Pieno Zvaigzdes

Annual / Quarterly Financial Statement • Apr 25, 2025

AB Pieno žvaigždės Financial statements for the year ended 31 December 2024 prepared in accordance with International Financial Reporting Standards as adopted by the European Union, presented together with Independent Auditor’s Report and Management Report AB Pieno žvaigždės Financial Statements for the year ended 31 December 2024 Content Company details 1 Management’s Statement on the Financial Statements 2 Statement of comprehensive income 3 Statement of financial position 4 Statement of changes in equity 5 Statement of Cash Flows 6 Notes to the Financial Statements 21 Confirmation ot the Management 44 Management report for 2024 45 Sustainability statement 77 AB Pieno žvaigždės Financial Statements for the year ended 31 December 2024 1 Company details AB Pieno žvaigždės Telephone: +370 5 246 1414 Telefax: +370 5 246 1415 Company code: 124665536 Registered at: Perkūnkiemio St. 3, Vilnius, Lithuania Management: Board Vikas Sachar Voldemaras Klovas Julius Kvaraciejus Aleksandr Smagin Gžegož Rogoža Regina Kvaraciejienė Artiom Smagin General Director Aleksandr Smagin Auditor Ernst & Young Baltic UAB Banks AB SEB bank AB Swedbank Luminor bank AS Lithuanian branch UAB Perlo paslaugos AS SEB Banka AB Šiaulių bankas AB Pieno žvaigždės Financial Statements for the year ended 31 December 2024 (EUR thousand unless otherwise stated) 2 Management’s Statement on the Financial Statements The Board and Management have today discussed and authorised for the issue the set of financial statements (further – financial statements) and signed them on behalf of the Company. The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. We consider that the accounting policies used are appropriate and that the financial statements present fairly the Company’s financial position, financial performance and cash flows in accordance with International Financial Reporting Standards as adopted by the European Union. We recommend the financial statements to be approved at the General Shareholders’ Meeting. Vilnius, 28 March 2025 Management and authorised finance department employees: ------------------------ --------------------------- Aleksandr Smagin Laimonas Vaškevičius General Director Finance Director ------------------------ Vanda Grigaliutė Chief Accountant AB Pieno žvaigždės Financial Statements for the year ended 31 December 2024 (EUR thousand unless otherwise stated) 3 Statement of comprehensive income EUR thousand Note 2024 2023 Revenue from contracts with customers 1 210,362 201,114 Cost of sales 3 (160,228) (148,500) Gross profit 50,134 52,614 Other operating income 2 249 318 Other operating expenses 2 (112) (169) Selling and distribution expenses 3 (20,055) (17,766) Administrative expenses 3 (17,625) (17,537) (Impairment) of receivables/reversal 18 10 (1) Operating profit 12,601 17,459 Finance income 39 31 Finance costs 4 (1,531) (1,869) Profit before tax 11,109 15,621 Income tax (expenses) 5 (1,042) (2,366) Profit for the year 10,067 13,255 Other comprehensive income - - Total comprehensive income for the year 10,067 13,255 Basic earnings per share (EUR) 6 0.22 0.29 Diluted earnings per share (EUR) 6 0.22 0.29 The accompanying notes are an integral part of these financial statements. AB Pieno žvaigždės Financial Statements for the year ended 31 December 2024 (EUR thousand unless otherwise stated) 4 Statement of financial position EUR thousand Note As at 31 December 2024 As at 31 December 2023 Assets Property, plant and equipment 7 46,010 43,422 Intangible assets 86 53 Right-of-use assets 14 2,703 841 Other financial assets 23 22 Other receivables 9 300 5 Deferred tax asset 16 411 366 Total non-current assets 49,533 44,709 Inventories 8 17,533 15,939 Trade receivables 9 7,478 8,102 Prepayments 9 211 193 Other receivables 9 862 966 Cash 10 2,010 1,584 Total current assets 28,094 26,784 Total assets 77,627 71,493 Equity Issued capital 13,089 13,089 Share premium 7,891 7,891 Reserves 1,570 1,570 Retained earnings (loss) 17,477 13,729 Total equity 11 40,027 36,279 Liabilities Grants 12 1,948 1,365 Loans and borrowings 13 5,996 3,500 Employee benefits 15 1,358 1,619 Lease liabilities 14 822 260 Total non-current liabilities 10,124 6,744 Loans and borrowings 13 3,622 7,860 Trade and other payables 17 20,866 18,624 Contract liabilities 17 824 785 Employee benefits 15 223 206 Lease liabilities 14 1,861 702 Income tax payable 80 293 Total current liabilities 27,476 28,470 Total liabilities 37,600 35,214 Total equity and liabilities 77,627 71,493 The accompanying notes are an integral part of these financial statements. AB Pieno žvaigždės Financial Statements for the year ended 31 December 2024 (EUR thousand unless otherwise stated) 5 Statement of changes in equity EUR thousand Note Issued capital Share premium Legal reserve Retained earnings Total equity As at 1 January 2023 13,089 7,891 1,570 474 23,024 Net profit for 2023 - - - 13,255 13,255 Other comprehensive income - - - - - Total comprehensive income for the year - - - 13,255 13,255 Dividends 11 - - - - - As at 31 December 2023 13,089 7,891 1,570 13,729 36,279 Net profit for 2024 - - - 10,067 10,067 Other comprehensive income - - - - - Total comprehensive income for the year - - - 10,067 10,067 Dividends 11 - - - (6,319) (6,319) As at 31 December 2024 13,089 7,891 1,570 17,477 40,027 The accompanying notes are an integral part of these financial statements. AB Pieno žvaigždės Financial Statements for the year ended 31 December 2024 (EUR thousand unless otherwise stated) 6 Statement of cash flows EUR thousand Note 2024 2023 Operating activities Profit (loss) before tax for the year 11,109 15,621 Adjustments to: Depreciation and amortisation 7,14 5,635 5,739 Amortisation of grants 12 (183) (170) Result of disposal of property, plant and equipment 2,7 (40) (59) Result of write-off of property, plant and equipment 7 1 9 Impairment of receivables/(reversal) 18 (10) 1 Change in vacation reserve 17 321 579 Impairment of inventories/(reversal) 8 277 (2,468) Interest income (38) (30) Interest expense 4 1,277 1,656 18,349 20,878 Changes in inventories (1,872) 6,186 Change in trade receivables, prepayments, other receivables 414 (1,329) Change in trade payables and other payables 1,906 (514) Income tax paid 5 (1,087) (396) Net cash flows from operating activities 17,710 24,825 Investing activities Acquisitions of property, plant and equipment 7 (7,157) (4,105) Purchase of intangible assets (67) (38) Proceeds from sale of property, plant and equipment 41 53 Loans granted 9,18 (400) - Interest received 38 30 Collection of loans granted 9,18 405 6 Grants received 12 431 528 Net cash flow used in investing activities (6,709) (3,526) Financing activities Loan received 13 11,701 - Repayment of borrowings 13 (13,442) (17,066) Payment of lease liabilities principal amount 14 (1,280) (1,261) Interest paid 18 (1,283) (1,658) Dividends paid 18 (6,271) (2) Net cash flow from/(used in) financing activities (10,575) (19,987) Change in cash 426 1,312 Cash as at 1 January 10 1,584 272 Cash as at 31 December 10 2,010 1,584 The accompanying notes are an integral part of these financial statements. 7 2024 General information The head office of AB Pieno žvaigždės (hereinafter “the Company”) is located in Perkūnkiemio St. 3, Vilnius, Lithuania. AB Pieno žvaigždės was established in 1998 by way of a merger of stock companies Mažeikių pieninė, Pasvalio sūrinė and Kauno pienas. The main office of the Company is located in Vilnius and the branches are in Mažeikiai, Pasvalys, Kaunas and Panevėžys. All ordinary shares of the Company are quoted in the Vilnius Stock Exchange. There is no controlling entity or individual among the shareholders of AB Pieno žvaigždės. The Company is engaged in production and sales of dairy products to retail stores directly and through distributors. The average number of employees in 2024 was 1,698 (2023: 1,646 employees). Significant accounting policies Statement of compliance The financial statements of AB Pieno žvaigždės have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU). Except for the impact of the new standards and their amendments as well as new interpretations on the financial statements, the Company has consistently applied the accounting policy, set out in the financial statements, to all periods presented in these financial statements. The management of the Company approved these financial statements on the 28 th of March 2025. The shareholders have a statutory right to approve these financial statements or not to approve them and require preparation of new financial statements. Basis of preparation The financial statements are presented in the euro being the functional currency of the Company, and are prepared on the historical cost basis. These financial statements have been prepared based on a going concern basis of accounting which assumes that the Company has ability to continue as a going concern for at least 12 months after the reporting date of these financial statements. The management of the Company considers that there are no significant climate related matters, which could affect the Company’s ability to continue as a going concerns. The current economic situation has impact on the Company’s performance which is disclosed in the Notes to the financial statements. The preparation of financial statements in conformity with IFRSs requires management to make estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical information and factors that reflect the present circumstances. Based on these assumptions and estimates, a conclusion is made about the values of assets and liabilities that cannot be determined from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision 8 2024 Significant accounting policies (continued) Basis of preparation (continued) affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods. the application of IFRSs that have the most significant effect on the financial statements are discussed on paragraph “Significant accounting estimates and judgements”. Property, plant and equipment Owned assets Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Land is stated at cost less impairment losses. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment and are depreciated over their expected useful lifetime. Useful lives, residual amounts and depreciation methods are reviewed at each reporting date. Subsequent costs Costs incurred when replacing a component part of an item of property, plant and equipment are capitalised only upon write-off of the carrying amount of the component and if it is probable that the future economic benefits embodied with the item and the cost of the component part can be measured reliably. All other costs are recognised in the statement of comprehensive income as an expense as incurred. Depreciation charge Depreciation (except for land which is not depreciated) is charged to comprehensive income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows: • buildings 8–80 years • machinery and equipment 5–40 years • vehicles and other non-current asset 3–20 years Right-of-use assets and lease liabilities The Company as a lessee At inception of a contract, the Company assesses whether the contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. 9 2024 Significant accounting policies (continued) Right-of-use assets and lease liabilities (continued) Right-of-use assets The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for recurring remeasurement of lease liabilities. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows: • Buildings 5 years • Vehicles and other equipment 2–5 years If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. For more details, see subsection “Impairment of non-financial assets”. Lease liabilities At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. he lease payments include fixed payments (including in-substance fixed payments). The Company does not have lease contracts with variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The Company’s lease contracts do not include lease incentives, purchase or termination options for which management judgement and assumptions would be needed to identify lease term. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments. For more details on the Company’s lease liabilities, see Note 14. Short-term leases and leases of low-value assets The Company applies the recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value (EUR 5 thousand). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term. 10 2024 Significant accounting policies (continued) Impairment of non-financial assets The carrying amounts of the Company’s assets other than inventories and deferred tax assets, subject to specific impairment assessment methods, are reviewed at each statement of financial position date to determine whether there is any indication of impairment. If any such indication exists, the Company makes estimate of the recoverable amount of such asset. For impairment testing, assets are grouped together into the smallest group of assets (as practically possible) that generates cash inflows. The Company’s management considers the entire Company as one cash-generating unit (CGU) as disclosed in Note “Significant accounting estimates and judgements”. The Company’s management determines the allocation coefficients for the cost of milk in such a way that the margins of related products remain similar. Impairment losses are recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment loss are recorded in the statements of comprehensive income under administrative expenses. Financial assets The financial assets of the Company include cash, trade and other receivable amounts, and loans granted. Initial recognition Financial assets are recognised initially when they occur. Financial assets without significant financing component are initially recognised at transaction price. Subsequent measurement The Company’s financial assets that are classified as financial assets measured at amortised cost in subsequent periods are measured using the effective interest rate method. In the statement of comprehensive income, interest income is reported under “Financial income”, Impairment loss is recognised in the statement of comprehensive income under “(Impairment) of receivables/reversal”. Derecognition Financial assets (or, where appropriate, part of financial assets or part of the group of similar financial assets) are derecognised when: ▪ the rights to receive cash flows from the asset have expired; ▪ when the Company retains the right to cash flows but undertakes an obligation to settle the total amount to a third party as to transfer agreement within a short period of time; ▪ the Company transfers its rights to receive cash flows from the asset and (or): (a) transfers substantially all the risks and rewards of the asset, (b) neither transfers nor retains substantially all the risks and rewards of the asset, but transfers control of the asset. The Company reduces the gross carrying amount of the financial asset if it cannot reasonably expect to recover all or part of the financial asset. Writing down is an event of derecognition. 11 2024 Significant accounting policies (continued) Financial assets (continued) Impairment of financial assets For trade receivables the Company applies a simplified approach in calculating expected credit losses (ECLs). Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. Based on the assessment of the Company’s management, trade receivables do not include significant financing component and, respectively, their impairment is measured using a simplified method, firstly the management performs individual ECL assessment considering the customer’s credit history, future factors and subjective market factors related to the debtor, secondly all overdue balances for more than 180 days are allowed by 100%, and lastly, the Company records an additional allowance of 0.1% for total outstanding accounts receivable balance, which is not overdue or overdue less than 180 days at the year end. Application of 0.1% is based on historical information of the Company on bad debts. Financial liabilities The Company’s financial liabilities include loans and borrowings, trade and other payables. Initial recognition Borrowings are initially recognised at fair value of proceeds received, less the costs of transaction. Trade liabilities are non-derivative financial liabilities with fixed or determinable payments that are not quoted in an active market. Such liabilities are carried at amortised cost using the effective interest rate method. Subsequent measurement Subsequent to initial recognition, financial liabilities are stated at amortised cost using the effective interest rate method and the difference between the proceeds received and the amount payable over the financial liability period is recognised in the statement of comprehensive income for the period. Derecognition A financial liability is derecognised by the Company when the obligation under the liability is discharged or cancelled, or expired. The Company also ceases recognition of a financial liability when its terms are changed and the cash flows of the amended liability are materially different. In this case, the new financial liability is recognised at fair value in accordance with the amended contractual terms. In the event of derecognition of a financial liability, the difference between the carrying amount written off and the consideration paid (including any transferred non-cash assets or liabilities assumed) is recognised in profit or loss. 12 2024 Significant accounting policies (continued) Factoring The Company transfers rights to receivables due at a future date according to invoices. The Company’s factoring transactions are transactions without recourse. 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. The Company’s factoring contract is without recourse (non-recourse factoring), therefore trade receivables are reduced when the factoring advance is received. Inventories Inventories are stated at the lower of cost and net realisable value. The costs of inventories are calculated using the FIFO method. In the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity distributed according to norms calculated considering the use of production capacities. Write-down of inventories to net realisable value At least on a quarterly basis, the Company determines whether the carrying amount of its inventory does not exceed the net realisable value. In respect of obsolete or slow moving items this involves comparing the levels of inventory held to future utilisation and sales projections. In addition, all of the Company’s production inventories are tested for potential decline of their expected selling prices below cost (Note 8). Cash Cash includes cash in hand and cash at banks. For the purposes of the cash flow statement, cash comprise cash held at current accounts at banks. Employee benefits Short-term employee benefits are recognised as a current expense in the period when employees render the services. These include salaries and wages, social security contributions, bonuses, paid holidays and other benefits. All pension obligations are borne by the State. Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company recognises termination benefits when it is firmly committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Under the remuneration plans employees are entitled to jubilee bonuses as well as retirement benefits. Each employee of the Company leaving the Company on the normal retirement date is entitled to a benefit equal to 2 monthly wages, as stipulated in the legal acts of the Republic of Lithuania. The jubilee bonuses are paid to employees who have reached 50 and 60 years old. Provisions for jubilee bonuses and retirement benefits are calculated individually for each entitled individual. The base for the calculation of provision for an employee is expected benefit which the Company is obliged to pay in accordance with internal policy and regulation. The present value of these obligations is estimated at the end of each reporting year. The Company recognizes the liability in the statement of financial position under current and non- current liabilities and reflects the current value of the benefits at the date of the statement of financial position. 13 2024 Significant accounting policies (continued) Revenue from contracts with customers The Company is engaged in production and sales of dairy products to retail stores directly and through distributors. Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company recognises revenue from contracts with customers at a point in time. After making assessments, the Company identified that in its revenue arrangements it acts as a principal. The Company also purchases marketing services from its customers. Based on agreements marketing related services acquired from customers (retailers) do not represent individual services related to various advertising and marketing activities provided to the Company, and therefore all such marketing expenses incurred over the financial period are accounted as revenue reduction in the Company’s statement of comprehensive income (Note 1). Variable consideration If the consideration promised in a contract includes a variable amount, the Company estimates the amount of consideration to which it expects to be entitled in exchange for transferring the promised goods to a customer, by applying the percentage of the monthly turnover achieved as specified in the contract. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur. Some dairy sales contracts grant volume discounts to certain customers for the previous period when the quantity of milk products purchased during the period exceeds a contractually agreed threshold. Such volume discounts, for the period specified in the sales contracts, are deducted from revenue recognised in the Company’s statement of comprehensive income (Note 1). Significant financing component The Company receives prepayments from its customers for the sale of dairy products. Such prepayments are considered to be current because they are realised in less than one year. The Company applies the practical expedient for current prepayments received from customers. That is, the promised amount of consideration is not adjusted for the effects of a significant financing component if the period between the transfer of the promised good or service and the payment is one year or less. Contract liabilities Contract liabilities are recognised if a customer pays consideration before the Company transfers the related goods. Contract liabilities are recognised as revenue when the Company performs under the contract (i.e. transfers the control of related goods). Grants Asset-related government grants comprise grants received for the acquisition of non-current assets. Grants are recognised in the statement of financial position when there is reasonable assurance that it will be received and that the Company will comply with the conditions attaching to it. Grants intended to compensate the Company for the cost of an asset are recorded as a liability and subsequently recognised in comprehensive income on a proportionate basis over the expected useful life of the asset. The balance of unutilised grants is shown in the caption ‘Grants’ in the statements of financial position. 14 2024 Significant accounting policies (continued) Other operating income (expenses) Other operating income and expenses mostly comprise sale of current assets and services which are not directly related to the operating activities of the Company. Finance costs Finance expenses comprise interest payable on borrowings calculated using the effective interest rate method. The interest expense component of lease payments is recognised in comprehensive income using the effective interest rate method. Income tax Income tax for the period comprises current and deferred tax. Income tax is recognised in comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the date of the statement of financial position, and any adjustment to tax payable in respect of previous years. The effective income tax rate applicable for companies of the Republic of Lithuania in 2024 and 2023 was 15%. As from 1 January 2025, the standard income tax rate applied for the entities in the Republic of Lithuania is 16%. Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. The following temporary differences are not provided for: differences arising at initial recognition of assets or liabilities that affect neither accounting, nor taxable profit. The amount of deferred tax depends on the expected future use of the asset and the settlement of future liabilities and substantially enacted tax rate expected to apply. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Only up to 70% of current year’s taxable profits can be offset against tax losses carried forward. Tax losses can be carried forward for indefinite period, except for the losses incurred as a result of disposal of securities and/or derivatives. The carrying amount of the deferred tax asset should be reduced to the extent that it is not probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Deferred tax assets and liabilities set off if there is a legally enforceable right to set off current tax assets against current tax liabilities and if deferred tax relates to the same taxable entity and the same taxation authority. According to legislation on taxation in effect, the Tax Authorities may at any time during 3-5 (depending on tax) successive years after the end of the reporting tax year carry out a tax inspection of the Company and impose additional taxes or fines by reassessing taxes calculations. The Company’s management believe that all the taxes are properly calculated and paid according to the prevailing tax laws and it is not aware of any circumstances that may give rise to a potential material liability in respect of taxes not paid. 15 2024 Significant accounting policies (continued) Basic and diluted earnings per share Basic earnings per share are calculated by dividing net profit attributable to ordinary equity holders by the weighted average number of ordinary shares. As there are no instruments that dilute equity, the basic and diluted earnings per share do not differ. Segments An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including transactions with other segments), whose operating results are regularly reviewed by the entity’s chief operating decision-maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segmentation principles are presented in Note 1. 16 2024 Significant accounting policies (continued) Adoption of new and/or amended IFRS and International Financial Reporting Interpretations Committee (IFRIC) interpretations The accounting policies adopted are consistent with those of the previous financial year except for the following IFRS and amendments to IFRS which have been adopted by the Company as of 1 January 2024: • IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (Amendments). • IFRS 16 Leases: Lease Liability in a Sale and Leaseback (Amendments). • IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments Disclosures - Supplier Finance Arrangements (Amendments). The newly adopted IFRS and amendments to IFRS did not have a material impact on the Company’s accounting policies. • IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (Amendments) The amendments are effective for annual reporting periods beginning on or after January 1, 2024, and are applied retrospectively. The objective of the amendments is to clarify the principles in IAS 1 for the classification of liabilities as either current or non-current. The amendments clarify the meaning of a right to defer settlement, the requirement for this right to exist at the end of the reporting period, that management intent does not affect current or non-current classification, that options by the counterparty that could result in settlement by the transfer of the entity’s own equity instruments do not affect current or non-current classification. Also, the amendments specify that only covenants with which an entity must comply on or before the reporting date will affect a liability’s classification. Additional disclosures are also required for non-current liabilities arising from loan arrangements that are subject to covenants to be complied within twelve months after the reporting period. The amendments had no impact on the financial statements of the Company. • IFRS 16 Leases: Lease Liability in a Sale and Leaseback (Amendments) The amendments are effective for annual reporting periods beginning on or after January 1, 2024. The amendments are intended to improve the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction in IFRS 16, while it does not change the accounting for leases unrelated to sale and leaseback transactions. Under the amendments, the seller-lessee determines ‘lease payments’ or ‘revised lease payments’ in such a way that the seller-lessee would not recognise any amount of the gain or loss that relates to the right of use it retains. Applying these requirements does not prevent the seller- lessee from recognising, in profit or loss, any gain or loss relating to the partial or full termination of a lease. The amendments apply retrospectively to sale and leaseback transactions entered into after the date of initial application, being the beginning of the annual reporting period in which an entity first applied IFRS 16. The amendments had no impact on the financial statements of the Company, as the Company has no such transactions. • IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments Disclosures - Supplier Finance Arrangements (Amendments) The amendments are effective for annual reporting periods beginning on or after January 1, 2024. The amendments supplement requirements already in IFRS and require an entity to disclose the terms and conditions of supplier finance arrangements. Additionally, entities are 17 2024 required to disclose at the beginning and end of reporting period the carrying amounts of supplier finance arrangement financial liabilities and the line items in which those liabilities are presented as well as the carrying amounts of financial liabilities and line items, for which the finance providers have already settled the corresponding trade payables. Entities should also disclose the type and effect of non-cash changes in the carrying amounts of supplier finance arrangement financial liabilities, which prevent the carrying amounts of the financial liabilities from being comparable. Furthermore, the amendments require an entity to disclose at the beginning and end of the reporting period the range of payment due dates for financial liabilities owed to the finance providers and for comparable trade payables that are not part of those arrangements. The amendments had no impact on the financial statements of the Company, as the Company has no supplier finance arrangements. Standards issued but not yet effective and not early adopted The standards/amendments that are not yet effective, but have been endorsed by the European Union • IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (Amendments). The amendments are effective for annual reporting periods beginning on or after January 1, 2025, with earlier application permitted. Management has assessed that amendments will have no impact, as the Company has no transactions in foreign currency. The standards/amendments that are not yet effective and have not yet been endorsed by the European Union • IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures - Classification and Measurement of Financial Instruments (Amendments) The amendments are effective for annual reporting periods beginning on or after January 1, 2026. Early adoption of amendments related to the classification of financial assets and the related disclosures is permitted, with the option to apply the other amendments at a later date. The amendments clarify that a financial liability is derecognised on the ‘settlement date’, when the obligation is discharged, cancelled, expired, or otherwise qualifies for derecognition. They introduce an accounting policy option to derecognise liabilities settled via electronic payment systems before the settlement date, subject to specific conditions. They also provide guidance on assessing the contractual cash flow characteristics of financial assets with environmental, social, and governance (ESG)-linked features or other similar contingent features. Additionally, they clarify the treatment of non-recourse assets and contractually linked instruments and require additional disclosures under IFRS 7 for financial assets and liabilities with contingent event references (including ESG-linked) and equity instruments classified at fair value through other comprehensive income. The amendments have not yet been endorsed by the EU. The management has not yet assessed the impact of the amendment on the Company's financial statements. • IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures - Contracts Referencing Nature-dependent Electricity (Amendments) The amendments are effective for annual reporting periods beginning on or after January 1, 2026, with earlier application permitted. The amendments include clarifying the application of the 'own-use' requirements, permitting hedge accounting if contracts in scope of the amendments are used as hedging instruments, and introduce new disclosure requirements to enable investors to understand the impact of these contracts on a company's financial performance and cash flows. The clarifications regarding the 'own-use' requirements must be 18 2024 applied retrospectively, but the guidance permitting hedge accounting have to be applied prospectively to new hedging relationships designated on or after the date of initial application. The amendments have not yet been endorsed by the EU. The management has not yet assessed the impact of the amendment on the Company's financial statements. • IFRS 18 Presentation and Disclosure in Financial Statements IFRS 18 introduces new requirements on presentation within the statement of profit or loss. It requires an entity to classify all income and expenses within its statement of profit or loss into one of the five categories: operating; investing; financing; income taxes; and discontinued operations. These categories are complemented by the requirements to present subtotals and totals for ‘operating profit or loss’, ‘profit or loss before financing and income taxes’ and ‘profit or loss’. It also requires disclosure of management-defined performance measures and includes new requirements for aggregation and disaggregation of financial information based on the identified ‘roles’ of the primary financial statements and the notes. In addition, there are consequential amendments to other accounting standards. IFRS 18 is effective for reporting periods beginning on or after January 1, 2027, with earlier application permitted. Retrospective application is required in both annual and interim financial statements. The standard has not yet been endorsed by the EU. Management will analyse the requirements of this newly issued standard and assess its impact. • IFRS 19 Subsidiaries without Public Accountability: Disclosures. In May 2024, the IASB issued the IFRS 19 - Subsidiaries without Public Accountability: Disclosures, and it becomes effective for annual reporting periods beginning on or after January 1, 2027, with earlier application permitted. Management has assessed that standard is not applicable to the Company. • Annual Improvements to IFRS Accounting Standards – Volume 11 The IASB’s annual improvements process deals with non-urgent, but necessary, clarifications and amendments to IFRS. In July 2024, the IASB issued Annual Improvements to IFRS Accounting Standards — Volume 11. An entity shall apply those amendments for annual reporting periods beginning on or after January 1, 2026. The Annual Improvements to IFRS Accounting Standards - Volume 11, includes amendments to IFRS 1, IFRS 7, IFRS 9, IFRS 10, and IAS 7. These amendments aim to clarify wording, correct minor unintended consequences, oversights, or conflicts between requirements in the standards. The standard has not been endorsed by the EU. Management will analyse the requirements of this newly issued standard and assess its impact. • Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture. In December 2015, the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. Management has assessed that standard is not applicable to the Company. 19 2024 Significant accounting policies (continued) Significant accounting estimates and judgements Estimates and underlying assumptions are reviewed on an ongoing basis and based on historical experience and other factors that reflect the current situation and reasonable future events. The Company makes estimates and assumptions concerning future events. Resulting accounting estimates, by definition, will seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing material adjustment to the carrying amounts of the assets and liabilities within the next financial year are discussed below. Impairment of property, plant and equipment The Company at the end of each reporting period assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. Recoverable amount is the higher of an asset’s or cash-generating unit's fair value less costs of disposal and its value in use (Note 7). The Company’s management considers the entire Company as one cash-generating unit. The Company’s production branches are not independent units, they all are integrated into a common system and rely on each other activities. When raw milk is purchased on the market, all its ingredients (protein and fat) are used for finished products, which are produced in different branches of the Company. The management measures what returns are being generated from the entire raw milk collected and processed. It is therefore appropriate to consider the entire Company as one cash-generating unit without identifying a separate cash-generating unit. As at 31 December 2024 and 2023, there were no indications, that non-current asset of the Company might be impaired, therefore detailed testing was not performed. Impairment losses on receivables At the end of each reporting period, the management of the Company makes assumptions, on the basis of which decisions are made on the valuation of expected credit losses (for more information refer to “Impairment of financial assets”). The Company has identified that the loss rates approximates to 0.1% from total receivables (during 2017–2024). Forward looking estimate of expected credit losses is disclosed by accounting for additional allowance for the trade receivables that are yet not overdue based on historic information (Note 18). Management assumes that a default occurs when the amounts receivable are outstanding and loans granted are overdue for more than 180 days (Note 18). Impairment of losses on inventories At the end of each reporting period, the Company’s management assesses inventory impairment, taking into account their condition, realizability, expiry dates and market price fluctuations. The assessment is based on historical data, the current market situation and future forecasts (Note 8). Deferred tax asset The Company recognises a deferred tax asset based on management’s judgement that is probable that the relevant tax benefit will be available against future taxable profit. Management’s judgements are based on internal budgets and forecasts (Note 16). 20 2024 Significant accounting policies (continued) Significant accounting estimates and judgements (continued) Employee benefits Recognition of provision for employee benefits requires estimate of the probable outflow of economic benefits and defining the best estimate of the expenditure required to settle the present obligation at the end of reporting period. Details of applied estimates and their influence on the financial statements are disclosed in Note 15. Non-current asset useful life estimate The useful life of the Company’s property, plant and equipment is established individually for each asset, estimating the future economic benefit, planned period, intensity and environment of use, the changes of the asset’s useful features throughout the useful operation period, technological and economic progress, which may make the asset old-fashioned, as well as legal and other factors, limiting the useful life of non-current tangible assets. In 2024, the Company revised useful lives of property, plant and equipment according to IAS 16 Property, plant and equipment and adjusted useful lives. New useful lives of property, plant and equipment have been applied prospectively from 1 May 2024 (Note 7). Total acquisition cost of property, plant and equipment items for which useful lives were extended was EUR 22,278 thousand in 2024 (2023: EUR 800 thousand). The impact of the change in accounting estimates on the Company’s depreciation expenses is disclosed in Note 7. Estimation of raw material cost allocation The Company specialises in the production of dairy products, so the largest part of the production cost is the amount paid for the raw milk purchased. The main ingredients in raw milk are fat (cream) and protein (skim milk). Because of the variety of products with different fat and protein contents, the management judgement is involved in identifying what proportion of the raw milk price is attributable to fat and what proportion to protein. The management of the Company determines the milk cost allocation ratios in a way that interrelated products margin remains similar. Climate change matters The Company constantly monitors the latest legislation in relation to climate related matters. The significant accounting estimates made by management incorporate the future effects of the Company’s strategic decisions and commitments on having its set of production adhered to the energy transition targets, short and long-term impacts of climate-related matters and energy transition to lower carbon energy sources. At the current time, no legislation has been passed that will significantly impact the Company. 21 2024 1. Operating segments Basis for segmentation The Company produces and sells various types of dairy products. Financial performance is analysed as per different types of dairy products. Certain types of dairy products have similar economic characteristics. Given the fact, the dairy product types have been aggregated to reportable segments. Aggregation also includes evaluation of similarities of the dairy product types in respect to production process, customer type and geographical areas, methods of product distribution. The Company has identified the following reportable segments: cheese, dry dairy products, ice cream and fresh dairy products. The management of the Company reviews internal management reports of reportable segments at least on a quarterly basis. Other segments include production of cream, whey, other products and services. None of these segments meet the quantitative thresholds (10% from total) for reportable segments in 2024 and 2023. Information about reportable segments Information on each reportable segment is presented below. The segment performance assessment is based on the segment’s gross profit, since the management believes that this information is the most relevant for performance evaluation of respective segments. Segment information is prepared in accordance with the same accounting principles as used in the financial statements of the Company. Information related with total assets and liabilities, interest income and operating expenses, pre-tax result, income tax of the operating segments is not provided to the Board and General Manager. In the management’s opinion, there is no need to allocate these line items to the operating segments. Part of the depreciation and amortisation expense included in the Company’s administrative and selling expenses is not allocated to segments. 2024, EUR thousand Cheese Dry dairy products Ice- cream Fresh dairy products Total reportable segments All other segments Total Sales 24,189 8,373 20,611 152,091 205,264 5,098 210,362 Gross profit 3,883 (2,324) 6,224 42,059 49,842 292 50,134 Depreciation and amortisation 1,004 70 384 2,358 3,816 20 3,836 Other material non-cash items: Impairment and write down of inventories - 592 - 423 1,015 - 1,015 Acquisitions of property, plant and equipment 417 642 2,191 3,975 7,225 - 7,225 22 2024 1. Operating segments (continued) 2023, EUR thousand Cheese Dry dairy products Ice-cream Fresh dairy products Total reportable segments All other segments Total Sales 23,173 11,681 19,552 140,825 195,231 5,883 201,114 Gross profit 3,344 (1,755) 6,821 44,633 53,043 (429) 52,614 Depreciation and amortisation 1,024 62 382 2,285 3,753 20 3,773 Other material non-cash items: Impairment and write down of inventories - 278 - 460 738 - 738 Acquisitions of property, plant and equipment 681 122 1,423 1,916 4,142 1 4,143 Geographic information Geographic information specifies revenues and non-current assets of the Company as per Company’s country and other countries. Revenue is presented based on the geographic location of customers, and non- current assets are presented according to their location. Sales revenue, EUR thousand 2024 2023 Lithuania 123,154 120,489 Poland 14,590 15,185 Latvia 9,163 7,401 Estonia 2,308 2,455 Germany 14,816 12,651 Netherlands 2,037 2,326 Ireland 2,267 2,052 Great Britain 5,779 5,395 USA 5,448 4,457 Indonesia 2,780 2,534 Uzbekistan 6,677 5,588 Kazakhstan 1,466 2,713 Azerbaijan 3,001 2,281 Israel 5,851 6,452 Other countries 11,025 9,135 Revenue, total 210,362 201,114 Non-current assets, EUR thousand EUR 2024 2023 Lithuania 45,341 42,624 Poland 754 851 Total non-current assets 46,095 43,475 Major customers The Company has one customer from whom the revenue related to segment of cheese and fresh dairy products in 2024 made 19.5% (2023: 20.6%) of the total revenue. Revenue recognition during the year ended 31 December: EUR thousand 2024 2023 Recognised at a point of time 212,584 203,040 Marketing costs reducing the sales (1,807) (1,514) Volume discounts on sales turnover (415) (412) 210,362 201,114 23 2024 1. Operating segments (continued) Recognition of revenue during the year ended 31 December EUR thousand 2024 2023 Amounts included in contract liabilities at the beginning of the year 785 474 Performance obligations satisfied in current period 785 474 Contract liabilities consist of prepayments received from customers for dairy products sold. The contracts with customers do not have a variable consideration. Such prepayments are considered to be current because they are realised in less than one year. Performance obligations are satisfied at the moment the control of goods promised to customers is transferred, and payment is normally due within 30 to 60 days of the transfer of control of the goods. 2. Other operating income and costs Other operating income: EUR thousand 2024 2023 Income from sale of current assets and services 209 269 Net gain on disposal of property, plant and equipment (Notes 7, 14) 40 49 249 318 Other operating expenses: EUR thousand 2024 2023 Cost of sale of current assets and services (112) (169) (112) (169) 3. Cost of sales, selling and distribution, and administrative expenses Cost of sales: EUR thousand 2024 2023 Raw materials and consumables (116,254) (109,812) Other expenses (10,943) (15,950) Energy expenses (electricity, gas, water) (8,349) (8,996) Personnel costs (19,628) (18,130) Right-of-use assets depreciation (82) (113) Depreciation and amortisation (3,836) (3,660) Changes in finished goods and work in progress (1,136) 8,161 (160,228) (148,500) The increase in cost of sales was largely impacted by growing raw milk prices in 2024. 24 2024 3. Cost of sales, selling and distribution, and administrative expenses (continued) Selling and distribution expenses: EUR thousand 2024 2023 Personnel costs (9,672) (8,439) Production delivery costs (2,171) (2,105) Marketing and advertising (1,661) (1,230) Fuel (1,603) (1,683) Consumables and spare parts (1,007) (1,042) Other expenses (834) (639) Development of new products (414) (202) Right-of-use assets depreciation (450) (384) Depreciation and amortisation (295) (446) Utilities (468) (428) Various services (516) (453) Repair (529) (348) Insurance (256) (207) Taxes (other than income tax) (91) (79) Leases of low-value assets (48) (37) Communication expenses (18) (20) Transport (22) (24) (20,055) (17,766) Administrative expenses: EUR thousand 2024 2023 Personnel costs (8,700) (8,275) Other expenses (1,582) (2,043) Various services (1,981) (1,575) Audit services (98) (62) Marketing and advertising (1) (12) Security services (904) (825) Charity (223) (696) Right-of-use assets depreciation (500) (552) Consumables and spare parts (303) (253) Depreciation and amortisation (473) (471) Utilities (621) (608) Repair (369) (277) Insurance (852) (604) Taxes (other than income tax) (426) (578) Impairment and write down of inventories (206) (377) Fuel (251) (211) Communication expenses (66) (62) Development of new products (32) (18) Leases of low-value assets (21) (19) Transport (16) (19) (17,625) (17,537) In 2024, personnel costs increased due to growing remuneration paid to the Company’s employees. 2024 audit services: Financial statements audit 66 000 EUR; translation of financial statements 1 500 EUR; sustainability report audit 29 000 EUR; other services 1 500 EUR. 25 2024 2023 audit services: Financial statements audit 60 000 EUR; translation of financial statements 1 500 EUR. 4. Finance costs EUR thousand 2024 2023 Interest expenses on loans (1,277) (1,656) Other (254) (213) Total finance costs (1,531) (1,869) * Including other interest expenses, factoring account fees, interest on late payments, and fines. 5. Income tax expense EUR thousand 2024 2023 Income tax (1,087) (396) Change in deferred income tax 45 (1,970) Total corporate income tax expense (1,042) (2,366) Reconciliation between the effective tax rate and the effective tax rate EUR thousand 2024 2023 Result before tax 11,109 15,621 Income tax using the prevailing tax rate 15% (1,666) (15%) (2,343) Expenses not deductible for tax purposes 2% (221) 0.7% 116 Tax incentive (support, investments) (7.6%) 845 0.8% (139) Effective tax rate 9.4% (1,042) (15.1%) (2,366) ) 6. Earnings per share Basic earnings per share is calculated dividing the net profit for the year by the average number of ordinary shares outstanding during the year. 2024 2023 Number of shares in issue calculated using weighted average method, units ‘000 45,134 45,134 Net result for the year, EUR thousand 10,067 13,255 Earnings (loss) per share (EUR) 0.22 0.29 Diluted earnings (loss) per share (EUR) 0.22 0.29 26 2024 7. Property, plant and equipment Land and buildings Machinery and equipment Other assets Prepayments Construction- in-progress Total Balance as at 1 January 2023 39,714 112,154 18,555 89 70 170,582 Additions - 3,246 357 - 502 4,105 Reclassification from right of-use-asset (Note 14) - - 19 - - 19 Disposals and write-offs (35) (261) (539) - (7) (842) Reclassifications - (1,993) 6 1,987 - - Transferred from construction in progress 83 359 - - (442) - Balance as at 31 December 2023 39,762 113,505 18,398 2,076 123 173,864 Balance as at 1 January 2024 39,762 113,505 18,398 2,076 123 173,864 Additions 6 4,179 821 2,151 7,157 Disposals and write-offs (34) (248) (907) - - (1,189) Reclassifications - 1,317 - (1,317) - - Transferred from construction in progress - 1,889 22 - (1,911) - Balance as at 31 December 2024 39,734 120,642 18,334 759 363 179,832 Depreciation and impairment Balance as at 1 January 2023 24,634 85164 16,800 - - 126,598 Depreciation charge for the year 980 3,036 639 - - 4,655 Reclassification from right of-use-asset (Note 14) - - 19 - - 19 Depreciation of assets disposed and written-off (34) (260) (536) - - (830) Balance as at 31 December 2023 25,580 87,940 16,922 - - 130,442 Balance as at 1 January 2024 25,580 87,940 16,922 - - 130,442 Depreciation charge for the year 967 3,138 463 - - 4,568 Depreciation of assets disposed and written-off (33) (248) (907) - - (1,188) Balance as at 31 December 2024 26,514 90,830 16,478 - - 133,822 Carrying amounts As at 1 January 2023 15,080 26,990 1,755 89 70 43,984 As at 31 December 2023 14,182 25,565 1,476 2,076 123 43,422 As at 31 December 2024 13,220 29,812 1,856 759 363 46,010 Pledges of property, plant and equipment Property, plant and equipment with a carrying amount of EUR 33,078 thousand as at 31 December 2024 (2023: EUR 39,082 thousand) have been pledged to secure the bank loans (Note 13). 27 2024 7. Property, plant and equipment (continued) Depreciation charge Depreciation is included in the following items of the statement of comprehensive income: EUR thousand 2024 2023 Cost of sales 3,836 3,773 Selling and distribution expenses 295 446 Administrative expenses 437 436 4,568 4,655 The Company’s additions in 2024 and 2023 consists of acquisitions of new machinery, equipment and production lines amounting to EUR 7,157 thousand in 2024 (EUR 4,105 thousand in 2023). As a result of changes in accounting estimates in 2024, depreciation costs of the Company for 2024 have decreased by approx. EUR 222 thousand in comparison to 2023 depreciations costs. In 2025, the effect on depreciation costs is expected to be approx. EUR 332 thousand less compared to 2024. As a result of changes in accounting estimates in 2024, depreciation costs of the Company for 2023 have decreased by approx. EUR 36 thousand in comparison to 2023 depreciations costs. Acquisition cost of fully depreciated property, plant and equipment still in use amounts to EUR 32,608 thousand as at 31 December 2024 (2023: EUR 33,621 thousand). The Company has not capitalised borrowing costs as at 31 December 2024 and 2023, as there were no significant projects performed, which comply with the capitalisation criteria. As at 31 December 2024 and 2023, there were no indications, that non-current asset of the Company might be impaired, therefore detailed testing was not performed. 28 2024 8. Inventories EUR thousand As at 31 December 2024 As at 31 December 2023 Raw materials 7,644 6,934 Production-in-progress 3,703 3,211 Finished goods 6,176 5,787 Goods for re-sale 10 7 17,533 15,939 The acquisition cost of the Company’s inventories accounted for at net realisable value as at 31 December 2024 amounted to EUR 2,195 thousand (31 December 2023: EUR 2,490 thousand). The allowance and write down of the inventories are mostly related with the decrease in finished goods value to the net realisable value and the allowance and/or write-off of obsolete and slow- moving inventory. In 2024 and 2023, the allowance and write down of inventories was included in the administrative expenses. Changes in the allowance for impairment of inventories (EUR thousand): 2024 2023 Balance at beginning of year 738 3,214 Increase 313 211 Decrease (36) (2,687) Balance at end of year 1,015 738 Raw materials include raw milk and other materials used in production. Inventories recognised as costs during the year can be specified as follows: EUR thousand 2024 2023 Cost of sales (manufactured goods sold) (159,915) (151,187) Sales, distribution and administrative expenses (consumption of inventories) (3,164) (3,188) Other operating expenses (sold raw materials, spare parts) (93) (148) (163,172) (154,523) Sales and distribution and administrative expenses include consumed fuel and materials, and spare parts. Other operating expenses include cost of re-sold goods and cost of sold raw materials and other inventories. Inventories with the carrying amount of up to EUR 17,534 thousand as at 31 December 2024 (2023: EUR 15,939 thousand) have been pledged to secure the bank loans (Note 13). The Company had a part of inventories with the carrying amount of EUR 691 thousand as at 31 December 2024 (31 December 2023: EUR 821 thousand) held warehouses rented from third parties. 29 2024 9. Trade receivables, prepayments and other receivables Trade receivables EUR thousand 2024 2023 Trade receivables 7,487 8,110 Impairment of receivables (9) (8) 7,478 8,102 For trade receivables ageing see Note 18. The Company’s management uses factoring services for faster collection of trade receivables. As factoring is without recourse on the financial statements trade receivables are disclosed net-off factored amount. Prepayments EUR thousand 2024 2023 Advance payments for delivery of milk 106 56 Other prepayments 105 137 211 193 Less: non-current portion - - 211 193 According to agreements with raw milk suppliers, prepayments for delivered milk shall be covered during the period from 1 to 2 years. A fixed rate interest, varying from 8.5% to 10%, is calculated on the outstanding prepayment balance. Other receivables EUR thousand 2024 2023 Deferred expenses 757 560 Loans to management, employees 405 411 1,162 971 Less: non-current portion (300) (5) 862 966 In 2020, the Company’s Board made a decision to grant an EUR 500 thousand loan to a general director. The loan was repaid on 26 June 2024. The annual interest rate under the Loan agreement is 5.83% (interest rate of “Loans to euro are households for other purposes – new agreements” announced by the Bank of Lithuania at the time of concluding the loan agreement). On 12 July 2024, the Company’s Board made a decision to grant an EUR 400 thousand loan to a general director. The loan is due on 15 July 2028. The annual interest rate under the Loan agreement is 7.63% (interest rate of “Loans to euro are households for other purposes – new agreements” announced by the Bank of Lithuania at the time of concluding the loan agreement). 10. Cash EUR thousand 2024 2023 Cash at banks 1,968 1,544 Cash on hand 42 40 2,010 1,584 30 2024 As at 31 December 2024, cash at bank, comprising EUR 2,010 thousand, were pledged to secure the bank loans (as at 31 December 2023: EUR 1,584 thousand). The Company has no restrictions on the use of pledged cash, therefore, it is disclosed as cash in these financial statements. 11. Equity As at 31 December 2024 and 2023, the issued capital comprised 45,134,419 units of ordinary registered shares at par value of 0.29 EUR each. All the shares are fully paid. There were no changes in issued capital during 2024 and 2023. Holders of ordinary shares have one voting right per share at the shareholders meeting and the right to dividends when they are declared, as well as the right to capital repayment in case of a decrease of a share capital. There is no controlling entity or individual among the shareholders of AB Pieno žvaigždės. Capital Management Capital comprise equity for the purpose of the Company’s capital management. The Board’s policy is to keep the shareholders’ equity over borrowings at the level to maintain the confidence of investors, creditors and the market and to fund business development opportunities in the future. The Board monitors the following indicators: Equity-to-debt ratio, which calculated each quarter as the ratio of the Company’s debt to equity ratio; Working capital financing ratio, which is calculated on a quarterly basis as the ratio of the credit limits utilised, factoring and overdraft limits included in the borrower’s balance sheet, less cash on hand and in bank accounts, to the working capital requirement. The working capital requirement is calculated as the sum of inventories, receivables and prepayments made less payables to and prepayments received from suppliers; Capital ratio, which is calculated each quarter as the ratio of the Company’s equity to total assets. The Board also makes suggestions regarding payment of dividends, based on the Company’s performance results and strategic plans. The Board also aims to keep balance between bigger return, which could be available if there was higher level of borrowed assets and security, which is provided by higher level of equity. The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its activities. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2024 and 31 December 2023. According to the Companies Law of the Republic of Lithuania, the Company’s equity shall be not less than 50% of its share capital. The Company complies with the requirement. Under the loan agreements, the Company is required to maintain a capital ratio, which is calculated each quarter as the ratio of the Company’s equity to total assets. As at 31 December 2024 and 2023, the Company complied with capital ratio requirements. Legal reserve Under Lithuanian legislation, an annual allocation to the legal reserve should amount to at least 5% of the net profit until the reserve makes up 10% of the share capital. The reserve can be used only to cover the accumulated losses. As at 31 December 2024 and 2023, the legal reserve was fully formed and amounted to EUR 1,570 thousand. 31 2024 Dividends per share 2024 2023 Number of shares in issue calculated using weighted average method, units ‘000 45,134 45,134 Dividends per share (EUR) 0.14 - Dividends 6,319 - 12. Grants EUR thousand 2024 2023 Grants as at 1 January 3,191 2,663 Increase during the period 431 528 Grants as at 31 December 3,622 3,191 Amortisation as at 1 January 1,491 1,321 Charge for the year 183 170 Amortisation as at 31 December 1,674 1,491 Carrying amount as at 1 January 1,700 1,342 Carrying amount at 31 December 1,948 1,700 Less: current portion - 335 Total non-current portion 1,948 1,365 Amortisation of the asset-related grants is calculated over the depreciation period of the related non-current assets and is carried in the statement of comprehensive income to reduce the depreciation charge. Amortisation of grants is stated under cost of sales in the statement of comprehensive income. As at 31 December 2024 and 2023, the Company met the indicators specified in the grant agreement. 13. Loans and borrowings As at 31 December 2024 and 2023, the Company’s loans and borrowings are as follows (thousand EUR): The balance of used syndicated credit agreement (between AB SEB bank and AB Swedbank) as at 31 December 2024 was EUR 6,766 thousand (31 December 2023: EUR 11,360 thousand). The credit limit of EUR 7,000 thousand granted under the syndicated credit limit agreement (between AB SEB bank and AB Swedbank) was not used as at 31 December 2024 (31 December 2023: the credit limit was not used). Creditor Maturity date Currency As at 31 December 2024 As at 31 December 2023 AB SEB bankas, AB Swedbank June 2026 (EUR) 6,766 11,360 Luminor Bank AS May 2027 (EUR) 2,852 - Total liabilities 9,618 11,360 Less: current portion (3,622) (7,860) Total non-current portion 5,996 3,500 32 2024 13. Loans and borrowings (continued) The overdraft facility of EUR 2,000 thousand (AB SEB bankas, AB Swedbank, Luminor Bank AS) was not used as at EUR 31 December 2024 (31 December 2023: the overdraft was not used). The balance of the long-term credit agreement with Luminor Bank AS was EUR 2,852 thousand as at 31 December 2024 (no balance as at 31 December 2023). Reconciliation of movement in interest bearing loans and borrowings EUR thousand 2024 2023 Balance as at January 1 11,374 28,434 Loan received 11,701 - Repayment of borrowings (13,442) (17,066) Loan and factoring interest accrued 1,193 1,628 Loan and factoring interest paid (1,194) (1,622) Balance as at 31 December 9,632 11,374 As at 31 December 2024, the balance of factoring interest payable was EUR 9 thousand (31 December 2023: EUR 14 thousand). All loans and borrowings as at 31 December 2024 and 2023 were denominated in EUR. All loans bear variable interest rates that are calculated as EURIBOR plus fixed margin. Interest rates are restated every 3 or 6 months depending on the loan contract, and for this reason the carrying amounts of the mentioned loans are assumed to approximate their fair values. The bank loans are secured by pledging property, plant and equipment (Note 7), inventories (Note 8), current and future cash flows in bank accounts (Note 10) and the right of rent of commercial land. All interest calculated during 2024 and 2023 is recognised in profit or loss of a respective year. Special terms and conditions of the loan agreement As at 31 December 2024 and 2023, the Company complied with all special covenants of loan agreements. Key indicators under the special covenants: net financial debt, debt coverage ratio, working capital financing ratio, capital ratio. Effective interest rates of the loans can be presented as follows: % 2024 2023 Long-term loans 5.06% 5.85% Loan repayment schedules The contractual repayment of loans was as follows: EUR thousand 2024 2023 Within a year (Note 18 Liquidity risk) 3,622 7,860 From one to five years 5,996 3,500 Total liabilities 9,618 11,360 33 2024 14. Right-of-use assets and lease liabilities The Company has lease contracts for various assets (buildings and vehicles) used in its operations. The Company’s liabilities under its leases are secured by the lessor’s title to the leased assets. The Company also has certain leases with lease terms of 12 months or less and leases of office equipment with low value. The Company applies the “short-term lease” and “lease of low-value assets” recognition exemptions for these leases. There are no covenants set in the lease agreements. Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period: Buildings Vehicles Total EUR thousand EUR thousand EUR thousand As at 1 January 2023 375 1,052 1,427 Additions 87 376 463 Depreciation expenses (Note 3) (287) (762) (1,049) Reclassification to non-current assets (Note 7) - - - As at 31 December 2023 175 666 841 As at 1 January 2024 175 666 841 Additions 1,735 1,369 3,104 Depreciation expenses (Note 3) Termination of lease (342) (205) (690) (5) (1,032) (210) As at 31 December 2024 1,363 1,340 2,703 34 2024 14. Right-of-use assets and lease liabilities (continued) Depreciation expense of right-of-use assets EUR 1,032 thousand was recorded in the statement of comprehensive income as follows: - EUR 950 thousand under selling and distribution expenses (2023: EUR 936 thousand); - EUR 82 thousand under the cost of sales (2023: EUR 113 thousand). Set out below are the carrying amounts of lease liabilities (included under the caption “Lease liabilities”) and the movements during the period: 2024 2023 EUR thousand EUR thousand As at 1 January 962 1,758 Additions 3,001 465 Interest 89 36 Payment (fees) (1,280) (1,261) Payments (interest) (89) (36) As at 31 December 2,683 962 Current 1,861 702 Non-current 822 260 The following are the amounts recognised in profit or loss: 2024 2023 EUR thousand EUR thousand Depreciation expenses of right-of-use assets 1,032 1,049 Lease liability interest expenses 89 36 Expenses relating to short-term leases (included in cost of sales) 46 54 Expenses related to low-value assets (included in administrative, selling and distribution expenses) 69 56 Total amount recognized in profit or loss 1,236 1,195 35 2024 15. Employee benefits Employee benefits comprise liabilities to employees leaving the Company on normal retirement date, provisions for anniversary bonuses and severance payments to the management. The present value of these obligations is estimated by the Company at the end of each reporting year. The provision amount equals discounted future payments, taking into account the employee rotation, and relates to the period ended at the last day of the reporting year. EUR thousand Net defined benefit liability 2024 Balance as at January 1 1,825 Retirement benefit 630 Provision for anniversary bonus 40 Severance payments 1,155 Total non-current employee benefits as at 1 January 1,825 Changes during the year Recognised in profit or loss: Used provision (150) Increase (decrease) in provision during the period (94) Amounts recognised in other comprehensive income - Balance as at 31 December 1,581 Retirement benefit 903 Provision for anniversary bonus 41 Severance payments 637 Total employee benefits provision as at 31 December 1,581 Current 223 Non-current 1,358 EUR thousand Net defined benefit liability 2023 Balance as at January 1 1,745 Retirement benefit 586 Provision for anniversary bonus 186 Severance payments 973 Total non-current employee benefits as at 1 January 1,745 Changes during the year Recognised in profit or loss: Used provision (170) Increase (decrease) in provision during the period 250 Amounts recognised in other comprehensive income - Balance as at 31 December 1,825 Retirement benefit 630 Provision for anniversary bonus 40 Severance payments 1,155 Total employee benefits provision as at 31 December 1,825 Current 206 Non-current 1,619 The following main assumptions were used for the calculation of benefit obligation in 2024: discount rate 3.56%; inflation of 3%; employees turnover of 30.9% (2023: discount rate 3.1%; inflation of 3%; employees turnover of 32.5%). 36 2024 Sensitivity of the changes in discount rate, wages and salaries and employee turnover rate to the defined benefit obligation (thousand EUR): 2024 2023 Discount rate +0,5% (5) (4) Discount rate -0,5% 5 5 Salary change +0.5% 5 4 Salary change -0.5% (5) (4) Employee turnover rate +5% (70) (55) Employee turnover rate -5% 91 72 16. Deferred tax assets and liabilities The deferred tax assets and liabilities calculated applying the 16% tax rate (as at 31 December 2024) and the 15% tax rate (as at 31 December 2023) are attributed to the following items: EUR thousand Assets Liabilities Net value 2024 2023 2024 2023 2024 2023 Property, plant and equipment - - 10 10 10 10 Write down of inventories (162) (111) - - (162) (111) Impairment of receivables (1) (1) - - (1) (1) Lease liabilities - - 355 132 355 132 Right-of-use assets (350) (114) - - (350) (114) Vacation reserve and employee benefits provision (263) (282) - - (263) (282) Tax (asset)/liability (776) (508) 365 142 (411) (366) Movements in temporary differences during the year can be presented as follows: EUR thousand As at 1 January 2024 Stated in profit or loss As at 31 December 2024 Property, plant and equipment 10 - 10 Write down of inventories (111) (51) (162) Impairment of receivables (1) - (1) Lease liabilities (114) (236) (350) Right-of-use assets 132 223 355 Vacation reserve and employee benefits provision (282) 19 (263) Tax (asset)/liability (366) (45) (411) EUR thousand As at 1 January 2023 Stated in profit or loss As at 31 December 2023 Property, plant and equipment 12 (2) 10 Write down of inventories (482) 371 (111) Non-utilized investment incentive (1,351) 1,351 - Impairment of receivables (36) 35 (1) Lease liabilities - (114) (114) Right-of-use assets - 132 132 Vacation reserve and employee benefits provision (269) (13) (282) Tax loss carry-forward (211) 211 - Tax (asset)/liability (2,337) 1,971 (366) 37 2024 17. Trade and other payables EUR thousand 2024 2023 Financial instruments Payable to suppliers 13,963 11,933 Other payables 495 394 14,458 12,327 Non-financial instruments Contract liabilities 824 785 Vacation reserve 3,517 3,196 Payable taxes and social security 1,625 1,644 Wages and salaries payable 1,266 1,122 Grants (Note 12) - 335 7,232 7,082 21,690 19,409 Less: non-current portion - - 21,690 19,409 The balance of the contract liabilities as at 31 December 2024 and 2023 reflects the balance of prepayments from customers, which should be recognised as income in the next financial period. 18. Financial instruments Included below is a change in liabilities arising from cash flows of financial activities: Loans Lease liabilities Subsidies Dividends Total As at 31 December 2023 11,366 962 1,700 361 14,389 Dividends accrued - - - 6,319 6,319 Dividends paid - - - (6,271) (6,271) Subsidies received - - 431 - 431 Subsidies amortisation - - (183) - (183) Loan received 11,701 - - - 11,701 Loans repaid (13,442) - - - (13,442) New lease agreements - 3,001 - - 3,001 Lease payments - (1,280) - - (1,280) Interest expenses accrued 1,188 89 - - 1,277 Interest paid (1,194) (89) - - (1,283) As at 31 December 2024 9,619 2,683 1,948 409 14,659 Loans Lease liabilities Subsidies Dividends Total As at 31 December 2022 28,434 1,758 1,342 363 31,897 Dividends paid - - - (2) (2) Subsidies received - - 528 - 528 Subsidies amortisation - - (170) - (170) Loan received - - - - - Loans repaid (17,066) - - - (17,066) New lease agreements - 465 - - 465 Lease payments - (1,261) - - (1,261) Interest expenses accrued 1,620 36 - - 1,656 Interest paid (1,622) (36) - - (1,658) As at 31 December 2023 11,366 962 1,700 361 14,389 38 2024 18. Financial instruments (continued) Credit, interest rate risks arise in the course of the Company’s activities carried out on normal business conditions. Financial risk management In its activities the Company is exposed to various financial risks: market risk (including interest rate risk), credit risk and liquidity risk. General risk management policy establishment and supervision is the responsibility of the Board. Risk management policy was set up in order to identify and analyse risks facing the Company, and determine risk acceptance limits. Risk management policy and processes are reviewed regularly considering changes in the markets and activities of the Company. The Company, applying learning and management standards and procedures, aims to establish constructive control environment where all employees clearly realise their functions and responsibilities. The Company’s management pays the greatest attention to unpredictability of financial markets and aims to decrease its eventual impact on the Company’s financial performance. Credit risk Credit risk is the risk of financial loss to the Company if a customer or a counterparty to a financial instrument fails to meet the contractual obligations. Credit risk arises principally from amounts receivable from the Company’s customers and cash balance held in banks. The Company has established procedures ensuring that sales are made to customers having a proper credit history without exceeding the limit of credit risk set by management. The Company has established a credit policy and credit risk is being monitored on a continuous basis. The Company applies factoring to major trade receivables, which is non-recourse factoring, i.e. the Company does not assume the risk of non-payment by its customers and all amounts received under factoring agreement are immediately accounted for as a decrease in receivables. As at 31 December 2024 and 2023, the Company had no customers from which outstanding trade receivables were higher than 10% calculated from total gross trade receivables. 2024 2023 Customer No 1 7.2% 6.8% Customer No 2 6.5% 6.7% The carrying amount of financial assets represents the maximum credit exposure, which was as follows at the date of the statement of financial position: EUR thousand Carrying amount 2024 2023 Non-current receivables 300 5 Short term receivables (Note 9) 7,478 8,102 Cash 2,010 1,584 9,788 9,691 39 2024 18. Financial instruments (continued) The maximum credit risk related to amounts receivable (both short-term and long-term) at the reporting date could be distributed per geographic zones in the following way: EUR thousand Carrying amount 2024 2023 2,080 Lithuania 2,182 European Union countries 3,260 3,641 Other countries 2,336 2,386 7,778 8,107 Impairment losses The following impairment losses of financial assets were recognised in profit or loss: Impairment losses on receivables 2024 2023 Impairment (reversal) of trade receivables (11) (233) Bad debts write-off 1 234 Total (10) 1 The Company’s exposure to credit risk is mainly determined by individual characteristics of each customer. However, the management considers also the factors that may affect the credit risk base of the customers, including the default risk related to the customer‘s country of operation and etc. Information about expected credit losses of trade receivables as at 31 December 2024 is presented in the table below: EUR thousand Average loss amount As at 31 December 2024 Impairment recognised Receivables, net Not past due 0.10% 6,382 6 6,376 Overdue 0–30 days 0.10% 997 1 996 Overdue 30–60 days 0.10% 101 0 101 Overdue 61–90 days 0.10% 1 0 1 Overdue 90–180 days 0.10% 4 0 4 More than 180 days 100% 2 2 0 7,487 9 7,478 EUR thousand Average loss amount As at 31 December 2023 Impairment recognised Receivables, net Not past due 0.10% 6,731 (6) 6,725 Overdue 0–30 days 0.10% 1,334 (1) 1,333 Overdue 30–60 days 0.10% 33 - 33 Overdue 61–90 days 0.10% 3 - 3 Overdue 90–180 days 0.10% 8 - 8 More than 180 days 100.00% 1 (1) - 8,110 (8) 8,102 40 2024 18. Financial instruments (continued) Credit risk (continued) Although the economic circumstances may have an impact on the recoverability of trade and other receivable amounts, as to the management, the Company is not exposed to material risk to incur losses which would exceed the impairment that has already been recognised. Majority of granted loans are issued to the member of management of the Company. A suretyship agreement is signed between the Company, one of the Company’s managers and one of the Company’s shareholders (Surety), based on which Surety has a liability to redeem all possible losses in case of default. Therefore, according to the management, the credit risk related to the granted loans is minimal, because the potential losses from non-compliance are insignificant. Cash includes cash at banks. The banks are belonging to international financial groups with high credit ratings assigned by international credit-rating agencies, therefore, the related credit risk is minimal. Below are the ratings of the rating agencies S&P and Moody’s: Banks Short-term funding Long-term funding SEB (S&P) A-1 A+ Luminor (Moody‘s) P-1 A2 Swedbank (S&P) A-1 A+ Liquidity risk An appropriate management of liquidity risk enables the Company to maintain sufficient cash and cash equivalents or have available funding through an adequate amount of committed credit facilities. The Company’s liquidity (total current assets/total current payables and current liabilities) and quick ratios ((total current assets – inventories) / total current payables and current liabilities) as at 31 December 2024 were 1.02 and 0.38, respectively (as at 31 December 2023, 0.94 and 0.38, respectively). The following are the contractual maturities of financial liabilities, including the estimated interest payments (undiscounted): As at 31 December 2024 Carrying amount Contractual net cash flows Up to 6 months 6–12 months 2–5 years EUR thousand Financial liabilities Loans 9,618 10,320 2,045 2,028 6,247 Lease liabilities 2,683 2,968 508 430 2,030 Trade and other payables (Note 17) 14,458 14,458 14,458 - - 26,759 27,746 17,011 2,458 8,277 41 2024 18. Financial instruments (continued) Liquidity risk (continued) As at 31 December 2023 Carrying amount Contractual net cash flows Up to 6 months 6–12 months 2–5 years EUR thousand Financial liabilities Loans 11,360 12,035 2,776 5,530 3,729 Lease liabilities 962 1,081 427 290 364 Trade and other payables (Note 17) 12,327 12,327 12,327 - - 24,649 25,443 15,530 5,820 4,093 The Company’s policy is to have sufficient liquidity to meet current operating settlements including repayment of financial liabilities. The Company also has a credit facility agreement (Note 13) to provide additional liquidity when needed. Market risk Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - will affect the Company's result or the value of its financial instruments held. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Company is subject to interest rate cash flow risk because interest-bearing loans are subject to variable interest, related to EURIBOR. As at 31 December 2024 and 2023, the Company did not have any significant loans granted or receivables with fixed interest rates. Interest rates applied on the Company’s financial instruments as at the reporting date were as follows: EUR thousand Carrying amount 2024 2023 Financial instruments bearing variable interest rate SEB bankas AB, Swedbank AS, Luminor AS (long-term loan) 9,618 11,360 9,618 11,360 Factual annual interest rate applied is 5.06% (2023: 5.85%). 42 2024 18. Financial instruments (continued) Cash flow sensitivity analysis for variable interest rate instruments A change of 100 basis points in interest rates on the reporting date would increase (decrease) profit or loss by amounts stated below. This analysis assumes that all other variables remain constant. An analysis for 2024 and 2023 is made on the same basis. Sensitivity effect on equity equals to effect on profit (loss) less tax effect. Effect in EUR thousand Profit (loss) for the year 100 bp increase 100 bp decrease As at 31 December 2024 Financial instruments on which variable interest rate was applied (96) 96 As at 31 December 2023 Financial instruments on which variable interest rate was applied (114) 114 19. Purchase commitments As at 31 December 2024 and 2023, the Company did not have any material purchase commitments. 20. Related party transactions The Company’s related parties are VŠĮ SSK and key management personnel of the Company. Transactions with related parties can be presented as follows: EUR thousand 2024 2023 Support, sales and interest income Loans receivable Support, sales and interest income Loans receivable SSK VŠĮ (1) 35 - 650 - VŠĮ Pasvalio rankinis (2) 90 - - - Management (3,4) 26 400 23 400 151 400 673 400 Management consists of General Director and Board members. The Company’s Board consists of seven members. (1) AB Pieno Žvaigždės is the sole participant of the basketball club SSK VŠĮ to which the Company’s support is provided. During the year 2024, the Company granted EUR 35 thousand of support (in 2023: EUR 650 thousand). In 2024, the Company terminated the support agreement. (2) On 16 October 2024, AB Pieno žvaigždės entered into the support agreement with VŠĮ Pasvalio rankinis, under which the Company granted EUR 90 thousand of support in 2024. (3) On 11 June 2020, the Company grated a loan of EUR 500 thousand to a General Director. A suretyship agreement is signed between the Company, General Director and one of the Company’s shareholders (Surety), based on which Surety has a liability to redeem all possible losses 43 2024 20. Related party transactions (continued) in case of default (Note 18). Interest rate applied is 5.83%. The loan was repaid on 26 June 2024. (4) On 12 July 2024, the Company’s Board made a decision to grant an EUR 400 thousand loan to a general director. The loan is due on 15 July 2028. The annual interest rate under the Loan agreement is 7.63% (interest rate of “Loans to euro are households for other purposes – new agreements” announced by the Bank of Lithuania at the time of concluding the loan agreement). Remuneration to management is included under the sales, distribution and administrative expenses category “Personnel costs” (refer to Note 3): EUR thousand 2024 2023 Expenses of remuneration to management (including payroll taxes) 1,840 1,979 Remuneration to management comprises calculated salaries (including annual vacation pay) and social security payable by the Company. The Company has an obligation to pay the eligible management members and employees a compensation of up to 12 average monthly salaries. The Company has recognised a provision for these increased employee benefits (Note 15). EUR thousand 2024 2023 Employee benefits liability to management (including vacation reserve) (Note 15 and Note 17) 1,144 1,268 The Audit Committee consists of three members (two of the are independent members). Remuneration for work in the Audit Committee in 2024 was EUR 16 thousand (including payroll taxes), in 2023 – EUR 16 thousand (including payroll taxes). 21. Contingencies The Company has no contingent liabilities as at 31 December 2024 and 2023. In accordance with the applicable tax legislation, the tax authorities may at any time perform investigation of the Company’s accounting registers and records for the period from three to five years (depending on tax) preceding the accounting tax period, as well as calculate additional taxes and penalties. The Management of the Company is not aware of any circumstances which would cause calculation of additional tax liabilities. 22. Events after the reporting period After the end of financial year, the Company has used the opportunity to take credit amounting to EUR 5,500 thousand. Credit was granted in accordance with syndicated credit agreement signed with SEB bankas AB and Swedbank AB. Credit maturity term – 4 June 2029. No other significant events after the end of the financial year occurred, which could have material influence on or require disclosure in these financial statements as at and for the year ended 31 December 2024 44 2024 Vilnius, 2025 AB „Pieno žvaigždės“ Confirmation of the Management Financial statements and the Management Report for the year 2024 We, Aleksandr Smagin, General Director, and Laimonas Vaškevičius, Finance Director of AB Pieno Žvaigždės, hereby confirm that, to the best of our knowledge, the Financial Statements prepared in accordance with IFRS, as adopted by the European Union, give true and fair view of the assets, liabilities, financial position, profit or loss and cash flow of the Issuer. Management report includes a fair review of the development and performance of the business, together with description of major risks and contingencies incurred by the Issuer. General Director / Aleksandr Smagin Finance Director / Laimonas Vaškevičius 45 2024 Management report for the year 2024 (The present Report has been prepared for the financial year 2024) GENERAL INFORMATION ABOUT THE ISSUER Key Data on the Issuer Name AB Pieno Žvaigždės Legal and organizational status Stock Company Registration date The Company was registered on 23 December 1998 Company code 124665536 VAT payer‘s code LT246655314 Authorized capital 13,088,981.51 euros, comprising 45,134,419 ordinary registered shares at par value of 0.29 euro each. Address Perkūnkiemio St. 3, LT-12127 Vilnius, the Republic of Lithuania Telephone (+370 5) 246 14 14 Fax (+370 5) 246 14 15 E-mail address info@pienozvaigzdes.lt Internet website www.pienozvaigzdes.lt Type of the Issuer’s main activities The Company’s main activity is production of dairy products. Agreements with intermediaries of public trading in securities The company has an agreement with AB Šiaulių Bankas (the bank license No.: 7, dated 4 February 1992), located at Tilžės St. 149, Šiauliai, the municipality of Šiauliai, telephone (8-5) 2102477 concerning management of securities accounting. Securities admitted to the trading lists of the stock exchanges Ordinary shares of AB Pieno Žvaigždės, were admitted to the official trading list of Nasdaq Baltic Stock Exchange. Type of shares – ordinary registered shares; Number of shares – 45,134,419; Total nominal value – 13,088,981.51 euros; VP ISIN code – LT0000111676. As at 31 December 2024, AB Pieno Žvaigždės, did not acquire any own shares. 46 2021 1. The objective review of the Company’s state, activity performance and development; the description of the main risk types and uncertainties encountered by the enterprise AB Pieno Žvaigždės, was established on 23 December 1998 after merger of independent milk processing companies operating in Lithuania: AB Mažeikių Pieninė and AB Pasvalio Sūrinė. Later, AB Kauno Pienas and in 2004 AB Panevėžio Pienas were also merged into AB Pieno Žvaigždės. The current structure of the Company enables to specialize production in separate branches and reach the highest efficiency as well as even distribution of raw milk collection capacities in the country. AB Pieno Žvaigždės, is one of the largest milk processing companies in Lithuania, which currently produces more than 500 different products. The Company operates not only in the local market but also exports production to the countries of the European Union, CIS, and Asia. Different types of ferment cheese, whey flour and fresh milk products produced by AB Pieno Žvaigždės, are the main products produced for export which are well known for their irreproachable quality. The products are awarded with quality certificates. The main activity of the Issuer is processing of milk. The mentioned business is risky due to eventual changes in product and raw materials markets, competition as well as eventual legal, political, technological and social changes, which are directly or indirectly related to the Issuer’s business and may have a negative influence on the Issuer’s cash flows and operating results. The main raw material used by the Issuer is milk, the supply of which, due to short validity period, is conditionally limited. Limitations put on supply of raw milk may result in lack of raw milk and an increase in prices for raw milk. These changes may have a negative influence on the cash flows and operating results of the Issuer. The Issuer’s business (especially collection and transportation of milk) is a labour consuming activity. The lack of human resources and an increase in salary costs may negatively affect the operating results of the Issuer. Information on financial risks is presented in the annual financial statements (note 20 of the explanatory information). AB Pieno Žvaigždės, has integrated the quality and environment management system as to the requirements of ISO 9001:2008 and ISO 14001:2004. As of March 2012 the Company is implementing the food safety management system as to ISO 22000:2005, which will be integrated into the existing management system. In December 2013, the affiliate Pasvalio Sūrinė received the certificate confirming the implementation of food safety management system complying with requirement of FSSC 22000. Other three affiliates of AB Pieno Žvaigždės, have finalized the implementation of the food management system and received certificate according to the requirements of FSSC 22000 at the beginning of the year 2015. Assurance of the quality of dairy products, especially of their safety, i.e. harmlessness to consumers, is one of the major tasks of the Company. The functioning food safety system allows to monitor risk factors and important control points that are related to milk production processes, transportation, and consumption and improves the quality control. The Company has prepared, implemented and operate the programs which provide for conditions, measures and behaviour rules to prevent biological, chemical, allergic and physical contamination and ensure high quality and safety of the dairy products. During the years 1998–2002 the State Food and Veterinarian Office assigned the affiliates of AB Pieno Žvaigždės, with certificates for export to EU, which allow exporting dairy products bearing identification marks to the EU countries. Primary certification of the quality management system in the Company’s affiliates was performed in 2002. The granted certificates proved that the establishment, documentation and maintenance of the quality management system complied with the ISO 9001 standard. The certification audit in the affiliates and issuance of the certificates was performed by an international certification firm TUV CERT. During 2005–2006, the environment management system complying with the requirements of ISO 14001 standards was integrated into the quality 47 2024 management system, and in February 2007 AB Pieno Žvaigždės, received the certificate confirming the integrated quality and environment management system complying with the requirements of ISO 9001 and ISO 14001 standards operates in the Company. Every year, the certifying firm performs supervision audits of the Company, and every 3 years the recertification takes place. AB Pieno Žvaigždės, aims to continuous improvement and better efficiency of its operations and processes, thus, for the purpose of more efficient use of external audit results for company improvement, in 2013, AB Pieno Žvaigždės, changed the certification firm. As of 2013, external audit of management systems is performed by certifying firm DNV. In order to further improve the quality control, in September 2016, the branch Pasvalio Sūrinė and in September 2017, the branch Mažeikių Pieninė were certified as to the IFS Food Standard requirements. This International Food Standard (IFS) was introduced by the retail trade association IFS Food of Germany, France and Italy to meet the requirements of private retailers in Germany, France, Italy, the Benelux and other countries. A company that complies with the IFS requirements ensures that it can manage the risks throughout all the stages of food production process, can produce a safe and high-quality product. The greatest attention is paid to the products that must meet the expectations of the ultimate customer and, most importantly, the consumer. Meanwhile, in April 2017, the branch Kauno Pienas was granted a BRC certificate (Global Standard for Food Safety). In 1998, the British Retail Consortium (BRC) established and implemented the BRC food technical standard, which is used for evaluation of foodstuff manufacturers. The purpose of the standard is to assist the food processing companies in the production and supply of safe and high quality foodstuff. This ensures consumer confidence in the company’s food safety. Due to clarity and versatility of the BRC standard requirements and control, they are acknowledged globally. The Company’s affiliates Kauno Pienas and Panevėžio Pienas are certified for production of ecological products (ecological yogurts, ecological sour cream, ecological curd and cottage cheese). After each annual review, a public company Ekoagros issues a new certificate on the Company’s compliance with the requirements. Production of ecological dairy products requires adhering to strict requirements set not only for production processes but also for their compound parts. The certified ecological products are marked with the following additional information: certification mark of ecological products, code of the certifying firm, and reference to the growth place of agricultural goods used for production. Certain products of the Company are assigned with specific quality certificates HALAL (whey powder and cream) and KOSHER (whey powder). The Company’s management has undertaken to produce safe and high-quality dairy products that satisfy the clients’ needs and expectations, with low impact on environment to the maximum extent, all being defined in the Company’s policy on the safety and quality of food and environment protection. The company continuously monitors the market and considers all development opportunities. There are no planned development projects for 2024. 2. Analysis of financial and non-financial activity results, information related to environment, personnel, corruption and bribery issues Key figures, million EUR 2024 12 31 2023 12 31 Turnover 210,4 201,1 Gross profit 50,1 52,6 Profit before tax, interest, depreciation and amortization (EBITDA) 18,1 23,0 Profit (loss) before tax 11,1 15,6 Investment in property, plant and equipment 7,2 4,6 Average number of employees 1 698 1 646 Raw milk purchased (natural milk), thousand tons 203,2 204,7 48 2024 Milk purchased as to basic ratios, thousand tons 247,9 251,7 Explanation of key operational indicators: Turnover – all sales of goods and services carried out during the reporting period. More specified analysis of sales is presented in Note 1 to the financial statements. Gross profit is calculated by deducting cost of sales from the total sales of the Company‘s goods and services. Specification of the cost of sales is presented in Note 3 to the financial statements. Profit before tax, interest and amortisation (EBITDA) is calculated as the total of operating profit before the financial activity result, depreciation and amortisation costs. Profit (loss) before tax – the total result earned by the company before calculation of the income tax. An amount of investments in property, plant and equipment is presented in the manner it is calculated and reflected in the statement of financial position of the Company. Detailed information on the investments (or non-current assets acquisitions) is presented in Notes 7. The average conditional number of employees is the sum of the average number of full-time and part-time employees recalculated to full-time employees. Quantity of purchased natural milk – actual quantity of purchased raw milk. Quantity of purchased milk according to basic indicators - restatement of actually purchased raw milk quantities as to baseline indicators. Basic rate of milk fat (R) – 3.4%, protein (B) – 3.0%. Formula for calculating the basic quantity of milk: kp = 1 + (Rf-Rb) x k1 + (Bf-Bb) x k2 where: kp – restatement of raw milk quantities into baseline ratio; Rf – fat content in purchased milk, %; Rb – baseline fat of milk, % (3.4); Bf - protein content in purchased milk, %; Bb – baseline protein of milk, % (3.0); k1 - coefficient showing the change in the amount due to change in fat by 1 percent (0.178); k2 - coefficient showing the change in the amount due to change in protein by 1 percent (0.267). Main quality management and environmental principles: • The quality management system is oriented towards a customer, thus a lot of attention is devoted to fulfilling customers’ needs and expectations; • Principles of cleaner production must be adhered to; the aspects that significantly influence the environment must be identified and managed, and proper preparation for emergency situation must be insured; • Management of the Company sets united aims and goals. Heads of the Company create environment where all employees take part in order to achieve aims; • Employees of all levels are involved in Company’s activities; • All activities of the Company, as well as the recourses related to them are managed as a process; • Interconnected processes are defined, understood and managed as a system, and this increases Company’s capacity and efficiency; • Company’s target is constant improvement. Improvement activities are integrated with Company’s strategy and every worker seeks improvement of a product, process and systems; • High-scoring solutions are based on data and information analysis; • A lot of attention is devoted to connections with suppliers. Possession of the ISO 9001 and ISO 14001 certificates proves that the structure, responsibilities and granted authorities are strictly defined in the Company, that processes and procedures are established, major documents are controlled and constantly updated, inspections and control 49 2024 procedures are regularly performed, discrepancies are identified, analysed and corrected, the prevention of non-conformities and accidents is ensured, and negative impact on the environment is minimized. The Company’s management annually reviews and confirms food safety, quality and environmental policies. Code of Business Ethics, Corruption and Bribery Prevention Policy: According to the code of ethics and business conduct approved by the Company, our relations with employees, customers, partners and the state are based on honesty and transparency. We believe that honest partnerships allow us to build lasting and meaningful relationships. We comply with legislation governing labour relations. We only compete on the market in accordance with legislative requirements, and we do not engage in prohibited anti-competitive activities. We strongly oppose any form of corruption, bribery and extortion. In conducting business, we do not provide, offer or promise any undue reward to individuals for the purpose of directly or indirectly influencing individuals in performing their functions and taking decisions. In order to ensure transparency and objectivity in our cooperation with suppliers and business partners, we do not accept any commercial offers which cast doubt on their legitimacy. We openly set out the requirements and evaluation criteria for potential partners, and define the principal terms of cooperation in the contracts: the price, quality, and delivery and payment terms of the product or service. The company pays the taxes established by the state, settles accounts with employees in a transparent manner, and encourages other market participants to act in a transparent manner as well. The Company cooperates with public authorities and provides them with information in accordance with legislative requirements. 3. The number of the shares acquired by the entity and the entity’s own shares as well as nominal value thereof and a part of the authorized capital made up by these shares During the year 2024, AB Pieno Žvaigždės did not acquire any own shares. 4. The number of the own shares acquired and transferred during the reporting period, and the share of the capital, which the mentioned shares constitute During the year 2024, the Company did not acquire nor cancel any own shares. 5. Information about payment for own shares, where they are acquired or transferred against payment During the year 2024, AB Pieno Žvaigždės did not acquire any own shares. 6. Reasons for acquiring the entity’s own shares during the reporting period - 7. Information about branches and representative offices AB Pieno Žvaigždės, comprises four production branches: Branch Kauno Pienas, Taikos pr. 90, LT-51181 Kaunas; Branch Mažeikių Pieninė, Skuodo St. 4, LT-89100 Mažeikiai; Branch Pasvalio Sūrinė, Mūšos St. 14, LT-39104 Pasvalys; Branch Panevėžio Pienas, Tinklų St. 9, LT-35115 Panevėžys. 8. Significant events occurred after the end of the financial year No significant events have occurred after the end of the financial year. 50 2024 9. Operational plans and forecasts of the Company AB Pieno Žvaigždės, expected turnover for the year 2025 about 215 million EUR. 10. Information about research and development activity The Company continuously makes investments and searches for new ways how to ensure a constant and better efficiency growth of its activity. 11. The goals of financial risk management, hedging instruments used for expected transactions on which hedging accounting is applied, and the scope of price risk, credit risk, liquidity risk and cash flows risk The scope of market (price) risk, credit risk, liquidity risk and cash flows risk is presented in the note 18 of the explanatory note in the financial statements. The Company is not using derivative financial instruments. The goals of financial risk management: Ensure fair and reliable financial reporting reflecting the company's financial position, operating results, and cash flows; Minimize the risk of financial losses that could have a negative impact on the company's profitability and financial condition; Ensure compliance with applicable laws and regulatory requirements related to financial reporting and risk management processes; Enhance investor and other stakeholders’ confidence in the company’s leadership and financial accountability; Ensure financing availability and stability to ensure that the company has sufficient financial resources to carry out its operations and invest in the future. 12. Information about other executive positions held by the company’s supervisory and management members of the board (head of the legal entity (form, name, code, address), member of the governing or supervisory body (form, name, code, address) and key information about their main employers (position held, legal form, name, code, address of the entity). Positions held by the supervisory and boards members and the head of administration in AB Pieno Žvaigždės and other companies: Name, surname Position held in AB Pieno Žvaigždės Position held in other companies Stanislav Kozel Chairman of the supervisory board AD Rem UAB (Jurgio Dobkevičiaus 7, LT-02189 Vilnius, code 110537569) general manager Rolandas Petkus Mamber of the supervisory board Finrosta UAB (Austėjos 37, Vilnius. code 300051777) director; Manpetra UAB (Tilto 27-10 Vilnius. code 302570557) director Rokas Kvaraciejus Mamber of the supervisory board; Deputy Executive director None Julius Chairman of the board; None 51 2024 Kvaraciejus Director for Business Development. Aleksandr Smagin General Director; Member of the board. None Regina Kvaraciejienė Member of the board; Consultant. None Voldemaras Klovas Member of the board; Deputy General Director. None Gžegož Rogoža Member of the board; Executive director. None Artiom Smagin Member of the board; Deputy Executive director Director of Cats.vc, UAB (Konstitucijos pr. 21A, LT-08130 Vilnius, company code 305376625) Vikas Sachar Member of the board; Railsmet DMCC, Excel International, general manager ESEF Reporting Company prepared the set of financial statements for the financial year ended on 31 December 2024 using extended hypertext markup language (XHTML). 52 2024 2024 Corporate Governance information 1. Reference to the applicable corporate governance code Information about compliance with the corporate governance code is presented in the annex to this Corporate Governance information (Annex No.1). 2. Explanation of deviations from the corporate governance code Information about the reasons of non-compliance with the corporate governance code is presented together with the provisions of the corporate governance code in the annex to this Corporate Governance information (Annex No.1). 3. Information about the scale of risk and risk management associated with financial statements, risk mitigation measures and internal control system established in the company The Company maintains its financial accounting and prepared its financial statements in accordance with International Financial Reporting Standards, as adopted in EU. Annual financial statements are subject to audit by external auditors, elected by the general shareholders meeting. The Company’s audit committee evaluates independence of the auditors. This procedure ensures relevance and transparency of the data presented in the financial statements of the Company. 4. Information about directly and indirectly governed material shareholdings According to the most recent data (as of 31 December 2024), the total number of the shareholders in the Company was 4 516. The shareholders holding more than 5 per cent of the Company’s authorized capital and votes are as follows: Shareholders Number of shares, units Share of the capital % Share of votes held personally and together with related persons, % Kvaraciejus Julius 7 085 907 15.70% 15.70% / 20.74% Kvaraciejienė Regina 2 275 086 5.04% 5.04% / 20.74% ŽŪKB „Smilgelė“ J. Tumo Vaižganto 8/27-3. Vilnius, company code 124906528 6 677 200 14,79% 14,79% UAB „Agrolitas Imeks Lesma“ Laisvės ave.125, Vilnius, company code 121918558 6 228 459 13,80% 13,80% Union Bancaire Privee (Singapore) LTD 5 122 022 11.35% 11.35% Klovas Voldemaras 3 142 567 6.96% 6.96% / 7.61% Klovienė Danutė 291 811 0.65% 0.65% / 7.61% 5. Information about transactions with related parties The information about transactions with related parties is provided in the explanatory notes of the financial statements (Note 20) 53 2024 6. Information about shareholders holding special control rights and description of such rights There are no shareholder holding special control rights in the Company. 7. Information about all existing limitations on voting rights, such as limitations on voting rights of persons holding a certain percentage or amount of the voting rights, deadlines by which voting rights can be exercised, or systems where the property rights granted by securities are segregated from the securities holder There are no such limitations on the voting rights in the Company. Furthermore, the Company is not aware about any agreements concluded among the shareholders due to which the securities transfer and (or) voting rights may be restricted. There are no shareholders having special control rights in the Company. 8. Information about rules regulating election and replacement of the supervisory and management boards members as well as amendments to the company’s articles of association The Articles of Association of AB Pieno žvaigždės shall be amended and the Supervisory Board and the Management Board of the company shall be elected in accordance with the procedure laid down by the legislation of the Republic of Lithuania. The governing bodies of the Company are the General Meeting of Shareholders, the Supervisory Board, the Management Board and the Chief Executive Officer of the Company. The Supervisory Board are the Company's collegial management body. The Supervisory Board consist of three members for a period of four years. The Supervisory Board elect a Chairman from among its members. The Executive Board are the collegiate management body of the Company. The Management Board of the Company are composed of 7 (seven) members for a period of 4 years. The Management Board elect the Chairman of the Management Board from among its members. Articles of Association can be amended based on a decision of the general shareholders meeting, adopted by a majority of not less than 2/3 of the total votes, except for the exceptions provided for in the Companies Law of the Republic of Lithuania. Upon the decision of the general shareholders meeting to amend the Articles of Association, the whole text of the amended articles is drawn up and signed by the person authorized by the general shareholders meeting. The amended Articles of Association and the decision confirming their replacement shall be submitted by the Company’s Head of Administration within the time limits specified by legislation to the Register of Legal Entities. The amended Articles of Association of the Company shall come into effect only upon their registration with the Register of Legal Entities in accordance with the procedure established by the legislation. 9. Information about the authorities of the supervisory and management board members The authorities of the supervisory and management board members are prescribed in the Companies Law of the Republic of Lithuania. The Articles of Association of the Company do not prescribe any restrictions or additions to the authorities. 10. Information about the competence of the general shareholders meeting, shareholder rights and their implementation, if such information is specified in the laws The competence of and procedure of announcement of the General shareholders’ meeting and all other issues related to the activities of the General shareholders’ meeting and their decisions are regulated by the Companies Law of the Republic of Lithuania. 54 2024 11. Information about the composition of management and supervisory bodies and their committees, spheres of their activity The governing bodies of the Company are the general shareholders meeting, the supervisory board, the management board and the general director. The Supervisory Board Name, surname Official duties Number shares, units Share of the capital % Term of office from Term of office until Stanislav Kozel Chairman - - 2022 04 28 2026 04 28 Rolandas Petkus Member - - 2022 04 28 2026 04 28 Rokas Kvaraciejus Member 1 348 920 2.99 2022 04 28 2026 04 28 The Management Board Name, surname Official duties Number shares, units Share of the capital % Term of office from Term of office until Julius Kvaraciejus Chairman 7 085 907 15.70 2022 05 04 2026 05 04 Artiom Smagin Member 550 000 1.22 2022 05 04 2026 05 04 Voldemaras Klovas Member 3 142 567 6.96 2022 05 04 2026 05 04 Aleksandr Smagin Member 773 536 1.71 2022 05 04 2026 05 04 Regina Kvaraciejienė Member 2 275 086 5.04 2022 05 04 2026 05 04 Gžegož Rogoža Member 46 150 0.10 2022 05 04 2026 05 04 Vikas Sachar Member - - 2024 03 15 2026 05 04 Administration Name, surname Official duties Number shares, units Share of the capital % Aleksandr Smagin CEO 773,536 1.71 Laimonas Vaškevičius CFO - - The authorities of the chairman of the board are prescribed in the Companies Law of the Republic of Lithuania. The Articles of Association of the Company do not prescribe any restrictions or additions to the authorities. 55 2024 Information about the remuneration to governing bodies as well as amount transactions carried out with members of the governing bodies is disclosed in Note 22 of the explanatory notes to the financial statements. Audit Committee in the Company Name, surname Official duties Number shares, units Share of the capital % From Until Aušra Joniūnienė Chairman - - 2024 04 30 2025 04 25 Rolandas Petkus Member - - 2024 04 30 2025 04 25 Danutė Kairevičienė Member - - 2024 04 30 2025 04 25 Positions of the members of the Audit Committee in AB Pieno Žvaigždės and other companies Name, surname Position in AB Pieno žvaigždėse Positions in other companies Aušra Joniūnienė (independent member) - UAB Gražina Buckiūnienė ir partneriai deputy director Rolandas Petkus (independent member) - Finrosta UAB (Austėjos 37, Vilnius. code 300051777) director; Manpetra UAB (Tilto 27-10 Vilnius. code 302570557) director Danutė Kairevičienė Deputy Chief Accountant - 12. Description of the variety of policies related to such aspects as e.g. age, sex, education, professional experience, applicable for election of the Company’s chief executive officer, governing and supervisory bodies; objectives and methods of realization of these policies and results for the period. Explanation of the reasons if the variety of policies is not applicable. The variety of policies is not applied in the Company when electing the Company’s chief executive officer, the members of managing and supervisory bodies, since the Company has not adopted such a policy. The main criterion for candidates to supervisory or management bodies is their competence. 13. Information about remuneration of each member of a management body (average salaries paid during the period, segregating bonuses, additions, tantjemes and other benefits). Information about the calculated amounts to management bodies and transactions with the members of the management bodies is disclosed with information on management remuneration below. 56 2024 14. Information about all agreements among the shareholders (their essence, conditions). The Company is not aware of any agreements among the shareholders that could result in limitations on disposal of securities and (or) voting rights. There are no shareholders with special control rights in the Company. 15. Employees 2024 12 31 2023 12 31 Average number of employees 1 698 1 646 With university education 464 450 With college education 286 277 With secondary education 854 828 With not completed secondary education 94 91 Average number of employees 1 698 1 646 Management 58 55 Specialists 481 462 Workers 1 159 1 130 Average gross salary, EUR Management 6 367 6321 Specialists 2 005 1 812 Workers 1 532 1 405 Information on Management Remuneration (Information is prepared for the financial year 2024) The Management Remuneration Policy of AB Pieno žvaigždės (hereinafter – the Company) was approved by the decision of the Annual General Shareholders Meeting dated 28 April 2022. The Remuneration Policy sets out the principles, structure, forms of remuneration, the basis for awarding additional benefits and the procedure for payment and review of the remuneration, and other requirements that the Company follows when determining and paying the remuneration to the Company’s General Director and the members of the Supervisory and Management Boards of the Company (hereinafter-the management). The Management Remuneration Policy is publicly available on the Company’s website. 1. The remuneration of the members of the company's board 57 2024 The members of the company's board receive a fixed part of the remuneration, which is 7,000 (seven thousand) euros per month, including all applicable taxes. This fixed part of remuneration is paid monthly. There is no quarterly variable part of remuneration paid to the board members. The table presents the remuneration paid to the members of the Company's Board for their work on the board (thousand euros). Position in the Company Position in the Board Full name Remuneration for work on the Board 2024 Remuneration for work on the Board 2023 Note Business Development Director Chairman of the Board Julius Kvaraciejus 84 84 Additionally, compensation is received for the positions held within the company General Director Member of the Board Aleksandr Smagin 84 84 Deputy Chief Executive Officer Member of the Board Voldemaras Klovas 84 84 Executive Director Member of the Board Gžegož Rogoža 84 84 Logistics Director Member of the Board till 2024.03.15 Vitalis Paškevičius 17,5 84 Consultant Member of the Board Regina Kvaraciejienė 84 84 Deputy Executive Director Member of the Board Artiom Smagin 84 84 - Member of the Board since 2024.03.15 Vikas Sachar 66,5 0 - 2. The remuneration of the company's supervisory board members. The members of the company's supervisory board receive a fixed part of the remuneration, which is 5,000 (five thousand) euros per month, including all applicable taxes. This fixed part of remuneration is paid as a monthly salary. The table presents the remuneration paid to the members of the company's supervisory board for their work on the supervisory board (thousand euros). Position in the Company Position on the Supervisory board Full name Remuneration for work on the Supervisory board 2024 Remuneration for work on the Supervisory board 2023 - Chairman of the Supervisory board Stanislav Kozel 60 60 - Member of the Supervisory board Rolandas Petkus 60 60 Deputy Executive director Member of the Supervisory board Rokas Kvaracijeus 60 60 58 2024 3. The remuneration of the company's audit committee members The table presents the remuneration paid to the members of the company's audit committee for their work on the audit committee (thousand euros). Position in the Audit Committee Name, surname Remuneration for work on the audit committee 2024 Remuneration for work on the audit committee 2023 Chairwoman Aušra Joniūnienė 6,0 6,0 Member of the Committee Danutė Kairevičienė 5,0 5,0 Member of the Committee Rolandas Petkus 5,0 5,0 4. The remuneration of the company's General manager (CEO). The table presents the remuneration paid to the company's General manager (CEO) in 2024 (thousand euros). Position in the Company Position in the Board Full name Remuneration for work on the Board Basic salary Bonuses Contributions into the pension fund Total in 2024 General Director Member of the Board Aleksandr Smagin 84 228 114 57 483 Below is the information provided in the table regarding the remuneration paid to the company's General manager (CEO) over the last five years. The remuneration includes the base salary, compensation for board work, variable remuneration, and contributions to pension funds. All amounts are in thousands of euros. Position in the Company Position on the Board Full name 2020 2021 2022 2023 2024 General Director Member of the Board Aleksandr Smagin 258 285 483 504 483 5. The company's results and average employee remuneration The table below provides information on the average annual remuneration of the Company’s employees, a comparison of the remuneration with the Company’s performance and the change in remuneration during the past five years. EUR thousand 2020 m. 2021 m. 2022 m. 2023 m. 2024 m. The Company’s sales 171 061 176 692 204 553 201 114 210 362 EBITDA 14 337 7 259 511 23 027 18 054 Net profit (loss) 7 712 1 223 (5 320) 13 255 10 067 59 2024 The Company’s remuneration fund 27 334 28 750 28 902 32 883 36 870 Average number of employees in full-time units 1 696 1 711 1 601 1 646 1 698 Average remuneration of all employees in the Company (for a full year) 16,1 17,1 17,2 20,2 22,0 Change in the average remuneration of all employees in the Company (each year) 0,4% 6,3% 0,6% 17,3% 8,9% Change in the average remuneration of all employees in the Company (over five years) - - - - 36,5% AB Pieno Žvaigždės is not a member of any group of companies, its financial statements are not consolidated. AB Pieno Žvaigždės has implemented neither policy on management incentive scheme, nor policy on employee share based scheme. As a result there are no shares or share options granted or offered to the management and other employees of the Company. The Company has no rules for recovering, in part or in full, a variable remuneration from the Company’s management and/or employees. No deviations from the Management Remuneration Policy approved by the Annual General Meeting of Shareholders occurred in 2024. 60 2024 Addendum No. 1 Disclosure by AB Pieno Žvaigždės, of compliance with the Governance Code for the companies listed on Nasdaq Baltic PRINCIPLES/ RECOMMENDATIONS YES/NO /NOT APPLICABLE COMMENTARY Principle 1: General meeting of shareholders, equitable treatment of shareholders, and shareholders’ rights The corporate governance framework should ensure the equitable treatment of all shareholders. The corporate governance framework should protect the rights of shareholders. 1.1. All shareholders should be provided with access to the information and/or documents established in the legal acts on equal terms. All shareholders should be furnished with equal opportunity to participate in the decision-making process where significant corporate matters are discussed. Yes The Company presents forecasts announcing significant events through the centralized information system, however due to competition in the market, the Company cannot publicly disclose certain strategies in advance. 1.2. It is recommended that the company’s capital should consist only of the shares that grant the same rights to voting, ownership, dividend and other rights to all of their holders. Yes Company’s capital consist only of the shares that grant the same rights to voting, ownership, dividend and other rights to all of their holders. 1.3. It is recommended that investors should have access to the information concerning the rights attached to the shares of the new issue or those issued earlier in advance, i.e. before they purchase shares. Yes 1.4. Exclusive transactions that are particularly important to the company, such as transfer of all or almost all assets of the company which in principle would mean the transfer of the company, should be subject to approval of the general meeting of shareholders. Not applicable 1.5. Procedures for convening and conducting a general meeting of shareholders should provide shareholders with equal opportunities to participate in the general meeting of shareholders and should not prejudice the rights and interests of shareholders. The chosen venue, date and time of the general meeting of shareholders should not prevent active participation of shareholders at the general meeting. In the notice of the general meeting of shareholders being convened, the company should specify the last day on which the proposed draft decisions should be submitted at the latest. Yes 61 2024 1.6. With a view to ensure the right of shareholders living abroad to access the information, it is recommended, where possible, that documents prepared for the general meeting of shareholders in advance should be announced publicly not only in Lithuanian language but also in English and/or other foreign languages in advance. It is recommended that the minutes of the general meeting of shareholders after the signing thereof and/or adopted decisions should be made available publicly not only in Lithuanian language but also in English and/or other foreign languages. It is recommended that this information should be placed on the website of the company. Such documents may be published to the extent that their public disclosure is not detrimental to the company or the company’s commercial secrets are not revealed. Yes 1.7.Shareholders who are entitled to vote should be furnished with the opportunity to vote at the general meeting of shareholders both in person and in absentia. Shareholders should not be prevented from voting in writing in advance by completing the general voting ballot. Yes 1.8. With a view to increasing the shareholders’ opportunities to participate effectively at general meetings of shareholders, it is recommended that companies should apply modern technologies on a wider scale and thus provide shareholders with the conditions to participate and vote in general meetings of shareholders via electronic means of communication. In such cases the security of transmitted information must be ensured and it must be possible to identify the participating and voting person. No Currently, the Company does not yet provide such voting opportunities 1.9. It is recommended that the notice on the draft decisions of the general meeting of shareholders being convened should specify new candidatures of members of the collegial body, their proposed remuneration and the proposed audit company if these issues are included into the agenda of the general meeting of shareholders. Where it is proposed to elect a new member of the collegial body, it is recommended that the information about his/her educational background, work experience and other managerial positions held (or proposed) should be provided. Yes 1.10. Members of the company’s collegial management body, heads of the administration 1 or other competent persons related to the company who can provide information related to the agenda of the general meeting of shareholders should take part in the general meeting of shareholders. Proposed candidates to member of the collegial body should also participate in the general meeting of shareholders in case the election of new members is included into the agenda of the general meeting of shareholders. Yes 1 For the purposes of this Code, heads of the administration are the employees of the company who hold top level management positions. 62 2024 Principle 2: Supervisory board 2.1. Functions and liability of the supervisory board The supervisory board of the company should ensure representation of the interests of the company and its shareholders, accountability of this body to the shareholders and objective monitoring of the company’s operations and its management bodies as well as constantly provide recommendations to the management bodies of the company. The supervisory board should ensure the integrity and transparency of the company’s financial accounting and control system. 2.1.1. Members of the supervisory board should act in good faith, with care and responsibility for the benefit and in the interests of the company and its shareholders and represent their interests, having regard to the interests of employees and public welfare. Yes 2.1.2. Where decisions of the supervisory board may have a different effect on the interests of the company’s shareholders, the supervisory board should treat all shareholders impartially and fairly. It should ensure that shareholders are properly informed about the company’s strategy, risk management and control, and resolution of conflicts of interest. Yes 2.1.3. The supervisory board should be impartial in passing decisions that are significant for the company’s operations and strategy. Members of the supervisory board should act and pass decisions without an external influence from the persons who elected them. Yes 2.1.4. Members of the supervisory board should clearly voice their objections in case they believe that a decision of the supervisory board is against the interests of the company. Independent 2 members of the supervisory board should: a) maintain independence of their analysis and decision- making; b) not seek or accept any unjustified privileges that might compromise their independence. Yes 2.1.5. The supervisory board should oversee that the company’s tax planning strategies are designed and implemented in accordance with the legal acts in order to avoid faulty practice that is not related to the long-term interests of the company and its shareholders, which may give rise to reputational, legal or other risks. Yes 2.1.6. The company should ensure that the supervisory board is provided with sufficient resources (including financial ones) to discharge their duties, including the right to obtain all the necessary information or to seek independent professional advice from external legal, accounting or other experts on matters pertaining to the competence of the supervisory board and its committees. Yes 2 For the purposes of this Code, the criteria of independence of members of the supervisory board are interpreted as the criteria of unrelated parties defined in Article 31(7) and (8) of the Law on Companies of the Republic of Lithuania. 63 2024 2.2. Formation of the supervisory board The procedure of the formation of the supervisory board should ensure proper resolution of conflicts of interest and effective and fair corporate governance. 2.2.1. The members of the supervisory board elected by the general meeting of shareholders should collectively ensure the diversity of qualifications, professional experience and competences and seek for gender equality. With a view to maintain a proper balance between the qualifications of the members of the supervisory board, it should be ensured that members of the supervisory board, as a whole, should have diverse knowledge, opinions and experience to duly perform their tasks. Yes 2.2.2. Members of the supervisory board should be appointed for a specific term, subject to individual re-election for a new term in office in order to ensure necessary development of professional experience. Yes 2.2.3. Chair of the supervisory board should be a person whose current or past positions constituted no obstacle to carry out impartial activities. A former manager or management board member of the company should not be immediately appointed as chair of the supervisory board either. Where the company decides to depart from these recommendations, it should provide information on the measures taken to ensure impartiality of the supervision. Yes 2.2.4. Each member should devote sufficient time and attention to perform his duties as a member of the supervisory board. Each member of the supervisory board should undertake to limit his other professional obligations (particularly the managing positions in other companies) so that they would not interfere with the proper performance of the duties of a member of the supervisory board. Should a member of the supervisory board attend less than a half of the meetings of the supervisory board throughout the financial year of the company, the shareholders of the company should be notified thereof. Yes 2.2.5. When it is proposed to appoint a member of the supervisory board, it should be announced which members of the supervisory board are deemed to be independent. The supervisory board may decide that, despite the fact that a particular member meets all the criteria of independence, he/she cannot be considered independent due to special personal or company-related circumstances. Yes 2.2.6. The amount of remuneration to members of the supervisory board for their activity and participation in meetings of the supervisory board should be approved by the general meeting of shareholders. Yes 64 2024 2.2.7. Every year the supervisory board should carry out an assessment of its activities. It should include evaluation of the structure of the supervisory board, its work organization and ability to act as a group, evaluation of the competence and work efficiency of each member of the supervisory board, and evaluation whether the supervisory board has achieved its objectives. The supervisory board should, at least once a year, make public respective information about its internal structure and working procedures. No The Supervisory Board does not publish information on its internal organization and operational procedures. Principle 3: Management Board 3.1. Functions and liability of the management board The management board should ensure the implementation of the company’s strategy and good corporate governance with due regard to the interests of its shareholders, employees and other interest groups. 3.1.1. The management board should ensure the implementation of the company’s strategy approved by the supervisory board if the latter has been formed at the company. In such cases where the supervisory board is not formed, the management board is also responsible for the approval of the company’s strategy. Yes 3.1.2. As a collegial management body of the company, the management board performs the functions assigned to it by the Law and in the articles of association of the company, and in such cases where the supervisory board is not formed in the company, it performs inter alia the supervisory functions established in the Law. By performing the functions assigned to it, the management board should take into account the needs of the company’s shareholders, employees and other interest groups by respectively striving to achieve sustainable business development. Yes 3.1.3. The management board should ensure compliance with the laws and the internal policy of the company applicable to the company or a group of companies to which this company belongs. It should also establish the respective risk management and control measures aimed at ensuring regular and direct liability of managers. Yes 3.1.4. Moreover, the management board should ensure that the measures included into the OECD Good Practice Guidance 3 on Internal Controls, Ethics and Compliance are applied at the company in order to ensure adherence to the applicable laws, rules and standards. Yes 3 Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oecd.org/daf/anti-bribery/44884389.pdf 65 2024 3.1.5. When appointing the manager of the company, the management board should take into account the appropriate balance between the candidate’s qualifications, experience and competence. Yes 3.2 Formation of the management board 3.2.1. The members of the management board elected by the supervisory board or, if the supervisory board is not formed, by the general meeting of shareholders should collectively ensure the required diversity of qualifications, professional experience and competences and seek for gender equality. With a view to maintain a proper balance in terms of the current qualifications possessed by the members of the management board, it should be ensured that the members of the management board would have, as a whole, diverse knowledge, opinions and experience to duly perform their tasks. Yes 3.2.2. Names and surnames of the candidates to become members of the management board, information on their educational background, qualifications, professional experience, current positions, other important professional obligations and potential conflicts of interest should be disclosed without violating the requirements of the legal acts regulating the handling of personal data at the meeting of the supervisory board in which the management board or individual members of the management board are elected. In the event that the supervisory board is not formed, the information specified in this paragraph should be submitted to the general meeting of shareholders. The management board should, on yearly basis, collect data provided in this paragraph on its members and disclose it in the company’s Management report. Yes 3.2.3. All new members of the management board should be familiarized with their duties and the structure and operations of the company. Yes 3.2.4. Members of the management board should be appointed for a specific term, subject to individual re- election for a new term in office in order to ensure necessary development of professional experience and sufficiently frequent reconfirmation of their status. Yes 3.2.5. Chair of the management board should be a person whose current or past positions constitute no obstacle to carry out impartial activity. Where the supervisory board is not formed, the former manager of the company should not be immediately appointed as chair of the management board. When a company decides to depart from these recommendations, it should furnish information on the Yes 66 2024 measures it has taken to ensure the impartiality of supervision. 3.2.6. Each member should devote sufficient time and attention to the duties of a board member. If a board member attended less than half of the board meetings during the financial year of the company, the company's supervisory board should be informed or, if the company is not formed, the general meeting of shareholders. Yes 3.2.7. In the event that the management board is elected in the cases established by the Law where the supervisory board is not formed at the company, and some of its members will be independent 4 , it should be announced which members of the management board are deemed as independent. The management board may decide that, despite the fact that a particular member meets all the criteria of independence established by the Law, he/she cannot be considered independent due to special personal or company-related circumstances. No The shareholders did not elect any independent members in this tenure of the Board. 3.2.8. The general meeting of shareholders of the company should approve the amount of remuneration to the members of the management board for their activity and participation in the meetings of the management board. Yes 3.2.9. The members of the management board should act in good faith, with care and responsibility for the benefit and the interests of the company and its shareholders with due regard to other stakeholders. When adopting decisions, they should not act in their personal interest; they should be subject to no-compete agreements and they should not use the business information or opportunities related to the company’s operations in violation of the company’s interests. Yes 3.2.10. Every year the management board should carry out an assessment of its activities. It should include evaluation of the structure of the management board, its work organization and ability to act as a group, evaluation of the competence and work efficiency of each member of the management board, and evaluation whether the management board has achieved its objectives. The management board should, at least once a year, make public respective information about its internal structure and working procedures in observance of the legal acts regulating the processing of personal data. No The Management Board does not publish information on its internal organization and operational procedures. 4 For the purposes of this Code, the criteria of independence of the members of the board are interpreted as the criteria of unrelated persons defined in Article 33(7) of the Law on Companies of the Republic of Lithuania. 67 2024 Principle 4: Rules of procedure of the supervisory board and the management board of the company The rules of procedure of the supervisory board, if it is formed at the company, and of the management board should ensure efficient operation and decision-making of these bodies and promote active cooperation between the company’s management bodies. 4.1. The management board and the supervisory board, if the latter is formed at the company, should act in close cooperation in order to attain benefit for the company and its shareholders. Good corporate governance requires an open discussion between the management board and the supervisory board. The management board should regularly and, where necessary, immediately inform the supervisory board about any matters significant for the company that are related to planning, business development, risk management and control, and compliance with the obligations at the company. The management board should inform he supervisory board about any derogations in its business development from the previously formulated plans and objectives by specifying the reasons for this. Yes 4.2. It is recommended that meetings of the company’s collegial bodies should be held at the respective intervals, according to the pre-approved schedule. Each company is free to decide how often meetings of the collegial bodies should be convened but it is recommended that these meetings should be convened at such intervals that uninterruptable resolution of essential corporate governance issues would be ensured. Meetings of the company’s collegial bodies should be convened at least once per quarter. Yes 4.3. Members of a collegial body should be notified of the meeting being convened in advance so that they would have sufficient time for proper preparation for the issues to be considered at the meeting and a fruitful discussion could be held and appropriate decisions could be adopted. Along with the notice of the meeting being convened all materials relevant to the issues on the agenda of the meeting should be submitted to the members of the collegial body. The agenda of the meeting should not be changed or supplemented during the meeting, unless all members of the collegial body present at the meeting agree with such change or supplement to the agenda, or certain issues that are important to the company require immediate resolution. Yes 4.4. In order to coordinate the activities of the company’s collegial bodies and ensure effective decision-making process, the chairs of the company’s collegial supervision and management bodies should mutually agree on the dates and agendas of the meetings and close cooperate in resolving other matters related to corporate governance. Meetings of the company’s supervisory board should be open to members of the management board, particularly in such cases where Yes 68 2024 issues concerning the removal of the management board members, their responsibility or remuneration are discussed. Principle 5: Nomination, remuneration and audit committees 5.1. Purpose and formation of committees The committees formed at the company should increase the work efficiency of the supervisory board or, where the supervisory board is not formed, of the management board which performs the supervisory functions by ensuring that decisions are based on due consideration and help organise its work in such a way that the decisions it takes would be free of material conflicts of interest. Committees should exercise independent judgment and integrity when performing their functions and provide the collegial body with recommendations concerning the decisions of the collegial body. However, the final decision should be adopted by the collegial body. 5.1.1. Taking due account of the company-related circumstances and the chosen corporate governance structure, the supervisory board of the company or, in cases where the supervisory board is not formed, the management board which performs the supervisory functions, establishes committees. It is recommended that the collegial body should form the nomination, remuneration and audit committees 5 . No Currently only the audit committee is formed in the company 5 The legal acts may provide for the obligation to form a respective committee. For example, the Law on the Audit of Financial Statements of the Republic of Lithuania provides that public-interest entities (including but not limited to public limited liability companies whose securities are traded on a regulated market of the Republic of Lithuania and/or of any other Member State) are under the obligation to set up an audit committee (the legal acts provide for the exemptions where the functions of the audit committee may be carried out by the collegial body performing the supervisory functions). 69 2024 5.1.2. Companies may decide to set up less than three committees. In such case companies should explain in detail why they have chosen the alternative approach, and how the chosen approach corresponds with the objectives set for the three different committees. Yes In the company, no appointment and remuneration committees are formed because, in the company’s opinion, the board, while performing its functions, partially fulfills the functions of the specified committees. The company’s board selects the candidacy of the company’s manager and appoints them, provides recommendations to the company’s manager regarding the appointment of senior management. The board provides proposals regarding the approved remuneration policy in the company. The company’s board approves the company’s strategic plans, budget plans, and oversees their implementation 5.1.3. In the cases established by the legal acts the functions assigned to the committees formed at companies may be performed by the collegial body itself. In such case the provisions of this Code pertaining to the committees (particularly those related to their role, operation and transparency) should apply, where relevant, to the collegial body as a whole. Yes The Audit Committee performs its functions, while the functions of the Nomination and Remuneration Committees are partly performed by the Board of the Company 5.1.4. Committees established by the collegial body should normally be composed of at least three members. Subject to the requirements of the legal acts, committees could be comprised only of two members as well. Members of each committee should be selected on the basis of their competences by giving priority to independent members of the collegial body. The chair of the management board should not serve as the chair of committees. Yes 5.1.5. The authority of each committee formed should be determined by the collegial body itself. Committees should perform their duties according to the authority delegated to them and regularly inform the collegial body about their activities and performance on a regular basis. The authority of each committee defining its role and specifying its rights and duties should be made public at least once a year (as part of the information disclosed by the company on its Yes 70 2024 governance structure and practice on an annual basis). In compliance with the legal acts regulating the processing of personal data, companies should also include in their Management reports the statements of the existing committees on their composition, the number of meetings and attendance over the year as well as the main directions of their activities and performance. 5.1.6. With a view to ensure the independence and impartiality of the committees, the members of the collegial body who are not members of the committees should normally have a right to participate in the meetings of the committee only if invited by the committee. A committee may invite or request that certain employees of the company or experts would participate in the meeting. Chair of each committee should have the possibility to maintain direct communication with the shareholders. Cases where such practice is to be applied should be specified in the rules regulating the activities of the committee. Yes 5.2. Nomination committee 5.2.1. The key functions of the nomination committee should be the following: 1) to select candidates to fill vacancies in the membership of supervisory and management bodies and the administration and recommend the collegial body to approve them. The nomination committee should evaluate the balance of skills, knowledge and experience in the management body, prepare a description of the functions and capabilities required to assume a particular position and assess the time commitment expected; 2) assess, on a regular basis, the structure, size and composition of the supervisory and management bodies as well as the skills, knowledge and activity of its members, and provide the collegial body with recommendations on how the required changes should be sought; 3) devote the attention necessary to ensure succession planning. Not applicable There is no Nomination Committee in the Company 5.2.2. When dealing with issues related to members of the collegial body who have employment relationships with the company and the heads of the administration, the manager of the company should be consulted by granting him/her the right to submit proposals to the Nomination Committee. Not applicable There is no Nomination Committee in the Company 5.3. Remuneration committee 71 2024 The main functions of the remuneration committee should be as follows: 1) submit to the collegial body proposals on the remuneration policy applied to members of the supervisory and management bodies and the heads of the administration for approval. Such policy should include all forms of remuneration, including the fixed-rate remuneration, performance-based remuneration, financial incentive schemes, pension arrangements and termination payments as well as conditions which would allow the company to recover the amounts or suspend the payments by specifying the circumstances under which it would be expedient to do so; 2) submit to the collegial body proposals regarding individual remuneration for members of the collegial bodies and the heads of the administration in order to ensure that they would be consistent with the company’s remuneration policy and the evaluation of the performance of the persons concerned; 3) review, on a regular basis, the remuneration policy and its implementation. Not applicable There is no Remuneration Committee in the Company 5.4. Audit committee 5.4.1. The key functions of the audit committee are defined in the legal acts regulating the activities of the audit committee 6 . Yes 5.4.2. All members of the committee should be provided with detailed information on specific issues of the company’s accounting system, finances and operations. The heads of the company’s administration should inform the audit committee about the methods of accounting for significant and unusual transactions where the accounting may be subject to different approaches. Yes 5.4.3. The audit committee should decide whether the participation of the chair of the management board, the manager of the company, the chief finance officer (or senior employees responsible for finance and accounting), the internal and external auditors in its meetings is required (and, if required, when). The committee should be entitled, when needed, to meet the relevant persons without members of the management bodies present. Yes 6 Issues related to the activities of audit committees are regulated by Regulation No. 537/2014 of the European Parliament and the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities, the Law on the Audit of Financial Statements of the Republic of Lithuania, and the Rules Regulating the Activities of Audit Committees approved by the Bank of Lithuania. 72 2024 5.4.4. The audit committee should be informed about the internal auditor’s work program and should be furnished with internal audit reports or periodic summaries. The audit committee should also be informed about the work program of external auditors and should receive from the audit firm a report describing all relationships between the independent audit firm and the company and its group. Yes 5.4.5. The audit committee should examine whether the company complies with the applicable provisions regulating the possibility of lodging a complaint or reporting anonymously his/her suspicions of potential violations committed at the company and should also ensure that there is a procedure in place for proportionate and independent investigation of such issues and appropriate follow-up actions. Yes 5.4.6. The audit committee should submit to the supervisory board or, where the supervisory board is not formed, to the management board its activity report at least once in every six months, at the time that annual and half-yearly reports are approved. No Only annual reports are reviewed Principle 6: Prevention and disclosure of conflicts of interest The corporate governance framework should encourage members of the company’s supervisory and management bodies to avoid conflicts of interest and ensure a transparent and effective mechanism of disclosure of conflicts of interest related to members of the supervisory and management bodies. The corporate governance framework should recognize the rights of the stakeholders as established by law and promote active cooperation between the company and its stakeholders in creating the company's well- being, jobs and financial stability. In the context of this principle, the term “interest holders” includes investors, employees, creditors, suppliers, customers, the local community and others with interests in a particular company. Any member of the company’s supervisory and management body should avoid a situation where his/her personal interests are or may be in conflict with the company’s interests. In case such a situation did occur, a member of the company’s supervisory or management body should, within a reasonable period of time, notify other members of the same body or the body of the company which elected him/her or the company’s shareholders of such situation of a conflict of interest, indicate the nature of interests and, where possible, their value. Yes 73 2024 Principle 7: Remuneration policy of the company The remuneration policy and the procedure for review and disclosure of such policy established at the company should prevent potential conflicts of interest and abuse in determining remuneration of members of the collegial bodies and heads of the administration, in addition it should ensure the publicity and transparency of the company’s remuneration policy and its long-term strategy. 7.1. The company should approve and post the remuneration policy on the website of the company; such policy should be reviewed on a regular basis and be consistent with the company’s long-term strategy. Yes 7.2. The remuneration policy should include all forms of remuneration, including the fixed-rate remuneration, performance-based remuneration, financial incentive schemes, pension arrangements and termination payments as well as the conditions specifying the cases where the company can recover the disbursed amounts or suspend the payments. Yes 7.3. With a view to avoid potential conflicts of interest, the remuneration policy should provide that members of the collegial bodies which perform the supervisory functions should not receive remuneration based on the company’s performance. Yes 7.4. The remuneration policy should provide sufficient information on the policy regarding termination payments. Termination payments should not exceed a fixed amount or a fixed number of annual wages and in general should not be higher than the non-variable component of remuneration for two years or the equivalent thereof. Termination payments should not be paid if the contract is terminated due to inadequate performance. Yes 7.5. In the event that the financial incentive scheme is applied at the company, the remuneration policy should contain sufficient information about the retention of shares after the award thereof. Where remuneration is based on the award of shares, shares should not be vested at least for three years after the award thereof. After vesting, members of the collegial bodies and heads of the administration should retain a certain number of shares until the end of their term in office, subject to the need to compensate for any costs related to the acquisition of shares. Yes 74 2024 7.6. The company should publish information about the implementation of the remuneration policy on its website, with a key focus on the remuneration policy in respect of the collegial bodies and managers in the next and, where relevant, subsequent financial years. It should also contain a review of how the remuneration policy was implemented during the previous financial year. The information of such nature should not include any details having a commercial value. Particular attention should be paid on the major changes in the company’s remuneration policy, compared to the previous financial year. Yes 7.7. It is recommended that the remuneration policy or any major change of the policy should be included on the agenda of the general meeting of shareholders. The schemes under which members and employees of a collegial body receive remuneration in shares or share options should be approved by the general meeting of shareholders. Yes Principle 8: Role of stakeholders in corporate governance The corporate governance framework should recognize the rights of stakeholders entrenched in the laws or mutual agreements and encourage active cooperation between companies and stakeholders in creating the company value, jobs and financial sustainability. In the context of this principle the concept “stakeholders” includes investors, employees, creditors, suppliers, clients, local community and other persons having certain interests in the company concerned. 8.1. The corporate governance framework should ensure that the rights and lawful interests of stakeholders are protected. Yes 8.2. The corporate governance framework should create conditions for stakeholders to participate in corporate governance in the manner prescribed by law. Examples of participation by stakeholders in corporate governance include the participation of employees or their representatives in the adoption of decisions that are important for the company, consultations with employees or their representatives on corporate governance and other important matters, participation of employees in the company’s authorized capital, involvement of creditors in corporate governance in the cases of the company’s insolvency, etc. Yes 8.3. Where stakeholders participate in the corporate governance process, they should have access to relevant information. Yes 75 2024 8.4. Stakeholders should be provided with the possibility of reporting confidentially any illegal or unethical practices to the collegial body performing the supervisory function. Yes Principle 9: Disclosure of information The corporate governance framework should ensure the timely and accurate disclosure of all material corporate issues, including the financial situation, operations and governance of the company. 9.1. In accordance with the company’s procedure on confidential information and commercial secrets and the legal acts regulating the processing of personal data, the information publicly disclosed by the company should include but not be limited to the following: Yes 9.1.1. operating and financial results of the company; Yes 9.1.2. objectives and non-financial information of the company; Yes 9.1.3. persons holding a stake in the company or controlling it directly and/or indirectly and/or together with related persons as well as the structure of the group of companies and their relationships by specifying the final beneficiary; Yes 9.1.4. members of the company’s supervisory and management bodies who are deemed independent, the manager of the company, the shares or votes held by them at the company, participation in corporate governance of other companies, their competence and remuneration; Yes 9.1.5. reports of the existing committees on their composition, number of meetings and attendance of members during the last year as well as the main directions and results of their activities; No Some information not fully disclosed 9.1.6. potential key risk factors, the company’s risk management and supervision policy; Yes 9.1.7. the company’s transactions with related parties; Yes 9.1.8. main issues related to employees and other stakeholders (for instance, human resource policy, participation of employees in corporate governance, award of the company’s shares or share options as incentives, relationships with creditors, suppliers, local community, etc.); Yes 9.1.9. structure and strategy of corporate governance; Yes 9.1.10. initiatives and measures of social responsibility policy and anti-corruption fight, significant current or planned investment projects. This list is deemed minimum and companies are encouraged not to restrict themselves to the disclosure of information included into this list. This principle of the Code does not exempt companies from their obligation to disclose information as provided for in the applicable legal acts. Yes 76 2024 9.2. When disclosing the information specified in paragraph 9.1.1 of recommendation 9.1, it is recommended that the company which is a parent company in respect of other companies should disclose information about the consolidated results of the whole group of companies. Not applicable The company is not a group company. 9.3. When disclosing the information specified in paragraph 9.1.4 of recommendation 9.1, it is recommended that the information on the professional experience and qualifications of members of the company’s supervisory and management bodies and the manager of the company as well as potential conflicts of interest which could affect their decisions should be provided. It is further recommended that the remuneration or other income of members of the company’s supervisory and management bodies and the manager of the company should be disclosed, as provided for in greater detail in Principle 7. No Some information not fully disclosed 9.4. Information should be disclosed in such manner that no shareholders or investors are discriminated in terms of the method of receipt and scope of information. Information should be disclosed to all parties concerned at the same time. Yes Principle 10: Selection of the company’s audit firm The company’s audit firm selection mechanism should ensure the independence of the report and opinion of the audit firm. 10.1.With a view to obtain an objective opinion on the company’s financial condition and financial results, the company’s annual financial statements and the financial information provided in its Management report should be audited by an independent audit firm. Yes 10.2. It is recommended that the audit firm would be proposed to the general meeting of shareholders by the supervisory board or, if the supervisory board is not formed at the company, by the management board of the company. Yes 10.3.In the event that the audit firm has received remuneration from the company for the non-audit services provided, the company should disclose this publicly. This information should also be available to the supervisory board or, if the supervisory board is not formed at the company, by the management board of the company when considering which audit firm should be proposed to the general meeting of shareholders. Yes The audit firm will be paid 1.5 thousand. euros for the translation services. 77 Sustainability statement for 2024 78 2024 Contents General Disclosures ............................................................................................. 79 Disclosures under the EU Taxonomy Regulation ............................................... 93 Environment ....................................................................................................... 102 Climate change................................................................................................... 103 Pollution ............................................................................................................. 110 Biodiversity and ecosystems.............................................................................. 113 Resource use and circular economy .................................................................. 116 Social .................................................................................................................. 121 Own workforce .................................................................................................. 122 Workers in value chain ...................................................................................... 132 Consumers and end-users .................................................................................. 135 Governance ........................................................................................................ 140 Business conduct ................................................................................................ 141 Appendix ............................................................................................................ 144 79 2024 General Disclosures BP-1 General basis for preparation of sustainability statements AB Pieno žvaigždės Sustainability Report is prepared as a stand-alone report and is consistent with the data and information presented in the Company’s (or undertaking, enterprise, entity) financial statements. The double materiality assessment covers the impacts, risks and opportunities identified across an undertaking’s upstream and downstream value chains. Only tier 1 actors were subject to the assessment in the value chain. The Company’s policies, actions, targets and indicators and their interface with the value chain are disclosed in sections of topical standards. Disclosures have been added to comply with the Corporate Sustainability Reporting Directive (CSRD), which was transposed into the law of the Republic of Lithuania and became effective on 1 July 2024. The content and disclosures of the Report are prepared in accordance with the European Sustainability Reporting Standards (ESRS). The Company did not use the option to omit a specific information corresponding to intellectual property, know-how or the results of innovation, impending developments or matters in the course of negotiation.. BP-2 Disclosures in relation to specific circumstances For value chain estimates, please refer to section E1-6. No external body other than the assurance provider has been involved in the validation of the measurement of the metrics presented in the Sustainability Report. The Sustainability Report also includes additional disclosures of Taxonomy under Article 8 of EU Regulation 2020/852. The list of the disclosure requirements of ESRS, that have been incorporated by reference GOV-1 The role of the administrative, management and supervisory bodies 2024 Corporate Governance information, page 54 S4-3 Processes to remediate negative impacts and channels for customers to raise concerns S4-2, page 137 E5-1 Policies related to resource use and circular economy E2-1, page 133 G1 The role of the administrative, management and supervisory bodies ESRS 2 GOV-1, page 79 GOV-1 The role of the administrative, management and supervisory bodies The management bodies of AB Pieno žvaigždės are the Supervisory board, the Board and the Company’s CEO. The Company’s Board ensures the implementation of the Strategy taking into account the interests of shareholders, employees and other groups. The Board consist of 7 executive members (0% of independent members), of which 14% are women. The Board members have extensive experience in the milk processing and dairy production industry and knowledge of rational use of resources, product safety and quality, business ethics and governance. One member of the Board is the Company’s CEO who organises the Company’s activities and acts on behalf thereof. The Company’s CEO is also responsible for approving the material impacts, risks and opportunities identified once a year. 80 2024 The Supervisory Board is the Company’s oversight body, consisting of 3 members: one executive member and 67% of independent members. 100% of its members are men. The Supervisory Board ensures the representation of the interests of the Company and its shareholders, the supervision of the Company’s activities and its management bodies, the integrity and transparency of the financial accounting and control system, and makes recommendations to the Company’s management bodies on strategic issues. The composition of the Company’s management and supervisory bodies and additional information is provided in the Management report of the Company for 2024. AB Pieno žvaigždės has not yet appointed the management bodies responsible for oversight of impacts, risks and opportunities (IRO’s). These areas are managed within the framework of the overall corporate governance processes, but there are no clearly defined areas of responsibility within the Board or other top- level management bodies. Currently, the Company does not carry out formalised reviews of the sustainability competences of the management bodies. The skills and expertise of the members of the Board and supervisory bodies on sustainability matters are not systematically assessed or developed through an established process. Information on own workforce is disclosed in section “S1 Own Workforce”. GOV-2 Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies Sustainability matters are addressed with on an ,,ad hoc” basis through regular management processes, but there is no clearly structured system of responsibility and accountability. The impacts, risks and opportunities identified through the double materiality assessment were not addressed during the reporting period. The Company recognises the importance of this area and plans to strengthen the management of the identified IROs in the future, including clearer reporting mechanisms and greater ownership of sustainability strategies by the management bodies. GOV-3 Integration of sustainability-related performance in incentive schemes The Company does not currently have a sustainability-related performance in incentive scheme. GOV-4 Statement on due diligence Pagrindiniai išsamaus patikrinimo elementai Tvarumo ataskaitos dalys (a) Embedding due diligence in governance, strategy and business model ESRS 2 GOV-2, GOV-3, SBM-3 (b) Engaging with affected stakeholders in all key steps of the due diligence IRO-1 – ESRS 2, E1, E2, E4, E5 (c) Identifying and assessing adverse impacts SBM-3 – ESRS 2, E1, E4, S1, S2, S4 (d) Taking actions to address those adverse impacts IRO-1 – ESRS 2, E1, E2, E4, E5 (e) Tracking the effectiveness of these efforts and communicating SBM-3 – ESRS 2, E1, E4, S1, S2 81 2024 GOV-5 Risk management and internal control over sustainability reporting AB Pieno žvaigždės sustainability reporting is at risk of material misstatement due to human error or incomplete data information. In 2024, the Company assigned the responsibility for consolidating, controlling and reporting qualitative and quantitative sustainability data to the Company’s Environmental-Sustainability Project Manager to ensure standardised accounting procedures and risk prioritisation methodology. The quantitative and qualitative data presented in the Sustainability Report is reviewed by the Company’s CFO, legal counsel and external consultants. The Company’s risk management system supports the sustainability reporting process. Responsible functional area managers develop, maintain and ensure compliance with policies and procedures, as well as local legal requirements, while central functional areas are responsible for data aggregation and control. This functional control and data aggregation is further reinforced by internal and external compliance visits that ensure enhanced oversight and adherence to the goals set. Operational risks of AB Pieno žvaigždės are managed in respect of third parties. The Company’s branches are certified to international standards such as BRC, IFS Food, FSSC 2200, ISO 9001 and ISO 14001. The Company has food safety, quality and environmental management system to manage identified hazards and risks and important control points related to the production processes, transportation and consumption of dairy products, and to improve quality control. The Company has developed, implemented and maintained processes providing for the conditions, measures and rules of conduct to manage the identified impacts, risks and opportunities. The Company’s Environmental-Sustainability Project Manager keeps the Company’s CEO and CFO informed of the progress of the Sustainability Report at regular meetings. Since it is the first time the Company has conducted a double materiality assessment and is submitting the ESRS-based Sustainability Report, the internal controls supporting the sustainability due diligence are planned to be reinforced during 2025. SBM-1 Strategy, business model and value chain AB Pieno žvaigždės was established on 23 December 1988 after the merger of AB Mažeikių pieninė and AB Pasvalio sūrinė, two dairy processing undertakings operating independently in Lithuania. This was followed by the merger of AB Kauno pienas, as well as AB Panevėžio pienas in 2004. During this period, the Company became one of the largest and modern milk processing and dairy production undertakings in the Baltic States, with a structure that makes it possible to specialise production at separate branches, achieving the highest level of efficiency and evenly distributing raw milk collection capacity in the country. AB Pieno žvaigždės currently produces more than 500 different products. The Company does not restrict its production to the local market, it is exported to more than 50 countries in Europe, Asia, North America, CIS and Oceania. The Company produces a wide range of dairy products, including milk, butter, ferment cheese, whey flour and ice cream. The Company also produces Halal, Kosher and organic-compliant products to meet the specific needs of consumers. The Company’s headcount is disclosed in paragraph S1-6 Characteristics of the undertaking’s employees. In 2024, the turnover of AB Pieno žvaigždės totalled EUR 210 million. As the sector-specific ESRS have not yet been adopted, the Company is not able to provide the information required by paragraph 40(b) and (c) of ESRS 2 SBM-1. The Company is not involved in the production of the fossil fuels, chemicals, controversial weapons or in the cultivation and production of tobacco. 82 2024 AB Pieno žvaigždės strategy is to continuously strengthen position in the dairy sector by maintaining close contact with consumers to tackle the needs of tomorrow. The Company’s main objective is to anticipate the future needs of the modern consumer, while maintaining a high quality of production and a high added value for a balanced diet. The Company’s management is also committed to respecting the environment throughout the entire cycle, by ensuring the sustainable use of natural, energy and other resources, proper and responsible waste management. AB Pieno žvaigždės value chain Upstream value chain Suppliers Our main raw material is natural milk, the supply of which is relatively limited due to its short shelf life. To maintain the quality of the milk and minimise the environmental impact, priority is given to local suppliers to shorten the logistics chain. In addition to milk, we buy other raw materials such as jams, syrups, cocoa, chocolate coating, etc. We acknowledge that the cultivation and production of these raw materials, in S , pose serious challenges such as deforestation, biodiversity loss, soil and climate pollution. To reduce this impact, we have an organic product line that uses only organic raw materials certified according to EU Regulation 2018/848 Article 35 (1). Additional information is presented in section E5-4 Resource Inflows. Packaging is another important group of raw materials. High-quality packaging ensures the quality and safety of our products and helps prevent food waste. However, improperly designed or disposed of packaging can contribute to pollution in oceans, land and air, as well as the formation of microplastics. To reduce the negative impact of packaging, we continuously work with packaging suppliers to find the most appropriate solutions for our products: optimising the packaging by redesigning and reformulating it, and finding alternatives to non-recyclable packaging. In addition, our main suppliers of paper and cardboard packaging are certified to FSC or PEFC standards, demonstrating sustainable forestry practices. Logistics We maintain a regular contact with our logistics partners to ensure a stable delivery of raw materials that meets quality and food safety requirements. We aim to reduce our environmental impact through order consolidation and optimisation. Company’s activities Production Our products are manufactured in four production branches in Kaunas, Mažeikiai, Panevėžys and Pasvalys. We strive to ensure the highest quality and food safety standards and to deliver products that meet consumer expectations. To conserve the environment, we are committed to ensuring the efficiency of all processes through the rational use of resources, responsible management and optimisation of production processes. The branches apply the principle of secondary recovery in the production process, which reduces the use of the Company’s resources. All the branches of AB Pieno žvaigždės reuse primary wash/rinse water in the next wash cycle. Furthermore, the water condensate generated in the technological equipment is returned to the steam boiler plant. Production process management Logistics We have our own milk collection and distribution network covering the Republic of Lithuania. This helps to maintain high standards of food safety 83 2024 and quality from the collection of raw materials to the delivery of products to customers. Having your own logistics network helps to reduce your environmental impact through logistics route optimisation, rational use of resources, and the gradual replacement of vehicles with low-emission models. Downstream value chain Logistics Although we have our own distribution network in Lithuania, we engage logistics partners to ensure a stable and quality and food safety-compliant delivery of products to all our customers. Distributors and customers Since the Company’s establishment, we have been consistently expanding our business, and today we are one of the largest and modern dairy processing and dairy production undertakings in the Baltic States. We supply our products to retail and wholesale outlets in more than 50 countries. Our production includes cheese, dry dairy products, ice cream and fresh dairy products. We strive to meet the changing needs of our customers and to combine high production quality and flexibility. Consumer We produce products with a balanced nutritional value that meet the highest quality and food safety requirements, using reliable and predominantly natural ingredients. By bringing healthy products to the market, we aim to have a positive impact on both people and the environment. We improve our service by analysing consumer behaviour and responding to customer preferences. To keep our production footprint low, we rely more on recyclable packaging, which includes information on proper waste sorting. SBM-2 Interests and views of stakeholders’ Engaging with stakeholders is a key aspect of AB Pieno žvaigždės Strategy enabling to create value and ensure the long-term success of the Company. The understanding of their expectations and needs helps us to improve our operations from managing a sustainable dairy supply chain to developing high quality products that meet consumer expectations and environmental requirements. The Company actively engages with farmers and suppliers on relevant issues to promote responsible production of milk and other raw materials. The compliance with all food safety, quality and sustainability requirements is also maintained through dialogue with regulators and consumers, to respond to their evolving needs and expectations for healthier, more sustainable products. Our commitment to transparency and continuous innovation is reflected in regular discussions with industry associations, investors and social organisations, which help to shape our long-term strategy. The table below details how we engage with key stakeholders, the objectives of the collaboration and the outcomes achieved. The views of stakeholders help to shape our due diligence process and the double materiality assessment, which is described in more detail in IRO-1. 84 2024 Stakeholders Engagement and objective Outcomes Employees We aim to foster a collaborative and meaningful working environment. Fair wages, safe working conditions. Suppliers We engage with employees through surveys, working groups, training, management communication and the system of whistleblowing. Training and surveys are carried out once a year. Other engagement activities are carried out on an as-needed basis. Stable long-term supply contracts, fair market prices, cooperation on quality assurance. Logistics partners We maintain a daily contact with our suppliers, carrying out our activities, developing partnerships through meetings and negotiations, to create mutual benefits. Stable long-term transport contracts, fair market prices. Consumer We maintain a daily contact with our logistics partners, carrying out our activities, developing partnerships through meetings and negotiations, to create mutual benefits. High-quality products, transparent and honest information about the content of products, competitive prices. Customers We strive to create high quality products that meet consumer expectations. We engaged with consumers through surveys, a complaint and suggestion channel, and publicly available information. Stable supply, flexibility in delivery times, competitive prices, data reliability. Local communities We strive to deliver products that meet the expectations of our customers when and as needed. We engaged with customers through meetings, regular communication, a complaint and suggestion channel, and publicly available information. Minimum environmental impact, support for local initiatives, community health and safety, job offers. Public authorities, including supervisors We aim to contribute to the well-being of local communities by monitoring public information and communication with local community representatives. Compliance with laws and regulations, cooperation on food safety and environmental inspections, honest record- keeping. Transparency, validity and consistency of disclosures. Reliability of data. Shareholders, banks and investors We aim to keep abreast of all regulatory developments. We engage with public authorities through meetings, annual inspection/assessment and reporting processes, and public market reviews. Sustainable financial returns, the Company’s transparent performance, long-term sustainable growth and stability. 85 2024 SBM-3 Material impacts, risks and opportunities and their interaction with business model The Company carried out its first materiality assessment in 2024, which involved IRO mapping. Due to lack of data, the Company did not carry out a resilience analysis of its strategy and business model. The review of strategy elements in respect of material IROs and a resilience analysis is planned for 2025. As this is the first time that a double materiality assessment has been carried out, the Company is not in a position to provide the changes to the material impacts, risks and opportunities. During the reporting year, no material IROs were identified that could lead to financial losses. Likewise, no material risks and opportunities for which there is significant risk of material adjustment within next reporting period to carrying amounts of assets and liabilities recognized in financial statements were identified. The Company has opted to exercise the phase-in allowance to omit the disclosure of the anticipated financial effects of material risks and opportunities on its financial position, financial performance, and cash flows over short-, medium- and long-term. The material impacts, risks and opportunities identified in the double materiality assessment are set out in the table below and are described in more detail in the topical ESRS. Material from both perspectives Material from the impact perspective Soil pollution Substances of concern Direct exploitation Health and safety of own workforce Adequate wage of workers in the value chain Health and safety of workers in the value chain Animal welfare Climate change mitigation Resource inflows, including resource use Resource outflows related to products and services Waste Product safety and quality Water and marine resources Affected communities Secure employment for own workforce Adequate wage of own workforce * Materiality only from the value chain perspective Material from the financial perspective 86 2024 E1 Climate change Material impacts, risks and opportunities Position on the value chain Time horizon Upstream value chain Own operations Downstream value chain Short -term Medium -term Long -term Climate change mitigation The Company’s operations and value chain, including raw material suppliers and logistics activities, generate greenhouse gas (GHG) emissions, which have direct impacts on climate change by contributing to global warming. Existing negative effects ● ● ● ● ● ● Climate change mitigation Increasingly stringent requirements on GHG emissions may require additional investment in GHG reduction technologies and processes. Changing consumer perspective concerning the product’s CO2 footprint and the emergence of lower footprint alternatives on the market may reduce demand for the Company’s products. Risk ● ● ● ● ● ● Climate change mitigation The Company has the opportunity to reduce its GHG emissions by investing in lower emissions technology, by becoming a prosumer (PV installation) or by purchasing renewable energy. Opportunity ● ● ● ● ● ● E2 Pollution Soil pollution (entity specific) Emissions released by dairy and agricultural farms, fossil fuel miners and the transport sector can cause long-term changes in ecosystems and affect human health. Existing negative effects ● ● ● ● Substances of concern Substances of concern used in the Company’s operations and supply chain are characterised by their toxicity, long-term persistence in organisms or environment, and their ability to cause serious adverse effects in humans, on the environment and ecosystems. Existing negative effects ● ● ● ● ● 87 2024 E4 Biodiversity and ecosystems Material impacts, risks and opportunities Position on the value chain Time horizon Upstream value chain Own operations Downstream value chain Short -term Medium -term Long -term Direct exploitation (entity specific) Deforestation for the production of cardboard and paper packaging and intensive agricultural practices have severe impacts on the natural habitats of flora and fauna. Existing negative effects ● ● ● ● E5 Resource use and circular economy Resource inflows, including resource use The procurement of the Company’s most significant resources (food ingredients and packaging) has a direct impact on people and the environment through the value chain due to the extraction and production processes of these resources. Existing negative effects ● ● ● ● ● ● Resource inflows, including resource use Increasingly stringent regulation and variations in market conditions for resources may increase the cost of resources needed by the Company. Risk ● ● ● ● ● ● Resource inflows, including resource use Introducing advanced and less resource-intensive technologies and investing in more sustainable packaging can reduce operating costs, provide competitive advantages and open up opportunities in new markets. Opportunity ● ● ● ● ● Resource outflows related to products Product packaging is one of the Company’s significant outflows. Poorly managed packaging is one of the biggest sources of soil pollution and microplastics, which have a negative impact on both the environment and human health. Existing negative effects ● ● ● ● ● ● 88 2024 Resource outflows related to products Increased legal regulation of packaging and packaging waste management and a more sustainable public approach to packaging can boost the prices of sustainable resources and the rates under the “polluter pays” principle. Risk ● ● ● ● ● Waste generated in value chain (entity specific) The waste generated across the value chain can be improperly managed and disposed of in landfills, with negative impacts on soil, biodiversity and ecosystems, and an increase in the release of microplastics into the environment. Existing negative effects ● ● ● ● ● Waste management in supply chain (entity specific) Unsustainable supply chains can lead to disruptions in the supply of raw materials due to sanctions for improper waste management. Improper disposal of waste by consumers can lead to the introduction of specific sanctions by state authorities for the release of packaging to the market. This may require the Company to incur additional operational costs to comply with the sanctions imposed. Risk ● ● ● ● ● S1 Own Workforce Material impacts, risks and opportunities Position on the value chain Time horizon Upstream value chain Own operations Downstream value chain Short -term Medium -term Long -term Health and safety The Company’s employees working in production, quality management, logistics and technical maintenance roles are exposed to increased hazards that may have a negative impact on their health. Existing negative effects ● ● ● ● Secure employment Unstable working conditions due to seasonality and cyclical production demands can reduce motivation and performance, and increase turnover. This can result in additional costs for the Company due to employee turnover and training of new employees. Risk ● ● ● ● 89 2024 Adequate wage In the medium to long term, there are risks of insufficiently competitive wages, which could increase employee turnover. Risk ● ● ● S2 Workers in value chain Material impacts, risks and opportunities Position on the value chain Time horizon Upstream value chain Own operations Downstream value chain Short -term Medium -term Long -term Adequate wages Upstream value chain workers, especially those working on dairy farms, may face lower wage rates and unstable working conditions due to decreasing milk purchase prices. Existing negative effects ● ● ● ● Health and safety Value chain workers in logistics sector are exposed to increased safety risks due to the operation of vehicles. Meanwhile workers in chemicals production that directly work with chemicals are exposed to occupational diseases and increased health risks. Existing negative effects ● ● ● ● ● ● S4 – Consumers and end-users Product safety and quality Quality dairy products are important for people’s balanced diet and can make a positive contribution to their health, ensuring that consumers receive the necessary nutrients. Existing positive effects ● ● ● ● Product safety and quality Failure to ensure high standards of food safety and quality expose to risks of financial losses due to product recalls, reputational damage, and fall in customer and consumer confidence. Risk ● ● ● 90 2024 G1 Business conduct Material impacts, risks and opportunities Position on the value chain Time horizon Upstream value chain Own operations Downstream value chain Short -term Medium -term Long -term Animal welfare Since the Company does not ensure compliance with animal welfare standards throughout its supply chain, it is exposed to the risk of animal health problems that can affect the quality of the milk. Existing negative effects ● ● ● ● ● IRO-1 Description of the processes to identify and assess material impacts, risks and opportunities In 2024, for the first time, AB Pieno žvaigždės carried out the double materiality assessment (DMA) in accordance with the requirements of ESRS 1 and the EFRAG Double Materiality Guidelines. In the future, the Company intends to review the DMA process annually to ensure monitoring of the identified material impacts, risks and opportunities. As part of DMA, we first conducted a value chain and stakeholder analysis, which involved the value chain assessment, identification of the Company’s business areas and stakeholders and their expectations. As stakeholders were not directly consulted this year, the Company selected internal experts based on their job position in the Company, expertise and relationship with different stakeholders, who were best placed to disclose the impacts and needs of specific groups. In the next step, we identified 93 sustainability matters in accordance with AR 16 ESRS 1. Each matter was assessed in the context of the Company’s operations and the impact of its value chain, potential financial risks and opportunities within the defined thresholds. IROs were rated material if the average score passed the threshold set. The list of material impacts, risks and opportunities that passed the materiality level threshold was presented to the Company’s CFO and legal counsel for the data verification. The finalized list of material IRO’s was agreed upon by the Company’s CEO. At present, the results of the double materiality assessment have not yet been integrated into the Company’s governance process. As this is the first time a DMA has been conducted, there have been no changes compared to the previous reporting period. Methodologies and assumptions Scope We have identified and assessed the impacts of our own operations on the people and the environment as well as the potential business risks and opportunities. Furthermore, we assessed the impacts, risks and 91 2024 opportunities in our value chain, with particular attention on the first level of the supply chain. The value chain assessments were based on internal and third-party expertise, publicly available information, scientific articles, studies, etc. During the impact assessment, the Company considered both positive and negative impacts as well as actual and potential impacts related to sustainability matters in accordance with AR 16 ESRS 1. During the financial assessment, the Company assessed potential sustainability-related risks and opportunities that could trigger a significant negative or positive financial effect on the Company’s business. Engaging stakeholders During DMA, we involved internal experts from different departments within the Company who have knowledge of stakeholders and their needs and could provide insights on sustainability matters. In their assessments, the Company’s experts used publicly available information, scientific literature, and data from national and international institutions and ongoing direct feedback from identified stakeholders (e.g. feedback received via the quality line or during the third-party inspections). This year, we have not directly consulted external stakeholders who may be affected by our activities, nor have we asked external stakeholders to review the outcome of our DMA. However, as an alternative approach, we engaged external experts who could provide insights on different sustainability matters. Time horizons During DMA, the Company followed the categorisation of short-, medium- and long-term time horizons as defined in ESRS 1 par. 77. Impact assessment The impact materiality assessment followed the assessment principles of ESRS: any of the three characteristics (scale, scope, and irremediable character) can make a negative impact severe, but, in the case of a potential negative human rights impact, the severity of the impact takes precedence over its likelihood. The severity of an impact is determined by the scale, scope and irremediable character of the impact. For potential impacts, materiality also includes consideration of their likelihood. For actual positive impacts, materiality is based on the scale and scope. For potential positive impacts, materiality is based on the scale, scope and likelihood. The process focused on the Company’s main business segments. No exclusion of or heightened attention to specific activities, geographies or business relationships was used . The following methods are used to assess impact drivers: • Scale: we assessed how grave the negative impact is or how beneficial the positive impact is for people or the environment; • Scope: we assessed how widespread the negative or positive impacts are; • Irremediable character: we assessed whether and to what extent the negative impacts could be remediated, i.e., restoring the environment or affected group of people to their prior state; • Likelihood: we assessed the chance of the potential impact happening. Assessment of risks and opportunities The double materiality assessment was based on the requirements of ESRS 1 and the EFRAG Double Materiality Guidelines, by multiplying the likelihood of occurrence by the financial effect. Only risks and 92 2024 opportunities related to the sustainability matters in the financial materiality assessment were considered, in particular with regard to their connections with the identified Company’s impacts and dependencies. When assessing the potential financial effect, both quantitative and qualitative approaches were used. The quantitative approach used profitability as the key financial parameter. The qualitative approach (use of assumptions in the context of likelihood) was used where effects could not be reliably measured in financial terms. The assessments considered the risk mitigation measures already in place. Thresholds For both impact materiality and financial materiality, the same quantitative threshold has been used. IRO-2 Disclosure requirements in ESRS covered by the company’s Sustainability statements The double materiality assessment was based on the criteria in ESRS section 3.2, including the impact and financial materiality analysis. In assessing materiality, we have applied clear thresholds and criteria to assess which sustainability topics are material to our activities. We disclose all required information on material sustainability matters in accordance with the relevant disclosure requirements in topical ESRS. 93 2024 Disclosures under the EU Taxonomy Regulation The European Union's (EU) Taxonomy Regulation is one of the most important pieces of legislation aimed at implementing EU objectives in the areas of sustainability and climate change mitigation. This regulation is part of the EU’s initiative to create a sustainable and competitive European economy based on the principles of low carbon emissions and sustainable development. The Taxonomy Regulation aims to establish a common and uniform classification system for sustainability, enabling investors to more easily identify and finance projects and financial products that meet sustainability criteria and contribute to long- term environmental protection, social welfare, and economic growth. AB Pieno žvaigždės as a large public interest company with more than 500 employees falls within the scope of application of the EU Taxonomy. Although the Company’s main activity, milk processing and dairy product manufacturing, is currently not regulated as taxonomy economic activity, an analysis has been conducted within the Company to identify the conformity of its other activities with the Taxonomy requirements, following the evaluation process outlined below: 1. 1. Identification of taxonomy-eligible economic activities. In accordance with Article 1(5) of Delegated Regulation (EU) 2021/2178, taxonomy- eligible economic activity’ means an economic activity that is described in the delegated acts, irrespective of whether that economic activity meets any or all of the technical screening criteria laid down in those delegated acts. The Company extensively analyses the descriptions of taxonomy-eligible economic activities provided for in Delegated Regulations (EU) 2021/2139 and (EU) 2023/2178, based on which the Company’s taxonomy-eligible economic activities are identified. 2. Assessment of compliance with technical screening criteria. The technical screening criteria for the identified taxonomy-eligible economic activities are analysed, and the processes carried out within the Company are reviewed for their compliance with the Taxonomy requirements. 3. 3. Verification of minimum social safeguards. The procedures implemented within the Company are evaluated to ensure compliance with the UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises. 4. 4. Determination of compliance status. After analysing the technical screening criteria and minimum safeguards, it is determined whether the taxonomy-eligible economic activities are taxonomy-aligned economic activities. If the taxonomy-eligible economic activity does not meet any of the substantial contribution or do no significant harm criteria, it is identified as a taxonomy non-aligned economic activity. 5. 5. Calculation of Key Performance Indicators (KPIs). KPIs are calculated according to the requirements outlined in Annexes I and II of Delegated Regulation (EU) 2021/2178 for non-financial companies. The Sustainability Report also includes additional disclosures of Taxonomy under Article 8 of EU Regulation 2020/852. 94 2024 Identification and alignment assessment of taxonomy-eligible economic activities After examining the Delegated Regulations, it is concluded that Pieno žvaigždės engages in the taxonomy-eligible economic activities specified below, and alignment with the technical screening criteria is provided. Activity listed in the Delegated Acts Taxonomy code Description of activities carried out by Pieno žvaigždės Technical screening criteria Minimum safeguards Criteria alignment District heating/cooling distribution CCM 4.15 CCA 4.15 The Company has installed centralized infrastructure in its production branches for heating, ventilation, and cooling of its own buildings. Since a reliable climate-related risk and vulnerability assessment has not been conducted, the Company cannot claim alignment with all the substantial contribution criteria and do no significant harm criteria identified. The Company conducts activities by ensuring the alignment with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. The publicly disclosed Code of Ethics is based on the Company’s values, which form the foundation of its business and guide the Company’s employees in establishing and maintaining relationships with clients, suppliers, partners, government institutions, and other stakeholders. Not aligned Collection and transportation of non- hazardous waste CCM 5.5 CCA 5.5 CE 2.3 Separate collection and delivery of remaining whey and category 3 ABPs from dairy production processes to biogas plants for recycling. Since a reliable climate-related risk and vulnerability assessment has not been conducted, the Company cannot claim alignment with all the substantial contribution criteria and do no significant harm criteria identified. Not aligned Urban and suburban transport, road passenger transport CCM 6.3 CCA 6.3 M2 vehicles owned by the Company. In 2024, zero-emission or low-emission vehicles were not operated, and a reliable climate-related risk assessment was not conducted. Therefore, the specified activity does not meet the substantial contribution criteria identified for environmental objectives. Not aligned Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5 CCA 6.5 M1 and N1 vehicles owned/leased by the Company (meeting the criteria of Regulation (EU) 715/2007). In 2024, zero-emission or low-emission vehicles were not operated, and a reliable climate-related risk assessment was not conducted. Therefore, the specified activity does not meet the substantial contribution criteria identified for environmental objectives. Not aligned Freight transport services by road CCM 6.6 CCA 6.6 N3 vehicles with EURO6E engine owned by the Company. In 2024, zero-emission or low-emission vehicles were not operated, and a reliable climate-related risk assessment was not conducted. Therefore, the specified activity does not meet the substantial contribution criteria identified for environmental objectives. Not aligned Renovation of existing buildings CCM 7.2 CCA 7.2 Renovation of premises and buildings owned by the Company. Since a reliable climate-related risk and vulnerability assessment has not been conducted, the Company cannot claim alignment with all the substantial contribution criteria and do no significant harm criteria identified. Not aligned Installation, maintenance and repair of energy efficiency equipment CCM 7.3 CCA 7.3 Installation and replacement of energy efficient light sources (energy-saving bulbs) Since a reliable climate-related risk and vulnerability assessment has not been conducted, the Company cannot claim alignment with all the Not aligned 95 2024 substantial contribution criteria and do no significant harm criteria identified. Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings CCM 7.5 CCA 7.5 Installing motion sensors to improve the energy performance of buildings Since a reliable climate-related risk and vulnerability assessment has not been conducted, the Company cannot claim alignment with all the substantial contribution criteria and do no significant harm criteria identified. Not aligned Acquisition and ownership of buildings CCM 7.7 CCA 7.7 Premises and buildings owned by the Company. The premises and buildings owned and/or leased by the Company do not meet the high energy efficiency class as per the specified substantial contribution criteria, and a reliable climate-related risk assessment was not conducted. Not aligned Manufacture of plastic packaging goods CE 1.1 Production of high-density polyethylene (HDPE) bottles and containers used for packaging finished products. The taxonomy-eligible economic activity does not meet all of the specified substantial contribution criteria. The packaging unit is designed to be practically and widely recyclable, but circular (secondary) raw materials are not used in packaging production. Not aligned Accounting policy The Company’s accounting methodology for calculating KPIs is based on the EU Commission Delegated Regulation (EU) 2178/2021 and the interpretations provided in currently applicable EU Commission communications and reports (hereinafter the “Guidelines”). Considering that the interpretive guidelines are limited, the Company has made several assumptions to ensure proper disclosure of the Taxonomy requirements. These assumptions will be adjusted accordingly upon the emergence of new official guidelines from the European Commission or additional information regarding the appropriate disclosure of taxonomy indicators. The KPIs for taxonomy non-aligned economic activities were calculated by associating relevant activity expenses with specific taxonomy-eligible economic activities and assigning the corresponding taxonomy code to these expenses. OpEx and CapEx financial indicators for taxonomy-eligible economic activities were disaggregated and selected according to published EU Commission guidelines, so the provided numbers may not match the data declared in the financial statements. In the accounting, KPIs for taxonomy-eligible economic activity CCM 5.5 “Collection and transportation of non-hazardous waste” is not provided because the Company lacks suitable tools to objectively assess the proportionate share of technical maintenance and repair required for taxonomy-eligible economic activity. The assets necessary for CCM 5.5 taxonomy-eligible economic activity are used for both taxonomy-eligible and taxonomy non-eligible economic activities. Additionally, the proportion of CapEx and OpEx for taxonomy-eligible economic activities identified under Delegated Regulation (EU) 2023/2486 (CE 1.1 “Manufacturing of plastic packaging goods”) were not provided for 2023, because KPIs for these identified taxonomy-eligible economic activities must be disclosed starting from the year 2024. To avoid double counting, the Company’s accounting policy introduces an additional tagging system whereby each taxonomy-eligible economic activity’s KPI is assigned a corresponding taxonomy code. When taxonomy-eligible economic activity contributes to several environmental objectives, responsible individuals within the company assess which environmental objective has the greatest impact and allocate the incurred expenses accordingly to the chosen environmental objective. 96 2024 Calculation of taxonomy-eligible turnover. During the reporting period, the Company identified few sources of taxonomy non-eligible revenue: EUR 4,716 from buildings (CCM 7.7 Acquisition and ownership of buildings) and EUR 16,899 from M1 vehicles (CCM 6.5 Transport by motorbikes, passenger cars and light commercial vehicles) disposed to third parties. Based on the management assessment, revenue from these activities are immaterial and therefore only the Company’s taxonomy non-eligible net revenue calculated in accordance with paragraph 82(a) of International Accounting Standard (IAS) 1 is presented. Compared to 2023, there has been no change in the taxonomy-eligible revenue. Calculation of taxonomy-eligible CapEx. According to Delegated Regulation (EU) 2178/2021, the Company’s taxonomy-eligible CapEx is calculated as the CapEx related to assets or processes associated with Taxonomy-eligible economic activities as a proportion of the total Company’s Taxonomy CapEx. CapEx KPIs are accounted for based on section 1.1.2 of the Annex I to the Delegated Regulation, identifying CapEx by linking it to identified taxonomy-eligible economic activities and including them into the CapEx numerator. To avoid double counting and in accordance with EU Commission guidelines, the Company’s taxonomy-eligible CapEx is calculated by excluding advance payments until the related capital expenditure elements are recognized according to applicable accounting standards. In 2024, the taxonomy-eligible CapEx accounted for 39.7% of the Company’s total CapEx, a 23.6 p. pincrease compared to the taxonomy-eligible CapEx in 2023. Both in 2024 and 2023, the Company’s identified taxonomy-eligible economic activities did not meet the technical screening criteria. The main driver of the increase is the acquisition of eight N3 vehicles with EURO 6 Stage E engines in 2024. Long-term lease expenses also increased by 14.1p. p. Calculation of taxonomy-eligible OpEx. According to Delegated Regulation (EU) 2178/2021, the Company’s taxonomy-eligible OpEx is calculated as the Taxonomy OpEx related to assets or processes associated with Taxonomy-eligible economic activities as a proportion of the total Company’s Taxonomy OpEx. Since, according to the Delegated Regulation, operating expenses include only maintenance and repair costs, short-term rental expenses, etc., the Taxonomy OpEx denominator does not reconcile the operating expenses indicated in the Company’s management report. Additionally, it is noted that during the reporting period, operating expenses related to asset maintenance and technical maintenance performed by employees were not included in either the OpEx numerator or denominator. The Company currently lacks suitable tools to objectively assess and proportionally allocate expenses related to employees since maintenance and repair work is performed on assets assigned to both taxonomy eligible and taxonomy -non-eligible activities. In 2024, the taxonomy-eligible OpEx accounted for 14.28% of the Company’s total OpEx, an 8.12 p. p decrease compared to the taxonomy-eligible OpEx in 2023. The Company incurred lower operating expenses for maintenance and repair of buildings and district heating/cooling distribution equipment, therefore the Company’s operating expenses were focused on the maintenance of facilities outside the scope of the Taxonomy Regulation. 97 2024 Turnover under the EU Taxonomy Financial year 2024 Year Substantial contribution criteria DNSH criteria (“Do No Significant Harm”) Proportion of Taxonomy- aligned (A.1.) or -eligible (A.2.) turnover, 2023 Category enabling activity Category transitional activity Economic activities Code Turnover Proportion of Turnover, 2023 Climate change mitigation Climate change adaptation Water Pollution Circular economy Biodiversity Climate change mitigation Climate change adaptation Water Pollution Circular economy Biodiversity Text Currency, EUR thousand % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Turnover of environmentally sustainable activities (Taxonomy- aligned) (A.1) 0 0% - - - - - - - - - - - - - - - Of which enabling 0 0% - - - - - - - - - - - - - E - Of which transitional 0 0% - - - - - - - - - - - - - - T A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL - - - - - - - - - Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 0.0 0.0 0 - - - - - - - - - - - - - - A. Turnover of Taxonomy eligible activities (A.1+A.2) 0.0 0.0 0 - - - - - - - - - - - - - - B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Turnover of taxonomy-non- eligible activities 210,362.4 100% 98 2024 TOTAL 210,362.4 100% CapEx according to the EU Taxonomy Regulation Financial year 2024 Year Substantial contribution criteria DNSH criteria (“Do No Significant Harm”) Proportion of Taxonomy- aligned (A.1.) or - eligible (A.2.) CapEx, 2023 Category enabling activity Category transition al activity Economic activities Code CapEx Proportion of CapEx, 2024 Climate change mitigation Climate change adaptation Water Pollution Circular economy Biodiversity Climate change mitigation Climate change adaptation Water Pollution Circular economy Biodiversity Text Currency, EUR thousand % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) CapEx of environmentally sustainable activities (Taxonomy- aligned) (A.1) 0 0% - - - - - - - - - - - - 0 - - Of which enabling 0 0% - - - - - - - - - - - - - E - Of which transitional 0 0% - - - - - - - - - - - - - - T A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL - - - - - - - - - Manufacture of plastic packaging goods CE 1.1 58.5 0.60 N/EL N/EL N/EL N/EL EL N/EL - - - - - - - - - District heating/cooling distribution CCM 4.15 CCA 4.15 302.8 3.10 EL EL N/EL N/EL N/EL N/EL - - - - - - 1.0 - - 99 2024 Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5 CCA 6.5 1252.3 12.83 EL EL N/EL N/EL N/EL N/EL - - - - - - 10.5 - - Freight transport services by road CCM 6.6 CCA 6.6 509.6 5.22 EL EL N/EL N/EL N/EL N/EL - - - - - - - - - Installation, maintenance and repair of energy efficiency equipment CCM 7.3 CCA 7.3 0 0.00 EL EL N/EL N/EL N/EL N/EL - - - - - - 0.8 - - Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings CCM 7.5 CCA 7.5 20.5 0.21 EL EL N/EL N/EL N/EL N/EL - - - - - - - - - Acquisition and ownership of buildings CCM 7.7 CCA 7.7 1735.0 17.78 EL EL N/EL N/EL N/EL N/EL - - - - - - 3.8 - - Taxonomy Capex of Taxonomy- eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 3878.7 39.74 16.1 - - - - - - - - - - - 16.1 - - A. CapEx of Taxonomy eligible activities (A.1+A.2) 3878.7 39.4 16.1 - - - - - - - - - - - 16.1 - - B. TAXONOMY-NON-ELIGIBLE ACTIVITIES CapEx of Taxonomy-non-eligible activities 5881.9 60.26 TOTAL 9760.6 100% 100 2024 OpEx according to the EU Taxonomy Regulation Financial year 2024 Year Substantial contribution criteria DNSH criteria (“Do No Significant Harm”) Proportion of Taxonomy- aligned (A.1.) or -eligible (A.2.) OpEx, 2023 Category enabling activity Category transitional activity Economic activities Code OpEx Proportion of OpEx, 2024 Climate change mitigation Climate change adaptation Water Pollution Circular economy Biodiversity Climate change mitigation Climate change adaptation Water Pollution Circular economy Biodiversity Text Currency, EUR thousand % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0 0% - - - - - - - - - - - - - - - Of which enabling 0 0% - - - - - - - - - - - - - E - Of which transitional 0 0% - - - - - - - - - - - - - - T A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL - - - - - - - - - Manufacture of plastic packaging goods CE 1.1 9.4 0.30 N/EL N/EL N/EL N/EL EL N/EL - - - - - - - - - District heating/cooling distribution CCM 4.15 CCA 4.15 84.2 2.71 EL EL N/EL N/EL N/EL N/EL - - - - - - 8.6 - - Urban and suburban transport, road passenger transport CCM 6.3 CCA 6.3 0.2 0.01 EL EL N/EL N/EL N/EL N/EL - - - - - - 0.05 - - 101 2024 Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5 CCA 6.5 210.2 6.76 EL EL N/EL N/EL N/EL N/EL - - - - - - 6.3 - - Freight transport services by road CCM 6.6 CCA 6.6 11.0 0.35 EL EL N/EL N/EL N/EL N/EL - - - - - - - - - Renovation of existing buildings CCM 7.2 CCA 7.2 18.7 0.60 EL EL N/EL N/EL N/EL N/EL - - - - - - - - - Installation, maintenance and repair of energy efficiency equipment CCM 7.3 CCA 7.3 22.6 0.73 EL EL N/EL N/EL N/EL N/EL - - - - - - - - - Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings CCM 7.5 CCA 7.5 0.2 0.01 EL EL N/EL N/EL N/EL N/EL - - - - - - - - - Acquisition and ownership of buildings CCM 7.7 CCA 7.7 87.9 2.83 EL EL N/EL N/EL N/EL N/EL - - - - - - 7.5 - - OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 444.3 14.28 - - - - - - - - - - - - 22.4 - - A. OpEx of Taxonomy eligible activities (A.1+A.2) 444.3 14.28 - - - - - - - - - - - - 22.4 - - B. TAXONOMY-NON-ELIGIBLE ACTIVITIES OpEx of Taxonomy-non-eligible activities 2,665.9 85.72 TOTAL 3110.2 100% 102 Environment 103 2024 Climate change ESRS 2 GOV-3: Integration of sustainability-related performance in incentive schemes The Company does not currently have a sustainability-related performance in incentive scheme. E1-1 Transition plan for climate change mitigation AB Pieno žvaigždės does not currently have a transition plan to mitigate climate change. In 2025, the Company will decide whether it intends to adopt the plan. ESRS 2 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model The Company did not carry out a climate resilience analysis during the reporting year and is therefore not currently in a position to provide information about the resilience of its strategy and business model. A double materiality assessment carried out in 2024 identified risks related to climate change mitigation: - changing consumer perspective concerning the product’s CO2 footprint and the emergence of more sustainable alternatives may reduce demand for the Company’s products; - increasingly stringent requirements may require high investments in GHG reduction technologies and processes. The risks identified are considered by the Company to be climate-related transition risks. IRO-1 Description of the processes to identify and assess material climate-related impacts, risks and opportunities The double materiality assessment was carried out in accordance with the requirements of ESRS 1 and the EFRAG Double Materiality Guidelines. The process is based on the principles set out in ESRS 1 chapter 3 and AR 16 ESRS 1. For more details on the assessment process, see section ‘ESRS 2: IRO-1 Materiality assessment process’. The assessment analysed AB Pieno žvaigždės managed operations and its upstream and downstream parts of value chain. In the identification of the actual and potential impacts, risks and opportunities, third-party experts and the Company’s internal specialists were consulted, who assessed the transition and physical risks. The Company did not use climate scenarios during the reporting period. The analysis was based on data from national and international institutions, databases of Eurostat and the World Resources Institute, and scientific literature and publications from the European Parliament and other bodies Publicly available information is considered sufficient for assessing climate change impacts, risks and opportunities. The impacts of value chain actors was identified as material if the sectors in which they operate are known to be sources of high impact. The following material impacts, risks and opportunities related to climate change have been identified through the double materiality assessment process: Climate change mitigation. Greenhouse gas (GHG) emissions have direct impacts on climate change. The Company’s operations and value chain, including suppliers, transport and logistics are responsible for GHG emissions which contribute to global warming. Key risks identified: increasingly stringent regulation may require additional investments in cleaner production technology, and changing consumer perspective concerning the product’s CO2 footprint may reduce demand for the Company’s products and its revenue. To 104 2024 manage these risks, the Company may invest in lower emissions technology, become a prosumer, or buy renewable energy. E1 Climate change Material impacts, risks and opportunities Position on the value chain Time horizon Upstream value chain Own operations Downstream value chain Short -term Medium -term Long -term Klimato kaitos švelninimas Esamas neigiamas poveikis ● ● ● ● ● ● Klimato kaitos švelninimas Rizika ● ● ● ● ● ● Klimato kaitos švelninimas Galimybė ● ● ● ● ● ● E1-2 Policies related to climate change mitigation and adaptation AB Pieno žvaigždės quality, food safety and environmental policy defines the Company’s commitment to environmental protection, prioritising clean technology, both company-wide and throughout the entire cycle. Also, to maintain and continuously improve environmental management system. To achieve this goal, the Company's management is committed to complying with the legal requirements applicable to the Company, to the sustainable use of natural, energy and other resources, to the proper and responsible management of waste, and to ensuring adequate preparation for potential emergencies. Sustainable use of energy relates to the identified significant negative impacts, risks and opportunities for climate change mitigation, and addresses energy efficiency. The policy applies to all facilities managed by the Company, production branches in Kaunas, Mažeikiai, Panevėžys and Pasvalys, as well as logistics centres in Vilnius and Klaipėda, and to employees working in these facilities, who, each year, are introduced to the content of the policy and related integrated quality management processes (ISO 14001:2015). Meanwhile, the effectiveness of the management system is ensured by periodic checks by independent audits. The Board is responsible for the implementation of the Policy. The policy has been developed on the basis of internal stakeholder consultations. The policy is publicly available on the Company’s website, therefore it is accessible to all stakeholders. The due diligence process found that the policy does not cover the value chain and that the concept of environmental conservation is vague and does not reflect all the identified material IROs related to climate change mitigation, including the risk of changing consumer perspective concerning the product’s CO2 105 2024 footprint, which may reduce demand for the Company’s products. The Company plans to update the policy in 2025. E1-3 Actions and resources in relation to climate change policies Although the Company has not yet set climate change mitigation targets, various efforts have been made over the years to ensure the most efficient use of energy resources. The Company’s steam boilers are equipped with economiser systems, which allow more efficient use of the heat already produced, reducing natural gas consumption and emissions. Modernised technological processes allow for secondary use of resources: the water condensate generated in the equipment is returned to the steam boiler plant, reducing the need for new steam production. The Company is also gradually introducing energy metering systems, replacing energy efficient light sources, and upgrading buildings and equipment to improve their energy performance. The environmental impact is also reduced through the logistics processes managed by the Company: using software to create optimal routes for delivering products, implementing procedures for efficient collection of raw materials, and replacing vehicles with vehicles having a lower environmental impact. The Company also analyses data and legal requirements to identify areas of concern in energy consumption and ensure rational use of resources. In the reporting period, the Company performed the following main actions that contribute to climate change mitigation: • Improvement in energy efficiency. In the Pasvalys Sūrinė branch, the Company has installed a VRC5 heat recovery system, which actively recovers the heat energy from by-products and reuses it in other production processes. The system not only reduces the use of natural gas in the operations, but also contributes to environmental sustainability by reducing greenhouse gas emissions. • Reduction of GHG emissions. To modernise the Company’s fleet, eight N3 vehicles with EURO 6 Stage E engines were acquired. • Fuel switching. The ice cream blast freezer at the Panevėžio pienas branch, which used the refrigerant R- 404A (Global Warming Potential (GWP) of 3,922), was replaced and connected to a centralised compressor station using ammonia (GWP 0) as a natural refrigerant. • Using renewable energy. At the end of the year, the Company’s managed facilities, i.e. production branches in Kaunas, Mažeikiai, Panevėžys and Pasvalys and logistics centres and offices in Klaipėda and Vilnius, started purchasing electricity generated from 100% renewable sources. The Company’s significant investment to implement the above actions, excluding the replacement of purchased power, amounted to EUR 1.3 million. These costs constitute a part of the Company’s total investments, with a detailed breakdown by segments is presented in the financial statements in Note 1 ‘Operating segments’ and in Note 14 “Right-of-use assets and lease liabilities”. Part of the investment is reflected in Taxonomy CapEx of the taxonomy non-aligned economic activities, which can be found in the section ‘Disclosures under the EU Taxonomy Regulation’. Investments in the VRC5 heat recovery system does not fall within the scope of the EU Taxonomy. At present, the Company has not yet developed a future action plan for climate change mitigation. It will be adopted following the adoption of climate change targets. 106 2024 E1-4 Targets related to climate change mitigation and/or adaptation The Company has not, at the present moment, set any measurable outcome-oriented targets. In 2024, the Company carried out its first greenhouse gas emissions calculations, therefore, in 2025, the Company plans to analyse the data and take appropriate decisions. Nevertheless, the Company monitors and analyses the rational use of resources, including fuel, electricity and gas, in its operations, in accordance with the environmental management system (ISO 14001:2015), integrated since 2013. The data is analysed using the Company’s accounting systems and the results are discussed in the course of a management review conducted in the Company’s branches. E1-5 Energy consumption and mix Energy consumption and mix 2024 m. 1 Fuel consumption from coal and coal products MWh N/A 2 Fuel consumption from crude oil and petroleum products MWh 28,128 3 Fuel consumption from natural gas MWh 61,361 4 Fuel consumption from other fossil sources MWh N/A 5 Consumption of purchased or acquired electricity, heat, steam and cooling from fossil sources MWh 25,063 6 Total fossil energy consumption (calculated as the sum of lines 1 to 5) MWh 114 552 Share of fossil sources in total energy consumption (%) 98.2 7 Consumption from nuclear sources MWh N/A Share of consumption from nuclear sources in total energy consumption (%) N/A 8 Fuel consumption for renewable sources, including biomass (also comprising industrial and municipal waste of biologic origin, bio gas, renewable hydrogen, etc.) MWh N/A 9 Consumption of purchased or acquired electricity, heat, steam and cooling from renewable sources MWh 2,087 10 The consumption of self-generated non-fuel renewable energy MWh N/A 11 Total renewable energy consumption (MWh) (calculated as the sum of lines 8 to 10) MWh 2,087 Share of renewable sources in total energy consumption % 1.8 Total energy consumption (calculated as the sum of lines 6, 7 and 11) MWh 116,639 Energy intensity based on net revenue 2024 Energy intensity (total energy consumption per net revenue) MWh/ thousand Eur 0,6 The data on energy consumption and mix are generated from the Company’s internal data collection system. Fuel consumption from natural gas and consumption of purchased electricity is calculated based on invoices from suppliers. Fuel consumption from petroleum products is calculated by converting the mass of fuel consumed into a net calorific value in megawatt-hours (MWh) in accordance with the methodology in CDP Technical Note: Conversion of fuel data to MWh. All of the Company’s business activities fall under section ‘C. Manufacturing’, which is a high climate impact sector. The energy efficiency ratio is calculated by dividing the Company’s total energy consumption (MWh) by its net revenue (EUR thousand). Net revenue are disclosed in Note 1 to the financial statements. 107 2024 E1-6 Gross Scopes 1, 2, 3 and total GHG emissions GHG emissions 2024 Scope 1 GHG emissions Gross Scope 1 GHG emissions tCO 2 e 19,709 Scope 2 GHG emissions Gross Scope 2 GHG emissions (location-based) tCO 2 e 4,104 Gross Scope 2 GHG emissions (market-based) tCO 2 e 14,616 Significant scope 3 GHG emissions Total Gross indirect Scope 3 GHG emissions (market-based) tCO 2 e 273,221 1. Purchased goods and services tCO 2 e 264,121 2. Capital goods tCO 2 e 888 3. Fuel and energy-related activities tCO 2 e 4,587 4. Upstream transportation and distribution tCO 2 e 859 5. Waste generated in operations tCO 2 e 374 6. Business travelling tCO 2 e 163 7. Employee commuting tCO 2 e 1,137 10. Processing of sold products tCO 2 e 345 12. End-of-life treatment of sold products tCO 2 e 747 Total GHG emissions Total GHG emissions (location-based) tCO 2 e 297,089 Total GHG emissions (market-based) tCO 2 e 307,546 AB Pieno žvaigždės carbon footprint calculations are based on the Greenhouse Gas (GHG) Protocol and aligned with the ESRS requirements. All of the Company’s operations are taken into account, and the operational control approach is used to consolidate GHG data. GHG emissions were calculated using tCO2e metric, which converts other gases into tonnes of carbon dioxide (CO2). CO2 equivalence is calculated using a value of the Global Warming Potential (GWP), which is provided by the Intergovernmental Panel on Climate Change. Emission factors are selected on the basis of the latest available data, (where possible) from publicly available or licensed databases, such as Ecoinvent v3.8, Exiobase v. 3.8.2, the UK Government Conversion Factors for greenhouse gas (GHG) reporting 2024 and other known and certified emission factor databases. In some cases, emission factors may not be updated annually or may not be available for a particular substance or location. In such cases, an appropriate alternative is used. We aim to use representative emission factors to ensure accurate disclosure in line with the GHG Protocol guidelines. Scope 3 GHG emissions are calculated using actual accounting data of the Company (when available), along with emission factors and as sector-average data for categories such as purchased goods, services, capital investments, transport and end-of-life products where direct data is not available. During the reporting period, all Scope 3 emissions were calculated using indirect data. The use of sector-average data involves uncertainty, especially in areas where direct data collection is limited. For the reporting of Scope 3 GHG emissions, the Company did not have access to directly measured data of upstream and downstream value chain and therefore used relevant sectoral databases such as Ecoinvent, Exiobase, EDP, IEA, etc. The Company plans to introduce new systems and processes to improve the collection of direct data from suppliers and reduce dependence on alternative data. 108 2024 Scope 1 GHG emissions Direct emission from stationary (boiler rooms) and mobile (vehicles) combustion sources are calculated by multiplying the fuel consumption by relevant emission factor. Cooling agents (freon gas leaks) emissions are calculated by multiplying the type of gas by relevant emission factor. Scope 2 GHG emissions Indirect emissions consist of electricity and heat purchased and used by the Company, calculated by multiplying the power volumes purchased by relevant emission factors, using both location-based and market-based approach. The market-based approach also includes contractual arrangements (guarantees of origin). The guarantees of origin used to calculate Scope 2 emissions under the market-based approach represent 7.7% of the total electricity purchased. Scope 3 GHG emissions All indirect Scope 3 emissions fall into the following categories: - Categories 1 and 2: where available, purchase volumes were multiplied by cradle-to-cradle emission factors. Where data were not available, the calculation was based on the amount of spending multiplied by supply chain emission factors applied to spending on product. The categorised service costs were also assessed against spend-based emission factors. - Category 3 is calculated by multiplying the actual energy consumption Category 1 and 2 and the T&D (transmission and distribution) loss rate by relevant emission factors. T&D loss rates have been developed based on publicly available loss indicators for Lithuanian energy networks from Enerdata and the Lithuanian Heat Suppliers Association. - Category 4 covers the cost of upstream and downstream transportation and distribution services provided by third party logistics partners. - Category 5 covers the actual quantities of different categories of waste multiplied by relevant emission factors. - Category 6 covers travel distances by plane or bus, as well as hotel costs, multiplied by relevant emission factors. - Category 7 covers the commuting distances of employees by type of transport, collected through a survey and multiplied by relevant emission factors. - Category 10 covers emissions related to the downstream processing of products sold to our business customers, including milk, cream and Cagliata cheese. As a proxy, we have used our own Scope 1 and Scope 2 data (electricity and gas) related to the recycling of these products in our own operations. - Category 12 covers end-of-life treatment of sold dairy products and their packaging. The analysis of waste management methods and consumer waste disposal habits was based on a regional approach by countries where the Company’s products are sold. The actual quantities of products and their packaging sold have been adjusted for regional consumer waste disposal patterns and multiplied by relevant emission factors. - Categories 8, 11, and 13-15 are not relevant for the Company as the Company is not engaged in activities related to the categories. - The Company did not calculate category 9 emissions this year due to a lack of data. AB Pieno žvaigždės did not use data from tier 1 suppliers or other value chain partners in the reporting year. The total GHG emissions are calculated by adding the emissions from Scope 1, 2 and 3. The market-based approach has been chosen as the main calculation method for emissions calculations. 109 2024 GHG emissions intensity 2024 Total GHG emissions (location-based) per net revenue tCO 2 e/Eur 1,4 Total GHG emissions (market-based) per net revenue tCO 2 e/Eur 1,5 Total GHG emissions (location-based)/(market-based) intensity based on net revenue is calculated by dividing Total GHG emissions (tCO 2 e ) by net revenue (EUR thousand). Net revenue are disclosed in Note 1 to the financial statements. E1-7 GHG removals and GHG mitigation projects financed through carbon credits The Company is not engaged in GHG removals or GHG mitigation projects financed through carbon credits. E1-8 Internal carbon pricing The Company does not apply carbon pricing systems in its business activities. E1-9 Anticipated financial effects from material physical and transition risks and potential climate- related opportunities The Company has opted to exercise the phase-in allowance. The Company omits this disclosure requirement for the first year of preparation of its sustainability report. GHG emissions per site (market-based) Panevėžio pienas Kauno pienas Pasvalio sūrinė Mažeikių pieninė Ofisai ir sandėliai 19 709 ; 6% 14 616 ; 5% 273 221 ; 89% GHG emissions (market- based) 1 lygis 2 lygis (rinkos metodas) 3 lygis (rinkos metodas) 110 2024 Pollution IRO-1 Description of the processes to identify and assess material pollution-related impacts, risks and opportunities The double materiality assessment was carried out in accordance with the requirements of ESRS 1 and the EFRAG Double Materiality Guidelines. The process is based on the principles set out in ESRS 1 chapter 3 and AR 16 ESRS 1. In the identification of the actual and potential impacts, risks and opportunities, the Company’s internal specialists and third-party experts were consulted. The affected communities were not consulted. The assessment analysed the Company’s sites in Kaunas, Mažeikiai, Panevėžys and Pasvalys, and business process. To identify risks and opportunities in its own operations and its upstream and downstream value chain, the Company considered transition and physical risks and opportunities. The analysis used publicly accessible information on the sector, including data from national and international institutions and sector trends. The impacts of value chain actors was identified as material if the sectors in which they operate are known to be sources of significant emissions. Publicly available information was considered sufficient for assessing pollution-related risks and opportunities. In the coming year, the Company intends to review the double materiality assessment process and improve stakeholder engagement and review the potential for the potential policies, actions, metrics and targetsto be set. A detailed description of the IRO-1 process is provided in paragraph ESRS 2 IRO-1. Soil pollution (entity specific). The main upstream polluters in the Company’s value chain are dairy and agricultural farms, fossil fuel miners and the transport sector. Pollutants generated in these sectors, when released into water and soil, can cause long-term changes in ecosystems, including destruction of biota and species extinction. Some pollutants accumulate in the food chain, affecting a wide range of organisms, including humans. Substances of concern. To ensure the necessary sanitary requirements and high product quality, chemicals and mixtures containing substances of concern are used in the production branches and upstream and downstream parts of the value chain managed by the Company. These substances are characterised by their toxicity, their long-term persistence in organisms or environment, and their ability to cause serious adverse effects. The main polluters are dairy farms, producers of organic raw materials and chemicals, and distribution networks. 111 2024 E2 Pollution Material impacts, risks and opportunities Position on the value chain Time horizon Upstream value chain Own operations Downstream value chain Short -term Medium -term Long -term Soil pollution (entity specific) Existing negative effects ● ● ● ● Substances of concern Existing negative effects ● ● ● ● ● E2-1 Policies related to pollution AB Pieno žvaigždės quality, food safety and environmental policy defines the Company’s commitment to environmental protection, prioritising clean technology, both company-wide and throughout the entire cycle. Also, to maintain and continuously improve environmental management system. To achieve this goal, the Company's management is committed to complying with the legal requirements applicable to the Company, to the sustainable use of natural, energy and other resources, to the proper and responsible management of waste, and to ensuring adequate preparation for potential emergencies. Sustainable use of energy and other sources and the preparation for potential emergencies are associated with identified significant adverse impacts from substances of concerns and resource inflow, including their use. The policy applies to all facilities managed by the Company, production branches in Kaunas, Mažeikiai, Panevėžys and Pasvalys, as well as logistics centres in Vilnius and Klaipėda, and to employees working in these facilities, who, each year, are introduced to the content of the policy and related integrated quality management processes (ISO 14001:2015). Meanwhile, the effectiveness of the management system is ensured by periodic checks by independent audits. The policy has been developed on the basis of internal stakeholder consultations. The policy is publicly available on the Company’s website, therefore it is accessible to all stakeholders. However, following the double materiality assessment in 2024, the Company noted that the adopted policy does not specifically identify significant matters on pollution of soil and substances of concern, and does not cover impacts across the value chain, and therefore plans to update the policy in 2025. E2-2 Actions and resources related to pollution AB Pieno žvaigždės has not taken any action at this stage to address the pollution of soil and substances of concern. In 2024, for the first time, the Company conducted a double materiality assessment which identified material sustainability matters, and therefore plans to adopt the relevant actions in the coming years. 112 2024 E2-3 Targets related to pollution The Company has not, at the present moment, set any measurable outcome-oriented targets, however, in accordance with the environmental management system (ISO 14001:2015), integrated since 2013, the Company monitors and analyses the rational use of chemicals and mixtures in its operations, based on accounting and software data, to prevent an increase in resource consumption. The results are discussed in the course of a management review conducted in the Company’s branches. E2-4 Pollution of air, water and soil All pollutants of soil are generated in the Company’s upstream value chain. For this reason, the Company does not have data on emissions and changes over time during the reporting period. E2-5 Substances of concern and substances of very high concern AB Pieno žvaigždės does not use the substances of concern directly in production as part of products. Chemicals and mixtures are purchased and used for the disinfection of production sites and facilities, and to ensure the sanitary requirements. The Company does not use concentrated substances of concern and has therefore relied on the information provided by suppliers about the percentage of substances in mixtures, based on information from the Company’s accounting systems. We do not test for every substance of concern in wastewater discharges, but we periodically take samples after disinfection of the plant to ensure high product quality and safety standards. This process assumes that the used substances of concern are discharged with wastewater as effluents, therefore, the quantity of substances discharged corresponds to the quantity of substances of concern used. Substances of concern by hazard categories Measurement unit Procurement Use Carcinogen of category 1 or 2 t - - Germ cell mutagen of category 1 or 2 t - - Human reproductive toxicant of category 1 or 2 t 0,004 0,004 Endocrine disruptor for human health t - - Endocrine disruptor for the environment t - - Persistent, mobile and toxic or very persistent very mobile t - - Persistent, bioaccumulative and toxic, very persistent very bioaccumulative t - - Respiratory sensitiser, category 1 t 0,054 0,054 Skin sensitiser, category 1 t 0,002 0,002 Hazardous to the aquatic environment, Chronic 1 to 4 t 34,081 33,972 Substance hazardous to the ozone layer t - - Specific target organ toxicity after repeated exposure, Category 1 or 2 t 1,052 1,058 Specific target organ toxicity after single exposure, Category 1 or 2 t - - Total substances of concern t 34,697 34,815 * Of which substances of very high concern t 0,004 0,004 113 2024 Biodiversity and ecosystems E4-1 Transition plan and consideration of biodiversity and ecosystems in strategy and business model AB Pieno žvaigždės business model focused on raw milk processing and dairy production impacts biodiversity and ecosystems through the value chain and related processes. The Company’s strategy aims to anticipate the future needs of the modern consumer while maintaining the highest product quality standards, however, in this process, the Company relies on milk, the main raw material, and its packaging, which have an environmental impact due to the direct use of forests and intensive agricultural practices in the supply chain. Intensive livestock grazing and forage crop cultivation have an impact on biodiversity and ecosystems, therefore agricultural activities are heavily regulated by the EU and national legislations. Packaging is an integral part of the product delivery chain, and the Company’s strategy is directly linked to the impact on biodiversity and ecosystems and the dependence on these resources. Therefore the Company intends to ensure compliance with the requirements of the EU Deforestation Regulation. The Company adheres to circular economy principles for packaging sustainability, aims to maximise the lifetime of resources and to ensure that their extraction does not disturb the regeneration of nature. In line with the EU Biodiversity Strategy for 2030 targets, the Company plans to optimise the recycling of packaging placed by it on the market to 100% by 2030. However, the reduction of the Company’s impact on biodiversity and ecosystems requires adjustment in the business model by increasing recycling of packaging and encouraging suppliers to adopt sustainable agricultural and forestry practices. AB Pieno žvaigždės will conduct the analysis of the resilience to biodiversity and ecosystems-related physical, transition and systemic risks in 2025. SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model AB Pieno žvaigždės double materiality assessment analysed the Company’s sites and business model. Using the Natura 2000 database, the assessment found that the Company’s sites in the cities of Kaunas, Mažeikiai, Panevėžys and Pasvalys are not located in biodiversity sensitive areas and do not have a direct significant impact on biodiversity and ecosystems. The materiality was identified in the value chain due to the direct use through intensive agricultural practices and deforestation for the production of paper and board packaging. As the impact comes from upstream, not only from tier 1 but also from tier 2 suppliers, the Company does not currently have objective information to provide the necessary data. The material negative impacts with regards to land degradation, desertification or soil sealing was not identified. The Company also does not have any operations that affect threatened species according to the information of the Natura 2000 database. IRO-1 Description of the processes to identify and assess material biodiversity and ecosystem-related impacts, risks and opportunities The double materiality assessment analysed the Company’s sites and business model. To identify risks and opportunities in its own operations and its upstream and downstream value chain, the Company considered dependencies on biodiversity and ecosystems (including ecosystem services), transition and physical risks and opportunities in accordance with the recommendations of E4 AR paragraph 9. This year, the Company has not considered systemic risks as it has no objective evidence that its business activities could lead to a system-wide failure. Third-party experts and the Company’s internal specialists were consulted during the assessment. Affected communities may be impacted through the Company’s supply chain, particularly 114 2024 through tier 2 suppliers, deforestation and intensive agricultural practices that can lead to soil-erosion and deterioration of air and water quality. The analysis was conducted based on trends in the sector and on publicly available information from the sector, including data from national and international institutions, from databases such as Natura 2000, EUSO, and publications from the Food and Agriculture Organisation of the United Nations and the European Environment Agency. The impacts of value chain actors was identified as material if the sectors in which they operate are known to be sources of high impact. Publicly available information is considered sufficient for assessing impacts, risks and opportunities related to biodiversity and ecosystems. AB Pieno žvaigždės managed branches are located in urbanised industrial areas in Kaunas, Mažeikiai, Panevėžys and Pasvalys. These operations at these facilities do not affect biodiversity areas (according to the Natura 2000 database) and do not deteriorate natural habitats and the habitats of species, and therefore it is concluded that there is no need to implement biodiversity mitigation measures, as the Company is not subject to the EU regulations related to biodiversity and ecosystems. The following material impacts related to biodiversity and ecosystems were identified in the double materiality assessment: Direct exploitation (entity specific). Although the Company does not and does not plan to engage in activities that directly affect natural resources, the Company does engage in such activities in the upstream value chain. The main activities identified in the supply chain are deforestation for the production of cardboard and paper for packaging and intensive agricultural practices, which have a material impact on natural habitats of flora and fauna. E4 Biodiversity and ecosystems Material impacts, risks and opportunities Position on the value chain Time horizon Upstream value chain Own operations Downstream value chain Short -term Medium -term Long -term Direct exploitation (entity specific) Existing negative effects ● ● ● ● E4-2 Policies related to biodiversity and ecosystems Currently, AB Pieno žvaigždės does not have policies related to biodiversity and ecosystems to manage the identified material impact in the value chain. Prior to the double materiality assessment, the Company focused on the management of its operations and direct environmental impacts, with less attention to indirect impacts along the value chain due to a lack of data and resources. The Company plans to update the policy in 2025 and include material IROs related to biodiversity and ecosystems. 115 2024 E4-3 Actions and resources related to biodiversity and ecosystems During the reporting period, AB Pieno žvaigždės did not take any action on direct use, as the double materiality assessment was carried out for the first time during the reporting period and due to a lack of data and resources. The Company has been applying circular economy packaging principles for several years, whereby around 94% of the product packaging placed on the market can be recycled, thus reducing the impact on biodiversity and ecosystems. Furthermore, the Company’s main cardboard packaging producers are covered by FSC or PEFC certification schemes, demonstrating sustainable forestry practices. In light of growing concern about biodiversity and ecosystems, AB Pieno žvaigždės plans to analyse the Company’s upstream value chain by the end of 2025, to identify materials used in the production and packaging of products containing cocoa, coffee, palm oil, soy and/or wood, and to ensure that all identified materials used in the Company do not contribute to forest degradation or deforestation, and that all identified materials have a due diligence statement approved by regulatory authorities. Thereby AB Pieno žvaigždės aims to reduce the contribution of its operations to the biodiversity and ecosystem degradation and to greenhouse gas emissions. The planned actions do not include any biodiversity offsets. The Company has not yet adopted planned actions related to intensive agricultural practices. E4-4 Targets related to biodiversity and ecosystems The Company has not, at the present moment, set any measurable outcome-oriented targets due to a lack of data and resources necessary to assess the current impacts of its activities and value chain on biodiversity and ecosystems. These impacts are difficult to quantify, making it complicated to set monitoring targets. As the Company does not currently have a policy in place, the effectiveness of impacts related to direct use is also not monitored. E4-5 Impact metrics related to changes in biodiversity and ecosystems The material impact identified by AB Pieno žvaigždės is in the upstream value chain, therefore the Company does not have objective information about the disclosure requirement. E4-6 Anticipated financial effects from material biodiversity and ecosystem-related risks and opportunities The Company has opted to exercise the phase-in allowance. The Company omits this disclosure requirement for the first year of preparation of its sustainability report. 116 2024 Resource use and circular economy IRO-1 Description of the processes to identify and assess material resource use and circular economy- related impacts, risks and opportunities The double materiality assessment analysed AB Pieno žvaigždės managed operations and its upstream and downstream parts of value chain. The assessment was carried out in accordance with the requirements of ESRS 1 and the EFRAG Double Materiality Guidelines. The process is based on the principles set out in ESRS 1 chapter 3 and AR 16 ESRS 1. In the identification of the actual and potential impacts, risks and opportunities, third-party experts and the Company’s internal specialists were consulted, without engaging with the affected communities. The analysis was based on data from national and international institutions and publicly available information from the sector. Publicly available information is considered sufficient for assessing resource use and circular economy-related impacts, risks and opportunities. The impacts of value chain actors was identified as material if the sectors in which they operate are known to be sources of high impact. A detailed description of the IRO-1 process is provided in paragraph ESRS 2 IRO-1. In the coming year, the Company intends to review the double materiality assessment process and improve stakeholder engagement and review the potential for the potential policies, actions, metrics and targets to be set. The following resource use and circular economy-related material impacts, risks and opportunities have been identified through the double materiality assessment process: Resource inflows, including resource use. The Company uses a wide variety of resources, including water, energy, fuel, raw materials and chemicals. As the Company is not directly involved in the extraction of these resources, the procurement thereof has significant direct impacts on the environment and people through the value chain. The most significant resource inflows are food ingredients and packaging for the production of products. To ensure the quality and safety of its products, the Company has not yet started using the secondary raw materials in its primary packaging, but its secondary/tertiary packaging is 100% made of secondary raw materials (SRM) or contains a certain percentage of SRM. Key risks identified: increasingly stringent regulation and variations in market conditions for resources that may increase the cost of resources. To manage these risks, the Company can introduce more advanced, less resource-intensive technologies and invest in more sustainable packaging that not only reduces environmental impact, but also provides a competitive advantage and opens up opportunities in new markets. Resource outflows related to products and services . AB Pieno žvaigždės uses two resource outflows in its operations: dairy products and packaging thereof. The foods are usually consumed and therefore have no circularity character. The same is not true for packaging: around 94% of the packaging used in the Company’s operations can be recycled and/or reused. Despite the high recyclability rate, the Company does not have objective information on the proper management of packaging once it is placed on the market. Poorly managed packaging is one of the biggest sources of soil pollution and microplastics, which have a negative impact on both the environment and health of the population. Increased legal regulation of packaging and packaging waste management and a more sustainable public approach to packaging can boost the prices of sustainable resources and the rates under the “polluter pays” principle. Waste from value chain (entity specific). The Company has not identified any significant direct impacts related to waste in its operations. Waste generated in the Company’s operations is transferred to licensed waste management companies, which are contractually obliged to properly manage the waste. The process is strictly supervised by national authorities and the Company has no reason to believe that the waste is not being disposed of properly. The material impacts are identified across the value chain on waste generated 117 2024 and management of waste, in particular in the downstream value chain. Much of the waste left over from consumers ends up in landfills, where recyclable packaging is contaminated by other waste and can only be incinerated. To mitigate this impact, the Company provides information on product packaging about the materials used and their recyclability, helping to inform consumers about the proper waste sorting. Poorly managed waste in the value chain can lead to disruptions in the supply of raw materials due to the identified infringements and limit the placing on the market of unsustainable packaging. E5 Resource use and circular economy Material impacts, risks and opportunities Position on the value chain Time horizon Upstream value chain Own operations Downstream value chain Short -term Medium -term Long -term Resource inflows, including resource use Existing negative effects ● ● ● ● ● ● Resource inflows, including resource use Risk ● ● ● ● ● ● Resource inflows, including resource use Opportunity ● ● ● ● ● Resource outflows related to products Existing negative effects ● ● ● ● ● ● Resource outflows related to products Risk ● ● ● ● ● Waste from value chain (entity specific) Existing negative effects ● ● ● ● ● Waste from value chain (entity specific) Risk ● ● ● ● ● 118 2024 E5-1 Policies related to resource use and circular economy AB Pieno žvaigždės environmental policy is disclosed in paragraph ‘E2-1 – Policies related to pollution’. The due diligence process found that the policy does not cover the value chain and does not specifically identify sustainable sourcing of renewable resources and the relative increase in use of secondary resources. E5-2 Actions and resources related to resource use and circular economy The Company makes various efforts to ensure the most efficient use of resources: introducing new technologies to reduce resource use (water usage, fuels, energy, chemicals), including recirculation systems for raw materials and other resources (water, steam). The Company also analyses data and legal requirements to identify areas of concern in resource use and ensure rational use of virgin resources. There is a strong focus on the circular lifecycle of product packaging - approx. 94% of single-use product packaging placed on the market can be recycled or reused. Furthermore, the Company has closed-loop systems in place with some of its customers, whereby wooden pallets and plastic storage boxes are recovered from customers and reused until the end of their life cycle. In the reporting period, the Company performed the following main actions to reduce virgin resources: • In the ice cream factory, investments were made in an automated packaging system that will not only alleviate the workload of own workforce, but will also reduce the amount of non-recyclable plastic placed on the market, which was previously used to seal cardboard boxes. • The Company modernised its packaging systems to attach plastic caps to plastic bottles and composite beverage packaging. • In light of growing concern about circular economy, AB Pieno žvaigždės plans to ensure that 100% of the packaging placed on the market is recycled and/or reused by 2030. The aim is to extend the life cycle of packaging and reduce the use of virgin resources across the value chain. In light of growing concern about circular economy, AB Pieno žvaigždės plans to ensure that 100% of the packaging placed on the market is recycled and/or reused by 2030. The aim is to extend the life cycle of packaging and reduce the use of virgin resources across the value chain. E5-3 Targets related to resource use and circular economy The Company’s current target is to ensure that 100% of the packaging placed on the market is recycled and/or reused by 2030. This target will have impact on the Company’s upstream and downstream value chains by increasing the circularity of packaging at the design stage and by increasing the recycling of packaging at the end of its lifecycle. The performance is monitored through the Company’s internal data collection system since 2018. The target set is binding under EU law, therefore stakeholders were not involved in the adoption of the target. E5-4 Resource inflows The double materiality assessment identified the following material resource inflows: food ingredients and packaging materials. The main raw material used by the Company is natural milk, which is the basis for the production of various dairy products. Additional ingredients such as enzymes, sugars and sweeteners, jams, coatings, salt and other additives also play an important role in ensuring the technological properties and taste of the products produced. The Company also has the EKO product line, which confirms its raw 119 2024 material’s compliance with organic production standards. All food ingredients used in the production of organic products are certified in accordance with Article 35 (1) of Regulation (EU) 2018/848. Packaging materials are one of the most significant inflows for the Company, with a direct impact on both production efficiency and circular economy principles. In its dairy production, the Company uses a variety of packaging materials, such as plastics (PET, HDPE, PP, multi-layer plastic), paper and cardboard, wooden packaging (Tetra Pak) and metal packaging. However, while approx. 94% of the packaging used can be recycled, the Company currently has no data on whether the packaging has been sustainably produced. Raw material Volume, 2024 Food ingredients, including milk, used in production, t 203 316 Packaging material used in production, t 4 801 Of which: food ingredients, including milk, used in organic production, t 6 186 Of which: food ingredients, including milk, used in organic production, % 3 Total, t: 208 301 In data calculations, the Company relies on the information provided by the suppliers on the origin of the materials, the invoiced weights and the rules laid down in the legislation. Data on inflows used in production are continuously recorded in the Company’s accounting information systems and software, based on the types of directly measured inflows and related estimations. The data used reflect the materials in their original state. The percentage of sustainably sourced inflows is calculated by dividing the food ingredients used in the production of organic products by the total weight of the inflows used. The data is collected and accounted for on the basis of accounting principles. During the reporting period, the Company did not collect data on the use of secondary reused or recycled components, secondary raw materials used to manufacture the resource inflows, therefore the Company is not in a position to provide the necessary information at this stage. In subsequent periods, the Company plans to carry out an analysis of the resource inflows and to update the software utilised for the use of secondary recycled components in packaging production. E5-5 Resource outflows AB Pieno žvaigždės uses two resource outflows: dairy products and packaging thereof. The Company produces a wide range of dairy products, which are divided into four main business segments: fresh dairy products, cheese, ice cream and dry dairy products. The Company relies on the assumption that most dairy products are consumed, thus completing their life cycle. However, according to Eurostat statistics1, in 2022, 127 kg of waste of food origin was generated per capita in the EU, of which dairy products may account for a certain proportion. All dairy products are waste of biologic origin and, if properly collected, can be recycled through the biological cycle, either through composting or anaerobic digestion. In its operations, the Company uses two types of packaging: single-use and reusable packaging. 51% of packaging placed into circulation during the reporting period can be reused. The remainder was made up of single-use packaging, of which approx. 94% can be recycled. In data calculations, the Company relies on the information provided by the suppliers on the end-of-life management of materials and the rules laid down in the legislation. The data on resources released into circulation consist of the physical products and packaging of these products that are placed on the market and are continuously recorded in the Company’s accounting information systems and software, based on the types of directly measured resources and related estimations. 120 2024 E5-6 Anticipated financial effects from material resource use and circular economy-related risks and opportunities The Company has opted to exercise the phase-in allowance. The Company omits the disclosure requirement for the first year of preparation of its sustainability report and will present it in the Sustainability Report for 2025. ______ 1 Eurostat data on Food waste in European Union. https://ec.europa.eu/eurostat/databrowser/view/cei_pc035/default/table?lang=en 121 2024 Social 122 2024 Own workforce SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model In this Report all people in its own workforce who could be materially impacted by the Company are included in the scope of its disclosure under ESRS 2. Only employees of AB Pieno Žvaigždės are included in the Company’s own workforce. Based on the nature of work, the Company’s employees fall into the following categories: top management, management, managing specialists and/or engineers, specialists and/or engineers, employees, skilled and low-skilled workers. The Company’s list of job positions comprises around 250 job positions in sales, marketing, procurement and supply, production, quality management, logistics, technical and production support, accounting and other functional areas. In their day-to-day operations, the Company’s business units use production/process equipment, technical equipment and devices, vehicles and other machinery, the use of which is associated with a risk of increased hazard. The work of the employees using (operating, driving, etc.) the aforementioned equipment, devices and/or vehicles and/or other machinery, working in the fields of production, quality management, logistics, machinery and production service, involves a higher risk of danger and harm. Most employees have work on standard business schedules (office workers), some work in shifts (manufacturers). In some positions the working hours are more flexible and unpredictable, for example during high-intensity production seasons.. Ice cream hardening specialists and waffle bakers, and single-position workers in cheese production and production warehouses usually work under such conditions of tolerable occupational risk. The Company’s employees usually work under an indefinite-term employment contract. In the case of a fixed-term employment contract, the term of an employment contract may be determined until a specific calendar date or the occurrence, change or cessation of specific circumstances. Fixed-term employment contracts are usually entered into with replacement employees to cover for employees who are sick, on maternity and parental leave, when seasonal production and/or transport volumes increase, or when other reasons arise in the operation of the Company that require work of a permanent nature but volatile in scope. The knowledge and experience of employees is crucial to the Company’s operations, therefore the Company manages the risks associated with secure employment and employee turnover. In 2024, the average number of full-time employees at the Company was 1,698, a 3% increase compared to the last year. The ice cream production department of the Panevėžys branch is increasingly exposed to high employee turnover, due to a temporary seasonal production volume and the associated fixed-term nature of the work. Competitive wage is an important factor in ensuring employee job satisfaction. In the light of this, the Company consistently reviews and adjusts its remuneration policy to keep remuneration levels in line with market conditions. In 2024, the Company’s annual payroll was 12% higher than the previous year, while the average wage of employees increased by 9% during the year. The double materiality assessment identified the following material impacts and risks related to own workforce: Health and safety. The work of the Company’s employees in production, quality management, logistics, machinery and production service are exposed to increased risk of occupational health and safety hazards. 123 2024 The Company has isolated accidents, about one third of which consists of accidents on the way to /from work. Secure employment. The Company uses fixed-term employment to ensure the supply of its products and to take account of the seasonality of customer orders. Unstable working conditions can reduce employee motivation and performance, increase employee grievances and conflicts, and employee turnover. High employee turnover can result in additional costs due to constant training of new employees. Adequate wages. In the medium to long term, there are potential risks of insufficiently competitive wages, which could lead to employee dissatisfaction, reduced motivation and loyalty, and increased employee turnover. S1 Own workforce Material impacts, risks and opportunities Position on the value chain Time horizon Upstream value chain Own operations Downstream value chain Short -term Medium -term Long -term Health and safety Negative impact ● ● ● ● Secure employment Risk ● ● ● ● Adequate wage Risk ● ● ● S1-1 Policies related to own workforce The Company’s human rights policy consists of the Code of Business Ethics, the Employee Data Retention Policy and the Rules for Applying Implementing Measures for the Employee Data Retention Policy, and the Policy on Prevention of Violence and Harassment. The Company’s Code of Business Ethics is approved by the Company’s Board and published on the Company’s website. The other policies referred to above relating to the Company’s own workforce are approved by the Company’s CEO, they published on the Company’s website, and the Company’s employees are familiarized with them by signing. The Company involves heads of structural units, HR and legal practitioners in the development of the policies related to own workforce. The Company’s management and the heads of its business units are responsible for the implementation of the policies related to own workforce. The general objectives and principles of these documents are outlined below. Although the Company has not identified any material IROs related to human rights and freedoms, in accordance with the United Nations Guiding Principles on Business and Human Rights, the Company respects internationally recognised human and labour rights, as set out in the International Bill of Human Rights and the eight core Conventions of the ILO’s Declaration on Fundamental Principles and Rights at Work. In accordance with Principle 1 of the Company’s Code of Business Ethics, the Company’s business ethics are based on respect for human rights and freedoms. This principle stipulates that the Company 124 2024 respects and guarantees the human rights enshrined in international and Lithuanian law, and ensures employee protection from forced or compulsory labour. This contributes to the protection of human rights and social responsibility. The Company does not tolerate child labour and ensures that all employees are above the legal minimum age. The Company has the Employee Data Retention Policy and rules for applying implementing measures for the policy to ensure the security of employees’ personal information. The Company’s working relationships are based on mutual tolerance, decency and fairness between employees. Both, employer and employees must practice honesty and respect towards each other, regardless of the nature of their duties. The Company’s internal procedures, employer-employee and employee- employee relations are governed by the Company’s Rules of Procedure, which cover the identified material IROs - occupational safety and health and hours of work and rest (secure employment). The Rules of Procedure define all preventive measures designed to preserve the working, health and life of workers at work, which are used at all stages of the Company’s activities in order to protect own workforce from occupational risks or to minimize them. The Company is guided by legislation on occupational safety and health. The Company’s structural units implement the following measures to prevent accidents at work and occupational diseases: develop and regularly update plans of measures for eliminating or reducing physical and ergonomic hazards, physical occupational risk factors, set deadlines for the implementation, designate persons responsible for implementing the measures, and monitor the implementation of preventive measures. Adequate wage is governed by AB Pieno žvaigždės Description of Remuneration Framework, which is approved by the Company’s CEO, taking into account the minimum benchmarks set by national legislation. To ensure the engagement of people in its own workforce, the Company’s Works Council was informed and consulted before adopting the Description. The main provisions of the Description: - To remunerate employees in fair and transparent manner for their work, performance, contribution to enhancing the Company’s efficiency and effectiveness, improving the quality of work, innovating, and creating sustainable added value. - To properly balance the remuneration of employees in the Company and to make it competitive within the national labour market. The Company does not tolerate any form of direct or indirect discrimination, including instruction to discriminate on the basis of gender, race, nationality, language, origin, social status, religion, convictions or views, age, sexual orientation, disability, ethnic origin or religion. The Company also does not tolerate harassment, psychological violence, bullying or abuse of a position that may take any form. The Company takes measures to create a work environment in which employees are not subjected to hostile, unethical, demeaning, aggressive, insulting or offensive actions which encroach on the honour and dignity, the physical or psychological integrity of an employee. The Abuse and Harassment Prevention Policy approved by the Company outlines recommended employee behaviour to prevent abuse and harassment from occurring. Before approving the Policy, the Company carried out an information and consultation procedure with the Company’s Works Council. The Company has channels to remediate negative impacts in place. An employee may directly contact his/her immediate supervisor, human resources personnel of the Company’s relevant structural unit, or anonymously inform the Human Resources department of the Company’s relevant structural unit in writing, in order to report a violation of the Company’s Code of Business Ethics, discrimination or a violation of equal opportunities, as well as when he/she has observed or received information about a suspected violation of equal opportunities with respect to other persons. The Company’s HR director shall be immediately informed 125 2024 of the report and shall be involved in making the appropriate decisions, taking into account the situation and its circumstances. Employees who experience physical and/or psychological abuse or harassment shall have the right to inform human resources personnel of their structural unit in writing. Upon receipt of a report from an employee, a commission shall be set up by a decision of the head of the Company’s structural unit or his/her authorized representative to examine the report and take an appropriate decision. Where necessary, the abuse and harassment prevention procedure shall be applied by organising meetings, providing relevant material on the subject matter by electronic means and/or training for employees on the recognition of forms and manifestations of abuse and harassment, recommended behaviour, emphasising employees’ rights and obligations in the area of abuse and harassment and the employer’s measures to create and ensure a psychologically safe work environment. The policies adopted by AB Pieno žvaigždės apply to all employees working in production branches, warehouses and offices controlled by the Company. S1-2 Processes for engaging with own workforce and workers' representatives about impacts The Company’s structural units have employer-designated safety and health officers. To implement occupational safety and health requirements in the Company’s structural units, the officers organise occupational risk assessments, mandatory health checks, the provision of personal protective equipment and employee briefings on health and safety issues. In making decisions, the employer-designated safety and health officers regularly consult with heads of units, specialists and other employees on relevant needs, priority tasks, the efficiency of measures implemented and necessary changes. Taking into account the comments and suggestions made by the representatives of own workforce, the employer-designated safety and health officers initiate and monitor the implementation of the necessary measures. A summary of the measures implemented during the reporting year is provided in paragraph S1-4. At the end of the reporting year, the Company had 26 employees who provided documentation on their disabilities. The majority of these employees are long-term staff members who contribute their valuable skills and perspectives in alignment with their health conditions. While the Company does not yet have a dedicated formal mechanism to actively seek insights from individuals with disabilities, it is committed to fostering an inclusive environment. The Company’s engagement processes are designed to encompass the entire workforce, ensuring that all employees, regardless of age, gender, nationality, or health status, could raise their concerns and bealued. The Company has the Code of Business Ethics, which stipulates that the Company respects and guarantees the human rights enshrined in international and Lithuanian law, and ensures employee protection from forced or compulsory labour. A Works Council is elected and operates in the Company to represent and protect the Company employees’ rights and interests at work. In accordance with national labour legislation and a mutual agreement, the Company and the Works Council exchange information on occupational, social and economic issues and consult on mutually acceptable ways of resolving these issues. The Working Council meets as and when necessary, usually once every quarter of the calendar year. The Company’s HR director is the Company’s authorised representative to provide the Works Council with the information referred to in the mutual agreement, draft documents for the approval or amendment of the internal legislation, as well as to receive and respond to the Works Council’s enquiries, comments and/or suggestions by providing the Works Council with the Company’s views and proposals as discussed and agreed upon by the Company’s management. Given the constructive discussions between the parties on relevant issues and implementation of targeted 126 2024 measures, the Company considers that the mutual agreement with the Works Council is being effectively implemented. S1-3 Processes to remediate negative impacts and channels for own workforce to raise concerns When taking decisions on occupational health and safety, the employer-designated safety and health officers consult regularly, orally and in writing, and by going to the particular workplace, with head of units, specialists and other employees on relevant needs, priorities, the effectiveness of implemented measures and other necessary occupational health and safety related changes. Taking into account the comments and suggestions made by the representatives of own workforce, the employer-designated safety and health officers initiate and monitor the implementation of the necessary measures. A summary of the occupational safety measures implemented during the reporting year is provided in paragraph S1-4. Accidents involving injuries to employees are addressed in accordance with the Company’s procedures and legal requirements. The employer’s safety and health representatives examine the information provided by the injured employee or by the person who witnessed the incident, assess whether the employee’s injury was the fault of the employer and, if necessary, initiate corrective and preventive action to ensure non recurrence. The Company’s employees may submit complaints, suggestions and/or comments on employee-related matters to their immediate supervisor, to a human resources unit, or to the Company’s executives, or by depositing them in special anonymous boxes located at the Company’s production branches. Written employee reports are usually responded in writing. If the concern raised is relevant to a group of employees, a meeting may be organised. This channel of cooperation with the own workforce is ensured in all the Company’s structural units. Employees are introduced to Company’s procedures, providing for means for employees to raise relevant concerns: • the procedure for reporting suspected discrimination or a violation of equal opportunities is set out in the Company’s Rules of Procedure; • the procedure for reporting concerns relating to product safety, integrity, quality and legality is also set out in the Company’s Rules of Procedure; • the detailed description of the procedure for reporting incidents of abuse or harassment is provided in the Company’s Abuse and Harassment Prevention Policy, which stipulates that information about the employee who made the report, the circumstances and persons indicated in the report shall be treated as confidential and shall not be disclosed to persons not involved in the violation and its investigation, except in cases provided for by law where the investigation of the violation is referred to law enforcement authorities; • the detailed description of the procedure for reporting infringements of the law that threaten or violate the public interest is provided in the description of the procedures for ensuring the functioning of the Company’s internal whistleblowing channel. The description stipulates that the data and any other information from which the identity of the person who reported the infringement may be inferred, directly or indirectly shall be processed only for the purposes of performing job duties or the Company’s functions, and that such information shall not be disclosed to third parties unless it is objectively necessary for the purpose of investigating the report and/or the violation of employment obligations; 127 2024 • employees may contact the Company regarding issues related to the processing of employees’ personal data in the manner set out in the rules for applying implementing measures for the Employee Data Retention Policy. The Company’s procedure for reporting through internal whistleblowing channel prohibits the Company from retaliating against a whistleblower. The precise effectiveness of own workforce’s awareness of and trust in these channels has not been evaluated. S1-4 Taking action on material impacts on own workforce, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions The Company has a range of health and safety measures in place to protect employees from illness, injury and other hazards. The Company provides accident insurance and supplementary health insurance for all employees. The measures put in place are improved considering the isolated accidents occurring in the Company. During the reporting period, the structural units implemented various health and safety-related measures designed to manage occupational risk factors and prevent accidents at work. These include: mandatory employee briefing; role-based employee training (e.g., for employees lifting loads manually, working with chemicals, working in conditions of increased noise level, operating electric forklifts and trolleys); updating and/or installing safety and warning signs; marking areas of higher risk with signalling ribbons and instructions; carrying out periodic inspections of forklifts, shelving and ladders; renewing personal protective equipment; upgrading engineering facilities and technologies (e.g, installing additional fans and ducts, improving lighting quality in workplaces). All own workforce is subject to the training requirement, according to the specifics of their work. The employer-designated safety and health officers regularly consult with heads of units, specialists and other employees on relevant needs and the efficiency of measures implemented. Regular consultations are planned to continue to further ensure a timely response to comments or suggestions made by the representatives of own workforce regarding the improvement of health and safety-related working conditions. Accidents involving injuries to employees are addressed in accordance with the Company’s procedures and legal requirements. The employer’s safety and health representatives examine the information provided by the injured employee or by the person who witnessed the incident, assess whether the employee’s injury was the fault of the employer and, if necessary, initiate corrective and preventive action to ensure non recurrence. The Company also has procedures and processes in place to manage emerging occupational health and safety risks. Once a year, the internal audit tests the processes for effectiveness. In the area of secure employment, during the reporting period, a special attention was paid to the own workforce of the ice cream production department of the Company’s branch in Panevėžys. Given a temporary increase in seasonal ice cream production and the associated fixed-term nature of the work, employees were provided with additional training, more flexible work arrangements were offered to employees with young children, and the roll out of automated ice cream packaging solutions was launched. To retain employees, they are offered to work in other production units in the period between production seasons. Some employees avail themselves of these opportunities. The Company plans to continue to look for ways and apply targeted measures to improve secure employment for its own workforce. To reduce risks related to adequate wage, in 2024, the Company increased its payroll fund, which was 12% higher than the previous year, while the average wage of employees increased by 9% during the year. Each year, the Company consistently increases its payroll fund, taking into account the minimum wage applicable in Lithuania, the competitive environment among peers, and the Company’s financial performance. 128 2024 All actions implemented in 2024 to manage material impacts and risks were applied to the Company’s own workforce in its production branches, logistics centres and offices. Value chain workers were not subject to these actions. As no follow-up action plan has been adopted by the Company at this time, it cannot provide information on the timeframes for completion of the planned actions. The Company has not yet started the monitoring of the effectiveness of the actions implemented. Each year, the Company conducts periodic occupational safety training, to ensure that the Company’s activities do not contribute to material negative impacts on its own workforce. Employee opinion surveys regarding working conditions have been launched in the Company’s production branches. The Company takes into account, as appropriate, employees’ suggestions for improving working conditions, e.g. redesigning premises to provide employees with more space for rest during breaks. S1-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities AB Pieno žvaigždės has not, at the present moment, set any measurable outcome-oriented targets related to identified impacts and risks. The employer-designated safety and health officers regularly consult with heads of units, specialists and other employees on the efficiency of measures implemented, relevant needs and prioritisation. The heads of the Company’s structural units are informed about the proposed initiatives and the need for solutions. Every year, the Company’s structural units update their plans of measures for eliminating and reducing occupational risk factors related to the prevention of accidents at work and occupational diseases. The Company conducts annual assessments of accident rate in the reporting period. The Company’s structural units aim to ensure that accident rates are not on the upward trend and that accidents in specific workplaces do not recur. In the area of the secure employment, HR specialists regularly consult with the heads of production and other departments on action plans, related work arrangements and the need for their own workforce. The nature of the planning and execution of agreements is determined on an as-needed basis, for example, in the case of seasonal production, planning for joint actions starts as early as possible, whereas the execution and coordination of actions are discussed and adjusted throughout the seasonal production period, considering comments and suggestions from employees and management. The Company regularly analyses indicators related to employee turnover and/or intra-company placements. To mitigate the potential risks of insufficiently competitive wages in the medium and long-term, the Company’s HR and economic analysis specialists are involved in the Company’s payroll fund planning and scenario modelling, taking into account the labour market dynamics and forecasts. Each year, the Board of the Company approves the Company’s annual budget, setting the guidelines for the Company’s wage dynamics. To engage own workforce in the identification of any lessons learnt or improvements made as a result of the Company’s performance, the Company is planning to develop a unified methodology for organising employee opinion surveys in 2025. 129 2024 S1-6 Characteristics of the undertaking's employees Gender Number of employees (head count) as at 31/12/2024 Male 787 (47%) Female 896 (53%) Other 0 Not reported 0 Total employment 1 683 (100%) 2024 (as at 31/12/2024) FEMALE MALE OTHER () NOT DISCLOSED TOTAL Number of employees (head count) 896 787 0 0 1 683 Number of non-guaranteed hours employees (head count) 0 0 0 0 0 Number of permanent employees (head count) 849 770 0 0 1 619 Number of temporary employees (head count) 47 17 0 0 64 (*) Gender a specified by the employees themselves Employee turnover 2024 Number of employees who left the Company 524 Employee turnover rate, % 31 All employee data is accounted based on the Company’s personnel registration system records. All tables showing the number of own workforce use the head count. The number of employees is determined as of the end of the financial year. As the Company operates only in Lithuania, no breakdown of employees by country is provided. The employee turnover rate is calculated by dividing the number of employees who left the Company during the reporting period by the number of employees at the beginning of that period. The most representative number of employees in the financial statements is presented in paragraph 15 of the Corporate Governance Report of the Company for 2024. The Governance Report gives the average number of employees in full-time units, whereas the above tables use the actual number of employees at the end of the financial year, therefore data does not tally. S1-10 Adequate wages All employees within the Company are paid an adequate wage in line with the benchmarks applicable under national labour law, i.e. the applicable minimum monthly wage (MMW) or the minimum hourly wage (MHW). In accordance with national labour law, MMW or MHW is paid only for unqualified work in the 130 2024 Company. Unqualified work in the Company is considered to be the work of domestic workers, dressers and/or cleaners. Other job positions created in the Company are classified in the relevant qualified job groups, which are subject to appropriate remuneration bands above the MMW or MHW. S1-11 Social protection The Company is guided by national legislation on social protection of employees. All Company’s employees are covered by social protection, through public programs, against loss of income due to sickness, loss of income due to unemployment, loss of income due to employment injury and acquired disability, loss of income due to parental leave and loss of income due to retirement. S1-14 Health and safety metrics All own workforce, which consists only of the Company’s employees, is covered by the Company’s health and safety management system. During the reporting period, there were no fatalities as a result of work-related injuries and work-related ill health of the Company’s own workforce. In 2024, the Company recorded 27 accidents with minor injuries: 17 of which happened at workplace, and 10 during commute to/from work. During the reporting period, the average number of full-time employees at the Company was 1,698. Based on the assumption that a full-time worker works an average of 2,000 hours per year (the Company’s employees worked 3,366,000 hours per year), the Company’s accident rate 1 during the reporting period was 1.6 accidents per 100 employees. The number of days lost to accidents was 990 calendar days, an average of 36 calendar days. The above data covers only the Company’s employees working in production branches, warehouses and offices controlled by the Company. Accident records are kept in the Company’s logbooks, in accordance with legal requirements. The number of days lost to work-related injuries of the Company’s employees is extracted from the Company’s internal accounting system or the information provided by the Board of the State Social Insurance Fund. When calculating the accident rate, the Company decided to use the average number of its employees worked during the reporting period, as this is a better reflection of the number of employees during the year. S1-17 Incidents, complaints, and severe human rights impacts discrimination or violation of equal opportunities in the Company’s structural units. In 2024, the Company received one report relating to stress and psychological abuse experienced by an employee due to the unethical and disrespectful behaviour of another employee. The head of the unit was notified about the incident, issued an official note and forwarded the information to the Human Resources Department. In accordance with the procedures laid down in the Company’s Abuse and Harassment Prevention Policy, the Company reacted promptly to the report, set up a commission to investigate and assess the situation, and undertook immediate measures to prevent negative consequences, and to ensure that any manifestations of abuse and harassment in the workplace were not tolerated. Since the complaint was resolved internally, the National Contact Points for OECD Multinational Enterprises were not informed ______ 1 The accident rate was computed from the following formula: Accident rate = Number of accidents during the reporting period / Total hours worked by all employees in the reporting period x 200,000. Therefore the accident rate = 27 / (1,698 x 2,000) x 200,000 = 1.6. 131 2024 about the matter. There were no fines, penalties or compensation for damages as a result of the incidents of abuse or harassment during the reporting period. 132 2024 Workers in value chain SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model In its operations, AB Pieno žvaigždės has regular contacts with a wide range of business actors, including upstream value chain entities that produce and deliver the raw materials it needs, and downstream value chain entities that provide distribution services and other logistics activities. This cooperation is relevant to our business strategy, but it can also contribute to potential negative impacts in our value chain, for example, the impact to the value chain wages, raw material (e.g. milk) availability and quality . The Company’s value chain consists of a diverse workforce, including, but not limited to, upstream value chain workers of dairy farms, production plants of suppliers, as well as downstream value chain service providers responsible for the storage and distribution of products. This disclosure covers all value chain workers who are materially impacted. The Company considered issues related to child or forced labour, however, no significant IROs were identified. The double materiality assessment identified the following material impacts related to value chain workers: Adequate wages. The Company is one of the largest dairy processing and dairy product producing companies in the Lithuanian market, with milk as its main raw material. Although the Company cannot influence the wages paid by other raw material suppliers, the majority of milk is purchased from Lithuanian farmers, for whom the Company’s purchases potentially represent a significant part of their income. The volatile price of raw milk may affect the income of workers in the value chain, however, the Company is not in the power to determine the level of wages for the whole industry. Although the Company has clearly defined guidelines on working conditions for its employees, employees of supply chain partners (in particular dairy farms) wages and work conditions may be impacted by volatile market conditions. Health and safety. There may be incidents, injuries and fatalities of upstream and downstream value chain workers in dairy farms, warehouses, production branches, as well as drivers serving the Company. Drivers and workers employed to transport goods are exposed to increased safety risks due to the operation of vehicles. Value chain workers working with chemicals are exposed to occupational diseases and increased health risks. Therefore, this impact is directly related to our business model and the nature of the activities of our partners to keep up with our high-quality standards. Most of the Company’s supply chain is located in Europe, where business entities have a statutory obligation to provide safe working conditions to employees. Additionally, most suppliers of raw materials (except for milk) have the GFSI-Recognised certification programs (BRC, IFS, FSSC 22000), against which auditors must verify working conditions of employees. 133 2024 S2 Workers in value chain Material impacts, risks and opportunities Position on the value chain Time horizon Upstream value chain Own operations Downstream value chain Short -term Medium -term Long -term Adequate wages Existing negative effects ● ● ● ● Health and safety Existing negative effects ● ● ● ● S2-1 Policies related to value chain workers Currently, AB Pieno žvaigždės does not have policies related to value chain workers or a supplier code to manage the identified material impact in the value chain. Since majority of the Company’s supply chain operations are conducted in Europe, where strict legal requirements apply . S2-2 Processes for engaging with value chain workers about impacts The Company does not currently have a process to engage with workers in the value chain. S2-3 Processes to remediate negative impacts and channels for value chain workers to raise concerns Although AB Pieno žvaigždės has established an internal whistleblowing channel accessible on the Company’s website (https://pienozvaigzdes.lt/com/en/content/26-protection-of-whistleblowers), the channel is not designed to address complaints, requests or reports intended to protect exclusively personal interests. However, all stakeholders, including value chain workers, may express concerns about alleged or committed criminal offences, administrative misconduct, violation of employment obligations, as well as a gross violation of the binding regulations of professional ethics or another breach of law, which constitutes a threat to the public interest or which is in violation thereof, of which a person becomes aware from his/her existing or previous employment or contractual relationship with the Company. The channel address the reports regarding: • a threat to public security or health, or to life or health of person(s); • environmental hazards; • obstruction or unlawful interference in the conduct of investigations by law enforcement authorities, or in the justice administration by courts; • financing of illegal activities; 134 2024 • unlawful or obscure use of public funds or property; • illegally acquired property; • concealment of the consequences of an infringement committed, obstruction in the conduct of establishing the scope and scale of such consequences; • other infringements that are in violation of the public interest. S2-4 Taking action on material impacts on value chain workers, and approaches to managing material risks and pursuing material opportunities related to value chain workers, and effectiveness of those action During the reporting year, AB Pieno žvaigždės had not adopted any actions to remediate negative impacts on value chain workers. In 2024, for the first time, the Company conducted a double materiality assessment which identified material sustainability matters, and therefore plans to adopt the relevant actions in the coming years. S2-5 Targets related to managing material negative impacts, advancing positive impacts and managing material risks and opportunities The Company has not, at the present moment, set any measurable outcome-oriented targets related to negative impact on value chain workers, as it cannot directly influence the operations of other business entities. Since the Company currently does not have policies or actions related to value chain workers, the effectiveness is not monitored. 135 2024 Consumers and end-users SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model AB Pieno žvaigždės is a specialized producer of high value-added fresh dairy products, including milk, butter, cheeses, whey flour, ice cream and other dairy products . To meet the different needs of consumers, the Company also produces organic, Halal and Kosher products, ensuring the highest quality and food safety standards. Complete and accurate product labelling is one of the most important criteria to ensure that consumers can make informed choices about their dietary preferences. Anticipating the future needs of the modern consumer and maintaining the highest quality standards is a key strategic objective of the Company. This disclosure covers all materially impacted consumers and end-users, as the Company’s products are used by a wide range of groups, regardless their age, gender, social status, etc. The following material impacts, risks and opportunities related to consumers and end-users have been identified through the double materiality assessment process: Product safety and quality. The products provided by the Company are important for people’s balanced diet and can make a positive contribution to the health of the community, ensuring that consumers receive the necessary nutrients, such as proteins, calcium, vitamins and probiotics, which support bone strength, the immune system, and the overall well-being of the body. Dairy products are easily absorbed and suitable for a wide range of age groups, including children, seniors and people promoting active lifestyles. AB Pieno žvaigždės products meet the highest food safety and quality standards: the microbiological safety target thresholds that are at least 30% stricter than those stipulated in legislation and/or regulatory documents. The Company’s actions ensuring positive impacts are disclosed under paragraph S4-4. Taking action on material impacts on consumers and end-users, and approaches to managing material risks and pursuing material opportunities related to consumers and end-users, and effectiveness of those actions. 136 2024 However, despite the high quality and food safety standards applied in the Company, the placing on the market of defective and unsafe products presents risk of disrupting consumers’ health and incurring financial compensation costs for consumers who have suffered damage to health or injuries. The Company would also incur financial losses due to the product recall and its disposal costs. This would increase the Company’s operating costs and reduce profitability. Unsafe and low-quality products can also damage the Company’s image, reduce consumer confidence and may threaten the loss of some customers. This may have an adverse effect on the Company’s revenues and reduce profitability. The impacts and risks identified by AB Pieno žvaigždės are associated with all consumers who buy the Company’s products, regardless of the specific group to which they belong. S4 Consumers and end-users Material impacts, risks and opportunities Position on the value chain Time horizon Upstream value chain Own operations Downstream value chain Short -term Medium -term Long -term Product safety and quality Existing positive effects ● ● ● ● Product safety and quality Risk ● ● ● ● S4-1 Policies related to consumers and end-users The top priority of AB Pieno Žvaigždės quality, food safety and environmental policy is to offer safe, nutritious, high-quality products that meet consumer needs. They key policy elements: 1. Use the most advanced production technology and work organisation and logistics solutions which ensure the highest production quality, authenticity, hygiene level and safety, produce customer-driven products in accordance with IFS, BRC GS, FSSC 22000, Halal, Kosher, organic certification requirements; 2. Ensure that 100% of production meets the Company’s quality and food safety standards. Apply at least 30% stricter target values for product safety indicators in the Company’s quality standards than those stipulated in legislation and/or regulatory documents; 3. Maintain and continuously improve the food safety culture and standards, quality management and environmental management systems; 4. Conserve the environment and prioritise clean technology, both company-wide and throughout the entire cycle; 5. Deliver the final product that meets consumers’ expectations and the lowest cost principle. 137 2024 The policy applies to all facilities managed by the Company, production branches in Kaunas, Mažeikiai, Panevėžys and Pasvalys, as well as logistics centres in Vilnius and Klaipėda, and to employees working in these facilities, who, each year, are introduced to the content of the policy and related integrated quality management processes. The Board is responsible for the implementation of the Policy. The Lithuanian food industry is strictly supervised by the State Food and Veterinary Service (SFVS), which ensures compliance with regulatory requirements and is responsible for addressing complaints submitted by consumers. The Company is also subject to annual independent audits confirming compliance with the criteria set out in the standards recognised by the Global Food Safety Initiative. This ensures that the Company maintains its material impact and manages its risks. The policy has been developed on the basis of internal stakeholder consultation to manage the impacts and risks for all consumers and end-users. The policy is publicly available on the Company’s website, therefore it is accessible to all stakeholders, without specifying particular consumers or groups of end-users. S4-2 Processes for engaging with consumers and end-users about impacts Satisfying consumers’ expectations is the key to the Company, for this reason we strive to ensure smooth communication and prompt resolution of complaints. We understand that bad customer experiences can affect our brand reputation, therefore we provide various opportunities to submit comments or questions about our products. AB Pieno žvaigždės Quality Line is the main channel for consumers to directly express concerns, opinions and expectations. The packaging of our products is provided with clearly indicated contact details: telephone number, email address, and physical production address, so that consumers can easily contact us. The Company’s website also provides contact details for users to conveniently contact the Company. Consumer reports are regularly recorded by the Quality Line and are addressed by the quality officers, who are part of the highest governance bodies in the individual branches of the Company, and are managed through a centralised database to ensure effective monitoring and decision-making. In accordance with the established procedure, the designated responsible persons must contact the consumer who submitted the report directly by email or phone and to answer to all questions raised. The report is recorded as resolved and potential improvement measures are assessed only after verbal or written confirmation is obtained from the consumer. Consumers can also raise their concerns through national authorities such as SFVS, the State Consumer Rights Protection Authority or the representatives of the Ministry of Health of the Republic of Lithuania. The Company’s processes of engagement and remediation of negative impacts provide an opportunity to promptly address the information received and quickly make individual decisions, in particular aimed at managing the identified risks. Further evaluation of the reports helps the Company’s specialists to take into account the observations or expectations expressed by consumers and improve products. The Company engages with customers through various channels such as such as email, calls, virtual or in- person meetings, etc. Business customers have direct and regular access to the Company’s assigned managers, who (where necessary) address individual needs, expectations or incidents, by engaging other internal experts. The precise effectiveness of clients’ and customers’ awareness of and trust in these channels has not been evaluated. Reports submitted to the Company via the Quality Line are handled in accordance with AB Pieno žvaigždės Privacy Policy that protects consumers from retaliation. 138 2024 S4-3 Processes to remediate negative impacts and channels for consumers and end-users to raise concerns Consumers and/or end-users can express concerns and needs through AB Pieno žvaigždės Quality Line, which is described in more detail in paragraph S4-2. S4-4 Taking action on material impacts on consumers and end- users, and approaches to managing material risks and pursuing material opportunities related to consumers and end-users, and effectiveness of those actions The Company’s main objective is to ensure the highest production quality, authenticity, hygiene level and safety. All our production facilities are certified to Global Food Safety Initiative (GFSI) standards and verified by independent third-party auditors. The Company’s branch Kauno pienas is certified to BRC (Global Standard For Food Safety) and IFS Food (International Featured Standards for Food), meanwhile branches Mažeikių pieninė, Panevėžio pienas and Pasvalio sūrinė are certified to IFS Food and FSSC 22000. These certifications give consumers around the world confidence in the high standards of quality and safety of our products. Each year, independent auditors verify the effectiveness of compliance with food safety and quality standards. Since initial certification, the Company’s subsidiaries have consistently maintained compliance with the established criteria, ensuring the highest level of safety in production processes and products. If there is the slightest doubt about the safety, the Company’s products are not placed on the market - the product safety indicators are subject to target thresholds at least 30% stricter than those stipulated in the legislation. The indicators are strictly monitored by the Company’s in-house laboratory specialists and accredited independent external laboratories. The precision of the Company’s laboratories’ work is reflected in their participation in benchmark tests against established criteria. If there were any indication of a food safety risk, the products would be immediately recalled according to an approved procedure. Every year, the Company’s specialists conduct exercises, simulate situations regarding potentially unsafe products to monitor the effectiveness of the system, constantly looking for opportunities to improve the situation. Furthermore, the introduction of stricter safety indicators is aimed at avoiding risks that may arise in the downstream value chain (during transportation and distribution of products). The regulators also conduct the inspections of the public limited company on the basis of an unannounced inspection protocol. All actions taken are focused on the downstream value chain, in particular consumers, and apply to all the Company’s products. During porting period, the Company made additional investments in X-ray screening systems for three product production lines in its branches Panevėžio pienas and Mažeikių pieninė. These systems will help to reduce the risk of possible contamination of products with external components and improve the Company’s food safety and quality performance. The performance effectiveness is monitored by analysing product recalls. At the moment, AB Pieno žvaigždės does not have any action plan in place, as its processes ensure effective management of impacts and risks. S4-5 Targets related to managing material negative impacts, advancing positive impacts and managing material risks and opportunities In 2024, AB Pieno žvaigždės set itself the target of zero recalls. This relates to Objective 2 of the Company’s policy: ensure that 100% of production meets the Company’s quality and food safety standards. The target 139 2024 set has no timeframe and covers all the Company’s products being sold, regardless of geographical boundaries, and has impact on the Company’s customers and end-users. AB Pieno žvaigždės does not engage directly with consumers or end-users when setting targets, tracking the performance against them, or identifying lessons and improvements. All product safety and quality-related incidents are addressed promptly to ensure consumer safety and legal compliance. The complaint received is registered by the Company’s Quality Line and the information is immediately forwarded to the Company’s Board. Recalls follow a standardised and well-defined process, which is reviewed and simulated annually in accordance with the requirements defined in the IFS, BRC, and FSSC 22000 standards to ensure the effectiveness of the process. The process is applied throughout the downstream value chain. In 2024, there were no recalls recorded. 140 2024 Governance 141 2024 Business conduct For AB Pieno žvaigždės, as one of the largest and modern dairy processing companies in Lithuania and the Baltic States, the business conduct is a key element in maintaining leadership within dairy industry and implementing its strategy. It is a responsibility that the Company promotes throughout its value chain and expects employees, suppliers, business partners and external investment managers to adhere to these principles. The Company’s Code of Business Ethics sets out core business principles upon which the Company’s business is based and the Company’s employees are guided in establishing and maintaining relationships with customers, suppliers, partners, state authorities, and in communicating with each other. The Code of Business Ethics describes the expectations and guidelines that apply to all employees. The Code covers topics such as respect for human rights and freedoms, safe working conditions and environment protection, honesty and transparency, getting paid for work, avoiding conflicts of interest and confidentiality. GOV-1 The role of the administrative, management and supervisory bodies The Board is responsible for the Company’s Code of Business Ethics. The Company’s management is responsible for the implementation of the provisions of this Code and for the intolerance of actions that do not comply with the provisions of this Code. The expertise of management bodies is discussed in further detail in paragraph ESRS 2 GOV-1. IRO-1 Description of the processes to identify and assess material impacts, risks and opportunities The double materiality assessment was carried out in accordance with the requirements of ESRS 1 and the EFRAG Double Materiality Guidelines. The process is based on the principles set out in ESRS 1 chapter 3 and AR 16 ESRS 1. Internal specialists and external experts were consulted to identify impacts, risks and opportunities related to business ethics. The assessment analysed the Company’s sites and business processes to identify impacts, risks and opportunities, both within the Company and across the value chain from upstream to downstream. The analysis used publicly accessible information on the sector, including data from national and international institutions and sector trends. Publicly accessible data was considered sufficient to identify business conduct risks and opportunities. The following material impacts related to business ethics were identified in the double materiality assessment: Animal welfare. AB Pieno žvaigždės depends on animal produce, specifically milk since it is the main Company’s raw material. The Company does not ensure compliance with animal welfare standards throughout its supply chain, as it does not have an approved supplier code of conduct and does not conduct supplier screening. Failure to comply with animal welfare standards in the supply chain exposes the Company to reputational and sales risk. In addition, failure to comply with animal welfare requirements cause health problems to animals, which can lead to a deterioration in the quality of the milk, animals may require medication, and this may affect the quality of the products produced. The Company does not currently have a formal supplier code of conduct covering animal welfare standards and does not conduct supplier screening but is working to improve its supply chain management and to 142 2024 ensure that partners meet high ethical standards and comply with national and international animal welfare legislation. In 2024, for the first time, AB Pieno žvaigždės conducted a double materiality assessment which identified material impact on animal welfare. The Company’s most important suppliers operate in the European Union, therefore are obliged to comply with established legal regulations. However, the Company acknowledges that the supplier code of conduct, which includes clear animal welfare criteria, would be an important step towards ensuring consistent and responsible solutions throughout the supply chain. This would not only give the Company a greater level of control but also help partners to better understand and implement the principles of animal welfare. The Company has the EKO product line, which confirms its raw material’s compliance with organic production standards. In accordance with the organic production requirements, all purchased organic ingredients must have certificates of compliance issued by the licensed company. Organic raw milk is purchased only from certified organic farms that comply with the EU Regulation on organic production and labelling of organic products. The principles of the Regulation define that organic production must sustain the health of animals and observe a high level of animal welfare. To avoid negative effects on the environment and animal health and welfare, producers are also take measures to contribute to a high level of animal health and a non-toxic environment. G1 Business conduct Material impacts, risks and opportunities Position on the value chain Time horizon Upstream value chain Own operations Downstream value chain Short -term Medium -term Long -term Animal welfare Existing negative effects ● ● ● ● G1-1 Business conduct policies and corporate culture AB Pieno žvaigždės policy on business ethics is based on the Company’s values, the Company’s Code of Business Ethics as well as specific policies (Privacy Policy, Whistleblower Protection Policy), which include anti-corruption, data protection, IT security, quality, food safety and environmental protection principles. These policies help our employees and suppliers to make ethical decisions. This Company’s approach aims to ensure that all business is conducted honestly, ethically and in a socially responsible manner throughout the value chain. The Company’s Code of Business Ethics sets the core values and guidelines for conduct that foster a positive corporate culture. This ensures responsible, transparent and honest behaviour both internally and with external partners, contributing to a positive corporate image and sustainability. Key guidelines, such as respect for human rights, provide a detailed description of the Company’s commitment to business practices 143 2024 such as diversity and fair competition. The Company competes in the marketplace only in compliance with requirements as prescribed by law and does not engage in prohibited, anti-competitive activities. The Company pays state-imposed taxes, makes settlements with employees in a transparent manner and encourages other market participants to act in a transparent manner and adhere to ethical business principles. The Company cooperates with and provides information to state authorities in compliance with requirements as prescribed by law. Additionally, the Company ensures minimum social safeguards in line with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, and has neither negative nor positive impacts. To ensure the effectiveness of business ethics, the Company’s employees may submit notes about breaches of this Code, as well as report issues or questions related to this Code of Business Ethics, to their immediate supervisor, to a human resources unit, or to the Company’s executives; or such notes may be deposited in special anonymous boxes located at the Company’s production branches. The Company’s management is responsible for the implementation of the provisions of this Code and for the intolerance of actions that do not comply with the provisions of this Code. The Code is reviewed and updated as necessary to take account of relevant legislative developments. The Code of Business Ethics is publicly available on the Company’s website. Its provisions may be communicated to the Company’s customers, suppliers, partners, creditors and other persons. Protection of whistle-blowers The Company ensures the protection of whistleblowers through its reporting channels on the internet and at the Company’s premises, as well as through the Quality Line. AB Pieno Žvaigždės has a whistleblowing channel that allows individuals such as employees, managers, customers, suppliers and business partners to report any financial or legal violations. The channel is accessible via Company’s website (https://pienozvaigzdes.lt/com/en/content/26-protection-of-whistleblowers) and all reported issues are reviewed and assessed by a designated competent person. The Company has adopted the Whistleblowing Procedure and a Whistleblowing Form. 144 2024 Appendix IRO-2 Disclosure requirements in ESRS covered by the company’s Sustainability statement List of Disclosure Requirements Page ESRS 2 General Disclosures BP-1 General basis for preparation of sustainability statements 79 BP-2 Disclosures in relation to specific circumstances 79 GOV-1 The role of the administrative, management and supervisory bodies 79 GOV-2 Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies 80 GOV-3 Integration of sustainability-related performance in incentive schemes 80 GOV-4 Statement on due diligence 80 GOV-5 Risk management and internal control over sustainability reporting 81 SBM-1 Strategy, business model and value chain 81 SBM-2 Interests and views of stakeholders’. 83 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 85 IRO-1 Description of the processes to identify and assess material impacts, risks and opportunities 90 IRO-2 Disclosure requirements in ESRS covered by the company’s Sustainability statement 92 E1 Climate change ESRS 2 GOV-3: Integration of sustainability-related performance in incentive schemes 103 E1-1 Transition plan for climate change mitigation 103 ESRS 2 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 103 ESRS 2 IRO-1 Description of the processes to identify and assess material climate-related impacts, risks and opportunities 103 E1-2 Policies related to climate change mitigation and adaptation 104 E1-3 Actions and resources in relation to climate change policies 105 E1-4 Targets related to climate change mitigation and/or adaptation 106 E1-5 Energy consumption and mix 106 E1-6 Gross Scopes 1, 2, 3 and total GHG emissions 107 E1-7 GHG removals and GHG mitigation projects financed through carbon credits 109 E1-8 Internal carbon pricing 109 E1-9 Anticipated financial effects from material physical and transition risks and potential climate-related opportunities 109 E2 Pollution IRO-1 Description of the processes to identify and assess material pollution-related impacts, risks and opportunities 110 E2-1 – Policies related to pollution 111 E2-2 – Actions and resources related to pollution 111 E2-3 – Targets related to pollution 112 E2-4 – Pollution of air, water and soil 112 E2-5 – Substances of concern and substances of very high concern 112 145 2024 E4 Biodiversity and ecosystems E4-1 Transition plan and consideration of biodiversity and ecosystems in strategy and business model 113 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 113 IRO-1 Description of the processes to identify and assess material biodiversity and ecosystem- related impacts, risks and opportunities 113 E4-2 Policies related to biodiversity and ecosystems 114 E4-3 Actions and resources related to biodiversity and ecosystems 115 E4-4 Targets related to biodiversity and ecosystems 115 E4-5 Impact metrics related to changes in biodiversity and ecosystems 115 E4-1 Transition plan and consideration of biodiversity and ecosystems in strategy and business model 115 E5 Resource use and circular economy IRO-1 – Description of the processes to identify and assess material resource use and circular economy-related impacts, risks and opportunities 116 E5-1 Policies related to resource use and circular economy 118 E5-2 Actions and resources related to resource use and circular economy 118 E5-3 Targets related to resource use and circular economy 118 E5-4 Resource inflows 118 E5-5 Resource outflows 119 E5-6 Anticipated financial effects from material resource use and circular economy-related risks and opportunities 120 S1 – Own Workforce SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 122 S1-1 Policies related to own workforce 123 S1-2 Processes for engaging with own workforce and workers' representatives about impacts 125 S1-3 Processes to remediate negative impacts and channels for own workforce to raise concerns 126 S1-4 Taking action on material impacts on own workforce, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions 127 S1-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities 128 S1-6 Characteristics of the undertaking's employees 129 S1-10 Adequate wages 129 S1-11 Social protection 130 S1-14 Health and safety metrics 130 S1-17 Incidents, complaints, and severe human rights impacts 130 S2 Workers in value chain SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 132 S2-1 Policies related to value chain workers 133 S2-2 Processes for engaging with value chain workers about impacts 133 S2-3 Processes to remediate negative impacts and channels for value chain workers to raise concerns 133 146 2024 S2-4 Taking action on material impacts on value chain workers, and approaches to managing material risks and pursuing material opportunities related to value chain workers, and effectiveness of those action 133 S2-5 Targets related to managing material negative impacts, advancing positive impacts and managing material risks and opportunities. 134 S4 Consumers and end-users SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 135 S4-1 Policies related to consumers and end-users 136 S4-2 Processes for engaging with consumers and end-users about impacts 137 S4-3 Processes to remediate negative impacts and channels for consumers and end-users to raise concerns 138 S4-4 Taking action on material impacts on consumers and end- users, and approaches to managing material risks and pursuing material opportunities related to consumers and end-users, and effectiveness of those actions 138 S4-5 Targets related to managing material negative impacts, advancing positive impacts and managing material risks and opportunities. 138 G1 Business conduct GOV-1 The role of the administrative, management and supervisory bodies 141 IRO-1 Description of the processes to identify and assess material impacts, risks and opportunities 141 G1-1 Business conduct policies and corporate culture 142 147 2024 ESRS 2 IRO-2 List of EU datapoints Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Benchmark Regulation reference EU Climate Law reference Material/non- material Page ESRS 2 GOV-1 Board’s gender diversity paragraph 21 (d) Indicator number 13 of Table #1 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Material 79 ESRS 2 GOV-1 Percentage of board members who are independent paragraph 21 (e) Delegated Regulation (EU) 2020/1816, Annex II Material 79 ESRS 2 GOV-4 Statement on due diligence paragraph 30 Indicator number 10 Table #3 of Annex 1 Material 80 ESRS 2 SBM-1 Involvement in activities related to fossil fuel activities paragraph 40 (d) i Indicator number 4 of Table #1 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 (6) Table 1: Qualitative information on Environmental risk and Table 2: Qualitative information on Social risk Delegated Regulation (EU) 2020/1816, Annex II Non-material ESRS 2 SBM-1 Involvement in activities related to chemical production paragraph 40 (d) ii Indicator number 9 Table #2 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Non-material ESRS 2 SBM-1 Involvement in activities related to controversial weapons paragraph 40 (d) iii Indicator number 14 of Table #1 of Annex 1 Delegated Regulation (EU) 2020/1818 (7), Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II Non-material ESRS 2 SBM-1 Involvement in activities related to cultivation and production of tobacco paragraph 40 (d) iv Delegated Regulation (EU) 2020/1818, Article 12(1) Delegated Non-material 148 2024 Regulation (EU) 2020/1816, Annex II ESRS E1-1 Transition plan to reach climate neutrality by 2050 paragraph 14 Regulation (EU) 2021/1119, Article 2(1) Non-material ESRS E1-1 Undertakings excluded from Paris-aligned Benchmarks paragraph 16 (g) Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 1: Banking book- Climate Change transition risk: Credit quality of exposures by sector, emissions and residual maturity Delegated Regulation (EU) 2020/1818, Article 12.1 (d) to (g), and Article 12.2 Non-material ESRS E1-4 GHG emission reduction targets paragraph 34 | Indicator number 4 Table #2 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book- Climate Change transition risk: alignment metrics Delegated Regulation (EU) 2020/1818, Article 6 Non-material ESRS E1-5 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) paragraph 38 Indicator number 5 Table #1 and Indicator n. 5 Table #2 of Annex 1 Material 106 ESRS E1-5 Energy consumption and mix paragraph 37 Indicator number 5 of Table #1 of Annex 1 Material 106 ESRS E1-5 Energy intensity associated with activities in high climate impact sectors paragraphs 40 to 43 Indicator number 6 of Table #1 of Annex 1 Material 106 ESRS E1-6 Gross Scope 1, 2, 3 and Total GHG emissions paragraph 44 Indicators number 1 and 2 Table #1 of Annex 1 Article 449a; Regulation (EU) No 575/2013; Commission Implementing Delegated Regulation (EU) 2020/1818, Material 107 149 2024 Regulation (EU) 2022/2453 Template 1: Banking book- Climate Change transition risk: Credit quality of exposures by sector, emissions and residual maturity Article 5(1), 6 and 8(1) ESRS E1-6 Gross GHG emissions intensity paragraphs 53 to 55 Indicator number 3 of Table #1 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book- Climate Change transition risk: alignment metrics Delegated Regulation (EU) 2020/1818, Article 8(1) Material 109 ESRS E1-7 GHG removals and carbon credits paragraph 56 Regulation (EU) 2021/1119, Article 2(1) Non-material ESRS E1-9 Exposure of the benchmark portfolio to climate-related physical risks paragraph 66 Delegated Regulation (EU) 2020/1818, Annex II Delegated Regulation (EU) 2020/1816, Annex II Disclosure Requirement that is phased- in ESRS E1-9 Disaggregation of monetary amounts by acute and chronic physical risk paragraph 66 (a) ESRS E1-9 Location of significant assets at material physical risk paragraph 66 (c). Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraphs 46 and 47; Template 5: Banking book- Climate change physical risk: Exposures subject to physical risk. Disclosure Requirement that is phased- in ESRS E1-9 Breakdown of the carrying value of its real estate assets by energy-efficiency classes paragraph 67 (c). Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraph 34;Template 2: Disclosure Requirement that is phased- in 150 2024 Banking book- Climate Change transition risk: Loans collateralised by immovable property - Energy efficiency of the collateral ESRS E1-9 Degree of exposure of the portfolio to climate- related opportunities paragraph 69 Delegated Regulation (EU) 2020/1818, Annex II Disclosure Requirement that is phased- in ESRS E2-4 Amount of each pollutant listed in Annex II of the E-PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil, paragraph 28 Indicator number 8 Table #1 of Annex 1 Indicator number 2 Table #2 of Annex 1 Indicator number 1 Table #2 of Annex 1 Indicator number 3 Table #2 of Annex 1 Non-material ESRS E3-1 Water and marine resources paragraph 9 Indicator number 7 Table #2 of Annex 1 Non-material ESRS E3-1 Dedicated policy paragraph 13 Indicator number 8 Table #2 of Annex 1 Non-material ESRS E3-1 Sustainable oceans and seas paragraph 14 Indicator number 12 Table #2 of Annex 1 Non-material ESRS E3-4 Total water recycled and reused paragraph 28 (c) Indicator number 6.2 Table #2 of Annex 1 Non-material ESRS E3-4 Total water consumption in m3 per net revenue on own operations paragraph 29 Indicator number 6.1 Table #2 of Annex 1 Non-material ESRS 2- SBM 3 - E4 paragraph 16 (a) i Indicator number 7 of Table #1 of Annex 1 Material 113 ESRS 2- SBM 3 - E4 paragraph 16 (b) Indicator number 10 Non-material 151 2024 Table #2 of Annex 1 ESRS SBM 3 - E4 paragraph 16 (c) Indicator number 14 Table #2 of Annex 1 Non-material ESRS E4-2 Sustainable land / agriculture practices or policies paragraph 24 (b) Indicator number 11 Table #2 of Annex 1 Material 114 ESRS E4-2 Sustainable oceans / seas practices or policies paragraph 24 (c) Indicator number 12 Table #2 of Annex 1 Non-material ESRS E4-2 Policies to address deforestation paragraph 24 (d) Indicator number 15 Table #2 of Annex 1 Material 114 ESRS E5-5 Non-recycled waste paragraph 37 (d) Indicator number 13 Table #2 of Annex 1 Non-material ESRS E5-5 Hazardous waste and radioactive waste paragraph 39 Indicator number 9 of Table #1 of Annex 1 Non-material ESRS 2- SBM3 - S1 Risk of incidents of forced labour paragraph 14 (f) Indicator number 13 Table #3 of Annex I Non-material ESRS 2- SBM3 - S1 Risk of incidents of child labour paragraph 14 (g) Indicator number 12 Table #3 of Annex I Non-material ESRS S1-1 Human rights policy commitments paragraph 20 Indicator number 9 Table #3 and Indicator number 11 Table #1 of Annex 1 Non-material ESRS S1-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 21 Delegated Regulation (EU) 2020/1816, Annex II Material 123 ESRS S1-1 processes and measures for preventing trafficking in human beings paragraph 22 Indicator number 11 Table #3 of Annex I Non-material 152 2024 ESRS S1-1 workplace accident prevention policy or management system paragraph 23 Indicator number 1 Table #3 of Annex I Material 123 ESRS S1-3 grievance/complaints handling mechanisms paragraph 32 (c) Indicator number 5 Table #3 of Annex I Material 126 ESRS S1-14 Number of fatalities and number and rate of work-related accidents paragraph 88 (b) and (c) Indicator number 2 Table #3 of Annex I Delegated Regulation (EU) 2020/1816, Annex II Material 130 ESRS S1-14 Number of days lost to injuries, accidents, fatalities or illness paragraph 88 (e) Indicator number 3 Table #3 of Annex I Material 130 ESRS S1-16 Unadjusted gender pay gap paragraph 97 (a) Indicator number 12 Table #1 of Annex I Delegated Regulation (EU) 2020/1816, Annex II Non-material ESRS S1-16 Excessive CEO pay ratio paragraph 97 (b) Indicator number 8 Table #3 of Annex I Non-material ESRS S1-17 Incidents of discrimination paragraph 103 (a) Indicator number 7 Table #3 of Annex I Material 130 S1-17 Non-respect of UNGPs on Business and Human Rights and OECD paragraph 104 (a) Indicator number 10 Table #1 and Indicator number 14 Table #3 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) Material 130 ESRS 2- SBM3 - S2 Significant risk of child labour or forced labour in the value chain paragraph 11 (b) Indicators number 12 and n. 13 Table #3 of Annex I Non-material ESRS S2-1 Human rights policy commitments paragraph 17 Indicator number 9 Table #3 and Indicator number 11 Table #1 of Annex 1 Non-material 153 2024 ESRS S2-1 Policies related to value chain workers paragraph 18 Indicator number 11 and n. 4 Table #3 of Annex 1 Material 133 ESRS S2-1 Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines paragraph 19 Indicator number 10 of Table #1 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) Material 133 ESRS S2-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 19 Delegated Regulation (EU) 2020/1816, Annex II Material 133 ESRS S2-4 Human rights issues and incidents connected to its upstream and downstream value chain paragraph 36 Indicator number 14 Table #3 of Annex 1 Non-material ESRS S3-1 Human rights policy commitments paragraph 16 Indicator number 9 Table #3 of Annex 1 and Indicator number 11 Table #1 of Annex 1 Non-material ESRS S3-1 non-respect of UNGPs on Business and Human Rights, ILO principles or and OECD guidelines paragraph 17 Indicator number 10 of Table #1 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) Non-material ESRS S3-4 Human rights issues and incidents paragraph 36 Indicator number 14 Table #3 of Annex 1 Non-material ESRS S4-1 Policies related to consumers and end-users paragraph 16 Indicator number 9 Table #3 and Indicator number 11 Material 136 154 2024 Table #1 of Annex 1 ESRS S4-1 Non-respect of UNGPs on Business and Human Rights and OECD guidelines paragraph 17 Indicator number 10 of Table #1 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) Non-material ESRS S4-4 Human rights issues and incidents paragraph 35 Indicator number 14 Table #3 of Annex 1 Non-material ESRS G1-1 United Nations Convention against Corruption paragraph 10 (b) Indicator number 15 Table #3 of Annex 1 Non-material ESRS G1-1 Protection of whistle- blowers paragraph 10 (d) Indicator number 6 Table #3 of Annex 1 Non-material ESRS G1-4 Fines for violation of anti-corruption and anti- bribery laws paragraph 24 (a) Indicator number 17 Table #3 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Non-material ESRS G1-4 Standards of anti- corruption and anti- bribery paragraph 24 (b) Indicator number 16 Table #3 of Annex 1 Non-material 155 2024 Address Perkūnkiemio g. 3, LT-12127, Vilnius, Lietuva Telephone number (+370 5) 246 14 14 E-mail info@pienozvaigzdes.lt Website www.pienozvaigzdes.lt