Vilkyskiu Pienine

Quarterly Report • Feb 29, 2016

Vilkyškių pieninė AB

Interim consolidated financial statements for the 12 months of 2015

CONFIRMATION OF RESPONSIBLE PERSONS 2
GENERAL INFORMATION 3
CONSOLIDATED STATEMENT OF FINANCIAL POSITION4
CONSOLIDATED INCOME STATEMENT5
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY6
CONSOLIDATED STATEMENT OF CASH FLOWS8
EXPLANATORY NOTES 9

Confirmation of Responsible Persons

Following the Article No. 22 of the Law on Securities of the Republic of Lithuania and Ru1es on Preparation and Submission of Periodic and Additional Information of the Lithuanian Securities Commissiolu we Gintaras Bertasius, General Director of Vilkyskiu pienine AB and Vilija Milaseviciute, Economics and finance Director of Vilkyskiu pieninb AB hereby confirm tha! unaudited intedm condensed consolidated financial statements for the twelve months of.2015, prepared in accordance with Intemational Financial Reporting Standarts, grve a true and fair view of the assets, liabilities, financial position and profit or loss and cash flows of Vilkyskiu pienine AB souP.

⁷3'- General Director Gintaras Bertasius / ,a)/, '\ ()'u,\wl Econo and finance Director Vilija Milaseviciute

The financial statements were approved and signed by the Management on29 February 20L5.

Interim consolidated financial statements for the 12 months of 2015 3

General information

Name of the Issue	Public Company Vilkyskiu pienine
Authorized capital	EUR 3 463 470
Registered office	Vilkyskiai, Pagegiai municipality
Telephone number	8-441 55330
Fax number	8-441 55242
E-mail address	info@vilkyskiu.lt
Date and place of registration	The 18 th of May 1993, Taurage Branch of Public Institution Center
Date and place of re-registration	The 30th of December 2005, Taurage Branch of Public Institution Center
	of Registers
Code in the Register of Enterprises	277160980
Internet address	http://www.vilkyskiu.lt

Vilkyskiu pienine AB Board

Gintaras Bertasius (Chairman) Sigitas Trijonis Rimantas Jancevicius Vilija Milaseviciute Andrej Cyba Linas Strelis

Vilkyskiu pienine AB Management

Gintaras Bertasius	General Director
Vaidotas Juskys	Chief operation officer
Vilija Milaseviciute	Economics and finance Director
Sigitas Trijonis	Technical Director
Rimantas Jancevicius	Raw materials Purchasing Director
Arvydas Zaranka	Production Director

The Group consists of the following companies:

• Vilkyskiu Pienine AB, the parent company
• Modest AB, the subsidiary
• Kelmes Pienine AB, the subsidiary.
• Pieno logistika AB, the subsidiary

The parent Company is engaged in production and sales of different types of cheese. Also, it produces and sells whey, raw milk and cream.

The Company has a subsidiary Modest AB, which is engaged in milk processing and production of dairy products. The Company holds 99.7% voting rights of the subsidiary. Modest AB specialises in production of cheese Mozzarella, mould cheese and other cheese products.

The Parent Company has also a subsidiary Kelmes Pienine AB, which is engaged in milk processing and production of dairy products. The Company holds 100% voting rights of Kelmes Pienine AB. Kelmes Pienine AB specializes in production of fresh dairy products.

As of December 2013, the Group includes a subsidiary AB Pieno Logistika. The main activity is lease of buildings. AB Vilkyškių Pieninė holds 56.1% shares of AB Pieno Logistika.

At 31 December 2015 the Group had 975 employees (31 December 2014 – 966).

Consolidated statement of financial position

Thousand EUR	31 12 2015	31 12 2014
Assets
Property, plant and equipment	35,265	31,210
Intangible assets	7,047	6,951
Long-term receivables	405	406
Non-current assets	42,717	38,567
Inventories	12,041	10,321
Trade and other receivables	6,175	6,756
Prepayments	519	478
Cash and cash equivalents	154	115
Current assets	18,889	17,670
Total assets	61,606	56,237
Equity
Share capital	3,463	3,459
Share premium	3,301	3,301
Reserves	5,158	5,126
Retained earnings	12,372	11,944
Total equity attributable to the shareholders of the Company	24,294	23,830
Non-controlling interest	46	47
Total equity	24,340	23,877
Liabilities
Interest-bearing loans and lease liabilities	13,092	7,216
Derivative financial instruments	239	375
Government grants	3,134	3,119
Deferred tax liabilities	389	1,022
Non-current liabilities	16,854	11,732
Interest-bearing loans and lease liabilities	9,123	8,965
Current tax liabilities	11	11
Derivative financial instruments	125	109
Trade and other payables, including derivatives	11,153	11,543
Current liabilities	20,412	20,628
Total liabilities	37,266	32,360
Total equity and liabilities	61,606	56,237

Consolidated income statement

Thousand EUR
	01.01.2015- 31.12.2015	01.01.2014- 31.12.2014	01.10.2015- 31.12.2015	01.10.2014- 31.12.2014
Revenue	84,445	109,660	24,365	28,908
Cost of sales	-75,594	-98,380	-22,046	-24,752
Gross profit	8,851	11,280	2,319	4,156
Other operating income	421	747	154	160
Distribution expenses	-5,439	-4,898	-1,294	-1,214
Administrative expenses	-2,521	-3,083	-659	-946
Other operating costs	-163	-280	-22	-67
Result from operating activities	1,149	3,766	498	2,089
Finance income	38	20	6	6
Finance costs	-634	-615	-186	-172
Net finance expenses	-596	-595	-180	-166
Profit before income tax	553	3,171	318	1,923
Income tax expense	622	36	230	-113
Profit for the period	1,175	3,207	548	1,810
Attributable to:
Shareholders of the Group	1,176	3,207	549	1,810
Non-controlling interest	-1	0	-1	0
Net profit (loss) for the year	1,175	3,207	548	1,810
Basic earnings per share (EUR)	0.10	0.27	0.05	0.15

Consolidated statement of changes in equity

Equity, attributable to the shareholders of the Company

Thousand EUR	Share capital	Share premium	Revalu ation reserve	Hedging reserve	Reserve for acquiri ng own shares	Legal reserve	Retained earnings	Total	Non contr olling intere st	Total equity
Balance at 1 January 2014	3,459	3,301	1,800	-453	1,729	346	10,352	20,534	53	20,587
Comprehensive income for the period
Net profit (loss)	-	-	-	-	-	-	1,397	1,397	0	1,397
Other comprehensive income
Allocated from reserves	-	-	-83	-	-	-	83	-	-	-
Formation of hedging reserve	-	-	-	-81	-	-	-	-81	-	-81
Total other comprehensive income	-	-	-83	-81	-	-	83	-81	-	-81
Total comprehensive income for the period	-	-	-83	-81	-	-	1,480	1,316	0	1,316
Contributions by and distributions to owners:
Transfers to Reserve for acquiring own shares	-	-	-	-	692	-	-692	-	-	-
Dividends	-	-	-	-	-	-	-1,038	-1,038	-	-1,038
Total contributions by and
distributions to owners Changes in the Group without losing control	-	-	-	-	692	-	-1,729	-1,038	-	-1,038
Changes in non-controling interest	-	-	-	-	-	-	-	-	-6	-6
Total contributions by and
distributions to owners	-	-	-	-	-	-	-	-	-	-
Balance at 30 September 2014	3,459	3,301	1,717	-534	2,421	346	10,102	20,812	47	20,859
Balance at 1 October 2014	3,459	3,301	1,717	-534	2,421	346	10,102	20,812	47	20,859
Comprehensive income for the period
Net profit (loss)	-	-	-	-	-	-	1,810	1,810	0	1,809
Other comprehensive income
Allocated from reserves	-	-	1,152	-	-	-	-	1,152	-	1,152
Allocated from reserves	-	-	-26	-	-	-	25	-	-	-
Formation of hedging reserve	-	-	-	50	-	-	-	50	-	50
Total other comprehensive
income	-	-	1,126	50	-	-	25	1,202	-	1,202
Total comprehensive income for the period	-	-	1,126	50	-	-	1,835	3,012	-1	3,011
Contributions by and
distributions to owners:
Transfers to Reserve for
acquiring own shares	-	-	-	-	-	-	-	-	-	-
Changes in non-controling
interest	-	-	-	-	-	-	6	6	-	6
Total contributions by and distributions to owners	-	-	-	-	-	-	6	6	-	6
Balance at 31 December 2014	3,459	3,301	2,843	-484	2,421	346	11,944	23,830	47	23,877

Consolidated statement of changes in equity (continued)

Equity, attributable to the shareholders of the Company

					Reserve				Non
			Revalu	Hedgin	for				contr	Total
Thousand EUR	Share	Share	ation	g	acquiri	Legal	Retained	Total	olling	equity
	capital	premium	reserve	reserve	ng own	reserve	earnings		intere
					shares				st
Balance at 1 January 2015	3,459	3,301	2,843	-484	2,421	346	11,944	23,830	47	23,877
Comprehensive income for the
period
Net profit (loss)	-	-	-	-	-	-	627	627	0	627
Increase of the authorized
capital due to translation of the	4	-	-	-	-	-	-	4	-	4
nominal value from Litas to EUR
Other comprehensive income
Allocated from reserves	-	-	-132	-	-	-	132	-	-	-
Formation of hedging reserve				66	-	-	-	66	-	66
	-	-	-
Total other comprehensive
income	-	-	-132	66	-	-	132	66	-	66
Total comprehensive income
for the period	4	-	-132	66	-	-	759	697	0	697
Contributions by and
distributions to owners:
Transfers to Reserve for
	-	-	-	-	87	-	-87	-	-	-
acquiring own shares
Dividends	-	-	-	-	-	-	-836	-836	-	-836
Total contributions by and
distributions to owners	-	-	-	-	87	-	-923	-836	-	-836
Changes in the Group without
losing control
Changes in non-controlling	-	-	-	-	-	-	-	-	-	-
interest
Total contributions by and
distributions to owners	-	-	-	-	-	-	-	-	-	-
Balance at 30 September 2015	3,463	3,301	2,711	-418	2,508	346	11,780	23,691	47	23,738
Balance at 1 October 2015	3,463	3,301	2,711	-418	2,508	346	11,780	23,691	47	23,738
Comprehensive income for the
period
Net profit (loss)	-	-	-	-	-	-	549	549	-1	548
Other comprehensive income
Allocated from reserves	-	-	-43	-	-	-	43	-	-	-
Allocated from reserves	-	-	-26	-	-	-	25	-	-	-
Formation of hedging reserve	-	-	-	50	-	-	-	50	-	50
Total other comprehensive
income	-	-	-43	54	-	-	43	54	-	54
Total comprehensive income
for the period	-	-	-43	54	-	-	592	603	-1	602
Contributions by and
distributions to owners:
Transfers to Reserve for
acquiring own shares	-	-	-	-	-	-	-	-	-	-
Changes in non-controling
interest	-	-	-	-	-	-	6	6	-	6
Total contributions by and
distributions to owners	-	-	-	-	-	-	6	6	-	6
Balance at 31 December 2014	3,459	3,301	2,843	-484	2,421	346	11,944	23,830	47	23,877

Consolidated statement of cash flows

Thousand EUR
	01.01.2015- 31.12.2015	01.01.2014- 31.12.2014
Cash flows from operating activities
Net profit (loss)	1,175	3,207
Adjustments:
Depreciation of property, plant and equipment	3,137	2,826
Amortization of intangible assets	49	12
Amortization and write down of grants	-447	-386
(Profit) loss on disposal of property, plant and	39	126
equipment Income tax expense	-622	-36
Interest expenses, net	599	599
	3,930	6,348
Change in inventories	-1,723	-1,575
Change in long-term receivables	1	80
Change in trade and other receivables and prepayments	558	809
Change in trade and other payables	-450	-160
	2,316	5,502
Paid interest	-511	-552
Paid profit tax	-11	-
Net cash from operating activities	1,794	4,950
Cash flows from investing activities
Acquisition of property, plant and equipment	-7,238	-4,487
Acquisition of intangible assets	-145	-34
Proceeds from sale of property, plant and equipment	31	109
Acquisition of shares of the subsidiary	-	-8
Loans granted	-12	-
Net cash from investing activities	-7,364	-4,420
Cash flows from financing activities
Loans received	10,823	4,479
Repayment of borrowings	-4,789	-4,295
Dividends paid	-887	-930
Capital grants received	462	261
Net cash used in financing activities	5,609	-485
Increase (decrease) in cash and cash equivalents	39	45
Cash and cash equivalents at 1 January	115	70
Cash and cash equivalents at 31 December	154	115

Explanatory notes

1. Accounting principles

Consolidated financial statements of Vilkyskiu pienine AB are prepared following International Standards of Financial Accountability.

The interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting.

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Consolidated annual financial statements for the year 2014.

2. Main financial indicators

2015	2014
	109.660
	6.218
4,6%	5,7%
1.149	3.766
1,4%	3,4%
1.175	3.207
1,4%	2,9%
	0,27
11 943 000	11 943 000
2015	2014
31.391	34.575
38.593	40.932
0	27.350
14.461	6.803
84.445	109.660
31 December 2015	31 December 2014
9.478	8.091
123	24
2.333	2.089
107	114
	3 ___
12.041	10.321
	84.445 3.888 0,10 - ______

5. Post balance sheet events

On the 10th day of each month, sales figures for the preceding months are published.

The following decisions were taken at the Ordinary General Meeting of Shareholders of Vilkyskiu pienine AB which was held on the 24 April 2015:

Item 1 of the Agenda: Company's annual report for the year 2014.

Resolution: To approve the Company's annual report for the year 2014.

Item 2 of the Agenda: Auditor's Report regarding the Company's Financial Statements for the year 2014.

Heard.

Item 3 of the Agenda: Approval of Company's annual and consolidated financial statements of the year 2014.

Resolution: To approve of Company's annual and consolidated financial statements of the year 2014.

Item 4 of the Agenda: Profit (loss) appropriation for the year 2014.

Resolution: To approve the Audited Profit appropriation for the year 2014 as follows under IAS:

	thousand EUR
1) Non-appropriated profit (loss) at the end of the year 2013	10,253
2) Approved by shareholders dividends of the year 2013	1,038
3) Transfers to reserves provided by law	0
4) Portion of the profit allocated to the reserve for the purchase of own shares	692
5) Non-appropriated profit (loss) at the beginning of the year 2013 after	8,523
dividends payout and transfer to reserves
6) Net profit (loss) of the reporting period	1,886
7) Transfers from reserves	109
8) Total profit (loss) to be appropriated:	10,518
- portion of the profit allocated to the legal reserve	0
- portion of the profit allocated to the reserve for the purchase of own shares	87
- portion of the profit allocated for payment of the dividends (or 0.07 EUR	836
per ordinary registered share with nominal value of 0.29 EUR)
- portion of the profit allocated to the other reserves	0
- portion of the profit allocated to be paid as annual payouts (tantiemes) to	43
board members, bonuses to employees and for other purposes
9) Non-appropriated profit (loss) at the end of the year 2014 carried forward to	9,552
next financial year

Item 5 of the Agenda: A decision on the purchase of own shares.

Resolution: A decision with regard to the purchase of own shares has been approved:

a) To purchase up to 10 percent of the Company's shares.

b) The purpose of acquisition of own shares – to maintain and increase the price of the Company's shares.

c) Period during which the Company may acquire own shares – until 27 April 2016.

d) To set the maximum price per share of own shares to be acquired – at 2.10 EUR, at the same time setting the minimum acquisition price per share equal to the nominal value of a share, i.e. 0.29 EUR.

e) To commit the Board to organize the purchase of own shares, to determine the procedure for purchase and sale of shares, time, number of shares and price, as well as to perform other actions relating thereto in compliance with the terms set in this resolution as well as in accordance with the requirements established in the Republic of Lithuania Law of Companies.

Item 6 of the Agenda: Approval of the new wording of the Articles of Association and authorization.

Draft resolution: Taking into consideration the adopted decisions to change the expression of the par value of the Company's shares and authorized capital in litas into expression in euro, amendments of the Republic of Lithuania Law on Companies, that came into force after registration of the last wording of the Articles of Association and other amendments provided in the draft of the Articles of Association amendments, to approve the new wording of the Articles of Association. To authorize General Manager of the Company (with the right to reauthorize) to sign the new wording of the Articles of Association.

Regarding the announcement of interim financial information

Amended Securities Act in force since 4 December 2015 foresees that issuers can decide whether to prepare interim financial information (3, 9 and 12 months interim financial statements) or not.

Vilkyskiu pienine, AB announces that instead of interim financial statements the company will publish key performance indicators review. Interim financial statements for 12 months of 2015 will be published on February 29, 2016, later will be published key performance indicators review.

AB Vilkyskiu Pienine group is to build a new whey processing facility in the town of Taurage

AB Vilkyskiu Pienine group is to build a new whey processing facility in the town of Taurage at Gaures Str. 23. The project will enable the company to implement one of its strategic goals to achieve a more "downstream" processing level and start making a basket of products with higher added value. This is expected to boost the dairy processor's competitiveness and improve its bottom line. The project is estimated at EUR 26m, with both self-financing and borrowed capital to be used as sources of funding.

The project is scheduled to start in February 2016, with completion date set for Q1 2017.