Vilkyskiu pienine AB

Interim consolidated financial statements for the 9 months of 2010

CONFIRMATION OF RESPONSIBLE PERSONS 2
GENERAL INFORMATION 3
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 4
CONSOLIDATED INCOME STATEMENT 5
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 6
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED) 7
CONSOLIDATED STATEMENT OF CASH FLOWS 8
EXPLANATORY NOTES 9

Confirmation of Responsible Persons

Following the Article No. 12 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, rue 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 nine months of 2010, prepared in accord.ance with International Financial Reporting Standarts, give a true and fair viewtf the assets, liabilities, financial position and profit or loss of Vilkyskiu pienine AB group.

		_---';;;"
General Director F*'""t-t"	eik- ''- '" " ;) r	Gintaras Bertasius
Finance Director		Vilija Milaseviciute
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VILKY\$KI PIENINE"

The financial statements were approved and signed by the Management on 30 November 2010.

General information

Public Company "Vilkyškių pieninė"
LTL 11 943 000
Vilkyškiai, Pagėgiai municipality
8-441 55330
8-441 55242
[email protected]
The 10th of May 1993
The 10th of December 2005, Tauragė Branch of Public Institution Center
of Registers
277160980
http://www.cheese.lt

Vilkyskiu pienine AB Board

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

Vilkyskiu pienine AB Management

General Director
Chief operation officer
Finance Director
Technical Director
Stock Director
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 30 September 2010 the Group had 777 employees (30 September 2009 - 777).

Consolidated statement of financial position

Thousand Litas	30 09 2010	31 12 2009

Assets
Property, plant and equipment	64 806	66 248
Intangible assets	484	608
Goodwill	23 875	23 875
Long-term receivables	1 194	1 421
Total non-current assets	90 359	92 152
Inventories	14 382	18 512
Trade and other receivables	18 751	14 820
Cash and cash equivalents	3 754	395
Total current assets	36 887	33 727
Total assets	127 246	125 879
s Equity
Share capital	11 943	11 943
Share premium	11 396	11 396
Reserves	8 345	8 624
Retained earnings	14 209	7 048
Total equity attributable to the shareholders of the Company	45 893	39 011
Non-controlling interest	120	88
Total equity	46 013	39 099
Liabilities
Interest-bearing loans and lease liabilities	25 698	39 266
Government grants	7 924	8 203
Deferred tax liabilities	2 626	2 301
Total non-current liabilities	36 248	49 770
Interest-bearing loans and lease liabilities	19 559	15 990
Trade and other payables, including derivatives	25 426	21 020
Total current liabilities	44 985	37 010
Total liabilities	81 233	86 780
Total equity and liabilities	127 246	125 879

Consolidated income statement

Thousand Litas
	01.01.2010-	01.01.2009-	01.07.2010-	01.07.2009-
	30.09.2010	30.09.2009	30.09.2010	30.09.2009

Revenue	179 071	114 686	71 485	43 983
Cost of sales	-158 070	-95 833	-58 815	-35 868
Gross profit (loss)	21 001	18 853	12 670	8 115

Other operating income, net	527	-452	228	-664
Distribution expenses	-5 527	-5 078	-1 801	-1 552
Administrative expenses	-6 169	-4 530	-2 959	-1 571
Operating result	9 832	8 793	8 138	4 328

Finance income	65	182	-1 948	49
Finance costs	-1 464	-2 828	-435	-808
Net finance costs	-1 399	-2 646	-2 383	-759

Profit (loss) before tax	8 433	6 147	5 755	3 569

Income tax expense	-374	177	-291	-305
Net profit (loss) for the year
	8 059	6 324	5 464	3 264

Attributable to:
Shareholders of the Company	8 027	6 284	5 452	3 264
Non-controlling interest	32	40	12
Net profit (loss) for the year	8 059	6 324	5 464	3 264

Basic earnings per share (Litas)	0.67	0.53	-	-
Diluted earnings per share (Litas)	0.67	0.53

Equity, attributable to the shareholders of the Company Thousand Litas Share capital Share premium Revaluation reserve Legal reserve Retained earnings Total Noncontroll ing interest Total equity Balance at 1 January 2009 11 943 11 396 7 588 935 -81 31 781 55 31 836 Comprehensive income for the period Net profit (loss) - - - - 6 284 6 284 40 6 324 Other comprehensive income Allocated from reserves - - -317 - 317 0 0 Increase of revaluation reserve, net of tax - - -165 - - -165 - -165 Total other comprehensive income - - -482 - 317 -165 - -165 Total comprehensive income for the period - - -482 - 6 601 6 119 40 6 159 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 30 September 2009 11 943 11 396 7 106 935 6 520 37 900 95 37 995 Balance at 1 October 2010 11 943 11 396 7 106 935 6 520 37 900 95 37 995 Comprehensive income for the period Net profit (loss) - - - - 406 406 -7 399 Other comprehensive income Allocated from reserves - - -122 - 122 0 - 0 Increase of revaluation reserve, net of tax - - 705 - - 705 - 705 Total other comprehensive income - - 583 - 122 705 - 705 Total comprehensive income for the period - - 583 - 528 1 111 -7 1 104 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 December 2009 11 943 11 396 7 689 935 7 048 39 011 88 39 099

Consolidated statement of changes in equity

Consolidated statement of changes in equity (continued)

Thousand Litas	Share capital	Share premium	Revalu ation reserve	Legal reserve	Retained earnings	Total	Non controll ing interest	Total equity
Balance at 1 January 2010	11 943	11 396	7 689	935	7 048	39 011	88	39 099
Comprehensive income for the period
Net profit (loss)	-	-	-	-	8 027	8 027	32	8 059
Other comprehensive income
Allocated from reserves	-	-	-328	-	328	0	-	0
Increase of revaluation
reserve, net of tax	-	-	49	-	-	49	-	49
Total other comprehensive
income	-	-	-279	-	328	49	-	49
Total comprehensive income for the period	-	-	279	-	8 355	8 076	32	8 108
Contributions by and distributions to owners:
Dividends					-1 194	-1 194		-1 194
Total contributions by and
distributions to owners					-1 194	-1 194		-1 194
Changes in the Group
without losing control Other changes in the Group
Total contributions by and
distributions to owners
Balance at 30 September 2010	11 943	11 396	7 410	935	14 209	45 893	120	46 013

Consolidated statement of cash flows

Thousand Litas

	01.01.2010- 30.09.2010	01.01.2009- 30.09.2009
Cash flows from operating activities
Net profit (loss) Adjustments:	8 059	6 324
Depreciation of property, plant and equipment Amortisation of intangible assets	4 732 200	4 841 177
Amortisation of grants (Profit) loss on disposal of property, plant and	-435	-366
equipment Income tax expense	80 374	1 259 -
Interest expenses, net	1 294	2 514
	14 304	14 749
Change in inventories Change in long-term receivables	4 130 227	1 377 -
Change in trade and other receivables	-3 931	307
Change in trade and other payables	3 794	-1 793
	18 524	14 640
Paid interest	-1 294	-2 514
Paid income tax
Net cash flows from (used in) operating activities	17 230	12 126
Cash flows from investing activities
Acquisition of property, plant and equipment Acquisition of intangible assets	-3 592 -76	-851 -445
Proceeds from sale of property, plant and equipment	462	22
Net cash flow used in investing activities	-3 206	-1 274
Cash flows from financing activities
Loans received	5 723	614
Repayment of borrowings	-15 905	-11 558
Dividends paid Capital grants received	-639 156	- 366

Net cash from (used in) financing activities	-10 665	-10 578
Increase (decrease) in cash and cash equivalents	3 359	274
Cash and cash equivalents at 1 January	395	195
Cash and cash equivalents at 30 September	3 754	469

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 for the three months of 2010 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 2009

2.Main financial indicators

	January – September 2010	January – September 2010
Revenue (Thousand Litas)	179 071	114 686
EBITDA (Thousand Litas)	14 350	13 404
EBITDA margin (%)	8,0	11,7
Operating result (Thousand Litas)	9 832	8 793
Operating result margin (%)	5.5	7.7
Profit (loss) before tax (Thousand Litas)	8 433	6 147
Profit (loss) before tax margin (%)	4.7	5.4
Profit (loss) per share (litas)	0.67	0.53
Number or shares (vnt)	11 943 000	11 943 000

3. Segment information

Revenue per geographical zones:

Thousand Litas	January – September 2010	January – September 2009	Change
Lithuania	71 123	60 633	8.5%
European Union	62 001	42 081	47%
Russia	42 136	11 059	3.8 times
Other countries	3 811	913	4.2 times
	179 071	114 686

During the nine months of this year sales revenue has increased 56% compared with same period of the last year. There are several reasons of increase:

1. increase in production, i.e. we have processed more raw milk (about 30 per cent);
1. increased quantities of export;
1. because of the increase in demand of production, in the beginning of the year we have reduced a part of the stock;
1. sale price of exported production has increased about 30%

4.Inventories

Thousand Litas	30 September 2010	31 December 2009
Finished production	10 165	14 683
Raw materials	270	194
Other auxiliary materials	3 179	3 624
Goods for re-sale	768	11
	14 382	18 512

5. Loans

AB Bankas Snoras has granted a loan of 1,448 t EUR to Vilkyskiu Pienine AB for an investment project as to facility "Processing of agricultural goods and increase of surplus value – support by loans". The liability is guaranteed by Zemes Ukio Paskolu Garantiju Fondas UAB for a period of seven years.

6. Post balance sheet events

On 2nd of November 2010 Modest AB, the subsidiary of Vilkyskių pieninė AB increased its share capital by addition cash contributions. The share capital has been increased from 617 118 LTL till 5 617 118 LTL by Vilkyskių pieninė AB.

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