2020 ANNUAL REPORT
Agromino A/S
Registration number: CVR no. 29801843
Vester Farimagsgade 23, DK-1606 København Ø
01.01.2020-31.12.2020
2020
ANNUAL
REPORT
2020 ANNUAL REPORT
PAGE 1
WE ARE
FARMERS AND
AGRIBUSINESS
MANAGERS
CONTENTS
Business Highlights 2
Financial Review 3
The Share 8
Corporate Social Responsibility 9
Financial History 12
Consolidated Financial Statements 13
Consolidated Balance Sheet 13
Consolidated Income Statement 14
Consolidated Statement of Comprehensive Income 15
Consolidated Statement of Changes in Equity 16
Consolidated Statement of Cash Flow 17
Contents of Notes to the Consolidated Financial Statements 18
Notes to the Consolidated Financial Statements 19
Financial Statements of the Parent Company 65
Notes to the Financial Statements of the Parent Company 68
Management´s Statement 76
Independent Auditor´s Report 77
Definitions 80
2020 ANNUAL REPORT
PAGE 2
BUSINESS HIGHLIGHTS
• Net profit
1
of EUR 1.0 million in 2020
compared to net profit
1
of EUR 2.6
million in 2019.
• EBITDA profit
1
of EUR 17.6 million in
2020 compared to EBITDA profit
1
of
EUR 9.9 million in 2019. IFRS 16
adoption has been improving EBITDA
1
since 2019 and thus widening the gap
between net profit and EBITDA
1
,
because operating lease expenses for
land are not recorded within OPEX,
and instead depreciations of right-of-
use assets and financial costs were
recognized. If IFRS 16 had not been
adopted, EBITDA would be EUR 12.7
million in 2020.
• The results in 2020 include losses from
exchange rate differences in amount
EUR 3.3 million (a gain from exchange
rate differences in amount EUR 1.8
million in 2019). In 2020 Ukrainian
hryvna as well as Russian ruble
depreciated significantly. The official
exchange rate of Ukrainian hryvna as
of 31 December 2020 against euro
was UAH 34.74 per EUR, compared to
UAH 26.42 per EUR as at 31 December
2019. The official exchange rate of
Russian ruble as of 31 December 2020
against euro was RUB 91.47 per EUR,
compared to RUB 69.96 per EUR as at
31 December 2019.
• Total land under control was around
55 thousand hectares as of December
31, 2020.
• 28 April 2020 the President of Ukraine
signed new land law which will lead to
discrimination of foreign investors in
Ukrainian agriculture. The key part of
new land legislation shall come into
force in July 2021.
• On 15 July 2020, Agromino announced
its plan to apply for delisting of
Agromino’s shares. On 19 October
2020, Nasdaq Stockholm has
approved such application. The last
day of trading of Agromino’s shares
was 30 October 2020.
• On November 18, 2020 Agromino sold
its share 39.24% in associated
company AS Trigon Dairy Farming
Estonia (TDFE) for EUR 9.5 million EUR
(book value of 9.0 million EUR).
1
Presented from continuing and discontinued operations.
3,5
- 9,5
2,6
1,0
MEUR
NET
PROFIT/LOSS
12m 2018
12m 2019
12m 2020
12m 2017
2020 ANNUAL REPORT
PAGE 3
FINANCIAL REVIEW
The Group’s operations are divided into the
following operational segments: Ukraine
cereals and milk production including storage
and trading, and milk production in Russia.
The Group also had a 39.24% shareholding in
Trigon Dairy Farming Estonia Ltd. (TDFE),
which was sold on November 18,2020.
Revenues
Total revenue of the Group from continuing
and discontinued operations for 2020 at EUR
56.6 million compared to EUR 35.6 million for
2019. In 2019 revenues of the acquired
Resilient were included only since acquisition
date October 17 till December 31. (EUR 1.9
million).
Changes in biological assets/inventories
The current biological assets as of the year end
consist of winter crops sown for 2021 harvest.
Area under winter crops decreased from
23 858 ha as of December 31, 2019 to 14 844
ha as of December 31, 2020.
Expenses
OPEX for 2020 increased by 19% in
comparison with 2019. OPEX of acquired
Resilient were included for the period from
October 17 till December in 2019 and for the
whole year in 2020.
Net result
Agromino recorded net profit of EUR 1,0 million
compared to net profit of EUR 2,6 million in
2019. And EBITDA
1
stood at a profit of EUR
17.6 million compared to a profit of EUR 9.9
million in 2019.
Assets
The consolidated assets of the Group as of
December 31, 2020, amounted to EUR 81
million (EUR 113 million at December 31,
2019). The reflected decrease was caused
mainly by UAH and RUB depreciations
Fixed assets
Property, plant and equipment as of December
31, 2020, in the amount of EUR 21.5 million
accounted for 26% of the total assets,
comprising of land, buildings, machinery,
equipment and construction in progress.
Right-of-use assets include land right-of-use
asset recognized under IFRS 16 and Land
usage rights from business acquisition of
Resilient. Right-of use assets equaled EUR 21.9
million or 27 % in total assets as of December
31, 2020.
Total land under control as at December 31,
2020 was around 55 thousand hectares. The
Group owns land in Russian Milk production
(near 2.5 thousand hectares). In Ukraine, the
land is covered with mostly medium to long-
term land lease contracts. There is 1.7
thousand hectares in ownership.
0 1 2 3 4 5 6 7 8 9
Seeds, fertilizers, chemicals
Employee benefits expense
Land tax and land rental
Animal feed
Repairs
Fuel, gas, electricity
Transportation, other services and materials
Office and administration expenses
Legal and consulting fees
Other expenses
OPEX (MEUR)
2020
2019
2020 ANNUAL REPORT
PAGE 4
Inventories and biological assets
As of December 31, 2020, the inventories
stood at EUR 7.8 million.
Biological assets of EUR 7.2 million as of
December 31, 2020, comprised of the dairy
herd, grasslands and winter crops seeded for
2021 harvest.
Fair value of biological assets sown for next
year harvest is determined by present valuing
the net cash flows expected to be generated
from the assets discounted at average cost of
short-term financing.
Investment in associates
The Group had a shareholding in Estonian milk
production business through associate AS
Trigon Dairy Farming Estonia (TDFE). The
Group´s shareholding in TDFE amounted to
39.24% as of December 31, 2019. On
November 18, 2020 Agromino sold its share
39.24% in associated company AS Trigon
Dairy Farming Estonia for EUR 9.5 million EUR
(book value of 9.0 million EUR).
Assets classified as held for sale
In the end of 2020, the Group concluded
preliminary share-purchase agreements for
sale of corporate rights of companies,
operating in Nikolaev region, and of company,
operating in Lviv region. Assets, relating to
that companies, were classified as held for sale
as of December 31, 2020.
Liabilities and equity
Borrowings
The total borrowings of the Group as of
December 31, 2020, amounted to EUR 2.9
million (EUR 16.8 million as at December 31,
2019).
Equity
The total number of shares with par value of 1
EUR in the Company equaled to 24,895,123 as
of December 31, 2020.
Lease liabilities
Lease liabilities include current and non-
current lease liabilities recognized under IFRS
16 adoption by the Group.
Liabilities associated with assets
classified as held for sale
As of December 31, 2020 the Group classified
liabilities as associated with assets held for
sale in the amount EUR 4.5 million. Those
liabilities relate to companies to be disposed
under preliminary share purchase agreements
signed in the end of 2020. Companies to be
disposed operate in Nikolaev region and one in
Lviv region.
0
10
20
30
40
50
LAND IN UKRAINE
(Thousand hectares)
31.12.2018 31.12.2019 31.12.2020
Property,
plant and
equipment
Prepayments
, receivables
and other
assets
Assets
classified as
held for sale
Right-of-use
asset
Inventories
Biological assets
Equity
Borrowings
Lease
liability
Other liabilities
Cash
Liabilities associated with
assets held for sale
0%
20%
40%
60%
80%
100%
Assets Equity and liabilities
BALANCE SHEET STRUCTURE 31.12.2020
2020 ANNUAL REPORT
PAGE 5
UKRAINE SEGMENT
The operations of the Group comprise cereal
farming, storing, trading and also the milk
production in the Black Earth region of
Ukraine. Group´s production milk capacity in
Ukraine was established as a result of the
acquisition of Resilient in the end of 2019 and
is located in the south of Kyiv region.
For cereal farming, Agromino focuses on
previously cultivated land in the Black Earth
region because of its highly fertile soil and the
availability of fertile farmland at a relatively
low cost compared to other farming regions in
the world.
The Group’s strategy is to secure sufficient
elevator capacity to enable the Group to dry
the in-house produced grain after it has been
harvested. The Group owned four elevators
with total storage capacity at 135,000 tonnes.
As for December 31, 2020 assets and liabilities
of elevator in Nikolaev region were included in
those classified as held for sale.
The Group generates its main net revenues
from the sales of own produced cereals. The
company can sell its products on the local
market or on export markets, where the goods
are delivered to the Black Sea ports.
Generally, the Group sells the maximum
amount of wheat, corn, rapeseed, and soya to
exports and sunflower on the local market.
1
Presented from continuing and discontinued operations.
EUR 53,827,507 REVENUE
EUR 16,993,507 EBITDA
208,842 TONNES OF GRAIN
HARVESTED
50,969 HECTARES HARVESTED
KEY FIGURES
1
2020 ANNUAL REPORT
PAGE 6
Operational review
Harvested hectares
2016
2017
2018
2019*
2020**
Wheat
19 536
21 399
20 987
16 124
18 875
Sunflower
16 529
9 413
14 745
12 910
14 084
Rapeseed
4 416
7 570
1 822
2 137
2 808
Corn
1 879
1 179
1 013
4 727
11 504
Barley
424
335
261
Soya
3 044
3 550
2 537
6 001
1 016
Other
330
1 862
3 447
3 479
2 421
Total
46 157
45 308
44 551
45 378
50 969
Net production, t
2016
2017
2018
2019*
2020**
Wheat
74 788
85 328
65 940
61 650
90 998
Sunflower
37 619
17 216
34 747
34 934
34 410
Rapeseed
6 309
14 943
1 850
3 429
6 695
Corn
15 620
6 239
6 253
38 659
64 392
Barley
1 449
726
-
-
1 255
Soya
7 653
3 658
4 954
11 048
2 182
Other
5 693
3 751
6 788
10 810
8 910
Total
149 130
131 861
120 532
160 530
208 842
Net yield, t/ha
2016
2017
2018
2019*
2020**
Wheat
3.83
3.99
3.14
3.82
4.82
Sunflower
2.28
1.83
2.36
2.71
2.44
Rapeseed
1.43
1.97
1.02
1.60
2.38
Corn
8.31
5.29
6.17
8.18
5.60
Barley
3.42
2.17
-
-
4.80
Soya
2.51
1.03
1.95
1.84
2.15
Other
17.28
2.01
1.97
3.11
3.68
Total
3.23
2.91
2.70
3.54
4.10
* Resilient harvesting was included since October 17, 2019.
**Data 2020 include data of Resilient a.s., that was acquired by Agromino on October 17, 2019.
1,43
1,97
1,02
1,60
2,38
3,83
3,99
3,14
3,82
4,82
2,28
1,83
2,36
2,71
2,44
8,31
5,29
6,17
8,18
5,60
2,51
1,03
1,95
1,84
2,15
0,00
1,00
2,00
3,00
4,00
5,00
6,00
7,00
8,00
9,00
2016 2017 2018 2019 2020
CROP NET YIELDS, t/ha
Rapeseed Wheat Sunflower Corn Soya
2020 ANNUAL REPORT
PAGE 7
Sales of grain and oilseeds (2020 and 2019 crop, 3rd party)
1
2020
Tonnes
Own
produced,
EUR
thousand
Price*
EUR/t
Tonnes
Third
party, EUR
thousand
Price
EUR/t
Tonnes
Total
Revenue,
EUR
thousand
Price
EUR/t
Wheat
88 591
15 621
176
-
-
-
88 591
15 621
176
Barley
1 140
164
144
-
-
-
1 140
164
144
Sunflower
55 801
18 738
336
-
-
-
55 801
18 738
336
Corn
83 377
12 657
152
-
-
-
83 377
12 657
152
Rapeseed
6 758
2 489
368
-
-
-
6 758
2 489
368
Soya
1 705
798
468
-
-
-
1 705
798
468
Millet
3 708
797
215
-
-
-
3 708
797
215
Sorgo
379
48
128
-
-
-
379
48
128
Other
760
15
20
-
-
-
760
15
20
Total
242 219
51 327
212
-
-
-
242 219
51 327
212
Sales of grain and oilseeds (2019 and 2018 crop, 3rd party)
1
2019
Tonnes
Own
produced,
EUR
thousand
Price
EUR/t
Tonnes
Third
party,
EUR
thousand
Price
EUR/t
Tonnes
Total
Revenue,
EUR
thousand
Price
EUR/t
Wheat
65 884
10 219
155
15
2
137
65 899
10 221
155
Barley
51
6
118
-
-
-
51
6
118
Sunflower
42 583
11 613
273
-
-
-
42 583
11 613
273
Corn
21 004
2 354
112
-
-
-
21 004
2 354
112
Rapeseed
3 556
1 155
325
-
-
-
3 556
1 155
325
Soya
17 769
4 876
274
-
-
-
17 769
4 876
274
Other
7 503
1 392
185
-
-
-
7 503
1 392
185
Total
158 350
31 615
200
15
2
137
158 365
31 617
200
All prices exclude VAT, Domestic sales are ex elevator and export sales are CPT
Overall, the EBITDA
1
in Ukrainian segment
stood at profit of EUR 16.99 million in 2020 in
comparison with EBITDA profit of EUR 9.9
million in 2019.
1
Presented from continuing and discontinued operations.
0 1 2 3 4 5 6 7 8 9
Seeds, fertilizers, chemicals
Employee benefits expense
Land tax and land rental
Animal feed
Repairs
Fuel, gas, electricity
Transportation, other services and materials
Office and administration expenses
Legal and consulting fees
Other expenses
OPEX (MEUR)
2020
2019
2020 ANNUAL REPORT
PAGE 8
RUSSIAN MILK SEGMENT
The Group’s managed Russian milk production
operations are located in the St Petersburg
region.
Our Russian milk production: The number of
milking cows as of December 31, 2020 was
1 201 (1 194 milking cows as at December 31,
2019). The fair value of animals was
determined by independent valuator. In 2020,
the gain from revaluing 2 557 animals was
recorded at EUR 0.14 million in the Income
Statement in comparison with gain from
revaluing 2 239 animals at EUR 0.22 million in
2019. In total, the fair value of the herd (2 557
animals), as of December 31, 2020, stood at
EUR 2 211 thousand (2019: 2 239 animals at
EUR 2 546 thousand).
The EBITDA of Milk production segment in
Russia amounted to a profit of EUR 0.63
million (profit of EUR 0.09 million in 2019).
THE SHARE
Share information
Major shareholders as at 31.12.2020
Country
No of shares
(thousands)
No of votes
(thousands)
MABON investiční fond s p.z.k.
Czech Republic
18 759
18 759
OTHER
6 136
6 136
Total number
24 895
24 895
As at 12.05.2021 Mabon investiční fond s p.z.k. owns 18 835 thousands shares and holds the same
number of votes. The number of shares and votes of other shareholders amounts to 6 060 thousands.
FINANCIAL CALENDAR
Annual General Meeting May 28, 2021
Annual Report 2021 (via Agromino web) May 23-31, 2022
2020 ANNUAL REPORT
PAGE 9
CORPORATE SOCIAL RESPONSIBILITY
Statutory statement on social
responsibility in accordance with
section 99a of the Danish Financial
Statements Act
2020 ANNUAL REPORT
PAGE 10
2020 ANNUAL REPORT
PAGE 11
Statutory statement on the
underrepresented gender in accordance
with section 99b of the Danish Financial
Statements Act
2020 ANNUAL REPORT
PAGE 12
FINANCIAL HISTORY
Income statement, EUR thousand
2016
2017
2018
1
2019
2020
Revenue from continuing operations
39 190
31 019
25 287
35 623
54 364
EBIT from continuing operations
3 192
3 821
-9 266
5 922
11 808
Net financials from continuing
operations
-3 231
-1 754
-1 100
-3 180
-9 320
Net profit/loss
-25 079
3 479
-9 552
2 662
1 019
Balance sheet, EUR thousand
31.12.2016
31.12.2017
31.12.2018
1
31.12.2019
31.12.2020
Total assets
45 140
46 765
46 707
112 912
81 449
incl Non-current assets
24 016
26 672
25 481
77 760
59 933
incl Property, plant and equipment
13 795
14 940
12 609
26 317
21 469
Investment in property, plant and
equipment
657
4 710
2 502
5 004
6 344
Net debt (including accrued interest)
6 436
10 478
10 635
14 936
-3 086
Total equity
30 421
31 197
31 837
52 381
43 277
Cash flow statement, EUR
thousand
2016
2017
2018
2019
2020
Cash flows from operating activities
5 952
-1 154
1 671
11 112
27 177
Cash flows from investing activities
11 213
466
271
-6 289
-323
Cash flows from financing activities
-15 347
-874
-2 942
-5 743
-21 940
Effects of exchange rate changes
-73
-404
21
2 119
-421
Cash and cash equivalents at
beginning of period
1 901
3 646
1 680
701
1 900
Cash and cash equivalents at end of
period
3 646
1 680
701
1 900
6 025
Key figures
31.12.2016
31.12.2017
31.12.2018
31.12.2019
31.12.2020
Number of shares, end of the period
(adjusted for reversed share split)
17 283 575
17 421 313
17 421 313
24 895 123
24 895 123
Total number of employees
893
835
735
1 028
923
Land under control, thousand hectares
58.8
57.8
47.1
55.3
54.5
Ratios
2016
2017
2018
2019
2020
Earnings per share (EPS), EUR
(adjusted for reversed share split)
-1.45
0.20
-0.54
0.14
0.04
Book value per share, EUR (adjusted
for reversed share split)
1.74
1.77
1.83
2.10
1.74
Return on assets (ROA)
-44%
8%
-20%
3%
1%
Return on equity (ROE)
-166%
11%
-30%
6%
2%
Equity ratio, %
67%
67%
69%
47%
54%
Current ratio
1.52
1.46
1.58
1.32
1.24
Acid test
0.74
0.46
0.41
0.36
0.54
For definitions of the ratios please refer to page 80.
1
The Group has changed its assumption regarding fair value measurement of biological assets of winter wheat and winter rapeseed for next
year harvest. Comparative information for the year 2018 in annual report was recalculated respectively.
2020 ANNUAL REPORT
PAGE 13
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
in EUR thousand
Note
31.12.2020
31.12.2019
ASSETS
Current assets
Cash and cash equivalents
5,7
Trade and other receivables
6,7
Inventories
8
Biological assets
9
Assets held for sale
Current assets
Prepaid land rents and land usage rights
12
Other non-current prepayments and receivables
6,7
Biological assets
9
Intangible assets
10
Property, plant and equipment
11
Right-of-use asset
22
Investments in associates
29
Assets classified as held for sale
33
Non-current assets
Total assets
LIABILITIES
Trade and other payables
7,13
Borrowings
7,14
Current portion of lease liability
22
Liabilities associated with assets classified as held for sale
33
Current liabilities
Trade and other payables
7,13
Borrowings
7,14
Lease liability
22
Deferred tax liabilities
16
Deferred income
Non-current liabilities
Total liabilities
EQUITY
Ordinary shares
17
Share premium
17
Other reserves
18
-44 162
-34 039
Accumulated deficit
-63 068
-64 087
Capital and reserves attributable to equity holders
of the Group
Non-controlling interest in equity
Total equity
Total equity and liabilities
The notes on pages 19 to 64 are an integral part of these consolidated financial statements.
2020 ANNUAL REPORT
PAGE 14
CONSOLIDATED INCOME STATEMENT
in EUR thousand
Note
2020
2019
Continuing operations:
Revenue
19
Other income
19
Gain/loss of biological assets arising from changes in fair value less cost to
sell
9
-1 512
Total revenue, other income and fair value adjustments
Net changes in inventories of agricultural produce and work in
process
8
-6 130
-5 420
Cost of purchased goods for trading purposes
-88
-120
Raw materials and consumables used for production purposes
20
-20 556
-17 609
Employee benefits expense
21
-7 003
-4 926
Depreciation and amortization
-5 753
-3 583
Other administrative expenses
23
-2 208
-1 750
Revaluation of land
11
Other (losses)/gains - net
24
Gains/losses from exchange rate differences
-3 349
Finance income
25
Finance costs
25
-6 649
-4 124
Share of profit/loss of investments accounted for using the equity method
29
-113
-61
Profit/loss before income tax
Corporate income tax
15
-22
Profit/loss for the period from continuing operations
Discontinued operations
Loss for the period from discontinued operations
33
-1 362
Profit/Loss for the period
Attributable to:
Equity holders of the Company
Non-controlling interest
Profit/loss per share for profit/loss attributable to the equity
holders of the Company during the period, both basic and diluted
(expressed in Euros per share)
26
The notes on pages 19 to 64 are an integral part of these consolidated financial statements.
2020 ANNUAL REPORT
PAGE 15
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
in EUR thousand
2020
2019
Profit/Loss for the period
Other comprehensive income:
Items that will not be reclassified to profit or loss
Gain/Loss from revaluation of land of continuing operations
11,18
-174
Items that may be subsequently reclassified to profit or loss
Currency translation differences (Note 3.1.1.(i))
18
-9 949
Other comprehensive expense/income for the period; net of tax
-10 123
Total comprehensive income/expense for the period
-9 104
Attributable to:
Equity holders of the Company
-9 104
Non-controlling interest
Total comprehensive income/expense for the period
-9 104
The notes on pages 19 to 64 are an integral part of these consolidated financial statements.
2020 ANNUAL REPORT
PAGE 16
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Attributable to equity holders of the Company
in EUR thousand
Share
capital
Share
premium
Other
reserves
Accumulated
deficit
Total
Non-
controlling
interest
Total
Equity
Balance at 31.12.2018
1
-38 988
-66 747
Profit/loss for the period
1
Other comprehensive expense
Total comprehensive income
Issuance of share capital
Balance at 31.12.2019
-34 039
-64 087
Profit/loss for the period
Other comprehensive income
-10 123
-10 123
-10 123
Total comprehensive income
-10 123
-9 104
-9 104
Balance at 31.12.2020
-44 162
-63 068
The notes on pages 19 to 64 are an integral part of these consolidated financial statements.
1
The Group has changed its assumption regarding fair value measurement of biological assets of winter wheat and winter rapeseed for next
year harvest. Comparative information was adjusted respectively. Please see Note 2.1 for more details
2020 ANNUAL REPORT
PAGE 17
CONSOLIDATED STATEMENT OF CASH FLOW
in EUR thousands
Note
2020
2019
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
-34 140
-29 872
Income tax paid
15
-16
Subsidies received
Interest received
25
Net cash used in/generated from operating activities
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired
Disposal of subsidiary, net of cash disposed of
Purchase of property, plant and equipment
11
-9 953
-6 436
Proceeds from sales of property, plant and equipment
11
Net cash generated from investing activities
-323
-6 289
Cash flows from financing activities
Proceeds from borrowings
14
Repayments of borrowings
14
-18 736
-2 389
Repayments of lease liabilities
14
-1 335
-2 102
Repayments of land lease liabilities
-4 614
-4 154
Interest paid
25
-991
-1 132
Other movement
-3 860
Net cash used in financing activities
-21 940
-5 743
Net decrease/increase in cash and cash equivalents
-920
Effects of exchange rate changes on cash and cash equivalents
-421
Classified as held for sale
-368
Cash and cash equivalents at beginning of period
5
Cash and cash equivalents at end of period
5
The notes on pages 19 to 64 are an integral part of these consolidated financial statements.
2020 ANNUAL REPORT
PAGE 18
CONTENTS OF NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
1. General information ..................................................................................................... 19
2. Summary of significant accounting policies ..................................................................... 19
3. Financial risk management ........................................................................................... 29
4. Critical Accounting Estimates and Judgments .................................................................. 32
5. Cash and cash equivalents ............................................................................................ 35
6. Trade and other receivables .......................................................................................... 36
8. Inventories ................................................................................................................. 38
9. Biological assets .......................................................................................................... 40
10. Intangible assets ....................................................................................................... 42
11. Property, plant and equipment .................................................................................... 42
12. Prepaid land rents and land usage rights ...................................................................... 45
13. Trade and other payables ........................................................................................... 45
14. Borrowings ............................................................................................................... 46
15. Income tax ............................................................................................................... 48
16. Deferred tax.............................................................................................................. 49
17. Share capital ............................................................................................................. 50
18. Other reserves .......................................................................................................... 50
19. Revenue and other income .......................................................................................... 51
20. Raw materials and consumables used for production purposes ........................................ 51
21. Employee benefits expense ......................................................................................... 51
22. Right-of-use asset and leasse liability ........................................................................... 52
23. Other administrative expenses .................................................................................... 53
24. Other (losses)/gains-net ............................................................................................. 53
25. Finance income and finance cost .................................................................................. 53
26. Segment reporting ..................................................................................................... 54
27. Contingencies ............................................................................................................ 55
28. Commitments............................................................................................................ 56
29. Interest in associate ................................................................................................... 56
30. Group structure ......................................................................................................... 58
31. Related party transactions .......................................................................................... 59
32. Fees to the auditors appointed by the shareholders ........................................................ 60
33. Assets held for sale and liabilities associated ................................................................. 60
34. Subsidiary acquisition ................................................................................................. 61
35. Events after the balance sheet date ............................................................................. 63
2020 ANNUAL REPORT
PAGE 19
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
1. GENERAL INFORMATION
Agromino A/S (The Company) is an integrated
soft commodities producer (operating
commercial cereals and dairy farms), storage
provider and trader with operations in Ukraine,
Russia and Estonia. (no farms etc. are in the
Czech Republic).
The parent company is a limited liability
company incorporated and domiciled in
Denmark. The address of its registered office is
c/o Advokatfirmaet Poul Schmith, Vester
Farimagsgade 23, 1606 Copenhagen,
Denmark. The company listed its shares on the
Stockholm First North Stock Exchange on May
18, 2007. From December 8, 2010, the
company’s shares have been traded on the
main market Small Cap segment on NASDAQ
Stockholm.
On 15 July 2020, Agromino announced its plan
to apply for delisting of Agromino’s shares. On
19 October 2020, Nasdaq Stockholm has
approved such application. The last day of
trading of Agromino’s shares was 30 October
2020. The Group’s owners are legal and
physical persons.
These financial statements were authorised for
issue by the Board of Directors on May 12,
2021.
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The principal accounting policies applied in the
preparation of these financial statements are
set out below. The policies have been
consistently applied to all the years presented
unless otherwise stated.
2.1 BASIS OF PREPARATION
This consolidated financial information of
Agromino A/S for 2020 ended December 31,
2020, has been prepared in accordance with
International Financial Reporting Standards
(IFRS) as adopted by the European Union and
further requirements in the Danish Financial
Statements Act. The consolidated financial
statements have been prepared under the
historical cost convention, as modified by the
revaluation of biological assets and land.
The reporting period of the consolidated
financial statements is the calendar year.
The Company prepares its separate financial
statements in accordance with IFRS as adopted
by the European Union and the further
requirements in the Danish Financial
Statements Act. Parent company financial
statements are presented after notes to the
consolidated financial statements in the same
set of financial statements.
The preparation of financial statements in
conformity with IFRS requires the use of certain
critical accounting estimates. It also requires
management to exercise its judgment in the
process of applying the Group’s accounting
policies. The areas involving a higher degree of
judgment or complexity, or areas where
assumptions and estimates are significant to
the consolidated financial statements are
disclosed in Note 4.
ADOPTION OF NEW OR REVISED STANDARDS
AND INTERPRETATIONS
The following amended standards that are
relevant to the Group became effective from 1
January 2020.
- Amendments to IFRS 3 - Definition of
Business.
- Amendments to IFRS 7, IFRS 9 and IAS 39 -
Base Interest Rate Reform - Phase 1.
- Amendments to IAS 1 and IAS 8 – Definition
of material.
- Revised Conceptual Framework for Financial
Reporting, issued on March 29, 2018.
- Amendments to IFRS 16 Leases - Accounting
for lease concessions related to the COVID-19
pandemic.
2020 ANNUAL REPORT
PAGE 20
Their application did not have a material effect
on the disclosures or the amounts reported in
these financial statements.
The Group has not applied in advance any
other standards, interpretations or
amendments that have been issued but have
not yet entered into force
New and revised IFRS Standards in issue but
not yet effective
At the date of authorisation of these financial
statements, the Group has not applied the
following new and revised IFRS Standards that
have been issued but are not yet effective:
IFRS 17 – Insurance Contracts (effective for
annual reporting periods beginning on or after
1 January 2023).
Amendments IFRS 4 – Extension of the
Temporary Exemption from Applying IFRS 9
(effective for annual reporting periods
beginning on or after 1 January 2023).
Amendments to IAS 1 – Classification of
Liabilities as Current or Non-current (applied
for annual periods beginning on or after 1
January 2023).
Amendments to IFRS 3 – Reference to the
Conceptual Framework (applied for annual
periods beginning on or after 1 January 2022).
Amendments to IAS 16 – Property, Plant and
Equipment: Proceeds before Intended Use
(applied for annual periods beginning on or
after 1 January 2022).
Amendments to IAS 37 – Onerous Contracts –
Costs of Fulfilling a Contract (applied for annual
periods beginning on or after 1 January 2022).
Amendments to IFRS 1 First-time Adoption of
International Financial Reporting Standards –
Subsidiary as a first-time adopter (applied for
annual periods beginning on or after 1 January
2022).
Amendments to IFRS 9 Financial Instruments
– Fees in the ’10 per cent’ test for
derecognition of financial liabilities (applied for
annual periods beginning on or after 1 January
2022).
Amendments to IAS 41 Agriculture – Taxation
in fair value measurements (applied for annual
periods beginning on or after 1 January 2022).
Amendment to IFRS 16 Leases COVID-19-
Related Rent Concessions (the amendment is
effective 1 June 2020 but, to ensure the relief
is available when needed most, lessees can
apply the amendment immediately in any
financial statements—interim or annual—not
yet authorised for issue).
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS
4 and IFRS 16 – Interest Rate Benchmark
Reform – Phase 2 (applied for annual periods
beginning on or after 1 January 2021).
Amendments to IAS 1 and IFRS Practice
Statement 2 – Disclosure of Accounting Policies
(effective for annual periods beginning on or
after 1 January 2023).
Amendments to IAS 8 – Definition of
Accounting Estimates (effective for annual
periods beginning on or after 1 January 2023).
The directors do not expect that the adoption
of the Standards listed above will have a
material impact on the financial statements of
the Group in future periods.CONSOLIDATION
a) Subsidiaries
Subsidiaries are all 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. Subsidiaries
are fully consolidated from the date on which
control is transferred to the group. They are
deconsolidated from the date that control
ceases.
The Group uses the acquisition method of
accounting to account for business
combinations. The consideration transferred for
the acquisition of a subsidiary is the fair values
of the assets transferred, the liabilities incurred
and the equity interests issued by the Group.
Any difference between fair value and the
carrying value of assets transferred is
recognised in the income statement. The
consideration transferred includes the fair
value of any asset or liability resulting from a
contingent consideration arrangement.
Acquisition-related costs are expensed as
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. On
an acquisition-by-acquisition basis, the Group
recognises any non-controlling interest in the
acquiree either at fair value or at the non-
controlling interest’s proportionate share of the
acquiree’s net assets. 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
this is less than the fair value of the net assets
of the subsidiary acquired in the case of a
2020 ANNUAL REPORT
PAGE 21
bargain purchase, the difference is recognised
directly in the income statement.
Inter-company transactions, balances and
unrealised profits on transactions between
Group companies are eliminated. Losses are
also eliminated but considered whether they
indicate an impairment that requires
recognition in consolidated financial
statements. Accounting policies of subsidiaries
have been changed where necessary to ensure
consistency with the policies adopted by the
Group.
b) Transactions with non-controlling interests
The Group treats transactions with non-
controlling interests as transactions with equity
owners of the group. For purchases from non-
controlling interests, the difference between
any consideration paid and the relevant share
acquired of the carrying value of net assets of
the subsidiary is recorded in equity. Gains or
losses on disposals to non-controlling interests
are also recorded in equity. When the group
ceases to consolidate or equity account for an
investment because of a loss of control, joint
control or significant influence, any retained
interest in the entity is remeasured to its fair
value with the change in carrying amount
recognised in profit or loss. This fair value
becomes the initial carrying amount for the
purposes of subsequently accounting for the
retained interest as an associate, joint venture
or financial asset. In addition, any amounts
previously recognised in other comprehensive
income in respect of that entity are accounted
for as if the group had directly disposed of the
related assets or liabilities. This may mean that
amounts previously recognised in other
comprehensive income are reclassified to profit
or loss. If the ownership interest in an associate
is reduced but the significant influence is
retained, only a proportionate share of the
amounts previously recognised in other
comprehensive income are reclassified to profit
or loss where appropriate.
c) Associates
Associates are all entities over which the group
has significant influence but not control or joint
control. This is generally the case where the
group holds between 20% and 50% of the
voting rights. Investments in associates are
accounted for using the equity method of
accounting (Note 2.1 d) below), after initially
being recognised at cost.
d) Equity method
Under the equity method of accounting, the
investments are initially recognised at cost
and adjusted thereafter to recognise the
group’s share of the post-acquisition profits or
losses of the investee in profit or loss, and the
group’s share of movements in other
comprehensive income of the investee in
other comprehensive income. Dividends
received or receivable from associates and
joint ventures are recognised as a reduction in
the carrying amount of the investment.
When the group’s share of losses in an equity-
accounted investment equals or exceeds its
interest in the entity, including any other
unsecured long-term receivables, the group
does not recognise further losses, unless it
has incurred obligations or made payments on
behalf of the other entity.
Unrealised gains on transactions between the
group and its associates and joint ventures
are eliminated to the extent of the group’s
interest in these entities. Unrealised losses
are also eliminated unless the transaction
provides evidence of an impairment of the
asset transferred. Accounting policies of
equity accounted investees have been
changed where necessary to ensure
consistency with the policies adopted by the
group.
The carrying amount of equity-accounted
investments is tested for impairment in
accordance with the policy described in Note
2.5.
2.2 FOREIGN CURRENCY
TRANSLATION
a) Functional and presentation currency
Items included in the financial statements of
each of the Group’s entities are measured
using the currency of the primary economic
environment in which the entity operates (‘the
functional currency’). The functional
currencies of group entities are the following:
for Estonian subsidiaries the Euro, for
Ukrainian subsidiaries the Ukrainian hryvna,
for Russian subsidiaries the Russian rouble,
for Cypriot subsidiaries the Euro, for Czech
Republic the Czech koruna and for Danish
parent company the Euro. The consolidated
financial statements are presented in Euro,
which is the functional currency for the parent
company and the presentation currency for
the group.
b) Transactions and balances
2020 ANNUAL REPORT
PAGE 22
Foreign currency transactions are translated
into the functional currency using the
exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and
losses resulting from the settlement of such
transactions and from the translation at year-
end exchange rates of monetary assets and
liabilities denominated in foreign currencies
are recognised in the income statement.
Foreign exchange gains and losses that relate
to borrowings and cash equivalents are
presented in the income statement within
‘Gains/losses from exchange rate differences’.
All other foreign exchange gains and losses
are presented in the income statement within
‘Other (losses)/gains – net.
c) Group companies
The results and financial position of all the
Group entities (none of which has the currency
of a hyperinflationary economy) that have a
functional currency different from the
presentation currency are translated into the
presentation currency as follows:
(a) assets and liabilities for each balance
sheet presented are translated at the
closing rate at the date of that balance
sheet;
(b) income and expenses for each income
statement are translated at average
exchange rates of a month or a longer
period as appropriate (unless this
average is not a reasonable
approximation of the cumulative effect
of the rates prevailing on the
transaction dates, in which case
income and expenses are translated at
the rate on the dates of the
transactions); and
(c) all resulting exchange differences are
recognised in other comprehensive
income.
On consolidation, exchange differences arising
from the translation of the net investment in
foreign operations and of borrowings are taken
to shareholders’ equity. When a foreign
operation is partially disposed of or sold,
exchange differences that were recorded in
Other comprehensive income are recognised in
the income statement as part of the gain or loss
on the sale.
Goodwill and fair value adjustments arising on
the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity and
translated at the closing rate.
2.3 PROPERTY, PLANT AND EQUIPMENT
All property, plant and equipment except for
land is stated at historical cost less depreciation
and impairment, where required. Historical cost
includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with
the item will flow to the Group and the cost of
the item can be measured reliably. The carrying
amount of the replaced part is derecognised. All
other repairs and maintenance are charged to
the income statement during the financial
period in which they are incurred.
The land is not depreciated. Depreciation on
other assets is calculated using the straight-line
method to allocate their cost to their residual
values over their estimated useful lives, as
follows:
• Buildings 25-40 years
• Machinery 7-20 years
• Vehicles 3-5 years
• Furniture, fittings and equipment 3-8 years
The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at each
balance sheet date.
An asset’s carrying amount is written down
immediately to its recoverable amount if the
asset’s carrying amount is greater than its
estimated recoverable amount (Note 2.5).
Gains and losses on disposals are determined by
comparing the proceeds with the carrying
amount and are recognised within Other
gains/losses – net, in the income statement.
General and specific borrowing costs directly
attributable to the acquisition, construction or
production of qualifying assets, which are assets
that necessarily take a substantial period of time
to get ready for their intended use or sale, are
added to the cost of those assets, until such time
as the assets are substantially ready for their
intended use or sale.
FAIR VALUE OF LAND
Land is carried using the revaluation method.
Under the revaluation method, an increase in
an asset’s carrying amount as a result of a
revaluation is recognised in other
2020 ANNUAL REPORT
PAGE 23
comprehensive income and accumulated in
equity under other reserves. However, the
increase is recognised in profit or loss to the
extent that it reverses a revaluation decrease
of the same asset previously recognised in
profit or loss. A decrease in an asset’s carrying
amount as a result of a revaluation is
recognised in profit or loss. However, the
decrease is recognised in other comprehensive
income to the extent of any credit balance
existing in the revaluation surplus in respect of
that asset. The decrease recognized in other
comprehensive income reduces the amount
accumulated in equity under other reserves
(Note 18).
Valuations are performed with sufficient
regularity to ensure that the fair value of a
revalued asset does not differ materially from
its carrying amount.
When revalued assets are sold, the amounts
included in other reserves are transferred to
retained earnings.
2.4 INTANGIBLE ASSETS
a) Licenses
Acquired computer software licences are
capitalised on the basis of the costs incurred to
acquire and bring to use the specific software.
These costs are amortised over their estimated
useful lives of two to ten years.
b) Land-usage rights under emphyteusis
Land-usage rights under emphyteusis are
capitalised on the basis of the costs incurred.
Land-usage rights are amortised over their
estimated useful lives to forty-nine years.
2.5 . IMPAIRMENT ON NON-FINANCIAL
ASSETS
Assets that are subject to depreciation and land
are reviewed for impairment whenever events
or changes in circumstances indicate that the
carrying amount may not be recoverable. An
impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable
amount is the higher of an asset’s fair value
less costs of disposal and value in use. For the
purposes of assessing impairment, assets are
grouped at the lowest levels for which there are
separately identifiable cash flows (cash-
generating units). Non-financial assets other
than goodwill that suffered impairment are
reviewed for possible reversal of the
impairment at each reporting date.
2.6 FINANCIAL ASSETS
a) Classification
The Group classifies its financial assets in the
following categories: loans and receivables.
The classification depends on the purpose for
which the financial assets were acquired.
Management determines the classification of its
financial assets at initial recognition. Loans and
receivables are non-derivative financial assets
with fixed or determinable payments that are
not quoted in an active market. They are
included in current assets, except for maturities
greater than 12 months after the balance sheet
date. These are classified as non-current
assets. The Group's loans and receivables
comprise “Trade and other receivables” (see
Note 6) and Cash and cash equivalents (see
Note 5) in the balance sheet. See Note 2.10 for
measurement of trade receivables.
b) Recognition and measurement
Regular purchases and sales of financial assets
are recognised on the trade-date – the date on
which the Group commits to purchase or sell
the asset. Investments are initially recognised
at fair value plus transaction costs for all
financial assets not carried at fair value through
profit or loss. Financial assets are derecognised
when the rights to receive cash flows from the
investments have expired or have been
transferred and the Group has transferred
substantially all risks and rewards of
ownership. Loans and receivables are carried at
amortised cost using the effective interest
method.
The Group assesses at each balance sheet date
whether there is objective evidence that a
financial asset or a group of financial assets is
impaired. Impairment testing of trade
receivables is described in Note 2.10.
c) Impairment of financial assets carried at
amortised cost
The Group assesses at the end of each
reporting period whether there is objective
evidence that a financial asset or group of
financial assets is impaired. A financial asset or
a Group of financial assets is impaired and
impairment losses are incurred only if there is
objective evidence of impairment as a result of
one or more events that occurred after the
initial recognition of the asset (a ‘loss event’)
and that loss event (or events) has an impact
on the estimated future cash flows of the
financial asset or Group of financial assets that
can be reliably estimated. Evidence of
2020 ANNUAL REPORT
PAGE 24
impairment may include indications that the
debtors or a group of debtors are experiencing
significant financial difficulty, default or
delinquency in interest or principal payments,
the probability that they will enter bankruptcy
or other financial reorganisation.
For loans and receivables category, the amount
of the loss is measured as the difference
between the asset’s carrying amount and the
present value of estimated future cash flows
(excluding future credit losses that have not
been incurred) discounted at the financial
asset’s original effective interest rate. The
carrying amount of the asset is reduced and the
amount of the loss is recognised in the
consolidated income statement. If in a
subsequent period, the amount of the
impairment loss decreases and the decrease
can be related objectively to an event occurring
after the impairment was recognised, the
reversal of the previously recognised
impairment loss is recognised in the
consolidated income statement.
2.7 AGRICULTURE AND BIOLOGICAL
ASSETS
Agricultural activity is defined by the
management as an activity of the biological
transformation of biological assets for sale into
agricultural produce or into additional biological
assets. Agricultural produce is defined as the
harvested product of the Group’s biological
assets and a biological asset is defined as a
living animal or plant. The Group has
determined the groups of its biological assets
to be livestock and growing crops.
Biological assets are measured on initial
recognition and at each balance sheet date at
its fair value less cost to sell. Agricultural
produce harvested from the Group’s biological
assets is measured at its fair value less cost to
sell and is subsequently recorded as inventories
and measured in accordance with the
accounting principles of inventory (Note 2.9).
If an active market exists for a biological asset
or agricultural produce, the quoted price in that
market is the appropriate basis for determining
the fair value of that asset. If an active market
does not exist the most proximate market
transaction price, provided that there has not
been a significant change in economic
circumstances between the date of that
transaction and the balance sheet date, is used
in determining fair value.
A gain or loss arising on initial recognition of a
biological asset at fair value less cost to sell and
from a subsequent change in fair value less
cost to sell is included in profit or loss for the
period in which it arises as “Gain/loss of
biological assets arising from changes in fair
value less cost to sell”.
The biological assets are recorded as current
and non-current biological assets based on the
operational cycle of the respective biological
assets. In general, biological assets of growing
plants are recognised as current assets
because the operational cycle is less than 12
months. Dairy herd is recorded as a non-
current biological asset.
a) Livestock and dairy herd
Livestock is measured at their fair value less
estimated point-of-sale costs. The fair value
measurements are categorized under Level 2 in
the fair value hierarchy, as defined by IFRS 13.
b) Crops – cereals and grassland
Crops are measured at their fair value less cost
to sell. The fair value measurements are
categorized under Level 3 in the fair value
hierarchy, as defined by IFRS 13. Fair value of
biological assets sown for next year harvest by
present valuing the net cash flows expected to
be generated from the assets discounted at
average cost of short-term financing.
The Group’s grasslands qualify as bearer plants
under the definition in IAS 41 Agriculture and
are therefore accounted for under the rules for
plant and equipment. The grasslands are
carried at cost less depreciation. Grasslands
are depreciated for a period of 3 years.
2.8 GOVERNMENT GRANTS
a) Government grants related to agricultural
activity
An unconditional government grant related to
a biological asset measured at its fair value less
cost to sell is recognised as income when the
government grant becomes receivable
(government grants for the dairy herd, general
area-aid subsidies). If a government grant
related to a biological asset measured at its fair
value less cost to sell, is conditional, including
whereby a government grant requires a Group
company not to engage in specified agricultural
activity, the Group recognizes the government
grant as income when the conditions attaching
to the government grant are met (investment
subsidies, area-aid environmental subsidies)
and until then aid received is recognized as a
liability.
2020 ANNUAL REPORT
PAGE 25
b) Government grants related to purchase of
property, plant and equipment
Grants from the government are recognised at
their fair value where there is a reasonable
assurance that the grant will be received and
the group will comply with all attached
conditions. Government grants relating to
property, plant and equipment are included in
non-current liabilities as deferred government
grants and are amortised to the income
statement on a straight-line basis over the
expected lives of the related assets.
2.9 INVENTORIES
a) Agricultural produce
i. Milk
Milk is initially measured at its fair value
less cost to sell at the time of milking and
subsequently recorded as inventories and
measured at the lower of cost and net
realisable value. The fair value of milk is
determined based on market prices in the local
area.
ii. Grain- own produced (harvested)
Grain and feeds produced by the Group
are initially measured at its fair value less cost
to sell at the time of harvest and recorded in
inventories until sold to third parties or used
internally for feeding animals or for seeds.
Grains and feed produced by the Group are
subsequently measured at net realisable value.
The net realisable value of feed is determined
based on market prices in the local area. The
net realisable value of grain is determined
based on quoted prices on the nearest market
or if multiple markets are available, in the
market where the Group’s company expects to
sell the produce.
b) Grain – purchased from third parties
Purchased grain from third parties is initially
recorded at the purchase price and
subsequently measured at a fair value less cost
to sell. The fair value of grain is determined
based on quoted prices on the nearest market
or if multiple markets are available, on the
most advantageous market.
c) Work-in-progress related to field
preparation
Cost of agricultural preparation on fields before
seeding is recorded as work-in-progress in
inventories. Work in progress comprises raw
materials, direct labor costs and other direct
costs (based on normal operating capacity).
After seeding the cost of field preparation is
reclassified as biological assets (Note 2.7 b)).
d) Raw materials
Inventories are stated at the lower of cost and
net realisable value. Cost is determined using
weighted average cost method. Net realisable
value is the estimated selling price in the
ordinary course of business, less applicable
variable selling expenses.
2.10 TRADE RECEIVABLES
Trade receivables are amounts due from
customers for merchandise sold or services
performed in the ordinary course of business.
If the collection is expected in one year or less
(or in the normal operating cycle of the
business if longer), they are classified as
current assets. If not, they are presented as
non-current assets.
Trade receivables are recognised initially at fair
value and subsequently measured at amortised
cost using the effective interest method, less
provision for impairment.
2.11 CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in
hand, deposits held at call with banks, other
short-term highly liquid investments with
original maturities of three months or less.
Deposits over three months are classified as
cash and cash equivalents if they are readily
convertible to a known amount of cash and are
subject to insignificant risk of changes in value.
2.12 SHARE CAPITAL
Ordinary shares are classified as equity.
Incremental costs directly attributable to the
issue of new shares or options are shown in
equity as a deduction, net of tax, from the
proceeds.
2.13 TRADE PAYABLES
Trade payables are obligations to pay for goods
or services that have been acquired in the
ordinary course of business from suppliers.
Accounts payable are classified as current
liabilities if payment is due within one year or
less. If not, they are presented as non-current
liabilities.
Trade payables are recognised initially at fair
value and subsequently measured at amortised
cost using the effective interest method.
2.14 BORROWINGS
Borrowings are recognised initially at fair value,
net of transaction costs incurred. Borrowings
are subsequently stated at amortised cost; any
difference between the proceeds (net of
2020 ANNUAL REPORT
PAGE 26
transaction costs) and the redemption value is
recognised in the income statement over the
period of the borrowings using the effective
interest method.
Borrowings are classified as current liabilities
unless the Group has an unconditional right to
defer settlement of the liability for at least 12
months after the balance sheet date.
Borrowings are removed from the balance
sheet when the obligation specified in the
contract is discharged, canceled or expired. The
difference between the carrying amount of a
financial liability that has been extinguished or
transferred to another party and the
consideration paid, including any non-cash
assets transferred or liabilities assumed, is
recognised in the Income statement as finance
income or finance cost. Where the terms of a
financial liability are renegotiated and the
entity issues equity instruments to a creditor to
extinguish all or part of the liability (debt for
equity swap), a gain or loss is recognised in the
Income statement, which is measured as the
difference between the carrying amount of the
financial liability and the fair value of the equity
instruments issued.
2.15 CURRENT AND DEFERRED INCOME
TAX
The tax expense for the period comprises a
current and deferred tax. Tax is recognised in
the income statement, except to the extent
that it relates to items recognised in other
comprehensive income or directly in equity. In
this case, the tax is also recognised in other
comprehensive income or equity, respectively.
a) Corporate income tax
The current income tax charge is calculated on
the basis of the tax laws enacted or
substantively enacted at the balance sheet date
in the countries where the Company and its
subsidiaries operate and generate taxable
income. Management periodically evaluates
positions taken in tax returns with respect to
situations in which applicable tax regulations
are subject to interpretation and establishes
provisions where appropriate on the basis of
amounts expected to be paid to the tax
authorities.
The Income tax rate in Ukraine is 18%, in
Russia 20%, in Denmark 22% and in Cyprus
12.5%. Agricultural producers in both Ukraine
and Russia are exempted from the ordinary
corporate income tax system if they meet the
requirements to be recognised as agricultural
producers (Note 2.15 b)). The income tax in
Estonia is calculated only on distributed
earnings with the effective rate 20/80 of the
distributed amount. From 2019, a tax rate of
14/86 can be applied to dividend payments.
The more beneficial tax rate can be used for
dividend payments in the amount of up to the
average dividend payment during the three
preceding years that were taxed at the tax rate
of 20/80.
Deferred income tax is provided in full, using
the liability method, on temporary differences
arising between the tax bases of assets and
liabilities and their carrying amounts in the
consolidated financial statements. However,
the deferred income tax is not accounted for if
it arises from initial recognition of an asset or
liability in a transaction other than a business
combination that at the time of the transaction
affects neither accounting nor taxable profit nor
loss. Deferred income tax is determined using
tax rates (and laws) that have been enacted or
substantially enacted by the balance sheet date
and are expected to apply when the related
deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred income tax assets are recognised to
the extent that it is probable that future taxable
profit will be available against which the
temporary differences can be utilised.
Deferred income tax is provided on temporary
differences arising on investments in
subsidiaries and associates, except where the
timing of the reversal of the temporary
difference is controlled by the Group and it is
probable that the temporary difference will not
reverse in the foreseeable future.
Deferred income tax assets and liabilities are
offset when there is a legally enforceable right
to offset current tax assets against current tax
liabilities and when the deferred income taxes
assets and liabilities relate to income taxes
levied by the same taxation authority on either
the taxable entity or different taxable entities
where there are an intention and ability to
settle the balances on a net basis.
b) Agricultural tax regimes in Ukraine and
Russia
Both in Ukraine and Russia companies are
exempt from ordinary corporate income tax
regime if they meet criteria to be recognised as
agricultural producers.
In Ukraine, a company is considered to be an
agricultural producer if it derived at least 75%
2020 ANNUAL REPORT
PAGE 27
of its revenue in the previous tax year from the
sales of the self-produced agricultural product.
Simplified agricultural tax means that the
agricultural producer pays tax based not on its
profits, but on the total area used for
agricultural production.
In Russia, a company can apply for the
agricultural tax regime if it meets the criteria of
an agricultural company. However, the
companies on a general tax regime having the
revenue from sales of self-produced
agricultural produce have reduced tax rates.
2.16 EMPLOYEE BENEFITS
a) Pension obligations and other post-
employment obligations
The Group does not operate pension schemes
and does not provide post-retirement benefits
to their retirees. Pension obligations may arise
due to a legal obligation to pay for the
incapability to work because of an accident.
The Group has legal obligation to pay
contributions to the state pension funds
according to the local regulations of each
country of location. The contributions to the
local pension funds are treated as social
security tax payments.
b) Termination benefits
Termination benefits are payable when
employment is terminated by the Group before
the normal retirement date, or whenever an
employee accepts voluntary redundancy in
exchange for these benefits.
2.17 PROVISIONS
Provisions for environmental restoration,
restructuring costs, and legal claims are
recognised when: the Group has a present legal
or constructive obligation as a result of past
events; it is probable that an outflow of
resources will be required to settle the
obligation, and the amount can be reliably
estimated. Restructuring provisions comprise
lease termination penalties and employee
termination payments. Provisions are not
recognised for future operating losses.
Provisions are measured at the present value
of the expenditures expected to be required to
settle the obligation using a pre-tax rate that
reflects current market assessments of the
time value of money and the risks specific to
the obligation. The increase in the provision
due to the passage of time is recognised as
interest expense.
2.18 REVENUE RECOGNITION
Revenue is income arising in the course of the
Group’s ordinary activities. Revenue is
recognised in the amount of transaction price.
Transaction price is the amount of
consideration to which the Group expects to be
entitled in exchange for transferring control
over promised goods or services to a customer,
excluding the amounts collected on behalf of
third parties.
Revenue is recognised net of discounts, returns
and value added taxes, export duties, other
similar mandatory payments.
Group's contracts with customers are fixed-
price contracts and generally include both
advance payment and deferred payment for
the same contracts. Generally the sales are
made with a credit term mainly to 2-5 business
days, which is consistent with the market
practice and consequently trade receivables
are classified as current assets.
A receivable is recognised when the goods are
delivered or dispatched based on delivery
terms 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 (Note 6). Contract assets are immaterial
and therefore not presented separately in the
consolidated financial statements.
A contract liability is an entity's obligation to
transfer goods or services to a customer for
which the entity has received consideration
from the customer. Contract liabilities are
included in trade and other payables line item
as advances from customers (Note 13).
a) Sales of goods – agricultural produce
The Group’s main revenue arises from the sales
of agricultural produce – grain and milk. The
agricultural produce is subject to quality control
at the point of sale and the sales value is
depending on the quality. Sales are recognised
when control of the good has transferred, being
when the goods are delivered to the customer,
the customer has full discretion over the goods,
and there is no unfulfilled obligation that could
affect the customer's acceptance of the goods.
Delivery occurs when the goods have been
shipped to the specific location, the risks of
obsolescence and loss have been transferred to
the customer, and either the customer has
accepted the goods in accordance with the
contract, the acceptance provisions have
lapsed, or the Group has objective evidence
that all criteria for acceptance have been
satisfied.
2020 ANNUAL REPORT
PAGE 28
b) Sales of biological assets
The Group sells living animals for slaughter.
The revenue from sales of living animals is
recognised after the animals have been
delivered to the slaughterhouse.
c) Sales of services
The Group occasionally sells services to other
agricultural producers. Revenue from the
services is recognised when the service has
been provided.
d) Interest income
Interest income is recognised on a time-
proportion basis using the effective interest
method. When a receivable is impaired, the
Group reduces the carrying amount to its
recoverable amount, being the estimated
future cash flow discounted at the original
effective interest rate of the instrument and
continues unwinding the discount as interest
income. Interest income on impaired loans is
recognised using the original effective interest
rate.
e) Dividend income
Dividend income is recognised when the right
to receive payment is established.
2.19 LEASES
The Group is a party to lease contracts as a
lessee for, the land plots.
Leases are recognized, measured and
presented in line with IFRS 16 Leases. The
Group implemented a single accounting model,
requiring lessees to recognize assets and
liabilities for all leases excluding exceptions
listed in the standard as at 1 January 2019.
Therefore, the definition of a lease under IFRS
16 was applied only to contracts entered into
or changed on or after 1 January 2019.
The Group has elected not to recognize right-
of-use assets and lease liabilities for short-term
leases that have a lease term of 12 months.
Payments associated with short-term leases
are recognized as an expense in profit or loss.
In applying IFRS 16 for the first time, the Group
has used the following practical expedients
permitted by the standard:
• the use of a single discount rate to a portfolio
of leases with reasonably similar
characteristics;
• the accounting for operating leases with a
remaining lease term of less than 12 months as
at 1 January 2019 as short-term leases;
• the exclusion of initial direct costs for the
measurement of the right-of-use asset at the
date of initial application.
Based on the accounting policy applied the
Group recognizes a land lease rights and a
lease liability at the commencement date of the
contract for all leases conveying the right to
control the use of an identified asset for a
period of time. The commencement date is the
date on which a lessor makes an underlying
asset available for use by a lessee.
The land lease rights are initially measured at
cost, which comprises:
- the amount of the initial measurement of the
lease liability;
- any lease payments made at or before the
commencement date, less any lease
incentives;
- any initial direct costs incurred by the lessee;
After the commencement date the land lease
rights are measured at cost less any
accumulated depreciation and any
accumulated impairment losses and adjusted
for any re-measurement of the lease liability.
The Group depreciates the land lease rights
from the commencement date to the earlier of
the end of the useful life of the land lease right
asset or the end of the lease term on a straight-
line basis.
The lease liability is initially measured at the
present value of the lease payments that are
not paid at that date.
Each lease payment is allocated between the
liability and finance cost. The finance cost is
charged to profit or loss over the lease period.
The lease payments are discounted using the
borrowing cost as published by National Bank
of Ukraine on its official
web-site (www.bank.gov.ua) since the interest
rate implicit in the lease could not be
determined.
2.20 DIVIDEND DISTRIBUTION
Dividend distribution to the Group’s
shareholders is recognised as a liability in the
Group’s financial statements in the period in
which the dividends are approved by the
Group’s shareholders.
2020 ANNUAL REPORT
PAGE 29
2.21 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 the performance of the operating
segments, has been identified as the Executive
Board. The Executive Board considers the
business from a geographical and operational
perspective. Local production units, which are
interlinked with each other in operational
activities, are aggregated in the internal
reporting in production clusters. The
management considers two continuing
business segments (Ukraine and Russian milk
production). The Group uses the equity method
to record the accounts of the Milk production
segment in Estonia as the profit/loss on the
Income Statement is shown under the line
Share of profit of investments accounted for
using the equity method. See Note 26 for
further information on the Russian milk
production segment. Ukraine segment includes
cereals production, storage, trading operations
and and newly also the milk production from
Resilient farms.
2.22 NON-CURRENT ASSETS HELD FOR
SALE AND DISCONTINUED
OPERATIONS
Non-current assets (or disposal groups) are
classified as held for sale if their carrying
amount will be recovered principally through a
sale transaction rather than through continuing
use and a sale is considered highly probable.
They are measured at the lower of their
carrying amount and fair value less cost to sell,
except for assets such as deferred tax assets,
assets arising from employee benefits, financial
assets.
An impairment loss is recognised for any initial
or subsequent write-down of the asset (or
disposal group) to fair value less cost to sell. A
gain is recognised for any subsequent increases
in fair value less cost to sell of an asset (or
disposal group), but not in excess of any
cumulative impairment loss previously
recognised. A gain or loss not previously
recognised by the date of the sale of the non-
current asset (or disposal group) is recognised
at the date of derecognition.
Non-current assets (including those that are
part of a disposal group) are not depreciated or
amortised while they are classified as held for
sale. Interest and other expenses attributable
to the liabilities of a disposal group classified as
held for sale continue to be recognised.
Non-current assets classified as held for sale
and the assets of a disposal group classified as
held for sale are presented separately from the
other assets in the balance sheet. The liabilities
of a disposal group classified as held for sale
are presented separately from other liabilities
in the balance sheet.
A discontinued operation is a component of the
entity that has been disposed of or is classified
as held for sale and that represents a separate
major line of business or geographical area of
operations, is part of a single coordinated plan
to dispose of such a line of business or area of
operations, or is a subsidiary acquired
exclusively with a view to resale. The results of
discontinued operations are presented
separately in the statement of profit or loss.
3. FINANCIAL RISK MANAGEMENT
3.1 FINANCIAL RISK FACTORS
The Group’s activities expose it to a variety of
financial risks: market risk (including currency
risk, commodity price risk, cash flow interest
rate risk, fair value interest rate risk), credit
risk, liquidity risk and capital repatriation risk.
The Group’s overall risk management program
acknowledges the unpredictability of financial
markets and on the basis of the current
business operations of the Group, the
management is following financial risk
management policies to minimise potential
adverse effects on the Group’s financial
performance from unpredictable fluctuations in
the financial markets. The Group’s centralised
controlling and risk management function
carries out risk management activities on a
day-to-day basis in close cooperation with the
regional management members.
1. Market risk
(i) Foreign exchange risk
The Group operations in Ukraine and Russia are
exposed to foreign exchange risk arising
primarily from exposures to the US dollar,
Euro, Russian rouble, and Ukrainian hryvna.
Foreign exchange risks from US dollar, Euro,
Russian rouble, and Ukrainian hryvna arise
2020 ANNUAL REPORT
PAGE 30
mainly from recognised assets and liabilities.
The Group has not implemented any formal
currency risk management policies.
The average value of US dollar relative to euro
depreciated by 2.0% in 2020 (depreciated in
2019 by 5.2%)
The average value of Ukrainian hryvna relative
to euro depreciated by 6.7% in 2020
(appreciated in 2019 by 10%).
The average value of Russian rouble relative to
euro depreciated by 14.2% in 2020
(depreciated in 2019 by 2%).
During 2020 foreign exchange rates changed
significantly. As at 31 December 2020, the
exchange rate of Ukrainian hryvna was
34,7396 UAH/EUR (as at 31 December 2019 -
26,4220) and exchange rate of Russian rouble
was 91,4671 UAH/EUR (as at 31 December
2019 - 69,9563).
The total recognised decrease in equity from
currency translation differences amounted to
EUR 44 700 thousand at December 31, 2020
(EUR 34 751 thousand at December 31, 2019)
(Note 18).
(ii) Commodity price risk
The Group is exposed to commodities price risk
because of the significant size of its business
operations in the production of cereals. In case
cereals produced by the Group are primarily
exported, a significant share of the Group’s
revenues will be exposed to global fluctuations
in agricultural commodity prices. The milk
production operations of the Group are to a
lesser extent affected by global commodity
prices since the raw milk is sold regionally and
cannot be exported over long distances.
The Group’s strategy is not to hedge against
any commodity price movements in order to
provide its shareholders a direct exposure to
the fluctuation in the market. Unlike traditional
large-scale farming enterprises that have
typically used a financial hedging strategy to
protect against adverse price fluctuations or
the risks inherent in a highly seasonal business,
the Group does not engage in any commodity
hedging. The Group believes that its diversified
crop rotation system and its combination of
cereal production and dairy farming provide its
business with sufficient operational stability.
(iii) Cash flow and fair value interest rate
risk
As the Group has no significant floating
interest-bearing assets, the Group’s income
and operating cash flows are substantially
independent of changes in market interest
rates.
The Group’s interest rate risk arises from
borrowings (Note 14). Borrowings issued at
variable rates expose the Group to cash flow
interest rate risk. The Group analyses its
interest rate exposure on a dynamic basis.
Various scenarios are simulated taking into
consideration refinancing, renewal of existing
positions and alternative financing.
At 31 December 2020, if interest rates on
floating interest rate borrowings at that date
had been 0.5% higher with all other variables
held constant, net loss for the year would have
been EUR 11 thousand higher (2019: EUR 38
thousand higher), as a result of higher interest
expense on floating rate borrowings.
The breakdown between floating and fixed interest rates for the existing borrowings of the Group is
shown below:
in EUR thousand
31.12.2020
31.12.2019
Borrowings and finance leases (outstanding amount)
Floating rate
2 228
7 574
incl. related to LIBOR
2 228
5 878
incl. related to EURIBOR
-
1 696
Fixed rate
711
9 262
2 939
16 836
2. Credit risk and counterparty business risk
Credit risk for the Group arises from cash and
cash equivalents, deposits with banks and
financial institutions and customers, including
outstanding receivables and committed
transactions. In respect of banks and financial
institutions, the Group’s policy is to work with
institutions, which have an internationally
2020 ANNUAL REPORT
PAGE 31
reputable strategic shareholder as the majority
investor. (See also Note 5 for details).
3. Liquidity risk
The Group’s main liquidity risks derive from the
cyclical nature of agricultural production. Field-
works in spring and harvest in autumn entails
concentration of costs and working capital need
in the spring season and concentration of
revenues in the autumn season. The cyclicality
is stronger in cereals production and much
lower in dairy production, as dairy production
revenues accrue evenly throughout the whole
operating year. The Group has been lowering
the cyclicality also in cereals production by
acquiring its own warehousing infrastructure to
store grain for longer time periods and to be
able to sell cereal products more evenly
throughout the year. The management
monitors the liquidity risk by following the main
key performance indicators on a continuous
basis, including cash flows.
The undiscounted gross payments of all
borrowings and trade payables are presented
in the included tables. The amounts include
interest payments.
in EUR thousand
Total
31.12.2020
Less
than 6
months
between
6 and 12
months
between
1 and 2
years
between
2 and 10
years
Maturity
Interest rate
Borrowings and
finance leases
(Note 14)
3 174
255
1 279
1 166
473
incl. related to
LIBOR
825
15
810
-
-
2021
3mLIBOR+3.4%
incl. related to
LIBOR
1 159
19
151
579
410
2025
3mLIBOR+3.3%
incl. related to
LIBOR
438
55
155
228
-
2021-2023
1mLIBOR + 4,4%-
6,1%
inc. with fixed
interest rate
752
167
163
359
63
2024
5%
Payables (Note 13)
13 416
932
5 680
-
6 803
2021-2029
no interest rate;
5% for amount of
loans from related
parties
Total
16 590
1 187
6 959
1 166
7 276
in EUR thousand
Total
31.12.2019
Less
than 6
months
between
6 and 12
months
between
1 and 2
years
between
2 and
10 years
Maturity
Interest rate
Borrowings and
finance leases
(Note 14)
17 792
1 748
14 501
1 499
44
incl. related to
LIBOR
6 312
434
5 303
531
44
2020-2023
1mLIBOR+3.5%-
9,4%
incl. related to
EURIBOR
1 015
-
1 015
-
2020
1M EURIBOR +
1,6% p.a.
incl. related to
EURIBOR
681
-
681
-
-
2020
7DAYS EURIBOR +
1,6% p.a.
inc.with fixed
interest rate
9 784
1 314
7 502
968
-
2020-2022
5%-25,8%
Payables (Note
13)
16 189
987
2 477
667
12 058
2020-2029
no interest rate;
4-5% for amount
of loans from
related parties
Total
33 981
2 735
16 978
2 166
12 102
3.2 CAPITAL MANAGEMENT
The Group considers as capital its equity and
borrowings.
2020 ANNUAL REPORT
PAGE 32
in EUR thousand
31.12.2020
31.12.2019
Borrowings (Note
14)
2 939
16 836
Total shareholders´
equity
43 535
52 639
Capital repatriation risk
The capital repatriation risk derives from the
Group’s investments into Ukrainian and Russian
subsidiaries. Potential changes in the political
environment in Ukraine or Russia may impose
restrictions on repatriating capital invested as it
was historically.
3.3 FAIR VALUE ESTIMATION
The different levels for assets carried at fair
value have been defined as follows:
• Quoted prices (unadjusted) in active
markets for identical assets or liabilities
(Level 1).
• Inputs other than quoted prices included
within level 1 that are observable for the
asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from
prices) (Level 2).
• Inputs for the asset or liability that are not
based on observable market data (that is,
unobservable inputs) (Level 3).
See Note 11 for disclosures of the land that is
measured at fair value, Note 8 for inventories,
Note 9 for biological assets and Note 14 for
borrowings.
4. CRITICAL ACCOUNTING ESTIMATES AND
JUDGMENTS
Estimates and judgments are continually
evaluated and are based on historical
experience and other factors, including
expectations of future events that are believed
to be reasonable under the circumstances.
4.1 CRITICAL ACCOUNTING
ESTIMATES AND ASSUMPTIONS
The Group makes estimates and assumptions
concerning the future. The resulting accounting
estimates will, by definition, rarely equal the
related actual results. The estimates and
assumptions that have a significant risk of
causing a material adjustment to the carrying
amounts of assets and liabilities within the next
financial year are outlined below.
a) Fair value of biological assets
The Group’s biological assets are measured at
fair value less cost to sell at each balance sheet
date (value at December 31, 2020, was EUR
7 181 thousand and value at December 31,
2019, was EUR 13 087 thousand) (Note 9).
Variability analysis:
Were the actual prices for the biological assets
in animal husbandry higher by 10% from
management’s estimates, the fair value would
increase by EUR 293 thousand (by EUR 350
thousand in 2019), if the prices were lower by
10%, the fair value would decrease by the
same amount.
Were the actual crop yields or prices in crop
cultivation higher by 10 % from management
estimates, the fair value would increase by EUR
882 thousand as of December 31, 2020 (by
EUR 1 719 thousand as of December 31, 2019),
if crop yields or prices were lower by 10 %, the
fair value would decrease for the same amount.
Were the actual cost per ha in crop cultivation
higher by 10 % from management estimates,
the fair value would decrease by EUR 371
thousand as of December 31, 2020 (by EUR
774 thousand as of December 31, 2019), if
crop yields were lower by 10 %, the fair value
would increase for the same amount.
b) Useful lives of property, plant, and
equipment
The depreciable items of property, plant, and
equipment amounted to EUR 17 179 thousand
as at December 31, 2020 (EUR 21 401
thousand as at December 31, 2019) (Note 11).
The remaining balance includes land, which
does not depreciate; and construction in
process. Management has estimated useful
lifetimes for depreciable property, plant, and
equipment. However, the actual useful
lifetimes can be different than those estimated
by the management. If the average useful
lifetime would be 10% longer (shorter) than
estimated by the management, it would
2020 ANNUAL REPORT
PAGE 33
decrease (increase) the depreciation charge by
EUR 285 thousand (decrease/increase by EUR
211 thousand in 2019).
c) Net realisable value and fair value less cost
to sell of inventories
The Group has its agricultural produce in
inventory as of the year-end (Note 8). The
agricultural produce and inventories for
commodities trading have been valued to fair
value less cost to sell. The fair value of the
grain is determined based on the market
statistics published by APK-Inform or in case
the Group had sold or had sales contracts for
its inventory then those actual prices were
used. Would the prices be lower (higher) than
estimated by 10%, the value of the inventories
would be EUR 194 thousand less (more) and
the equity smaller (bigger) by the equal
amount (in 2019: EUR 1 059 thousand).
d) Recoverable values of property, plant, and
equipment
No impairment indicators were identified for
assets in Ukraine as of December 31, 2020.
For the assets in Ukraine impairment test was
carried out in 2019. The value-in-use method
was applied to determine the recoverable
values of non-current assets. Cash flows were
projected, including revenues, operating
expenses, investment requirements and
working capital needs. The Group used in the
model its target yields and prices based on
forecasts. The Group applied 5% long-term
growth rate. The discount rate applied was
15.67%. The test demonstrated that the
segment´s assets value in use was higher than
the carrying amount of these assets.
Major sensitive inputs 2019:
EUR
thousand
Change
Recov.
Amount
change
Impairment
Increase in
discount rate
2pp
-10 127
no
Decrease in
terminal
growth rate
1pp
-3 749
no
For the assets in milk production in Russia
impairment test was carried out in 2020 and
2019. The value-in-use method was applied to
determine the recoverable values of non-
current assets. The total value of the non-
current assets and net working capital in milk
production in Russia on December 31, 2020,
amounted to EUR 4 088 thousand (2019: EUR
6 528 thousand). Cash flows were projected,
including revenues, operating expenses,
investment requirements and working capital
needs. The Group used in the model its target
yields and prices for milk based on forecasts.
The Group applied 4% long-term growth rate
(2019: 4%) that has been aggregated from the
long-term growth perspective in Russia and
estimation of the growth in food prices in
relation to other inputs. The discount rate
applied was 16.01% in 2020 (14.76% in 2019).
The test demonstrated that the segment´s
assets value in use was higher than the
carrying amount of these assets as of
December 31,2020 and as of December 31,
2019.
In 2020 and 2019, the following reasonable
changes in major sensitive inputs would have
caused the decrease of the recoverable amount
below the carrying amount:
Major sensitive inputs 2020:
EUR thousand
Change
Impairment
Increase in discount rate
2pp
-737
Decrease in milk price from
2021 onwards
5%
-1 555
Decrease in terminal growth
rate
1pp
-268
Major sensitive inputs 2019:
EUR thousand
Change
Impairment
Increase in discount rate
2pp
-1 120
Decrease in milk price from
2020 onwards
5%
-1 547
Decrease in terminal growth
rate
1pp
-417
e) Fair value of land
The fair value of land is reliant on significant
assumptions and unobservable inputs. See
Note 11.1 for the measurement of fair value of
land and financial impact of a potential change
in the value per hectare.
4.2 OTHER RISK FACTORS
RISKS RELATED TO UKRAINIAN LAND
28 April 2020 the President of Ukraine signed
new land law which will lead to discrimination
of foreign investors in Ukrainian agriculture.
2020 ANNUAL REPORT
PAGE 34
The key part of new land legislation shall come
into force in July 2021.
RISKS RELATED TO LAND OWNERSHIP IN
RUSSIA
Russian law does not allow a foreign entity nor
a foreign controlled Russian entity to own
agricultural land in Russia. A Russian entity is
considered a foreign-controlled entity when
more than 50 percent of its share capital is
owned by a foreign entity.
The Russian agricultural land (Note 11) of the
Group is currently owned by Russian operating
company, which is wholly-owned subsidiary of
the holding company incorporated in Russia.
The holding company is, in turn, owned by the
non-Russian parent companies. While this
structure technically complies with the Russian
law restriction on the foreign ownership of
Russian agricultural land, no assurances can be
given that the ownership structure could not be
challenged on the basis that they possibly
violate the spirit of the law. The Russian courts
and legal system generally tend to adopt a
formal approach to legislative interpretation.
However, no assurance can be given as to how
a Russian court would treat each particular
situation brought to its consideration or as to
future developments in the Russian legal
system which may give greater weight to
substance over form.
4.3 SITUATION IN UKRAINE AND
RUSSIA AND POTENTIAL IMPACT ON THE
GROUPS´S OPERATIONS
Ukraine
During last years, the Ukrainian economy
started to demonstrate certain signs of
recovery and growth following the significant
decline in 2014-2016. After recovering during
2016-2019 in 2020, the economy of Ukraine
was negatively affected by the global economic
crisis, burdened by the COVID-19 pandemic.
The inflation rate in Ukraine during 2020
amounted to 5.0% (as compared to 4.1% in
2019).
The National Bank of Ukraine (“NBU”)
implements currency liberalization measures to
boost the economic growth. In 2018-2019, the
national currency – Ukrainian hryvnia – has
strengthened, particularly, against US dollar
and Euro. Further, the NBU has gradually
decreased its key interest rate from 18% p.a.
in September 2018 to 6% p.a. in June 2020.
During 2020 foreign exchange rates changed
significantly. As at 31 December 2020, the
official exchange rate of the national currency
was 28,2746 UAH/USD (as at 31 December
2019 – 23,6862) and 34,7396 UAH/EUR (as at
31 December 2019 - 26,4220).
Nevertheless, main risks affecting the
sustainability of the economic growth are
represented by the continuing Russian military
aggression against Ukraine; lack of the clear
consensus as to the directions of the
institutional reforms and low level of capital
inflow.
Russia
The Russian Federation displays certain
characteristics of an emerging market. Its
economy is particularly sensitive to oil and gas
prices. The legal, tax and regulatory
frameworks continue to develop and are
subject to frequent changes and varying
interpretations. In 2020 inflation equaled to 4.9
% (3.0 % in 2019). Considering the sensitivity
of the economy to oil and gas prices, the
economic situation in the future is difficult to
predict and management’s current
expectations and estimates could differ from
actual results. Management is taking necessary
measures to ensure sustainability of the
Group’s operations.
4.4. COVID-19 OUTBREAK
The COVID-19 outbreak was first reported near
the end of 2019. At that time, a cluster of cases
displaying the symptoms of a ‘pneumonia of
unknown cause’ were identified in Wuhan, the
capital of China’s Hubei province. On 31
December 2019, China alerted the World
Health Organisation (WHO) of the new virus.
Since then, the virus has spread worldwide. On
11 March 2020, the WHO declared the COVID-
19 outbreak to be a pandemic.
The rapid spread of the pandemic in 2020 has
prompted governments in many countries,
including Ukraine, to introduce various
measures to combat the outbreak, including
travel restrictions, business closures, isolation,
quarantine, and more. These measures
affected the global supply chain, demand for
goods and services, and the scale of business
activity, leading to volatility in the financial and
commodity markets. The crisis in the real
sector, burdened by quarantine measures, had
a negative impact on production volumes,
2020 ANNUAL REPORT
PAGE 35
capital investment and employment. This
worsened the financial position of a large part
of enterprises, falling incomes, etc.
The Management assessed the impact of
COVID-19 on its Group’s assets impairment, its
revenues and its ability to generate sufficient
cash flow to settle its liabilities when they are
due and to maintain its operations in the
foreseeable future. As of the date of the issue
of this financial statements, the Group’s
operations have not been significantly
impacted.
The final impact of COVID-19 will depend on
future developments, including, among others,
the ultimate geographic spread and severity of
the virus, the consequences of governmental
and other measures designed to prevent the
spread of the virus, the development of
effective treatments, the duration of the
outbreak, actions taken by governmental
authorities, customers, suppliers and other
third parties, workforce availability, and the
timing and extent to which normal economic
and operating conditions resume. Management
continues to make efforts to identify, manage
and mitigate the economic disruption impacts
of the COVID-19 pandemic to the Group;
however, there are factors beyond its
knowledge or control, including the duration
and severity of this outbreak, any such similar
outbreak, as well as further governmental and
regulatory actions taken.
5. CASH AND CASH EQUIVALENTS
in EUR thousand
31.12.2020
31.12.2019
Cash on hand
5
5
Short-term bank deposits
6 020
1 895
6 025
1 900
Short-term bank deposits bear interest of 0%-3.5% on annualized base (in 2019 0% – 5%)
The credit quality of cash at bank according to banks external credit rating (Moody’s) is given in the
following table:
in EUR thousand
31.12.2020
31.12.2019
A1*
34
3
Aa2*
41
126
Aa3*
602
8
Baa1*
5 209
626
Baa3*
5
551
Ba1
27
68
B2
76
-
B3
4
7
Caa1
-
5
Caa2
-
358
Other
22
143
6 020
1 895
* As at December 31, 2020, the parent company ratings were used for the money at AS SEB Pank
(Estonia), AS Swedbank (Estonia), PJSC OTP Bank (Ukraine) and PJSC Credit Agricole Bank (Ukraine)
(the same as of December 31, 2019).
2020 ANNUAL REPORT
PAGE 36
The split of cash between currencies:
in EUR thousand
31.12.2020
31.12.2019
Ukrainian hryvna
314
653
US dollar
2 825
538
Euro
2 820
632
Russian rouble
32
55
Other currencies
34
22
6 025
1 900
6. TRADE AND OTHER RECEIVABLES
in EUR thousand
31.12.2020
31.12.2019
Trade receivables
447
775
Other receivables
197
945
Prepayments for taxes
1 935
3 875
Prepayments to suppliers
1 030
2 138
Total receivables and prepayments
3 609
7 733
Less non-current portion:
Prepayments for non-current assets
-124
-22
Other receivables
-71
-94
Total non-current portion
195
116
Current portion
3 414
7 617
The fair values of trade and other receivables are
not materially different from the carrying values
based on the expected discounted cash flows. All
non-current receivables are due within more
than one year from the balance sheet date. Non-
current prepayments will realize in non-current
assets, like property, plant, and equipment. As
of December 31, 2020, VAT receivable in
amount of EUR 71 thousand is presented in non-
current portion of total trade and other
receivables (VAT receivable in amount of EUR 94
thousand as of December 31, 2019). For a
breakdown of trade and other receivables by
category please refer to Note 7.
The ageing of trade receivables is as follows:
in EUR thousand
31.12.2020
31.12.2019
including receivables not due
293
728
including receivables overdue up to 3 months
91
17
including receivables overdue up 3 to 6 months
6
1
including receivables overdue over 6 months
57
29
The ageing of other receivables is as follows:
in EUR thousand
31.12.2020
31.12.2019
including receivables not due
195
299
including receivables overdue up to 3 months
-
-
including receivables overdue over 6 months
2
646
Overdue trade receivables are not considered
impaired based on the individual assessment of
each significant receivable.
The credit quality of trade receivables that are
not overdue can be assessed by reference to
external credit ratings (if available) or to
historical information about counterparty default
rates:
2020 ANNUAL REPORT
PAGE 37
in EUR thousand
31.12.2020
31.12.2019
Group 1
140
257
Group 2
153
470
Group 3
-
1
Total unimpaired trade receivable
293
728
Group 1 – new customers/related parties (less than 6 months).
Group 2 – existing customers/related parties (more than 6 months) with no
defaults in the past.
Group 3 – existing customers/related parties (more than 6 months) with
some defaults in the past. All defaults were fully recovered.
As at December 31, 2020, Other receivables not
due are from counterparties with no or some
defaults in the past (no or some defaults in the
past in as at December 31, 2019).
in EUR thousand
2020
2019
At January 1
-14
-108
Provision for receivables impairment
-
-
Receivables written off during the year as uncollectible
-
-
Provision recovery
14
95
Currency translation differences
-
-1
At December 31
-
-14
The carrying amounts of the Group’s trade and other receivables are denominated in the following
currencies:
in EUR thousand
31.12.2020
31.12.2019
US dollar
145
919
Russian rouble
94
146
Ukrainian hryvna
404
646
Euro
1
1
Czech koruna
-
8
644
1 720
The maximum exposure to credit risk arising
from trade and other receivables at the reporting
date is the carrying amount of each class of
receivable mentioned above. The Group does
not hold any collateral as security for the trade
receivable
2020 ANNUAL REPORT
PAGE 38
7. FINANCIAL INSTRUMENTS BY CATEGORY
In EUR thousand
31.12.2020
31.12.2019
Assets as per balance sheet
Loans and
receivables
Loans and
receivables
Cash and cash equivalents (Note 5)
6 025
1 900
Trade and other receivables excluding prepayments (Note 6)
644
1 720
6 669
3 620
31.12.2020
31.12.2019
Liabilities as per balance sheet
Financial
liabilities at
amortised
cost
Financial
liabilities at
amortised
cost
Trade and other payables excluding social security, other taxes and
prepayments from clients (Note 13)
13 416
16 189
Borrowings excluding lease liabilities (Note 14)
2 573
14 870
Lease liabilities (Note 14)
366
1 966
Land lease liability (Note 22)
14 927
24 646
31 282
57 671
Prepayments are excluded as this analysis is required only for financial assets.
8. INVENTORIES
Inventory breakdown, EUR thousand
31.12.2020
31.12.2019
Grain for sale
1 941
10 594
Raw materials, supplies
3 632
3 941
Fieldworks in process
2 253
1 602
Total
7 826
16 137
Incl. own produced inventory
4 738
12 840
in EUR thousand
2020
2019
At 1 January
12 840
10 072
Changes in balances of finished product stocks**:
-4 465
-2 306
- Agricultural production recognized at the fair value (Note 9)
30 160
26 927
- Dairy production recognized at the fair value
4 646
3 089
- Capitalization of costs to fieldworks in process
6 592
1 930
- Reclassification from fieldworks in process to biological assets at the
moment of seeding
-5 283
-1 814
- Cost of own production on realization to third parties
-40 866
-32 267
- Inventory revaluation
286
-171
For internal use*
-1 286
-902
Increase due to subsidiary acquisition (Note 34)
-
4 002
Classified as assets held for sale
-157
-
Currency translation differences
-2 194
1 975
At 31 December
4 738
12 840
*Own produced inventory for internal use includes seeds, fertilizer and animal feed, which are presented
in the Income statement on the line Raw materials and consumables used for production purposes (Note
20).** Changes in balances of finished product stocks include amount EUR 1 665 thousand from discontinued
operations. Changes in balances of finished products from continuing operations is EUR (6 130) thousand (EUR
3 114 thousand from discontinued operations and EUR (5 420) thousand from continuing operations in 2019).
2020 ANNUAL REPORT
PAGE 39
Inventories that are measured at fair value are
categorized under Level 2 in the fair value
hierarchy, as defined by IFRS 13.
Grain for sale is revalued by the Group on each
balance sheet date using contracted and market
prices. Market prices were retrieved from APK-
Inform as at the end of January for both years
as the year-end prices do not reflect the real
market situation due to the long holiday season
in Ukraine and therefore the very low volume of
trades. Own produced inventories are measured
at net realizable value. In determining the NRV
(net realizable value), the Group also considers
existing sales agreements at balance sheet date,
and actual sales transactions by the Group
shortly after the balance sheet date.
As at December 31, 2020, inventories were not
pledged at a carrying value for the benefit of the
bank (2019: inventories in amount EUR 1 343
thousand were pledged at a carrying value for
the benefit of the bank).
Breakdown of the grain for sale, agricultural produce
inventory, 31.12.2020
Grain for
sale,
agricultural
produce,
EUR
thousand
Tonnes
Average
price used,
EUR/t
Wheat
55
289
190
Barley
10
54
185
Sunflower
261
511
511
Corn
104
706
147
Rapeseed
11
37
297
Soya
3
10
300
Millet
1 481
9 032
164
Other
16
276
58
Total
1 941
10 915
178
Breakdown of the grain for sale, agricultural produce
inventory, 31.12.2019
Grain for sale,
agricultural
produce, EUR
thousand
Tonnes
Average
price used,
EUR/t
Wheat
195
1 371
142
Barley
23
173
132
Sunflower
6 375
22 460
284
Corn
3 164
25 648
123
Rapeseed
6
17
347
Soya
12
41
284
Other
819
4 773
172
Total
10 594
54 483
194
2020 ANNUAL REPORT
PAGE 40
9. BIOLOGICAL ASSETS
in EUR thousand
Plant
cultivation
Animal
husbandry
Total
Carrying amount at 31.12.2019
9 582
3 505
13 087
Non-current biological assets
84
3 505
3 589
Current biological assets
9 498
-
9 498
2020
Reclassified to assets held for sale
-924
-
-924
Gain/loss of biological assets arising from changes in fair value
less cost to sell*:
-2 303
172
-2 131
- Increases due to new plantations/birth
27 959
840
28 799
- Harvest (Note 8)
-30 160
-
-30 160
- Decreases due to written-off biol.assets
-102
-1 197
-1 299
- Other changes in fair value
529
529
Currency translation differences
-2 004
-848
-2 852
Carrying amount at 31.12.2020
4 351
2 829
7 180
Non-current biological assets
101
2 829
2 930
Current biological assets
4 250
-
4 250
* Gain/loss of biological assets arising from changes in fair value less cost to sell comprises of amount
EUR (1 512) thousand from continuing operations and amount EUR (619) thousand from discontinued
operations.
in EUR thousand
Plant
cultivation
Animal
husbandry
Total
Carrying amount at 31.12.2018 (recalculated)
3 529
2 192
5 721
Non-current biological assets
75
2 192
2 267
Current biological assets
3 454
-
3 454
2019
Increases due to subsidiaries acquisition (Note 34)
2 370
890
3 260
Gain/loss of biological assets arising from changes in fair value
less cost to sell*:
2 641
95
2 736
- Increases due to new plantations/birth
29 717
364
30 081
- Harvest (Note 8)
-26 927
-
-26 927
- Decreases due to written-off biol.assets
-149
-651
-800
- Other changes in fair value
-
382
382
Currency translation differences
1 042
328
1 370
Carrying amount at 31.12.2019 (recalculated)
9 582
3 505
13 087
Non-current biological assets
84
3 505
3 589
Current biological assets
9 498
-
9 498
* Gain/loss of biological assets arising from changes in fair value less cost to sell comprises of amount
EUR 1 536 thousand from continuing operations and amount EUR 1 200 thousand from discontinued
operations.
Animals, pcs
Winter
crops,
hectares
Physical quantities at 31.12.2020
3 696
10 579
Physical quantities at 31.12.2019
3 899
23 858
Biological assets on 4 265 ha were classified as held for sale as of December 31, 2020.
As at the balance sheet date, Current biological
assets in plant cultivation include winter crops
seeded for the next harvest. Non-current
biological assets in plant cultivation include
grasslands, which are used for harvesting
animal feed. Non-current assets in animal
husbandry include dairy herd, both mature and
immature. Animal husbandry is measured at
fair value less cost to sell.
The gain arising from changes in fair value
includes changes in both physical quantities
due to the growth of plants/animals and
changes in market prices of the biological
assets.
2020 ANNUAL REPORT
PAGE 41
During 2019 the Group voluntary changed
assumption relating to fair value measurement
of biological assets of winter wheat and winter
rapeseed of next year harvest. Management of
the Group decided to determine fair value of
biological assets sown for next year harvest by
present valuing the net cash flows expected to
be generated from the assets discounted at
average cost of short-term financing. The fair
value of biological assets is determined by the
Group’s own agricultural and IFRS experts. The
valuation of the biological assets (winter wheat
and winter rapeseed) is within level 3 of the fair
value hierarchy.
Winter crops seeded in 2020 for the next year
are determined by valuing the net cash flows
expected to be generated from the assets
discounted at average cost of short-term
financing.
The following inputs and assumptions were
made to determine the fair value of biological
assets:
- revenue from the crops sales is projected
based on the expected volume of crop
harvested;
- prices are projected based on budget data for
next year;
- production and costs to sell are projected
based on budget data for next year;
-a discount rate 12.63% is applied in
determining fair value of biological assets as of
December 31, 2020 (18.35% as of December,
2019).
The significant unobservable inputs used in the
fair value measurement of the crops as of
31.12.2020 are as follows:
Yields of crops (4,83 tons per hectare for winter
wheat, 2,65 tons per hectare for winter
rapeseed, 4,5 tons per hectare for winter
barley).
Prices of crops (UAH 4 541 per ton for winter
wheat, UAH 11 026 per ton for winter rapeseed
and UAH 3 645 per ton of winter barley).
Inputs used in the fair value measurement of
the crops for comparative reporting date
December 31, 2019 were as follows:
Yields of crops (4,95 tons per hectare for winter
wheat and 2,60 tons per hectare for winter
rapeseed)
Prices of crops (UAH 4 253 per ton for winter
wheat and UAH 10 177 per ton for winter
rapeseed).
The fair value of the livestock is based on the
valuation from the independent valuator. The
valuator used the market prices of livestock of
similar age, breed and genetic merit based on
the relevant market, taking into account
transaction prices on the most advantageous
market, and the market situation in the dairy
sector. The fair value measurements are
categorized under Level 2 in the fair value
hierarchy, as defined by IFRS 13. In 2020, the
gain from revaluating 3 696 animals was
recorded at EUR 268 thousand in the Income
Statement (in 2019 the gain from revaluating
3 899 animals in amount EUR 235 thousand in
the Income Statement). In total, the fair value
of the herd (3 696 animals), as of December
31, 2020, stood at EUR 2 829 thousand (EUR
3 505 thousand as at December 31, 2019).
As at December 31, 2020, biological assets in
Ukraine were pledged at a value of EUR 947
thousand for the benefit of the bank (as at
December 31, 2019: EUR 7 976 thousand).
In the year 2020 harvest of cereals was at the
level of 208 842 net tonnes (2019: 160 530 net
tonnes). Milk production for the year 2020 was
14 586 tonnes (8 908 tonnes for the year
2019).
2020 ANNUAL REPORT
PAGE 42
10. INTANGIBLE ASSETS
in EUR thousand
Software
Land-usage
rights under
emphyteusis
Total
31.12.2019
Cost
107
3 518
3 625
Accumulated depreciation
-101
-39
-140
Net book amount
6
3 479
3 485
2020
Additions
9
3 254
3 263
Amortization charge
-2
-77
-79
Disposal
-
-43
-43
Classified as held for sale
-
-201
-201
Currency translation
differences
-3
-1 185
-1 188
Closing net book amount
10
5 227
5 237
31.12.2020
Cost
89
5 325
5 414
Accumulated depreciation
-79
-98
-177
Net book amount
10
5 227
5 237
in EUR thousand
Software
Land-usage
rights under
emphyteusis
Total
31.12.2018
Cost
85
762
847
Accumulated depreciation
-82
-4
-86
Net book amount
3
758
761
2019
Additions
1
1 575
1 576
Additions due to subsidiary
acquisitions (Note 34)
3
852
855
Amortization charge
-2
-32
-34
Currency translation
differences
1
326
327
Closing net book amount
6
3 479
3 485
31.12.2019
Cost
107
3 518
3 625
Accumulated depreciation
-101
-39
-140
Net book amount
6
3 479
3 485
11. PROPERTY, PLANT AND EQUIPMENT
The Group’s acquisitions of property, plant and
equipment during 2020 amounted to EUR 6 344
thousand (EUR 12 736 thousand in 2019). The
major increment in 2019 was recorded because
of the acquisition of Resilient a.s. Total value of
its property, plant and equipment was EUR 7
672 thousand (Note 34).
As of December 31, 2019 Land was revaluated
using the market approach by independent
valuators. During 2020 there were no
significant changes at land market. Land was
not revaluated by independent appraiser as of
December 31, 2020.
2020 ANNUAL REPORT
PAGE 43
in EUR thousand
Land
Buildings
Vehicles &
machinery
Furniture,
fittings &
equipment
Construction
in process
Total
31.12.2019
Cost
3 896
10 421
29 400
1 287
1 020
46 024
Accumulated depreciation
-
-3 188
-15 634
-885
-
-19 707
Net book amount
3 896
7 233
13 766
402
1 020
26 317
2020
Additions
227
2 144
3 520
46
407
6 344
Classified as held for sale
-25
-508
-568
-21
-34
-1 156
Disposals
-35
-18
-155
-1
-
-209
Reclassification balance sheet
items/between groups
-
7
293
-
-300
-
Depreciation charge
-
-724
-1 960
-164
-
-2 848
Currency translation
differences
-617
-2 625
-3 409
-81
-247
-6 979
Closing net book amount
3 446
5 509
11 487
181
846
21 469
31.12.2020
Cost
3 446
9 256
28 374
1 175
846
43 097
Accumulated depreciation
-
-3 747
-16 887
-994
-
-21 628
Net book amount
3 446
5 509
11 487
181
846
21 469
in EUR thousand
Land
Buildings
Vehicles &
machinery
Furniture,
fittings &
equipment
Construction
in process
Total
31.12.2018
Cost
993
6 594
20 720
981
1 056
30 344
Accumulated depreciation
-
-2 977
-13 983
-775
-
-17 735
Net book amount
993
3 617
6 737
206
1 056
12 609
2019
Additions
317
317
549
3 146
102
950
5 064
Additions due to subsidiary
acquisitions
1 893
1 789
3 577
148
265
7 672
Revaluation through Other
Comprehensive Income
430
-
-
-
-
430
Revaluation through Income
statement
78
-
-
-
-
78
Disposals
-7
-35
-287
-
-
-329
Reclassification balance sheet
items/between groups
-
749
663
2
-1 414
-
Depreciation charge
-
-348
-1 664
-102
-
-2 114
Currency translation
differences
192
912
1 594
46
163
2 907
Closing net book amount
3 896
7 233
13 766
402
1 020
26 317
31.12.2019
Cost
3 896
10 421
29 400
1 287
1 020
46 024
Accumulated depreciation
-
-3 188
-15 634
-885
-
-19 707
Net book amount
3 896
7 233
13 766
402
1 020
26 317
No impairment indicators were identified for
assets in Ukraine as of December 31, 2020.
For the assets in Ukraine impairment test was
carried out in 2019 (Note 4.1(d)).
For the assets in milk production in Russia
impairment test was carried out in 2020 and
2019 (Note 4.1(d)).
The change in total property, plant and
equipment carrying value was also influenced
2020 ANNUAL REPORT
PAGE 44
by the change in the exchange rate of Russian
rouble and Ukrainian hryvna. Ukrainian hryvna
in 2020 decreased its value in relation to the
euro by 6.7% (increased in 2019 by 10%).
Russian rouble in 2020 decreased in relation to
the euro by 14.2% (increased in 2019 by 2%).
Please see Note 3.1 for further information.
Land in Russian Milk production was not
mortgaged in 2020 and 2019. Machinery in
Russia were pledged at a carrying value of EUR
0 thousand (2019: EUR 58 thousand). Land,
buildings, machinery, vehicles and equipment
in Ukraine were pledged at a carrying value of
EUR 8 224 thousand (2019: EUR 7 011
thousand).
The net book value of assets leased (vehicles
and machinery) as at December 31, 2020,
stood at EUR 701 thousand (as at December
31, 2019, EUR 4 119 thousand).
11.1 FAIR VALUE OF LAND
The fair value of freehold land as at December
31, 2020, is EUR 3 446 thousand (EUR 3 896
thousand as at December 31, 2019). In 2019
revaluation gain through Other Comprehensive
Income stood at EUR 430 thousand.
Fair value is based on active market prices,
adjusted, if necessary, for any difference in the
nature, location or condition of the specific
asset. If this information is not available, the
Group uses alternative valuation methods,
such as recent prices on less active markets or
discounted cash flow projections. The valuation
of the land in Russian Dairy cluster as at
December 31, 2019, was performed by
Company “Price Consulting” LLC. The valuation
of the land in Ukraine as at December 31, 2019
was performed by Company “Proconsul” LLC.
During 2020 there were no significant changes
at land market. Land was not revaluated by
independent appraiser as of December 31,
2020.
RUSSIAN MILK PRODUCTION SEGMENT
Gdov (land carried using the revaluation method as at December 31, 2019)
Information about fair value measurements using significant unobservable inputs (Level 3)
Fair value at
31.12.2019
(EUR
thousand)
Unobservable inputs
Range
Weighted
average,
EUR/ha
Agricultural land
Sales comparison approach
Russian dairy cluster
742
Rate per hectare (EUR)
236-290
256
Adjustments applied to comparison data:
Size adjustment
-0%-20%
Location adjustment
0%
Bargaining discount
-10%
UKRAINE SEGMENT
Ukraine (land carried using the revaluation method as at December 31, 2019)
Information about fair value measurements using significant unobservable inputs (Level 3)
Fair value at
31.12.2019 (EUR
thousand)
Unobservable
inputs
Range
Weighted
average,
EUR/ha
Agricultural land
Market approach
Ukraine cluster
3 154
Rate per hectare
(EUR)
1 401-2 851
2 142
Adjustments applied to comparison data:
Location adjustment
0%
Bargain discount
-30%
2020 ANNUAL REPORT
PAGE 45
Sales comparison approach was applied for the
land. It is a valuation methodology whereby the
subject property is compared to recently sold
or to sales quotes of properties of a similar
nature with fair value determined through the
application of positive and negative
adjustments for their differing attributes.
Unobservable inputs within the sales
comparison approach:
Size adjustment – the valuer’s assessment of
the price differential between the valued
property and compared property attributable to
their size difference.
Location adjustment – the valuer’s assessment
of the price differential between the valued
property and compared property attributable to
differences in their location.
Bargaining discount – the valuer’s assessment
of the average price discount generally
obtained compared to quoted asking prices of
property.
Relationship of unobservable inputs to fair
value: The fair value measurements listed
above are all sensitive to a significant increase
(decrease) in the unobservable inputs. The
higher the rate per hectare, the higher the fair
value.
If the value per hectare had been 10%
higher/lower, the fair value of land as at
December 31, 2019, would have been EUR 74
thousand higher/lower in Russia and EUR 315
thousand higher/lower in Ukraine.
12. PREPAID LAND RENTS AND LAND USAGE
RIGHTS
The Group’s land in Ukraine is used mainly
based on lease agreements. The Group has
made prepayments or has recognised land
usage rights in business combinations to get
access to that land in previous periods. These
prepayments and land usage rights are
amortised during the period of the lease.
in EUR thousand
31.12.2020
31.12.2019
Balance at the beginning of the period
460
457
Additional prepayments made
-
11
Amortization recognised
-100
-91
Unrealised exchange rate differences
-96
83
Balance at the end of the period
264
460
13. TRADE AND OTHER PAYABLES
in EUR thousand
31.12.2020
31.12.2019
Trade payables
639
666
Prepayments from clients
231
17
Social security and other taxes
831
1 427
Accrued expenses
1 099
1 393
Amounts due to related parties (Note 31)
12 477
14 114
Other payables
146
961
15 423
18 578
Less: non-current portion (Note 31)
-6 803
-12 080
8 620
6 498
Non-current portion of trade and other
payables in amount EUR 6 803 thousand is
included in amounts due to related parties and
is denominated in Czech koruna in amount EUR
315 thousand and in Euro in amount EUR 6 488
thousand. Current amount EUR 5 674 thousand
due to related party is denominated in EUR.
The carrying amounts of the Group’s financial
liabilities (trade and other payables, excluding
prepayments, tax liabilities and payables to
2020 ANNUAL REPORT
PAGE 46
employees) are denominated in the following
currencies:
in EUR thousand
31.12.2020
31.12.2019
US dollar
-
-
Russian rouble
292
264
Ukrainian hryvna
477
1 258
Euro
12 329
6 610
Czech koruna
318
8 057
13 416
16 189
14. BORROWINGS
The total borrowings of the Group as at
December 31, 2020, amounted to EUR 2,939
thousand (EUR 16,836 thousand as at December
31, 2019).
Details of the borrowings’ currencies, interest
rates, and maturities are shown in the included
tables. Total finance costs in 2020 amounted to
EUR 812 thousand (EUR 936 thousand in 2019)
(Note 25).
in EUR thousand
31.12.2020
31.12.2019
Current
Bank borrowings
1 240
14 378
Finance lease payables
172
1 061
1 412
15 439
Non-current
Bank borrowings
1 333
490
Finance lease payables
194
907
1 527
1 397
Total borrowings
2 939
16 836
31.12.2020, in EUR thousand
31.12.2020
Maturity
Interest rate
USD-nominated
711
2024
5%
USD-nominated
800
2021
3mLIBOR+3,4%
USD-nominated
1 061
2025
3mLibor+3,3%
UAH-nominated
367
2021-2023
1mLIBOR + 4,4%-6,1%
2 939
Less: non-current portion
1 527
1 412
Less accrued interest
-8
Current portion excl accrued interest
1 404
31.12.2019, in EUR thousand
31.12.2019
Maturity
Interest rate
RUB-nominated
138
2020-2021
5%-25.8%
USD-nominated
5 908
2020-2022
5%-6,5%
EUR-nominated
2 419
2020
5,0%
EUR-nominated
1 015
2020
1M EURIBOR + 1,6%
EUR-nominated
681
2020
7days EURIBOR + 1,6%
USD-nominated
797
2021
12,59% - 12,62%
USD-nominated
4 828
2020
1mLIBOR+3,5%
UAH-nominated
1 050
2020-2023
1mLIBOR + 4,4%-9,4%
16 836
Less: non-current portion
1 397
15 439
Less accrued interest
-62
Current portion excl accrued interest
15 377
2020 ANNUAL REPORT
PAGE 47
31.12.2020
31.12.2019
Bank
borrowings
Lease
payables
Bank
borrowings
Lease
payables
Floating rate:
– Expiring within one year
933
172
6 524
569
– Expiring beyond one year
929
194
-
481
Fixed rate:
– Expiring within one year
307
-
7 853
491
– Expiring beyond one year
404
-
491
427
2 573
366
14 868
1 968
31.12.2020
31.12.2019
in EUR thousand
Bank
borrowings
Lease
payables
Bank
borrowings
Lease
payables
US dollar
2 573
-
10 687
845
Euro
-
-
4 115
-
Russian rouble
-
-
66
73
Ukrainian hryvna
-
366
-
1 050
2 573
366
14 868
1 968
in EUR thousand
Cash
Leases due
within 1
year
Leases due
after 1 year
Borrow.
due within
1 year
Borrow.
due after 1
year
Total
Net debt as at 31
December 2019*
1 900
-1 050
-908
-14 326
-489
-14 873
Cash flows
4 914
1 335
-
12 576
-1 436
17 389
Foreign exchange
adjustments
-421
-223
492
823
288
959
Other non-cash
movements
-368
-234
222
-304
304
-380
Net debt as at 31
December 2020*
6 025
-172
-194
-1 231
-1 333
3 095
* Net debt reconciliation is shown excluding the interest liability
in EUR thousand
Cash
Leases due
within 1
year
Leases due
after 1 year
Borrow.
due within
1 year
Borrow.
due after 1
year
Total
Net debt as at 31
December 2018*
701
-1 289
-986
-9 012
-
-10 586
Cash flows
-1 137
2 102
-
-1 645
-
-680
Acquisition of finance
leases
-
-651
-800
-
-
-1 451
Foreign exchange
adjustments
2 119
-235
-90
-489
-42
1 263
Movements due to
subsidiary acquisition
217
-
-
-3 667
-
-3 450
Other non-cash
movements
-
-977
968
486
-446
31
Net debt as at 31
December 2019*
1 900
-1 050
-908
-14 327
-488
-14 873
* Net debt reconciliation is shown excluding the interest liability
** Most of the amount is related to the factoring
2020 ANNUAL REPORT
PAGE 48
Total future finance lease minimum payments
in EUR thousand
31.12.2020
31.12.2019
up to 12 months
210
1 274
1-5 years
228
1 046
438
2 320
Future interests
72
352
Present value of the lease
366
1 968
The fair value of borrowings equals their
carrying amount, as the impact of discounting
is not significant or market rates are not
significantly different from actual borrowing
rates. The borrowings are classified as Level 3
under the fair value hierarchy, as defined by
IFRS 13.
15. INCOME TAX
in EUR thousand
2020
2019
Current tax:
Current tax on profits for the year
1
32
Adjustments in respect of prior years
-4
-2
Total current tax
-3
30
Deferred tax (Note 16):
Origination and reversal of temporary differences
-10
-15
Transfer to discontinued operations
7
7
Total deferred tax
-3
-8
Income tax expense
-6
22
The tax on the group’s profit before tax differs from the theoretical amount that would arise using the
weighted average tax rate applicable to profits of the consolidated entities as follows:
in EUR thousand
2020
2019
Profit/loss before tax*
1 006
2 677
Profit/Loss before tax from entities not subject to Income tax by statutory
legislation
-1 312
15 770
Profit/loss before tax from entities subject to income tax
2 318
-13 093
Tax calculated at domestic tax rates applicable to profits in the respective
countries
696
-1 739
Tax effects of:
-
-
Income not subject to tax
-1 334
-584
Expenses not deductible for tax purposes
182
1 822
Utilisation of previously unrecognised tax losses
-
-
Tax losses for which no deferred income tax asset was recognised
464
491
Adjustments in respect of prior years
-21
25
Transfer to discontinued operations
7
7
Tax charge
-6
22
*Profit/loss before tax comprises EUR 2 375 thousand from continuing operations and EUR (1 369)
thousand from discontinued operations (2019: EUR 2 413 thousand from continuing operations and
EUR 264 thousand from discontinued operations)
The Group does not have material deferred tax
assets or liabilities in companies, which are
active in agricultural production. This is due to
the following reasons:
1) The Group companies in Estonia are subject
to income tax only when the profits are
distributed. No corporate income tax is
imposed on earnings; therefore, there are no
2020 ANNUAL REPORT
PAGE 49
temporary differences between the tax and
accounting bases of assets and liabilities.
2) All of the Group companies in Ukraine that
are producing agricultural produce are not
subject to income tax but to the unified
agricultural tax. The agricultural tax is based on
hectares of arable land the company uses, not
on its earnings and therefore no deferred tax
arises. All other companies in Ukraine
(companies that are related to sales and
trading and storage elevators) are under
regular tax regime and subject to income tax.
3) The Group company in Russia, except for
sub-holding company, is subject of the
agricultural tax and not income tax.
Agricultural tax regime means that the
agricultural producer pays tax only from non-
agricultural profits. Major income not subject to
tax relates to currency translation differences.
Major expenses not deductible for tax purposes
related to interests on intra-group borrowings.
4) The Group companies in Czech republic are
subject to income tax at rate 19% . The Group
companies in Czech republic are holding
companies which generate accounting losses.
The non-tax duductible expenses are
permanent (refreshment and non-deductible
part of paid interest) so there are no temporary
differences between the tax and accounting
bases of assets and liabilities
16. DEFERRED TAX
The analysis of deferred tax assets and deferred tax liabilities is as follows:
in EUR thousand
2020
2019
Deferred tax assets:
– Deferred tax assets to be recovered after more than 12 months
-
-
– Deferred tax asset to be recovered within 12 months
-
-
-
-
Deferred tax liabilities:
– Deferred tax liability to be recovered after more than 12 months
51
213
– Deferred tax liability to be recovered within 12 months
-
-
51
213
Deferred tax liabilities (net)
51
213
The gross movement on the deferred income tax account is as follows:
in EUR thousand
2020
2019
At 1 January
213
187
Currency translation differences
-51
41
Income statement charge related to change in deferred tax assets/ liability
(Note 15)
-10
-15
Tax charge /(credit) relating to components of other comprehensive income
-
-
Classified as associated with assets classified as held for sale
-101
At 31 December
51
213
Deferred income tax assets are recognised for
tax loss carry-forwards to the extent that the
realisation of the related tax benefit through
future taxable profits is probable. The group did
not recognise deferred income tax assets of
EUR 464 thousand (EUR 491 thousand in 2019)
in respect of losses amounting to EUR 2 310
thousand (EUR 2 555 thousand in 2019) that
can be carried forward against future taxable
income. The accumulated amount of tax losses
where tax asset was not recognized as at
December 31, 2020 was 25 173 EUR thousand
(2019: EUR 30 622 thousand) that can be
carried forward against future taxable income.
Losses amounting to EUR 24 221 thousand
(EUR 29 882 thousand in 2019) have unlimited
usage and the rest of losses will expire during
1 to 5 years.
2020 ANNUAL REPORT
PAGE 50
The movement in deferred income tax assets and liabilities during the year is as follows:
Deferred tax liabilities
Accelerated
tax
depreciation
Other
Total
At 31 December 2018
159
28
187
Charged/(credited) to the income statement
-15
-
-15
Currency translation differences
41
-
41
At 31 December 2019
185
28
213
Charged/(credited) to the income statement
-10
-
-10
Currency translation differences
-51
-
-51
Classified as associated with assets classified as held for sale
-101
-
-101
At 31 December 2020
23
28
51
Deferred tax assets
Other
Total
At 31 December 2018
-
-
Charged/(credited) to the income statement
-
-
Currency translation differences
-
-
At 31 December 2019
-
-
Charged/(credited) to the income statement
Currency translation differences
-
-
At 31 December 2020
-
-
17. SHARE CAPITAL
in EUR thousand
Number of
shares
Incl. ordinary
shares
Share
capital
Share
premium
Total
31.12.2018
17 421 313
17 421 313
17 421
120 151
137 572
Issuance of share capital
7 473 810
7 473 810
7 474
5 461
12 935
31.12.2019
24 895 123
24 895 123
24 895
125 612
150 507
31.12.2020
24 895 123
24 895 123
24 895
125 612
150 507
Including treasury shares
42
42
-
-
-
As at December 31, 2020, the total number of
issued shares was 24,895,123 (as of December
31, 2019: 24,895,123 shares) including 42
treasury shares with a par value of 1 EUR per
share. All shares have been fully paid. The shares
of Agromino A/S were listed on the main market
of Small Cap segment on NASDAQ Stockholm.
On 15 July 2020, Agromino announced its plan
to apply for delisting of Agromino’s shares. On 19
October 2020, Nasdaq Stockholm has approved
such application. The last day of trading of
Agromino’s shares was 30 October 2020.
In the year 2019 ordinary shares in quantity
7,473,810 were issued as a consideration in
amount of EUR 12 935 thousand for the
acquisition of Resilient. As a result the total
number of shares in 2019 in the Company
increased from 17,421,313 to 24,895,123.
18. OTHER RESERVES
in EUR thousand
Revaluation
of land*
Translation
differences
Total
31.12.2018
1
198
-39 186
-38 988
Currency translation differences
-
4 435
4 435
Revaluation of land (Note 11)
514
-
514
31.12.2019
712
-34 751
-34 039
Currency translation differences
-
-9 949
-9 949
Revaluation of land (Note 11)
-174
-
-174
31.12.2020
538
-44 700
-44 162
2020 ANNUAL REPORT
PAGE 51
As at December 31, 2020, land reserve (related
to land in ownership) amounts to EUR 538
thousand (December 31, 2019: EUR 712
thousand) included in Other reserves
attributable to the holders of the parent.
19. REVENUE AND OTHER INCOME
in EUR thousand
2020
2019
Sales of cereals
49 230
30 751
Sales of milk
4 244
3 030
Revenue from elevator services
292
258
Other revenue
598
445
TOTAL revenue
54 364
34 484
Subsidies
125
61
Other income
550
341
Total other income
675
402
Revenues of EUR 11 128 thousand (2019: EUR
8 962 thousand) are derived from one external
customer, revenues of EUR 6 016 thousand
(2019: EUR 3 231 thousand) are derived from
the second external customer and revenues of
EUR 5 408 thousand (2019: 2 811 thousand)
are derived from the third external customer.
Revenue from the first three customers is
attributable to the Ukraine segment.
For segment reporting refer to Note 26.
20. RAW MATERIALS AND CONSUMABLES
USEDFOR PRODUCTION PURPOSES
in EUR thousand
2020
2019
Seeds, fertilizers, chemicals
7 845
6 350
Animal feed
2 761
1 926
Repairs
1 993
1 731
Fuel, gas, electricity
1 982
2 256
Land tax and land rental
1 003
1 166
Other services and materials
4 972
4 180
20 556
17 609
21. EMPLOYEE BENEFITS EXPENSE
in EUR thousand
2020
2019
Wages and salaries
5 788
4 033
Social security costs
1 215
893
7 003
4 926
Remuneration to the Board of Directors and
Executive Board is disclosed in Note 31.
2020 ANNUAL REPORT
PAGE 52
22. RIGHT-OF-USE ASSET AND LEASE
LIABILITY
Amounts recognized in the balance sheet
The balance sheet shows the following amounts relating to land leases:
in EUR thousand
31.12.2020
31.12.2019
Right-of-use assets
Land
13 820
24 114
Land usage rights from business acquisition*
8 129
10 496
21 949
34 610
Land lease liabilities
Non-current
12 060
19 989
Current portion
2 867
4 657
Total lease liabilities
14 927
24 646
*The Group has recognized land usage rights
related to the acquisition of Resilient for
amount EUR 10 799 thousand as of the date of
acquisition October 17, 2019 (Note 34).
Balance value of land usage rights acquired was
EUR 8 129 thousand as of December 31, 2020
(EUR 10 496 thousand as of December 31,
2019). Land usage rights acquired in amount
EUR 819 thousand were reclassified as assets
held for sale.
Amounts recognised in the statement of profit or loss
The statement of profit or loss shows the following amounts relating to leases:
in EUR thousand
2020
2019
Depreciation charge of right-of-use assets (under IFRS 16)
1 723
1 527
Depreciation charge of land-usage rights from business combinations
1 548
303
Interest expense on land lease liabilities (included in finance cost)
4 132
3 796
Movements for the right-of-use assets were the following:
in EUR thousand
2020
2019
Cost as of 1 January
36 580
17 647
Accumulated depreciation
-1 970
-
Net book value as at 1 January
34 610
17 647
Additions due to subsidiary acquisition:
-
14 475
Recognized under IFRS 16
-
3 676
Land usage rights from business acquisition
-
10 799
Additions to the right-of-use assets
38
24
Depreciation
-3 271
-1 830
Other movements (including changes to agreements)
1 908
1 304
Disposals
-826
-592
Classified as assets held for sale
-4 803
-
Currency translation differences
-5 707
3 582
Cost as of 31 December
25 844
36 580
Accumulated depreciation
-3 895
-1 970
Net book value as at 31 December
21 949
34 610
2020 ANNUAL REPORT
PAGE 53
Movements for the land lease liability were the following:
in EUR thousand
2020
2019
Land lease liability as at 1 January
-24 646
-17 647
Non-current
-19 989
-14 457
Current
-4 657
-3 190
Additions due to subsidiary acquisition
-
-3 676
Additions due to new agreements
-38
-24
Financial costs from continuing operations
-3 196
-2 899
Financial costs from discontinued operations
-936
-897
Other movements (including changes to agreements)
-1 908
-727
Disposals
973
685
Repayment
4 614
4 154
Classified as assets held for sale
4 274
-
Currency translation differences
5 936
-3 615
Land lease liability as at 31 December
-14 927
-24 646
Non-current
-12 060
-19 989
Current
-2 867
-4 657
23. OTHER ADMINISTRATIVE EXPENSES
in EUR thousand
2020
2019
Legal and consulting fees
942
718
Office and administration expenses
1 026
866
Other expenses
240
166
2 208
1 750
24. OTHER (LOSSES)/GAINS-NET
in EUR thousand
2020
2019
Reversal/write down of doubtful receivables and prepayments (Note 6)
411
595
Foreign exchange losses/gains net
-184
550
Other losses / gains net
-208
530
19
1 675
The Group wrote off the prepayment for the
undelivered fertilizers in 2017 amounting to EUR
1,337 thousand. In 2020 the amount of EUR 486
thousand was recovered (EUR 688 thousand in
2019).
25. FINANCE INCOME AND FINANCE COST
in EUR thousand
2020
2019
Interest income
244
42
Other financial income
434
-
678
42
Interest expense at effective interest rate:
Finance lease liabilities
-176
-200
Bank borrowings
-710
-736
Lease liabilities (Note 22)
-3 196
-2 899
Related parties (Note 31)
-2 538
-207
Other finance costs
-29
-82
-6 649
-4 124
2020 ANNUAL REPORT
PAGE 54
26. SEGMENT REPORTING
The management considers two business
segments: Ukraine and Russian milk
production. The Group used the equity method
to record the accounts of the Milk production
segment in Estonia as the profit/loss on the
Income Statement is shown under the line
Share of loss/profit of investments accounted
for using the equity method. In November,
2020 the Group sold its shares in associated
company. Ukraine segment includes cereals
production, storage, and trading operations,
and newly also the milk production from
acquired farms. In Russia, the Group has a Milk
production farm in the St Petersburg region,
around 170 kilometres South West of St
Petersburg. The facilities, which have a
capacity of 1,200 cows, were built in 2008.
The below segment reporting comprises
continuing and discontinued operations (Note
33).
2020, in EUR thousand
Ukraine
agriculture
Russian milk
production
Total
Revenue from external customers
53 828
2 802
56 630
Total segment revenue
53 828
2 802
56 630
Subsidies
-
125
125
Other income
584
36
620
Gain/loss arising from changes in fair value less estimated
point-of-sale costs of biological assets
-2 468
337
-2 131
Total revenue, other income and fair value
adjustments
51 944
3 300
55 244
Net changes in inventories of agricultural produce and
work in process
-5 467
1 002
-4 465
Cost of purchased goods
-88
-
-88
OPEX
-29 431
-3 598
-33 029
Other (losses)/gains - net
36
-72
-36
EBITDA
16 994
632
17 626
Depreciation and amortization
-6 274
Finance income/costs
-10 233
Share of profit of investments accounted for using the
equity method
-113
-113
Profit before income tax
1 006
2019, in EUR thousand
Ukraine
Russian milk
production
Total
Revenue from external customers
32 766
2 857
35 623
Total segment revenue
32 766
2 857
35 623
Subsidies
20
41
61
Other income
347
2
349
Gain/loss arising from changes in fair value less estimated
point-of-sale costs of biological assets
2 707
30
2 737
Total revenue, other income and fair value
adjustments
35 840
2 930
38 770
Net changes in inventories of agricultural produce and
work in process
-2 875
569
-2 306
Cost of purchased goods
-120
-
-120
OPEX
-24 339
-3 485
-27 824
Revaluation of land
-
78
78
Other (losses)/gains – net
1 385
2
1 387
EBITDA
9 891
94
9 985
Depreciation and amortization
-4 067
Finance income/costs
-3 180
Share of profit of investments accounted for using the
equity method
-61
-61
Profit/loss before income tax
2 677
2020 ANNUAL REPORT
PAGE 55
27. CONTINGENCIES
TAXES
UKRAINE:
Tax legislation. Ukrainian tax, currency, and
customs legislation is subject to varying
interpretations, and changes, which can occur
frequently. Management’s interpretation of
such legislation as applied to the transactions
and activity of the Group may be challenged by
the relevant regional and central authorities.
The tax authorities in Ukraine may be taking a
more assertive position in their interpretation
of the legislation and assessments, and it is
possible that transactions and activities that
have not been challenged in the past may be
challenged. As a result, significant additional
taxes, penalties, and interest may be assessed.
Fiscal periods remain open to review by the
authorities in respect of taxes for three
calendar years preceding the year of review.
Under certain circumstances, reviews may
cover longer periods.
The tax consequence of transactions for
Ukrainian taxation purposes is frequently
determined by the form in which transactions
are documented and the underlying accounting
treatment prescribed by Ukrainian GAAP.
One of the Group companies acts as claimant
in lawsuit with the tax authorities. Based on the
results of the documentary inspection
concerning the period from October 1, 2016 to
September 30, 2019, the State Tax Authority
of Ukraine in Kyiv issued tax decision regarding
decrease in negative value of object of
corporate income tax in the total amount of
EUR 2 720 thousand. The same decision also
set out that the respective Group company’s
VAT liability should increase by the amount of
EUR 76 thousand and should pay penalties in
the total amount of EUR 29 thousand.
The Group disagreed with assessment made by
the State Tax Authority in Kyiv and,
accordingly, respective Group company filed an
administrative lawsuit with the District
Administrative Court of Kyiv to cancel the
above decisions.
On December 8, 2020, the District
Administrative Court of Kyiv decided to cancel
part of the decision concerning the income tax
and maintained in force part concerning the
VAT assessment.
This decision was appealed by the Group (in
part concerning the VAT) and was upheld by
the decision of the Sixth Appeal Administrative
Court on April 6, 2021.
Negative consequences of the decision on the
Group in part concerning VAT were reflected by
the respective Group company in its financial
statements in April 2021 and the corresponding
amounts of payments were paid to the state
budget. However, the Group company filed a
cassation appeal to the Supreme Court of
Ukraine and is persuaded that the assessment
of the case made by the first instance court and
appellate court was incorrect and, hence,
decisions will be overturned by the Supreme
Court of Ukraine. If that will occur, the VAT
payments made by the company in April 2021
will be returned to the company.
RUSSIA:
Tax legislation. Russian tax legislation is
subject to varying interpretations, and
changes, which can occur frequently.
Management’s interpretation of such legislation
as applied to the transactions and activity of
the Group may be challenged by the relevant
authorities.
The Russian tax authorities may be taking a
more assertive and sophisticated approach in
their interpretation of the legislation and tax
examinations. This includes them following
guidance from the Supreme Arbitration Court
for anti-avoidance claims based on reviewing
the substance and business purpose of
transactions. Combined with a possible
increase in tax collection efforts to respond to
budget pressures, the above may lead to an
increase in the level and frequency of scrutiny
by the tax authorities. In particular, it is
possible that transactions and activities that
have not been challenged in the past may be
challenged. As a result, significant additional
taxes, penalties, and interest may be assessed.
Fiscal periods remain open to review by the
authorities in respect of taxes for three
calendar years preceding the year of review.
Under certain circumstances, reviews may
cover longer periods.
Russian transfer pricing legislation provides the
possibility for tax authorities to make transfer
pricing adjustments and impose additional tax
liabilities in respect of all controllable
transactions, the list of which is established by
the Russian Tax Code.
2020 ANNUAL REPORT
PAGE 56
Controllable transactions include transactions
with interdependent parties, all cross-border
transactions (irrespective whether performed
between related or unrelated parties),
transactions where the price applied by a
taxpayer differs by more than 20% from the
price applied in similar transactions by the
same taxpayer within a short period of time,
and barter transactions. There is no formal
guidance as to how these rules should be
applied in practice. The arbitration court
practice has not yet taken shape.
Tax liabilities arising from transactions between
companies are determined using actual
transaction prices. It is possible with the
evolution of the interpretation of the transfer
pricing rules in the Russian Federation and the
changes in the approach of the Russian tax
authorities, that such transfer prices could be
challenged. Given the brief nature of the
current Russian transfer pricing rules, the
impact of any such challenge cannot be reliably
estimated; however, it may be significant to
the financial position and/or the overall
operations of the entity.
ESTONIA:
The tax authorities may at any time inspect the
books and records within three to five years
subsequent to the reported tax year and may
impose additional tax assessments and
penalties on Estonian subsidiaries of the Group.
The Group's management is not aware of any
circumstances which may give rise to a
potential material liability in this respect
28. COMMITMENTS
Within the framework of the share purchase
agreement (SPA) for the acquisition of 100% of
shares of Resilient a.s. (Shares) in October
2019 a pledge over the Shares was established
by the Company in favour of Mabon investiční
fond s proměnným kapitálem a.s. (Mabon).
Mabon is controlled by Mr. Petr Krogman, who
is also the Chairman of the Agromino‘s Board
of Directors.
The pledge shall secure potential future
liabilities of the Company towards Mabon which
may arise mainly in case of substantial breach
of limited warranties by Agromino under the
SPA. No liabilities towards Mabon under the
framework of the SPA exist on the date of this
report. The Company assesses the risk of
origination of substantial liabilities under the
framework of the SPA as very low.
Consequently, the Company assesses the risk
of pledge realization as very low.
During the process of the SPA negotiation
applicable disqualification rules were respected
by the Company.
29. INTEREST IN ASSOCIATE
The Group’s interest in Trigon Dairy Farming
Estonia was carried using the equity method.
In 2020, Group's share in the loss of the
associate stood at EUR 113 thousand (2019:
Group´s share in the loss totaled EUR 61
thousand). In November, 2020 the Group sold
its shares in associated company. Carrying
amount of investment at the date of disposal
was EUR 9 070 thousand.
Summarised balance sheet
in EUR thousand
31 December
2019
Current
Assets
12 802
Liabilities
-3 150
Total current net assets
9 652
Non-current
Assets
39 199
Liabilities
-16 293
Total non-current net assets
22 906
Net assets
32 558
2020 ANNUAL REPORT
PAGE 57
Summarised income statement
For the period ended
31 December
in EUR thousand
2020*
2019
Revenue
10 301
15 301
Profit/(loss) before income tax
-288
-155
Income tax expense/income
-
-
Post-tax profit/loss
-288
-155
Other comprehensive income/expense
-
-
Total comprehensive income/expense
-288
-155
Total comprehensive income allocated to non-controlling interests
-
-
*2020 data include period when Agromino had shares in associated company
Reconciliation to carrying amounts:
As at December 31
in EUR thousand
2020
2019
Opening net assets
32 558
32 728
Sales of intra-company PPE
-
-
Profit/(loss) for the period
-288
-155
Other comprehensive income/expense
-
-
New capital invested
-
-
Closing net assets
32 270
32 558
Group’s share in %
39.24%
39.24%
Group’s share in EUR thousand
12 663
12 776
Adjustment to equity value
-3 593
-3 593
Disposal
-9 070
-
Carrying amount
-
9 183
2020 ANNUAL REPORT
PAGE 58
30. GROUP STRUCTURE
The Group’s parent company Agromino A/S
registered in Denmark. The parent company
operates also its branch in Estonia (Agromino
A/S Eesti filial).
The transfer of funds from subsidiaries to
Agromino A/S is not restricted. However, the
transfer of funds from Ukraine and Russia to
Agromino A/S may be subject to restrictions
regarding foreign currency transactions due to
the particular limitations in local legislation.
As of December 31, 2020, and 2019, the Group included the following companies:
Country of
registration
Segment
Ownership
percentage
in 2020
Ownership
percentage
in 2019
Legal
Status in
the Group
Agromino A/S
Denmark
-
100%
100%
Parent
company
LLC Trigon Security
Ukraine
Ukraine
-
100%
Subsidiary
LLC Trigon Farming Kharkiv
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Trigon Agro 2
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Agro Capital Center
Ukraine
Ukraine
100%
100%
Subsidiary
OJSC Krasnokutskagrohim
Ukraine
Ukraine
-
65.31%
Subsidiary
LLC Kirovograd agroinvestment
company
Ukraine
Ukraine
100%
100%
Subsidiary
PAC Molniya-1
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Trigon Farming
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Trigon-Export
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Trigon-Elevator
Ukraine
Ukraine
-
100%
Subsidiary
LLC Kovyagovskoye Zerno
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Kovyaqovskoуe
Ukraine
Ukraine
100%
100%
Subsidiary
CJSC Vovchanskiy Combinat
Khliboproduktiv
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Yavkino Holding
Ukraine
Ukraine
100%
-
Subsidiary
OJSC Yavkinskiy elevator
Ukraine
Ukraine
99.42502%
92.5945%
Subsidiary
LLC Resilient
Ukraine
Ukraine
99.99%
99.99%
Subsidiary
LLC Resilient Agro
Ukraine
Ukraine
100%
100%
Subsidiary
Private Rental Agricultural
Enterprise Sydory
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Oliynykova Sloboda,
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Resilient Gorodylovychi
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Gorodylovychi
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Resilient Pryvitiv
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Resilient Stara Synyava
Ukraine
Ukraine
100%
100%
Subsidiary
Private enterprise, Trans Agro
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Resilient Matyushi
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Saturn Agrokom
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Agrocompany Bilotserkivska
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Resilient Bilotserkivska
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Pryvitivske
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Agrocompany Matyushi
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Resilient Oliynykova Sloboda
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Resilient Sydory
Ukraine
Ukraine
100%
100%
Subsidiary
LLC Trigon Moloko
Russia
Milk production
100%
100%
Subsidiary
LLC Dobruchi-2
Russia
Milk production
100%
100%
Subsidiary
Resilient a.s.
Czech
Republic
-
100%
100%
Subsidiary
Rimela International s.r.o.
Czech
Republic
-
100%
100%
Subsidiary
TC Farming Ukraine Ltd.
Cyprus
-
100%
100%
Subsidiary
TC Farming Russian Ltd.
Cyprus
-
100%
100%
Subsidiary
Trigon Dairy Farming Ltd.
Estonia
Milk production
100%
100%
Subsidiary
Trigon Farming Ltd.
Estonia
-
100%
100%
Subsidiary
Trigon Dairy Farming Estonia Ltd.
(Note 29)
Estonia
Interest in
associates
-
39.24%
Associate
2020 ANNUAL REPORT
PAGE 59
In the year ended December 31, 2020 the Group
divested group companies LLC Trigon Security,
LLC Trigon-Elevator, OJSC Krasnokutskagrohim.
Net assets of the divested companies as of the
date of disposal were insignificant.
31. RELATED PARTY TRANSACTIONS
The Group’s owners are legal and physical
persons.
Associate Ltd Trigon Dairy Farming Estonia (a
holding company for milk production operations
in Estonia where the Group has a 39.24% stake)
was considered a related party till the date of
sale of associate company shares.
Other related parties comprise of companies
which are controlled by the Group´s
management personnel or the members of the
Board of Directors.
During the reporting period the Group had the
following balances outstanding and operations
with related parties:
in EUR thousand
Sales and purchases
2020
2019
Purchase of goods and services from related parties (Companies under
control of Members of Board of Directors)
-
-455
Purchase of goods and services with Resilient
a.s. for period January 1, 2019 till October 16,
2019 was included in related party transaction.
Since October 17, 2019 Resilient a.s. became
Group company.
The following table sets forth the aggregate gross amounts of salaries and other remuneration by the
Group to the members of its Board of Directors and Executive Board in 2020 and in 2019.
in EUR thousand
Salary (incl social security costs)
Total
2020
Members of Board of Directors
50
50
Members of the Executive Board
232
232
282
282
2019
Members of Board of Directors
69
69
Members of the Executive Board
210
210
279
279
As of December 31, 2020, the Group had
liability to Board of Directors members in the
amount of EUR 13 thousand (EUR 11 thousand
as of December 31, 2019).
Loans from related parties (Companies under control of Members of
Board of Directors)
in EUR thousand
2020
2019
Beginning of the year
14 114
-
Loans advanced
11 989
2 000
Loans related to new acquisition
-
12 059
Loan repayments made
-15 490
-
Interest charged
807
55
Long-term loan discount write off
1 731
Interest paid
-217
-
Currency translation differences
-457
End of the period (Note 13)
12 477
14 114
2020 ANNUAL REPORT
PAGE 60
Loans from related parties in amount EUR
12 475 thousand have maturity within years
2021-2029. Interest rate is 5% per loan
contracts (4-5 % in 2019). Long-term loans
from related parties were measured at their fair
value by discounting them at the effective rate
6.71%.
32. FEES TO THE AUDITORS APPOINTED BY THE
SHAREHOLDERS
In 2020 expenses to auditors were:
in EUR thousand
2020
2019
Audit, assurance engagements and other services
96
120
Beierholm and Baker Tilly were not elected as the statutory auditor, and thus did not audit the annual
report for the following companies:
• LLC Dobruchi-2
• Trigon Farming AS
33. ASSETS HELD FOR SALE AND LIABILITIES
ASSOCIATED
In year 2020 Agromino concluded preliminary
agreements for sale of its subsidiaries LLC
Yavkino Holding, LLC Yavkinsky elevator, LLC
Agro Capital Center and LLC Resilient
Gorodylovychi.
Thus assets and liabilities of these companies
were classified as assets held for sale and
liabilities associated with assets held for sale
correspondingly.
No impairment loss was recognized on
classification disposal of group as held for sale
as the management of the Group expects that
the fair value less costs to sell either equals or is
higher than the carrying amount.
The major classes of assets and liabilities of
subsidiaries to be disposed at the end of the
reporting period are as follows:
31 December
2020
Cash and cash equivalents
368
Trade and other receivables
202
Inventories
231
Biological assets
924
Property, plant and equipment
1 156
Other non-current prepayments and receivables
4
Intangible assets
201
Right-of-use assets
4 803
Total assets classified as held for sale
7 889
Trade and other payables
-144
Lease liability (current and non-current)
-4 274
Deferred tax liabilities
-102
Total liabilities associated with assets
classified as held for sale
-4 520
Intragroup accounts receivable and payable
eliminated on consolidation, net
-2 507
Net assets of disposal group
862
2020 ANNUAL REPORT
PAGE 61
The combined results of the discontinued
operations are set out below. The comparative
losses and cash flows from discontinued
operations have been represented to include
those operations classified as discontinued in
the current year.
Results from discontinued operations for year ended 31 December:
in EUR thousand
2020
2019
Discontinued operations:
Revenue
2 266
1 139
Other income
70
8
Gain/loss of biological assets arising from changes in fair value less cost to
sell
-619
1 200
Total revenue, other income and fair value adjustments
1 717
2 347
Net changes in inventories of agricultural produce and work in
process
1 665
3 114
Cost of purchased goods for trading purposes
-
-
Raw materials and consumables used for production purposes
-2 433
-2 808
Employee benefits expense
-758
-648
Depreciation and amortization
-521
-483
Other administrative expenses
-71
-84
Revaluation of land
-
-
Other (losses)/gains - net
-54
-287
-455
1 151
Gains/losses from exchange rate differences
22
10
Finance income
-
-
Finance costs (Note 22)
-936
-897
Share of profit/loss of investments accounted for using the equity method
-
-
Profit/loss before income tax
-1 369
264
Corporate income tax
7
7
Profit/loss for the period from
-1 362
271
Revenue from grain sales of subsidiaries to be
disposed that went through intergroup
operations was EUR 3 030 thousand in 2020
year, and EUR 3 565 thousand in 2019.
Discontinued operations relate to Ukraine
agriculture segment (Note 26).
Cash flows from discontinued operations for year ended 31 December
in EUR thousand
2020
2019
Net cash (outflows)/inflows from operating activities
-382
-1 374
Net cash outflows from investing activities
-100
-494
Net cash inflows/(outflows) from financing activities
-804
-934
Net decrease in cash and cash equivalents
-1 286
-2 802
34. SUBSIDIARY ACQUISITION
On October 17, 2019 Agromino A/S completed
the acquisition of 100 per cent of the shares of
Resilient a.s. from Mabon investiční fond s
proměnným základním kapitálem a.s.
The consideration consisted of 7,473,810 newly
issued ordinary shares in Agromino, subscribed
for by Mabon investiční fond s proměnným
základním kapitálem a.s at a subscription price
of SEK 18.6 per share, based on an acquisition
value of EUR 12,935,040.
Mabon subscribed for 7,473,810 newly issued
shares at a subscription price of SEK 18.6 per
share and upon the issuance of new shares
Mabon controlled approximately 74.3 per cent of
2020 ANNUAL REPORT
PAGE 62
the outstanding shares and votes in Agromino.
Total number of shares and votes in the
Company increased from 17,421,313 to
24,895,123.
Resilient a.s. owns a total of eighteen wholly-
owned subsidiaries out of which one is
incorporated in the Czech Republic and
seventeen are incorporated in Ukraine and
engaged in the agricultural sector producing
grains, oilseeds, pulses, and milk on its farms in
black-earth regions of western Ukraine.
Acquisition of Resilient a.s. is expected to help
the Agromino Group to increase its landbank,
cattle quantity and supplements its current
business model and strategy. Additionally, it
improves its regional diversification within
Ukraine and partially mitigates the risks related
to weather conditions as well as the geopolitical
risks. It also allows exchange/rotate the best
managers and experts between both companies
to improve the Agromino group and may lead to
economies of scale.
in EUR thousand
Net assets of acquired Company
Book
value
Fair value
adjustment
Fair value
Cash and bank accounts
217
-
217
Receivables and prepayments
2 128
-
2 128
Inventory*
4 415
360
4 775
Biological assets
904
1 466
2 370
TOTAL CURRENT ASSETS
7 664
1 826
9 490
Prepayments for land rent
7
-
7
Fixed assets
8 769
-1 097
7 672
Intangible assets
524
330
854
Land right of use assets
-
10 799
10 799
Biological assets
1 304
-414
890
TOTAL NON-CURRENT ASSETS
10 604
9 618
20 222
TOTAL ASSETS
18 269
11 443
29 713
Current loan liabilities
3 803
-
3 803
Trade and other payables
1 023
-
1 023
Total current liabilities
4 826
4 826
Non-current payables to related party
15 264
-3 312
11 952
TOTAL LIABILITIES
20 090
-3 312
16 778
NET ASSETS
-1 821
14 755
12 935
* including own-produced inventory in amount EUR 4 002
thousand
Receivables and prepayments included the
following groups: trade receivables in amount
EUR 477 thousand, prepayments to suppliers in
amount EUR 501 thousand, prepayments of
taxes in amount EUR 714 thousand and Other
receivables in amount EUR 435 thousand.
Grain for sale was revalued using market prices
in order to measure inventories at fair value.
As at the date of acquisition, Current biological
assets included winter crops (2 799 hectares)
seeded for the next harvest and crops of 2019
harvest that remained unharvested (1 192
hectares). Crops in the field as of the
acquisition date were determined by valuing
the net cash flows expected to be generated
from the assets discounted at average cost of
short-term financing (18.35%).
The significant unobservable inputs used in the
fair value measurement of winter crops as of
the date of acquisition were as follows:
Yields of crops (7,14 tons per hectare for winter
wheat and 3,45 tons per hectare for winter
rapeseed)
Prices of crops (UAH 4 241 per ton for winter
wheat and UAH 10 001 per ton for winter
rapeseed).
Inputs used in the fair value measurement of
crops of 2019 unharvested as of the date of
acquisition were as follows:
2020 ANNUAL REPORT
PAGE 63
Yields of crops (9,03 tons per hectare for corn
and 2,32 tons per hectare for soya)
Prices of crops (UAH 3 313 per ton for corn and
UAH 7 536 per ton for soya).
Revaluation of fixed assets was performed by
independent valuator “Proconsul” LLC using
market approach. Fair value of property, plant
and equipment acquired per groups is
presented in Note 11, including 686 hectares of
land in ownership.
Intangible assets were mainly presented by
land-usage rights under emphyteusis
agreements. As of the date of acquisition there
350 hectares of land under emphyteusis
agreements.
The Group has recognised land usage rights in
business combinations to get access to land
under rental agreements (7 429 hectares)
related to the acquisition of Resilient for
amount EUR 10 799 thousand as of the date of
acquisition.
Land right-of-use assets and land lease liability
were recognized under IFRS 16 in same
amount EUR 3 676 thousand as of the date of
acquisition (Note 22). Since total effect from
this recognizing was nil on net assets as of the
date of acquisition, land right-of-use assets and
related land lease liability were not disclosed in
table above.
Non-current biological assets include dairy
herd, both mature and immature. Animal
husbandry was measured at fair value less cost
to sell, using the market prices of livestock of
similar age, breed and genetic.
Non-current payables to related party included
loans with interest rate 4%-5% per loan
contracts and maturity within years 2024-
2029. Loans payable to related party were
measured at their fair value by discounting
them at the effective rate 6.71%. Loans to
related parties are unsecured.
Revenue of Resilient for the period since the
date of acquisition to December 31, 2019 was
included in Consolidated income statement in
amount EUR 1 861 thousand. Net loss of
Resilient for the period since the date of
acquisition to December 31, 2019 was included
in Consolidated income statement in amount
EUR 2 055 thousand.
Disclosure of profit or loss of Resilient for the
year ended December 31, 2019 as if the
acquisition occurred as of the beginning of the
year 2019 was impracticable, because effect of
fair value adjustments that could be as of the
beginning of the year 2019 and could effect net
profit or loss of acquired Group was not
possible to estimate.
35. EVENTS AFTER THE BALANCE SHEET DATE
Historically worst performing cluster of all
Agromino clusters, i.e. Nikolaev cluster with
circa 8.900 hectares and adjacent elevator
used for storage of Nikolaev production, was
divested in April 2021 to Prometey group. On
January 18th 2021, after completion of due
diligence, Prometey confirmed its intent to
acquire the cluster. The purchase price was
confirmed by the parties on March 30, 2021
and amounts to 4,8 MEUR. Estimated impact of
this divestment is minus 2,9 MEUR in group´s
EBITDA and the same negative impact of minus
2,9 MEUR in group’s net profit. The final
settlement of transaction is expected in July
2021.
Nikolaev cluster is located in southern Ukraine.
Unlike Agromino farms located in central
Ukraine and to a lesser extent those located in
eastern Ukraine, the climate change and local
weather specifics in Nikolaev cluster (with
summer temperatures often reaching up to 40
degrees Celsius) for many years negatively
affected yields of traditional crops. During the
last 3 years Agromino tried innovative
approaches in performing agrioperations in this
region (including selection of specific seeds and
fertilizers) to overturn negative historical
performance. These attempts did not bring
about substantial change in the financial results
of the cluster. Hence, upon receipt of
reasonable offer and completion by the buyer
of due diligence Agromino decided to divest this
cluster.
On April 20, 2021 company “LLC Resilient
Gorodylovychi” was divested to Private
Enterprise “Zahidniy Buh”. The purchase price
was confirmed by the parties on April 12, 2021
and amounts to 0,5 MEUR with estimated
2020 ANNUAL REPORT
PAGE 64
impact of minus 0,3 MEUR in company´s
EBITDA and the same negative impact of 0,3
MEUR in Net profit.
The land under operation of LLC Resilient
Gorodylovychi is located in the westernmost
part of Ukraine close to the Ukrainian-Polish
border. Due to the fact that this cluster was the
smallest of all Agromino´s standalone clusters
(with around 670 hectares) and as a result of
the forthcoming land reform which will allow
landowners to sell the leased land, the
management assessed that the operational
difficulties resulting from the remoteness of
this cluster from other clusters as well as high
competition on the local market would highly
likely lead to deterioration of the Group´s
position and profitability in this region. As a
result the decision on the divestment of the
smallest cluster was adopted.
2020 ANNUAL REPORT
PAGE 65
FINANCIAL STATEMENTS OF THE PARENT
COMPANY
STATEMENT OF FINANCIAL POSITION OF THE
PARENT COMPANY
in EUR thousand
Note
31.12.2020
31.12.2019
ASSETS
Current assets
Cash and cash equivalents
5
41
120
Trade and other receivables
7
4 108
6 374
4 149
6 494
Non-current assets
Investments in subsidiaries
6
45 808
63 407
Trade and other receivables
7
-
-
Tangible assets
-
-
45 808
63 407
Total assets
49 957
69 901
LIABILITIES
Current liabilities
Trade and other payables
8
4 078
4 314
Borrowings
9
833
2 863
4 911
7 177
Non-current liabilities
Borrowings
9
6 091
-
6 091
-
Total liabilities
11 002
7 177
EQUITY
Capital and reserves attributable to equity holders of
the Company
Ordinary shares
10
24 895
24 895
Share premium
10
125 612
125 612
Accumulated deficit
-111 552
-87 783
Total equity
38 955
62 724
Total equity and liabilities
49 957
69 901
The notes on pages 68 to 75 are an integral part of the parent company financial statements.
2020 ANNUAL REPORT
PAGE 66
STATEMENT OF THE COMPREHENSIVE INCOME OF
THE PARENT COMPANY
in EUR thousand
Note
2020
2019
Revenues
11
10
1 353
Other income
11
52
Cost of purchased goods for trading purposes
12
-
-1 331
Employee benefits expense
13
-226
-182
Other expenses
-548
-623
Impairment losses
15
-22 727
-
Gains/losses from exchange rate differences
-183
20
Interest income
14
70
241
Interest expense
14
-148
-478
Loss from sale of investment
-28
-
Net loss before income tax
-23 769
-948
Corporate income tax
-
-
Net loss for the period
-23 769
-948
Other comprehensive income
-
-
Total comprehensive loss for the period
-23 769
-948
STATEMENT OF CHANGES IN EQUITY FOR THE
PARENT COMPANY
in EUR thousand
Share
capital
Share
premium*
Accumulated
deficit
Total
Balance at 31.12.2017
17 421
120 151
-86 283
51 290
Issuance of share capital
-
-
-
-
Total comprehensive loss for the period
-
-
-552
-552
Balance at 31.12.2018
17 421
120 151
-86 835
50 738
Issuance of share capital
7 474
5 461
-
12 935
Total comprehensive income for the period
-948
-948
Balance at 31.12.2019
24 895
125 612
-87 783
62 724
Total comprehensive loss for the period
-23 769
-23 769
Balance at 31.12.2020
24 895
125 612
-111 552
38 955
* Share premium can be distributed as dividend.
The notes on pages 68 to 75 are an integral part of the parent company financial statements.
2020 ANNUAL REPORT
PAGE 67
STATEMENT OF CASH FLOWS OF THE PARENT
COMPANY
In EUR thousand
Note
2020
2019
Cash flows from operating activities
Cash receipts from customers
11
31
1 270
Cash paid to suppliers and employees
12,13,16
-1 034
-2 045
Income tax paid
-
-
Interest received
-
-
Net cash used in/generated from operating activities
-1 003
-775
Cash flows from investing activities
Contribution to share capital of subsidiary
16
-5 158
-
Acquisition of subsidiary, net of cash acquired
16
-11
-
Loans issued to subsidiaries
16
-380
-2 803
Proceeds from loan repayments from subsidiaries
16
1 621
1 594
Proceeds from interest repayments from subsidiaries
16
932
-
Purchase of tangible assets
-
-
Net cash used in/generated from investing activities
-2 996
-1 209
Cash flows from financing activities
Loans received from related parties
16
4 868
2 000
Loans repaid to subsidiaries
16
-
-5
Loans repaid to related parties
16
-950
-
Net cash generated from or used in financing activities
3 918
1 995
Net increase in cash and cash equivalents
-81
11
Effects of exchange rate changes on cash and cash
equivalents
-
1
Cash and cash equivalents at beginning of period
5
121
109
Cash and cash equivalents at end of period
5
41
121
The notes on pages 68 to 75 are an integral part of the parent company financial statements.
2020 ANNUAL REPORT
PAGE 68
NOTES TO THE FINANCIAL STATEMENTS OF
THE PARENT COMPANY
1. GENERAL INFORMATION
The Company was established on December
11, 2006. Agromino A/S (“the Company”) is
the parent company of the Agromino Group.
The Company is a limited liability company
incorporated and domiciled in Denmark. The
address of its registered office is c/o
Advokatfirmaet Poul Schmith, Vester
Farimagsgade 23, 1606 Copenhagen,
Denmark.
The Parent Company has in 2011 established a
branch "Agromino Eesti Filiaal" in Estonia.
The Company prepares its separate financial
statements in accordance with IFRS and further
requirements in the Danish Financial
Statements Act.
The principal accounting policies applied in the
preparation of these financial statements are
set out below.
2. ACCOUNTING PRINCIPLES
Basis of preparation of the financial statements
of the parent company
The financial statements of Agromino A/S have
been prepared in accordance with International
Financial Reporting Standards, as adopted by
the EU (IFRS) and further requirements in the
Danish Financial Statements Act. The parent
company has applied the same accounting
policies as the Group, except for the
investments in subsidiaries as described below.
See Note 2 to the Consolidated Financial
Statements, for the summary of significant
accounting policies of the Group.
Long-term investments in subsidiaries and
associate companies
In the separate financial statements of the
parent company, the investments in
subsidiaries are recognised and measured at
cost. Equity interests in foreign currencies are
translated to the reporting currency using the
historical exchange rate prevailing at the time
of the transaction. Where cost exceeds the
recoverable amount, the carrying value is
written down to the recoverable amount.
Dividends from investments in subsidiaries,
joint ventures, and associates are recognized
as income in the financial year when the
dividends are distributed.
3. CRITICAL ACCOUNTING ESTIMATES
An impairment test was performed at
investments in subsidiaries as at December 31,
2020, and 2019.
Based on the test performed impairment of
investments in Cyprus subsidiary amounted to
EUR 22 727 thousand in 2020.
The test demonstrated that the Ukraine
segment assets carrying amount is higher than
the recoverable value of the investment as at
December 31, 2019. Based on the test
performed there has been no impairment
recognition in 2019.
The parent company has in the model used its
target yields and prices for cereals and milk
based on forecasts. The parent company has
applied 5.0% long-term growth rate that has
been aggregated from the long-term growth
perspective in the respective country and
estimation of the growth in food prices in
relation to other inputs for Ukrainian and 4 %
for Russian milk production segments. The
discount rates applied in Ukraine 15,67%
(18.21% in 2019). The discount rates applied
in Russia 16,01% (14.76% in 2019).
2020 ANNUAL REPORT
PAGE 69
4. FINANCIAL RISK MANAGEMENT
Financial risk management principles of
Agromino A/S correspond to the principles used
for the whole Group. For further information on
the financial risk management principles used
please refer to the consolidated financial
statements Note 3. For details concerning the
parent company please refer to the other Notes
of the financial statements of the parent
company.
The Company is exposed to foreign exchange
risk arising primarily from exposures to the US
dollar. Refer to Notes 7,8,9 for the amounts of
assets and liabilities nominated in the US
dollar.
As at December 31, 2020, if the US dollar rate
against euro had been 10% higher with all
other variables held constant, profit for the
year would have been EUR 220 thousand lower
(2019: EUR profit 288 thousand). If the US
dollar rate against euro had been 10% higher
with all other variables held constant, profit for
the year would have been higher by the same
amount.
5. CASH AND CASH EQUIVALENTS OF THE PARENT
COMPANY
in EUR thousand
2020
2019
Cash at bank and on hand
41
120
41
120
As at December 31, 2019 (and December 31, 2018) there was no cash on bank deposits. The credit
rating (Moody`s) of the banks where the cash was held was Aa2.
6. LONG TERM INVESTMENTS IN SHARES OF
SUBSIDIARIES
Breakdown of investments in subsidiaries by companies is given in the table below:
in EUR thousand
2020
2019
TC Farming Ukraine Ltd.
1 074
23 801
Ltd Trigon Dairy Farming
14 345
14 345
LLC Trigon Security
-
28
Trigon Farming Ltd.
2 187
2 187
LLC Trigon Moloko
515
515
LLC Kovyaqovskoуe
253
254
RESILIENT A.S.
16 735
12 935
LLC Trigon Farming Kharkiv
7 325
7 325
CJSC Vovchanskiy Combinat Khliboproduktiv
1 778
450
PAC Molniya-1
1 560
1 560
LLC Resilient Gorodolovichi
29
-
LLC Trigon-Export
-
-
LLC Trigon Farming
-
-
LLC Trigon-Elevator
-
-
LLC Agro Capital Center
-
-
LLC Kovyagivske Zerno
-
-
LLC Trigon Agro 2
7
7
45 808
63 407
During 2020 The Company has made share
capital contributions into subsidiaries in
amount of EUR 5 158 thousand. Also in 2020
acquired 100% of LLC Resilient Gorodylovychi
for a consideration of EUR 29 thousand and
disposed LLC Trigon Security for EUR 100.
2020 ANNUAL REPORT
PAGE 70
Impairment of subsidiaries in 2020 have been
recognized in the amount of EUR 22 727
thousand (Note 15).
As a result of restructuring the Company in
2019 has purchased Ukrainian group
companies for EUR 9,595 thousand from
subsidiary. Liability was partially set-off against
receivable in amount of EUR 8,595 thousand.
During 2019 The Company acquired 100%
shares in Resilient A.S. for a consideration of
7,473,810 newly issued shares in Agromino,
equivalent to a value of EUR 12,935 thousand.
As of December 31, 2020, the parent company owned directly the following companies:
2020
Country of
registration
Segment
Ownership
percentage
Legal Status in the
Group
LLC Kovyaqovskoуe
Ukraine
Ukraine
100%
Subsidiary
LLC Kovyaqovskoуe
Zerno
Ukraine
Ukraine
100%
Subsidiary
LLC Trigon Farming
Kharkiv
Ukraine
Ukraine
99,85%
Subsidiary
CJSC Vovchanskiy
Combinat Khliboproduktiv
Ukraine
Ukraine
100%
Subsidiary
PAC Molniya-1
Ukraine
Ukraine
100%
Subsidiary
LLC Trigon-Export
Ukraine
Ukraine
100%
Subsidiary
LLC Trigon Farming
Ukraine
Ukraine
100%
Subsidiary
LLC Agro Capital Center
Ukraine
Ukraine
1,73%
Minority interest
LLC Trigon Agro 2
Ukraine
Ukraine
8,78%
Minority interest
LLC Resilient
Gorodolovichi
Ukraine
Ukraine
100%
Subsidiary
LLC Trigon Moloko
Russia
Milk production
99%
Subsidiary
Resilient a.s.
Czech Republic
-
100%
Subsidiary
Ltd Trigon Dairy Farming
Estonia
Milk production
69%
Subsidiary
Trigon Farming Ltd.
Estonia
-
100%
Subsidiary
TC Farming Ukraine Ltd.
Cyprus
-
100%
Subsidiary
TC Farming Russia Ltd.
Cyprus
-
100%
Subsidiary
As of December 31, 2019, the parent company owned directly the following companies:
2019
Country of
registration
Segment
Ownership
percentage
Legal Status in the
Group
LLC Trigon Security
Ukraine
-
100%
Subsidiary
LLC Kovyaqovskoуe
Ukraine
Ukraine
100%
Subsidiary
LLC Kovyaqovskoуe
Zerno
Ukraine
Ukraine
100%
Subsidiary
LLC Trigon Farming
Kharkiv
Ukraine
Ukraine
99,85%
Subsidiary
CJSC Vovchanskiy
Combinat Khliboproduktiv
Ukraine
Ukraine
100%
Subsidiary
PAC Molniya-1
Ukraine
Ukraine
100%
Subsidiary
LLC Trigon-Export
Ukraine
Ukraine
100%
Subsidiary
LLC Trigon Farming
Ukraine
Ukraine
100%
Subsidiary
LLC Trigon-Elevator
Ukraine
Ukraine
100%
Subsidiary
LLC Agro Capital Center
Ukraine
Ukraine
1,73%
Minority interest
LLC Trigon Agro 2
Ukraine
Ukraine
8,78%
Minority interest
LLC Trigon Moloko
Russia
Milk production
99%
Subsidiary
Resilient a.s.
Czech Republic
-
100%
Subsidiary
Ltd Trigon Dairy Farming
Estonia
Milk production
69%
Subsidiary
Trigon Farming Ltd.
Estonia
-
100%
Subsidiary
TC Farming Ukraine Ltd.
Cyprus
-
100%
Subsidiary
TC Farming Russia Ltd.
Cyprus
-
100%
Subsidiary
2020 ANNUAL REPORT
PAGE 71
7. TRADE AND OTHER RECEIVABLES
in EUR thousand
2020
2019
Current receivables:
Receivables from subsidiaries (Note 16)
3 009
2 523
Short-term loans given to subsidiaries (Note 16)
1 032
3 173
Other receivables
-
650
Total current receivables
4 041
6 346
Current prepayments:
Prepayments
-
-
Prepayments for indirect taxes
67
28
67
28
Total current receivables and prepayments
4 108
6 374
Total receivables and prepayments
4 108
6 374
Breakdown of the receivables from subsidiaries and group companies by companies is given below:
in EUR thousand
31.12.2020
31.12.2019
TC Farming Ukraine Ltd.
1 242
1 242
Trigon Dairy Farming Ltd.
30
1 015
LLC Trigon Farming Kharkiv
1 788
2 867
LLC Dobruchi
955
560
TC Farming Russia Ltd
26
12
Total receivables
4 041
5 696
During 2020 no receivables or loans from the
group companies were impaired.
During 2019 the Company has set-off loan
receivable in amount of EUR 3,090 thousand
(including EUR 859 thousand interest).
The Company also has waived receivable from
subsidiary in amount of EUR 400 thousand.
Assigned receivable from subsidiary amounted
to EUR 653 thousand.
Trade and other receivables are not due as at
December 31, 2020, and December 31, 2019.
The carrying amounts of the trade and other receivables were denominated in the following
currencies:
in EUR thousand
31.12.2020
31.12.2019
US dollar
1 788
2 867
Euro
2 320
3 507
4 108
6 374
2020 ANNUAL REPORT
PAGE 72
8. TRADE AND OTHER PAYABLES
in EUR thousand
31.12.2020
31.12.2019
Trade payables
54
3
Trade payables to related parties (Note 16)
2 893
3 163
Social security and other taxes
4
1
Accrued expenses
118
127
Amounts due to related parties (Note 16)
1 009
1 020
4 078
4 314
Less: non-current portion
-
-
4 078
4 314
The carrying amounts of the trade and other payables were denominated in the following currencies:
in EUR thousand
31.12.2020
31.12.2019
US dollar
-
270
Euro
4 078
4 044
4 078
4 314
9. BORROWINGS
in EUR thousand
31.12.2020
31.12.2019
Current
Borrowings from subsidiaries (Note 16)
833
808
Borrowings from Related parties (Note 16)
-
2 055
833
2 863
Non-current
Borrowings from Related parties (Note 16)
6 091
-
6 091
-
Total borrowings
6 924
2 863
in EUR thousand
31.12.2020
31.12.2019
Euro
6 924
2 863
6 924
2 863
10. SHARE CAPITAL OF THE PARENT COMPANY
in EUR thousand
Number of
shares
Ordinary
shares
Share
capital
Share
premium
Total
Balance at 31.12.2018
17 421 313
17 421 313
17 421
120 151
137 572
Including treasury
shares
42
42
-
-
-
Share capital increase
7 473 810
7 473 810
7 474
5 461
12 935
Balance at 31.12.2019
24 895 123
24 895 123
24 895
125 612
150 507
Including treasury
shares
42
42
-
-
-
Balance at 31.12.2020
24 895 123
24 895 123
24 895
125 612
150 507
Including treasury
shares
42
42
-
-
-
2020 ANNUAL REPORT
PAGE 73
As at December 31, 2020, the total number of
issued shares was 24,895,123 including 42
treasury shares with a par value of 1 EUR per
share.
All shares have been fully paid. The shares of
Agromino A/S were listed on the main market
of Small Cap segment on NASDAQ Stockholm.
On 15 July 2020, Agromino announced its plan
to apply for delisting of Agromino’s shares. On
19 October 2020, Nasdaq Stockholm has
approved such application. The last day of
trading of Agromino’s shares was 30 October
2020.
11. REVENUE
in EUR thousand
2020
2019
Sales of cereals
-
1 344
Sales of services
10
9
TOTAL revenue
10
1 353
In 2020 no sales of cereals took place (2019:
EUR 1 344 thousand).
Sale of services includes revenue from related
parties in amount EUR 10 thousand (2019: EUR
9 thousand) (Note 16).
12. COST OF PURCHASED GOODS FOR TRADING
PURPOSES
13. EMPLOYEE BENEFITS EXPENSE
in EUR thousand
2020
2019
Fees of Members of Board of Directors and Executive
Board (Note 16)
133
169
Social security costs related to fees of Members of
Board of Directors and Executive Board (Note 16)
23
12
156
181
Wages and salaries
54
1
Social security costs
16
-
70
1
226
182
in EUR thousand
2020
2019
Cost of goods sold (Note 16)
-
-1 331
Total cost of goods sold
-
-1 331
2020 ANNUAL REPORT
PAGE 74
14. FINANCE INCOME AND FINANCE COST
in EUR thousand
2020
2019
Interest income from group companies (Note 16)
70
241
TOTAL interest income
70
241
Interest expense from group companies (Note 16)
-118
-47
Interest expense from related parties (Note 16)
-30
-431
TOTAL interest expense
-148
-478
15. IMPAIRMENT LOSSES
in EUR thousand
2020
2019
Impairment of investments (Note 6)
-22 727
-
-22 727
-
16. RELATED PARTY TRANSACTIONS
in EUR thousand
Sales and purchases
2020
2019
Sale of services to group companies (Note 11)
10
9
Including re-charged expenses
-
-
Cost of purchased goods for trading purposes from
subsidiaries (Note 12)
-
1 331
Shares purchase from subsidiaries (Note 6)
-
9 595
Loss from sale of investments (Note 6,14)
-28
-
Interest income from subsidiaries (Note 14)
70
241
Interest expense from subsidiaries (Note 14)
-118
-431
Cash flow transactions
Contribution to share capital of subsidiary
-5 158
-
Cash paid to subsidiaries
-278
-3
Loans issued to subsidiaries
-380
-2 803
Proceeds from loan repayments from subsidiaries
1 615
1 588
Proceeds from interest repayments from subsidiaries
932
-
Loans received from related parties
4 868
2 000
Loans repaid to related parties
-950
-
Repayments of loans from subsidiaries
-
-5
The following table sets forth the aggregate gross amounts of salaries and other remuneration to the
Board of Directors and Executive Board in 2020 and 2019.
.
in EUR thousand
Salary (incl
social
security
costs)
Total
2020
Members of Board of Directors
50
50
Members of the Executive Board
106
106
156
156
2019
Members of Board of Directors
69
69
Members of the Executive Board
110
110
179
179
2020 ANNUAL REPORT
PAGE 75
Balances from subsidiaries and other group companies
in EUR thousand
31.12.2020
31.12.2019
Receivables (Note 7)
3 009
2 523
Loan receivables (Note 7)
1 032
3 173
Payables (Note 8)
3 902
4 183
Borrowings (Note 9)
833
808
Balances from other related parties
31.12.2020
31.12.2019
Payable to related parties (Note 8)
6 091
2 056
17. FEES TO THE AUDITORS OF THE PARENT COMPANY
in EUR thousand
2020
2019
Audit
75
89
Other assurance engagements
-
7
Other services
2
17
77
113
18. COMMITMENTS
Surety agreement #253 CL/S2 was concluded
between the Company and JSC “CREDIT
AGRICOLE BANK” on 12 February 2019. Under
surety agreement Agromino A/S shall be liable
to the Bank in case of breach of the Debt
obligations by its subsidiaries under
Agreement on rendering of banking services
#253 CL dated 07 December 2012 with
general loan limit USD 4 100 thousand.
Surety agreement # SR 19-652/28-2 was
concluded between the Company and OTP
Bank on 13 December 2019, under the
agreement the Agromino A/S shall be liable to
the Bank in case of breach of the Debt
obligations by its subsidiaries with general
loan limit UAH 200 000 thousand.
Surety agreement # SR 20-001/28-2 was
concluded between the Company and OTP
Bank on 14 January 2020, under the
agreement Agromino A/S shall be liable to the
Bank in case of breach of the Debt obligations
by its subsidiaries with general loan limit UAH
80 000 thousand.
Surety agreement # SR 20-272/28-2 was
concluded between the Company and OTP
Bank on 12 June 2020, under the agreement
Agromino A/S shall be liable to the Bank in
case of breach of the Debt obligations by its
subsidiaries with general loan limit UAH 36
000 thousand.
Within the framework of the share purchase
agreement (SPA) for the acquisition of 100%
of shares of Resilient a.s. (Shares) a pledge
over the Shares was established by the
Company in favour of Mabon investiční fond
s proměnným kapitálem a.s. (Mabon). Mabon
is controlled by Mr. Petr Krogman, who is also
the Chairman of the Agromino‘s Board of
Directors.
The pledge shall secure potential future
liabilities of the Company towards Mabon
which may arise mainly in case of substantial
breach of limited warranties by Agromino
under the SPA. No liabilities towards Mabon
under the framework of the SPA exist on the
date of this report. The Company assesses the
risk of origination of substantial liabilities
under the framework of the SPA as very low.
Consequently, the Company assesses the risk
of pledge realization as very low.
During the process of the SPA negotiation
applicable disqualification rules were
respected by the Company.
2020 ANNUAL REPORT
PAGE 76
MANAGEMENT´S STATEMENT
May 12, 2021
__________________ __________________ ___________________
__________
Petr Krogman Jan Urban Jiri Vyskočil
Chairman of the Vice-Chairman of the Member of the
Board of Directors Board of Directors Board of Directors
__________________ _________________________
Petr Toman Rastislav Pagáč
Chief Executive Officer Executive Board Member
2020 ANNUAL REPORT
PAGE 77
INDEPENDENT AUDITOR´S REPORT
OPINION
BASIS FOR OPINION
MANAGEMENT’S RESPONSIBILITIES FOR
THE CONSOLIDATED FINANCIAL
STATEMENTS AND THE FINANCIAL
STATEMENTS
AUDITOR’S RESPONSIBILITIES FOR THE
AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS AND THE
FINANCIAL STATEMENTS
2020 ANNUAL REPORT
PAGE 78
STATEMENT REGARDING THE
MANAGEMENT’S REVIEW
2020 ANNUAL REPORT
PAGE 79
Aalborg, May 12. 2021
Beierholm
Statsautoriseret Revisionspartnerselskab
CVR no. 32 89 54 68
Henrik Bjørn
State Authorized Public Accountant
MNE no. Mne28606
2020 ANNUAL REPORT
PAGE 80
DEFINITIONS
Acid test
(Total current assets – Inventories (inventories including biological
assets)-Assets held for sale (including Assets of disposal group classified
as held for sale)/Total current liabilities. The acid test or quick ratio
measures a company’s ability to use its near cash or quick assets to
immediately extinguish or retire its short-term liabilities (liabilities due
within the next twelve months).
Current ratio
Total current assets/Total current liabilities. The current ratio measures
a company’s ability to meet short-term obligations (liabilities due within
the next twelve months).
Earnings per share
Net result attributable to the shareholders of the Company/ year-end
number of common shares outstanding during the period (in accordance
with IAS 33). Earnings/loss per share for profit attributable to the equity
holders of the Company during the year, both basic and diluted.
EBITDA
EBITDA is calculated by adding to the operating profit the annual
depreciation of the fixed assets and amortisation of land-related long-
term prepayments.
Equity ratio
Total equity/Total assets. The equity ratio indicates how much debt a
company uses to finance its assets relative to equity.
Net debt
Total borrowings and the fair value of derivative financial instruments
(including Liabilities directly associated with assets classified as held for
sale -Cash and cash equivalents. Net debt is a measure of a company's
ability to repay its debts if they were all due today.
Return on assets
(ROA)
Net profit attributable to the owners of the parent company/Average total
assets. Return on assets compares income with total assets measuring
management’s ability and efficiency in using the firm’s assets to generate
profits.
Return on equity
(ROE)
Net profit attributable to the owners of the parent company/Average
equity excluding minority interest. Return on equity relates income with
the equity capital measuring management´s ability and efficiency in
generating a return to the shareholders of the Company
Book value per share
Total Stockholders’ equity/ year-end number of common shares
outstanding during the period (in accordance with IAS 33). The book
value per share measures the per share value of a company based on its
equity available to shareholders.