Snaige AB

Quarterly Report • Feb 21, 2011

AB SNAIG

CONSOLIDATED INTERIM FINACIAL STATEMENTS FOR THE TWELVE MONTHS OF2010

I. GENERAL PROVISIONS 3
II. FINANCIAL STATUS 4
III. EXPLANATORY NOTES 10

I. GENERAL PROVISIONS

1. Accounting period of the report

The report has been issued for the twelve months of 2010.

2. The basic data about the issuer

The name of the company – SNAIG PLC (hereinafter referred to as the Company)

Authorised capital – LTL 30,735,715

Address - Pramones str. 6, LT-62175 Alytus

Phone - (8-315) 56 206

Fax - (8-315) 56 207

E-mail – snaige@snaige.lt

Internet address - http://www.snaige.lt

Legal organisation status – legal entity, public limited company

Registered as an enterprise on December 1,1992 in the Municipality Administration of Alytus; registration number AB 92-119; enterprise register code 249664610. The latest Statute of AB "Snaige" was registered on April 20, 2010 in Legal Entities of the Republic of Lithuania.

3. Information with regard to the location and time provided for introduction of the report and the accompanying documents; name of the mass media

The report is available in the Budget and Accounting Department of AB "Snaige" at Pramones str. 6, Alytus on the days of I-IV from 7.30 to 16.30, and V from 7.30 to 14.00.

The mass media – daily paper "Kauno diena".

II. FINANCIAL STATUS

AB "Snaige" is the parent company situated in Lithuania with subsidiaries also in Lithuania, Russia and Ukraine. The financial statements of the subsidiary companies are integrated into the consolidated financial statements. These financial statements have been composed in accordance with the international financial reporting standards (IFRS), which are accepted in the European Union countries.

Ref. No.	ASSETS	Notes	31 12 2010	31 12 2009
A.	Non-current assets		51,327,891	57,515,131
I.	FORMATION COSTS
II.	INTANGIBLE ASSETS	7	4,914,786	4,857,966
III.	TANGIBLE ASSETS	8	46,280,887	52,612,170
	III.1. Land
	III.2. Buildings		27,261,549	27,252,392
	III.3. Other non-current tangible assets		17,551,100	23,489,940
	III.4. Construction in progress and advance payments		1468,238	1,869,838
IV.	NON-CURRENT FINANCIAL ASSETS
V.	DEFERRED TAXES ASSETS		132,218	44,995
VI.	ACCOUNTS RECEIVABLE AFTER ONE YEAR
	Assets classified as held for sale		10,308,762	9,577,200
B.	Current assets		32,790,189	38,081,311
I.	INVENTORY AND CONTRACTS IN PROGRESS	9	12,711,416	18,919,843
I.1.	Inventory		12,711,416	18,919,843
I.2.	Advance payments
I.3.	Contracts in progress
II.	ACCOUNTS RECEIVABLE WITHIN ONE YEAR	10	17,092,934	17,436,381
III.	INVESTMENTS AND TERM DEPOSITS		1,015,000
IV.	CASH AT BANK AND ON HAND	12	1,970,839	1,725,087
V.	Other current assets
	Planned to sell non-current assets
C.	Accrued income and prepaid expenses
	TOTAL ASSETS		94,426,842	105,173,642

1. Accounting Balance Sheet (in LTL)

Ref. No.	SHAREHOLDERS' EQUITY AND LIABILITIES	Notes	31 12 2010	31 12 2009
A.	Capital and reserves		30,561,492	29,713,013
I.	SHARE CAPITAL		36,434,371	46,554,635
I.1.	Authorized (subscribed) share capital		30,735,715	27,827,365
I.2.	Uncalled share capital (-)
I.3.	Share premium (surplus of nominal value)		5,698,656	18,727,270
	Own shares (-)
III.	REVALUATION RESERVE		(6,275,132)	(6,841,946)
IV.	RESERVES		4,688,472	4,688,472
V.	PROFIT (LOSS) BROUGHT FORWARD		(4,286,219)	(14,688,148)
	Current Profit (Loss)		(2,626,685)
	The previous year Profit (Loss)		(1,659,534)
B.	Minority interest		1,475	1,676
D.	Provisions and deferred taxes		0	0
I.	PROVISIONS FOR COVERING LIABILITIES AND DEMANDS
II.	DEFERRED TAXES
E.	Accounts payable and liabilities		63,863,875	75,458,953
				,
I.	ACCOUNTS PAYABLE AFTER ONE YEAR AND NON CURRENT LIABILITIES		14,778,399	4,548,951
C.	Financing (grants and subsidies)	15	1,282,433	1,600,737
I.1.	Financial debts		11,781,996	904,363
I.2.	Warranty provisions	16	799,441	1,139,120
I.3.	Deferred income tax liability		554,701	515,337
I.4.	Advances received on contracts in progress
I.5.	Non-current employee benefits		359,828	389,394
II.	ACCOUNTS PAYABLE WITHIN ONE YEAR AND CURRENT		49,085,476	70,910,002
II.1.	Current portion of non-current debts	17	25,150,822	37,519,361
II.2.	Financial debts
II.3.	Trade creditors		15,980,019	22,510,528
II.4.	Advances received on contracts in progress		627,570	1,046,343
II.5.	Taxes, remuneration and social security payable	21	3,083,894	2,574,225
II.6.	Warranty provisions		1,993,555	2,620,737
II.7.	Other provisions	21	22,027	151,701
II.8.	Other current liabilities	21	2,227,589	4,487,107
	TOTAL SHAREHOLDERS' EQUITY AND		94,426,842	105,173,642

2. Profit (Loss) Report (in LTL)

Ref. No.	ITEMS	31.12.2010	01.10.2010 31.12.2010	31.12.2009	01.10.2009 31.12.2009
I.	SALES AND SERVICES	113,839,612	26,392,050	123,035,965	23,522,696
I.1	Income of goods and other products sold	12,314,152	2,538,577	6,006,900	1,623,174
I.2	Income of refrigerators sold	101,525,460	23,853,473	117,029,065	21,899,522
II.	COST OF GOODS SOLD AND SERVICES RENDERED	96,411,060	23,918,629	110,413,978	18,701,777
II.1	Net cost of goods and other products sold	2,450,807	928,892	3,376,904	933,884
II.2	Net cost of refrigerators sold	93,960,253	22,989,737	107,037,074	17,767,893
III.	GROSS PROFIT	17,428,552	2,473,421	12,621,987	4,820,919
IV.	OPERATING EXPENSES	19,429,456	3,146,742	36,963,203	7,918,264
IV.1	Sales expenses	6,783,665	241,483	9,519,077	2,589,031
IV.2	General and administrative expenses	12,645,791	2,905,259	27,444,126	5,329,233
V.	PROFIT (LOSS) FROM OPERATIONS	(2,000,904)		(673,321) (24,341,216)	(3,097,345)
VI.	OTHER ACTIVITY	449,608	312,209	1,676	(53,350)
VI.1.	Income	749,746	401,746	506,486	(8,122)
VI.2.	Expenses	300,138	89,537	504,810	45,228
VII.	FINANCIAL AND INVESTING ACTIVITIES	(1,162,505)	116,980	(9,139,603)	2,203,760
VII.1.	Income	2,852,498	966,969	395,443	3,343
VII.2.	Expenses	4,015,003	849,989	9,535,046	(2,200,417)
VIII.	PROFIT (LOSS) FROM ORDINARY ACTIVITIES	(2,713,801)		(244,132) (33,479,143)	(946,935)
IX.	EXTRAORDINARY GAIN
X.	EXTRAORDINARY LOSS
XI.	CURRENT ACCOUNTING PERIOD PROFIT (LOSS) BEFORE TAXES	(2,713,801)		(244,132) (33,479,143)	(946,935)
XII.	TAXES	86,914	87,001	4,703,092	3,801,971
XII.1	PROFIT TAX	309	222	24,268	12,941
XIII.	Adjustment of deferred profit tax	87,223	87,223	4,678,824	3,789,030
XIV.	Social tax			,	,
XV.	MINORITY INTEREST	202	202	1,185	1,185
XVI.	NET CURRENT ACCOUNTING PERIOD PROFIT (LOSS)	(2,626,685)		(156,929) (38,181,050)	(4,747,721)

3. Cash Flows Statement

Ref. No.		31 12 2010	31 12 2009
I.	Cash flows from the key operations
I.1	Result before taxes	(2,713,801)	(33,479,143)
I.2	Depreciation and amortization expenses	8,238,167	9,996,445
I.3	Subsidies amortization	(318,304)	(399,974)
I.4	Result of sold non-current assets	(38,077)	(8,790)
I.5	Write-off of non-current assets	125,465	9,421,051
I.6	Write-off of inventories	161,725	21,770
I.7	Depreciation of receivables	(2,834,731)	2,820,663
I.8	Non-realized loss on currency future deals		645,961
I.9	Change in provision for guarantee repair	(966,861)	(1,579,224)
I.10	Recovery of devaluation of trade receivables	1,217,136
I.11	Influence of foreign currency exchange rate change	43,751	84,735
I.12	Financial income (interest income)	(13,216)	(19,622)
I.13	Financial expenses (interest expenses)	3,966,701	2,803,719
	Cash flows from the key operations until decrease (increase) in working capital	6,867,955	(9,692,409)
II.1	Decrease (increase) in receivables and other liabilities	343,447	26,688,854
II.2	Decrease (increase) in inventories	6,208,427,	37,686,134
II.3	Decrease (increase) in trade and other debts to suppliers	(8,828,805)	(28,921,106)
	Cash flows from the main activities	4,591,024	25,761,473
III.1	Interest received	67,141
III.2	Interest paid	(1,160,563)	(2,803,719)
III.3	Profit tax paid	135,120	(212,971)
	Net cash flows from the key operations	3,632,722	22,744,783

IV.	Cash flows from the investing activities
IV.1	Acquisition of tangible non-current assets	(628,355)	(143,322)
IV.2	Capitalization of intangible non-current assets	(1,107,116)	(440,808)
IV.3	Sales of non-current assets	68,507	176,030
IV.4	Loans granted
IV.5	Loans regained
	Prepayments and constructions in progress	401,600
	Net cash flows from the investing activities	(1,265,364)	(408,100)

III.	Cash flows from the financial activities	(1,106,606)	(22,286,898)
III.1	Cash flows related to the shareholders of the company
III.1.1	Issue of shares
III.1.2	Issue of bonds	4,725,256	7,162,801
III.1.3	Sale of own shares
III.1.4	Payment of dividends
III.2	Cash flows arising from other financing sources
III.2.1	Subsidies received	384,280
III.2.1.1	Inflows from non-current loans	6,000,000
III.2.1.2	Loans repaid	(5,688,731)	(28,621,329)
III.2.2	Finance lease received
III.2.2.1	Payments of leasing (finance lease) liabilities	(801,982)	(828,370)
III.3	Other decreases in the cash flows from financial activities
III.4.	Redemption of securities issued	(5,725,429)
	Net cash flows from the financial activities	(1,106,606)	(22,286,898)

IV.	Cash flows from extraordinary items
IV.1.	Increase in cash flows from extraordinary items
IV.2.	Decrease in cash flows from extraordinary items
V.	The influence of exchange rates adjustments on the balance of cash and cash equivalents
VI.	Net increase (decrease) in cash flows	1,260,752	49,785
VII.	Cash and cash equivalents at the beginning of period	1,725,087	1,675,302
VIII.	Cash and cash equivalents at the end of period	2,985,839	1,725,087

4. Statement of Changes in Equity

	Pai d u p	Sha re	Ow n	Leg al r	ese rve s			Oth er r ese rve s			ain ed Ret		Mi ity nor
	hor ised aut ital cap	miu pre m	sha res (- )	Co uls mp or y	For uiri acq ng har ow n s es	ch arit For y, don atio n	cia l For so ds nee	For inv estm ent s	Oth er res erv es	Cu rren cy han exc ge res erv e	nin ear gs ( los ) ses	TO TA L	sha reh old e rs	TO TA L
Ba lan s of De ber 31 200 8 ce a cem ,	27, 827 365 ,	18, 727 270 ,	0	2, 828 472 ,	0	0	0	4, 512 300 ,	0	( 5, 241 966 ) ,	20, 840 602 ,	69, 494 043 ,	2, 861	69, 496 904 ,
Div ide for 200 8 nts											0	0		0
Tot al r iste red inc d e eg om e an xpe nse s as of 200 9									0		( 38, 181 050 ) ,	( 38, 181 050 ) ,	( 1, 185 )	( 38, 182 235 ) ,
For d re me serv es							60, 000	1, 800 000 ,	0		( 1, 860 000 ) ,	0		0
nsf from Tra ers res erv es								512 ( 4, 300 ) ,	,		512 4, 300 ,	0		0
Ac isit ion of har es d urin he g t qu ow n s fina nci al y ear												0		0
Dis al o f ow n sh s du ring the pos are fina nci al y ear												0		0
Tot al r iste red inc d e eg om e an xpe nse s as of 200 9												0		0
Oth han er c ges										( 1, 599 980 ) ,		( 1, 599 980 ) ,		( 1, 599 980 ) ,
fit n iste red in the ofit ( s) Pro Pr Los ot r eg t acc oun												0		0
Ba lan s of De ber 31 200 9 ce a cem ,	27, 827 365 ,	18, 727 270 ,	0	2, 828 472 ,	0	0	60, 000	1, 800 000 ,	0	( 6, 841 946 ) ,	( 14, 688 148 ) ,	29, 713 013 ,	1, 676	29, 714 689 ,
Tot al r iste red inc d e eg om e an xpe nse s as of 201 0											( 2, 626 685 ) ,	( 2, 626 685 ) ,	( 201 )	( 2, 626 886 ) ,
Div ide nds for 20 09												0	0	0
For d re me serv es							30, 000	1, 830 000 ,			( 1, 860 000 ) ,	0	0	0
Tra nsf from ers res erv es							( 60, 000 )	( 1, 860 000 ) ,			1, 860 000 ,	0	0	0
Inc f au tho rize d c ital rea se o ap	350 2, 908 ,											2, 908 350 ,	0	2, 908 350 ,
Ac isit ion of har es d urin he g t qu ow n s fina nci al y ear
Dis al o f ow n sh s du ring the pos are fina nci al y ear
Oth han er c ges										566 814 ,		566 814 ,		566 814 ,
Los s co ver age		( 13, 028 614 ) ,									13, 028 614 ,	0		0
Cu rofi iste red in the t ye t no t re rren ar p g Pro fit ( Los s) a unt cco												0		0
s of 31 201 0 Ba lan De ber ce a cem ,	30, 735 715 ,	5, 698 656 ,	0	2, 828 472 ,	0	0	30, 000	1, 830 000 ,	0	( 6, 275 132 ) ,	( 4, 286 219 ) ,	30, 561 493 ,	1, 475	30, 562 968 ,

III. EXPLANATORY NOTES

1 Basic information

The Company is active manufacturer of refrigerators and freezers. The refrigerator manufacturing plant was established on April 1, 1963. After the privatization of the Company on the 1st of December, 1992, the joint-stock company "Snaige" was established and in December 1993 all state-owned shares were bought out. The Company's shares are listed on Vilnius Stock Exchange Secondary List.

Main shareholders of AB "Snaig" as on December 31, 2010 and December 31, 2009 were:

	December 31, 2010		December 31, 2009
	Number of shares owned	Share of total capital, %	Number of shares owned	Share of total capital, %
Swedbank AS (Estonia) Clients	15,004,428	48.82	13,229,667	47.54
Skandinaviska Enskilda Banken AB	3,720,698	12.11	3,351,924	12.05
Hermis Capital UAB	-	-	4,412,032	15.86
Other shareholders	12, 010,589	39.07	6,833,742	24.55
Total	30,735,715	100.00	27,827,365	100.00

All the shares (with nominal value LTL 1 per share), are ordinary and were fully paid as on December 31, 2010 and December 31, 2009. The authorized share capital is equal to LTL 30,735,715 on December 30, 2010. Subsidiaries did not have any shares of AB "Snaige" on December 31, 2010 and December 31, 2009. The Company did not have any of their own shares.

Group is consisted of AB "Snaige" and its subsidiaries and associated companies (hereinafter – Group):

Company	Company address	Share capital owned by Group, %	Investment value, LTL.	Current period profit (loss), LTL.	Equity
Techprominvest OOO	Okr Bolšaja žnaja, 1-a, Kaliningrad	100	67,846,761	(1,132,715)	6,617,790
Snaige Ukraina TOV	Gruševskio 28-2a/43, Kiev	99	88,875	(35,258)	25,631
Moroz Trade OOO	Prospekt Mira 52, Moscow	100	947	0	(14,064,720)
Liga Servis OOO	Prospekt Mira 52, Moscow	100	1,028	(292,587)	(1,315,328)
UAB Almecha	Pramons 6, Alytus	100	1,375,785	48,776	258,290

As 31 December 2010 The Board of the Company comprised 1 representative of Hermis Capital UAB and 3 representatives Swedbank AS clients as on the 31st of December, 2009, 1 representative from the employees of the Company, 1 representative of UAB Hermis Capital and 3 representatives of Swedbank AS clients. Those changes had happened after general meeting on the 29th of April, year 2010.

In 2002 AB "Snaige" acquired 85% of share capital in "Techprominvest" (Kaliningrad, Russia) and in 2006 AB "Snaige" bought the remaining 15% of "Techprominvest" share capital and became the main proprietor of the subsidiary.

In September 2008, AB "Snaig" has increased its subsidiary's "Techprominvest" authorized capital by LTL 55,197,921. An authorized capital was increased from the receivables of "Techprominvest" for sold and not paid equipment, as well as granted and not repaid loans.

On the 12th of August, 2009, due to the global economic crisis and particularly unfavourable effect of it on the Group activities, the Management of the Group made a decision to close the activities of AB Snaige refrigerator factory OOO Techprominvest. Goodwill that arose during the acquisition of minority of the subsidiary in 2006 and 2007 amounting to LTL 12,313 thousand was written off on August 31, 2009. The expense of the writing-off the carrying amount of goodwill, which is LTL 9,390 thousand, is included into administrative expenses caption. Foreign currency revaluation reserve related to goodwill that appeared due to foreign currency fluctuations amounting to LTL 2,923 thousand is accounted in equity.

"TOV Snaige Ukraina" (Kiev, Ukraine) was established in 2002. Since the acquisition in 2002, the Company holds 99% shares of this subsidiary. The subsidiary provides sales and marketing services for the Company in the Ukrainian market.

On the 13th of May, 2004, OOO Moroz Trade (Moscow, Russia) was established. The Company acquired 100% of OOO Moroz Trade shares in October 2004. The subsidiary provides sales and marketing services in the Russian market. In 2009 OOO Moroz Trade had not operated.

OOO Liga Servis (Moscow, Russia) was established on the 7th of February, 2006. The subsidiary provides sales and marketing services in the Russian market.

UAB Almecha (Alytus, Lithuania) was established on the 9th of November, 2006. The main activity of the company is the production of refrigerating components and equipment.

The number of employees in the whole Group on the 31 of December, 2010, was 777 (as of 31 December 2009 – 812).

2 Accounting principles

The principal accounting policies adopted in preparing the Group's financial statements as of 31 December, 2010 are as follows:

2.1. Preparation basis of financial statement

These financial statements are prepared according to international financial reporting standards (IFRS), which are accepted in the European Union countries.

2.2. Going concern

The Group's current liabilities exceeded current assets by LTL 16,295 thousand on December 31th, 2010 (2009, December 31th, the current liabilities exceeded current assets by LTL 32,829 thousand).

• - the liquidity ratios: gross replacement ratio was 0.68, quick recovery ratio 0.41 (whereas on the year 2009 for the same date those ratios were respectively 0.54 and 0.27). The Group for this period of time incurred LTL 2,714 thousand loss, what is LTL 30,765 thousand less than at the same period of 2009.
• - the commitment ratios: the ratio of debt/asset was 0.68 (whereas in the year 2009, December 31th 0.72)
• - asset utilization ratios: inventory turnover 6.4; receivables turnover 5.7; fixed asset turnover – 2.2 (whereas on the year 2009 for the same date those ratios were respectively 3.7, 3.9 and 2.1)

The Group's financial report for the 12 months of 2010 is prepared under the assumption that the Group will continue as a going concern at least 12 months from the statement of financial position date. The going concern is based on the following assumptions:

• - in 2011 the Group is planning to maintain its sales at the level of 2010 and additionally optimise costs;
• - trade payables are planned to be decreased using free operational cash flows;
• - the company expects to fulfil all obligations related with established bonds, which has to be pledge on 11th of April, 2011.

The direction of the Company agrees that all those assumptions above could be influenced of significant uncertainties, which could raise doubts about Company's ability to continue operating, because of the disability to realize its property and to implement its commitments by carrying out its normal activities. However despite all this the Company's direction expects that the Company will have enough resources to continue operating in the near future. That is why the Company preparing those financial statements applied the principle of its activity succession.

2.3. Currency of financial statement

Accounting of the Group is done using the domestic currency of the Country, and all the sums of these financial accounts are expressed into the national currency of the Republic of Lithuania, Litas (LTL).

From February 2, 2002 Litas is pegged with Euro at a rate LTL 3.4528 for 1 Euro, and the exchange rate with other currencies is decided by the central bank of the Republic of Lithuania every day.

The valid currency exchange rates were:

31-12-2010	31-12-2009
0.0855535	0.079465
0.32788	0.29842
2.6099	2.9842

2.4. Principles of consolidation

The consolidated financial statements of the Group include AB Snaig and its controlled entities. This control is normally evidenced when the Group owns, either directly or indirectly, more than 50 % of the voting rights of a company's share capital and/or is able to govern the financial and operating policies of an enterprise so as to benefit from its activities. The part of equity and net income attributable to minority shareholders' interests are shown separately in the consolidated statement of financial position and consolidated income statement.

The purchase method of accounting is used for acquired businesses. The Company accounts for the acquired identifiable assets, liabilities and contingent liabilities of another company at their fair value at acquisition date. The difference of the fair value of the acquired net assets and acquisition costs is accounted for as goodwill.

During consolidation all the transactions between the companies, balance and unrealized profit and loss are eliminated.

Consolidated financial statement is prepared applying same accounting principles to similar transactions and other events with similar situations.

2.5. Intangible assets, except for goodwill

Intangible assets are recognised if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of asset can be measured reliably. After initial recognition, intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses. Intangible assets are amortised on a straight-line basis over their estimated useful lives.

Research and development

The cost of research expensed during the objective for new technological improvements, are accounted in the profit (loss) account at the moment when they were expensed.

Expenses from the development activities of creation of new or enhanced products and operational processes are capitalized if the product or the process is technically and commercially proven and the Group has enough resources and intentions to finish the creation of this product or process. Capitalized expenses include raw material and direct work expenses as well as respective additional expenses. Capitalized development expenses are accounted at their cost subtracting the accumulated depreciation. Capitalized product creation expenses are being amortized as soon as product creation works are finished and their results can be used in commercial production. Capitalized product creation expenses will be amortized over the period when the economic benefit is received. The amortization period applied varies from 1 to 8 years.

Licenses

Amounts paid for licences are capitalised and amortised over their validity period.

Software

The costs of acquisition of new software are capitalised and treated as an intangible asset if these costs are not an integral part of the related hardware. Software is amortised over a period not exceeding 3 years.

Costs incurred in order to restore or maintain the future economic benefits that the Group expects from the originally assessed standard of performance of existing software systems are recognised as an expense when the restoration or maintenance work is carried out.

2.6. Tangible non-current assets

Tangible non-current assets are assets that are controlled by the Group, which is expected to generate economic benefits in the future periods with the useful life exceeding one year, and which acquisition (manufacturing) costs could be reliably defined and is higher then LTL 500. Liquidity value is equal to LTL 1. Tangible fixed assets are accounted for at cost, which does not include the daily maintenance costs, less accumulated depreciation and estimated impairment losses. The acquisition value includes the tangible assets replacement cost, when incurred, if such costs meet the asset recognition criteria, and modified parts are written off. Tangible assets are retired when it is sold or no economical benefit is expected from its sale. Any gain or loss resulting from the writedown of assets (calculated as the net sales proceeds and the carrying value of the assets) are included in the income (loss) statement, which the property is retired.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised.

Depreciation is computed on a straight-line basis over the following estimated useful lives:

Buildings and structures (excluding commercial buildings) 15 – 63 years
Machinery and equipment	5 – 15 years
Vehicles	4 – 6 years
Other assets	3 – 8 years

Construction in progress is stated at cost less accumulated impairment. This includes the cost of construction, plant and equipment and other directly attributable costs. Construction in progress is not depreciated until the relevant assets are completed and put into operation.

2.7. Inventories

Inventories are valued at the lower of cost or net realisable value, after impairment evaluation for obsolete and slow moving items. Net realisable value is the selling price in the ordinary course of business, less the costs of completion, marketing and distribution. Cost is determined by the first-in, first-out (FIFO) method. The cost of finished goods and work in progress includes the applicable allocation of fixed and variable overhead costs based on a normal operating capacity. Unrealisable inventory is fully written-off.

In calculating cost of goods Group attributes part of received discounts towards the acquired goods from the distributors, which are not yet sold.

Inventories in transit are accounted for in accordance with INCOTERMS-2000 condition requirements, when risk and benefit, in accordance with inventories, goes to the Group.

2.8. Receivables and loans granted

Receivables are initially recorded at the true value at the same moment as they were given. Later receivables and loans are accounted in justice to their depreciation.

2.9. Cash and cash equivalents

Cash includes cash on hand and cash with banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of change in value.

For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits at current accounts, and other short-term highly liquid investments.

2.10. Borrowings

Borrowing costs are expensed as incurred.

Borrowings are initially recognized at fair value of proceeds received. They are subsequently carried at amortized cost, the difference between net proceeds and redemption value being recognized in the net profit or loss over the period of the borrowings. The borrowings are classified as non-current if the completion of a refinancing agreement before authorization of the financial statements for issue provides evidence that the substance of the liability at the balance sheet date was non-current.

2.11. Factoring

Factoring transaction is a funding transaction wherein the company transfers to factor claim rights for determined fee. The companies alienate rights to receivables due at a future date according to invoices. Factoring transactions of the Group comprise factoring transactions with regress (recourse) right (the factor is entitled to returning the overdue claim back to the Group) and without regress (recourse) right (the factor is not entitled to returning the overdue claim back to the Group). The factoring expenses comprise a lump-sum contract fee charged on the conclusion of the contract, commission fees charged for processing the invoices, and interest expenses depending on the duration on the payment term set by the debtor. Factored accounts receivable (with regress right) and related financing are recorded in accounts receivable caption and liabilities to credit institutions caption in the financial statements.

2.12. Financial lease and operating lease

Operating lease – the Group as lessee

The Group recognizes the lease assets and obligations in the balance sheet on the day of the leasing period. Initial direct costs related to assets, are included in the asset value. Lease payments are apportioned between the finance cost and the remaining obligation. The financing costs are allocated over the lease period so as to meet the constant rate of interest payable from the rest of the commitment of the end of each reporting period.

Direct costs incurred by the tenant during the lease period, is included in the leased assets. The depreciation is calculated for the assets purchased with financial lease; in addition, financial

costs are incurred due to financial lease over the reporting period. Depreciation scheme for the calculation of lease payments for the purchased assets is similar as in the property. But such assets cannot be depreciated over a longer period than the lease period, if according to the contract at the end of the contract period; the property is not transferred to the Group.

Operating lease – the Group as lessor

Assets to which the property-related risks and benefits maintains the lessor, rent is classified as operating leases. Lease payments under operating leases are recognized straight-line method over the cost of the lease period and are included in operating costs.

2.13. Grants and subsidies

Grants and subsidies received in the form of non-current assets or intended for the purchase, construction or other acquisition of non-current assets are considered as asset-related grants. Assets received free of charge are also allocated to this group of grants. The amount of the grants related to assets is recognized in the financial statements as used in parts according to the depreciation of the assets associated with this grant. In the income statement, a relevant expense account is reduced by the amount of grant amortization.

Grants received as a compensation for the expenses or unearned income of the current or previous reporting period, also, all the grants, which are not grants related to assets, are considered as grants related to income. The income-related grants are recognized as used in parts to the extent of the expenses incurred during the reporting period or unearned income to be compensated by that grant.

2.14. Provisions

Provisions are recognized when the Group or the Company has a present obligation (legal or constructive) as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The provisions are reviewed at each balance sheet date and adjusted in order to present the most reasonable current estimate.

2.15. Revenue recognition

Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably. Sales are recognized net of VAT and discounts.

Revenue from sales of goods is recognized when delivery has taken place and transfer of risks and rewards has been completed.

Service revenue is recognized using the accrual basis and recognized in profit (loss) statement when services are rendered and end user accepts it.

In the consolidated profit (loss) statement sales between the Group companies are eliminated.

2.16. Expense recognition

Expenses are recognized on the basis of accrual and revenue and expense matching principles in the reporting period when the income related to these expenses was earned, irrespective of the time the money was spent. In those cases when the costs incurred cannot be directly attributed to the specific income and they will not bring income during the future periods, they are expensed as incurred.

2.17. Foreign currencies

Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies on the balance sheet date are recognized in the income statement. Such balances are translated at period-end exchange rates.

The accounting of subsidiaries is arranged in respective local currencies, which is their functional currency. Financial statements of foreign consolidated subsidiaries are translated to Litas at yearend exchange rates in respect to the balance sheet accounts, and at the average exchange rates for the year in respect to the accounts of the statement of income.

On the net investment in foreign Group companies resulting from the conversion into Litas occurring foreign currency exchange rate differences are recorded in shareholder's equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign subsidiary are treated as assets (or liabilities related to fair value adjustments) of the acquired company and are recorded at the exchange rate at the balance sheet date.

2.18. Segments

Business segment is considered component of the Group participating in production of an individual product or provision of a service or a group of related products or services, the risk and returns whereof are different from other business segments.

Geographical segment is considered component of the Group participating in production of an individual product or provision of a service or a group of related products or services, in particular

economic environment the risk and returns whereof are different from other economic environments.

For the management purpose Group's activities is organized as one main segment – manufacturing of refrigerators. Financial information about the business and geographical segments is represented in 3rd note of these financial statements.

2.19. Subsequent events

Post-balance sheet events that provide additional information about the Group's position at the balance sheet date (adjusting events) are reflected in the financial statements. Post-balance sheet events that are not adjusting events are disclosed in the notes when material.

2.20. Offsetting and comparative figures

When preparing the financial statements, assets and liabilities, as well as revenue and expenses are not set off.

3 Segment information

The Group's only business segment (basis for primary reporting format) is the manufacturing of refrigerators and specialized equipment.

Results for the reporting period 31 December 2010 by geographical segments can be specified as follows (in LTL thousand):

Group		Total sement sales revenue		Inter segments sales		Sales revenue	Acquisition of property, plant and equipment and intangible asset
	2010	2009	2010	2009	2010	2009 2010		2009
Russia	2,518	20,141	(367)	(1,605)	2,151	18,536	28,775	33,654
Ukraine	41,508	14,326	(94)	(180)	41,414	14,146	28	41
Western Europe	45,517	63,571		-	45,517	63,571
Eastern Europe	8,442	11,084		-	8,442	11,084		-
Lithuania	23,321	21,852	(15,230)	(13,117)	8,091	8,735	65,624	71,479
Baltic Countries	1,161	1,990			1,161	1,990
Other countries from	6,994	4,524		-	6,994	4,524		-
NVS Other countries	70	450		-	70	450		-
Total:	129,531	137,938	(15,691)	(14,902)	113,840	123,036	94,427	105,174

4 Operational expenses

Over reporting period the operational expenses were:

	2010	2009
Sales expenses	6,783,665	9,519,077
Administration expenses	12,645,791	27,444,126
Total:	19,429,456	36,963,203

5 Other income (expenses) – net result

Over reporting period, December 30 other income (expenses) was:

	2010	2009
Other operating income
Income from logistics	231,366	248,283
Rent of fixed asset	325,397	23,991
Profit from sale of fixed asset	38,077	69,875
Income from rent of equipment	3,847	651
Other	151,059	163,686
	749,746	506,486
Other operating expenses
Transportation expenses	234,523	252,578
Rent of fixed asset	-	48,931
Loss from sale of fixed asset	-	65,173
Rent of equipment	1,549	-
Other	64,066	138,128
	300,138	504,810
Other operating income (expense) – net result	449,608	1,676
6 Net result from financial activities	31.12.2010	31.12.2009
Financial income
Profit from currency exchange	2,834,731	-
Gain on revaluation of foreign currency derivatives	-	340,630

Consolidated interim financial statements for the twelve months of 2010

Net result from financial activities	(1,162,505)	(9,139,603)
	4,015,003	9,535,046
Other
Loss of foreign currency translation transactions	35,219	3,034,035
	13,083	102,998
Interest expenses	3,966,701	5,607,863
Loss on revaluation of foreign currency derivatives		726,587
Realised loss on foreign currency derivatives		260,004
Foreign currency exchange loss	-	2,820,663
Financial expenses
	2,852,498	395,443
Other	14,739	19,626
Gain of foreign currency translation transactions	3,028	35,187

7 Non-current intangible assets

The balance sheet value of non-current intangible assets on December 31, 2010 was LTL 4,915 thousand (on December 31, 2009 – LTL 4,858 thousand)

Non-current intangible assets depreciation expenses are included under operating expenses in the profit (loss) account.

Over the 12 months of 2010, the Group has accumulated LTL 652 thousand (12 months of 2009 - LTL 1,034 thousand) of non-current intangible assets depreciation.

8 Non-current tangible assets

Non-current tangible assets consist of the following assets groups:

Balance sheet value

	31.12.2010	31.12.2009
Buildings and constructions	27,261,549	27,252,392
Other non-current assets	17,551,100	23,489,940
Construction in progress and prepayments	1,468,238	1,869,838
Total:	46,280,887	52,612,170

Group's non-current tangible assets depreciation on 30 December, 2010 is equal to LTL 7,586 thousand (in 2009 – LTL 8,963 thousand)

9 Inventories

	31.12.2010	31.12.2009
Raw materials, spare parts and production in progress	8,726,918	10,470,164
Finished goods	3,802,014	8,504,123
Other	277,826	40,898
	12,806,758	19,015,185
Less: net realizable value allowance	(95,342)	(95,342)
	12,711,416	18,919,843

Raw materials and spare parts consist of compressors, components, plastics, wires, metals and other materials used in the production.

10 Trade receivables

Trade receivables were composed as follows:

	31.12.2010	31.12.2009
Trade receivables from the Group companies	28,536,845	27,899,204
Less: allowance for doubtful trade receivables	(13,585,026)	(12,603,962)
	14,951,819	15,295,242

Trade receivables are non-interest bearing and are generally on 30 – 90 days terms.

Movements in the provision for impairment of receivables were as follows:

	31.12.2010	31.12.2009
Balance at the beginning of the period	(12,603,962)	(10,372,687)
Charge for the year	(479,304)	(2,713,130)
Used	194,324	22,932
Recovered receivables	135,745	1,583
Currency exchange rate influence	(831,829)	457,340
Balance at the end of the period	(13,585,026)	(12,603,962)

The ageing analysis of trade receivables as of 31 December 2010 and 31 December 2009 is as follows:

	Trade receivables		Trade receivables past due but not impaired
	neither past due nor impaired	Less than 30 days	30 – 60 days	60 – 90 days	90 – 120 days	More than 120 days	Total
	12,906,136	1,398,400	396,722	60,410	66,591	123,560	14,951,819
2010 2009	9,133,535	2,840,955	641,576	26,388	171,642	2,481,146	15,295,242

According to factoring with regress (recourse) right agreement the Group had pledged to the factoring agent the amounts of receivable and inventory, the balance sheet values of which on the 31st of December, 2009, were LTL 7,000 thousand. At the day of the report the pledge for this asset is cancelled due to the complete Group's payment to the agency.

11 Other current assets

	31.12.2010	31.12.2009
VAT receivable	478,691	457,060
Prepayments and deferred expenses
Compensations receivable from suppliers	1,155,055 137,434	1,299,316 158,075
Other receivable	369,935	226,688
	2,141,115	2,141,139
Compensations from suppliers are received for bad quality goods.
12 Cash and cash equivalents
	31.12.2010	31.12.2009
Cash at bank	1,965,694	1,713,531
Cash on hand	5,145	11,556
Money in depozite (to make certain the implement of all duties)	1,015,000	-
	2,985,839	1,725,087

The accounts of the Company in foreign currency up to LTL 10,085 thousand (31 December, 2009 - 10,000 thousand) are pledged to the bank for the secure of the loans, and the fixed – term input for LTL 1 million is pledged for the loan with INVEGA assurance.

13 Share capital

According to the Law on Companies of the Republic of Lithuania the Company's total equity cannot be less than 1/2 of its share capital specified in the Company's by-laws. As on the 30 of December, 2010, the Company was in compliance with this requirement. At the date of the reporting the legal reserve was fully formed.

14 Reserves

Legal reserve

A legal reserve is a compulsory reserve under Lithuanian legislation. Annual transfers of not less than 5% of net profit, calculated in accordance with Lithuanian Business Accounting Standards, are compulsory until the reserve reaches 10% of the share capital. The legal reserve in December 31, 2010, as well as in December 31, 2009 was fully formed; LTL 2,828 thousand was accumulated in it.

The Company did not get any profit on 2010, and this is the reason why on the 31st of the December, 2010, it will not transfer 245 thousands LTL, into the compulsory reserve and will not secure that this fond will accumulate the amount of money which is equal to 10 percent of Company's share capital.

Non-restricted reserves

Other reserves for special purposes are formed by shareholders decision. Before allocating profit all the distributable reserves are transferred into retained earnings and each year are re-allocated by shareholders decisions.

On the 31th December, 2010, other distributable reserves consisted of LTL 1,830 thousand LTL (2009 – LTL 1,800 thousand) of reserve for investments and LTL 30 thousands socio-cultural needs (in 2009 - LTL 60 thousand).

Foreign currency translation reserve

Exchange differences are classified as equity in the consolidated financial statements until the disposal of the investment. Upon disposal of the corresponding investment, the cumulative revaluation of translation reserves is recognised as income or expenses in the same period when the gain or loss on disposal is recognised.

15 Subsidies

Subsidies on 31 December 2006	10,358,600
Increase during period	345,280
Subsidies on 31 December 2007	10,703,880
Increase during period	-
Subsidies on 31 December 2008	10,703,880
Increase during period	-
Subsidies on 31 December 2009	10,703,880
Increase during period	-
Subsidies on 31 December 2010	10,703,880
Accumulated amortization on 31 December 2006	6,509,260
Amortization during period	1,179,704
Accumulated amortization on 31 December 2007	7,688,964
Amortization during period	1,014,205
Accumulated amortization on 31 December 2008	8,703,169
Amortization during period	399,974
Accumulated amortization on 31 December 2009	9,103,143
Amortization during period	318,304
Accumulated amortization on 31 December 2010	9,421,447
Net residual value 31 December 2010	1,282,433
Net residual value 31 December 2009	1,600,737

Future periods' subsidies income consists of subsidies for renewal of manufacturing equipment and building repairs due to the CFC 11 ingredient abandonment in the manufacturing of polyurethane insulating material and filling foam manufacturing, elimination of greenhouse gas elimination in the refrigerators manufacturing processes, and subsidy for export development. Deferred subsidies amount is amortized during the same period as equipment and machinery, for which subsidies were received, and when compensated expenses are incurred. Subsidies amortization amount is included into costs of goods sold while decreasing equipment and buildings reconstruction, for which subsidies were received, depreciation.

The company has mastered LTL 1,019 thousands from the European Union structural funds support, strengthening the competitiveness of companies investing in the new refrigerator with multi-functional chapter creation.

16 Provisions for guarantee related liabilities

The Group provides a warranty up to 2 years for the production sold since 1 January 2009 (up to 3 years before 1 January 2009). The provision for warranty repairs was formed based on the expected cost of repairs and statistical warranty repair rates and divided respectively into non-current and current provisions. Non-current provisions on 31 December 2010 were equal to LTL 799 thousand (31 December 2009 – LTL 1,139 thousand), current provisions on 31 December 2010 are equal to LTL 1,994 thousand (31 December 2009 – LTL 2,621 thousand).

Changes over the reporting period were:

	2010
1 January	3,759,857
Changes over reporting period	1,128,045
Used	(2,127,487)
Foreign currency exchange effect	32,581
31 December, 2010	2,792,996

The postponements of warranty obligations accounted for the 31st of December:

	2010 m.
- Long-term	799,441
- Shot-term	1,993,555
	2009 m.
- Long-term	1,139,120
- Shot-term	2,620,737

17 Borrowings

	31.12.2010	31.12.2009
Non-current borrowings
Bank borrowings secured by Company's assets	10,987,137	-
Redemption of issued securities	723,707	-
Other loans	-	-
	11,710,844	-
Current borrowings
Factoring liabilities	-	1,737,256
Short-term loans with variable interest rate	-	9,342,081
Short-term loans with fixed interest rate	1,403,448	1,000,000
Ordinary bonds	-	2,825,300
Convertible bonds	21,190,524	21,812,741
Coupon nominal bonds	1,723,638	-
	24,317,610	36,717,378
Total	36,028,454	36,717,378

Borrowings with variable interest rate bear 6 – month EUR LIBOR + 3.5% and 6 – months VILIBOR + 4,88% annual interest rate. Borrowings with the fixed interest rate bear 9-14% annual interest rate. At the day of the report the Company has been fulfilled its all obligations under the factoring contract.

In 2010 the Company had issued 61,372 units convertible bonds, which par value for one piece is 100 EUR and annual yield is 10%, and which has to be repurchase on the 11th of April, 2011. The purpose of the emission of those bonds is to refinance the other emission which was emitted on the April, 2009.

The convertible securities issued during the previous time-periods had been exchanged into Company's registered shares, which par value was LTL 2,908,350 and thus the Company's authorized capital has been increased. The Company's new regulation had been registered on April 20, 2010.

Previously it was issued 10 000 ps. of registered bonds by coupons, which net value is 100 EUR (for one pc.), annual yield is 10% and the lasting time is extended to 731 days. The Company has committed during all those bonds lasting period (every 20th day of every month) to redeem over 416 units of bonds. The final redemption of those 432 unites has been intended on the 15th of June, 2012.

The bonds accounted for the discounted value in the short-term clause, and cumulated interest, which amount had achieved 1,572 thousand. LTL on the 31st of December, 2010, recorded in other current payables clause. The interest on the bonds are paid on the time of redemption.

At the 31t of December, 2010, buildings with the carrying amount of LTL 6,132 thousand (31 December 2009 – LTL 22,678 thousand), machinery and equipment with the net book value of LTL 7,358 thousand (31 December 2009 – LTL 5,204 thousand), inventories with the net book value of LTL 10,500 thousand (31 December 2009 – LTL 20,500 thousand), cash inflows into the bank accounts up to LTL 10,085 thousand (31 December 2009 – LTL 10,000 thousand) are pledged as a collateral for loans from banks.

Borrowings at the end of the year in national and foreign currencies:

	31.12.2010	31.12.2009
Borrowings denominated in:
EUR	23,637,869	32,677,269
USD	-	3,690
LTL	12,390,585	4,036,419
RUB	-	-
	36,028,454	36,717,378

18 Financial leasing

Principal amounts of financial lease payables as of 31 December 2010 and 31 December 2009 are denominated in EUR.

The variable interest rates on the financial lease obligations in EUR vary depending on the 6 month EURIBOR + 1.1% margin, 6-month LIBOR EUR + 1% and 1.2% margin.

Future minimal lease payments under the above-mentioned financial lease contracts are as follows:

	31.12.2010	31.12.2009
Within one year	850,846	836,619
From one to five years	72,589	949,127
Total financial lease obligations	923,435	1,785,746
Interest	(19,071)	(79,400)
Present value of financial lease obligations	904,364	1,706,346
Financial lease obligations are accounted for as:
- current	833,212	801,983
- non-current	71,152	904,363

The assets leased by the Group under financial lease contracts consist of machinery, equipment and vehicles. Apart from the lease payments, the most significant liabilities under lease contracts are property maintenance and insurance. The terms of financial lease are from 3 to 5 years. The distribution of the net book value of the assets acquired under financial lease is as follows:

31.12.2010 31.12.2009

	31.12.2010	31.12.2009
Machinery and equipment	22,578,088	3,033,044
Vehicles	-	19,958
	2,578,088	3,053,002

Principal amounts of financial lease payables at the year-end denominated in national and foreign currencies are as follows:

	904,364	1,706,346
LTL	904,364	1,706,346
EUR	-	-

19 Operating lease

The Group has concluded several contracts of operating lease of land and premises. The terms of lease do not include restrictions of the activities of the Group in connection with the dividends, additional borrowings or additional lease agreements.

The most significant operating lease agreement of the Group is the non-current agreement of AB "Snaige" signed with the Municipality of Alytus for the rent of the land. The payments of the lease are reviewed periodically; the maturity term is on July 2, 2078.

20 Trade credits

The conditions of the above mentioned type of liabilities:

• Trade credits are non interest paying and approximate time for the payment is equal to 60 days.

• Other amounts payable are non interests paying and approximate time for the payment is equal to 60 days.

• Interests payable are usually set quarterly during the financial year.

21 Other current amounts payable

Other creditors were composed as follows:

	31.12.2010	31.12.20090
Salaries and related taxes payable	1,727,394	1,425,808
Vacation reserve	1,356,500	1,148,417
Bonuses and payments to the Board accrued	-	-
Taxes payable	257,953	640,497
Other payables and accrued expenses	1,969,646	3,846,609
Total other creditors	5,311,483	7,061,332
22 Basic and diluted earnings (loss) per share
	31.12.2010	31.12.2009
Shares issued 1 January	27,827,365	27,827,365
Weighted average number of shares	29,867,194	27,827,365
Earnings (loss) per share and diluted (loss) per share, in LTL	(0.09)	(1.37)
23 Risk and capital management

Credit risk

The Group has significant concentration of trading counterparties. The main ten customers of the Group on the 31^t of December, 2010, accounted for approximately 68.4% (57.46% as of 31 December 2009) of the total Group's trade receivables. The maximum sum of credit risk in the reporting period and on the 31st of December, 2009, includes carrying amount of accounts receivables.

The credit policy and credit risk is constantly controlled. All the customers willing to receive a deferred payment are evaluated for credit risk. Majority of accounts receivables are insured.

The Group does not guarantee obligations of other parties. The Group considers that its maximum exposure is reflected by the amount of trade receivables, net of allowance for doubtful accounts recognized at the balance sheet date.

Interest rate risk

Majority of Groups loans consists of loans with floating interest rates; with the floating part being associated to LIBOR, therefore, creating an interest rate risk.

Group did not use any financial instruments to hedge the risks from interest rate fluctuations for debt obligations associated with floating interest rates.

Liquidity risk

The Group's policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate amount of committed credit facilities to meet its commitments at a given date in accordance with its strategic plans.

Foreign exchange risk

The Group used financial instruments to manage its exposure to foreign exchange risk in 2009, making a predefined currency exchange transactions. Financial derivatives are used to hedge from negative currency fluctuations for cash flows from sales income with US Dollars.

On the 31st December, 2009, the company had fulfilled all the pre-concluded foreign exchange transactions.

At this time, company does not trade in USD and do not have entered into such transactions. It determined that the Company significantly reduced its revenue by USD, and in such way it set the earnings by USD to the obligations by USD. Therefore the exchange rate risk decreased, because the main part of Company's revenue comes by Euros, which has the fixed rate with Lithuanian Litas.

24 Related parties transactions

The parties are considered related when one party has the possibility to control the other one or have significant influence over the other party in making financial and operating decisions. The related parties of the Group and the transactions with related parties during the 12 months of 2010 and 2009 were as follows:

UAB "Hermis Capital" (same final controlling shareholder);

UAB "Meditus" (same final controlling shareholder);

UAB "Baltijos polistirenas" (other companies controlled by board members or their family members);

UAB "Astmaris" (other companies controlled by board members or their family members).

2010	Purchases	Sales		Accounts receivable		Accounts payables
TEO LT AB	98,481		-		-	7,641
	98,481		-		-	7,641
2009	Purchases	Sales		Accounts receivable		Accounts payables
UAB "Baltijos polistirenas" raw materials	1,347,969		-		-	457,404
UAB Astmaris raw materials	652,500		-		-	379,992
	2,000,469		-		-	834,396

According to the provided management information, these companies are not involved parties in 2010.

On the 2010 all contracts with TEO LT AB were made for telecommunication service.

The Group has a policy to make transactions with related parties only for commercial purpose and under commercial conditions. No guarantees were received or given from any related party in order to assure the payments of accounts receivable or accounts payable.

Financial and investment activities with related parties:

	2010		2009
	Loans received	Repayment of loans	Interest paid	Loans received	Repayment of loans granted	Interest paid
UAB Hermis Capital	-	-	-			5,713,379 1,087,241
UAB Meditus	-	1,000,000	-	1,000,000
	-	1,000,000	-	1,000,000	5,713,379	1,087,241

The direction of the Company contains the chairman of the board, other board members, managing director and functional directors.

Remuneration of the Company's and subsidiaries management amounted to LTL 1,264 thousand and LTL 355 thousand, respectively, in 2009 LTL 1,340 thousand and LTL 635 thousand in 2009, respectively).

25. Commitments and contingencies

On the 25th of June, 2009, a claim for the debt of LTL 2,049 thousand was filed against the Company by A/S Comfitt Glass (hereinafter the Plaintiff) at Kaunas County Court. According to the Plaintiff, the debt was for delivered and not paid goods. The Company did not admit the part of the debt of LTL 489 thousand, since the part of the goods was not delivered to the Company.

On the 5th of October, 2010, the judgement of the Court of appeal of the Republic of Lithuania had changed the decision about the final court settlement of Kaunas Regional Court made on the 12th of February, 2010. This judgement had obligated the Company to pay to the plaintiff 1.095 thousand LTL till the 1st of February, 2010, and to continue paying every month from the 12th of February, 2011, till the 12th of February, 2012, for 9,091.3 thousand LTL.

The company announced the claim for undelivered goods. For the date of this report the result of this case is not known and the management expects to win it, though on the 31st of December a part of the debt amounting to LTL 1,560 thousand (for received goods) has accounted as a trade payable and the other part 120 thousand LTL is accounted as interest and 1.3 thousand LTL as the court expense; therefore, the amount 489 thousand for undelivered goods is not accounted in these financial statements.

On the 2nd of March, 2010, the Company and Kazakhstan social-entrepreneurship corporation national company Saryarka signed an establishment agreement of joint company TOO Snaig- Saryarka. It is planned that TOO Snaig-Saryarka will be engaged in the production and sale of refrigerators in Kazakhstan and neighbouring markets. Currently the project is in the early stage of the implementation. There is the consent received from the government of Kazakhstan and the tentative approval from a financing bank with the condition of additional private investor, which was currently analysing the offer and did not provide the final answer yet.

During the General Shareholder's meeting it was made a decision the inappropriate loss of the parent Company which is LTL 13,028,614 to cover with share premium.

The Minister of Economy of the Republic of Lithuania issued the decision to provide LTL 865 thousand to reinforce Company's competitive ability; that money will take a part of all investment to the new generation refrigerator "3D frost".

On 11 January 2011 Hermis Capital UAB signed an agreement to sell convertible bonds issued by Snaige AB (ISIN – LT1000401315, nominal value - 100 EUR, redemption date – 11 April 2011) for the following Snaige AB shareholders:

KJK Fund SICAV-SIF	6 617 bonds
Firebird Republics Fund, Ltd	1 629 bonds
Firebird Avrora Fund, Ltd	1 630 bonds

The transaction and the transfer of ownership rights should be completed by 21 January 2011.

The agreement also gives buyers the rights to acquire the remaining 22 411 convertible bonds, which can be exercised until 10 April 2011.

On the 8th of February 2011 Snaige AB received a notification of several groups' of the Boards intention to afford the official offering to engross the rest of 19 218 720 Snaige AB ordinary registered shares which nominal value is 1 LTL and which compose 62,53 percents of all Snaige AB shares.

The Offer Submitters and Amber Trust S.C.A. acquired more that 1/3 (one third) of shares of Snaige AB on 7 February 2011. The aforementioned companies collectively hold 11,516,995 ordinary registered shares of Snaige AB with the par value of LTL 1 each, constituting 37.47% of shares and.

On 14 February 2011 Snaige AB has received announcement about the executive officer's transactions on the issuer's securities which have been made by the Managing director.