Vilkyskiu Pienine

Quarterly Report • May 31, 2013

Vilkyskiu pienine AB

Interim consolidated financial statements for the 3 months of 2013

Content

CONFIRMATION OF RESPONSIBLE PERSONS
GENERAL INFORMATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
EXPLANATORY NOTES

VILKYŠKIU

Interim consolidated financial statements for the 3 months of 2013

Confirmation of Responsible Persons

Following the Article No. 22 of the Law on Securities of the Republic of Lithuania and Rules on Preparation and Submission of Periodic and Additional Information of the Lithuanian Securities Commission, we Gintaras Bertasius, General Director of Vilkyskiu pienine AB and Vilija Milaseviciute, Finance Director of of Vilkyskiu pienine AB hereby confirm that, unaudited interim condensed consolidated financial statements for the three months of 2013, prepared in accordance with International Financial Reporting Standarts, give a true and fair view of the assets, liabilities, financial position and profit or loss and cach flows of Vilkyskiu pienine AB group.

Gintaras Bertasius General Director Van Vilija Milaseviciute Finance Director $\sqrt{2}$ $S$ _r YSK ENINE

The financial statements were approved and signed by the Management on 31 May 2013.

Interim consolidated financial statements for the 3 months of 2013 3

General information

Name of the Issue	Public Company "Vilkyškių pieninė"
Authorized capital	LTL 11 943 000
Registered office	Vilkyškiai, Pagėgiai municipality
Telephone number	8-441 55330
Fax number	8-441 55242
E-mail address	info@vilkyskiu.lt
Date and place of registration	The 18 th of May 1993, Tauragė Branch of Public Institution Center
Date and place of re-registration	The 30th of December 2005, Tauragė Branch of Public Institution Center
	of Registers
Code in the Register of Enterprises	277160980
Internet address	http://www.vilkyskiu.lt

Vilkyskiu pienine AB Board

Gintaras Bertasius (Chairman) Sigitas Trijonis Rimantas Jancevicius Vilija Milaseviciute Andrej Cyba Linas Strelis

Vilkyskiu pienine AB Management

Gintaras Bertasius	General Director
Vaidotas Juskys	Chief operation officer
Vilija Milaseviciute	Finance Director
Sigitas Trišonis	Technical Director
Rimantas Jancevičius	Stock Director
Arvydas Paranka	Production Director

The Group consists of the following companies:

• Vilkyskiu Pienine AB, the parent company
• Modest AB, the subsidiary
• Kelmes Pienine AB, the subsidiary.

The parent Company is engaged in production and sales of different types of cheese. Also, it produces and sells whey, raw milk and cream.

The Company has a subsidiary Modest AB, which is engaged in milk processing and production of dairy products. The Company holds 99.7% voting rights of the subsidiary. Modest AB specialises in production of fermented cheese, cottage cheese and other cheese products.

Company also has a subsidiary - Kelmes Pienine AB, which is engaged in milk processing and production of dairy products. The Company holds 99.9% voting rights of Kelmes Pienine AB. Kelmes Pienine AB specialises in production of fresh dairy products.

At 31 March 2013 the Group had 936 employees (31 March 2012 - 878).

Consolidated statement of financial position

Thousand Litas	31 03 2013	31 12 2012
Assets
Property, plant and equipment	94.659	93.927
Intangible assets	23.877	23.879
Long-term receivables	1.320	1.395
Non-current assets	119.856	119.201
Inventories	22.900	23.969
Trade and other receivables	22.101	16.724
Prepayments	837	1.406
Cash and cash equivalents	531	880
Current assets	46.369	42.979
Total assets	166.225	162.180
Equity
Share capital	11.943	11.943
Share premium	11.396	11.396
Reserves	11.359	11.389
Retained earnings	24.011	25.132
Total equity attributable to the shareholders of the Company	58.709	59.860
Non-controlling interest	151	141
Total equity	58.860	60.001
Liabilities
Interest-bearing loans and lease liabilities	35.254	35.755
Derivative financial instruments	1.654	1.707
Government grants	12.123	12.564
Deferred tax liabilities	1.660	1.862
Non-current liabilities	50.691	51.888
Interest-bearing loans and lease liabilities	27.216	17.950
Derivative financial instruments	431	436
Trade and other payables, including derivatives	29.027	31.905
Current liabilities	56.674	50.291
Total liabilities	107.365	102.179
Total equity and liabilities	166.225	162.180

Consolidated income statement

Thousand Litas	01.01.2013- 31.03.2013	01.01.2012- 31.03.2012
Revenue	70.395	68.827
Cost of sales	-66.059	-65.230
Gross profit	4.336	3.597
Other operating income	326	384
Distribution expenses	-3.719	-2.657
Administrative expenses	-1.677	-2.489
Other operating costs	-149	-24
Result from operating activities	-883	-1.189
Finance income	15	27
Finance costs	-532	-511
Net finance expenses	-517	-484
Profit before income tax	-1.400	-1.673
Income tax expense	201	439
Profit for the period
	-1.199	-1.234
Attributable to:
Shareholders of the Group	-1.209	-1.252
Non-controlling interest	10	18
Net profit (loss) for the year	-1.199	-1.234
Basic earnings per share (Litas)	-0,10	-0,10
Diluted earnings per share (Litas)	-0,10	-0,10

Consolidated statement of changes in equity

Equity, attributable to the shareholders of the Company

Thousand Litas	Share capital	Share premium	Revalu ation reserve	Hedging reserve	Reserve for acquiri ng own shares	Legal reserve	Retained earnings	Total	Non contr olling intere st	Total equity
Balance at 1 January 2012	11.943	11.396	6.929	-1.397	5.768	1.194	20.195	56.028	104	56.132
Comprehensive income for the period Net profit (loss)	-	-	-	-	-	-	-1.252	-1.252	18	-1.234
Other comprehensive income
Allocated from reserves Increase of revaluation reserve,	-	-	-104	-	-	-	104	-	-	-
net of tax	-	-	16	-	-	-	-	16	-	16
Formation of hedging reserve	-	-	-	-237	-	-	-	-237	-	-237
Total other comprehensive
income	-	-	-88	-237	-	-	104	-221	-	-221
Total comprehensive income for
the period	-	-	-88	-237	-	-	-1.148	-1.473	18	-1.455
Contributions by and
distributions to owners: Dividends	-	-	-	-	-	-	-	-	-	-
Total contributions by and
distributions to owners	-	-	-	-	-	-	-	-	-	-
Changes in the Group without losing control
Other changes in the Group	-	-	-	-	-	-	-	-	-	-
Total contributions by and
distributions to owners	-	-	-	-	-	-	-	-	-	-
Balance at 31 March 2012	11.943	11.396	6.841	-1.634	5.768	1.194	19.047	54.555	122	54.677
Balance at 1 January 2013	11.943	11.396	6.570	-2.143	5.768	1.194	25.132	59.860	141	60.001
Comprehensive income for the period
Net profit (loss)	-	-	-	-	-	-	-1.209	-1.209	10	-1.199
Other comprehensive income
Allocated from reserves Formation of hedging reserve	- -	- -	-88 -	- 58	- -	- -	88 -	- 58	- -	- 58
Total other comprehensive income	-	-	-88	58	-	-	88	58	-	58
Total comprehensive income for the period	-	-	-88	58	-	-	-1.121	-1.150	10	-1.141
Contributions by and
distributions to owners:
Total contributions by and
distributions to owners	-	-	-	-	-	-	-	-	-	-
Changes in the Group without losing control
Other changes in the Group	-	-	-	-	-	-	-	-	-	-
Total contributions by and distributions to owners	-	-	-	-	-	-	-	-	-	-
Balance at 31 March 2013	11.943	11.396	6.482	-2.085	5.768	1.194	24.011	58.709	151	58.860

Consolidated statement of cash flows

Thousand Litas	01.01.2013-	01.01.2012-
	31.03.2013	31.03.2012
Cash flows from operating activities
Net profit (loss)	-1.199	-1.234
Adjustments:
Depreciation of property, plant and equipment	2.271	1.320
Amortisation of intangible assets	2	66
Amortisation and write down of grants	-313	-196
(Profit) loss on disposal of property, plant and	-27	-97
equipment Income tax expense	-201	-439
Interest expenses, net	517	484
	1.050	-96
Change in inventories Change in long-term receivables	1.069 75	2.580 -25
Change in trade and other receivables and prepayments	-4.876	-2.676
Change in trade and other payables	-2.701	921
	-5.383	704
Paid interest	-407	-413
Net cash from operating activities	-5.790	291
Cash flows from investing activities Acquisition of property, plant and equipment	-3.561	-8.658
Proceeds from sale of property, plant and equipment	-	100
Loans granted	235	-153
Recovery of the loans	2	158
Interest received	-	2
Net cash from investing activities	-3.324	-8.551
Cash flows from financing activities
Loans received*	10.844	14.192
Repayment of borrowings	-2.078	-6.067
Net cash used in financing activities	8.766	8.125
Increase (decrease) in cash and cash equivalents	-349	-135
Cash and cash equivalents at 1 January	880	337
Cash and cash equivalents at 31 March	531	202

^* Change of Credit line 8,488 Thousand Litas (for the three months of 2012 – 1,743 Thousand Litas)

Explanatory notes

1. Accounting principles

Consolidated financial statements of Vilkyskiu pienine AB are prepared following International Standards of Financial Accountability.

The interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting.

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Consolidated annual financial statements for the year 2012.

2.Main financial indicators

	January – March 2013	January – March 2012
Revenue (Thousand Litas)	70.395	68.827
EBITDA (Thousand Litas)	1.077	1
EBITDA margin (%)	1.5%	0%
Operating result (Thousand Litas)	-883	-1.189
Operating result margin (%)	-1,3%	-1,7%
Profit (loss) (Thousand Litas)	-1.199	-1.234
Profit (loss) (%)	-1,7%	-1,8%
Profit (loss) per share (litas)	-0,10	-0,10
Number or shares (vnt)	11 943 000	11 943 000

3. Segment information

Revenue per geographical zones:

Thousand Litas	January – March 2013	January – March 2012	Change
Lithuania	26.800	31.755	-15,6%
European Union	16.183	16.058	0,8%
Russia	23.732	17.804	33,3%
Other countries	3.680	3.210	14,6%
	70.395	68.827

4. Inventories

Thousand Litas	31 March 2013	31 December 2012
Finished production	15,991	17,824
Raw materials	423	87
Other auxiliary materials	6,486	6,026
Goods for re-sale	-	32
	22,900	23,969

Interim consolidated financial statements for the 3 months of 2013 9

6. Post balance sheet events

The following decisions was taken at the Ordinary General Meeting of Shareholders of Vilkyskiu pienine AB which was held on the 26 April 2013:

Item 1 of the Agenda: Company"s annual report for the year 2012.

Resolution: To approve the Company"s annual report for the year 2012.

Item 2 of the Agenda: Auditor"s Report regarding the Company"s Financial Statements for the year 2012. Heard.

Item 3 of the Agenda: Approval of Company's annual and consolidated financial statements of the year 2012.

Resolution: To approve of Company's annual and consolidated financial statements of the year 2012.

Item 4 of the Agenda: Profit (loss) appropriation for the year 2012.

Resolution: To approve the Audited Profit appropriation for the year 2012 as follows under IAS (in thousand Litas; in thousand EUR):

	thousand LTL	thousand EUR
1) Non-appropriated profit (loss) at the end of the year 2011	14,138	4,095
2) Approved by shareholders dividends of the year 2011	2,986	865
3) Transfers to reserves provided by law	0	0
4) Portion of the profit allocated to the reserve for the purchase	0	0
of own shares
5) Non-appropriated profit (loss) at the beginning of the year	11,152	3,230
2011 after dividends payout and transfer to reserves
6) Net profit (loss) of the reporting period	5,175	1,499
7) Transfers from reserves	354	103
8) Total profit (loss) to be appropriated:	16,681	4,831
- portion of the profit allocated to the legal reserve	0	0
- portion of the profit allocated to the reserve for the	203	59
purchase of own shares
- portion of the profit allocated for payment of the dividends	2,508	726
(or 0.21 LTL (0.0608 EUR) per ordinary registered share with
nominal value of 1 LTL)
- portion of the profit allocated to the other reserves	0	0
- portion of the profit allocated to be paid as annual payouts	150	43
(tantiemes) to board members, bonuses to employees and for
other purposes
9) Non-appropriated profit (loss) at the end of the year 2011	13,820	4,003
carried forward to next financial year

Item 5 of the Agenda: A decision on the purchase of own shares.

A decision with regard to the purchase of own shares has been approved:

a) To purchase up to 10 percent of the Company"s shares.

b) The purpose of acquisition of own shares – to maintain and increase the price of the Company"s shares. c) Period during which the Company may acquire own shares – until 25 April 2014.

d) To set the maximum price per share of own shares to be acquired – at 1.45 EUR (5.00 LTL), at the same time setting the minimum acquisition price per share equal to the nominal value of a share, i.e. 0.29 EUR (1.00 LTL).

e) To commit the Board to organize the purchase of own shares, to determine the procedure for purchase and sale of shares, time, number of shares and price, as well as to perform other actions relating thereto in compliance with the terms set in this resolution as well as in accordance with the requirements established in the Republic of Lithuania Law of Companies.

Interim consolidated financial statements for the 3 months of 2013 10

Item 6 of the Agenda: Election of the Company's Audit firm for the year 2013, 2014 and 2015 and setting the conditions of payment.

Resolution:

1) To elect KPMG Baltics, UAB as the Company's Audit firm for the year 2013, 2014 and 2015.

2) To authorize Mr. Gintaras Bertasius, the Company's General Director, to contract with KPMG Baltics,

UAB and to set the conditions of payment for the services.