Pieno Zvaigzdes

Earnings Release • May 31, 2011

Pieno Žvaigždės, AB Confirmation of the Management

2011 05 31 Vilnius

Interim Financial Statements for the first three months 2011

We hereby confirm that to the best of our knowledge, the attached not audited Pieno žvaigždes AB Interim Financial Statements for the first three 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 FIRST THREE MONTHS OF 2011

VILNIUS, MAY 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	2011.03.31	2010.12.31
Assets
Property, plant and equipment	190 271	191 762
Intangible assets	1 139	1 199
Investments available for sale	275	275
Long-term receivables	1 108	1 108
Deferred tax
Total non-current assets	192 793	194 344
Inventories	60 367	60 322
Receivables	59 005	67 587
Cash and cash equivalents	4 305	3 582
Total current assets	123 677	131 491
Total assets	316 470	325 835
Equity
Share capital	54 205	54 205
Share premium	27 246	27 246
Own shares	(14 435)	(14 349)
Reserves	36 605	36 884
Retained earnings	50 016	43 058
Total equity	153 637	147 044
Liabilities
Government grants	4 621	4 859
Interest-bearing loans and borrowings	41 610	41 610
Deferred tax	2 010	2 010
Total non-current liabilities	48 241	48 479
Provisions	-	-
Interest-bearing loans and borrowings	60 013	71 591
Income tax payable	1 847	2 368
Trade and other amounts payable	52 732	56 353
Total current liabilities	114 592	130 312
Total liabilities	162 833	178 791
Total equity and liabilities	316 470	325 835

2. Statement of comprehensive income

Thousand Litas	2011.01.01 - 2011.03.31	2010.01.01 - 2010.03.31
Revenue	165 302	124 392
Cost of sales	(132 441)	(106 745)
Gross profit	32 861	17 647
Other operating income, net	63	106
Sales and administrative expenses	(24 140)	(22 005)
Operating profit before finance costs	8 784	(4 252)
Finance income	55	116
Finance expenses	( 981)	(1 028)
Finance income/expenses, net	( 926)	( 912)
Profit before tax	7 858	(5 164)
Corporate income tax	(1 179)	0
Profit for the year	6 679	(5 164)
Earnings per share (Litas)	0,12	- 0,10

3. Cash flows statement

Thousand Litas	2011.03.31	2010.03.31
Cash flows from operating activities
Net profit	6.679	(5.165)
Adjustments:
Depreciation and amortisation	8.505	10.595
Amortisation of government grants	(237)	(174)
Result of disposal of property, plant and equipment	(48)	(569)
Change in vacation reserve	315	-
Income tax	1.179	-
Interest income/expenses, net	859	1.580
Cash flows from ordinary activities before changes in	17.252	6.267
the working capital
Change in inventories	(45)	4.246
Change in receivables	9.406	18.849
Change in trade and other payable amounts	(5.622)	(4.226)
Cash flows from operating activities	20.991	25.136
Interest paid	(859)	(1.640)
Income tax paid	(824)	(375)
Net cash flow from operating activities	19.308	23.121
Cash flows from investing activities
Acquisition of property, plant and equipment	(6.951)	(1.716)
Acquisition of intangible assets	(28)	(568)
Proceeds on sale of property, plant and equipment	56	175
Net cash flow used in investing activities	(6.923)	(2.109)
Cash flows from financing activities
Loans received Repayment of borrowings	- (8.627)	- (21.377)
Issue (redemption) of shares	(86)	-
Dividends paid	-	-
Payment of finance lease liabilities	(2.949)	(4.268)
Government grants received	-	2.248
Net cash from/(used in) financing activities	(11.662)	(23.397)
Change in cash and cash equivalents	723	(2.385)
Beginning cash	3.582	6.136
Ending cash	4.305	3.751

4. Statement on changes in equity

Thousand Litas	Share capital	Share premiu m	Own shares	Compulso ry reserve	Revaluat ion reserve	Other reserves	Retained earnings	Total equity
As at 1 January 2010 Profit allocation Dividends Acquisition of own	54 205	27 246	(6 108)	5 420	15 423	6 250	46 376	148 812 0 0
shares Revaluation of fixed								0
assets								0
Depreciation of revaluated part Net profit for 2010					( 279)		279 (5 164)	0 (5 164)
As at 31 March 2010	54 205	27 246	(6 108)	5 420	15 144	6 250	41 491	143 648
As at 1 April 2010	54 205	27 246	(6 108)	5 420	15 144	6 250	41 491	143 648
Profit allocation Dividends						10 120	(10 120) (12 098)	0 (12 098)
Acquisition of own
shares			(8 241)					(8 241)
Revaluation of fixed
assets Depreciation of								0
revaluated part					( 51)		51	0
Net profit for 2010							23 734	23 734
As at 31 December 2010	54 205	27 246	(14 349)	5 420	15 093	16 370	43 058	147 043
As at 1 January 2011	54 205	27 246	(14 349)	5 420	15 093	16 370	43 058	147 043
Profit allocation								0
Dividends								0
Acquisition of own
shares Revaluation of fixed			( 86)					( 86)
assets								0
Depreciation of
revaluated part					( 279)		279	0
Net profit for 2011							6 679	6 679
As at 31 March 2011	54 205	27 246	(14 435)	5 420	14 814	16 370	50 016	153 636

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 - 2011.03.31	2010.01.01 - 2010.03.31
Sales, Thousand Litas	165 302	124 392
Gross profit, Thousand Litas	32 861	17 647
EBITDA, Thousand Litas	17 052	6 169
Current ratio (at the end of period)	1,1	0,8
Book value per share (at the end of period), LTL	2,83	2,65
Net profit per share	0,12	-0,10

Inventories

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

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

Inventories, Thousand Litas	2011.03.31	2010.12.31
Raw materials	19 925	17 140
Stored production	40 182	43 027
Goods for resale	260	155
Total:	60 367	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 - 2011.03.31	2010.01.01 - 2010.03.31
Lithuania	77 794	70 594
Russia	64 885	30 557
EU, other countries	22 623	23 241
Total:	165 302	124 392

Post balance sheet events

There were no significant events after the balance sheet date.