Snaige AB

Quarterly Report • Mar 15, 2010

AB SNAIGE

CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE TWELVE MONTHS OF 2009

CONTENTS

I. GENERAL PROVISIONS
II. FINANCIAL STATUS
III. EXPLANATORY NOTES

I. GENERAL PROVISIONS

1. Accounting period of the report

The report has been issued for the twelve months of 2009.

2. The basic data about the issuer

The name of the company – SNAIGE PLC (hereinafter referred to as the Company)

Authorised capital - 27,827,365 LTL

Address - Pramonės str. 6, LT-62175 Alytus

Phone - (8-315) 56 206

Fax - (8-315) 56 207;

E-mail – snaige@snaige.lt

Internet address - http://www.snaige.lt

Legal organisation status - legal entity, public limited company

Registered as an enterprise on December 1, 1992 in the Municipality Administration of Alytus; registration number AB 92-119; enterprise register code 249664610. The latest Statute of AB "Snaigė" was registered on May 25, 2009 in Legal Entities of the Republic of Lithuania.

3. Information with regard to the location and time provided for introduction of the report and the accompanying documents; name of the mass media

The report is available in the Budget and Accounting Department of AB "Snaige" at Pramones str. 6, Alytus on the days of I-IV from 7.30 to 16.30, and V from 7.30 to 14.00, as well as in Financial Broker Firm UAB "Orion Securities" at Tumeno str. 4, corp. B, floor 9, LT-01109, Vilnius on work days from 9.00 to 17.00.

II. FINANCIAL STATUS

AB "Snaigė" is a parent company situated in Lithuania with subsidiaries in Lithuania, Russia and Ukraine. The financial statements of the subsidiary companies are integrated into the consolidated financial statements. These financial statements have been composed in accordance with the international financial reporting standards (IFRS), which are accepted in the European Union countries.

1. Accounting Balance Sheet (in LTL)

Ref. No.	ASSETS	31.12.2009	31.12.2008
A.	Non-current assets	42,231,800	93,982,512
I.	FORMATION COSTS
II.	INTANGIBLE ASSETS	4,640,588	15,725,926
III.	TANGIBLE ASSETS	33,095,083	72,595,486
III.1.	Land
III.2.	Buildings	9,128,725	29,507,972
III.3.	Other non-current tangible assets	22,113,512	41,203,287
III.4.	Construction in progress and advance payments	1,852,846	1,884,227
IV.	NON-CURRENT FINANCIAL ASSETS
V.	DEFERRED TAXES ASSETS	4,496,129	5,661,100
VI.	ACCOUNTS RECEIVABLE AFTER ONE YEAR
B.	Current assets	67,310,747	104,294,573
Ī.	INVENTORY AND CONTRACTS IN PROGRESS	19,014,475	56,605,977
L1.	Inventory	19,014,475	56,605,977
$\overline{1.2}$ .	Advance payments
I.3.	Contracts in progress
Π.	ACCOUNTS RECEIVABLE WITHIN ONE YEAR	17,538,658	45,604,642
III.	INVESTMENTS AND TERM DEPOSITS
IV.	CASH AT BANK AND ON HAND	1,725,087	1,675,302
V.	Other current assets		408,652
	Planned to sell non-current assets	29,032,527
C.	Accrued income and prepaid expenses
	TOTAL ASSETS	109,542,547	198,277,085

Ref. No.	SHAREHOLDERS' EQUITY AND LIABILITIES	31.12.2009	31.12.2008
A.	Capital and reserves	34,370,637	69,494,043
I.	SHARE CAPITAL	46,554,635	46,554,635
1.1.	Authorized (subscribed) share capital	27,827,365	27,827,365
1.2.	Uncalled share capital (-)
I.3.	Share premium (surplus of nominal value)	18,727,270	18,727,270
	Own shares (-)
III.	REVALUATION RESERVE	(3,919,156)	(5,241,966)
IV.	RESERVES	4,688,472	7,340,772
V.	PROFIT (LOSS) BROUGHT FORWARD	(12, 953, 314)	20,840,602
B.	Minority interest	1,674	2,861
C.	Financing (grants and subsidies)	1,600,737	2,000,711
D.	Provisions and deferred taxes	$\bf{0}$	$\bf{0}$
I.	PROVISIONS FOR COVERING LIABILITIES AND DEMANDS
Π.	DEFERRED TAXES
E.	Accounts payable and liabilities	73,569,499	126,779,470
I.	ACCOUNTS PAYABLE AFTER ONE YEAR AND NON- CURRENT LIABILITIES	3,457,305	5,546,244
I.1.	Financial debts	904,363	1,906,200
I.2.	Trade creditors
I.3.	Advances received on contracts in progress
I.4.	Other accounts payable and non-current liabilities	2,552,942	3,640,044
II.	ACCOUNTS PAYABLE WITHIN ONE YEAR AND CURRENT LIABILITIES	70,112,194	121,233,226
II.1.	Current portion of non-current debts	37,519,361	58,804,422
II.2.	Financial debts
II.3.	Trade creditors	22,512,368	50,450,833
II.4.	Advances received on contracts in progress	1,046,347	1,252,572
II.5.	Taxes, remuneration and social security payable	2,519,020	3,739,868
II.6.	Other accounts payable and current liabilities	6,515,098	6,985,531
II.7.	Fair value of derivative financial instruments
	TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	109,542,547	198,277,085

2. Profit (Loss) Report (in LTL)

Ref. No.	ITEMS	31.12.2009	01.10.2009 31.12.2009	31.12.2008	01.10.2008 31.12.2008
I.	SALES AND SERVICES	121,143,180	22,821,531	338,867,460	60,167,820
I.1	Income of goods and other products sold	4,112,444	920,338	10,232,549	423,622
I.2	Income of refrigerators sold	117,030,736	21,901,193	328,634,911	59,744,198
π.	COST OF GOODS SOLD AND SERVICES RENDERED	111,764,822	20,052,621	296,302,333	54,941,725
II.1	Net cost of goods and other products sold	3,308,617	865,597	9,300,054	1,556,476
II.2	Net cost of refrigerators sold	108,456,205	19,187,024	287,002,279	53,385,249
III.	GROSS PROFIT	9,378,358	2,768,910	42,565,127	5,226,095
IV.	OPERATING EXPENSES	34,732,176	5,687,237	53,924,998	15,851,367
IV.1	Sales expenses	9,487,339	2,557,293	28,324,564	8,083,123
IV.2	General and administrative expenses	25,244,837	3,129,944	25,600,434	7,768,244
V.	PROFIT (LOSS) FROM OPERATIONS	(25, 353, 818)	(2,918,327)	(11, 359, 871)	(10, 625, 272)
VI.	OTHER ACTIVITY	1,870,519	623,873	420,396	33,305
VI.1.	Income	2,375,301	669,073	2,088,150	230,804
VI.2.	Expenses	504,782	45,200	1,667,754	197,499
VII.	FINANCIAL AND INVESTING ACTIVITIES	(12, 049, 631)	(706, 268)	(14, 745, 387)	(8,397,150)
VII.1.	Income	9,903,510	1,972,689	21,218,714	10,266,716
VII.2.	Expenses	21,953,141	2,678,957	35,964,101	18,663,866
VIII.	PROFIT (LOSS) FROM ORDINARY ACTIVITIES	(35, 532, 930)	(3,000,722)	(25, 684, 862)	(18,989,117)
IX.	EXTRAORDINARY GAIN
X.	EXTRAORDINARY LOSS
XI.	CURRENT ACCOUNTING PERIOD PROFIT (LOSS) BEFORE TAXES	(35, 532, 930)	(3,000,722)	(25, 684, 862)	(18,989,117)
XII.	TAXES	914,473	13,352	(1, 584, 518)	(161, 628)
XII.1	PROFIT TAX	24,679	13,352	104,071	6,818
XIII.	Adjustment of deferred profit tax	889,794		(1,688,589)	(168, 446)
XIV.	Social tax
XV.	MINORITY INTEREST	1,187	1,187	1,052	604
XVI.	NET CURRENT ACCOUNTING PERIOD PROFIT (LOSS)	(36, 446, 216)	(3,012,887)	(24,099,292)	(18, 826, 885)

3. Cash Flows Statement

Ref. No.		31.12.2009	31.12.2008
I.	Cash flows from the key operations
1.1	Result before taxes	(35, 532, 930)	(25, 684, 862)
1.2	Depreciation and amortization expenses	10,071,802	21,856,278
$\overline{1.3}$	Subsidies amortization	(399, 974)	(1,014,205)
I.4	Result of sold non-current assets	(12, 567)	(27,913)
I.5	Write-off of non-current assets	9,421,051	172,265
I.6	Write-off of inventories	483,178	(176, 646)
I.7	Depreciation of receivables	2,075,643	(1, 154, 668)
I.8	Non-realized loss on currency future deals	645,961	208,030
I.9	Change in provision for guarantee repair	(1,639,967)	707,931
I.10	Recovery of devaluation of trade receivables
I.11	Influence of foreign currency exchange rate change	2,893,021	6,917,132
I.12	Financial income	(19, 622)	(25,071)
I.13	Financial expenses	2,803,719	3,986,849
	Cash flows from the key operations until decrease (increase) in working capital	(9, 210, 685)	5,765,120
$\Pi.1$	Decrease (increase) in receivables and other liabilities	26,586,578	13,505,533
II.2	Decrease (increase) in inventories	37,591,502	6,578,921
II.3	Decrease (increase) in trade and other debts to suppliers	(29, 283, 107)	(34, 369, 252)
	Cash flows from the main activities	25,684, 288	(8,519,678)
III.1	Interest received
III.2	Interest paid	(2,803,719)	(3,986,849)
III.3	Profit tax paid	(212,971)	(1,762,372)
	Net cash flows from the key operations	22,667,598	(14, 268, 899)

IV.	Cash flows from the investing activities
IV.1.	Acquisition of tangible non-current assets	(143, 321)	4,894,677)
IV.2.	Capitalization of intangible non-current assets	(341, 880)
IV.3.	Sales of non-current assets	183,714	105,863
IV.4.	Loans granted		(49, 123)
IV.5.	Loans regained		26,381
	Net cash flows from the investing activities	(330, 915)	(4,811,556)

Ш.	Cash flows from the financial activities	(22, 286, 898)	16,771,197
III.1	Cash flows related to the shareholders of the company
III.1.1	Issue of shares
III.1.2	Shareholders' contributions for covering losses	7,162,801
III.1.3	Sale of own shares		9,900,000
III.1.4	Payment of dividends
III.2	Cash flows arising from other financing sources
III.2.1	Subsidies received
III.2.1.1	Inflows from non-current loans		20,159,063
III.2.1.2	Loans repaid	(28, 621, 329)	(29, 636, 180)
III.2.2	Finance lease received
III.2.2.1	Payments of leasing (finance lease) liabilities	(828, 370)	(888, 216)
III.3	Other decreases in the cash flows from financial activities		17,236,530
	Net cash flows from the financial activities	(22, 286, 898)	16,771,197

IV.	Cash flows from extraordinary items
IV.1.	Increase in cash flows from extraordinary items
IV.2.	Decrease in cash flows from extraordinary items
V.	The influence of exchange rates adjustments on the balance of cash and cash equivalents
VI.	Net increase (decrease) in cash flows	49,785	(2,309,258)
VII.	Cash and cash equivalents at the beginning of period	1,675,302	3,984,560
VIII.	Cash and cash equivalents at the end of period	1,725,087	1,675,302

Consolidated Interim Financial Statements for twelve months of 2009

4. Statement of Changes in Equity

	TOTAL	87,935,267	0	(24, 100, 344)	٠	۰	٠	٠	٠	0	5,661,981	۰	69,496,904	0	(36,447,403)	0	0	1,322,810		34,372,311
	shareholders Minority	3,913		(1,052)		$\Rightarrow$							2,861		(1,187)	0				1,674
	TOTAL	87,931,354	÷	(24,099,292)	0	$\Rightarrow$	۰	٠	$\bullet$	۰	5,661,981	$\Rightarrow$	69,494,043	0	(36,446,216)	۰		1,322,810		34,370,637
Retained	earnings (losses)	15,794,495		24,099,292)	(2.289,901)	34,087,600							23,492,902		(36,446,216)	۰				(12,953,314)
	exchange Currency reserve	-903,947									(4,338,019)		(5,241,966)					1,322,810		(3,919,156)
	reserves Other					۰							۰							۰
Other reserves	investments Ĕ	23,647,600			00.008.1	(23, 647, 600)							1,800,000							1,800,000
	For social needs	350,000		۰		(350,000)							۰							⇔
	For charity. donation	90,000		$\circ$	60,000	(90, 000)							60,000							60,000
	For acquiring own shares	10,000,000			c	(10,000,000)							۰							¢
Legal reserves	Compulsory	÷ 2,398,57			429,921								$\mathbf{a}$ 2,828,47							2,828,472
Own	slares (-)												0							۵
Share	premium	12,727,270									6,000,000		18,727,270
Paid up authorised	capital	23,827,365									4,000,000		27,827,365							27,827,365 18,727,270
		Balance as of December 31, 2007	Dividends for 2007	Total registered income and expenses as of 2008	Formed reserves	Transfers from reserves	Repurchase of own shares during the financial years	Sale of own shares during the financial years	Net profit / loss of the reporting period (2008)	have been defrayed by the major covering previous losses, which Appropriated profit of the minority shareholders for shareholders	Other changes		Balance as of December 31, 2008	Dividends for 2008	Total registered income and expenses as of 2009	Formed reserves		Other changes	registered in the Profit (Loss) Current year profit not account	Balance as of December 31, 2009

page 9

III. EXPLANATORY NOTES

$\mathbf{1}$ Basic information

Company is active manufacturer of refrigerators and freezers. The refrigerator manufacturing plant was established on the 1 April 1963. After the privatization of the Company on 1 December 1992, the joint-stock company "Snaige" was established and in December 1993 all state-owned shares were bought out. Company's shares are listed on Vilnius Stock Exchange Secondary List.

The authorized capital was increased to 27,827,365 LTL with the registering of latest Statute of AB "Snaige" on September 11, 2008 in Legal Entities of the Republic of Lithuania and with the issue of new shares in 2008.

Main shareholders of AB "Snaigė" as of December 31, 2009 and December 31, 2008 were:

	December 31, 2009		December 31, 2008
	Number of shares owned	Share of total capital, %	Number of shares owned	Share of total capital, %
Survesta			7,034,891	25.28
Swedbank AS (Estonia) Clients	13,243,657	47.59	12,002,781	44.13
Skandinaviska Enskilda Banken Clients	3,274,369	11.77	3,852,141	13.84
Enskilda Banken AB Skandinaviska Finnish Clients	77,555	0.28	992,747	3.57
Hermis Capital UAB	4,412,032	15.86
Other shareholders	6,819,752	24.50	3,944,805	13.18
Total	27,827,365	100.00	27,827,365	100,00

All the shares (with nominal value 1 LTL. per share), are ordinary and were fully paid as for December 31, 2009 and December 31, 2008. Authorized share capital as of December 31, 2009 is equal to 27,827,365 LTL. Subsidiaries did not have any shares of AB "Snaigė" as of December 31, 2009 and December 31, 2008. Company did not have any of their own shares.

Group consists of AB "Snaige" and its subsidiaries and associated companies (hereinafter – Group):

Company	Company address	Share capital owned by Group, %	Investment value, LTL.	Current period profit (loss), LTL.	Main activity
"Techprominvest" 000	Bolšaja Okrūžnaja, 1-a, Kaliningrad	100	67,846,761	(9, 430, 460)	Manufacturing and trade of refrigerators and freezers
Ukraina" "Snaige TOB	Gruševskio $28-$ 2a/43, Kiev	99	88,875	(81,709)	Trade, consulting, service
Trade" "Moroz 000	Mira Prospekt 52, Moscow	10003 100	947	0	marketing and Trade services
"Liga Servis" OOO	Mira Prospekt 52, Moscow	100	1,028	118,203	Trade, marketing, logistics
UAB Almecha	Pramonės6, Alytus	100	1,375,785	(715,508)	of Manufacturing machinery equipment

As of 31 December, 2009 Company's board consisted of 5 members, one of whom is an employee of Company.

In 2002 AB "Snaigė" acquired 85% of share capital in "Techprominvest" (Kaliningrad, Russia) and in 2006 AB "Snaige" bought the remaining 15% of "Techprominyest" share capital and became the main proprietor of the subsidiary.

In September 2008, AB "Snaigė" has increased its subsidiary's "Techprominyest" authorized capital by 5,519,7921 LTL. An authorized capital was increased from the receivables from "Techprominvest" for sold and not payed equipment, as well as granted and not repayed loans. This company is a manufacturer of refrigerators and freezers that are sold in Russian Federation.

"Snaige Ukraina" (Kiev, Ukraine) was established in 2002. since the purchase in 2002, AB "Snaigė" controls 99% of the subsidiary. The company renders trade and consulting services for AB "Snaige" in Ukraine.

On 13 May, 2004 "Moroz Trade" (Moscow, Rusria) was established. In 2004 October the company bought 100% of "Moroz trade" shares. The company provides trade and marketing services for "Techprominvest" in Russian Federation.

"Liga Servis" (Moscow, Russia) - was established on 7 February, 2006. The company provides trading, marketing and logistics services for "Techprominvest" in Russian Federation.

UAB Almecha (Alytus, Pramonės str. 6, Lithuania) – was established on 9 November, 2006. The company's activity is manufacturing of machinery equipment.

The number of employees in the Group as of 31 December, 2009 was 812 (while on 31 December, $2008 - 2.237$ ).

$\overline{2}$ Accounting principles

The main accounting principles used in preparation of Group's financial accounts as of 31 December, 2009:

2.1. Preparation basis of financial statement

These financial statements are prepared according to international financial reporting standards (IFRS), which are accepted in the European Union countries.

2.2. Currency of financial statement

Accounting of the Group is done using the domestic currency of the Country, and all the sums of these financial accounts are expressed in the national currency of the Republic of Lithuania. Litas $(LTL)$ .

From 2 February, 2002 Litas is pegged with Euro at a rate 3.4528 LTL for 1 Euro, and the exchange rate with other currencies is decided by the central bank of the Republic of Lithuania every day.

$2000 + 2.2$

$0.0001222$

The valid currency exchange rates were:

	$2009 - 12 - 31$	2008-12-51
Russian rouble	0.079465	0.083337
Ukraine hryvnia	0.29842	0.32161
U.S. dollar	2.9842	2.4507

2.3. Principles of consolidation

Consolidated financial statements of the Group include AB "Snaige" and its controlled subsidiaries and associated companies. This control is normally evidenced when the Group owns, either directly or indirectly, more than 50 percent of the voting rights of a company's share capital and/or is able to govern the financial and operating policies of an enterprise so as to benefit from its activities. The equity and net income attributable to minority shareholders' interests are shown separately in the consolidated balance sheet and consolidated income statement.

The purchase method of accounting is used for acquired businesses. The Company accounts for the acquired identifiable assets and liabilities of another company at their fair value at acquisition date. The difference of the acquired minority interest value in the Group's financial statements and costs of shares is accounted for as goodwill.

During consolidation all the transactions between the companies, balance and unrealized profit and loss are eliminated.

Consolidated financial statement is prepared applying same accounting principles to similar transactions and other events with similar situations.

2.4. Intangible assets, except for goodwill

Intangible assets are recognized if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of asset can be measured reliably. After initial recognition, intangible assets are measured at cost less accumulated amortization and any accumulated impairment losses. Intangible assets are amortized on a straight-line basis over their estimated useful lives.

Research and development

The cost of research expensed during the objective for new technological improvements, are accounted in the profit (loss) account at the moment when they were expensed.

Expenses from the development activities of creation of new or enhanced products and operational processes are capitalized if the product or the process is technically and commercially proven and the Group has enough resources and intentions to finish the creation of this product or process. Capitalized expenses include raw material and direct work expenses as well as respective additional expenses. Capitalized development expenses are accounted at their cost subtracting the accumulated depreciation. Capitalized product creation expenses are being amortized as soon as product creation works are finished and their results can be used in commercial production. Capitalized product creation expenses will be amortized over the period when the economic benefit is received. The amortization period applied varies from 1 to 4 years.

Licenses

Amounts paid for licenses are capitalized and then amortized over their validity period.

Software

The costs of acquisition of new software are capitalized and treated as an intangible asset if these costs are not an integral part of the related hardware. Software is amortized over a period not exceeding 3 years.

Costs incurred in order to restore or maintain the future economic benefits that the Group expects from the originally assessed standard of performance of existing software systems are recognized as an expense when the restoration or maintenance work is carried out.

2.5. Tangible non-current assets

Tangible non-current assets are assets that are controlled by the Group, which is expected to generate economic benefits in the future periods with the useful life exceeding one year, and which acquisition (manufacturing) costs could be reliably defined and is higher then 500 LTL. Liquidity value is equal to 1 LTL. Tangible fixed assets are accounted for at cost, which does not include the daily maintenance costs, less accumulated depreciation and estimated impairment losses. The acquisition value includes the tangible assets replacement cost, when incurred, if such costs meet the asset recognition criteria, and modified parts are written off. Tangible assets are retired when it is sold or no economical benefit is expected from its sale. Any gain or loss resulting from the writedown of assets (calculated as the net sales proceeds and the carrying value of the assets) are included in the income (loss) statement, which the property is retired.

The initial cost of property, plant and equipment comprises its purchase price, including nonrefundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the property, plant and equipment have been put into operation, such as repair and maintenance costs, are normally charged to the income statement in the period the costs are incurred.

Depreciation is computed on a straight-line basis over the following estimated useful lives:

Buildings and structures (excluding commercial buildings) $15 - 63$ years
Machinery and equipment	$5 - 15$ years
Vehicles	$4 - 6$ years
Other assets	$3 - 8$ years

Construction in progress is stated at cost less accumulated impairment. This includes the cost of construction, plant and equipment and other directly attributable costs. Construction in progress is not depreciated until the relevant assets are completed and put into operation.

2.6. Inventories

Inventories are valued at the lower of cost or net realizable value, after impairment evaluation for obsolete and slow moving items. Net realizable value is the selling price in the ordinary course of business, less the costs of completion, marketing and distribution. Cost is determined by the first-in, first-out (FIFO) method. The cost of finished goods and work in progress includes the applicable allocation of fixed and variable overhead costs based on a normal operating capacity. Unrealizable inventory has is fully written-off.

In calculating cost of goods Group attributes part of received discounts towards the acquired goods from the distributor, which are not yet sold.

Inventories in transit are accounted for in accordance with INCOTERMS-2000 condition requirements, when risk and benefit, in accordance with inventories, goes to the Group.

2.7. Receivables and loans granted

Receivables are initially recorded at the fair value of the consideration given. Receivables and loans granted are subsequently carried at amortized cost, less impairment.

2.8. Cash and cash equivalents

Cash includes cash on hand and cash with banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of change in value.

For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits at current accounts, and other short-term highly liquid investments and bank overdrafts.

2.9. Borrowings

Borrowing costs are expensed as incurred.

Borrowings are initially recognized at fair value of proceeds received. They are subsequently carried at amortized cost, the difference between net proceeds and redemption value being recognized in the net profit or loss over the period of the borrowings. The borrowings are classified as non-current if the completion of a refinancing agreement before authorization of the financial statements for issue provides evidence that the substance of the liability at the balance sheet date was non-current.

2.10. Factoring

Factoring transaction is a funding transaction wherein the company transfers to factor claim rights for determined fee. The companies alienate rights to receivables due at a future date according to invoices. Factoring transactions of the Group comprise factoring transactions with regress (recourse) right (the factor is entitled to returning the overdue claim back to the Group) and without regress (recourse) right (the factor is not entitled to returning the overdue claim back to the Group). The factoring expenses comprise a lump-sum contract fee charged on the conclusion of the contract, commission fees charged for processing the invoices, and interest expenses depending on the duration on the payment term set by the debtor. Factored accounts receivable (with regress right) and related financing are recorded in accounts receivable caption and liabilities to credit institutions caption in the financial statements.

2.11. Financial lease and operating lease

Operating lease - the Group as lessee

The Group recognizes the lease assets and obligations in the balance sheet on the day of the leasing period. Initial direct costs related to assets, are included in the asset value. Lease payments are apportioned between the finance cost and the remaining obligation. The financing costs are allocated over the lease period so as to meet the constant rate of interest payable from the rest of the commitment of the end of each reporting period.

Direct costs incurred by the tenant during the lease period, is included in the leased assets.

The depreciation is calculated for the assets purchased with financial lease; in addition, financial costs are incurred due to financial lease over the reporting period. Depreciation scheme for the calculation of lease payments for the purchased assets is similar as in the property. But such assets cannot be depreciated over a longer period than the lease period, if according to the contract at the end of the contract period; the property is not transferred to the Group.

Operating lease - the Group as lessor

Assets to which the property-related risks and benefits maintains the lessor, rent is classified as operating leases. Lease payments under operating leases are recognized straight-line method over the cost of the lease period and are included in operating costs.

2.12. Grants and subsidies

Grants and subsidies received in the form of non-current assets or intended for the purchase. construction or other acquisition of non-current assets are considered as asset-related grants. Assets received free of charge are also allocated to this group of grants. The amount of the grants related to assets is recognized in the financial statements as used in parts according to the depreciation of the assets associated with this grant. In the income statement, a relevant expense account is reduced by the amount of grant amortization.

Grants received as a compensation for the expenses or unearned income of the current or previous reporting period, also, all the grants, which are not grants related to assets, are considered as grants related to income. The income-related grants are recognized as used in parts to the extent of the expenses incurred during the reporting period or unearned income to be compensated by that grant.

2.13. Provisions

Provisions are recognized when the Group or the Company has a present obligation (legal or constructive) as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The provisions are reviewed at each balance sheet date and adjusted in order to present the most reasonable current estimate.

2.14. Revenue recognition

Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably. Sales are recognized net of VAT and discounts.

Revenue from sales of goods is recognized when delivery has taken place and transfer of risks and rewards has been completed.

Service revenue is recognized using the accrual basis and recognized in profit (loss) statement when services are rendered and end user accepts it.

In the consolidated profit (loss) statement sales between the Group companies are eliminated.

2.15. Expense recognition

Expenses are recognized on the basis of accrual and revenue and expense matching principles in the reporting period when the income related to these expenses was earned, irrespective of the time the money was spent. In those cases when the costs incurred cannot be directly attributed to the specific income and they will not bring income during the future periods, they are expensed as incurred.

2.16. Foreign currencies

Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies on the balance sheet date are recognized in the income statement. Such balances are translated at period-end exchange rates.

The accounting of subsidiaries is arranged in respective local currencies, which is their functional currency. Financial statements of foreign consolidated subsidiaries are translated to Litas at year-end exchange rates in respect to the balance sheet accounts, and at the average exchange rates for the year in respect to the accounts of the statement of income.

On the net investment in foreign Group companies resulting from the conversion into Litas occurring foreign currency exchange rate differences are recorded in shareholder's equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign subsidiary are treated as assets (or liabilities related to fair value adjustments) of the acquired company and are recorded at the exchange rate at the balance sheet date.

2.17. Segments

Business segment is considered component of the Group participating in production of an individual product or provision of a service or a group of related products or services, the risk and returns whereof are different from other business segments.

Geographical segment is considered component of the Group participating in production of an individual product or provision of a service or a group of related products or services, in particular economic environment the risk and returns whereof are different from other economic environments.

For the management purpose Group's activities is organized as one main segment – manufacturing of refrigerators. Financial information about the business and geographical segments is represented in $3^rd$ note of these financial statements

2.18. Subsequent events

Post-balance sheet events that provide additional information about the Group's position at the balance sheet date (adjusting events) are reflected in the financial statements. Post-balance sheet events that are not adjusting events are disclosed in the notes when material.

2.19. Offsetting and comparative figures

When preparing the financial statements, assets and liabilities, as well as revenue and expenses are not set off.

3 Segment information

The Group's only business segment (basis for primary reporting format) is the manufacturing of refrigerators and specialized equipment.

Results for the reporting period 30 September 2009 by geographical segments can be specified as follows (thous. LTL):

		Sales	Assets
Group	31.12.2009	31.12.2008	31.12.2009	31.12.2008
Russia	18,513	115,940	38,012	69,765
Ukraine	12,276	72,802	41	177
Western Europe	63,571	81,225	$\tilde{a}$	$\overline{a}$
Eastern Europe	11,084	38,394	$\hat{\mathcal{H}}$	$\overline{\phantom{a}}$
Lithuania	8,735	16,269	71,490	128,335
Baltic Countries	1,990	5,283	÷
Other countries from NVS	4,524	7,743	ā
Other countries	450	1,211	۰	$\blacksquare$
Total	121,143	278,700	109,543	198,277

Operational expenses $\overline{4}$

Over reporting period the operational expenses were:

	2009	2008
Sales expenses	9,487,339	28,324,564
Administration expenses	25,244,837	25,600,434
Total:	34,732,176	53,924,998

Administration expenses accounted at year 2009 written of prestige (9,390 thous. Lt).

5 Other income (expenses) - net result

Over reporting period, September 30 other incomes (expenses) were:

	2009	2008
Other operating income
Income from logistics	248,283	1,026,765
Rent of fixed asset	23,991	135,658
Profit from sale of fixed asset	58,015	27,913
Rent of equipment	651	301,480
Marketing	1,870,062	×
Other	174,299	596 334
	2,375,301	2,088,150

Other operating expenses
Transportation expenses	252,578	794,291
Rent of equipment	48,931	94,360
Cost of support departments	31,922	246,561
Loss from sale of fixed asset	45,448	75,562
Other	125,903	456,980
	504,782	1,667,754
Other operating income (expense) - net result	1,870,519	420,396
Net result from financial activities 6
	31.12.2009	31.12.2008
Financial income
Profit from currency exchange	9,508,067	19,288,284
Profit from foreign currency derivatives	340,630	1,557,874
Profit from foreign exchange transactions	35,187	344,573
Other income from financial activities	19,626	27,983
	9,903,510	21,218,714
Financial expenses
Loss from currency fluctuations	12,316,350	26,682,127
Realized loss from foreign currency derivatives	260,004	358,778
Loss from revaluation of foreign currency derivatives	726,587	1,743,248
Interest expenses	5,607,863	6,915,754
Loss from exchange transaction	102,998	182,481
Loss from written of prestige	2,922,408
Other expenses from financial activities	16,931	81,713
	21,953,141	35,964,101
Net result from financial activities	(12, 049, 631)	(14,745,387)

7 Non-current intangible assets

The balance sheet value of non-current intangible assets on 31 December 2009 was 4,640.5 thous. LTL (on 31 December 2008 - 15,725.9 thous. LTL)

Non-current intangible assets depreciation expenses are included under operating expenses in the profit and loss account.

Over the 12 months of 2009, the Group has accumulated 1,135 thous. LTL of non-current intangible assets depreciation.

8 Non-current tangible assets

Non-current tangible assets consist of the following assets groups:

	Balance sheet value
	31.12.2009	31.12.2008
Buildings and constructions	9,128,725	29,507,972
Other non-current assets	22,113,512	41,203,287
Construction in progress and prepayments	1,852,846	1.884.227
Total:	33,095,083	72,595,486

After the Board of AB Snaige decided to close the companies refrigerator plant "Techprominvest" in Kaliningrad (the production activities have been suspended since March 2, 2009) 70 million Litas losses deferred for the future, and the subsidiary "Techprominvest" tangible assets, for which the residual value of 29,032 thousand LTL current assets recorded in the short term, decided to sell.

Group's non-current tangible assets depreciation on 31 December, 2009 is equal to 8,937 thous. LTL (in 2008(12 months) - 15,669.8 thous. LTL)

9 Inventories

	31.12.2009	31.12.2008
Raw materials, spare parts and production in progress	10,469,692	28,084,224
Finished goods	8,503,827	28,303,677
Other	40,956	218,076
	19,014,475	56,605,977
Less: net realizable value allowance
	19,014,475	56,605,977

Raw materials and spare parts consist of compressors, components, plastics, wires, metals and other materials used in the production.

10 Trade receivables

Trade receivables were composed as follows:

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	31.12.2009	31.12.2008
Trade receivables from the Group companies	27,605,082	52,609,977
Less: allowance for doubtful trade receivables		$(12, 448, 330)$ $(10, 372, 687)$
Other receivables	3,633,560	4,679,994
Less: other doubtful receivable payment impairment	(1,251,654)	(1,312,642)
	17,538,658	45,604,642

Trade receivables are non-interest bearing and are generally on $30 - 90$ days terms.

Movements in the provision for impairment of receivables were as follows:

	31.12.2009	31.12.2008
Balance at the beginning of the period	(10, 372, 687)	(11, 527, 355)
Charge for the year	$(2,557,498)$ )	(445,221)
Used	22,932
Recovered receivables
Currency exchange rate influence	457,340	1,556,831
Other changes	1,583	43,058
	(12, 448, 330)	(10, 372, 687)
Other doubtful payments loss were as follows:	31.12.2009	31.12.2008
Balance at the beginning of the period	(1,312,642)
Charge for the year		(1,312,642)
Recovered receivables
Currency exchange rate influence	60,988
Other changes
	(1,251,654)	(1, 312, 642)

The ageing analysis of trade receivables as of 31 December 2009 and 31 December 2008 is as follows:

				Trade receivables past due but not impaired
	Trade receivables neither past due nor impaired	Less than 30 days	$30 - 60$ days	$60 - 90$ days	$90 - 120$ days	More than $120$ days	Total
2009	8,995,045	2,840,955	641, 576	26, 388	171,642	2,481,146	15, 156, 752
2008	22, 078, 988	7,795,650	7,608,610	2,578,491	1,660,176	515.375	42.237.290

According to factoring with regress (recourse) right agreement the Group had pledged to the factoring agent amounts receivable and inventory, the balance sheet values of which on 31 December 2009 were, finished goods - 7,000 thous. LTL.

11 Other current assets

	757, 043
	716,655
	150,293
	233,992
848,892	1 509,021
	3,367,352
	404,248 1,751,415 2,381,906

Compensations from suppliers are received for bad quality goods.

12 Cash and cash equivalents 31.12.2009 31.12.2008 Cash at bank 1,713,531 1,674,842 Cash on hand 11,556 460 1,725,087 1,675,302

The accounts of the Company in foreign currency up to 12,375 thous. LTL are pledged to secure the bank loans.

13 Share capital

According to the Law on Companies of the Republic of Lithuania the Company's total equity cannot be less than 1/2 of its share capital specified in the Company's by-laws. As of 30 December 2009 the Company was in compliance with this requirement.

At the date of the reporting the legal reserve was fully formed.

14 Reserves

Legal reserve

A legal reserve is a compulsory reserve under Lithuanian legislation. Annual transfers of not less than 5% of net profit, calculated in accordance with Lithuanian Business Accounting Standards, are compulsory until the reserve reaches 10% of the share capital.

Non-restricted reserves

Other reserves for special purposes are formed by shareholders decision. Before allocating profit all the allocatable reserves are transferred to retained earnings and each year are re-allocated by shareholders decisions.

On 31SDecember 2009 other allocatable reserves consisted of 1,800 thous. LTL (2008 - 4,512.3) thous. LTL) of reserve for investments and 60 thousands of LTL socio-cultural needs (in 2008 these reserves have not been concluded).

Foreign currency translation reserve

Exchange differences are classified as equity in the consolidated financial statements until disposal of the investment. Upon disposal of the corresponding investment, the cumulative revaluation of translation reserves is recognized as income or expenses in the same period when the gain or loss on disposal is recognized.

15 Subsidies

Subsidies on 31 December 2006	10,358,600
Increase during period	345,280
Subsidies on 31 December 2007	10,703,880
Increase during period
Subsidies on 31 December 2008	10,703,880
Increase during period
Subsidies on 31 December 2009	10,703,880
Accumulated amortization on 31 December 2006	6,509,260
Amortization during period	1,179,704
Accumulated amortization on 31 December 2007	7,688,964
Amortization during period	1,014,205
Accumulated amortization on 31 December 2008	8,703,169
Amortization during period	399,974
Accumulated amortization on 31 December 2009	9,103,143
Net residual value 30 December 2009	1,600,737
Net residual value 31 December 2008	2,000,711

Future periods' subsidies income consists of subsidies for renewal of manufacturing equipment and building repairs due to the CFC 11 ingredient abandonment in the manufacturing of polyurethane insulating material and filling foam manufacturing, elimination of greenhouse gas elimination in the refrigerators manufacturing processes, and subsidy for export development. Deferred subsidies amount is amortized during the same period as equipment and machinery, for which subsidies were received, and when compensated expenses are incurred. Subsidies amortization amount is included into costs of goods sold while decreasing equipment and buildings reconstruction, for which subsidies were received, depreciation.

The company has received 565 thousands of Litas from the European Union structural funds support, strengthening the competitiveness of companies investing in the new refrigerator with multi-functional chapter creation.

16 Provisions for guarantee related liabilities

Sold products are given up to 10 years guarantees. Provisions for guarantee related services were made according to planned service expenses and refrigerators breakdowns statistics, and appropriately were divided into non-current and current provisions. Non-current provisions on 31

December 2009 were equal to 1,375 thous. LTL (2008 - 2,463 thous. LTL), current provisions on 31 December 2009 are equal to 2,324 thous. LTL (2008 - 2,876 thous. LTL).

Changes over the reporting period were:

	2009
1 January	5,339,081
Changes over reporting period	701,705
Used	(2,229,851)
Currency exchange rate change influence	(41, 820)
31 December, 2009	3,699,115

17 Borrowings

	As of 31 December 2009	As of 31 December 2008
Non-current borrowings
Bank borrowings secured by Company's assets		200,000
Other loans
Leasing	904,363	1,706,200
	904,363	1,906,200
Current borrowings
Factoring liabilities	1,737,256	10,851,922
Short-term loans with variable interest rate	9,342,081	22,935,364
Short-term loans with fixed interest rate	1,000,000	6,713 379
Convertible bonds	24,638,041	17,475,240
Leasing	801,983	828,516
	37,519,361	58,804,422
Total	38,423,724	60,710,622

The factoring is applying with euros, Litas or U.S. dollars with recourse within the meaning of clients and can not exceed 4,344 thousands LTL. Factoring contract is valid until 27 February 2010 and it is set the special currency (in litas, euro or U.S. dollars). From 2009 June 1 by 2009 November the last day (included) it is set corresponding 10.78; 3.98 and 3.76 per cent yearly interest rate which in 2009 December 1 is replaced by the date of six months ahead by taking appropriate: VILIBOR; EUR LIBOR, LIBOR plus 2.5% of the bank's yearly interest rate premium.

Loans with fixed interest rates are set at $14 - 18$ % annual interest.

December 31, 2009 buildings with a residual value of 22,678 thousand LTL (24,421 thousand LTL at 31 December, 2008), machinery and equipment, with a residual value of 5,204 thousand LTL (12,717 thousand LTL at December 31, 2008), stocks with a residual value of 14,110 thousand. LTL, while under the loan agreement pledged 21,300 thousand. LTL (26,300thousand dollars at December 31, 2008), cash inflows into the bank accounts of up to 10,000 thousand LTL (12,375 thousand LTL at December 31, 2008) and a capital "Techprominyest" shares are pledged as security for bank loans.

December 31, 2009 and December 31, 2008 Companys group did not welshed, loans with a value of 9,142 thousand LTL at December 31, 2009 (16,163 thousand LTL at December 31, 2008) contracts provided the turnover index of the bank. During this reporting period, the loan was repaid on time and the banks did not take any action on the failure rate.

Short-term loans, received from related parties, are not guaranteed with company's assets.

18 Financial leasing

The assets leased by the Group under financial lease contracts consist of machines, equipment and vehicles. Apart from the lease payments, the most significant liabilities under lease contracts are property maintenance and insurance. The terms of financial lease are from 3 to 5 years. The distribution of the net book value of the assets acquired under financial lease is as follows:

	ome.	31.12.2009	31.12.2008
Machinery and equipment		1,700,701	2,461,796
Vehicles		5.645	72,920
		1,706,346	2, 534, 716

Principal amounts of financial lease payables at the year-end denominated in national and foreign currencies are as follows:

	31.12.2009 31.12.2008
EUR	$\overline{\phantom{a}}$
LTL	1,706,346 2,534,716
	1,706,346 2,534,716

Financial lease obligations are arranged at floating interest rates of 6 month EURIBOR +1.1% margin, 6 month LIBOREUR +1% margin, 6 month LIBOREUR +1.2% margin

19 Operating lease

The group has formed several operating lease agreement. In the agreement conditions there are no limitations set for the Group's activities related to dividends, additional borrowings or additional long-term rent.

20 Trade credits

The conditions of the above mentioned type of liabilities:

-Trade credits are non interest paying and approximate time to payment is equal to 60 days.

21.12.2000

-Other amounts payable are non interest paying and approximate time to payment is equal to 60 days.

-Interests payable are usually set quarterly during the financial year.

21 Other current amounts payable

Other creditors were composed as follows:

	31.12.2009	31.12.2008
Salaries and related taxes payable	1,370,604	1,758,925
Vacation reserve	1,148,416	1,980,943
Bonuses and payments to the Board accrued
Taxes payable	644,363	1,786,717
Provisions for guaranty repair	2,323,614	2,876,478
Other payables and accrued expenses	3,547,121	2,322,336
Total other creditors	9,034,118	10,725,399
22 Basic and diluted earnings (loss) per share
	31.12.2009	31.12.2008
Shares issued 1 January	27,827,365	23,827,365
Average weighted number of shares in issue
Net result for the year, attributable to the parent company	(36, 446, 216)	(24,099,292)
Earnings (loss) per share	(1.31)	(1,01)

23 Risk and capital management

Credit risk

The Group has significant concentration of trading counterparties. The main ten customers of the Group on 31 December 2009 account for approximately 57.46% (39.8% as of 31 December 2008) of the total Group's trade receivables. The maximum sum of credit risk in the reporting period and on 31 December 2008 includes accounts receivables and loans provided.

The credit policy and credit risk is constantly controlled. All the customers willing to receive a deferred payment are evaluated for credit risk. Majority of accounts receivables are insured.

The Group does not guarantee obligations of other parties. The Group considers that its maximum exposure is reflected by the amount of trade receivables, net of allowance for doubtful accounts recognized at the balance sheet date.

Interest rate risk

Majority of Groups loans consists of loans with floating interest rates; with the floating part being associated to LIBOR, therefore, creating an interest rate risk.

Group did not use any financial instruments to hedge the risks from interest rate fluctuations for debt obligations associated with floating interest rates.

Liquidity risk

The Group's policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate amount of committed credit facilities to meet its commitments at a given date in accordance with its strategic plans.

The Group's current ratio as of 31 December 2009 was 0.27 (31 December 2008 it was 0.39).

Foreign exchange risk

The Group used financial instruments to manage its exposure to foreign exchange risk in 2009, making a predefined currency exchange transactions. Financial derivatives are used to hedge from negative currency fluctuations for cash flows from sales income with US Dollars.

On 31 SDecember 2009 the company had fulfilled all the pre-concluded foreign exchange transactions.

At this time, company does not trade in U.S. dollars and do not have entered into such transactions.

24 Related parties transactions

The parties are considered related when one party has the possibility to control the other one or have significant influence over the other party in making financial and operating decisions. The related parties of the Group and the transactions with related parties during the 9 months of 2009 and 2008 were as follows:

UAB "Hermis Capital" (same final controlling shareholder);

UAB "Genčiu nafta" (same final controlling shareholder);

AB "Kauno duona" (same final controlling shareholder):

UAB "Meditus" (same final controlling shareholder);

UAB "Baltijos polistirenas" (other companies controlled by board members or their family members):

UAB "Astmaris" (other companies controlled by board members or their family members).

2009		Purchases	Sales	Accounts receivable	Accounts payables
UAB "Baltijos polistirenas" raw materials
UAB "Astmaris"	raw materials			۰

According to the provided management information, these companies are not involved parties in 2009.

2008		Purchases	Sales	Accounts receivable	Accounts payables
UAB "Baltijos polistirenas" raw materials		3,712,781	2,821	۰	375,517
UAB "Astmaris"	raw materials	8,462,171	$\overline{\phantom{a}}$	$\sim$	1,272,617
		12,174,952	2,821		1,648,134

The Group has a policy to make transactions with related parties only for commercial purpose and under commercial conditions. No guarantees were received or given from any related party in order to assure the payments of accounts receivable or accounts payable.

Financial and investment activities with related parties:

2009			2008
UAB "Hermis Capital "	Loans Received 5,713,379	Loans Paid 5,713,379	Interest Payments 1,087,241	Loans Received 29,300,000	Loans Paid 23,586,621	Interest payments 87,109
UAB "Genčių nafta "	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	÷	8,750,000	8,750,000	190,137
AB "Kauno duona "	$\overline{\phantom{a}}$	УP,		1,100,000	1,100,000	33,659
UAB, Baltijos polistirenas,	×,	Ħ,	÷.	3,000,000	3,000,000	÷.
UAB "Meditus "	1,000,000	÷.		6,000,000	5,000,000	8
Total:	6,713,379	5,713,379	1,087,241	48,150,000	41,436, 621	310,905

Over the 12 months of 2009 salary of senior management of the Company and its subsidiaries amounted to $1,971.6$ thous. LTL and $635.1$ thous. LTL in total (over 12 months of $2008 - 2,906$ ) thous. LTL and 1,146 thous. LTL).

25. Post-balance sheet event

The company have submitted an application for the European Union structural funds support because of the company's productivity aggrandizement by investing into the development of the industrial base to launch a new product.

By the order November 23, 2009 No. 4-603 of Lithuanian Minister of Economy, it is designated 81 thousand LTL export credit insurance to cover partial costs for the company.

According to the 15 January, 2010 and 5 February, 2010 signed credit agreement amendment with the banks to postpone loan repayment periods up to May 31, 2010 and change the SEB bank repayment schedule.

According to the 18 February, 2010 signed a factoring contract, with DnB NORD Bank, conditions reduced the factoring limit of up to 4,166 thousand LTL to access up to 31 July, 2010.

Currently it is looking for a buyer, closed subsidiary "Techprominvest" Fixed asset purchases.