Rokiskio Suris

Annual Report (ESEF) • Apr 30, 2025

Report 48510000PW42N5W74S872024-01-012024-12-31iso4217:EUR48510000PW42N5W74S872023-01-012023-12-31iso4217:EURxbrli:shares48510000PW42N5W74S872024-12-3148510000PW42N5W74S872023-12-3148510000PW42N5W74S872022-12-31ifrs-full:IssuedCapitalMemberifrs-full:PreviouslyStatedMember48510000PW42N5W74S872022-12-31ifrs-full:SharePremiumMemberifrs-full:PreviouslyStatedMember48510000PW42N5W74S872022-12-31ifrs-full:CapitalRedemptionReserveMemberifrs-full:PreviouslyStatedMember48510000PW42N5W74S872022-12-31ifrs-full:TreasurySharesMemberifrs-full:PreviouslyStatedMember48510000PW42N5W74S872022-12-31ifrs-full:OtherReservesMemberifrs-full:PreviouslyStatedMember48510000PW42N5W74S872022-12-31ifrs-full:RetainedEarningsMemberifrs-full:PreviouslyStatedMember48510000PW42N5W74S872022-12-31ifrs-full:PreviouslyStatedMember48510000PW42N5W74S872022-12-31ifrs-full:IssuedCapitalMemberifrs-full:FinancialEffectOfChangesInAccountingPolicyMember48510000PW42N5W74S872022-12-31ifrs-full:SharePremiumMemberifrs-full:FinancialEffectOfChangesInAccountingPolicyMember48510000PW42N5W74S872022-12-31ifrs-full:CapitalRedemptionReserveMemberifrs-full:FinancialEffectOfChangesInAccountingPolicyMember48510000PW42N5W74S872022-12-31ifrs-full:TreasurySharesMemberifrs-full:FinancialEffectOfChangesInAccountingPolicyMember48510000PW42N5W74S872022-12-31ifrs-full:OtherReservesMemberifrs-full:FinancialEffectOfChangesInAccountingPolicyMember48510000PW42N5W74S872022-12-31ifrs-full:RetainedEarningsMemberifrs-full:FinancialEffectOfChangesInAccountingPolicyMember48510000PW42N5W74S872022-12-31ifrs-full:FinancialEffectOfChangesInAccountingPolicyMember48510000PW42N5W74S872022-12-31ifrs-full:IssuedCapitalMember48510000PW42N5W74S872022-12-31ifrs-full:SharePremiumMember48510000PW42N5W74S872022-12-31ifrs-full:CapitalRedemptionReserveMember48510000PW42N5W74S872022-12-31ifrs-full:TreasurySharesMember48510000PW42N5W74S872022-12-31ifrs-full:OtherReservesMember48510000PW42N5W74S872022-12-31ifrs-full:RetainedEarningsMember48510000PW42N5W74S872022-12-3148510000PW42N5W74S872023-01-012023-12-31ifrs-full:IssuedCapitalMember48510000PW42N5W74S872023-01-012023-12-31ifrs-full:SharePremiumMember48510000PW42N5W74S872023-01-012023-12-31ifrs-full:CapitalRedemptionReserveMember48510000PW42N5W74S872023-01-012023-12-31ifrs-full:TreasurySharesMember48510000PW42N5W74S872023-01-012023-12-31ifrs-full:OtherReservesMember48510000PW42N5W74S872023-01-012023-12-31ifrs-full:RetainedEarningsMember48510000PW42N5W74S872023-12-31ifrs-full:IssuedCapitalMember48510000PW42N5W74S872023-12-31ifrs-full:SharePremiumMember48510000PW42N5W74S872023-12-31ifrs-full:CapitalRedemptionReserveMember48510000PW42N5W74S872023-12-31ifrs-full:TreasurySharesMember48510000PW42N5W74S872023-12-31ifrs-full:OtherReservesMember48510000PW42N5W74S872023-12-31ifrs-full:RetainedEarningsMember48510000PW42N5W74S872024-01-012024-12-31ifrs-full:IssuedCapitalMember48510000PW42N5W74S872024-01-012024-12-31ifrs-full:SharePremiumMember48510000PW42N5W74S872024-01-012024-12-31ifrs-full:CapitalRedemptionReserveMember48510000PW42N5W74S872024-01-012024-12-31ifrs-full:TreasurySharesMember48510000PW42N5W74S872024-01-012024-12-31ifrs-full:OtherReservesMember48510000PW42N5W74S872024-01-012024-12-31ifrs-full:RetainedEarningsMember48510000PW42N5W74S872024-12-31ifrs-full:IssuedCapitalMember48510000PW42N5W74S872024-12-31ifrs-full:SharePremiumMember48510000PW42N5W74S872024-12-31ifrs-full:CapitalRedemptionReserveMember48510000PW42N5W74S872024-12-31ifrs-full:TreasurySharesMember48510000PW42N5W74S872024-12-31ifrs-full:OtherReservesMember48510000PW42N5W74S872024-12-31ifrs-full:RetainedEarningsMember Message from the CEO Dear colleagues, partners and all those who stand with us, The year 2024 will go down in the history of Rokiškio sūris AB as the most financially successful year we have ever had. We have achieved record turnover - not just as a result of numbers, but also as a result of the professionalism of our people, the trust of our partners and our strong direction. Another particularly encouraging news is the significant increase in profits compared to 2023. Despite the decrease in the amount of raw milk processed during the year, our ability to work efficiently, to produce high value-added products and to manage our business processes successfully, has enabled us to achieve this result. We also have a lot to be proud of when it comes to exports. Export volumes have increased both in financial and quantitative terms. This shows that our products are valued not only in Lithuania but also abroad. In 2024, we continued our policy of employee welfare, with an average salary increase of around 6%. We have also invested in training, development and seminars - our long-term investment in the competence and growth of our team. An important aspect of 2024 is the successful completion of investment projects, such as the construction of a storage facility for long-ripened cheese and the expansion of curd production. But more importantly, we have launched two particularly significant projects that will allow us to maintain our leadership in the dairy sector not only in Lithuania but also in the entire Baltic region. Our sustainability strategy is consistently pursued: from responsible use of raw materials to energy efficiency and social initiatives. As in the past, we believe that only sustainable business growth can be sustainable. We have clear goals for 2025: to deliver the planned investments on time and to a high standard, to be a reliable partner for milk sellers and, above all, to foster the development of our employees as the foundation for all other achievements. My sincere thanks to all of you who contribute to our common success. Every day shows that our vision - Trusted Dairy Professionals - is not just words, but something we live and work by. Together, we create value, strengthen communities and achieve our goals. Dalius Trumpa CEO, AB „Rokiškio sūris“ 2 ENDORSEMENT BY THE RESPONSIBLE PERSONS 08/04/2025 Pursuing Article 12 of the Law on Securities of the Republic of Lithuania and in accordance with the rules of disclosure of information of the Bank of Lithuania, we, the undersigned – the Chief Executive Officer Dalius Trumpa and the Chief Financial Officer Antanas Kavaliauskas – approve that to our knowledge the audited financial statements of the year 2024 as well as annual consolidated financial statements of Rokiskio suris AB for the year 2024, are formed in accordance with the applicable accounting standards, they are true and show fair assets, obligations, financial state, profit and cash flows of the Company and total consolidated group. Also, to our best knowledge both the Company’s management report and the consolidated management report make fair overview of the operations and business development, current state of the company Rokiskio suris AB and the overall group of Rokiskio suris AB, including description of the main risks and uncertainties. Chief Executive Officer Chief Financial Officer Dalius Trumpa Antanas Kavaliauskas Translation note: This version of the accompanying documents is a translation from the original, which was prepared in Lithuanian language. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of the accompanying documents takes precedence over this translation. TABLE OF CONTENTS Statement of profit or loss 7 Statement of other comprehensive income 8 Statement of financial position 9 The Company’s statement of changes in equity 10 The group’s statement of changes in equity 11 Statement of cash flows 12 Notes to the financial statements 13 1. General information 13 2. Accounting policies 14 3. Financial risk management 29 4. Critical accounting estimates and judgements 37 5. Segment reporting 38 6. Selling and marketing expenses 39 7. General and administrative expenses 40 8. Other income 40 9. Other (losses)/gains 40 10. Expenses by nature 41 11. Finance costs 41 12. Income tax 41 13. Earnings per share 42 14. Property, plant, and equipment 43 15. Intangible assets 45 16. Investments in subsidiaries and other investments 46 17. Deferred income tax 47 18. Loans granted 49 19. Inventories 49 20. Trade and other receivables 50 21. Cash and cash equivalents 51 22. Share capital 51 23. Treasury shares 52 24. Other reserves and reserve for acquisition of treasury shares 52 25. Borrowings 53 26. Deferred income 54 27. Trade and other payables 54 28. Provisions 54 29. Contingent liabilities and commitments 55 30. Cash flows from operating activities 55 31. Related-party transactions 56 32. Services rendered by the audit firm 59 33. Change of accounting policy for property, plant and equipment 59 34. Impact of war in Ukraine 62 35. Environmental, Social and Governance (ESG) matters - Consideration of climate change and resulting climate related risks 63 36. Events after the reporting period 63 MANAGEMENT REPORT 65 37. Reporting period for which the management report is prepared 65 38. Key information about the issuer: 65 39. Information about the Company's group of companies 65 40. Nature of the principal activities of the company and group 66 41. Group strategy and objectives 66 42. Highlights of the reporting period 67 43. Significant events after the end of the financial year 73 INFORMATION ON THE COMPANY'S AND GROUP'S ACTIVITIES 74 44. Group operating environment 74 45. Group sales 78 46. Products, brands and achievements 81 47. Risk factors and risk management 84 48. Ensuring business continuity of Rokiskio suris AB 91 49. Information on financial risk management objectives and hedging instruments used 92 50. Key features of internal control and risk management systems relevant to the preparation of the consolidated financial statements 92 51. Food safety and quality 93 52. Research and development activities 95 53. FINANCIAL PERFORMANCE 96 54. Group activity by segment 100 55. Investments 101 56. Group business plans and forecasts 102 INFORMATION ON THE COMPANY'S SHAREHOLDERS 102 57. Information on the Company's share capital 102 58. Company contracts with brokerage firms 103 59. Details of trading in the issuer's securities on regulated markets 103 60. Restrictions on transfer of securities 105 61. Procedure for amending the Company's Articles of Association 105 62. Information about the Company's shareholders 106 63. Rights of shareholders 107 64. Details of the issuer's own share buybacks 108 65. Dividends 108 CORPORATE GOVERNANCE 110 66. The governing bodies of the Company 110 67. Corporate governance and organisational structure of the Company Group 111 GENERAL MEETING OF SHAREHOLDERS 111 68. Information on the competence and procedure for convening the General Meeting of Shareholders 111 69. The Board of Directors of the Company 115 70. Committees of the Company 119 71. Management of the Company 120 72. Staff 120 73. Information on agreements between the Company and members of its organs, members of committees formed or employees providing for compensation in the event of their resignation or dismissal without just cause or if their employment is terminated as a result of a change of control of the issuer 124 INFORMATION ON RELATED PARTY TRANSACTIONS AND MATERIAL ARRANGEMENTS 124 74. Related parties of Rokiskio suris AB Group 124 75. Related party transactions 125 76. Information on harmful transactions entered into on behalf of the issuer 125 77. Prevention of corruption and bribery 125 OTHER INFORMATION 126 78. Audit information 126 79. Data on publicly available information 126 GOVERNANCE REPORT OF ROKISKIO SURIS AB 127 COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE 130 REMUNERATION REPORT FOR THE YEAR 2024 154 INFORMATION ON SUSTAINABILITY MATTERS 157 ABOUT THIS STATEMENT 157 GOVERNANCE OF SUSTAINABILITY MATTERS 158 STRATEGY, BUSINESS MODEL AND VALUE CHAIN 163 SUSTAINABILITY-RELATED OBJECTIVES 165 DOUBLE MATERIALITY ASSESSMENT 172 ENVIRONMENTAL AREA 188 E1 CLIMATE CHANGE 188 E2 POLLUTION 202 E3 WATER AND MARINE RESOURCES 208 E4 BIODIVERSITY AND ECOSYSTEMS 213 E5 CIRCULAR ECONOMY 218 Overview of compliance with the EU Taxonomy Regulation 227 SOCIAL PART 240 S1 OWN WORKFORCE 240 S2 VALUE CHAIN WORKERS 255 S3 AFFECTED COMMUNITIES 261 S4 CONSUMERS AND END-USERS 267 GOVERNANCE PART 275 G1 BUSINESS ETHICS 275 RESPONSIBLE BUSINESS PRACTICES: INVESTMENT AND INNOVATION (ENTITY-SPECIFIC DISCLOSURE) 286 INDEX 289 List of ESRS indicators 289 Statement of profit or loss Group Company Notes 2024 2023 restated 2024 2023 restated Sales 5 370,348 304,254 334,199 264,072 Cost of sales 10 (319,451) (261,336) (305,302) (247,846) Gross profit 50,897 42,918 28,897 16,226 Selling and marketing expenses 6, 10 (15,729) (14,142) (11,354) (10,207) General and administrative expenses 7, 10 (8,897) (8,551) (5,031) (5,372) Other income 8 998 358 11,336 3,627 Other gains/(losses) - net 9 173 147 103 136 Operating profit 27,442 20,730 23,951 4,410 Finance costs 11 (1,841) (1,486) (1,841) (1,486) Profit before income tax 25,601 19,244 22,110 2,924 Income tax 12 (2,760) (3,003) (808) 44 Profit for the year 22,841 16,241 21,302 2,968 Profit for the year attributable to: Owners of the Company 22,841 16,241 21,302 2,968 Non-controlling interest - - - - 22,841 16,241 21,302 2,968 Basic and diluted earnings per share (in EUR per share) 13 0.73 0.46 0.68 0.08 The accompanying notes are an integral part of these annual financial statements. These financial statements were authorised for issue on 8 April 2025 by the Board of Directors and signed on behalf of the Board of Directors by the Managing Director and the Finance Director. Dalius Trumpa Antanas Kavaliauskas Managing Director Finance Director 7 Statement of other comprehensive income Group Company Notes 2024 2023 restated 2024 2023 restated Profit for the year 22,841 16,241 21,302 2,968 Other comprehensive income Items that will not be reclassified to profit or loss Other comprehensive income for the year, net of tax - - - - Total comprehensive income for the year 22,841 16,241 21,302 2,968 Total comprehensive income for the year attributable to: Owners of the Company 22,841 16,241 21,302 2,968 Non-controlling interest - - - - 22,841 16,241 21,302 2,968 The accompanying notes are an integral part of these annual financial statements. 8 Statement of financial position Group Company At 31 December At 31 December Notes 2024 2023 2023 01 01 2024 2023 2023 01 01 ASSETS restated restated restated restated Non-current assets Property, plant and equipment 14 55,123 57,468 56,411 42,961 44,365 41,751 Intangible assets 15 22 93 162 22 77 132 Investments in subsidiaries 16 169 169 169 5,048 5,048 5,048 Trade and other receivables 20 11,464 536 827 11,464 536 827 Deferred income tax assets 17 1,199 1,194 2,500 1,128 1,143 1,847 Loans granted 18 1,757 1,803 2,213 1,724 1,767 2,174 69,734 61,263 62,282 62,347 52,936 51,779 Current assets Inventories 19 82,782 94,397 72,229 78,393 90,583 68,446 Loans granted 18 1,335 1,539 2,896 1,335 1,539 2,896 Trade and other receivables 20 58,504 54,466 56,675 49,279 44,941 62,762 Prepaid income tax 777 923 139 803 923 91 Cash and cash equivalents 21 4,244 3,896 3,401 56 237 1,149 147,642 155,221 135,340 129,866 138,223 135,344 Total assets 217,376 216,484 197,622 192,213 191,159 187,123 EQUITY Attributable to owners of the Company Share capital 22 9,362 10,402 10,402 9,362 10,402 10,402 Share premium 18,073 18,073 18,073 18,073 18,073 18,073 Reserve for acquisition of treasury shares 24 9,943 10,850 10,850 9,943 10,850 10,850 Treasury shares 23 (1,895) (2,251) (2,251) (1,895) (2,251) (2,251) Other reserves 24 3,026 3,016 3,016 2,154 2,154 2,154 Retained earnings 110,698 99,438 88,453 91,886 82,169 84,485 Total equity 149,207 139,528 128,543 129,523 121,397 123,713 LIABILITIES Non-current liabilities Borrowings 25 1,750 3,850 5,950 1,750 3,850 5,950 Deferred income tax liability 17 - - - - - - Deferred income 26 2,199 2,060 2,097 1,869 1,720 1,585 Contract liabilities 31(ii) - 1,896 2,126 - 1,896 2,126 Provisions 28 1,573 1,421 1,421 1,230 1,180 1,180 5,522 9,227 11,594 4,849 8,646 10,841 Current liabilities Borrowings 25 32,335 39,127 24,440 32,335 39,127 24,440 Deferred income 26 310 500 399 310 307 206 Trade and other payables 27 28,343 25,616 30,208 24,313 21,466 25,583 Profit tax payable 1,314 2,172 2,124 636 - 2,124 Provisions 28 345 314 314 247 216 216 62,647 67,729 57,485 57,841 61,116 52,569 Total liabilities 68,169 76,956 69,079 62,690 69,762 63,410 Total equity and liabilities 217,376 216,484 197,622 192,213 191,159 187,123 The accompanying notes are an integral part of these annual financial statements. 9 The Company’s statement of changes in equity Notes Share capital Share premium Reserve for acquisition of treasury shares Treasury shares Other reserves Retained earnings Total Balance at 1 January 2023 10,402 18,073 10,850 (2,251) 15,105 84,485 136,664 Correction relates to chage of accounting policy of PPE (Note 33) - - - - (12,951) - (12,951) Reatated balance at 1 January 2023 10,402 18,073 10,850 (2,251) 2,154 84,485 123,713 Profit for the year - - - - - 2,968 2,968 Other comprehensive income for the year - - - - - - - Total comprehensive income for the year - - - - - 2,968 2,968 - - - - - - - Transactions with owners Bonus to the Board members - - - - - (33) (33) Dividends 22 - - - - - (5,251) (5,251) Total transactions with owners for the year - - - - - (5,284) (5,284) Balance at 31 December 2023 (restated) 10,402 18,073 10,850 (2,251) 2,154 82,169 121,397 Profit for the year - - - - - 21,302 21,302 Other comprehensive income for the year - - - - - - - Total comprehensive income for the year - - - - - 21,302 21,302 Transactions with owners Formation of reserve for own shares - - 6,300 - - (6,300) - Purchase of own shares - - - (7,891) - - (7,891) Cancelation of own shares (1,040) - (7,207) 8,247 - - - Bonus to the Board members - - - - - (34) (34) Dividends 22 - - - - - (5,251) (5,251) Total transactions with owners for the year (1,040) - (907) 356 - (11,585) (13,176) Balance at 31 December 2024 9,362 18,073 9,943 (1,895) 2,154 91,886 129,523 The accompanying notes are an integral part of these annual financial statements. 10 The group’s statement of changes in equity Attributable to owners of the Company Notes Share capital Share premium Reserve for acquisition of treasury shares Treasury shares Other reserves Retained earnings Total Balance at 1 January 2023 10,402 18,073 10,850 (2,251) 25,922 88,453 151,449 Correction relates to chage of accounting policy of PPE (Note 33) - - - - (22,906) - (22,906) Restated balance at 1 January 2023 10,402 18,073 10,850 (2,251) 3,016 88,453 128,543 Comprehensive income Profit for the year - - - - - 16,241 16,241 Other comprehensive income for the year - - - - - - - Total comprehensive income for the year - - - - - 16,241 16,241 Transactions with owners Bonuses to the Board members - - - - - (5) (5) Dividends 22 - - - - - (5,251) (5,251) Total transactions with owners for the year - - - - - (5,256) (5,256) Balance at 31 December 2023 10,402 18,073 10,850 (2,251) 3,016 99,438 139,528 Comprehensive income Profit for the year - - - - - 22,841 22,841 Total other comprehensive income for the year - - - - - - - Total comprehensive income for the year - - - - - 22,841 22,841 Transactions with owners Formation of reserve for own shares - - 6,300 - - (6,300) - Purchase of own shares - - - (7,891) - - (7,891) Cancelation of own shares (1,040) - (7,207) 8,247 - - - Transfers to non-distributable reserve - - - - 10 (10) - Bonus to the Board members - - - - - (20) (20) Dividends 22 - - - - - (5,251) (5,251) Total transactions with owners for the year (1,040) - (907) 356 10 (11,581) (13,162) Balance at 31 December 2024 9,362 18,073 9,943 (1,895) 3,026 110,698 149,207 The accompanying notes are an integral part of these annual financial statements. 11 Statement of cash flows Group Company Year ended Year ended 31-Dec 31-Dec Notes 2024 2023 2024 2023 Cash flows from operating activities Cash generated from operations 30 32,760 4,289 18,196 (1,912) Interest paid (1,841) (1,486) (1,841) (1,486) Income tax paid (2,447) (1,586) (793) (1,534) Net cash generated from/ operating activities 28,472 1,217 15,562 (4,932) Cash flows from investing activities Purchases of property, plant and equipment 14 (7,685) (10,504) (5,576) (8,810) Purchases of intangible assets 15 (3) (5) - 28 Proceeds from sale of property, plant and equipment 30 394 408 325 164 Other loan repayments received 202 1,685 202 1,685 Interest received 998 358 998 358 Dividends received 31 - - 10,338 3,259 Net cash (used in) investing activities (6,094) (8,058) 6,287 (3,316) Cash flows from financing activities Dividends paid 22 (5,251) (5,251) (5,251) (5,251) Purchase of own shares (7,891) - (7,891) - Repayment of non-current borrowings (2,100) (2,100) (2,100) (2,100) Net change in credit line (6,788) 14,687 (6,788) 14,687 Net cash (used in) financing activities (22,030) 7,336 (22,030) 7,336 Net (decrease) in cash and cash equivalents 348 495 (181) (912) Cash and cash equivalents at the beginning of the year 21 3,896 3,401 237 1,149 Cash and cash equivalents at the end of the year 21 4,244 3,896 56 237 The accompanying notes are an integral part of these annual financial statements. 12 Notes to the financial statements 1. General information Rokiškio Sūris AB (“the Company”) is a public limited liability company based in Rokiškis. The Company’s code is 173057512, address: Pramonės g. 3, LT-42150 Rokiškis, Lithuania. The Company’s core line of business is the production and trade in fermented cheese, skimmed milk powder and wide range of other dairy products. The shares of Rokiškio Sūris AB are quoted on the Baltic Main List (ticket: RSU1L) of Nasdaq Vilnius stock exchange. The main shareholders of the Company are disclosed in Note 31. Antanas Trumpa and Dalius Trumpa are ultimate beneficial owners. The consolidated group (“the Group”) consists of the Company and five subsidiaries (2023: five subsidiaries). Information on the Group subsidiaries is presented below: Year of acquisition Main activity Group’s ownership interest (%) as at 31 December Subsidiaries 2024 2023 Rokiškio Pienas UAB 2006 Distribution of dairy products 100.00 100.00 Rokiškio Pieno Gamyba UAB 2013 Production of dairy products 100.00 100.00 Jekabpils Piena Kombinats SIA 2005-2011 Raw milk collection 100.00 100.00 Kaunata SIA 2010 Raw milk collection 60.00 60.00 DairyHub.LT UAB 2021 Production of dairy products 100.00 100.00 * This subsidiary was not consolidated in the Group’s financial statements as it was not material (see Note 16). All the above-listed subsidiaries have been registered in Lithuania, except for Jekabpils Piena Kombinats SIA and Kaunata SIA which have been registered in Latvia. The average number of the Company’s employees during the year ended 31 December 2024 was 718 (2023: 763). The average number of the Group’s employees during the year ended 31 December 2024 was 1,155 (2023: 1,205). 13 2. Accounting policies 2.1 Basis of preparation These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial statements have been prepared on a going concern basis and under the historical cost convention. Pursuant to the Law on Companies of the Republic of Lithuania, the annual financial statements prepared by the management must be approved by the general meeting of shareholders. The shareholders of the Company have a statutory right to approve these financial statements or not to approve them and to require preparation of a new set of financial statements. The financial year of the Company and other Group companies coincides with the calendar year. These financial statements include the consolidated financial statements of the Group and the separate financial statements of the Company. The financial statements have been prepared under the historical cost convention. The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented unless otherwise stated. The preparation of the financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current event and actions, actual results ultimately may differ from those estimates (Note 4). Amendments to standards and interpretations (a) New and/or amended standards and interpretations effective from 1 January 2024: The following standards, amendments to the existing standards and interpretations issued by the International Accounting Standards Board (IASB) and adopted by the European Union (further – EU) are effective for the current period and were adopted by the Group: Amendments to IFRS 16 Lease: Lease Liability in a Sale and Leaseback which provide a requirement for the seller-lessee to determine ‘lease payments’ or ‘revised lease payments’ in a way that the seller-lessee would not recognise any amount of the gain or loss that relates to the right of use retained by the seller-lessee; Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current which require that an entity’s right to defer settlement of a liability for at least twelve months after the reporting period must have substance and must exist at the end of the reporting period. Classification of a liability is unaffected by the likelihood that the entity will exercise its right to defer settlement for at least twelve months after the reporting period; Amendments to IAS 1 Presentation of Financial Statements: Non-current Liabilities with Covenants. If an entity’s right to defer is subject to the entity complying with specified conditions, such conditions affect whether that right exists at the end of the reporting period, if the entity is required to comply with the condition on or before the end of the reporting period and not if the entity is required to comply with the conditions after the reporting period. The amendments also provide clarification on the meaning of ‘settlement’ for the purpose of classifying a liability as current or non-current; 14 Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements introduce additional disclosure requirements related to supplier finance arrangements. The amendments also provide clarification on characteristics of supplier finance arrangements. The application of these standards, amendments and interpretations had not a material impact on the Group’s consolidated financial statements and so have not been discussed in detail in the notes to the financial statements The application of these standards, amendments and interpretations had not a material impact on the Group’s consolidated financial statements and so have not been discussed in detail in the notes to the financial statements. (b) Standards, amendments and interpretations to existing standards issued by IASB, adopted by EU, but not yet effective and have not been early adopted by the Group: At the date of authorisation of these consolidated financial statements, the Group has not early adopted the following new and revised IFRS standards, amendments and interpretations that have been issued but are not yet effective: Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability introduce requirements to assess when a currency is exchangeable into another currency and when it is not. The Amendments require an entity to estimate the spot exchange rate when it concludes that a currency is not exchangeable into another currency. (effective for annual periods beginning on or after 1 January 2025). The Group is currently assessing the impact of these new accounting standards and amendments. The management of the Group does not expect that the adoption of these standards, amendments and interpretations listed above will have a material impact on the consolidated financial statements of the Group in future periods. (c) Standards, amendments and interpretations to existing standards that are not yet effective and have not been endorsed by EU: IFRSs currently endorsed by EU are not significantly different from the standards, endorsed by IASB, except the standards, amendments and interpretations that were not endorsed by EU (the effective dates are applicable to IFRS to full extent). These standards, amendments and interpretations are listed below: Amendments to the Classification and Measurement of Financial Instruments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures modify requirements in IFRS 9 and IFRS 7 regarding derecognition of financial liabilities, classification of financial assets and disclosures (effective for annual periods beginning on or after 1 January 2026); Annual Improvements to IFRS Accounting Standards – Volume 11 introduced minor amendments to IFRS 1 First – time Adoption of International Financial Reporting Standards, IFRS 7 Financial Instruments: Disclosures, IFRS 9 Financial Instruments, IFRS 10 Consolidated Financial Statements and IAS 7 Statement of Cash Flows (effective for annual periods beginning on or after 1 January 2026); 15 Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures. Contracts Referencing Nature-dependent Electricity were made to improve the disclosure of such contracts in the financial statements. New disclosure requirements to enable investors to understand the effect of these contracts on a financial performance and cash flows were added (effective for annual periods beginning on or after 1 January 2026); IFRS 18 Presentation and Disclosure in Financial Statements replaces IAS 1 Presentation of Financial Statements. IFRS 18 sets out significant new requirements for how financial statements are presented (effective for annual periods beginning on or after 1 January 2027); IFRS 19 Subsidiaries without Public Accountability: Disclosures permits reduced disclosures for subsidiaries with no public accountability and whose parent company applies IFRS Accounting Standards in their consolidated financial statements, while still applying the recognition, measurement and presentation requirements in other IFRS (effective for annual periods beginning on or after 1 January 2027). The Group is currently assessing the impact of these new accounting standards and amendments. The management of the Group does not expect that the adoption of these standards, amendments and interpretations listed above will have a material impact on the consolidated financial statements of the Group in future periods. 2.2 Consolidation (a) Subsidiaries Subsidiaries are those investees, that the Group controls because the Group (i) has power to direct the relevant activities of the investees that significantly affect their returns, (ii) has exposure, or rights, to variable returns from its involvement with the investees, and (iii) has the ability to use its power over the investees to affect the amount of the investor’s returns. The existence and effect of substantive rights, including substantive potential voting rights, are considered when assessing whether the Group has power over another entity. For a right to be substantive, the holder must have a practical ability to exercise that right when decisions about the direction of the relevant activities of the investee need to be made. The Group may have power over an investee even when it holds less than the majority of the voting power in an investee. In such a case, the Group assesses the size of its voting rights relative to the size and dispersion of holdings of the other vote holders to determine if it has de-facto power over the investee. Protective rights of other investors, such as those that relate to fundamental changes of the investee’s activities or apply only in exceptional circumstances, do not prevent the Group from controlling an investee. Subsidiaries are consolidated from the date on which control is transferred to the Group (acquisition date) and are deconsolidated from the date on which control ceases. The group uses the acquisition method of accounting to account for the acquisition of subsidiaries. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the group recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. 16 The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognized directly in the income statement. Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. (b) Transactions and minority interest The group treats transactions with non-controlling interest as transactions with equity owners of the group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. When the group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss. 2.3 Stand-alone financial statements Subsidiaries in the stand-alone financial statements are accounted at cost less impairment charge. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s ‘fair value less costs of disposal’ or ‘value in use’. The Company assesses at the end of each reporting period whether there is any indication that an impairment loss recognised in prior periods for investment in subsidiary may no longer exist or may have decreased. If any such indication exists, the Company estimates the recoverable amount of investment and reverses impairment loss, if recoverable amount significantly exceeds the carrying amount. 2.4 Foreign currency translation (a) Functional and presentation currency The items shown in the financial statements of the Company and each entity of the Group are valued by the currency of the original economic environment wherein a specific company operates (hereinafter the “functional currency”). These financial statements have been presented in euros (EUR), which is the Company’s (and the Group’s each entity’s) functional and presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. 17 2.5 Property, plant, and equipment Property, plant and equipment is shown at revalued amount, based on periodic valuations of assets, less subsequent accumulated depreciation and impairment. Note: during preparation of financial statements for the year 2024, it was changed accounting policy for property, plant and equipment, see note 33. Subsequent costs are included in the asset’s carrying amount or recognised as separate assets only when it is probable that future economic benefits associated with the item will flow to the Company or the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives. Useful lives of property, plant and equipment are given in the table below: Buildings15-93 years Plant and machinery4-75 years Motor vehicles2-34 years Equipment and other property, plant and equipment2-34 years The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date. Construction in progress is transferred to appropriate group of property plant and equipment when it is completed and ready for its intended use. When property is retired or otherwise disposed, the cost and related depreciation are removed from the financial statements and any related gains or losses are determined by comparing proceeds with carrying amount and are included in operating profit. 2.6 Intangible assets (a) Computer software Software assets expected to provide economic benefit to the Company and the Group in future periods are valued at acquisition cost less subsequent amortisation. Software is amortised on the straight-line basis over the useful life of 1 to 6 years. (b) Contractual customer relationships Contractual customer relationships recognized as intangible asset upon business acquisition are accounted for at cost less accumulated amortization and impairment. Contractual customer relationships are amortised on the straight-line basis over the estimated useful life of 2 years. 2.7 Impairment of non-financial assets Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). 18 2.8 Financial assets (a) Following the adoption of IFRS 9, Financial Instruments, the Group and the Company classifies its financial assets into the following 3 new categories: financial assets subsequently measured at amortised cost; financial assets subsequently measured at fair value through other comprehensive income; and financial assets subsequently measured at fair value through profit or loss. Subsequent to initial recognition, financial assets are classified into the aforementioned categories based on the business model the Group and the Company apply when managing their financial assets. The business model applied to the financial assets of the Group and the Company is determined at a level that reflects how all financial assets of the Group and the Company are managed together to achieve a particular business objective of the Group and the Company. The intentions of the Group and the Company’s management regarding individual items of instruments have no effect on the adopted business model. The Group and the Company and the Company may adopt more than one business model to manage its financial assets. The business model for managing of financial assets is based not merely on an assertion, but also on facts that are observable in the activities that the Group and the Company and the Company undertakes in order to achieve the objectives of the business model. In determining the business model applicable for managing financial assets, the Group and the Company makes its decision in view of not individual factors or activity, but in view of all evidence that is available in the course of the assessment. The Group and the Company and the Company recognises a financial asset in its statement of financial position only when the Group and the Company becomes a party to the contractual provisions of the instrument. The purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting. At initial recognition, the Group and the Company measures financial assets at fair value, except for trade receivables that do not have a significant financing component. Transaction costs comprise all charges and commission that the Group and the Company would not have paid if it had not entered into an agreement on the financial instrument. If the fair value of the financial asset at initial recognition differs from the transaction price, the difference is recognised in profit or loss. In view of the business model applied for managing the Group and the Company of financial assets, the accounting for financial assets is as follows: Financial assets measured at amortised cost Loans granted by the Company and the Group and the Company and amounts receivable are accounted for under the business model the purpose of which is to hold financial assets in order to collect contractual cash flows that can contain cash flows related to the payment of the principal amount and interest inflows. 19 Loans and amounts receivable are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the date of the Balance sheet. These are classified as non-current assets. Loans and receivables are initially recognised at cost (the fair value of consideration receivable) and subsequently carried at amortised cost using the effective interest rate method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when these assets are derecognised, impaired or amortised. Financial assets at fair value through profit or loss The Group and the Company measures financial assets, which are stated at fair value in subsequent periods, through profit or loss, using the business model whose objective is achieved by both collecting contractual cash flows and selling financial assets. The Group and the Company does not have any financial assets held for trading and acquired for the purpose of selling in the near term and attributes to this category only financial assets arising from the disposal of business or investments classified as non-equity contingent consideration. (b) Effective interest method The effective interest method is used in the calculation of the amortised cost of a financial asset and in the allocation of the interest income or interest expense in profit or loss over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash inflows through the expected life of the financial asset to the gross carrying amount of the financial asset that shows the amortised cost of the financial asset, before adjusting for any loss allowance. When calculating the effective interest rate, the Group and the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. There is an assumption that the cash flows and the expected life of a Group and the Company of similar financial instruments can be estimated reliably. However, when it is not possible to reliably estimate the cash flows or the expected life of a financial instrument (or Group and the Company of financial instruments), the Group and the Company uses the contractual cash flows over the full contractual term of the financial instrument (or Group and the Company of financial instruments). (c) Expected credit losses Credit losses incurred by the Group and the Company are calculated as the difference between all contractual cash flows that are due to the Group and the Company in accordance with the contract and all the cash flows that the Group and the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate. The Group and the Company estimates cash flows by considering all contractual terms of the financial instrument through the expected life of that financial instrument, including cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. Expected credit losses show the weighted average of credit losses with the respective risks (probability) of a default occurring as the weights. 20 Lifetime expected credit losses are the expected credit losses that result from all possible default events over the period from the date of initial recognition of a financial asset to the subsequent date of settlement of the financial asset or ultimate write-off of the financial asset. The Group and the Company seeks for lifetime expected credit losses to be recognised before a financial instrument becomes past due. Typically, credit risk increases significantly before a financial instrument becomes past due or other lagging borrower-specific factors (for example, a modification or restructuring) are observed. Consequently when reasonable and supportable information that is more forward-looking than past due information is available without undue cost or effort, it must be used to assess changes in credit risk. Expected credit losses are recognised by taking into consideration individually or collectively assessed credit risk of loans granted and trade receivables. Credit risk is assessed based on all reasonable and verifiable information including future oriented information. The lifetime expected credit losses of trade receivables are assessed based on both the collective and individual assessment basis. The Group and the Company’s management decides on the performance of the assessment on an individual basis reflecting the possibility of obtaining information on the credit history of a particular borrower, its financial position as at the date of assessment, including forward-looking information that would allow to timely determine whether there has been a significant increase in the credit risk of that particular borrower, thus enabling making judgment on the recognition of lifetime expected credit losses in respect of that particular borrower. In the absence of reliable sources of information on the credit history of a particular borrower, its financial position as at the date of assessment, including forward-looking information, the Group and the Company assesses the debt on a collective basis. The lifetime expected credit losses of trade receivables are recognised at the recognition of amounts receivable. When granting the loan the Group and the Company assesses and recognises 12-month expected credit losses. In subsequent reporting periods, in case there is no significant increase in credit risk related to the lender, the Group and the Company adjusts the balance of 12-month expected credit losses in view of the outstanding balance of the loan at the assessment date. Having determined that the financial position of the lender has deteriorated significantly compared to the financial position that existed upon the issue of the loan, the Group and the Company records all lifetime expected credit losses of the loan. The latest point at which the Group and the Company recognises all lifetime expected credit losses of the loan granted is identified when the borrower is late to pay a periodic amount or the total debt for more than 30 days. In case of other evidence available, the Group and the Company accounts for all lifetime expected credit losses of the loan granted regardless of the more than 30 days past due assumption. Loans for which lifetime expected credit losses were calculated are considered credit-impaired financial assets. (d) Credit-impaired financial assets A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired include observable data about the following events: a) significant financial difficulty of the borrower; b) a breach of contract, such as a default or event that is past due for more than 90 days; 21 c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider; d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; e) the disappearance of an active market for that financial asset because of financial difficulties; f) the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses. The combined effect of several events that may occur simultaneously or subsequently throughout the term of validity of the agreement on the financial assets may have caused financial assets to become credit-impaired. The lifetime expected credit losses of loans receivable and trade receivables is recognised in profit or loss through the contra account of doubtful receivables. The Group and the Company writes off the loans receivable and trade receivables when it loses the right to receive contractual cash flows from financial assets. (e) Derecognition of financial assets The Group and the Company derecognises financial assets in case of the following: - the rights to receive cash flows from the asset have expired; - the Group and the Company has retained the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a “pass through” arrangement; or - the Group and the Company has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset: if the Group and the Company has not retained control, it shall derecognise the financial asset and recognise separately as assets or liabilities any rights and obligations created or retained in the transfer; if the Group and the Company has retained control, it shall continue to recognise the financial asset to the extent of its continuing involvement in the financial asset. Whether the Group and the Company has retained control of the transferred asset depends on the transferee's ability to sell the asset. If the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer, the Group and the Company has not retained control. In all other cases, the Group and the Company has retained control. 2.9 Inventories Inventories are carried at the lower of cost and net realisable value. Cost is determined by the first-in first-out (FIFO) method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related indirect production overheads, but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. 2.10 Prepayments Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current when the goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment relates to an asset which will itself be classified as non-current upon initial recognition. Prepayments to acquire assets are transferred to the carrying amount of the asset once the Group has obtained control of the asset and it is probable that future economic benefits associated with the asset will flow to the Group. Other prepayments are written off to profit or loss when the services relating to the prepayments are received. If there is an indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the prepayment is written down accordingly and a corresponding impairment loss is recognised in profit or loss for the year. 22 2.11 Cash and cash equivalents Cash and cash equivalents include cash at bank and on hand. Cash and cash equivalents are carried at AC because: (i) they are held for collection of contractual cash flows and those cash flows represent SPPI, and (ii) they are not designated at FVTPL. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and at bank and bank overdrafts. Bank overdrafts are included in borrowings in current liabilities on the balance sheet. 2.12 Share capital (a) Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Any excess of the fair value of consideration received over the par value of shares issued is recorded as share premium in equity. (b) Treasury shares Where the Company or its subsidiaries purchase the Company’s equity share capital, the consideration paid, including any attributed incremental external costs, is deducted from shareholders’ equity as treasury shares until they are sold, reissued or cancelled. No gain or loss is recognised in the income statement on the sale, issuance or cancellation of treasury shares. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is presented in the consolidated financial statements as a change in shareholders’ equity. 2.13 Reserves (a) Other reserves Other reserves are established upon the decision of annual general meeting of shareholders on profit appropriation. This reserve may be used only for the purposes approved by annual general meeting of shareholders. Legal reserve is included into other reserves. A legal reserve is a compulsory reserve under the Lithuanian legislation. Annual transfers of 5 per cent of net profit are required until the reserve reaches 10 per cent of the share capital. The legal reserve cannot be used for payment of dividends and it is established to cover future losses only. Revaluation reserve is included into other reserves. 23 (b) Reserve for acquisition of treasury shares This reserve is maintained as long as the Group is involved in acquisition/disposal of its treasury shares. This reserve is compulsory under the Lithuanian regulatory legislation and should not be lower than the acquisition cost of treasury shares acquired. 2.14 Financial liabilities (a) Financial liabilities Financial liabilities are classified as subsequently measured at AC, except for (i) financial liabilities at FVTPL: this classification is applied to derivatives, financial liabilities held for trading (e.g. short positions in securities), contingent consideration recognised by an acquirer in a business combination and other financial liabilities designated as such at initial recognition and (ii) financial guarantee contracts and loan commitments. The Group does not have any financial liabilities at fair value through profit or loss. (b) Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is settled, cancelled or expires. An exchange between the Group and the Company and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability. Modifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch up method, with any gain or loss recognised in profit or loss, unless the economic substance of the difference in carrying values is attributed to a capital transaction with owners. (c) Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position only when there is a legally enforceable right to offset the recognised amounts, and there is an intention to either settle on a net basis, or to realise the asset and settle the liability simultaneously. Such a right of set off (a) must not be contingent on a future event and (b) must be legally enforceable in all of the following circumstances: (i) in the normal course of business, (ii) in the event of default and (iii) in the event of insolvency or bankruptcy. (d) Trade and other payables. Trade payables are accrued when the counterparty performs its obligations under the contract and are recognised initially at fair value and subsequently carried at AC using the effective interest method. 24 (e) Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred, and are subsequently carried at AC using the effective interest method. 2.15 Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Profit is taxable at a rate of 15 per cent in accordance with the Lithuanian regulatory legislation on taxation. In Latvia distributed profits are taxed at 20% whereas undistributed profits are taxed at 0% tax rate; deemed profit distributions are taxed at a 20% tax rate (25% effective rate, applying 20/80 to the taxable base). Deferred income tax is recognised using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax liabilities are recognised on all temporary differences that will increase the taxable profit in future, whereas deferred tax assets are recognised to the extent it is probable that they will reduce the taxable profit in future. However the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. The Group controls the reversal of temporary differences relating to taxes chargeable on dividends from subsidiaries or on gains upon their disposal. The Group does not recognise deferred tax liabilities on such temporary differences except to the extent that management expects the temporary differences to reverse in the foreseeable future. The Group and the Company determines whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments based on which approach better predicts the resolution of the uncertainty. The Group and the Company assumes that the taxation authority will examine amounts it has a right to examine and will have full knowledge of all related information when making those examinations. If the Group and the Company concludes it is not probable that the taxation authority will accept an uncertain tax treatment, the effect of uncertainty will be reflected in determining the related taxable profit or loss, tax bases, unused tax losses, unused tax credits or tax rates, by using either the most likely amount or the expected value, depending on which method the entity expects to better predict the resolution of the uncertainty. The Group and the Company reflects the effect of a change in facts and circumstances or of new information that affects the judgments or estimates required by the interpretation as a change in accounting estimate. The absence of agreement or disagreement by a taxation authority with a tax treatment, in isolation, is unlikely to constitute a change in facts and circumstances or new information that affects the judgments and estimates required. 25 2.16 Employee benefits (a) Social security contributions The Group pays social security contributions to the state Social Security Fund (the Fund) on behalf of its employees based on the defined contribution plan in accordance with the local legal requirements. A defined contribution plan is a plan under which the Group pays fixed contributions into the Fund and will have no legal or constructive obligations to pay further contributions if the Fund does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior period. Social security contributions are recognised as expenses on an accrual basis and are included in payroll expenses. (b) Termination benefit 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 Group recognizes termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit or loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service costs. (c) Bonus plans The Group recognises a liability and an expense for bonuses and profit-sharing where contractually obliged or where there is a past practice that has created a constructive obligation. 2.17 Revenue recognition Revenue is income arising in the course of the Group’s and the Company’s ordinary activities. Revenue is recognised in the amount of transaction price. Transaction price is the amount of consideration to which the Group and the Company expects to be entitled in exchange for transferring control over promised goods or services to a customer, excluding the amounts collected on behalf of third parties. 26 Revenue is recognised net of discounts, returns and value added taxes, export duties and other similar mandatory payments. The Company and the Group manufactures and sells a range of cheese and milk products in the wholesale market. Sales are recognised when control of the products has transferred, being when the products are delivered to the wholesaler, the wholesaler has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the wholesaler, and either the wholesaler has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied. The goods are often sold with retrospective volume discounts based on aggregate sales over a 12 months period. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate and provide for the discounts, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A refund liability (included in trade and other payables) is recognised for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales mostly are made with a credit term of 30 days, which is consistent with market practice. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. Revenue from transportation services is recognised in the period when services are performed. Interest income is recognised on a time-proportion basis using the effective interest method. When a receivable is impaired the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate. 2.18 Expense recognition Expenses are recognised on an accrual basis and matching principle in the reporting period in which they are incurred. Expenses incurred during the reporting period, which cannot be attributed directly to specific income earned and will not generate any income in subsequent reporting periods, are recognised as expenses during the period when incurred. Expenses are stated at fair value. 2.19 Dividend distribution Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s shareholders. 2.20 Earnings per share Basic earnings per share are calculated by dividing net profit attributed to the shareholders from average weighted number of ordinary registered shares in issue, excluding ordinary registered shares purchased by the Company and the Group and held as treasury shares. 27 2.21 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker who is responsible for allocating resources and assessing performance of the operating segments has been identified as the Board of Directors that makes strategic decisions. The Group’s management distinguished the following operating segments of the Group: hard cheese, semi-hard cheese, butter, milk cream, sour cream, sour milk, yogurt, curd, curd cheese and other. These segments were combined into two main reportable segments based on the similar nature of products production process types of customers and the method of distribution. 2.22 Government grants and subsidies Government grants are recognised at fair value where there is sufficient evidence that the grant will be received and the Group and the Company will comply with all attached conditions. Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight line basis over the expected lives of the related assets. 2.23 Provisions Provisions are recognised when: the Group and the Company have a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Provisions are measured at the present value of expenditures expected to be required to settle the obligation using pre-tax rate that reflects current market assessments of the time value of money and the risks specified to the obligation. The increase in the provision due to passage of time is recognised as operating expenses. 2.24 Trade payables Trade payables are recognised initially at fair value and subsequently measured at amortised cost using effective interest method. 2.25 Derivative financial instruments The Company uses derivative financial instruments such as interest rate swaps to hedge its cash flow interest rate risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re -measured at fair value. Changes in the fair value of the interest rate swap are recognised immediately in profit or loss and are included in finance cost. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. The fair value of currency interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves. Additionally, the instruments’ value is agreed upon with bank. All of the resulting fair value estimates are included in level 2 in the fair value hierarchy. 28 2.26 Events after the reporting period Post-balance sheet events that provide additional information about the Company’s and Group’s position at the statement of financial position date (adjusting events) are reflected in the financial statements. Events after the reporting period that are non-adjusting events are disclosed in the notes when material. 2.27 Contingent assets and liabilities Contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the financial statements but disclosed when an inflow of economic benefits is probable. 2.28 Finance costs Finance costs represents costs incurred by the Company and the Group from financing activities, such as interest costs on borrowings. 2.29 Transactions with related parties In the normal course of business, the Company and the Group enter into transactions with their related parties. These transactions are priced predominantly at market rates. Judgement is applied in determining if transactions are priced at market or non-market rates, where there is no active market for such transactions. The basis for judgement is pricing for similar types of transactions with unrelated parties, when such information is known to the Company or the Group. 3. Financial risk management 3.1 Financial risk factors The Group’s and the Company’s activities expose them to a variety of financial risks. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Group. Risk management is carried out by the Company’s management. There are no written principles for overall risk management in place. (a) Market risk (i) Foreign exchange risk The Company and the Group operate internationally, however, their exposure to foreign exchange risk is set at minimum level, since sales outside Lithuania are performed mostly in the euros. (ii) Cash flow and fair value interest rate risk The Company’s and the Group’s interest rate risk arises from interest-bearing loans and borrowings. Borrowings with variable interest rates expose the Group to cash flow interest rate risk. Borrowings with fixed interest rates expose the Group to fair value interest rate risk. In current year and previous year, loans granted by the Group at a fixed interest rate were denominated in the euros. Borrowings were denominated in the euros. 29 IBOR reform had no material impact for the Company and Group, as major borrowings are either EURIBOR linked, or have fixed interest rates, therefore there was no need to transition to alternative benchmark interest rates. Changes in how EURIBOR is determined (determination has shifted from a quotes-based to a transactions-based methodology) had no impact on interest rates applied, as for all EURIBOR linked borrowings three months EURIBOR is subject to a 0% floor. Before and after the changes in how EURIBOR is determined EURIBOR was negative, therefore 0% floor was applicable to arrive at interest rate and therefore those changes had no impact on interest rate itself and no effect on future cash flows. The financial liabilities denominated at EURIBOR based interest rate are disclosed in Note 25. Instruments used by the group (Note 25) The Company and the Group uses Interest rate swap to minimise the risk of interest rate fluctuations. The interest rate swap currently in place covers approximately 11% (2023: 5%) of the short - term borrowings interest and 100% of long term interest (2023: 100%). The swap contract requires settlement of net interest receivable or payable every 30 days. The settlement dates coincide with the dates on which interest is payable on the underlying debt. The exposure of variable rate of the Group’s and the Company’s borrowings (amounted to EUR 34,085 (2023: 42,977)) to interest rate changes are as follows, at the year end: in every change of interest rate amount by 0,1% (100 points), the Group’s and the Company’s interest expense changes by Eur 34 thousand in 2024 and EUR 43 thousand in 2023. As at 31 December 2024 the Company’s and the Group’s net assets sensitive to changes in interest rate amounted to EUR 14,556 thousand (2023: EUR 3,422 thousand). (b) Credit risk The Group and the Company exposes itself to credit risk, which is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to meet an obligation. Exposure to credit risk arises from trade receivables, cash and cash equivalents and as a result of the Group’s and the Company’s lending and other transactions with counterparties, giving rise to financial assets and off-balance sheet credit-related commitments. Credit risk is managed on a group basis. According to internal rules, the Company’s and the Group’s all cash balances are held at banks that had external credit ratings from ‘A+’ to ‘BBB’, as set by the rating agency Fitch Ratings. As at the year end the Group’s cash amounted EUR 4,244 thousand (2023: EUR 3,896 thousand) and the Company’s cash amounted EUR 56 thousand (2023: EUR 237 thousand) were held at bank with rating AA-, remaining miscellaneous balances were held in banks and payment institutions with lower ratings or those which were not rated by Fitch. While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial. (i) Maximum exposure to credit risk The table below summarises the Company’s and the Group’s credit risk exposures relating to on-balance sheet items. Maximum exposure to credit risk before collateral held or other credit enhancements as at 31 December: 30 Group Company 2024 2023 2024 2023 Cash and cash equivalents at banks 4,244 3,896 56 237 Trade receivables 50,774 46,830 45,346 39,797 Loans granted 3,092 3,342 3,059 3,306 58,110 54,068 48,461 43,340 (ii) Credit quality of financial assets The Group does not classify amounts receivable and other financial assets exposed to credit risk according to credit quality. Credit risk is managed through established credit limits for a major customers and monitoring of overdue receivables and loans. Credit limits and overdue receivables are continuously monitored by the Company’s and the Group’s management. There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions. The table below presents credit limits, if management has established for the major customers and amounts receivable from them before allowance as at 31 December 2024. Group Company Credit limit Amount receivable Credit limit Amount receivable Customer A 2,700 2,594 2,700 2,594 Customer B 2,400 2,207 2,400 2,207 Customer C 2,500 2,121 - - Customer D 4,800 4,113 - - Customer E 4,500 4,003 4,500 4,003 Customer F 6,000 3,922 6,000 3,922 Customer G 4,000 3,790 4,000 3,790 Customer H 3,950 2,994 3,950 2,994 The table below presents credit limits established for the major customers and amounts receivable from them as at 31 December 2023. Group Company Credit limit Amount receivable Credit limit Amount receivable Customer A 4,345 4,119 - - Customer B 4,500 4,036 4,500 4,036 Customer F 5,500 3,751 5,500 3,751 Customer G 4,000 3,375 4,000 3,375 Customer D 3,500 2,673 - - Customer I 2,500 2,397 2,500 2,397 Customer J 2,000 1,726 2,000 1,726 Customer K 2,000 1,623 2,000 1,623 The table below summaries concentration of the loans granted: 31 Group Company 2024 2023 2024 2023 in excess of EUR 1,000 thousand 1,987 2,987 1,987 2,987 in excess of EUR 500 thousand, but not in excess of EUR 1,000 thousand - - - - not in excess of EUR 500 thousand 1,105 355 1,105 319 3,092 3,342 3,092 3,306 Loans in excess of EUR 1,000 thousand were granted to two business entities. (iii) Impairment of financial assets The Group applies the IFRS 9 simplified approach to measuring expected credit losses (ECL) which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a period of 36 month before 31 December 2024 or 31 December 2023 respectively and the corresponding historical credit losses experienced within this period. The forward looking analysis lead to the conclusion that an adjustment of historical loss rates is not necessary. On that basis, the loss allowance as at 31 December was determined as follows for trade receivables grouped (collective model) based on shared characteristics: Group Not yet due Less than 30 days past due More than 30 days past due More than 90 days past due More than 180 days past due More than 365 days past due Total December 31, 2024 Expected loss rate 0.10% 0.10% 0.80% 0.80% 0.80% 0.80% Gross carrying amount – trade receivables 42,529 5,694 1,069 640 668 175 50,775 Loss allowance 43 6 9 5 5 2 70 32 Group Not yet due Less than 30 days past due More than 30 days past due More than 90 days past due More than 180 days past due More than 365 days past due Total December 31, 2023 Expected loss rate 0.10% 0.10% 1.00% 1.00% 1.00% 0.90% Gross carrying amount – trade receivables 38,250 3,159 538 743 1,017 675 44,382 Loss allowance 38 3 5 7 10 6 70 Company Not yet due Less than 30 days past due More than 30 days past due More than 90 days past due More than 180 days past due More than 365 days past due Total December 31, 2024 Expected loss rate 0.12% 0.10% 0.80% 0.80% 0.80% 0.80% Gross carrying amount – trade receivables 37,101 5,694 1,069 640 668 175 45,347 Loss allowance 45 6 8 5 5 1 70 Company Not yet due Less than 30 days past due More than 30 days past due More than 90 days past due More than 180 days past due More than 365 days past due Total December 31, 2023 Expected loss rate 0.12% 0.10% 1.00% 1.00% 1.00% 0.90% Gross carrying amount – trade receivables 31,217 3,159 538 743 1,017 675 37,349 Loss allowance 37 3 5 7 10 6 70 ECL for significant trade receivables overdue for more than 90 days is evaluated individually based on external information from credit insurance agency, collaterals received as security of repayment and past history of default. For such trade receivables the loss allowance as at 31 December was determined as follows: 33 Group Not yet due Less than 30 days past due More than 30 days past due More than 90 days past due More than 180 days past due More than 365 days past due Total December 31, 2024 Gross carrying amount – trade receivables 121 51 82 151 181 2,918 3,504 Expected loss rate 98.0% Loss allowance 3,435 Group Not yet due Less than 30 days past due More than 30 days past due More than 90 days past due More than 180 days past due More than 365 days past due Total December 31, 2023 Gross carrying amount – trade receivables 1,992 438 601 139 357 2,707 6,234 Expected loss rate 59.6% Loss allowance 3,716 Company Not yet due Less than 30 days past due More than 30 days past due More than 90 days past due More than 180 days past due More than 365 days past due Total December 31, 2024 Gross carrying amount – trade receivables 121 51 82 151 181 2,918 3,504 Expected loss rate 98.0% Loss allowance 3,435 Company Not yet due Less than 30 days past due More than 30 days past due More than 90 days past due More than 180 days past due More than 365 days past due Total December 31, 2023 Gross carrying amount – trade receivables 1,992 438 601 139 357 2,707 6,234 Expected loss rate 59.6% Loss allowance 3,716 The Group has followed the three-stage model for impairment of financial assets other than trade receivables and considered all its loans granted at amortised cost to have Stage 1 (performing) credit. The ECL model is based on the financial information of the Company’s and the Group’s debtors and the assessment of collaterals as security of loan repayment. The Company and the Group carried out an assessment of collaterals as security of loan repayment and determined that the credit losses determined based on probability of default within 12 months resulted in immaterial impairment loss. The information on loans receivable is disclosed in Note 18. 34 As at 31 December 2024 debtors collateral placed as security in favor to the Company and the Group for trade receivables and loans receivable are valued at Eur 6,630 thousand (2023: Eur 6,630 thousand). The collateral consists of certain buildings, land plots and milk cows, no negative changes in collateral quality observed during both reporting periods. (c) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. Prudent liquidity risk management allows maintaining sufficient cash and availability of funding under committed credit facilities. The Group had access to EUR 19,765 thousand (2023: EUR 12,973 thousand) undrawn borrowing facilities at the end of the reporting period expiring within one year. The table below summarises the Group’s and the Company‘s financial liabilities. The financial liabilities are classified into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are contractual undiscounted cash flows. Accounts payable and other financial liabilities due within 3 months or less are equal to their carrying amounts as the impact of discounting is insignificant. Group Less than 3 months From 3 to 12 months From 1 to 5 years After 5 years At 31 December 2024 Borrowings from banks and other financial liabilities 30,760 1,575 1,750 - Accrued expenses 22,443 - - - 53,203 1,575 1,750 - Group Less than 3 months From 3 to 12 months From 1 to 5 years After 5 years At 31 December 2023 Borrowings from banks and other financial liabilities 37,552 1,575 3,850 - Accrued expenses 19,898 - - - 57,450 1,575 3,850 - Company Less than 3 months From 3 to 12 months From 1 to 5 years After 5 years At 31 December 2024 Borrowings from banks and other financial liabilities 30,760 1,575 1,750 - Trade payables 20,714 - - - 51,474 1,575 1,750 - 35 Company Less than 3 months From 3 to 12 months From 1 to 5 years After 5 years At 31 December 2023 Borrowings from banks and other financial liabilities 37,552 1,575 3,850 - Trade payables 17,507 - - - 55,059 1,575 3,850 - 3.2 Capital risk management The Company’s and the Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group and Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Company and the Group define their capital as equity and debt, less cash and cash equivalents. As at 31 December, the Group’s and the Company’s capital structure was as follows: Group Company 2024 2023 2024 2023 Borrowings (Note 25) 34,085 42,977 34,085 42,977 Less: cash and cash equivalents (Note 21) (4,244) (3,896) (56) (237) Net debt 29,841 39,081 34,029 42,740 Shareholders’ equity 149,207 139,528 129,523 121,397 Total capital 179,048 178,609 163,552 164,137 Pursuant to the Lithuanian Law on Companies the authorised share capital of a public company must be not less than EUR 25 thousand (the authorised share capital of a private company must not be less than EUR 2.5 thousand) and the shareholders’ equity should not be lower than 50 per cent of the company’s registered share capital. As at 31 December 2024 and 31 December 2023, the Company and its subsidiaries registered in Lithuania complied with these requirements. Under the terms of the major borrowing facilities, the Group is required to comply with the following financial covenants: net Debt/EBITDA ratio no more than 4, Equity ratio more than 40% borrowings/working capital ratio less than 60%. The Group has complied with these covenants throughout the reporting period. 36 3.3 Fair value estimation Trade payables and trade receivables accounted for in the balance sheet should be settled within a period shorter than three months therefore it is deemed that their fair value equals to their carrying amount less impairment. Interest rate on the borrowings received by the Company is subject to repricing at least every six months therefore it is deemed that their fair value equals their carrying amount. Companies and Group issued loans fair value disclosed in Note 18. Property, plant and equipment fair value disclosed in Note 14. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of the fair value hierarchy have been defined as follows: Level 1 includes the fair value of assets which is established based on quoted prices (unadjusted) in active markets for identical assets. Level 2 includes the fair value of assets which is established based on other directly or indirectly observable inputs. Level 3 includes the fair value of assets which is established based on unobservable inputs. 4. Critical accounting estimates and judgements Impairment of financial assets The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Details of the key assumptions and inputs used are disclosed in Note 3.1. Estimates of useful lives of property, plant and equipment The estimation of the useful lives of items of property, plant and equipment is a matter of judgment based on the experience with similar assets. The future economic benefits embodied in the assets are consumed principally through use. However, other factors, such as technical or commercial obsolescence and wear and tear, often result in the diminution of the economic benefits embodied in the assets. Management assesses the remaining useful lives in accordance with the current technical conditions of the assets and estimated period during which the assets are expected to earn benefits for the Group and the Company. The following primary factors are considered: (a) the expected usage of the assets; (b) the expected physical wear and tear, which depends on operational factors and maintenance programme; and (c) the technical or commercial obsolescence arising from changes in market conditions. The Company and the Group have old buildings and machinery, where the useful lives are estimated based on the expected product lifecycles. However, economic useful lives may differ from the currently estimated as a result of technical innovations and actions of competitors. Inventory write-down to net realizable value The Group and the Company recognise inventory at the lower of cost and net realizable value. The Group and the Company assess whether the value of inventory recognised at cost is not lower that its net realisable value based on the historical data and actual results of inventory items sold below cost after the financial year end. If the recognised inventory write-down to net realisable value was 5 % higher/lower, the Group’s and the Company’s profit before income tax for the year 2024 would be EUR 39 thousand lower/ higher (2023: EUR 40 thousand, respectively). See Note 19 for more details. 37 5. Segment reporting Operating segments and reportable segments The Group’s management has distinguished the following operating segments of the Group: hard cheese, semi-hard cheese, butter milk, cream, sour cream, sour milk, yogurt, curd, curd cheese and other. These segments were combined into two main reportable segments based on the similar nature of products, production process, types of customers and the method of distribution. From 2022 the Group has introduced a modified segment structure, redistributing the Other segment into Cheese and other dairy products segment. These changes were a result of change in management reporting. Due to the change in the composition of these reportable segments, the Group has re-casted the comparable prior year figures. The main two reportable business segments of the Group are as follows: - Fresh milk products - Cheese and other dairy products Transactions between the operating segments are on normal commercial terms and conditions. The number of segment customers, each generating 10% of total revenue of the segment are: - Fresh milk products: 2 external customers - Cheese and other dairy products: 1 external customer The table below summarizes segment information for the years ended: Fresh milk products Cheese and other dairy products Group 2024 Sales 131,591 277,288 408,879 Inter-segment sales - (38,531) (38,531) Third party sales 131,591 238,757 370,348 Segment’s gross profit 16,339 34,558 50,897 2023 Sales 110,407 228,843 339,250 Inter-segment sales - (34,996) (34,996) Third party sales 110,407 193,847 304,254 Segment’s gross profit 20,120 22,798 42,918 During the year 2024 the Group’s amount of services of goods and milk transportation, milk production and other services, recorded within the sales, was to EUR 1,034 thousand (2023: EUR 967 thousand), the Company’s – respectively EUR 6,020 thousand (2023: EUR 5,885 thousand). Geographical information 38 The Company’s sales by markets and assets by can be analysed as follows: Sales revenue Total assets Capital expenditure 2024 2023 2024 2023 2024 2023 Lithuania 117,980 93,737 192,213 191,159 5,576 8,809 Europe Union countries 194,276 133,549 - - - - Near East 10,963 22,364 - - - - North America 4,377 5,575 - - - - Far East 3,295 3,635 - - - - Other countries 3,308 5,212 - - - - 334,199 264,072 192,213 191,159 5,576 8,809 The Group’s sales by markets and assets by location can be analysed as follows: Sales revenue Total assets Capital expenditure 2024 2023 2024 2023 2024 2023 Lithuania 121,805 111,023 212,798 234,185 7,683 10,487 Europe Union countries 220,903 153,359 4,502 6,129 1 17 Near East 13,330 23,080 - - - - North America 4,398 5,575 - - - - Far East 4,780 5,069 - - - - Other countries 5,132 6,148 - - - - 370,348 304,254 217,300 240,314 7,684 10,504 Sales are allocated based on the country in which the customers are located. 6. Selling and marketing expenses Group Company 2024 2023 2024 2023 Transportation services (4,985) (4,739) (4,562) (4,410) Wages and salaries (4,449) (3,725) (2,335) (1,937) Intermediation services (567) (440) (567) (430) Product image creation and advertising expenses (1,311) (1,188) (260) (205) Repair and maintenance (1,017) (928) (931) (840) Depreciation of property, plant and equipment (769) (525) (726) (479) Warehousing services (435) (405) (435) (405) Customs fees (139) (365) (139) (365) Other expenses (2,057) (1,827) (1,399) (1,136) (15,729) (14,142) (11,354) (10,207) 39 7. General and administrative expenses Group Company 2024 2023 2024 2023 Wages and salaries (5,164) (4,438) (2,768) (2,553) Taxes (other than income tax) (61) (53) (36) (36) Provisions for impairment of loans granted and doubtful receivables and write-offs of loans and receivables (reversals) (Note 20) 620 (14) 620 (11) Consultations (243) (260) (160) (179) Depreciation of property, plant and equipment and amortisation of intangible assets (758) (681) (583) (570) Repairs and maintenance (736) (582) (283) (316) Telecommunications and IT maintenance expenses (296) (184) (213) (141) Insurance expenses (185) (203) (166) (185) Bank charges (187) (134) (182) (130) Business trips (147) (79) (105) (62) Fines (7) (9) (8) (1) Staff training (116) (54) (81) (29) Membership fees (10) (16) (9) (15) Charity and support (528) (425) (144) (88) Other expenses (1,079) (1,419) (913) (1,056) (8,897) (8,551) (5,031) (5,372) 8. Other income Group Company 2024 2023 2024 2023 Interest income 998 358 998 358 Dividend and other income - - 10,338 3,269 998 358 11,336 3,627 The Company’s other income comprises dividends received from subsidiary Rokiškio Pieno Gamyba UAB. 9. Other (losses)/gains Group Company 2024 2023 2024 2023 Result of disposal of property, plant and equipment 173 147 103 136 173 147 103 136 40 10. Expenses by nature Group Company 2024 2023 2024 2023 Raw materials and consumables used 236,954 215,359 222,800 206,184 Changes in inventories of finished goods and work in progress 11,615 (21,378) 12,189 (21,347) Inventory write-down to net realizable value (Note 19) (770) (790) (770) (790) Wages and salaries including social security contributions 31,080 28,117 19,143 18,129 Transportation services 12,235 13,219 11,808 12,884 Depreciation (Notes 14) 9,789 9,106 6,737 6,086 Amortisation of the Government grant for property, plant and equipment (Note 26) (514) (453) (311) (281) Intermediation services 567 440 567 430 Repairs and maintenance 8,905 8,383 6,977 6,885 Cost of finished goods resold 612 385 23,546 15,302 Provisions for impairment of loans granted and doubtful receivables and write-offs of loans and receivables (reversals) (632) - (632) - Taxes (other than income tax) 820 774 417 649 Consultations 244 259 160 179 Telecommunication and IT maintenance expenses 298 185 221 150 Utilities (energy) 20,268 20,538 12,180 12,163 Other 12,606 9,885 6,655 6,802 Total cost of sales, selling and marketing expenses and general and administrative expenses 344,077 284,029 321,687 263,425 11. Finance costs Group Company 2024 2023 2024 2023 Interest expenses: - bank borrowings (1,841) (1,486) (1,841) (1,486) 12. Income tax Group Company 2024 2023 2024 2023 Current income tax (2,765) (1,695) (793) 747 Prior year income tax corrections - - - - Deferred income tax (Note 17) 5 (1,308) (15) (703) Income tax (expenses)/ benefit (2,760) (3,003) (808) 44 The income tax on the Company’s and the Group’s profit before tax differs from the theoretical amount that would arise when using the basic tax rate as follows: 41 Group Company 2024 2023 2024 2023 Profit before income tax 25,601 19,244 22,110 2,924 Tax calculated at a rate of 15% (Note 2.15) 3,840 2,680 3,317 233 Expenses not deductible for tax purposes 186 346 125 289 Income not subject to tax (1,551) (528) (1,551) (526) Charity expenses deductible twice for tax purposes (152) (101) (37) - Investment projects relief (278) (335) (200) (28) Prior year income tax corrections and other 715 941 (846) (12) Income tax expense/(benefit) 2,760 3,003 808 (44) Expenses not deductible for tax purposes include representation expenses, write-offs, etc. Income not subject to tax include interest on late payment and insurance benefits received. The Tax Authorities may at any time during 3 successive years after the end of the reporting tax year carry out the inspection of book-keeping and accounting records and impose additional taxes or fines (for certain transactions period is 5 years). The Company‘s management is not aware of any circumstances that might result in a potential material liability in this respect. 13. Earnings per share Group Company 2024 2023 2024 2023 Net profit attributable to shareholders 22,841 16,241 21,302 2,968 Weighted average number of ordinary shares in issue (thousand) 31,420 35,007 31,420 35,007 Weighted average number of treasury shares held (thousand) (861) (861) (861) (861) Basic earnings/(deficit) per share (EUR per share) 0.73 0.46 0.68 0.08 The Group has no dilutive potential ordinary shares, therefore, the diluted earnings per share are the same as basic earnings per share. 42 14. Property, plant, and equipment Company Buildings Plant and machinery Motor vehicles and other assets Construction in progress Total At 1 January 2023 Acquisition cost and revalued amount 17,123 63,887 39,160 4,215 124,385 Accumulated depreciation (8,056) (46,721) (27,857) - (82,634) Net book amount 9,067 17,166 11,303 4,215 41,751 Year ended 31 December 2023 Opening net book amount 9,067 17,166 11,303 4,215 41,751 Additions 56 1,818 3,001 3,933 8,808 Disposals (30) - (77) - (107) Write-offs (1) - - - (1) Transfers from CIP 172 1,302 347 (1,821) - Depreciation charge (553) (2,791) (2,742) - (6,086) Closing net book amount 8,711 17,495 11,832 6,327 44,365 At 31 December 2023 Acquisition cost and revalued amount 17,101 65,803 40,975 6,327 130,206 Accumulated depreciation (8,390) (48,308) (29,143) - (85,841) Net book amount 8,711 17,495 11,832 6,327 44,365 Year ended 31 December 2024 Opening net book amount 8,711 17,495 11,832 6,327 44,365 Additions 129 1,849 2,043 1,555 5,576 Disposals (145) (38) (39) - (222) Write-offs (17) - (4) - (21) Transfers from CIP 3,504 2,060 1,193 (6,757) - Depreciation charge (650) (3,100) (2,987) - (6,737) Closing net book amount 11,532 18,266 12,038 1,125 42,961 At 31 December 2024 Acquisition cost and revalued amount 20,173 68,791 42,570 1,125 132,659 Accumulated depreciation (8,641) (50,525) (30,532) - (89,698) Net book amount 11,532 18,266 12,038 1,125 42,961 43 Group Buildings Plant and machinery Motor vehicles and other assets Construction in progress Total At 1 January 2023 (restated) Cost or revaluated amount 25,458 96,647 41,443 4,215 167,763 Accumulated depreciation (13,276) (68,589) (29,487) - (111,352) Net book amount 12,182 28,058 11,956 4,215 56,411 Year ended 31 December 2023 Opening net book amount 12,182 28,058 11,956 4,215 56,411 Additions 193 2,599 3,033 4,679 10,504 Disposals (29) - (311) - (340) Write-offs - (1) - - (1) Transfers from CIP 339 1,874 354 (2,567) - Depreciation charge (1,050) (5,217) (2,839) - (9,106) Closing net book amount 11,635 27,313 12,193 6,327 57,468 At 31 December 2023 (restated) Cost or revaluated amount 25,742 99,814 42,990 6,327 174,873 Accumulated depreciation (14,107) (72,501) (30,797) - (117,405) Net book amount 11,635 27,313 12,193 6,327 57,468 Year ended 31 December 2024 Opening net book amount 11,635 27,313 12,193 6,327 57,468 Additions 151 3,251 2,061 2,222 7,685 Disposals (145) (38) (38) - (221) Write-offs (18) (2) - - (20) Transfers from CIP 3,505 2,693 1,193 (7,391) - Depreciation charge (1,117) (5,592) (3,080) - (9,789) Closing net book amount 14,011 27,625 12,329 1,158 55,123 At 31 December 2024 Cost or revaluated amount 28,830 103,553 44,467 1,158 178,008 Accumulated depreciation (14,819) (75,928) (32,138) - (122,885) Net book amount 14,011 27,625 12,329 1,158 55,123 As at 31 December 2024, the Company’s and the Group’s property, plant and equipment with a carrying value of EUR 30,923 thousand and EUR 41,273 thousand, respectively (31 December 2023: EUR 32,533 thousand and EUR 44,027 thousand, respectively) was pledged as a security for credit limit agreements. Depreciation expenses of property plant and equipment are included in selling and marketing expenses, general and administrative expenses and cost of sales in the income statement, as well as in work in progress and finished goods in the balance sheet. 44 15. Intangible assets Company Computer software At 1 January 2023 Cost 1,329 Accumulated amortisation (1,197) Net book amount 132 Year ended 31 December 2023 Opening net book amount 132 Additions - Amortisation charge (55) Closing net book amount 77 At 31 December 2023 Cost 1,327 Accumulated amortisation (1,250) Net book amount 77 Year ended 31 December 2024 Opening net book amount 77 Additions - Amortisation charge (55) Closing net book amount 22 At 31 December 2024 Cost 1,325 Accumulated amortisation (1,303) Net book amount 22 45 Group Computer software At 1 January 2023 Cost 1,462 Accumulated amortisation (1,300) Net book amount 162 Year ended 31 December 2023 Opening net book amount 162 Additions 5 Amortisation charge (74) Closing net book amount 93 At 31 December 2023 Cost 1,466 Accumulated amortisation (1,373) Net book amount 93 Year ended 31 December 2024 Opening net book amount 93 Additions 3 Amortisation charge (74) Closing net book amount 22 At 31 December 2024 Cost 1,462 Accumulated amortisation (1,440) Net book amount 22 Amortisation expenses of computer software and other intangible assets are included in general and administrative expenses in the income statement. 16. Investments in subsidiaries and other investments Group Company 2024 2023 2024 2023 Rokiškio Pieno Gamyba UAB (consolidated) - - 4,733 4,733 Rokiškio Pienas UAB (consolidated) - - 105 105 Jekabpils Piena Kombinats SIA (consolidated) - - 3 3 DairyHub.LT UAB (consolidated) - - 100 100 Kaunata SIA (not consolidated) 165 165 103 103 Other (accounted at cost) 4 4 4 4 169 169 5,048 5,048 The Group’s investments in subsidiaries consist of investment in Kaunata SIA. Kaunata SIA was accounted for at cost in the consolidated and separate financial statements and not consolidated due to immateriality. Kaunata SIA, company code 240300369, VAT payer’s code: LV42403003695, address: S. Rogs, Kaunatas pag. Rezekne novads. Results of operations for the year ended 31 December 2024 (unaudited) are as follows: 46 Total assets: EUR 215,502; Property, plant and equipment: EUR 28,374; Results of operations: EUR 28,115. Core line of business of the subsidiary: collection and realisation of milk. The company is the main supplier of raw milk to company Jekabpils Piena Kombinats SIA (subsidiary of Rokiškio Sūris AB). 17. Deferred income tax Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The offset amounts are as follows: Group Company 2024 2023 2024 2023 Deferred income tax assets: restated restated – to be realised after more than 12 months 1,076 1,075 1,005 1,024 – to be realised within 12 months 123 119 123 119 1,199 1,194 1,128 1,143 Deferred income tax liabilities: – to be realised after more than 12 months - - - - – to be realised within 12 months - - - - - - - - Net deferred tax liability 1,199 1,194 1,128 1,143 The gross movement in deferred income tax liabilities was as follows: Group Company 2024 2023 2024 2023 restated restated At the beginning of the year 1,194 653 1,143 1,847 Recognised in the income statement 5 541 (15) (704) Recognised in other comprehensive income - - - - At the end of the year 1,199 1,194 1,128 1,143 The movement in deferred income tax assets and liabilities during the period, without taking into consideration the offsetting of balances within the same fiscal jurisdiction is as follows: 47 Company Deferred income tax assets Inventory write-down to net realisable value Employee post-retirement benefits Impairment of amounts receivable Vacation reserve Total At 1 January 2023 822 210 652 163 1,847 Recognised in the income statement (703) (1) - - (704) Recognised in other comprehensive income - - - - - At 31 December 2023 119 209 652 163 1,143 Recognised in the income statement 4 27 (57) 11 (15) Recognised in other comprehensive income - - - - - At 31 December 2024 123 236 595 174 1,128 Group Deferred income tax assets Inventory write-down to net realisable value Employee post-retirement benefits Impairment of amounts receivable Vacation reserve Tax loss, transferable for future years Total At 1 January 2023 822 261 652 163 602 2,500 Recognised in the income statement (703) (1) - - (602) (1,306) Recognised in other comprehensive income - - - - - - At 31 December 2023 119 260 652 163 - 1,194 Recognised in the income statement 4 47 (57) 11 - 5 Recognised in other comprehensive income - - - - - - At 31 December 2024 123 307 595 174 - 1,199 Deferred income tax assets and deferred income tax liabilities were calculated using a tax rate of 16% (2023: 15%) enacted by the balance sheet date and expected to apply when the related deferred income tax asset is realised or deferred income tax liability is settled. 48 18. Loans granted Group Company 2024 2023 2024 2023 Long-term loans to employees 270 316 237 280 Other long-term loans 1,487 1,487 1,487 1,487 Less: provision for impairment of loans receivable - - - - Long-term loans, net 1,757 1,803 1,724 1,767 Current portion of loans to employees 37 39 37 39 Other short-term loans granted 1,298 1,500 1,298 1,500 Current portion of long-term loans and short-term loans, net 1,335 1,539 1,335 1,539 Repayment terms of other long-term loans granted ranged between 1 and 5 years. The loans bear average weighted interest rate of 5.74% (2023: 6.72%). Other loans repayments are secured with pledges of assets or guarantees. The fair value of borrowings is attributed to Level 2 in the fair value hierarchy. The fair value of loans granted approximated their carrying amount. Information on loans receivable that were past due as at 31 December is provided in the table below: Group Company 2024 2023 2024 2023 Loans granted not past due 3,092 3,342 3,059 3,306 Impaired loans granted - - - - Gross value of loans granted 3,092 3,342 3,059 3,306 Less: Provision for impairment of loans receivable - - - - Net amount 3,092 3,342 3,059 3,306 19. Inventories Group Company 2024 2023 2024 2023 Raw materials 3,832 3,601 1,800 1,482 Work in progress 16,041 12,917 15,712 12,710 Finished products 61,157 77,129 59,386 76,010 Other inventories 2,522 1,540 2,265 1,171 Total inventories at cost 83,552 95,187 79,163 91,373 Less: inventory write-down to net realizable value (770) (790) (770) (790) Total inventories 82,782 94,397 78,393 90,583 As at 31 December 2024 and 2023 inventories were pledged as security for bank borrowings, subsidiaries’ inventories were not pledged. 49 The Company’s inventories as at 31 December 2024: 0 tons milk sugar (2023: 2,587,5 tons), 943 tons of hard cheese (2023: 1,795.9 tons), 104 tons of caliata and mozzarella cheese (2023:0 tons) held in Lithuania, 0 tons of hard cheese (2023: 340.2 tons) held in the USA. The total value of these inventories is EUR 5,526 thousand (2023: 12,356 thousand). The Company and the Group have to maintain comparably high level of hard cheese levels due to technological process i.e., before selling this type of cheeses to customers, it is needed to mature them for period from 6 month to 3 years. The Company does not have long-term contracts with customers to be able to fix sales price. 20. Trade and other receivables Group Company 2024 2023 2024 2023 Non-current receivables Prepayments for non-current assets 307 456 307 456 Prepayments for milk supply 11,157 80 11,157 80 11,464 536 11,464 536 Current receivables Trade receivables 50,774 46,830 45,346 39,797 VAT receivable 6,237 4,247 3,335 2,826 Prepayments for milk supply 1,018 2,628 273 2033 Other prepayments and deferred expenses 475 761 325 285 58,504 54,466 49,279 44,941 As at 31 December 2024 the Group’s and the Company’s trade receivables and claim rights to future trade receivables were pledged as collateral respectively for amount not larger than EUR 20,000 thousand (2023: no larger than EUR 20,000 thousand). At 31 December 2024 and 2023 prepayments for milk supply were granted with repayment terms ranging between 1 month and 4 years. The annual interest rate ranged between 1,1% and 6%. Majority part of prepayments for milk supply were secured with pledges of assets (land, building) of the farmers. Most of prepayments for milk supply are repaid not in the form of money but are offset with amounts payable for raw milk purchases from farmers, therefore they do not meet criteria for the financial assets. In view of the deterioration of the economic situation of certain farmers, an impairment provision was established for certain prepayments for milk supply. As at 31 December 2024 and 2023, it amounted, respectively, to EUR 211 thousand and EUR 561 thousand. The information on credit quality of receivables as at 31 December 2023 is provided in Note 3.1. (b). Movement in impairment during the financial year for trade receivables under contracts with clients: Group Company 2024 2023 2024 2023 In the beginning of the reporting period 3,786 3,786 3,786 3,786 Bad debts reversal during the year (282) - (282) - Recognized impairment during the year - - - - At the end of the reporting period 3,504 3,786 3,504 3,786 50 The Group received no collaterals as a security for impaired amounts receivable. 21. Cash and cash equivalents Group Company At 31 December At 31 December 2024 2023 2024 2023 Cash at bank and on hand 4,244 3,896 56 237 4,244 3,896 56 237 As at 31 December 2024, cash at bank balances pledged amounted to EUR 1,800 thousand (31 December 2023: EUR 285 thousand). For the purposes of the cash flow statement, cash and cash equivalents comprise as follows: Group Company At 31 December At 31 December 2024 2023 2024 2023 Cash at bank and on hand 4,244 3,896 56 237 4,244 3,896 56 237 22. Share capital As at 31 December 2024, the authorized capital of the Company amounted to 32,281,173 (2023: 35,867,970) ordinary registered shares with a par value of EUR 0.29 per share. All shares are fully paid. The total amount of the authorized capital is EUR 9,361,540 (2023: EUR 10,401,711). Based on decision made on extraordinary shareholders meeting held on 27 June 2024 the Company canceled 10 percent of own shares, new by laws were registered on State register of legal entities on 10th of September 2024. Dividends Dividends per share (other than treasury shares) declared at the Company for the previous year were paid out in the current year. Company At 31 December 2024 2023 Dividends per share, EUR 0.15 0.15 Total amount of dividends paid (5,251) (5,251) 51 23. Treasury shares 2024 2023 Number Amount Number Amount At the beginning of the year 861,274 (2,251) 861,274 (2,251) Cancelled treasury shares (3,586,797) 8,247 - - Treasury shares acquired 3,586,797 (7,891) - - 861,274 (1,895) 861,274 (2,251) Treasury shares purchased through the official bidding market of Nasdaq Vilnius stock exchange. During the year 2024 the Company made 2 purchases of own shares: During 20-24th of May 2024, there were acquired 2,725,523 units of treasury shares for an amount of EUR 5,996 thousand. During 23-27 of September 2024, there were acquired 861,274 units of treasury shares for an amount of EUR 1,895 thousand. Based on decision made on extraordinary shareholders meeting held on 27 June 2024 the Company canceled 10 percent of treasury shares, new by laws were registered on State register of legal entities on 10th of September 2024. 24. Other reserves and reserve for acquisition of treasury shares Reserve for acquisition of treasury shares Total reserve for acquisition of own shares was EUR9,943 thousand (2023 EUR 10,850 thousand) as at 31 December 2024. On the annual shareholders’ meeting held on 30th April 2024 shareholders decided to increase the reserve for acquisition of treasury shares by EUR 6,300 thousand and, during cancelation of treasury shares, respectively reduced by EUR 7,207 thousand. Other reserves Non-distributable reserves (legal reserves) of Rokiškio Sūris AB, Rokiškio Pieno Gamyba UAB and Rokiškio Pienas UAB can only be used to cover future operating losses, if any. Revaluation reserve represents an increase in the value of property, plant and equipment as a result of its revaluation. This reserve may not be used to cover losses. Movements in revaluation reserve are given in the table below. During preparing the financial statements for the year 2024, management decided to change the accounting policy for property, plant and equipment by moving from accounting for at revalued value to accounting at cost of acquisition (see note Change in accounting principles for fixed tangible assets). As a result, because the rstatemet, the revaluation reserve decreased by EUR 22,906 thousand (2023: EUR 21 713 thousand). 52 Group Company At 31 December At 31 December 2024 2023 2024 2023 restated restated Non-distributable reserve 1,985 1,975 1,113 1,113 Revaluation reserve 1,041 1,041 1,041 1,041 3,026 3,016 2,154 2,154 25. Borrowings Group Company 2024 2023 2024 2023 Non-current Non-current borrowings 1,750 3,850 1,750 3,850 Current Current borrowings 32,335 39,127 32,335 39,127 Total borrowings 34,085 42,977 34,085 42,977 The Company’s and the Group’s current borrowings – credit line granted by SEB Bankas. Interest rate for non-current borrowings is fixed, interest rate for current borrowings is Euribor plus margin at market level. The Group acquired IR/SWAP and fixed entire amount of non-current borrowings interest rate for entire period of the loan. The fair value of the derivative is EUR 82 thousand as at 31 December 2024 (2023: 241 thousand). Under the loan agreements signed with the banks, certain property, plant and equipment (Note 14), inventories (Note 19), trade receivables (Note 20) and cash balances in bank accounts (Note 21) were pledged as collateral. The carrying amounts of the Group’s and the Company’s borrowings are denominated in Euro only. The fair value of borrowings does not materially differ from the carrying amount. Net debt Reconciliation Group Company 2024 2023 2024 2023 Cash and cash equivalents 4,244 3,896 56 237 Credit line (30,235) (37,027) (30,235) (37,027) Borrowings (excluding credit line) (3,850) (5,950) (3,850) (5,950) Net debt (29,841) (39,081) (34,029) (42,740) As at 31 December 2024, the balance not withdrawn under the committed credit line facilities with the banks amounted to EUR 19,765 thousand (2023: EUR 12,973 thousand) for the Company and the Group. The Group was not in breach of the set borrowing limits or financial covenants (Note 3.2). 53 26. Deferred income Group Company 2024 2023 2024 2023 Government grants at the beginning of the year 2,560 2,496 2,027 1,791 Government grants recognised 463 517 463 517 Recognised in the income statement (514) (453) (311) (281) 2,509 2,560 2,179 2,027 Less: non-current portion (2,199) (2,060) (1,869) (1,720) Current portion 310 500 310 307 Deferred government grant is related to acquisition of property, plant and equipment using the European Union funds and the funds of the Lithuanian Government under the SAPARD, Rural Development Programme and other programmes. The Company has no obligation to repay or otherwise refund the grants received unless it breaches the contractual provisions contained in the agreements with the grantors. 27. Trade and other payables Group Company 2024 2023 2024 2023 Trade payables 22,443 19,898 20,714 17,507 Salaries, social security contributions and taxes 2,333 2,364 1,303 1,536 Advance amounts received and other payables 1,248 1,489 872 999 Accrued expenses 2,319 1,865 1,424 1,424 28,343 25,616 24,313 21,466 28. Provisions Group Company 2024 2023 2024 2023 Non-current Non-current provisions 1,573 1,421 1,230 1,180 Current Current provisions 345 314 247 216 Total provisions 1,918 1,735 1,477 1,396 Employee benefit obligations Group Company 2024 2023 2024 2023 At the beginning of the year 1,735 1,735 1,396 1,396 Recognized in other comprehensive income – remeasurement loss from change in demographic assumptions - - - - Recognized in profit or loss – interest expense 183 - 81 - At the end of the year 1,918 1,735 1,477 1,396 54 The Company’s and the Group’s current and non-current provisions consists of provisions for payments at the day of retirement calculated in accordance with the legal acts of the Republic of Lithuania. The amount of the benefit equals to 2 monthly average salary amounts (calculated on last 3 month of service salary amounts). The amount does not depend on service years. The sensitivity of the defined obligation to changes in the weighted principal assumption is: Impact on defined obligation Change of assumption Increase in assumption Decrease in assumption 2024 2023 2024 2023 2024 2023 Discount rate 1% 1.0% -1% -1% 1% 1% Salary growth rate 1% 1.0% 1% 1% -1% -1% The above sensitivity analyses are based on a change while holding all other assumptions constant. The methods of assumptions used did not change compared to prior period. 29. Contingent liabilities and commitments Contingent liabilities As at 31 December 2024 and 2023, no guarantees were granted to third parties on behalf of the Group and the Company. Capital expenditure commitments As at 31 December 2024 and 2023, there were no capital expenditure contracted for property, plant and equipment at the balance sheet date but not recognised in the financial statements. Assets pledged as collateral to the bank are disclosed in Notes 14, 20 and 21. 30. Cash flows from operating activities Reconciliation of profit before income tax to cash generated from operating activities: 55 Group Company At 31 December At 31 December 2024 2023 2024 2023 Net profit (loss) before income tax 25,601 19,244 22,110 2,924 Adjustments for: depreciation (Note 14) 9,789 8,875 6,737 6,086 amortisation (Note 15) 74 74 55 27 write-off of property, plant and equipment and intangible assets (Notes 14 and 15) 20 80 21 81 loss/(profit) on disposal of property, plant and equipment (Note 9) (173) (39) (103) (28) interest expense (Note 11) 1,841 1,486 1,841 1,486 interest income (Note 8) (998) (358) (998) (358) amortisation of loans - (230) - (230) inventory write-down to net realisable value (reversal) (20) (4,690) (20) (4,690) impairment for doubtful receivables and write-offs of bad debts (reversal) (632) - (632) - accrual for vacation reserve and bonuses 454 - - - amortisation of government grants received (Note 26) (514) (453) (311) (281) dividend income - - (10,338) (3,259) Changes in operating assets and liabilities: trade and other receivables (3,418) 1,843 (3,727) 17,402 inventories 11,635 (17,478) 12,210 (17,447) prepayments for milk supply (10,727) 185 (10,727) 185 trade and other payable (173) (4,250) 2,078 (3,810) Net cash generated from/(used in) operating activities 32,760 4,289 18,196 (1,912) For the purpose of the cash flow statement, proceeds from disposal of property, plant and equipment comprised as follows: Group Company At 31 December At 31 December 2024 2023 2024 2023 Net book amount (Note 14) 221 369 222 136 Profit/(Loss) on disposal of property, plant and equipment (Note 9) 173 39 103 28 Proceeds from sale of property, plant and equipment 394 408 325 164 31. Related-party transactions Main shareholders of the Company: At 31 December 2024 2023 Antanas Trumpa and family members (Chairman of the Board) 23.35% 21.02% Pieno Pramonės Investicijų Valdymas UAB (established in Lithuania) 30.23% 27.21% RSU Holding SIA (established in Latvia) 27.74% 24.96% Other shareholders (legal entities and natural persons, not related parties) 18.68% 26.81% 56 * Pieno Pramonės Investicijų Valdymas UAB is controlled by Mr Antanas Trumpa (as a principal shareholder holding 51.7% of the share capital and votes of Pieno Pramonės Investicijų Valdymas UAB). RSU Holding SIA is controlled by Mr Dalius Trumpa (as a single shareholder holding 92% of the share capital and votes of RSU Holding SIA). The group of persons acting in concert holds in total 81.32% (2023: 83.18%) of the Company’s share capital and votes. Members of the Board of Directors of Pieno Pramonės Investicijų Valdymas UAB, RSU Holding SIA, , and Rokiškio Sūris AB and their family members are treated as related parties. In year 2023 as related parties were treated all Fonterra group companies including Fonterra (Europe) Coöperatie U.A. Fonterra group stepped off from shareholding in the Company and from the Board of the Company, as from 1 October 2024 the Fonterra group companies are not treaded as related parties. Certain cooperative societies engaged in the production of milk are treated as related parties of the Company because the Company can exercise a significant influence over daily activities of these cooperative societies through close family members of its directors and certain employees. (i) The following transactions were carried out with related parties: Group Company At 31 December At 31 December 2024 2023 2024 2023 Purchase of milk from other related parties 4,237 4,021 44,300 38,844 Purchase of non-current assets - - 35 - Purchase of inventory 0 59.00 11,627 10,526 Purchases of services 343 357 1,871 2,039 Sales of transportation services to other related parties 78 93 2,463 2,183 Sales of production and other inventories 55 16,845 103,934 89,783 Interest charges on credit facility 11 11 11 11 In order to properly indicate the internal turnover of Rokiškio Sūris AB, Rokiškio Pienas UAB, and Rokiškio Pieno Gamyba UAB, the management of the Group has decided that raw materials used in the production of exported products of Rokiškio Sūris UAB will be bought at a zero price, while the production generated by Rokiškio Pienas UAB and Rokiškio Pieno Gamyba UAB will be sold as a service, i.e. excluding the value of raw materials. Transactions related to the purchase of milk, acquisition of non-current assets and inventories, purchase and sale of services and goods with related parties are carried out under normal market conditions, including Fonterra group companies. 57 (ii) Year-end balances arising from transactions with related parties: Group Company At 31 December At 31 December 2024 2023 2024 2023 Current loan receivable from Dzūkijos Pienas KB 298 298 298 298 Advance payment received from Fonterra (Europe) Coöperatie U.A – non current - 1,896 - 1,896 Advance payment received from Fonterra (Europe) Coöperatie U.A –current - 230 - 230 Trade payables to other related parties 6 68 2,992 2,459 Trade receivables from other related parties 44 2,795 9,277 8,563 In 2012 the agreement was signed with Fonterra (Europe) Coöperatie U.A. for the purpose of financing the acquisition of certain production facilities and improvement of certain production lines. Together with the financing agreement the Company signed long term sales agreement, where the Company committed to produce by the above mentioned production lines the agreed quantity of certain products and sell it to Fonterra (Europe) Coöperatie U.A., while Fonterra (Europe) Coöperatie U.A. committed to purchase them. According to the financing agreement the prepayment received is amortised in equal parts until 2033, if the Company is fulfilling its obligations under the sales agreement. The total value of sales of products related to the advance payment is EUR 2,275 thousand for the period ended 30 September 2024 (12 months period of year 2023: EUR 12,650 thousand). Related trade receivables and trade payables were equal zero at 1 of October and 31 of December 2024. There were no any purchases during the years 2024 and 2023. During 2024, the Company and Fonterra (Europe) Coöperatie U.A. terminated the agreement after the Fonterra Group decided to withdraw from the Company's share capital. All transactions, when there were after 1 of October 2024, were carried out as an unrelated party. The Company accounted both agreements as single performance obligation, since the products developed and sold and financing services received by the purchaser are not distinct. By the decision of the Shareholder of Rokiškio Pieno Gamyba UAB, Rokiškio pienas UAB and Jakabpils piena kombinats SIA it was decided to approve and allocate dividends in the amount of EUR 5,499 thousand, EUR 4,133 thousand and EUR 706 thousand (2023: EUR 2,655 thousnd, EUR 0 and EUR 603 thousand). Dividends were paid out to Rokiškio Sūris AB in May 2024 and 2023 respectively. (iii) Compensation of key management personnel Group Company At 31 December At 31 December 2024 2023 2024 2023 Salaries 224 235 203 218 Bonuses/management bonuses paid 36 30 36 30 Accrual (reversal) for management bonuses - - - - Social security contributions 4 4 4 4 264 269 243 252 Key management personnel include 9 (2023: 10) members of the Board and management officers. 58 32. Services rendered by the audit firm Presented below are all services rendered by the audit firm to the Group / the Company (in EUR thousands): Group Company At 31 December At 31 December 2024 2023 2024 2023 Audit of the financial statements and management report under the agreement 111 75 46 45 Tax consultation services 20 21 13 13 131 96 59 58 33. Change of accounting policy for property, plant and equipment During preparation of the financial statements for the year 2024, management decided to change the accounting policy for property, plant and equipment by changing the policy from accounting for assets at revalued value to accounting at the cost of acquisition according IAS16 “Property, plant and equipment”. The decision made because the cost model provides more relevant and reliable information due to the following factors: · Based on the representation of the engagement team's current economic situation in Lithuania overall and on the Lithuanian real estate market, the use of a revaluation model can lead to strong volatility of financial position and financial results presented in Group's and standalone financial statements of the Client. The markets violently react to economic uncertainty and instability with changes in prices, which are quite unpredictable and short-term. Due to significantly increased volatility, the revaluation model becomes significantly more sensitive to judgements and changes in underlying assumptions, which distorts reliability of such information. · The client's business model is to use property, plant and equipment for business purposes over a long term period and not to realise gains from their sale. Due to high volatility, fair values will likely have to be reviewed frequently and the fair value fluctuations will misrepresent the results of operations. · One of the important conditions is availability of accurate historical cost data that would allow the preparer to track historical costs back. The Group concluded that the cost of acquisition method reflects performance more accurately and reliably than the revaluation method. · That industry practice in respect of PP&E accounting for similar business is the cost model. Therefore, by changing from revaluation to cost model the Group would improve comparability of IFRS financial statements with other market participants in the same industry. When calculating income tax The Group is obliged to account for the depreciation of property, plant and equipment according to the cost of acquisition model, when accounting is carried out by two methods, significant additional administrative costs arise, which in the opinion of management is impractical. · The change in accounting policy is not connected with the distortion of covenants, impairment of assets or any similar factors. In accordance with IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors", this change is material has been applied retrospectively. The balance sheet data for 31 December 2023 and 1 January 2023 and the profit loss statement for year 2023 have been adjusted to reflect the new accounting principles that apply. This change had an impact on the carrying amount of fixed assets, the revaluation reserve, the amount of the deferred income tax liability, depreciation and profit for the period. Detailed information is given in the table below. Management is confident that this change will help investors and other stakeholders to more reliably assess the performance and financial position of the Group and the Company. 59 The retrospective corrections made to the Group's and the Company's accounts relate to the value of property, plant and equipment and it’s depreciation, and changes in deferred income tax items as shown in the following tables: Group At 31 December At 1 January Notes 2023 Increase/ (decrease) 2023 2023 Increase/ (decrease) 2023 ASSETS restated restated Non-current assets Property, plant and equipment 14 82,600 (25,132) 57,468 82,939 (26,528) 56,411 Intangible assets 15 93 - 93 162 - 162 Investments in subsidiaries 16 169 - 169 169 - 169 Trade and other receivables 20 536 - 536 827 - 827 Deferred income tax assets 17 - 1,194 1,194 - 2,500 2,500 Loans granted 18 1,803 - 1,803 2,213 - 2,213 85,201 (23,938) 61,263 86,310 (24,028) 62,282 Current assets Inventories 19 94,397 - 94,397 72,229 - 72,229 Loans granted 18 1,539 - 1,539 2,896 - 2,896 Trade and other receivables 20 54,466 - 54,466 56,675 - 56,675 Prepaid income tax 766 - 766 139 - 139 Cash and cash equivalents 21 3,896 - 3,896 3,401 - 3,401 155,064 - 155,064 135,340 - 135,340 Total assets 240,265 (23,938) 216,327 221,650 (24,028) 197,622 EQUITY Attributable to owners of the Company Share capital 22 10,402 - 10,402 10,402 - 10,402 Share premium 18,073 - 18,073 18,073 - 18,073 Reserve for acquisition of treasury shares 24 10,850 - 10,850 10,850 - 10,850 Treasury shares 23 (2,251) - (2,251) (2,251) - (2,251) Other reserves 24 24,729 (21,713) 3,016 25,922 (22,906) 3,016 Retained earnings 99,438 - 99,438 88,453 - 88,453 Total equity 161,241 (21,713) 139,528 151,449 (22,906) 128,543 LIABILITIES Non-current liabilities Borrowings 25 3,850 - 3,850 5,950 - 5,950 Deferred income tax liability 17 2,068 (2,068) - 1,122 (1,122) - Deferred income 26 2,060 - 2,060 2,097 - 2,097 Contract liabilities 31(ii) 1,896 - 1,896 2,126 - 2,126 Provisions 28 1,421 - 1,421 1,421 - 1,421 11,295 (2,068) 9,227 12,716 (1,122) 11,594 Current liabilities Borrowings 25 39,127 - 39,127 24,440 - 24,440 Deferred income 26 500 - 500 399 - 399 Trade and other payables 27 25,616 - 25,616 30,209 - 30,208 Profit tax payable 2,172 - 2,172 2,123 - 2,124 Provisions 28 314 - 314 314 - 314 67,729 - 67,729 57,485 - 57,485 Total liabilities 79,024 (2,068) 76,956 70,201 (1,122) 69,079 Total equity and liabilities 240,265 (23,781) 216,484 221,650 (24,028) 197,622 60 Company At 31 December At 1 January Notes 2023 Increase/ (decrease) 2023 2023 Increase/ (decrease) 2023 ASSETS restated restated Non-current assets Property, plant and equipment 14 58,228 (13,863) 44,365 56,988 (15,237) 41,751 Intangible assets 15 77 - 77 132 - 132 Investments in subsidiaries 16 5,048 - 5,048 5,048 - 5,048 Trade and other receivables 20 536 - 536 827 - 827 Deferred income tax assets 17 - 1,143 1,143 - 1,847 1,847 Loans granted 18 1,767 - 1,767 2,174 - 2,174 65,656 (12,720) 52,936 65,169 (13,390) 51,779 Current assets Inventories 19 90,583 - 90,583 68,446 - 68,446 Loans granted 18 1,539 - 1,539 2,896 - 2,896 Trade and other receivables 20 44,941 - 44,941 62,762 - 62,762 Prepaid income tax 766 157 923 91 - 91 Cash and cash equivalents 21 237 - 237 1,149 - 1,149 138,066 157 138,223 135,344 - 135,344 Total assets 203,722 (12,563) 191,159 200,513 (13,390) 187,123 EQUITY Attributable to owners of the Company Share capital 22 10,402 - 10,402 10,402 - 10,402 Share premium 18,073 - 18,073 18,073 - 18,073 Reserve for acquisition of treasury shares 24 10,850 - 10,850 10,850 - 10,850 Treasury shares 23 (2,251) - (2,251) (2,251) - (2,251) Other reserves 24 13,937 (11,783) 2,154 15,105 (12,951) 2,154 Retained earnings 82,169 - 82,169 84,485 - 84,485 Total equity 133,180 (11,783) 121,397 136,664 (12,951) 123,713 LIABILITIES Non-current liabilities Borrowings 25 3,850 - 3,850 5,950 - 5,950 Deferred income tax liability 17 780 (780) - 439 (439) - Deferred income 26 1,720 - 1,720 1,585 - 1,585 Contract liabilities 31(ii) 1,896 - 1,896 2,126 - 2,126 Provisions 28 1,180 - 1,180 1,180 - 1,180 9,426 (780) 8,646 11,280 (439) 10,841 Current liabilities Borrowings 25 39,127 - 39,127 24,440 - 24,440 Deferred income 26 307 - 307 206 - 206 Trade and other payables 27 21,466 - 21,466 25,584 - 25,583 Profit tax payable - - - 2,123 - 2,124 Provisions 28 216 - 216 216 - 216 61,116 - 61,116 52,569 - 52,569 Total liabilities 70,542 (780) 69,762 63,849 (439) 63,410 Total equity and liabilities 203,722 (12,563) 191,159 200,513 (13,390) 187,123 61 Group Company Notes 2023 Increase/ (decrease) 2023 restated 2023 Increase/ (decrease) 2023 restated Sales 5 304,254 - 304,254 264,072 - 264,072 Cost of sales 10 (262,487) 1,151 (261,336) (248,997) 1,151 (247,846) Gross profit 41,767 1,151 42,918 15,075 1,151 16,226 Selling and marketing expenses 6,10 (14,253) 111 (14,142) (10,318) 111 (10,207) General and administrative expenses 7,10 (8,555) 4 (8,551) (5,376) 4 (5,372) Other income 8 358 - 358 3,627 - 3,627 Other gains/(losses) - net 9 39 108 147 28 108 136 Operating profit 19,356 1,374 20,730 3,036 1,374 4,410 Finance costs 11 (1,486) - (1,486) (1,486) - (1,486) Profit before income tax 17,870 1,374 19,244 1,550 1,374 2,924 Income tax 12 (2,797) (206) (3,003) 250 (206) 44 Profit for the year 15,073 1,168 16,241 1,800 1,168 2,968 Profit for the year attributable to: Owners of the Company 15,073 1,168 16,241 1,800 1,168 2,968 Non-controlling interest - - - - - 15,073 1,168 16,241 1,800 1,168 2,968 Basic and diluted earnings per share (in EUR per share) 13 0.43 0.03 0.46 0.04 0.04 0.08 34. Impact of war in Ukraine On 24 February 2022 the Russian Federation started a war in eastern Ukraine, which was condemned by the World. The economic and financial sanctions were imposed on Russian regime. Management of the Group has assessed the possible consequences of these sanctions and the effect of the war for the financial results to the Companies of the Group should not be significant. During the year 2024 and 2023 the Group’s and the Company has no any sales to clients in Russia and Belarus. During the year 2024 the Group’s and the Company’s sales of milk products to the clients Ukraine totaled EUR 905 EUR thousand (2023: 3,160 thousand). As at 31 December 2024 there were no accounts receivable from companies Ukraine (2023: EUR none). The management of the Group carefully monitors the situation in Ukraine and the sanctions imposed in order to comply. However, based on Group’s Management evaluation, the current situation does not affect the Group’s ability to continue as a going concern. 62 35. Environmental, Social and Governance (ESG) matters - Consideration of climate change and resulting climate related risks The Group is continuously assessing climate related risks and their impact on the Group’s operation, including the physical risks of climate change (such as severe weather events and the effects of rising temperatures), the policy changes and economic consequences of efforts being made towards decarbonisation of the economy. Further disclosure how the Group’s operations are impacted by the climate related risks is provided in the paragraph “Information on sustainability matters”. For the identified climate related risks, the Group has assessed their impact on the recognition/derecognition of assets and liabilities and measurement of such assets and liabilities as well. As at date of preparing financial statements the Group’s management did not identify any material maters that could materially affect assets, liabilities or it’s measurement or require additional disclosures in the financial statements, in addition as disclosed in above mentioned reports. 36. Events after the reporting period There were no significant events after reporting period. 63 64 MANAGEMENT REPORT GENERAL INFORMATION 37. Reporting period for which the management report is prepared This 2024 consolidated report covers the period from 1 January 2024 to 31 December 2024. 38. Key information about the issuer: Name of the issuer: ROKISKIO SURIS AB (hereinafter referred to as the Company) Legal form: Public limited company Date and place of registration: 28 February 1992. State Enterprise Centre of Registers Company code: 173057512 Address: Pramones st. 3, LT 42150 Rokiskis, Republic of Lithuania Keeper of the register of legal persons: State Enterprise Centre of Registers Telephone number: +370 458 55200 Fax number +370 458 55300 Email address: rokiskio.suris@rokiskio.com Website address: www.rokiskio.com ISIN code: LT0000100372 LEI (Legal Entity Identifier) code: 48510000PW42N5W74S87 Share trading code AB Nasdaq Vilnius RSU1L 39. Information about the Company's group of companies 31 December 2024 Rokiskio suris AB Group (the Group) consists of the parent company Rokiskio suris AB and five subsidiaries (2023: parent company and five subsidiaries). Main company: Rokiskio suris AB (company code 173057512, registered office address, Pramones st. 3, LT-42150 Rokiskis) Subsidiaries of Rokiskio suris AB: Rokiskio pienas UAB (company code 300561844, registered office address Pramones st. 8, LT - 28216 Utena). Rokiskio suris AB is the founder and sole shareholder of Rokiskio pienas UAB, holding 100 % of shares and votes. 65 Rokiskio pieno gamyba UAB (company code 303055649, registered office address Pramones st. 8, LT - 28216 Utena). Rokiskio suris AB is the founder and sole shareholder of Rokiskio pieno gamyba UAB, holding 100 % of shares and votes. The Latvian company SIA Jekabpils piena kombinats (company code 45402008851, registered office address Akmenu iela 1, Jekabpils, Latvia LV-5201). Rokiskio suris AB holds 100 % of the shares and votes of the company. The Latvian company SIA Kaunata (company code 240300369, registered office address Rogs, Kaunata pag., Rezeknes nov., Latvia), Rokiskio suris AB owns 40 % of the company's shares and Rokiskio pienas UAB owns 20 %. DairyHub.LT UAB (company code 305831304, registered office address Kauno st. 65, LT-20118 Ukmerge). Rokiskio suris AB is the founder and sole shareholder of DairyHub.LT UAB, holding 100 % of shares and votes. 40. Nature of the principal activities of the company and group The main activities of the Rokiskio suris Group: Dairy farming and cheese production (EVRK 10.51) Rokiskio suris AB: Rokiskio suris AB is principally engaged in the production and marketing of fermented cheeses, whey products and skimmed milk flour. Subsidiaries: The main activity of Rokiskio pienas UAB is the sale of fresh dairy products and fermented cheeses. The main activity of Rokiskio pieno gamyba UAB is the production of fresh dairy products (milk, kefir, sour milk, butter, cottage cheese, cottage cheese, sour cream, glazed cheese, desserts). SIA Jekabpils piena kombinats is active in the purchase of raw milk. SIA Kaunata business is the purchase of raw milk. DairyHub.LT UAB – preparation and sale of hard cheeses to final consumers in various countries around the world. 41. Group strategy and objectives In order to ensure that all members of the Company's governing bodies have a clear understanding of the Company's goals, directions and objectives, the Company's strategy is being developed to set out long-term strategic goals and objectives. Rokiskio suris Group is guided by a 3-year strategic plan approved by the Board of Directors, the main provisions of which are presented below: MISSION: Rokiskio suris AB = Trusted Dairy Professionals VISION: 66 In Lithuania, which has become Baltlandia, more than 1 million tons of raw milk per year are processed sustainably. OBJECTIVES: Sustainable milk processing. Leadership in the dairy sector in the region. Flexible production and sales of premium quality products that exceed consumer expectations. To be the most attractive and reliable partner for dairy farmers. Continuously increase shareholder value. Achieving sustainability objectives along the entire chain. Achieving our goals: By increasing the amount of milk bought and processed by 5% each year. We are targeting a net annual yield of 3%. By continuously reducing greenhouse gas emissions, energy and water consumption and the use of non-recyclable packaging in the production process. Folow sustainable principle of business development. 42. Highlights of the reporting period General Meeting of Shareholders of Rokiskio suris AB held on 30 April 2024: 1. Agreed with the Audit Committee's conclusion. 2. Approved the audited consolidated and Company financial statements for 2023. 3. Approved the allocation of profit/loss for 2023: thousand EUR 1. Retained earnings of the Company for the year at the beginning of the year 84,485 2. Dividend for previous year approved by shareholders -5,251 3. Transfers from other reserves 1,167 4. Allocated for annual payments (tantiemes) for 2022 -33 5. Retained earnings (losses) for the year at the beginning of the year after payment of dividends and transfer to reserves 80,368 6. Net profit/(loss) of the Company for the year under review 1,800 7. Total distributable profit of the Company 82,169 8. Share of profits allocated to the statutory reserve 0 9. Share of profits allocated to the reserve for treasury shares -6,300 10. Share of profit allocated to other reserves 0 11. Share of profit allocated to dividends -5,251 12. Share of profit allocated to annual payments (bonuses) to members of the Management Board, employee bonuses and other purposes, recorded in the Profit and Loss Account -30 13. Retained earnings (losses) at the end of the financial year to be carried forward to the following financial year 70,588 The total dividend allocation is EUR 5,251,004.40 EUR 0.15 per ordinary registered share. 67 4. Approved the company's remuneration report. 5. Taken the decision to acquire its own shares Acquire treasury shares in the Company on the following terms: 5.1. The purpose of the acquisition of treasury shares – Reduction of the company's share capital by cancelling its own repurchased shares. Following a change in the priorities of the Company's strategic investor, the investor's expressed intention to sell its shares to the Company that issued the shares, and to ensure that all willing shareholders have the opportunity to sell their shares. 5.2. Maximal number of the shares to be purchased – total value of the Company’s treasury shares including the nominal value of already owned shares may not exceed 1/10 of the Company’s Authorized Capital. 5.3. Period during which the company may purchase own shares – 18 months from the approval of resolution. 5.4. Maximal and minimal purchase price per share - the maximum purchase price per share is EUR 2.94 per ordinary registered share of Rokiskio suris AB. The minimum purchase price per share shall be EUR 1.98 per ordinary registered share of Rokiskio suris AB. 5.5. Procedure of selling the treasury shares and minimal sales price - treasury shares will not be sold, but will be cancelled by a decision of the General Meeting of Shareholders, reducing the Company's authorised capital. 5.6. Following the conditions set herewith and the requirements of the Law on Companies of the Republic of Lithuania, to authorize the Board of Directors to accept resolutions regarding purchase of the Company’s own shares, organize purchase of the own shares, establish an order for purchase of the own shares, as well as their price and number, and also complete all other related actions. The Company had a reserve of EUR 10.850 million for the acquisition of its own shares in accordance with previous decisions of the General Meeting of Shareholders. The draft resolution proposed at this General Meeting will increase the reserve for the purchase of treasury shares to EUR 17,150 thousand. As of the date of adoption of this decision, the decision of the General Meeting of Shareholders of 28 April 2023 on the acquisition of treasury shares will expire. 6. The updated Remuneration Policy of AB "Rokiškio sūris" is approved. 7. Reserve for the acquisition of own shares is increased to EUR 17 150 thousand (seventeen million one hundred and fifty thousand euro). Strategic investor Fonterra has decided to withdraw from the capital of AB Rokiškio sūris The strategic investor Fonterra has decided to exit its minority interest in AB Rokiškio sūris as part of a long-term strategic investment review. The cooperation in dairy processing and product marketing will continue on mutually acceptable and beneficial terms. The major shareholders of the Company have agreed that the exit will be carried out by Fonterra (Europe) Coöperatie U.A. by selling its 3,586,797 shares to the Company. The expected share price is EUR 2,2 per share. AB Rokiškio sūris plans to repurchase its shares through the official offering market of AB Nasdaq Vilnius Stock Exchange. All shareholders of the company may submit orders to sell shares. The number of shares to be bought back will be calculated in proportion to the number of shares submitted. 68 The share repurchase is planned for May 2024. If the shares are repurchased up to 1/10 of the Company's share capital, the shares will be cancelled. A further public buyback will then be announced at the same price (EUR 2.2 per share). This procedure will be repeated until Fonterra (Europe) Coöperatie U.A. has sold to the Company all of its 3,586,797 shares. Regarding purchase of own shares of Rokiskio suris AB Based on the resolution of the 30 April 2024 General Meeting of Shareholders of Rokiskio suris AB, on 16 May 2024 the Board of Directors of Rokiskio suris AB decided to launch purchase of ordinary registered shares of Rokiskio suris AB, par value of which is equal to EUR 0.29 (twenty nine euro cents), consequently total nominal value including the shares already purchased would not exceed 1/10 of the Company’s Authorized Capital. For the purchase of own shares there is an accumulated and unused reserve of kEUR 17,150. A tender offer will be made to purchase own shares via the securities market Nasdaq Vilnius AB. Assignments to sell shares will be accumulated during the whole period of share purchasing. If the share offer surpasses number of the shares to be purchased, then the number of buyable shares will be reduced proportionally to all sellers of the shares. Conditions of the purchase: The beginning of share purchase: 20 May 2024 The end of share purchase: 24 May 2024 The maximum number of shares to buy: 2,725,523 units Total maximal price of shares to be bought: EUR 5,996,150.60 Price per share: EUR 2.20 AB Rokiškio sūris repurchased 10% of its own shares Rokiskio suris AB completed purchasing of own shares on the Tender Offer Market of Nasdaq Vilnius AB. During the period from May 20, 2024, until May 24, 2024, the company acquired the maximal intended amount of shares, i. e. 2,725,523 units. Total amount of share acquisition transactions EUR 5,996,150.60. Payments for the acquired shares will be settled on May 28, 2024. Including the treasury shares previously acquired, now the company will have 3,586,797 units of own shares which will make 10 percent of the Authorized Capital. Information on the shares issued by Rokiskio suris AB and the votes granted Following the acquisition of 10% of own shares by Rokiskio suris AB (hereinafter referred to as the Company), in accordance with Article 19 (2) of the Law on Securities of the Republic of Lithuania, the Company shall provide information on the total number of voting rights attached to all the issued shares of the Company and the size of the authorised capital, the number of shares and their nominal value as at 28 May 2024: 69 Type of shares Ordinary registered shares ISIN code LT0000100372 Number of shares, units 35,867,970 Nominal value per share, EUR 0.29 Authorised capital of the Company, EUR 10,401,711.30 Number of own shares, units 3,586,797 Number of votes to be cast, units 35,867,970 Number of votes for calculating the quorum for the General Meeting of Shareholders 32,281,173 27 June 2024 Decisions made by the Extraordinary General Meeting of Shareholders of AB "Rokiskio suris": 1. Reduction of the Company's authorised capital by cancelling the Company's repurchased shares. Decision: To reduce the authorised capital of AB "Rokiškio sūris" by EUR 1 040 171,13 (one million forty thousand one hundred and seventy-one euro and 13 cents) by cancelling the Company's 3 586 797 (three million five hundred and eighty-six thousand seven hundred and ninety-seven) ordinary registered shares with a nominal value of EUR 0.29 each. After cancellation of its own repurchased shares, the authorised capital of Rokiškio sūris AB shall amount to EUR 9 361 540,17 (nine million three hundred and sixty-one thousand five hundred and forty euros and 17 cents) divided into 32 281 173 (thirty-two million two hundred and eighty-one thousand one hundred and seventy-three) ordinary registered shares, with a nominal value of EUR 0,29 per share. 2. Approval of the new version of the Company's Articles of Association. Decision: 2.1 To approve the new version of the Articles of Association of the Company. 2.2. To authorise the Director of AB "Rokiškio sūris", Dalius Trumpas, to sign the new version of the Articles of Association of AB "Rokiškio sūris". 3. Acquisition of the Company's own shares. Decision: Acquire own shares oft he Company at the following conditions: 3.1 The purpose of the acquisition of own shares is to reduce the Company's authorised capital by cancelling treasury shares. Following a change in the priorities of the Company's strategic investor, this investor's expressed wish to sell its shares to the Company, which had issued the shares in the first place, and to ensure that all interested shareholders are able to sell their shares; 3.2 The maximum number of shares that may be acquired - the total nominal value of the Company's treasury shares may not exceed 1/10 of the Company's share capital. 3.3 The period within which the Company may acquire its own shares is 18 months from the date of adoption of this Decision; 70 3.4 Maximum and minimum acquisition price of shares - the maximum acquisition price of one share shall be EUR 2.94 per ordinary registered share of AB "Rokiškio sūris". The minimum acquisition price per share shall be EUR 1,98 per ordinary registered share of AB Rokiškio sūris; 3.5 Procedure for the sale of treasury shares and minimum sale price - treasury shares will not be sold, but will be cancelled by a decision of the General Meeting of Shareholders to reduce the Company's authorised capital; 3.6 To instruct the Management Board of the Company, in accordance with the conditions set out in this Decision and the requirements of the Law on Joint Stock Companies of the Republic of Lithuania, to take decisions on the acquisition of the Company's own shares, to organise the purchase and sale of own shares, to determine the procedure for the purchase of the shares, the granting of the shares and the sale of the shares, the timing, the number of the shares and the price of the shares and to carry out any other action related to the purchase and sale of the own shares. The Company has an unused reserve of EUR 9 943 thousand for the acquisition of own shares. On 30 August 2024, six-month results of the Rokiskio suris Group for 2024 were announced: In January-June 2024, the consolidated unaudited sales of Rokiskio suris AB Group amounted to EUR 174 808 thousand, i.e. 18% more than in the same period in 2023 (EUR 148 106 thousand). Rokiskio suris AB Group earned a net profit of EUR 6 429 thousand in the first 6 months of 2024 (net profitability 3.68%). In the same period of 2023, the Group generated a net profit of EUR 1 794 thousand. The EBITDA of the Rokiskio suris AB Group for the first half of 2024 – profit before interest, taxes, depreciation and amortisation – amounted to EUR 13 710 thousand. EBITDA for the first half of 2023 amounted to EUR 6 615 thousand. The increase in the Group's operating result is due to higher prices for fresh and GRAND fermented cheeses and other whey products and fats in the first half of 2024. A new version of the Articles of Association of Rokiskio suris AB is registered On 10 September 2024 a new version of the Articles of Association of Rokiskio suris AB was registered in the Register of Legal Entities of the Republic of Lithuania. The new version of the Articles of Association was approved at the Extraordinary General Meeting of Shareholders of the Company held on 27 June 2024. The Company's Articles of Association are being amended as a result of the reduction of the Company's authorised capital by cancelling its own shares repurchased. Following the reduction of the Company's authorised capital, i.e. the cancellation of 3,586,797 ordinary registered shares, the authorised capital of Rokiskio suris AB amounts to EUR 9,361,540.17 divided into 32,281,173 ordinary registered shares with a par value of EUR 0.29. Loss of treasury shares of Rokiskio suris AB Rokiskio suris AB had acquired 3,586,797 own ordinary registered shares representing 10% of the Company's authorised capital. On 27 June 2024, the Extraordinary General Meeting of Shareholders of the Company resolved to reduce the Company's authorised capital by cancelling 3,586,797 ordinary registered shares purchased by the Company. 71 Following the completion of the procedure for the reduction of the Company's authorised capital, on 10 September 2024 the reduced authorised capital of Rokiskio suris AB was registered in the Register of Legal Entities and all treasury shares were cancelled. Following the cancellation of treasury shares, the authorised capital of Rokiskio suris AB consists of EUR 9,361,540.17 divided into 32,281,173 ordinary registered shares with a nominal value of EUR 0.29. Information on the shares issued by Rokiškio sūris AB and the votes granted Rokiskio suris AB (hereinafter referred to as "the Company") having reduced its authorised capital by cancelling 10% of its own repurchased ordinary registered shares, pursuant to Article 19 (2) of the Securities Law of the Republic of Lithuania, the Company hereby provides the information on the total number of voting rights and the size of the authorised capital of all the issued shares of the Company, as well as the number of the shares and the nominal value of the shares as at 10 September 2024: Type of shares Ordinary registered shares ISIN code LT0000100372 Number of shares, units 32,281,173 Nominal value per share, EUR 0.29 Authorised capital of the Company, EUR 9,361,540.17 Number of own shares, units - Number of votes to be cast, units 32,281,173 Number of votes for calculating the quorum for the General Meeting of Shareholders 32,281,173 Regarding purchase of own shares of Rokiskio suris AB The Management Board of Rokiškio sūris AB, in accordance with the decision of the General Extraordinary Meeting of Shareholders of Rokiškio sūris AB held on 27 June 2024, has decided to buy back up to 3 228 117 (three million two hundred and twenty-eight thousand one hundred and seventeen) units of the Company's shares. Rokiškio sūris AB ordinary registered shares with a nominal value of EUR 0,29. This buy-back of treasury shares is carried out in order to complete the implementation of the decision of the strategic investor Fonterra to withdraw from the capital of Rokiškio sūris AB. The Company will buy back its own shares at a price of EUR 2,20 per share. The Company shall ensure that all shareholders have an equal opportunity to transfer their shares in the Company. Put orders are accumulated over the lifetime of the share purchase. If the supply of shares exceeds the number of shares to be acquired, all sellers of shares will have their number of shares reduced proportionately. 72 Acquisition terms: Start of the acquisition: 23 September 2024 End of the acquisition: 27 September 2024 Maximum number of shares to be acquired: 3 228 117 units. Total maximum price of the shares to be acquired: EUR 7 101 857.40 Acquisition price: EUR 2,20 per share. Rokiskio suris ABpurchased its own shares Rokiskio suris AB has completed the buy-back of its own shares through the official offering market of the Nasdaq Vilnius Stock Exchange. During the buy-back period, 23 September 2024 - 27 September 2024, the Company acquired 861 274 treasury shares, representing 2.67% of the Company's authorised capital. The total amount of the share purchase transaction is EUR 1 894 802.80. Settlement of repurchased shares will be on 1 October 2024. Information on the shares issued by Rokiskio suris AB and the votes granted Rokiskio suris AB, in accordance with Article 19(2) of the Law on Securities of the Republic of Lithuania, provides information on the total number of voting rights and the size of the share capital, the number of shares and their nominal value of all the issued shares of the Company as of the date of 27 September 2024: Type of shares Ordinary registered shares ISIN code LT0000100372 Number of shares, units 32,281,173 Nominal value per share, EUR 0.29 Authorised capital of the Company, EUR 9,361,540.17 Number of own shares, units 861,274 Number of votes to be cast, units 32,281,173 Number of votes for calculating the quorum for the General Meeting of Shareholders 31,419,899 43. Significant events after the end of the financial year After the end of the financial year (31 December 2024) no significant events occurred in the Company or the Group. 73 Further information on significant events after the end of the financial year is disclosed in note 36 to the consolidated and parent company financial statements of Rokiskio suris AB as at 31 December 2024. INFORMATION ON THE COMPANY'S AND GROUP'S ACTIVITIES 44. Group operating environment Key provisions Who we are: We process more than 500,000 tons of milk in three dairies. We produce and sell more than 35,000 tons of different cheeses. About two-thirds of our production is exported outside Lithuania. We are a responsible employer of around 1,200 employees. The Group's activities include the purchase of raw milk, the production of various dairy products and their sale on the Lithuanian and export markets. The group does not have or use intangible resources. Purchase of raw milk According to the Milk Accounting Information System (MAIS) maintained by the State Enterprise Agricultural Data Centre (hereinafter referred to as 'MADC'), in Lithuania, 1 389,9 thousand tonnes of milk of an average fat content of 4,21 % and a protein content of 3,43 % were purchased by approved milk purchasers from 11 022 farms selling milk in the period January-December 2024. Compared to January-December 2023, milk purchases increased by 3.15%. According to the data of the Agricultural Data Center (ADC), the number of farms selling milk in January-December 2024 has decreased by - 15% compared to the same period in 2023. The number of cows decreased by 1.9% in 2024 and the number of cows on farms selling milk at 31 December 2024 was 193 567. This decrease was offset by an increase in raw milk yield. Dairy farms with 15 or more cows account for about 48.5% of milk sales and the number of dairy cows on such farms accounts for about 83%. 74 According to the data of the ADC, the average farm-gate price of natural milk in Lithuania has been increasing since February compared to the corresponding months of 2023. In December 2024, the average buying-in price for natural milk was 580.53 €/t, 32.95% higher than in December 2023. The annual buying-in price for natural milk in 2024 was 16% above 2023 at 437.7 €/t. According to the ADC data, milk prices in Lithuania have risen much faster than the European Union average, while the price paid to Lithuania's large suppliers has matched and exceeded the European average. For large milk producers selling more than 40 t of raw milk per month, milk purchasers paid an average of €614.21/tonne in December 2024 for natural milk (4.37% fat content and 3.58% protein content). In December 2023, the average price paid for natural milk (4.37% fat and 3.61% protein) was 473.54 €/t. In December 2024, the price paid for natural milk was 29.7% higher compared to December 2023. Here is a comparison of the buying-in prices for natural milk of Rokiskio suris AB for the years 2022-2024, for milk bought in from milk producers of European size, selling more than 40 t of milk per month: The graph shows that the raw milk price in January 2024 was similar to that in January 2022 and 2023. From August onwards, the farm-gate milk price started to increase and in December it was 610,26 €/t. In Lithuania, the share of milk purchased from dairy producers selling more than 40 t of milk per month was 69% in December, while AB Rokiškio sūris purchased 91.1% of its milk from large milk producers. The increase in dairy prices is driven by growing global demand, which in some markets (Europe) is supported by an improving consumer income situation. This increased demand for dairy products has also led to an increase in farm-gate milk prices. 75 Production of dairy products Rokiskio suris AB Group is the largest Lithuanian dairy processing company, producing and distributing more than 300 product names to consumers. These include not only the well-known and everyday fermented cheeses, processed cheeses, butter, cottage cheese and curd products, other fresh dairy products, but also various whey products such as milk sugar, IBK (whey protein concentrate), IBI (whey protein isolate). The products produced by the companies of the Rokiskio suris Group are of high quality, which is why they have earned recognition not only in the domestic but also in export markets. In total, 484,600 tonnes of milk were processed in the Group in 2024, a 6.3% decrease compared to 2023. The production of fermented cheeses in 2024 is down 2.3% compared to 2023. Hard cheese production is 53% lower than in 2023. Semi-hard cheese production is 11% higher and fresh cheese production is 25% higher. The changes in the range are driven by market demand and price changes. 76 In 2024, the production of GRAND hard cheese increased by 13.5%. The GRAND cheese technology was developed by the company's production technologists and craftsmen in collaboration with Angelo Frosio, a cheese master and professor from Italy. GRAND hard cheese (GRANA type) weighs approximately 32 kg. These hard cheeses are characterised by their outstanding mature, rich and savoury flavour. The production process for this type of cheese is very complex, requiring a great deal of investment, exceptional knowledge, time and patience. These cheeses can only be made by a company with a very high technical level and a team of highly qualified specialists. Changes in production volumes of Rokiskio suris AB Group in 2020-2024: 2024 2023 2022 2021 2020 Fermented cheeses, t 38,638 39,545 37,831 35,357 32,617 Milk sugar, t 13,411 13,934 12,701 12,631 12,592 Butter and spreadable fat mixtures, t 5,133 7,432 5,816 5,451 8,333 Fresh milk products, t 45,152 41,294 42,317 45,365 46,833 WPC powder, t 2,731 2,958 2,648 2,615 2,484 Dried milk products, t 3,101 4,125 3,129 3,170 4,348 77 In 2024, the company produced 3.8% less milk sugar compared to 2023. This is due to the lower volume of milk processed. The volume of fresh dairy products increased by 9.3% in 2024 compared to 2023. Butter and spreadable fat mixtures decreased by 30.9% In 2024, the production of dried milk products was 24.8% lower than in 2023. In 2022, Rokiskio suris AB launched a new product - spreadable processed cheeses with additives. In 2023, the already well-known spreadable processed cheeses with ham, chimichuri spices, chanterelles and Grand were joined by a new product - spreadable processed cheese Mozzarella. In 2024, the production of spreadable processed cheese increased by 17.7% compared to 2023. 45. Group sales As every year, most of the company's production is exported. In 2024, Rokiskio Suris exports its production to 54 countries worldwide (2023: 42 countries). During 2024, the Group resumed sales to Switzerland, New Zealand. Sales to Denmark, Algeria, Indonesia have started. Discontinued sales to countries such as Canada, Kazakhstan, Turkey. In 2024, the Group's exports accounted for around 67% of total sales. By contrast, in 2023, export accounted for around 64% of total sales. Italy remains the main and largest buyer of production. A large part of production is also exported to the Netherlands, Germany and Latvia. thousand EUR % thousand EUR % % 2024 2023 Change Lithuania 121,805 32.89 111,023 36.49 9.71 European countries 220,903 59.65 153,359 50.40 44.04 Middle East 13,330 3.60 23,080 7.59 -42.24 Far East 4,780 1.29 5,069 1.67 -5.70 North America 4,398 1.19 5,575 1.83 -21.11 Other countries 5,132 1.39 6,148 2.02 -16.53 Total: 370,348 100.00 304,254 100.00 21.72 78 In 2024, the Group's sales revenue amounted to EUR 370,348 thousand. Compared to 2023 (EUR 304 254 thousand), the Group's sales revenue increased by 21.72 %. 2024 was an extraordinary year for the dairy industry in terms of prices - especially on the fat (butter and cream) market. At the beginning of 2024, cream and butter prices reached all-time highs and remained at those levels until almost the end of the year. As the price of cream per unit of fat was more financially advantageous than the production and sale of butter, the company produced very little butter for export and sold cream to European countries. This is why we see a drop of around 42% in exports to the Middle East, where most of the butter exports are sold. As in every year, in 2024 the company's exports were mainly to Western European countries and, compared to 2023, sales to all European countries have increased by around 44% across all product groups. This was driven more by the increase in overall prices in the dairy sector compared to 2023. The prices of fresh cheese, which represent the largest part of the company's production, started to increase compared to 2023 in January 2024 and peaked in September 2024, which is the main reason for the significant increase in sales revenue to European countries compared to 2023 (as well as the increase in prices of whey concentrates, lactose and cream). Hard cheese sales to the US have decreased by 21% in 2024 compared to 2023, driven by lower prices for domestic cheese production compared to EU production and exports. US customers could not afford the prices that the company could obtain when selling these cheeses in Europe. 79 As in the past, the Group continued to sell its usual products - cream, milk and buttermilk flours, and the additional products produced in the cheese-making process - IBK and lactose - on the export markets. After whey protein prices started to increase in the last few months of 2023, they continued to increase until the end of 2024. Demand for these products remains extremely high (which continues to drive prices upwards). The company sells almost all of its whey concentrates to the EU, as there is simply not enough production to offer for export to third countries. In 2023 there was a significant drop in the price of lactose due to high stocks in both the EU and the US, and thus supply, whereas in 2024 the situation has changed dramatically and demand has started to increase, and thus prices too, due to a lack of stocks in warehouses. Lactose exports to the Far East started to decline slightly in the second half of the year as lactose became more expensive. India, which is a large importer of lactose, found it too expensive to buy from the EU and the US (as prices were aligned) and reduced its lactose imports from these regions. In addition to lactose, the company also exports Grand cheese to India. The main countries of export for Grand cheese would be Greece, Italy, Romania and Germany. One of the Rokiškio sūris Group's main objectives remains the further penetration of hard cheeses, in particular Grand, into the European retail/Horeca market, i.e. to increase the sales of value-added cheeses, which is currently being pursued intensively and is already showing good results. The rapidly rising raw material prices dictate that we sell as much value-added as possible and gradually reduce the production and sales of raw cheese. Sales on the local market In 2024, Rokiskio Group's consolidated sales turnover in the local market amounted to EUR 121.81 million, or 9.8% more than in 2023. This represents almost a third of the company's generated revenue (32.9%), slightly lower than in the previous year, as export markets were expected to show even higher growth in 2024. The total annual volume of production sold on the domestic market in 2024 grew at a similar level to revenues, reaching 49.9 thousand tonnes, an increase of around 10% on 2023. Average output prices remained at a similar level, with an increase in the price of fat products, but with a slight increase in the milk/kefir/chard/fermented cheese categories. Domestic consumption of dairy products remains stable, being a daily "conservative" category with little exposure to high inflation or other factors. However, the decline in the supply of drinking milk by Lithuanian producers is notable, mainly due to the high share of Polish milk imports. Another reason is the variety of milk alternatives - vegan; for this reason, in 2024 Rokiskio Pienas started to produce lactose-free milk, which is suitable for all consumer segments. In financial terms, the domestic market remained profitable in 2024, but the rapid increase in global fat prices resulted in a revenue gap with the fat export alternative. Looking at product categories, in 2024, the company's portfolio showed the strongest growth in sales of cottage cheese and retail cream (over 20%), but weaker declines in the categories of cheeses and cream. The total domestic product mix grew slightly during the year, with over 230 products, with growth coming through private label production, which is a market-wide trend. Private label sales reached 34% of domestic sales compared to 31% a year earlier. Participation in this segment helps to make better use of the company's production capacities, including access to foreign markets. 80 The company aims at a balanced sales portfolio between own and private labels, the share of which has increased over the last year. This is a signal that consumers are trying to save more. The company does not try to participate in small market segments, focusing on mass production with a low cost index and consistency of quality for high quality products. The company's preferred sales channel is retail chains. The aim is to work with them in a mutually cooperative manner and to produce private labels for them. 46. Products, brands and achievements 1st half of 2024 AB Rokiškio sūris received a high EcoVadis sustainability rating of 62 points. We are proud of our very good environmental performance (80 points). According to an independent study conducted by SB Insight, a research company based in Sweden, AB Rokiškio sūris is in the top 20 of the list of the most sustainable brands in the food and beverage category! According to the researchers, the Sustainable Brand Index reveals how consumers perceive a brand through the prism of sustainability in relation to the United Nations Sustainable Development Goals. Keeping traditions alive is what we do best! In March 2024, sour cream in a bag was added to the “Rokiškio Naminis” line. Sour cream fits perfectly in a line characterised by high quality and deep traditions of Lithuanian dairy production. In spring 2024, we upgraded the packaging of Rokiškio Bifi Active kefir from 0.7 kg to 1 kg. This change brings even more convenience and value to consumers. 81 Spring also saw the launch of Rokiškio's sweetest dairy novelty - Rokiškio Bifi Creamy creamy yoghurts with granola. The yoghurts come in three unique flavours: mango and passionfruit, cherry and strawberry. "Rokiškio Bifi Creamy” double-layered creamy yoghurts with granola will leave no one indifferent with their pleasantly smooth texture and the taste of ripe berries or exotic fruits, while the granola will add crunch and richness to this exquisite tasting dessert. "Rokiškio Bifi Creamy” is a spoonful of creamy dream! This product was selected by NielsenIQ as one of the "Best New Launch 2024" projects. Another spring novelty is Rokiškio GRAND grated hard cheese. Perfect for pasta, soups and salads such as Caesar. It is the ideal choice for both professional chefs and home cooks. At the same time, the packaging of Rokiškio sūris AB's pride and joy, Rokiškio GRAND cheese, has been renewed, with a visible and clear emphasis on the name and an update of other design details. In July 2024, a new product line was added to the Rokiškio range - Rokiškio LACTOSE-FREE - products designed for those who are lactose intolerant or lactose avoidant, but who do not want to give up the benefits and taste of milk. This line consists of milk, cottage cheese and natural yoghurt, which retain all their natural nutritional properties when lactose is removed in the technological process. It is the perfect choice for lactose intolerant people as well as for anyone looking for dairy products that are easier to digest. In September 2024, at the prestigious “Baltic Brand” Forum, the Rokiškis brand was recognised as one of the fastest-growing brands in Lithuania, taking the honourable 5th place. This is a solid accolade that demonstrates consistent growth, consumer confidence and a further strengthening of the brand's market position. "The Baltic Brand” rankings is an annual study that assesses the popularity of brands and changes in consumer behaviour in the Baltic States. It covers more than 600 brands and 300 aspects of consumer lifestyle. 82 In October 2024, UAB Rokiškio Pienas Gamyba was ranked 10th in the food industry sector in the "Lithuanian Sector Leaders 2024" ranking compiled by the business daily "Verslo žinios". This ranking reflects the company's financial stability, growth in production volumes and significant contribution to the Lithuanian dairy sector. "Lithuanian Sector Leaders is an annual ranking that assesses companies in various sectors according to their financial performance, growth rates and operational efficiency, providing a clear picture of sector leaders. In November 2024, the new ROKIŠKIO kefir yoghurts hit the market. Strawberry, cherry and mango and passion fruit flavours. The yogurts are made with natural kefir starter, which gives them a light acidity. Refreshing, smooth and lightly acidic, ROKIŠKIO kefir yogurts are the perfect choice for every day! At the end of 2024, Rokiškio GRAND grated aged hard cheese maxi in 1 kg packs was added to the range. This is a high quality, long-ripened hard cheese, which is very practical for wholesale and export due to its large 1 kg packaging. 83 47. Risk factors and risk management Risk is understood as the impediment to the achievement of objectives due to potential events and their potential impact on the business. The Company's objectives include both long-term strategic goals and specific actions related to operations. The Company's Board is responsible for managing the Company's risks and assessing the adverse impact on the objectives and results. The identification and management of specific risks is assigned to the relevant functions within the Company. The level of risk is assessed in both strategic and operational decision-making, taking into account the external and internal environment. Risk management is integrated into the Company's business processes, so that potential risks are continuously monitored and analysed. The group's principal activity is milk processing. The dairy processing business is linked to raw material suppliers, competition in the raw milk market and fluctuations in raw milk prices. Shortages of raw milk, which lead to continuous volatility in milk prices, may affect the Issuer's results of operations. Specialisation in the production of fermented cheeses accounts for the bulk of revenues. The cheese maturation process is rather long, which makes it difficult to react quickly to market changes and may affect the company's performance. In addition, there is strong competition for dairy products on the domestic and export markets, cheaper Polish products and the Russian market ban limits sales. The Group's credit risk relates to receivables. The risk of default by counterparties is controlled. The Group has credit insurance cover for its customers. For customers with higher financial risks, a prepayment system is in place. The Group's activities are subject to regular food safety, environmental and social responsibility audits. Food safety systems are in place and operational in the Group. The company's products have specific Halal and Kosher quality certificates. Organic products are produced and labelled with additional information. The Group's management aims to produce safe and quality dairy products with the lowest possible environmental impact. The Group is constantly looking for opportunities to optimise production, reduce costs and minimise and manage risks. Risk factors: Risk factor Source of risk Risk management. Economic factors: Supply of raw materials Small farms; Seasonality; Competition; Lack of a long-term public regulatory framework. The evolution of raw milk prices during the winter and summer periods. Significant movements in milk prices on world markets. To mitigate potential risks and their impact, milk producers are paid milk price premiums for long-term cooperation, higher milk quality, loyalty and balancing seasonality in milk production. The risk is managed by additional imports of milk from other countries (Estonia, Latvia) and by diversifying the purchase of raw milk from different sized suppliers in Lithuania. Sales of products The group's principal activity is milk processing. Its main product is rennet cheese. Revenue from the sale of cheese accounts for the majority of revenue. The company's revenue, profit and cash flow may be adversely affected by changes in demand and prices for cheese and other products such as milk sugar, butter, WPC on the markets. The production of long-ripened hard cheese is a lengthy technological process that lasts between 9 and 24 months. This lengthy process may adversely affect the company's cash flow and results of operations. Internal competition between local producers. Cheaper Polish production on the Lithuanian market. Increase in the volume and range of cheaper products from other EU countries. Finding alternatives to imports. Increasing the range of products. Finding new markets. Working with business partners. Risk assessment for each client. Environmental factors Our activities consume large amounts of energy and natural resources. This poses a risk of environmental pollution directly and/or indirectly, as well as air pollution from technological installations. Vehicle replacement, maintenance, control of operating conditions. Choosing energy suppliers. Resource saving, accounting and control measures. Process control, automation, modernisation. Monitoring the use and impact of natural resources. Use of chemicals. This poses risks to workers, products and the environment. Employee training, personal protective equipment. Accounting and control. Process automation. Physical environmental pollution: noise, smell, light Control measurements and assessment. Deploying technical tools. Focus on design. Treatment of industrial and surface wastewater. Discharge of pollutants with industrial and surface wastewater. Maintenance, operating conditions, process control. Pollutant concentration studies, emission accounting. Use of reserves at a municipal wastewater treatment plant. Cleaning and maintenance of sand oil traps and sewers. Improper management of waste from operations poses a threat to the environment Waste sorting and accounting. Ensuring proper storage conditions. Process management, staff training. Transfer to legitimate processors. Regulation and compliance. Risks are manifested in the high volume of regulation and change in legislation. Certified management system compliant with ISO 14001:2015 Environmental Management Systems. Requirements and guidelines for use. Continuous evaluation of legislation and developments. Reporting, evaluation of established reports. Environmental concerns of residents, neighbouring businesses and local authorities. The company is located in an industrial area of the city and is adjacent to both other businesses and residential areas. Disseminating information about company news in the local press and on the internet. Active cooperation with local authorities, residents and business communities. Assessment of the impact of planned activities in accordance with the established procedures In the production areas, climate control systems are installed, which not only maintain the set temperature and humidity parameters, but also work in a recuperative mode. Accounting and reduction of GHG emissions. Dissemination of information and achievement of reduction targets to actors in the supply chain. 94% of our emissions are GHG emissions from dairy farms. Energy risks We consume a lot of electricity, heat and water in our operations. All production and non-production equipment relies on electricity to operate. This poses a risk to the uninterrupted supply of electricity. Electricity, heat (steam) and water supply influence the production and technological processes. Electricity is supplied by an independent energy supplier under the terms of a contract. Distribution is provided by the Energy Distribution Operator. Medium-voltage switchgear is fed from two independent sources, which feed the power transformers. If one substation loses voltage, the other is immediately energised. We have installed 90 MW of solar power plants. Heat energy is supplied by centralised urban heating networks using biofuels (wood) in Rokiškis and Utena. We also produce our own heat with two boiler plants in Utena and Ukmergė which use natural gas. Strict contractual conditions for the supply of thermal energy (steam), defining maximum requirements for pressure and temperature. Installed steam metering to control and ensure consumption and demand of the respective workshops. Boilers for hot water production. The heat pumps recover some of the heat from the environment and reduce the amount of heat energy purchased. Rokiškis receives most of its water supply from its own waterworks and treats wastewater in its own plants. The technological operation of wastewater treatment plants is strictly controlled, and monitoring is carried out and reports are submitted and made public in accordance with the established procedures. Part of the water is purchased from the city's waterworks and part of the wastewater is managed by the city's water management company. The water supply and wastewater treatment services for companies in Utena and Ukmergė are provided by the urban water management companies. Food safety and quality In order to achieve one of the most important objectives of Rokiskio sūris AB - to ensure food safety and quality and to avoid product recalls, the existing and potentially dangerous risk factors (biological, chemical, physical) have been identified, and the favourable conditions for their occurrence and increase have been analysed. The risk assessment consists of an evaluation of the likelihood of the risk factor occurring and the severity of the consequences. Risk assessment covers the entire production chain, from the purchase of raw materials to delivery to the customer. Based on the level of risk identified and the methodology approved by the Codex Alimentarius Commission, categories of control measures are identified and control measures are defined. Identification of key control measures for the main risk factors at play; Assessing the effectiveness of operational controls to reduce risks to an acceptable level; Developing the necessary action plans to improve the control system; Regular risk management and monitoring of targets. Information security IT risks relate to the use of illegal software, lost and unrecoverable data, and data vulnerabilities. Only legal, licensed IT software is used to avoid potential threats. A configurable firewall is used to protect against unauthorised access to the company from outside. Unauthorised access to data is limited to those rights and roles that are necessary for their work. A test environment is used to test changes to applications. Data loss is prevented by backing up data. All company computers have anti-virus software installed. Old computer equipment is replaced by new equipment with supported software versions. Occupational risk factors: Physical factors: Inadequate workplace design; Non-compliance with the general minimum requirements for work equipment; Mobile self-propelled, non-self-propelled work equipment; Potentially hazardous installations; Stability and robustness of structures; Escape routes and exits; Fire detection and extinguishing; Electric current; Activities of other companies in the provision of services and other work for the company. Workplaces and work equipment are maintained. Any deficiencies that may affect workers' health and safety are corrected. Controls for work equipment shall be clearly visible, identifiable and labelled. The work equipment shall have a control system that allows it to be brought to a complete and safe stop. Emergency stop devices shall be provided for this purpose. Where there is a risk of injury to a worker as a result of mechanical contact with moving parts of the work equipment, such parts shall be covered by guards and protective devices shall be fitted to prevent access to dangerous areas. Work equipment shall bear the necessary safety and health signs to ensure the safety of workers. Workers shall receive appropriate information on the use of work equipment, on-the-job training and instruction, i.e. they shall be made aware of the hazards they may encounter from work equipment. Mobile work equipment shall be so arranged and constructed as to expose the worker to minimum risk. Such equipment is subject to regular maintenance, training and periodic health checks. Potentially hazardous installations are operated in accordance with the Law on the Maintenance of Potentially Hazardous Installations. Maintenance of potentially hazardous installations is carried out. Employees working with potentially hazardous equipment are trained, periodically checked for their knowledge and periodically checked for their health. To ensure the stability and robustness of buildings, maintenance is carried out in accordance with the technical building regulations. Evacuation routes are maintained and signposted. Fire extinguishing equipment and fire safety engineering systems are appropriate for the size and purpose of the buildings, the equipment in the buildings, the nature of the materials stored in the buildings, and the number of employees in the workplaces. Fire extinguishers and fire safety engineering systems are subject to maintenance testing. Fire extinguishing equipment is labelled. Workplaces are equipped with a ventilation system. Ventilation equipment is maintained and updated. Fire safety training and drills are organised for staff. Hazardous areas in workplaces are marked. Workstations have strong, stable floors. Workers are provided with special footwear that is slip-resistant. Electrical installations shall be installed in such a way as to avoid the risk of fire or explosion and to protect workers from direct or indirect contact with electrical installations. Periodic resistance measurements of electrical installations shall be carried out in accordance with the procedures laid down by law. In order to ensure the safety and health of workers, avoiding risks arising from the activities of another undertaking and risks to their workers from the activities of the company, a description of the procedures for cooperation and coordination shall be drawn up and coordinating persons shall be appointed. Physical: Noise Lighting Chemical factors: Ergonomic factors: Work equipment Inadequate or poorly installed and maintained lighting in workplaces is a major occupational risk factor, affecting workers' emotional stress, reducing productivity and increasing the number of accidents. Use of chemicals in laboratory testing, cleaning of work equipment and facilities. Manual work exists in many workplaces Use of personal protective equipment, compulsory health checks for noise, training for workers. Occupational risk assessments measure lighting in workplaces. If the lighting does not meet the hygiene standards, the luminaires are replaced with new LED luminaires. The advantages are lower energy consumption, longer lifetime and higher efficiency. High-pressure washing stations are installed to fully control the doses of chemicals needed for cleaning and disinfecting rooms and to improve staff conditions. Occupational risk assessments are carried out in workplaces where chemicals are used. Mandatory health checks. Information and training for workers. Use of personal protective equipment where hazardous chemical agents are likely. Artificial ventilation system in place. An occupational risk assessment is carried out. An ergonomic risk assessment to prevent musculoskeletal disorders. Compulsory health screening. Manual and electric wheelchairs are used to reduce ergonomic risks. Lifts are also used. The company has introduced robotic technology to avoid heavy lifting. Job rotation is implemented. Social factors: Finding and recruiting staff. Staff development, and integrating staff into work processes. Retaining staff and reducing turnover. Search for workers at the labour exchange. Cooperation with research institutions. Recommendations from employees working for the company. Internal company resources (encourages employees to develop their skills and qualifications). The company has a performance appraisal and development system. Staff development plans are drawn up each year. Training is organised both by sending employees to external seminars organised by suppliers and internally. The company strives to build a stable workforce by fostering good relations, providing opportunities for development, growth, participation in decision-making, and employee benefits under the Collective Agreement. These social factors do not depend solely on the actions of the company. The company may be forced to increase investment in robotic production processes, i.e. replacing manual labour with robots. The Collective Agreement is updated in 2024 to include more benefits for the company's employees. Employee engagement is promoted through social actions and various events that increase the sense of community and pride in the company. 84 48. Ensuring business continuity of Rokiskio suris AB Key risk areas: - Potential supply chain disruptions for raw materials and other materials used in production. The company's main raw material, milk, is purchased domestically and in adjacent regions, so there were no disruptions and no additional measures were needed. Stock levels of other essential materials have been reviewed and uninterrupted supply of materials is ensured. - Ensuring uninterrupted milk processing and continuity of the production chain - Market volatility and changes in consumption patterns. The company constantly monitors and analyses the market situation and adapts to changing customer needs. On the Russian invasion of Ukraine 85 24 February 2022 The Russian Federation started a war in Ukraine, condemned by the world. Economic and financial sanctions were imposed on the Russian regime. The Group's management believes that the crisis has no material direct or indirect impact on the Group's operations, financial position, economic performance, markets or supply chains. The Group's managemant is closely monitoring the situation in Ukraine and the sanctions imposed to ensure compliance. Further information on the Russian invasion of Ukraine is provided in note 34 to the consolidated and parent company financial statements of Rokiskio suris AB as at 31 December 2024. 49. Information on financial risk management objectives and hedging instruments used The Company and the Group are exposed to various financial risks in the course of their business. The Group's overall risk management programme focuses on the unpredictability of the financial markets and seeks to mitigate any potential negative impact on the Group's financial performance. The Group is insured against general civil liability arising out of its business activities and damages caused to the Group's products or services. The insurance policy is valid worldwide. Risk management is carried out by the Company's management. There are no written principles for overall risk management. The financial risk factors of the Company and the Group are described in detail in Note 3 to the consolidated and parent company financial statements of Rokiskio suris AB as at 31 December 2024. 50. Key features of internal control and risk management systems relevant to the preparation of the consolidated financial statements The preparation of the Company's consolidated financial statements, internal control and financial risk management systems, and compliance with the legislation governing the preparation of the consolidated financial statements are supervised by the Audit Committee. The consolidated financial statements of Rokiskio suris AB and the Company are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union. The Audit Committee monitors the preparation of the financial statements of the Company and the Subsidiaries, reviews IFRS to ensure that all changes in IFRS are implemented in the financial statements in a timely manner, analyses transactions material to the operations of the Company and the Subsidiaries, ensures that information is gathered from the Group companies and that it is timely and accurately processed and prepared for the purpose of the financial statements and informs the Company's Board of Directors of material internal control weaknesses in the financial statements identified by external and internal audits, and makes recommendations to remedy them. The preparation of financial statements in conformity with IFRSs involves making estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. These estimates are based on management's knowledge of current conditions and actions. The financial statements comprise the consolidated financial statements of the Group and the separate financial statements of the Company. 86 Subsidiaries (including special purpose entities) are entities in which the Group has control over financial and operating policies. Such control is generally exercised through the ownership of more than half of the voting shares. In assessing whether the Group controls another entity, the existence and effect of potential voting shares, whether presently held or convertible, are taken into account. Subsidiaries are fully consolidated from the date on which the Group obtains control of those entities and are deconsolidated from the date on which control is lost. The Audit Committee makes recommendations to the Board on the selection of the external audit firm and monitors the adherence of the external auditor and the audit firm to the principles of independence and objectivity. 51. Food safety and quality The company's products are internationally recognised for their quality, with internationally recognised food safety and environmental systems in place and validated, allowing it to provide consumers with a wide range of products with excellent taste. The experience gained over the years, the focus on the introduction of new technologies and the continuous investment, allow us to remain competitive in the raw milk purchasing and product sales markets. The production of hard-ripened cheese is a lengthy process that can take from a few months to several years. This specificity of production does not allow for a rapid response to sudden changes in the cheese market, which may affect the results of operations. The Company's companies place great emphasis on product safety and quality, meeting customer needs and environmental requirements. Rokiskio suris AB was the first company in Lithuania to certify its Food Safety System, the first dairy company to certify its Quality Management and Environmental Management Systems in accordance with the international ISO standards (ISO 9001, ISO 14001). In order to meet the needs of customers, expand sales markets and improve processes, it was decided to implement the IFS food safety standard in all companies of the Rokiskio suris Group. 87 The IFS- International Food Standard is developed by the German, French and Italian retail associations and is recognised by the Global Food Safety Initiative (GFSI) and retail organisations. It is recognised by retailers and brand owners worldwide. Rokiskio suris AB successfully certified its food safety systems according to IFS requirements and achieved the highest Higher Level rating (> 95%). The IFS core objective is to achieve the best possible product safety and quality management system so that consumers can have confidence in the products they buy. The requirements of the food safety standards establish rules to ensure the production of stable, uniform, quality and safe products without deviating from the policies of the organisation. The system covers processes from the purchase of raw materials to the satisfaction of customer needs and is constantly reviewed and improved to maintain high product quality. In order to produce only safe and high quality products that meet customer expectations, the Food Safety, Quality and Safety systems are continuously reviewed and continuously improved. In 2023, changes related to the new IFS Version 8 requirements were introduced as part of the improvement of the company's existing food safety systems. The company places great emphasis on maintaining and improving its food safety and quality culture. The management and all employees are concerned about safe food production, and employees are informed about food safety hazards and the importance of food safety and hygiene. As part of the implementation of the new IFS standard, targets have been set for food safety policy awareness, training, employee feedback on food safety and performance evaluation in this area. The company's management reviews and approves the food safety, quality and environmental policy annually, declaring continuous improvement - "Our understanding is that 'doing well' is never enough. We know that 'What we do well today, we will do even better tomorrow!' The company has created an atmosphere in which every employee is involved in achieving its goals and objectives. The company has developed and implemented operational essential programmes that provide conditions, measures and rules to prevent biological, chemical, physical, allergenic and radiological contamination and to help ensure the production of safe products. The State Food and Veterinary Service of the Republic of Lithuania has certified the compliance of dairy production with the requirements of the EU hygiene regulations and issued veterinary approval numbers: AB ,,Rokiškio sūris" LT 73-01 P; UAB "Rokiškio pieno gamyba" LT 82-01 P; UAB "DairyHub.LT" LT 81-08 P. The laboratory of Rokiskio suris AB is accredited according to the international standard LST EN ISO/IES 17025 "General requirements for the competence of laboratories for testing, examination and calibration". The laboratory shall comply with the set objectives, improve the quality management of the laboratory, the quality of the tests performed, acquire professional experience and ensure reliable tests. 88 The company has specific HALAL and KOSHER certificates for some products (lactose, IBK, butter, skimmed milk flour, rennet cheese) (lactose, IBK, skimmed and whole milk flour, buttermilk flour, butter). In order to ensure the satisfaction of customers' needs and to contribute to a more sustainable world, UAB DairyHub.LT has been certified according to the requirements of RSPO Supply Chain Certification Systems, February 2020. RSPO (Roundtable on sustainable palm oil) - A global initiative to make sustainable palm oil the standard. The RSPO is a non-profit organisation bringing together stakeholders - palm oil producers, processors, retailers, environmental and social non-governmental organisations (NGOs) - to develop and implement global standards for sustainable palm oil. The icing used in the production of the glazed curd cheese is made from certified (RSPO SG) palm oil. The changing geopolitical situation has led to a search for opportunities to expand outlets. The competent Moroccan authority has granted an export licence for the products and approval is pending to several more countries. For more information on product safety and quality, see the company's Sustainability disclosures (Social. Product safety and quality). 52. Research and development activities Rokiskio suris AB is always looking for ways to make the company more efficient, to continuously increase revenues and to achieve the highest quality, which is why the company invests constantly. In 2024, the Company has earmarked EUR 7.7 million for investments. As part of the development of Grand's hard cheese technology, the construction of a cheese ripening/storage building was completed. Construction work has not stopped and an expansion of the production facility is planned from 2025. A major focus is on improving operational efficiency and developing new technologies to reduce production and operating costs. The project to digitise the paper journals continued in 2024. Digitised journals have become a convenient and time-saving tool for completing and analysing data records, and the development of this tool is foreseen for 2025. The constant goal of the companies of the Rokiskio suris AB Group is to ensure the production and supply to the customer of products that meet the highest food safety and quality standards and that create the greatest added value. In order to ensure production efficiency and quality, a new and modern facility for milk sugar production was purchased in 2024. With this plant, the plant control cabinets were upgraded and reconstructed. Continuous quality improvement and improvement are an integral part of the life of the factory, which is why during 2024 some minor upgrades were carried out. Investments were made in new refrigeration and cooling equipment, which was installed in the warehouses for the storage of products. Reconstruction work continued on the curing basins and one of the curing basins was renovated. Work was carried out to improve the efficiency of the refrigeration pipeline. The technical workshop of the workshop has been newly reconstructed. 89 Continuous research activities are carried out both in-house and in cooperation with scientific institutions. Much of the research is carried out by the company's production specialists in collaboration with Prof. Angelo Frosio from Italy (collaborator and founder of Centro Latte Lodi and Scuola d'Arte Bergognone). New products are developed in collaboration with scientific institutions to meet the needs of today's consumers. Product development takes into account sustainable raw materials and technologies, and looks for added values for product functionality (products enriched with vitamins, milk proteins). The company's specialists regularly take part in exhibitions and seminars. The company cooperates closely with brands such as LIDL, whose product quality is confirmed by the EN ISO 17025 certified Eurofins laboratory. We also work with Mars, Incorporated, IKI, MAXIMA and other confectionery companies that place great emphasis on exceptional quality. Laboratory tests of products are carried out both in the laboratories of the Group's companies and in other laboratories in Lithuania and abroad, such as the National Institute of Food and Veterinary Risk Assessment, KTU MI, Eurofins Germany, Poland, Campden Bri food and drink innovation (UK), Galab laboratories (Germany), Qlip quality assurance in agrofood (Netherlands), Mérieux NutriSciences Italia (Italy), Nutricontrol laboratory (Netherlands). The company's laboratory in Rokiskis is accredited, certificate No LA01.129. The aim of these activities is to ensure the safety of the products, to improve the recipes in order to achieve product uniqueness and a more efficient production process, as well as to develop new products. To better understand market needs, the company has a regular partnership with NIELSEN, an expert in the field, both in terms of purchasing its services and in terms of seminars. Another way of conducting market research is to participate in global exhibitions in the most important regions, working with both the most competent specialists of the largest customers and representatives of the largest suppliers. In 2022, Rokiskio suris AB established a new subsidiary in Ukmerge - UAB DairyHub.Lt. The company continues to specialise and develop in the packaging and retail sale of GRAND hard cheese both in Lithuania and abroad. 53. FINANCIAL PERFORMANCE Alternative performance indicators Rokiskio suris AB presents in its financial statements financial performance indicators prepared in accordance with International Financial Reporting Standards (IFRS), together with non-IFRS financial performance indicators. These alternative performance indicators are important indicators of its performance for investors and other users of financial statements. The alternative performance measures should be treated as supplementary information prepared in accordance with IFRS. The Group sets out below the alternative performance indicators and the methodology for calculating them: Financial indicators (EUR thousand) 2024 2023 2022 2021 2020 Sales revenue 370,348 304,254 359,269 253,062 210,829 Gross profit 50,897 42,918 39,888 18,627 21,388 EBITDA 37,305 29,910 22,890 9,094 13,431 EBIT 27,442 20,730 13,042 965 4,171 Operating profit 27,442 20,730 13,042 965 4,171 Profit before tax (EBT) 25,601 19,244 12,593 596 3,972 Net profit/loss 22,841 16,241 12,514 553 4,061 Fixed assets 55,123 57,468 86,310 82,965 76,646 Short-term assets 147,642 155,221 135,340 119,902 120,424 Total assets 217,376 216,484 221,650 202,867 197,070 Shareholders' equity 149,207 139,528 151,449 142,480 145,428 Profitability (%) Return on assets [ROA] 12.65 9.46 6.14 0.28 2.22 Return on equity [ROE] 15.82 11.16 8.51 0.38 2.94 Gross profit margin (%) 13.74 14.11 11.10 7.36 10.14 EBITDA margin (%) 10.07 9.83 6.37 3.59 6.37 EBIT margin (%) 7.41 6.81 3.63 0.38 1.98 Return on constant capital employed [ROCE] 18.39 14.86 8.61 0.53 2.45 Profitability ratio [EBT margin] 6.91 6.32 3.51 0.24 1.88 Net profit margin 6.17 5.34 3.48 0.22 1.93 Financial structure Liabilities/equity ratio 0.46 0.55 0.46 0.42 0.36 Equity to assets ratio 0.69 0.64 0.68 0.7 0.74 Debt-to-equity ratio 0.23 0.31 0.2 0.19 0.18 Debt ratio 0.31 0.36 0.32 0.3 0.26 Gross liquidity ratio 2.36 2.29 2.35 2.77 2.7 Market value indicators Share price to earnings per share ratio [P/E ratio] 3.97 6.74 8 144 24.33 Net earnings per share 0.73 0.46 0.37 0.02 0.12 90 * see note 33 of financial statements, change in accounting policies of property, plant and equipment. Name of indicator Methodology for calculating the indicator Value of indicator EBITDA Earnings before interest, tax, depreciation and amortisation. EBITDA - operating profit before depreciation, amortisation and impairment of fixed assets - helps investors assess the potential for profit generation before investing in fixed assets. EBITDA margin EBITDA / Revenue EBITDA to revenue ratio shows the efficiency of a company's operations. EBIT Earnings before interest and tax, i.e. net profit + corporation tax + finance costs. EBIT - operating profit. EBIT is a very important indicator as operating profit is used to pay all liabilities to creditors. It is a good indicator of a company's ability to generate cash flow. EBT Profit before tax, i.e. net profit + corporation tax. Profit before net investment and financing activities and income tax. Average return on assets [ROA] Ratio of operating profit for the last 12 months to average total assets for the last 12 months. This indicator shows how efficiently a company's assets are managed, i.e. how much net profit is generated for every euro of assets, which is one of the most popular measures of a company's performance Rate of return on equity [ROE] Ratio of average (net) profit for the last 12 months to average equity for the last 12 months. The return on equity (or return on equity) shows how many euros of net profit are generated per euro of equity. This indicator is important for shareholders in assessing the return on their past investment in the company. Return on constant capital employed [ROCE] Ratio of the sum of operating profit (EBIT) and financial operating income for the last 12 months to the average capital employed for the last 12 months. The ROCE profitability ratio measures the return on the funds required for the company's ongoing operations. It is often compared with the interest rates on loans available on the market at the time. The ROCE of a company is considered to be higher than the cost of borrowed capital at that time. Liabilities/equity ratio Liabilities/Equity The liabilities/equity ratio shows the amount of a company's total long-term and short-term liabilities per euro of equity. Debt-to-assets ratio Financial debts (long-term + short-term)/ Assets It is a financial ratio that compares a company's financial debts to its total assets. The ratio shows how much of the company's assets are financed by debt. Debt-to-equity ratio Financial debts (long-term + short-term)/Equity This is one of the main indicators of financial leverage. The debt-to-equity ratio shows how many euros of short-term and long-term debt are held per euro of equity. The debt calculation takes into account all the interest-bearing liabilities of the company. Debt ratio Liabilities to assets ratio The debt ratio reflects the proportion of a company's assets that are acquired with borrowed funds. Gross liquidity ratio Ratio of current assets to current liabilities The current ratio measures the ability of an enterprise to meet its short-term liabilities using its current assets. P/E (share price/earnings ratio) Share price at the end of the period / (Net profit/Shares) The share price/earnings ratio reflects how much an investor pays per euro of a company's net profit earned in the previous period. Earnings per share Net profit/Shares Earnings per share shows how much a company earns in net profit per share outstanding. 91 92 Profit/(loss) statement In 2024, Rokiskio suris AB Group's sales revenues amounted to EUR 370,348 thousand, an increase of 21.72% compared to 2023 (in 2023 the Group's sales revenues amounted to EUR 304,254 thousand). In 2024, the main share of revenues is 51.8% (50.7% in 2023) from sales of fermented cheeses. In volume terms, sales of fermented cheeses in 2024 are 17% higher than in 2023, while in value terms the increase is around 24%. This is due to a significant increase in the selling prices of dairy products. In 2024, sales prices for whey products also increased by a factor of around 1.3. Exports of cream in 2024 grew due to an increase in demand. With a 6% increase in sales in volume and a 54% increase in average price, sales in value terms increased by 62%. Butter sales in value terms decreased by 12% compared to 2023. This was due to a 29% decrease in volume terms, while the average price increased by almost 24%. Revenues from the sale of fresh dairy products increased by EUR 8.2 million in 2023 compared to 2023. This is due to a change in the product mix. Costs: In 2024, the Rokiskio suris AB Group will incur costs of sales of products amounting to EUR 319,451 thousand (in 2023: EUR 261,336 thousand). In 2024, the cost of sales decreased by 22.2% or EUR 58,115 thousand. This significant change is due to an increase in sales volumes, an increase in the purchase price of raw milk and an increase in service prices.. The largest cost component in 2024 (EUR 236,954 thousand) was raw materials and consumables (EUR 215,359 thousand in 2023), an increase of EUR 21,595 thousand. Sales, marketing and general administrative costs as a percentage of turnover amounted to 6.6% in 2024 (EUR 24,626 thousand) and 7.5% in 2023 (EUR 22,693 thousand). In 2024, sales and marketing costs increased by 11.22% The increase in sales and marketing costs in 2024 is due to a increase in sales volumes of cheese, related transport costs, freight and other services received. 93 Profit: The consolidated audited net profit of the Rokiskio suris AB Group for 2024 is EUR 22,841 thousand, which is EUR 6,600 thousand higher than in 2023 (EUR 16,241 thousand). The calculation of net profit takes into account direct and indirect production costs and costs not related to direct activities. The most important factors contributing to the increase in profits were the sales of cream to export markets (due to the significant increase in market prices for cream) and the sales of fermented cheeses on both domestic and export markets. The net profit margin of the Rokiskio suris AB Group in 2024 was 5.98% (5.34% in 2023). EBITDA in 2024 of EUR 37,305 thousand, i.e. 1.3 times higher than in 2023 (EUR 29,910 thousand). EBITDA margin in 2024: 10.07% (9.83% in 2023). 54. Group activity by segment Rokiskio suris AB Group's business consists of the following segments: hard cheese, semi-hard cheese, butter, milk, cream, sour cream, sour milk, yoghurt, cottage cheese, cottage cheese and others. These segments have been aggregated into two main segments in the financial statements on the basis of the similar nature of the products, the production process, the customer group and the distribution method. The two main segments presented in the Group's business financial statements are: - Fresh dairy products - Cheese and other milk products Transactions between operating segments are conducted on normal commercial terms. The number of segment customers, each of which generates 10% of the segment's total revenue, is: - Fresh dairy products – 2 external customers - Cheese and other dairy products – 1 external customer Information on the impact of each of the operating segments on the Group's financial performance is presented below. Sales 2024 2023 Change (%) Fresh dairy products 131,591 110,407 19.19 Cheese and other milk products 238,757 193,847 23.17 Total sales revenue (EUR thousand) 370,348 304,254 21.72 Gross profit Fresh dairy products 16,339 20,120 -18.79 Cheese and other milk products 34,558 21,647 59.64 Total gross profit (EUR thousand) 50,897 41,767 21.86 94 55. Investments In 2024, Rokiskio suris AB continued its active, sustainable development and renewal. Particular attention was paid to innovative solutions and sustainability, and to what enables us to remain competitive today and in the future. The exploitation of the opportunities offered by technology has strengthened the company's investment policy, which has increased its competitiveness, the production of higher value-added products, and the uptake of new products and innovative technologies. The policy of implementing the company's strategic priorities was continued. As every year, investments have been made to protect the environment and to rationalise the allocation and use of energy resources. Part of the investment has been for the modernisation of existing equipment and buildings. During the financial year 2024, the value of investments made by Rokiskio suris Group amounted to EUR 7.7 million (2023: EUR 10.5 million). One of the major investments in Rokiškis was the purchase of equipment for the new Grand cheese ripening building (refrigeration compressor, racking system, etc.), for an investment of 2.7 million euro. Some of the investments started in 2023 and earlier were completed in 2024. These include investments related to the production service bars, part of the investments related to the ripening of cheeses, such as racks, cold room equipment, a decanter is purchased for the milk sugar factory. Investments related to the sustainability policy include refrigeration modules for the cheese ripening chambers. In the subsidiary in Utena, the major part of the investment was in the expansion of the curd production facility and production lines. Dairy HUB.LT UAB investments focused on cheese cutting and packaging lines. 95 56. Group business plans and forecasts The investment objective of Rokiskio suris is to continue to increase production efficiency, focusing on the modernisation, repair and renewal of production units and their equipment. It also focuses on flexible management of energy resources. As every year, the plan is to invest in solving environmental problems, introducing sustainable solutions and generating a clear and strong position. In 2025, the main investments will be the completion of investments started in 2024 and previous years. In 2024, the construction of the Grand cheese ripening warehouse has already been completed, with new modern refrigeration equipment and a racking system. The refrigeration equipment and system were already installed in 2023. The investment value of the warehouse building is EUR 2.7 million. In 2024, the reconstruction of the ripening chambers has already been completed at a cost of EUR 0.9 million, milk scales have been installed in the milk reception area, and the reconstruction of the security post has been finished. During 2025, investments will be made in works and repairs in workshops and units related to production and economic activities. Each investment is planned with a view to future prospects and trends and the current situation. The main areas of investment for 2025 are: Investment in the expansion of hard cheese production; Acquisition of equipment for production workshops and ancillary bars (cheese production, curing, ripening, milk sugar, cheese melting, modernisation of existing equipment, repairs and reconstruction of workshops and buildings); To improve the competitiveness of the company; Saving, rational use and distribution of energy resources; Reducing environmental impacts, developing sustainability; Improving the working conditions of employees and the production environment; Measures to improve sanitation and hygiene in production and service departments; To meet customer needs for the products produced; For sustainability purposes. The subsidiary DairyHub.Lt UAB plans to invest in an improved cheese slicing and grating technological process. The subsidiary Rokiskio pieno gamyba UAB will continue to invest in the storage of dairy products. INFORMATION ON THE COMPANY'S SHAREHOLDERS 57. Information on the Company's share capital 31 December 2024 The authorised capital of Rokiskio suris AB consisted of: 96 Number of shares Nominal value Total nominal Share of authorised capital (%) Type of shares (pcs.) (EUR) Value (EUR) Ordinary registered shares 32,281,173 0.29 9,361,540.17 100 58. Company contracts with brokerage firms Rokiskio suris AB has concluded an agreement with FMĮ Orion Securities UAB (A. Tumeno st. 4, LT-01109 Vilnius, tel. (8-5) 231 38 33, info@orion.lt) for the management of accounting of the Company's securities issued by the Company as well as for provision of investment services. 59. Details of trading in the issuer's securities on regulated markets 32,281,173 ordinary registered shares of Rokiskio suris AB are listed on the Nasdaq Vilnius Baltic Official List (VVPB symbol RSU1L). Nominal value per share EUR 0.29. The Nasdaq Vilnius Stock Exchange is the only trading market for the Company's shares. The Company has been listed since 25 July 1995. The company has not issued any debt securities to the public. There are no debt securities registered and issued for private circulation. There are no securities that do not represent a participation in the authorised capital but whose circulation is regulated by the Securities Law of the Republic of Lithuania. There was no trading on other exchanges or other organised markets. Trading statistics for the Company's shares: 2020 2021 2022 2023 2024 Opening price, EUR 2.54 3 2.88 2.96 2.92 Closing price, EUR 2.92 2.88 2.96 2.92 2.93 Maximum price, EUR 2.98 3.18 3.20 3.06 3.74 Lowest price, EUR 2.1 2.6 2.50 2.78 2.8 Turnover, pcs. 261,788 218,200 196,098 86,531 64,264 Turnover, million euro 0.65 0.63 0.57 0.25 0.21 Capitalisation, million euro 80 101 103 103 99 Dynamics of the Company's share price and turnover during the reporting period 97 Source - AB Nasdaq Vilnius website Rokiškio sūris | Trading - Nasdaq Baltic Exchange (nasdaqbaltic.com) Dynamics of the company's share price and turnover over 4 years Source - AB Nasdaq Vilnius website Rokiškio sūris | Trading - Nasdaq Baltic Exchange (nasdaqbaltic.com) Dynamics of the company's shares (RSU1L), OMX_Baltic_Benchmark_GI and OMX_Baltic_GI indices: 98 Chart data: Source - AB Nasdaq Vilnius: Baltic Market Indices - Nasdaq Baltic Exchange (nasdaqbaltic.com) 60. Restrictions on transfer of securities There are no restrictions on holdings or requirements to obtain the approval of the company or other security holders. 61. Procedure for amending the Company's Articles of Association The Articles of Association of the Company shall be amended in accordance with the procedure provided for by the laws of the Republic of Lithuania and the Articles of Association of the Company. The decision to amend the Company's Articles of Association shall be taken by the General Meeting of Shareholders of the Company by a qualified majority of 2/3 of the votes cast by the shareholders present at the meeting, except for the exceptions provided for in the Law on Joint-Stock Companies of the Republic of Lithuania. 99 If the General Meeting of Shareholders adopts a decision to amend the Company's Articles of Association, a new version of the Articles of Association shall be drawn up and signed by a person authorised by the General Meeting of Shareholders. All amendments and additions to the Articles of Association of the Company shall enter into force only after they have been registered in accordance with the procedure established by the laws of the Republic of Lithuania. The Company's Articles of Association were amended on 27 June 2024. by the decision of the Extraordinary General Meeting of Shareholders of Rokiskio suris AB. The new version of the Articles of Association of Rokiškio sūris AB was registered in the Register of Legal Entities on 10 September 2024.The Articles of Association were amended to decrease the Authorized Capital of Rokiskio suris AB and to bring the Articles of Association into line with the relevant provisions of the Law on Joint-Stock Companies of the Republic of Lithuania. 62. Information about the Company's shareholders The total number of shareholders of Rokiskio suris on 31 December 2024 was 5 614. Shareholding held by a group of shareholders (31.12.2024): Name, surname Company name Company code Address Owned With persons acting in concert Number of ordinary registered shares Share of capital and votes % Share of capital and votes % Pieno pramones investiciju valdymas UAB Company code 173748857 Pramones st. 3, Rokiskis Lithuania 9,758,312 30.23 81.32 RSU Holding Ltd SIA, reg. No 40103739795 Elizabetes iela 45/47, LV-1010 Riga 8,953,883 27.74 Antanas Trumpa Chairman of the Board of the Company 2,378,755 7.37 Andrius Trumpa 2,760,247 8.55 Rita Trumpaite-Vanagiene 2,399,120 7.43 SB Asset Management managed investment and pension funds funds UAB Gyneju st.14, Vilnius Lithuania 2,088,986 6.47 100 The total group of persons acting in concert comprises: Pieno pramones investiciju valdymas UAB (30.23 %), SIA "RSU Holding" (27.74% of the Company's authorised capital and votes), members of the family of Antanas Trumpa (23.35% of the Company's share capital and votes). Distribution of shareholders of AB "Rokiškio sūris" 31 December 2024 63. Rights of shareholders Shareholders have the following moral rights: 1) attend general meetings of shareholders; 2) submit questions to the company in advance on items on the agenda of general meetings of shareholders; 3) voting rights at general meetings of shareholders, based on the rights attached to the shares; 4) to receive the information on the company referred to in Article 18(1) of the Law on Public Limited Companies; 5) to file a lawsuit with the court, requesting to compensate the company for damages incurred as a result of non-performance or improper performance of the duties of the company's manager and members of the board of directors, as set out in the Law on Companies of the Republic of Lithuania and other laws, as well as the company's articles of association, as well as in other cases provided for by law; 6) to obtain the information referred to in Article 89(6) of the Law on Markets in Financial Instruments on a public limited liability company whose shares are admitted to trading on a regulated market; 7) other moral rights established by the laws of the Republic of Lithuania. Shareholders have the following property rights: 101 1) receive a share of the company's profits (dividend); 2) to receive company funds when the company's share capital is reduced in order to pay out company funds to shareholders; 3) to receive shares gratuitously when the authorised capital is increased from the company's funds, except for the exception provided for in Article 42(4) of the Law on Public Limited Companies and in the case provided for in Article 471 of the Law on Public Limited Companies; 4) the right of first refusal to acquire shares or convertible bonds issued by the company, unless the General Meeting of Shareholders decides to cancel the right of first refusal for all shareholders in accordance with the procedure established by the Law on Companies of the Republic of Lithuania; 5) lend money to the company in the manner prescribed by law, but a company may not pledge its assets to its shareholders when borrowing from them. When a company borrows from a shareholder, the interest shall not exceed the average interest rate of commercial banks in the place of residence or business of the lender at the time of the conclusion of the loan agreement. In such a case, the company and the shareholders are prohibited from agreeing on a higher interest rate; 6) to receive a share of the assets of the liquidating company; 7) to have other property rights established by the laws of the Republic of Lithuania. The rights referred to in paragraphs 1, 2, 3 and 4 shall be vested in the persons who were shareholders of the company at the end of the tenth business day following the General Meeting of Shareholders which adopted the relevant resolution. 64. Details of the issuer's own share buybacks In line with the 30 April 2024 Rokiškio sūris AB Ordinary General Meeting of Shareholders, the Company bought back 2 725 523 of its own shares during 20-24 May 2024. The purchase price per share was EUR 2.20. The total price of the shares purchased was EUR 5 996 150.60. With previously acquired own shares at 30 June 2024 The Company has acquired 3 586 797 own shares for a total purchase price of EUR 8 247 436.62. The total nominal value of the acquired own shares amounts to 1/10 of the Company's share capital. On 27 June 2024, the Extraordinary Meeting of Shareholders of AB Rokiškio sūris adopted a decision to cancel the 3 586 797 treasury shares and to reduce the authorised capital of the Company. Following the completion of the procedure for the reduction of the Company's authorised capital, on 10 September 2024 the reduced authorised capital of Rokiškio sūris AB was registered in the Register of Legal Entities and all treasury shares were cancelled. Following the cancellation of treasury shares, the authorised capital of Rokiškio sūris AB consists of EUR 9,361,540.17 divided into 32,281,173 ordinary registered shares with a nominal value of EUR 0.29. During the buy-back period, 23 September 2024 - 27 September 2024, the Company acquired 861 274 treasury shares, representing 2.67% of the Company's authorised capital. Rokiskio suris AB has completed the buy-back of its own shares through the official offering market of the Nasdaq Vilnius Stock Exchange. The total amount of the share purchase transaction is EUR 1 894 802.80. 65. Dividends The General Meeting of Shareholders decides on the allocation and payment of dividends when distributing the company's distributable profit. The Ordinary General Meeting of Shareholders of Rokiskio suris AB, held on 30 April 2024, approved the audited consolidated financial statements and the Company's financial statements for 2023 and the distribution of the Company's profit for 2023. Dividends were distributed in the amount of EUR 5,251,004.40 or EUR 0.15 per ordinary registered share. 102 Below are the dividends declared and paid over the last 10 years: Per year Amount of dividends declared, EUR Dividend per share, EUR 2014 Dividendai nebuvo mokami 0 2015 2,341,737.37 0.07 2016 2,341,373.37 0.10 2017 3,586,797.00 0.10 2018 3,506,165.30 0.10 2019 3,500,669.60 0.10 2020 3,500,669.60 0.10 2021 3,500,669.60 0.10 2022 5,251,004.40 0.15 2023 5,251,004.40 0.15 Rokiskio suris AB has a Dividend Policy approved by the General Meeting of Shareholders. In accordance with this Dividend Policy, the Company's Board of Directors, when proposing to the General Meeting of Shareholders to allocate dividends, will be guided by the signed Shareholders' Agreement, according to which 100% of the Company's profit for the financial period, less the Company's funds earmarked by the Board of Directors to be used for investment (CAPEX), working capital and/or other purposes, will be allocated to the dividends. In the event that the Company's Board of Directors foresees a significant amount of investments, which would result in the Company's profit for the financial period being insufficient to pay dividends in accordance with the dividend provisions described above, the Board of Directors of the Company will endeavour to maintain the continuity of the payment of the dividends for the previous financial periods, taking into account the Company's financial situation and the trend in the global dairy industry market. The General Meeting of Shareholders may not decide to declare and pay dividends if any of the following conditions are met: 1) has outstanding debts with the company which have fallen due before the decision is taken; 2) the amount of distributable profit (loss) for the financial year is negative (loss); 3) the company's equity is less than, or would become less if dividends were paid, than the sum of the company's share capital, statutory reserve, revaluation reserve and reserve for the acquisition of own shares. A company that fails to pay its statutory taxes by the due dates cannot pay dividends, annual bonuses to board members and bonuses to employees. Dividends are payable to those persons who, at the close of business on the record date for the rights of the General Meeting of Shareholders that declared the dividend (the close of business on the tenth business day after the General Meeting that adopted the resolution), were shareholders in the company or otherwise legally entitled to receive the dividend. The Company shall pay the dividend within 1 month from the date of the decision to distribute profits. The dividend may be for a financial year or for a period of less than a financial year. Dividends for periods shorter than the financial year are distributed by a decision of the General Meeting of Shareholders. Shareholders holding at least 1/3 of the total number of votes shall have the right of initiative in the case of dividends for periods of less than one financial year. A general meeting of shareholders whose agenda shall include the question of the granting of dividends for a period shorter than a financial year shall be held within 3 months of the end of the period for which the dividends are proposed to be granted, but no earlier than the approval of the set of annual accounts and the distribution of the company's profit (loss) for the preceding financial year, and no later than the end of the financial year. 103 Dividends for periods shorter than a financial year may be granted if all the following conditions are met: 1) a set of interim financial statements for a period of less than one financial year; 2) the amount of profit or loss for the period of less than one financial year is positive (no loss); 3) the amount of the dividend payment does not exceed the amount of the profit (loss) for the period shorter than the financial year, the amount of the retained earnings (loss) for the previous financial year carried forward to the current financial year, less the part of the profit for the period shorter than the financial year that, in accordance with the Law on Companies of the Republic of Lithuania or the Articles of Association of the Company, is to be allocated to the reserves; 4) the company has no outstanding debts that have fallen due before the decision is taken and would be able to meet its obligations for the current financial year if the dividend were paid. If a dividend is declared for a period shorter than a financial year, it may not be declared for another period shorter than a financial year earlier than 3 months. CORPORATE GOVERNANCE 66. The governing bodies of the Company The Articles of Association of Rokiskio suris AB, registered in the Register of Legal Entities, provide for the following governing bodies of the Company: General Meeting of Shareholders Board Head of the company (director). The Company does not have a Supervisory Board. 104 67. Corporate governance and organisational structure of the Company Group The management structure of the Rokiskio suris AB Group (hereinafter referred to as the Group) is organised according to the main functions, i.e. sales and marketing, production, financial management, milk purchasing, logistics and vindication. The functional directors formulate and develop the Group's strategy, tactics and objectives in accordance with their assigned functions. GENERAL MEETING OF SHAREHOLDERS 68. Information on the competence and procedure for convening the General Meeting of Shareholders The competence and convening procedure of the General Meeting of Shareholders shall not differ from the competence and convening procedure of the General Meeting of Shareholders set out in the Law on Companies of the Republic of Lithuania. 105 The right of initiative to convene the General Meeting of Shareholders of Rokiskio suris AB shall be vested in the Management Board and the shareholders whose shares carry at least 1/10 of the total number of votes at the General Meeting of Shareholders. The notice of the General Meeting of Shareholders of the Company to be convened shall be made public in the Republic of Lithuania and in all other Member States of the European Union, as well as in the countries belonging to the European Economic Area, at least 21 days before the General Meeting of Shareholders, in accordance with the procedure established by the Securities Law. The notice of convening the General Meeting of Shareholders shall be additionally published in the electronic publication "Public Notices of Legal Entities" published by the State Enterprise Centre of Registers in the source specified in the Articles of Association. Persons who were shareholders of the company at the close of business on the record date of the meeting shall be entitled to attend and vote at a general meeting of shareholders or a reconvened general meeting of shareholders, in person or by proxy, or by persons with whom an agreement to transfer the voting right has been concluded, except for the exceptions provided for by law. A shareholder's right to participate in a general meeting shall also include the right to speak and to ask questions. The record date of a meeting of a public limited liability company shall be the fifth business day preceding the general meeting or the fifth business day preceding a repeated general meeting. A shareholder may vote in writing by completing a general ballot paper. The form of the general voting ballot is available on the Company's website www.rokiskio.com in the Investors section, and is also attached to the draft resolutions submitted by the Company via the Central Regulated Information Submission Database. The completed General Ballot Form must be signed by the shareholder or his/her authorised person. The completed and signed by the shareholder or other person entitled to vote general ballot paper and the document confirming the right to vote shall be submitted to the Company in writing not later than on the last business day before the meeting, by registered mail to Pramones st. 3, LT- 42150 Rokiskis, or by hand delivery to the Company during business days at the Company's registered office. The Company does not offer the possibility to attend and vote at the meeting by electronic means. A general meeting of shareholders may take decisions and shall be deemed to have taken place when shareholders holding more than ½ of the total voting rights are present. If a quorum is established, it shall be deemed to be present for the entire meeting. If a quorum is not present, the general meeting shall be deemed not to have been held and a reconvened general meeting shall be convened, which shall have the right to take decisions only on the agenda of the meeting that was not held and shall not be subject to the quorum requirement. The reconvening of the General Meeting of Shareholders shall be convened not earlier than 14 days and not later than 21 days after the date of the failed General Meeting of Shareholders. The shareholders shall be notified of the reconvened general meeting in the manner prescribed in Article 261 (3) of the Law on Companies not later than 14 days before the reconvened general meeting of shareholders. The Annual General Meeting of Shareholders must be held annually at the latest within 4 months of the end of the financial year. Shareholders holding shares representing at least 1/20 of the total votes shall have the right to propose items to be added to the agenda. The proposal shall be accompanied by draft decisions on the proposed items or, where no decisions are required, explanations of each proposed item on the agenda of the General Meeting of Shareholders. The proposal to supplement the agenda shall be submitted in writing by registered mail to AB "Rokiškio sūris" at the address Pramones st. 3, LT-42150 Rokiskis, or by e-mail at rokiskio.suris@rokiskio.com. The agenda shall be supplemented if the proposal is received not later than 14 days prior to the date of the General Meeting of Shareholders. 106 Shareholders holding shares representing at least 1/20 of the total votes shall have the right to propose new draft resolutions on the issues included in the agenda of the meeting. The draft resolutions shall be submitted in writing by registered mail to Rokiskio suris AB, Pramones st. 3, LT-42150 Rokiskis, or by e-mail to rokiskio.suris@rokiskio.com. The shareholders shall also have the right to propose draft resolutions on the items on the agenda of the Meeting in writing during the Meeting. Shareholders attending the General Meeting of Shareholders shall be registered in the register of shareholders. This list shall indicate the number of votes attached to each shareholder's shareholding. A person attending a General Meeting of Shareholders and entitled to vote must produce proof of identity. A person who is not a shareholder shall, in addition to this document, produce a document confirming his/her right to vote at the General Meeting. The requirement to provide proof of identity shall not apply to voting by written ballot in the form of a single ballot paper. The form of the general voting form is available on the Company's website at www.rokiskio.com under "Investors". If the shareholder so requests, the company shall, not later than 10 days before the general meeting, send the general ballot paper by registered mail or deliver it personally by hand and by signature free of charge. The completed postal ballot paper shall be signed by the shareholder or by his/her authorised representative. The completed and signed blank ballot paper and the document confirming the right to vote shall be submitted to the company in writing not later than on the last working day before the meeting, by registered post to Pramones st. 3, LT-42150 Rokiskis, or by hand delivery to the company on working days at the registered office of the company to the address indicated above. Only fully paid-up shares confer the right to vote at other General Meetings. Each share carries one vote at a general meeting of shareholders. The General Meeting of Shareholders has the exclusive right to: 107 1) amend the company's articles of association; 2) change your company's registered office; 3) elect the members of the Supervisory Board, or, in the absence of a Supervisory Board, the members of the Management Board, or, in the absence of a Supervisory Board or a Management Board, the Chief Executive Officer of the company; 4) to dismiss the Supervisory Board or its members, as well as the Management Board or its members elected by the General Meeting of Shareholders and the Company's CEO; 5) to appoint and recall an auditor or audit firm to audit the annual financial statements, and to determine the terms of remuneration for audit services; 6) decide on the approval of the remuneration policy for public limited liability companies whose shares are admitted to trading on a regulated market; 7) determine the class, number, nominal value and minimum issue price of shares to be issued by the company; 8) to adopt a decision to convert shares of one class of the company into shares of another class, and to approve the description of the procedure for the conversion of shares; 9) to decide to change the number of shares of the same class issued by the company and the nominal value per share without changing the amount of the share capital; 10) approve the annual accounts; 11) decide on the allocation of profits (losses); 12) decide on the establishment, use, reduction and elimination of reserves; 13) approve the interim financial statements drawn up for the purpose of deciding on the distribution of dividends for a period of less than one financial year; 14) to decide on the granting of dividends for a period of less than a financial year; 15) decide to issue convertible bonds; 16) decide to withdraw the pre-emptive right of all shareholders to acquire shares or convertible bonds of a particular issue of the company; 17) to decide to increase the share capital; 18) to take a decision to reduce the authorised capital, except for the exceptions provided for in the Law on Joint Stock Companies; 19) to decide on the acquisition by the company of its own shares; 20) to decide on the award of Shares to employees and/or members of the organs, 21) approve the rules for the award of Shares; 22) decide on the reorganisation or separation of the company and approve the terms of the reorganisation or separation; 23) decide to reorganise the company; 24) to take decisions on the restructuring of the Company in the cases set out in the Law on Corporate Restructuring; 25) to take a decision to liquidate the company, to cancel the liquidation of the company, except for the exceptions set out in the Companies Act; 26) to elect and remove the company's liquidator, except for the exceptions set out in the Companies Act. The General Meeting of Shareholders may also decide on other matters falling within its competence under the company's Articles of Association, provided that such matters are not within the competence of other organs of the company under the Companies Act and that they are not essentially functions of the management bodies. A resolution of the General Meeting of Shareholders shall be deemed to have been passed when more shareholders vote in favour of it than against it, with the exception of items 1, 6, 7, 8, 9, 11, 12, 14, 15, 17, 18, 21, 22, 23, 24, 25 above, which shall be decided by a 2/3 (two-thirds) vote of the total number of shares held by all the shareholders present at the Meeting, and for item 16, the decision shall require 3/4 (three-quarters) of the votes of all the shares of the shareholders present and entitled to vote at the General Meeting of Shareholders. The Company's General Meetings of Shareholders were convened in 2024: During 2024, two General Meetings of Shareholders of Rokiskio suris AB was convened on the initiative and decision of the Board of the Company. At the General Meeting of Shareholders of the Company held on 30 April 2024, the shareholders were presented with the 2023 consolidated management report of AB Rokiškio sūris and the auditor's report on the 2023 consolidated financial statements and the management report, the audit committee's report was approved, the sets of consolidated and Company 2023 financial statements were approved, and 2023 financial statements of Rokiskio suris AB and Rokiskio suris AB were approved. The distribution of the Company's profits, a dividend of EUR 0.15 per ordinary registered share (total dividend of EUR 5,251,004.40) and EUR 36 thousand in bonuses to the members of the Board; a decision was taken to buy back up to 10% of the Company's shares in 2023. On 27 June 2024, the General Meeting of Shareholders of the Company decided to reduce the authorised capital of AB Rokiškio sūris by cancelling the Company's ordinary registered shares, to approve a new version of the Company's Articles of Association, and to buy back up to 10% of the Company's own shares. The General Meetings of Shareholders of Rokiskio suris AB held in 2024 were attended by the Chief Executive Officer of the Company, the Chairman of the Board of Directors of the Company and the CFO of the Company. 108 69. The Board of Directors of the Company The Board is the collegiate management body of the Company, consisting of 6 (six) members. The members of the Board shall be elected and recalled by the General Meeting of Shareholders in accordance with the procedure established by the Companies Law. The members of the Board shall elect the Chairman of the Board. The number of terms of office of a member of the Board shall be unlimited. Only a natural person may be elected as a member of the Board. A member of the Supervisory Board of the Company (if the Company would have a Supervisory Board) and a person who is not entitled to hold such office under the law shall not be a member of the Management Board. The powers of the members of the Management Board are defined in the Companies Act and the Articles of Association of the Company. If the Board is dismissed, resigns or otherwise ceases to hold office before the end of its term of office, a new Board shall be elected for a new term of office. If individual Board members are elected, they shall be elected only until the end of the term of office of the existing Board. The Board can take decisions and a meeting will be considered to have taken place when 2/3 or more of the members of the Board are present. Members of the Board who have voted in advance shall be deemed to be present at the meeting. A decision of the Board shall be adopted by a greater number of votes in favour than against. The Board held 8 meetings during 2024. (4 Board meetings in 2023). All Board meetings were held remotely. All Board meetings were attended by all Board members. All Board meetings were held in accordance with the pre-arranged Board meeting schedule. During the meetings, the Board approved the Company's 2023 consolidated and Company financial statements and management report, as well as the consolidated report and consolidated financial statements for the first half of 2024, proposed to the General Shareholders' Meeting for approval the 2023 profit distribution project, proposed a project for the repurchase of treasury shares and approved the Company's remuneration report, which has been submitted to the General Shareholders' Meeting for approval. The Board also analysed the reports of the Management and Audit Committees and decided on the distribution of bonuses. The members of the Board of Directors are paid bonuses for their work on the Board in accordance with the procedure laid down in Article 59 of the Law on Joint Stock Companies. The amount of royalties depends on the Company's performance. The General Meeting of Shareholders shall decide on the payment of bonuses. In 2024 (for the year 2023), the Company granted bonuses of EUR 36 thousand to the members of the Board. There are no other additional payments for the Chairman of the Board in relation to the incentive scheme. Members of the Board of Rokiskio suris AB : (Elected at the Extraordinary General Meeting of the Company on 10.12.2021) Antanas Trumpa - Chairman of the Board of the Company (since 13.12.2017) Work experience Rokiskio suris AB has been operating since 1966. 1971 - 2017 Head of the Company (Director). Education 1966 Kaunas Polytechnic Institute, specialist in food industry machinery and apparatus, qualified as a mechanical engineer. In 1979 he defended his thesis "Organisation of the work of vacuum machine" at Kaunas Polytechnic Institute, for which he received the degree of Candidate of Technical Sciences on 12 October 1994. The doctorate degree was awarded by the Lithuanian Science Council on 1994. Shares in Rokiskio suris AB Directly owns 2,378,755 shares (6.63 % of the authorised capital and votes) Together with related parties, 29,837,114 shares (81,32 % of the authorised capital and votes). Involvement in other companies Chairman of the Board of Rokiskio pienas UAB (company code 300561844, registered office address Pramones st. 8, Utena) and Rokiskio pieno gamyba UAB (company code 303055649, registered office address Pramones st. 8, Utena). A shareholder of Pieno pramones investiciju valdymas (company code 173748857, address Pramones st.3, Rokiskis), holding 5.211 units, i.e. 55,76 % of the shares and votes of UAB Pieno pramonės investi valdymas. 109 Darius Norkus - Member of the Board of the Company. Deputy Chairman of the Board. Member of the Board since 2008 (re-elected for a new 4-year term of office at the Company's General Meeting of Shareholders on 10.12.2021). Work experience Since 2001 Sales and Marketing Director Rokiskio suris AB (company code 173057512, address Pramonss st.3, Rokiskis). Education Kaunas University of Technology, graduated engineer (1993). Baltic Management Institute, Master's degree in Business Administration (EMBA programme, 2000). Shares in Rokiskio suris AB No shares. Involvement in other companies A shareholder of Pieno pramones investiciju valdymas UAB (company code 173748857, address Pramones st. 3, Rokiskis), holding 4.07 % of the shares and votes of Pieno pramones investiciju valdymas UAB. Director of DairyHub.LT UAB (company code 305831304, address Kauno st. 65, Ukmerge). Has no shares in this company. Paul M Campbell - Independent member of the Company's Board. (Elected for a new 4-year term of office at the Company's General Meeting of Shareholders on 10.12.2021). Work experience Director and owner of Osmotics Consulting Ltd. "Osmotics Consulting provides dairy and other agricultural companies with strategic, M&A, management and financial advice. Paul has over 35 years of experience in general management, setting up and managing international joint ventures, marketing, engineering and finance. Worldwide, Paul has worked in Australia, USA, Japan, Latin America, Russia, China, India, Europe and North Africa. Paul M. Campbell currently lives in London. Education University of Canterbury, New Zealand, Chemical and Industrial Engineering. Massey University in New Zealand, Diploma in Dairy Science and Technology. Shares in Rokiskio suris AB He does not own shares in the Company. Participation in other activities There is no information on involvement in other companies. 110 Ramūnas Vanagas - Member of the Board of Directors of the Company. Member of the Board since 2006 (re-elected for a new 4-year term of office at the Extraordinary General Meeting of Shareholders of the Company on 10.12.2021) Work experience Since 2005 Development Director of Rokiskio suris AB (company code 173057512, address Pramones st. 3, Rokiskis). From 2020 Director of Milk Purchasing for Lithuania at Rokiskio suris AB (company code 173057512, address Pramones st.3, Rokiskis). Education Lithuanian Academy of Agriculture, economics and organisation. Shares in Rokiskio suris AB No shares. Involvement in other companies Shareholder of Pieno pramones investiciju valdymas UAB, holds 4.07 % of the shares and votes of Pieno pramones investiciju valdymas UAB (company code 173748857, address: Pramones st. 3, Rokiskis); Member of the Board of the Latvian company SIA Jekabpils piena kombinats (company code 45402008851, registered office address Akmenu iela 1, Jekabpils, Latvia), no shares. Jonas Vaičaitis - Independent Member of the Board of Directors of the Company. (Elected for a new 4-year term of office at the Company's General Meeting of Shareholders on 10.12.2021). Work experience 1992-2018 m. Head of Branch, SEB Bank AB, Senior Project Manager, Client Department. Education Higher engineering education, Kiev Polytechnic Institute. Shares in Rokiskio suris AB No shares. Involvement in other companies It is not involved in the activities of other companies. Thomas Jan de Bruijn – Member of the Board. (until the end of the current term of office (10.12.2025), elected at the Extraordinary General Meeting of Shareholders of the Company on 07.10.2022). Work experience M&A consultant at Deloitte (2011-2017) Head of M&A Fonterra Europe (2017-2019) Head of Supply Fonterra Europe (2019-2021) Commercial and Partnerships Director Fonterra Europe (2021-2024) Currently: Director Strategy & Partnerships @ HZPC Education Master's degree in Strategic Management (Rotterdam RSM University) Shares in Rokiskio suris AB No shares. Involvement in other companies There is no information on involvement in other companies. Company director: 111 For the company is headed by the Chief Executive Officer (Director) of the Company. The Chief Executive Officer (Director) of the Company is the Company's sole management body, which organises the day-to-day business activities of the Company, considers and decides on the Company's long-term strategic plan and business plan. In the Company's relations with other persons, the Director shall act on behalf of the Company with sole authority. The company's CEO attends all General Meetings of Shareholders (including those held during the reporting period). Director The duties and powers of the Director are defined in the Law on Joint Stock Companies of the Republic of Lithuania and the Articles of Association of the Company. Details of the Company's CEO: Dalius Trumpa - Head of the Company (CEO) (Appointed by the Board of the Company as of 01.01.2018) Work experience Rokiskio suris AB (company code 173057512, address Pramones st.3, Rokiskis) has been operating since 1991. 2002-2006 Production Director of Rokiskio suris AB. 2007-2017 Deputy Director of Rokiskio suris AB. CEO of Rokiskio suris since 01.01.2018. Since 2007.01.02 Director of the subsidiary Rokiskio pienas UAB (company code 300561844, registered office address Pramones st.8, Utena). Since 29.04.2013 Director of the subsidiary Rokiskio pieno gamyba UAB (company code 303055649, registered office address Pramones st.8, Utena). Education Kaunas University of Technology, Food Industry Machinery and Machine, Mechanical Engineer. Shares in Rokiskio suris AB Does not hold shares directly in Rokiskio suris AB. Together with related parties - 29,837,114 shares (81.32 % of the authorised capital and votes) Involvement in other companies Shareholder of Rokvalda UAB (company code 300059165, address Basanaviciaus st.16A-125, Vilnius), holding 100% of the shares and votes. Since 2010 Chairman of the Board of the Latvian company SIA Kaunata (company code 240300369, registered office address Rogs, Kaunata pag., Rezeknes nov., Latvia). Does not own shares in this company. Since 11 December 2013 Director of SIA RSU Holding (company code 40103739795, business address Elizabetes iela 45/47, Riga). Holds 92 % of the shares of SIA RSU Holding. The shareholder of Pieno pramones investiciju valdymas UAB (company code 173748857, address Pramones st.3, Rokiskis) holds 27.97 % of the shares and votes of Pieno pramones investiciju valdymas UAB. 112 70. Committees of the Company Audit Committee of Rokiskio suris AB: The Company's Audit Committee is composed of 3 members, 2 of whom are independent. The term of office of the members of the Audit Committee is 4 years. The members of the Audit Committee shall be elected by the General Meeting of Shareholders on the recommendation of the Board of Directors of the Company. Members of the Audit Committee of Rokiskio suris AB: 1. Kestutis Gataveckas - Director of Perlas Finance UAB (independent member). Does not hold any shares in Rokiskio suris AB. 2. Vilmantas Peciura - Director of Virenda UAB (independent member). Does not hold any shares in Rokiskio suris AB 3. Rasa Zukauskaite - (employee of the Finance Department of Rokiskio suris AB). Has 2 shares in Rokiskio suris AB. The term of office of the members of the Audit Committee ends on 30 April 2025. The Audit Committee is a collegial body that takes its decisions at meetings. The Audit Committee may take decisions and a meeting shall be deemed to have taken place when at least two (2) members of the Committee are present. A decision shall be adopted by the affirmative vote of at least two (2) members of the Audit Committee present at the meeting. The functions, rights and duties of the Audit Committee shall be regulated by the Regulations on the Establishment and Activities of the Audit Committee of Rokiskio suris AB, approved by the General Meeting of Shareholders of the Company, as well as by other documents regulating the activities of the Audit Committee. The main functions of the Audit Committee: 1. Monitor the process of preparing the financial statements of the Company and its Subsidiaries; 2. Monitor the effectiveness of the Company's internal control, risk management and internal audit systems; 3. To make recommendations to the Company's Board on the selection of the external audit firm and to monitor the audit process; 4. Monitor the external auditor's and audit firm's compliance with the principles of independence and objectivity; 5. To inform the Company's Board of Directors of significant deficiencies in internal control over financial reporting identified by external and internal audit and to make recommendations for remediation; 6. To act honestly and responsibly for the benefit and welfare of the Company and its shareholders. The Audit Committee held 3 meetings in 2024 to discuss the principles for the preparation of the 2023 consolidated financial statements and the conclusions reached, the process for the preparation of the 2024 half-year consolidated financial statements, the main risks, the impact of war in Ukraine, the measures taken to minimise risks, the application of the accounting principles, and the conclusions reached. The Audit Committee was also briefed on the Anti-Money Laundering and Anti-Terrorist Financing Policy and discussed the company's internal control procedures and the risks related to the prevention of money laundering and terrorist financing. The Audit Committee reported on their functions, i.e. the preparation of the financial statements of the Company and its subsidiaries, the functioning of the Company's internal control risk management and internal audit systems. 113 The audit of the 2024 financial statements of Rokiskio suris AB Group was performed by independent international audit firm BDO auditas ir apskaita, UAB. During a meeting with BDO auditas ir apskaita, UAB on 15 January 2024, the audit team discussed a summarised audit plan setting out the stakeholders' and BDO auditas ir apskaita, UAB's overall understanding of the current situation, a description of the main risk factors, the reporting of the ESEF 53, the audit plan of the external auditors and other issues. The Audit Committee approved the draft terms of reference for the audit services and had no comments to make. In accordance with the requirements of the Law on Audit of the Republic of Lithuania, the audit firm provided the Audit Committee with a written confirmation of the independence of the audit firm. The Audit Committee has not identified any instances of the provision of services that are contrary to the laws on auditing of the Republic of Lithuania and the principles of professional ethics of auditing and that may affect the independence of the audit firm. There are no other committees in the company. 71. Management of the Company Members of the company's management Responsibilities Name, surname In office since CEO Dalius Trumpa 2018-01-01 Director of Finance Antanas Kavaliauskas 2002-05-01 Milk Purchasing Director Ramunas Vanagas 2020-01-01 Acting Director of Logistics Ramunas Kubilius 2024-02-20 Sales and Marketing Director Darius Norkus 2001-07-18 Management bonus system: Members of the Company's management receive a salary and variable components of remuneration depending on the Company's performance, market conditions and other factors. The Group does not have any management bonus schemes in place. 72. Staff The average number of employees of the Rokiskio suris AB Group in 2024 is 1,155, a decrease of 4.15% or 50 employees compared to 2023 (1,205). The decrease in the number of employees is due to the reduction of the raw milk collection points, which resulted in a decrease in the number of milk collection point managers and logistics department employees. The number of staff increases slightly during the summer season when more raw milk is purchased. In 2024, 76.7% of the Company's total workforce are labourers (77.5% in 2023), 22.8% are professionals (22.0% in 2023); number of management staff 6 (6 managers in 2023). Group employees by category 114 Employee group Average number of employees Change 2024 2023 (%) Managers 6 6 0 Specialists 263 265 -0.75 Workers 886 934 -5.14 Total 1,155 1,205 -4.15 Functional directors are assigned to the company's senior management. As at 31 December 2024, 61.4% of the employees in the Rokiskio suris AB Group were male and 38.6% were female. (31 December 2023. 60.3 % and 39.7 % respectively). The average age of employees in the Company's group is 48 years. In 2023, the average age of employees was as follows also 48 years old. The Company has highly qualified employees, of which: higher education - 25.02% (24.98% in 2023); post- secondary education - 36.97% (37.51% in 2023); secondary education - 36.71% (35.93% in 2023); incomplete secondary education - 1.30% (1.58% in 2023). Rokiskio suris AB Group staff education Education 2024 2023 Change, % Higher education 289 301 -3.99 Higher education 427 452 -5.53 Secondary 424 433 -2.08 Unfinished secondary education 15 19 -21.05 115 Remuneration system The company has an efficient and fair remuneration system to attract, retain and motivate staff. All employment contracts with the Company's employees, including managers, are concluded in accordance with the requirements of the Labour Code of the Republic of Lithuania. Employees are recruited and dismissed in accordance with the requirements of the Labour Code. Average monthly earnings of Rokiskio suris Group by employee group 2024 2023 Change, % Managers 3,378 3,313 1.96 Specialists 2,442 2,066 18.20 Workers 2,237 1,944 15.07 Group average 2,288 2,150 6.42 The average monthly salary is calculated in accordance with Government Resolution No 496, 21.06.2017. The remuneration paid to employees of Rokiskio suris AB Group consists of: 1) the fixed remuneration you receive for the work you do - the monthly salary stipulated in your contract; 2) piece rates: for shop floor workers, sales figures, etc. Warehouse workers are remunerated according to the amount of actual work performed and the approved rates; 3) Variable remuneration: in accordance with the provisions of the incentive fund approved in the collective agreement. The Company has a remuneration system in place since 2018, with variable remuneration components determined by the Company, depending on the Company's performance, market conditions and other factors. The variable remuneration components are allocated to each division in accordance with the approved functional management system. These remuneration arrangements shall be approved by the CEO of the Company. Each of the Company's production workshops or departments has an approved procedure for the allocation of the incentive pool, which includes performance criteria and incentives for all employees. Performance appraisal is one of the most important tasks of the Company in order to organise work as efficiently as possible, to achieve the objectives set, to foster positive relations between managers and their subordinates, and to increase the motivation of employees. Social dialogue 116 As of 2018, the Company has an elected Labour Council with 11 members. The Council is established for a three-year term of office, starting from the beginning of the Council's mandate. At the end of the term, the Labour Council was re-elected in August 2024 for another three-year term. Employees of Group companies have the right to participate in trade union activities. The companies have a trade union committee which defends the labour, economic and social rights and interests of its members, defends the right to employment and social security of its members, takes care of the development of professional qualifications, develops professional ethics, and seeks to increase the wages and other incomes of workers in the food industry. The Collective Agreement was approved in September 2020 and renewed in April 2024, improving the existing guarantees for employees. The purpose of this Collective Agreement is to create the conditions for a harmonious collective activity, to guarantee a level of work, remuneration, health and safety and other working conditions for the various categories of employees that is better than that provided for by the laws of the Republic of Lithuania, governmental decrees and regulations, and to provide better labour and social guarantees for the Company's employees. The following additional guarantees are foreseen for employees: A worker with a disabled child receives a material allowance of 1 minimal monthly salary (MMA) once a year; A funeral allowance is paid to employees of the Company in the event of the death of a family member (spouse, parent, child); In the event of the death of an employee of the Company, a one-off funeral allowance is granted to the family of the employee; On the occasion of work anniversaries (20th, 25th, 30th, 35th, 40th, 45th, 50th), an additional allowance is paid to employees of the Company; Support is provided to the Company's employees with serious and prolonged illnesses and injuries; Company employees, employees' family members, employees who have worked for the Company and retired employees are granted a discount for medical treatment at the Company's preventive health centre; Unpaid leave provided for in the LC for the marriage of an employee, for the attendance of an employee at the funeral of a deceased family member, shall be paid in accordance with the general procedure for granting leave. In addition, leave is granted for the marriage of employees' children and for the death of the parents of the employee's spouse. The rights and obligations of the Company's employees are set out in their job descriptions. There are no specific rights and obligations in the employment contracts. During 2024, 235 employees of the Company Group benefited from the social guarantees of the Material Incentive and Benefits Procedure in force prior to the Collective Bargaining Agreement and subsequently of the Collective Agreement. Developing competences The development of Rokiskio suris AB staff and the improvement of special and general skills is one of the company's top priorities, as only educated employees with the right knowledge and experience can create a quality product. Training plans are drawn up annually, taking into account the Company's objectives and the adequacy of the staff's competences to meet these objectives. The Group's employees are provided with opportunities to improve their knowledge and skills at various training courses, seminars and conferences, and the Company supports the acquisition of professional education at national universities, colleges or other qualifying educational institutions. A strong emphasis is placed on learning foreign languages. 117 The company continuously trains its employees internally, taking into account the nature of the work and the requirements of the workplace and product quality. In 2024, distance training was provided to employees on the basic principles of sustainability. Rokiskio suris AB also organises special courses and training for farmers in the country in order to ensure that they successfully take care of the health of their cow herds, properly maintain milking, cooling and storage equipment, and modernise their dairy farm. A modern dairy farm, milk quality and herd health are key to the success of a dairy business. The Human Resources Plan 2025 reflects a commitment to ensure that the company's strategy and objectives are consistently delivered through its people, who are not only the tools to achieve the objective, but also key partners and ambassadors who enhance the company's reputation in the public arena. In today's business environment, where demands and challenges are changing rapidly, a company's success depends on its ability to attract, retain and develop the highest calibre professionals. Human resources are becoming a decisive factor in the competitive marketplace and a structured approach to this area is needed. Code of Ethics The Company's activities are based on internationally recognised human and workers' rights, including the International Bill of Human Rights and the principles of fundamental rights as set out in the International Labour Organisation's Declaration on Fundamental Principles and Rights at Work, the principles of socially responsible business conduct, and the principles of transparency, reliability and honesty. These principles are set out in the company's Code of Conduct, which is communicated to every employee. For more information on social aspects, see the Sustainability Report (Social area). 73. Information on agreements between the Company and members of its organs, members of committees formed or employees providing for compensation in the event of their resignation or dismissal without just cause or if their employment is terminated as a result of a change of control of the issuer There are no agreements between the Company and the members of the Board or employees providing for compensation in the event of their resignation or dismissal without just cause, or in the event of termination of their employment as a result of a change of control of the Company. All employment contracts with the Company's employees, including members of the Company's management, are concluded in accordance with the requirements of the Labour Code of the Republic of Lithuania. The Company does not provide for any additional share-based payments. INFORMATION ON RELATED PARTY TRANSACTIONS AND MATERIAL ARRANGEMENTS 74. Related parties of Rokiskio suris AB Group The group of persons acting in concert consists of Pieno pramones investiciju valdymas (30.23% of the Company's share capital and votes), SIA RSU Holding (27.74% of the Company's share capital and votes), Antanas Trumpa and his family members (23.35% of the Company's share capital and votes). The group of persons acting in concert owns 81.32% of the Company's share capital and votes. 118 The remaining 18.68% of the Company's shares and votes are held by other small Lithuanian and foreign individuals and legal entities. Pieno pramones investiciju valdymas UAB is controlled by Antanas Trumpa (as the main shareholder, holding 55.76 % of the shares and votes in Pieno pramones investiciju valdymas UAB) and Dalius Trumpa, holding 27.97 % of the shares and votes in Pieno pramones investiciju valdymas UAB. RSU Holding Ltd. is controlled by Dalius Trumpa (holding 92 % of the shares and votes of RSU Holding Ltd.). Certain cooperative companies involved in milk production are considered related parties of the Company as the Company, through close family members of its directors and certain of its employees, can exercise significant influence over the day-to-day operations of these companies. 75. Related party transactions During 2024, the company did not have any transactions with related parties that meet the criteria in Article 372. All related party transactions included purchases of raw milk from related parties and sales of dairy products by related parties, see note to the Company's consolidated financial statements "Related party transactions". The transactions were at arm's length, are in the ordinary course of business and do not have a material impact on the Company. The Company considers the related parties to be Dzukijos pienas KB, company registration number 300058288, registered office at Varanauskas km., Krokialaukis sen. In 2023, the companies in the Fonterra group were considered related parties and in 2024, after Fonterra withdrew from the share capital of AB Rokiškio sūris, since 1 of October 2024 it was no longer considered a related party. All transactions with the Fonterra group companies were independent and on market terms. Related party transactions are disclosed in note 31 to the Company's consolidated financial statements for 2024. 76. Information on harmful transactions entered into on behalf of the issuer During the reporting period, there were no harmful transactions that were inconsistent with the Company's objectives, were not in line with normal market conditions, were prejudicial to the interests of the shareholders or other groups of persons, and had or may in the future have an adverse effect on the Company's business or results of operations. There were also no transactions resulting from conflicts of interest between the duties of the Company's directors, controlling shareholders or other related parties to the Company and their private interests and/or duties. 77. Prevention of corruption and bribery Corruption is intolerable in the Group. If such cases are detected, disciplinary penalties could be imposed on the employee and reported to the relevant law enforcement authorities. During the reporting year, the management did not identify any cases of corruption. 119 OTHER INFORMATION 78. Audit information The consolidated balance sheet of Rokiskio suris AB Group as at 31 December 2024 and the related consolidated statements of comprehensive income, cash flows and changes in equity for the year then ended, as well as the assessment of the management report, have been audited and the assessment of the management report has been carried out by BDO auditas ir apskaita UAB. The General Meeting of Shareholders selects the audit firm for the audit of the annual financial statements and sets the terms of remuneration. As the Company is listed and maintains its accounts in accordance with International Financial Reporting Standards, the Company's shareholders are required to appoint an international audit firm. BDO auditas ir apskaita UAB, is the sole authorised representative of the international group of audit, accounting and consulting companies BDO International in Lithuania. BDO is a member of BDO International, one of the world's largest accounting, auditing and consulting organisations, with more than 1,700 offices in 167 countries. The Rokiskio suris AB Group will pay a fee of EUR 111,000 + VAT to the audit firm for the audit of the separate and consolidated IFRS financial statements and management report for 2024. 79. Data on publicly available information The information on the 2024 public announcement of Rokiskio suris AB is available on the company's website www.rokiskio.com in the Investors > Material events section. Summary of information published: Date of publication Brief description of the report 18.04.2024 On April 30, 2024, the Ordinary General Meeting of Shareholders of AB Rokiskio suris is convened 18.04.2024 Strategic investor Fonterra decided to withdraw from the share capital of AB Rokiškio sūris 30.04.2024 Resolutions supplemented by the Ordinary General Meeting of Shareholders of Rokiskio suris AB convened on 30 April 2024 30.04.2024 The audited annual information of Rokiskio suris AB for the year 2023 02.05.2024 Ex-day dividend payment of AB Rokiškio sūris 16.05.2024 Regarding purchase of own shares of Rokiskio suris AB 23.05.2024 AB "Rokiškio sūris" dividend payment procedure for the year 2023 24.05.2024 Rokiskio suris AB completed purchasing of own shares 28.05.2024 Information on the shares issued by Rokiskio suris AB and the votes granted 28.05.2024 Notification on the disposal of voting rights 05.06.2024 On June 27, 2024, the General Extraordinary Meeting of Shareholders of AB Rokiskio suris is convened 27.06.2024 Resolutions supplemented by the Extraordinary General Meeting of Shareholders of Rokiskio suris AB convened on 27 June 2024 30.08.2024 Six-months results of AB Rokiskio suris Group for 2024 10.09.2024 A new version of the Articles of Association of Rokiškio sūris AB is registered 11.09.2024 Loss of treasury shares of Rokiškio sūris AB 11.09.2024 Information on the shares issued by Rokiškio sūris AB and the votes granted 18.09.2024 On the acquisition of own shares of Rokiškio sūris AB 27.09.2024 Rokiskio suris AB acquires own shares 27.09.2024 Information on the shares issued by Rokiskio suris AB and the votes granted 01.10.2024 Notification on the disposal of voting rights 30.12.2024 Dates of publication of AB "Rokiškio sūris" Group results for 2025 120 The Company publishes public information by uploading it to the Central Database of Regulated Information, publishing it on the website of Nasdaq Vilnius AB at http://www.nasdaqbaltic.com, and uploading it to the Company's website at www.rokiskio.com GOVERNANCE REPORT OF ROKISKIO SURIS AB Summary of Governance report According to the Articles of Association of Rokiskio suris AB, the organs of the Company are the General Meeting of Shareholders, the Board and the CEO. The Company does not have a Supervisory Board. The supervisory functions provided for in the Law on Joint-Stock Companies of the Republic of Lithuania are performed by the Board. The Board is composed of 6 members, two of whom are independent. The Board elects and dismisses the Company's CEO, determines his/her remuneration and follows the remuneration policy. The Company has one committee, the Audit Committee. The members of the Audit Committee are elected by the General Meeting of Shareholders on the recommendation of the Board of the Company. The Company's Audit Committee is composed of 3 members, 2 of whom are independent. The Company's governing bodies are obliged to act in the best interests of the Company and its shareholders, to comply with the laws and regulations and to be guided by the Company's Articles of Association. Rokiskio suris AB Corporate Governance Report prepared in accordance with the Law on Companies and Groups Financial Reporting of the Republic of Lithuania 1. Reference to the applicable corporate governance code and where it is publicly available and/or reference to any relevant publicly available information on corporate governance practices 121 The consolidated report for 2024, together with the Corporate Governance Report and the audited financial statements of the Company and its Group, is published on the Company's website www.rokiskio.com and on the website of the stock exchange Nasdaq Vilnius AB www.nasdaqbaltic.com 2. Where the provisions of the applicable corporate governance code are deviated from and/or not complied with, the provisions deviated from and/or not complied with and the reasons for this Information on compliance and/or non-compliance with the provisions of the Corporate Governance Code is presented in a structured table (No.2). 3. Information on the extent and management of risks - a description of the management of risks associated with the financial statements, mitigating measures and the entity's internal control system The Company shall disclose information on the extent of risk and risk management, risk mitigation measures and the internal control system in place at the Company in paragraphs 49-50 to 51 of the consolidated management report for 2024. 4. Information on significant direct or indirect shareholdings Information on significant direct or indirect holdings is provided in paragraph 64 of the 2024 consolidated management report. 5. Information on transactions with related parties as set out in Article 372 of the Law on Joint Stock Companies (specifying the parties to the transaction (legal form of the legal entity, name, code, the register in which the data concerning this person are collected and stored, the registered office (address) name of the natural person, the address for correspondence) and the value of the transaction) During 2024, the company did not have any related party transactions that meet the criteria in paragraph 372 . For further details, please refer to paragraph 77 of the 2024 Consolidated Management Report. 6. Information on shareholders with special control rights and a description of those rights The company has no shareholders with special control rights. 7. Information on any existing restrictions on voting rights, such as restrictions on the voting rights of persons holding a certain percentage or number of votes, time limits for the exercise of voting rights, or systems whereby the rights attached to the securities are separated from the security holder The Company is not subject to restrictions on voting rights. All shareholders have the same property and non-property rights (except for the Company's treasury shares, which have no voting rights). 8. Information on the rules governing the election and replacement of members of the board of directors and amendments to the articles of association The Company does not have rules governing amendments to the Company's Articles of Association and the election and replacement of members of the Company's Board. The Company's activities are governed by the Law on Companies of the Republic of Lithuania, the Company's Articles of Association and other legal acts. For further details see paragraphs 63 and 71 of the Company's 2024 Consolidated Management Report. 9. Information on the powers of the members of the Board 122 The members of the Board have not delegated any authority to others to perform the functions falling within the Board's competence. The members of the Company's Board act in accordance with the Companies Act, the Company's Articles of Association and the Board's Rules of Procedure. 10. Information on the competence of the general meeting of shareholders, the rights of shareholders and their exercise, unless this information is provided for by law Information on the competences, rights and exercise of the General Meeting of Shareholders, as well as on the procedures for organising shareholders' meetings, is provided in point 70 of the 2024 Consolidated Management Report. 11. Information on the composition of the management and supervisory bodies and their committees, and their activities and those of the chief executive The Company's information on the composition of the management and supervisory bodies and their committees, and the scope of their activities and the activities of the Company's Chief Executive Officer, is set out in paragraphs 71 and 73 of the 2024 Consolidated Management Report. 12. A description of the diversity policy for the election of the members of the company's management, governing and supervisory bodies, including aspects such as age, gender, education, professional experience, the objectives of the policy, how it has been implemented and the results achieved during the reporting period. If the diversity policy is not applied, the reasons for not applying it shall be explained The Company does not have a policy on diversity in the election of the CEO and the management and supervisory bodies. The requirements for candidates for nomination to the Company's governing bodies do not discriminate between candidates on the basis of age, gender, education or professional experience. The Company does not impose any restriction on persons standing for election on the grounds of sex or age. The main criterion for the election of members of the management bodies is the competence of the candidate. 13. Information on the remuneration of each member of the management or supervisory body (average remuneration paid during the reporting period, with separate reference to bonuses, allowances, royalties and other payments Members of the management bodies Number of people Total amounts accrued, (salaries and bonuses) thousand EUR TOTAL average per member, (salaries and bonuses) thousand EUR incl. average wage levels incl. average royalty rate incl. average size of bonuses Board members 6 120.65 20.11 14.16 5.95 0 Chief Executive Officer and Chief Financial Officer 2 70.02 35.01 35.01 0 0 Amounts and average amounts of money per member of the management bodies, assets transferred and guarantees granted to the members of the Board of Rokiskio suris AB, the Company's CEO and the Chief Financial Officer during 2024: 123 * Two members of the Board are employees of the Company. The amounts accrued and paid for 2024 (salaries) relate to employment. During the period under review, the Company did not make any loans, guarantees or transfers of assets to the members of the Board of Directors, the Chief Executive Officer or the Chief Financial Officer. 14. Details of any agreements between shareholders (substance, terms) On 13 October 2017, the Strategic Investment Agreement and the Shareholders' Agreement were signed between the Company's shareholders - Pieno pramones investiciju valdymas UAB, SIA RSU Holding, Antanas Trumpa and Ledina Trumpiene, Dalius Trumpa and Rasa Trumpiene, the Strategic Investor - Fonterra (Europe) Coöperatie U.A., and the Company - Rokiskio suris AB. The purpose of this agreement was to define the relationship between the parties in relation to the Company, to ensure joint action in the development of the Company and in the exercise of voting rights at General Meetings of Shareholders, to agree on specific conditions and restrictions on the disposal of the shares, and to enable the shareholders to protect their interests in their investment in the Company. The Strategic Investment Agreement was terminated in April 2024. Since that date, Fonterra (Europe) Coöperatie U.A. does not participate in any form of management. The Company has no record of any other agreements between shareholders. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE Rokiskio suris AB Company (hereinafter referred to as the "Company"), pursuant to Article 12(3) of the Securities Law of the Republic of Lithuania and Section 24.5 of the Listing Rules of Nasdaq Vilnius AB, discloses the extent to which it has complied with the Code of Corporate Governance of Companies Listed on Nasdaq Vilnius, and the specific provisions or recommendations thereof. In the event of non-compliance with the Code or any of its provisions or recommendations, it shall state which specific provisions or recommendations are not complied with and the reasons for non-compliance, as well as any other explanatory information as specified in this form. Governance report form of the Company For the year ended 31 December 2024 Structured table 2 PRINCIPLES/GUIDELINES YES /NO /NOT APPLICABLE COMMENTARY Principle 1: General Meeting of Shareholders, fair treatment of shareholders and shareholders' rights The corporate governance system should ensure fair treatment of all shareholders. The corporate governance system should protect shareholders' rights. 1.1 All shareholders should have equal access to the information and/or documents provided for in the legislation and should be able to participate in the adoption of decisions of importance to the company. Yes All shareholders have equal access to information and/or documents required by law and to participate in decisions of importance to the company. The Company provides information through the Central Regulated Information Database of AB Nasdaq Vilnius Stock Exchange in Lithuanian and English simultaneously. The information shall be published immediately and simultaneously, thus ensuring simultaneous provision of information to all. 1.2 It is recommended that a company's capital should consist only of shares that give their holders equal voting, ownership, dividend and other rights. Yes The Company's authorised capital consists of ordinary registered shares, giving all holders of the Company's shares equal voting, ownership, dividend and other rights. 1.3 It is recommended that investors should be given the opportunity to familiarise themselves with the rights attaching to new or existing shares in advance, i.e. before purchasing them. Yes The Company makes available to investors in advance the rights attaching to new or existing shares to be issued. 124 1.4 Exceptional transactions of major importance, such as the disposal of all or substantially all of the company's assets, which would effectively amount to a disposal of the company, should be subject to the approval of the General Meeting of Shareholders. Yes In accordance with the Company's Articles of Association, significant transactions, i.e. decisions on investment, transfer, lease, pledge and mortgage of fixed assets with a carrying amount exceeding 1/5 of the Company's authorised capital, decisions on guaranteeing or guaranteeing the performance of obligations of other persons exceeding 1/5 of the Company's authorised capital and decisions on the acquisition of fixed assets for a price exceeding 1/5 of the Company's authorised capital, do not require the approval of the Company's shareholders. These decisions (in accordance with the Company's Articles of Association) shall be approved by the Board. For very important exceptional transactions, such as the disposal of all or almost all of the Company's assets, the Company would be guided by the Law on Joint Stock Companies of the Republic of Lithuania as well as by other legal acts setting out the requirements for approval of such transactions. 1.5 The procedures for organising and participating in the General Meeting of Shareholders should ensure that shareholders have an equal opportunity to participate in the General Meeting of Shareholders and should not prejudice the rights and interests of shareholders. The choice of the place, date and time of the General Meeting of Shareholders should not preclude the active participation of shareholders in the General Meeting of Shareholders. In the notice convening the general meeting, the company should indicate the latest date on which proposed draft resolutions may be submitted Yes All shareholders of the Company shall be informed of the date, place and time of the General Meeting of Shareholders by publicly announcing the General Meeting of Shareholders, the agenda, and draft resolutions in advance in accordance with the procedure established by law, in the Central Regulated Information Base of the AB Nasdaq Vilnius Stock Exchange, in the electronic publication "Public Announcements of Legal Entities" issued by the Centre of Registers of Legal Entities, as well as in the Company's website www.rokiskio.com In the notice of the General Meeting of Shareholders, the Company shall indicate by when shareholders may supplement the agenda of the General Meeting of Shareholders and propose draft resolutions. 1.6 In order to ensure the right of shareholders living abroad to access information, it is recommended that, where possible, the documents prepared for the General Meeting of Shareholders be made available to the public in advance not only in the Lithuanian language, but also in English and/or in other foreign languages. It is also recommended that the minutes of the General Shareholders' Meeting after signing and/or the decisions adopted are made public not only in Lithuanian but also in English and/or other foreign languages. It is recommended that this information be published on the company's website. Not all documents may be made publicly available if their public disclosure would be detrimental to the company or would disclose the company's business secrets. Yes The documents prepared for the General Meeting of Shareholders, including the draft resolutions of the meeting, in accordance with the procedure established by the Law on Companies of the Republic of Lithuania, shall be published on the website of the Nasdaq Vilnius Stock Exchange and on the Company's website not later than 21 days prior to the General Meeting of Shareholders, and shall be made available to the shareholders for public inspection in Lithuanian and English. The resolutions approved by the General Meeting of Shareholders, including the financial statements, the audit report, the management report, amendments to the Articles of Association, etc., are publicly disclosed in Lithuanian and English through the Central Regulated Information Database of Nasdaq Vilnius and on the Company's website www.rokiskio.com. 1.7 Shareholders entitled to vote should be given the opportunity to vote at the shareholders' meeting in person, either present or absent. Shareholders should not be prevented from voting in advance in writing by completing a single ballot paper. Yes The Company's shareholders have the right to participate in the General Meeting of Shareholders both in person and through a representative, provided that the person has a proper power of attorney or a contract for transfer of voting rights has been concluded with him/her in accordance with the procedure established by the legislation, as well as the Company shall enable the shareholders to cast their votes by completing a general ballot paper, as provided for by the Law on Companies of the Republic of Lithuania. 1.8 In order to enhance shareholders' ability to participate in general meetings, it is recommended that companies should increase the use of modern technology to enable shareholders to participate and vote in general meetings by electronic means. In such cases, the security of the information transmitted must be ensured and the identity of the attendees and voters must be identifiable. No The Company does not comply with the provisions of this Recommendation as it is not possible to ensure the security of the information transmitted and the identity of the person who participated and voted cannot be established. 1.9 It is recommended to disclose in the notice of the draft decisions of the convened General Meeting of Shareholders the new nominations of the members of the collegial body, the remuneration proposed for them, the proposed appointment of the audit firm, if these matters are included in the agenda of the General Meeting of Shareholders. When a new member of the collegial body is proposed for election, it is recommended to disclose his/her educational background, work experience and other management positions held (or proposed to be held). Yes The company shall disclose in the draft resolutions, when giving notice of a general meeting of shareholders and if the agenda of the general meeting of shareholders includes the election of a new member of the collegial body or the appointment of an audit firm, the nominations of the proposed new members of the collegial body and the audit firm to be appointed. Information on candidates for the members of the collegial body shall be provided in advance by publishing this information on the website of the Nasdaq Vilnius Stock Exchange, on the website of Rokiskio suris AB www.rokiskio.com, or by publicly announcing it to the shareholders present at the General Shareholders' Meeting at the time of the meeting, if the shareholders whose shares represent at least 1/20 of the total number of votes nominate an additional candidate during the meeting. The company publicly discloses the position, experience and educational background of the collegiate body in its annual and six-monthly interim reports. 1.10 Members of the Company's collegial body, the Chief Executive Officers1 or other competent persons associated with the Company who are in a position to provide information relating to the agenda of the General Meeting of Shareholders should be present at the General Meeting of Shareholders. Proposed candidates for membership of a collegiate body should also attend the General Meeting if the election of new members is on the agenda of the General Meeting. Yes General Shareholders' Meetings are attended by members of the company's collegial body and the Chief Executive Officer. Proposed candidates for election to the collegiate body shall also be present if the election of new members is on the agenda of the General Meeting of Shareholders, except in special cases (e.g. if physical attendance at the meeting would be prevented due to quarantine regime or other important circumstances). Principle 2: Supervisory Board 2.1 Functions and responsibilities of the Supervisory Board The Supervisory Board should ensure that the interests of the company and its shareholders are represented, that it is accountable to the shareholders and that it exercises objective and impartial oversight of the company's activities and its management bodies, and that it makes regular recommendations to the management bodies. 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 honestly, diligently and responsibly in the best interests of the Company and its shareholders and represent their interests, taking into account the interests of employees and the public good. Not applicable According to the Articles of Association of Rokiskio suris AB, the Company has only one collegial body - the Management Board. There is no Supervisory Board in the Company. The shareholders of the Company have decided to delegate all management functions to a collegiate body, the Management Board. 2.1.2. Where the Supervisory Board's decisions may affect the interests of the company's shareholders differently, the Supervisory Board should treat all shareholders impartially. It should ensure that shareholders are adequately informed about the company's strategy, risk management and control, and the management of conflicts of interest. Not applicable See point 2.1.1. 2.1.3. The Supervisory Board should be impartial in making decisions relevant to the company's operations and strategy. The work and decisions of the members of the Supervisory Board should not be influenced by those who elected them. Not applicable See point 2.1.1 2.1.4. Members of the Supervisory Board should make clear their objection when they consider that a decision of the Supervisory Board could be detrimental to the company. Independent members of the2 Supervisory Board should: a) remain independent in their analysis and decision-making; b) neither seek nor accept any undue preferences that may cast doubt on the independence of the members of the Supervisory Board. Not applicable See point 2.1.1 2.1.5 The Supervisory Board should oversee that the company's tax planning strategies are designed and implemented in accordance with the law, in order to avoid perverse practices that are not in the long-term interests of the company and its shareholders, which could give rise to reputational, legal or other risks. Not applicable See point 2.1.1 2.1.6 The company should ensure that the Supervisory Board is provided with sufficient resources (including financial resources) to carry out its duties, including access to all relevant information and the right to seek independent professional advice from external legal, accounting or other specialists on matters within the competence of the Supervisory Board and its committees. Not applicable See point 2.1.1 2.2 Formation of the Supervisory Board The procedures for the composition of the Supervisory Board should ensure that conflicts of interest are properly managed, and that the company is governed efficiently and fairly. 2.2.1 The members of the Supervisory Board elected by the General Meeting of Shareholders should collectively ensure a diversity of qualifications, professional experience and competences, and strive for gender balance. In order to maintain an appropriate balance of qualifications among the members of the Supervisory Board, it should be ensured that the members of the Supervisory Board as a whole have a broad range of knowledge, views and experience to perform their tasks properly. Not applicable See point 2.1.1 2.2.2. Members of the Supervisory Board should be appointed for a fixed term, with the possibility of individual re-election, in order to ensure the necessary development of professional experience. Not applicable See point 2.1.1 2.2.3. Chairperson of the Supervisory Board should be a person whose current or former position would not be an obstacle to the impartial exercise of his/her duties. A former director or member of the management board of a company should not be immediately appointed as chairman of the Supervisory Board. Where a company decides not to comply with these recommendations, information should be provided on the measures taken to ensure the impartiality of the activity. Not applicable See point 2.1.1 2.2.4 Each member should devote sufficient time and attention to his/her duties as a member of the Supervisory Board. Each member of the Supervisory Board should undertake to limit his/her other professional commitments (in particular managerial positions in other companies) in such a way that they do not interfere with the proper performance of his/her duties as a member of the Supervisory Board. If a member of the Supervisory Board has attended less than half of the meetings of the Supervisory Board during the company's financial year, the company's shareholders should be informed. Not applicable See point 2.1.1 2.2.5. When the appointment of a member of the Supervisory Board is proposed, it should be disclosed which members of the Supervisory Board are considered independent. The Supervisory Board may decide that a particular member of the Supervisory Board, although fulfilling the criteria for independence, may not be considered to be independent because of particular personal or company-related circumstances. Not applicable See point 2.1.1 2.2.6 The amount of remuneration for the members of the Supervisory Board should be approved by the company's General Meeting of Shareholders for their activities and participation in the meetings of the Supervisory Board. Not applicable See point 2.1.1 2.2.7 The Supervisory Board should carry out an annual evaluation of its activities. This should include an assessment of the Supervisory Board's structure, organisation and ability to act as a group, as well as an assessment of the competence and effectiveness of each member of the Supervisory Board and an assessment of whether the Supervisory Board has achieved its stated performance objectives. The Supervisory Board should publish, at least once a year, relevant information on its internal structure and operating procedures. Not applicable See point 2.1.1 3. Principle: Board 3.1 Functions and responsibilities of the Board The Board should ensure the implementation of the company's strategy, as well as the proper governance of the company, taking into account the interests of shareholders, employees and other interest groups. 3.1.1 The Executive Board should ensure the implementation of the company's strategy, as approved by the Supervisory Board, if one is established. In cases where the Supervisory Board is not established, the Management Board is also responsible for approving the company's strategy. Yes The Company has only one collegiate body, the Board of Directors. The Company's Board is responsible for the proper strategic management of the Company (approving the Company's business strategy, approving the annual budget and performance targets, and making important decisions on the Company's organisational management structure as provided for by law). 3.1.2 The Management Board, as the collegial management body of the Company, shall perform the functions assigned to it by the Act and the Articles of Association of the Company and, in cases where the Company does not have a Supervisory Board, shall perform, inter alia, the supervisory functions provided for in the Act. In exercising the functions assigned to it, the Management Board should take into account the needs of the company, its shareholders, employees and other interest groups, as appropriate, with a view to building a sustainable business. Yes The Company is guided by a corporate strategic plan, according to which the mission of the governing bodies of the Company is to create and maintain a strong, competitive, financially capable and technically advanced company that creates and maximises shareholder value. According to the Company's information, all members of the Board of Directors act in good faith in the interests of the Company and its shareholders, are guided by the interests of the Company rather than their own interests or those of third parties, and endeavour to maintain their independence in their decision-making. 3.1.3. The Board should ensure compliance with the laws and internal company policies applicable to the company or group of companies to which it belongs. It should also establish appropriate risk management and control measures to ensure regular and direct accountability of management. Yes The Board ensures compliance with the law and the company's internal policies, both for the company and the Group. The company also has a risk management and control programme. Risk management is carried out by the Company's management. 3.1.4 The Board should also ensure that the company has in place the measures included in the OECD Good Practice Guidance3 on internal control, ethics and compliance to ensure compliance with applicable laws, regulations and standards. Yes The Company has adopted an Anti-Corruption Policy, which clearly and publicly declares its negative attitude towards bribery and corruption. The provisions of this policy apply to all employees, agents, intermediaries and suppliers of the Company. The Company has also adopted a Code of Ethics, a Human Rights Policy, an Equal Opportunities Policy, a Violence and Harassment Prevention Policy and a Personal Data Protection Policy. 3.1.5 When appointing a director of the company, the Board should take into account an appropriate balance of qualifications, experience and competence. Yes When appointing the company's CEO, the Board considers the candidate's qualifications, experience and competence. 3.1 Formation of the Management Board 3.2.1 The members of the Board elected by the Supervisory Board, or by the General Meeting of Shareholders in the absence of a Supervisory Board, should collectively ensure a diversity of qualifications, professional experience and competences, and strive for gender balance. In order to maintain an appropriate balance of qualifications among the members of the Management Board, it should be ensured that the members of the Management Board as a whole have a wide range of knowledge, views and experience to perform their tasks adequately. Yes The members of the Company's Board are elected by the General Meeting of Shareholders. The members of the Company's Board of Directors are qualified and competent to perform their functions and have many years of management experience. Among them, three independent board members have extensive experience in general management, marketing, setting up and managing international joint ventures. 3.2.2 The names of the candidates for election to the Board, their education, qualifications, professional experience, positions held, other relevant professional commitments and potential conflicts of interest should be disclosed, without prejudice to the requirements of the legislation on the processing of personal data, at the meeting of the Supervisory Board at which the Management Board or individual members thereof are to be elected. In the absence of a Supervisory Board, the information set out in this point should be provided to the general meeting of shareholders. The Board should compile the data referred to in this point on its members on an annual basis and present them in the company's management report. Yes Information on the candidates for the Company's Board shall be provided to the shareholders in accordance with the procedure established by the Law of the Republic of Lithuania on Joint-Stock Companies in the materials of the shareholders' meeting, which shall be made available to the shareholders in advance. Information on the members of the collegial management bodies (names, surnames, information on their education, qualifications, professional experience, participation in the activities of other companies, other relevant professional commitments) shall be provided in the Company's periodic reports and on its website. 3.2.3 All new board members should be familiarised with their duties, the company's structure and activities. Yes All new members of the company's board are briefed on their duties, the company's structure and activities. 3.2.4 Board members should be appointed for a fixed term, with the possibility of individual re-election, to ensure the necessary growth in professional experience and sufficiently frequent reconfirmation of their status. Yes The members of the Board are elected for a 4-year term. There is no limit to the number of terms. The members of the Board are elected by the General Meeting of Shareholders. Shareholders nominate and vote for candidates for the Board based on their own views as to which candidates are best placed to represent the interests of shareholders. 3.2.5 The Chairperson of the Board should be a person whose current or former position would not be an obstacle to the impartial conduct of business. In the absence of a Supervisory Board, a former director of the company should not be immediately appointed to the post of Chairman of the Board. Where a company decides not to comply with these recommendations, information should be provided on the measures taken to ensure the impartiality of the activity. No The Chairman of the Board of Directors of the company is the former CEO of the company. In appointing the former CEO as Chairman of the Board, the members of the Board took into account the former CEO's long-standing managerial experience and his competence for the position of Chairman of the Board. 3.2.6 Each member should devote sufficient time and attention to his/her duties as a Board member. If a member of the Board has attended less than half of the meetings of the Board during the company's financial year, the company's Supervisory Board should be informed, or, in the absence of a Supervisory Board, the general meeting of shareholders. Yes Members of the Company perform their assigned functions well: they actively participate in the meetings of the collegial body and devote sufficient time to the performance of their duties as a collegial member. A quorum of Board members is established at all Board meetings, which allows the Board to take decisions in a constructive manner. During 2024, the Board held 8 Board meetings. All Board meetings were held remotely. All Board meetings were attended by all Board members. 3.2.7. If, in the cases provided for in the Act, some of the members of the Board will be independent in the election of the Board where no Supervisory Board is established,4 , it should be published which members of the Board are considered independent. The board may decide that a particular member of the board, although fulfilling all the criteria for independence set out in the Act, cannot be considered independent because of particular personal or company-related circumstances. No As the company does not have a Supervisory Board, three independent members of the Board have been elected to the Board of the company and meet the criteria of independence set out in the Law on Public Limited Companies. The Board of Rokiskio suris AB consists of 6 members. Candidates to the Board may be nominated by shareholders whose shares carry at least 1/20 of the total votes. 3.2.8. The amount of remuneration to be paid to the members of the Board for their activities and participation in Board meetings should be approved by the company's general meeting of shareholders. Yes In accordance with the Law on Joint-Stock Companies of the Republic of Lithuania, the members of the Board of Directors are paid remuneration for their work on the Board of Directors by the decision of the General Meeting of Shareholders. The members of the Board of Directors do not receive any other remuneration for their activities and participation in meetings. 3.2.9 Board members should act honestly, diligently and responsibly in the best interests of the Company and its shareholders and represent their interests, taking into account other interest holders. They should not pursue personal interests in their decision-making, they should be subject to non-competition agreements and they should not take advantage of business information and opportunities that are relevant to the company's business to the detriment of the company. Yes According to the Company's information, all members of the Board of Directors act in good faith in the interests of the Company and its shareholders, are guided by the interests of the Company rather than their own interests or the interests of third parties, and endeavour to maintain their independence in their decision-making. 3.2.10. Each year the Board should carry out an evaluation of its own performance. This should include an assessment of the Board's structure, organisation and ability to act as a group, as well as an assessment of the competence and effectiveness of each member of the Board and an assessment of whether the Board has achieved its stated performance objectives. The Board should, at least once a year, publish relevant information on its internal structure and operating procedures, without prejudice to the requirements of the legislation on the processing of personal data. No The Company does not have a practice of evaluating the performance of the Board. As two members of the Board are members of the Company's management (functional directors of the Company) and one member of the Board is a former long-serving manager of the Company, the Board is considered to have sufficient organisation and ability to work as a group. Therefore, it does not carry out any assessment of competence and effectiveness. The other two members of the Board are independent members. 4. Principle 1: Working procedures of the Company's Supervisory Board and Management Board The company's procedures for the work of the Supervisory Board, if established, and the Management Board should ensure the effective work and decision-making of these bodies and promote active cooperation between the company's bodies. 4.1 Board and the Supervisory Board, if established, should work closely together for the benefit of both 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, if necessary, promptly inform the Supervisory Board on all matters of importance to the company, such as planning, business development, risk management and control, and compliance with company commitments. The Executive Board should inform the Supervisory Board of actual deviations of the business development from the previously formulated plans and objectives, indicating the reasons for this. No The Company does not have a Supervisory Board. The shareholders of the Company have decided to delegate all management functions to a single collegiate body, the Management Board. They believe that. that a single collegial body, the Management Board, is sufficient to ensure the effective management of the Company. 4.2 It is recommended that meetings of the Company's collegial bodies be held at appropriate intervals in accordance with a pre-approved schedule. It is up to each company to decide on the frequency of meetings of its collegial bodies, but it is recommended that they be held at a frequency that ensures uninterrupted discussion of key corporate governance issues. Meetings of the company's collegial bodies should be convened at least once a quarter of the year. Yes The Board shall meet in accordance with a timetable approved in advance in the Rules of Procedure of the Board, i.e. at least once every 3 months, and more frequently if necessary. The agenda for the Board meeting, together with the notice convening the meeting, shall be sent to all Board members at least five (5) days before the Board meeting, indicating the items to be discussed at the meeting. Scheduled meetings of the Board shall be convened by its Chairperson or, in his/her absence, by his/her Deputy. 4.3 Members of the collegial body should be informed in advance of the convening of a meeting in order to allow sufficient time for adequate preparation of the issues to be discussed at the meeting and for the discussion leading to the adoption of decisions. The members of the collegial body should be provided with all relevant material relating to the agenda of the meeting together with the notice of the convened meeting. The agenda should not be amended or supplemented during the meeting unless all members of the collegial body are present and agree to such amendment or supplementation or unless there is an urgent need to deal with matters of importance to the company. Yes The agenda may only be added to a meeting if all Board members are present, there is an important matter and all Board members agree that it should be dealt with urgently. 4.4 In order to coordinate the work of the company's collegial bodies and ensure an efficient decision-making process, the chairpersons of the company's collegial supervisory and management bodies should coordinate the dates and agendas of the meetings convened and cooperate closely on other issues related to the company's governance. Meetings of the company's Supervisory Board should be open to the members of the company's Management Board, in particular where the meeting deals with issues relating to the removal of members of the Management Board, liability, remuneration. Not applicable The company does not have a Supervisory Board and therefore cannot comply with this provision. 5. Principle 1: Nomination, Remuneration and Audit Committees 5.1 Purpose and composition of committees The committees established in the company should enhance the effectiveness of the Supervisory Board and, where there is no Supervisory Board, of the Management Board, which performs supervisory functions, by ensuring that decisions are taken after due consideration and by helping to organise the work in such a way as to ensure that decisions are not influenced by material conflicts of interest. The Committees should act independently and in a principled manner and make recommendations related to the decision of the collegial body, but the final decision is taken by the collegial body itself. 5.1.1 Depending on the specific circumstances of the company and the governance structure chosen, the company's Supervisory Board and, in the absence of a Supervisory Board, the Board of Management, which performs supervisory functions, shall set up Committees. It is recommended that the collegial body form nomination, remuneration and audit committees5 . Yes/No The Company has an Audit Committee. The Audit Committee was formed and elected at the General Meeting of Shareholders on 24 April 2009. The General Shareholders' Meeting approved the Terms of Reference for the establishment and operation of the Audit Committee. 30 April 2021 The Company's General Meeting of Shareholders elected 3 new members of the Audit Committee, 2 of whom are independent members. The members of the Audit Committee were elected for a term of 4 years. The Audit Committee is an independent, objective monitoring, research, evaluation and advisory committee dedicated to improving the organisation's performance and creating added value. Its main function is to systematically and comprehensively assess and promote improvements in the effectiveness of the organisation's risk management, control and oversight processes, and to report to the Board and Management on the achievement of objectives and targets, the effectiveness of risk management procedures, and the functioning of the internal controls. The Company does not have nomination and remuneration committees. As the Company's Board is composed of competent members and performs its functions effectively, the Company does not see the need for any other committees at present. 5.1.2 Companies may decide to form fewer than three committees. In this case, companies should provide an explanation as to why they have chosen an alternative approach and how the chosen approach meets the objectives set for three separate committees. 5.1.3. the functions assigned to the committees formed in the companies may be performed by the collegial body itself in the cases provided for by law. In such a case, the provisions of this Code relating to committees (in particular as regards their role, functioning and transparency) should apply to the collegiate body as a whole where appropriate. Not applicable The Board of Directors of the Company does not perform the functions assigned to the Audit Committee. 5.1.4 Committees set up by a collegiate body should normally consist of at least three members. Subject to legal requirements, committees may be composed of as few as two members. The members of each committee should be selected primarily on the basis of their expertise, with a preference for independent members of the collegial body. The Chairperson of the Board should not be the Chairperson of the Committees. Yes The Audit Committee shall be composed of 3 members, 2 of whom shall be independent, with at least 5 years' experience in the accounting field, with relevant experience in the finance and accounting of listed companies. The Chairman of the Board is not a member of the Committee. 5.1.5 The mandate of each committee formed should be determined by the collegiate body itself. The committees should carry out their duties in accordance with their terms of reference and regularly report to the collegial body on their activities and their results. The terms of reference of each committee, defining its role and specifying its rights and duties, should be published at least once a year (as part of the information that the company publishes annually on its governance structure and practices). Companies should also publish each year in their management report, without prejudice to the requirements of the legislation on the processing of personal data, reports by existing committees on their composition, number of meetings and attendance of members at meetings during the previous year, as well as on their main activities and performance. Yes The Audit Committee shall be governed by the rules of procedure established by the Committee and approved by the General Meeting of Shareholders. These bylaws lay down the rules defining the rights and duties of the Audit Committee, the size of the Audit Committee, the period of membership of the Audit Committee, the educational and professional requirements of the members of the Audit Committee and the principles of independence. The Audit Committee shall submit an annual activity report to the General Meeting of Shareholders each year, disclosing the composition of the Committee, the number of meetings and attendance of its members, a description of the work carried out and the results. 5.1.6 In order to ensure the independence and objectivity of committees, members of the collegial body who are not members of the committee should normally be entitled to attend committee meetings only at the invitation of the committee. The committee may invite or require the attendance of certain employees or experts of the company. The chairman of each committee should be able to communicate directly with shareholders. The circumstances in which this should be done should be set out in the rules governing the operation of the committee. Yes The members of the collegial body take decisions at meetings of its members, but in certain cases the Committee shall invite the CEO of the Company and the responsible employees of the Company who are in charge of the areas of activity of the matters under discussion to attend its meetings. The Chairman of the Audit Committee is also able to communicate with shareholders. 5.2 Nomination Committee. 5.2.1 The main functions of the Nomination Committee should be: (1) to select candidates for vacancies in the Supervisory, Governing Body and Executive Management positions and to recommend them to the collegial body for consideration. The Nomination Committee should assess the balance of skills, knowledge and experience in the management body, prepare a description of the functions and skills required for the specific position and assess the time required to complete the assignment; (2) regularly assess the structure, size, composition, skills, knowledge and performance of the supervisory and management bodies, and make recommendations to the collegiate body on how to bring about the necessary changes; 3) giving due attention to succession planning. No The Company does not have a nomination committee. 5.2.2 The CEO should be consulted on matters relating to members of the collegial body who have an employment relationship with the company and the CEO, with the right to make proposals to the Nomination Committee. No 5.3 Remuneration Committee. No The Company does not have a Remuneration Committee. The company has a remuneration policy covering all forms of remuneration, including fixed remuneration, performance-related benefits, pension modules and severance payments. The Company's policy is approved by the Company's management in consultation with the Company's Trade Union Committee. The main functions of the Remuneration Committee should be: 1) submitting proposals to the college for consideration on the remuneration policy applicable to members of the supervisory and management bodies and the chief executive officers. Such a policy should cover all forms of remuneration, including fixed remuneration, performance-related remuneration, incentive schemes with financial incentives, pension schemes, severance payments, as well as conditions that would allow the company to recover amounts or suspend payments, indicating the circumstances that would make it appropriate to do so; 2) proposing to the collegial body the individual remuneration of members of the collegial bodies and of the chief executive officers, in order to ensure that it is in line with the company's remuneration policy and the assessment of their performance; 3) regularly review the remuneration policy and its implementation. 5.4 Audit Committee. 5.4.1 The main functions of the Audit Committee are defined in the legislation governing the Audit Committee6 . Yes The Audit Committee shall be governed by the Audit Committee Charter approved by the General Meeting of Shareholders of the Company. The Audit Committee carries out independent, objective monitoring, research, evaluation and advisory activities to improve the Company's performance and create added value. 5.4.2 All members of the Committee should be provided with detailed information relating to the company's specific accounting, financial and operational characteristics. The audit committee should be informed by the company's senior management of the accounting treatment of significant and unusual transactions, which may be accounted for in different ways. Yes All members of the Committee are provided with detailed information relating to the specific accounting, financial and operational features of the Company and, on request, are provided with information on the execution of significant transactions. 5.4.3 The Audit Committee should decide whether (and if so, when) the Chairman of the Board, the CEO, the Chief Financial Officer (or senior finance and accounting staff), the Internal Auditor and the External Auditor should attend its meetings. The Committee should be able to meet i with the relevant persons, if necessary, in the absence of the members of the management bodies. Yes The Audit Committee shall decide on the attendance of other persons at its meetings and, if necessary, the Audit Committee shall invite to its meetings the CEO of the Company and the responsible employees of the Company who are in charge of the areas of activity of the matters under discussion. The Chairman of the Audit Committee shall also be able to communicate with the shareholders. 5.4.4 The Audit Committee should be informed of the work programme of the internal auditors and receive internal audit reports or a periodic summary. The audit committee should also be informed of the work programme of the external auditors and should receive a report from the audit firm describing any relationship between the independent audit firm and the company and its group. Yes The Audit Committee is informed of the work carried out by the Internal Auditor and receives the conclusions of the investigations carried out. The Audit Committee receives reports each year from the external auditors describing any relationship between the independent audit firm and the Company and its Group. 5.4.5 The Audit Committee should review the company's compliance with the provisions in place governing the ability of employees to make a complaint or anonymously report allegations of wrongdoing within the company, and should ensure that there are procedures in place for a proportionate and independent investigation of such matters and for the appropriate follow-up action. Yes The Company has given employees the opportunity to file complaints or anonymous reports of irregularities committed by the Company, but the Company has not received any such complaints or reports during the reporting period. 5.4.6 The Audit Committee should report to the Supervisory Board, or if no Supervisory Board is formed, to the Management Board, at least once every six months, at the same time as the approval of the annual and half-yearly reports. Yes The Audit Committee analyses and evaluates the company's annual and half-yearly financial statements and makes recommendations to the Board of Directors for their approval, together with its own performance reports for that period. 6. Principle 1: Avoidance and disclosure of conflicts of interest The corporate governance framework should encourage members of the supervisory and management bodies of the company to avoid conflicts of interest and ensure a transparent and effective mechanism for disclosure of conflicts of interest by members of the supervisory and management bodies of the company. The corporate governance system should recognise the rights of stakeholders as enshrined in law and promote active cooperation between the company and stakeholders to create wealth, jobs and financial stability. In the context of this principle, stakeholders include investors, employees, creditors, suppliers, customers, the local community and others with an interest in the company. A member of a company's supervisory and management body should avoid a situation where his or her personal interest conflict or may conflict with the interests of the company. If such a situation does arise, the member of the supervisory or management body of the company should, within a reasonable period of time, inform the other members of the same body, or the body of the company which elected him, or the shareholders of the company of the situation of such a conflict of interests, indicating the nature of the interests and, where possible, the value. Yes Members of the Company's governing bodies shall conduct themselves in such a way as to avoid any conflict of interest with the Company. During the reporting period, there are no known cases of conflict of interest between the Company and a member of its governing body. 7. Principle 1: Company remuneration policy The company's remuneration policy and the procedures for its review and disclosure should prevent potential conflicts of interest and abuse in determining the remuneration of members of the collegiate bodies and the chief executive officers, as well as ensure the openness and transparency of the company's remuneration policy, including the company's long-term strategy. 7.1 The Company should adopt and publish on the Company's website a remuneration policy, which should be reviewed regularly and be consistent with the Company's long-term strategy. Yes/No The Company has a remuneration policy in place and approved by the Company's management, but it is not published on the Company's website. The Remuneration Policy was approved at the company's 2020 Annual General Meeting and is published on the company's website. 7.2 Remuneration policies should cover all forms of remuneration, including fixed remuneration, performance-related remuneration, financial incentive schemes, pension schemes, termination payments, and conditions that provide for the company to recover amounts paid or to suspend payments Yes The company has a remuneration policy covering all forms of remuneration, including fixed remuneration, performance-related benefits, pension modules and severance payments. 7.3 In order to avoid potential conflicts of interest, the remuneration policy should stipulate that members of the collegiate bodies which exercise supervisory functions should not receive remuneration which is linked to the performance of the company. Yes See point 3.2.8. 7.4 The remuneration policy should provide sufficient detail on the severance pay policy. Severance payments should not exceed a fixed amount or a fixed number of annual salaries and should generally not exceed a fraction of two years' fixed remuneration or its equivalent. Termination payments should not be made if the contract is terminated due to poor performance. Yes Severance payments are granted in accordance with the provisions of Chapter 5 of the Labour Code of the Republic of Lithuania and the Collective Agreement of the Company. 7.5 If the company has a financial incentive scheme, the remuneration policy should include sufficient details on the retention of shares after vesting. In the case of share-based awards, the shares should not vest for at least three years after the award. After vesting, members of the collegiate bodies and chief executives should retain a certain number of shares until the end of their term of office, depending on the need to cover any costs associated with the acquisition of shares. No The Company does not have a financial incentive scheme. 7.6 The company should publish on the company's website information on the implementation of the remuneration policy, which should focus on the remuneration policy of the collegiate bodies and the management for the next and, where appropriate, the following financial year. It should also provide an overview of how the remuneration policy was implemented in the previous financial year. Such information should not contain commercially valuable information. Particular attention should be paid to material changes in the company's remuneration policy compared to the previous financial year. No See point 7.1. 7.7 It is recommended that the remuneration policy, or any material change to the remuneration policy, should be placed on the agenda of the general meeting of shareholders. Schemes where members of the collegial body and employees are remunerated in shares or share options should be approved by the general meeting of shareholders. No See point 7.1. 8. Principle 1: The role of stakeholders in corporate governance The corporate governance system should recognise the rights of stakeholders, whether enshrined in law or in mutual agreements, and promote active cooperation between the company and stakeholders in order to create wealth, jobs and financial stability. In the context of this principle, stakeholders include investors, employees, creditors, suppliers, customers, the local community and others with an interest in the company. 8.1 The corporate governance framework should ensure that the rights and legitimate interests of interest holders are respected. Yes The company's corporate governance system ensures that the rights of interest holders protected by law are respected. The Company provides for the participation of interest holders in the management of the Company through the participation of the Company's employees and milk producers in the share capital of the Company. The majority of the employees are shareholders of the Company and therefore participate directly in the management of the Company. Interest holders involved in the governance process are given access to relevant information and the opportunity to vote on relevant decisions. In addition, the Company has made arrangements for confidential reporting of illegal or unethical practices. 8.2 The corporate governance framework should allow interest holders to participate in the governance of the company in accordance with the law. Examples of the participation of interest holders in the governance of the company could include the participation of employees or their representatives in important decisions of the company, consultations with employees or their representatives on corporate governance and other important issues, participation of employees in the share capital of the company, the involvement of creditors in the governance of the company in cases of insolvency, etc. 8.3 Where stakeholders are involved in the governance of the company, they should be given access to relevant information. 8.4 Interest holders should be able to confidentially report illegal or unethical practices to the collegiate body exercising the supervisory function. 9. Principle 1: Disclosure of information The corporate governance framework should ensure that timely and accurate disclosures are made on all material matters relating to the company, including its financial position, performance and corporate governance. 9.1 Without prejudice to the Company's procedures for confidential information and trade secrets, as well as the requirements of the legislation governing the processing of personal data, the Company's public disclosure of information should include, but not be limited to: Yes The information referred to in this Recommendation is disclosed in the Company's annual and half-yearly reports, subject to the requirements of data processing legislation and the confidential information regime. This information shall be published on the website of AB Nasdaq Vilnius Stock Exchange and on the Company's website. 9.1.1. the Company's performance and financial results; 9.1.2. the company's business objectives and non-financial information; 9.1.3. the persons owning or controlling a shareholding in the company, directly and/or indirectly and/or jointly with related persons, as well as the structure of the group of companies and the interrelationships between them, indicating the final beneficiary; 9.1.4. the members of the company's supervisory and management bodies, which of them are considered independent, the company's chief executive officer, the shares or votes they hold in the company, and their participation in the management of other companies, their competence and remuneration; 9.1.5. reports from existing committees on their composition, number of meetings and attendance of members during the previous year, as well as on their main activities and results; 9.1.6. the foreseeable material risk factors and the company's risk management and oversight policies; 9.1.7. the Company's transactions with related parties; 9.1.8. key issues relating to employees and other stakeholders (e.g. human resources policy, employee participation in the management of the company, promotion through shares or stock options, relations with creditors, suppliers, the local community, etc); 9.1.9. the company's governance structure and strategy; 9.1.10. initiatives and measures in the areas of social responsibility policy, anti-corruption, and major investment projects underway or planned. This list is to be considered as a minimum and companies are encouraged to go beyond the disclosures contained in this list. This principle of the Code does not relieve companies of their obligation to disclose information as required by law. 9.2 For the disclosures referred to in paragraph 9.1.1 of Guideline 9.1, it is recommended that a company that is a parent company in relation to other companies should disclose the consolidated results of the whole group. Yes The Company discloses information on the consolidated results of the Company and its group of subsidiaries. The disclosures are made in the consolidated management report and consolidated half-yearly financial statements. 9.3 In the disclosures referred to in paragraph 9.1.4 of Guideline 9.1, it is recommended to provide information on the professional experience and qualifications of the members of the company's supervisory and management bodies and the company's chief executive officer, and on any potential conflicts of interest that could affect their decisions. It is also recommended to disclose the remuneration or other income received by the members of the supervisory and management bodies of the company and by the company's manager from the company, as detailed in Principle 7. Yes The information referred to in the Recommendation is provided in the Company's annual and half-yearly reports. The consolidated management report shall disclose information on total employee-related costs, the amount of remuneration paid to the Company's chief executive officer during the year, and the Remuneration Report shall disclose the remuneration received by the members of the collegial body. 9.4 Disclosures should be made in such a way that no shareholders or investors are discriminated against in terms of the manner and extent to which they receive information. Disclosure should be made to all and at the same time. Yes The Company discloses all regulated information through the AB Nasdaq Vilnius news distribution system. This ensures that it is available to the widest possible public. The information is simultaneously available in both Lithuanian and English. In addition, the Company publishes the information before or after the Nasdaq Vilnius trading session to ensure that all shareholders and investors of the Company have equal access to the information and to make appropriate investment decisions. The Company shall not disclose information that may affect the price of its issued securities in comments, interviews or otherwise until such information is made publicly available through the Central Regulated Information Base. 10. Principle 1: Selection of the Company's audit firm The company's mechanism for selecting the audit firm should ensure the independence of the audit firm's report and opinion. 10.1 In order to obtain an objective opinion on the Company's financial position and financial performance, the Company's set of annual financial statements and the financial information contained in the Management Report should be reviewed by an independent audit firm. Yes An independent audit firm audits the separate and consolidated annual financial statements of the Company and its subsidiaries (the Group) in accordance with International Financial Reporting Standards as adopted by the European Union. The independent audit firm also assesses the consistency of the management report with the audited financial statements. 10.2 It is recommended that the nomination of the audit firm be proposed to the General Meeting of Shareholders by the company's Supervisory Board or, if the company does not have a Supervisory Board, by the company's Management Board. Yes The Board of Directors of the Company proposes the appointment of the auditor to the General Meeting of Shareholders. 10.3 If the audit firm has received fees from the company for non-audit services, the company should disclose this publicly. This information should also be made available to the company's supervisory board or, if the company does not have a supervisory board, to the company's management board when considering which audit firm to propose to the general meeting of shareholders. Yes Information on the remuneration of the audit firm is disclosed publicly in the Company's management reports. The audit firm shall provide non-audit services only with the approval of the Audit Committee. During 2024, the Audit Committee received a fee of EUR 20 thousand for non-audit services rendered to the Company's Group. 125 126 REMUNERATION REPORT FOR THE YEAR 2024 (appendix to the consolidated management report for 2024) AB Rokiškio sūris (hereinafter - the Company) Remuneration Report for 2024 (hereinafter - the Report) was prepared and approved in accordance with the procedure provided for in the Law on Companies of the Republic of Lithuania and the provisions of Article 233 of the Law on Financial Statements of Companies of the Republic of Lithuania. The remuneration policy was approved by the Company's General Meeting of Shareholders on April 30, 2024. The Company's remuneration policy applies to the Company's management (the Company's director and members of the Board). The 2024 Report provides information on the remuneration paid to the Company's CEO and members of the Company's Board. Director Dalius Trumpa Members of the Board Antanas Trumpa Darius Norkus Paul M Campbell Ramūnas Vanagas Jonas Vaičaitis Thomas Jan de Bruijn Report on the remuneration paid to the Company's manager in 2024 The remuneration paid to the head (director) of the Company consists of one or more parts belonging to the financial and non-financial performance - the basic salary, the additional variable part of the salary (incentive fund), bonuses and material benefits. Remuneration paid to the Company's manager during 2024: Salary components (EUR) Basic-fixed salary Variable part of the salary - incentive fund Bonuses Financial allowance Head of the company 21,127 10,154 - - 127 As provided in the Company's Remuneration Policy, the amount of the Director's basic monthly salary may not exceed five average monthly salaries of the Company's employees for the previous financial year. The incentive fund directly depends on the Company's financial performance. Its amount may not exceed 100% of the basic monthly salary. The amount of bonuses may not exceed the average bonuses per board member awarded for the previous year. No agreements on supplementary pensions or early retirement conditions have been concluded with the Company's manager, the conditions of termination of the employment contract have not been changed, and the payments related to the termination of the employment contract do not differ from those provided for in the applicable legal acts. The head of the Company did not receive any indirect benefit from the Company and was not granted stock options of the Company. No deferral of remuneration was applied to the head of the company and the opportunity to recover the variable part of the remuneration was not used. Information on the remuneration paid to the Company's manager in 2024 from companies that belong to a group of companies, as defined in the Law on Consolidated Financial Statements of Groups of Companies of the Republic of Lithuania: Salary components (EUR) Basic-fixed salary Variable part of the salary - incentive fund Bonuses Financial allowance Head of the company 9,909 6,192 - - The remuneration paid to the Company's manager in 2024 complied with the approved provisions of the Remuneration Policy. Report on the remuneration paid to the members of the Board of the Company in 2024 No agreements have been concluded with the members of the Board of the Company on the basis of which they perform their duties. The members of the Board of the Company are paid only bonuses, which are granted in accordance with the procedure established by legal acts by the decision of the General Meeting of Shareholders of the Company, and the allocation of which is disclosed in the consolidated management report of the Company. Bonuses are awarded and paid to the members of the Board for successful performance of the Company. The share of the Company's profit allocated for the payment of bonuses may not exceed 1/3 of the Company's share of the profit intended for the payment of dividends. The General Meeting of Shareholders held on 30 April 2024, when distributing the company's profit for 2023, granted the members of the Board of Directors tantjemes amounting to EUR 36 thousand No variable remuneration or bonus was paid to the members of the Board of the Company. Remuneration was not paid to the members of the Board when granting the Company's shares. No remuneration was paid to the members of the Board of the Company from companies that belong to a group of companies as defined in the Law on Consolidated Financial Statements of Groups of Companies of the Republic of Lithuania. 128 Information on changes in the results of AB Rokiškio sūris group and the calculated average remuneration for the employees of the company group, who are not members of the management bodies, during the last 5 financial years: Year Net profit (kEur) Average monthly salary (Eur) 2024 22,841 2,288 (change %) 40.63 6.42 2023 16,241 2,150 (change %) 29.78 15.59 2022 12,514 1,860 (change %) 2.162,93 35.57 2021 553 1,372 (change %) -86,38 6,36 2020 4,061 1,290 (change %) -0.98 6.17 129 INFORMATION ON SUSTAINABILITY MATTERS ABOUT THIS STATEMENT This section presents information on sustainability matters (hereinafter referred to as the "Sustainability Statement) for the year 2024 prepared in accordance with the European Sustainability Reporting Standards (ESRS) for Rokiškio sūris AB (hereinafter referred to as the "Company") and its subsidiaries UAB Rokiškio pienas, UAB DairyHub.lt, UAB Rokiškio pieno gamyba, SIA Jekabpils piena kombinats (hereinafter altogether referred to as "the Group"). BP-1 – General basis for preparation of Sustainability Statement The sustainability information in this report has been prepared on a consolidated basis. The Latvian company SIA Kaunata is not included in the scope of consolidation as it does not represent a significant part of the operations. The scope of consolidation of sustainability information is the same as the scope applied to the financial statements, thus ensuring consistency and compatibility between financial and sustainability data. At the time of reporting, there is no obligation for subsidiaries to provide individual or consolidated sustainability information. The Sustainability Statement presents the Group's achievements and targets in the areas of environmental, social and governance (ESG). The report is prepared in consultation with external sustainability experts. The Sustainability Statement covers the upstream and downstream parts of the Group's value chain as defined in section 5.1 of ESRS 1. The Group has not exercised the option to withhold certain information on intellectual property, know-how or results of innovation, as set out in Section 7.7 of ESRS 1, 'Classified and sensitive information and information on intellectual property, know-how or results of innovation'. The Group has also not made use of the option not to disclose information on future operational developments or matters relating to ongoing negotiations as set out in Articles 19a(3) and 29a(3) of Directive 2013/34/EC. BP-2 – Disclosures in relation to specific circumstances In this Statement, the Group follows the ESRS specified definitions of short-, medium- and long-term as set out in ESRS 1 Section 6.4 'Definition of short-, medium- and long-term for reporting purposes'. The Group does not include indicators in the Sustainability Statement that include upstream and/or downstream value chain data estimated using indirect sources, making the related disclosures irrelevant. 130 The quantitative, qualitative indicators or monetary values disclosed in the report have not been found to be characterised by significant measurement uncertainty, except for forward-looking information. The Group has not identified any material errors of prior reporting period. In the previous reporting period, sustainability information was prepared in accordance with the Global Reporting Initiative (GRI) standards, but in the current period, the requirements of the EU Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) apply. This is therefore the first time the report is being produced in this new format. The changes have been made to ensure compliance with EU and Lithuanian legislation and to provide more complete, reliable and comparable information with other companies. In addition to the mandatory disclosures under the ESRS, the Group includes in its Sustainability Statement the disclosures required under Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council and the Commission delegated regulations specifying the content and presentation of those disclosures. In compiling its GHG emissions information, the Group has followed the principles, requirements and guidelines of the GHG Protocol's Corporate Standard (2004), as well as those of the Intergovernmental Panel on Climate Change (IPCC). The following information is incorporated by reference to other parts of the Management Report: - GOV-1 (Information about the Group's administrative, management, and supervisory bodies' experience related to the company's sectors, products, and geographical locations), GOV-3 (Remuneration policy), SBM-1 – (Information about significant served markets and customer groups, including changes during the reporting period, and information about the number of employees by geographical locations). Each of these topics is covered in detail in the corresponding section of the Management Report. Given that the Group's average number of employees during the year at the last day of the reporting period exceeds 750, the requirement to elect not to provide the information required by ESRS E4, ESRS S1, ESRS S2, ESRS S3 or ESRS S4 in accordance with Appendix C of ESRS 1 is not applicable. GOVERNANCE OF SUSTAINABILITY MATTERS GOV-1 Role of administrative, management and supervisory bodies Composition of administrative, management and supervisory bodies The Group's governing bodies are: the General Meeting of Shareholders, the Board of Directors, and the CEO. The Group's highest level of governance is the General Meeting of Shareholders. The Group's Board of Directors is elected by the General Meeting of Shareholders for a term of 4 years. The Board of AB "Rokiškio sūris" consists of 6 members: 2 of them are Executive Directors of the Company, 3 are independent members, and 1 is a major shareholder of the Company and Chairman of the Board. The Group does not have a Supervisory Board. The Group also has an Audit Committee consisting of 3 members (2 of which are independent and 1 of which is an employee of the Company (not a director)). 131 The Group has a Labour Council and a Trade Union. One of the members of the Audit Committee of AB Rokiškio sūris Group is a member of the Labour Council. UAB Rokiškio pieno gamyba has a Social Performance Team (SPT) in accordance with the SA8000 standard, which is composed equally of management representatives and employee representatives: 4 administrative representatives appointed by order (including the Director of Production and Administration) and 4 employee representatives, including 2 trade union members. The role of the SPT is to oversee the implementation of and compliance with the SA8000 standard. To strengthen the implementation of the standard, the SPT conducts an evaluative analysis at least once a year, monitors the implementation of corrective actions, discusses areas of social responsibility and potential risks. Information on the experience of the Group's administrative, management and supervisory bodies in relation to the company's sectors, products and geographic locations is provided in the Consolidated Management Report (disclosures are provided in the following paragraphs 68. Corporate governance bodies, 69. The organisational structure of the Company's management and of the Group, 70. Information on the competence and convening procedures of the General Meeting of Shareholders, 71. The Board of Directors of the Company, 72. Committees established within the Company, 73. Management of the Company). All (100%) of the Group's Board members are men. Half (50%) of the Company's Board of Directors are independent. Monitoring of sustainability matters Managing impacts, risks and opportunities is the responsibility of everyone with a specific area of responsibility. Control is exercised by senior management and monitored by the Audit Committee and the Board. Management is also monitored by external stakeholders, including governmental and non-governmental organisations, business partners and buyers of production. The Company's management oversees the identification of targets relating to significant impacts, risks and opportunities and progress against those targets each time a sustainability statementis presented at the quarterly meetings. If necessary, the meetings resolve to correct the situation or implement other actions. There will also be a follow-up report on achieved progress. The Group is audited annually by EcoVadis in 4 areas: Environment, Labour & Human rights, Ethics, Sustainable Procurement. 132 Business ethics matters The Group's administrative, management and supervisory bodies play a key role in ensuring that the principles of business ethics are implemented and respected at all levels of the organisation. They are responsible for: ● Overseeing the implementation of the Code of Ethics - monitoring how the Code of Ethics is applied in day-to-day activities, and promoting the commitment of staff and stakeholders to the ethical standards set. ● Creating a culture of ethical behaviour - regular training sessions for employees focusing on the Group's values, communication standards and ethical principles. ● Ensuring transparency - Governing bodies are responsible for open and clear communication with employees, customers, partners and the public about the Group's ethical principles and their application. All employees are made aware of the Code of Ethics by signature and the Code itself is publicly available on the Group's website. ● Decision-making with the highest ethical standards - both internal and external business decisions are evaluated for their compliance with ethical principles and their impact on stakeholder interests. ● Investigating misconduct - every report of a possible ethical breach is dealt with promptly and fairly, with full confidentiality of the reporting party. The Group's administrative, management and supervisory bodies' expertise in business ethics is continuously strengthened through specialised training and the introduction of best practices. This ensures high standards of transparency, accountability and responsible business conduct in all areas of activity. Sustainability Team The Sustainability Team is responsible for managing impacts, risks and opportunities within the Group. Its members represent the Group's various areas of activity: environment, energy efficiency, human resources, marketing, raw material sourcing and production. Personal responsibility for sustainability issues is set out in each employee's job description. The Head of the Sustainability Team is the HR Director, reporting directly to the CEO of the Company. The activities of this team are focused on raising awareness of sustainability and promoting sustainable decision-making in the Group's operations and throughout the value chain. The Sustainability Team is also responsible for reporting to external partners. The activities of the Sustainability Team are monitored through quarterly management meetings to provide information on the current situation. Audit Committee 133 Monitoring of impacts, risks and opportunities is the responsibility of the Company's Chief Executive Officer, who works closely with members of the Group's Sustainability Team to identify potential impacts and address issues in a timely manner. The Audit Committee monitors and is also responsible for controlling the transparency of the information provided in the reports. For more information on the activities and responsibilities of the Audit Committee, please refer to the annual Management Report (see Consolidated Management Report item 72. Committees established within the Company). The Company's Director and the Committee are directly accountable to the members of the Company's Board. Competences related to sustainability All members of the Sustainability Team have completed the Sustain Academy's 3-month Sustainability Training and Mentoring Programme, and have received specific training related to sustainability and their immediate professional field. The team leader has also completed the ISM University of Management and Economics module "Business Development and Sustainability". To ensure expertise, the Group hires external sustainability experts for consulting and reporting. All Group employees receive training on sustainability principles. The expertise and skills of the members of the Sustainability Team help the Group to focus on environmental aspects, including the calculation of CO₂ emissions in operations and throughout the value chain. There is also active engagement with raw milk suppliers to help them calculate CO₂ emissions using the internationally recognised Cool Farm Tool. GOV-2 – Information provided to and sustainability matters addressed by the administrative, management, and supervisory bodies Management is briefed on significant impacts, risks and opportunities on a quarterly basis, unless there are urgent matters to discuss. The information is provided by the Head of the Sustainability Team and/or another member of the Sustainability Team. In overseeing the Group's strategy, key transaction decisions and risk management process, the administrative, management and supervisory bodies take into account impacts, risks and opportunities. The Group's business processes are strictly regulated in accordance with the laws of the Republic of Lithuania and other regulatory acts. All existing procedures, rules, policies and orders have designated persons responsible for ensuring compliance with these procedures and for preventive monitoring of potential hazards or risks. Where a decision requires additional investment or approval from a higher management body, the matter is addressed at the appropriate level. In the first year of the report, the Sustainability Team considered all the topics on the ESRS list and other sustainability topics of interest to the Group as part of its double materiality assessment. During the reporting period, the administrative, management and supervisory bodies focused on the following issues related to the sustainability: calculation of CO₂ emissions, in particular with regard to raw milk suppliers; and the sustainability requirements of the buyers of the production and the actions taken to comply with these requirements. 134 GOV-3 – Integration of sustainability performance into incentive schemes The remuneration policy for the administrative, management and supervisory bodies is described in the Consolidated Management Report (2024 REMUNERATION REPORT). The Group's incentive scheme and remuneration policy are currently not linked to the achievement of sustainability objectives. Remuneration for members of the administrative, management and supervisory bodies does not include climate change considerations and performance is not measured against GHG emission reduction targets. GOV-4 –Sustainability due diligence processes Although there is no formalised due diligence system, separate elements of it are applied in the Group's operations. The key elements and steps outlined in Chapter 4 "Due Diligence" of ESRS 1 relate to a number of horizontal and thematic disclosure requirements under ESRS. In the table below, the Group indicates how and where the key aspects and steps of the due diligence process are reflected in its sustainability statement. KEY ELEMENTS OF DUE DILIGENCE PARTS OF THE SUSTAINABILITY STATEMENT a) Integration of Due Diligence into Governance, Strategy and Business Model GOV-1, GOV-2, GOV-3, SBM-3 (b) Involvement of Affected Stakeholders in All Key Stages of the Due Diligence Process GOV-2, SBM-2, IRO-1, MDR-P, S1-2, S2-2, S3-2, S4-2 (c) Identification and Assessment of Negative Impacts IRO-1, SBM-3 d) Taking action to address these negative impacts MDR-A, E1, E2, E3, E4, E5, S1, S2, S3, S4, G1 e) Monitoring and Communicating the Effectiveness of These Actions MDR-M, MDR-T, E1, E2, E3, E4, E5, S1, S4, G1 GOV-5 – Risk management and internal control over sustainability reporting The Group has risk management and internal control processes and systems in place for sustainability reporting to ensure data reliability, regulatory compliance and process efficiency. The Group has a centralised data management system to organise the collection and analysis of key data. The system is currently being upgraded to further improve data structuring, accessibility and reliability. Planned improvements include increased integration with other internal systems, automation of data validation and expanded analysis capabilities. The Integrated Management System is subject to internal food safety and environmental audits in accordance with established procedures. In addition, the Group regularly engages with external auditors or experts who independently review and assess the sustainability information provided, thus ensuring the reliability of the data and providing feedback on process improvements. All data is collected and processed in accordance with EU and international sustainability standards such as IFS, ISO 14001, ESRS, and EU Taxonomy. Group staff receive regular training on the latest regulatory developments to ensure that the report is produced in line with all legal requirements. 135 The Group aims to ensure that sustainability information is accurate, complete and timely, and therefore adopts a systematic approach to risk assessment, including risk identification, assessment and prioritisation. The risk assessment processes are integrated with internal control processes, which rely on a centralised data management system to ensure the traceability and systematic collection of sustainability data. The accuracy of the data and the evaluation of the results are ensured by checking key indicators such as energy consumption or CO₂ emissions against international standards. All parts of the report are reviewed by the heads of the responsible departments before final approval. In addition, the availability of value chain data is managed in active cooperation with key suppliers and partners to ensure data completeness and instant availability. Risks related to data unavailability are mitigated by alternative assessment methods such as modelling or the use of third-party data. The situation is regularly discussed at top management meetings to ensure continuous process improvement. Risks identified in accordance with internal procedures are discussed at management/board meetings and responsible persons are appointed to implement risk mitigation actions. Risk mitigation actions are agreed with management and their implementation is the responsibility of Heads of Departments. Information on progress and achieved results are presented at management meetings. Sustainability issues are discussed in a management meeting at least once a quarter. Where necessary, responsible persons are assigned to resolve the problem and the achieved results are reported to the management meeting. STRATEGY, BUSINESS MODEL AND VALUE CHAIN SBM-1 - Strategy, business model and value chain The Group's principal activities are dairy farming and cheese production. The main products are cheese, butter, dry dairy products and short shelf-life dairy products. The principal activities of the subsidiaries are: Rokiškio pienas UAB - trade in short shelf-life dairy products and fermented cheeses; Rokiškio pieno gamyba UAB - production of short shelf-life dairy products (milk, kefir, sour milk, butter, cottage cheese, quark, , sour cream, glazed cheeses, desserts) and milk flour; Jekabpils piena kombinats SIA is active in the purchase of raw milk; SIA Kaunata's activity is the purchase of raw milk; DairyHub.lt UAB - preparation and sale of hard cheeses to the final consumer in various countries around the world. Production takes place in three specialised plants in Rokiškis (fermented cheese, lactose, whey protein concentrate), Utena (short shelf-life dairy products, butter, milk and whey flour) and Ukmergė (Hard cheese slicing and packaging). 136 The information required under ESRS 2 SBM-1 paragraph 40 (b) (revenue breakdown by significant ESRS sectors) and paragraph 40 (c) (list of additional material ESRS sectors), as well as paragraph 41, is not disclosed, as the ESRS sectors have not yet been published. No changes in new/removed products were recorded during the reporting period. The Group's overall strategy’s objectives for 2022-2024 is closely linked to sustainability aspects at the social, governance and environmental levels. The main objectives of the Group's strategy include ensuring sustainable milk processing, achieving regional leadership in the dairy processing sector, flexible production and sales of premium quality products that exceed consumer expectations, being the most attractive and reliable partner for dairy farmers, and continuously increasing value for shareholders. The strategy also highlights key values and strengths: cohesive staff and good governance, modern technology, experience, financial stability, speed and flexibility in decision-making and in responding to external changes, and continuous improvement. The Group's new Strategic Plan 2025-2027 sets out to "consistently develop sustainable, innovative and responsible operations that combine economic growth with social and environmental well-being". This is achieved through efficiency improvements and the introduction of sustainable solutions in the production process. Information on the significant markets and customer groups served, including changes during the reporting period, is disclosed in the Consolidated Management Report (47. Group sales). Information on the number of employees by geographical location is disclosed in the Consolidated Management Report (74. Employees). During the reporting period, the Group employed 1,155 employees. The Group does not provide products and services that are banned in certain markets. Group companies comply with government sanctions prohibiting trade in certain countries. The Group operates in the fossil fuel (gas) sector, i.e., it generates revenue from the distribution of fossil fuels, as defined in point 62 of Article 2 of Regulation (EU) 2018/1999 of the European Parliament and of the Council, including transportation, storage, and trading—this includes revenue from fuel station operations. The amount of income from these activities is shown in the Group's financial statements at EUR 1,327,216.86. A breakdown of the income derived from qualifying taxonomic economic activities related to fossil gas is disclosed in the Disclosure of Compliance with the EU Taxonomy Regulation. The Group is not involved in the production of chemicals, controversial weapons, or tobacco cultivation and manufacturing. Description of the Group’s value chain Table 1. Value Chain 137 The initial link The Group’s activities The final link Raw milk collection Raw materials needed for production Manufacture and supply of other raw materials, equipment and supply of significant services Purchases, raw milk purchases Product manufacturing, warehousing, sales Cutting, packing, Storage Wholesale Delivery, logistics - own transport Delivery, logistics - hired transport Retail trade Consumption/use Waste management The Group's key inputs are raw milk (sourced from farmers, agribusinesses and cooperatives) and other ingredients, packaging and equipment, sourced mainly from EU countries, some from third countries. Production is organised in three specialised factories in Lithuania - in Rokiškis, Utena and Ukmergė – where modern equipment helps ensure quality control, efficient processes and compliance with food safety standards. The Group's outputs and results cover a wide range of dairy products. The value chain has three key links: the initial (dairy farms, other raw material suppliers, equipment suppliers), the Group's activities (milk purchasing, production, cutting, packaging, storage, marketing, transport (own transport)) and the final (transport (own and hired transport), retailing, consumption and waste management). At the initial link, the key is reliable raw material quality, thanks to stable relationships with farmers and qualitative tests carried out by external inspection services and internal laboratories. At the final link the produce reaches consumers, both locally and internationally, through a network of major supermarket chains and logistics partners, and waste management is handled by specialised companies. In this way, the Group maintains a strategic position in the dairy sector, covering all stages of value creation, and delivers value to customers, investors and the entire stakeholder community. Customers and consumers have access to high quality, multi-category dairy products (fermented and hard cheeses, fresh dairy products, desserts) that comply with strict food safety requirements. Other stakeholders (local communities, workers, suppliers) also get benefit: increasing employment in the region and developing long-term partnerships. SUSTAINABILITY-RELATED OBJECTIVES The Group categorises its objectives according to the 5 main strands of its sustainability strategy7 : reducing environmental impact, employee and community well-being, responsible supply chain, ethical management, product quality and safety. All these objectives apply equally to all relevant categories and are not differentiated according to product and service groups, customer categories, geographical locations and stakeholder relationships. 138 Table 2 Sustainability-related objectives of the Group Scope Sustainability theme Objectives and indicators Value in 2024 Alignment with the Sustainable Development Goals Reducing Environmental Impact Climate change: GHG emissions and energy Reduce Scope 1 and 2 GHG emissions by 30% (compared to 2020) -22% Reduce Scope 3 GHG emissions by 5% (compared to 2020) -0.4% Ensure 90% of electricity and thermal energy comes from renewable sources 52% Reduce energy consumption intensity by 2% annually -19% Pollution 0 incidents/accidents related to pollution-related requirements 0 Circular Economy (Resources, waste) Achieve 95% of waste reused; reduce landfill waste 93.1% Ensure 85% of product packaging is recyclable 88.9 % Ensure 10% of used water is recycled or reused 6.6% Reduce water consumption intensity by 10% (compared to base year) +7.9 % Responsible Supply chain Supplier relationship management including application of environmental and social criteria, animal welfare, biodiversity and ecosystems, pollution (soil, water) 90% of acquired key materials/ingredients certified by GFSI 85.38% Somatic cell count in raw milk must not exceed 400,000/ml Avg. 198,000/ml 100% of key suppliers comply with environmental and/or social standards 100% 100% of inspected farms meet criteria for animal welfare, environmental and social standards 100% Employee and Community Well-being Working conditions, including health and safety, Social dialogue Increase employee loyalty and satisfaction index (eNPS) score by 2–3 points by 2027 40.2 Maintain employee turnover at a similar level 15.32% Zero serious workplace accidents 0 Training and skills development Allocate sufficient resources for employee training, professional development and academic studies EUR 125,000 Implement a digital training management system to analyse training hours and effectiveness In progress Equal Treatment and Equal Opportunities Zero cases of discrimination at the workplace. 0 Increase proportion of women on the Board 0 Gender pay gap not exceeding 10% 10.77% Affected Communities Support (financially or production) at least 100 events annually ~70-80 Product Quality and Safety Consumer health & safety Expand range of healthier products by 3% by 2027 6% of total SKUs Ensure no recurring complaints related to product safety and quality 3 Zero product recalls due to safety breaches 0 Quality and transparent Information about the products Zero cases of product or labelling falsification 0 Ethical Governance Business ethics and compliance (incl. anti-corruption) Zero significant breaches of law 0 Zero confirmed cases of corruption 0 Investment and Innovation Improving operational efficiency / reducing environmental impact through innovations and/or solutions (100%) 100% Data Security Zero data protection breaches 0 100% of administrative staff trained on data protection topics 0 139 SBM-2 - Stakeholder interests and views We define our stakeholders as those individuals or organisations that are highly relevant and/or have a significant impact on our activities, and those who can significantly influence the implementation of our strategy. The Group's strategy and business model takes into account the views of our stakeholders - information on stakeholder engagement is provided in the table below. Table 3. Information about stakeholder involvement 140 Key stakeholders How to get involved Purpose of involvement/cooperation Indications that the Group takes into account the results of the engagement Shareholders and other investors Regular financial reports, AGMs, direct comments at shareholder meetings Conducting profitable and sustainable operations in compliance with the law and the Group's Articles of Association Share price fluctuations, or by other means (for more information, see the Management Report "Shareholder Rights") Customers (wholesale buyers) Face-to-face meetings, contractual agreements, personalised offers Long-term business-to-business (B2B) cooperation Sales growth, orders repeatability, customers feedback Employees (including trade unions) Internal communication, surveys, meetings with trade unions, employee representatives Create the right working conditions, ensure safety, develop competences and improve process efficiency, ensuring that identified risks are properly managed and impacts minimised. Employee satisfaction levels, staff turnover, results of employee surveys, complaints Consumers Market research, social networks, loyalty programmes, consumer surveys To best meet market needs, develop safe, quality products, and assess the Group's strengths and weaknesses Brand awareness, consumer feedback, sales dynamics Raw milk suppliers, suppliers' employees Long-term supply contracts, quality control programmes, educational initiatives, surveys, dialogues Seeking long-term partnerships and creating mutual value Product quality, supplier loyalty, supply chain stability (the Group operates with suppliers that are assessed against established criteria and included in a list of trusted suppliers) Suppliers of other raw materials and services, employees of suppliers Regular meetings, cooperation agreements, quality standards, surveys, dialogues Selecting suppliers on the basis of ethical business and environmental and social criteria Supply chain efficiency, on-time delivery, supplier evaluation indicators (The Group operates with suppliers that are evaluated against established criteria and included in a list of trusted suppliers) Government organisations Ensuring compliance, participation in industry discussions, regulatory meetings. To comply impeccably with the laws of the Republic of Lithuania and to obtain advisory assistance or financial support for the Group's ongoing investment projects Regulatory compliance, inspection results, company's reputation with public authorities Media Press releases, press conferences, proactive communication. Provide transparent and reliable information to the public Tone of media coverage of the Group, number of publications, outreach for disseminating information Local communities and non-governmental organisations (NGOs) Social responsibility projects, dialogue with communities, support programmes, channels for local communities to express their views Promote community by supporting various initiatives, thereby contributing to the well-being of our employees, ensuring a lasting positive impact on the local population, contributing to the creation of employment opportunities and improving quality of life Community satisfaction, participation in initiatives, long-term relationships with NGOs Academic community Partnership projects, research funding, student placements Collaborate on research into new product development, packaging and process improvements in operations; develop the younger generation. Adoption of innovations, publications about the company, recruitment of specialists/trainees 141 The Group analyses the comments, suggestions and feedback provided by these stakeholders and assesses their relevance to the strategic objectives and legal requirements. The insights obtained are systematised, analysed and become the basis for target setting and improvement actions. The results may lead to adjustments in operational strategy, process improvements or additional decisions to ensure sustainable and profitable operations. The Group currently has no plans to change its strategy or business model as no significant stakeholder interests or views have been identified that would require such a change. Existing stakeholder feedback is continuously monitored. Should significant misalignments of interests or significant expectations be identified in the future, the Group would consider revising its strategy or business model. The developed Sustainability Strategy will continue to be reviewed and updated to take into account stakeholder interests. A separate stakeholder survey was not carried out as part of the double materiality assessment. However, this assessment has taken into account the existing dialogue with stakeholders by drawing on other stakeholder surveys (e.g. the staff survey conducted in 2024) as well as a survey conducted during the previous materiality assessment based on the GRI standard. All stakeholders were interviewed for this survey and the results are presented in last year's Consolidated Social Responsibility and Sustainability Statement 142 The results of this survey were directly used in the double materiality assessment in 2024. The administrative, management and supervisory bodies are kept informed of the views and interests of stakeholders through a variety of mechanisms to ensure systematic and transparent communication. Communication methods include regular reports to the Group's management, the Board, shareholders and the public, integration of sustainability indicators (e.g. CO₂ emissions, waste reduction, employee well-being) into key performance reviews, and the introduction of incident tracking systems allowing employees and partners to report anonymously on potential problems and irregularities. In addition, the Group is regularly audited on various aspects (financial performance, food safety and quality, environment, social responsibility). From 2021, a sustainability report is produced annually and presented to both stakeholders and the governing bodies. All interested parties have access to information about the company's activities and the opportunity to make enquiries, complaints or suggestions about its activities. DOUBLE MATERIALITY ASSESSMENT SBM-3 - Material impacts, risks, opportunities, and their interaction with the strategy and business model The table below summarises the results of the double assessment of significance - the significant impacts, risks and opportunities identified. All significant impacts, risks and opportunities under SBM-3 and other thematic requirements of the standard are described in detail later in this report, in the chapters arranged by theme. In this report, the company provides for the first time a list of identified material impacts, risks and opportunities in accordance with the double materiality assessment set out in the Corporate Sustainability Reporting Directive (EU) 2022/2464 (CSRD) and the European Sustainability Reporting Standards (ESRS). It is noted that the company is continuously improving its processes to identify actual and potential impacts, risks and opportunities and therefore the list of sustainability topics identified through the double materiality assessment will be regularly reviewed, with future additions and changes. The results of the previous materiality assessment, which was carried out in accordance with the GRI Standards methodology, can be found in the previous Sustainability Report 2023. 49. An entity discloses the narrative information required by paragraph 46 of SBM-3 in conjunction with the disclosures required by the relevant thematic ESRS. Meanings of symbols: + positive impact (F) ⚫ actual impact 🟡 - opportunities - negative impact (G) ⚪ possible effects ❗- risks 143 Abbreviations: ST – short-term, MT – medium-term, LT – long-term Table 4: Material sustainability impacts, risks and opportunities. ESRS / Sustainability theme Material sub-themes Material impact Material risks and/or opportunities Value chain Primary Group activities Final link E1 Climate change Adaptation to climate change Climate change mitigation Energy (-) ⚫ Energy consumption and direct GHG emissions in the Group's activities and GHG emissions in the value chain (ST, MT, LT) (+) ⚫ Assessing and reducing GHG emissions through energy efficiency projects and retrofitting of vehicles. (ST, MT, LT) (+) ⚫ Educational support for dairy farms to promote a lower climate impact of the industry. (ST, MT, LT) The risks and opportunities are described in Chapter 2 of the ESRS on Climate Risk Assessment and Management Y Y E2 Pollution Air pollution Water pollution Soil pollution Microplastics (-) ⚫ Air pollution (particulate matter) from process plants, transport, manufacturing, and combustion processes (ST, MT, LT) (-) ⚪Water and soil pollution caused by agricultural activities: livestock waste management, fertiliser and pesticide use (ST, MT, LT) (-) ⚫ Plastic packaging of the Group's dairy products contributes to microplastic pollution (ST, MT, LT) Risks: ❗Financial losses and the necessary investments to meet increasing environmental requirements can lead to financial burdens. Opportunities: not identified Y Y Y E3 Water and marine resources Water consumption Water abstraction Water discharge (+) ⚫ Reuse of treated water, reducing demand for water resources. (ST, MT, LT) Risks: ❗ Consequences of inadequate sewage management: fines and reputational damage (v. i. periods) Opportunities: not identified Y E4 Biodiversity and ecosystems Direct impacts on biodiversity loss Impacts on the extent and condition of ecosystems (+) ⚪Participation in the State Forest Enterprise's reforestation programmes with plans to continue in the future (ST, MT, LT) Risks: ❗ Declining ecosystems due to environmental factors can lead to rising commodity prices. (period i.) Opportunities: not identified Y Y E5 Circular economy Resource inputs, including resource use Resource outputs related to products and services Waste (-) ⚫ Production waste generated; packaging of products produced (ST, MT, LT) (+) ⚪ Innovations in packaging design to minimise environmental impact (ST, MT, LT). Risks: ❗New requirements related to waste, packaging (MT, LT) ❗ Lack of attention to packaging can negatively affect the image among sustainability-minded consumers (MT, LT) ❗ Decrease in availability of raw milk, increase in purchase price due to environmental requirements, disease or drought (MT, LT) Opportunities: 🟡 Incorporating waste and products into the circular economy (ST, MT, LT). Y Y Y S1 Own workforce Freedom of association, existing works councils and workers' information, consultation and participation rights Collective bargaining, including the share of workers covered by collective agreements Health and safety Equal treatment and equal opportunities for all (all sub-themes) Privacy (+) ⚫Additional financial incentives, benefits, promotion of staff development and learning, open communication and collective bargaining (ST, MT, LT) (-) ⚪ Increasing investment in robotic manufacturing would make some jobs redundant (LT) (-) ⚪The main adverse effects on workers arise from mechanised processes in production, which can cause injuries (+) ⚫Strategic diversity beyond legal requirements (ST, MT, LT) (-) ⚪ Data leakage incidents involving employees' personal data Risks: not identified Opportunities: 🟡 Clear development and career progression processes and the promotion of diversity with equal working opportunities increase employee loyalty, foster innovation, improve the working climate and enhance the organisation's reputation (ST, MT, LT) Y Risks: ❗ Gender imbalance may lead to ineligibility, reputational damage. (ST, MT, LT) ❗ Data leakage incidents involving employees' personal data and the resulting negative impact on the Group in terms of reputational and financial damage (ST, MT, LT) Possibilities: not identified Y S2 Value chain workers Working conditions Equal treatment and equal opportunities for all Other work-related rights (+) ⚫ Criteria for suppliers promote good working conditions for workers in the value chain (ST, MT, LT) Risks: ❗ Human rights abuses along the value chain, especially in third country territories, can cause financial and reputational damage (ST, MT, LT). Opportunities: 🟡 Strict requirements and certifications for suppliers help to improve both the conditions of workers in the sector and the company's image and reputation. (ST, MT, LT) Y S3 Affected communities Economic, social and cultural rights of communities (-) ⚪Effects of manufacturing activities in cities where factories are located (ST) (+) ⚫ Active support for communities in Rokiškis, Utena and Ukmergė. (ST, MT, LT) (+) ⚫ Cooperation with farmers to develop modern, cost-effective and sustainable farms (ST, MT, LT) Risks: ❗ Withdrawing support from local communities may cause dissatisfaction and damage to the Group's reputation (ST, MT, LT) Opportunities: 🟡 Strategic giving focused on creating mutual value, strengthening relationships with communities and improving corporate image. (ST, MT, LT) Y S4 Consumers and end-users Privacy Access to (quality) For information visit Health and safety (-) ⚪Despite the principles of responsible marketing, misleading or unethical information may lead to consumer dissatisfaction (ST, MT, LT) (-)⚪ Customer data loss incidents have a negative impact on customers and their trust (ST, MT, LT) (+) ⚫ Additional information verification filter ensures fair, transparent and reliable communication (ST, MT, LT) Risks: ❗Reputational and financial damages due to leakage of customer data (ST, MT, LT) ❗ Financial risks due to incorrect labelling of products (periods in v.i.) Opportunities: 🟡 N/A Y Y (-)⚪ Products that do not meet safety and quality requirements may cause health problems for consumers. (MT, LT) (+) ⚫ Production processes ensure the nutritional quality of products, contributing to a healthy, safe and complete diet. (ST, MT, LT) Risks: ❗ Failure to meet safety and quality requirements could result in financial and reputational consequences for the Group (including fines). (ST, MT, LT) Opportunities: Not identified Y Y G1 Business ethics Company culture (+) ⚫ Additional initiatives and actions going beyond legal requirements enhance staff satisfaction and motivation. (ST, MT, LT) Risks: ❗ Failure to comply with rules, procedures and laws can lead to legal, financial and reputational consequences (MT, LT) Opportunities: 🟡 Additional initiatives to strengthen company culture (ST, MT, LT) Y Protection of speakers Not identified Risks: ❗ Failure to operate a whistleblowing channel and protect whistleblowers puts the company at risk (reputational as well as financial) from unreported potential misconduct. Opportunities: 🟡 Not identified Y Animal welfare (+) ⚫ Additional initiatives such as high criteria, inspections, training and education ensure animal welfare in line with the "5 freedoms" principle (ST, MT, LT) Risks: ❗ Failure of suppliers to meet animal welfare standards poses reputational, credibility and financial risks, (ST, MT, LT) Opportunities: 🟡 Using high quality milk from healthy animals and rigorous standards, the Group produces premium products (ST, MT) Y Y Supplier relationship management, including payment practices (-) ⚪ Negative impact due to lack of supplier responsibility (ST, MT, LT) (+) ⚫ Strict criteria and standards for suppliers in place) (ST, MT, LT) (+) ⚫ Cooperation with local farmers (ST, MT, LT) Risks: ❗ Risk of inadequate controls or lack of supplier responsibility (ST, MT, LT) Opportunities: 🟡 Cooperation with farmers strengthens the Group's reputation (ST, MT, LT) Y Corruption and bribery (-) ⚪ Corruption cases Risks: ❗ Incidents of corruption in the supply chain or other areas and the impact on the company's image (ST, MT, LT) Opportunities: 🟡 Not identified Y Y Entity-specific disclosures Responsible investment and innovation (+) ⚫ Roboticisation of systems improves working conditions for employees (ST, MT, LT) (+) ⚫ Innovations to enhance environmental protection and energy saving are introduced (ST, MT, LT) (+) ⚫ Environmental, social and economic criteria are strictly taken into account when making investment decisions, (ST, MT, LT) (-)⚪ Innovating without taking into account environmental, social aspects can have negative environmental consequences Risks: ❗Inadequate deployment process, technology application and lack of knowledge (ST, MT, LT) ❗Lack of environmentally friendly packaging (ST, MT, LT) ❗Insufficient consideration of social and environmental criteria in investment (ST, MT, LT) Opportunities: 🟡 Investment decisions based on environmental, social and economic criteria enhance the company's reputation (ST, MT, LT) Y 144 145 Climate risk assessment and management E1 Climate Change: SBM-3 – Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model; IRO-1 – Description of the processes to identify and assess material climate-related impacts, risks and opportunities In 2024, in order to prepare for the CSRD sustainability reporting requirements, the Group carried out an assessment of climate change risks and opportunities in accordance with the requirements of the ESRS and the EU Taxonomy Regulation's No Significant Adverse Effects on Climate Change Adaptation criteria (Appendix A of the Taxonomy Delegated Acts No 2021/2178 and No 2023/2486). The assessment guidelines have been developed on the basis of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the scenario analysis guidelines for non-financial companies. Physical climate risks and transformation risks and opportunities were identified and assessed through scenario analysis. The assessment is planned to be reviewed annually and/or in the event of a significant change in business circumstances, or the renewal of significant physical and transformational event forecasts. Assessment of physical risks The assessment of physical risks was carried out in proportion to the scale and expected duration of the Group's activities. The time periods for the assessment were set as follows: short - up to 2026, medium - from 2026 to 2030, long - from 2030 and 2050. These time periods were chosen taking into account the adaptive nature of the Group's operations and the ease with which they can adapt to physical climate-related events - i.e. an assessment of an even longer time period beyond 2050 would not be appropriate, as the available climate projections are subject to a high degree of uncertainty, and the Group's direct activities are likely to have been adapted by then. Risks for the longer term (up to 2100) were also considered in the assessment of the physical assets of the group companies, but no significant risks to physical assets were identified. The assessment was based on the introductory report "Preparation of climate change projections up to 2100"1 prepared by the Ministry of Environment's programme "Environment, Energy and Climate Change" (projections on a 12x12 km grid) and the "Study of climate change risks for the mid-21st century"2 prepared by the Lithuanian Hydro-meteorological Service, Climate and Research Unit (projections per county). The IPCC scenarios RCP4.5 and RCP8.5 for typical air pollutant concentrations were analysed using data from these sources. 1 Preparation of climate change forecasts, a national study on the sensitivity and vulnerability of Lithuanian municipalities to climate change and a climate change adaptation plan for the most vulnerable municipality. PHASE I: PREPARATION OF CLIMATE CHANGE PROJECTIONS UP TO 2100. INTRODUCTORY REPORT; report prepared for the Ministry of Environment of the Republic of Lithuania, Riga 2022). 2Study of climate change risks for the mid-21st century (Lithuanian Hydrometeorological Service, Climate and Research Division; analysis commissioned by the Association of Lithuanian Banks, Vilnius 2023). The Group assessed climate-related risks across its operations and supply chain, including farms. In particular, the Group's assets or operations were analysed to determine whether they would be negatively affected if a climate-related hazard were to occur in its most extreme form, including in combination with other climate-related hazards. Further, an assessment was made as to whether potential negative impacts on assets or business activities could have a material adverse effect on economic performance. Once it was determined that negative impacts on economic performance were possible, the likelihood of the specific risk and the magnitude of the financial impact were further assessed. The significance of risks was assessed based on a score calculated as the product of probability and financial impact: High – very important / significant (final assessment scores 15–25), Medium – significant (5–14), and Low – insignificant (0–4). 146 The results of the physical risk assessment and the adaptation measures are summarized in Table 5. The table presents significant risks, i.e. those assessed with High and Medium scores. The Group plans to consider potential adaptation measures and continuously assesses the effectiveness of implemented actions. Table 5. Overview of the assessment of the vulnerability of activities to climate-related physical hazards Classification of physical hazards Potential adverse effects on operations or assets Assessment of financial materiality Adaptation solutions Chronic Temperature-related: Variable temperature (air, freshwater, seawater) Rising temperatures can disrupt the reliability of agricultural supply chains (raw milk), leading to increased uncertainty and price volatility. Significant in the long term Contributing to animal welfare through initiatives and cooperation with farmers Farm assessment and advice Acute Water-related: Drought Droughts, combined with the predicted warming and less rapid increases in precipitation, could threaten livestock and feed resources, and lead to changes in crop production which could increase costs. Significant in the long term Contributing to animal welfare through initiatives and cooperation with farmers Farm assessment and advice Wind-related: Storms Assets damaged/destroyed in the event of an extreme occurrence Assets drowned/destroyed by suppliers in the event of an extreme occurrence and the associated impact on the Group during operational/supply disruptions. Significant Taken into account when designing buildings or outdoor equipment Notes: * The Climate Risk Assessment considered the full list of physical hazards in Appendix A of Commission Delegated Regulation (EU) 2021/2139. The table summarises information only for those hazards that are significant (i.e. physical assets or activities are likely to be negatively affected). 147 Assessment of transition risks and opportunities The timeframes used to assess the transition risks were: short - up to 2026, medium - from 2026 to 2030, long - from 2030 and 2050. The team analysed foreseeable and possible events under a zero emissions scenario by 2050, which is in line with the Paris Agreement and the European Green Deal's ultimate goal of climate neutrality by 2050. The assessment was carried out in accordance with the TCFD guidelines, examining the TCFD classification of climate-related transition events. The main assumptions considered and the risks and opportunities identified for transition are summarised in Table 6. Table 6. Significant Climate-related Transition Risks Risk assessment Transition events (TCFD) Potential financial impact Politics and law Higher pricing of GHG emissions The risk that countries will introduce (higher) taxes on emissions, allowances or expand GHG taxation measures in the future, leading to higher costs. Increased GHG emissions reporting obligations Reputational and financial risks if the Group fails to meet its GHG reduction targets on time. Obligations and regulation of existing products and services/production processes Introducing more energy-efficient technologies/solutions in production and the associated costs. Litigation risk Imposing sanctions through non-compliance with requirements related to climate change contributions or failure to disclose climate risks. Increased costs and/or reduced demand for products and services as a result of fines and court rulings. Technology Costs of Transitioning to Less Polluting Technologies Replacing existing products with less polluting alternatives can increase production costs, as the company may have to invest in new technologies, change the composition of its products, or buy more expensive sustainable raw materials. Failed Investments in New Technologies Uncertainty in investing in new technologies - potential risk of investment failure. Costs of Transitioning to Less Polluting Technologies Write-offs of existing assets, investments in low-emission technologies. Research and development (R&D) expenditure on new and alternative technologies Market Changes in Customer Behaviour and Priorities Adaptation costs associated with increasing demands from customers, such as providing information on product emissions. Loss of customers, loss of demand if the size of issues does not meet customer expectations. Rising raw material prices Increased input costs (due to the costs of adapting agricultural and dairy farms to climate mitigation requirements). Reputation Changes in Consumer Priorities Changing consumer preferences and growing demand for products with minimal environmental impact may lead to a reduction in demand for goods if some products do not meet the need for new innovative solutions; moreover, failure to meet its sustainability targets may lead to a loss of market share. Increased Stakeholder Concerns Failure to meet investors' needs, more expensive borrowing from banks if the Group fails to meet sustainability expectations or causes environmental damage. 148 The Group manages these risks through emissions accounting, reducing them in operations, and collaborating with suppliers by setting requirements. The Group has established a Sustainability Group to ensure that reporting is carried out in line with requirements and that emission reduction measures are implemented. Risk management includes training specialists, support from consultants and strict compliance with legal regulations. In addition, the Group monitors market developments, analyses information, makes investments and integrates emission reduction assessments into planning processes. Monitoring consumer needs and cooperating with suppliers helps to adapt efficiently to changing conditions. Climate-related transformation opportunities have been identified for all transformation events through a potential competitive advantage, for example, competing at a low level of emissions per unit of output. Opportunities were also identified to provide products to customers with ambitious reduction plans. The Group's financial statements do not contain critical climate-related assumptions. IRO-1 – Description of processes to identify and assess material impacts, risks and opportunities 149 The enactment of the Corporate Sustainability Reporting Directive (EU) 2022/2464 (CSRD) and the European Sustainability Reporting Standards (ESRS) established double materiality as the basis for disclosing sustainability information. At the end of 2024, the Group carried out its first assessment of double materiality in the light of the new sustainability reporting requirements. The purpose of this analysis is to identify the environmental, social and governance sustainability issues that are most important to the Group and which will inform the scope of sustainability disclosures and shape the Group's future sustainability strategy. The company's process for assessing double materiality was designed in accordance with the requirements of ESRS. The materiality assessment was carried out in consultation with external and internal experts. ESRS does not prescribe a specific methodology for how a company should plan or conduct a double materiality assessment. Therefore, the Group has developed a process in line with the guidelines set out in ESRS, taking into account the nature and context of its operations and the good sustainability practices applied to date. In the materiality analysis, the Group has considered both the impact and financial materiality aspects and their interrelationships. The process of identifying and assessing significant impacts, risks and opportunities involved members of the Sustainability Team responsible for activities related to the company's significant sustainability themes (as identified in the previous materiality assessment). The assessment also considered the list of sustainability issues to be included in the materiality assessment given by ESRS (ESRS 1, TR 16). The Group has assessed the significance of each sustainability issue individually, based on the ESRS criteria, taking into account the specificities and circumstances of its own operations. The assessment of materiality was based, to the extent possible, on objective information, expert insights from the Group's staff (in the relevant field) and generally accepted scientific advice. Impacts, risks and opportunities have been assessed in the short, medium and long term, which are consistent with the definitions of the time periods set out in the ESRS. The main steps in assessing the double materiality of the Group: 1. Context analysis (value chain and business model). 2. Identifying existing and potential impacts, risks and opportunities. 3. Assessing the significance of impacts, risks and opportunities. 4. Summarising, reviewing and validating the significance results. Other due diligence processes used by the company to identify, assess and monitor the company's current and potential, positive and negative impacts along the value chain, and the use of stakeholder consultation are summarised together with the information disclosed in accordance with the disclosure requirements of GOV-4. All significant impacts, risks and opportunities, including factors that increase the risk of adverse impacts, are detailed later in this report in accordance with the requirements of the standard, together with the disclosures made in accordance with the relevant thematic ESRS. In the materiality analysis, the Group considered the impacts, risks and opportunities associated with the Group through its own operations or as a result of its business relationships. The double materiality assessment process was developed based on the Group's risk management methodology and the company's previous materiality assessment. 150 The previous materiality assessment was based on the Global Reporting Initiative (GRI) methodology. Impact assessment. A sustainability issue is significant in terms of impact when it relates to the Group's significant actual or potential, positive or negative impacts on people or the environment in the short, medium and long term: an inside-out perspective. In assessing the materiality of the impact, the Company has followed the general criteria of the ESRS (Section 3.2 'Significant Issues and Materiality of Information' in ESRS 1) and the European Financial Reporting Advisory Group (EFRAG) practical application guidance. The Company has assessed the materiality of the actual negative effect based on the severity of the effect and the materiality of the potential negative effect based on the severity and likelihood. The assessment of the severity of the impact is based on the magnitude, scope and irreversible nature of the impact. In assessing potential negative impacts on human rights, the severity of the impact is more important than the likelihood, and the company has therefore applied appropriate weights to increase the severity of the impact relative to the likelihood in the assessment of human rights issues. The company has assessed the significance of positive impacts in terms of magnitude and scope for actual impacts and magnitude, scope and likelihood for potential impacts. Financial impact assessment. In assessing the risks and opportunities that have or may have a financial impact, the Group has considered the linkages between its exposure and dependence and the risks and opportunities that may arise from that exposure and dependence. To determine financial materiality, the Company assessed risks and opportunities in terms of likelihood, magnitude and nature using quantitative and qualitative thresholds. The probability was assessed on a scale from 1 to 5, where 1 is a very low probability (less than 5%) and 5 is a very high probability (more than 50%), and the magnitude of the financial impact on a scale from 1 to 5, where 1 is a very low financial impact (no change or a small decrease in EBITDA forecast, negative impact on profit between >0% and <0.5%); and 5 is a very high financial impact (negative impact on EBITDA, negative impact on profit >5%). The financial impact weights used in the double materiality assessment are aligned with the company's overall risk assessment methodology. For the double materiality assessment, the company only assessed risks related to sustainability. For the double materiality assessment, decisions were taken through discussions at the Sustainability Team meetings. The results of the double materiality assessment were presented and endorsed at the Group Management meeting. The double materiality assessment process has been developed based on the company's risk management methodology, but is not currently integrated into the company's overall risk assessment and management process. The process for identifying, assessing and managing sustainability-related opportunities is also not integrated into the overall corporate governance process. The need to integrate these processes will be considered within the Group in the light of sustainability best practices emerging and prevalent in the market. The results of the double materiality assessment are planned to be reviewed annually. 151 IRO-1 E2 – Description of processes to identify and assess material impacts, risks and opportunities In order to identify significant impacts, risks, opportunities, the Group has analysed its locations and business activities to identify actual and potential pollution-related impacts, risks and opportunities in its operations and upstream and downstream parts of the value chain. The identification and assessment process and methodology were the same as described in IRO-1 - – Description of processes to identify and assess material impacts, risks and opportunities. Community participation is ensured in the process of issuing Integrated Pollution Prevention and Control permits (IPPC). The team shall carry out consultations with affected communities in accordance with established procedures. In addition, information is provided in accordance with applicable legal and environmental provisions when planning production changes. IRO-1 E3 – Description of the processes to identify and assess material impacts, risks and opportunities related to water and marine resources In order to identify significant impacts, risks, opportunities, the Group has analysed its assets and activities to identify actual and potential impacts, risks and opportunities related to water and marine resources in its operations and upstream and downstream of the value chain. The identification and assessment process and methodology were the same as described in IRO-1 - – Description of processes to identify and assess material impacts, risks and opportunities. The Group is not currently experiencing any water restrictions and therefore no consultation with affected communities is taking place. However, in the event of an emergency, there are municipal arrangements in place whereby water supply would be provided first to the urban population in response to the needs of the community. In such a situation, the Group would have to slow down or redistribute production flows if necessary. IRO-1 E4 – Description of processes to identify and assess material impacts, risks and opportunities related to biodiversity and ecosystems The Group has assessed the importance of biodiversity to its business model and has identified (incorporating both its operational and value chain analysis) that the main risk relates to the stability of raw material supply. This risk is directly linked to the dependence of the business model on the main raw material. Physical risks arise from ecosystem degradation and climate change. Dependence on natural resources (raw materials, water, soil) can affect supply chains and production efficiency, while extreme weather events can reduce the quality and availability of resources. Transformation risks relate to increasing regulatory and adaptation requirements on farmers to reduce impacts on ecosystems. Systemic risks include global changes in ecosystems that can disrupt supply chains and have long-term impacts on the availability of natural resources. The Group reduces its dependence on sensitive ecosystems by introducing alternative sourcing solutions, investing in the responsible management of natural resources and working with stakeholders to implement environmental measures. 152 The Group's direct activities are not located in areas sensitive for biodiversity conservation and therefore no direct negative impacts on such areas have been identified. However, the supply chain may have an impact on biodiversity and the Group monitors potential risks and assesses suppliers' environmental compliance. Stakeholders were not directly involved in the analysis of impacts on biodiversity - the assessments were based on publicly available data. However, information provided by stakeholders has been used to identify the most significant sustainability themes, as described in more detail in SBM-2 Stakeholder Interests and Views and IRO-1 - Description of processes to identify and assess material impacts, risks and opportunities. The Group has no identified requirements to undertake biodiversity mitigation measures under EU Directives or other regulations, as no such need has been identified in its operations. IRO-1 E5 – Description of processes to identify and assess material impacts, risks and opportunities related to resource use and the circular economy The Group has carried out an analysis of its assets and activities to identify potential and actual impacts, risks and opportunities related to resource use and the circular economy. This analysis covers both primary resources (inputs) and final products and wastes (outputs), looking at supply and value chains. The methodologies used and the involvement of affected communities have been carried out to the extent described in SBM-2 Stakeholder interests and views and IRO-1 - Description of processes to identify and assess material impacts, risks and opportunities. IRO-2 – Disclosure requirements in ESRS covered by the Group’s sustainability statement A table of contents listing the disclosure requirements that have been met in the preparation of the Sustainability Statement, taking into account the results of the materiality assessment, can be found in the ESRS Indicators List section of this report. A table of all data items required by other EU legislation as specified in Appendix B of the ESRS standard is available in the ESRS list of data items required by other EU legislation section. The material information to be disclosed was determined through a double materiality assessment in accordance with the criteria set out in Section 3.2 of ESRS 1, Significant Matters and Materiality of Information. The Group has assessed the topic of climate change as material and therefore does not omit the related disclosure requirements and discloses them in E1 Climate change. 153 ENVIRONMENTAL AREA E1 CLIMATE CHANGE SBM-3, E1 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model A summary of the Group's significant impacts, risks and opportunities in the Climate Change topic is presented in ESRS Part 2 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model. This section provides a more detailed description of these impacts, risks and opportunities and their relationship to the Group's strategy and business model. In the previous reporting period, the Group identified significant impacts related to climate change and energy based on the Global Reporting Initiative (GRI) guidelines. These are described in the Consolidated Social Responsibility and Sustainability Report 2023. In the reporting year, the Group conducted a double materiality assessment for the first time. Significant environmental impact topics were also found to be financially material. The Group has identified the following significant negative impacts contributing to climate change through emissions: ● In the upstream, dairy production is the largest contributor to greenhouse gas (GHG) emissions, mainly due to livestock and feed production. ● In the midstream, production processes with a significant use of electricity and heat, with GHG emissions related to the production technology. ● In logistics, transport emissions from both the arrival of raw materials and the delivery of products. Positive environmental impacts of the Group's activities are identified: Working with milk producers to reduce GHG emissions and help milk suppliers adapt to lower environmental impact requirements and expectations. Reducing emissions through energy efficiency projects and vehicle modernisation. The Group is directly exposed to these significant impacts, both through its own operations and through its business relationships with its supply chain partners. Significant risks have been assessed through the Climate Risk Assessment. The risks identified are further described in Part 2 of the ESRS (SBM-3 Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model). The Group is exposed to climate-related risks through its direct operations and may also be indirectly affected by such risks across its value chain. The Group's strategy for efficiency, innovation and sustainability can be successfully linked to the management of climate change risks and opportunities along the value chain. 154 These impacts and risks are directly linked to the Group's business model and strategy, as the dairy supply chain is a significant source of methane emissions, and cooperation with suppliers to reduce emissions is essential. In addition, the production processes depend on intensive energy use, making investments in renewable energy a strategic focus. Logistics also generates additional emissions, which makes it necessary to optimise transport processes. In this context, the Group is taking the following actions: ● Finding ways to improve energy efficiency, ● Aims to adapt its activities to EU climate policy requirements, ensuring compliance with increasingly stringent environmental standards, ● Invests in innovation and technology, including renewable energy and production technologies with a lower environmental impact, which also increase competitiveness ● Optimises logistics to reduce emissions from transport. These actions reflect the Group's strategic objectives and changes in its business model, which are focused on sustainability and efficiency. Financial impact and sources of funding The Group has not identified any current financial impacts at this time. However, the following challenges may arise in the longer term: Impairment of assets if investment in new, more sustainable production technologies is needed. Increasing financial commitments related to regulatory requirements to reduce emissions. Supply chain risks if climate change affects milk production and the supply of raw materials. Investments in sustainability solutions are expected to be funded from the following sources: Own funds; EU green transformation funds and grants Group resilience The Group aims to be prepared to manage the impacts and risks of climate change through sustainability initiatives and strategic resilience building. The qualitative analysis carried out as part of the Climate Risk Assessment shows that investing in sustainability in the medium and long term can deliver financial benefits and ensure long-term competitiveness. While a quantitative resilience analysis has not yet been carried out, the qualitative assessments carried out during the Climate Risk Assessment (as disclosed in SBM-3 Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model) show that the Group is preparing for the challenges ahead. E1-1 - Transition plan for climate change mitigation Transition plan for climate change mitigation 155 According to the ESRS definition, a transformation plan is a part of a joint undertaking's strategy that sets out its objectives, actions and resources for the transition to a lower carbon economy, including actions such as reducing its GHG emissions to limit global warming to 1.5 °C and neutralise its impact on climate. Based on this definition, The Group has not yet developed a full and comprehensive transformation plan, but has set targets and identified first actions for the period 2025-2027. The objectives and actions are described in E1-3 - Actions and resources in relation to climate change policies and E1-4 - Targets related to climate change mitigation and adaptation. The latter section explains which decarbonisation levers have been identified and what key actions are planned. The preparation of a long-term roadmap towards a zero-emission balance in line with the science-based targets has started, i.e. a roadmap with targets and actions for the period 2025-2027 has already been prepared. It is planned to complement this plan and to prepare a full transformation plan in 2026. The Group has set out in its Action Plan to join the Science Based Targets Initiative (SBTi) and align the Group's targets with the 1.5 °C global warming limit, including specific GHG reduction targets. Strategic actions integrated into business strategy and financial planning: Switching to green energy sources (solar, wind) in production processes. Improving energy efficiency and modernising production technologies to reduce emissions. Building a sustainable supply chain: working with milk suppliers to reduce emissions, including methane reduction in livestock production. Product innovation: low-emission products that meet consumer demands.Adjusting the business model: moving towards a circular economy, increasing recycling and the use of waste for energy production. Long-term financing strategies: ● Green loan mechanisms. ● Taxonomy-compatible sources of finance that ensure access to capital. ● Evaluating investments in terms of their impact on GHG reductions and compliance with sustainability standards. No overall investments related to the implementation of a transition plan for climate change mitigation actions (as disclosed under E1-3) are currently planned. In the short term, annual investments will be relied upon in line with the objectives, strategy and sustainability policy. Possible sources of funding include EU green transformation funds and grants. The taxonomic economic activities that meet the criteria set out in relation to the key capital cost and performance indicators are disclosed in the section "Disclosure of compliance with the EU Taxonomy". The analysis of the amount of GHG emissions likely to result from the sale of the company's main assets and products over their useful life is presented below. 156 Fixed assets: The Group's production facilities, logistics transport fleet and infrastructure are the largest sources of Scope 1 and 2 GHG emissions. The largest GHG emissions are caused by the use of heat and electricity in dairy processing. The total GHG emissions associated with fixed assets have not yet been estimated. However, in 2024, emissions from fixed assets accounted for 0.5% of total GHG emissions. Based on the available data, the total emissions could be projected to be higher, but the Group assesses that these assets would not pose significant risks to the achievement of GHG reduction targets. Products: Scope 3 emissions are mainly linked to the dairy supply chain, with over 93% of total emissions occurring in the supply and production stages of raw materials, including 91% from dairy farms. The Group does not have a direct role in reducing these emissions, and there is therefore a risk to the achievement of the Group's GHG reduction targets. In order to contribute to GHG reductions, the Group works with suppliers and regulators to develop emission reduction measures. Other actions are further described in E1-3 - Actions and resources related to climate change policy. The Group does not currently have a plan in place to ensure that the economic activities comply with the criteria set out in Commission Delegated Regulation EU 2021/2139. The Group has no investments in the coal, oil or gas industries. The group is subject to EU benchmarks aligned with the Paris Agreement. The Group's GHG reduction plan has been approved by management in the Strategic Plan 2025-2027. Progress is assessed at least once a year and interim assessments are initiated as necessary. E1-2 – Policies related to climate change mitigation and adaptation MDR-P – Policies adopted to manage material sustainability matters The Group's Sustainability Policy has been adopted and covers key sustainability issues related to significant impacts, risks and opportunities. The objective of the policy is to ensure a sustainable business model, taking into account environmental, social and governance (ESG) considerations. The policy sets out key objectives: ● Environment - responsible use of natural resources, climate change mitigation, reducing pollution and protecting biodiversity. ● Governance - transparent management, accountability for achieving sustainability goals, ethical standards. ● On the social side, workers' rights, gender equality, safe working conditions and supply chain responsibility. 157 In its sustainability policy, the Group is committed to reducing its environmental impact and seeking the contribution of all stakeholders along the value chain, to reducing greenhouse gas emissions - contributing to climate change mitigation and adaptation. To this end, the Group is implementing measures to move towards a lower carbon footprint business model, with a focus on improving energy efficiency, the transition to renewable energy sources, and the assessment of supply chain data. The objectives are described in E1-4 - Targets related to climate change mitigation and adaptation. The Group is also committed to contributing to: ● Saving water by optimising production processes and reducing water consumption; ● Promoting the circular economy by recycling waste and improving resource efficiency; ● Working with raw milk suppliers to reduce GHG emissions in the agricultural sector; ● Ensuring a sustainable supply chain by ensuring that products and raw materials purchased do not contribute to deforestation and comply with EU regulations. The implementation of the policy is monitored on an ongoing basis to ensure its relevance and consistency with legislation and good practice. The Sustainability Policy applies to all of the Group's activities - there are no specific exceptions. The highest level of responsibility for implementing the sustainability policy is the Group's management, headed by Director Dalius Trumpa. Management is committed to regularly reviewing the policy and ensuring that it is implemented and updated in line with the latest legislative requirements and industry best practices. In implementing its Sustainability Policy, the Group adheres to international standards and initiatives, including ISO 14001, SBTi (Science Based Targets initiative) and the European Union's European Union Deforestation Reduction Regulation (EUDR), the EU Green Deal. Stakeholder interests have been taken into account in the policy formulation to the extent that they have been included in the materiality assessments, which have helped to identify the most important social, environmental and governance issues. For more information, see the Materiality Assessment document. The Sustainability Policy is publicly available on the Group's website. Information on the Policy has also been communicated to suppliers through formal letters to ensure its implementation throughout the supply chain. E1-3 - Actions and resources related to climate change policy MDR-A. Actions and resources in relation to material sustainability matters Key actions to mitigate climate change were implemented in the reporting year: 158 ● Improving energy efficiency (decarbonisation lever - energy efficiency and reduction of consumption) ● Use of renewable energy (decarbonisation lever - use of renewable energy) ● Waste reduction (decarbonisation - process abandonment, substitution or modification) ● Supply chain optimisation (decarbonisation - process abandonment, substitution or modification) The Group has launched initiatives to protect forests and support the agricultural sector in order to reduce GHG emissions and global biodiversity loss. The Group's next steps for the period 2025-2027 are to develop a long-term GHG reduction roadmap covering the entire value chain and intermediate targets towards climate neutrality, to join the Science Based Targets (SBTi) initiative and to align the Group's targets with the 1.5°C global warming limit by setting specific GHG reduction targets. Actions related to risk management are described in the section Climate risk assessment and management (ESRS 2 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model). Anticipated actions for the period 2025-2027: ● Assess options and prepare a roadmap for reducing life cycle emissions from products; first steps towards this action include extending the Scope 3 GHG emission calculation thresholds to include packaging, end-of-life product stewardship, working with farmers, industry groups to reduce emissions (decarbonisation lever - product abandonment, substitution or modification), ● Further improve energy efficiency - develop an action plan to improve energy efficiency and optimise the performance of installations/processes (decarbonisation lever - energy efficiency and consumption reduction), ● Increase the use of renewable energy (the decarbonisation lever - renewable energy), ● Assess the transformation of logistics systems towards less polluting transport by analysing possible measures such as electric vehicles, alternative fuels and optimisation of transport routes (decarbonisation lever - fuel switching). The group's priority area is decarbonising the supply chain. Working with dairy producers and the Ministry of Agriculture to apply science-based emission reduction measures in the sector. The Group plans to reduce fuel consumption in transport, and natural gas used for drying products will be replaced by biofuel heat supplied by the municipality. The Group also already uses part of its electricity from renewable sources. In the near future, by 2027, the Group plans to switch to using only green electricity. All of these actions contribute to the Group's long-term policy objectives to reduce its environmental impact and to seek the contribution of all stakeholders along the value chain. They aim to comply with international climate change commitments. 159 All actions are within the framework of the Strategic Plan 2025-2027, and a long-term climate neutrality plan based on science-based targets is under preparation. The objectives of the Strategic Plan are described in section E1-4 - Targets related to climate change mitigation and adaptation. The main scope of the actions covers the entire chain of the Group's activities, from the supply of raw materials to the marketing and end-of-life of the final products, as well as all the Group's products and geographic areas. The Group has not currently implemented any specific actions for those affected by significant GHG emissions. However, the Group is pursuing sustainability initiatives focused on reducing emissions across the entire value chain, with the aim of achieving a long-term positive impact on the environment and society. By 2025, the Group had set a target to reduce direct GHG emissions (Scope 1 and Scope 2) by 25%, reaching a reduction of 21.7% in 2024. The extent of the further reductions expected is further disclosed in section E1-4 - Targets related to climate change mitigation and adaptation. The Group does not currently have a separate financial or capital expenditure plan for the expansion of mitigation actions or taxonomic activities. However, it intends to pursue its sustainability objectives through annual investments in line with its sustainability policy, strategy and objectives. Data on the monetary amounts of significant capital expenditure and operating expenses attributable to the key performance indicators required under Commission Delegated Regulation (EU) 2021/2178 shall be disclosed in the section "Disclosure of compliance with the EU Taxonomy". The Group does not currently have a capital expenditure plan to expand the taxonomy activities that meet the criteria, or to seek to bring the taxonomy activities into compliance with the technical analysis criteria. The Group has not yet projected specific costs for implementing its mitigation strategy and adapting to a sustainable economic transition. However, the following areas are foreseen: ● Operating costs: ○ Implementation of energy efficiency measures, including costs for servicing equipment and optimising energy consumption. ○ Deploying renewable energy solutions. ● Cost of capital: ○ Modernisation projects and plant upgrades with modern technologies that reduce emissions. ○ Installation of renewable energy infrastructure such as solar power plants, biogas plants and other renewable fuels. E1-4 - Targets related to climate change mitigation and adaptation MDR-T. Tracking effectiveness of policies and actions through targets The Group has set measurable, results-oriented targets to reduce its environmental impact and improve the sustainability of its operations: Until 2027 160 ● Reduce direct GHG emissions (Scope 1 and Scope 2 emissions) by 30% compared to 2020 levels and indirect supply chain emissions (Scope 3 emissions) by 5% (linked to the Sustainability Policy's commitment to reduce environmental impacts and GHG emissions), ● The target is to source 90% of electricity and heat from renewable energy sources (linked to the commitment to increase the use of renewable energy in the Sustainability Policy), ● Reduce energy intensity by 2% (linked to the commitment in the Sustainability Policy to reduce environmental impacts). By 2027, the Group aims to reduce its Scope 1 and 2 GHG emissions by 30% and its Scope 3 GHG emissions by 5% compared to 2020 levels. The long-term goal is to reach net zero emissions by 2050, including the entire value chain. All of these targets cover the Group's operations as well as upstream and downstream parts of the value chain, including supply from farms in Lithuania, Latvia and Estonia, which account for more than 91% of the Group's GHG emissions. The Group's Scope 3 GHG emissions account for over 95% of total GHG emissions. Cooperation with dairy producers is therefore a priority area. Reducing supply chain GHG emissions is a priority. The intermediate targets and more detailed information are presented in Table 7 GHG emission reduction targets. The Group's targets have been set after taking into account historical data, the Group's policies, business development trends, new technologies and regulatory developments, strategic objectives and the EU's climate neutrality ambitions. It is planned that by 2025-2026 the targets will be aligned and validated under the Science Based Targets Initiative ("SBTi"). The objectives were set in the light of the results of the materiality assessment, a broader description of which, as well as aspects related to stakeholder involvement, is provided in the General Part ESRS 2 IRO-1. In the event of changes to the targets, indicators or the methodology used to calculate them, information will be provided in an updated report. Targets set during the reporting period; no changes recorded. The Group monitors progress against its targets by analysing the data in the GHG inventory and regularly reporting it to management and publishing it in annual reports. Performance is measured against the targets set, the details of which are shown in Table 7. All GHG reduction targets are general and do not include carbon credits or offsets. The assumptions of the company's GHG reduction plan are based on a number of main thrusts. Firstly, a switch to renewable thermal energy is envisaged, thus replacing natural gas. The plan is to switch completely to green electricity over the next three years and to reduce the use of fossil fuels for both electricity generation and transport by optimising logistics and investing in more sustainable vehicles. In the base year, 2020, Scope 1 and Scope 2 emissions amounted to 41,609 tCO2e, and were reduced to 32,577 tCO2e in 2024. The initial value is considered representative as 2020 was considered as a year of normal operations for the Group. 161 The Group's planned GHG reduction actions include both operational actions and product portfolio changes. The company is introducing new technologies, reducing energy consumption (improving energy efficiency and optimising production processes, decarbonisation lever - Energy Efficiency and Consumption Reduction), optimising logistics (decarbonisation lever - fuel switching), and strengthening cooperation with supply chain partners, Aiming at reducing product life cycle emissions (reduction of emissions from dairy suppliers, feed producers, decarbonisation lever - product abandonment, substitution or modification), Use of renewable energy (decarbonisation lever - use of renewable energy). These measures will be further fleshed out in the context of a long-term GHG reduction plan, with the aim of achieving meaningful GHG reduction targets and ensuring long-term coherence with the Paris Agreement and EU climate policy. Table 7. GHG emission reduction targets Base year 2020 2025 target 2026 target 2027 target Scope 1 and 2 emissions (kt CO2e) 42 31 30 29 Reduction compared to base year -25% -27% -30% Scope 3 emissions (kt CO2e) 632 625 613 600 Reduction compared to base year -1% -3% -5% GHG emissions (kt CO2e) 673 656 643 629 Reduction compared to base year -2% -4% -7% Note: Targets are based on market-based GHG calculations. The Strategic Plan 2025-2027 aims to reduce greenhouse gas (GHG) emissions by 30% by replacing fossil fuels with alternative energy sources and by 5% through the introduction of direct data collection systems for dairy raw materials. No new technologies are currently planned. E1-5 - Energy consumption and energy mix Table 8. Energy consumption and energy mix Energy consumption and mix 2024 (1) Consumption of Hard Coal and Coal-derived Fuels (MWh) 0 (2) Consumption of Crude Oil and Petroleum-derived Fuels (MWh) 46 511 (3) Consumption of Natural Gas (MWh) 18 891 (4) Consumption of Other Fossil Fuels (MWh) 0 (5) Consumption of Purchased Electricity, Heat, Steam and Cooling from Fossil Fuel Sources (MWh) 25 299 (6) Total Fossil Fuel Energy Consumption (MWh) (sum of rows 1-5) 90 763 Share of Fossil Fuel Energy in Total Energy Consumption (%) 48% (7) Consumption of Nuclear Fuel (MWh) 0 Share of Nuclear Energy in Total Energy Consumption (%) 0 (8) Consumption of Renewable Fuels, Including Biomass (which also covers bio-based industrial and municipal waste, biogas, renewable hydrogen, etc.) 22 (9) Consumption of Purchased Electricity, Heat, Steam and Cooling from Renewable Sources (MWh) 98 439 (10) Consumption of Renewable Energy Generated without Fuel Combustion (MWh) (11) Total Renewable Energy Consumption (MWh) (sum of rows 8-10) 98 524 Share of Renewable Energy in Total Energy Consumption (%) 52% Total Energy Consumption (MWh) (sum of rows 6 and 11) 189 162 162 Note: In 2024, 63.1 MWh of green electricity generated by the photovoltaic power plant was fed into the grid, while 5,921.3 MWh of thermal energy from heat pumps was consumed for industrial use. Table 9. Energy consumption intensity Energy Consumption Intensity per Net Revenue 2023 2024 Change in % Total Energy Consumption from Activities in Climate Change Mitigation and Adaptation Key Sectors Divided by Net Revenue Generated from Those Activities (MWh / EUR) 2 264 1 839 -19% Note: Link to income line in the financial statements: Profit/(loss) statement line 1. The calculation of the energy intensity is based on total energy consumption and net revenues from activities in sectors with high climate impact. For these calculations, the Group refers to the manufacturing sector of Section C, namely activity class 10.51: dairy activities and cheese production. A reconciliation of the amount of net income from activities in sectors with a high climate impact has been carried out with line 1 of the profit and loss account. E1-6 – Gross Scopes 1, 2, 3 and Total GHG emissions 163 All GHG emissions data from Group companies are consolidated. During the reporting year, there were no changes to the definition of the starting and ending links of the Group and its value chain. Table 10 GHG emissions Emission type Retrospective data Base year 2020 2023 2024 Comparison with base year Comparison with previous year (% N / N-1) Scope 1 GHG emissions Total Scope 1 GHG Emissions (tCO2e) 23 206 14 504 17 151 -26% 18% Percentage of Scope 1 GHG Emissions Covered by a Regulated Emissions Trading Scheme (ETS) (%) - - - - - Scope 2 GHG emissions Total Scope 2 GHG Emissions (Market-Based Method) (tCO2e) 18 403 30 676 15 426 -16% -50% Total Scope 2 GHG Emissions (Location-Based Method) (tCO2e) 13 269 7 626 7 638 -42% 0% Material Scope 3 Emissions Total Indirect (Scope 3) GHG Emissions (tCO2e) 631 535 682 924 628 3220 -1% -8% 1. Purchased Goods and Services 620 206 672 370 616 698 -1% -8% 2. Capital Goods 1 851 2 095 3 117 68% 49% 3. Fuel- and Energy-Related Activities (not included in Scope 1 or 2) 4 288 2 771 3 161 -26% 14% 4. Upstream Transportation and Distribution 604 772 708 17% -8% 5. Waste Generated in Operations 327 261 264 -19% 1% 9. Downstream Transportation and Distribution 4 259 4 655 4 272 0% -8% Total GHG Emissions Total GHG Emissions (Location-Based Method) (tCO2e) 668 008 705 053 653 008 -2% -7% Total GHG Emissions (Market-Based Method) (tCO2e) 673 142 728 103 660 796 -2% -9% 164 Note: 50.4% of the electricity consumed in 2024 was covered by the Guarantee of Origin for electricity from renewable sources. In calculating “Total Scope 2 GHG emissions using the location-based method (tCO2e),” only electricity-related emissions were assessed, based on actual electricity purchases. There is no available methodology for assessing heat-related emissions using the location-based approach, therefore these emissions are not included in this assessment. GHG calculation methodology The calculations have been carried out in accordance with the Greenhouse Gas Protocol (GHG Protocol) standards and the guidelines of the Intergovernmental Panel on Climate Change (IPCC). All direct Scope 1 emissions are related to activities controlled by the Group, such as emissions from the Group’s vehicles and other direct emissions from production facilities. The calculations include CO₂, CH₄, N₂O, and fluorinated greenhouse gases (HFCs and PFCs), expressed in carbon dioxide equivalents (CO₂e). Scope 2 emissions refer to indirect emissions from the Group’s energy consumption, such as purchased electricity and heat. Scope 3 emissions: we have assessed the categories most relevant to our operations: 1. Purchased goods and services; 2. Capital goods; 3. Fuel- and energy-related activities (not included in Scope 1 or 2); 4. Upstream transportation and distribution; 5. Waste generated in operations; 9. Downstream transportation and distribution. The GHG emissions of a group of companies include: Rokiskio suris AB, Rokiskio pieno gamyba UAB, DairyHub.LT UAB, SIA Jekabpils piena kombinats, milk purchasing points, rented warehouses. Under the GHG Protocol, the Group discloses its biogenic CO₂ emissions separately. The largest part of the biogenic emissions is due to the purchase of thermal energy from renewable energy sources. Sources of emission factors used: - IPCC - IPCC AR5 for refrigerants 165 - European Environment Agency – Air Pollutant Emission Inventory Guidebook - Association of Issuing Bodies (AIB) – Residual Mix and Production Mix for electricity - DEFRA - PlasticsEurope - IEA for energy losses - PROBAS database - CCaLC database - tateandlyle.com - Journal of Dairy Science Volume 105, Issue 12, December 2022, Pages 9713-9725 - Cool Farm Tool for assessing farm emissions In 2024, 100% of Scope 3 emissions are estimated based on activity-specific data, 12% are estimated based on primary data from suppliers or other value chain partners GHG assessment of dairy farms using the Cool Farm Tool website tool started in 2024. Initially, seven Lithuanian farms were assessed. The assessment was carried out for milk sold in 2023. Subsequently, 8 farms were assessed for milk sold in 2024. The results are better than the average emissions: 0.955 tCO₂e/t FPCM in 2023, 0.903 tCO₂e/t FPCM in 2024. As a consequence, the GHG indicator and the total amount of emissions from the 2023 Scope 3 inputs changed. The table below shows the Scope 3 GHG emission categories and the reporting coverage/assumptions applied. Table 11. Scope 3 emissions Evaluation area Assumptions Purchased Goods and Services The main raw materials used in production and packaging are assessed (Only significant quantities are assessed, small items are not assessed and represent <1% of total quantities). Capital Goods All expenditure on fixed assets is assessed, using average expenditure emission factors for expenditure categories. Fuel- and Energy-Related Activities (not included in Scope 1 or Scope 2) The energy losses (electricity, heating), and emissions from the consumption of fuel during extraction, processing and transportation, or from purchased electricity, are assessed. Upstream Transportation and Distribution The transportation of main raw materials (based on distance travelled). Waste Generated in Operations Waste transferred for management based on internal waste accounting. Business Travel Minor category, to be assessed in the future. Employee Commuting Minor category, to be assessed in the future. Upstream Leased Assets All related issues have been assessed at Level 1 and Level 2 Downstream Transportation and Distribution Road, sea and rail freight is assessed on the basis of origin-destination points and freight weights. Processing of Sold Products Not relevant, no emission activities involved Use of Sold Products Not relevant, no emission activities involved End-of-Life Treatment of Sold Products Minor category, to be assessed in the future. Downstream Leased Assets Not relevant, no emission activities involved Franchises Not relevant, no emission activities involved Investments Not relevant, no emission activities involved 166 Table 12. GHG intensities GHG Emissions Intensity per Net Revenue Base year 2020 2023 2024 Comparison with base year Comparison with previous year (% N / N-1) Total GHG Emissions (Location-Based Method) per Net Revenue (tCO₂e / monetary unit) 3,168 2,317 1,763 -44% -24% Total GHG Emissions (Market-Based Method) per Net Revenue (tCO₂e / monetary unit) 3,193 2,393 1,785 -44% -25% 167 Note: Link to income line in the financial statements: Profit/(loss) Statement line 1. E1-7 - GHG removals and GHG mitigation projects financed through carbon credits The Group does not currently implement or contribute to projects to absorb or store GHGs in its operations or upstream and downstream of the value chain. E1-8 - Internal carbon pricing The Group does not apply carbon pricing systems. E2 POLLUTION SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model A summary of the Group's significant impacts, risks and opportunities in the topic "Pollution" is presented in ESRS Part 2 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model. This section provides a more detailed description of these impacts, risks and opportunities and their relationship to the Group's strategy and business model. In the previous reporting period, the Group did not identify any significant impacts related to pollution (the report was prepared in accordance with the Global Reporting Initiative (GRI) guidelines). The Group has identified that air pollution from technological installations, including pollution related to transportation, manufacturing and combustion processes (e.g., particulate matter), is a significant factor. Although the Group complies with the regulatory and permissible limits, some negative environmental impacts remain. Air pollution can affect air quality, ecosystems and human well-being. Packaging waste from the consumption of the Group's dairy products also contributes to pollution and, if not recycled properly, can cause environmental pollution and contribute to microplastic pollution. However, food packaging is strictly regulated and complies with all established safe consumption requirements. 168 Water and soil pollution along the supply chain, particularly from agricultural activities, was also assessed as a negative impact. Sources of pollution such as the management of animal waste, the use of fertilisers or pesticides can affect water bodies and soil quality, which can have impacts on both ecosystems and people's quality of life. In addition, the Group has identified the risk that increasing environmental requirements on this topic may lead to additional financial costs. Their implementation may require significant investments in environmental measures and technologies. The main objective of the business model is the production of high quality dairy products, but this is energy, water and raw material intensive, which are the main environmental impact factors. The Group's companies continuously monitor the regulatory environment, assess potential risks and plan actions, as well as monitoring and staying within pollution limits. The impacts and risks discussed in this topic arise directly from the Group's business model, which includes the raw materials and consumables used, the production and transport of dairy products, the packaging of the products, and their environmental impact at the end of the value chain. The Group is therefore exposed to significant impacts both through its direct activities and through business relationships along the value chain. In order to reduce its environmental impact, the Group continuously reviews its business model, monitors market developments and assesses opportunities to move towards less polluting production. This includes investing in the evaluation and introduction of sustainable packaging materials, and working with farms that manage their sustainability aspects responsibly through clear selection criteria. The Group has long-term relationships with milk suppliers (farmers), packaging manufacturers and logistics companies. Significant risks may have a financial impact on the Group's operations. Higher costs are expected due to compliance with pollution taxes and regulatory requirements, Investments in abatement technologies reduce free cash flow. Water treatment infrastructure costs are rising in order to comply with stricter environmental standards. The risk of losing business partners or funding could arise from non-compliance with sustainability criteria. Depreciation of productive assets is possible due to stricter environmental requirements and their impact on business operations. The Group plans to finance the implementation of its strategic objectives from its own resources and to benefit from EU climate change programmes and grants The resilience of the Group's strategy and business model in terms of its ability to address significant impacts and risks and to take advantage of its significant opportunities has been considered to the extent that it has been assessed through a double materiality assessment. The Group is strengthening its strategic resilience to pollution-related risks through sustainability initiatives and investment in environmental measures. The resilience analysis shows that in the medium to long term, these investments have the potential to increase financial returns and long-term competitiveness. A quantitative resilience analysis has not yet been carried out. E2-1 - Policies related to pollution MDR-P. Policies adopted to manage material sustainability matters 169 The Group's management of significant impacts and risks on the topic of pollution is guided by the Sustainability Policy. We are committed to reducing the environmental impact of our activities and strive to ensure that all stakeholders in the value chain contribute to this. A more detailed description of the Sustainability Policy, in line with the requirements of the MDR-P, can be found in section E1-2 - Policies related to climate change mitigation and adaptation. The Group's Pollution Policy is a corporate statement and commitment of the Group. The specific pollutants to which the policy applies are identified in the Environmental Permits and the Group Strategy. The policy addresses the mitigation of negative impacts related to air, water and soil pollution, including prevention and control. This includes Best Management Practices: ● Introducing clean production technologies to reduce emissions and waste; ● Regular maintenance of infrastructure to prevent sources of pollution, such as sewage or hazardous material leaks; ● Real-time monitoring of air, water and soil quality using monitoring systems; ● Ensuring consistent compliance with pollution limits, taking into account local and international standards. The Group also has valid Pollution Prevention and Control permits and monitoring programmes. The Group does not use substances of very high concern in its activities. The Group has measures in place to prevent incidents and emergencies, and to control and limit the impact on people and the environment in the event of such incidents. Incident and emergency management plans are in place to ensure rapid response and containment of pollution. Staff are regularly briefed on these procedures and receive training to ensure effective incident management. E2-2 - Actions and resources related to pollution MDR-A. Actions and resources in relation to material sustainability matters Key actions taken by Group companies to manage significant pollution impacts and risks: Raw material supply. Suppliers implement established sustainability standards (i.e. Supplier Questionnaires, GFSI certifications), which are regularly assessed through annual audits. Detailed sustainability guidelines have been issued and approved for suppliers to ensure mutual understanding and to address challenges more effectively. These actions are aimed at managing the impacts associated with the upstream part of the Group's value chain. Production processes. The production sites in Utena and Rokiškis have Integrated Pollution Prevention and Control permits. Strict limits are set for emissions to air and water, noise, odour and waste management. The results of the environmental inspections confirmed that no irregularities or non-compliances were found. The Group's companies have also implemented an environmental management system in accordance with ISO 14001. 170 To reduce its environmental impact, the Group introduces new technologies to reduce emissions, implements waste management systems and optimises processes to reduce the use of energy and natural resources. In 2024, the capacity of the ammonia compressor station was expanded to accommodate a new warehouse, a new decanter was replaced to process whey, a new water softening system was introduced, the energy distribution of the heat pump was expanded, and part of the wastewater system was rebuilt, among other measures. These actions are aimed at managing the impacts associated with the Group's own operations. Transportation of products. Fuel consumption in the product transport circuit is controlled. The transport fleet is gradually being renewed. All vehicles meet the technical requirements and are repaired and maintained only by authorised service centres. These actions are aimed at managing the impacts related to the Group's own operations. Consumption of products. The aim is to ensure that customers find detailed information on the packaging of products on the proper use and handling of the packaging. This action is aimed at managing impacts related to the final link of the Group's value chain. Regular training is provided to staff on responsible business practices, the use of new technologies and reducing pollution. They are also encouraged to take initiatives in relation to environmental solutions. The Group operates in a wide range of markets, complying with local legislation and environmental requirements. All actions apply across the Group's operations and are not restricted in any way, but are implemented by all Group companies to the extent relevant to their specific activities. These actions help to manage the impacts and risks arising both directly from the Group's operations and through business relationships. The Group has actions in place to mitigate and manage the significant impacts and risks in this topic. Actions for the period 2025-2027 include: ● Conduct compliance audits of suppliers to check compliance with environmental (including pollution) criteria, ● Work with suppliers to provide the necessary support. ● Provide training to farmers on how to apply different techniques to achieve sustainable practices, and support data collection to understand and record the impact of these techniques on soil health ● Conduct analysis and audits to identify the most significant sources of pollution in operations. Actions related to product packaging are described in more detail in topic E5 in section E5-2 Actions and resources related to resource use and circular economy. No incidents or pollution incidents identified in 2024. The Group does not currently have a separate action plan requiring significant capital or operating expenditure. Short-term targets are met through annual investments in line with the sustainability policy. The Group does not yet have a separate plan for future financial resources. E2-3 - Targets related to pollution MDR-T. Tracking effectiveness of policies and actions through targets 171 To manage the issue of pollution, the Group has set objectives, which have been set out in the Sustainability Strategy for the period 2025-2027. These objectives, as well as the outcome for 2024, are identified in the report under ESRS 2 SBM-1 - Strategy, Business Model and Value Chain. The Group's Sustainability Strategy is structured around 5 key areas of sustainability, highlighting the most relevant areas for the Group's activities. Each of the strands is interlinked with priority sustainability themes and links to relevant Sustainable Development Goals. Sustainability policy commitment to reduce the environmental impact of its activities and to seek the contribution of all stakeholders involved in the value chain. The targets set are linked to pollution: ● 0 incidents/accidents related to pollution-related requirements (target related to the activities of Group companies) ● 100% of key suppliers comply with established environmental and/or social standards (the target relates to the upstream part of the value chain, and this target also relates to other significant issues for the Group, which are covered in other topics in the report) ● 100% of farmers audited, according to the applicable animal welfare, environmental, social criteria (the target relates to the upstream part of the value chain, and is also linked to other relevant issues for the Group, which are discussed in other topics of the statement) Incidents are recorded in accordance with the requirements of the ISO 14001 environmental management system. The compliance of the main suppliers with the environmental and/or social standards set out shall be carried out in accordance with the Procurement Unit's procedures for the evaluation of suppliers. Farmers are evaluated on the basis of animal welfare, environmental and social criteria in accordance with the Raw Milk Purchasing Unit's procedure for evaluating dairy farms. These units are responsible for providing and analysing information for management and the sustainability report. These targets apply in all the territories in which the Group operates. The base year from which progress is measured is 2020. The situation has also remained stable during the reporting period. The target values have been established on the basis of the available historical data and the competitive environment. Stakeholders were involved in the setting of the objectives to the extent described in SBM-2 - Stakeholder Interests and Views, and to the extent that they were involved in the double materiality assessment process. There have been no changes to targets, indicators, measurement methodologies, significant assumptions, constraints, data sources or data collection processes during the period. The Strategic Plan does not set any additional targets for reducing air pollution. However, the Group's companies comply with the applicable legislative and regulatory requirements relating to the prevention and control of air pollutants - within specified limits. The targets set relate to the prevention of pollution of both air and other elements (water). 172 The Group has no activities that cause soil contamination, so no cases of such contamination are recorded. According to the available data, the Group does not use or discard substances of concern or very high concern. The aim of avoiding pollution incidents is based on mandatory requirements. E2-4 - Pollution of air, water and soil Table 13. Pollutants (excluding greenhouse gases) No. CAS Number Pollution(1) Emission limit Pollutants emitted to air (column 1a) kg/year to water (column 1b) kg/year to land (column 1c) kg/year to air (column 2a) kg/year to water (column 2b) kg/year to land (column 2c) kg/year 2024 Total phosphorus - 5 000 5 000 5 242 Note: * in accordance with the discharge limits laid down in Annex II to Regulation (EC) No 166/2006. ESRS reporting in the first year and use of the ESRS waiver not to report comparative information in the first year, i.e. information for the previous year. As a result, changes in emissions over time are also not described. The reported amounts are consolidated and include emissions from facilities over which the Group has financial control and facilities over which the Group has operational control. The consolidated quantity includes only emissions from installations that exceed the applicable emission limits set out in Annex II to Regulation (EC) No 166/2006. One plant, UAB Rokiškio pieno gamyba, exceeded the limit for total phosphorus in its production effluent. Group companies do not use microplastics. The amount of microplastics generated by the Group companies' activities is unknown (could be related to packaging). The Group monitors air, water and soil pollution in accordance with legal requirements. Measurements of air pollution are carried out by licensed companies, which prepare pollutant inventory reports, which are used to compile statistical air pollution reports and are submitted to the Environmental Protection Agency (hereinafter "EPA"). Effluent sampling is carried out in accordance with approved methodologies and standards, in accordance with established testing control plans and by accredited laboratories. The data obtained are used to calculate and report discharges to the EPA and to pay pollution charges. The measurements shall be made according to the following methodologies: 173 ● Air pollution measurements: gas analysers (CO, NOx, SO₂, O₂), LAND methodologies for the determination of dust and ammonia, and other standardised test methods. ● Wastewater pollution measurements: carried out in accordance with ISO, LAND and LST EN ISO standards to ensure data reliability and regulatory compliance. The Group follows legislation for accounting and reporting of emissions, including the Regulations on Environmental Monitoring of Operators (No D1-546), the Procedures for Accounting for Emissions to the Environment (No 408) and the EU Regulation on the European Pollutant Release and Transfer Register (No 166/2006). Wastewater pollution from two milk purchasing subsidiaries was not assessed because they do not keep direct records of pollution and do not have the relevant data. E3 WATER AND MARINE RESOURCES SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model A summary of the Group's significant impacts, risks and opportunities in the topic "Water and Marine Resources" is presented in ESRS Part 2 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model. This section provides a more detailed description of these impacts, risks and opportunities and their relationship to the Group's strategy and business model. In the previous reporting period, the Group identified significant impacts under the theme Water Resources Sustainability (the report was prepared in accordance with the Global Reporting Initiative (GRI) guidelines). The Group's core business, dairy production, requires to ensure sanitation and hygiene standards, and the Group's groundwater consumption is relatively high. The Group has its own water point in Rokiškis, where it extracts and treats water for internal use. Most of the water consumed is extracted from the company's own waterworks, while the rest is supplied by the towns' centralised water production companies. The Group's waterworks are operated in compliance with all statutory regulations and the amount of groundwater used does not pose a risk to the local ecosystem. The water point is registered, the water resources are approved by the Lithuanian Geological Survey, the resources used are accounted for and monitored, and reports are submitted in accordance with the established procedures. The extraction and proper use of groundwater resources is regulated by the Ministry of the Environment and supervised through a system of permits, reports and fees. The Group aims to conserve water resources as much as possible and, as far as possible, reuses treated water instead of groundwater. Significant risks in the Group's operations arise from wastewater management. The wastewater generated contains a high level of organic matter. Lithuanian IPPC permits and the EU Water Directive set strict effluent discharge standards, non-compliance with which may result in fines, operational restrictions or necessity to invest in wastewater management infrastructure. In addition, contamination of water bodies can lead to dissatisfaction from local communities and NGOs and negatively affect the company's reputation. 174 Inadequate wastewater treatment can lead to risks of contamination and eutrophication of surface water bodies, and groundwater resources can be reduced if not properly managed. The Group's operations are significantly affected by water use and wastewater management, which have a direct impact on production costs and environmental compliance. To manage this risk, the company has already integrated water efficiency improvement and wastewater management solutions that comply with the requirements of the Lithuanian IPPC permits and EU Directives. The Group intends to invest in advanced wastewater treatment systems and water consumption monitoring, to move towards a circular economy model, and to introduce innovation and less water-intensive technologies. The impacts arise from the Group's business model, as they are directly related to the raw materials and materials used as well as the water resources required for the production processes. The Group's strategy is to minimise these impacts. No significant risks and opportunities have been identified that would have a current financial impact on the Company's financial position, results of operations or cash flows for the current (or next) year. However, in light of potential regulatory changes and environmental requirements, the Group will continue to monitor risks and opportunities to ensure financial stability and to adapt to the changing environment. The Group manages water resources and wastewater risks by implementing sustainability initiatives and building strategic resilience. A quantitative resilience analysis has not yet been carried out. The Group employs various strategies to manage these risks and take advantage of opportunities: ● Short-term measures: Investments in wastewater treatment systems that meet EU and Lithuanian environmental requirements and water consumption monitoring technologies. ● Medium-term strategy: moving towards a circular economy model, recycling organic matter from wastewater into secondary products, reducing water consumption and optimising energy resources. The Group plans to use its own funds and to benefit from grants from EU climate change programmes to achieve its strategic objectives. E3-1 - Policies related to water and marine resources Our Sustainability Policy commits us to improving water efficiency through the adoption of technological solutions, the promotion of water reuse, and fostering employee awareness. This policy is further described in section E1-2 - Policies related to climate change mitigation and adaptation. The Group pursues a Sustainability Policy on the use of water resources and the prevention of pollution, with the aim of using resources efficiently and minimising environmental impact. 175 The implementation and objectives of this policy are described in more detail in E3-2 - Actions and resources related to water and marine resources. The Group has not identified any significant negative impacts or issues related to water use or its environmental impacts, and therefore there is no need for a policy to address water-related issues through product development. For this reason no such policy is in place. The Group's activities are not related to marine resources, and therefore there is no accepted policy or practice on sustainable oceans and seas. The Group also does not have any operational sites in areas of high water scarcity, so no additional policy is needed in this area. E3-2 - Actions and resources related to water and marine resources Minimum disclosure requirement Actions (MDR-A): Actions and resources related to material sustainability matters The Group continuously implements measures to reduce the use and reuse of water resources in the Group's production activities, which are therefore not limited in time. In order to increase efficiency, the Group is introducing new technologies to optimise water consumption in its production processes. Key actions: ● Monitoring and accounting for water consumption. ● Reducing water use through efficiency measures such as automated water supply systems and technological solutions to optimise water use. ● Using secondary water instead of groundwater to reduce freshwater demand. These measures contribute to the Group's sustainability strategy and ensure more efficient use of resources. The Group does not carry out aquatic ecosystem or water body restoration activities as these are not directly related to its field of activity. The Group does not have any operational sites in areas of high water scarcity, so no additional measures are taken in this area. Wastewater treatment includes biological treatment plants with nitrogen and phosphorus removal, providing 96-99% treatment efficiency, and reverse osmosis filtration plants, providing 98% treatment efficiency. Part of the treated water is used for sanitary purposes, reducing the demand for groundwater, and the rest is discharged as treated industrial wastewater, which complies with the EU's and Lithuania's environmental requirements. The contract also transfers part of the wastewater to the city's wastewater operator. The Group is commited to preventing water pollution through: 176 ● Surface stormwater management networks with sand and oil traps that are regularly cleaned. ● Maintenance of WN wastewater treatment plant by environmental services company Rokvesta UAB. It is responsible for controlling the technological process, the technical condition of the plant and monitoring the quality of the waste water. ● Reverse osmosis filtration plants are part of the whey processing process, which is the responsibility of the production plant. The Group has implemented a number of measures to reduce water consumption, including high-pressure washing stations, continuously maintained and leak-proof pipelines, and automated washing systems. Planned future actions: ● Further reducing water use through new technologies and streamlining production processes. ● Introducing a more efficient monitoring system to better monitor water consumption and ensure more effective management. These actions contribute to the Group's policy objectives, reducing environmental impacts and ensuring more sustainable management of water resources. No significant adverse effects requiring compensatory measures have been identified. Progress in previous periods: ● Modernised water treatment process. ● Reconstruction of biological wastewater treatment plants to improve efficiency and ensure high quality performance. Currently, investments in water efficiency are financed from the current year's budget. A separate investment plan is not yet in place and these costs are classified as operating expenses in the consolidated financial statements. A plan for future financial resources has not yet been prepared. E3-3 - Targets related to water and marine resources Minimum disclosure requirement Targets (MDR-T): Tracking effectiveness of policies and actions through targets The Group has set voluntary targets for reducing water consumption, which are in line with the recommendations of reporting standards. They are based on a sustainability strategy and best practices. Water efficiency improvements are not linked to water risk areas or areas of high water scarcity. Key objectives: 177 ● Reducing water consumption by optimising production processes and introducing new technologies. ● Increasing secondary water use by reducing freshwater demand. ● Maintaining the efficiency of wastewater treatment, ensuring compliance with EU and Lithuanian environmental standards. The Group does not exploit marine resources, so there are no targets for the management of marine ecosystems. The Ecological Thresholds methodology has not been applied in setting water consumption reduction targets. The Group has set measurable, results-oriented objectives to improve sustainability and efficiency. The main objective of reducing water use is linked to the Group's sustainability policy, which promotes resource conservation through technological solutions, water reuse and employee awareness. Description of objectives: ● Target: Reduce the intensity of water use by 6% by 2027, by comparing the amount of water used with the amount of milk processed. ● Coverage: the target applies to all the Group's production operations. ● Base year: 2020, baseline 3.57 l of water / 1 t of raw material, target 2027 3.35 l of water / 1 t of raw material. ● Timeframe: 2025-2027, with intermediate targets integrated into the Strategic Plan. ● Methodologies and assumptions: the targets are based on the results of the double materiality assessment, the Sustainability Policy and the ESRS Guidelines. ● Scientific justification: none at present. ● Stakeholder involvement: stakeholders were not directly involved in the setting of the objectives, but their input on key sustainability topics was assessed during the double materiality assessment. The Group has also set the following targets for the period 2025-2027 (the targets are set out, including the relevance of the current year, in ESRS 2 General Part SBM-1 - Strategy, Business Model and Value Chain): ● Increase secondary water consumption by up to 10% (compared to the 2020 baseline). ● Base year: 2020, starting value 8.6% ● Timeframe: 2025-2027, with intermediate targets integrated into the Strategic Plan. ● Methodologies and assumptions: the targets are based on the results of the double materiality assessment, the Sustainability Policy and the ESRS Guidelines. ● Scientific justification: none at present. ● Stakeholder involvement: stakeholders were not directly involved in the setting of the targets, but their input on key sustainability themes was assessed during the double materiality assessment. 178 The targets are monitored annually and reported to management and made public in sustainability reports. Data collection and analysis is carried out on an ongoing basis to assess changes in the indicators and to ensure that the sustainability targets are met. Performance and trends will be analysed in detail in future reporting periods in order to continuously improve strategies and measures. E3-4 - Water consumption Table 14. Water consumption Total water consumption (m³) Amount of recirculated and reused water (m³) Water consumption intensity: total water consumption related to own operations (m³) per million EUR of net revenue Water withdrawal (m³) Water discharge (m³) 2024 Production processes 0 124 857 5 104 1 890 199 2 020 390 Note: Direct measurement data. According to the strategic plan, the company measures water intensity in relation to the volume of milk processed, which in 2024 is 3.90 m3/t. * Water consumption is understood in accordance with the definition provided in Annex 2 of the ESRS as the amount of water withdrawn within the reporting boundary of the undertaking (or facility) that is not discharged into the water environment or transferred to a third party during the reporting period. ** The amount of water discharged is higher than the amount of water taken in as condensate is discharged into the wastewater during the drying process The Group's water consumption is calculated using metrologically verified measuring devices. Water consumption data is collected by direct measurement to ensure accuracy and reliability. The Group does not have any water storage activities (e.g. no reservoirs, no filtration, no storage of water during production). The Group's production processes do not involve the storage of water, but only direct use and discharge. E4 BIODIVERSITY AND ECOSYSTEMS SBM-3, E4 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model A summary of the Group's significant impacts, risks and opportunities in the Biodiversity theme is presented in ESRS Part 2 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model. This section provides a more detailed description of these impacts, risks and opportunities and their relationship to the Group's strategy and business model. In the previous reporting period, the Group did not include this topic in its sustainability statement (the statement was prepared in accordance with the Global Reporting Initiative (GRI) guidelines. 179 In terms of materiality, the risks identified show that ecosystem degradation can lead to higher commodity prices, disrupt supply chains and pose reputational challenges. In order to mitigate negative impacts and contribute to the positive impact of environmental restoration, the Group is actively participating in reforestation activities organised by the State Forestry Service and plans to continue this initiative in future. In addition, the company promotes responsible production, invests in sustainable solutions and supports biodiversity conservation projects. It is also important to note that the Group's impact on biodiversity is concentrated in its direct operations as well as at the beginning and end of the value chain. Key impacts include land use, production processes and resource extraction, which can contribute to deforestation, soil degradation and habitat loss. The Group seeks to work with farmers and suppliers who apply environmental standards and best practices. Although these impacts have not been assessed as significant, the Group continuously monitors them and applies appropriate management solutions to ensure environmental compliance and minimise potential negative impacts. In summary, the significant impacts and risks of biodiversity are closely linked to the Group's business model, especially during the supply phase. Proper management of these aspects can not only mitigate risks but also strengthen the Group's competitiveness. There are currently no significant risks or opportunities that have been identified that could have a material financial impact on the Company's financial position, results of operations or cash flows. Nor have any significant risks or opportunities been identified that would be more likely than not to result in a material adjustment to the carrying amounts of assets and liabilities in the financial statements in the next annual reporting period. The risks identified relate to the long term. The objectives of the Strategic Plan are planned to be implemented using own resources. Access to EU climate change or other funding is also being considered for the implementation of the sustainability strategic objectives. The risk resilience was analysed at two levels of significance. It is also described below in section E4-1 - Transition plan and consideration of biodiversity and ecosystems in the strategy and business model. No significant adverse effects have been identified for this topic. At present, the Group is not aware of any significant impacts related to land degradation, desertification or soil sealing. There are also no identified impacts on endangered species. E4-1 - Transition plan and consideration of biodiversity and ecosystems in the strategy and business model The Group has assessed the resilience of its strategy and business model to changes in biodiversity and ecosystems. The main risks identified include physical, transformational and systemic drivers. Physical risks relate to the loss of ecosystems and climate change, which can affect the availability and quality of natural resources. Extreme weather events can disrupt production and supply and the Group invests in alternative sources of supply and responsible resource management. 180 Risks to transformation are driven by increasing regulatory requirements and changing consumer expectations. To remain competitive, the Group is adapting to new legal requirements, developing sustainable products and investing in staff competences and new technologies. Systemic risks relate to global changes in ecosystems and supply chain stability. The Group builds its resilience through long-term strategic planning, working with organisations and governments to ensure sustainable operations. Resilience analysis covers the Group's activities and the entire value chain. The upstream value chain assesses the impact of suppliers on ecosystems, while the downstream value chain analyses the life cycle of products and waste management. The resilience analysis is based on the following assumptions: ● Ecosystem degradation will continue without active conservation measures. ● Climate change and extreme weather events will have a direct impact on production and supply. ● Regulatory and market requirements will become more stringent, promoting sustainability standards. ● Liabilities of value chain participants will affect the stability of the Group's operations. Periods used for resistance analysis: ● Short-term (1-3 years): focus on managing existing risks and quick solutions - optimising production, reviewing suppliers. ● Medium term (3-10 years): Emphasis on market changes, regulatory requirements and technological innovation. ● Long-term (10+ years): assessing the impacts of global ecosystem and climate change and the implementation of a long-term sustainability strategy. Results of the resilience analysis Managing physical risks involves diversifying sources of supply and reducing dependence on vulnerable ecosystems. In terms of transformation risks, the Group is actively investing in sustainable products and business model transformation to meet increasing environmental requirements. Systemic risks are managed through long-term ecosystem protection measures and collaboration with stakeholders. The overall assessment shows that the Group's strategy is resilient to short- and medium-term risks, but additional actions are needed for long-term stability. Stakeholders were not involved in the resilience analysis. The analysis was carried out based on publicly available data. The Group does not currently have an approved transformation plan to align its business model and strategy with the vision set out in the Kunming-Monreal Global Biodiversity Strategy, the EU Biodiversity Strategy 2030 or the planet's limits to resources. 181 E4-2 - Policies related to biodiversity and ecosystems MDR-P. Policies adopted to manage material sustainability matters The Group does not have a separate biodiversity and ecosystem protection policy, but these aspects are integrated into the overall Sustainability Policy (this policy is described under MDR-P under E1 Climate Change E1-2 - Policies related to climate change mitigation and adaptation). It covers the company's operations, supply chain and responsible sourcing of raw materials to ensure sustainable practices throughout the value chain. This integrated policy ensures that biodiversity issues and risks are managed through the supply chain and responsible sourcing. In our Sustainability Policy, we are committed to ensuring that the ingredients used in our supply chains comply with EU legislation on the supply and export of certain commodities and products related to deforestation and forest degradation to and from the European Union market. In this way, we contribute to the conservation of biodiversity in sensitive regions. The Group's main activities related to biodiversity dependencies: ● Milk production depends directly on the quality of the soil, the availability of water and the agricultural practices used. ● Supply chain - dairy farms operate in land-intensive areas, so working with suppliers can present both risks and opportunities for more sustainable farming. The Group implements a traceability system for raw materials in accordance with the requirements of Hazard Analysis and Critical Control Points (HACCP), ensuring transparency of the origin of products and ingredients. The traceability system allows the traceability of the origin of raw materials and ensures their compliance with sustainability standards. The Group's industrial activities are located in an industrial area and no direct significant effects on biodiversity have been identified in this area. The Group does not currently have a biodiversity monitoring plan or reports, but is monitoring environmental requirements and assessing potential sustainability solutions in its operations. The Group's biodiversity and ecosystem protection policies, as well as its land use and agricultural practices policies, are integrated into the overall Sustainability Policy, which covers operational principles along the supply chain. Although the company does not have a separate, specific biodiversity policy, the Sustainability Strategy includes aspects of responsible resource use, suppliers' environmental commitments and ecosystem protection. The Group has no activities related to the exploitation of oceans and marine resources (so the relevant policy aspects are not relevant). 182 The Group's policy on reducing deforestation is integrated into the overall Sustainability Policy. This is implemented through the supply chain, ensuring responsible sourcing of regulated raw materials and compliance with environmental standards. The Group has not been exposed to the social consequences of biodiversity impacts and therefore has no specific policy instruments to address this issue. However, collaboration with suppliers and regular stakeholder surveys ensure that important sustainability topics are included in decision-making. The Group does not have any operational sites located in areas of sensitive biodiversity. E4-3 Actions and resources related to biodiversity and ecosystems The Group's sustainability strategy aims to reduce the impact of its activities on biodiversity and ecosystems. Although the Group does not directly manage supplier farms, it actively supports and promotes sustainable practices. For example, the Group organises training for farmers, conducts forage quality testing and provides advice to improve farm productivity and sustainability. Training is conducted for farmers on sustainable agriculture, feed quality and conservation of natural resources (minimisation). The Group does not directly manage supplier farms but promotes sustainable practices and responsible farming (avoidance). During the reporting year, a Sustainability Policy was developed in response to emerging requirements and risks, which includes a commitment that the ingredients used comply with the EU legal framework for the supply to and export from the EU market of certain commodities and products associated with deforestation and forest degradation. We also ensure that in certain product categories where ingredients containing oil are used, such ingredients are RSPO certified. Actions that are currently underway and planned for the future that address the topic of biodiversity in the supply chain: ● Conduct compliance audits of suppliers against environmental criteria. ● Work with suppliers to provide the necessary assistance and support in their sustainability initiatives. The Group does not apply specific countervailing actions for biodiversity impacts as no significant adverse impacts have been identified. An action plan in this area has not yet been established. The need to include local knowledge in biodiversity actions has not yet been identified. The Group plans to meet these targets through annual investments, based on its sustainability policy and strategy. There is not yet a separate long-term financing plan, but the short-term objectives are integrated into the annual budgets. Information on financial resources is provided in the Group's financial statements. 183 No cases of actual significant effects have been identified that would require additional compensatory action. The Group monitors progress in implementing the Action Plan and provides quantitative and qualitative information in sustainability statements. E4-4. Targets related to biodiversity and ecosystems MDR-T. Tracking effectiveness of policies and actions through targets The Group has not set specific, measurable, results-based biodiversity targets. As a result, their relationship to policy objectives, targets, coverage of targets in the value chain or baselines and milestones have not been defined. Although there are no biodiversity targets, the Group periodically monitors the effectiveness of its policies and actions through an overall assessment of its sustainability strategy, including environmental impact indicators. However, specific methodologies, indicators and baselines for this monitoring are not currently established. The Group has not included biodiversity impacts in its targets and has not ranked them according to the mitigation hierarchy. The Group reports periodically to management and publishes a public sustainability statementreport, which provides an overview of the results of the actions and the targets achieved. The Group has not established and does not apply ecological thresholds and therefore responsibility for compliance has not been allocated. E4-5 – Impact metrics related to biodiversity and ecosystems change The Group does not have any indicators related to significant positive impact on biodiversity and ecosystems. E5 CIRCULAR ECONOMY SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model A summary of the Group's significant impacts, risks and opportunities in the Circular Economy theme is presented in ESRS Part 2 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model. This section provides a more detailed description of these impacts, risks and opportunities and their relationship to the Group's strategy and business model. In the previous reporting period, the Group identified significant impacts related to waste, packaging and the circular economy based on the Global Reporting Initiative (GRI) guidelines. These are described in the Consolidated Social Responsibility and Sustainability Report 2023. 184 Product packaging The packaging of food products must first and foremost be safe and ensure the quality and safety of the product throughout its shelf life. Dairy products are very sensitive to environmental influences, so the functionality and design of the packaging is essential to ensure product safety. Ever-increasing consumption around the world has led to environmental problems, diminishing resources and waste accumulation. The environmental impact of packaging is linked to the extraction of raw materials, production and waste management. This negative impact - the generation of packaging - is inherent in the current business model due to the specific nature of the product being produced. Innovations in packaging design that focus on minimal environmental impact could have a significant positive impact. Related risks could arise if insufficient attention is paid to packaging issues, which could negatively affect the image of Group companies among sustainability-minded consumers. Increasingly stringent requirements related to waste and packaging could lead to additional costs and regulatory challenges. Production waste If not properly managed, the production waste generated by the Group's companies' direct activities could lead to negative impacts, such as pollution and the release of hazardous substances, which could have a negative impact on the environment and ecosystems. However, 93% of the Group's industrial waste is used for: biomass production, composting, fertilization or electricity generation and other approved treatment methods. All other waste generated is sorted and sent to waste managers. All production waste is managed in accordance with environmental requirements. The Group has identified an opportunity in this area through the materiality assessment to reduce costs, increase efficiency and enhance its reputation by incorporating waste into reuse. Resources Decreases in the availability of the Group's main resource, raw milk, and increases in farm-gate prices may be due to: increasing environmental requirements that increase production costs (e.g. investments in more sustainable technologies or waste management), animal diseases that reduce milk production, or climate change that adversely affects the growth of forage and the well-being of animals. These factors could cause disruptions in the milk supply chain and, as a result, increase the purchase price of milk, which could have a negative impact on the Group's profitability and product prices, creating a risk for the Group. Group strategy and business model The Group responds to the significant impacts and risks associated with waste generated throughout the value chain. With regard to industrial waste, the Group is reviewing its processes and pursuing a business model that focuses on the reuse of resources, the reuse of industrial waste and the reduction of waste. To this end, new solutions are being analysed, such as the use of recycled materials and the efficiency of production processes. 185 When choosing packaging suppliers, the Group's companies prefer manufacturers with the latest technology, who avoid waste and use of harmful substances in their operations. The Group strives to use resources rationally by using as little packaging as possible and seeks modern packaging options for its products that minimise environmental impact and fully ensure product safety and quality. It also provides consumers with education on sustainable products and the circular economy, thus promoting responsible consumption and creating long-term value for both business and society. The Group works directly with dairy producers to minimise the risk to the raw milk supply by advising them on animal welfare, health and environmental issues, carrying out farm assessments, sharing insights and recommendations. It also promotes and strengthens farms through financial instruments. Significant impacts in this area are directly related to the Group's business model and strategy - the products produced and the associated packaging and waste required for production and market supply. The significant risks and opportunities in this topic do not have a material impact on the Group's current financial position, financial performance or cash flows. There are also no risks or opportunities that could result in a significant risk that a material adjustment to the carrying amounts of assets and liabilities will be required in the next reporting period. The Group is prepared to manage the risks of the circular economy by introducing sustainability initiatives and strengthening its strategic resilience. Insights show that investing in sustainability can deliver financial benefits in the medium- and long-term and enhance long-term competitiveness. The Group does not currently have a quantitative and qualitative resilience analysis of its strategy and business model. Risk resilience has only been analysed to the extent that it has been assessed at two levels of significance. The Group is actively working to better understand and assess these risks and opportunities in order to make informed decisions in the future. E5-1 - Policies related to resource use and circular economy MDR-P. Policies adopted to manage material sustainability matters The Group implements an overall Sustainability Policy, which includes impacts, risks and opportunities related to waste and the circular economy. The Group does not have a separate policy dedicated solely to the circular economy. This policy is integrated into a broader sustainability strategy which sets out key objectives. The policy commits the Group to organise waste management in a way that contributes to the circular economy and the re-use of resources. The policy covers the entire value chain, from the supply of raw materials to the delivery of manufactured products to the consumer, as well as all products and activities of the Group in all geographical regions. The implementation of the policy is the responsibility of the Group's Management at the highest level, which ensures that the policy is monitored and periodically updated in accordance with the requirements of legislation and best practice. The Group implements the policy in accordance with ISO 14001. Stakeholder interests have been taken into account in the preparation and updating of the policy to the extent disclosed in the SBM-2 - Stakeholder Interests and Views. The policy is available on the Group's website. 186 The Group's policy addresses the reduction of the use of primary resources and aims to increase the use of secondary (recycled) resources. The Group organises the management of waste in order to contribute to the circular economy and to promote the reuse and recycling of resources. For example, by improving production processes, we have achieved that 100% of whey is recycled into other products. This allows us to produce more products from primary resources and reduce waste. The Group is committed in its sustainability policy to reducing the environmental impact of its operations and to ensuring that all stakeholders involved in the value chain contribute to this objective. Approved Supplier Guidelines on risk management helps the Group in guiding suppliers and articulating the Group's expectations in the area of waste management and the circular economy. Through engagement with suppliers, the Group will request input on this issue. E5-2 - Actions and resources related to resource use and circular economy During the reporting year, the Group continued to implement actions to manage significant sustainability issues related to resource use and the circular economy: ● The Group has increased the proportion of recyclable packaging for dairy products to 88.9% in order to facilitate recycling (processed cheese packaging is fully recyclable, loosecottage cheese packaging is being replaced by more recyclable packaging). ● Thanks to a modified waste management process and recycling initiatives, we have reduced the amount of municipal waste by 1.5%, thereby reducing the amount of waste going to landfill. The main types of packaging used in the Group's activities are plastic, wood, cardboard, metal and combination. One of the Group's priorities is to find new opportunities and to use as much recyclable packaging as possible. However, we face another challenge: the extremely high requirements for primary packaging in contact with food. In order to use only the necessary quantities and the best solutions to ensure product quality and safety, we continue to use proven practices such as reduced weight (due to design decisions) carton packaging, flattened wrapping film and no cartons, the use of recyclable wooden and plastic pallets, reduced weight triple-layer packaging for bulk products, and the use of a single large package per pallet. We are delighted that the new product "Lydytas tepamas sūrelis“ is packaged in 100% recyclable packaging. Polypropylene is used for the packaging. Once properly collected and returned, it can be recycled an unlimited number of times. 93% of our industrial waste is used for: biomass production, composting, fertiliser or electricity generation, animal forage and other approved treatment options. All other waste generated is sorted and sent to waste managers. All our industrial waste is managed in accordance with environmental requirements. Contracts are in place with waste handlers, waste records are kept, procedures for waste management are in place in the organisation's departments and responsible persons are appointed. Our main objective in this area is to avoid waste and to make the most efficient use of available raw materials. 187 The Group implements various actions to reduce waste both upstream and downstream of the supply chain: ● Choosing sustainable raw materials: using recycled or biodegradable materials, optimising the supply of raw materials to reduce excess packaging (wooden pallets, cardboard, recycled plastics). ● Efficiency in production processes: investment in new technologies and automation to reduce waste (automated curd production line). ● Waste hierarchy: a system of waste prevention, reuse, recycling and alternative recovery integrated into production processes. ● Logistics process review: processes are reviewed to reduce the use of transport packaging (reusable plastic boxes and pallets are used to transport products). ● Cooperation with recycling companies: strengthening links with waste management partners to maximise recycling opportunities (with the aim of diverting more waste for recycling). By changing the waste sorting at AB Rokiškio sūris, we have reduced the municipal waste stream by a factor of 2.5. Quantitative information on the results of these actions is provided in section E5-5 - Resource outputs. Key actions planned for 2025-2027: ● Evaluate packaging design to optimise recyclability and reduce packaging volume. ● Develop a strategy to reduce the use of virgin plastics by promoting the use of recycled and sustainable materials in packaging. ● Collaborate with partners to develop lighter and more sustainable packaging materials and designs. ● Educating consumers about correct sorting of packaging. ● Evaluate the potential for reuse and recycling to reduce waste going to landfill. These actions relate to the Group's objectives set out in the Group's Sustainability Strategy, which are further described in E5-3 - Targets related to resource use and circular economy. Key actions cover the entire value chain, from the supply of raw materials to product use and waste management: 188 ● Sourcing of raw materials: preference for recycled and more sustainable raw materials, working with suppliers who follow circular economy principles. ● Production processes: low-emissionproduction technologies and methods to reduce waste. ● Waste management: waste reuse is promoted (by agreement with the waste manager, AB Rokiškio sūris provides production waste for energy production, thus reducing the amount of waste going to landfill. This is also planned for the Rokiškio Pienas Gamyba branch in Utena), more efficient recycling and improvement of waste collection systems. ● Product design: designing packaging that is easier to recycle while ensuring safety and quality. ● Consumer involvement: the Group encourages consumers to consume responsibly and to separate their waste, ensuring a higher recycling rate (the Group has set itself the goal of including information and appropriate labelling on the sorting requirements and suitability of the packaging whenever a product is renewed. The Group is also looking for opportunities to switch to more sustainable packaging, as far as product safety requirements allow, e.g. a new packaging for loosecottage cheese, which is more recyclable, is being finalised this year and is being labelled accordingly). The geographical scope of the activities covers the Group's countries of operation - Lithuania and Latvia, where the supply and production units operate, and the markets where the products are sold. To the best of our knowledge, there are no cases of those affected by significant impacts and therefore no compensation measures have been applied. The Group implements the short-term strategic plan using its own resources, as well as funding and grants from the EU Climate Change Programme. The Group does not foresee any significant operational and/or capital costs for the implementation of the action plan set out in the strategy. The Group plans to integrate circular economy principles and improve operational efficiency through planning, rationalisation and automation solutions. ● Current financing: the actions are implemented from the current year's budget and no capital investment is currently foreseen. ● Future investments: there is currently no financing plan for the future, but the Group is monitoring market and regulatory developments that may affect future decisions. In the consolidated financial statements, these costs are classified as operating expenses. E5-3 - Targets related to resource use and circular economy MDR-T. Tracking effectiveness of policies and actions through targets The Group has set measurable, results-based targets in this topic, which the Group plans to achieve by 2027. The targets are also identified in ESRS Topic 2 through disclosures SBM-1 - Strategy, Business Model and Value Chain: ● Recycle or reuse 95% of waste generated (with a base year result of 89% in 2020), with intermediate targets of 93% (2025), 94% (2026) and 94% (2026) ● Ensure that 85% of packaging is recyclable (78.5% in the base year 2020), with intermediate targets of 84% (2025), 84.5% (2026). ● Increase the use of secondary water up to 10%, thus reducing the use of groundwater 189 These targets are voluntary and based on a double materiality assessment. The targets are directly linked to the Group's commitment in its Sustainability Policy to organise waste management in a way that contributes to the circular economy and the re-use of resources. The results of the double materiality assessment, the current situation in the Group and practices in the sector were used to set the targets. Stakeholders/representatives were not directly involved in setting the targets. The Group's objectives are not related to the reduction of primary raw materials. The Group aims to optimise its production processes by reducing waste, energy and water consumption, but reducing the amount of primary raw materials is not a priority as this could have a negative impact on the quality of the product and its compliance with the standards set. Nor are the current challenges related to the sourcing and cascading of renewable resources (other than energy as described in E1 Climate Change). The implementation of the policy and objectives is monitored every reporting period and the results are reported to management and made public in a sustainability statement Data collection and analysis is carried out in a systematic way, comparing calculated indicators with planned results to ensure that the strategic objectives are achieved. The Group aims to increase the recyclability of product packaging and to organise waste management in a way that contributes to the circular economy and the re-use of resources. The Group's objectives relate to the levels of recycling and reuse (first objective) and waste prevention (second objective) in the waste hierarchy. E5-4 - Resource inputs The Group's main input is raw milk from dairy farms in Lithuania, Latvia and Estonia. The Group considers that the disclosure requirements set out later in this section are not relevant to the identified risks associated with the resources and are therefore not disclosed. E5-5 - Resource outputs Key circular economy outputs: ● Frozen processed cheese - produced by separating the fine cheese particles from the whey by means of a decanter, which is then used in the production of processed cheese. ● Lactose syrup, buttermilk, separation sludge - supplied for biofuel and biomass production through the biological cycle, contributing to renewable energy production. ● Sewage sludge - used as a fertiliser in agriculture, contributing to sustainable soil management. ● Secondary water - water obtained and treated from whey and used for sanitation purposes to reduce groundwater consumption. In 2024, 4 074.3 tonnes of packaging will be used. 88,9% of the packaging was recyclable. 190 Table 15. Waste generated from operations Waste generated, tonnes 2024 Total quantity 10,869 Hazardous 22 Non-hazardous 10,847 Waste Directed to Recycling Total quantity 10,118 Hazardous Non-hazardous 10,118 Other Recovery Operations Total quantity - Hazardous - Non-hazardous - Waste Directed to Recovery – Incineration with Energy Recovery Total quantity - Hazardous - Non-hazardous - Waste Directed to Disposal – Landfilling Total quantity 751 Hazardous 22 Non-hazardous 729 191 Notes: No radioactive waste is generated by the Group's activities. There are also no waste streams classified as preparation for re-use. The Group does not have sufficient information on the recycling of some of the waste and therefore considers it to be disposed of. Table 16. Unprocessed waste Total quantity, tonnes Share, % 2024 751 6.9 Notes: Untreated waste is the sum of the waste sent for disposal and the proportion of the total waste. Waste management and composition The waste generated by the Group's activities includes: ● Dairy processing waste not suitable for use or recycling. ● Sewage sludge, which is used as fertiliser. ● Packaging waste, including paper, plastic, metal, wood and mixed packaging. The predominant materials in the waste are: biomass, metal, plastic. Data calculation methodologies 192 Waste accounting is being kept in a unified information system for the accounting of products, packaging and waste, in accordance with the rules approved by the Minister of the Environment. Data is obtained by direct measurement using official methods of waste quantification. Overview of compliance with the EU Taxonomy Regulation The EU Taxonomy Regulation is a piece of legislation that establishes a common framework for classifying sustainable economic activities and common terms for defining activities that contribute to the achievement of environmental sustainability objectives. The EU Taxonomy Regulation (EU) 2020/852 and the related delegated acts ("the Taxonomy") set out the criteria for assessing whether an economic activity is considered environmentally sustainable. This framework helps to objectively assess the degree of sustainability of investments and promotes sustainable economic development. The taxonomy defines the following environmental objectives: ● CCM - Climate change mitigation. ● CCA - Climate change adaptation. ● WTR - Sustainable use and protection of water and marine resources. ● CE - Transition to a circular economy. ● PPC - Pollution prevention and control. ● BIO - Protection and restoration of biodiversity and ecosystems. As a non-financial company, Rokiškio sūris AB is obliged to disclose key performance indicators (KPIs) - the percentage of Turnover (Turnover), capital (CapEx) and operating expenses (OpEx) represented by taxonomic and/or qualifying activities. Key concepts Taxonomy-eligible economic activities are those described in the delegated acts of the Taxonomy Regulation, irrespective of whether or not they meet the criteria set for technical analysis in accordance with the EU's Taxonomy objectives. It is important to note that the designation of an economic activity as a taxonomy-eligible activity does not automatically imply that it is environmentally efficient or sustainable. Taxonomic activities are divided into several categories: ● A transitional economic activity (transitional activity) is an activity that does not currently have low-carbon alternatives, but is carried out in such a way that greenhouse gas emissions are in line with the best sectoral or industrial standards. Such activities must meet two conditions: (a) not hinder the development and deployment of low carbon alternatives; (b) not lead to long-term dependence on polluting activities, taking into account the useful life of the economic asset. ● Enabling economic activity (enabling activity) - activity that directly enables a significant contribution to environmental objectives. ● A taxonomy-aligned economic activity (taxonomy-aligned) is an activity that: (a) makes a significant contribution to one or more of the environmental objectives set out in the EU Taxonomy Delegated Acts, (b) does not cause significant harm to other environmental objectives (DNSH), (c) is carried out in compliance with minimum protection measures, (d) meets the technical analysis criteria. ● A taxonomy-non-eligible economic activity (taxonomy-non-eligible) an activity that is not included in or described by the European Commission’s delegated acts under the EU Taxonomy. 193 Identification of taxonomy-eligible activities and assessment of alignment AB Rokiškio sūris has evaluated the activities carried out at the Group level in accordance with the descriptions of taxonomic activities in the EU Taxonomy Regulation. The Group carries out taxonomic activities and/or invests in taxonomic measures that can contribute to climate change mitigation (CCM), the transition to a circular economy (CE), and the sustainable use and protection of water and marine resources (WTR). The Group does not carry out activities that may contribute to other environmental objectives of the Taxonomy. No investments have been made in 2024 to adapt to the physical risks of climate change, and therefore there are no applicable climate change adaptation (CCA) activities for the Group. In 2024, a comprehensive climate risk assessment was carried out to determine whether the Group's activities are causing significant damage to Climate change adaptation. The assessment has identified significant physical risks and evaluated adaptation solutions that can help mitigate the identified climate-related physical risks, and therefore the activities are assessed as meeting the DNSH criterion for Climate change adaptation. A detailed description of the assessment and management of climate risks can be found in the Climate Risk Assessment and Management section. Once the taxonomic activities have been identified, their technical analysis criteria have been analysed in detail and an assessment made as to whether the Group-wide processes comply with them. Compliance with essential safeguards was also examined, not only against the technical criteria, but also against the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. The results of the assessment confirmed that the Group complies with the minimum safeguards. The compliance assessment was carried out in accordance with the European Commission's PlatformonSustainableFinance's Final Report on Minimum Safeguards (2022). If, after taking all aspects into account, a taxonomic activity was found not to meet at least one of the criteria for a significant contribution to environmental objectives or criteria of DNSH, it was classified as a taxonomic activity that did not meet the criteria. Changes in the calculation of taxonomy-eligible activities and indicators 194 In 2024, the Group reviewed its list of taxonomic activities to ensure that the activities are in line with the Taxonomy definitions and relate to turnover or expenditure in accordance with the Taxonomy's KPI definitions. Compared to 2023, some taxonomic activities are no longer available after the review (CCM 5.2., CCM 8.1., PPC 2.1., CE 1.2. and all CCA activities). It was found that there are no applicable CCA activities for the Group (no financial indicators to attribute) and therefore no activities that contribute significantly to this objective are identified in this statement. Accordingly, the vehicles classified as CCM 6.5 and CCM 6.6 have been revised in line with the definitions of the taxonomic activities, taking into account the standards to be complied with (EURO 5, EURO 6 for passenger cars, EURO 6e for freight vehicles). The calculated indicators are available in Tables 1B, 2B and 3B. No retrospective recalculation of the 2023 KPIs has been carried out. Taxonomy-aligned activities (taxonomy-aligned) Taxonomy code Name of activity Activity assessment for compliance with substantial contribution criteria Activity checked for compliance with all applicable DNSH criteria CCM 7.3 Installation, maintenance and repair of energy efficiency equipment In 2024, the Group invested in energy efficiency measures that make a significant contribution to climate change mitigation. Verified - compliant. CCM 7.5 Installation, maintenance, and repair of equipment and devices for measuring, regulating, and controlling building energy performance In 2024, the Group also invested in devices and equipment for measuring, regulating and controlling the energy performance of buildings, which make an important contribution to climate change mitigation. Verified - compliant. CCM 4.1 Electricity generation using photovoltaic solar energy technology The Group has installed solar power plants for its own use, generating electricity using solar photovoltaic technology, which makes an important contribution to climate change mitigation. Verified - compliant. CCM 4.25 Heat or cooling generation using waste heat This includes the Group's use of higher capacity heat pumps installed in separate containerised buildings. The activities generate heat and/or cooling using waste heat, which makes an important contribution to climate change mitigation. Verified - compliant. CCM 5.5 Collection and transport of non-hazardous waste separated at source The activity meets the criteria: all separately collected and transported non-hazardous waste, separated at source, is sent for preparation for reuse or recycling. Verified - compliant. CE 2.3 Collection and transport of non-hazardous and hazardous waste The activity meets the established criteria, as waste is sorted in accordance with the Waste Regulations, separated at the point of generation, and transferred for recovery or recycling under concluded agreements. Verified - compliant. CCM 5.1 Construction, development and operation of water collection, treatment and supply systems The activity fulfils the criteria for a significant contribution to the taxonomy, as the average energy consumption for water extraction and treatment is 0,355 kWh/m³, within the threshold of 0,5 kWh/m³. The leakage rate criterion does not apply as the supply volume is less than 10 000 m³/d. Verified - compliant. WTR 2.1 Water supply The activity complies with the criteria set out in point 1: a) The water supply system complies with the requirements of Directive (EU) 2020/2184; water testing is carried out according to a defined plan and reported to the State Food and Veterinary Service (SFVS). Commission Decision (EU) 2022/679 has not been transposed into Lithuanian Hygiene Norm HN24, therefore compliance with it is not mandatory. b)There are no system leak. c) Water is used solely for the company’s internal needs and not for consumer supply. Water consumption is metered and verified. The activity also meets the criteria set out in point 4, as the water resources are approved in accordance with Directive 2000/60/EC, are not adversely affected, the permit from the Lithuanian Geological Survey (LGT) has been obtained, and the boreholes are registered. The criteria set out in the remaining points are not applicable to the Group. Verified - compliant. CCM 5.3 Construction, expansion, and operation of sewage collection and treatment systems The activity fulfils the criteria, as the total energy consumption is 13 kWh/PE within the limit of 25 kWh/PEfor a treatment plant with a capacity of 10 000 to 100 000 PE. The assessment of GHG emissions is not applicable as the company does not operate an intensive GHG emitting (anaerobic) plant. Verified - compliant. CCM 5.4 Renovation of sewage collection and treatment systems The activity meets the criteria because: 1. The upgrading of the wastewater collection system has increased energy efficiency and reduced energy consumption in the final part of the wastewater agglomeration (see point 2). 2. The renovation of the wastewater treatment plant reduced energy consumption by more than 20%. 3. Data on the reduction in PE is currently not available, but estimates suggest that the energy consumption of 1 PE has also fallen by more than 20%. 4. The amount of wastewater treated has remained stable over the comparative period, and the results of the assessment have been confirmed in the waste water treatment reports. Verified - compliant. 195 Other taxonomy activity (non-aligned with the criteria) Currently, the taxonomy-aligned activities identified by other Group companies are classified as non-aligned, as they do not yet meet one or more of the technical screening criteria, or there is insufficient information or evidence for a complete assessment. Detailed information and the indicators related to these activities are provided below, in the Taxonomy table templates. Calculation of Taxonomy indicators The following is information on the calculated Taxonomy indicators. In order to avoid double counting in the calculation of the taxonomy indicators, the Group only includes the amounts related to several activities only once in the numerator of the respective KPI. Intra-group transactions have not been included. The Group does not have a capital expenditure plan to expand a qualifying taxonomic economic activity or to enable a taxonomic economic activity to become a taxonomy-aligned. Turnover Given that the Group's principal activities have not yet been defined as taxonomic activities, only a very small part of the turnover is taxonomic. Part of the Group's turnover in 2024 corresponds to the following activities defined in the taxonomy: ● Turnover from the sale of electricity generated - CCM 4.1 Electricity generation using solar photovoltaic technology. ● Turnover from freight transport - CCM 6.6 Freight transport services by road. The share of turnover from taxonomic activities is calculated by dividing the income from products and services related to taxonomic activities by the Group's total turnover (see Tables 1A, 1B). The line in the financial statements that best corresponds to the turnover indicator according to the Taxonomy is the Profit and Loss Account line Sales. Taxonomy Table 1A. Turnover by Taxonomy Objectives Percentage of turnover / Total turnover Meets the taxonomy criteria (for each objective) Taxonomic (for each objective) CCM 0.003 % 0.2 % CCA 0 % 0 % WTR 0 % 0 % CE 0 % 0 % PPC 0 % 0 % BIO 0 % 0 % 196 Capital expenditure (CapEx) In accordance with Delegated Regulation (EU) 2021/2178, the calculation of the capital expenditure indicator for taxonomic activities includes the amounts of additions to tangible and intangible assets before depreciation, amortisation and any revaluation, and excludes changes in fair value. The performance indicator relating to capital expenditure was calculated in accordance with the provisions of point 1.1.2 of Annex I to the above-mentioned Delegated Regulation. Part of the Group's capital expenditure through 2024 corresponds to the following activities defined in the taxonomy: ● New building construction (increase during the financial year) - CCM 7.1 and CE 3.1 New building construction. ● Acquisition of more energy-efficient equipment - CCM 7.3 Installation, maintenance and repair of energy-efficient equipment. ● Acquisitions of light motor vehicles - CCM 6.5 Transport of motorcycles, passenger cars and light commercial vehicles. ● Acquisitions of freight transport vehicles - CCM 6.6 Road freight transport services. ● Reconstruction and/or expansion of a water treatment plant - CCM 5.1 Construction, development and operation of water collection, treatment and supply systems; WTR 2.1 Water supply. ● Reconstruction of sewerage and wastewater systems - CCM 5.4 Upgrading of wastewater collection and treatment systems. The capital expenditure of taxonomic activities is calculated by dividing the investment related to the activities defined in the taxonomy by the total capital expenditure according to the taxonomy (see Tables 2A, 2B). CapEx under the Taxonomy refers only to those acquisitions required by the EU Taxonomy Regulation. 197 The line in the financial statements that best corresponds to the CapEx indicator according to the Taxonomy is the Balance Sheet line Tangible fixed assets. Taxonomy Table 2A. Capital expenditure by taxonomy objectives Percentage of capital expenditure / Total capital expenditure Meets the taxonomy criteria (for each objective) Taxonomic (for each objective) CCM 9 % 19 % CCA 0 % 0 % WTR 0.2 % 0.2 % CE 0 % 0.7 % PPC 0 % 0 % BIO 0 % 0 % Operational expenditure (OpEx) Part of the Group's operating costs under the Taxonomy through 2024 correspond to the following activities defined in the Taxonomy: 198 ● Maintenance and/or repair of more energy-efficient equipment - CCM 7.3 Installation, maintenance and repair of energy-efficient equipment. ● Maintenance and/or repair of solar power plants - CCM 4.1 Generation of electricity using photovoltaic solar energy technology. ● Repairs of own buildings - CCM 7.7 Acquisition and ownership of buildings. ● Maintenance and/or repair of light motor vehicles - CCM 6.5 Transportation bymotorcycles, passenger cars and light commercial vehicles. ● Maintenance and/or repair of goods transport equipment - CCM 6.6 Road freight transport services. ● Maintenance and/or repair of heat pumps - CCM 4.25 Production of heat or cooling using waste heat. ● Maintenance and/or repair of a special vehicle (sewagevehicle) - CCM 5.5 Collection and transport of non-hazardous waste separated at source; CE 2.3 Collection and transport of non-hazardous and hazardous waste. ● Maintenance and/or repair of water systems - CCM 5.1 Construction, development and operation of water collection, treatment and supply systems; WTR 2.1 Water supply. ● Maintenance and/or /repair of sewerage and wastewater systems - CCM 5.3 Construction, extension and operation of wastewater collection and treatment systems. Definition of operational expenditure (OpEx) in taxonomy differs from the definition normally used in financial accounting and covers a much smaller proportion of costs. In the Taxonomy definition, only maintenance and/or repair costs are included in the denominator of OpEx. The operating expenses indicator is calculated by dividing the operational expenses related to the activities defined in the Taxonomy by the total operational expenses according to the Taxonomy (see Tables 3A, 3B). Taxonomy Table 3A. Operational expenditure by taxonomy objectives Percentage of operational expenditure / Total operational expenditure Meets the taxonomy criteria (for each objective) Taxonomic (for each objective) CCM 10 % 37 % CCA 0 % 0 % WTR 0,1 % 0.1 % CE 0.4 % 0.4 % PPC 0 % 0 % BIO 0 % 0 % Taxonomy Table 1B. Proportion of turnover from products or services associated with Taxonomy-aligned economic activities– disclosure covering year 2024 Financial year 2024 2024 Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm')(h) Economic activities Code Turnover Proportion of Turnover 2024 Climate change mitigation Adaptation to climate change Water Pollution Circular economy Biodiversity Climate change mitigation Adaptation to climate change Water Pollution Circular economy Biodiversity Minimum safeguards Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) turnover, 2023 Category (enabling activity) Category (transitional activity) Text Thousands EUR % 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 Y/N % E T A. TAXONOMY ELIGIBLE ACTIVITIES A.1 Environmentally sustainable activities (Taxonomy-aligned) Generating electricity using photovoltaic solar technology CCM 4.1 13 0.003% Y N/EL N/EL N/EL N/EL N/EL - Y - - Y Y Y 0.004% - - Turnover of environmentally sustainable activities (Taxonomy aligned) (A.1) 13 0.003% Y N/EL N/EL N/EL N/EL N/EL - Y - - Y Y Y 0.004% Of which: enabling activities 0 0% - - - - - - - - - - - - - 0% E Of which: Transitional activities 0% - - Y - - Y Y Y 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 Road freight transport services CCM 6.6 704 0.2 % EL N/EL N/EL N/EL N/EL N/EL 0.2% Turnover of Taxonomy eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 704 0.2 % 0.2 % - - - - - 0.2% Turnover of Taxonomy eligible activities (A.1+A.2) 716 0.2 % 0.2 % - - - - - 0.2% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy non-eligible activities 369 633 99.8% TOTAL: A + B 370 348 100% 199 Explanation of abbreviations: 200 Y - Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective. N - No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective. N/EL - Taxonomy non-eligible activity for the relevant objective. EL – Taxonomy-eligible activity for the relevant objective. Note: Due to changes in the methodology for calculating the 2024 indicators, no retrospective recalculation of the 2023 indicators has been made. Therefore, the differences in methodology must be taken into account when comparing the indicators between these periods. Taxonomy Table 2B. Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2024 Financial year 2024 2024 Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm')(h) Economic activities Code Capital Expenditure Proportion of Capital Expenditure 2024 Climate change mitigation Adaptation to climate change Water Pollution Circular economy Biodiversity Climate change mitigation Adaptation to climate change Water Pollution Circular economy Biodiversity Minimum safeguards Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) turnover, 2023 Category (enabling activity) Category transitional activity Text Thousands EUR % 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 Y/N % E T A. TAXONOMY ELIGIBLE ACTIVITIES A.1 Environmentally sustainable activities (Taxonomy-aligned) Installation, maintenance and repair of energy efficiency equipment CCM 7.3 492 6% Y N/EL N/EL N/EL N/EL N/EL - Y - Y - - - 0.1% E - Construction, development and operation of water collection, treatment and supply systems CCM 5.1 12 0.2% Y N/EL N/EL N/EL N/EL N/EL - Y Y - - - Y - - - Water supply WTR 2.1 12 0.2% N/EL N/EL Y N/EL N/EL N/EL - Y - - - - Y - - - Upgrading wastewater collection and treatment systems CCM 5.4 156 2% Y N/EL N/EL N/EL N/EL N/EL - Y Y Y - Y Y 2.5% - - CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 660 9% 9% - 0.2% - - - - Y Y Y - Y Y 2.6% Of which: Enabling activities 492 6% 6% - - - - - - Y - Y - - - 0.1% E Of which: Transitional activities 0 0 % 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 Construction of new buildings CCM 7.1 CE 3.1 57 0.7% EL N/EL N/EL N/EL EL N/EL 0% Carriage by motorcycles, passenger cars and light commercial vehicles CCM 6.5 414 5% EL N/EL N/EL N/EL N/EL N/EL 4.4% Road freight transport services CCM 6.6 291 4% EL N/EL N/EL N/EL N/EL N/EL 12.4% CapEx of Taxonomy eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 762 10% 10% - - - 0.7% - 16.9% CapEx of Taxonomy eligible activities (A.1+A.2) 1 422 19% 19% - 0.2% - 0.7% - 19.5% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES CapEx of Taxonomy-non-eligible activities 6 263 81% TOTAL: A + B 7 685 100% 201 Explanation of abbreviations: Y - Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective. N - No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective. N/EL - Taxonomy non-eligible activity for the relevant objective. EL – Taxonomy-eligible activity for the relevant objective. - - The indicator has not been calculated for 2023. Note: Due to changes in the 2024 indicator calculation methodology, a retrospective recalculation of the 2023 indicators was not performed. Only the allocation of activities to enabling (E) or transitional (T) categories was reviewed for accuracy. Therefore, when comparing the indicators of these periods, it is important to consider the differences in methodology. Taxonomy Table 3B. Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2024 202 Financial year 2024 2024 Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm')(h) Economic activity Code Operational Expenditure Proportion of Operational Expenditure 2024 Climate change mitigation Adaptation to climate change Water Pollution Circular economy Biodiversity Climate change mitigation Adaptation to climate change Water Pollution Circular economy Biodiversity Minimum safeguards Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) turnover, 2023 Category (enabling activity) Category transitional activity Text Thousands EUR % 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 Y/N % E T A. TAXONOMY ELIGIBLE ACTIVITIES A.1 Environmentally sustainable activities (Taxonomy-aligned) Installation, maintenance and repair of energy efficiency equipment CCM 7.3 10 0.1% Y N/EL N/EL N/EL N/EL N/EL - Y - Y - - Y 0,2% E - Generating electricity using photovoltaic solar technology CCM 4.1 0.1 0% Y N/EL N/EL N/EL N/EL N/EL - Y - - - - Y 0% E - Production of heat or cooling using waste heat CCM 4.25 75 0.9% Y N/EL N/EL N/EL N/EL N/EL - Y - Y Y Y Y - - - Collection and transport of non-hazardous waste separated at source CCM 5.5 36 0.4% Y N/EL N/EL N/EL N/EL N/EL - Y - - Y - Y - - - Collection and transport of non-hazardous and hazardous waste CE 2.3 36 0.4% NTA N/EL N/EL N/EL Y N/EL - Y Y Y Y - Y - - - Construction, development and operation of water collection, treatment and supply systems CCM 5.1 11 0.1% Y N/EL N/EL N/EL N/EL N/EL - Y Y - - Y Y - - - Water supply WTR 2.1 11 0.1% N/EL N/EL Y N/EL N/EL N/EL - Y - - - Y Y - - - Construction, extension and operation of wastewater collection and treatment systems CCM 5.3 733 8% Y N/EL N/EL N/EL N/EL N/EL - Y Y Y - Y Y 9.3% - - OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 864 10% 10% - 0.1% - 0.4% - - Y Y Y Y Y Y 9.7% - Of which: enabling activities 10 0.1% 0,1% - - - - - - Y - Y - - Y 0.2% E Of which: Transitional activities 0 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 Acquisition and ownership of buildings CCM 7.7 271 3% EL N/EL N/EL N/EL N/EL N/EL 0,7% Carriage by motorcycles, passenger cars and light commercial vehicles CCM 6.5 247 3% EL N/EL N/EL N/EL N/EL N/EL N/EL Road freight transport services CCM 6.6 1 927 22% EL N/EL N/EL N/EL N/EL N/EL 0% OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 2 445 28% 28% - - - - - 0,9% OpEx of Taxonomy eligible activities (A.1+A.2) 3 309 38% 38% - 0.1% - 0.4% - 10,6% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES OpEx of Taxonomy-non-eligible activities 5 398 62% TOTAL: A + B 8 707 100% 203 Explanation of abbreviations: Y - Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective. N - No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective. N/EL - Taxonomy non-eligible activity for the relevant objective. EL – Taxonomy-eligible activity for the relevant objective. Note: Due to changes in the 2024 indicator calculation methodology, a retrospective recalculation of the 2023 indicators was not performed. Only the allocation of activities to enabling (E) or transitional (T) categories was reviewed for accuracy. Therefore, when comparing the indicators of these periods, it is important to consider the differences in methodology. Activities related to nuclear energy and fossil gases The Group does not have any taxonomic activities related to nuclear energy and fossil gas, but has non-taxonomic activities related to fossil gas. However, there were no Turnovers, capital expenditure and/or operational expenditure related to these activities in 2024 (all KPIs 0 / 0%). The following disclosures are made in accordance with Template 1 of Annex XII. Templates 2 to 5 are not applicable. 1 template. Activities related to nuclear energy and fossil gas 204 Line Nuclear energy-related activities 1 The company conducts research, development, demonstration and deployment of innovative electricity generation technologies using nuclear processes that produce minimal waste throughout the nuclear fuel cycle; it also finances such activities or holds related positions. NO 2 The company constructs and safely operates new nuclear installations for the generation of electricity or process heat, including for district heating or industrial applications such as hydrogen production. It also enhances their safety by applying the best available technologies, finances such activities, or holds related positions. NO 3 The company safely operates existing nuclear installations for the generation of electricity or process heat, including for district heating or industrial applications such as hydrogen production from nuclear energy. It also enhances the safety of these installations, finances such activities, or holds related positions. NO Activities related to fossil gas 4 The company constructs or operates electricity generation installations that use fossil gaseous fuels, finances such activities, or holds related positions. NO 5 The company constructs, refurbishes, and operates combined heat and/or cooling and power generation facilities using fossil gaseous fuels, finances such activities, or holds related positions. NO 6 The company constructs, refurbishes, and operates heat generation installations that use fossil gaseous fuels to produce heat and/or cooling; it also finances such activities or holds related positions. YES SOCIAL PART S1 OWN WORKFORCE SBM-3, S1 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model A summary of the Group's significant impacts, risks and opportunities under the theme "Own workforce" is presented in ESRS Part 2 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model. This section provides a more detailed description of these impacts, risks and opportunities and their relationship to the Group's strategy and business model. In the previous reporting period, the Group identified significant impacts related to its workforce based on the Global Reporting Initiative (GRI) guidelines. These are described in the Consolidated Social Responsibility and Sustainability Report for 2023. 205 All workers classified as own workforce, including employed and non-employed, were included in the double significance assessment. However, the significant impacts identified are mainly related to workers with employment contracts (fixed or open-ended). The Group applies all internal rules and procedures equally to both men and women. Based on the risk analysis carried out, it has not been found that women in the company are exposed to a higher risk of harm. The Group does not currently have any migrant workers, so this group of workers was not considered in the assessment. Employee well-being The Group has a positive impact on its workforce by offering additional financial and other benefits provided for in collective agreements (such as access to health centre services, psychological counselling, training). The purpose of collective agreements is to create conditions for the harmonious functioning of the collective and to guarantee a level of work, pay, health and safety and other working conditions for the various categories of workers that is better than that provided for by the laws, governmental decrees and regulations of the Republic of Lithuania. The Group aims to provide the best possible employment and social guarantees for employees. Clear learning and career opportunities increase employee loyalty and improve employer image. These opportunities are closely linked to the Group's performance management and human resources development processes, allowing employees to develop and grow with the Group. Welfare programmes and learning opportunities increase employee productivity and loyalty, directly contributing to the Group's strategic goals of driving innovation and long-term growth. These positive impacts and opportunities apply to all employees. Health and safety The main adverse effects on workers arise from mechanised processes in production, which can cause injuries. The Group invests in workplace risk assessments, ergonomics, compliance with safety standards and protection of workers' health. The Group takes preventive measures such as regular health and safety inspections, training and technological innovations to reduce workplace risks. Employees are encouraged to communicate openly about potential hazards and preventive actions. All workers who are exposed to higher risks due to the nature of their work (e.g. those working with chemicals or dangerous equipment) have regularly training and are informed about safety requirements.. Workplaces are subject to regular risk assessments and these are verified through social (SA8000) and food safety and quality (IFS) audits. In addition, the Group's activities are monitored and inspected by public authorities to ensure that all safety standards are met. 206 Employees of other companies (e.g. security, construction, cleaning services) who work for the Group are subject to the same safety criteria and requirements as employees and must be supervised and controlled by their employers, but the Group company has a designated person in charge of supervision and control. As the Group's business model shifts towards technology-based production, there is a need for decisions on retraining surplus staff. Investments in robotics contribute to process efficiency and lead to the replacement of manual labour, which reduces the need for certain jobs, especially in the production chain. This can lead to job insecurity for workers in terms of job security and long-term career prospects. Although robotics can have a negative impact, it is entirely manageable, as automation enables workers to perform more interesting, higher-skilled tasks that increase their job satisfaction. The Group is actively involved in up-skilling and retraining its employees, ensuring that they are adapted to changing technologies. These effects are not relevant to all workers, but only to those who work in production activities. Diversity and equal opportunities Group companies have a collective agreement with employee representatives. Collective agreements apply to all employees and ensure equal welfare conditions regardless of age, position, type of contract, full-time/part-time position, etc. Promoting diversity by ensuring equal opportunities and involving different groups of employees allows the Group to become more open to new ideas, improving the working climate and reducing discrimination, a theme that has been identified as both a positive impact on employees and an opportunity for the Group. Promoting equality and inclusion improves the working environment, enhances creativity and strengthens the organisation's reputation by integrating social responsibility principles into the Group's business model. The double materiality assessment identified risks related to gender balance at the top management level, where one gender is dominant. The Group sees a need for strategic measures to ensure gender equality. However, gender balance is maintained at middle management level. These impacts, opportunities and risks affect all workers. Privacy Potential negative impacts and risks associated with data leaks. Such incidents could have negative consequences for employees (e.g. breaches of personal privacy) and for the Group, affecting its reputation and causing financial losses. Although no incidents have been recorded so far, the Group identifies this topic as significant in order to strengthen its management and minimise the risk of occurrence. All staff are exposed to the risk of a data privacy breach, but the most exposed are those who work with sensitive data, i.e. staff in the HR, IT and Finance Departments. 207 Actions to address specific significant impacts or risks, or to take advantage of specific significant opportunities, are described in section 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 Group's activities have a direct impact on the working conditions, well-being and safety of employees. The impact of activities on employees is assessed on an ongoing basis, including through surveys, data analysis and consultation with employee representatives. The Group's strategy is closely linked to the well-being of its employees, and continuous investment is made in improving working conditions and ensuring safety. Decisions to improve working conditions and implement preventive measures contribute to the organisation's competitiveness and sustainable growth, while risk management and investment in health and safety underpin the Group's long-term success. The resilience of the Group's strategy and business model in relation to the Group's ability to address significant impacts and risks and to take advantage of its significant opportunities has been assessed to the extent that risks have been assessed through a double materiality assessment. The current financial impact on the Group related to its workforce risks is not recorded. The Group has also assessed that there is no significant risk that a material adjustment to the carrying amounts of assets and liabilities will be required in the next reporting period as a result of the risks and opportunities that exist. The Group's operations do not currently identify any significant impact on its own workforce as a result of transformation plans related to environmental objectives. The Group's activities have not identified any operations with a high risk of forced or child labour incidents. S1-1 - Policies related to own workforce MDR-P. Policies adopted to manage material sustainability matters The Group adopted a Sustainability Policy in 2024 and a Sustainability Strategy 2025-2027, which includes targets in each sustainability area. The aims and principles of the Sustainability Policy apply to all employees of the Group, irrespective of the nature of their work or the type of contract they hold, and include key commitments to improving working conditions, equality, safety and health. The commitments set out in the policy aim to manage significant impacts, risks and opportunities along the entire value chain, from the supply of raw materials to the delivery of products to consumers. The privacy of personal data is ensured in accordance with the General Data Protection Regulation and the Personal Data Protection Policy. The Director Dalius Trumpa is responsible for the implementation of the Sustainability Policy, and the Company's management is committed to continuously monitoring and updating the policy to ensure its compliance with legal requirements and best practices. The Sustainable Action Group is responsible for achieving the objectives and implementing the tasks. 208 In implementing its Sustainability Policy, the Group adheres to international standards, including the principles of the United Nations Global Compact, in particular Principle 6, which promotes the elimination of discrimination in the workplace. In the process of developing the Sustainability Policy, consideration was given to existing internal procedures and stakeholder interests. The Sustainability Policy is publicly available on the Company's website, ensuring that it is accessible to both interested parties and those responsible for its implementation. The Group does not have a separate policy for the prevention of accidents at work, but the safety and health of employees is ensured in accordance with the legislation of the Republic of Lithuania and the Republic of Latvia, in accordance with the established management procedures and internal procedural documents. Human rights policy commitments The Group has a Human Rights Policy and a Code of Ethics which define the Group's commitments and approach to human rights, including labour rights. The commitments contained in the Policy are consistent with the United Nations (UN) Guiding Principles on Business and Human Rights and the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work. The Group is guided by a number of core principles: a commitment to respecting human rights and avoiding violations of human rights; ensuring labour rights and safety, including the right to join trade unions and not tolerating forced and child labour or discrimination; ensuring safe, fair and dignified working conditions; the ability to report possible violations; and mainstreaming the policy throughout the organisation. The policy is communicated to employees at the time of recruitment and is also published on the Company's website. In addition, the Group has a whistle-blowing system in place, which allows employees to report anonymously or openly violations, which the Group investigates and takes appropriate action. The Code of Ethics clearly states that the Group does not tolerate forced, compulsory or involuntary labour and does not contribute to human trafficking. Children are employed only in accordance with the applicable legislation, ensuring their willingness to work and age eligibility. Preventing discrimination and harassment The Group has adopted "Prevention of Violence and Harassment", "Equal Opportunities" and "Human Rights" policies and a Code of Ethics, which clearly define the Group's commitment to equal opportunities and the prevention of discrimination. The policies identify grounds for discrimination such as race and ethnicity, colour, gender, sexual orientation, gender identity, disability, age, religion, political opinion, nationality or social origin and the Group is opposed to all forms of discrimination, including, but not limited to, access to employment and education, to receive social guarantees as provided for in the laws of the Republic of Latvia and Collective Agreements, to have appropriate working conditions that ensure the safety and health of employees, and to have equal opportunities as provided for in the Labour Code of the Republic of Latvia (the Latvian company SIA Jekabpils piena kombinats is guided by the relevant laws and other legal acts of the Republic of Latvia). Employees may report cases of discrimination through channels known to them, and the Company shall take steps to investigate and remedy them. 209 The Group does not have separate policy commitments related to inclusion and affirmative action for vulnerable groups in its workforce. S1-2 - Processes for engaging with own workforce and workers’ representatives about impacts Feedback and its impact on decision-making. The inclusion of workers' views and interests in decision-making processes is done through the Trade Union and the Works Council, which act as intermediaries between workers and management. Workers' representatives are regularly informed, consulted and collectively bargained on the inclusion of working conditions and fringe benefits in the Collective Agreement. The Group does not directly assess the effectiveness of the inclusion in a separate system, but employees' views are collected through annual surveys (microclimate surveys). In addition, employees can contact their manager or the company's management directly or anonymously. Employee involvement is carried out periodically, in line with legal requirements. Responsibility for these processes lies with the Sustainability Group, headed by the HR Director, who reports directly to management. Organising engagement. Involvement activities are carried out both at the organisational level (through the central HR management system) and at the level of local units or projects. At the local level, issues and suggestions identified are addressed through management feedback channels, meetings, individual interviews. Relevant information from different levels is systematised and relevant decisions are integrated into strategic planning, HR policies or departmental activities. Resources for engagement activities. Involvement activities require both human resources (HR specialists, managers, employee representatives) and financial resources in terms of training, consultation processes, negotiation and communication tools. Time is allocated for regular meetings, surveys and open communication with employees. Involving employees in addressing relevant issues. Employee representatives actively participate in collective agreement negotiations, during which additional benefits are proposed and improvements in working conditions are negotiated. The company aims to promote equal opportunities and gender equality, and health and safety aspects are regularly discussed and integrated into daily operations. The company does not have specific measures in place for specific vulnerable groups, but all employees are encouraged to provide feedback and actively engage in decision-making through existing representation and communication channels. S1-3 - Processes to remediate negative impacts and channels for own workforce to raise concerns The Group has processes in place to correct significant negative impacts on its workforce. Therefore, although no such cases have been identified at this time, the Group would take immediate action to remedy the damage if necessary. 210 The Group has an approved "Procedure for Complaints, Inquiries and Requests". Employees can use various channels to express their concerns: email, telephone, the "requests, complaints, suggestions" box and contact the Trade Union, the Works Council or the Occupational Safety and Health Committee. All channels are legal, known and accessible to staff, with procedures in place to respond to queries with indicative deadlines and transparency. These channels are communicated to staff by posting notices in accessible and visible places in the workplace. All communications received are recorded and analysed to assess the effectiveness of the channels and to ensure that issues raised are properly addressed. The Company does not currently have an assessment to demonstrate employee confidence in the grievance mechanisms in place. Further information on the whistleblowing system is disclosed in G1-1 Business conduct policies and corporate culture 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 MDR-A. Actions and resources in relation to material sustainability matters In view of the potential negative impacts, policies and procedures are described that set out the steps to be taken to address them, such as the Code of Ethics, the Equal Opportunities Policy, the Human Rights Policy, the Anti-Corruption Policy, the Policy on Prevention of Violence and Harassment, and the Policy on Prevention of Money Laundering and Countering the Financing of Terrorists. The Group considered in 2024 and endorsed in 2025 a Sustainability Strategy with targets and actions in each sustainability area for the period 2025-2027, including its workforce. In previous periods, including the reporting period, activities have been more fragmented, focusing on individual objectives in each area, integrating them into overall strategic and operational objectives. Key actions to be implemented in the period 2025-2027: ● Organise staff climate surveys and satisfaction surveys; ● Organise sustainability and wellness events; ● Assess the need to develop missing skills at all levels of the organisation ● Assess current perceptions of diversity, equality and inclusion in the workplace (e.g. through a survey); ● Establish an action plan to improve gender equality in management and supervisory positions; ● Track the implementation of the 2024 microclimate survey solutions in each department. ● Strive for gender equality at Group Management level. 211 In addition, in 2025, the focus will be on training and the dissemination of data security knowledge, as well as on the review of procedures and the establishment of clearer preventive measures to ensure security against cyber-attacks and compliance with the soon-to-be-enacted EU TIS2 Directive. These envisaged actions relate both to reducing the potential negative impact on employees and to minimising the risks to the Group. The scope of the existing and envisaged actions is not limited in any way and applies to all employees in the Group. The Group had not identified any actual significant negative impacts and therefore no further remedial action was required. The Group's social and planned actions do not require significant operating and/or capital expenditure. Actions and initiatives related to having a positive impact on own workforce: ● During 2024, the company has made training available to all employees on the following topics: microclimate in the company and how to improve it, prevention of psychological violence, conflict management, personality awareness, practical use of the IoT, and a wide range of mandatory training on occupational safety and hygiene, etc. ● The Collective Agreement with the employees provides for various benefits, including the use of the services of the health centre, etc. ● A range of events and training are organised to promote a healthy, creative workplace environment. The effectiveness of actions and initiatives is not quantified, but is reflected in staff surveys, microclimate surveys and interviews with job applicants. The Group continuously monitors market developments and assesses possible factors that could have a negative impact on its workforce. In the light of these developments, the Group takes decisions to ensure that its business practices do not contribute to a negative impact on its workforce; this includes where there is a tension between business objectives and social responsibility. The management of the Group's significant impacts is centralised under the direct authority of the company's CEO, who is directly responsible for the personnel and occupational safety functions. This allows for effective coordination of resources and measures to minimise negative impacts and ensure the well-being of employees. S1-5 - Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities The Group has set time-bound and results-oriented targets to manage significant sustainability issues under the theme Own Workforce. These objectives are identified in the ESRS Part 2 of the report in the section SBM-1 - Strategy, Business Model and Value Chain and are further elaborated below. 212 The objectives of reducing negative impacts on the own workforce, increasing positive impacts, and managing significant risks and opportunities are foreseen for the period 2025-2027: ● 100% of administrative staff trained in data security ● Zero data breach incidents ● Zero serious accidents at work ● No discrimination in the workplace. ● Increase the Employee Satisfaction Index score by 2-3 points ● Keep staff turnover at a similar level. ● Adequate funding for staff training, further training and academic studies. ● Increase women's representation on the Company's Board. The objectives cover all the Group's activities and all its employees. The Group's progress towards the targets is not measured against historical data, but is based on the results of the year under review. The target-setting process includes periodic employee involvement meetings at different levels and departments, anonymous employee surveys to identify key issues and priorities (e.g. working conditions, pay, health and safety), as well as ongoing cooperation with the Trade Unions and the Labour Council to identify the most pressing social and working environment issues. The analysis of relevant sustainability issues is carried out by the Sustainability Group, which consists of management representatives and specialists. To monitor the implementation of the objectives, sustainability reports are produced annually, which include key performance indicators such as accident rates, results of staff surveys and changes in wages. Periodic meetings are also organised with employees and their representatives to discuss achievements, challenges and possible improvements. The Group initiates improvements based on performance. Employees' suggestions for improving work processes are reviewed and, where appropriate, incorporated into action plans. S1-6 - Characteristics of employees in the Group Table 17. Breakdown of the number of employees by gender Gender Number of employees 2024 Men 709 Women 446 Other 0 No data available 0 Total: Salaried employees 1,155 213 Notes: the average annual number of employees is calculated in accordance with Order No 134 of the Minister of Finance of the Republic of Lithuania "On the Approval of the Rules for the Calculation of the Average Number of Employees per Year" Actual number of employees, excluding head count, is reported. See the Consolidated and separate financial statements of the Company. Explanatory notes. General information. Table 18. Breakdown of number of employees by country Country Number of employees 2024 Lithuania 1,097 Latvia 58 Notes: the average annual number of employees is calculated in accordance with Order No 134 of the Minister of Finance of the Republic of Lithuania "On the Approval of the Rules for the Calculation of the Average Number of Employees per Year" Actual number of employees, excluding head count, is reported. Table 19. Breakdown of the number of employees by gender and type of contract 2024 Average number of employees WOMEN MEN OTHER () NON-DISCLOSED TOTAL Number of employees 446 709 0 0 1,155 of which with permanent contract 417 667 0 0 1,084 of which with temporary contract 29 42 0 0 71 Number of salaried workers working non-guaranteed hours 0 0 0 0 0 214 Notes: the average annual number of employees is calculated in accordance with Order No 134 of the Minister of Finance of the Republic of Lithuania "On the Approval of the Rules for the Calculation of the Average Number of Employees per Year" () Gender as self-reported by employees. Table 20. Breakdown of the number of employees by region and type of employment contract 2024 Number of employees Lithuania Latvia TOTAL Number of employees 1,097 58 1,155 of which with permanent contract 1,028 56 1,084 of which with temporary contract 69 2 71 Number of salaried workers working non-guaranteed hours 0 0 0 Notes: the average annual number of employees is calculated in accordance with Order No 134 of the Minister of Finance of the Republic of Lithuania "On the Approval of the Rules for the Calculation of the Average Number of Employees per Year" Table 21. Staff turnover 215 Employees who left the company or were dismissed * Staff turnover rate 2024 177 15.32 Note: Staff turnover rate includes all staff who left during the reference period, including pupils and students working during the summer * Staff who left voluntarily or were dismissed, retired or died in the line of duty during the whole year ** Number of resignations or redundancies divided by the average number of employees S1-7 - Characteristics of non-employees considered part of the own workforce Table 22. Non-employed workers classified as own workforce Number of non-employed staff 2024 25 Note: The table refers to non-employees: workers employed by other enterprises providing a service in the same field, e.g. construction, cleaning, security. The number of employees is based on the number of employees at the end of the year, but this number does not change significantly throughout the year. The information is collected on the basis of data from the employing organisation. S1-8 - Collective bargaining coverage and social dialogue Information on the coverage of collective agreements was collected using the personnel accounting system. The data were calculated by number of employees rather than by post, as this is a more accurate reflection of the actual number of employees covered by collective agreements, regardless of the amount of time they work. Table 23. Collective bargaining coverage and social dialogue Coverage of collective bargaining agreements Social dialogue Part of the coverage Employees – EEA (in countries with > 50 employees, representing > 10% of the total number of employees) Employees – non-EEA (estimate for regions with > 50 employees representing > 10% of all employees) Representation at workplace (EEA only) (in countries with > 50 employees, representing > 10% of the total number of employees) 0-19% Latvia - Latvia 20-39% - - - 40-59% - - - 60-79% - - - 80-100% Lithuania - Lithuania 216 S1-9 - Diversity metrics Table 24. Distribution of staff by gender at senior management level Gender distribution of staff at top management level 2024 Number of employees Employee share, %. Men 5 100% Women 0 0% Total 5 100% Table 25. Employee distribution by age group 2024 Number of employees Employee share, % of employees Under 30 years old 94 8% 30-50 years 487 42% Over 50 years old 574 50% Total 1,155 100% Note: Calculation methodology: The calculation of the average annual age of staff follows the same methodology as the calculation of the average annual number of total staff, i.e. the list of staff present on the last day of each month is taken and an annual average is derived. S1-10 - Adequate wages 217 All employees of the Group are paid a fair wage in line with applicable benchmarks. Therefore, there are no countries where the remuneration of the Group's employees is lower than the benchmark level of appropriate remuneration. S1-11 - Social protection All employees of the Group are covered by social security, which helps to ensure financial stability in the event of major life events such as illness, loss of employment with Group companies, work accidents or disability, parental leave or retirement. Social security is provided in accordance with the applicable legislation of the Republic of Lithuania and additional benefits offered by the Group. The social guarantees of the company operating in Latvia are provided in accordance with the legislation of the Republic of Latvia. S1-12 - Employees with disabilities Table 26. Proportion of employees with disabilities 2024 Share of employees with disabilities, % of employees with disabilities All staff 1.3% Notes: data are based on information provided by employees, subject to restrictions on the collection of such information. S1-13 - Training and skills development metrics In the first year of preparing its sustainability statement, a company may omit information that is required to be disclosed under the disclosure requirement of ESRS S1-13. The Group makes use of this provision. Regarding information on the average number of training hours per staff member by gender, no information is provided this year due to limitations of the accounting system. It is planned to introduce such capabilities in the next 2-3 years. S1-14 - Health and safety metrics Table 27. Health and safety metrics 2024 Employees of the company: Number of work-related fatalities and work-related ill-health cases 0 Number of recordable work-related accidents 7 (light) Total number of hours worked by all employees during the year 1 966 599.35 Rate of recordable work-related accidents (number of recordable work-related accidents × 1,000,000) / total number of hours worked 3.56 Number of recordable work-related ill-health cases 2 Number of lost working days due to work-related injuries, fatalities from occupational accidents, work-related ill-health, and fatalities from work-related ill-health 191 Percentage of own workforce covered by the undertaking’s occupational health and safety management system based on legal requirements and/or recognised standards or guidelines (calculated based on headcount, not full-time equivalent) 100% Non-employees classified as own workforce: Number of work-related fatalities among non-employees working at the undertaking’s sites, due to work-related injuries and work-related ill-health 0 218 Note: In 2024, the Group recorded a total of 7 work-related recordable accidents. These resulted in 191 working days lost, equivalent to 1,140 working hours (assuming 8 hours of work per day). In total, the Group's employees worked 1 966 599.35 hours during the year. According to the ESRS TR 89 methodology, the rate of recordable accidents is 3.56 per million hours worked, calculated as follows: number of recordable accidents × 1 000 000) / total hours worked = (7 × 1 000 000) / 1 966 599.35 ≈ 3.56. All employees of the Group are included in the calculation. All input data were obtained from actual internal staff records and occupational safety summaries. S1-16 - Remuneration metrics (pay gap and total remuneration) Table 28. Gender pay gap Gender pay gap, % 2024 All staff 10.77 Notes: * Formula used to calculate the gender pay gap: (Average hourly earnings before tax of male employees - Average hourly earnings before tax of female employees) / Average hourly earnings before tax of male employees 𝑥 100 219 Table 29. Total remuneration ratio Ratio of the total annual compensation of the highest-paid individual to the median total annual compensation of all employees (excluding the highest-paid individual)* 2024 2.7 Notes: * Formula used to calculate the total remuneration ratio: Annual total remuneration of the highest paid person in the company / Average annual total remuneration of salaried employees (excluding the highest paid person). S1-17 - Incidents, complaints, and severe human rights impacts During the reporting period, the Group did not have any reported incidents of discrimination, including harassment, nor were there any complaints made through the Group's channels for raising concerns, nor were there any fines, penalties or compensation imposed in relation to the disclosed incidents or complaints. In addition, no serious human rights violations such as forced labour, trafficking in human beings or child labour were identified. The channels for raising concerns are identical in each Group company, but identified cases are recorded in an individual, non-centralised system. S2 VALUE CHAIN WORKERS SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model A summary of the Group's material impacts, risks and opportunities in the topic 'Value chain employees' is presented in ESRS Part 2 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model. This section provides a more detailed description of these impacts, risks and opportunities and their relationship to the Group's strategy and business model. In the previous reporting period, the Group had not identified any material impacts, risks and/or opportunities in this topic (the previous report was prepared in accordance with the Global Reporting Initiative (GRI) guidelines). All employees in the value chain are included in the Group's double materiality assessment. This includes employees of both upstream and downstream entities in the value chain. However, the identified material impacts, risks and opportunities are mainly concentrated in the upstream raw material supply stage, i.e. related to employees working for the Group's upstream value chain entities - dairy farms operating in the Baltic countries, other raw material suppliers operating in both EU and non-EU countries. The Group has not specifically identified vulnerable groups of employees. 220 The risk of harm is higher for workers in the agricultural sector, where there may be volatility in working conditions, fluctuations in pay or health and safety challenges, and in non-EU countries, where there may be risks of human rights abuses. The material impacts, risks and opportunities identified are not further differentiated and/or linked to specific groups of workers in the value chain. The Group aims to contribute to better working conditions for workers in the value chain and reduce social risks (positive impact). To this end, it carries out surveys and audits of key suppliers of raw materials and supplies, assesses social aspects and ensures that contracts with suppliers include an obligation to respect decent working conditions. Contracts also explicitly require respect for human rights. Strict requirements and certifications for suppliers of key raw materials and supplies not only help to ensure better conditions for employees, but also enhance the Group's reputation and create opportunities for new business partnerships. The application of strict standards in the supply chain provides opportunities to reinforce the principles of responsible business practices, improve the corporate image and increase competitive advantage. The main risk is the potential for human rights abuses (e.g. inadequate working conditions) in the supply chain, especially in regions where social standards are underdeveloped. Such violations can have financial and reputational consequences. The Group has not identified any countries with a high risk of child labour, forced labour or compulsory labour. The impacts, risks and opportunities identified are concentrated in the upstream phase. The Group's actions to improve working conditions and reduce risks directly shape its strategy and business model. Strict requirements for suppliers in terms of working conditions and protection of human rights enhance the Group's reputation and build trust with customers, partners and investors. This contributes to responsible supply chain management and is in line with the Group's strategic objectives. Positive impact enhancement/risk mitigation measures include monitoring of key suppliers of raw materials and consumables and regular audits. The risks and opportunities identified do not have a current material financial impact on the Group's financial position, financial performance and cash flows. There is also no identified significant risk that a material adjustment to the carrying amounts of assets and liabilities in the financial statements will be required in the future. The Group does not currently have a comprehensive resilience analysis. Resilience has been analysed to the extent that it has been assessed through a double materiality assessment. Although specific quantitative data and analyses on resilience are not currently available, the Group continuously monitors external and internal factors that may affect its operations and applies preventive measures to effectively manage risks and take advantage of opportunities to create positive impact. S2-1 Policies related to value chain workers MDR-P. Policies adopted to manage material sustainability matters 221 The Group follows the following policies to manage material issues related to its value chain workers (the commitments in the policies apply to all workers in the value chain): ● Sustainability policy. For a broader description of the policy, see S1-1 - Own workforce policy. In the Sustainability Policy, the Group has defined the attitudes that it adheres to and expects from its partners. ● Guidelines for supplier behaviour. These outline provisions on safe working conditions, business ethics, compliance with environmental obligations, forced labour, and prohibition of child labour, among others. The Group will update the existing Supplier Conduct Guidelines to include more sustainability-related obligations, including human trafficking, as appropriate. ● A Code of Ethics that complies with the laws of the Republic of Lithuania and integrates the UN Guiding Principles on Business and Human Rights. The implementation of human rights obligations is monitored through regular audits and risk assessments of suppliers and partners to ensure respect for workers' rights throughout the value chain. In addition, ethical business provisions are incorporated into contractual obligations. The majority of the Group's suppliers operate in EU countries, so it is reasonable to assume that suppliers' businesses are committed to social justice values. All these policies and guidelines are publicly available on the Company's website. The views of stakeholders shall be taken into account in the formulation and updating of the policies and guidelines to the extent further described in ESRS Part 2 SBM-2 - Stakeholder Interests and Views. The Director is responsible for the implementation of the policies and guidelines. Group Management is committed to continuously monitoring and updating the policies to ensure that they are in line with legislation and good practice. Responsible choice of suppliers is an essential part of policy implementation. The Group carefully evaluates its suppliers and conducts periodic audits and surveys to ensure that their performance is in line with the Group's policies and that the rights of workers in the Value Chain are protected. The Group's approach to value chain engagement is further described in Disclosure Requirement S2-2 Processes for engaging with value chain workers about impacts. There were no reports of human rights violations in the Group's value chain during the reporting period. S2-2 Processes for engaging with value chain workers about impacts The group gives workers along the value chain the opportunity to express their views on actual or potential impacts on them. Value chain workers can submit comments and reports anonymously or directly. The Group's processes are publicly available on the Company's website, so that all market participants have access to the practices in place. 222 If there are no complaints or indications of improper performance, the Group takes no further action. The Group does not specifically assess the effectiveness of the engagement of value chain workers. There were no irregularities or complaints during the reporting period that would require further action. Within the Group, the responsibility for ensuring engagement and accountability lies with the sourcing specialists, who are also part of the Sustainable Operations Group. These specialists oversee processes and consult with their managers on important issues or problems. Where necessary, sourcing managers communicate directly with sourcing managers to ensure that the Group's approach and decisions reflect the principles of inclusion and are implemented in practice. Due to the nature of its activities, the Group does not have any global framework agreements with union federations. Nor does the Group currently have specific measures in place to involve vulnerable or marginalised groups of workers, as such situations have not been identified in the value chain. The Group has no plans to develop new engagement processes as existing mechanisms are considered sufficient to ensure employee engagement and rights. S2-3 Processes to remediate negative impacts and channels for value chain workers to raise concerns The Company recognises its responsibility to remedy negative impacts it has caused or contributed to for workers in the value chain. It refers to the UN Guiding Principles on Business and Human Rights and the OECD Guidelines, ensuring that its processes are consistent with international best practice. During the reporting period, the Group did not record any actual negative impacts on workers in the value chain. However, if such an event were to occur, the Group's generalised remediation process for adverse impacts would include the following steps: ● Impact identification - identifying and evaluating actions that have caused negative impacts, based on complaints and audits. ● Remediation planning - planning specific actions to reduce damage and prevent future risks. ● Supply chain assessment - to ensure that suppliers comply with the Group's policies and best practices. ● Partnership and cooperation - working with workers, suppliers, NGOs and other stakeholders to ensure proper remediation and sharing of best practices to improve working conditions. ● Staff training - ensuring that staff are aware of their rights and the possibilities to report violations. ● Complaint channels - anonymous and direct complaint mechanisms are in place to allow staff to raise concerns in a safe and confidential manner. ● Measuring effectiveness - the success of corrective measures is measured by indicators and feedback received. The Group ensures that workers in the value chain have access to a range of channels (put in place by the Group) to raise concerns, including: 223 ● A complaints and requests box in a prominent place in each of the Group's production facilities. ● A dedicated email address for communications from staff and other stakeholders. ● Directly contacting the Group Chief Executive. According to the evaluation, these channels are available and the Group has not received any comments on their functioning from its own staff or from external experts carrying out social audits. The company shall also ensure that value chain workers using these mechanisms are protected from potential retaliation. All complaints are handled confidentially, respecting the principles of privacy and data protection, and there is also the possibility to report anonymously or through third parties. There is no signed policy on protection against retaliation but protection of whistleblowers is provided for in the procedure for the submission and handling of complaints, suggestions, queries and requests. Workers are informed about the mechanisms in place through different channels, depending on their relationship with the Group: ● Workers working directly in the Company's operations who are not part of the own workforce are informed via the Company's notice boards. ● Workers indirectly affected through the value chain, working in supplier or subcontractor organisations, shall be informed through the subcontractor's responsible persons. ● Workers affected through business relationships, workers related to third party business partners are informed through the employer's company managers and have access to publicly available company information. 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 actions To prevent or mitigate material adverse impacts on workers in the value chain, the Group takes the following actions: ● Regular audits and supply chain analysis - assessing potential impacts and identifying risks. ● Contract requirements - clear criteria for suppliers on fair working conditions. ● Continuous review of policies and processes - to respond to new risks in a timely manner. No actual cases of material adverse impacts were identified during the reporting period, so there was no need for additional remedial measures. The Group is implementing additional initiatives to have a positive impact on workers in the value chain. As the Company's operating regions are remote from larger centres and there is a risk of talent drain, a strong focus is placed on the well-being of local communities: ● Supporting sports and cultural events to strengthen the local community and promote employee engagement. ● Improving leisure employment to reduce the socio-economic backwardness of regions. 224 The effectiveness of actions and initiatives is monitored through: ● Regular supplier surveys - assessing working conditions in the supplier's organisation. ● Complaint analysis - assessing the dynamics and trends of complaints. The results of these actions are publicly reported in the annual reports and comments are integrated into the Group's improvement plans. The processes by which the Group determines what action is necessary and appropriate in response to a specific actual or potential impact on value chain workers are described in more detail in S2-3 Processes to remediate negative impacts and channels for value chain workers to raise concerns. The Group only works with verified suppliers, mainly from EU countries, who ensure compliance with labour legislation. Buyers from third countries account for around 10-15% of total turnover. To take advantage of the significant opportunities and manage the risks associated with value chain workers, the Group selects suppliers responsibly and ensures that they comply with the Group's publicly disclosed policies and Supplier Conduct Guidelines. The Group seeks to ensure that its activities do not cause or contribute to a material adverse effect on workers in the value chain and therefore complies with the provisions of the Code of Conduct and the requirements of various policies, including the Anti-Corruption Policy and the Policy on Prevention of Money Laundering and Countering the Financing of Terrorists. It also pays particular attention to the protection of personal data, ensuring that the use of data complies with applicable legislation and does not infringe the rights of value chain workers. In this way, the Group seeks to align responsible business practices with business objectives, minimising the potential negative impact on value chain workers. The Group aims to increase its positive impact in the area of value chain management by publishing the Supplier Conduct Guidelines. Risk mitigation is carried out in close cooperation with suppliers through reputation analysis and publicly available information to ensure a responsible supply chain. As most suppliers operate in EU countries where working conditions are strictly regulated, this helps to reduce the risks associated with the supply chain. During the reporting period, there were no major human rights issues or incidents involving workers in the value chain. The Group's resources related to the positive impact, i.e. through the application of the criteria to suppliers, are current financial resources, as well as human resources. Human resources include specialised sustainability experts responsible for impact management and professionals in the supply chain who ensure the updating, application and relevance of the criteria. S2-5 Disclosure Requirement – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities MDR-T. Tracking effectiveness of policies and actions through targets 225 The Group does not have specific targets for increasing the positive impact on workers in the value chain as it considers this to be the responsibility of suppliers. However, it chooses its business partners responsibly. Despite the absence of measurable targets, the Group constantly monitors the effectiveness of its policies and actions. Monitoring is carried out through feedback from business partners, feedback in the media, on social networks, direct comments or complaints. In the future, consideration will be given to involving stakeholders in the process of setting targets and ensuring transparent monitoring and evaluation. S3 AFFECTED COMMUNITIES SBM-3, S3 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model A summary of the Group's material impacts, risks and opportunities under the theme "Affected Communities" is presented in ESRS Part 2 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model. This section provides a more detailed description of these impacts, risks and opportunities and their relationship to the Group's strategy and business model. In the previous reporting period, the Group identified material impacts related to affected communities based on the Global Reporting Initiative (GRI) guidelines. These are described in the Consolidated Social Responsibility and Sustainability Report 2023. Support and cooperation The Group is the most active and maintains close ties with the communities where it operates - Rokiškis, Utena, Ukmergė. The Group's companies have a positive impact on these communities through various forms of support, participation in initiatives, and focus on increasing employment. The Group also cooperates with dairy farms (mainly in Lithuania), helping them to develop modern, cost-effective and sustainable farms. In order to improve the competitiveness of dairy farms, the Group's companies primarily help farmers to develop a sustainable approach: to ensure the good quality of raw milk, to minimise waste, and to use the least possible resources. The group sees opportunities for strategic delivery of support focused on creating mutual value by strengthening relationships with local communities. Investing in social initiatives, employment promotion and local infrastructure strengthens the economic and social well-being of communities, mitigates risks and builds sustainable partnerships that are important for the Group's image, reputation and business model. At the same time, withdrawing support from communities (although not planned) risks causing resentment among local people and damaging the Group's reputation. The group understands that certain communities may be more vulnerable because of their social or economic situation. As a city remote from major centres, Rokiškis faces limited employment opportunities and the Group aims not only to provide jobs but also to promote local economic and social development. The Group contributes to infrastructure improvement projects organised by municipalities, which contribute to better living conditions and reduce social exclusion. 226 The Group does not currently identify any material financial effects related to significant risks and opportunities that would have a material impact on its financial position, results of operations or cash flows. Nor have any risks or opportunities been identified that would require a material adjustment to the carrying amounts of assets and liabilities recognised in the financial statements in the next reporting period. No resilience analysis has been performed on the Group's strategy and business model, as risks have been assessed to the extent that they are covered by the double materiality analysis. Production-related effects Negative impacts on communities are possible due to the Group's production activities (e.g. noise and odour) at the Rokiškis and Utena plants. Impacts may have a negative impact on the quality of life and health of the local population. The Group is guided by the principle of respect for oneself and for people, and therefore the existing negative impacts of its activities are minimal. The Group has no history of protracted, unresolved conflicts or grievances with affected communities. There have been no significant breaches or projects in the Group's history that pose a risk to all or part of a community. If significant adverse impacts were to occur, they would be localised. The Group manages its impacts in accordance with Directive 2010/75/EC of the European Parliament and of the Council on industrial emissions (Integrated Pollution Prevention and Control; IPPC). AB Rokiškio sūris and UAB Rokiškio pieno gamyba are classified as having installations for which an IPPC permit is required. Both companies have valid IPPC permits assessing the Best Available Techniques (BAT), resource inputs and emission levels in line with those achieved in the European Union (according to the "IPPC Reference Document on the Best Available Techniques in the Food, Drink and Milk Industries"). S3-1 - Policies related to affected communities MDR-P. Policies adopted to manage material sustainability matters The Group is guided by the principle of respect for people and communities, with the aim of minimising negative impacts and promoting positive initiatives for communities. To manage impacts, risks and opportunities, the Group's businesses are guided by the principles set out in the Sustainability Policy and Code of Ethics, which enshrine a commitment to open dialogue and active contribution to the well-being of local communities. The Group's standards and operating principles in this area include: 227 ● Open and transparent dialogue - we listen to the needs of our communities, actively participate in discussions and work together to address pressing social, economic and environmental issues. ● Community involvement - when implementing activities, we aim to consult with local stakeholders, taking into account their expectations and aiming for a lasting positive impact. ● Making a positive impact - investing in social, educational, health and environmental initiatives that strengthen the communities where we operate. ● Responsible impact management - assessing the social, economic and environmental impacts of our activities on communities, minimising negative effects and developing sustainable solutions. The Sustainability Policy and Code of Ethics cover all affected communities. Information on material events related to the impact on the community or other stakeholders and the implementation of the policy is publicly available on the website of AB Rokiškio sūris, social media and local media outlets and the Nasdaq stock exchange platform. The Group adheres to internationally recognised human rights principles, including the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work and the OECD Guidelines for Multinational Enterprises. Respect for human rights is at the core of the Group's activities and its commitment in this area is integrated into its Sustainability Policy and Code of Ethics. In our Sustainability Policy, we declare: We respect and protect human rights and freedoms in accordance with the guidelines set out in the Universal Declaration of Human Rights. The same is expected of our business partners, and this expectation is expressed in our Sustainability Policy ("We encourage our partners and suppliers to implement sustainable practices in their operations. We strive to ensure that our customers, suppliers and other partners act legally, reliably, transparently and do not engage in any fraudulent practices") and the Supplier Conduct Guidelines, which cover all three layers of sustainability - environmental, social and governance - and additionally include Animal Welfare and Health as a very important aspect throughout the value chain. To date, the Group's activities have not resulted in any human rights violations, either at the level of the Group's own operations or in the value chain. S3-2 - Processes for engaging with affected communities about impacts The Group's operating locations are well established, and there is no need to develop new sites or change the use of other sites. For this reason, there are no identified issues that require the direct involvement of communities or their representatives. The most senior person in the Group, the CEO, has a responsibility to ensure that affected communities and their representatives are properly involved in decision-making processes related to material positive or negative impacts. This person shall also ensure that the views of affected communities and relevant outcomes are taken into account in the development of the company's approach, through an ongoing and thorough due diligence process. Involvement of affected communities is ensured by providing access for the community to express their views through various channels (described in more detail in the next section S3-3 - Processes to remediate negative impacts and channels for affected communities to raise concerns. S3-3 - Processes to remediate negative impacts and channels for affected communities to raise concerns The Group takes a systematic approach to remedying negative impacts on affected communities and addressing complaints. The Group's business processes are regularly monitored both through internal control mechanisms and periodic inspections by public authorities. The Group has an Emergency Management Team, which works closely with the municipal Emergency Management Teams to ensure a rapid response to potential risks related to affected communities. If material negative impacts on communities are identified, remedial action would be taken, including analysis of the causes of the impacts, additional staff training or more frequent monitoring surveys. 228 Members of the public can raise concerns or make complaints through several channels: by contacting the Group company directly, through publicly available contact details, or through the national supervisory authorities. In such cases, action would be taken to find a solution and information on the action taken would be made public through the available channels. During the last reporting period, the Group did not receive any complaints regarding issues related to impacts. Community members are active in asking for support of various initiatives, and proposing cooperation, which shows that communication channels are accessible and effective. The Group has not set up a specific mechanism to monitor the effectiveness of these channels, but the fact that it has not received any signals or complaints about difficult or failed communication shows that the existing channels are sufficient and accessible to all stakeholders. The Group ensures that all complaints are dealt with confidentially, respecting privacy, internationally recognised human rights and data protection principles. It also allows for communications to be made through third parties (e.g. public authorities, NGOs representing consumers, etc.) to ensure transparency and to protect complainants from possible reprisals, which is provided for in the Procedure for the Submission and Handling of Complaints, Suggestions, Queries, and Requests (a specific policy on this issue has not been adopted). A representative of the group participates in the municipality's Social Business Development Commission, which assesses community problems and seeks solutions to promote social well-being. S3-4 - Taking action on material impacts on affected communities, and approaches to managing material risks and pursuing material opportunities related to affected communities, and effectiveness of those actions Social initiatives The Group has a material positive impact on local communities through its focus on employment and social initiatives. It actively supports cultural and sporting events, particularly those aimed at youth engagement. In cooperation with student organisations, the Group supports educational events, organises study visits to the Group and invites speakers to give seminars on relevant topics. In 2024, the Group invited schoolchildren in the city and the district to the traditional " Career Exploration Day " event, organised a seminar "Financial Beginner's Guide", led by lecturer Nerijus Murauskas, and, together with the municipality, is implementing a programme to encourage talented pupils and young people, with a significant financial contribution. Traditionally, for many years in a row, the Group has supported the following events in Rokiškis: Lithuanian Professional Theatre Festival "Vaidiname žemdirbiams" (renamed “Teatro Genas”), the International Amateur Theatre Festival "Interrampa", the Rokiškis Classical Music Festival, the International Organ Music Festival, and many other cultural and sports events. The Group often supports local community events and initiatives with its products. 229 In the next reporting periods, the Group plans to continue its ongoing support programmes and to consider strategically focusing on specific sustainability themes/areas, e.g. healthy living, ecology, education etc. Currently, the Group does not systematically measure the effectiveness of its actions and initiatives. In the future, it is planned to evaluate the support provided to various initiatives, but in many cases it is difficult to measure the impact due to its long-term nature. For example, support for youth employment and education can only be measured in the current period in terms of emotional response, but long-term results such as educational attainment or career achievements only become visible after many years, so that the immediate impact of individual actions remains difficult to measure. The Group has no plans to withdraw support, as this is the cultural and value base of the Group. Cooperation with farmers The company works with dairy farms, providing support for their modernisation and training materials. This cooperation ensures a higher quality of raw milk, which translates into better quality products for consumers. During the reporting period, the focus was on calculating CO₂ emissions at farm level, through consultations with farm representatives, with the aim of not only calculating emissions but also drawing up a plan to reduce them. We plan to further expand our network of cooperation and increase our involvement in sustainability initiatives. These initiatives have already yielded positive results, with an increasing number of dairy farms looking to review their processes to improve efficiency, save resources and reduce CO₂ emissions. These initiatives not only ensure a higher quality of raw milk, but also contribute to sustainable food production and the long-term competitiveness of dairy farms. Impacts related to industrial activities The company measures noise levels, invests in noise reduction by upgrading equipment and installing noise insulation systems. Two exhaust air cleaning systems are in place to prevent odours. The Group ensures that processes to address material adverse impacts are accessible and effective through external controls. The implementation and results of these processes are evaluated by independent experts or responsible authorities to ensure transparency, efficiency and continuous improvement. Complaints from residents are recorded (no complaints in the reporting year), taken into account; and the situation is improved. The Group assesses the effectiveness of its actions and initiatives through the complaints it receives and the current situation - to date, there have been no significant irregularities or projects that pose a risk to the community. If a material impact is identified, the situation would be analysed and further action coordinated at management level. 230 The Group ensures that all processes related to impact management are regularly reviewed and evaluated. Where necessary, independent experts shall be involved in decision-making to help remedy the situation effectively. Impact management and accountability assurance Responsibility for all of these actions identified in this paragraph S3-4 rests with the Company's directors, who, acting in accordance with the Company's Articles of Association, oversee the impact of the Group's activities and ensure that appropriate actions are taken to manage risks and promote sustainable initiatives. In the event of a material exposure, a management meeting would be convened to determine the next steps and their control mechanisms. If internal resources are insufficient to manage the situation, external experts would be brought in to effectively address the challenges. The team determines the necessary and appropriate actions to respond to actual or potential impacts on the affected communities based on feedback from stakeholders (e.g. feedback from social media, networks, information from surveys). The information gathered helps to assess the needs of the communities and to make appropriate decisions to minimise negative impacts or to enhance the positive contribution of the company. The implementation of the actions is not expected to entail material operational or capital costs. The Group has not been informed of, and has not recorded, any major human rights problems or incidents involving the affected communities. S3-5 - Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities MDR-T. Tracking effectiveness of policies and actions through targets The Group aims to establish and maintain mutually beneficial relationships with the communities in which it operates. The Group is currently measuring the number of events supported in order to enrich the cultural experiences of communities. In its Sustainability Strategy, the Group has set itself the goal of supporting at least 100 events per year, either financially or through product contributions (between 2025 and 2027). Regarding the targets related to potential impacts through production activities, the Group's target related to pollution is relevant: 0 incidents/accidents related to pollution-related requirements. The base year of measurement and the reported value of the targets are disclosed in ESRS Part 2 SBM-1 - Strategy, Business Model and Value Chain. The targets were based on the current situation in the Group and selected practices in the sector. In the future, the possibility of linking support to projects that will have a lasting positive impact on community well-being is being considered. The head of Rokiškio sūris AB communicates directly with the municipal leaders of the affected communities, as all information about the communities' dissatisfaction first reaches the municipalities. This cooperation ensures that the objectives set are in line with the needs and expectations of the communities. There is no specific procedure/mechanism for setting targets. The management of the group is flexible in responding to problems or issues raised by the municipalities in which it operates, thus responding to the needs of the communities. The Group has not established a separate procedure for setting targets, monitoring results, improving the process as far as the involvement of affected communities is concerned. 231 S4 CONSUMERS AND END-USERS SBM-3, S4 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model A summary of the Group's material impacts, risks and opportunities under the theme "Users and end-users" is presented in ESRS Part 2 SBM-3 - Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model. This section provides a more detailed description of these impacts, risks and opportunities and their relationship to the Group's strategy and business model. In the previous reporting period, the Group identified material impacts related to users and end-users based on the Global Reporting Initiative (GRI) guidelines. These are described in the Consolidated Social Responsibility and Sustainability Report for 2023. The Group's activities are closely linked to consumer health and trust. Consumer health depends on many factors. One of them is a complete diet, and transparent and accurate information on the composition of products helps to avoid misleading communication. Transparency in production processes and strict controls ensure that final products meet the highest quality and safety standards. The Group produces dairy products that may have a material impact on all end-users and end-consumers (and all users of the Group's dairy products are included in the scope of the Group's disclosures in accordance with ESRS 2). The Group has identified two main groups of consumers at higher risk of harm: 1. Users whose privacy rights may be violated, in particular users who participate in the Group's loyalty programmes where their personal data is collected. These users could be at risk from the processing of their personal data, but the Group strives to avoid collecting sensitive data and continuously monitors and improves its data protection measures to ensure the highest level of privacy and to comply with data protection requirements. This group of users is associated with an identified risk for the Group - Reputational and financial damage due to data leakage. 2. Consumers who value accurate and accessible product information, such as nutrition labels and allergen labelling. These consumers may be adversely affected by misunderstood or incorrect information, which could lead to health problems. To avoid this risk, the Group ensures that all products are properly labelled and provide clear information to enable consumers to make informed decisions on product consumption. An identified risk to the Group in relation to this group of consumers is the financial risk of inadequate labelling of products. 232 The Group continuously takes action to reduce negative impacts, for example by improving product composition, providing clear nutritional and allergy information and ensuring high standards of data protection. The other impacts and risks identified in relation to product safety and quality concern all consumers and end-users of the products in the regions where they are marketed. The Group's strategy and business model are constantly evolving, taking into account actual and potential impacts on consumers. Additional quality and labelling control mechanisms are implemented to ensure adequate product safety and quality. As the Group's business is dependent on consumer behaviour and purchasing habits, significant changes in these areas can have a direct impact on business results. Product safety and quality Product safety and quality is the Group's top priority, and is directly linked to the Group's goal of producing the highest quality products. The real positive impact is reflected in the high food safety and quality standards applied throughout the Group, which ensure safe and nutritious products. Specially supplemented with some fresh dairy products, enriched with vitamins, proteins and good bacteria, they contribute to a complete and quality diet for consumers. Products that do not comply with the requirements may pose a health risk to consumers. This potential negative impact also poses a risk to the Group, as failure to meet the safety and quality requirements could result in financial and reputational consequences for the Group. The company's strategy is focused on ensuring product quality and safety, with material impacts and risks managed also along the value chain. In response to potential challenges, the Group implements the following measures: ● The key to ensuring product safety and quality is the implementation of and compliance with international standards. All of the Group's production companies have adopted the IFS standard. ● Additional quality control measures are included to identify and manage potential risks; ● The supply chain is subject to stricter requirements for raw material quality and sustainability standards; ● Staff development programmes on sustainability and quality standards are encouraged. Responsible communication To ensure fair and transparent communication, our value chain includes additional information screening filters to avoid misleading or unethical information. Information that is communicated publicly is carefully coordinated with responsible employees and senior management. Responsible communication has a positive impact on consumers by providing them with clear, correct and reliable information, enabling them to make informed decisions and reducing the risk of misleading information. 233 One potential negative effect is inaccuracies in product composition, nutrition labelling or other product-related communication. Lack of accuracy of information can lead to a loss of consumer confidence and limit their ability to make informed decisions. This potential negative impact also exposes the Group to the risk of financial consequences through fines or loss of reputation from misleading product information. Privacy protection The main negative impact on consumers may arise from personal data breaches in order fulfilment and loyalty programme management processes, which may lead to data leakage, unauthorised use of data or privacy breaches. This potential negative impact also exposes the Group to financial and reputational risks in the event of a data leakage incident. Loyalty programmes do not collect sensitive data from registered participants, such as phone number, name and email address, but a prize acceptance and handover certificate is signed at the time of collection, asking for full name and residential address. This information is forwarded to the finance department by the responsible person in the marketing department. Data security is respected in accordance with the legislation in force in the Republic of Lithuania; each employee of the Group companies signs the "Personal Data Protection Policy". Data security breaches are managed in accordance with the "Personal Data Breach Management Procedure". The Code of Ethics, which is communicated to every employee of the Group, clearly defines the importance of data security: 'We only process the personal data of employees, partners, customers, suppliers and others on a lawful basis and for a purpose. Data shall be processed in a manner that ensures its privacy, security and confidentiality and that appropriate technical and organisational measures are in place to protect against unauthorised access, disclosure, accidental loss, alteration, destruction or other unlawful processing." All of the impacts on consumers and end-users identified above are directly related to the nature of the Group's activities and production processes. The Group currently has no material risks and opportunities that would have a material current financial effect on its financial position, results of operations or cash flows, nor are there any risks that would cause the carrying amounts of assets and liabilities in the financial statements to change materially during the annual reporting period. The company's strategy and business model ensure risk resilience. Reputational risks are managed through transparent communication with consumers and strong marketing oversight, while product quality risks are managed through the implementation of international food safety and quality standards. There is also an innovative product development strategy to deliver healthier products that meet consumer needs. No separate quantitative analysis of resistance has been carried out. Our production processes follow international food safety standards, applying best manufacturing practices and using advanced production technologies to ensure that all products meet the highest quality and safety standards. S4-1 - Policies related to consumers and end-users 234 MDR-P. Policies adopted to manage material sustainability matters The Group's senior management has established, implements and oversees the Food Safety, Quality and Environmental Policy. Food safety, quality and environmental policies apply to all customers and consumers equally. This policy ensures the highest standards of product quality and safety as well as environmental compliance. The policy is an integral part of the overall sustainability strategy and includes guiding principles to manage risks, opportunities and material impacts related to consumers. The production of the products is based on fundamental principles that ensure high quality, safety and transparent communication. The Group does not have a policy specifically related to transparent communication, but there is a procedure described under the existing Integrated Management System called "Marketing", which applies to all user groups. Quality and safety are ensured through internationally recognised certifications, i.e. all the Group's production companies have adopted the IFS standard. Marketing campaigns follow responsible principles to avoid misleading information. If there is a need to update the product information on the label, the technologists inform the marketing department in the event of changes in labelling requirements, changes in production technology or on the basis of research results, and the marketing department prepares the packaging update accordingly. The company uses GDPR (General Data Protection Regulation) compliant systems to ensure the secure management of all customer data, including consumers and end users. Food safety, quality and environmental policy aims to provide consumers with only authentic products that meet quality and food safety requirements, in order to ensure their confidence. It is also important to meet the needs of our customers by continuously adapting to their expectations and market changes, and to strengthen the food safety culture. This policy relates to the Group's exposures and risks on the topic of product safety and quality. The monitoring process includes continuous quality control checks, rigorous oversight of supply and production processes, and verification of compliance with established standards to prevent potential risks and ensure positive outcomes. Information on the Food Safety, Quality and Environmental Policy is publicly available on the company's website www.rokiskio.com and on the Nasdaq Stock Market's website. The highest level in the Company responsible for the implementation of the Food Safety, Quality and Environmental Policy is the Chief Executive Officer of the Company. The interests of consumers shall be taken into account in setting, updating and updating the policy, as described in ESRS Part 2 SBM-2 Stakeholder Interests and Views. The Group adheres to strict human rights principles that include all consumers and end-users. It ensures that its activities respect the rights of consumers and users without compromising their safety and dignity. The company is committed to ensuring that all products meet safety and quality standards to protect the health and well-being of consumers. It respects users' right to privacy and ensures that their personal data is processed lawfully and responsibly in accordance with applicable law. 235 The Group is guided by the International Bill of Human Rights, including the Universal Declaration of Human Rights and its two implementing covenants: the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights. The Group works to ensure that all activities comply with the ILO Declaration on Fundamental Principles and Rights at Work, including non-discrimination, prohibition of child labour and decent work. Value chain management includes clear requirements for suppliers and partners to comply with these principles. To date, there have been no reported cases of non-compliance with the UN Guiding Principles on Business and Human Rights or other international standards in relation to consumers or end-users. S4-2 - Processes for engaging with consumers and end- users about impacts The Group continuously monitors the market and analyses third-party market research to understand the needs and expectations of consumers and end users. Consumer surveys are carried out at least once a year to identify the strengths and weaknesses of the Group's products. The results of the surveys are systematised and used for improvement actions, which are reflected in measurable objectives. The Marketing Director is responsible for organising and implementing these processes, ensuring that the data is properly analysed and used in the Group's strategy. The Group does not currently specifically assess the effectiveness of consumer/end-user involvement. However, consumer needs and expectations are monitored through feedback channels, customer surveys and market trend analysis to ensure product quality and compliance with consumer expectations. The Group does not currently use specific tools to gauge the views of particularly vulnerable or marginalised consumer groups. However, food products are developed to the highest standards of quality and safety, ensuring that they are safe and suitable for consumption by all consumer groups, including those who may have special dietary needs. S4-3 - Processes to remediate negative impacts and channels for consumers and end-users to raise concerns The Group takes a responsible approach to addressing negative impacts on consumers and end-users, ensuring that all potential impacts are not only identified but also effectively remedied. This approach is based on the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. The following processes and principles are used to prevent and remedy negative impacts: 236 ● Acceptance of responsibility - The Group acknowledges its responsibility for adverse impacts, should they occur, and acts proactively to eliminate the likelihood of their recurrence. ● Prevention measures - Continuous strengthening of process controls to prevent the recurrence of negative impacts in the future. ● Identification and evaluation mechanism - a customer complaint logging system is in place, allowing users and end-users to quickly report problems or concerns. Once a report has been received, an impact assessment is carried out to identify the causes and possible solutions. Corrective actions are followed by an analysis of their effectiveness to ensure that the problem is fully resolved and customer satisfaction restored. Users can report negative impacts in a variety of ways - by contacting the Group company via social media, email, telephone, by completing an annual survey or by expressing their dissatisfaction publicly, for example by posting on their social media wall. This feedback tells the Group which aspects require improvement and special attention to reduce repeated complaints about product quality and safety. All channels are publicly accessible and are monitored by the relevant staff, who pass the information on to the responsible persons for decision-making. Appropriate procedures are described and in place within the Group for this purpose. Up to 20 complaints related to product quality or safety are confirmed across the Group each year. Identified risks and corrective actions are communicated throughout the supply chain up to the customer to continuously improve the safety and quality of food products. Complaints are dealt with in accordance with the Complaints Procedure, which guarantees confidentiality and the protection of personal data. Mechanisms are also in place to allow consumers/end-users to lodge complaints anonymously or through third parties, i.e. employee representatives (Labour Council, Trade Union), public authorities (e.g. the State Consumer Rights Protection Authority) or non-governmental organisations. The group considers that the channels are effective, as referrals are received and no complaints about their inaccessibility have been recorded. The Group does not have a separate policy on the protection of individuals from retaliation, but provisions to ensure the safety of whistleblowers are included in the procedures for the reporting and handling of complaints and other communications. 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 MDR-A. Actions and resources in relation to material sustainability matters Product safety and quality All of the Group's production facilities are certified according to the IFS standard, which ensures a high level of food safety and quality. Annual audits give companies a score of 95% and above, confirming compliance with the requirements. The system continuously assesses and preventively manages biological, physical and chemical risks. The Group regularly reviews and improves its production processes by improving its safety and quality control systems. Further strengthening of the food safety and quality control systems is planned to ensure compliance with IFS and other international standards such as Kosher and Halal. These certifications are applied throughout the value chain, covering supply, production and distribution. Certification processes are carried out annually. 237 As dairy products are pasteurised, bacteria that pose a risk are destroyed, ensuring their microbiological safety. In addition, chemical risks are monitored and controlled to prevent unwanted substances from entering the products, while metal detectors and other equipment help ensure the physical safety of the products. There is also a foreign body management procedure that allows the rapid identification and elimination of potential physical hazards, ensuring consumer safety. All products are tested in the laboratory to ensure their safety and compliance with quality requirements. A rapid response system is in place for reporting and resolving product quality problems. These actions contribute to minimising both the negative impact on consumers and the risk to the Group. Promoting a nutritious diet Some short shelf-life fresh dairy products are supplemented with vitamins, proteins and good bacteria to enrich their nutritional value. Cheeses are particularly high in calcium and rich in protein. To ensure high quality and safe storage, the Group has invested in its own cheese ripening warehouses, where fermented hard cheeses can be ripened for 2 years or more, thus preserving their unique flavour characteristics and nutritional value. The Group has consistently reduced the sugar content of short shelf-life products such as yoghurts and glazed cottage cheese, as well as the salt content of cheeses. At the same time, products with increased protein content are being developed for lactose intolerant consumers. The company's products are essential for everyday food consumption. Responsible communication The Group strives to ensure that its products, marketing strategies and sales practices do not have a negative impact on consumers. Advertisements provide accurate and non-misleading information and ensure that consumers are properly informed about product features. To date, there have been no human rights violations or other significant incidents involving consumers or end-users. To ensure fair and transparent marketing communications, our value chain includes additional information screening filters to help avoid misleading or unethical information. Information communicated publicly is carefully coordinated with the responsible departments and the company's top management. The company takes a very responsible approach to the transparency of the information it provides to the customer or consumer, so product labels are updated whenever necessary and always contain relevant information for the consumer. Privacy protection 238 To avoid material negative impacts on users in terms of data privacy, all Group employees adhere to the Code of Ethics. Employees who have access to sensitive data are trained and comply with the relevant legislation of the Republic of Lithuania. Resources to implement actions The Company shall ensure that the necessary resources for responsible communication, privacy protection, audits and certification processes are included in annual budgets. These costs are not financially significant and do not represent a material part of the investment, but are important to ensure compliance with the highest quality and safety standards. Managing the impact of transparent communication is the responsibility of marketers and production technologists. Processes for identifying actions and their effectiveness To ensure food safety and quality, risk factors (biological, chemical, physical) are evaluated and conditions that may lead to their occurrence are identified. Risk assessment covers the entire production chain, from the supply of raw materials to the delivery of the final product to the customer. Using the Codex Alimentarius methodology, control measures are identified to effectively manage risks. Risk management involves developing action plans to improve systems and ensure risk mitigation. Risk management is integrated into the quality control system, the effectiveness of which is monitored through audits and customer feedback. The Group provides several opportunities for customers to disclose information on potential negative impacts to ensure a proactive dialogue and rapid response. In this way, the Group receives valuable product information that allows it to identify areas for improvement and to highlight important aspects that require special attention and further improvement. It has not yet been determined whether wider collective or collaborative action with other relevant parties will be required. With a good understanding of consumer needs, a company can see an increase in sales. Customers who value quality and innovation are likely to return and increase their purchases because they want to continue their relationship with a Group whose products meet their expectations. The security of consumer data collected for marketing purposes is ensured in accordance with the GDPR. Consumer feedback and complaints are used to determine the necessary actions related to responsible communication. The Group operates to the highest standards of product safety and quality, so that there is no excuse for fines for non-compliance. S4-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities MDR-T. Tracking effectiveness of policies and actions through targets The group has specific measurable objectives under the themes of Consumer Health and Safety, Quality and Transparency of Product Information, Data Security. These objectives, as well as the base year of measurement and the reported meaning of the objectives, are disclosed in ESRS Part 2 SBM-1 - Strategy, Business Model and Value Chain. 239 The objectives were set on the basis of the current situation in the Group and selected practices in the sector. These objectives are directly linked to the Company's policy, whose main priorities are to ensure product safety, minimise negative impacts on consumers and strengthen consumer confidence. The main objectives include the prevention of recurrent complaints, product safety violations, recalls and adulteration. It also aims to prevent data breach incidents. The aim is to achieve zero recurrent complaints and zero breaches. The objectives apply to all the Group's activities and geographies. Progress is measured from 2024 and assessed annually. To reinforce the positive impact, the target is to expand the available range of healthier products by 3% of the total number of SKUs by 2027. In 2024, healthier products (i.e. products with reduced sugar, salt and products supplemented with good bacteria, vitamins and/or minerals) accounted for 6% of the total SKUs. The Group actively engages with end-users through exhibitions, events and meetings to better understand their needs and expectations. Customer surveys and interviews are also used to gather views on product quality, safety and information presentation. The information gathered is fed directly into the formulation of objectives and customer feedback is regularly used to inform decision-making. As part of the monitoring process, the indicators are regularly reviewed to ensure that progress is being made and that targets are being met. Annual audits and customer feedback help assess long-term trends and identify opportunities for improvement. To date, no significant deviations from targets have been identified. Performance is monitored through internal and external audits, customer feedback and laboratory testing. Progress at is measured against established indicators and strategic objectives. Annual reporting on the achievement of sustainability goals and targets. The Group's quality system is continuously improved on the basis of the principle "What we do well today, we'll do even better tomorrow", ensuring continuous process improvement and better compliance with customer expectations. GOVERNANCE PART G1 BUSINESS ETHICS SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model A summary of the Group's significant impacts, risks and opportunities in regards to the topic "Business Ethics" is presented in ESRS Part 2 SBM-3 - Material impacts, risks and opportunities and their interaction with strategy and business model. This section provides a more detailed description of these impacts, risks and opportunities and their relationship to the Group's strategy and business model. In the previous reporting period, the Group identified significant impacts related to business ethics based on the Global Reporting Initiative (GRI) guidelines. They are described in the Consolidated Social Responsibility and Sustainability Report for 2023. 240 The main risks are unethical practices in the supply chain, corruption threat, inadequate protection of whistleblowers and non-compliance with the Group's corporate standards, procedures as well as law violations. All of these topics could have a material financial impact on the Group. The opportunities lie in building a strong and ethical organisational culture that fosters transparency, accountability and employee confidence, while responsible ethical business policies enhance the Group's reputation and appeal to informed consumers. Cooperation with farmers strengthens the Group's reputation. Group companies are implementing additional initiatives and actions that go beyond the legal requirements, thereby strengthening the organisational culture. These efforts increase employee satisfaction and motivation, contributing to a positive impact on their well-being. In addition, to ensure high standards of responsible business conduct, suppliers are subject to strict criteria and standards that help to minimise negative environmental impacts and promote a sustainable supply chain. Active engagement with local farmers also has a positive impact, promoting the local economy and more sustainable farming practices. The Group's negative impact may be manifested in cases of corruption that threaten transparency and trust in the business environment. In addition, a lack of supplier accountability can lead to negative consequences in the supply chain, including social and environmental violations. The Group's management monitors and assesses the significant impact of these topics on the business model, value chain, strategy and decision-making. It takes action to ensure an appropriate response to the situation, taking into account the risks and opportunities that arise. Where necessary, it modifies its strategic approach, updates its business models and implements measures to effectively address the challenges or opportunities that arise. The Group considers that forming organisational culture, protecting whistleblowers, managing relationships with suppliers and preventing corruption and bribery are essential parts of a corporate culture. In addition, relationships with suppliers based on clear standards of accountability reduce supply chain risks and promote mutual trust. Corruption and bribery prevention, supported by strong policies and continuous training, ensures that the Group's operations remain transparent and reliable in all areas. No material financial impact was currently identified to the Group's financial position (for the year under review and beyond), results of operations or cash flows that involves significant risks and opportunities. The analysis of the resilience of the Group's strategy and business model in relation to its ability to address material impacts and risks and to take advantage of its material opportunities is assessed to the extent that it has been estimated in the Group's overall business risk assessment as well as to the extent that it has been assessed in the Double Materiality Assessment. Animal welfare A summary of the Group's significant impacts, risks and opportunities under the topic "Animal Welfare" is presented in ESRS Part 2 SBM-3 - Material impacts, risks and opportunities and their interaction with strategy and business model. This section provides a more detailed description of these impacts, risks and opportunities and their relationship to the Group's strategy and business model. In the previous reporting period, the Group had identified Animal Welfare as a material factor and had included it in the Sustainability Report (the report was prepared in accordance with the Global Reporting Initiative (GRI) guidelines). 241 The group identified animal welfare as a significant topic, which is mainly concentrated at the upstream end of the value chain - dairy farms. Animal housing conditions, feeding and health care have a direct impact on both milk quality and the Group's reputation, and can therefore create both risks and opportunities for the Group. Insufficient attention to animal welfare poses reputational and regulatory risks, while higher welfare standards open up opportunities to add value and strengthen market position. Geographically significant impacts are concentrated in dairy farms in Lithuania and neighbouring countries (Latvia and Estonia). The Group aims to ensure that suppliers comply with EU animal welfare standards, implement sustainable practices and reinforce responsible production principles in the supply chain, thus contributing to a positive impact on animals in the sector. This impact relates to the Group's main raw material and is therefore directly linked to the Group's strategy and business model. No material financial impact was currently identified to the Group's financial position, results of operations and cash flows, nor are there any identified risks or opportunities that would more likely than not require a material adjustment to the carrying amounts of assets and liabilities in the next reporting period. The resilience of the Group's strategy and business model is addressed to the extent that it is touched upon through the Group's overall risk assessment and the double materiality assessment. The resilience analysis is carried out in the context of the identified risks and opportunities and no quantitative analysis is performed. G1-1 Business conduct policies and corporate culture MDR-P. Policies adopted to manage material sustainability matters The Group strives to foster a responsible, ethical and collaborative organisational culture that reflects its core values of transparency, respect for human rights, environmental responsibility and the well-being of society. The administrative, management and supervisory bodies actively contribute to building and implementing said culture. The main aspects that are discussed and monitored are: ● Promoting ethics and responsibility - ensuring that the highest ethical standards are upheld in the organisation's activities. ● Employee engagement and well-being - fostering respectful and inclusive attitudes and fair working conditions. ● Transparency and social responsibility indicators - these indicators are recorded and assessed in an annual sustainability report. 242 Core Values: ● Transparency and integrity - The Group operates under the highest ethical standards and ensures clear communication with clients, partners and the public. ● Respect for employees and partners - fostering a culture where disrespectful behaviour is not tolerated, regardless of a person's position or status. ● Environmental responsibility - employees are encouraged to conserve resources and take responsible care of the environment. ● Continuous improvement - opportunities to learn, grow and develop professionally. Cultural values are promoted through the example of top management as well as the arrangement of educational and recreational events that bring together employees with different job titles, genders, beliefs and other differences. The Group has a whistleblowing system in place that allows employees, suppliers and other stakeholders to report anonymously or openly possible illegal actions or violations of the Code of Conduct. Reports can be made by email, telephone or anonymous online form. All reports shall be dealt with confidentially in accordance with established procedures, ensuring that whistleblowers are protected from retaliation. To date, there have been no reported cases of breaches of whistleblowers' rights or confidentiality, but the Group plans to develop and implement a separate whistleblower protection policy in 2025. The Code of Ethics is intended to enshrine the Group's values, operating principles and standards of conduct. The main objective is to ensure ethical, fair and socially responsible business practices. The document focuses on a number of key areas: employee rights, relations with customers and partners, transparency, environmental protection, respect for human rights and anti-corruption policy. The main risks are potential breaches of the Code, corruption, discrimination or unethical behaviour. Opportunities - strengthening the Group's reputation, attracting responsible partners and talented employees. Monitoring is carried out through management commitment and employee involvement in reporting potential breaches. The Code of Conduct applies to all employees of the Group, regardless of their position. It also applies to relations with customers, partners, competitors and public authorities. Stakeholders include both internal (employees, management) and external (suppliers, contractors, the public). Exceptions are not explicitly defined, but the Code states that it may be reviewed and updated as required. Responsibility for the implementation of the Code of Conduct rests with the Group Management. They undertake to monitor compliance with the Code, to communicate it to stakeholders and to ensure that the policy is effectively implemented in day-to-day operations. The Code of Conduct notes that the Group aims to engage with its various stakeholders - employees, customers, partners, public authorities, shareholders and the public. Employees' rights and interests are particularly emphasised through the provision of working conditions, preventing discrimination and professional development. The Group is also committed to taking into account environmental aspects and minimising negative impacts on society. 243 The Code of Conduct is publicly available to all employees and partners of the Group. It is communicated to stakeholders as required. Employees are also encouraged to report possible breaches and to make suggestions for the implementation of the policy. Information on reporting is made available through official communication channels, including the email socialine.atsakomybe@rokiskio.com. The Group does not currently have a separate policy or procedure on whistleblower protection. A provision on whistleblower protection is included in the Procedure for the Submission and Handling of Complaints, Suggestions, Inquiries and Requests: "The appointed Company representative must ensure that all whistleblower-related information and associated data are securely stored and accessible exclusively to authorized personnel responsible for handling such information. " and " Employees of the Company who, through their responsibilities, gain access to the personal data of individuals providing whistleblower information, or the content of such information, must maintain its confidentiality, both during and after their employment." Staff whose remit includes dealing with complaints have the opportunity to attend training if they feel that their existing knowledge is insufficient to deal with a situation. No such training was provided to staff during the reporting period. The Group has a dual procedure for dealing with notifications - on product safety and quality and on other issues - and has designated employees responsible for this. Payment practice The Group has not adopted a specific policy aimed at preventing late payments, in particular to small and medium-sized enterprises (SMEs). However, the Group ensures timely settlement of obligations to suppliers, regardless of their size – whether they are large enterprises, small or medium-sized enterprises. Measures to prevent corruption and bribery The Group has adopted an Anti-Corruption Policy, which is communicated to all employees. At present, there is no identified employee group that is most at risk of corruption and bribery. The Company's Anti-Corruption Policy is broadly in line with the Preventive Principles of the United Nations Convention Against Corruption (UNCAC). The policy enshrines the principles of transparency, management responsibility, avoidance of conflicts of interest and zero tolerance for corruption. Although the document does not explicitly refer to the UNCAC, its main provisions are implemented in practice. The Anti-Corruption Policy aims to create a transparent business environment, raise awareness among employees and tolerate any form of corruption. The main risks are potential bribery, conflict of interest, influence peddling and illegal gifts. The main opportunities are to strengthening the Group's reputation, mitigating legal and financial risks and foster greater trust among business partners and the public. 244 The policy covers all of the Group's activities, including its relations with business partners, suppliers, customers and public authorities. There are no exceptions, but the document emphasises that all employees, without exception, must comply with the principles set out. The policy emphasises that the selection of suppliers and business partners must be transparent and based on objective criteria. Staff must avoid conflicts of interest and decisions shall be based on the principles of impartiality, integrity, transparency and confidentiality. The policy is publicly communicated to staff and stakeholders. Violations can be reported confidentially by email (socialine.atsakomybe@rokiskio.com) or by phone (+370 458 55302). The process for handling reports in alignment with the Group's procedures is set out. In addition, there is an Anti-Money Laundering and Anti-Terrorist Financing Policy, which applies to staff in positions of highest risk of corruption and bribery. Animal welfare is integrated into the Group's Sustainability Policy and Supplier Guidelines. All new hires are made aware of the Code of Conduct and, in the event of its renewal, all employees are re-informed. Training covers adherence to ethical standards, responsible decision-making and the reinforcement of a transparent corporate culture. The Group does not have established procedures for the prompt, independent and objective handling of business ethics incidents, including incidents of corruption and bribery, but has a general Procedure for the submission and handling of complaints, suggestions, requests and inquiries. During the reporting period, the Group has not identified any business ethics incidents, including incidents of corruption and bribery, and has not been involved in any prompt, independent and impartial investigation procedures. Animal welfare The Group has adopted a Sustainability Policy, which covers approaches and attitudes to all three aspects of sustainability: environmental, governance and social issues. The policy encompasses the entire value chain, from sourcing raw materials to delivering the final product to consumers, as well as addresses animal welfare concerns. The Group's Sustainability Policy includes provisions on animal welfare: ● Work with milk producers to ensure transparency in the supply chain. ● Ensuring that animal welfare standards are met on dairy farms from which raw materials are purchased. Other aspects of these policies, as required by the MDR-P, are disclosed in topic E1 E1-2 - Policies related to climate change mitigation and adaptation. 245 G1-2 Management of relationships with suppliers In accordance with the Group's Accounting Policy, payments are processed in compliance with the specified terms. There are no complaints about overdue debts or conflicts. The Group's approach to supplier relations The Group strives to ensure sustainable and transparent relationships with its suppliers, taking into account the risks in the supply chain and their social, environmental and economic impacts. Supply chain risk analysis is carried out regularly to identify potential supply disruptions. Preventive measures include stockpiling, finding alternative suppliers and establishing long-term supply contracts. In the raw milk supply chain, where stockpiling is not feasible, the Group makes efforts to ensure long-term cooperation with farmers. The Group has not identified specific vulnerable suppliers who would face significant economic, environmental, and/or social risks. Social and environmental criteria in supplier selection The Group applies social and environmental requirements to its suppliers, which are defined in the Supplier Conduct Guidelines. Procurement staff receives training on the principles of supply chain sustainability and supplier evaluation. Supplier audits and surveys are also carried out to assess the compliance of suppliers with established standards. The Group encourages cooperation with suppliers with international certifications (e.g. ISO, FSC) confirming their compliance with sustainability standards. G1-3 Prevention and detection of corruption and bribery The Group has an Anti-Corruption Policy, which all employees acknowledge by signing. The culture of anti-bribery and anti-corruption is clearly communicated at top management level and understood by all employees. The policy defines the procedure to be followed in the event of an instance of misconduct. The Group does not have any exclusive verification or control measures in place as the culture of the organisation is based on trust. To date, no cases of bribery or corruption have been reported. Investigations into corruption and bribery must be conducted in accordance to the Anti-Corruption Policy. The issue of the separation of the Investigative Committee from the chain of command is not exclusively regulated. The results of investigations are reported in accordance to the Anti-Corruption Policy, but there is no separate procedure for handling such reports. All employees shall be made aware of the Anti-Corruption Policy at the time of onboarding or when it is updated. A signed acknowledgement of understanding of the policy shall be provided. The latest version of the policy is publicly available on the Group's website. 246 In 2024, only one employee of the Group participated in anti-corruption and anti-bribery training. The plan is to provide training in 2025, involving employees whose positions involve a higher risk of corruption and bribery, as well as administrative, management and supervisory bodies. Percentage of functions-at-risk covered by training programmes During the reporting period, no high-risk group of individuals was identified. Anti-corruption awareness/training is conducted for all employees. It is assessed that this corresponds to 100% coverage. MDR-A. Action MDR-A. Actions and resources in relation to material sustainability matters Actions foreseen for the future and embedded in the Group's Sustainability Strategy for the period 2025-2027. ● Develop and approve an anti-corruption awareness programme and training programme for staff, updating management on corruption prevention. ● Assign sustainability objectives to top managers at group level. ● Analyse potential corruption risks, take preventive measures and regularly update training concepts. ● Regularly promote (e.g. launch campaigns) the possibility of raising concerns through whistleblowing channels and complaints mechanisms; ensure that they are accessible, ensure and emphasise anonymity. During the reporting period, the Director of Finance of AB Rokiškio sūris participated in the training course Monitoring of Business Relationships and Operations (Training organiser: Center of Excellence in Anti-Money Laundering). Anti-corruption training is planned for 2025 for all employees for whom this topic is most relevant. The actions apply across the Group's activities. There were no actual cases of significant impact that required remedial action. The Action Plan is not expected to require significant operational and/or capital costs. Animal welfare The Group's main raw material is cow's milk, purchased from farms in Lithuania, Latvia and Estonia. The Group purchases milk only after it has concluded milk sales and purchase agreements, which also contain requirements relating to animal welfare. By signing the contract, the seller confirms that the milk sold comes from cows kept in herds included in the EU competent authorities' agricultural surveillance system and that they comply with the EU rules. 247 The Group is actively working to ensure the sustainability of milk production and reduce its environmental impact. The Group works with farmers to help them calculate their CO₂ emissions and to identify ways and targets to reduce these emissions. Only good quality milk can produce good quality dairy products and good quality milk can only come from healthy animals (milk is only bought from farms with healthy herd status). The somatic cell count (SCC) of all milk delivered from farms is monitored. In 2024, the average somatic cell count of milk was 198 000/ml, which is in line with the requirements of the rules on milk purchases (400 000/ml). The Group takes continuous action to ensure animal welfare and milk quality throughout the value chain. Farm inspections are carried out once a year, visually assessing animal welfare under the five freedoms. Risk analysis of raw materials and assessment of suppliers according to risk groups is carried out every three years. In addition, milk samples are taken three times a month for somatic cell counts - milk producers are notified if they exceed the permitted limits (400,000/ml) and are obliged to submit measures to improve the situation. This process allows potential animal health problems to be quickly identified and addressed. The Group also provides soft loans to farms, strengthening their capacity to invest in animal welfare and sustainable practices. Although the Group can only partially influence the introduction and improvement of sustainability practices on farms, these aspects controlled by public bodies. The Group in turn supports farms implementing modern practices, organises training, and assists in the implementation of various on-farm monitoring systems. All of these actions are ongoing, ensuring continuity and consistent impact management. No actual significant impacts were identified during the reporting period and therefore no additional actions have been taken in this area. All the actions listed in this paragraph apply equally to all farms. The Group considers that the implementation of the Action Plan does not require significant operating costs and/or capital expenditure, as it depends on the decisions and capabilities of each farm. MDR-T. Targets MDR-T. Tracking effectiveness of policies and actions through targets The targets described in this topic are linked to the Group's policy commitment to ethical, fair and socially responsible business practices. The Group has set the following objectives in the area of business ethics, which are set out in the Sustainability Strategy for the period 2025-2027: ● Zero significant cases of non-compliance with the law ● Zero confirmed cases of corruption These objectives apply to all the Group's activities. Base year 2024 - no incidents and no such cases recorded. The targets relate to good business practice and no specific methodologies or assumptions have been made to set them. #80 h. External stakeholders have not been specifically involved in the definition of the targets. 248 Animal welfare The Group has set clear, measurable targets to improve animal welfare and milk quality. Somatic cell count and the number of farms inspected are key indicators used to measure progress. The somatic cell count in raw milk must not exceed 400 000/ml. There are also related targets: ● 100% of key suppliers meet environmental standards. ● 100% of farms have been audited based on applied animal welfare, environmental, and social criteria.. These objectives are supported by public authorities through supervision and authorisation of farming activities. The level of targets and the units of measurement are defined in the Group's Sustainability Strategy for the period 2025-2027 (further commented in ESRS Part 2 SBM-1 - Strategy, business model and value chain). The reference period for measurements is 2020, serving as the basis for evaluating changes in somatic cell indicators and progress toward other targets.. In the reporting year, the targets were met: ● Average somatic cell count did not exceed 400 000/ml. ● Proportion of suppliers evaluated on environmental and/or social criteria - 100%. ● Percentage of farms audited for animal welfare, environmental and social criteria - 100%. The somatic cell count in raw milk is determined at least 3 times a month by an independent laboratory of UAB Pieno tyrimai. Somatic cell count reflects the animal's health status and serve as a key metric for evaluating animal welfare.. G1-4 Confirmed incidents of corruption or bribery During the reporting period, the Group did not identify any cases of corruption or bribery, and no further action was required to address breaches of anti-corruption and anti-bribery procedures or standards. Number of incidents of corruption or bribery during the reporting period 0 G1-5 Political influence and lobbying 249 The Group's shareholder structure is not connected to the government, does not participate in political activities, and has no intention of doing so. Through the double materiality assessment, no significant impacts, risks, or opportunities related to the topic of political engagement were identified, and therefore, detailed disclosures under this disclosure requirement are not provided. During the current reporting period, the members of the administrative, management and supervisory bodies of the Company were not appointed from individuals who, within two years prior to their appointment, had held similar positions in public administration institutions or regulatory authorities. No new appointments were made to such positions during the reporting period. G1-6 Payment practices The Group makes all payments to suppliers and business partners on time, in accordance with contractual obligations and fair commercial practices. Payments are made to both large and small players in the supply chain, irrespective of their size or geographical location. Milk suppliers are subject to a payment period of 30 calendar days from the date of invoice. For all other suppliers, the deadline is 60 days or as agreed between the parties. There are no exceptions or different payment practices for SMEs. The Group did not record any overdue/unpaid invoices during the reporting period. At present, the Group is not in a position to disclose the average payment term, but plans to assess the possibilities in the near future with the aim of being able to report this information within the next 2–3 years. The Group has not received any complaints or disputes about late payments and the long-term cooperation with suppliers is based on trust, financial soundness and respect for contractual obligations. Number of outstanding legal proceedings for late payments 0 Animal welfare. MDR-M. Metrics in relation to material sustainability matters The Group uses somatic cell count and the number of farms inspected as key indicators to assess performance and efficiency. In 2024, the somatic cell count in purchased raw milk was 198 000/ml. 100% of raw milk suppliers have been inspected during 2024. The somatic cell count is calculated according to the methodology used by UAB Pieno tyrimai in accordance with established standards. This methodology has certain limitations in terms of frequency of testing and interpretation of results. The results of the measurement of the indicators shall be validated by an external body other than the assurance provider. Somatic cells in milk are the epithelial cells of the mammary gland and white blood cells (leucocytes). Their content in milk is an important indicator of the health status of the animal, especially possible inflammation or mastitis. 250 RESPONSIBLE BUSINESS PRACTICES: INVESTMENT AND INNOVATION (ENTITY-SPECIFIC DISCLOSURE) SBM-3- Material impacts, risks and opportunities and their interaction with strategy and business model The double materiality assessment identifies responsible investment and innovation as a priority area for sustainability. This includes the deployment of sustainable technologies, modernisation of processes and investment in low-carbon systems. ● Risks: a lack of focus on responsible investment may limit the Group's competitiveness and adaptability to changing market and regulatory requirements. ● Opportunities: investing in innovation can increase operational efficiency, reduce environmental impacts and build long-term resilience. Geographically, significant impacts are concentrated in production facilities, logistics and distribution centres, where innovations directly contribute to energy efficiency and waste reduction. Responsible investment and innovation have a significant impact on both people and the environment: ● Impact on people: ○ Responsible investment ensures the production of safe and quality products. ○ Energy-saving technologies help reduce production costs, offer competitive prices and increase consumer satisfaction. ● Environmental impact: ○ Improving energy efficiency reduces greenhouse gas emissions. ○ Optimised use of raw materials helps reduce production waste and environmental pollution. No material financial impact was currently identified to the Group's financial position, results of operations and cash flows, nor are there any identified risks or opportunities that would more likely than not require a material adjustment to the carrying amounts of assets and liabilities in the next reporting period. The resilience of the Group's strategy and business model is addressed to the extent that it is touched upon through the Group's overall risk assessment and the double materiality assessment. The resilience analysis is carried out in the context of the identified risks and opportunities and no quantitative analysis is performed. 251 Policy MDR-P. Policies adopted to manage material sustainability matters In our Sustainability Policy, we declare that we are continuously investing in new technologies and processes that increase production efficiency, reduce environmental impact and ensure the highest quality of the products. Our innovation strategy focuses on long-term sustainability and reduced resource use. The Group has adopted a Sustainability Policy which includes approaches and attitudes to all three layers of sustainability: environmental, governance and social issues. The policy aims to cover the entire value chain, from the supply of raw materials to the delivery of the final product to the consumer. Other aspects of these policies, as required by the MDR-P, are disclosed in topic E1 E1-2 - Policies related to climate change mitigation and adaptation. Action MDR-A. Actions and resources in relation to material sustainability matters The Group seeks to assess environmental, social and economic criteria when making investment decisions. This principle is integrated into the investment approval policy, which guides management when approving annual investments. Opportunities: Responsible investment can increase operational efficiency, reduce environmental impacts, and build long-term business resilience, thus contributing to the production of superior quality products and greater consumer satisfaction. Possible positive effects: ● Modernised production processes reduce energy consumption and contribute to reducing greenhouse gas emissions. ● Optimised use of raw materials helps reduce waste and environmental impact. Risks: ● The slow uptake of environmentally friendly packaging can damage consumer confidence and reputation in markets where sustainability is a priority. ● The lack of recyclability of packaging increases the problem of plastic waste and may pose a long-term sustainability risk. In view of these risks, it is planned to upgrade the packaging of fermented cheese sold in retail chains to recyclable packaging. The possibility of extending this technology to other products will also be assessed. The Strategic Sustainability Plan 2025-2027 foresees that by 2027 at least 85% of all packaging used in the production of dairy products will be recyclable. The Group's strategy for 2025-2027 sets out the following actions: 252 ● Evaluate the most relevant new technologies/solutions to reduce CO₂ emissions, reduce/manage waste, reduce environmental impact, use resources more efficiently, improve working conditions, increase productivity (with a sustainability and environmental criterion), and develop a follow-up action plan accordingly. ● Collaborate with technology suppliers/associations to gain knowledge of cutting-edge innovations and benefit from external expertise in technological advances, for example to develop technologies that reduce CO₂ emissions along the value chain. The Group's sustainability objectives are guided by a strategic plan, which includes key actions, their scope and timelines. This plan defines the measures to achieve the sustainability policy objectives, but does not describe the actions in detail. There is currently no investment plan in place to achieve these objectives. Funding is provided from the current year's budget and funding for sustainability activities is included in operating expenses in the consolidated financial statements. The Action Plan does not require significant operating expenditure (Opex) and/or capital expenditure (Capex). The Group has no information on victims of significant exposure and no further action has been taken in this area. Targets MDR-T. Tracking effectiveness of policies and actions through targets In this topic, the Group aims to: To responsibly deploy innovative technologies to increase the Group's productivity, reduce environmental impact and improve working conditions; to ensure that investments contribute to the achievement of strategic objectives and have a positive impact on nature, people and the economy. The objective of this topic is to take environmental, social and economic criteria into account when investing, i.e. to ensure that 100% of the environmental, social and economic criteria relevant to the investment are assessed. This objective is directly linked to the Group's Strategic Plan and the Sustainability Policy, which defines the main directions in the areas of environment, social responsibility and governance. This objective covers all the Group's activities. The baseline year for monitoring goal achievement is 2024. The Group has sought to meet the target and take into account relevant environmental, social and economic criteria during the 2024 investment appraisal, but does not have a defined procedure for this process and has not prepared separate documentation. The Group assesses that the achievement of this objective is 100% in line with the target set. This continuity of compliance with the target is also included in the Sustainability Strategy for the period 2025-2027. This target is based on best practice in the sector. Stakeholders have been involved in the definition of this objective to the extent described in SBM-2 - Stakeholder interests and views. All investment projects are monitored and reviewed primarily by the executive managers, who report to senior management on progress and results achieved. The Group has not set up a separate mechanism to measure progress. However, we monitor individual indicators such as water, electricity, heat, fuel efficiency and CO₂ emissions. 253 Metrics MDR-M. Metrics in relation to material sustainability matters The Group assesses performance and effectiveness through indicators relating to significant impacts, risks and opportunities. The value of the target-related indicator for the year under review is already described in the MDR-T section. Tracking effectiveness of policies and actions through targets. Additional environmental impact-related indicators, closely linked to innovations, are also monitored. For example, the proportion of recyclable materials in packaging is one of them, reaching 88.9% in 2024. This indicator helps to measure progress on sustainable packaging. The measurements are not validated by any external body other than the assurance provider. The related indicators, including methodology and definition, are described in more detail in topic E5 Circular Economy. INDEX List of ESRS indicators ESRS 2 General Disclosures Disclosure Requirements Page 1. Basis for reporting BP-1 General basis for preparation of sustainability statements 131 BP-2 Disclosures in relation to specific circumstances 131 2. Governance GOV-1 Role of administrative, management and supervisory bodies 132 GOV-2 Information provided to and sustainability matters addressed by the administrative, management, and supervisory bodies 135 GOV-3 Integration of sustainability performance into incentive schemes 135 GOV-4 Statement on due diligence 136 GOV-5 Risk management and internal control over sustainability reporting 136 3. Strategy SBM-1 Strategy, business model and value chain 137 SBM-2 Stakeholder interests and views 141 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 144, 147, 154, 168, 173, 179, 184, 204, 207, 219, 224, 230, 239 4. Impact, Risk and Opportunity Management 4.1 Disclosures on the materiality assessment process IRO-1 Description of processes to identify and assess material impacts, risks and opportunities 150 IRO-2 Disclosure requirements in ESRS covered by the Group’s sustainability statement 154 4.2 Minimum Disclosure Requirements for Policies and Actions MDR-P Policies adopted to manage material sustainability matters 158, 169, 181, 186, 219, 226, 233, 240, 250 MDR-A Actions and resources in relation to material sustainability matters 159, 170, 175, 210, 236, 245, 250 5. Metrics and Targets MDR-M Metrics in relation to material sustainability matters 248, 252 MDR-T Tracking effectiveness of policies and actions through targets 161, 171, 177, 183, 188, 224, 229, 238, 246, 251 Environmental topics E1 ESRS Climate Change Governance E1 GOV-3 Integration of sustainability-related performance in incentive schemes 135 Strategy E1-1 Transition plan for climate change mitigation 156 E1 2 SBM-3 Material impacts, risks, opportunities, and their interaction with the strategy and business model 147, 154 Impact, Risk and Opportunity Management E1 IRO-1 Description of processes to identify and assess material climate-related impacts, risks and opportunities 150 E1-2 Policies related to climate change mitigation and adaptation 158 E1-3 Actions and resources in relation to climate change policies 159 Metrics and targets E1-4 Targets related to climate change mitigation and adaptation 161 E1-5 Energy consumption and energy mix 163 E1-6 Gross Scopes 1, 2, 3 and Total GHG emissions 164 E1-7 GHG removals and GHG mitigation projects financed through carbon credits 167 E1-8 Internal carbon pricing 167 E2 ESRS Pollution Impact, Risk and Opportunity Management E2 IRO-1 Description of the processes to identify and assess material pollution-related impacts, risks and opportunities 152 E2-1 Policies related to pollution 169 E2-2 Actions and resources related to pollution 170 Metrics and Targets E2-3 Targets related to pollution 171 E2-4 Pollution of air, water and soil 172 E3 ESRS Water and Marine Resources Impact, Risk and Opportunity Management E3 IRO-1 Description of processes to identify and assess material impacts, risks and opportunities related to water and marine resources 153 E3-1 Policies related to water and marine resources 175 E3-2 Actions and resources related to water and marine resources 175 Metrics and Targets E3-3 Targets related to water and marine resources 177 E3-4 Water consumption 178 E4 ESRS Biodiversity and Ecosystems Strategy E4-1 Transition plan and consideration of biodiversity and ecosystems in the strategy and business model 180 E4 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 179 Impact, Risk and Opportunity Management E4 IRO-1 Description of processes to identify and assess material impacts, risks and opportunities related to biodiversity and ecosystems 153 E4-2 Policies related to biodiversity and ecosystems 181 E4-3 Actions and resources related to biodiversity and ecosystems 182 Metrics and Targets E4-4 Targets related to biodiversity and ecosystems 183 E4-5 Impact metrics related to biodiversity and ecosystems change 183 E5 ESRS Resource Use and Circular Economy Impact, Risk and Opportunity Management E5 IRO-1 Description of processes to identify and assess material impacts, risks and opportunities related to resource use and circular economy 154 E5-1 Policies related to resource use and circular economy 185 E5-2 Actions and resources related to resource use and circular economy 186 Metrics and Targets E5-3 Targets related to resource use and circular economy 188 E5-4 Resource inputs 189 E5-5 Resource outputs 189 Social themes S1 ESRS Own Workforce Impact, Risk and Opportunity Management S1 SBM-2 Stakeholder interests and views 141 S1 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 204 Impact, Risk and Opportunity Management S1-1 Policies related to own workforce 207 S1-2 Processes for engaging with own workforce and workers’ representatives about impacts 208 S1-3 Processes to remediate negative impacts and channels for own workforce to raise concerns 209 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 210 Metrics and Targets S1-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities 211 S1-6 Characteristics of employees 212 S1-7 Characteristics of non-employees considered part of the own workforce 214 S1-8 Collective bargaining coverage and social dialogue 215 S1-9 Diversity metrics 215 S1-10 Adequate wages 216 S1-11 Social protection 216 S1-12 Employees with disabilities 216 S1-13 Training and skills development metrics 217 S1-14 Health and safety metrics 217 S1-16 Remuneration metrics (pay gap and total remuneration) 218 S1-17 Incidents, complaints, and severe human rights impacts 218 S2 ESRS Workers in the Value Chain Impact, Risk and Opportunity Management 2 ESRS SBM-2 Stakeholder interests and views 141 2 ESRS SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 219 Impact, Risk and Opportunity Management S2-1 Policies related to value chain workers 220 S2-2 Processes for engaging with value chain workers about impacts 221 S2-3 Processes to remediate negative impacts and channels for value chain workers to raise concerns 221 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 actions 223 Metrics and Targets S2-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities 224 S3 ESRS Affected Communities Strategy S3 SBM-2 Stakeholder interests and views 141 S3 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 224 Impact, Risk and Opportunity Management S3-1 Policies related to affected communities 226 S3-2 Processes for engaging with affected communities about impacts 227 S3-3 Processes to remediate negative impacts and channels for affected communities to raise concerns 227 S3-4 Taking action on material impacts on affected communities, and approaches to managing material risks and pursuing material opportunities related to affected communities, and effectiveness of those actions 228 Metrics and Targets S3-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities 229 S4 ESRS Consumers and end-users Strategy S4 SBM-2 Stakeholder interests and views 141 S4 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 230 Impact, Risk and Opportunity Management S4-1 Policies related to consumers and end-users 233 S4-2 Processes for engaging with consumers and end- users about impacts 234 S4-3 Processes to remediate negative impacts and channels for consumers and end-users to raise concerns 235 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 236 Metrics and Targets S4-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities 238 Governance topics G1 ESRS Business Conduct Governance G1 GOV-1 Role of the administrative, management, and supervisory bodies 132 Impact, Risk and Opportunity Management G1 IRO-1 Description of processes to identify and assess material impacts, risks and opportunities 150 G1-1 Business conduct policies and corporate culture 240 G1-2 Management of relationships with suppliers 244 G1-3 Prevention and detection of corruption and bribery 244 Metrics and Targets G1-4 Confirmed incidents of corruption or bribery 247 G1-5 Political influence and lobbying 248 G1-6 Payment practices 248 254 List of ESRS data items required by other EU legislation 255 List of horizontal standards and thematic standard data items required by other EU legislation This appendix is an integral annex to the ESRS standard Part 2 (ESRS 2). The following table indicates the data units required by other EU legislation for ESRS 2 and thematic ESRS. Disclosure requirement and related data unit Reference to SFDR Reference to Pillar 3 Reference to the Benchmark Regulation Reference to the EU climate legislation Page 2 ESRS GOV-1 Gender balance on the Board Article 21(d) Indicator 13 of Annex 1, Table 1 Annex II to Commission Delegated Regulation (EU) 2020/1816 133 2 ESRS GOV-1 Percentage of independent board members Article 21(e) Annex II to Commission Delegated Regulation (EU) 2020/1816 133 2 ESRS GOV-4 Declaration of due diligence Article 30 Annex 1, Table 3, Indicator 10 136 2 ESRS SBM-1 Participation in activities related to fossil fuels Article 40(d)(i) Indicator 4 of Annex 1, Table 1 Article 449a of Regulation (EU) No 575/2013; Table 1 of Commission Implementing Regulation (EU) 2022/2453: Qualitative information on environmental risks and Table 2: Qualitative information on social risks Annex II to Commission Delegated Regulation (EU) 2020/1816 203 2 ESRS SBM-1 Involvement in activities related to the production of chemicals Article 40(d)(ii) Indicator 9 of Annex 1, Table 2 Annex II to Commission Delegated Regulation (EU) 2020/1816 138 2 ESRS SBM-1 Participation in activities related to controversial weapons Article 40(d)(iii) Indicator 14 in Annex 1, Table 1 Article 12(1) of Delegated Regulation (EU) 2020/1818, Annex II to Delegated Regulation (EU) 2020/1816 138 2 ESRS SBM-1 Participation in activities related to tobacco production and cultivation Article 40(d)(iv) Article 12(1) of Delegated Regulation (EU) 2020/1818, Annex II to Delegated Regulation (EU) 2020/1816 138 E1-1 ESRS Roadmap to a climate-neutral economy by 2050 Article 14 Article 2(1) of Regulation (EU) 2021/1119 162 E1-1 ESRS Undertakings not covered by benchmarks aligned to the Paris Agreement Article 16(g) Article 449a Regulation (EU) No 575/2013; Template 1 of Commission Implementing Regulation (EU) 2022/2453: Bankbook. Indicators of potential transformation risks related to climate change. Credit quality of exposures by sector, emissions and residual maturity Article 12(1)(d) to (g) and (g) and Article 12(2) of Delegated Regulation (EU) 2020/1818 149 E1-4 ESRS GHG emission reduction targets Article 34 Indicator 4 of Annex 1, Table 2 Article 449a Regulation (EU) No 575/2013; Template 3 of Commission Implementing Regulation (EU) 2022/2453: Bankbook. Indicators of potential climate change-related transformation risks. Reconciliation parameters Article 6 of Delegated Regulation (EU) 2020/1818 162 E1-5 ESRS Fossil energy consumption broken down by source (only for sectors with significant climate impact) Article 38 Annex 1, Table 1, Indicator 5 and Table 2, Indicator 5 163 E1-5 ESRS Energy consumption and mix Article 37 Indicator 5 of Annex 1, Table 1 163 E1-5 ESRS Energy consumption intensity related to the activities of sectors with significant climate impacts Articles 40-43 Indicator 6 of Annex 1, Table 1 164 E1-6 ESRS Combined Scope 1, Scope 2 and Scope 3 and total emissions Article 44 Annex 1, Table 1, Indicators 1 and 2 Article 449a; Regulation (EU) No 575/2013; Template 1 of Commission Implementing Regulation (EU) 2022/2453: Bankbook. Indicators of potential climate change-related transformation risks. Credit quality of exposures by sector, emissions and residual maturity Articles 5(1), 6 and 8(1) of Delegated Regulation (EU) 2020/1 818 164 E1-6 ESRS Energy intensity of total GHG emissions Articles 53-55 Indicator 3 of Annex 1, Table 1 Article 449a of Regulation (EU) No 575/2013; Template 3 of Commission Implementing Regulation (EU) 2022/2453: Bankbook. Indicators of potential climate change-related transformation risks. Reconciliation parameters Article 8(1) of Delegated Regulation (EU) 2020/1818 167 E1-7 ESRS GHG removals and carbon credits Article 56 Article 2(1) of Regulation (EU) 2021/1119 167 E1-9 ESRS Exposure of the benchmark portfolio to climate-related physical risk Article 66 Annex II to Delegated Regulation (EU) 2020/1818, Annex II to Delegated Regulation (EU) 2020/1816 167 E1-9 ESRS Breakdown of sums of money by acute and chronic physical risk, Article 66(a) E1-9 ESRS Determination of the location of important assets subject to significant physical risk Article 66(c) Article 449a of Regulation (EU) No 575/2013; Articles 46 and 47 of Commission Implementing Regulation (EU) 2022/2453; Template 5. Bank book. Indicators of potential physical risks associated with climate change. Exposures related to physical risks. E1-9 ESRS Breakdown of the carrying amount of an undertaking's real estate by energy efficiency class; Article 67(c) Article 449a of Regulation (EU) No 575/2013; Article 34 of Commission Implementing Regulation (EU) 2022/2453; Template 2. Bankbook. Indicators of potential risks of climate change-related transformation. Loans secured by real estate. Collateral measures Energy efficiency E1-9 ESRS Extent of portfolio exposure to climate-related options Article 69 Annex II to Commission Delegated Regulation (EU) 2020/1818 E2-4 ESRS Amount of each pollutant listed in Annex II of the E-IPTR Regulation (European Pollutant Release and Transfer Register Regulation) discharged into air, water and soil, Article 28 Annex 1, Table 1, Indicator 8, Annex 1, Table 2, Indicator 2, Annex 1, Table 2, Indicator 1, Indicator 3, Annex 1, Table 2 172 E3-1 ESRS Aquatic and marine resources Article 9 Indicator 7 of Annex 1, Table 2 175 E3-1 ESRS Adopted policy Article 13 Indicator 8 of Annex 1, Table 2 175 E3-1 ESRS Sustainable oceans and seas Article 14 Indicator 12 of Annex 1, Table 2 175 E3-4 ESRS Total quantity of water recycled and reused Article 28(c) Indicator 6.2 of Annex 1, Table 2 178 E3-4 ESRS Total water consumption (m3) by net revenue of own operations Article 29 Indicator 6.1 of Annex 1, Table 2 178 2 ESRS IRO 1 - E4 Article 16(a)(i) Indicator 7 of Annex 1, Table 1 152-153 2 ESRS IRO 1 - E4 Article 16(b) Indicator 10 of Annex 1, Table 2 152-153 2 ESRS IRO 1 - E4 Article 16(c) Indicator 14 in Annex 1, Table 2 152-153 E4-2 ESRS Sustainable land use/agricultural practices/policies Article 24(b) Indicator 11 of Annex 1, Table 2 179 E4-2 ESRS Sustainable ocean/marine use practices or policies Article 24(c) Indicator 12 of Annex 1, Table 2 181 E4-2 ESRS Policies to address deforestation Article 24(d) Indicator 15 of Annex 1, Table 2 181 E5-5 ESRS Untreated waste Article 37(d) Indicator 13 of Annex 1, Table 2 190 E5-5 ESRS Hazardous waste and radioactive waste Article 39 Indicator 9 of Annex 1, Table 1 190 2 ESRS - SBM3 - S1 Risk of incidents involving forced labour Article 14(f) Annex I, Table 3, Indicator 13 207 2 ESRS - SBM3 - S1 Risk of child labour incidents Article 14(g) Annex I, Table 3, Indicator 12 207 S1-1 ESRS Human rights policy commitments Article 20 Annex I, Table 3, Indicator 9 and Table 1, Indicator 11 208 S1-1 ESRS Policy on comprehensive verification applicable to aspects covered by International Labour Organisation Core Conventions Nos. 1 to 8 Article 21 Annex II to Commission Delegated Regulation (EU) 2020/1816 207 S1-1 ESRS Processes and measures to prevent trafficking in human beings Article 22 Indicator 11 of Annex I, Table 3 218 S1-1 ESRS Policy or management system for the prevention of accidents at work Article 23 Annex I, Table 3, Indicator 1 205 S1-3 ESRS Complaints/complaints handling mechanism Article 32(c) Annex I, Table 3, Indicator 5 208 S1-14 ESRS Number and rate of deaths and work-related accidents Article 88(b) and (c) Indicator 2 of Annex I, Table 3 Annex II to Commission Delegated Regulation (EU) 2020/1816 217 S1-14 ESRS Number of working days lost due to injury, accident, death or sickness Article 88(e) Annex I, Table 3, Indicator 3 217 S1-16 ESRS Unadjusted gender pay gap Article 97(a) Indicator 12 of Annex I, Table 1 Annex II to Commission Delegated Regulation (EU) 2020/1816 218 S1-16 ESRS Excessive coefficient of remuneration for the Executive Director Article 97(b) Annex I, Table 3, Indicator 8 218 S1-17 ESRS Discrimination cases Article 103(a) Annex I, Table 3, Indicator 7 218 S1-17 ESRS Failure to comply with the UN Guiding Principles on Business and Human Rights and OECD Recommendations Article 104(a) Annex I, Table 1, Indicator 10 and Table 3, Indicator 14 Annex II of Delegated Regulation (EU) 2020/1816, Article 12(1) of Delegated Regulation (EU) 2020/1818 218 2 ESRS - SBM3 - S2 High risk of child labour or forced labour in the value chain Article 11(b) Annex I, Table 3, indicators 12 and 13 138 S2-1 ESRS Human rights policy commitments Article 17 Annex I, Table 3, Indicator 9 and Table 1, Indicator 11 208 S2-1 ESRS Policy on value chain workers Article 18 Annex 1, Table 3, Indicators 11 and 4 220 S2-1 ESRS Failure to comply with the UN Guiding Principles on Business and Human Rights and OECD Recommendations Article 19 Indicator 10 in Annex 1, Table 1 Annex II of Delegated Regulation (EU) 2020/1816, Article 12(1) of Delegated Regulation (EU) 2020/1818 220 S2-1 ESRS Policy on comprehensive verification applicable to aspects covered by International Labour Organisation Core Conventions Nos. 1 to 8 Article 19 Annex II to Commission Delegated Regulation (EU) 2020/1816 220 S2-4 ESRS Problems and incidents related to human rights in the upstream and downstream parts of the value chain Article 36 Indicator 14 in Annex 1, Table 3 223 S3-1 ESRS Human rights policy commitments Article 16 Annex 1, Table 3, Indicator 9 and Table 1, Indicator 11 226 S3-1 ESRS Failure to comply with the UN Guiding Principles on Business and Human Rights, ILO Principles and OECD Recommendations Article 17 Indicator 10 in Annex 1, Table 1 Annex II of Delegated Regulation (EU) 2020/1816, Article 12(1) of Delegated Regulation (EU) 2020/1818 226 S3-4 ESRS Human rights problems and incidents Article 36 Indicator 14 in Annex 1, Table 3 228 S4-1 ESRS Consumer and end-user policy Article 16 Annex I, Table 3, Indicator 9 and Table 1, Indicator 11 233 S4-1 ESRS Failure to comply with the UN Guiding Principles on Business and Human Rights and OECD Recommendations Article 17 Indicator 10 in Annex 1, Table 1 Annex II of Delegated Regulation (EU) 2020/1816, Article 12(1) of Delegated Regulation (EU) 2020/1818 233 S4-4 ESRS Human rights problems and incidents Article 35 Indicator 14 in Annex 1, Table 3 236 G1-1 ESRS United Nations Convention against Corruption Article 10(b) Indicator 15 of Annex 1, Table 3 240 G1-1 ESRS Protection of whistleblowers Article 10(d) Indicator 6 of Annex 1, Table 3 241 G1-4 ESRS Article 24(a) Penalties for infringements of anti-corruption and anti-bribery laws Indicator 17 of Annex 1, Table 3 Annex II to Delegated Regulation (EU) 2020/1816 247 G1-4 ESRS Anti-corruption and anti-bribery standards Article 24(b) Indicator 16 in Annex 1, Table 3 247 256 257 1 For the purposes of this Code, chief executives are those employees of a company who hold senior management positions. 2 For the purposes of this Code, the criteria for independence of the members of the Supervisory Board shall be understood in the same way as the criteria for non-affiliated persons are defined in Article 31(7) and (8) of the Law on Joint-Stock Companies. 3 Link to the OECD Good Practice Guidance on Internal Control, Ethics and Compliance: https://www.oecd.org/daf/anti-bribery/44884389.pdf 4 For the purposes of this Code, the criteria for independence of the members of the Board of Directors shall be understood in the same way as the criteria for unrelated persons are defined in Article 33(7) of the Law of the Republic of Lithuania on Public Limited Companies. 5 Legislation may provide for an obligation to set up an appropriate committee. For example, the Law on Audit of Financial Statements of the Republic of Lithuania stipulates that public interest entities (including, but not limited to, joint stock companies whose securities are traded on the regulated market of the Republic of Lithuania and/or any other Member State) are obliged to establish an audit committee (the legislation provides for exceptions when the functions of the audit committee may be performed by a collegial body exercising oversight functions). 6 The activities of audit committees are governed by Regulation No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific statutory audit requirements for public-interest entities, the Law on Audit of Financial Statements of the Republic of Lithuania, as well as by the rules of the Bank of Lithuania governing the activities of audit committees. 7 The group has been working on a sustainability strategy in 2024 (for the period 2025-2027), which was approved in early 2025.