ROKIŠKIO SRIS AB CONSOLIDATED AND PARENT COMPANY'S FINANCIAL STATEMENTS, ANNUAL REPORT AND INDEPENDENT AUDITOR'S REPORT 31 DECEMBER 2007

INDEPENDENT AUDITOR'S REPORT	3 - 4
CONSOLIDATED AND PARENT COMPANY'S FINANCIAL STATEMENTS
Income statement	5
Balance sheet	6
Statement of changes in equity	7
Cash flow statement	8
Notes to the financial statements	9 – 43
CONSOLIDATED ANNUAL REPORT	44 – 79
Appendix to consolidated annual report	80 - 104

(All tabular amounts are in LTL '000 unless otherwise stated)

Income statement

The Group				The Company
Year ended 31 December				Year ended 31 December
2007	2006		Notes	2007	2006
664,962	510,272	Sales	5	609,595	510,272
(549,020)	(444,341)	Cost of sales		(520,621)	(444,341)

115,942	65,931	Gross profit		88,974	65,931
(29,401)	(24,358)	Selling and marketing expenses	6	(15,948)	(24,358)
(40,328)	(21,936)	General and administrative expenses	7	(31,835)	(21,936)
10,801	7,872	Other income	8	13,570	7,872
(8,623)	(6,622)	Other expenses	9	(11,808)	(6,622)
394	(197)	Other operating (losses)/gains - net	10	383	(197)
48,785	20,690	Operating profit		43,336	20,690
(2,278)	(2,452)	Finance costs	12	(2,275)	(2,452)
46,507	18,238	Profit before tax		41,061	18,238
(12,269)	(5,217)	Income tax	13	(10,462)	(5,217)
34,238	13,021	Net profit		30,599	13,021

		Attributable to:
34,238	13,021	Equity holders of the Company		30,599	13,021
-	-	Minority interest		-	-
34,238	13,021			30,599	13,021

		Diluted and basics earnings per	14
0,81	0,30	share (LTL per share)		0,72	0,30

The notes on pages 10 to 43 are an integral part of these financial statements.

The financial statements on pages 5 to 43 have been approved for issue by the Board of Directors as at 14 April 2008 and signed on their behalf by the Director and Chief Financial Officer.

Antanas Trumpa Antanas Kavaliauskas Director Chief Financial Officer

(All tabular amounts are in LTL '000 unless otherwise stated)

Balance sheet

	The Group			The Company
	As at 31 December			As at 31 December
2007	2006		Notes	2007	2006
		ASSETS
		Non-current assets
	113,451 122,822	Property, plant and equipment	15	86,950	122,822
	3,815	547 Intangible assets	16	341	547
	1,186	- Investments	17	33,220	10
	1,590	- Deferred income tax asset	18	1,590	-
	15,336 10,064	Loans granted	19	15,336	10,064
	3,840 3,103	Other receivables	21	3,730	3,103
	139,218 136,536			141,167	136,546
		Current assets
	104,195 102,703	Inventories	20	99,378	102,703
	25,985 12,524	Loans granted	19	25,624	12,524
	59,923 68,699	Trade and other receivables	21	55,023	68,699
	- 1,625	Prepaid Income Tax		-	1,625
	4,623	669 Cash and cash equivalents	22	1,041	659
	194,726 186,220			181,066	186,210

	333,944 322,756	Total assets		322,233	322,756
		EQUITY
		Attributable to the equity holders of
		the Company
	42,716 47,462	Share capital	23	42,716	47,462
	41,473 41,473	Share premium		41,473	41,473
	14,394 30,000	Reserve for acquisition of treasury		14,394	30,000
		shares
	(4,702) (20,352)	Treasury shares	24	(4,702)	(20,352)
	5,362 69,805	Other reserves	25	5,362	69,805
	113,245 24,645	Retained earnings		109,606	24,645

	212,488 193,033	Total equity		208,849	193,033

		LIABILITIES
		Non-current liabilities
	504	- Borrowings	26	459	-
	5,946 6,703	Deferred income	27	4,422	6,703
	6,450 6,703			4,881	6,703
		Current liabilities
	8,413	- Income tax liabilities		6,584
	36,154 76,337	Borrowings	26	36,034	76,337
	2,160 2,380	Deferred income	27	1,949	2,380
	67,455 44,303	Trade and other payables	28	63,112	44,303
	824	- Provisions	29	824
	115,006 123,020			108,503	123,020
	121,456 129,723	Total liabilities		113,384	129,723
	333,944 322,756	Total equity and liabilities		322,233	322,756

(All tabular amounts are in LTL '000 unless otherwise stated)

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 2006		47,462	41,473	10,000	(16,224)	69,805	41,900	194,416
Net profit for the period		-	-	-	-	-	13,021	13,021
Total recognised income for 2006		-	-	-	-	-	13,021	13,021
Acquisition of own shares	24	-	-	-	(4,128)	-	-	(4,128)
Transfer to reserve for acquisition of treasury shares		-	-	20,000	-	-	(20,000)	-
Dividends relating to 2005		-	-	-	-	-	(10,276)	(10,276)
Balance at 31 December 2006		47,462	41,473	30,000	(20,352)	69,805	24,645	193,033
Net profit for the period		-	-	-	-	-	30,599	30,599
Total recognized income for 2007		-	-	-	-	-	30,599	30,599
Treasury shares acquisition	24	-	-	-	(4,702)	-	-	(4,702)
Decrease in share capital / cancellation of treasury shares	24	(4,746)	-	(15,606)	20,352	-	-	-
Transfer to legal reserve		-	-	-	-	651	(651)	-
Reallocation of unutilized distributable reserves	25	-	-	-	-	(65,094)	65,094	-
Dividends relating to 2006		-	-	-	-	-	(10,081)	(10,081)
Balance at 31 December 2007		42,716	41,473	14,394	(4,702)	5,362	109,606	208,849

(All tabular amounts are in LTL '000 unless otherwise stated)

The Group'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 2006		47,462	41,473	10,000	(16,224)	69,805	41,900	194,416
Net profit for the period		-	-	-	-	-	13,021	13,021
Total recognised income for 2006		-	-	-	-	-	13,021	13,021
Acquisition of own shares	24	-	-	-	(4,128)	-	-	(4,128)
Transfer to reserve for acquisition of treasury shares		-	-	20,000	-	-	(20,000)	-
Dividends relating to 2005		-	-	-	-	-	(10,276)	(10,276)
Balance at 31 December 2006		47,462	41,473	30,000	(20,352)	69,805	24,645	193,033
Net profit for the period		-	-	-	-	-	34,238	34,238
Total recognized income for 2007		-	-	-	-	-	34,238	34,238
Treasury shares acquisition	24	-	-	-	(4,702)	-	-	(4,702)
Decrease in share capital / cancellation of treasury shares	24	(4,746)	-	(15,606)	20,352	-	-	-
Transfer to legal reserve		-	-	-	-	651	(651)	-
Reallocation of unutilized distributable reserves	25	-	-	-	-	(65,094)	65,094	-
Dividends relating to 2006		-	-	-	-	-	(10,081)	(10,081)
Balance at 31 December 2007		42,716	41,473	14,394	(4,702)	5,362	113,245	212,488

(All tabular amounts are in LTL '000 unless otherwise stated)

Cash flow statement

The Group				The Company
Year ended 31 December				Year ended 31 December
2007	2006		Notes	2007	2006
		Cash flows from operating activities
106,606	17,822	Cash generated from operations	30	99,230	17,822
(2,278)	(2,452)	Interest paid		(2,275)	(2,452)
(3,821)	(6,970)	Income tax paid		(3,843)	(6,970)

		Net cash generated from operating
100,507	8,400	activities		93,112	8,400
		Cash flows from investing activities
(19,867)	(20,442)	Purchase of property, plant and equipment	15	(15,377)	(20,442)
(126)	(41)	Purchase of intangible assets	16	(126)	(41)
		Purchase of investments (for the Group net	17
(8,347)	-	of cash acquired)		(8,409)	-
(9,953)	(516)	Loans granted to farmers and employees		(9,753)	(516)
(13,270)	(1,529)	Other loans granted		(13,270)	(1,529)
2,263	134	Proceeds from sale of property, plant and		1,396	134
		equipment
3,505	300	Government Grants received		3,505	300
129	677	Other loan repayments received		129	677
		Loan repayments from farmers and
3,466	2,929	employees		3,466	2,929
348	594	Interest received		323	594

(41,851)	(17,894)	Net cash used in investing activities		(38,115)	(17,894)
		Cash flows from financing activities
(10,081)	(10,276)	Dividends paid		(10,081)	(10,276)
(4,702)	(4,128)	Acquisition of treasury shares	23	(4,702)	(4,128)
(267,226)	38,135	Proceeds from borrowings		267,284	38,135
(299,066)	(25,232)	Repayments of borrowings		(299,066)	(25,232)
(20)	(260)	Finance lease principal payments		-	(260)

(46,643)	(1,761)	Net cash used in financing activities		(46,565)	(1,761)
		Net increase (decrease) in cash and
12,013	(11,255)	cash equivalents		8,431	(11,255)

		Cash and cash equivalents at beginning of	20
(16,582)	(5,327)	the year		(16,582)	(5,327)
		Cash and cash equivalents at end of the
(4,569)	(16,582)	year		(8,151)	(16,582)

(All tabular amounts are in LTL '000 unless otherwise stated) Notes to the financial statements

1. General information

Rokiškio Sris AB (hereinafter "the Company") is a public listed company incorporated in Rokiškis, 160 km North–West from Vilnius, the capital of Lithuania. Company's code 173057512, address: Pramons St. 3, LT-42150 Rokiškis, Lithuania.

The shares of Rokiškio Sris AB are traded on the Official List of the National Stock Exchange.

The consolidated Group (hereinafter "the Group") consists of the Company its two branches, six subsidiaries and one joint venture (2006: two branches and one subsidiary). The branches and subsidiaries that comprise consolidated Group are indicated below:

Operating as at 31 December

Operating			Group's share (%)
2007	2006	Subsidiaries	2007	2006
Yes	Yes	Rokiškio pienas UAB	100	100
Yes	Yes	Skeberdis ir partneriai UAB	100	-
		Skirpstas UAB	100	-
			100	-
			100	-
			100	-
		as at 31 December	Žalmarg KB Batnai UAB * Pe up UAB *	as at 31 December

* These subsidiaries were not consolidated due to their insignificance.

All the above-mentioned branches and subsidiary undertakings are incorporated in Lithuania.

Pieno ups UAB 50 -

The Company's and the Group's main line of business is the production of ferment cheese and a wide range of milk products. During 2006 the Company established a new legal entity Rokiškio pienas UAB with an objective to transfer its fresh milk products activity. Fresh milk products production activity was fully transferred in 2007 (Note 17).

Average number of Company's employees during the year ended 31 December 2007 was 1,192 people (2006: 1,620 people). Average number of Group's employees during the year ended 31 December 2007 was 1,738 people (2006: 1,620 people).

2. Accounting policies

2.1 Basis of preparation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

The consolidated financial statements have been prepared under the historical cost convention.

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(All tabular amounts are in LTL '000 unless otherwise stated)

The preparation of consolidated 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).

Standards, amendments to standards and interpretations effective in 2007

IFRS 7, Financial Instruments: Disclosures (effective for annual periods beginning on or after 1 January 2007), and the complementary Amendments to IAS 1, Presentation of Financial Statements–Capital disclosure were adopted by the Company in 2007. The IFRS 7 introduced new disclosures to improve the information about financial instruments, including about quantitative aspects of risk exposures and the methods of risk management. The new quantitative disclosures provide information about the extent of exposure to risk, based on information provided internally to the entity's key management personnel. Qualitative and quantitative disclosures cover exposure to credit risk, liquidity risk and market risk including sensitivity analysis to market risk. The Amendment to IAS 1 introduced disclosures about the level of an entity's capital and how it manages capital. The new disclosures are made in these financial statements.

Standards, amendments to standards and interpretations effective in 2007, but not relevant to the Company'sand Group's operations

The following standards, interpretations and amendments to published standards are mandatory for accounting periods beginning on or after 1 January 2007 but are either not relevant to the Companys and Group's operations or do not have a material effect on the financial statements:

IFRS 4, Insurance Contracts
IFRIC 7, Applying the Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary Economies
IFRIC 8, Scope of IFRS 2
IFRIC 9, Reassessment of Embedded Derivative
IFRIC 10, Interim Financial Reporting and Impairment

Early adoption of standards, interpretations and amendments to published standards

The Group and the Company has not elected to early adopt any new standards, interpretations and amendments to published standards.

Standards, interpretations and amendments to published standards that are not yet effective

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Company's and Group's accounting periods beginning on or after 1 January 2008 or later periods but which the Company and the Group has not early adopted:

IAS 1, Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 2009). The Company will apply this Standard with effect from 1 January 2009, however, it is not expected to have material effect on the Company's financial statements.
IAS 23, Borrowing Costs, Amendment (effective for annual periods beginning on 1 January 2009). The Company will apply this Standard with effect from 1 January 2009; however, meanwhile this Standard is not relevant to the Company's operations since no borrowings are used to finance the construction of qualifying assets.
IAS 27, Consolidated and Separate Financial Statements (reviewed in January 2008 and effective for annual periods beginning on or after 1 July 2009). Management plans to apply the new standard when it is effective.

(All tabular amounts are in LTL '000 unless otherwise stated)

IFRS 3, Business Combinations (reviewed in January 2008 and applicable to business combinations, in which the acquisition date falls within the first annual period beginning on or after 1 July 2009). Management plans to apply the new standard when it is effective.
Vesting Conditions and Cancellations Amendment to IFRS 2, Share-based (issued in January 2008, effective for annual periods beginning on or after 1 January 2008). Management believe this Standard is not relevant to the Company's operations.
IFRS 8, Operating Segments (effective for annual periods beginning on or after 1 January 2009). Management plans to apply the new standard when it is effective.
IFRIC 11, IFRS 2 Group and Treasury Share Transactions (effective for annual periods beginning on or after 1 March 2007). Management do not expect this interpretation to be relevant to the Company's operations.
IFRIC 12 Service Concession Arrangements (effective for annual periods beginning on or after 1 January 2008). Management do not expect this interpretation to be relevant to the Company's operations.
IFRIC 13, Customer Loyalty Programmes (effective for annual periods beginning on or after 1 July 2008). This Interpretation is not relevant to the Company.
IFRIC 14, IAS 19 The Limit on Defined Benefit Asset, Minimum Funding Requirement and their Interaction (effective for annual periods beginning on or after 1 January 2008). Management believe this Interpretation is not relevant to the Company's operations.
IAS 32 and IAS 1 Amendment, Puttable financial instruments and obligations arising on liquidation (effective from 1 January 2009). Management does not expect the amendment to affect its stand alone and consolidated financial statements.

IFRIC 12, 13, 14 and amended IAS 1, IAS 23, IAS 27, IAS 32 as well as amended IFRS 2 and revised IFRS 3 have not been yet endorsed by the EU.

2.2 Consolidated financial statements

(a) Subsidiaries

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(b) Transactions and minority interests

The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests result in gains and losses for the Group that are recorded in the income statement.

(All tabular amounts are in LTL '000 unless otherwise stated)

The group's interests in jointly controlled entities are accounted for by proportionate consolidation. The group combines its share of the joint ventures' individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the group's financial statements. The group recognises the portion of gains or losses on the sale of assets by the group to the joint venture that is attributable to the other venturers. The group does not recognise its share of profits or losses from the joint venture that result from the group's purchase of assets from the joint venture until it resells the assets to an independent party. However, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets, or an impairment loss.

2.3 Stand alone financial statements

Subsidiaries in the stand-alone financial statements are accounted at cost – that is the income from the investment is recognized only to the extent that the Company receives distributions from accumulated profits of the investee arising after the date of acquisition. Distributions received in excess such profits are regarded as a recovery of investment and are recognized as a reduction of the cost of the investment.

2.4 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of the Company and each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The financial statements are presented in Litas (LTL), which is the Company's (and each of the Group entity's) functional and presentation currency.

Litas is pegged to the Euro at an exchange rate of LTL 3.4528 = EUR 1 from 2 February 2002.

(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 such 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.

(All tabular amounts are in LTL '000 unless otherwise stated)

2.5 Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and Group and the cost of the item can be measured reliably. 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:

Buildings	25-55 years
Plant & machinery	5-15 years
Motor vehicles	3-5 years
Equipment and other property, plant and equipment	3-8 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised, during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are expensed when incurred.

Construction in progress is transferred to appropriate groups of property, plant and equipment when it is completed and available 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 5 years.

(b) Contractual Customer relationships

Contractual customer relationships recognized as intangible asset upon business acquisition (Note 30) 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.

(All tabular amounts are in LTL '000 unless otherwise stated)

2.7 Impairment of non-financial assets

Assets that are subject to amortisation and 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).

2.8 Financial assets

The Group classifies its financial assets in a category of loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and reevaluates this designation at every reporting date.

Loans and receivables 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 balance sheet date. These are classified as noncurrent assets. Loans and receivables are classified as 'trade and other receivables' in the balance sheet.

2.9 Inventories

Inventories are stated at the lower of cost or net realisable value. Cost is determined by the firstin, 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 Trade and other amounts receivable

Amounts receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of amounts receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement within 'general and administrative expenses'. Bad debts are written off during the year in which they are identified as irrecoverable.

2.11 Cash and cash equivalents

Cash and cash equivalents are carried at nominal value. 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 stated at their par value. Consideration received for the shares sold in excess over their par value is shown as share premium. Incremental external costs directly attributable to the issue of new shares are accounted for as a deduction from share premium.

(All tabular amounts are in LTL '000 unless otherwise stated) (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 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. These reserves can be used only for the purposes approved by annual general meeting of shareholders.

Legal reserve is included into other reserves. Legal reserve is compulsory under the Lithuanian regulatory legislation. Annual transfers of 5 per cent of net result are required until the reserve reaches 10 per cent of share capital. The legal reserve cannot be used for payment of dividends and it is established to cover future losses only.

(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 nominal value of treasury shares acquired.

2.14 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are

subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

2.15 Deferred income tax

Profit is taxable at a 15 per cent (2006: 15 per cent) set in accordance with Lithuanian regulatory legislation on taxation.

According to the newly adopted Lithuanian Provisional Law on Social Tax, social tax at the rate of 4 per cent for 2006 and at a rate of 3 per cent for 2007 should be paid on taxable income earned during 2006 and 2007 respectively.

Deferred income tax is provided in full, 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. 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 nor 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

(All tabular amounts are in LTL '000 unless otherwise stated)

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.

2.16 Leases where the Group is the lessee

(a) Finance lease

Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease's commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in long-term payables except for instalments due within 12 months which are included in current liabilities. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset's useful life and the lease term.

(b) Operating lease

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

2.17 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 included in payroll expenses.

(b) Termination benefits

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 recognises termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value.

(c) Bonus plans

The Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation.

(All tabular amounts are in LTL '000 unless otherwise stated)

2.18 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group's activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminated sales within the Group. Revenue from sales of goods is recognised only when all significant risks and benefits arising from ownership of goods is transferred to the customer.

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.

2.19 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 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.

2.21 Segment reporting

The Company's single business segment is production of cheese and other diary products, therefore, information on key business segment is not presented. The Group is organised on a basis of two main business segments: Fresh milk products and Cheese and other diary products. Secondary reporting format – geographical segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and return that are different from those of segments operating in other economic environments.

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 will comply with all conditions attached.

Export subsidies paid by the Government for each exported tone of products meeting certain requirements are included in sales revenue.

Government grants received to finance acquisition of property, plant and equipment are included in deferred income in the balance sheet. They are recognised as income on a straightline basis over the useful life of related property, plant and equipment.

2.23 Provisions

Provisions for restructuring costs and legal claims are recognised when: the Group has 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 the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time

(All tabular amounts are in LTL '000 unless otherwise stated)

value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

2.24 Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using effective interest method.

2.25 Comparatives

Comparative figures have been adjusted to conform to changes in presentation in the current year by reclassifying LTL 7,872 thousand from sales to other operating income (Note 8) and LTL 6,622 thousand from cost of sales to other operating expenses (Note 9) for the year ended 31 December 2006.

In the Company's and Group's balance sheet comparative figures have been adjusted to conform to changes in presentation in the current year by reclassifying LTL 10,064 thousand from non current other receivables to non current loans granted and LTL 12,524 thousand from current trade and other receivables to current loans granted as at 31 December 2006.

2.26 Demergers

A disposal of a part of the business may take place by means of a demerger to fully controlled legal entity (subsidiary). In such demerger no gain or loss arises on the disposal, because it is a transaction under common control and no control is passed away i.e. in substance the net assets are not disposed off. Total carrying amount of net assets transferred by the Parent Company is treated as investment into the subsidiary (i.e. at cost method in its stand-alone financial statements).

3. Financial risk management

3.1 Financial risk factors

The Group's activities are exposed to a variety of financial risks. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.

Risk management is carried out by Group's management. No written principles for overall risk management are prepared.

(a) Market risk

(i) foreign exchange risk

The Group operates internationally, however, its exposure to foreign exchange risk is set at minimum level, since its sales outside Lithuania are performed in euros. The exchange rate of euro and litas is fixed.

(ii) Cash flow and fair value interest rate risk

The Group's and Company's interest rate risk arises from interest-bearing loans and long-term borrowings issued. Borrowings issued at a variable interest rate expose the Group to cash flow interest rate risk. Loans granted at a fixed interest rate expose the Group to fair value interest rate risk. In 2007 and 2006, loans granted by the Group at a fixed interest rate were denominated in euros. In 2007 and 2006, borrowings issued to the Group at a variable interest rate were denominated in litas and euros.

The Company's and the Group's net interest sensitive liabilities amounted to LTL 14,566 thousand as at 31 December 2007 (31 December 2006: LTL 68,725 thousand). As a result of increase in interest rate by 1 percentage point, the Company's and the Group's profit would decrease by LTL 146 thousand (2006: by LTL 687 thousand).

(All tabular amounts are in LTL '000 unless otherwise stated)

(b) Credit risk

Credit risk arises from cash and cash equivalents and deposits with banks, as well as credit exposures to customers, mainly related to outstanding receivables.

As at 31 December 2007 and 2006 all Company's and Group's cash balances held in banks that had external credit ratings of 'A', or higher, as set by international Fitch Ratings agency (assessed in accordance with long-term borrowing ratings).

i) Maximum exposure to credit risk

The table below summarizes all balance sheet items that are related to credit risk. Maximum exposure to credit risk before collateral held or other credit enhancements as at 31 December:

The Group			The Company
2007	2006		2007	2006
4,290	472	Cash and cash equivalents within the banks	753	472
53,945	52,325	Trade receivables	48,875	52,325
41,158	22,588	Loans granted	40,958	22,588
9,982	21,087	Other amounts receivables	9,880	21,087
109,375	96,472		100,466	96,472

ii) Credit quality of financial assets

The Group's management does not classify amounts receivables and other financial assets that are exposed to credit risk based on quality of the credit. Credit risk is managed through established credit limits for a major customers and monitoring of overdue receivables. Analysis of overdue receivables and credit limits is regularly monitored by management.

Credit limits and receivables as at 31 December 2007 for the major 9 customers are summarized below.

The Group			The Company
Credit limit	Receivables		Credit limit	Receivables
3,000	1,258	Customer A	3,000	1,258
16,000	9,899	Customer B	16,000	9,899
2,200	1,188	Customer C	2,200	1,188
3,452	2,762	Customer D	3,452	2,762
4,000	3,321	Customer E	4,000	3,321
3,578	3,617	Customer F	-	-
8,715	9,167	Customer G	-	-
2,600	833	Customer H	2,600	833
2,600	738	Customer I	2,600	738

(All tabular amounts are in LTL '000 unless otherwise stated)

Credit limits and receivables as at 31 December 2006 for the major 7 customers are summarized below.

	The Group			The Company
Credit limit	Receivables		Credit limit	Receivables
3,000	2,398	Customer A	3,000	2,398
16,000	5,302	Customer B	16,000	5,302
2,200	1,587	Customer C	2,200	1,587
3,452	370	Customer D	3,452	370
4,000	1,442	Customer E	4,000	1,442
3,578	2,626	Customer F	3,578	2,626
8,715	6,853	Customer G	8,715	6,853

No credit limits were significantly exceeded during the reporting period.

The table below summaries concentration of the loans granted:

The Group			The Company
2007	2006		2007	2006
25,545	7,351	Loans granted for amount of above LTL 2 million	25,545	7,351
3,691	3,639	Loans granted for amount above LTL 1 million but not more than LTL 2 million	3,691	3,639
12,085	11,598	Loans granted for amount less than LTL 1 million	11,724	11,598
41,321	22,588		40,960	22,588

Major part of loans granted for amount of above LTL 2 million comprise loan granted to related parties (Note 33).

(c) Liquidity risk

Prudent liquidity risk management allows maintaining sufficient cash and availability of funding under committed credit facilities.

The table below analyses the Group's and the Company's financial liabilities 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 the contractual undiscounted cash flows. Accounts payable and other financial liabilities due within 3 months or less are equal to their carrying balances as the impact of discounting is insignificant.

The Company

31 December 2007	Less than 3 months	From 3 to 12 months	From 1 to 5 years	After 5 years
Bank loans	-	37,000	461	-
Trade payables	49,843	-	-	-
Other financial liabilities	562	-	-	-
	47,746	37,000	461	-
31 December 2006	Less than 3 months	From 3 to 12 months	From 1 to 5 years	After 5 years
Bank loans	11,899	66,960	-	-
Trade payables	40,150	-	-	-
	52,049	66,960	-	-
The Group

(All tabular amounts are in LTL '000 unless otherwise stated)

31 December 2007	Less than 3 months	From 3 to 12 months	From 1 to 5 years	After 5 years
Bank loans	-	37,126	509	-
Trade payables	52,176	-	-	-
Other financial liabilities	562	-	-	-
	52,738	37,126	509	-
31 December 2006	Less than 3 months	From 3 to 12 months	From 1 to 5 years	After 5 years
Bank loans	11,899	66,960	-	-
Trade payables	40,150	-	-	-
	55,317	66,960	-	-

3.2. Capital risk management

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 Group defines its capital as cash and cash equivalents, equity and debt.

As at 31 December The Group's and the Company's capital structure was as follows:

The Group			The Company
2007	2006		2007	2006
36,658	76,337	Total borrowings	36,493	76,337
(4,623)	(669)	Less: cash and cash equivalents	(1,041)	(659)

32,035	75,668	Net debt	35,452	75,678
212,488	193,033	Total Equity	208,849	193,033

244,523	268,701	Total capital	244,301	268,711

Pursuant to the Lithuanian Law on Companies the authorised share capital of a public company must be not less than LTL 100,000 (private limited liability company must be not less than LTL 10,000) and the shareholders' equity should not be lower than 50 per cent of the company's registered share capital. As at 31 December 2007 and 31 December 2006, the Company and Group complied with these requirements.

3.3. Fair value estimation

Trade payables and 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. Interest rate on the borrowings received by is subject to repricing at least every six months, therefore it is deemed that their fair value equals their carrying amount.

(All tabular amounts are in LTL '000 unless otherwise stated)

4. Critical accounting estimates and judgments

Impairment provision for accounts receivable

Impairment provision for accounts receivable was determined based on the management's estimates on recoverability and timing relating to the amounts that will not be collectable according to the original terms of receivables. This determination requires significant judgement. Judgement is exercised based on significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments. Current estimates of the Group could change significantly as a result of change in situation in the market and the economy as a whole. Recoverability rate also highly depends on success rate and actions employed relating to recovery of significantly overdue amounts receivable.

Estimates of useful lives of property, plant and equipment

The Group has old buildings and machinery, where the useful lives are estimated based on the projected product lifecycles. However, economic useful lives may differ from the currently estimated as a result of technical innovations and competitors actions.

Contractual client relationship

In 2007 the Group acquired several milk collecting intermediary companies. On acquisition of these companies (as disclosed in note 31) the Group recognized costumer relationship intangibles (note 16). Milk collecting business is a very competitive where contracts with farmers are normally signed for 1 year period only. The Group estimates that the average customer relationship period is 2 years; however actual duration of the relationship may differ from currently estimated.

5. Segment reporting

Primary reporting format – business segments

The Company's single business segment is production of cheese and other diary products.

The Group is organised on a basis of two main business segments:

Fresh milk products
Cheese and other diary products

Other operations of the Group mainly comprise of milk collecting activity which is not of a sufficient size to be reported separately. Transactions between the business segments are on normal commercial terms and conditions.

Segment information for the main reportable business segments of the Group for the years ended 31 December 2007 and 2006 is set out below:

(All tabular amounts are in LTL '000 unless otherwise stated)

	Fresh diary products	Cheese and other diary products	Other	Group
2007
Sales – external	185,387	474,919	4,656	664,962
Sales to other segments Total revenue	(125,575)	106,565	19,010	- 664,962
Segment result / Operating profit	7,612	43,475	(2,302)	48,785
Finance costs (Note 12)	-	-	-	(2,278)
Profit before income tax				46,507
Income tax expense	-	-	-	(12,269)
Profit /(loss) for the year				34,238
Total segment assets	28,525	298,823	1,936	329,284
Other unallocated assets	-	-	-	4,660
Total assets				333,944
Total segment liabilities	10,713	110,489	304	121,506
Capital expenditure	5,565	13,853	67	19,576
Depreciation and amortisation	2,275	22,637	73	24,985
	Fresh diary	Cheese and	Other	Group
	products	other diary products
2006
Sales – external	107,231	403,041	-	510,273
Segment result / Operating profit	4,150	16,540	-	20,690
Finance costs (Note 12)	-	-	-	(2,452)
Profit before income tax				18,238
Income tax expense	-	-	-	(5,217)
Profit /(loss) for the year				13,021
Total segment assets	71,643	250,451		322,094
Other unallocated assets	-	-	-	662
Total assets				322,756
Total segment liabilities	21,469	99,909	-	121,378
Capital expenditure	3,208	18,304	-	21,512
Depreciation and amortisation	2,373	23,615	-	25,988

(All tabular amounts are in LTL '000 unless otherwise stated)

Secondary reporting format – geographical segments

All the Company's assets are located in Lithuania. The Company's sales by markets can be analysed as follows:

	Sales			Total assets	Capital expenditure
	2007	2006	2007	2006	2007	2006
Lithuania	161,820	181,488	322,233	322,756	15,213	21,553
Europe Union countries	282,707	198,075	-	-	-	-
CIS countries	111,180	120,500	-	-	-	-
Other (including USA and Japan)	53,888	10,209	-	-	-	-

	609,595	510,272	322,233	322,756	15,213	21,553

All the Group's assets are located in Lithuania. The Group's sales by markets can be analysed as follows:

		Sales		Total assets		Capital expenditure
	2007	2006	2007	2006	2007	2006
Lithuania	210,911	181,488	333,944	322,756	19,702	21,553
Europe Union countries	288,983	198,075	-	-	-	-
CIS countries	111,180	120,500	-	-	-	-
Other (including USA and Japan)	53,888	10,209	-	-	-	-
	664,962	510,272	333,944	322,756	19,702	21,553

Sales are allocated based on the country in which the customers are located.

The Company's revenue analyzed by category:

	2006
582,329	487,223
6,558	21,040
20,708	9,881
609,595	518,144

2007	2006
657,173	487,223
6,558	21,040
1,231	2,009
664,962	510,272
	2007

Pursuant to European Commission Regulation On definition of compensation for milk and milk product export costs, with effect from 1 May 2004 the Company is entitled to receive subsidies for cheese exported to the countries specified in the Regulation. Export subsidies are paid for each tone of exported products that meet certain requirements attached to the Regulation. Export subsidies receivable are recorded under amounts trade and other receivables (Note 21).

(All tabular amounts are in LTL '000 unless otherwise stated)

6. Selling and marketing expenses

The Group			The Company
2007	2006		2007	2006
6,777	7,154	Marketing services	52	7,154
7,325	5,832	Payroll expenses	3,907	5,832
6,700	4,733	Transportation services	5,671	4,733
1,467	1,774	Product image creation and advertising expenses	388	1,774
2,597	1,752	Repair and maintenance	2,067	1,752
1,290	1,315	Depreciation of property, plant and equipment	1,175	1,315
115	142	Warehousing services	115	142
3,130	1,656	Other expenses	2,573	1,656
29,401	24,358		15,948	24,358

7. General and administrative expenses

The Group			The Company
2007	2006		2007	2006
7,956	6,814	Payroll expenses	5,409	6,814
328	371	Taxes (other than income tax)	254	371
3,798	2,773	Impairment and write-offs of loans and receivables	3,025	2,773
1,271	765	Consulting expenses	803	765
3,678	1185	Depreciation of property, plant and equipment	1,302	1,185
913	581	Repair and maintenance	802	581
11,567	4,200	Paid and accrued bonuses	11,567	4,200
523	80	Telecommunication and IT maintenance expenses	411	80
300	324	Insurance expenses	281	324
1,603	54	Write-offs of property, plant and equipment	1,102	54
264	212	Bank charges	229	212
610	746	Business trips	522	746
1,050	191	Fines	831	191
320	167	Training of employees	302	167
138	140	Membership fees	141	140
1,805	139	Charity, support	1,764	139
-	-	Impairment and write-offs of amounts receivable	-	-
4,204	3,194	Other expenses	3,090	3,194
40,328	21,936		31,835	21,936

8. Other income

The Group			The Company
2007	2006		2007	2006
8,061	6,161	Re-sale of goods	10,888	6,161
1,234	291	Interest income	1,208	291
1,506	1,420	Other income	1,474	1,420
10,801	7,872		13,570	7,872

(All tabular amounts are in LTL '000 unless otherwise stated)

9. Other expenses

	The Group		The Company
2007	2006		2007	2006
8,070	6,125	Cost of goods resold	10,889	6,125
553	497	Other costs	919	497
8,623	6,622		11,808	6,622

10. Other operating (losses)/gains - net

The Group			The Company
2007	2006		2007	2006
394	(155)	Loss on disposal of property, plant and equipment (Note 32)	383	(155)
-	(42)	Other	-	(42)
394	(197)		383	(197)

11. Expenses by nature

The Group			The Company
2007	2006		2007	2006
422,384	360,701	Raw materials and consumables used	405,724	360,701
(11,304)	(31,096)	Changes in inventories of finished goods and work in progress	(9,746)	(31,096)
45,543	36,107	Salaries	37,301	36,107
12,562	9,916	Social security costs	8,051	9,916
27,635	28,713	Transportation services	32,104	28,713
27,440	25,988	Depreciation and amortization	22,716	25,988
(2,250)	(2,179)	Amortization of grant for property, plant and equipment (Note 27)	(2,152)	(2,179)
6,777	7,154	Marketing services	52	7,154
12,041	7,821	Repair and maintenance	13,014	7,821
-	-	Cost of finished goods resold (Intercompany)	3,635	-
468	577	Taxes (other than income tax)	432	577
1,271	765	Consulting expenses	803	765
660	223	Telecommunication and IT maintenance expenses	584	223
75,502	45,945	Other	55,886	45,945
		Total cost of sales, selling and marketing expenses
618,749	490,635	and general and administrative expenses	568,404	490,635

12. Finance costs

The Group				The Company
2007	2006			2007	2006
		Interest expense:
(2,277)	(2,432)	bank borrowings	(2,275)		(2,432)
(1)	(20)	finance leases		-	(20)
(2,278)	(2,452)		(2,275)		(2,452)

(All tabular amounts are in LTL '000 unless otherwise stated)

13. Income tax

The Group			The Company
2007	2006		2007	2006
(13,859)	(5,217)	Current tax	(12,016)	(5,217)
1,590	-	Deferred tax (Note 18)	1,590	-
(12,269)	(5,217)		(10,426)	(5,217)

The tax on the Company's and Group's profit before tax differs from the theoretical amount that would arise using the basic tax rate as follows:

The Group			The Company
2007	2006		2007	2006
46,507	18,238	Profit before tax	41,061	18,238
		Tax calculated at a tax rate of 18 per cent (2006: 19
8,371	3,465	per cent) (Note 2.14)	7,391	3,465
5,035	1,825	Tax non-deductible expenses	4,172	1,825
(151)	(32)	Income not subject to tax	(151)	(32)
		Charity expenses deductible twice for tax purposes
(594)	(34)		(594)	(34)
(392)	(7)	Other	(392)	(7)
12,269	5,217	Tax charge	10,426	5,217

The tax authorities have carried out full-scope tax audits at the Company for the year 2001. The tax authorities may at any time inspect the books and records within 5 years subsequent to the reported tax year, and may impose additional tax assessments and penalties. The Company's management is not aware of any circumstances which may give rise to a potential material liability in this respect.

14. Earnings per share

The Group 2007 2006			The Company 2007 2006
34,238	13,021	Net profit attributable to shareholders Weighted average number of ordinary shares in	30,599	13,021
42,325	43,267	issue (thousands)	42,325	43,267
0.81	0.30	Basic earnings per share (LTL per share)	0.72	0.30

The Group has no dilutive potential ordinary shares, therefore, the diluted earnings per share are the same as basic earnings per share.

(All tabular amounts are in LTL '000 unless otherwise stated)

15. Property, plant and equipment

The Company

			Vehicles,
		Plant &	equipment	Construction
	Buildings	machinery	& other	in progress	Total
At 1 January 2006
Cost	47,354	130,827	65,455	1,862	245,498
Accumulated depreciation	(10,378)	(67,710)	(40,397)	-	(118,485)
Net book amount	36,976	63,117	25,058	1,862	127,013
Year ended 31 December 2006
Opening net book amount	36,976	63,117	25,058	1,862	127,013
Additions	99	10,113	5,410	5,890	21,512
Disposals	(150)	(68)	(71)	-	(289)
Write-offs	(2)	(6)	(46)	-	(54)
Transfers from CIP	332	1,288	593	(2,213)	-
Depreciation charge	(1,874)	(15,576)	(7,910)	-	(25,360)
Closing net book amount	35,381	58,868	23,034	5,539	122,822
At 31 December 2006
Cost	47,609	141,147	69,947	5,539	264,242
Accumulated depreciation	(12,228)	(82,279)	(46,913)	-	(141,420)
Net book amount	35,381	58,868	23,034	5,539	122,822
Year ended 31 December 2007
Opening net book amount	35,381	58,868	23,034	5,539	122,822
Additions	122	8,087	5,534	1,344	15,087
Disposals	(179)	(723)	(111)	-	1,013
Contribution to subsidiaries share
capital (Note 17)	(12,489)	(10,567)	(1,710)	-	(24,766)
Write-offs	(251)	(27)	(1,173)	(1,309)	(2,760)
Transfers from CIP	1,805	3,114	635	(5,572)	-
Depreciation charge	(1,557)	(13,893)	(6,970)	-	(22,419)
Closing net book amount	22,832	44,859	19,257	2	86,950
At 31 December 2007
Cost	32,612	116,315	67,200	2	216,130
Accumulated depreciation	9,781	71,456	47,943	-	129,180
Net book amount	22,832	44,859	19,257	2	86,950

(All tabular amounts are in LTL '000 unless otherwise stated)

The Group

			Vehicles,
		Plant &	equipment	Construction
	Buildings	machinery	& other	in progress	Total
At 1 January 2006
Cost	47,354	130,827	65,455	1,862	245,498
Accumulated depreciation	(10,378)	(67,710)	(40,397)	-	(118,485)
Net book amount	36,976	63,117	25,058	1,862	127,013
Year ended 31 December 2006
Opening net book amount	36,976	63,117	25,058	1,862	127,013
Additions	99	10,113	5,410	5,890	21,512
Disposals	(150)	(68)	(71)	-	(289)
Write-offs	(2)	(6)	(46)	-	(54)
Transfers from CIP	332	1,288	593	(2,213)	-
Depreciation charge	(1,874)	(15,576)	(7,910)	-	(25,360)
Closing net book amount	35,381	58,868	23,034	5,539	122,822
At 31 December 2006
Cost	47,609	141,147	69,947	5,539	264,242
Accumulated depreciation	(12,228)	(82,279)	(46,913)	-	(141,420)
Net book amount	35,381	58,868	23,034	5,539	122,822
Year ended 31 December 2007
Opening net book amount	35,381	58,868	23,034	5,539	122,822
Acquisition of subsidiaries (Note 30)	687	118	417	67	1,289
Additions	128	9,923	5,791	3,734	19,576
Disposals	(179)	(1,579)	(111)	-	(1,869)
Write-offs	(267)	(1,629)	(177)	(1,309)	(3,382)
Transfers from CIP	2,123	5,184	655	(7,962)	-
Depreciation charge	(1,894)	(15,837)	(7,254)	-	(24,985)
Closing net book amount	35,979	55,048	22,355	69	113,451
At 31 December 2007
Cost	46,428	127,842	71,416	69	245,755
Accumulated depreciation	(10,449)	(72,794)	(49,061)	-	(132,304)
Net book amount	35,979	55,048	22,355	69	113,451

As at 31 December 2007, certain property, plant and equipment with a carrying value of LTL 58,407 thousand (31 December 2006: LTL 54,624 thousand) have been pledged as security for bank borrowings.

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, and in work in progress and finished goods in the balance sheet.

No borrowing costs were capitalised during the years ended 31 December 2007 and 31 December 2006.

(All tabular amounts are in LTL '000 unless otherwise stated)

16. Intangible assets

The Comapny
At 1 January 2006	Software
Cost	2,075
Accumulated amortisation	(940)
Net book amount	1,135
Year ended 31 December 2006
Opening net book amount	1,135
Additions
Write-offs
Amortisation charge	(628)
Closing net book amount	547
At 31 December 2006
Cost	2,039
Accumulated amortisation	(1,492)
Net book amount
Year ended 31 December 2007
Opening net book amount
Additions
Contribution to subsidiaries share capital (Note 17)	(35)
Amortisation charge	(297)
Closing net book amount
At 31 December 2007
Cost	1,712
Accumulated amortisation	(1,371)
Net book amount	341

(All tabular amounts are in LTL '000 unless otherwise stated)

The Group	Client contractual relationships	Software	Total
At 1 January 2006
Cost	-	2,075	2,075
Accumulated amortisation	-	(940)	(940)
Net book amount	-	1,135	1,135
Year ended 31 December 2006
Opening net book amount	-	1,135	1,135
Additions	-	41	41
Write-offs	-	(1)	(1)
Amortisation charge	-	(628)	(628)
Closing net book amount	-	547	547
At 31 December 2006
Cost	-	2,039	2,039
Accumulated amortisation	-	(1,492)	(1,492)
Net book amount	-	547	547
Year ended 31 December 2007
Opening net book amount	-	547	547
Acquisition of subsidiaries (Note 31)	5,597	-	5,597
Additions	-	126	126
Amortisation and impairment charge	(2,123)	(332)	(2,455)
Closing net book amount	3,474	341	3,815
At 31 December 2007
Cost	5,597	1,712	7,309
Accumulated amortisation	(2,123)	(1,371)	(3,494)
Net book amount	3,474	341	3,815

Amortisation expenses of software and other intangible assets are included in general and administrative expenses in the income statement.

17. Investment in subsidiaries

The Company's investments into subsidiaries and joint venture are accounted for at cost in stand-alone financial statements.

During the year 2007 the Company increased cost of investment in Rokiškio pienas UAB by contributing property, plant and equipment with the net book value of LTL 24,766 thousand (Note 15) and intangibles with the net book value of LTL 35 thousand (Note 16). Furthermore the Company acquired 5 new subsidiaries (Skeberdis ir partneriai UAB, Skirpstas UAB, Žalmarg KB, Batnai UAB *, Peup UAB * ) and 1 joint venture (Pieno ups). Investments in subsidiaries as of 31 December are summarized in the table below:

	2007	2006
Rokiškio pienas UAB	24,811	10
New subsidriaries and Joint venture acquired	8,409	-
	33,220	10

* These subsidiaries were not included in consolidated financial statements due to their insignificance and are accounted for at cost in the consolidated financial statememnts.

(All tabular amounts are in LTL '000 unless otherwise stated)

18. Deferred income tax

Deferred Tax asset was recognized on Inventory net realizable value adjustment accounted (See Note 20). All amount of deferred tax asset accounted to be recovered within the 12 months period.

19. Loans granted

The Group			The Company
2007	2006		2007	2006
16,461	10,218	Long-term loans to farmers	16,461	10,218
460	676	Long-term loans to employees	460	676
653	-	Other long-term loans	653	-
(2,238)	(830)	Less: provision for impairment of loans receivable	(2,238)	(830)
15,336	10,064	Long-term loans net	15,336	10,064
4,340	4,800	Current portion of loans to farmers	4,294	4,800
708	128	Current portion of loans to employees	708	128
20,937	9,796	Other short term loans granted	20,622	9,796
		Less: provision for impairment of other amounts
-	(2,200)	receivables	-	(2,200)
		Current portion of long term loans and short term
25,985	12,524	loans net	25,624	12,524

Loans to farmers were granted with repayment terms ranging from 1 to 15 years. The annual interest rate ranges from 1 to 10 per cent. Effective interest rate was 7.74 per cent (2006: 7.56 per cent).

Long-term loans to employees were granted with repayment terms ranging from 5 to 25 years. The loans are interest free. Effective interest rate was 9.56 per cent (2006: 10.90 per cent).

Loans to employees and farmers include a certain amount of loans granted to Directors and Board member of the Group (Note 32).

As at 31 December 2007 fair value of loans granted to employees amounted to LTL 1,083 thousands (2006: LTL 769 thousands). As at 31 December 2007 fair value of loans granted to farmers as at 31 December amounted to LTL 14,397 thousand (2006: LTL 11,236 thousands).

The information of loans receivable overdue as at 31 December is provided in the table below:

The Group			The Company
2007	2006		2007	2006
37,238	17,100	Loans granted not past due	36,922	17,100
4,038	5,488	Loans granted past due but not impaired	4,038	5,488
2,238	828	Impaired loans granted	2,238	828
43,559	23,416	Gross value of loans granted	43,198	23,416
(2,238)	(828)	Impairment	(2,238)	(828)
41,321	22,588	Net value	40,960	22,588

(All tabular amounts are in LTL '000 unless otherwise stated)

20. Inventories

The Group			The Company
2007	2006		2007	2006
7,072	5,572	Raw materials	3,994	5,572
18,489	10,776	Work in progress	18,489	10,776
85,381	81,790	Finished goods	83,820	81,790
3,855	4,565	Other inventory	3,677	4,565
114,797	102,703	Total inventories at cost	109,980	102,703
(10,602)	-	Less: write-down to net realizable value	(10,602)	-

104,195	102,703	Total inventories	99,378	102,703

As at 31 December 2007, inventories with cost of LTL 37,336 thousand (as at 31 December 2006: LTL 45,336 thousand) have been pledged as security for bank borrowings.

As at 31 December 2007, inventories (fat-free powdered milk and concentrate of whey protein) with cost of LTL 6,090 thousand (as at 31 December 2006: none) was in the custody of Girtekos Logistika UAB.

21. Trade and other receivables

The Group			The Company
2007	2006		2007	2006
		Non current receivables
3,840	3,088	Prepayments	3,730	3,088
-	15	Other	-	15

3,840	3,103		3,730	3,103
		Current receivables
53,945	52,325	Trade receivables	48,875	52,325
5,358	3,541	VAT receivable	5,537	3,541
64	9,912	Export subsidies receivable	64	9,912
-	2,232	Grant receivable	-	2,232
556	689	Prepayments and deferred charges	547	689
59,923	68,699		55,023	68,699

As at 31 December 2007, trade accounts receivable for LTL 17,087 thousand (as at 31 December 2006: LTL 14,972 thousand) have been pledged as security for bank borrowings.

Current portion of long-term receivables and other amounts receivable include a certain amount of loans and other receivables from related parties (Note 32).

The information on receivables overdue is provided in the table below:

The Group			The Company
2007	2006		2007	2006
		Trade receivables that were not past due neither
44,200	35,610	impaired	39,326	35,610
		Trade receivables that were past due but not
9,745	16,715	impaired	9,549	16,715
53,945	52,325	Gross value	48,875	52,325

-	-	Impairment	-	-

(All tabular amounts are in LTL '000 unless otherwise stated)
53,945	52,325	Net value		48,875	52,325

The Group has received no collateral as security in relation to impaired amounts receivable.

Trade receivables that are less than 360 days past due are not considered impaired if the Company does not posses other negative information about the customers. The ageing analysis of trade receivables past due but not impaired as at 31 December is as follows:

The Group			The Company
2007	2006		2007	2006
8,336	13,473	Up to 30 days	8,140	13,473
1,306	2,467	31 to 60 days	1,306	2,467
88	771	61 to 180 days	88	771
15	4	More than 181 days	15	4
9,745	16,715		9,549	16,715

22. Cash and cash equivalents

The Group 31 December			The Company 31 December
2007	2006		2007	2006
4,623	669	Cash in bank and on hand	1,041	659
4,623	669		1,041	659

As at 31 December 2007 cash in certain bank accounts and future cash inflows into these accounts up to LTL 9,156 thousand (2006: LTL 14,250 thousand) have been pledged as security for bank borrowings.

No Group's cash balance were frozen as at 31 December 2007 (2006: LTL 872 thousand), for the payment guarantees issued.

For the purposes of the cash flow statement, the cash and cash equivalents comprise the following:

The Group			The Company
2007	2006		2007	2006

4,623	669	Cash and bank balances	1,041	669
(9,192)	(17,251)	Bank overdrafts (Note 26)	(9,192)	(17,251)

(4,569)	(16,582)		(8,151)	(16,582)

23. Share capital

As at 31 December 2007, the share capital was comprised of 42,716,000 ordinary registered shares with par value of LTL 1 each (31 December 2006: 4,746,270 ordinary registered shares with par value of LTL 10 each). On 29 October 2007 the Company's each ordinary share with par value of LTL 10 was spitted into 10 ordinary shares with par value of LTL 1. All the shares are fully paid. For changes in share capital during the year see Note 24.

(All tabular amounts are in LTL '000 unless otherwise stated)

24. Treasury shares

		2007		2006
	Number	Amount	Number	Amount
At beginning of year	474,617	20,352	392,047	16,224
Cancelation of treasury shares	(474,617)	(20,352)	-	-
Additions	78,365	4,702	82,570	4,128
	78,365	4,702	474,617	20,352
Split of shares *	783,650	4,702	-	-
At end of year	783,650	4,702	474,617	20,352

On 22 December 2006 the Company's shareholders made a decision to reduce the Company's authorized share capital by LTL 4,746 thousand through cancellation of 474,617 own shares previously purchased. Appropriate amendments were made to the Company's Articles of Association in 2007.

* On 29 October 2007 the Company's each share with par value of LTL 10 was spitted into 10 ordinary shares with par value of LTL 1.

25. Other reserves

2007	2006
-	65,091
5,362	4,714
5,362	69,805

Based on decision of the Company's shareholders distributable reserves not utilized and amounting to LTL 65,091 thousand were reallocated to the retained earnings.

Non-distributable reserves of LTL 3,593 thousand can only be used for share capital increase and nondistributable reserves of LTL1,121 thousand (legal reserve) can only be used for offsetting future operating losses, if any.

The dividends, declared in respect of 2006 and 2005 and paid in 2007 and 2006, amounted to LTL 10,081 thousand and LTL 10,276 thousand, respectively, which is LTL 2,36 per share. There were no dividends proposed or declared in respect of 2007 as at the date of approval of these financial statements.

(All tabular amounts are in LTL '000 unless otherwise stated)

26. Borrowings

The Group			The Company
2007	2006		2007	2006
		Current
25,078	59,086	Short-term bank borrowings	25,000	59,086
9,192	17,251	Bank overdrafts	9,192	17,251
1,830	-	Current portion of long-term bank borrowings	1,830	-
54	-	Finance lease liabilities	12	-
36,154	76,337		36,034	76,337
		Non-current
459	-	Long-term bank borrowings	459	-
45	-	Finance lease liabilities	-	-
504	-		459	-
36,658	76,337	Total borrowings	36,493	76,337

The bank borrowings are secured over certain of the property, plant and equipment (Note 17), inventories (Note 20), trade receivables (Note 21), cash in certain bank accounts (Note 22) and a bill of exchange issued for LTL 13,811 thousand (2006: LTL 13,811 thousand).

Weighted average interest rates effective as at 31 December (per cent) were as follows:

The Group
2007	2006		2007	2006
5.75	-	Long-term bank borrowings	5.75	-
5.67	4.04	Short-term bank borrowings	5.67	4.04
4.33	4.33	Finance lease liabilities	4.33	4.33
5.94	4.31	Bank overdrafts	5.94	4.31
				The Company

As at 31 December the carrying amounts of the Group's borrowings (excluding finance lease liabilities) are denominated in the following currencies:

The Group			The Company
2007	2006		2007
36,493	55,718	Euro	36,493
165	20,619	Litas	-
36,658	76,337		36,493
				2006 55,718 20,619 76,337

Fair value of borrowings approximates to their carrying values due to fact that interest rate on the borrowings received is subject to repricing at least every six months.

(All tabular amounts are in LTL '000 unless otherwise stated)

27. Deferred income

			The Company
2007	2006		2007	2006
9,083	8,730	Government grants at beginning of year	9,083	8,730
1,273	2,532	Government grants recognised	1,273	2,532
-	-	Government grants transferred*	(1,833)	-
(2,250)	(2,179)	Credited to income statement	(2,152)	(2,179)
8,106	9,083		6,371	9,083
(5,946)	(6,703)	Less non-current portion	(4,422)	(6,703)
2,160	2,380	Current portion	1,949	2,380

* Government grants amounting to LTL 1,833 thousand related property, plant and equipment transferred to Rokiškio pienas UAB (Note 15). Transfer was made by settlement with intercompany receivables.

Deferred grants are related to acquisition of property, plant and equipment and are donated by the European Union funds and Lithuanian Government under the SAPARD and other programmes. The Company and the Group has no obligation to repay or otherwise refund the grants received unless it breaches the contractual provisions contained in the agreements concluded with the grantors.

28. Trade payables and other amounts payable

The Group 31 December			The Company 31 December
2007	2006		2007	2006
52,176	40,150	Trade payables	49,843	40,150
3,531	2,892	Salaries, social security and taxes	2,314	2,892
1,044	321	Other payables	884	321
10,704	940	Accrued charges	10,071	940
67,455	44,303		63,112	44,303

29. Provisions

In March of 2008, the Competition Council, following its operational research of the Company and other companies operating in the milk sector, imposed a fine of LTL 824 thousand on the Company in respect of the Company's management established a 100 per cent provision. For the purpose of the income statement, the above-mention amount was stated under administrative expenses.

(All tabular amounts are in LTL '000 unless otherwise stated)

30. Contingent liabilities and commitments

Contingent liabilities

The Group 31 December			The Company 31 December
2007	2006		2007	2006
793	4,269	Guarantees issued by the bank to third parties on behalf of the Group	793	4,269
196	740	Guarantees issued by the Group on behalf of farmers and agricultural companies	196	740
989	5,009		989	5,009

The Group has given these guarantees in the ordinary course of business and anticipates that no material liabilities will arise.

Capital commitments

Capital expenditure contracted for property, plant and equipment at the balance sheet date but not recognized in the financial statements was LTL 3,426 thousand (31 December 2006: LTL 1,501 thousand)

Operating lease commitments – where the Group is the lessee

The Group leases passenger cars and premises under operating lease agreements.

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

The Group 2007	2006		The Company 2007	2006
257	298	Not later than 1 year	257	298
336	546	Later than 1 year but not later than 5 years	336	546
593	844		593	844

(All tabular amounts are in LTL '000 unless otherwise stated)

31. Business combinations

On 31 July 2007, the group acquired 100% of the share capital of Žalmarg KB, a milk provider. On 30 November 2007, the group acquired 100% of share capital of Skirpstas UAB and Skeberdis ir partneriai UAB. All those companies are milk collectors. The acquired businesses contributed revenues of LTL 2,392 thousand and net loss of LTL 1,753 thousand to the group for the period from 31 July 2007 to 31 December 2007 and 30 November 2007 to 31 December 2007 respectively. If the acquisition had occurred on 1 January 2007, revenue contribution to the group would have been LTL 4,415 thousand, and net loss contribution to the group would have been LTL 3,702 thousand. These amounts have been calculated using the group's accounting policies and by adjusting the results of the subsidiaries to reflect the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had applied from 1 January 2007, together with the consequential tax effects.

The table below summaries the details of net assets acquired in a subsidiaries at the date of acquisition and 50% share of net assets acquired in a Joint venture Pieno ups UAB at the date of acquisition, which is 31 May 2007.

	Fair value	Acquiree's carrying
		amount
Cash and cash equivalents	63	63
Property, plant and equipment (Note 15)	1,290	1,290
Other assets	4	4
Contractual customer relationships (included in	5,597	-
intangibles) (Note 16)
Inventories	6	6
Trade and other receivables	2,335	2,335
Trade and other payables	(1,878)	(1,878)
Borrowings	(178)	(178)
Net assets acquired	7,239	1,642
Purchase consideration settled in cash	7,239
Cash and cash equivalents in subsidiary acquired	(63)
Net cash outflow on acquisition	7,176

The following amounts represent the group's 50% share of the assets and liabilities, sales and results of the joint venture as at 31 December 2007. They are consolidated in the Group's balance sheet and income statement:

	2007
Assets
Long-term assets	474
Current assets	537
	1 011
Liabilities
Long-term liabilities	26
Current liabilities	479
	505
Net assets	506
Income	4 258
Expenses	(4 108)
Profit after income tax	150

There are no contingent liabilities relating to the group's interest in the joint venture, and no contingent

(All tabular amounts are in LTL '000 unless otherwise stated) liabilities of the venture itself.

32. Cash generated from operations

Reconciliation of profit before tax to cash generated from operations:

The Group 31 December 2007	2006		The Company 31 December 2007 2006
46,507	18,238	Net profit before tax	41,062	18,238
		Adjustments for:
24,985	25,360	depreciation (Note 15)	22,419	25,360
2,455	629	amortisation and impairment charge (Note 16)	297	629
3,382	54	write-off of property, plant and equipment and intangible assets (Notes 15 and 16)	2,760	54
(394)	155	loss (gain) on disposal of property, plant and equipment (Note 10)	(383)	155
2,278	2,459	interest expense (Note 12)	2,275	2,459
(348)	(594)	interest income (Note 10)	(323)	(594)
10,602	-	write-offs of inventories	10,602	-
-	2,200	impairment of other loans receivable (Note 9)	-	2,200
1,083	270	impairment and write-offs of doubtful and bad receivables (Note 9)	1,083	270
2,715	303	impairment and write-offs of loans granted to farmers (Note 9)	1,942	303
(9,637)	(75)	accrual for vacation reserve and bonus	(9,000)	(75)
(2,250)	(2,179)	amortisation of government grants received (Note 27)	(2,152)	(2,179)
		Changes in working capital
5,313	640	receivables and prepayments	7,002	640
(12,083)	(31,588)	inventories	(7,277)	(31,588)
31,977	1,957	payables	28,923	1,957
106,606	17,822	Net cash generated from operating activities	99,230	17,822

In the cash flow statement, proceeds from disposal of property, plant and equipment comprise:

2007	2006		2007	2006
1,869	289	Net book amount (Note 15)	1,013	289
394	(155)	Loss from disposal of property, plant and equipment (Note 10)	383	(155)
2,263	134	Proceeds from disposal property, plant and equipment	1,396	134

(All tabular amounts are in LTL '000 unless otherwise stated)

33. Related party transactions

The Group is controlled by Pieno Pramons Investicij Valdymas UAB (incorporated in Lithuania) and Mr. A.Trumpa (the Company's Managing Director), which together own 48.85 per cent (2006: 47.87) of the Company's share capital. Pieno Pramons Investicij Valdymas UAB is controlled by Mr. A.Trumpa (through the majority of shareholding). The remaining 51.15 per cent of the shares are widely held (including treasury shares).

Pieno Pramons Investicij Valdymas UAB, the members of the Board and Senior Management and their close family members are treated as related parties.

Certain cooperative societies, engaged in the production of milk, are treated as other related parties of the Company through close family relationships with members of the Senior Management and because certain of the Company's employees have significant influence over day-to-day activities of these societies.

The Group 31 December			The Company 31 December
2007	2006		2007	2006
		(i) The following transactions were carried out with related parties:
64,833	56,132	Purchase of milk and milk collection services from other	79,339	56,132
		related parties
-	-	Purchase of fixed assets	1,261	-
-	-	Purchase of inventory	7,564	-
-	-	Purchase of services	16,318	-
1,375	1,687	Sales of utility services to other related parties	20,484	1,687
1,081	-	Sales of production and other inventories	117,907
8	-	Sale of fixed assets	321
852	277	Interest charges on credit facility	852	277
2007	2006		2007	2006
3,035	3,065	Non-interest bearing loans granted to Senior Management (and their families)	3,035	3,065
		Credit facility granted to Pieno Pramons Investicij
20,545	7,351	Valdymas UAB	20,545	7,351
10,803	1,853	Trade payables to other related parties	13,035	1,853
-	-	Trade receivables from other related parties	12,025	-
		(iii) Compensation of key management
2007	2006		2007	2006
1,010	1,024	Salaries	1,010	1,024
2,567	4,200	Bonuses	2,567	4,200
347	337	Social Insurance Contributions	347	337

Key management includes 12 (2006: 12) members of the Board and Senior Management.

3,924 5,561 3,924 5,561

(All tabular amounts are in LTL '000 unless otherwise stated)

34. Events after the balance sheet date

As at 25 January 2008 the Company has acquired 50,05% of the share capital of SIA Jekabpils piena kombinats, the milk provider company for a total purchase price (cash paid) of LTL 1,509 thousand. Management of the Company is still in the process on purchase price allocation.

Based on Company's board decision as at 11 February 2008 the Company acquired 674,000 treasury shares (par value per each is LTL 1) for a price of 6 LTL per one ordinary share acquired.

Subsequent to the balance sheet, the Company concluded a credit line agreement to finance its working capital. The credit line was extended in EUR and amounted to LTL 24 000 thousand. The repayment term of the credit line is 30 September 2010 and it is subject to an interest rate of LIBOR + 0.9 per cent margin. The borrowings were secured over the property, plant and equipment with net book value of LTL 15,499 thousands.

AI assistant

Rokiskio Suris — Audit Report / Information 2007

2242_10-k-afs_2008-04-14_a23391dc-3cfe-4fc4-9424-1db43aebfd87.pdf

CONTENTS

Income statement

Balance sheet

The Company's statement of changes in equity

The Group's statement of changes in equity

Cash flow statement

(All tabular amounts are in LTL '000 unless otherwise stated) Notes to the financial statements

1. General information

2. Accounting policies

2.1 Basis of preparation

(All tabular amounts are in LTL '000 unless otherwise stated)

Standards, amendments to standards and interpretations effective in 2007

Standards, amendments to standards and interpretations effective in 2007, but not relevant to the Company'sand Group's operations

Early adoption of standards, interpretations and amendments to published standards

Standards, interpretations and amendments to published standards that are not yet effective

2.2 Consolidated financial statements

(a) Subsidiaries

(b) Transactions and minority interests

2.3 Stand alone financial statements

2.4 Foreign currency translation

(a) Functional and presentation currency

(b) Transactions and balances

2.5 Property, plant and equipment

2.6 Intangible assets

(a) Computer software

(b) Contractual Customer relationships

2.7 Impairment of non-financial assets

2.8 Financial assets

2.9 Inventories

2.10 Trade and other amounts receivable

2.11 Cash and cash equivalents

2.12 Share capital

(a) Ordinary shares

2.13 Reserves

(a) Other reserves

(b) Reserve for acquisition of treasury shares

2.14 Borrowings

2.15 Deferred income tax

2.16 Leases where the Group is the lessee

(a) Finance lease

(b) Operating lease

2.17 Employee benefits

(a) Social security contributions

(b) Termination benefits

(c) Bonus plans

2.18 Revenue recognition

2.19 Dividend distribution

2.20 Earnings per share

2.21 Segment reporting

2.22 Government grants and subsidies

2.23 Provisions

2.24 Trade payables

2.25 Comparatives

2.26 Demergers

3. Financial risk management

3.1 Financial risk factors

(a) Market risk

(i) foreign exchange risk

(ii) Cash flow and fair value interest rate risk

(b) Credit risk

i) Maximum exposure to credit risk

ii) Credit quality of financial assets

(c) Liquidity risk

The Company

3.2. Capital risk management

3.3. Fair value estimation

4. Critical accounting estimates and judgments

Impairment provision for accounts receivable

Estimates of useful lives of property, plant and equipment

Contractual client relationship

5. Segment reporting

Primary reporting format – business segments

Secondary reporting format – geographical segments

6. Selling and marketing expenses

7. General and administrative expenses

8. Other income

9. Other expenses

Rokiskio Suris Audit Report / Information 2007