legal acts regulating
the processing of personal data, companies
should also include in their annual reports
the statements of the existing committees
on their composition, the number of
meetings and attendance over the year as
well as the main directions of their
activities and performance.
Yes
The activities of the Nomination and
Remuneration Committee of AB Vilkyškių
pieninė are regulated by the Regulations
approved by the management board.
Regulations of the Audit Committee of AB
Vilkyškių pieninė are approved by the general
meeting of shareholders.
Both committees regularly inform the collegial
body about their activities and results.
Information on Committee activities and
attendance of Committee meetings is presented
in the consolidated annual
report of 2021.
5.1.6.
With a view to ensure the
independence and impartiality of the
committees, the members of the collegial
body who are not members of the
committees should normally have a right to
participate in the meetings of the committee
only if invited by the committee. A
committee may invite or request that certain
employees of the company or experts would
participate in the meeting. Chair of each
committee should have the possibility to
maintain direct communication with the
shareholders. Cases where
such practice is
to be applied should be specified in the
rules regulating the activities of the
committee.
Yes
The members of the collegial body, who are
not members of the Committee, shall
participate in the meetings of the committees,
if necessary, at the invitation of the respective
Committee. If necessary, the Committee may
invite relevant Company personnel,
responsible for the matters discussed in the
Committee, to attend the meeting. The
chairman of the committee is also provided
with the possibility to communicate with the
shareholders as necessary.
5.2.
Nomination committee
5.2.1.
The key functions of the nomination
committee should be the following:
1) to select candidates to fill vacancies in
the membership of supervisory and
management bodies and the administration
and recommend the collegial body to
approve them. The nomination committee
should evaluate the balance of skills,
knowledge and experience in the
management body, prepare a description of
the functions and capabilities required to
assume a particular position and assess the
time commitment expected;
2) assess, on a regular basis, the structure,
Yes
The functions of the Nomination Committee
specified in this recommendation are
essentially performed by the Nomination and
Remuneration Committee of AB Vilkyškių
pieninė.
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size and composition of the supervisory and
management bodies as well as the skills,
knowledge and activity of its members, and
provide the collegial body with
recommendations on how the required
changes should be sought;
3) devote the attention necessary to ensure
succession planning.
5.2.2.
When dealing with issues
related to members of the collegial body
who have employment relationships with
the company and the heads of the
administration, the manager of the company
should be consulted by granting him/her the
right to submit proposals to the Nomination
Committee.
Yes
5.3.
Remuneration committee
The main functions of the remuneration
committee should be as follows:
1) submit to the collegial body proposals on
the remuneration policy applied to members
of the supervisory and management bodies
and the heads of the administration for
approval. Such policy should include all
forms of remuneration, including the fixed-
rate remuneration, performance
-
based
remuneration, financial incentive schemes,
pension arrangements and termination
payments as well as conditions which
would allow the company to recover the
amounts or suspend the payments by
specifying the circumstances under which it
would be expedient to do so;
2) submit to the collegial body proposals
regarding individual remuneration for
members of the collegial bodies and the
heads of the administration in order to
ensure that they would be consistent with
the company’s remuneration policy and the
evaluation of the performance of the
persons concerned;
3) review, on a regular basis, the
remuneration policy and its
implementation.
Yes
The functions of the Remuneration Committee
specified in this recommendation are
essentially performed by the Nomination and
Remuneration Committee of AB Vilkyškių
pieninė.
The Nomination and Remuneration Committee
submits proposals to the collegial body on the
remuneration policy, reviews it regularly, and
monitors its implementation.
5.4.
Audit committee
5.4.1.
The key functions of the audit
committee are defined in the legal acts
regulating the activities of the audit
committee.
Yes
The functions of the Audit Committee are
defined in the Regulations of the Audit
Committee approved by the General Meeting
of Shareholders.
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5.4.2. All members of the committee
should be provided with detailed
information on specific issues of the
company’s accounting system, finances and
operations. The heads of the company’s
administration should inform the audit
committee about the methods of accounting
for significant and unusual transactions
where the accounting may be subject to
different approaches.
Yes
The members of the Committee shall be
provided with all the detailed information
necessary for the performance of its functions.
5.4.3.
The
audit committee should decide
whether the participation of the chair of the
management board, the manager of the
company, the chief finance officer (or
senior employees responsible for finance
and accounting), the internal and external
auditors in its meetings is required (and, if
required, when). The committee should be
entitled, when needed, to meet the relevant
persons without members of the
management bodies present.
Yes
After the members of the Audit Committee
decide who must attend the meeting of the
Committee, these persons shall be invited,
ensuring possibility that the members of the
managerial bodies would not be present at the
same meeting.
5.4.4.
The audit committee should be
informed about the internal auditor’s work
program and should be furnished with
internal audit reports or periodic
summaries. The audit committee should
also be informed about the work program of
external auditors and should receive from
the audit firm a report describing all
relationships between the independent audit
firm and the company and its group.
Yes
Internal and external auditors shall regularly
present their activity plans and reports to the
Audit Committee.
5.4.5.
The audit committee should examine
whether the company complies with the
applicable provisions regulating the
possibility of lodging a complaint or
reporting anonymously his/her suspicions
of potential violations committed at the
company and should also ensure that there
is a procedure in place for proportionate
and independent investigation of such
issues and appropriate follow-up actions.
Yes
The Audit Committee shall have the
opportunity to periodically verify whether
employees have the possibility to lodge a
complaint or report anonymously any
suspected violations by the Company.
Complaints are submitted to an authorized
employee of the Company's HR Department,
which must ensure the anonymity of the
complaint.
5.4.6.
The audit committee should submit
to the supervisory board or, where the
supervisory board is not formed, to the
management board its activity report at
least once in every six months, at the time
that annual and half
-
yearly reports are
approved.
Yes
Reports of the Audit Committee are presented
at management board meetings twice a year.
Principle
6: Prevention and disclosure of conflicts of interest
The corporate governance framework should encourage members of the company’s supervisory
and management bodies to avoid conflicts of interest and ensure a transparent and effective
mechanism of disclosure of conflicts of interest related to members of the supervisory and
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management bodies.
The Corporate Governance Framework should recognize the rights of the stakeholders as
established by law and promote active cooperation between the company and its stakeholders in
the creation of the well
-being, jobs, and financial stability of the Company. Within the context of
this principle, the term “stakeholders” includes investors, employees, creditors, suppliers,
customers, the local community, and oth
er persons with interests in a particular company.
Any member of the company’s supervisory
and management body should avoid a
situation where his/her personal interests
are or may be in conflict with the
company’s interests. In case such a
situation did occur, a member of the
company’s supervisory or management
body should, within a reasonable period of
time, notify other members of the same
body or the body of the company which
elected him/her or the company’s
shareholders of such situation of a conflict
of interest, indicate the nature of interests
and, where possible, their value.
Yes
Management board members avoid situations
where their personal interests may be in
conflict with the company’s interests.
Principle 7: Remuneration policy of the company
The remuneration policy and the procedure for review
and disclosure of such policy established
at the company should prevent potential conflicts of interest and abuse in determining
remuneration of members of the collegial bodies and heads of the administration, in addition it
should ensure the publicity and transparency of the company’s remuneration policy and its long-
term strategy.
7.1.
The company should approve and post
the remuneration policy on the website of
the company; such policy should be
reviewed on a regular basis and be
consistent with the company’s long
-
term
strategy.
Yes
The remuneration policy approved by the
management board is published on the
Company’s website and is regularly reviewed.
7.2.
The remuneration policy should
include all forms of remuneration, including
the fixed
-
rate remuneration, performance-
based remuneration, financial incentive
schemes, pension arrangements and
termination payments as well as the
conditions specifying the cases where the
company can recover the disbursed
amounts or suspend the payments.
Yes
7.3.
With a view to avoid potential
conflicts of interest, the remuneration
policy should provide that members of the
collegial bodies which perform the
supervisory functions should not receive
remuneration based on the company’s
performance.
Yes
The approved Remuneration Policy does not
provide for the possibility to receive
remuneration depending on the Company's
performance.
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7.4. The remuneration policy should
provide sufficient information on the policy
regarding termination payments.
Termination payments should not exceed a
fixed amount or a fixed number of annual
wages and in general should not be higher
than the non
-variable component of
remuneration for two years or the
equivalent thereof. Termination payments
should not be paid if the contract is
terminated due to inadequate performance.
Yes
The Company adheres to the requirements of
applicable laws (provisions of the Labor Code
of the Republic of Lithuania) regarding
termination payments.
7.5.
In the event that
the financial incentive
scheme is applied at the company, the
remuneration policy should contain
sufficient information about the retention of
shares after the award thereof. Where
remuneration is based on the award of
shares, shares should not be vested at least
for three years after the award thereof. After
vesting, members of the collegial bodies
and heads of the administration should
retain a certain number of shares until the
end of their term in office, subject to the
need to compensate for any costs
related to
the acquisition of shares.
Not
applic
able
The Company has no system of employee
incentivisation or remuneration with Company
shares.
7.6.
The company should publish
information about the implementation of
the remuneration policy on its website, with
a key focus on the remuneration policy in
respect of the collegial bodies and managers
in the next and, where relevant, subsequent
financial years. It should also contain a
review of how the remuneration policy was
implemented during the previous financial
year. The information of such nature should
not include any details having a commercial
value. Particular attention should be paid on
the major changes in the company’s
remuneration policy, compared to the
previous financial year.
Yes
The implementation of the Remuneration
Policy is disclosed in the Remuneration
Report, which is published on the Company's
website.
7.7. It is recommended that the
remuneration policy or any major change of
the policy should be included on the agenda
of the general meeting of shareholders. The
schemes under which members and
employees of a collegial body receive
remuneration in shares or share options
should be approved by the general meeting
of shareholders.
Yes
In the event of a material change in the
remuneration policy, such change shall be
included in the agenda of the general meeting
of shareholders.
The Company does not employ schemes under
which the remuneration is provided in shares
or share options, or other rights to purchase
shares or receive remuneration based on the
changes in the share price.
Principle 8: Role of stakeholders in corporate governance
The corporate governance framework should recognize the rights of stakeholders entrenched in
the laws or mutual agreements and encourage active cooperation between companies and
stakeholders in creating the company value, jobs and financial sustainability. In the context of
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this principle the concept “stakeholders” includes investors, employees, creditors, suppliers,
clients, local community and other persons having certain interests in the company concerned.
8.1.
The corporate governance framework
should ensure that the rights and lawful
interests of stakeholders are protected.
Yes
All stakeholders are provided with the
possibility to participate in corporate
governance and access to the necessary
information.
8.2.
The corporate governance framework
should create conditions for stakeholders to
participate in corporate governance in the
manner prescribed by law. Examples of
participation by stakeholders in corporate
governance include the participation of
employees or their representatives in the
adoption of decisions that are important for
the company, consultations with employees
or their representatives on corporate
governance and other important matters,
participation of employees in the
company’s authorized capital, involvement
of creditors in corporate governance in the
cases of the company’s insolvency, etc.
Yes
All stakeholders are provided with the
possibility to participate in corporate
governance in the manner prescribed by law
8.3.
Where stakeholders participate in the
corporate governance process, they should
have access to relevant information.
Yes
The stakeholders involved in the corporate
governance process shall be granted access to
the necessary information, without prejudice to
the interests of the Company and other related
parties.
8.4.
Stakeholders should be provided with
the possibility of reporting confidentially
any illegal or unethical practices to the
collegial body performing the supervisory
function.
Yes
The Company provides the possibility to
confidentially report any illegal or unethical
practices to the collegial body performing the
supervisory function.
Principle 9: Disclosure of information
The corporate governance framework should ensure the timely and accurate disclosure of all
material corporate issues, including the financial situation, operations and governance of the
company.
9.1.
In accordance with the company’s
procedure on confidential information and
commercial secrets and the legal acts
regulating the processing of personal data,
the information publicly disclosed by the
company should include but not be limited
to the following:
Yes
9.1.1.
operating and financial results of
the
company;
Yes
On a quarterly basis, the Company reports its
operating and financial results on the
Company’s website and through the
information disclosure system used by Nasdaq
Vilnius.
9.1.2.
objectives and non-
financial
information of the company;
Yes
Information on the Company’s activities,
objectives and corporate governance is
disclosed through press releases and
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notifications on material events, as well as on
the Company’s website, and the information
disclosure system used by Nasdaq Vilnius.
9.1.3.
persons holding a stake in the
company or controlling it directly and/or
indirectly and/or together with related
persons as well as the structure of the group
of companies and their relationships by
specifying the final beneficiary;
Yes
Information is provided on the Company’s
website and in its interim and annual reports.
9.1.4.
members of the company’s
supervisory and management bodies who
are deemed independent, the manager of the
company, the shares or votes held by them
at the company, participation in corporate
governance of other companies, their
competence and remuneration;
Yes
Information is provided on the Company’s
website and in its interim and annual reports.
9.1.5.
reports of the existing committees
on their composition, number of meetings
and attendance of members during the last
year as well as the main directions and
results of their activities;
Yes
Information on the composition of committees
and the number of meetings is provided in the
annual reports.
9.1.6.
potential key risk factors, the
company’s risk management and
supervision policy;
Yes
The information is provided in interim and
annual reports
9.1.7. the company’s transactions with
related parties;
Yes
Information is provided on the Company’s
website and in its interim and annual reports.
9.1.8.
main issues related to employees
and other stakeholders (for instance, human
resource policy, participation of employees
in corporate governance, award of the
company’s shares or share options as
incentives, relationships with creditors,
suppliers, local community, etc.);
Yes
The information is provided in interim and
annual reports.
9.1.9. structure and strategy of corporate
governance;
Yes
Information is provided on the Company’s
website and in its interim and annual reports.
9.1.10.
initiatives and measures of social
responsibility policy and
anti-
corruption
fight, significant current or planned
investment projects.
This list is deemed minimum and
companies are encouraged not to restrict
themselves to the disclosure of information
included into this list. This principle of the
Code does not exempt companies from their
obligation to disclose information as
provided for in the applicable legal acts.
Yes
Information is provided in interim and annual
reports, notifications on material events, on the
Company’s website, and in the Company’s
social rep
ort.
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9.2. When disclosing the information
specified in paragraph 9.1.1 of
recommendation 9.1, it is recommended
that the company which is a parent
company in respect of other companies
should disclose information about the
consolidated results of the whole group of
companies.
Yes
When disclosing the information specified in
paragraph 9.1.1 of recommendation 9.1, the
company which is a parent company in respect
of other companies discloses information
about the consolidated results of the whole
group of
companies in the interim and annual
reports.
9.3.
When disclosing the information
specified in paragraph 9.1.4 of
recommendation 9.1, it is recommended
that the information on the professional
experience and qualifications of members
of the company’s supervisory and
management bodies and the manager of the
company as well as potential conflicts of
interest which could affect their decisions
should be provided. It is further
recommended that the remuneration or
other income of members of the company’s
supervisory and management bodies and
the manager of the company should be
disclosed, as provided for in greater detail
in Principle 7.
Yes
The Company discloses in its consolidated
annual report information on the amount of
annual remuneration and other income paid to
the Company’s key management and members
of the managerial bodies, as well as education,
qualifications and participation in the activities
and capital of other companies.
9.4.
Information should be disclosed in
such manner that no shareholders or
investors are discriminated in terms of the
method of receipt and scope of information.
Information should be disclosed to all
parties concerned at the same time.
Yes
AB Vilkyškių pieninė submits information via
the information disclosure system used by
Nasdaq Vilnius in Lithuanian and English at
the same time, thus ensuring simultaneous
disclosure of information to everyone. The
Company seeks to publish the information
before or after the Nasdaq Vilnius trading
session and simultaneously submit it to all
markets where the Company’s securities are
traded, and also makes it publicly available on
the website.
Principle 10: Selection of the company’s audit firm
The company’s audit firm selection mechanism should ensure the independence of the report and
opinion of the audit firm.
10.1.
With a view to obtain an objective
opinion on the company’s financial
condition and financial results, the
company’s annual financial statements and
the financial information provided in its
annual report should be audited by an
independent audit firm.
Yes
The Company adheres to this recommendation
because the Company’s annual consolidated
financial information is audited by an
independent audit firm.
10.2.
It is recommended that the audit firm
would be proposed to the general meeting
of shareholders by the supervisory board or,
if the supervisory board is not formed at the
company, by the management board of the
company.
Yes
The management board of the Company
(manager in AB Pieno logistika of the
Company Group) submits the candidacy of the
audit company to the meeting of shareholders.
The Audit Company shall be approved by the
general meeting of shareholders of the
Company.
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2021
133
10.3. In the event that the audit firm has
received remuneration from the company
for the non
-audit services provided, the
company should disclose this publicly. This
information should also be available to the
supervisory board or, if the supervisory
board is not formed at the company, by the
management board of the company when
considering which audit firm should be
proposed to the general meeting of
shareholders.
Yes
In 2021, the audit company did not provide
non
-audit services to the Company.
Should the audit company provide
non-
audit
services, then the Company would inform
about it publicly.
_______________________________________
PricewaterhouseCoopers UAB, J. Jasinskio str. 16B, 03163 Vilnius, Lithuania
+370 (5) 239 2300, lt_vilnius@pwc.com, www.pwc.lt
Company code 111473315, registered with the Legal Entities’ Register of the Republic of Lithuania
Independent auditor’s report
To the shareholders of VILKYŠKIŲ PIENINĖ AB
Report on the audit of the consolidated and separate financial statements
Our opinion
In our opinion, the consolidated and separate financial statements give a true and fair view of the
consolidated and separate financial position of VILKYŠKIŲ PIENINĖ AB (the “Company”) and its
subsidiaries (together - the “Group”) as at 31 December 2021, and of the Group’s and of the Company’s
consolidated and separate financial performance and consolidated and separate cash flows for the year
then ended in accordance with International Financial Reporting Standards as adopted by the European
Union.
Our opinion is consistent with our additional report to the Audit Committee dated 8 April 2022.
What we have audited
The Group’s and the Company’s consolidated and separate financial statements comprise:
● the consolidated and separate statements of financial position as at 31 December 2021;
● the consolidated and separate statements of profit or loss and statements of other comprehensive
income for the year then ended;
● the consolidated and separate statements of changes in equity for the year then ended;
● the consolidated and separate statements of cash flows for the year then ended; and
● the notes to the consolidated and separate financial statements, which include significant accounting
policies and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group and the Company in accordance with the International Code of Ethics
for Professional Accountants (including International Independence Standards) issued by the
International Ethics Standards Board for Accountants (IESBA Code) and the Law of the Republic of
Lithuania on the Audit of Financial Statements that are relevant to our audit of the separate and
consolidated financial statements in the Republic of Lithuania. We have fulfilled our other ethical
responsibilities in accordance with the IESBA Code and the Law of the Republic of Lithuania on the Audit
of Financial Statements.
To the best of our knowledge and belief, we declare that non-audit services that we have provided to the
Group and the Company are in accordance with the applicable law and regulations in the Republic of
Lithuania and that we have not provided non-audit services that are prohibited under Article 5(1) of
Regulation (EU) No 537/2014 considering the exemptions of Regulation (EU) No 537/2014 endorsed in
the Law of the Republic of Lithuania on the Audit of Financial Statements.
The non-audit services that we have provided to the Group and the Company, in the period from 1
January 2021 to 31 December 2021, are disclosed in note 8 to the financial statements.
Our audit approach
Overview
●
Overall Group and Company materiality: Euro 1,068 thousand
and Euro 800 thousand respectively
x
We conducted audit at 3 Group entities, all operating in Lithuania,
covering 99% of the Group’s revenues and 89
% of the Group’s
total assets.
x Impairment testing of goodwill.
x Inventory write-down to net realisable value.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement
in the consolidated and separate financial statements (together “the financial statements”). In particular,
we considered where management made subjective judgements; for example, in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently
uncertain. As in all of our audits, we also addressed the risk of management override of internal controls,
including, among other matters, consideration of whether there was evidence of bias that represented a
risk of material misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance whether the financial statements are free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group and Company materiality for the financial statements as a whole as set out in
the table below. These, together with qualitative considerations, helped us to determine the scope of our
audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements, if any, both individually and in aggregate on the financial statements as a whole.
Overall
Company materiality
EUR 800 thousand (in 2020 – EUR 800 thousand).
Overall Group materiality
EUR 1,068 thousand (in 2020 – EUR 884 thousand).
How we determined it
0.68% of the Group’s and 0.41% of the Company’s total
revenue.
Materiality
Group
scoping
Key audit
matters
Rationale for the
materiality
benchmark applied
Significant fluctuations in the Group’s and the Company’s
profit depend on the prevailing trends in global dairy
markets. We have, therefore, chosen revenue as a
benchmark for determining the materiality because, in our
view,
it provides the stakeholders consistent information
year-on-year basis, reflecting the Group’s and the Company’s
growth. Revenue and market share are also considered to be
important business performance indicators.
We agreed with the Audit Committee that we would report to them misstatements identified during our
audit above EUR 53 thousand and EUR 40 thousand for the Group and the Company, respectively, as
well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Impairment testing of
goodwill
Refer to accounting policy on impairment
testing on page 2
1
, accounting estimates and
assessments on pages
27-28 and note 15
‘Intangible assets’ in the financial statements.
We focused on this area because of the
significance of the goodwill bala
nce (The
Group has goodwill balance of EUR 4,166
thousand as
at 31 December 2021) and
because the impairment assessment involved
significant management’s judgements about
the future results and the discount rates
applied to future cash flows forecasts.
Under the requirements of IAS 36 Impairment
of assets goodwill has to be tested for
impairment at least on an annual basis. The
determination of recoverable amount, being
the higher of value in
-
use and fair value less
costs of disposal, requires judgment fro
m
management when identifying and valuing the
relevant cash
-
generating units. Recoverable
amounts are based on management’s view of
internal and market conditions such as future
prices and volume growth rate, the timing of
future operating expenditure and
the most
appropriate discount and long
-term growth
rates.
We focused on goodwill attributable to the cash
generating unit
from fresh milk products
of Kelmės
pienas
UAB, which represents 93% (in 2020 –
96%
)
of the entire goodwill balance of the Group.
Our audit procedures included challenging
management on the appropriateness of the
impairment models and the reasonableness of the
assumptions used by performing the following:
- Assessing the reliability of the cash flow forecast
by checking the actual past performance and
comparing to previous forecasts and by inspecting
internal documents, such as budget forecasts for
202
2–2026;
- Benchmarking market related assumptions like
discount rate and long
-
term growth rate against
external data. Where it was considered
necessary, we involved our valuation experts;
- Testing the mathematical accuracy of the model
and assessing the sensitivity of the impairment
test to key inputs.
We found the assumptions used by management
in the calculation of discounted cash flows to be
within acceptable range of our expectations.
We also reviewed the disclosures in the financial
statements regarding i
mpairment tests.
As at 31 December 2021, based on the
impairment test performed for that day, an
impairment loss was recognized
for cash
generating unit of Kelmės pienas UAB related
to
fresh milk products. The Group estimated
that carrying amount of this cash generating
unit has exceeded its recoverable amount by
2,749
thousand EUR. No impairment was
identified as at 31 December 2020.
Inventory write
-down to net realisable value
Refer to accounting policy on inventory on
page
17, accounting estimates and
assessments on page
27-28 and note 18
‘Inventories’ in the financial statements.
We focused on this area due to the size of the
inventory balance (EUR 1
7,625
thousand and
EUR
8,046 thousand as at 31 December 20
21
at the Group and the Company, respectively),
and because the management’s assessment
of the net realisable value of inventory involved
estimates about the future discounts and sales
of goods below their cost.
During 2021 the Group and the Company sold
in
ventory at higher prices, therefore
inventory
write
-down to net realisable value was not
recognized.
As at 31 December 2021 the
Group’s and the Company’s w
rite-
down to net
realisable value allowance amounted to EUR
37 thousand and EUR
37 thousand,
respectively.
We obtained the Group’s
and the Company’s
policies and methodology in respect of inventory
write
-downs to net realisable value, evaluated
their compliance with the requirements of IFRSs,
and found them to be consistent.
We analysed sales prices of the finished goods
items sold after the balance sheet date and
compared results with the figures used in the
management’s calculation of inventory write
-
down
allowance.
We analysed the aging of inventories other than
finished goods, by periods, to identif
y slow-
moving
or obsolete items. We also verified the reliability of
the inventory ageing report and compared our
estimated inventory write
-
down allowance to the
management’s calculations.
We found the assumptions used by management
in the
calculation of inventory write-
down to net
realisable value to be within acceptable range of
our expectations.
How we tailored our Group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on
the financial statements as a whole, taking into account the structure of the Group, the accounting
processes and controls, and the industry in which the Group operates.
The Group comprises of parent and 4 subsidiaries three of which operate in Lithuania and one in Latvia.
Based on our risk and materiality assessments, we determined which entities were required to be
audited, by taking into account the relative significance of each entity to the Group as a whole and in
relation to each material line item in the consolidated financial statements. We performed audits of parent
entity VILKYŠKIŲ PIENINĖ AB and subsidiaries Kelmės Pieninė AB and Modest AB. Our audits
addressed 99% of the Group’s revenues and 89% of the Group’s total assets. The remaining components
of the Group was not material.
Reporting on other information including the consolidated annual report
Management is responsible for the other information. The other information comprises the consolidated
annual report, including the corporate governance report and renumeration report (but does not include
the financial statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover the other information, including the consolidated
annual report.
In connection with our audit of the financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
With respect to the consolidated annual report, we considered whether the consolidated annual report
includes the disclosures required by the Law of the Republic of Lithuania on Consolidated Financial
Reporting by Groups of Undertakings, the Law of the Republic of Lithuania on Financial Reporting by
Undertakings.
Based on the work undertaken in the course of our audit, in our opinion:
● the information given in the consolidated annual report for the financial year for which the financial
statements are prepared, is consistent with the financial statements; and
● the consolidated annual report has been prepared in accordance with the Law of the Republic of
Lithuania on Consolidated Financial Reporting by Groups of Undertakings and the Law of the
Republic of Lithuania on Financial Reporting by Undertakings.
The Group has prepared the social responsibility report that was presented as a separate report.
In addition, in light of the knowledge and understanding of the Group and the Company and their
environment obtained in the course of the audit, we are required to report if we have identified material
misstatements in the consolidated annual report which we obtained prior to the date of this auditor’s
report. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the financial
statements
Management is responsible for the preparation of the financial statements that give a true and fair view in
accordance with International Financial Reporting Standards as adopted by the European Union, and for
such internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Group’s and the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Group and the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s and the Company’s financial
reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
● Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
● Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s and the Company’s internal control.
● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
● Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s and the Company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group and the
Company to cease to continue as a going concern.
● Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the Group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and have communicated with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threads or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that
a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
Report on the compliance of the format of the consolidated and separate financial statements with
the requirements of the European Single Electronic Reporting Format
We have been engaged based on the amendment to our audit agreement by the management of the
Company to conduct a reasonable assurance engagement for the verification of compliance with the
applicable requirements of the European single electronic reporting format of the Group’s consolidated
and the Company’s separate financial statements, including the consolidated annual report, for the year
ended 31 December 2021 (the “Single Electronic Reporting Format of the separate and consolidated
financial statements”).
Description of a subject matter and applicable criteria
The Single Electronic Reporting Format of the consolidated and separate financial statements has been
applied by the management of the Company to comply with the requirements of art. 3 and 4 of the
Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive
2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards
on the specification of a single electronic reporting format (the “ESEF Regulation”). The applicable
requirements regarding the Single Electronic Reporting Format of the consolidated and separate financial
statements are contained in the ESEF Regulation.
The requirements described in the preceding sentence determine the basis for application of the
Single Electronic Reporting Format of the consolidated and separate financial statements and, in our
view, constitute appropriate criteria to form a reasonable assurance conclusion.
Responsibility of the management and those charged with governance
The management of the Company is responsible for the application of the Single Electronic Reporting
Format of the consolidated and separate financial statements that complies with the requirements of the
ESEF Regulation.
This responsibility includes the selection and application of appropriate markups in iXBRL using ESEF
taxonomy and designing, implementing and maintaining internal controls relevant for the preparation of
the Single Electronic Reporting Format of the consolidated and separate financial statements which is
free from material non-compliance with the requirements of the ESEF Regulation.
Those charged with governance are responsible for overseeing the financial reporting process, which
should also be understood as the preparation of financial statements in accordance with the format
resulting from the ESEF Regulation.
Our responsibility
Our responsibility was to express a reasonable assurance conclusion whether the Single Electronic
Reporting Format of the consolidated and separate financial statements complies, in all material aspects,
with the ESEF Regulation.
We conducted our engagement in accordance with International Standard on Assurance
Engagements 3000 (Revised) ‘Assurance Engagements other than Audits and Reviews of Historical
Financial Information’ (“ISAE 3000 (R)”). This standard requires that we comply with ethical requirements,
plan and perform procedures to obtain reasonable assurance whether the Single Electronic Reporting
Format of the consolidated and separate financial statements complies, in all material aspects, with the
applicable requirements.
Reasonable assurance is a high level of assurance, but it does not guarantee that the service performed
in accordance ISAE 3000 (R) will always detect the existing material misstatement (significant non-
compliance with the requirements).
Summary of the work performed
Our planned and performed procedures were aimed at obtaining reasonable assurance that the
Single Electronic Reporting Format of the consolidated and separate financial statements was applied, in
all material aspects, in accordance with the applicable requirements and such application is free from
material errors or omissions. Our procedures included in particular:
x obtaining an understanding of the internal control system and processes relevant to the application of
the Single Electronic Reporting Format of the consolidated and separate financial statements,
including the preparation of the XHTML format and marking up the separate and consolidated
financial statements;
x verification whether the XHTML format was applied properly;
x evaluating the completeness of marking up the consolidated and separate financial statements using
the iXBRL markup language according to the requirements of the implementation of single electronic
format as described in the ESEF Regulation;
x evaluating the appropriateness of the Company’s and the Group’s' use of XBRL markups selected
from the ESEF taxonomy and the creation of extension markups where no suitable element in the
ESEF taxonomy has been identified; and
x evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
conclusion.
Conclusion
In our opinion, the Single Electronic Reporting Format of the consolidated and separate financial
statements for the year ended 31 December 2021 complies, in all material aspects, with the ESEF
Regulation.
Appointment
We were first appointed as auditors of the Group and the Company on 28 April 2017. Our appointment
has been renewed by shareholder resolution representing a total period of uninterrupted engagement
appointment of 5 years.
The key audit partner on the audit resulting in this independent auditor’s report is Rimvydas Jogėla.
On behalf of PricewaterhouseCoopers UAB
/signed with electronic signature/
Rimvydas Jogėla
Partner
Auditor's Certificate No.000457
Vilnius, Republic of Lithuania
8 April 2022
The auditor's electronic signature is used herein to sign only the Independent Auditor's Report