Pieno Zvaigzdes

Earnings Release • Nov 29, 2011

Pieno Žvaigždės, AB Confirmation of the Management

2011 11 29 Vilnius

Interim Financial Statements for the nine months 2011

We hereby confirm that to the best of our knowledge, the attached not audited Pieno žvaigždes, AB Interim Financial Statements for the nine months 2011 prepared in accordance with International Financial Reporting Standards give a true and fair view of the assets, liabilities, financial position and profit of Pieno žvaigždės, AB.

CEO

Pieno Žvaigždės, AB Aleksandr Smagin

CFO

Pieno Žvaigždės, AB Audrius Statulevičius

PIENO ŽVAIGŽDĖS, AB

INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS OF 2011

VILNIUS, NOVEMBER 2011

1. Statement of financial position3
2. Statement of comprehensive income4
3. Cash flows statement5
4. Statement on changes in equity6
5. Notes to the financial statements7

Financial statements prepared according IFRS, not audited

1. Statement of financial position

Thousand Litas	2011.09.30	2010.12.31
Assets
Property, plant and equipment	182 972	191 762
Intangible assets	983	1 199
Investments available for sale	275	275
Long-term receivables	388	1 108
Deferred tax
Total non-current assets	184 618	194 344
Inventories	71 143	60 322
Receivables	79 896	67 587
Cash and cash equivalents	4 569	3 582
Total current assets	155 608	131 491
Total assets	340 226	325 835
Equity
Share capital	54 205	54 205
Share premium	27 246	27 246
Own shares	(14 435)	(14 349)
Reserves	37 098	36 884
Retained earnings	38 209	43 058
Total equity	142 323	147 044
Liabilities Government grants	4 715	4 859
Interest-bearing loans and borrowings	101 785	41 610
Deferred tax	2 010	2 010
Total non-current liabilities	108 510	48 479
Provisions	-	-
Interest-bearing loans and borrowings	24 054	71 591
Income tax payable	3 560	2 368
Trade and other amounts payable	61 779	56 353
Total current liabilities	89 393	130 312
Total liabilities	197 903	178 791
Total equity and liabilities	340 226	325 835

2. Statement of comprehensive income

Thousand Litas	2011.01.01 - 2011.09.30	2010.01.01 - 2010.09.30
Revenue	524 359	453 630
Cost of sales	(425 518)	(367 466)
Gross profit	98 841	86 164
Other operating income, net	242	380
Sales and administrative expenses	(72 318)	(72 252)
Operating profit before finance costs	26 765	14 292
Finance income	158	304
Finance expenses	(3 198)	(2 662)
Finance income/expenses, net	(3 040)	(2 358)
Profit before tax	23 725	11 934
Corporate income tax	(3 559)	(2 165)
Profit for the year	20 166	9 769
Earnings per share (Litas)	0,37	0,18
Thousand Litas	2011.07.01 - 2011.09.30	2010.07.01 - 2010.09.30
Revenue	187 139	180 204
Cost of sales	(151 779)	(139 701)
Gross profit	35 360	40 503
Other operating income, net	70	58
Sales and administrative expenses	(23 591)	(27 093)
Operating profit before finance costs	11 839	13 468
Finance income	79	38
Finance expenses	(1 197)	( 861)
Finance income/expenses, net	(1 118)	( 823)

Profit before tax 10 721 12 645 Corporate income tax (1 608) (2 107) Profit for the year 9 113 10 538 Earnings per share (Litas) 0,17 0,19

3. Cash flows statement

Thousand Litas	2011.09.30	2010.09.30
Cash flows from operating activities
Net profit	20.166	9.769
Depreciation and amortisation	25.000	30.205
Amortisation of government grants	(776)	(522)
Result of disposal of property, plant and equipment	91	748
Change in vacation reserve	31
Income tax	3.560
Interest income/expenses, net	3.090	2.191
Cash flows from ordinary activities before changes in	51.162	42.391
the working capital
Change in inventories	(10.822)	(13.174)
Change in receivables	(9.115)	8.791
Change in trade and other payable amounts	3.036	15.247
Cash flows from operating activities	34.261	53.255
Interest paid	(3.090)	(2.369)
Income tax paid	(2.474)	(3.343)
Net cash flow from operating activities	28.697	47.543
Cash flows from investing activities
Acquisition of property, plant and equipment	(16.179)	(8.417)
Acquisition of intangible assets	(48)	(652)
Proceeds on sale of property, plant and equipment	145	321
Net cash flow used in investing activities	(16.082)	(8.570)
Cash flows from financing activities
Loans received	108.068	18.135
Repayment of borrowings	(75.353)	(31.379)
Issue (redemption) of shares	(86)	(6.000)
Dividends paid	(24.812)	(12.098)
Payment of finance lease liabilities	(20.077)	(12.187)
Government grants received	632	2.248
Net cash from/(used in) financing activities	(11.628)	(41.281)
Change in cash and cash equivalents	987	(2.308)
Beginning cash	3.582	6.136
Ending cash	4.569	3.828

4. Statement on changes in equity

000 LTL	Share capital	Share premiu m	Own shares	Compul sory reserve	Revalua tion reserve	Other reserve s	Retained earnings	Total equity
As at 1 January 2010	54 205	27 246	(6 108)	5 420	15 423	6 250	46 376	148 812
Profit allocation Dividends Acquisition of own						10 120	(10 120) (12 098)	0 (12 098)
shares Revaluation of fixed			(6 000)					(6 000)
assets								0
Depreciation of revaluated part					( 247)		247	0
Net profit for 2010							9 769	9 769
As at 30 September 2010	54 205	27 246	(12 108)	5 420	15 176	16 370	34 174	140 483
As at 1 October 2010	54 205	27 246	(12 108)	5 420	15 176	16 370	34 174	140 483
Profit allocation								0
Dividends								0
Acquisition of own
shares			(2 241)					(2 241)
Revaluation of fixed
assets								0
Depreciation of
revaluated part Net profit for 2010					( 83)		83	0
As at 31 December 2010	54 205	27 246	(14 349)	5 420	15 093	16 370	8 802 43 059	8 802 147 044
As at 1 January 2011	54 205	27 246	(14 349)	5 420	15 093	16 370	43 059	147 044
Profit allocation						1 050	(1 050)	0
Dividends							(24 801)	(24 801)
Acquisition of own
shares			( 86)					( 86)
Revaluation of fixed
assets								0
Depreciation of
revaluated part					( 836)		836	0
Net profit for 2011							20 166	20 166
As at 30 September 2011	54 205	27 246	(14 435)	5 420	14 257	17 420	38 210	142 323

5. Notes to the financial statements

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

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

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

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

Statement of compliance

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

Main indicators of the Company's' performance

Ratios	2011.01.01 - 2011.09.30	2010.01.01 - 2010.09.30
Sales, Thousand Litas	524 359	453 630
Gross profit, Thousand Litas	98 941	86 164
EBITDA, Thousand Litas	50 988	43 975
Current ratio (at the end of period)	1,74	1,08
Book value per share (at the end of period), LTL	2,63	2,59
Net profit per share	0,37	0,18

Ratios	2011.07.01 - 2011.09.30	2010.07.01 - 2010.09.30
Sales, Thousand Litas	187 139	180 204
Gross profit, Thousand Litas	35 360	40 503
EBITDA, Thousand Litas	19 904	23 148
Current ratio (at the end of period)	1,74	1,08
Book value per share (at the end of period), LTL	2,63	2,59
Net profit per share	0,17	0,19

Inventories

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

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

Inventories, Thousand Litas	2011.09.30	2010.12.31
Raw materials	17 009	17 140
Stored production	53 941	43 027
Goods for resale	193	155
Total:	71 143	60 322

Segment reporting

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

Sales, Thousand Litas	2011.01.01 - 2011.09.30	2010.01.01 - 2010.09.30
Lithuania	242 679	229 335
Russia	207 239	161 273
EU, other countries	74 441	63 022
Total:	524 359	453 630

Sales, Thousand Litas	2011.07.01 - 2011.09.30	2010.07.01 - 2010.09.30
Lithuania	82 199	82 839
Russia	75 649	77 659
EU, other countries	29 291	19 706
Total:	187 139	180 204

Post balance sheet events

There were no significant events after the balance sheet date.