Consolidated and the parent
company’s separate financial
statements for the year ended
31 December 2022
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
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
Company details 1
Management’s statement on the consolidated and parent company’s
separate annual financial statements 2
Consolidated and separate statements of financial position 3
Consolidated and separate statements of profit or loss 4
Consolidated and separate statements of other comprehensive income 5
Separate statement of changes in equity 6
Consolidated statement of changes in equity 7
Consolidated and separate statements of cash flows 8
Notes to the consolidated and separate financial statements 10
Annual report of “Vilvi Group” for 2022 76
AB Vilkyškių pieninė corporate governance report form 114
Independent auditor‘s report 135
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
1
Company details
Telephone: +370 441 55330
Company code: 277160980
Registered office address: P. Lukošaičio g. 14, Vilkyškiai, LT-99254 Pagėgiai
Country of incorporation: Lithuania
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
AS "Citadele banka" Lithuania branch
SC "Citadele bank"
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
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, 7th April 2023
Gintaras Bertašius
General Manager
(The document has been signed by a qualified electronic signature)
Vilija Milaševičiutė
Director for Economic and Financial Affairs
(The document has been signed by a qualified electronic signature)
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
3
Consolidated and separate statements of financial position
EUR ‘000
GROUP
At 31 December
Note
COMPANY
At 31 December
2022
2021
Assets
2022
2021
Investment property
12,14
6,527
6,780
Property, plant and equipment
12
13,052
11,090
Right-of-use assets
12,13
1,050
1,129
Intangible assets
15
5
14
Investments in subsidiaries
16
10,918
10,984
Non-current amounts receivable
17
1,008
1,116
Deferred income tax assets
26
-
470
Non-current assets
32,560
31,583
Inventories
18
9,188
8,046
Trade and other receivables
19
27,795
18,600
Prepayments
20
596
456
Cash and cash equivalents
21
325
579
Current assets
37,904
27,681
Total assets
70,464
59,264
Equity
Share capital
3,463
3,463
Share premium
3,301
3,301
Reserves
1,400
1,445
Retained earnings
39,096
28,841
Equity attributable to owners of the
Company
22
47,260
37,050
Non-controlling interest
-
-
Equity
22
47,260
37,050
Liabilities
Borrowings
23
1,499
2,285
Lease liabilities
23
374
414
Government grants
24
520
685
Trade and other payables
25
-
-
Deferred income tax liabilities
518
-
___
____
____
____
Non-current liabilities
2,911
3,384
Borrowings
23
3,483
3,941
Lease liabilities
23
309
301
Income tax payable
146
-
Trade and other payables
27
16,355
14,588
Current liabilities
20,293
18,830
Liabilities
23,204
22,214
Total equity and liabilities
70,464
59,264
The notes on pages 10 to 73 are an integral part of these separate and consolidated financial statements.
General Manager (The document has been signed by a qualified electronic signature) Gintaras Bertašius
Director for Economic and Financial Affairs (The document has been signed by a qualified electronic signature) Vilija Milaševičiutė
7 April 2023
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
4
Consolidated and separate statements of profit or loss
EUR ‘000
The notes on pages 10 to 73 are an integral part of these separate and consolidated financial statements.
GROUP
COMPANY
2022
2021
EUR ’000
Note
2022
2021
Revenue
1
288,643
196,442
-209,809
-138,849
Cost of sales
2
-271,448
-187,411
Gross profit
17,195
9,031
Other operating income
3
11,592
10,959
-4,149
-3,167
Distribution expenses
6
-3,843
-2,987
-5,427
-4,301
Administrative expenses
7
-3,855
-3,064
-2,749
Impairment of goodwill
15
-
-
-179
-118
Other operating expenses
4
-6,951
-2,908
Other gain (loss) - net
5
-245
419
Results of operating activities
13,893
11,450
Finance income
193
208
-868
-1,187
Finance costs
-353
-464
-741
-978
Finance costs, net
9
-160
-256
Profit (loss) before income tax
13,733
11,194
-1,481
-656
Income tax
10
-1,134
-420
Profit (loss) for the reporting year
12,599
10,774
Attributable to:
Shareholders of the Company
12,599
10,774
-36
Non-controlling interest
-
-
Profit (loss) for the reporting year
12,599
10,774
Basic and diluted earnings per share (in EUR)
11
1.05
0.90
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
5
Consolidated and separate statements of other comprehensive income
EUR ‘000
GROUP
COMPANY
2022
2021
EUR ‘000
2022
2021
Profit (loss) for the reporting year
12,599
10,774
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
12,599
10,774
Attributable to:
Shareholders of the Company
12,599
10,774
-36
Non-controlling interest
-
-
Total comprehensive income for the year
12,599
10,774
The notes on pages 10 to 73 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 2022
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 2021
22
3,463
3,301
1,167
346
18,954
27,231
Profit (loss) for the period
-
-
-
-
10,774
10,774
Other comprehensive income
-
-
-
-
-
-
Total comprehensive income
for the year
-
-
-
-
10,774
10,774
Depreciation, write-off of
revalued assets
-
-
-68
-
68
-
Transactions with owners
recognised directly in equity
Dividends
-
-
-
-
-955
-955
Total transactions with
owners recognised directly in
equity
-
-
-
-
-955
-955
Balance at 31 December 2021
22
3,463
3,301
1,099
346
28,841
37,050
Balance at 1 January 2022
22
3,463
3,301
1,099
346
28,841
37,050
Profit (loss) for the period
-
-
-
-
12,599
12,599
Other comprehensive income
-
-
-
-
-
-
Total comprehensive income
for the year
12
-
-
-
-
12,599
12,599
Depreciation, write-off of
revalued assets
-
-
-45
-
45
-
Transactions with owners
recognised directly in equity
Dividends
-
-
-
-
-2,389
-2,389
Total transactions with
owners recognised directly in
equity
-
-
-
-
-2,389
-2,389
Balance at 31 December 2022
22
3,463
3,301
1,054
346
39,096
47,260
The notes on pages 10 to 73 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 2022
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 2021
22
Comprehensive income for the year
Net profit (loss)
-36
Other comprehensive income
-
-
-
-
-
-
-
-
Total comprehensive income for the year
-36
Depreciation, write-off of revalued assets
-173
Transactions with owners recognised
directly in equity:
Dividends
-955
-955
-955
Change in fair value of put option
-53
-53
-53
Total transactions with owners
recognised directly in equity:
-1,008
-1,008
-1,008
Changes in the Group not resulting in a
loss of control
Non-controlling interests on acquisition of
subsidiary
Total transactions with owners
-1,008
-1,008
-892
At 31 December 2021
22
At 1 January 2022
22
Comprehensive income for the year
Net profit (loss)
Other comprehensive income
-
-
-
-
-
-
-
-
Total comprehensive income for the
year
Depreciation, write-off of revalued
assets
-106
Transactions with owners recognised
directly in equity:
Dividends
-2,389
-2,389
-2,389
Change in fair value of put option
Total transactions with owners
recognised directly in equity
-2,378
-2,378
-2,378
At 31 December 2022
The notes on pages 10 to 73 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 2022
8
Consolidated and separate statements of cash flows
EUR ‘000
GROUP
COMPANY
2022
2021
EUR ‘000
2022
2021
Cash flows from operating activities
Profit (loss) for the year
12,599
10,774
Adjustments for:
Depreciation of property, plant and equipment
1,793
1,804
Loss (gain) on change in fair value of investment
property
280
-375
Amortisation of intangible assets
9
13
-394
-590
Amortisation and write-off of grants
-165
-188
Change in inventory write-down allowance
521
37
Impairment of goodwill
-
-
-28
-11
Loss (gain) from disposal and write-off of property,
plant and equipment
29
-71
Losses (gain) from the transfer of investments
2
-
Other operating income
-3,931
-7,373
Income tax expenses
1,134
420
Finance costs, net
160
256
12,431
5,297
-10,461
-5,755
Change in inventories
-1,663
-1,648
-62
Change in non-current amounts receivable
108
-890
-4,159
-3,396
Change in trade and other receivables and prepayments
-8,070
-5,984
Change in trade and other payables
2,881
5,993
5,687
2,768
-393
-687
Interest paid
-178
-321
-222
Income tax paid
-
-
Net cash flows generated from operating activities
5,509
2,447
Cash flows from investing activities
-3,958
-1,474
Payments for acquisition of property, plant and
equipment
-3,384
-750
-17
Payments for acquisition of intangible assets
1
-7
Proceeds from sale of property, plant and equipment
8
341
Proceeds from the disposal of investments
63
-
Acquisition of ownership interest in subsidiary
-
-271
-800
-2,125
Loans granted
-800
-2,955
Government grants
-
-
Dividends received
1,000
2,571
Repayment of loans
1,361
1,044
-271
Outflow of cash to acquire subsidiary, net of cash
acquired
-
-
-3,301
-2,392
Net cash flows generated used in investing activities
-1,751
-27
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
9
Consolidated and separate statements of cash flows (continued)
EUR ‘000
GROUP
Note
COMPANY
2022
2021
EUR ‘000
2022
2021
Cash flows from financing activities
Proceeds from borrowings
23
669
1,951
-8,165
-7,058
Repayments of borrowings
23
-1,913
-2,500
-386
-535
Lease payments
-379
-533
-2,389
-914
Payment of dividends
-2,389
-914
-4,029
-4,032
Net cash flows generated from (used in)
financing activities
-4,012
-1,996
-178
Net increase (decrease) in cash and cash
equivalents
-254
424
Cash and cash equivalents as at 1 January
579
155
Cash and cash equivalents as at 31 December
21
325
579
The notes on pages 10 to 73 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 2022
10
Notes to the consolidated and separate financial statements
General information
The following companies are part of the Vilvi Group (hereinafter the “Group”):
• VILKYŠKIŲ PIENINĖ AB , a parent company (hereinafter the “Parent” or the “Company”);
• Modest AB, a subsidiary (hereinafter the “subsidiary Modest AB” or “Modest AB”);
• Kelmės Pieninė AB, a subsidiary (hereinafter the “subsidiary Kelmės Pieninė AB” or “Kelmės Pieninė
AB“).
• Kelmės Pienas UAB, a subsidiary of Kelmės pieninė AB (hereinafter the “Kelmės Pienas UAB).
• Pieno Logistika AB, a subsidiary of Kelmės pienas UAB (hereinafter “Pieno Logistika AB”).
• Baltic Dairy Board SIA, a subsidiary (hereinafter the “subsidiary Baltic Dairy Board SIA“ or “Baltic Dairy
Board SIA“).
VILKYŠKIŲ PIENINĖ AB is a Lithuanian company listed on Nasdaq OMX Vilnius AB stock exchange.
As at 31 December 2022, the Company’s shareholder structure was as follows:
Shareholder
Number of shares
held
Nominal value,
EUR
Total value, EUR
Swisspartners Versicherung AG
Zweigniederlassung Österreich
6,994,316
0.29
2,028,352
Multi Asset Selection Fund
2,035,729
0.29
590,361
Mr. Gintaras Bertašius
219,364
0.29
63,616
Other minority shareholders
2,693,591
0.29
781,141
Total capital
11,943,000
0.29
3,463,470
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
The Company’s ultimate controlling party is Mr Gintaras Bertašius and persons related to him .
As at 31 December 2022, Gintaras Bertašius held 219,364 shares of Vilkyškių pieninė AB granting 60.4
percent of voting rights at the general meeting of shareholders (a joint life insurance policy has been drawn
up with insurance company Swisspartners Versicherung AG Zweigniederlassung Österreich , which has taken
over ownership rights to 6,994,316 shares of AB Vilkyškių pieninė). As at 31 December 2021, he held 927,110
shares of Vilkyškių pieninė AB granting 58.55 percent of voting rights at the general meeting of shareholders
(since April 2018, ownership rights to 6,067,206 shares (50.8 per cent of total share capital and votes) of
Vilkyškių pieninė AB have been taken over by Swisspartners Versicherung AG Zweigniederlassung
Österreich).
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
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 2022. Kelmės Pieninė AB owns 100% of shares of Kelmės Pienas
UAB. . Kelmės Pienas UAB controls the subsidiary Pieno Logistika AB engaged in lease of buildings. Kelmės
Pienas UAB owns 58.9% of shares with voting rights in the subsidiary Pieno Logistika AB (31 December
2021: Vilkyškių Pieninė AB owned 58.9% of shares of 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 (31 December 2022
and 31 December 2021).
As at 31 December 2022, the Group had 884 (31 December 2021: 867) employees.
As at 31 December 2022, the Company had 462 (31 December 2021: 440) employees.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
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:
• buildings that are a part of property, plant and equipment and measured at fair value, less any
subsequent accumulated depreciation and impairment losses;
• 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 controls
an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the entity. 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 2022
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 2022
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 produced 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, they 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 future 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 2022
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:
• the provisions of the construction contract;
• the stage of completion;
• whether the project/property is standard (typical for the market) or non-standard;
• the level of reliability of cash inflows after completion;
• 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 2022
Notes to the consolidated and separate financial statements
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.
16
Intangible assets
Intangible assets with a finite useful life that are acquired by the Parent Company and its subsidiaries are
stated at cost less accumulated amortisation and impairment losses. Amortisation is recorded in the statement
of profit or loss on a straight-line basis over the useful life of 3 years.
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.
Summary of significant accounting policies (continued)
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
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:
• 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;
• 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 2022
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 2022 or 31 December 2021, 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 2022
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 dividends 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 can 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 2022
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 unlisted 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 different 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 presented
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 2022
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 cash 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 2022
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:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payment that are based on an index or a rate, initially measured using the index or rate as at
the commencement date
• amounts expected to be payable by the group under residual value guarantees
• 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:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs incurred by a lessee; and
• 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 2022
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 recognised 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 also 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 2022
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 Company also pays 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 recognised 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 2022
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.
a) The following amendments to standards have been endorsed by the EU and effective from 1 January
2022
The Company adopted the following amendments to standards with effect from 1 January 2022
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
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)
- 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).
- Covid-19-Related Rent Concessions – Amendments to IFRS 16 (issued on 31 March 2021 and effective
for annual periods beginning on or after 1 April 2021).
The Company and the Group have assessed the impact of the amendments and concluded that they have no
impact on their financial statements.
b) The following new standards and amendments are not yet effective, but have been endorsed by
the EU
A number of amendments to new standards and interpretations are effective for annual periods beginning on
1 January 2023 and have not been adopted in the preparation of these 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.
- Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12
February 2021 and effective for annual periods beginning on or after 1 January 2023).
- Amendments to IAS 8: Definition of Accounting Estimates (issued on 12 February 2021 and effective for
annual periods beginning on or after 1 January 2023).
- Deferred tax related to assets and liabilities arising from a single transaction – Amendments to IAS 12
(issued on 7 May 2021 and effective for annual periods beginning on or after 1 January 2023).
- IFRS 17 "Insurance Contracts" (issued on 18 May 2017 and effective for annual periods beginning on or
after 1 January 2023).
- Amendments to IFRS 17 and an amendment to IFRS 4 (issued on 25 June 2020 and effective for annual
periods beginning on or after 1 January 2023).
- Transition option to insurers applying IFRS 17 – Amendments to IFRS 17 (issued on 9 December 2021
and effective for annual periods beginning on or after 1 January 2023).
- Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (issued on 22 September 2022
and effective for annual periods beginning on or after 1 January 2024).
- Classification of liabilities as current or non-current – Amendments to IAS 1 (originally issued on 23
January 2020 and subsequently amended on 15 July 2020 and 31 October 2022, ultimately effective for
annual periods beginning on or after 1 January 2024).
The Company and the Group are currently assessing the impact of the amendments.
c) The following standards have been issued, but not yet endorsed by the EU
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.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
27
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
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.
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 and intangible assets
The Company and the Group did not identify any impairment indications in respect of property, plant and
equipment as at 31 December 2022 and 2021, 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
2022 and 2021 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’.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
28
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
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.
Financial risk management
The use of the financial instruments exposes the Group and the Company to the following risks:
•
credit risk;
•
liquidity risk;
•
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:
• limit,
• guarantees,
• insurance.
The Group and the Company have insurance for their sales to foreign clients under the credit insurance
agreement concluded with the company Euler Hermes for the term of two years. On November 2022, 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.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
29
Notes to the consolidated and separate financial statements
Summary of significant accounting policies (continued)
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.
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 ‘Financial
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 2022
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.
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:
1. Cheese, cheese products and other. The segment comprises cheese, cheese products, cream, and liquid
whey that stays during the process of cheese production;
2. Dry milk products. The segment comprises WPC, skimmed-milk, permeate, whey and GOS powder
produced by the subsidiaries;
3. 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.
Results of operations of the operating segments at 31 December 2022:
GROUP
EUR ‘000
Cheese, cheese
products and
other
Dried milk
products
Fresh milk
products
Total
Revenue
170,589
36,630
26,864
234,083
Cost of sales
-152,498
-33,414
-23,897
-209,809
Gross profit
18,091
3,216
2,967
24,274
Other operating income
313
Distribution, administrative and other
operating expenses
-9,755
Impairment of goodwill
-
Other gain (loss) – net
89
Operating result
14,921
Finance income
127
Finance costs
-868
Finance costs, net
-741
Profit (loss) before income tax
14,180
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
31
Notes to the consolidated and separate financial statements
Notes (continued)
1 Segment information (continued)
In 2022, gross profit of the Group‘s operating segment Cheese, cheese products and other increased by EUR
8,262 thousand compared to 2021 due to higher demand and price for cream and overall growth of export prices.
In 2022 gross profit of dry milk products decreased due to higher prices of raw materials and energy.
Results of operations of the operating segments at 31 December 2021:
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
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 2022 and 2021 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 2022:
EUR ‘000
Revenue
Assets
Lithuania
26,751
80,468
European Union (excluding Lithuania)
132,771
10,515
Other countries
74,561
7,480
234,083
98,463
Disclosure by geographical location in 2021:
EUR ‘000
Revenue
Assets
Lithuania
21,748
73,288
European Union (excluding Lithuania)
80,647
10,237
Other countries
53,650
4,449
156,045
87,974
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
32
Notes to the consolidated and separate financial statements
Notes (continued)
1 Segment reporting (continued)
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
2022
2021
2022
2021
-168,220
-107,460
Raw materials
-147,779
-95,156
-
-
Resale cost of goods produced by the subsidiaries
-105,268
-77,455
-9,916
-8,213
Employee expenses, including social security contributions
-3,323
-2,855
-3,750
-3,818
Depreciation and grants’ amortisation
-1,117
-1,148
-5,922
-4,872
Milk collection and transportation costs
-5,758
-4,853
-14,186
-8,150
Gas, electricity, water
-3,844
-2,227
-2,205
-1,590
Transport costs
-2,205
-1,590
-5,610
-4,746
Other
-2,154
-2,127
-209,809
-138,849
-271,448
-187,411
As at 31 December 2022 the Group’s and the Company’s inventory write-down to net realizable value
amounted to EUR 2,593 thousand and EUR 521 thousand, respectively. In 2021 there was no write-down to
net realizable value.
3 Other operating income (EUR ’000)
GROUP
COMPANY
2022
2021
2022
2021
89
119
Income from rendering of services
7,300
3,341
-
-
Dividends
3,931
7,371
16
16
Income from accounting services
197
183
-
32
Income from transport services rendered to other entities
-
18
-
32
Amounts due not yet claimed
-
32
208
29
Other income
164
14
313
228
11,592
10,959
4 Other operating expenses (EUR ’000)
GROUP
COMPANY
2022
2021
2022
2021
-82
-41
Cost of services rendered
-6,950
-2,907
-97
-77
Other expenses
-1
-1
-179
-118
-6,951
-2,908
5 Other gain (loss) – net (EUR ’000)
GROUP
COMPANY
2022
2021
2022
2021
89
45
Gain (loss) from disposal of raw materials, non-current
assets
35
44
-
-
Gain (loss) from fair value change of investment property
-280
375
89
45
-245
419
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
33
Notes to the consolidated and separate financial statements
Notes (continued)
6 Distribution expenses (EUR ’000)
GROUP
COMPANY
2022
2021
2022
2021
-1,530
-1,197
Logistics and transport services
-1,332
-1,064
-499
-342
Marketing and advertising services
-446
-326
-1,126
-967
Personnel expenses, including social security contributions
-1,126
-967
-65
-63
Depreciation expenses
-48
-46
-929
-598
Other selling expenses
-891
-584
-4,149
-3,167
-3,843
-2,987
7 Administrative expenses (EUR ’000)
GROUP
COMPANY
2022
2021
2022
2021
-2,441
-1,802
Personnel expenses, including social security
contributions and change in vacation reserve
-1,822
-1,376
-140
-123
Depreciation and amortisation, including amortisation
of subsidies
-92
-126
-393
-458
Services received
-175
-201
-242
-193
Taxes, other than income tax
-179
-168
-126
-125
Veterinary services
-80
-79
-210
-235
Consultation services
-151
-150
-
-37
Inventory write-down, reversal
-
-37
-142
-123
Security
-54
-47
-22
-86
Fines and interest paid on late payments
-9
-10
-52
-94
Write-off of bad debt expenses
-52
-94
-205
-145
Computer expenses
-194
-133
-85
-59
Fuel
-46
-31
-66
-35
Repair expenses
-55
-25
-44
-36
Fee for membership in association
-44
-36
-31
-30
Stock exchange expenses
-29
-27
-132
-65
New product development expenses
-98
-2
-99
-45
Insurance
-52
-21
-23
-21
Bank charges
-18
-18
-974
-589
Other
-705
-483
-5,427
-4,301
-3,855
-3,064
In 2022, the Group’s and the Company’s social security contributions payable by an employer amounted to
EUR 420 thousand and EUR 160 thousand, respectively (2021: EUR 307 thousand and EUR 135 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 2022 (EUR ’000)
GROUP
COMPANY
Audit of the financial statements under the agreements
94
65
Other services
2
1
Total
96
66
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
34
Notes to the consolidated and separate financial statements
Notes (continued)
9 Finance costs, net (EUR ’000)
GROUP
COMPANY
2022
2021
2022
2021
Finance income
19
178
Interest
87
179
95
-
Foreign exchange gain
95
-
13
31
Other
11
29
127
209
Total finance income
193
208
Finance costs
-671
-987
Interest
-162
-299
-17
-15
Interest on lease
-17
-15
-119
-121
Factoring charges
-116
-121
-
-
Foreign exchange loss
-
-
-61
-64
Other
-58
-29
-868
-1,187
Total finance costs
-353
-464
-741
-978
-160
-256
10 Income tax expenses (EUR ’000)
Recognised in profit or loss
GROUP
COMPANY
2022
2021
2022
2021
Current year income tax expenses
-386
-179
Reporting period
-146
-
Deferred income tax expenses
-1,095
-477
Change in deferred income tax
-988
-420
-1,481
-656
-1,134
-420
Reconciliation of effective income tax rate (EUR ’000)
GROUP
COMPANY
2022
2021
2022
2021
14,180
6,156
Profit for the year
13,733
11,194
2,127
923
Income tax calculated at a rate of -15%
2,060
1,679
-
443
Gain from inter-company disposal of business
-
-
-
-
Dividend income
-589
-1,106
-27
-246
Other non-taxable income
-2
-8
-
412
Impairment of goodwill
-
-
-17
-5
Charity expenses deductible twice for tax
purposes
-16
-4
-40
-56
R&D expenses deductible thrice for tax
purposes
-
-
-592
-727
Investment project relief
-363
-174
-86
-107
Tax loss carry forward
-
-
402
93
Other expenses not deductible for tax purposes
44
33
-286
-74
Other expenses deductible for tax purposes
-
-
1,481
656
Income tax expenses (benefit)
1,134
420
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
35
Notes to the consolidated and separate financial statements
Notes (continued)
Income tax expenses (continued)
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
2022
2021
2022
2021
12,511
5,536
Net profit attributable to holders of ordinary
shares of the Parent, EUR ‘000
12,599
10,774
11,943
11,943
Number of issued shares calculated based
on the weighted average unit cost method,
in thousands
11,943
11,943
Basic earnings (loss) per share (EUR)
1.05
0.90
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 2022
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 2021
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
Balance at 31 December 2021
1,986
19,438
61,470
3,684
355
86,933
Balance at 1 January 2022
1,986
19,438
61,470
3,684
355
86,933
Additions
335
26
442
150
3,383
4,336
Disposals
-
-133
-114
-27
-
-274
Reclassifications
-475
71
710
8
-314
-
Balance at 31 December 2022
1,846
19,402
62,508
3,815
3,424
90,995
Depreciation and impairment losses
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
Balance at 1 January 2022
878
4,025
29,675
2,476
-
37,054
Depreciation charge for the year
211
679
3,523
300
-
4,713
Impairment
-
-
-
-
-
-
Disposals
-
-91
-104
-24
-
-219
Reclassifications
-325
-
325
-
-
-
Balance at 31 December 2022
764
4,613
33,419
2,752
-
41,548
Net book amounts
At 1 January 2021
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
At 31 December 2022
1,082
14,789
29,089
1,063
3,424
49,447
* For more details on right-of-use assets, see Note 13.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
37
Notes to the consolidated and separate financial statements
Notes (continued)
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 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
(a)
Balance at 31 December 2021
2,015
6,792
22,133
1,373
237
32,550
Balance at 1 January 2022
2,015
6,792
22,133
1,373
237
32,550
Additions
289
-
248
48
3,157
3,742
Increase in value
-
-
-
-
-
-
Disposals
-
-80
-97
-7
-
-184
Reclassifications
-476
8
487
-
-83
-64
Balance at 31 December 2022
1,828
6,720
22,771
1,414
3,311
36,044
Depreciation and impairment losses
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
Balance at 1 January 2022
886
1,626
16,620
1,199
-
20,331
Depreciation charge for the year
215
274
1,256
48
-
1,793
Impairment
2
-
-
-
-
2
Disposals
-
-80
-97
-7
-
-184
Reclassifications
-325
-
325
-
-
-
Balance at 31 December 2022
778
1,820
18,104
1,240
-
21,942
Net book amounts
At 1 January 2021
960
6,487
6,310
157
242
14,156
At 31 December 2021
1,129
5,166
5,513
174
237
12,219
At 31 December 2022
1,050
4,900
4,667
174
3,311
14,102
* For more details on right-of-use assets, see Note 13.
(a) 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 2022
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 9,753 thousand as at 31 December 2022 (31 December
2021: EUR 11,503 thousand);
- production plant and machinery, fixtures and equipment with the net book amount of EUR 24,382
thousand as at 31 December 2022 (31 December 2021: EUR 28,561 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 3,640 thousand as at 31 December 2022 (31 December
2021: EUR 3,344 thousand);
- production plant and machinery, fixtures and equipment with the net book amount of EUR 3,792
thousand as at 31 December 2022 (31 December 2021: EUR 4,786 thousand) (Note 23).
The acquisition cost of the Group’s property, plant and equipment fully depreciated but still in use amounted
to EUR 12,540 thousand as at 31 December 2022 (31 December 2021: EUR 14,002 thousand).
The acquisition cost of the Company’s property, plant and equipment fully depreciated but still in use
amounted to EUR 11,365 thousand as at 31 December 2022 (31 December 2021: EUR 8,281 thousand).
Depreciation
Depreciation was included in the following line items:
GROUP
COMPANY
2022
2021
EUR ‘000
2022
2021
4,517
4,583
Cost of finished products
1,543
1,525
196
205
Distribution and administrative expenses
131
159
-
-
Other operating expenses
119
120
4,713
4,788
1,793
1,804
Valuation of buildings
The Group and the Company account for the buildings at a revalued amount, less subsequent accumulated
depreciation and impairment.
In 2022, 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 2022, 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 2022. The value of general-purpose buildings 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
2022, 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 2022. As at 31 December 2022, the net book amount of those buildings was EUR 5,404
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 over 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 2022.
The valuation of other buildings of the Group and the Company, the fair value of which was not determined in
2022, was performed on 23 September 2021 (the Group‘s buildings attributed to the operating segment of dry
milk products) and on 1 December 2020.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
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 2020. In 2022, 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 2022, the net value of the Group’s revaluation reserve amounted to EUR 1,722 thousand
(31 December 2021: EUR 1,828 thousand). As at 31 December 2022, the net value of the Company’s
revaluation reserve amounted to EUR 1,054 thousand (31 December 2021: EUR 1,099 thousand).
If the Group’s buildings were accounted at cost, their net book amount would be EUR 9,115 thousand
(revalued amount would be EUR 11,077 thousand) as at 31 December 2022 (31 December 2021: net book
amount – EUR 9,388 thousand, revalued amount – EUR 11,473 thousand).
If the Company’s buildings were accounted at cost, their net book amount would be EUR 2,663 thousand
(revalued amount would be EUR 3,817 thousand) as at 31 December 2022 (31 December 2021: net book
amount – EUR 2,776 thousand, revalued amount – EUR 3,978 thousand).
13 Leases
Amounts recognised in profit or loss were as follows:
EUR ‘000
GROUP
COMPANY
2022
2021
2022
2021
211
217
Depreciation of right-of-use assets
215
217
-
28
Impairment of right-of-use assets
2
28
18
15
Interest expenses (included in finance costs)
17
15
34
41
Expenses related to short-term leases (included in cost of
sales and general and administrative expenses)
27
40
67
49
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)
15
13
37
46
Expenses related to variable lease payments not included
in lease liabilities (included in cost of sales, general and
administrative expenses, other operating expenses)
37
46
367
396
313
359
Movements in right-of-use assets during 2022 and 2021 are disclosed in Note 12.
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 2022
40
Notes to the consolidated and separate financial statements
Notes (continued)
14 Investment property
EUR ‘000
2022
2021
Balance at 1 January
6,780
5,395
Additions
64
-
Disposals
-37
-
Net gain/(loss) on fair value adjustment
-280
375
Reclassification from/(to) inventories and owner-occupied PP&E
-
1,010*
Balance at 31 December
6,527
6,780
(*) 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 7 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 2022
At 31
December 2021
Hierarchy level 2 (a)
1,614
1,546
Hierarchy level 3 (b)
4,913
4,161
6,527
5,707
Assets with no fair value determined (c)
-
1,073
6,527
6,780
(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 2022 by an independent property valuation corporation Matininkai
UAB (the same method was applied on 1 December 2021). 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 valuation performed on 1 December 2022 by
an independent property valuation corporation Matininkai UAB.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
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 present 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 15.5%
(2021:12.19%). Key assumptions used in calculation of value of in use were as follows:
• Future cash flows are estimated based on historical experience and 2022-2027 business forecasts based on
the existing long-term contracts with the consumers of the products, and the expected expansion of sales
(production) in view of growth in demand for whey processing products on a domestic and global markets.
• 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 capital expenditures will be up to 40% during 2023-
2027 for renovation of old property.
The same method was applied on 1 December 2021.
(c) 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. In 2022 a value was determined for all investment property.
Minimum lease payments receivable on lease of investment property:
EUR ‘000
31 12 2022
31 12 2021
Within one year
293
292
Between 1 and 5 years
878
832
After 5 years
-
-
1,171
1,124
In 2022, the Company‘s rental income amounted to EUR 293 thousand (2021: EUR 292 thousand). Rental
income is included in other operating income.
There were no direct operating expenses from investment property that generated rental income during 2022
and 2021.
The Company‘s investment property with the carrying amount of EUR 6,527 thousand as at 31 December 2022
(31 December 2021: EUR 6,780 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 2022
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 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
Balance at 1 January 2022
6,915
546
17
7,478
Additions
-
-
-
-
Disposals
-
-
-
-
Reclassifications
-
-
-
-
Balance at 31 December 2022
6,915
546
17
7,478
Amortisation and impairment
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
Balance at 1 January 2022
2,749
533
10
3,292
Amortisation charge for the year
-
11
-
11
Disposals
-
-
-
-
Impairment
-
-
-
-
Balance at 31 December 2022
2,749
544
10
3,303
Net book amounts
At 1 January 2021
6,915
15
5
6,935
At 31 December 2021
4,166
13
7
4,186
At 31 December 2022
4,166
2
7
4,175
Amortisation charge for the year was included in administrative expenses.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
43
Notes to the consolidated and separate financial statements
Notes (continued)
15 Intangible assets (continued)
COMPANY
EUR ‘000
Goodwill
Computer
software
Other intangible
assets
Total
Cost
Balance at 1 January 2021
-
654
12
666
Additions
-
2
5
7
Disposals
-
-
-
-
Reclassifications
-
-
-
-
Balance at 31 December 2021
-
656
17
673
Balance at 1 January 2022
-
656
17
673
Additions
-
-
-
-
Disposals
-
-
-
-
Reclassifications
-
-
-
-
Balance at 31 December 2022
-
656
17
673
Amortisation and impairment
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
Balance at 1 January 2022
-
646
13
659
Amortisation charge for the year
-
8
1
9
Disposals
-
-
-
-
Balance at 31 December 2022
-
654
14
668
Net book amounts
At 1 January 2021
-
18
2
20
At 31 December 2021
-
10
4
14
At 31 December 2022
-
2
3
5
Amortisation charge for the year was included in administrative expenses.
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 2022
31 12 2021
Kelmės Pienas UAB (fresh milk products)*
3,867
3,867
Modest AB (cheese, cheese products)
299
299
4,166
4,166
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
44
Notes to the consolidated and separate financial statements
Notes (continued)
15 Intangible assets (continued)
* 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 2022. 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:
• 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% (2021: growth rate of 1%).
• 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 15.5% (2021: 12.18%).
• The projected revenue increase by 5% in 2023 compared to 2022 (see table below). According to
Lithuanian economists, the growth of the local economy will be slower in 2023, but Vilvi group's
forecasted revenue from fresh products will increase because:
➢ a favorable basket of fresh products is selected;
➢ purposeful diversion of fresh dairy products to export markets;
➢ larger production of those products with higher profitability is planned.
Therefore, it is forecasted to process up to 9 percent more raw milk in 2023, compared to 2022. A 15%
decrease in the price of raw milk compared to 2022 is projected (based on external data).
• According to the management, in 2023 the active work with export markets and the redistribution of
the product structure will offset the expected decrease in price level in 2023;
• The revenue growth is expected to be 5 percent in 2023-2024 and 2 percent in 2025-2027. Revenue
growth is expected due to the expected increase in production volumes, the introduction of new
products to the market and expansion into new markets.
The projected revenue from sales of fresh milk products (EUR ‘000):
Financial year
2022
2023
2024
2025
2026
2027
Revenue
26,819
28,160
29,568
30,046
30,508
31,208
Projected growth rate
-%
5.0%
5.0%
2.0%
2.0%
2.0%
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
45
Notes to the consolidated and separate financial statements
Notes (continued)
15 Intangible assets (continued)
• The projected increase in gross profit margin in 2023 is 3.6 p.p. (up to 12.3%). The forecasted gross
profit will increase from EUR 2,352 thousand to EUR 3,470 thousand (47.5%). The gross profit
margin is expected to increase due to lower prices of raw materials, and decreasing energy costs:
- 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 decrease in 2023 compared to 2022.
- Decrease of energy costs. There was a sharp increase in energy prices in spring throughout to autumn
2022, which resulted in a high level of energy prices. Because the energy costs stabilized during the
fourth quarter of 2022, lower energy costs are expected in 2023.
- Growth of payroll costs. Based on the market forecast, salaries are expected to grow by 5% in 2023.
Since, according to the management, the selling prices of production will fall more slowly, the level of raw
materials and energy prices will be lower and will not reach such heights as they were in 2022, it is projected
that gross profit margin will increase in 2023.
• During 2023-2027, capital expenditures of EUR 160 thousand are projected annually to support
production-technological assets. When calculating the terminal value (capitalising the last activity
flows), the amount of deducted capital expenditures is equal to the aggregate amount of depreciation
of capital expenditures.
• The basic components of working capital: required inventory, trade receivables and trade payables are
taken as the factual amounts at the end of 2022. Subsequently (starting from 2023), the required
working capital is calculated in view of the production growth and the required inventory, trade
receivables and trade payables, as a proportionate share of the cost of sales and revenue.
The sensitivity analysis of the recoverable amount of the investment in Kelmės Pienas UAB shows the effects
of the change in the assumptions used in the impairment test on the evaluation result:
• If the budgeted gross profit margin used in the value in use calculation for Kelmės Pienas UAB had
been 3% lower than management’s estimates at 31 December 2022, no impairment of goodwill would
have been recognized for the Group. A reasonably possible change of 3% reduction in budgeted gross
profit margin represents a reasonably possible increase in raw milk price of 1 %.
• If the pre-tax discount rate applied to the cash flow projections of Kelmės Pienas UAB had been 1%
higher than management’s estimates (16.5% instead of 15.5%), no impairment of goodwill would have
been recognized for the Group.
Based on the above assumptions, the calculated recoverable amount of the cash-generating unit was higher
than the carrying amount, and therefore, no impairment of goodwill was recognized.
In 2021, EUR 2,749 thousand impairment of goodwill was recognised for fresh product activities . In 2021,
the results showed that the selling prices of fresh products decreased as compared to 2020, while the price of
the main raw material used for the production of products (i.e. milk) increased significantly.
Key assumptions used in the calculation of the recoverable amount in 2021 were as follows:
• 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%).
• 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%.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
46
Notes to the consolidated and separate financial statements
Notes (continued)
15 Intangible assets (continued)
• 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 more moderate economic growth the sales volume
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 the projected sales volume on revenue.
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:
• 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% (2021: growth rate of 1%).
• 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 15.5% (2021: 12.18%).
• Based on the budget prepared by management for Modest AB, revenue budgeted for 2023 amounts to
EUR 40,896 thousand. Compared to 2022, revenue is expected to decrease by 15%. Annual revenue
growth of 15% is expected during 2025-2027.
• During 2023, gross profit margin is expected to decrease by 2.2 p.p. compared to 2022 because of
decreasing price levels in export markets. During 2024-2027 gross profit margin is expected to remain
at the level of 2022, and it is expected to reach 5.3% during the entire forecast period. The projected
EBITDA margin ranges between 5.13% and 5.38% during the entire forecast period.
• During 2023-2027 capital expenditure of EUR 100 thousand is planned annually for the maintenance
of production-technological assets. When calculating the terminal value (capitalization of the last
activity flow), the amount of deductible capital expenditure is equated to aggregate amount of
depreciation of capital expenditure.
• The working capital requirement is calculated taking into account production growth and the
corresponding inventory requirement as a proportion of the cost price. This assumes that the effect of
current liabilities on working capital is neutral.
Based on these assumptions, the recoverable amount of the cash-generating unit calculated for Modest AB
exceeded the carrying amount, and no impairment was recognized. A sensitivity analysis for key assumptions
is not presented, as a reasonable change therein will have no significant impact on the estimated value of
goodwill.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
47
Notes to the consolidated and separate financial statements
Notes (continued)
16 Investments in subsidiaries
EUR ‘000
31 12 2022
31 12 2021
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
Cost of shares of Baltic Dairy Board SIA
271
271
10,918
10,984
The Company acquired control over Modest AB in 2006. The ownership interest held by the Company was
99.7% as at 31 December 2022 (31 December 2021: 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 2022 (31 December 2021: 100%).
On 1 April 2021, Vilkyškių Pieninė AB completed the acquisition transaction of 70% of shares in Baltic Dairy
Board SIA.
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 owned 70% of Baltic Dairy Board SIA as at 31 December 2022 and
2021.
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.
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 2022 (and 31 December 2021), there were no indications of impairment for investments
in subsidiaries.
Key financial indicators of Pieno Logistika AB:
EUR ’000
31 12 2022
31 12 2021
Total assets
174
177
Shareholders’ equity
105
109
Net profit (loss)
-4
-2
Key financial indicators of Modest AB:
EUR ’000
2022.12.31
2021.12.31
Total assets
15,409
10,746
Shareholders’ equity
5,053
3,702
Net profit (loss)
1,351
1,244
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
48
Notes to the consolidated and separate financial statements
Notes (continued)
16 Investments in subsidiaries (continued)
Key financial indicators of Kelmės Pieninė AB:
EUR ’000
2022.12.31
2021.12.31
Total assets
30,645
29,193
Shareholders’ equity
5,303
8,473
Net profit (loss)
761
6,893
Key financial indicators of Baltic Dairy Board SIA:
EUR ’000
31 12 2022
31 12 2022
Total assets
7,913
7,760
Shareholders’ equity
1,128
510
Net profit (loss)
618
-185
17 Non-current amounts receivable (EUR ’000)
GROUP
COMPANY
31 12 2022
31 12 2021
Note
31 12 2022
31 12 2021
Financial instruments
-
13
29
Loans granted to related parties (a)
897
843
-
13
897
843
Non-financial assets
-
214
29
Prepayments made to related parties (b)
-
214
111
59
Non-current amounts receivable
from farmers (c)
111
59
-
2
Other non-current amounts receivable
-
-
111
275
111
273
111
288
1,008
1,116
(a) In December 2021, ae loan was granted to the subsidiary Baltic Dairy Board SIA. As at 31 December
2022, the outstanding balance of the loan was EUR 830 thousand (31 December 2021: EUR 830 thousand)
and interest was EUR 67 thousand (31 December 2021: zero). The loan is to be repaid by 31 January 2024.
(b) 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.
18 Inventories (EUR ’000)
GROUP
COMPANY
31 12 2022
31 12 2021
31 12 2022
31 12 2021
21,063
13,656
Finished products
7,709
6,662
21,063
13,656
7,709
6,662
449
349
Raw materials
158
64
3,661
3,208
Consumables
1,321
1,251
320
343
Work in progress
-
-
-
69
Non-current assets held
for sale
-
69
25,493
17,625
9,188
8,046
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
49
Notes to the consolidated and separate financial statements
Notes (continued)
Inventories (continued)
Raw materials include milk and other materials used in the production.
As at 31 December 2022, the Group’s materials (packaging, auxiliary materials, etc.) written down to net
realisable value amounted to EUR 37 thousand (31 December 2021: EUR 37 thousand).
As at 31 December 2022, the Company’s materials (tare, packaging, auxiliary materials, etc.) written down to
net realisable value amounted to EUR 37 thousand (31 December 2021: EUR 37 thousand).
The write-down of inventories (finished products) to net realisable value and its reversal are accounted for in
the cost of sales.
As at 31 December 2022,, the Group's and the Company's inventories (finished products) written down to net
realisable value amounted to EUR 2,593 thousand and EUR 521 thousand, respectively. (In 2021 there was
no write-down to net realisable value).
As at 31 December 2022, all inventories of the Group and the Company (cheese, cheese products and other,
dry milk products and fresh milk products) were pledged to the financial institutions (as at 31 December 2022,
the net book amount of the Group’s and the Company’s inventories was EUR 25,493 thousand and EUR 9,188
thousand, respectively. In 2021, the net book amount of inventories pledged as collateral was up to EUR 7,404
thousand for the Group, and up to EUR 4,448 thousand for the Company) (Note 23).
19 Trade and other receivables (EUR ’000)
GROUP Note
31 12 2022
31 12 2021
Trade receivables
14,133
10,630
Impairment losses
-99
-59
Trade receivables from related parties
30
-
Loans granted to related parties, including interest
charged and administration fee
29
928
1,640
Financial assets
14,992
12,211
Taxes receivable (other than income tax)
2,764
2,025
Other receivables from related parties
-
12
Other receivables
119
23
Total trade and other receivables
17,875
14,271
COMPANY
31 12 2022
31 12 2021
Trade receivables
13,808
10,498
Impairment losses
j
-99
-59
Trade receivables from related parties
29
8,762
4,556
Loans granted to related parties, including interest
charged and administration fee
29
928
1,639
Financial assets
23,399
16,634
Taxes receivable (other than income tax)
2,665
1,954
Other receivables from related parties
29
1,631
12
Other receivables
100
-
Total trade and other receivables
27,795
18,600
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
50
Notes to the consolidated and separate financial statements
Notes (continued)
19 Trade and other receivables (continued)
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 2022, all receivables of the Group and the Companywere pledged as collateral (31
December 2021: EUR 50 thousand) (Note 28).
The Group’s and the Company’s exposure to credit and foreign 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 2022
31 12 2021
Note
31 12 2022
31 12 2021
544
600
(a)
Prepayments
399
434
197
22
29
Prepayments to related
parties
197
22
741
622
596
456
(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 2022
31 12 2021
31 12 2022
31 12 2021
596
764
Cash at bank
301
545
25
35
Cash on hand
24
34
621
799
325
579
As at 31 December 2022, 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.
22 Capital and reserves
As at 31 December 2022 and 2021, 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.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
51
Notes to the consolidated and separate financial statements
Notes (continued)
Capital and reserves (continued)
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 2022, the Company’s and
the Group’s legal reserve amounted to EUR 346 thousand (31 December 2021: 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 2022, dividends of EUR 0.20 per share were paid out to the shareholders (2021: dividends of EUR 0.08 per
share were paid out to the shareholders).
23 Borrowings and lease liabilities
GROUP
COMPANY
31 12 2022
31 12 2021
Note
31 12 2022
31 12 2021
12,978
17,050
Non-current borrowings 28, 29
1,499
2,285
399
403
Lease liabilities 13
374
414
13,377
17,453
Non-current
1,873
2,699
9,238
6,420
Current bank borrowings and other
borrowings 28, 29
3,483
3,941
314
290
Lease liabilities 13
309
301
9,552
6,710
Current
3,792
4,242
22,929
24,163
Total borrowings and lease liabilities
5,665
6,941
As at 31 December 2022, under the agreements signed with the banks the Company’s and the Group’s balance
of undrawn short-term credit limits amounted to EUR 465 thousand (2021: the Company’s and the Group’s
balance of undrawn short-term credit limits amounted to EUR 1,134 thousand). As at 31 December 2022, the
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
52
Notes to the consolidated and separate financial statements
Notes (continued)
Borrowings and lease liabilities (continued)
Company and the Group had no long-term credit limits, but the Company had an undrawn balance of a long-
term credit limit from Swedbank AB amounting to EUR 7,408 thousand (for the purchase of production
equipment). 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 overdraft are as follows: 6-month EURIBOR + 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 2022
31 12 2021
31 12 2022
31 12 2021
9,238
6,420
Within 1 year
3,483
3,941
12,978
17,050
Between 1 and 5 years
1,499
2,285
22,216
23,470
4,982
6,226
In 2022, the Group’s borrowings were subject to annual effective interest rate of 3.0% (2021: 4.15%).
In 2022, the Company’s borrowings were subject to annual effective interest rate of 3.16% (2021: 4.52%).
Lease liabilities (EUR ‘000):
GROUP
COMPANY
31 12 2022
31 12 2021
31 12 2022
31 12 2021
314
290
Within 1 year
309
301
399
403
Between 1 and 5 years
374
414
713
693
683
715
The right-of-use assets recognised in relation to lease liabilities is disclosed in Notes 12 and 13.
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 2022
301
414
2,206
1,735
2,285
6,941
Cash inflows - proceeds from
borrowings
-
-
-
669
-
669
Cash outflows - repayments of
borrowings
-
-
-1,913
-
-
-1,913
Additions - lease
-
347
-
-
-
347
Repayments – lease
-379
-
-
-
-
-379
Other non-cash changes
(reclassification of current/non-current
portion, impairment, write-offs)
387
-387
786
-
-786
-
At 31 December 2022
309
374
1,079
2,404
1,499
5,665
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
53
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 2022
290
403
4,685
1,735
17,050
24,163
Cash inflows - proceeds from
borrowings
-
-
4,642
669
1,600
6,911
Cash inflows – loan offsetting
-
-
-
-
-
-
Cash outflows - repayments of borrowings
-
-
-3,872
-
-4,293
-8,165
Additions - lease
13
393
-
-
-
406
Repayments – lease
-386
-
-
-
-
-386
Other non-cash changes
(reclassification of current/non-current
portion, impairment, write-offs)
397
-397
1,379
-
-1,379
-
At 31 December 2022
314
399
6,834
2,404
12,978
22,929
*Borrowings acquired on business combination
(Note 16).
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 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 (loan
repayment offset against amounts
receivable)
522
-582
786
-
-786
-60
At 31 December 2021
301
414
2,206
1,735
2,285
6,941
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 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
*Loans acquired in a business combination (see Note 16).
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
54
Notes to the consolidated and separate financial statements
Notes (continued)
24 Government grants
EUR ’000
GROUP
COMPANY
31 12 2022
31 12 2021
31 12 2022
31 12 2021
4,125
4,664
Opening net book amount
685
873
13
51
Grants received
-
-
-
-
Grant receivable
-
-
-456
-486
Amortisation recognised in profit or loss and
write-off of grants
-165
-188
61
-104
Write-off of grants upon disposal of assets
-
-
3,743
4,125
Closing net book amount
520
685
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 2014-2021 programme financed from the EU funds, the Group received support of EUR 3.98 million
during 2018-2020 for the acquisition of the technological lines intended for the production of dry whey milk
products. The support is amortised in proportion to the depreciation of the related assets.
On 8 July 2021, 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 2020–2022, the amount used from the support was EUR 208 thousand (out of which EUR 123
thousand was used in 2020-2021), whereof the grant for non-current assets amounted to EUR 60 thousand.
In December 2022 Vilkyškių Pieninė AB and National Paying Agency under the Ministry of Agriculture
signed an agreement for the project No Nr. 17PP-KT-22-1-04217-PR001 Lithuanian Rural Development
Programme 2014-2020 measure "Investments in tangible assets" of the activity area "Support for investments
in the processing, marketing and/or development of agricultural products". The company has been allocated
up to EUR 1 million for the implementation of this project.
25 Non-current trade and other amounts payable
GROUP
COMPANY
31 12 2022
31 12 2021
EUR ‘000
31 12 2022
31 12 2021
42
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 option. The put
option was accounted for at the present value of redemption amount within non-current liabilities and equity
of the Company. It was determined that the fair value of put option amounted to EUR 42 thousand as at 31
December 2022 (EUR 53 thousand in 2021).
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
55
Notes to the consolidated and separate financial statements
Notes (continued)
26 Deferred income tax assets (liabilities)
Deferred income tax assets and liabilities calculated using a 15% tax rate in 2022 (2021: 15%) relate to the
following line items:
COMPANY
Assets
Liabilities
Net value
EUR ‘000
31 12 2022
31 12 2021
31 12 2022
31 12 2021
31 12 2022
31 12 2021
Property, plant and
equipment
-
-
1,741
1,832
1,741
1,832
Vacation reserve
-174
-117
-
-
-174
-117
Inventories
-84
-6
-
-
-84
-6
Government grants
-78
-103
-
-
-78
-103
Tax loss carry forward
-887
-2,076
-
-
-887
-2,076
Deferred income tax
(assets)/liabilities
-1,223
-2,302
1,741
1,832
518
-470
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 2022
31 12 2021
31 12 2022
31 12 2021
31 12 2022
31 12 2021
Property, plant and
equipment
-
-
1,896
1,903
1,896
1,903
Vacation reserve
-214
-145
-
-
-214
-145
Inventories
-84
-6
-
-
-84
-6
Government grants
-78
-103
-
-
-78
-103
Tax loss carry forward
-887
-2,076
-
-
-887
-2,076
Fair value adjustment to
assets and liabilities of
Baltic Dairy Board SIA
-
-
157
123
157
123
Deferred income tax
(assets)/liabilities
-1,263
-2,330
2,053
2,026
790
-304
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
56
Notes to the consolidated and separate financial statements
Notes (continued)
26 Deferred income tax assets (liabilities) (continued)
COMPANY
EUR ‘000
01 01 2022
Recognised in
profit or loss
Recognised in
equity
31 12 2022
Property, plant and equipment
1,832
-91
-
1,741
Vacation reserve
-117
-57
-
-174
Inventories
-6
-78
-
-84
Government grants
-103
25
-
-78
Tax loss carry forward
-2,076
1,189
-
-887
Deferred income tax (assets)/liabilities
-470
988
-
518
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
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 2022.
GROUP
EUR ‘000
01 01 2022
Recognised in
profit or loss
Recognised in
equity
31 12 2022
Property, plant and equipment
1,903
-7
-
1,896
Vacation reserve
-145
-69
-
-214
Inventories
-6
-78
-
-84
Government grants
-103
25
-
-78
Tax loss carry forward
-2,076
1,189
-
-887
Adjustment to assets and liabilities of
Baltic Dairy Board SIA
123
34
-
157
Deferred income tax (assets)/liabilities
-304
1,094
-
790
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
57
Notes to the consolidated and separate financial statements
Notes (continued)
26 Deferred income tax assets (liabilities) (continued)
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
GROUP
COMPANY
31 12 2022
31 12 2021
EUR ‘000
31 12 2022
31 12 2021
Deferred income tax assets/(liability)
376/ -404
254/ -206
Deferred income tax assets (liability), which
will be realised within 12 months
382/ -91
157/ -12
887/ -1,649
2,076/ -1,820
Deferred income tax assets (liability), which
will be realised after 12 months
840/ -1,649
2,145/ -1,820
-790
304
Net deferred income tax assets (liability)
-518
470
The Group and the Company do not recognise deferred income tax assets on investment project relief. As at
31 December 2022, the Group and the Company had no amounts of unutilised investment project relief (31
December 2021: EUR 1,433 thousand and EUR 305 thousand, respectively).
27 Trade and other amounts payable
GROUP
COMPANY
31 12 2022
31 12 2021
EUR ‘000
31 12 2022
31 12 2021
Financial instruments Note
14,328
12,980
Trade payables
11,162
10,238
8
47
Trade payables to related parties
29
2,831
2,428
14,336
13,027
13,993
12,666
Non-financial instruments
3,319
2,600
Employment-related liabilities
1,949
1,547
302
302
Advance amounts received
296
225
74
74
Dividends payable
-
-
2,560
3,599
Taxes payable (other than income tax)*
71
56
122
271
Accrued expenses and provisions
45
94
-
-
Other amounts payable
1
-
6,377
6,846
2,362
1,922
20,713
19,873
16,355
14,588
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
58
Notes to the consolidated and separate financial statements
Notes (continued)
Trade and other amounts payable (continued)
* Based on Order of 26 March 2021 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 2021 the Group was eligible to tax-related suport 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 2022 and 25 December 2022. Outstanding credit balance as at 31 December 2022 amounted
to EUR 1,821 thousand.
In December 2022, the Group received a tax credit in amount of EUR 1,900 thousand. The final tax credit
repayment date is 25 December 2024. The Group undertook to pay interest at the rate determined by the
Ministry of Finance of the Republic of Lithuania.
The Group‘s and the Company‘s foreign exchange and liquidity risks arising from trade and other amounts
payable are disclosed in Note 30.
28 Contingent liabilities
Significant contractual commitments as at 31 December 2022:
GROUP
COMPANY
31 12 2022
31 12 2021
EUR ‘000
31 12 2022
31 12 2021
6,387
428
Acquisition of property, plant and
equipment
6,353
428
7,251
6,809
Purchase of raw materials
7,251
6,809
13,638
7,237
13,604
7,237
As at 31 December 2022, 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:
• cash inflows to bank accounts with Luminor Bank AS;
• immovable property with the carrying amount of EUR 9,753 thousand;
• movable property with the carrying amount of EUR 22,475 thousand;
• all stocks in turnover;
• all amounts receivable;
• lease rights to state-owned land
• 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 2,329 thousand and EUR 4,291 thousand as at 31 December 2022, respectively.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
59
Notes to the consolidated and separate financial statements
Notes (continued)
Contingent liabilities (continued)
COMPANY:
• cash inflows to bank accounts with Luminor Bank AS;
• 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 3,424 thousand –
to secure fulfilment of the Company‘s obligations to Swedbank AB;
• the Company‘s investment property located at address: Gaurės g. 23, Tauragė, with the carrying amount
of EUR 6,127 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;
• the Company‘s lease rights to state-owned land;
• the Company‘s movable property located at address: P. Lukošaičio g. 14, Vilkyškiai, with the carrying
amount of EUR 3,792 thousand to secure fulfilment of the Company‘s obligations to Swedbank AB;
• all the Company‘s inventories (stocks) to secure fulfilment of the Company‘s obligations to Swedbank
AB and Luminor Bank AS;
• all the Company‘s amounts receivable.
Other collaterals:
• 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 2,405 thousand as at 31 December 2022 (the surety
agreements were signed in 2022);
• 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 2,285 thousand as at 31 December 2022 (the surety agreements were signed in 2021
and 2022);
• 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 27 thousand (the net book amount of leased
assets was EUR 162 thousand as at 31 December 2022);
• a complex of property pledged by Kelmės Pieninė AB and equipment pledged by Modest AB to Luminor
Bank AS to secure fulfilment of the Company‘s overdraft liabilities.
Sureties and guarantees issued:
• surety issued to AS Citadele banka to secure fulfilment of financial liabilities of SIA Baltic Dairy Board
in amount of EUR 4,163 thousand as at 31 December 2022. (the surety agreement was signed in 2021).
• surety issued to Op Corporate bank to secure fulfilment of financial liabilities of Kelmės Pieninė AB in
amount of EUR 12,929 thousand as at 31 December 2022 (the surety agreement was signed in 2021).
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.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
60
Notes to the consolidated and separate financial statements
Notes (continued)
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
2022, 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
2022
2021
EUR ‘000
2022
2021
-
-
Kelmės Pieninė AB
31,071
29,756
-
-
Kelmės Pienas UAB
26,659
15,595
-
-
Modest AB
47,724
32,316
-
-
Baltic Dairy Board SIA
351
79
-
31
Management personnel
-
31
3,085
2,971
Other related parties
3,085
2,678
3,085
3,002
108,890
80,455
(ii) Transactions with related parties:
Sale of raw materials, products, non-current assets and services, interest income
GROUP
COMPANY
2022
2021
EUR ‘000
2022
2021
-
-
Kelmės Pieninė AB
14,945
10,764
-
-
Kelmės Pienas UAB
14,190
7,277
-
-
Modest AB
43,702
30,321
-
-
Pieno Logistika AB
1
1
-
-
Baltic Dairy Board SIA
5,072
126
1
6
Management personnel
1
6
45
204
Other related parties
45
204
46
206
77,956
48,699
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
61
Notes to the consolidated and separate financial statements
Notes (continued)
29 Transactions with related parties and management personnel (continued)
(iii) Year-end balances of transactions with related parties:
GROUP
COMPANY
31 12 2022
31 12 2021
EUR ‘000
31 12 2022
31 12 2021
-
-
Loan payable (Kelmės Pieninė AB)
-
-
-
-
Trade and other amounts payable
2,824
2,381
-
-
(Kelmės Pieninė AB)
-
-
-
-
(Kelmės Pienas UAB)
2,824
2,381
-
-
Trade and other amounts receivable
10,393
4,555
-
-
(Kelmės Pieninė AB)
2,021
-
-
-
(Modest AB)
8,196
4,365
-
-
(Baltic Dairy Board SIA)
146
189
-
-
(From other related countries)
30
-
-
-
Loan receivable (Baltic Dairy Board
SIA, including interest)
897
831
13
23
Loan receivable (including interest from
management personnel)
13
23
-
12
Other amounts receivable (from
management personnel)
-
12
8
47
Trade and other amounts payable (to
other related parties)
8
47
36
-
Trade receivables (from other related
parties)
36
-
197
236
Advance amounts receivable (from
other related parties)
197
236
915
1,631
Loan receivable (including interest and
administration fee from other related
parties)
915
1,631
-
4,567
Loan payable (including interest to
other related parties)
-
-
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 2022. Interest receivable in 2022 was EUR 67 thousand.
- In 2021, 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 11 thousand and interest receivable was EUR 2
thousand as at 31 December 2022. The loan bears interests.
- The Group‘s and the Company‘s loans receivable from other related parties amounted to EUR 915 thousand
as at 31 December 2022.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
62
Notes to the consolidated and separate financial statements
Notes (continued)
29 Transactions with related parties and management personnel (continued)
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 97 thousand.
Loan of EUR 805 thousand has to be repaid by 31 December 2023. Interest is charged on the outstanding
balance of the loan.
In 2022, personnel expenses included payments of EUR 1,028 thousand and EUR 606 thousand to the Group‘s
and the Company‘s management personnel, including social security contributions (2021: EUR 943 thousand
and EUR 564 thousand, respectively).
In 2022, the Group‘s and the Company‘s payments on behalf of personnel under the defined plan for
contributions to Pillar III investment funds amounted to EUR 290 thousand (2021: EUR 253 thousand and
EUR 231 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
2022 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 2022
31 12 2021
Non-current amounts receivable
17
-
13
Trade and other amounts receivable, net of tax
19
14,992
12,211
Cash and cash equivalents
21
621
799
15,613
13,023
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
63
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 2022
31 12 2021
Lithuania
1,922
2,706
Great Britain
2,009
319
Israel
594
859
Saudi Arabia
2,871
2,174
Portugal
788
408
Italy
640
497
Poland
1,593
975
Latvia
556
91
Estonia
56
312
Republic of Korea
-
157
Kazakhstan
76
101
Belgium
81
-
Egypt
141
-
Albania
170
104
Denmark
433
138
The Netherlands
254
794
Azerbaijan
192
78
Cameroon
-
3
Qatar
91
-
Thailand
237
69
Germany
551
1,019
Libya
94
146
Lebanon
58
70
Ireland
-
2
Greece
422
160
Bosnia-Herzegovina
307
250
Slovakia
28
-
Finland
186
61
Spain
-
50
Czech
2
224
South Africa
86
140
Malta
-
68
Norway
5
20
Sakartvelo
-
58
UAE
299
87
Vietnam
226
63
USA
23
-
Other
1
8
14,992
12,211
As at 31 December 2022, significant credit risk concentration was related to five customers, the receivables
from which accounted for 41% of total trade receivables (31 December 2021: 31%).
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
64
Notes to the consolidated and separate financial statements
30 Financial instruments and risk management (continued)
COMPANY
EUR ‘000
Net book amount
Note
31 12 2022
31 12 2021
Non-current amounts receivable
17
897
843
Trade and other receivables
19
23,399
16,634
Cash and cash equivalents
21
325
579
24,621
18,056
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 2022
31 12 2021
Lithuania
10,572
6,950
Great Britain
2,009
319
Israel
594
859
Saudi Arabia
2,871
2,174
Portugal
788
408
Italy
640
497
Poland
1,533
975
Latvia
555
279
Estonia
56
312
Republic of Korea
-
157
Kazakhstan
76
101
Belgium
81
-
Egypt
141
-
Albania
170
104
Denmark
433
138
The Netherlands
72
794
Azerbaijan
192
78
Cameroon
-
3
Qatar
91
-
Thailand
237
69
Germany
551
1,019
Libya
94
146
Lebanon
58
70
Ireland
23
-
Greece
422
160
Bosnia-Herzegovina
307
250
Slovakia
28
-
Finland
186
61
Spain
-
50
Czech
2
224
South Africa
86
140
Malta
-
68
Norway
5
20
Sakartvelo
-
58
Vietnam
226
63
UAE
299
87
Luxembourg
-
-
Other
1
1
23,399
16,634
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
65
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
As at 31 December 2022, a significant credit risk concentration was related to three customers, the receivables
from which accounted for 20% of total trade receivables (31 December 2021: 36%).
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 of trade and other receivables
and non-current amounts receivable as at the reporting date is as follows:
GROUP
Gross amount
Impairment
Gross amount
Impairment
EUR ‘000
31 12 2022
31 12 2022
31 12 2021
31 12 2021
Related parties:
Not past due
862
-
1,559
-
Past due 0-30 days
-
-
-
-
Past due 31-60 days
-
-
-
-
More than 60 days
96
-
94
-
958
-
1,653
-
Not past due
9,500
-
9,598
-
Past due 0-30 days
3,935
-
902
-
Past due 31-60 days
479
-
55
-
More than 60 days
219
-99
75
-59
14,133
-99
10,630
-59
15,091
-99
12,283
-59
Impairment losses related to trade and other receivables amounted to EUR 99 thousand as at 31 December 2022
(2021: EUR 59 thousand).
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
66
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 2022
31 12 2022
31 12 2021
31 12 2021
Related parties:
Not past due
10,346
-
6,357
-
Past due 0-30 days
-
-
419
-
Past due 31-60 days
-
-
168
-
More than 60 days
242
-
94
-
10,588
-
7,038
-
Other parties:
Not past due
9,293
-
9,474
-
Past due 0-30 days
3,930
-
899
-
Past due 31-60 days
471
-
52
-
More than 60 days
113
-99
73
-59
13,807
-99
10,498
-59
24,395
-99
17,536
-59
Impairment losses related to trade and other receivables amounted to EUR 99 thousand as at 31 December 2022
(2021: EUR 59 thousand).
Movements on the account of provision for impairment of trade and other receivables during the year were as
follows:
GROUP
EUR ‘000
Net book amount
2022
2021
Balance at 1 January
-59
-95
Impairment losses recognised
-75
-59
Write-off of bad debts
11
95
Impairment losses reversed
24
-
Balance at 31 December
-99
-59
COMPANY
EUR ‘000
Net book amount
2022
2021
Balance at 1 January
-59
-95
Impairment losses recognised
-75
-59
Write-off of bad debts
11
95
Impairment losses reversed
24
-
Balance at 31 December
-99
-59
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
67
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 99 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 2022
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
21,781
-22,921
-1,583
-7,761
-2,486
-11,091
Other borrowings
-
-
-
-
-
-
Lease liabilities
713
-747
-189
-142
-219
-197
Factoring
435
-448
-448
-
-
-
Trade payables
14,336
-14,336
-14,336
-
-
-
37,265
-38,452
-16,556
-7,903
-2,705
-11,288
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
COMPANY
At 31 December 2022
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
4,690
-4,937
-414
-2,945
-827
-751
Lease liabilities
683
-717
-187
-139
-202
-190
Factoring
292
-301
-301
-
-
-
Trade payables
13,993
-13,993
-13,993
-
-
-
19,658
-19,948
-14,895
-3,084
-1,029
-941
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
68
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
At 31 December 2021
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
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
As at 31 December 2022, the Group‘s and the Company‘s current assets exceeded the current liabilities by
EUR 14,121 thousand and EUR 17,611 thousand, respectively. As at 31 December 2022, the Group‘s and the
Company’s borrowings and lease liabilities totalled EUR 22,929 thousand and EUR 5,665 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 2022 amounted to EUR 9,183 thousand and EUR 3,501
thousand, respectively (see Note 23).
The export is particularly important for the Group, since it accounts for 89% of total annual turnover.
It is expected that in 2022 the level of sale prices of products will be lower than in 2022. The fall of prices in
export markets is likely to stabilize and a lower level of raw materials and energy prices will amortize lower
prices in export markets. Borrowings and lease liabilities are expected to amount to EUR 30,601 thousand as
at 31 December 2023. In view of all the projections for 2023, the Group’s net debt to EBITDA ratio will be
around 2.2 as at 31 December 2023.
Foreign exchange risk
Exposure to foreign exchange risk, at the exchange rates effective as at 31 December 2022, was as follows:
Exposure to foreign exchange risk, at the exchange rates effective as at 31 December 2021, was as follows:
GROUP (COMPANY) ( EUR ‘000)
USD
PLN
Trade and other receivables, net of tax
3,211
47
Cash and cash equivalents
-
-
Trade payables
-
-
Net exposure
3,211
47
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
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
69
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
During the year the exchange rates against the euro were as follows:
Average
2022
2021
USD
1.0522
1.1831
PLN
4.6856
4.5650
The exchange rates applied against the euro as at 31 December were as follows:
2022
2021
USD
1.0666
1.1334
PLN
4.6808
4.5960
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 2022, 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.
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 2022 were
as follows:
GROUP
COMPANY
Net book amount
EUR ‘000
Net book amount
31 12 2022
31 12 2021
31 12 2022
31 12 2021
Financial instruments with fixed interest
rates
-
-
Loan granted to Baltic Dairy Board SIA
830
830
800
1,350
Current portion of loan granted
800
1,350
11
21
Short-term loan granted to management
personnel
11
21
-
-
Current borrowings of management
personnel
-
-
811
1,371
1,641
2,201
GROUP
COMPANY
Net book amount
EUR ‘000
Net book amount
31 12 2022
31 12 2021
31 12 2022
31 12 2021
Financial instruments with variable
interest rates
-21,781
-22,051
Bank borrowings
-4,690
-4,807
-
-
Kelmės Pieninė AB
-
-
-435
-1,419
Factoring
-292
-1,419
-713
-693
Lease liabilities
-683
-715
-22,929
-24,163
-5,665
-6,941
-22,118
-22,792
-4,024
-4,740
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
70
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
In 2022 the Group paid interest of EUR 393 thoisamd on borrowing. In 2023, at a similar level of borrowing,
interest payments are projected to approximate EUR 1 million.
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 2021 and 2022 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 2022
-221
221
Financial instruments bearing variable
interest rates
-40
40
At 31 December 2021
-228
228
Financial instruments bearing variable
interest rates
-47
47
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.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
71
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
Financial instruments measured at fair value
The Group and the Company have no financial instruments measured at fair value.
GROUP
At 31 December 2022
EUR ’000
Level 1
Level 2
Level 3
Total
Non-current amounts receivable
-
-
-
-
Trade and other receivables
-
-
14,992
14,992
Cash and cash equivalents
621
-
-
621
Borrowings and lease liabilities
-
-
-20,601
-20,601
Trade and other payables
-
-
-14,336
-14,336
621
-
-19,945
-19,324
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
COMPANY
At 31 December 2022
EUR ’000
Level 1
Level 2
Level 3
Total
Non-current amounts receivable
-
-
897
897
Trade and other receivables
-
-
23,399
23,399
Cash and cash equivalents
325
-
-
325
Borrowings and lease liabilities
-
-
-5,090
-5,090
Trade and other payables
-
-
-13,993
-13,993
325
-
5,213
5,538
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
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
72
Notes to the consolidated and separate financial statements
Notes (continued)
30 Financial instruments and risk management (continued)
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 2022 and 31 December 2021.
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.
Risk of changes in energy prices
In 2022 the Group consumed slightly less energy than in 2021, and due to the increased production volumes and
technologies being implemented, energy was used extremely efficiently. In 2022 the amount of energy
consumption per 1 tonne of production was significantly lower than in 2021. (3.12 MWh/t in 2022 and 3.34
MWh/t in 2021). The amount of energy consumed per 1 unit of revenue also fell from 0.64 GWh/million EUR
to 0.42 GWh/million Eur.
The jump in energy prices that started in the spring and continued until autumn led to a high level of energy
prices. Since the energy costs stabilized in the fourth quarter of 2022, energy costs are projected to be lower in
2023.
Average price of gas purchased by the Group in 2022 was 3 times higher than in 2021. In 2023 it is planned to
be about 24% lower than in 2022. The average price of electricity in 2022 was twice as high as in 2021, and in
2023 a similar price level is planned as in 2021.
Gas prices are influenced by many factors, including increased CNG supplies from the US, stocks in EU
underground gas storage facilities and others. Thus, there is a noticeable drop in gas prices. It is also prpjected
that electricity prices will gradually decrease due to the expansion of renewable energy sources. For the first
time in history, the production of renewable energy power plants in the European Union has exceeded the
production of power plants using natural gas.
VILKYŠKIŲ PIENINĖ AB
Consolidated and separate financial statements for the year
ended 31 December 2022
73
Notes to the consolidated and separate financial statements
Notes (continued)
31 Impact of the war in Ukraine
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 an 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 had no significant
impact on the Group‘s and the Company's operations After the start of the war in Ukraine, Vilvi Group's strong
and unequivocal position and support for Ukraine allowed to strengthen relations with existing partners in
Ukraine and gain greater trust from new trade partners. This allowed to increase sales volumes (of blue cheese,
yogurt, sour cream) in the fourth quarter of 2022. Projects frozen at the beginning of the war were renewed
with the largest retailers and the product range was expanded to include new brand yogurt, butter and cheeses.
In 2021 and 2022, the Group’s sales to Ukraine amounted to EUR 973 thousand– and EUR 477 thousand,
respectively. In 2023 growth of sales to Ukraine is planned.
The Company's and Group’s sales to Russia and Belarus were insignificant in 2021, and there were none in
2022.
The management did not identify any other additional threats to business continuity of the Group and the
Company. The management monitors the changing situation on a daily basis and, if necessary, makes decisions
to ensure the stable operation of the Group and the Company.
32 Events after the reporting period
There were no significant events after the end of the reporting period.
“Vilvi Group”
annual report for 2022
74
Annual report of “Vilvi Group” for 2022
I. ISSUER OVERVIEW
1. Reporting Period for this Report
This consolidated annual Report is for 2022.
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
E-mail
info@vilvi.eu
Website
https://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
E-mail
modest@vilvi.eu
Website
https://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
E-mail
kelmespienine@vilvi.eu
Website
https://vilvigroup.lt
“Vilvi Group”
annual report for 2022
75
“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 2021, 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
https://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
E-mail
pienologistika@vilvi.eu
Website
https://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 2022
76
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 2022
77
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 2022
78
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 is
“Vilvi Group”
annual report for 2022
79
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.
2022: In the largest Europe’s brand study on sustainability – Sustainable Brand Index – Vilkyškių pieninė
brand was among the most sustainable in Lithuania and was 12
h
in overall ranking, and 2
rd
in food category.
9. Main Investments of “Vilvi Group” During Reporting Period
During 2022 the Group of companies invested 4.3 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 2022
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. The
certificate is renewed every year.
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
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22000 certification schemes. In 2022 Kelmės pieninė AB renewed certificates with updated versions ISO
22000:2019, 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.
In August 2022 AB Kelmės pieninė was excellently evaluated in the social audit SMETA. During the audit,
the company's responsibility towards nature and society was checked - what are the company's practices in the
fields of human rights, ethical employment, business transparency and environmental protection.
11. Human Resources
Vilvi Group is managed on the basis of the Group's common principles and values, so human resources
management is implemented in all Group companies using the same processes.
Vilvi Group's main focus is on employees, their well-being, safety and health, competence development and
career opportunities. Personnel policy is focused on promoting cooperation, openness, personal and
professional growth. The company creates conditions for sharing knowledge and improving skills, with the
help of internal and external training, and creates a supportive, open and respectful environment. The
involvement of employees is encouraged, conditions are created to propose ideas, to actively participate in
improving the business processes of companies.
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 2021.
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
issued boiler pollution permit No. (30.3) - A4-33. in accordance with the provisions of Paragraphs 40 and 41
“Vilvi Group”
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of the Rules. In 2022 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 2022,
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 2021, 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 2022, 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 2022, 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.
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2018 m.
2019 m.
2020 m.
2021 m.
2022 m.
Revenue (EUR tho)
126,242
140,492
148,738
196,442
288,643
Gross profit (EUR tho)
3,282
325
913
9,031
17,195
Gross profit margin, pct
2.6%
0.2%
0.6%
4.6%
6.0%
EBITDA (EUR tho)
-1,055
-2,504
2,994
13,079
15,530
EBITDA margin, pct
-0.8%
-1.8%
2.0%
6.7%
5.4%
EBIT (operating profit) (EUR tho)
-2,974
-4,322
1,394
11,450
13,893
EBIT margin, pct
-2.4%
-3.1%
0.9%
5.8%
4.8%
EBT (profit before tax) (EUR tho)
-2,712
-5,061
640
11,194
13,733
EBT margin, pct
-2.1%
-3.6%
0.4%
5.7%
4.8%
Net profit (EUR tho)
-2,028
-4,059
1,371
10,774
12,599
Net profit margin, pct
-1.6%
-2.9%
0.9%
5.5%
4.4%
Net profit per share (EUR)
-0.17
-0.34
0.11
0.90
1.05
Share market price and net profit per share
ratio 0.0 P/E ratio
-
-
-
-
-
Return on equity (ROE), pct
-6.4%
-14.6%
5.2%
33.5%
29.9%
Return on assets (ROA), pct
-3.7%
-7.7%
2.8%
19.9%
19.4%
Return on Capital employed (ROCE), pct
-9.1%
-15.6%
4.5%
28.3%
27.7%
Debt ratio
0.45
0.49
0.44
0.37
0.33
Debt to equity ratio
0.32
0.44
0.27
0.19
0.12
The liquidity ratio
1.04
0.83
0.99
1.47
1.87
Turnover of assets
2.32
2.77
3.05
3.31
4.10
The capital to assets ratio
0.55
0.51
0.56
0.63
0.67
Financial debt (EUR tho)
9,430
11,287
7,432
6,941
5,665
Net debt (EUR tho)
9,093
11,056
7,277
6,362
5,340
Net debt /EBITDA
-8.62
-4.42
2.43
0.49
0.34
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 finance costs to pre-tax profit and deducting the financial activity income
EBIT margin is indicator that shows operating effectiveness, it is calculated by dividing operating profit by
sales revenue.
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EBT (profit before tax) is profit before taxation. The indicator is calculated by adding income 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 taxes 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 profit 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 shows 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 efficient 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 ratio. 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 profit 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 indicator 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 indicator 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
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 deduction 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.
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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”:
2018 m.
2019 m.
2020 m.
2021 m.
2022 m.
Revenue (EUR tho)
103,162
114,581
120,873
156,045
234,083
Gross profit (EUR tho)
5,773
7,096
10,629
17,196
24,274
Gross profit margin, pct
5.6%
6.2%
8.8%
11.0%
10.4%
EBITDA (EUR tho)*
3,140
3,698
8,271
14,122
19,280
EBITDA margin, pct
3.0%
3.2%
6.8%
9.0%
8.2%
EBIT (operating profit) (EUR tho)
-884
-206
4,332
7,134
14,921
EBIT margin, pct
-0.9%
-0.2%
3.6%
4.6%
6.4%
EBT (profit before tax) (EUR tho)
-1,870
-1,448
3,142
6,156
14,180
EBT margin, pct
-1.8%
-1.3%
2.6%
3.9%
6.1%
Net profit (EUR tho)
-1,186
-446
3,872
5,500
12,699
Net profit margin, pct
-1.1%
-0.4%
3.2%
3.5%
5.4%
Net profit per share (EUR)
-0.10
-0.04
0.32
0.46
1.06
Share market price and net profit per
share ratio - P/E ratio
-
-
7.59
7.95
4.50
Return on equity (ROE), pct
-3.6%
-1.4%
11.7%
14.8%
28.4%
Return on assets (ROA), pct
-1.5%
-0.6%
5.0%
6.7%
13.6%
Return on capital employed (ROCE), pct
-1.7%
-0.4%
10.1%
11.7%
22.0%
Debt ratio
0.62
0.60
0.55
0.55
0.49
Debt to equity ratio
0.88
0.88
0.62
0.61
0.46
The liquidity ratio
0.81
0.72
0.64
1.24
1.46
Turnover of assets
1.25
1.47
1.57
1.77
2.38
The capital to assets ratio
0.38
0.40
0.45
0.45
0.51
Financial debt (EUR tho)
27,824
27,483
21,660
24,163
22,929
Net debt (EUR tho)
27,417
27,185
21,479
23,364
22,308
Net debt /EBITDA
8.73
7.35
2.60
1.65
1.16
“Vilvi Group” production output, tonnes:
2018
2019
2020
2021
2022
Cheese, cheese products and other
34,306
36,095
39,187
43,970
47,575
Fresh milk products
15,120
12,277
12,696
14,048
15,174
Dry milk products
8,321
15,310
19,006
21,416
21,886
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85
In 2022 cheese, cheese product and other production output 47.6 tho tonnes, up by 8.2 percent comparing to
2021. Production of fresh milk products 15.2 tho tonnes, up by 8 percent comparing to 2021. Production of
dry milk products 21.9 tho tonnes in 2022 up by 2.2 percent comparing to 2021.
Basic indicators milk purchases by “Vilvi Group”:
2018
2019
2020
2021
2022
Basic indicators milk, tonnes
267,785
268,555
287,370
314,540
342,953
Cost of basic indicators milk, EUR
tho
67,695
68,720
70,747
90,542
144,975
Milk price, EUR/t
252.8
255.9
246.2
287.9
422.7
In 2022, a total of 343 tho tonnes of basic indicators milk was purchased, an increase by 9 percent as compared
with 2021. The price of milk in 2022 increased by 46.8 percent from the year 2021.
15. Sales and Marketing
“Vilvi Group” sales by product segment, EUR thousand:
2018 m.
2019 m.
2020 m.
2021 m.
2022 m.
Cheese, cheese products and other
76,870
81,909
84,134
109,199
170,589
Fresh milk products
18,721
17,803
16,252
18,710
26,864
Dry milk products
7,571
14,869
20,487
28,136
36,630
Total revenue
103,162
114,581
120,873
156,045
234,083
In 2022 “Vilvi Group” sales revenue grew by 54% in export markets and by 23% in Lithuanian market
compared to year 2021. In 2022 exports amounted to 89% 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. 2022 marked the dairy sector as a period of gradual price growth, as the price increase,
which began back at the end of 2021, continued until November 2022. The sales prices of the cheeses produced
by Vilvi Group followed the general direction of the world market, since 93% of the cheese sold was exported
outside Lithuania, therefore, the pricing was influenced by the general dynamics of the market. Sales revenue
grew by 56%, while the volume of sales did not rise significantly - by 6%. The number of markets and
customers remained similar to that in 2021. The number of markets and customers remained similar to that in
2021. Well-established relationships with customers, knowledge of the markets, their wide geography and
quick response to changes ensured favorable sales prices.
- Dry dairy products. The increase in production/sales volumes back in 2020 remained similar in quantitative
terms in 2022. However, the value of sales has increased by 30%. This was influenced, as in the cheese
category, by the already mentioned global price rise and the shortage of products on the market, which made
it possible to maintain stable and regular sales of dry milk products. The number of markets remained
unchanged, with the European Union region accounting for the largest share of sales, but exports to Korea,
Vietnam, India, Serbia, Egypt and other countries outside the EU increased.
-
Industrial cream
. The increase in demand for cream led to the fact that during the reporting period its sales
volume increased by 64%, when the sales volume remained very similar compared to in 2021, in 2022, the
average price of cream in 2022 was 49% or 1.02 Eur / kg higher compared to the previous year.
“Vilvi Group” sales revenue by geographical segments, EUR thousand:
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86
2018 m.
2019 m.
2020 m.
2021 m.
2022 m.
European Union
55,865
61,591
63,745
80,647
132,771
Lithuania
24,585
22,526
20,234
21,748
26,751
Other countries
22,712
30,464
36,894
53,650
74,561
Total revenue
103,162
114,581
120,873
156,045
234,083
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2018 2019 2020 2021 2022
54%
54%
53%
52%
57%
22%
26%
30%
34%
32%
24%
20%
17%
14%
11%
Lithuania
Other countries
European Union
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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 2015-2016 Company participated in the exhibitions Food Ingredients Beijing 2015 took place in China and
Food Ingredients Paris 2015, SIAL China Shanghai, in the exhibition Summer Fancy Food Show in New York.
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. Also a company
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 2018 exhibition in Taiwan, where presented mozzarella cheese.
In 2019-2020 Vilkyškių pieninė AB traditionally participated in the food exhibitions Gulfood 2020 in Dubai,
United Arab Emirates and ANUGA 2020 in Cologne, Germany, in Gulfood Manufacturing, in Dubai, The
United Arab Emirates and Food Ingredients 2020 in Paris, France and presented its industrial products. Also
participated in the exhibition FHC China 2020 in Shanghai in China. The mozzarella cheese and dry milk
products were presented to Chinese market.
In 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. Also “Vilvi Group” participated in
"WorldFood Ukraine", the largest annual food and beverage exhibition in Ukraine, where we presented
products of the Vilkyškių black cat line and Memel blue melted cheese. “Vilvi Group” participated in the
largest exhibition of food industry, equipment, processing and packaging and food logistics "Gulfood
Manufacturing" in Dubai, United Arab Emirates.
In February 2022 February Vilvi Group has traditionally participated in the international food and beverage
exhibition Gulfood 2022 in Dubai, United Arab Emirates. The company presented mozzarella cheese at the
exhibition.
In November 2022 Vilvi Group's export team participated in Gulfood Manufacturing, the largest food industry,
equipment, processing and packaging and food logistics exhibition in Dubai, United Arab Emirates. Whey
powder and cheese products were presented during the exhibition.
In December 2022 "Vilvi goup" participated in the international exhibition of food ingredients "Food
Ingredients Europe". This year the exhibition was held in Paris (France). Whey powder and cheese products
were presented during the exhibition.
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.
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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.
➢ 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.
➢ 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.
➢ 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%.
➢ Risk management. The Group's companies are streamlining production to maximize equipment
utilization, as well as plan logistics routes efficiently.
MANAGEMENT OF ECONOMIC RISK FACTORS
MANAGEMENT OF OCCUPATIONAL RISK FACTORS
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Noise. Non-compliance with minimum general requirements for work equipment.
➢ 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.
➢ 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.
➢ 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.
➢ 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.
➢ Risk management. The group follows an approved IT security policy. 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.
➢ Risk management. A firewall is used to protect against unauthorized access from the outside. Its
maintenance and constant updating is performed by certified specialists.
Food safety and quality. Risks may arise in case of insufficient assessment and management of risk factors
(biological, chemical, physical).
MANAGEMENT OF SOCIAL RISK FACTORS
MANAGEMENT OF INFORMATION SECURITY RISK FACTORS
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➢ Risk management. Food safety and management standards (ISO 22000/FSSC 22000) are used to
control the risk of production quality. The Group follows an approved Food Safety and Quality Policy.
Monthly and quarterly factory inspections and internal audits are carried out in the companies of the
Group in accordance with the quality and safety system implemented in the Group. Audits are
performed by competent personnel trained by external auditors. Also controlling, certifying
authorities, existing or potential customers. Annual user and customer surveys are conducted for the
purpose of analyzing satisfaction and needs. In the group of companies, complaints are registered via
the general quality phone and e-mail, they are registered, analyzed, and customers are communicated
with in order to find out the specific reasons. Reaction time and actions are provided according to the
nature of the complaint and based on the described complaint guidelines.
Ensuring human rights.
➢ Risk management. Vilvi Group follows the approved policies and codes: Human Rights Policy, Ethical
Employment Code, Equal Opportunities Policy, Violence and Harassment Prevention Policy. For
these policies and codes, responsible persons have been appointed in the Group's management, as well
as planned implementation, supervision and control processes. Employees and other interested parties
have access to the Group's Internet Message Channel and Helpline, which can be used to anonymously
inform about worrying situations. The group does not tolerate any manifestations of human rights and
discrimination, every employee is provided with the level of employment, professional development
and career opportunities, regardless of their gender, age, social status, there must be other suitable
ones that are not related to the employees' professional characteristics. The remuneration policy and
the Labor Payment System ensure fair remuneration.
Attracting and retaining employees. The risk of attracting and retaining employees is related to the lack of
employees and population decline in regions (where the group's companies are established: Taurage,
Vilkyškiai, Kelmė) far from large cities. The lack of highly qualified (engineering) employees is especially
felt.
➢ Risk management. The lack of employees is directly related to the smooth operation of the company,
therefore various measures are applied, and special attention is paid to the management of employee
attraction and retention: close cooperation with the Employment Service, educational institutions
(participation in career fairs, thematic lectures), various employee search channels are used. Great
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 employee careers are planned.
Employees are additionally motivated by various wellness measures. The company values employee
loyalty - long-term employees are additionally encouraged.
Unfair work / corruption and bribery.
➢ Risk management. Vilvi Group follows the approved Code of Ethical Business, which provides basic
provisions and rules for dealing with stakeholders. The Group does not tolerate any manifestations of
corruption, including bribery and bribery, and adheres to the principles of fair business and transparent
cooperation with state institutions and other interested parties. 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.
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.
➢ Risk management. Food safety and management standards (ISO 22000 / FSSC 22000) are used to
manage product quality risks. The Group follows the approved Code of Ethical Business, which
provides basic provisions and rules for dealing with stakeholders. The position of the group of
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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.
Environmental impact. In their activities, the companies of the Group consume a significant amount of
energy and natural resources, which poses a risk of environmental pollution. There is also a risk that the
activities carried out may cause unwanted noise and smell to the surrounding residents or businesses. Since
AB Vilkyškiu's dairy production wastewater is cleaned in its own treatment facilities, there is a risk that
pollutants will be released into the environment due to technical malfunctions. Improper handling of waste
generated during the activity poses a threat to environmental pollution.
➢ Risk management. Vilvi Group follows an approved Environmental Protection Policy. Monitoring of
the consumption of natural and energy resources is carried out in the companies, environmental impact
analysis and assessment is periodically carried out, and a project for raising the goals for the
assessment and reduction of greenhouse gas emissions is carried out. In accordance with the
established procedure, AB Vilkyškių dairy has developed a monitoring program for the impact of the
watering place on the groundwater and the observations are being carried out, as well as the possible
impact of the own gas station on the groundwater is controlled according to the monitoring program,
and the monitoring of pollutants emitted into the air, sources of pollution with sewage is carried out.
AB Vilkyškių dairy is equipped with an automatic wastewater control system that prevents excess
sewage sludge from entering the environment together with treated wastewater. From the dryers of
AB Kelmės pieninė, the air contaminated with solid particles is directed to the cyclones and discharged
into the environment. Waste generated during production is managed and accounted for in all Group
companies in accordance with the established environmental requirements in the product, packaging
and waste accounting information system - GPAIS
.
Physical risks of climate change. In the region of operation, risks may arise due to the frequency of extreme
meteorological events, increasing gradual climate change, deterioration of the environmental condition (air,
water, soil pollution) as well as water shortages, loss of biodiversity, deforestation. It is necessary to manage
due to the possible influence on the continuity of operations and due to the possible financial impact.
➢ Risk management. Vilvi Group conducts climate risk assessment, reviews climate change scenarios
and their possible impact on the region of operation. Climate change adaptation goals are set, plans
for unexpected business interruptions, employee training and exercises are updated.
Climate change transition risk. As a result of adapting to lower carbon technologies and the process of a
more environmentally sustainable economy, the Group may directly or indirectly experience financial losses.
Risks arise from the rapidly changing environment of climate change regulation and environmental
requirements, rapid technological advances, changes in customer and investor expectations and consumer
priorities.
➢ Risk management. "Vilvi Group" is guided by the approved Environmental Protection Policy, in which
one of the main objectives is the assessment of environmental impact, the measurement of GHG
emissions and the setting of reduction targets. Having assessed the extent of the need for energy
resources, the Group strives for energy independence by planning its own sources of renewable energy.
"Vilvi Group" takes the path of sustainability by carefully and consistently planning actions, actively
monitoring changes in the legal environment of the European Union and Lithuania, changing reporting
requirements, and implementing the evaluation process of Taxonomy activities. There is active
cooperation with clients, their expectations are heard and the Group's position and aspirations are
communicated.
UNCERTAINTY IN THE BUSINESS ENVIRONMENT
MANAGEMENT OF CLIMATE AND ENVIRONMENTAL PROTECTION RISK FACTORS
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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.
➢ 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.
Changing EU and LR legal regulation. Increasing and rapidly changing requirements may require rapid
response, human resources, implementation of additional measures, processes and tools, resulting in direct and
indirect financial losses.
➢ Risk management. "Vilvi group" feels an increased acceleration of changes in legal requirements,
especially in areas related to the EU Green Course (e.g. environmental requirements and non-financial
reporting, taxonomy), transparency (e.g. accounting standards), social areas (e.g. changes to the labor
code), etc. . Changes are being prepared consistently and in measured steps - the aim is to increase
energy efficiency, optimize the use of resources, increase the involvement of human resources, and
look for IT solutions that can shorten the adaptation time. Responsible persons are appointed,
employees' competence is developed, legal requirements are constantly followed.
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 Statements of AB Vilkyškių pieninė as of 31 December 2022, and in para
30 thereof.
18. Competition
Vilkyškių pieninė AB estimates that it has a 20 percent share of the Lithuanian market as measured by quantity
of processed milk, i.e. it is in third place behind competitors Rokiškio sūris AB and 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.
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 2022, in Chapter 32.
20. Business Plans and Forecasts
In 2022, “Vilvi group” exceeded the set goals and achieved very good financial results, although there were
certainly no shortage of challenges. The war in Ukraine that started at the beginning of the year forced us to
change plans, adapt to a serious energy crisis, and at the same time tested how resistant we are to unexpected
events and ready for new and quick solutions. The challenge was not only the rising gas and electricity prices,
but also the rising prices of raw materials, which also increased production prices. All these and other
challenges were overcome and historically the highest added value was created. In 2023 the main goal is
further create greater value for company shareholders. To achieve this goal main tasks are as follows:
FINANCIAL RISK MANAGEMENT
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annual report for 2022
93
• To seek 5% growth in sales revenue;
• To maintain the growth in quantities of processed raw milk;
• 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;
- 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.
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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 2022 was 1499. The following are
the major shareholders:
Shareholder
Number of
shares held,
units
Percent
of share
capital,
pct
Share of votes at shareholder
meetings, pct
Swisspartners Versicherung AG
69,94,316
58.6%
-
Multi Asset Selection Fund
20,35,729
17.0%
17%
Gintaras Bertašius
2,19,364
1.8%
60%
Minority shareholders
26,93,591
22.6%
23%
Total stock
1,19,43,000
100%
100%
Vilkyškių pieninė AB shareholder structure by legal subject
Kelmės pieninė AB shareholders
The total number of shareholders of Kelmės pieninė AB on 31 December 2022 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
-24,57,070
100%
100%
Total stock
-24,57,070
100%
100%
“Kelmės pienas” UAB shareholders
The total number of shareholders of “Kelmės pienas” UAB on 31 December 2022 was 1. The major
shareholder, who owns more than 5 percent of the Issuer‘s stock was 1:
Natural person
19%
Legal person, funds
81%
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Shareholder
Number of
shares held,
units
Percent
of share
capital,
pct
Share of votes at shareholder
meetings, pct
Kelmės pieninė AB
2,500
100.0%
100.0%
Total stock
2,500
100.0%
100.0%
“Modest” AB shareholders
The total number of shareholders of “Modest” AB on 31 December 2022 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
56,01,277
99.7%
99.7%
Minority shareholders
15,841
0.3%
0.3%
Total stock
56,17,118
100.0%
100.0%
“Pieno logistika” AB shareholders
The total number of shareholders of “Pieno logistika” AB on 31 December 2022 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
2,18,781
58.9%
58.9%
ŽŪB „Repšiai“
35,032
9.4%
9.4%
Minority shareholders
1,17,520
31.6%
31.6%
Total stock
3,71,333
100.0%
100.0%
“Baltic Dairy Board” SIA shareholders
The total number of shareholders of “Baltic Dairy Board” SIA on 31 December 2022 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
5,44,446
70.0%
70.0%
KIK Asset Management SIA
2,33,332
30.0%
30.0%
Total stock
7,77,778
100.0%
100.0%
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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 2020-2022.
0
20
40
60
80
100
120
0.00
1.00
2.00
3.00
4.00
5.00
6.00
2020-01 2020-06 2020-11 2021-04 2021-09 2022-02 2022-07 2022-12
Share price, EUR Turnover, thsd., EUR
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Comparison of Vilkyškių pieninė AB share price and Nasdaq OMX Vilnius Index, 2020-2022.
Security trading history of Vilkyškių pieninė AB during 2018-2022:
Price
2018 m.
2019 m.
2020 m.
2021 m.
2022 m.
Open
3.72
2.09
2.26
2.46
3.67
High
3.76
3.13
2.48
3.68
4.91
Low
1.95
2.07
1.39
2.40
3.00
Average
3.09
2.47
1.93
2.90
4.12
Last
2.05
2.24
2.46
3.66
4.79
Traded volume
472,421
762,071
1,138,435
1,060,431
637,222
Turnover, million
1.46
1.88
2.20
3.08
2.63
Capitalisation, million
24.48
26.75
29.38
43.71
57.21
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.
5. The Company shall pay dividend in cash.
40%
60%
80%
100%
120%
140%
160%
180%
200%
220%
240%
2020-01 2020-06 2020-11 2021-04 2021-09 2022-02 2022-07 2022-12
OMX Vilnius VLP1L
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annual report for 2022
98
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
2018
(for 2017)
2019
(for 2018)
2020
(for 2019)
2021
(for 2020)
2022
(for 2021)
Dividend (EUR)
1,672,020
-
-
955,440
2,388,600
Dividend per share (EUR)
0.14
-
-
0.08
0.20
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
2018
(for 2017)
2019
(for 2018)
2020
(for 2019)
2021
(for 2020)
2022
(for 2021)
Dividend (EUR)
786,262
1,719,949
5,651,261
7,371,210
3,931,312
Dividend per share (EUR)
0.32
0.70
2.30
3.00
1.60
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 2022, there were 884 employees working at “Vilvi Group”.
Employee category
Number of
employees
Education
Average
monthly
salary (EUR)
higher
vocational
secondary
secondary
incomplete
Managers
30
23
7
-
-
4,799
Specialists
310
115
85
106
4
1,711
Workers
544
20
153
321
50
1,209
884
158
245
427
54
1,508
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
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.
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. The supervisory council in the
Company will be set up in 2023. The Board of the Company represents the shareholders and performs oversight
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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
“Vilvi Group”
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100
“Vilvi Group”
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101
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 2022, Board meetings were held regularly according to the schedule, required quorum was present at each
of them. During 2022, 19 ordinary board meetings took place. The Board approved the 12-month financial
statements for 2021, the 2022 three-month, six-month and nine-month interim financial statements, the 2021
annual financial statements and annual report; it also called an ordinary meeting of shareholders, offered the
distribution of the 2021 profit (loss) for an ordinary meeting of shareholders.
In regular meetings the Board discussed 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 29 April
2022, 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 2022 had 219,364 shares in
Vilkyškių pieninė AB, however he had 60.4 percent voting rights in shareholder’s meetings (joint life
insurance policy has been drawn up at Swisspartners Versicherung AG Zweigniederlassung Österreich which
has taken over ownership rights to 6,994,316 shares of AB Vilkyškių pieninė).
Sigitas Trijonis – a Board Member since 30 January 2006, re-elected for a four-year term on 29 April 2022,
Chief Technology Officer of Vilkyškių pieninė AB. Has higher education degree in mechanical engineering.
As of 31 December 2022, 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 29 April
2022. Has college diploma in livestock engineering. Chief Purchasing Officer at Vilkyškių pieninė AB. As of
31 December 2022, 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 29 April 2022.
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 2022, 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 29 April 2022. 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 2022, 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 29 April 2022. 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), Ymmalu UAB (CRN 305765142, address:
Šaltinių g. 24-10, LT-03233, Vilnius) and UAB „LAMA Capital“ (įm.k. 306178639, adresas: Šaltinių g. 24-
10, LT-03233, Vilnius). As of 31 December 2022, 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 2022 had 219,364 shares in Vilkyškių pieninė AB, however he had 60.4
percent voting rights in shareholder’s meetings (joint life insurance policy has been drawn up at Swisspartners
Versicherung AG Zweigniederlassung Österreich which has taken over ownership rights to 6,994,316 shares
of AB Vilkyškių pieninė).
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 2022, 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 2022, 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.
“Vilvi Group”
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Sigitas Trijonis – Chief Technology Officer, a Board Member, working at the Company since 1993. Has
higher education in mechanical engineering. As of 31 December 2022, 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.
Rimantas Jancevičius – Chief Purchasing Officer, a Board Member, working at the Company since 1996.
Has college diploma in livestock engineering. As of 31 December 2022, 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 2022, held 1,933 shares of Vilkyškių pieninė AB, 0.02 percent of
the stock and voting rights.
Rita Juodikienė – Management and quality director. Working 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 2022, 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 2022 144,0 tEUR.
The salaries were paid out to Vilkyškių pieninė AB board members in 2022:
Board members (4 members),
EUR tho
Average size per month, EUR
salary
325
6,767
In 2022, 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 2021. 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 2022 had 219,364 shares in Vilkyškių
pieninė AB, however he had 60.4 percent voting rights in shareholder’s meetings (joint life insurance policy
has been drawn up at Swisspartners Versicherung AG Zweigniederlassung Österreich which has taken over
ownership rights to 6,994,316 shares of AB Vilkyškių pieninė).
Vilija Milaševičiutė – a member of the board, re-elected for a four-year term on 29 April 2021. 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 2022, 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 2021. 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 2022,
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 2022, held 1,933 shares of Vilkyškių pieninė AB, 0.02 percent of the stock
and voting rights.
In 2022, 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.
“Vilvi Group”
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Members of “Kelmės pienas” UAB board and administration
Gintaras Bertašius – Chairman of the Board, elected for a four-year term on 17 November 2021. 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 2022 had 219,364 shares in Vilkyškių pieninė
AB, however he had 60.4 percent voting rights in shareholder’s meetings (joint life insurance policy has been
drawn up at Swisspartners Versicherung AG Zweigniederlassung Österreich which has taken over ownership
rights to 6,994,316 shares of AB Vilkyškių pieninė).
Vilija Milaševičiutė – a member of the Board, elected for a four-year term on 17 November 2021. 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 2022, 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 2021. 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
2022, 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 2022, did not have any shares in Vilkyškių pieninė AB. Has no seats in
other companies’ governing bodies.
In 2022, “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 2022. 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 2022 had 219,364 shares in Vilkyškių
pieninė AB, however he had 60.4 percent voting rights in shareholder’s meetings (joint life insurance policy
has been drawn up at Swisspartners Versicherung AG Zweigniederlassung Österreich which has taken over
ownership rights to 6,994,316 shares of AB Vilkyškių pieninė).
Arvydas Zaranka – a member of the board, re-elected for a four-year term on 29 April 2022. 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 2022, 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 2022. 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 2022, 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 2021. Has higher education degree in
management and business administration. As of 31 December 2022, did not have any shares in Vilkyškių
pieninė AB. Has no seats in other companies’ governing bodies.
In 2022, “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
“Vilvi Group”
annual report for 2022
105
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 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 2022, 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 2022 had
219,364 shares in Vilkyškių pieninė AB, however he had 60.4 percent voting rights in shareholder’s meetings
(joint life insurance policy has been drawn up at Swisspartners Versicherung AG Zweigniederlassung
Österreich which has taken over ownership rights to 6,994,316 shares of AB Vilkyškių pieninė).
Kaspars Kazāks – Director of “Baltic Dairy Board” SIA 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 2022, 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 2022, 5 meetings of the Audit Committee were held. The Audit Committee discussed and approved the
following: the Company’s 2021 financial statements, the draft 2021 annual report, the draft 2021 profit (loss)
distribution report, the 2022 internal audit plan and the 2022 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 2022, 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
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“Vilvi group“ 2022 social responsibility report is available on the company's website (link:
https://vilvigroup.lt/wp-content/uploads/2023/03/VILVI-Group-Social-responsibility-and-Sustainability-
Report-2022-_ENG.pdf)
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AB VILKYŠKIŲ PIENINĖ REMUNERATION REPORT FOR 2022
General information
AB Vilkyškių pieninė remuneration report has been prepared for the reporting financial period of 2022,
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 2021. 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 2021 - 2022
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 2022, 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 2022 correspond to the amounts provided for in the remuneration policy
approved by the company.
“Vilvi Group”
annual report for 2022
108
Annual pre-tax remuneration of the members of the Board working under an employment contract,
in thousand euros.
Name, surname, position
Year of 2021
Year of 2022
Fixed
salary
Variable
salary
In
total
Fixed
salary
Variable
salary
In
total
Gintaras Bertašius, general
director
101.3
-
101.3
101.4
-
101.4
Vilija Milaševičiūtė,
director for economy and
finance
62.9
11.0
73.9
66.9
11.3
78.1
Sigitas Trijonis, technical
director
62.8
11.1
73.9
66.6
11.4
78.0
Rimantas Jancevičius,
director for procuring raw
materials
62.5
11.3
73.8
66.0
11.8
77.8
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 2022, 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 2022), 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 2022 was equal to EUR 12.966 million (in 2021 - EUR 11.418
million). The table below shows the average monthly salary of employees in 2018-2022 before taxes, in euros.
The average monthly salary of corporate group‘s employees before taxes, in euros.
Employee
group
Year of 2018
Year of 2019
Year of 2020
Year of 2021
Year of 2022
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
30
3,616
28
3,919
29
3,997
30
4,261
30
4,799
Specialists
332
1,166
298
1,258
301
1,311
310
1,434
310
1,711
Workers
572
822
502
872
500
924
527
1,020
544
1,209
934
1,026
828
1,107
830
1,166
867
1,281
884
1,508
“Vilvi Group”
annual report for 2022
109
The average monthly salary of AB “Vilkyškių pieninė” employees before taxes, in euros.
Employee
group
Year of 2018
Year of 2019
Year of 2020
Year of 2021
Year of 2022
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
23
3,693
22
4,020
21
4,198
19
4,565
20
5,029
Specialists
183
1,215
170
1,304
155
1,338
147
1,506
150
1,777
Workers
319
890
285
930
283
948
274
1,059
292
1,253
525
1,125
477
1,197
459
1,228
440
1,365
462
1,581
The remuneration paid to the members of the Board and employees of AB Vilkyškių pieninė in 2022 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 2022 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 2022
110
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 2022, 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 2022 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 2022.
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 2022, 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 2022.
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
legislation. The Company’s articles of association are amended in accordance with the law of the Republic of
Lithuania.
“Vilvi Group”
annual report for 2022
111
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 2022
112
14. Information on all mutual agreements between shareholders (their essence and conditions):
The Company has no data on mutual agreements between its shareholders. In 2022, 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 2022
113
AB VILKYŠKIŲ PIENINĖ CORPORATE GOVERNANCE REPORT FORM FOR THE YEAR
THAT ENDED ON 31 DECEMBER 2022
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 2022.
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2022
114
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
shareholders.
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.
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
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
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2022
115
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.
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
writing in advance by completing the
general voting ballot.
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 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 general ballot as required
by law.
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2022
116
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.
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.
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Corporate governance report
for the year that ended on 31 December 2022
117
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
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
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2022
118
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
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
Not
applica
ble
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2022
119
independence, he/she cannot be considered
independent due to special personal or
company-related circumstances.
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.
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
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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.
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.
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.
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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 position, 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 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 re-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.
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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 2022, 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 2022.
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.
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 2022.
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
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.
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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.
Principle 4: Rules 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 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.
Not
applica
ble
The Supervisory board is not formed in the
Company.
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
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
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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.
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 decision-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 2022.
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,
size and composition of the supervisory and
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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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
management bodies.
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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 other 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 this
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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 report.
VILKYŠKIŲ PIENINĖ AB
Corporate governance report
for the year that ended on 31 December 2021
133
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
134
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 2022, 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 2022, 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 7 April 2023.
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 2022;
● 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 2022 to 31 December 2022, are disclosed in note 8 to the financial statements.
Our audit approach
Overview
●
Overall Group and Company materiality: Euro 1,750 thousand
and Euro 1,750 thousand respectively
x We conducted audit at 3 Group entities, all
operating in Lithuania;
x Our audit addressed 94% of the Group’s revenues and 99
% of
the Group’s total assets.
x Impairment testing of goodwill (Group)
x Inventory write-down to net realisable value (Group and
Company)
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
Group materiality
EUR
1,750 thousand (in 2021 – EUR 1,068 thousand).
Overall
Company materiality
EUR 1,750 thousand (in 2021 – EUR 800 thousand).
How we determined it
0.75% of the Group’s and 0.60% 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 chose the thresholds of 0.75% and 0.60%, which is within
the range of acceptable quantitative materiality thresholds for
this benchmark.
We agreed with the Audit Committee that we would report to them misstatements identified during our
audit above EUR 87 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
(Group)
Refer to accounting policy on impairment
testing on
page 21
, accounting estimates and
assessments on page
27 and note 15
‘Intangible assets’ in the financial statements.
We focused on this area because of the
significance of the goodwill balance (The
Group has goodwill balance of EUR 4,166
thousand as
at 31 December 2022) 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 t
ested 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 from
management
and management expert’s
when
identifying and valuing the re
levant cash-
generating units. Recoverable amounts are
based on management’s view of internal and
market conditions such as future prices and
We focused on goodwill attributable to the cash
generating unit
from fresh milk products
of Kelmės
pienas
UAB, which represents 93% (in 2021 –
96%
)
of the entire goodwill balance of the Group.
We
evaluated the Group’s accounting policies
with
respect to impairment
of goodwill that these
are
based on IFRS.
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
2023
–2027;
- 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;
-
Testi
ng the mathematical accuracy of the model
and assessing the sensitivity of the impairment
test to key inputs.
volume growth rate, the timing of future
operating expenditure and the most
appropriate discount and long
-term growth
rates.
As
at 31 December 2022, based on the
impairment test performed for that day, no
further impairment was identified for cash
generating unit of Kelmės pienas UAB related
to
fresh milk products as recoverable amount
exceeded its
carrying amount. An impairment
loss of EUR 2,749 thousand
was identified as
at
31 December 2021.
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 impairment tests.
Inventory write
-down to net realisable value
(Group and Company)
Refer
to accounting policy on inventory on
page
17, accounting estimates and
assessments on page
27 and note 18
‘Inventories’ in the financial statements.
We focused on this area due to the size of the
inventory balance (EUR
25,493
thousand and
EUR
9,188 thousand as at 31 December
2022
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.
As at 31 Dece
mber 2022
the Group’s and the
Company’s
inventory (finished goods) write
-
down to net realisable value allowance
amounted to EUR
2,593
thousand and EUR
521
thousand, respectively.
We
assessed the Group’s and the Company’s
policies and methodology in respect of inventory
write
-downs to net realisable value
compliance
with the requirements of IFRSs.
W
e analysed, on sample bases,
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 identify slow
-
moving
or obsolete items. We also verified the reliability of
the inventory ageing report and compared our
e
stimated 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 5 subsidiaries four 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 full scope audits
of the parent entity VILKYŠKIŲ PIENINĖ AB and its subsidiaries Kelmės Pieninė AB and Modest AB. For
Kelmės pienas UAB and Baltic Dairy Board SIA we have carried audit work on selected balances and
transactions which were assessed by us as material from the Group audit perspective. The remaining
component of the Group was immaterial. Our audit addressed 94% of the Group’s revenues and 99% of
the Group’s total assets.
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, remuneration report and social responsibility
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, including the corporate governance report and
remuneration report, we considered whether the consolidated annual report, including the corporate
governance report and remuneration report, includes the disclosures required by the Law of the Republic
of Lithuania on Consolidated Reporting by Groups of Undertakings, the Law of the Republic of Lithuania
on 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, including the corporate governance report
and remuneration report, for the financial year for which the financial statements are prepared, is
consistent with the financial statements; and
● the consolidated annual report, including the corporate governance report and remuneration report,
has been prepared in accordance with the Law of the Republic of Lithuania on Consolidated
Reporting by Groups of Undertakings and the Law of the Republic of Lithuania on 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 threats 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 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
financial statements, including the consolidated annual report, for the year ended 31 December 2022 (the
“Single Electronic Reporting Format of the consolidated financial statements”).
Description of a subject matter and applicable criteria
The Single Electronic Reporting Format of the consolidated 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 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 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 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 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 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 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 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 financial statements, including the
preparation of the XHTML format and marking up the consolidated financial statements;
x verification whether the XHTML format was applied properly;
x evaluating the completeness of marking up the consolidated 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 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 financial statements for the
year ended 31 December 2022 complies, in all material aspects, with the ESEF Regulation.
Report on the compliance of the format of the separate financial statements with the requirements
of the European Single Electronic Reporting Format
The European single electronic reporting format has been applied by the management of the Company to
the Company’s financial statements to comply with the requirements of Article 3 of 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”). These requirements specify the
Company’s obligation to prepare its financial statements in a XHTML format. We confirm that the
European single electronic reporting format of the financial statements for the year ended 31 December
2022 complies with the ESEF Regulation in this respect
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 6 years.
The key audit partner on the audit resulting in this independent auditor’s report is Rasa Selevičienė.
On behalf of PricewaterhouseCoopers UAB
/signed with electronic signature/
Rasa Selevi
čienė
Assurance director
Auditor's Certificate No.000
504
Vilnius, Republic of Lithuania
7 April 2023
The auditor's electronic signature is used herein to sign only the Independent Auditor's Report