Pieno Zvaigzdes

Annual / Quarterly Financial Statement • Feb 28, 2013

Pieno Žvaigždės, AB Confirmation of the Management

Vilnius, February 28, 2013

Financial statements for the twelve months 2012

We, Aleksandr Smagin, Chief Executive Officer and Audrius Statulevičius, Chief Financial Officer, hereby confirm that, to the best of our knowledge, Interim Financial Statements of the twelve months of 2012 prepared in accordance with IFRS, give true and fair view of the assets, liabilities, financial position, profit or loss and cash flows of AB "Pieno žvaigždės".

Pieno Žvaigždės, AB Aleksandr Smagin CEO

CFO

Pieno Žvaigždės, AB Audrius Statulevičius

PIENO ŽVAIGŽDĖS, AB

INTERIM FINANCIAL STATEMENTS

For the twelve months 2012

VILNIUS, FEBRUARY 2013

1. Balance sheet 3
2. Income statement4
3. Cash flows statement5
4. Statement on changes in equity6
5. Notes to the financial statements7

Prepared according to IFRS, not audited

1. Balance sheet
Thousand Litas	2012.12.31	2011.12.31
Assets
Property, plant and equipment	197 273	181 166
Intangible assets	714	899
Investments available for sale	276	276
Long-term receivables	-	126
Deferred tax
Total non-current assets	198 263	182 467
Inventories Receivables	55 142 79 788	75 725 73 238
Cash and cash equivalents	4 528	1 973
Total current assets	139 458	150 936
Total assets	337 721	333 403
Equity
Share capital	49 634	54 205
Share premium	27 246	27 246
Own shares	-	(14 435)
Reserves	33 559	36 819
Retained earnings	38 060	43 997
Total equity	148 499	147 832
Liabilities
Government grants	3 187	4 422
Interest-bearing loans and borrowings	60 543	92 078
Deferred tax	1 862	1 478
Total non-current liabilities	65 592	97 978
Provisions	-	-
Interest-bearing loans and borrowings	60 975	28 578
Income tax payable	956	1 402
Trade and other amounts payable	61 699	57 613
Total current liabilities	123 630	87 593
Total liabilities	189 222	185 571
Total equity and liabilities	337 721	333 403

2. Income statement

Thousand Litas	2012.01.01 - 2012.12.31	2011.01.01 - 2011.12.31
Revenue	769 089	700 924
Cost of sales	(622 964)	(568 679)
Gross profit	146 125	132 245
Other operating income, net	683	777
Sales and administrative expenses	(107 567)	(98 849)
Operating profit before finance costs	39 241	34 173
Finance income	345	368
Finance expenses	(5 418)	(4 545)
Finance income/expenses, net	(5 073)	(4 177)
Profit before tax	34 168	29 996
Corporate income tax	(5 102)	(4 311)
Profit for the year	29 066	25 685
Earnings per share (Litas)	0,59	0,47
Thousand Litas	2012.10.01 -	2011.10.01 -
	2012.12.31	2011.12.31
Revenue	202 110	176 565
Cost of sales	(160 988)	(143 161)
Gross profit	41 122	33 404
Other operating income, net	219	535
Sales and administrative expenses	(29 587)	(26 531)
Operating profit before finance costs	11 754	7 408
Finance income	198	210
Finance expenses Finance income/expenses, net	( 997) ( 799)	(1 347) (1 137)
Profit before tax	10 955	6 271
Corporate income tax Profit for the year	(1 620) 9 335	( 752) 5 519

3. Cash flows statement

Thousand Litas Cash flows from operating activities	2012.12.31	2011.12.31
Net profit	29.066	25.685
Adjustments:
Depreciation and amortisation	32.081	33.413
Amortisation of government grants	(1.235)	(1.069)
Result of disposal of property, plant and equipment	(323)	341
Impairment loss of receivables	54	243
Change in vacation reserve	522	412
Interest income/expenses, net	5.220	4.012
Income tax	5.102	4.311
Cash flows from ordinary activities before changes in the working capital	70.487	67.348
Change in inventories	20.583	(15.403)
Change in receivables	(7.479)	(5.687)
Change in trade and other payable amounts	(735)	(1.586)
Cash flows from operating activities	82.856	44.672
Interest paid	(3.838)	(4.012)
Income tax paid	(4.514)	(2.644)
Net cash flow from operating activities	74.504	38.016
Cash flows from investing activities
Acquisition of property, plant and equipment	(42.924)	(23.213)
Acquisition of intangible assets	(82)	(66)
Proceeds on sale of property, plant and equipment	426	600
Proceeds from other investment activity	200	-
Net cash flow used in investing activities	(42.380)	(22.679)
Cash flows from financing activities
Loans received	35.848	110.680
Repayment of borrowings	(34.986)	(83.148)
Issue (redemption) of shares	(5.766)	(86)
Dividends paid	(24.665)	(24.947)
Payment of finance lease liabilities	-	(20.077)
Government grants received	-	632
Net cash from/(used in) financing activities	(29.569)	(16.946)
Change in cash and cash equivalents	2.555	(1.609)
Beginning cash	1.973	3.582
Ending cash	4.528	1.973

4. Statement on changes in equity

As at 1 January 2011 54 205 27 246 (14 349) 5 420 15 093 16 370 43 058 147 043 Profit allocation 1 050 (1 050) 0 Dividends (24 810) (24 810) Acquisition of own shares ( 86) ( 86) Revaluation of fixed assets 0 Depreciation of revaluated part ( 836) 836 0 Net profit for 2011 20 166 20 166 As at 30 September 2011 54 205 27 246 (14 435) 5 420 14 257 17 420 38 200 142 313 As at 1 October 2011 54 205 27 246 (14 435) 5 420 14 257 17 420 38 200 142 313 Profit allocation 0 Dividends 0 Acquisition of own shares 0 Revaluation of fixed assets 0 Depreciation of revaluated part ( 279) 279 0 Net profit for 2011 5 519 5 519 As at 31 December 2011 54 205 27 246 (14 435) 5 420 13 978 17 420 43 998 147 832 As at 1 January 2012 54 205 27 246 (14 435) 5 420 13 978 17 420 43 998 147 832 Profit allocation 11 250 (11 250) 0 Dividends (24 817) (24 817) Acquisition of own shares (5 766) (5 766) Revaluation of fixed assets 0 Depreciation of revaluated part ( 837) 837 0 Net profit for 2012 19 730 19 730 As at 30 September 2012 54 205 27 246 (20 201) 5 420 13 141 28 670 28 498 136 979 As at 1 October 2012 54 205 27 246 (20 201) 5 420 13 141 28 670 28 498 Other income 200 Dividends Reduction of share (15 capital (4 571) 20 201 630) 0 Revaluation of fixed assets 1 984 1 984 Depreciation of revaluated part ( 26) 26 0 Net profit for 2012 9 336 9 336	000 LTL	Share capital	Share premiu m	Own shares	Compul sory reserve	Revalua tion reserve	Other reserve s	Retained earnings	Total equity
									136 979
									200
									0
	As at 31 December 2012	49 634	27 246	0	5 420	15 099	13 040	38 060	148 499

5. Notes to the financial statements

AB Pieno Žvaigždės was established by way of merger of stock companies Mažeikių Pieninė, Pasvalio Sūrinė, Kauno Pienas and Panevėžio pienas.

The main office of the Company is located in Vilnius and the branches – in Mažeikiai, Pasvalys, Kaunas and Panevėžys.

Ordinary shares of the Company are quoted in the NASDAQ OMX Vilnius Stock Exchange.

The Company is engaged in production and sales of milk products to retail stores directly and through distributors.

Statement of compliance

These are the financial statements of a separate company AB Pieno Žvaigždės, which have been prepared in accordance with International Financial Reporting Standards (IFRS).

Main indicators of the Company's' performance

Ratios	2012.01.01 - 2012.12.31	2011.01.01 - 2011.12.31
Sales, Thousand Litas	769 089	700 924
Gross profit, Thousand Litas	146 125	132 245
EBITDA, Thousand Litas	70 087	66 504
Current ratio (at the end of period)	1,13	1,72
Book value per share (at the end of period), LTL	2,99	2,73
Net profit per share	0,59	0,47

Ratios	2012.10.01 - 2012.12.31	2011.10.01 - 2011.12.31
Sales, Thousand Litas	202 110	176 565
Gross profit, Thousand Litas	41 122	33 404
EBITDA, Thousand Litas	19 398	15 516
Current ratio (at the end of period)	1,13	1,72
Book value per share (at the end of period), LTL	2,99	2,73
Net profit per share	0,19	0,10

Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

The cost of inventories is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity.

Inventories, Thousand Litas	2012.12.31	2011.12.31
Raw materials	19 077	18 114
Stored production	35 512	57 356
Goods for resale	553	255
Total:	55 142	75 725

Segment reporting

A segment is a distinguishable component of the Company that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Company sales production mainly in domestic market, Russia, EU.

Sales, Thousand Litas	2012.01.01 - 2012.12.31	2011.01.01 - 2011.12.31
Lithuania	334 786	318 353
Other EU countries	105 447	82 225
Other non EU countries	328 856	300 346
Total:	769 089	700 924

Sales, Thousand Litas	2012.10.01 -	2011.10.01 -
	2012.12.31	2011.12.31
Lithuania	81 309	75 673
Other EU countries	26 954	17 965
Other non EU countries	93 847	82 927
Total:	202 110	176 565

Post balance sheet events

There were no significant events after the balance sheet date.