Annual Report (ESEF) • Apr 29, 2025
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Download Source FileGeneral information ...................................................................................................... 2
Information on the issuer's stock trading on the regulated market ................................ 4
Review of the group's business activities, risks, and prospects ..................................... 7
Other information ......................................................................................................... 28
Information on remuneration for 2024..........................................................................30
Corporate governance information................................................................................32
Information on compliance with the AB Nasdaq Vilnius listed companies code.........46
This consolidated management report is prepared for the 2024 period and includes significant events and data occurring after the end of the reporting period. The document refers to ŽEMAITIJOS PIENAS, AB (hereinafter - the Company or Issuer), Šilutės Rambynas, AB (hereinafter - the Group company or Subsidiary). When facts and/or data about both companies are described, they are collectively referred to as Group companies.
The origins of ŽEMAITIJOS PIENAS, AB date back to 1924 when the Telšiai dairy was established, which at the time was considered a major facility. In late 1984, Telšiai dairy began operations in new premises and operated until the opening and privatization of one of the largest cheese factories in the Baltic region. ŽEMAITIJOS PIENAS, AB was registered in the Register of Legal Entities on June 23, 1993, and re-registered on October 16, 1998. On May 1, 2004, by a decision of the general meeting of shareholders, it was reorganized by separation, establishing Žemaitijos pieno investicija, AB. On December 18, 2019, the Company was reorganized by merging Baltijos mineralinių vandenų kompanija, UAB which was deregistered from the Register of Legal Entities on January 10, 2020.
Registry data stored at the State Enterprise Centre of Registers of the Republic of Lithuania.
The company's branches handle sales functions for dairy products within their designated territories and perform other tasks assigned by the Company. The Company has no representative offices.
The group structure is represented as follows:
ŽEMAITIJOS PIENAS, AB
├── ŽEMAITIJOS PIENAS, AB Vilnius branch
├── ŽEMAITIJOS PIENAS, AB Kaunas branch
├── ŽEMAITIJOS PIENAS, AB Telšiai branch
├── ŽEMAITIJOS PIENAS, AB Panevėžys branch
└── Šilutės Rambynas, AB
Šilutės Rambynas, AB specializes in the production and sale of fermented cheeses, pasteurized cream, and pasteurized and concentrated whey (NACE 10.5 Group "Manufacture of Dairy Products," 10.51 Class "Operation of Dairies and Cheese Making"). Additionally, the company provides leasing, transportation, warehousing, and milk collection point maintenance services. Šilutės Rambynas, AB has no branches or representative offices.
The Group companies engage in economic and commercial activities (manufacturing, trade, service provision, etc.) to generate benefits and profits for themselves and their shareholders. The objectives of these activities are to organize and conduct operations in accordance with the company's statutes, aiming to generate revenue and profit while satisfying the financial interests of shareholders and the interests of employees.
AB "ŽEMAITIJOS PIENAS" is primarily engaged in the development, production, and sale of dairy products, including (Fermented cheeses and cheese products, packaged cheeses and cheese products, processed cheeses and cheese products, creams and curd creams, butter and dairy spreads, mixed spreads and milk fats, pasteurized cream, buttermilk, whey, and dried dairy products, fresh dairy products (milk, cream, curd, curd products, yogurts, desserts, curd snacks, glazed curd snacks, and fermented dairy products).
The Company operates in both Lithuanian and international markets under the NACE 10.5 Group "Manufacture of Dairy Products" and 10.51 Class "Operation of Dairies and Cheese Making." According to the Industry Classification Benchmark (ICB), a widely used international business classification standard, ŽEMAITIJOS PIENAS, AB falls under the category of Consumer Staples – Food, Beverages, and Tobacco.
On July 16, 2004, ŽEMAITIJOS PIENAS, AB entered into an agreement with Šiaulių Bankas, AB under which the management of the accounts of the securities issued by the company was transferred to the competence of Šiaulių Bankas, AB from July 23, 2004. The securities register (accounting) of Šilutės Rambynas, AB is managed by Šiaulių Bankas, AB based on the agreement concluded on July 16, 2004.
AB "ŽEMAITIJOS PIENAS" shares are listed on the NASDAQ OMX Vilnius Stock Exchange supplementary list (symbol – ZMP1L). The company's securities have been listed since October 13, 1997. The ISIN code of the shares is LT0000121865.
Below is a chart of the public trading of the company's securities on the stock exchange, showing that from January 2, 2024, to December 30, 2024, the stock price increased overall during the year. The change at the end of the reporting period amounted to +0.56 euros or +32.94%. During the 2024 trading period, a total of 235,715 shares of the company were transferred through executed transactions. As of December 30, 2024, AB "ŽEMAITIJOS PIENAS" had a market capitalization of 94.33 million euros. Compared to 2023, the company's capital value increased by 23.79 million euros.# INFORMATION ABOUT THE ISSUER'S TRADING IN SECURITIES MARKET
For the twelve-month period ended December 31, 2024
During the reporting period, the volume of stock sales and price dynamics are presented in the chart below. Historical stock data is presented in the table below.
Stock information of ŽEMAITIJOS PIENAS, AB
The issuer’s securities have not been traded on other exchanges or organized regulated markets.
Šilutės Rambynas, ABF shares are not traded on the Vilnius Stock Exchange or any other organized regulated markets. ŽEMAITIJOS PIENAS, AB holds 87.82% of Šilutės Rambynas, ABF ordinary registered shares, with full property and non-property rights without any restrictions. Šilutės Rambynas, ABF does not own any shares of ŽEMAITIJOS PIENAS, AB. Both companies do not hold each other's shares through orders or any other contractual basis.
On April 26, 2024, the Annual general meeting of shareholders of ŽEMAITIJOS PIENAS, AB decided:
Šilutės Rambynas, ABF shareholders did not allocate dividends.
Stock information of Šilutės Rambynas, ABF
As of December 31, 2024, the share capital of ŽEMAITIJOS PIENAS, AB consisted of:
| Share class, type | Number of shares (units) | Nominal value (EUR) | Total nominal value (EUR) | Share of authorized capital (%) |
|---|---|---|---|---|
| Ordinary registered shares | 41,737,500 | 0.29 | 12,103,875 | 100 |
All Company shares are fully paid, and no restrictions on the transfer of securities were applied to them during the reporting period. The Issuer is not aware of any separate mutual shareholder agreements that may restrict the transfer of securities and/or voting rights. According to the Company's data, there are no shareholders who have special control rights.
As of December 31, 2024, the share capital of Šilutės Rambynas, ABF consisted of:
| Share class, type | Number of shares (units) | Nominal value (EUR) | Total nominal value (EUR) | Share of authorized capital (%) |
|---|---|---|---|---|
| Ordinary registered shares | 859,665 | 2.90 | 2,493,028.50 | 100 |
All shares of Šilutės Rambynas, AB are fully paid, and no restrictions on the transfer of securities are applied to them. The Issuer is also not aware of any separate mutual shareholder agreements that may restrict the transfer of securities and/or voting rights. According to the Company's knowledge, there are no shareholders who have special control rights.
On April 26, 2024, the General Meeting of Shareholders decided to allocate a reserve for the acquisition of own shares and set the conditions for the share buyback. The purpose of acquiring shares is their cancellation to increase each investor’s ownership share in the Company's capital. However, during the reporting period, the Company did not implement this decision and did not repurchase its own shares. Additionally, during the reporting period, the Company did not transfer its own shares or enter into any other transactions, such as pledging or imposing any other restrictions or limitations on them. There are no disputes or claims regarding these shares.
At the end of the reporting period, the Company owned 222,020 of its own shares, representing 0.53% of all ŽEMAITIJOS PIENAS, AB shares listed on the NASDAQ OMX Vilnius Stock Exchange.
Šilutės Rambynas, AB has not repurchased any of its own shares and does not hold any own shares on any other grounds. Šilutės Rambynas, AB does not have any subsidiaries and does not engage in own share repurchases.
In 2024, ŽEMAITIJOS PIENAS, AB actively invested in the renewal and modernization of production unit equipment to optimize manufacturing processes and enhance the efficiency of compliance with food safety and quality standards. Taking into account international food safety and quality management standards, the following audits and evaluations were conducted:
For the twelve-month period ended December 31, 2024
ŽEMAITIJOS PIENAS, AB meets all international food safety standards and the requirements set by retail chains.
In 2024, ŽEMAITIJOS PIENAS, AB continued its sustainability initiatives:
Šilutės Rambynas, AB has been dedicated to environmental protection for many years, with the primary goal of reducing production waste and conserving natural resources:
To meet the requirements of export markets and their retail chains, the following actions are planned for 2025:
Meet packaging and product requirements imposed by different EU retail chains. 4. Optimize internal processes to reduce manual labor and save energy resources 5. Enhance employee qualifications and participate in international exhibitions and conferences. 6. Expand collaboration with scientific institutions and conduct research related to new product development. A strong focus is placed on company employees by improving their qualifications through participation in international exhibitions and conferences showcasing equipment innovations and advanced technologies related to environmental sustainability, including waste recycling and circular production trends. The company collaborates with scientific institutions to conduct research aimed at increasing product value-added benefits.
In 2024, the primary investment goal of the Company, as in previous years, was to enhance competitiveness, seek and develop solutions to improve product quality, employee working conditions, and safety. Numerous small-scale operational, repair, and programming works were carried out, which improved workplace safety, enhanced technical equipment levels, reduced pollution, and lowered energy costs. Key investments focused on the modernization of production units:
In 2024, the company's activities were evaluated according to various international standards, retail chain requirements, and ethnic standards:
In 2024, Šilutės Rambynas, AB-F invested in upgrading and modernizing equipment in various production units to optimize manufacturing processes and ensure effective management of food safety risk factors. The company acquired and put into operation long-term assets worth €1.5 million, a significant increase compared to €108,000 in 2023. The largest investments included:
| Asset | Investment Amount |
|---|---|
| Two curd drying vats | €1,118,000 |
| Internal roadway construction | €234,000 |
| Natural gas equipment site | €71,000 |
| Various cheese production support equipment, inventory, computer technology, and other assets | €75,000 |
Taking into account consumer expectations and needs, 27 new products were developed in 2024 and successfully established themselves in the market:
The year 2024 was significant for ŽEMAITIJOS PIENAS, AB, as the company celebrated its 100th anniversary. The company traces its origins back to 1924, when a dairy began operating in Telšiai, later growing into one of the largest and most modern dairy processing companies in Lithuania. The centennial anniversary provided an important opportunity to reflect on past achievements, completed projects, newly developed products, and recognitions received both in Lithuania and internationally.
ŽEMAITIJOS PIENAS, AB products are valued not only in Lithuania but also abroad. In 2024, the company's products received various awards:
As in previous years, 2024 saw the traditional celebration marking the start of the "Džiugas" cheese production season – "Džiugiadienis". This year was the 22nd edition of the event, which attracted significant attention both in Lithuania and abroad. In honor of the company’s centennial, the event format was expanded—besides the annual virtual event, physical celebrations were organized in Poland, Estonia, and the United Kingdom. During these events, participants tasted "Džiugas" cheese, evaluated its flavor, aroma, color, and texture, and learned about pairing possibilities and culinary applications.
In 2024, the "Pik-Nik Pasiplėšom!" championships were once again held in Lithuania, Latvia, and Estonia. These events brought together both children and adults, encouraging consumers to actively engage with the products. In the autumn, consumers across various European countries participated in the "Pik-Nik" tattoo campaign, highlighting string cheese snacks as a perfect option for home, school, or outdoor activities.
In 2024, ŽEMAITIJOS PIENAS, AB placed a strong emphasis on social responsibility. The company carried out social initiatives in Lithuania, Latvia, Estonia, Poland, Croatia, and Hungary. During these campaigns, consumers had the opportunity to contribute to various social projects by purchasing the company’s products. The funds raised were allocated to:
The year 2024 became an important part of the company's history. The achieved results and implemented projects contribute to the further growth of ŽEMAITIJOS PIENAS, AB and its international recognition, strengthening the company's position in both local and foreign markets.
The company has selected key standard financial indicators for analysis, which are commonly used by businesses to evaluate financial data. The main financial performance indicators reflecting the activities of the Group and the Company for the years 2024 and 2023 are as follows:
| Financial Indicators | Group 2024 | Group 2023 | Change, % | Company 2024 | Company 2023 | Change, % |
|---|---|---|---|---|---|---|
| Revenue, thousand EUR | 307 643 | 278 004 | 10,66 | 306 653 | 277 305 | 10,58 |
| Gross Profit Margin, % | 23,62 | 21,93 | 7,7 | 22,12 | 20,67 | 7,0 |
| Net Profit Margin, % | 8,87 | 7,72 | 15,0 | 7,94 | 7,09 | 12,0 |
| EBITDA, thousand EUR | 37 830 | 32 251 | 17,3 | 34 092 | 29 748 | 14,6 |
| EBITDA Margin, % | 12,30 | 11,60 | 6,0 | 11,12 | 10,73 | 3,6 |
| ROE Profitability, % | 18,71 | 17,33 | 7,9 | 18,10 | 17,05 | 6,2 |
| ROA Profitability, % | 13,60 | 12,88 | 5,5 | 12,95 | 12,51 | 3,5 |
| Current Liquidity Ratio | 3,25 | 3,33 | -2,5 | 3,11 | 3,21 | -3,2 |
| Quick Ratio | 1,79 | 1,54 | 16,2 | 1,67 | 1,48 | 12,8 |
| Debt-to-Equity Ratio | 0,38 | 0,35 | 8,6 | 0,40 | 0,36 | 11,1 |
| Debt Ratio | 0,27 | 0,26 | 3,8 | 0,28 | 0,27 | 3,7 |
| Investment in Fixed Assets, thousand EUR | 19 805 | 13 482 | 46,9 | 18 952 | 12 215 | 55,2 |
The financial indicators mentioned above were calculated using the following formulas:
When calculating the financial indicators for 2024 and 2023, all changes in the Statement of Financial Position were assessed in accordance with the IFRS 16 requirements. Additionally, in calculations where depreciation and amortization amounts were used, the amortization of received grants and the depreciation of right-of-use assets were taken into account.
Sales under contracts with customers in 2024 increased by more than 10% compared to 2023, but the Company's gross profit margin in 2024 increased from 20.67% to 22% compared to 2023. The Group's gross profit margin in 2024 increased by 7.7%. Both the Company's and the Group's gross profit increased in 2024 due to the rise in dairy product prices. The shortage of qualified labor and the existing employees' demand for higher wages did not decrease in 2024. The increase in wages raised the production cost of products and operating expenses. When calculating net profit, all expenses of the Company and the Group were taken into account, including those that may not be directly related to core operations or may be one-time expenses, as well as costs such as provisions, impairments, etc. The net profitability of the Company and the Group in 2024, compared to 2023, significantly increased due to successful/profitable sales in export markets. The net sales profitability ratio reflects the true profitability of sales, considering all revenues and expenses. The Company's EBITDA in 2024, compared to 2023, increased by 14.6%. The biggest impact was the increase in net profit. Šilutės Rambynas, ABF ended 2024 with a profit, as a result, the Group's EBITDA in 2024, compared to 2023, increased by 17.3%.
The Company's current liquidity ratio in 2024 was 3.11, while in 2023, it was 3.21. The Group's current liquidity ratio in 2024 was 3.25, compared to 3.33 in 2023. The current liquidity ratio shows how many times a company’s current assets exceed its short-term liabilities, meaning the value of the indicator indicates how much one euro of short-term liabilities is covered by current assets. The optimal range for this ratio is considered to be between 1.2 and 2.0, though the acceptable range varies across different industries. The Company’s quick ratio (solvency ratio) in 2024 was 1.67, compared to 1.48 in 2023. The Group’s quick ratio in 2024 was 1.79, compared to 1.54 in 2023. The quick ratio for both the Company and the Group in 2024 increased by more than 10% compared to 2023. The quick ratio indicates whether a company could quickly pay off its short-term liabilities using its most liquid assets (assets that can be quickly converted into cash). A normal value is considered to be between 0.5 and 1.5, while a value below 0.5 is considered unsatisfactory.
The debt-to-equity ratio for both the Company and the Group increased by approximately 10% in 2024 compared to 2023. The debt-to-equity ratio, sometimes referred to as the financial dependency ratio, reveals the company’s capital structure by comparing its debt to its equity. This solvency ratio is closely related to the overall solvency ratio, with the only difference being that its numerator and denominator are reversed. As a general rule, if the ratio is close to 1, the company’s solvency position is considered normal, while a ratio of 0.5 is considered good. However, it is important to note that the interpretation of this ratio depends heavily on the industry in which the company operates. In industries requiring high capital investments, even a debt-to-equity ratio of 2 may be considered acceptable. In 2024, the Company’s debt ratio was 0.28, compared to 0.27 in 2023. The Group’s debt ratio in 2024 was 0.27, compared to 0.26 in 2023.This ratio indicates what portion of a company’s assets is financed by debt, meaning it shows how much debt corresponds to each euro of assets. A lower debt ratio is considered better, as it indicates a lower financial risk for the company. Since the Company had financial obligations in 2024, it calculated the Interest Coverage Ratio. The interest coverage ratio is a financial indicator that compares the company’s EBIT (earnings before interest and taxes) to its interest expenses. This ratio reflects the company’s ability to meet its debt obligations.
* The lower the ratio, the worse the company’s financial position.
* The higher the ratio, the easier it is for the company to handle its financial leverage.
* If the interest coverage ratio is close to or below 1, it signals a critical financial situation for the company.
The interest coverage ratio is calculated as follows:
Interest Coverage Ratio = EBIT / Interest Expenses.
The Company's and the Group's interest coverage ratios for 2024 are greater than 40.
The Company's operating expenses in 2024 amounted to €41.943 million, which accounted for 13.7% of revenue, whereas in 2023, operating expenses were €34.120 million, making up 12.3% of revenue. The largest share of operating expenses consisted of wages and marketing expenses. The Group's operating expenses in 2024 totaled €43.541 million, accounting for 14.15% of revenue, while in 2023, they amounted to €35.757 million, or 12.86% of revenue. The Group’s sales in 2024 increased by 10.66%, while operating expenses rose by 21.8% due to higher marketing costs and sales expenses.
ŽEMAITIJOS PIENAS, AB
CONSOLIDATED MANAGEMENT REPORT
For the twelve-month period ended December 31, 2024
Comparison of raw milk procurement quantity and prices of ŽEMAITIJOS PIENAS, AB in 2024 and 2023:
The dairy sector in Lithuania is an important part of the agricultural industry, facing various challenges and achievements while having a significant economic and social impact. ŽEMAITIJOS PIENAS, AB collaborates with dairy producers who focus on three key aspects:
1. Dairy farms of various sizes;
2. Aiming to improve farming efficiency;
3. Investing in modern technologies and innovations to enhance productivity.
For many years, the company has paid a competitive price to dairy producers for higher-quality milk that exceeds EU standards. Every farm, regardless of its size, has the opportunity for successful development if it focuses on productive and high-quality milk production. The average quantity of raw milk procured and recalculated to standardized indicators by ŽEMAITIJOS PIENAS, AB in 2024 amounted to 459 thousand tons, which is 7.71% more than in 2023 (426 thousand tons).
In 2024, the Lithuanian raw milk market faced climate change challenges, which led some farmers to change their business activities or cease dairy farming. Rising temperatures and the presence of non-native pests negatively affected fodder quality, contributing to increased milk production costs. Additionally, dairy farms encountered difficulties due to the energy crisis, rising energy and fertilizer prices, and geopolitical tensions. A notable trend is that small farms with 1 to 14 cows were the most affected and ceased operations. However, despite the decline in the number of dairy farms, there is a trend toward farm consolidation—milk yield per cow is increasing, and large dairy farms are occupying an increasing share of the market.
The average purchase price of raw milk procured and recalculated to standardized indicators in 2024 was 357.9 EUR/t, which is 15.25% more than in 2023 (310.5 EUR/t).
The dairy product market is characterized by significant price fluctuations, which are influenced by the dynamics of supply and demand for dairy products. ŽEMAITIJOS PIENAS, AB operates in an open market, where a large portion of production is exported – more than half of the processed milk is sold to foreign markets. As a result, international market changes directly affect both the prices of Lithuanian dairy products and the level of raw milk procurement prices in Lithuania.
In Q4 2024, the procurement price of natural raw milk at ŽEMAITIJOS PIENAS, AB reached 564.9 EUR/t, which is 32.8% more than in Q4 2023 (425.3 EUR/t). This price increase was partially driven by the recovering export market and the growing demand in foreign markets.
The subsidiary company ŠILUTĖS RAMBYNAS, ABF does not directly purchase raw milk from dairy farms. The raw milk used for its product manufacturing is procured from ŽEMAITIJOS PIENAS, AB.
Raw Milk Procurement (Recalculated to Standardized Indicators*)
| 2024 | 2023 | Change Compared to 2024 vs. 2023, % | |
|---|---|---|---|
| Procured Milk Quantity (thousand tons) | 459 | 426 | 7.7 % |
| Procurement Milk Price (EUR/t) | 357.9 | 310.5 | 15.3 % |
ŽEMAITIJOS PIENAS, AB
CONSOLIDATED MANAGEMENT REPORT
For the twelve-month period ended December 31, 2024
In 2024, the total sales revenue of ŽEMAITIJOS PIENAS, AB GROUP reached 307.6 million EUR (307,643 thousand EUR), representing an increase of 10.66% compared to 2023, when sales amounted to 278,004 thousand EUR. The sales revenue of ŽEMAITIJOS PIENAS, AB in 2024 amounted to 306 million EUR (306,653 thousand EUR), which is 10.58% more than in 2023 (277,305 thousand EUR).
The largest share of the company's revenue is generated in the Lithuanian market, accounting for 48% of total revenue (2023 – 51%). The European Union markets accounted for 36% of total revenue in 2024 (2023 – 35%), while other international markets contributed 16% (2023 – 14%). The top export markets with the highest turnover in 2024 were Poland, Latvia, Estonia, Germany, the Netherlands, Italy, Kazakhstan, and the USA. ŽEMAITIJOS PIENAS, AB products are widely exported and well-known in international markets.
Company sales by geographical segments (secondary segments) in 2024 and 2023:
| No. | Sales by geographical segments (thousand EUR) | 2024 | % of Total Revenue 2024 | 2023 | % of Total Revenue 2023 | Change 2024 vs. 2023 (%) |
|---|---|---|---|---|---|---|
| 1 | Lithuania | 147,852 | 48.21 % | 140,049 | 50.50 % | 5.57 % |
| 2 | EU Countries | 109,357 | 35.66 % | 97,068 | 35.00 % | 12.66 % |
| 3 | Other Countries | 49,444 | 16.12 % | 40,188 | 14.50 % | 23.03 % |
| 4 | Total | 306,653 | 100% | 277,305 | 100% | 10.58 % |
Group companies' sales by geographical segments (secondary segments) in 2024 and 2023:
| No. | Sales by geographical segments (thousand EUR) | 2024 | % of Total Revenue 2024 | 2023 | % of Total Revenue 2023 | Change 2024 vs. 2023 (%) |
|---|---|---|---|---|---|---|
| 1 | Lietuva | 147,317 | 47.9 % | 139,220 | 50.08 % | 5.82 % |
| 2 | ES šalys | 110,238 | 35.8 % | 97,931 | 35.23 % | 12.57 % |
| 3 | Kitos šalys | 50,088 | 16.3 % | 40,853 | 14.69 % | 22.61 % |
| 4 | Viso | 307,643 | 100% | 278,004 | 100% | 10.66 % |
Export remains the company's main strategy. In 2024, ŽEMAITIJOS PIENAS, AB exported its products to 48 countries, and export market turnover increased by 28% compared to 2023. A significant breakthrough was recorded in the export sales of "Pik Nik" and "Cheerafa" string cheese snacks. In the United Kingdom and Ireland, these products have already established themselves in the market, with customers appreciating their taste and quality. In the Netherlands, "Cheerafa" became available in major retail chains, and sales are steadily increasing. In the German market, "Džiugas" cheeses and the "Magija" glazed curd snack line gained ŽEMAITIJOS PIENAS, AB CONSOLIDATED MANAGEMENT REPORT For the twelve-month period ended December 31, 2024
consumer interest through "in & out" sales, signaling growing product recognition. It is expected that these products will become a permanent part of retail assortments.
Despite the challenges caused by the war, Ukraine remains one of the key export markets. Here, the product assortment is actively expanding, and new supply contracts are being signed. The Croatian market is also showing steady growth, with new agreements signed with retail chains and an expansion of the existing clients' product range. Croatia was one of the first export countries to introduce "Džiugas Cheese Balls", which has received highly positive feedback in all export markets and is now positioned in the healthy snacks category. The popularity of "Magija" glazed curd snacks is also growing in Georgia, where one of the largest retail chains successfully sells not only these snacks but also other ŽEMAITIJOS PIENAS, AB brands: "Džiugas," "Germantas," and "Pik Nik."
Expansion in export markets involves not only increasing sales but also strengthening collaboration with local communities through social initiatives. In Hungary and Croatia, social campaigns encouraged consumers to not only become more familiar with the company's products but also to contribute to supporting socially disadvantaged groups in their countries.
As part of export expansion, various marketing initiatives are consistently implemented to increase product awareness and strengthen the connection with consumers:
* “Džiugiadieniai” – "Džiugas" cheese tasting events organized in export markets to introduce the product to buyers and clients. Event participants have the opportunity to directly learn about the product’s characteristics and pairing possibilities.
* “Lithuanian Days” in foreign retail chains – special events where products are showcased in stores, tastings are held, and direct interaction between producers and consumers takes place. In 2024, such events were held in Germany, Ireland, and Croatia.
As brand awareness grows and sales channels expand, the number of export markets is also increasing.# ŽEMAITIJOS PIENAS, AB CONSOLIDATED MANAGEMENT REPORT
For the twelve-month period ended December 31, 2024
This encourages continuous improvement of service processes, adapting products to meet individual market requirements, investing in advertising projects, and enhancing the company’s expertise in various fields, including marketing, management, finance, law, and technology. The company’s strategic goal is to develop brands with minimal adaptation to export markets while maintaining their authenticity. To achieve this, market trends are continuously analyzed, and global resources are assessed to ensure a competitive advantage. The biggest challenges are standing out among competitors, offering unique value to consumers, and encouraging more frequent product consumption while considering each country’s market maturity, traditions, and competitive environment. The ŽEMAITIJOS PIENAS, AB export team serves as brand ambassadors, leveraging their knowledge, experience, and persistence to establish a presence in new markets and introduce the world to high-quality Lithuanian dairy products.
| No | Sales by Product Groups (thousand EUR) | 2024 | % of Total Revenue 2024 | 2023 | % of Total Revenue 2023 | Change 2024 vs. 2023 (%) |
|---|---|---|---|---|---|---|
| 1 | Fermented and Processed Cheeses | 135,767 | 44.27% | 117,207 | 42.27% | 15.84% |
| 2 | Fresh Dairy Products | 97,299 | 31.73% | 95,098 | 34.29% | 2.32% |
| 3 | Butter and Spreadable Mixtures | 34,936 | 11.39% | 27,783 | 10.02% | 25.75% |
| 4 | Dried Dairy Products | 22,381 | 7.30% | 24,849 | 8.96% | -9.93% |
| 5 | Other | 16,270 | 5.31% | 12,368 | 4.46% | 31.55% |
| 6 | Total | 306,653 | 100% | 277,305 | 100% | 10.58% |
| No | Sales by Product Groups (thousand EUR) | 2024 | % of Total Revenue 2024 | 2023 | % of Total Revenue 2023 | Change 2024 vs. 2023 (%) |
|---|---|---|---|---|---|---|
| 1 | Fermented and Processed Cheeses | 137,958 | 44.84 % | 118,465 | 42.61 % | 16.45 % |
| 2 | Fresh Dairy Products | 97,842 | 31.80 % | 95,584 | 34.38 % | 2.36 % |
| 3 | Butter and Spreadable Mixtures | 34,936 | 11.36 % | 27,783 | 10.00 % | 25.75 % |
| 4 | Dried Dairy Products | 22,381 | 7.28 % | 24,849 | 8.94 % | -9.93 % |
| 5 | Other | 14,526 | 4.72 % | 11,323 | 4.07 % | 28.29 % |
| 6 | Total | 307,643 | 100% | 278,004 | 100% | 10.66 % |
Sales classified under Other Products include raw milk, raw cream, kastinys, water products, and ice cream sales. Comparing 2024 to 2023, the largest turnover change was in the Other Product Group, which increased by 31.55%. This was influenced by the increase in the average selling price of raw cream (in 2024 compared to 2023, the average selling price of raw cream increased by 44%). The turnover of butter and spreadable fat mixtures increased by 25.75% due to the increase in the average butter price. The turnover of fermented and processed cheeses increased by 15.84% due to increased demand. The turnover of dried dairy products decreased by 9.93% due to a decrease in demand for skimmed milk powder and whey powder.
The main activity of Šilutės Rambynas, ABF is the production and sale of fermented cheeses and cheese products, as well as the production and trade of pasteurized cream, pasteurized, and concentrated whey (NACE 10.5 group – "Manufacture of dairy products," 10.51 class – "Operation of dairies and cheese making"). In addition to its main activities, the company also provides rental, transportation, warehousing, milk collection point servicing, and other related services. Šilutės Rambynas, ABF has not established any branches or representative offices. Šilutės Rambynas, ABF does not purchase raw materials directly from producers – all milk needed for production is purchased from ŽEMAITIJOS PIENAS, AB. The raw material purchase price is determined by the formula: milk price + ŽEMAITIJOS PIENAS, AB collection costs (excluding transportation expenses). In 2024, the company purchased 6,175 tons of natural milk, compared to 5,042 tons in 2023, which represents an increase of 1,133 tons (or 22.5%). The average price of milk purchased in 2024, recalculated based on standardized parameters, was 372.7 EUR/t, whereas in 2023, the price was 319.3 EUR/t. Over the year, the average raw milk price increased by 53.4 EUR/t or 16.7%.
Despite the increase in milk procurement volume, the company's purchased raw material volumes remain lower than pre-pandemic levels. This is influenced by reduced demand for the company's produced goods. ABF "Šilutės Rambynas" specializes in cheese production. The production volumes for 2023 and 2024 are shown in the graph below:
Production and Sales Results in 2024
In 2024, ABF "Šilutės Rambynas" produced 5,595 tons of cheese, which is 1,052 tons (or 23.2%) more than in 2023. The increase in production volume was driven by growing demand for string cheese snacks. A significant impact was also made by the new semi-hard fermented cheese production line, which was put into operation at the ŽEMAITIJOS PIENAS, AB factory in 2020. As a result, the production of fermented cheeses such as Gouda and Tilsit remains at a low level.
Production changes by category:
The majority of the company's produced goods are sold through the parent company, ŽEMAITIJOS PIENAS, AB.
Sales Volumes in 2024:
Raw cream price changes:
298 279
870 791
3866 3027
561 446
0 1000 2000 3000 4000 5000 6000
2024 m.
2023 m.
Fermented cheeses
Fermented cheese product
Pik-Nik
Kiti
Since the main sales of Šilutės Rambynas, ABF are conducted through the parent company, ŽEMAITIJOS PIENAS, AB, the company does not invest separately in marketing and advertising. For the same reason, the company does not directly face significant market uncertainty or client reliability risks. To ensure smooth payments and minimize financial losses, the following measures are applied to direct sales clients:
The company, when analyzing its operational efficiency, applies key standard financial indicators that are widely used for corporate financial data analysis. The main financial performance indicators for 2024 and 2023, reflecting the company’s results, are as follows:
| Financial Indicators | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Revenue (EUR) | 44,582,566 | 33,338,601 | 33.7 |
| Gross Profit Margin (%) | 10.30 | 10.32 | -0.2 |
| Net Profit Margin (%) | 6.20 | 4.83 | 28.4 |
| EBITDA (EUR) | 3,771,376 | 2,541,162 | 48.4 |
| EBITDA Margin (%) | 8.46 | 7.62 | 11.0 |
| ROE (%) | 17.52 | 12.38 | 41.5 |
| ROA (%) | 15.02 | 10.29 | 46.0 |
| Current Liquidity Ratio | 4.75 | 3.24 | 46.6 |
| Quick Ratio | 3.58 | 2.04 | 75.5 |
| Debt-to-Equity Ratio | 0.12 | 0.15 | -20.0 |
| Debt Ratio | 0.10 | 0.13 | -23.1 |
| Investment in Fixed Assets (EUR) | 852,766 | 1,267,098 | -32.7 |
Detailed information on the extent of risk, risk management measures, potential risk types, uncertainties, and the internal control system is provided in the Company's Management Report.
94% AB "Žemaitijos pienas"
3% Lietuva kt.
2% Latvija
1% Kitos šalys
2024 m.
94% AB "Žemaitijos pienas"
1% Lietuva kt.
3% Latvija
2% Kitos šalys
2023 m.
Financial and other risks, as well as their management aspects, are also thoroughly disclosed in Section 28, "Financial Risk Management," of the 2024 audited annual financial statements. The Company and Group companies are insured under the following policies:
Before the war, ŽEMAITIJOS PIENAS, AB sales to Ukraine and Belarus accounted for approximately 2.5% of total sales. The Company and the Group ensured secure transactions by applying advance payment terms or credit insurance limits. In 2024, ŽEMAITIJOS PIENAS, AB and the Group had no overdue receivables from buyers in Ukraine or Belarus, so there was no need to assess impairment of receivables. Despite the challenging geopolitical situation, the company maintained its market positions and brand recognition in the markets where it operated before the war. Furthermore, sales in Ukraine increased, and new agreements were signed with retail chains. Following the outbreak of war in Israel, sales to this market temporarily declined due to imposed security restrictions. However, as the year progressed, the situation stabilized, and sales began returning to pre-war levels.
Risk Management Measures:
23
The Company and the Group had no remaining inventory at the end of the year that was exclusively designated for these markets.
ŽEMAITIJOS PIENAS, AB had no real estate in Ukraine or Belarus, so there was no need to assess impairment of long-term assets.
The Company and Group management closely monitors the situation in Ukraine and Israel, as well as the sanctions being imposed, ensuring full compliance. The current geopolitical situation does not affect the Company's or Group's ability to continue operations.
In 2024, ŽEMAITIJOS PIENAS, AB celebrated its 100th anniversary, symbolizing a balance between tradition and innovation. Despite global challenges, the company remained strong, ensured stable growth, and continues to pursue ambitious goals both in Lithuania and international markets—the Baltic States, Poland, Germany, Hungary, Spain, the United Kingdom, and beyond.
In 2025, ŽEMAITIJOS PIENAS GROUP companies will continue expanding their activities, developing new products to meet market demands, increasing brand and company recognition, and expanding into export markets. These objectives are based on a clear strategy, focused on top-quality standards, innovation, and responsible business practices.
To remain a leader in the dairy industry, ŽEMAITIJOS PIENAS, AB continuously monitors market changes, analyzes consumer behavior, and seeks sustainable and competitive growth opportunities. In 2025, the Company will prioritize the following areas:
Given the fluctuating product prices, ABF "Šilutės Rambynas" will place greater emphasis on exploring new export markets and strengthening its presence in existing ones. The company will prioritize further modernization, reducing energy, material, and labor resource consumption, optimizing operations, and focusing on the production of profitable products. A key focus will be on increasing the production and improving the quality of "Pik-Nik" string cheese snacks, as well as expanding into new markets.
In 2025, ŽEMAITIJOS PIENAS, AB will strategically focus on implementing sustainable and environmentally friendly solutions:
The energy consumption and use of renewable resources across the Group's operations in 2024 are detailed in the Corporate Social Responsibility and Sustainability Report.
The dairy products market remains dynamic and full of challenges, therefore ŽEMAITIJOS PIENAS, AB dedicates special attention to market analysis and strategic planning. The company is convinced that sustainable growth and responsible business decisions are the key to long-term success. Although market conditions are constantly changing, the company remains faithful to its values and to the centenary slogan: "Courage, truth, and mutual respect – never old." This is not only a historical reference but also a clear commitment to the future – to create the highest quality products, promote innovation, and be a reliable partner to consumers and the business community.
Taking into account the dynamism of the dairy industry, the company does not announce specific turnover and profit forecasts this year. However, a clearly defined strategy, focused work, and commitment to the highest standards allow expectations of successful results both in Lithuania and export markets.
The technologists at ŽEMAITIJOS PIENAS, AB are constantly seeking innovative technologies that not only enhance production efficiency but also contribute to sustainability goals. In 2024, scientific research, analysis of results, and their application in production became a key element in creating added value for products.
One of the most significant achievements in 2024 was the further processing of certain by-products. Raw materials that were previously considered “problematic” due to their physical properties have now become valuable products with added value through the implementation of innovative technologies. The company has also implemented an advanced vacuum cheese drying method in product manufacturing. This technology allows moisture to evaporate at low temperatures, preserving the nutritional value of the product. Crunchy dried cheese balls, produced using this method, have already found their market and loyal consumers.
Another strategic research and development focus is the processing of liquid (milk-derived) waste, which helps reduce the environmental impact of the dairy industry. Innovative solutions that transform by-products into new raw materials are an essential part of the circular economy. These cutting-edge processes not only reduce waste but also create high-value-added products from previously unused resources.
In 2024, the company consulted and continued collaboration with scientists from an Italian university to explore the potential of transforming liquid (milk-derived) waste into biopolymers—materials that could potentially be used for sustainable product packaging. Various feasibility studies are being conducted in this field.
Investments in research and development ensure the company's competitiveness and sustainable growth, making their importance ever-increasing. Close cooperation between business and science enables the development of future solutions that meet both market demands and environmental sustainability challenges.
ABF "Šilutės Rambynas" does not engage in research and development activities.
For the twelve-month period ended December 31, 2024
25
Human resources are the main engine of our organization. In 2023, the annual employee turnover rate was 12.08%, while in 2024, it decreased to 10.32%. Throughout the reporting period, the number of employees increased, and the adaptation success rate during the probation period remained stable at around 80%.
During the reporting period, various events were organized to strengthen the sense of community among employees. Key events included:
One of the most significant events was the jubilee dairy industry celebration, "Žemaitijos Pienas. Blooming Centennial Meadows," marking the company’s 100th anniversary.
During the reporting period, 18 students completed internships at the company. Additionally, the company hosted the final event of the "Career Development in STEAM" project (Phase II) on April 23, 2024, where six youth teams participated.
Other educational initiatives:
Looking ahead, we recognize both challenges and opportunities.# ŽEMAITIJOS PIENAS, AB CONSOLIDATED MANAGEMENT REPORT
For the twelve-month period ended December 31, 2024
Our key goals include:
* Enhancing employee engagement and motivation
* Promoting leadership, mentorship, and talent development
* Attracting young professionals to Telšiai and ŽEMAITIJOS PIENAS, AB
* Strengthening internal communication
* Managing potential risks effectively
The company remains committed to fostering a supportive and dynamic work environment, ensuring sustainable growth and long-term success.
| Year | Number of employees |
|---|---|
| 2020 | 1242 |
| 2021 | 1249 |
| 2022 | 1271 |
| 2023 | 1288 |
| 2024 | 1316 |
Compared to the reporting year, the number of employees at ŽEMAITIJOS PIENAS, AB increased by approximately 2% in 2023.
| Education level | 2022 | 2023 | 2024 |
|---|---|---|---|
| Higher education (university) | 177 | 181 | 179 |
| Higher education (college) | 286 | 270 | 261 |
| Vocational education | 384 | 395 | 411 |
| Secondary education | 345 | 358 | 368 |
| Incomplete secondary education | 79 | 84 | 97 |
| Total | 1271 | 1288 | 1316 |
| Position | 2022 | 2023 | 2024 |
|---|---|---|---|
| Managers | 6 | 7 | 6 |
| Average salary | 7710 | 7870 | 7516 |
| Specialists | 309 | 311 | 307 |
| Average salary | 2890 | 2832 | 3054 |
| Workers | 956 | 970 | 1003 |
| Average salary | 1769 | 1819 | 2051 |
| Total employees | 1271 | 1288 | 1316 |
In 2024, the company employed 165 people (growth of +5.1%). The average monthly salary was EUR 2,112 (+8.7%).
| Education level | 2024-12-31 | 2023-12-31 |
|---|---|---|
| With a master's degree | 4 | 5 |
| With a higher (university) degree | 21 | 19 |
| With a college (non-university) degree | 35 | 35 |
| With vocational education | 60 | 55 |
| With secondary education | 34 | 33 |
| With incomplete secondary education | 11 | 10 |
| Total: | 165 | 157 |
| Position | 2023 | 2024 |
|---|---|---|
| Managers | 6 | 6 |
| Average salary | 4075 | 4067 |
| Specialists | 23 | 24 |
| Average salary | 2675 | 2807 |
| Workers | 128 | 135 |
| Average salary | 1712 | 1902 |
| Total employees | 157 | 165 |
Šilutės Rambynas aims to build and maintain long-term relationships with its employees, especially in the context of an unsatisfactory labor market situation – there is a shortage of highly qualified workers. Therefore, employees are continuously encouraged to improve their professional skills. The company's employees have opportunities to enhance their knowledge and abilities through seminars and training courses. Training programs have been developed, under which specialists, production workers, equipment operators, machine operators, mechanics, team leaders, and foremen are trained and certified.
Related party transactions carried out during 2024 that had a significant impact on the Company’s and/or the Group’s financial position or operations for that period, including the amounts of such transactions, are disclosed in the 2024 explanatory notes.
During the reporting period, the Company published 9 announcements via the information system of the Vilnius Stock Exchange (AB NASDAQ OMX Vilnius) (on its website). All facts (events) are stored in the Central Regulated Information Database, and this information is also available on the Company's website at www.zpienas.lt. Public announcements are disclosed in accordance with the procedure established by legal acts. Notices regarding the convening of the Company’s General Meeting of Shareholders and other significant events are published in accordance with the procedure set out in the Law on Securities in the Central Regulated Information Database at www.crib.lt and on the Company's website at www.zpienas.lt.
Key events disclosed in 2024 during the reporting period include:
| Data | Svarbiausi ataskaitinio laikotarpio pranešimai |
|---|---|
| 30-09-2024 | ŽEMAITIJOS PIENAS AB Group half-year information for the I-st half of 2024 |
| 11-09-2024 | Preliminary results of ŽEMAITIJOS PIENAS AB group for the first half of 2024 |
| 29-04-2024 | Procedure for the payout of dividends for the year 2023 |
| 26-04-2024 | Annual information of ŽEMAITIJOS PIENAS, AB |
| 26-04-2024 | Decisions made by Ordinary General Meeting of Shareholders of ŽEMAITIJOS PIENAS, AB |
| 25-04-2024 | Regarding the draft alternative resolution submitted to the Ordinary General Meeting of Shareholders of ŽEMAITIJOS PIENAS, AB |
| 04-04-2024 | Regarding the convening of the Ordinary General Meeting of Shareholders of ŽEMAITIJOS PIENAS, AB |
| 26-03-2024 | The results of business activity of ŽEMAITIJOS PIENAS, AB group in 2023, excluding audit |
| 28-02-2024 | Regarding the ruling of the Court of Appeal of Lithuania in a civil case with a Polish company |
During the reporting period, there were no significant changes related to compliance with the Corporate Governance Code. Additional information regarding compliance with the Governance Code is provided in the annex to the 2024 Management Report – the Corporate Governance Report.
No significant events occurred after the preparation of the financial statements.
ŽEMAITIJOS PIENAS, AB (hereinafter referred to as the Company) has prepared this remuneration information for the financial reporting period of 2024, which coincides with the calendar year. The preparation of the remuneration information (hereinafter referred to as the Report) was based on the Law on the Reporting of Companies and Company Groups of the Republic of Lithuania, the Remuneration Policy of the Chief Executive Officer, Members of the Board, and Members of the Supervisory Board of ŽEMAITIJOS PIENAS, AB (hereinafter referred to as the Remuneration Policy), and other legal acts.
On April 9, 2020, the General Meeting of Shareholders approved the Remuneration Policy of the Chief Executive Officer, Members of the Board, and Members of the Supervisory Board of ŽEMAITIJOS PIENAS, AB. This Remuneration Policy applies to the Company’s Chief Executive Officer and members of the governing bodies to the extent that it concerns the payment of monetary remuneration for their activities in the Company’s management and/or supervisory bodies.
The Remuneration Report includes information about the remuneration of each member of the management and supervisory bodies, information about other (non-)received benefits, and other relevant data.
In 2024, the remuneration calculated for the Company’s Chief Executive Officer, which was determined by the Board, as well as additional remuneration, did not exceed the total amount set/approved in the Remuneration Policy (clauses 4.1 and 4.2). The Chief Executive Officer – General Director – did not receive any remuneration from companies belonging to the group of companies as defined by the Law on Consolidated Financial Statements of Companies of the Republic of Lithuania. In addition to basic and additional salary, the CEO was paid performance bonuses (clause 4.6). The CEO's salary was paid in accordance with the procedures, scope, and timelines established in the employment contract. The General Director did not receive any other material benefits in 2024, including no shares or other transactions in favor of or in the interests of the CEO were granted.
According to the Remuneration Policy approved by the Company’s General Meeting of Shareholders, fixed and additional remuneration is paid only to independent members of the management and supervisory boards, while bonuses (tantjemas), approved by the General Meeting, are paid to all members of management bodies. For the purposes of the Remuneration Policy, independent members of the management bodies are those who have no employment or other relationship with the Company and/or its subsidiaries. The Company has 3 (three) independent members of the Supervisory Board. During the reporting period (2024), the Company (the issuer) calculated EUR 35,223 in remuneration for the independent members of the Supervisory Board under activity agreements, averaging EUR 11,741 per year per independent member. The members of the Supervisory Board did not receive any amounts from the subsidiary or other companies related to ŽEMAITIJOS PIENAS, AB. All members of the Company's Board are employed under employment contracts and, in 2024, received no fixed or additional remuneration for their work on the Board. Their remuneration was solely based on employment.# INFORMATION ON REMUNERATION RECEIVED BY MEMBERS OF MANAGEMENT AND SUPERVISORY BODIES
ŽEMAITIJOS PIENAS, AB
CONSOLIDATED MANAGEMENT REPORT
For the twelve-month period ended December 31, 2024
Average monthly salaries by employee group are presented in the annual report. Remuneration paid to members of the management and supervisory boards would be subject to recovery (repayment) under the procedure established by legal acts, should certain conditions arise. In the event of resignation, term expiration, or removal of the CEO, board, or supervisory board members from their positions, no severance payments are made; however, remuneration proportional to the time served under the employment contract is paid. No bonuses (tantjemas) were paid to members of the Supervisory Board or the Board. During the reporting period (2024), no guarantees or sureties were provided to the members of the Supervisory Board, the Board, or the CEO. No assets or other property rights were transferred, nor were any other types of benefits granted by the Company. Members of the Supervisory Board, the Board, the CEO, and members of the Audit Committee have no significant material obligations to the Company (issuer), except for one Board member who, as of December 31, 2024, had obligations amounting to EUR 117,822.86 to the Company under two (2) loan agreements. The Company (issuer) has no obligations to the aforementioned individuals. No guarantees, sureties, or other security measures for the fulfillment of obligations of the CEO, members of the management or supervisory boards were granted in 2024 in the name of the issuer. The issuer did not grant any loans or shares of the Company to these individuals. The remuneration paid in 2024 to the CEO, members of the Board, and the Supervisory Board of ŽEMAITIJOS PIENAS, AB was in accordance with the principles, grounds, and conditions approved in the Remuneration Policy. The Report, approved by the Company’s Board, is submitted to the Annual General Meeting of Shareholders, which makes a decision on whether to approve the remuneration report. This (non-)approval does not relieve the Board of responsibility for the adopted decision. The 2023 consolidated remuneration report was approved at the General Meeting of Shareholders held on April 26, 2024, together with the 2023 financial statement set. This information about remuneration for 2024 is an integral part of the Consolidated Management Report and is published in accordance with the procedure established by law on the Company’s website www.zpienas.lt/lt and www.nasdaqomxbaltic.com.
CONSOLIDATED CORPORATE GOVERNANCE INFORMATION 2024
In the consolidated corporate governance statement of ŽEMAITIJOS PIENAS, AB (hereinafter – the Report), key information is provided regarding governance principles and related processes. The Report has been prepared in accordance with the Law on the Reporting of Companies and Company Groups of the Republic of Lithuania and the Law on Companies of the Republic of Lithuania, as well as legal acts regulating the issuer’s legal form and activities, the incorporation documents of the issuer and its subsidiary, and other applicable legislation. ŽEMAITIJOS PIENAS, AB (hereinafter – the Company) is a large public interest entity whose securities are traded on a regulated market of the Republic of Lithuania. The Company has a subsidiary – Šilutės Rambynas, ABF, which is classified as a medium-sized enterprise (hereinafter – the Company or the Group). As both of these companies are related, a consolidated governance report is provided accordingly. The Report outlines the main risks encountered in business operations, the measures and processes in place to mitigate them, and provides information on the structural bodies of both Companies, data on shareholders and their directly or indirectly held shareholdings, shareholders’ rights, as well as transactions (if any) concluded by the Group in accordance with Article 37 2 of the Law on Companies of the Republic of Lithuania. It also includes information on the Group’s management and other governing bodies, the procedures and policies for the election of their members, their powers and functions, compliance with the corporate governance code, an overview of other information related to the governance of the Group, and any other information required by legal acts. The 2024 Corporate Governance Report is an integral part of the Consolidated Management Report and is published in accordance with the procedure established by legal acts on the Company’s website www.zpienas.lt/en and www.nasdaqomxbaltic.com.
Grupės įmonių rizikų valdymas remiasi COSO ERM principais (įmonių rizikų valdymo metodologija, angl. – The Committee of Sponsoring Organizations’ Enterprise Risk Management Framework), kurie įmonių rizikos valdymą apibrėžia: „Įmonės rizikos valdymas nėra funkcija ar padalinys. Tai yra kultūra, gebėjimai ir praktika, kurią organizacijos integruoja į strategijos nustatymą ir įgyvendinimą, siekdamos suvaldyti rizikas kuriant, išsaugant ir realizuojant vertę“.
Risks in our operations are inherent and may be related to strategic objectives, operational performance, compliance with laws and other legal acts, as well as key environmental, social, and governance (ESG) priorities. Risk management begins with the individual and collective capabilities of the organization’s employees; knowledge of risks, their significance, and impact on the organization; and an attitude that strong risk management is a vital contribution to effective organizational governance. All employees within the Group are encouraged to be open, honest, and fact-based when discussing risks and their management, thereby enabling the Group to consider all possible opportunities and threats and to make well-informed decisions.
ŽEMAITIJOS PIENAS, AB
CONSOLIDATED MANAGEMENT REPORT
For the twelve-month period ended 31 December 2024
Rizikų valdymo organizacinė struktūra, vaidmenys ir atsakomybės
Main Objectives of Risk Management:
* Timely management of internally identified risks related to compliance with laws and other legal acts, ensuring the production and supply of high-quality products, consumer safety, satisfaction, and proper relationships with clients;
* Maintaining strategies that ensure efficient use of resources; enabling an optimized, proactive approach to audit and compliance identification/remediation processes; encouraging the monitoring and accountability of functional compliance;
* Continuous improvement of decision-making, planning, and prioritization by assessing opportunities and threats;
* Promoting value creation by enabling management to respond quickly, effectively, and efficiently to future events that create uncertainty and indicate significant threats or opportunities.
Risk management supports the successful business development of the Group of companies, aligned with our business principles and organizational values.
Risk is the effect of uncertainty on objectives (a deviation from what was expected). The Group’s approach to risk is twofold:
RISK = THREATS + OPPORTUNITIES
Risks rarely occur in isolation; therefore, when identifying risks, management assesses the interrelationship between different risks. Risk is evaluated based on its impact and the likelihood of occurrence. Effective risk management requires a broad understanding of the business environment (both internal and external factors) that may influence the achievement of strategic and business objectives. As the business environment evolves, so do risks, their impact, and the priorities in managing them. Within the Group of companies, risks are categorized. The review and categorization of risks is a continuous, ongoing process, the frequency and scope of which depend on changes in the business environment. Below are examples of selected risks typical for our industry. A final and static definition of all possible types of risks is not feasible due to the constantly changing business environment.
| Risk Categories | Description, Examples |
| :--- | :---# ŽEMAITIJOS PIENAS, AB CONSOLIDATED MANAGEMENT REPORT
For the twelve-month period ended 31 December 2024
Risk Categories Description, Examples
Below is a more detailed description of the risks identified by the Group companies as the most significant (priority) during the 2024 period, along with the directions for managing these risks:
Business resilience risk is closely linked to the environment in which the Company and the Group operate and which affects the performance results of the Company and the Group. This includes the competitiveness of the Company and the Group; the economic viability of the Company’s and the Group’s major clients; the political and economic environment within the European Union; and legal regulations related to the procurement of the main raw material.
The greatest risk faced by ŽEMAITIJOS PIENAS, AB is the seasonality of raw milk: in summer, the amount of milk is twice as high as in winter. As a result, the production capacities of ŽEMAITIJOS PIENAS, AB are used unevenly: in summer the plant operates at full capacity, while in winter capacity utilization may drop to just 60%. Therefore, in order to ensure a stable supply of raw milk, the Company typically pays its raw milk suppliers (farms) slightly higher prices than the market average and seeks additional suppliers in neighboring countries.
The main reasons why the Company, as a milk processor, may face a shortage of milk include:
The rising cost of energy affects the Company and the Group due to increasing production expenses. As fuel prices rise, so do the costs of transporting raw materials and distributing finished products. In order to mitigate these risks, the Company and the Group are improving production efficiency by digitizing and standardizing workstations, investing in energy consumption optimization solutions, and optimizing logistics routes. By investing in green energy, the Company aims to follow a sustainable business direction, thereby contributing to the fight against climate change. It is expected that the amount of green electricity generated by these wind turbines will cover the majority of the Company’s electricity consumption needs.
The Company and the Group face competitive risk in the domestic market; therefore, the main objective of the Company and the Group is to increase export sales directly to retail shelves. To mitigate the risk of a shortage of sales specialists, the Company has affiliated enterprises in strategic countries, where local sales professionals are employed—this helps to reduce the risk related to the lack of qualified personnel. Ambitious goals are also being set to expand export volumes to EU countries and to broaden export distribution channels.
The reputational risk is related to the decisions made by the Company and the behavior of its employees. In the Company and the Group, reputation and a good name are considered the foundation of operations and business relationships. In 2018, the Code of Ethics was approved and later supplemented and modified in 2021. The Code of Ethics establishes behavioral standards applicable to all employees, regardless of their position, employment scope, etc. The positions within the Group that carry the highest risk of corruption and bribery are: Procurement Manager, Chief Financial Officer, and Sales and Marketing Director. To mitigate the risks of corruption and bribery, the Company and the Group have implemented appropriate internal processes and have also adopted an Anti-Corruption Policy. Additionally, they have an Equal Opportunity Policy. To ensure high standards of competition law compliance and ethical behavior towards competitors, the Company has adopted a Competition Compliance Policy. According to management's assessment, the implemented measures are effective. In 2024, the Group was not found guilty of violating anti-corruption and bribery laws. It was also not found guilty of bribing foreign officials in international business transactions. As a result, the Company was not fined for these violations. In 2023–2024, work regulations, the human rights policy, remote work procedures, and other policies were reviewed and updated. In 2024, the Responsible Business Code was approved.
The procurement of goods (core and auxiliary materials, components, equipment, etc.) and services in the Company is carried out through public or closed tenders, or by sending requests for proposals to suppliers. Supplier selection is generally based on at least three submitted offers. Within the Company and the Group, procedures are in place for the identification and analysis of procurement and supplier risk factors. When selecting key suppliers, internal supplier audits are conducted. Contracts with suppliers are prepared and signed in accordance with the procedures outlined in the Company’s and the Group’s approved rules for contract drafting, coordination, and approval. The Company has a legal department that oversees all contracts concluded by the Company (or Group companies) with suppliers and buyers.
The Company and Group companies, like all business organizations in Lithuania and worldwide, operate under increased threats and impacts of these risks. The most significant risks in this category today include Russia’s ongoing war in Ukraine, the effects of climate change, and the heightened threat of cyberattacks and breaches. Due to their uniqueness and importance in the current context, these risks and their management approaches have been discussed in the Annual Report, while their impact on financial statements has been addressed in the Explanatory Notes. Therefore, the Management Report does not duplicate this information but briefly outlines the key directions for managing these risks:
The impact of the war in Ukraine is managed by the Company's management through close monitoring of the situation in Ukraine and the implementation of sanctions to ensure compliance. The Company has adopted a Sanctions Policy, which helps ensure that no transactions are conducted with sanctioned individuals. The threat of cyberattacks and breaches is managed in accordance with the company's existing procedures. In 2024, the company aimed to fully comply with the EU NIS2 Directive requirements, investing in information system security solutions and conducting IT security training for employees.
The Company and the Group face key financial risks, primarily market risk. Financial risk management is an integrated part of the Group’s Financial Management Policy, which, in turn, is a component of the Group’s Risk Management System.# ŽEMAITIJOS PIENAS, AB CONSOLIDATED MANAGEMENT REPORT
The main financial risks that the Company and the Group currently encounter include interest rate risk, foreign exchange risk, liquidity risk, and credit risk.
As the Company and the Group operate internationally, they are exposed to foreign exchange rate fluctuation risk. Conducting business internationally involves transactions in foreign currencies, leading to foreign exchange risk associated with fluctuations in the Polish zloty, the US dollar, and other currencies. This risk arises from future commercial transactions, recognized assets and liabilities, and net investments in foreign subsidiaries when assets and liabilities are denominated in a currency other than the Company’s and the Group’s functional currency. The primary currency used for transactions by the Company and the Group is the Euro.
The Company's and the Group's revenues and expenses from core operations are largely independent of market interest rate fluctuations. However, the Company faces interest rate risk due to long-term loans. To assess the impact of interest rates on the Company’s financial performance, positions that generate interest rate risk are identified. Assets and liabilities sensitive to interest rate changes include the Company’s actual transactions such as deposits, investments, granted loans, securities held by the Company, and other on-balance-sheet and off-balance-sheet transactions whose value depends on fixed or variable interest rates and positively correlates with interest rate fluctuations. The Company does not use any financial instruments to hedge against interest rate risk. However, the situation is continuously monitored to ensure timely decision-making if such measures become necessary.
Credit risk. To ensure the timely coverage of accounts receivable, the financial and economic condition of a customer/buyer is assessed through available sources (customer-provided data, various databases, registers, etc.) before signing a sales contract. The concentration of buyers in the dairy industry influences the overall credit risk of the Company and the Group, as these buyers may be similarly affected by environmental and economic changes. The Company has procedures in place, including a Credit Risk Management Policy, to ensure that sales do not exceed the accepted credit risk limits. When selling or purchasing goods and services, the Company evaluates the reliability of each business partner through a credibility analysis. Product sales (shipment of goods) are initiated only when there is a 90-100% payment guarantee. Various payment guarantees are applied, such as:
The Company is among the Lithuanian businesses that settle payments for purchased goods and services on time. It assesses, rates, and determines the reliability of its clients, making case-by-case decisions on the necessary level of security from customers, the credit limit to be granted, and the number of days for deferred payment. Client payments are continuously monitored and analyzed. As this type of risk is well managed, the Company does not have significant new "bad" debts, allowing for easier cash flow planning.
Liquidity risk is managed through cash flow planning and forecasting, which helps proactively identify potential cash shortages and select appropriate financing methods. Cash flow forecasts are prepared for one month, one year, and long-term periods of up to 3–5 years. These forecasts estimate cash inflows and outflows, allowing for short-term borrowing and investment planning. By the end of the current year, the forecast highlights key trends in working capital and cash movements, identifying the need for external financing or investment opportunities while assessing the impact of interest rate and foreign exchange risks. At the end of the fiscal year, a budget for the following year is prepared. Long-term forecasts (over one year) are part of strategic business planning. These forecasts provide insights into the extent of cash surpluses or additional funding needs, including when surpluses or shortages will occur, their duration, and how excess cash will be utilized or additional financing secured.
For short-term forecasts (up to one month or the end of the current year), the cash payments and receipts method is used, while for budgeting the next year or planning for the upcoming 3–5 years, the sources and uses of funds method is applied. Cash flow forecasting is essential, as cash inflows and outflows do not distribute evenly over time. Payment terms for sold goods range from 14 to 30 days, and in rare cases, up to 60–90 days. Payments to service and goods suppliers are typically settled within 30 days, while raw milk suppliers and farmers receive payments 15–20 days after the end of each 10-day period. Considering these factors, monthly and weekly forecasts are relatively accurate. The Company aims to negotiate payment deferrals of up to 60 days with suppliers.
A Loan Committee operates within the Company to assess the risk of loans granted to employees and milk suppliers/farmers. The Company has approved loan provision regulations, based on which the Loan Committee evaluates loan applications. Loans are not granted unless the borrower offers liquid real estate or movable assets as collateral. A conservative approach to liquidity risk management enables the Company to maintain the necessary level of cash while ensuring financial flexibility.
In 2023, AB “ŽEMAITIJOS PIENAS” was awarded a Stable Company Certificate. The assessment confirmed that the Company’s solvency structure is strong and has met the CrefoCert STABILUS (Creditreform Solvency Certificate) requirements for over ten years, maintaining a CR risk class of 1–4, with no significant threats identified to the Company's stability.
The Company strives to minimize legal non-compliance risks and ensure that its operations align with applicable legal requirements and standards. To achieve this, the Company's legal team is actively involved in decision-making processes, the preparation and coordination of various policies, procedures, and contracts. Representatives of potential clients have visited the Company multiple times to conduct independent audits, which have positively evaluated the existing infrastructure, the organization of core operational and safety processes, collaboration with relevant third parties, and the established control system.
The Audit Committee oversees the preparation of the Company's consolidated financial statements, internal control, and financial reporting risk management systems, ensuring compliance with regulations governing consolidated financial statements. The Company is responsible for the accurate and timely preparation of these reports.
Risk management within the Company and the Group is implemented through a Risk Management System that aligns with the organization’s operational principles, values, and business philosophy. This system integrates internal policies, procedures, and regulations to ensure effective governance. Proper internal control is maintained by:
In the Company, business decision-making and operational functions are clearly separated from control functions. Decision-making authorization limits are established and monitored, while collective decision-making is integrated into business processes. The overall internal control framework is structured within the Risk Management System Map, which outlines the functioning and interaction of these controls within the organization.
The governing bodies of AB "ŽEMAITIJOS PIENAS" are: (i) the General Meeting of Shareholders; (ii) the Supervisory Board; (iii) the Board of Directors; and (iv) the General Director. The Company’s Administration, which consists of structural units—departments, is subordinate to the General Director. The following departments operate within the Company: (i) Finance, (ii) Human Resources and Legal, (iii) Logistics, (iv) Production and Raw Material Procurement, (v) Sales and Marketing, and (vi) Centralized Procurement. The Company has an established and functioning Audit Committee.
SECRETARIAT
PRODUCTION AND RAW MATERIAL PROCUREMENT DEPARTMENT
General Meeting of Shareholders – the General Meeting of Shareholders is the governing body responsible for making the most significant decisions within the Company.# The competencies, convening procedures, rights, and obligations of the General Meeting of Shareholders essentially do not differ from those outlined in the Law on Companies of the Republic of Lithuania, other legal acts, and the Company’s Articles of Association. It is important to note that AB "ŽEMAITIJOS PIENAS" shares are traded on the stock exchange, meaning the number and structure of shareholders are constantly changing.
It should be noted that AB "ŽEMAITIJOS PIENAS" shares are traded on the stock exchange, and therefore, the number and structure of shareholders are constantly changing. According to data obtained from the securities market intermediary, as of 31 December 2024, the Company had 3,162 shareholders (both individuals and legal entities), compared to 3,182 shareholders at the beginning of 2024. Therefore, the number of shareholders decreased during the reporting period. In 2024, the structure of the Company’s major shareholders (holding more than 5% of the capital) remained unchanged. Additionally, as of 2024, the Company continued to hold 222,020 units of its own shares, representing 0.53% of its share capital.
| Shareholder | Number of Shares Owned, pcs. | Percentage of Statutory Capital Owned, % | Percentage of Voting Rights Owned, % | Percentage of Voting Rights Owned Together with Related Parties, % |
|---|---|---|---|---|
| Pažemeckas Algirdas* | 14,070,152 | 33.71 | 33.71 | 67.29 |
| Pažemeckienė Danutė** | 14,014,581 | 33.58 | 33.58 | |
| UAB “Baltic Holding” į. k.: 302688114, address: Vilhelmo Berbomo g. 9-4, Klaipėda | 4,530,380 | 10.85 | 10.85 | 10.85 |
| AB “KLAIPĖDOS PIENAS” į. k.: 240026930, Šilutės pl. 33, 91107, Klaipėda | 2,901,844 | 6.95 | 6.95 | 6.95 |
* - Algirdas Pažemeckas and Danutė Pažemeckienė jointly own 14,070,152 shares (votes) under common joint ownership rights.; ** - Danutė Pažemeckienė personally owns 14,014,581 shares, and therefore, it is considered that together with her spouse, Algirdas Pažemeckas, they jointly own 28,084,733 shares or 67.29% of the total shares (votes).
The largest shareholder of ŽEMAITIJOS PIENAS, AB is Šilutės Rambynas, ABF, which directly owns 87.82% of the shares. The remaining shares are held by minority shareholders, the majority of whom are raw milk producers. The total number of shareholders is 601. There are no restrictions on the management and use of shares in Šilutės Rambynas, ABF. The company does not directly or indirectly hold any significant share packages in other entities.
Both ŽEMAITIJOS PIENAS, AB and Šilutės Rambynas, ABF have no restrictions or limitations on the transfer (disposal) of securities, including restrictions on voting rights. The shareholders of both companies exercise their property and non-property rights and fulfill obligations as stipulated in the Law on Companies of the Republic of Lithuania and the Company’s Articles of Association. All issued shares grant shareholders equal rights as provided by the Law on Companies of the Republic of Lithuania, other legal acts, and the Company’s Articles of Association.
All company shares are ordinary registered shares, granting equal voting rights and having the same nominal value. Each share entitles its holder to one vote at the General Meeting of Shareholders. The Companies have no information regarding any restrictions, prohibitions, or special conditions applied to their securities or shareholdings during the reporting period. Additionally, they are not aware of (do not have data on) any systems where the property rights granted by securities are separated from the security holders. The Companies do not have data on any special control rights held by individual shareholders (or a shareholder) and therefore assume that such shareholders do not exist. Furthermore, the Companies are not aware of any special agreements between ŽEMAITIJOS PIENAS, AB CONSOLIDATED MANAGEMENT REPORT For the twelve-month period ended 31 December 2024 40 shareholders or groups of shareholders that could fundamentally alter, create, or terminate their rights and obligations in managing the Company, including those that could affect the Group's or shareholders' interests.
The shareholders of the Companies have the following property rights:
((i) to receive a share of the company's profit (dividend);
(ii) to receive a share of the assets of the liquidated company;
(iii) to receive shares free of charge if the authorized capital is increased from the company's funds, except in cases provided by law;
(iv) when the shareholder is a natural person – to bequeath all or part of the shares to one or more persons;
(v) to sell or otherwise transfer all or part of the shares to the ownership of other persons in accordance with the procedure and conditions established by law;
(vi) other rights granted by legal acts.
The shareholders of the Companies have the following non- property rights:
(i) to participate in meetings;
(ii) to vote in meetings according to the rights granted by shares;
(iii) to receive non-confidential information about the company’s economic activities under the conditions and grounds established by legal acts;
(iv) to elect and be elected to the company’s management and supervisory bodies, to hold any position in the company unless otherwise provided by the Law on Companies of the Republic of Lithuania;
(v) to submit specific proposals for improving the company’s financial, economic, organizational, and other activities, to appeal to the court against decisions or actions of the shareholders' meeting, the supervisory board, the board, and the company’s management that violate the laws of the Republic of Lithuania, the company’s Articles of Association, or the property and non-property rights of shareholders;
(vi) one or several shareholders, without a separate authorization, have the right to demand compensation for damages caused to shareholders;
(vii) other non-property rights established by law.
Asmuo įgyja visas teises bei pareigas, kurias jam suteikia jo įsigyta bendrovės įstatinio kapitalo ir (arba) balsavimo teisių dalis: įstatinio kapitalo didinimo atveju – nuo bendrovės įstatų pakeitimų, susijusių su įstatinio kapitalo ir (arba) balsavimo teisių padidėjimu, įregistravimo dienos, kitais atvejais – nuo nuosavybės teisių į bendrove įstatinio kapitalo ir (arba) balsavimo teisių dalį atsiradimo.
The Companies are not aware of any significant shareholder agreements, shareholders with special control rights, or any restrictions or limitations applied to shares held by shareholders. According to the available information, no special rights have been established. To the Companies' knowledge, shareholders are free to exercise both property and non-property rights granted by their shares. There are no agreements to which ŽEMAITIJOS PIENAS, AB is a party that would take effect, change, or terminate in the event of a change in the issuer's control, nor any impact of such agreements, except in cases where disclosure of their nature would cause significant harm to the issuer. The same situation applies to Šilutės Rambynas, ABF. The Companies have not entered into any unusual agreements with their management body members or employees that would provide for compensation in the event of their resignation, dismissal without just cause, or termination of employment due to a change in the issuer's control. During the reporting period, no harmful transactions were concluded that would contradict the objectives of the Company or the Group, deviate from usual market conditions, violate the interests of shareholders or other groups, or have had or could potentially have a negative impact on the Company's operations or financial results. Additionally, no transactions were made that involved conflicts of interest between the Company's management, controlling shareholders, or other parties' duties to the Company and their private interests and/or obligations.
The Supervisory Board is a collegial supervisory body of the Company, consisting of three (3) members and led by its chairman. The General Meeting of Shareholders elects the Supervisory Board for a term of four (4) years. The Company's Articles of Association stipulate that there is no limit on the number of terms a board member may serve. As of December 31, 2024, the Supervisory Board was independent, as all three members were not affiliated with the Company. More detailed aspects regarding the status and activities of the Supervisory Board and its members are outlined in the Corporate Governance Code Compliance Report. It is important to note that no special rules apply to the election or replacement of the Company's Supervisory Board members. These actions are carried out in accordance with the provisions of the Law on Companies and the Company’s Articles of Association. There are no specific policies governing the election of members related to age, gender, education, or professional experience. Instead, qualities that best align with the Group’s and shareholders’ interests are assessed. The working procedures of the Supervisory Board are regulated by the Supervisory Board Work Regulations.
Linas Siraštanovas (Independent Member)
Chairman of the Company’s Supervisory Board
Elected as a member of the Supervisory Board on August 2, 2021, during the Annual General Meeting of Shareholders, for a four-year term.
Education: Master’s degree in Commerce, Vilnius University.
ŽEMAITIJOS PIENAS, AB CONSOLIDATED MANAGEMENT REPORT
For the twelve-month period ended 31 December 2024 41
Participation in other companies, institutions, and organizations: Compensa Vienna Insurance Group, Regional Manager for Klaipėda Region.# Areas of Supervision within the Company
Oversees sales and finance.
Member of the Company’s Supervisory Board
Elected as a member of the Supervisory Board on August 2, 2021, during the Annual General Meeting of Shareholders, for a four-year term.
Education: Kaunas Polytechnic Institute, Specialization in Dairy Product Technology and Engineering.
Participation in other companies, institutions, and organizations: Does not participate in the activities of other companies, institutions, or organizations.
Areas of supervision within the Company: Oversees quality parameters in the Company’s production processes, performs raw milk quality control, supervises tasting sessions, and monitors companies providing raw milk testing services.
Member of the Company’s Supervisory Board
Elected as a member of the Supervisory Board on August 2, 2021, during the Annual General Meeting of Shareholders, for a four-year term.
Education: Kaunas Polytechnic Institute, Dairy and Dairy Product Technology, Engineer-Technologist.
Participation in other companies, institutions, and organizations: Does not participate in the activities of other companies, institutions, or organizations.
Areas of supervision within the Company: Oversees production processes and new product development.
During 2024, the following amounts were allocated to the Supervisory Board members for their work on the board:
No loans, guarantees, or asset transfers were provided to the Supervisory Board members.
The Company’s Board is a collegial management body that represents the Company’s shareholders between their meetings and makes decisions on key economic and business matters of the Company. The Board does not perform supervisory functions, as these are carried out by the Supervisory Board. The Board members have powers as stipulated by laws, the Company’s Articles of Association, and the Board’s internal regulations. Each Board member is responsible for specific assigned areas of the Company's economic activities. Currently, the Board consists of five (5) members. The Supervisory Board elects the Board members for a term of up to four years, with no limit on the number of terms they may serve. It is important to note that no special rules regulate the election or replacement of Board members. The Company follows the provisions of the Law on Companies and its Articles of Association. There are no specific policies regarding age, gender, education, or professional experience for Board member selection; instead, candidates are evaluated based on qualities that best align with the interests of the Group and shareholders. The Board is chaired by the Chairman, who is elected from among the Board members. Certain aspects related to the Board and its activities are outlined in the Corporate Governance Code Compliance Report. The Board members not only perform general and legally assigned functions but also carry out delegated, specialized individual functions directly related to the Company's operations. Additionally, some functions are focused on prevention measures to mitigate various external negative impacts.
Below are the details of the Board members of ŽEMAITIJOS PIENAS, AB.
Member of the Company’s Board since 2021-08-24, elected as a Board member until the end of the current Board’s term.
Chairman of the Board.
Education: Master’s degree in Law, Vilnius University.
Current Employment: General Director of the Company.
Participation in the management of other companies: Does not participate in the management of other companies.
Company Shares Owned: Owns 2,540 shares of the Company. The owned shareholding represents less than 0.05% of the total Company shares.
ŽEMAITIJOS PIENAS, AB CONSOLIDATED MANAGEMENT REPORT
For the twelve-month period ended 31 December 2024
42
Member of the Company’s Board since 2021-08-24, elected as a Board member until the end of the current Board’s term.
Education: Bachelor’s degree in Transport Engineering, Kaunas University of Technology. Master’s degree in Transport Engineering, Vilnius Gediminas Technical University.
Current Employment: Logistics Director of the Company.
Participation in the management of other companies: Board Member of Čia Market, UAB (Company code: 141354683, Address: Sedos g. 35a, Telšiai, LT-87101).
Company Shares Owned: Does not own Company shares.
Member of the Company’s Board since 2021-08-24, elected as a Board member until the end of the current Board’s term.
Education: Kaunas Polytechnic Institute (KTU), Engineer-Economist.
Current Employment: Chief Accountant of the Company.
Participation in the management of other companies: Does not participate in the management of other companies.
Company Shares Owned: Owns 475,160 shares of the Company. The owned shareholding represents 1.14% of the total Company shares.
Member of the Company’s Board since 2022-07-27, elected as a Board member until the end of the current Board’s term.
Education: Higher university degree – Kaunas Polytechnic Institute, Mechanical Engineer.
Current Employment: ŽEMAITIJOS PIENAS, AB.
Participation in the management of other companies: Does not participate in the management of other companies.
Company Shares Owned: The shareholding owned jointly with spouse under common joint ownership rights represents 33.71% of the total Company shares.
Member of the Company’s Board since 2021-08-24, elected as a Board member until the end of the current Board’s term.
Education: Bachelor’s degree in Food Chemistry and Engineering, Kaunas University of Technology. Master’s degree in Production Engineering, Kaunas University of Technology.
Current Employment: Production Director of ŽEMAITIJOS PIENAS, AB.
Participation in the management of other companies: Does not participate in the management of other companies.
Company Shares Owned: Does not own Company shares.
During 2024, ŽEMAITIJOS PIENAS, AB Board members did not receive any salaries or other monetary compensations for their work on the Board. Board member Monika Jasiulionienė, as of December 31, 2024, had an outstanding loan balance of €117,822.86. The loans were granted with interest and secured by real estate collateral. No other Board members were granted loans, guarantees, or asset transfers. All Board members are employees of the Company under employment contracts, and they receive salaries based on their respective job positions.
The Company’s manager – Chief Executive Officer (CEO) operates in accordance with the Company’s Articles of Association, the decisions of the General Meeting of Shareholders, the decisions of the Board, and other local acts of the Company. The CEO is elected by the Company’s Board. The CEO organizes the Company’s daily operations and performs the actions necessary to carry out its functions, implement the decisions of the Company’s governing bodies, and ensure the Company’s operations. The Company’s Chief Executive Officer is responsible and regularly reports to the Board. The Company does not apply special rules governing the election or replacement of the CEO. When carrying out these actions, the Company follows the provisions of the Law on Companies and the Company’s Articles of Association. The Company’s manager, management, and supervisory body members are elected in accordance with legal requirements, taking into account their abilities, qualifications, and professional experience. Each candidate, before being elected to the respective body, fills out a conflict of interest declaration.
ŽEMAITIJOS PIENAS, AB CONSOLIDATED MANAGEMENT REPORT
For the twelve-month period ended 31 December 2024
43
The Company believes that this selection system fully aligns with the interests of the Company and the vast majority of shareholders. The Company’s administration consists of the Chief Executive Officer (CEO), Production Director, Logistics Director, Finance Director, Chief Accountant, Sales and Marketing Director, Human Resources and Legal Department Director, and other employees performing administrative functions. The Company’s administration is led by the Chief Executive Officer. The Company’s departments are structural units responsible for executing and implementing the decisions, assignments, and other instructions of the Company’s Board and the Chief Executive Officer.
Chief Executive Officer (CEO)
Employed at the Company since 2002- 08-26.
Company Shares Owned: Owns 2,540 shares of the Company. The owned shareholding represents less than 0.05% of the total Company shares.
The position of Finance Director is currently vacant.
Chief Accountant
Employed at the Company since 1986- 07-29.
Company Shares Owned: Owns 475,160 shares of the Company. The owned shareholding represents 1.14% of the total Company shares.
The position of Sales and Marketing Director is currently vacant.
Production Director
Employed at the Company since 2020- 08-10.
Company Shares Owned: Does not own Company shares.
Logistics Director
Employed at the Company since 2003- 12-01.
Company Shares Owned: Does not own Company shares.
The position of Human Resources and Legal Department Director is currently vacant.
Head of Marketing
Employed at the Company since 2018- 11-28.
Education: Vilnius Gediminas Technical University, Bachelor’s degree in Communication.
Company Shares Owned: Does not own Company shares.
Head of Procurement Department
Employed at the Company since 2017- 07-03.
Education: Higher education.
Company Shares Owned: Does not own Company shares.
The Company’s Audit Committee consists of three members.# ŽEMAITIJOS PIENAS, AB CONSOLIDATED MANAGEMENT REPORT
On June 19, 2023, the Supervisory Board elected the following individuals as members of the Audit Committee, two of whom are independent:
- Nijolė Zibalienė (Chairwoman)
- Regina Domarkienė
- Sigita Leonavičienė
Main Functions of the Audit Committee:
Conducting unexpected financial audits and inventory checks of material assets.
Providing recommendations for process optimization.
Performing other duties as assigned by legal acts.
The Audit Committee also serves an advisory role to the Supervisory Board, with the primary goal of enhancing the efficiency of the Supervisory Board’s oversight of the Company’s financial management and ensuring that decisions are made impartially and thoroughly considered.
It is important to note that the Company has not established any other committees or governing bodies.
Financial Benefits and Transactions:
No loans, guarantees, asset transfers, bonuses, additional payments, royalties, or other compensations were provided to Audit Committee members. Two Audit Committee members received €5,000 each under service contracts.
Sigita Leonavičienė
Audito komiteto narė nuo 2017 m. 2023-06-19 buvo perrinkta naujai kadencijai iki narį išrinkęs Bendrovės organas atšauks iš pareigų.
Regina Domarkienė
Audito komiteto nepriklausoma narė, išrinkta 2023-06-19 kadencijai iki narį išrinkęs Bendrovės organas atšauks iš pareigų.
Nijolė Zibalienė
Audito komiteto pirmininkė – nepriklausoma narė,
išrinkta 2023-06-19 kadencijai iki narį išrinkęs Bendrovės organas atšauks iš pareigų.
The governing bodies of Šilutės Rambynas, ABF (hereinafter – Šilutės Rambynas) are:
(i) General Meeting of Shareholders,
(ii) Board of Directors, and
(iii) Sole executive body – the Company’s Manager.
Administrative employees operate under the CEO’s supervision. The Company does not have a Supervisory Board or an Audit Committee.
The competence of the General Meeting of Shareholders, as well as shareholders' rights and obligations, are defined by the Law on Companies of the Republic of Lithuania, other legal acts, and the Company’s Articles of Association. Any amendments or new provisions to the Articles of Association follow the standard legal procedure.The Board’s activities, election, and replacement follow the same rules as those of ŽEMAITIJOS PIENAS, AB, in accordance with the Law on Companies and the Company’s Articles of Association. Board members do not have special or additional powers beyond those defined by law. They are not assigned specific operational areas, except for duties outlined in their employment contracts, if they are also employees of the Company.responsibilities defined in their employment contracts if they are employees of the Company.
Algirdas Bladžinauskas
He was re-elected as a member of the Company’s Board for a new term from 2023-04-20 until the end of the current Board’s term (2027-04-20). Chairman of the Board.
Education: Lithuanian Agricultural Academy, Master’s degree in Agronomy.
Employment: Chief Executive Officer of Šilutės Rambynas.
He does not participate in the management of other companies.
He does not own any shares of Šilutės Rambynas.
Irena Baltrušaitienė
She was re-elected as a member of the Board for a new term from 2023-04-20 until the end of the current Board’s term (2027-04-20).
Education: Kaunas Polytechnic Institute, Master’s degree in Dairy and Dairy Product Technology.
Employment: Unemployed.
She does not participate in the management of other companies.
She does not own any shares of Šilutės Rambynas.
Linas Puskunigis
He was re-elected as a member of the Company’s Board for a new term from 2023-04-20 until the end of the current Board’s term (2027-04-20).
Education: Lithuanian Agricultural Academy, Master’s degree in Economics and Organization.
Employment: Chief Accountant of Šilutės Rambynas.
He does not participate in the management of other companies.
He owns 2,076 shares of Šilutės Rambynas, representing 0.24% of the total shares.
Robertas Pavelskis
He was re-elected as a member of the Company’s Board for a new term from 2023-04-20 until the end of the current Board’s term (2027-04-20).
Education: Vytautas Magnus University Agricultural Academy.
Employment: Technical Manager at AB “ŽEMAITIJOS PIENAS”.
He does not participate in the management of other companies.
He does not own any shares of the Company.
Renata Rupšienė
She was re-elected as a member of the Company’s Board for a new term from 2023-04-20 until the end of the current Board’s term (2027-04-20).
Education: Kaunas University of Technology – Bachelor’s degree in Food Chemistry and Engineering; Kaunas University of Technology, Master’s degree in Production Engineering.
Employment: Production Director at AB “ŽEMAITIJOS PIENAS”.
She does not participate in the management of other companies.
She does not own any shares of the Company.
The administration of Šilutės Rambynas consists of the Chief Executive Officer (CEO), Production Director, Technical Director, Transport Manager, Sales Manager, Production Manager, Chief Accountant, and other employees. The CEO leads the company’s administration.The directors/managers implement the goals and tasks set by the Company’s governing bodies, carry out functions according to their assigned competencies, and manage subordinate employees.
During the reporting period (2024), no amounts were allocated to the members of the Šilutės Rambynas Board for their work on the Board. The administration directors/managers were allocated a total of €229,000 in salary based on their employment contracts. On average, each administration manager received €57,228.
During the reporting period, no guarantees or warranties were provided to the Board members, CEO, or Chief Accountant, and no assets or other property rights were transferred. Board members, the CEO, and the Chief Accountant do not have any significant material obligations to the company, and the company has no obligations to these individuals. No guarantees or warranties or other measures to secure the management or other entities' (such as the CEO, Chief Financial Officer) obligations were provided on behalf of the issuer during 2024, nor did the issuer grant any loans to these individuals.
During the 2024 period, ŽEMAITIJOS PIENAS, AB and Šilutės Rambynas, ABF did not enter into any transactions with related parties as defined by Article 372 of the Law on Companies of the Republic of Lithuania. Other transactions between the parties are specified in the Company’s financial statements.
ŽEMAITIJOS PIENAS, AB, acting in accordance with Article 12, Section 3 of the Securities Law of the Republic of Lithuania and Section 24.4 of the Listing Rules of AB “NASDAQ Vilnius”, discloses in this document how the Company complies with the NASDAQ Vilnius Listed Companies Corporate Governance Code, including its specific provisions and recommendations. If the Company does not comply with the Code or any of its provisions or recommendations, it must specify the particular provisions or recommendations that are not being followed and provide the reasons for non-compliance. Additionally, any other explanatory information as required by this form must be provided.
The Company’s governance structure consists of four levels: the General Meeting of Shareholders, the Supervisory Board, the Board of Directors, and the CEO. In 2024, the Supervisory Board consisted of three members, while the Board of Directors consisted of five members. The members of the Board of Directors are elected and removed by the Supervisory Board. On the other hand, the function of electing and removing Supervisory Board members lies with the General Meeting of Shareholders. The Board of Directors, within the powers granted by law, elects and dismisses the Company’s CEO.
The Company essentially complies with the recommendations of the NASDAQ Vilnius Listed Companies Corporate Governance Code, except for the recommendations related to the establishment of nomination and remuneration committees and the assignment of certain functions to the competencies of these committees (Sections 5.2 and 5.3). The Company maintains the position that the creation of these bodies would be excessive, disproportionate to the Company’s governance objectives, and would increase administrative costs. Moreover, the Board of Directors and the Supervisory Board are responsible for performing these functions (within their respective competencies). In the Company’s view, the committees would even duplicate functions.
| PRINCIPLES / RECOMMENDATIONS | YES / NO / NOT APPLICABLE | COMMENT |
|---|---|---|
| Principle I: The General Meeting of Shareholders, impartial treatment of shareholders, and shareholder rights within the Company’s governance system should ensure the impartial treatment of all shareholders. The Company’s governance system should protect shareholder rights. | ||
| 1.1. All shareholders should be provided with equal opportunities to access information and documents required by law and to participate in making important decisions for the company. | YES |
1.2. It is recommended that the company’s capital consist solely of shares that provide their holders with equal voting, ownership, dividend, and other rights.
Yes The Company's shares grant all shareholders equal rights.
1.3. It is recommended to provide investors with the opportunity to familiarize themselves in advance, i.e., before purchasing shares, with the rights granted by newly issued or already existing shares.
Yes The recommendations are followed in accordance with the procedures established by legal acts.
1.4. For transactions of critical importance, such as the transfer of all or nearly all of the company’s assets, which would essentially mean the transfer of the company, the approval of the General Meeting of Shareholders should be obtained.
Yes In accordance with the procedures and conditions established by legal acts.
1.5. The procedures for organizing and participating in the General Meeting of Shareholders should provide shareholders with equal opportunities to participate and should not violate their rights and interests. The selected venue, date, and time for the General Meeting of Shareholders should not hinder active shareholder participation. In the notice calling the General Meeting of Shareholders, the company should specify the latest date by which proposed resolution drafts can be submitted.
Yes In accordance with the procedures and conditions established by legal acts.
INFORMATION ON COMPLIANCE WITH THE NASDAQ VILNIUS LISTED COMPANIES CODE
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1.6. To ensure that shareholders residing abroad can access information, it is recommended that, where possible, the documents prepared for the General Meeting of Shareholders be publicly disclosed in advance, not only in Lithuanian but also in English and/or other foreign languages. The minutes of the General Meeting of Shareholders, after being signed, and/or the decisions made, should also be publicly disclosed not only in Lithuanian but also in English and/or other foreign languages. It is recommended that this information be published on the company’s website. Not all documents may be made publicly available if their disclosure could harm the company or reveal commercial secrets.
Yes The recommendations are followed, ensuring the rights of shareholders living abroad to access and/or familiarize themselves with the information.
1.7. Shareholders entitled to vote should be given the opportunity to vote at the General Meeting of Shareholders either in person or without attending. No obstacles should be placed for shareholders to vote in advance by filling out a general voting ballot.
Yes Shareholders are provided with the opportunity to vote both in advance and directly at the shareholders' meetings.
1.8. To increase shareholders' participation in the General Meetings of Shareholders, companies are recommended to widely apply modern technologies, thus allowing shareholders to participate and vote in the General Meetings using electronic communication methods. In such cases, the security of transmitted information must be ensured, and the identity of the participant and voter can be verified.
Yes The Company, having assessed the shareholders' reasonable, real, and practical proposals regarding the use of electronic means in the General Meetings of Shareholders, as well as considering other conditions, including the interests of all shareholders, economic costs, technological capabilities, and other aspects, would consider the recommendation.
1.9. The notice of the upcoming General Meeting of Shareholders should disclose the new candidates for the collegial body members, the proposed compensation for them, and the proposed appointment of the audit firm if these issues are included in the agenda. When proposing the election of a new collegial body member, it is recommended to provide information about their education, work experience, and any other managerial positions held (or proposed to be held).
Yes The recommendation is followed based on objective and reasonable possibilities.
1.10. Members of the company’s collegial bodies, the administration's managers, or other competent individuals related to the company, who can provide information related to the agenda of the General Meeting of Shareholders, should attend the General Meeting. Proposed candidates for the collegial body should also attend the General Meeting if the election of new members is included in the General Meeting agenda.
Yes The recommendation is followed based on objective and reasonable possibilities.
The Company’s Supervisory Board should ensure the representation of the company and its shareholders' interests, accountability to the shareholders, and objective and impartial supervision of the company’s activities and its governing bodies. Additionally, the Supervisory Board should continuously provide recommendations to the company’s governing bodies. The Supervisory Board should ensure the integrity and transparency of the company’s financial accounting and control systems.
Yes The majority of the Supervisory Board is independent, which ensures that their actions are carried out responsibly in relation to all stakeholders.
Yes The majority of the Supervisory Board is independent, which ensures that their actions are carried out responsibly with regard to all stakeholders.
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informed about the company’s strategy, risk management and control, and conflict of interest resolution.
Yes The majority of the Supervisory Board is independent, which ensures that their actions are carried out responsibly with respect to all stakeholders.
a) Remain independent when conducting analysis and making decisions;
b) Not seek or accept any undue benefits that may raise doubts about their independence.
Yes
Yes
Yes Conditions are created to ensure the proper performance of duties.
The procedure for forming the Supervisory Board should ensure the proper resolution of conflicts of interest and effective and fair corporate governance.
Yes
Yes
Yes
Yes
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For the twelve-month period ended 31 December 2024 49
proper performance of their duties as a Supervisory Board member.# Principle 2: Supervisory Board
2.2.5. When proposing the appointment of a Supervisory Board member, it should be disclosed which members are considered independent. The Supervisory Board may decide that a certain member, although meeting the independence criteria, cannot be considered independent due to specific personal or company-related circumstances.
Yes
2.2.6. The remuneration for the Supervisory Board members for their activities and participation in meetings should be approved by the General Meeting of Shareholders.
Yes
The annual budget for the remuneration of the Supervisory Board members is determined by the company's General Meeting of Shareholders.
2.2.7. Each year, the Supervisory Board should conduct a self-assessment of its performance. This should include an evaluation of the Supervisory Board's structure, organization of work, and ability to function as a group, as well as an evaluation of each member's competence and work efficiency and whether the Supervisory Board has achieved its set performance goals. The Supervisory Board should publish relevant information at least once a year about its internal structure and operational procedures.
Yes
Partially implemented.
The Board should ensure the implementation of the company’s strategy, as well as proper corporate governance, taking into account the interests of shareholders, employees, and other stakeholder groups.
3.1.1. The Board should ensure the implementation of the company’s strategy, as approved by the Supervisory Board, if one is established. In cases where the Supervisory Board is not established, the Board is also responsible for approving the company’s strategy.
Yes
The Board implements and executes strategic plans and objectives.
3.1.2. The Board, as a collegial management body of the company, performs the functions assigned to it by the Law and the company’s Articles of Association. In cases where the company does not have a Supervisory Board, among other things, it performs the oversight functions prescribed by the Law. When performing its functions, the Board should consider the needs of the company, shareholders, employees, and other stakeholder groups, accordingly aiming for the creation of sustainable business.
Yes
The Board, in performing its assigned functions, takes into account the needs of the company, shareholders, employees, and other stakeholder groups in order to create a sustainable business.
3.1.3. The Board should ensure that the laws and internal policies of the company, applicable to the company or the group of companies to which it belongs, are followed. It should also establish appropriate risk management and control measures to ensure regular and direct accountability of executives.
Yes
3.1.4. The Board should also ensure that measures included in the OECD’s good practice recommendations regarding internal control, ethics, and compliance are implemented in the company to ensure adherence to applicable laws, rules, and standards.
Yes
As far as possible.
3.1.5. When appointing the company’s CEO, the Board should consider the proper balance of the candidate’s qualifications, experience, and competence.
Taip
For the twelve-month period ended 31 December 2024
50
3.2.1. The members of the Board, elected by the Supervisory Board or General Meeting of Shareholders (if no Supervisory Board is established), should collectively ensure diversity in qualifications, professional experience, and competencies, and also strive for gender balance. To maintain a proper balance of qualifications within the Board, it should be ensured that the members, as a whole, possess diverse knowledge, opinions, and experience necessary for properly fulfilling their tasks.
Yes
3.2.2. The names, surnames, information about the candidates' education, qualifications, professional experience, current positions, other important professional commitments, and potential conflicts of interest should be disclosed in the Supervisory Board meeting, in which the Board members will be elected, without violating the data protection laws. If no Supervisory Board is formed, this information should be provided to the General Meeting of Shareholders. The Board should collect this information every year about its members and include it in the company’s annual report.
Yes
3.2.3. All new Board members should be familiarized with their duties, the company’s structure, and its operations.
Yes
All members are familiarized with their rights and duties.
3.2.4. Board members should be appointed for a defined term, with the possibility of being individually re-elected for a new term to ensure the necessary professional experience growth and sufficiently frequent re-confirmation of their status.
Yes
3.2.5. The Chairman of the Board should be someone whose current or former positions do not hinder the impartial performance of duties. When no Supervisory Board is established, a former CEO should not immediately be appointed as the Chairman of the Board. If the company decides not to follow these recommendations, information should be provided about the measures taken to ensure impartiality in its activities.
Yes/No
The Chairman of the Board holds the position of CEO but does not vote when decisions are made that could lead to a conflict of interest.
3.2.6. Each Board member should dedicate sufficient time and attention to performing their duties. If a Board member attended fewer than half of the Board meetings during the company’s financial year, the Supervisory Board should be informed, and if no Supervisory Board is formed, the General Meeting of Shareholders should be notified.
Yes
3.2.7. If, in cases prescribed by law, when electing the Board, and when no Supervisory Board is formed, some members of the Board are independent, it should be disclosed which Board members are considered independent. The Board may decide that a certain member, although meeting all the independence criteria set by law, may still not be considered independent due to specific personal or company-related circumstances.
Not relevant
3.2.8. The remuneration for the Board members’ activities and participation in Board meetings should be approved by the General Meeting of Shareholders.
Yes
The remuneration budget for independent members is approved by the company's General Meeting of Shareholders. Board members who are employed by the company under an employment contract do not receive additional remuneration.
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3.2.9. Board members should act honestly, diligently, and responsibly in the interests of the company and its shareholders, representing their interests, while also considering other stakeholders. When making decisions, they should not pursue personal interests, and they should be subject to non-compete agreements. They should also refrain from using business information and opportunities related to the company’s activities for personal benefit, thereby not violating the company’s interests.
Yes
3.2.10. Each year, the Board should conduct a self- assessment of its performance. This should include an evaluation of the Board’s structure, work organization, and ability to function as a group, as well as an evaluation of each Board member’s competence and work efficiency and an evaluation of whether the Board has achieved its established goals. The Board should publish relevant information about its internal structure and operational procedures at least once a year, in compliance with data protection laws.
Yes
Partially implemented.
The established work procedure for the Supervisory Board, if it is formed, and the Board should ensure the efficient functioning of these bodies and decision-making, while promoting active collaboration between the company’s governing bodies.
4.1. The Supervisory Board and the Board, if established, should closely collaborate to benefit both the company and its shareholders. Good corporate governance requires open discussion between the Board and the Supervisory Board. The Board should regularly, and immediately when necessary, inform the Supervisory Board about all important company matters related to planning, business development, risk management and control, and compliance with obligations within the company. The Board should inform the Supervisory Board about actual deviations in business development from previously formulated plans and objectives, specifying the reasons for those deviations.
Yes
4.2. It is recommended that meetings of the company’s collegial bodies be held with appropriate frequency based on a pre-approved schedule. Each company decides on the frequency of meetings of collegial bodies, but it is recommended that meetings be held frequently enough to ensure continuous decision-making on essential corporate governance issues. Meetings of the company’s collegial bodies should be held at least once per quarter.
Yes
An advance schedule is approved, specifying the meeting time, date, and agenda.
4.3. The members of the collegial body should be informed in advance about the scheduled meeting to allow sufficient time for proper preparation for the discussion of the matters on the agenda and enable a discussion, after which decisions can be made. Along with the notice of the scheduled meeting, all relevant material related to the meeting's agenda should be provided to the members of the collegial body. The agenda should not be changed or supplemented during the meeting, except when all members of the collegial body are present and agree to such changes or additions, or when urgent matters concerning the company need to be addressed.# ŽEMAITIJOS PIENAS, AB CONSOLIDATED MANAGEMENT REPORT
For the twelve-month period ended 31 December 2024
The committees established within the company should enhance the effectiveness of the Supervisory Board, or if no Supervisory Board is formed, the Board, which performs oversight functions, ensuring that decisions are made after proper consideration and helping to organize the work in a way that essential conflicts of interest do not influence the decisions. The committees should operate independently and with integrity, providing recommendations related to decisions of the collegial body, but the final decision is made by the collegial body itself.
Yes/No: The audit committee has been formed.
Yes/No: The principle is partially implemented.
Yes
Yes/No:
Yes
No: Not established, the functions are carried out by the collegial bodies.
No
The main functions of the Remuneration Committee should be as follows:
No: Not established, the functions are carried out by the collegial bodies.
Yes
Yes: All members of the audit committee are familiarized with the specifics of the company's operations, except for what is considered confidential information.
Yes: Conditions are provided for the implementation of the principle.
Yes
Yes
Yes
The company's governance system should encourage members of the company's supervisory and management bodies to avoid conflicts of interest and ensure a transparent and effective mechanism for disclosing conflicts of interest among the members of the company's supervisory and management bodies. A member of the company’s supervisory or management body should avoid situations where their personal interests conflict or may conflict with the company’s interests. If such a situation arises, the member of the supervisory or management body should inform the other members of the same body or the governing body that elected them, or the company’s shareholders, within a reasonable timeframe, about the conflict of interest situation, specifying the nature of the interests and, if possible, their value.
Yes: The principle is followed, as each member of the supervisory and management bodies submits a written declaration and confirms their interests, committing to avoid conflicts of interest.# Principle: The Company's Remuneration Policy
The company's established remuneration policy, along with its review and publication procedure, should prevent potential conflicts of interest and abuse in determining the remuneration of members of the collegial bodies and administrative heads, as well as ensure the transparency, public availability, and alignment of the company's remuneration policy with the long-term company strategy.
The company should approve and publish its remuneration policy on the company's website, which should be regularly reviewed and align with the company’s long- term strategy.
Yes
The company implements a remuneration policy for the CEO, Board members, and Supervisory Board members, which is publicly disclosed.
The remuneration policy should cover all forms of remuneration, including fixed salary, performance-based remuneration, incentive systems using financial instruments, pension schemes, severance payments, and the conditions that outline situations where the company can recover paid amounts or suspend payments.
Yes
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To avoid potential conflicts of interest, the remuneration policy should stipulate that members of collegial bodies performing supervisory functions should not receive remuneration that depends on the company’s performance.
Yes
The remuneration policy should provide sufficient detail regarding the severance pay policy. Severance payments should not exceed a specified amount or the equivalent of a set number of annual salaries, and should generally not be greater than the equivalent of two years of fixed salary. Severance payments should not be made if the contract is terminated due to poor performance.
Not relevant
Severance payments are not specified in the company's remuneration policy.
If the company has an incentive system based on financial instruments, the remuneration policy should provide sufficient information about the retention of shares after the rights are granted. In cases where remuneration is based on share allocation, the right to shares should not be granted for at least three years after their allocation. After the rights are granted, members of the collegial bodies and administrative heads should retain a certain number of shares until the end of their term, depending on the need to cover any costs related to purchasing the shares.
Not relevant
The company does not have an incentive system based on financial instruments.
The company should publish information on the implementation of the remuneration policy on the company’s website, focusing on the remuneration policy for the collegial bodies and management for the upcoming, and where applicable, subsequent financial years. This should also include a review of how the remuneration policy was implemented in the previous financial year. Such information should not contain commercially valuable information. Special attention should be given to significant changes in the company’s remuneration policy compared to the previous financial year.
Yes
Information about the implementation of the company’s remuneration policy and the average salaries of different employee groups is publicly disclosed in the company’s annual report, which is published on the company’s website.
It is recommended that the remuneration policy or any significant changes to the remuneration policy be included in the agenda of the General Meeting of Shareholders. Schemes under which members of the collegial body and employees are compensated with shares or stock options should be approved by the General Meeting of Shareholders.
Yes
The mentioned schemes are not applied in the company.
The corporate governance system should recognize the rights of stakeholders as established by law or mutual agreements and promote active collaboration between the company and its stakeholders in creating the company’s prosperity, jobs, and financial stability. In the context of this principle, the term "stakeholders" includes investors, employees, creditors, suppliers, customers, local communities, and other individuals with an interest in the specific company.
The corporate governance system should ensure that the rights and legitimate interests of stakeholders are respected.
Yes
The implementation of the 8th principle is ensured by the precise oversight and control of the company’s activities by state institutions, regulators, and supervisory authorities. The company conducts consultations and meetings with employee representatives regarding the operational processes carried out within the company. Stakeholders can participate in the company’s governance as provided by law.
The corporate governance system should enable stakeholders to participate in the company’s governance in accordance with the law. Examples of stakeholder participation in corporate governance could include the involvement of employees or their representatives in making important decisions for the company, consultations with employees or their representatives on corporate governance and other significant matters, employee participation in the company’s share capital, creditor involvement in corporate governance during the company’s insolvency, and more.
Yes
When stakeholders participate in the corporate governance process, they should be provided with the necessary information to familiarize themselves with.
Yes
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Stakeholders should be provided with a means to confidentially report illegal or unethical practices to the collegial body responsible for oversight.
Yes
The corporate governance system should ensure that information about all essential company matters, including its financial situation, operations, and corporate governance, is disclosed in a timely and accurate manner.
Without violating the company’s confidential information and trade secrets management procedures, as well as the legal requirements governing the processing of personal data, the company should disclose public information that should include, but is not limited to:
the company’s activities and financial results;
the company’s operational goals and non-financial information;
individuals who own the company’s shares, directly and/or indirectly, and/or together with related persons, as well as the group structure and interrelations of companies, indicating the ultimate beneficiary;
members of the company’s supervisory and management bodies who are considered independent, the company’s CEO, their shares or votes in the company, participation in the governance of other companies, their competence, and remuneration;
reports of existing committees regarding their composition, number of meetings, and member participation in meetings over the past year, as well as their main activities and results;
possible major risk factors, the company’s risk management and oversight policy;
the company’s transactions with related parties;
key issues related to employees and other stakeholders (e.g., human resources policy, employee participation in the company’s governance, incentivizing with company shares or stock options, relations with creditors, suppliers, local communities, etc.);
the company’s governance structure and strategy;
corporate social responsibility policies, anti- corruption initiatives and measures, significant ongoing or planned investment projects.
This list is considered minimal, and companies are encouraged not to limit themselves to only disclosing the information listed here. This principle of the Code does not exempt the company from the obligation to disclose information required by legal acts.
Yes
The information is disclosed publicly in accordance with the legal requirements, and conditions are provided for shareholders to access it through other means, except for information or data that are confidential.
When disclosing the information specified in point 9.1.1, it is recommended that the company, which is a parent company to other companies, disclose information about the consolidated results of the entire group.
Yes
Please refer to the above comment regarding point 9.1.
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When disclosing the information specified in point 9.1.4, it is recommended to provide information about the professional experience, qualifications, and potential conflicts of interest of the members of the company’s supervisory and management bodies, and the CEO, which could affect their decisions. It is also recommended to disclose the remuneration or other income received by the members of the supervisory and management bodies, and the CEO from the company, as detailed in Principle 7.
Yes
Please refer to the above comment regarding point 9.1.
The information should be disclosed in such a way that no shareholders or investors are discriminated against regarding the method and scope of information they receive. The information should be disclosed to all at the same time.
Yes
Please refer to the above comment regarding point 9.1.
The mechanism for selecting the company’s audit firm should ensure the independence of the audit firm's conclusions and opinions.
In order to obtain an objective opinion on the company’s financial position and financial performance, the audit of the company’s annual financial statements and the financial information presented in the annual report should be performed by an independent audit firm.
Yes
The audit is performed by an independent company.
ŽEMAITIJOS PIENAS, AB
Registration number 180240752, Sedos str. 35, Telšiai, Lithuania
PAGE
FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL STATEMENTS:
STATEMENTS OF FINANCIAL POSITION ------------------------------------------------- 3
STATEMENTS OF COMPREHENSIVE INCOME------------------------------------------ 4
STATEMENTS OF CHANGES IN EQUITY-------------------------------------------------- 5-6
STATEMENTS OF CASH FLOW---------------------------------------------------------------- 7
EXPLANATORY NOTES--------------------------------------------------------------------------- 8-51
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
(All amounts in EUR thousands unless otherwise stated)
| As at 31 December 2024 | As at 31 December 2023 | As at 31 December 2024 | As at 31 December 2023 | ||
|---|---|---|---|---|---|
| The Group | The Group | The Company | The Company | ||
| ASSETS | |||||
| Non-current assets | |||||
| Intangible assets | 5 | 218 | 144 | 218 | 144 |
| Property, plant and equipment | 5 | 80.119 | 66.559 | 72.030 | 58.868 |
| Investment property | 6 | 2.237 | 2.551 | 2.219 | 2.468 |
| Right-of-Use assets | 7 | 894 | 1.367 | 894 | 1.367 |
| Investments in subsidiaries and associates | 1 | - | 3.150 | 3.150 | |
| Loans granted | 8 | 1.307 | 1.400 | 1.307 | 1.400 |
| Other financial assets | - | - | - | - | |
| Deferred income tax asset | 27 | 1.163 | 293 | 1.414 | 395 |
| Total non-current assets | 85.938 | 72.314 | 81.232 | 67.792 | |
| Current assets | |||||
| Inventories | 9 | 51.678 | 50.580 | 49.492 | 48.225 |
| Prepayments | 335 | 426 | 299 | 388 | |
| Trade accounts receivable | 10 | 26.853 | 23.273 | 26.797 | 23.235 |
| Other accounts receivable | 11 | 3.931 | 1.636 | 3.931 | 1.636 |
| Cash and cash equivalents | 12 | 31.992 | 18.246 | 26.294 | 15.905 |
| Total current assets | 114.789 | 94.161 | 106.813 | 89.389 | |
| TOTAL ASSETS | 200.727 | 166.475 | 188.045 | 157.181 | |
| EQUITY AND LIABILITIES | |||||
| Capital and reserves | |||||
| Share capital | 13 | 12.104 | 12.104 | 12.104 | 12.104 |
| Own shares (-) | 13 | (389) | (389) | (389) | (389) |
| Legal reserve | 13 | 1.403 | 1.403 | 1.403 | 1.403 |
| Other reserves | 13 | 10.200 | 10.200 | 10.200 | 10.200 |
| Retained earnings | 120.666 | 98.841 | 111.243 | 92.020 | |
| Equity attributable to equity holders of the Company | 14 | 143.984 | 122.159 | 134.561 | 115.338 |
| Non-controlling interest | 16 | 1.922 | 1.585 | - | - |
| Total Equity | 145.906 | 123.744 | 134.561 | 115.338 | |
| Non-current liabilities | |||||
| Grants received | 14 | 2.836 | 2.445 | 2.672 | 2.175 |
| Loans received | 19 | 9.284 | 7.041 | 9.284 | 7.041 |
| Obligations under finance lease | 18 | 515 | 1.126 | 515 | 1.126 |
| Deferred Corporate income tax liability | - | - | - | - | |
| Long term provision for defined employee benefits | 15 | 6.870 | 3.862 | 6.661 | 3.669 |
| Total non-current liabilities | 19.505 | 14.474 | 19.132 | 14.011 | |
| Current liabilities | |||||
| Loans received | 19 | 3.234 | 2.933 | 3.234 | 2.933 |
| Obligations under finance lease | 18 | 766 | 796 | 766 | 796 |
| Trade accounts payable | 20 | 21.498 | 15.389 | 21.498 | 15.751 |
| Income tax payable | 1.712 | 2.295 | 1.544 | 2.225 | |
| Accrued expenses and other current liabilities | 15, 21 | 8.106 | 6.844 | 7.310 | 6.127 |
| Total current liabilities | 35.316 | 28.257 | 34.352 | 27.832 | |
| Total liabilities | 54.821 | 42.731 | 53.484 | 41.843 | |
| TOTAL EQUITY AND LIABILITIES | 200.727 | 166.475 | 188.045 | 157.181 |
The accompanying explanatory notes are an integral part of these consolidated and Company financial statements.
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
(All amounts in EUR thousands unless otherwise stated)
| Notes | 2024 | 2023 | 2024 | 2023 | |
|---|---|---|---|---|---|
| The Group | The Group | The Company | The Company | ||
| REVENUE FROM CONTRACTS WITH CUSTOMERS | 22 | 307.643 | 278.004 | 306.653 | 277.305 |
| SALES | 22 | - | - | - | - |
| Cost of sales | (234.991) | (217.036) | (238.832) | (219.987) | |
| GROSS PROFIT | 72.652 | 60.968 | 67.821 | 57.318 | |
| Operating expenses | 23 | (43.541) | (35.757) | (41.943) | (34.120) |
| Other operating income and expenses | 24 | 588 | 253 | 565 | 209 |
| PROFIT (LOSS) FROM OPERATIONS | 29.699 | 25.464 | 26.443 | 23.407 | |
| Financial income and expenses | 25 | 754 | (401) | 754 | (401) |
| PROFIT (LOSS) BEFORE TAX | 30.453 | 25.063 | 27.197 | 23.006 | |
| Income tax benefit (expense) | 26 | (3.157) | (3.614) | (2.840) | (3.338) |
| NET PROFIT (LOSS) | 27.296 | 21.449 | 24.357 | 19.668 | |
| ATTRIBUTABLE TO: | |||||
| Equity holders of the Company | 26.959 | 21.253 | 24.357 | 19.668 | |
| Non-controlling interest | 337 | 196 | - | - | |
| 27.296 | 21.449 | 24.357 | 19.668 | ||
| Basic and diluted earnings per share (EUR) | 17 | 0.65 | 0.51 | 0.59 | 0.47 |
| Other comprehensive income (loss) not to be reclassified to profit or loss in subsequent periods | |||||
| Actuarial gains (losses) from long term provision for defined employee benefits, less deferred income tax | (3.058) | 199 | (3.058) | 199 | |
| Net other comprehensive income (loss) not to be reclassified to profit or loss in subsequent periods | (3.058) | 199 | (3.058) | 199 | |
| Total comprehensive income (loss) for the year, net of tax | 24.238 | 21.648 | 21.299 | 19.867 | |
| ATTRIBUTABLE TO: | |||||
| Equity holders of the Company | 23.901 | 21.452 | 21.299 | 19.867 | |
| Non-controlling interest | 337 | 196 | - | - | |
| 24.238 | 21.648 | 21.299 | 19.867 |
The accompanying explanatory notes are an integral part of these consolidated and Company financial statements.
Company code 180240752, Sedos str. 35, Telšiai, Lithuania
(All amounts in EUR, in thousands, unless otherwise stated)
| Share capital | Own shares (-) | Legal reserve | Other reserves | Retained earnings | Total equity attributable to equity holders of the Company | Non-controlling interest | Total equity | |
|---|---|---|---|---|---|---|---|---|
| The Group | ||||||||
| Balance as of 31 December 2022 | 12.104 | (389) | 1.403 | 11.600 | 75.989 | 100.707 | 1.389 | 102.096 |
| Net profit | - | - | - | - | 21.253 | 21.253 | 196 | 21.449 |
| Other comprehensive income | - | - | - | - | 199 | 199 | - | 199 |
| Total comprehensive income | - | - | - | - | 21.452 | 21.452 | 196 | 21.648 |
| Acquisition of own shares | - | - | - | - | - | - | - | - |
| Transfer to/from reserves | - | - | - | 200 | (200) | - | - | - |
| Used of reserves | - | - | - | (1.600) | 1.600 | - | - | - |
| Authorized capital increase-decrease | - | - | - | - | - | - | - | - |
| Balance as of 31 December 2023 | 12.104 | (389) | 1.403 | 10.200 | 98.841 | 122.159 | 1.585 | 123.744 |
| Dividends paid | - | - | - | - | (2.076) | (2.076) | - | (2.076) |
| Net profit | - | - | - | - | 26.959 | 26.959 | 337 | 27.296 |
| Other comprehensive income | - | - | - | - | (3.058) | (3.058) | - | (3.058) |
| Total comprehensive income | - | - | - | - | 23.901 | 23.901 | 337 | 24.238 |
| Acquisition of own shares | - | - | - | - | - | - | - | - |
| Transfer to/from reserves | - | - | - | - | - | - | - | - |
| Used of reserves | - | - | - | - | - | - | - | - |
| Authorized capital increase-decrease | - | - | - | - | - | - | - | - |
| Balance as of 31 December 2024 | 12.104 | (389) | 1.403 | 10.200 | 120.666 | 143.984 | 1.922 | 145.906 |
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
(All amounts in EUR thousands unless otherwise stated)
| Share capital | Own shares (-) | Legal reserve | Other reserves | Retained earnings | Total equity | |
|---|---|---|---|---|---|---|
| The Company | ||||||
| Balance as of 31 December 2022 | 12.104 | (389) | 1.403 | 11.600 | 70.753 | 95.471 |
| Net profit | - | - | - | - | 19.668 | 19.668 |
| Other comprehensive income | - | - | - | - | 199 | 199 |
| Total comprehensive income | - | - | - | - | 19.867 | 19.867 |
| Acquisition of own shares | - | - | - | - | - | - |
| Transfer to/from reserves | - | - | - | 200 | (200) | - |
| Used of reserves | - | - | - | (1.600) | 1.600 | - |
| Authorized capital increase- decrease | - | - | - | - | - | - |
| Balance as of 31 December 2023 | 12.104 | (389) | 1.403 | 10.200 | 92.020 | 115.338 |
| Dividends paid | - | - | - | - | (2.076) | (2.076) |
| Net profit | - | - | - | - | 24.357 | 24.357 |
| Other comprehensive income | - | - | - | - | (3.058) | (3.058) |
| Total comprehensive income | - | - | - | - | 21.299 | 21.299 |
| Acquisition of own shares | - | - | - | - | - | - |
| Transfer to/from reserves | - | - | - | - | - | - |
| Used of reserves | - | - | - | - | - | - |
| Authorized capital increase- decrease | - | - | - | - | - | - |
| Balance as of 31 December 2024 | 12.104 | (389) | 1.403 | 10.200 | 111.243 | 134.561 |
The accompanying explanatory notes are an integral part of these consolidated and Company financial statements.
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
(All amounts in EUR thousands unless otherwise stated)
| Notes | 2024 | 2023 | 2024 | 2023 | |
|---|---|---|---|---|---|
| The Group | The Group | The Company | The Company | ||
| Cash flows to operating activities | |||||
| Profit (loss) for the period | 27 | 27.296 | 21.449 | 24.357 | 19.668 |
| Adjustments: | |||||
| Depreciation and amortization | 5,6 | 6.274 | 6.029 | 5.757 | 5.545 |
| Amortization of grants received | 14 | (263) | (291) | (228) | (253) |
| Depreciation right-of-use assets | 7 | 704 | 705 | 704 | 705 |
| Gain (loss) on disposal and write offs of non-current assets | (186) | 0 | (181) | 4 | |
| Decrease (increase) in deferred tax asset | 27 | (871) | 307 | (1.019) | 100 |
| Impairment (reversal) of accounts receivable | 10 | (8) | 532 | (8) | 532 |
| Net financial expenses (income) | 377 | 389 | 377 | 427 | |
| Impairment (reversal) of inventories to net realizable value | 9 | (220) | (2.321) | (65) | (2.441) |
| Elimination of non-cash items | (3.058) | 325 | (3.058) | 325 | |
| Net cash flows from ordinary activities before changes in working capital | 30.045 | 27.124 | 26.636 | 24.612 | |
| Changes in working capital: | |||||
| (Increase) decrease in inventories | 9 | (877) | 20.785 | (1.203) | 20.424 |
| (Increase) decrease in trade receivables | 10 | (3.573) | 206 | (3.554) | 180 |
| (Increase) decrease in prepayments | 90 | (141) | 88 | (129) | |
| (Increase) decrease in other receivables | (2.236) | 581 | (2.236) | 538 | |
| (Decrease) increase in trade payables | 20 | 6.109 | (4.696) | 5.747 | (3.920) |
| (Decrease) increase | |||||
| :------------------------------------------------------------------- | -------: | -------: | -------: | -------: | |
| other accounts payable | 5.710 | 2.903 | 5.616 | 2.651 | |
| income tax payables | (2.124) | (666) | (2.222) | (666) | |
| Net cash flows from operating activities | 33.144 | 46.096 | 28.872 | 43.690 | |
| Cash flows from (to) investing activities | |||||
| (Acquisition) of intangible assets and property, plant and equipment | (19.805) | (13.482) | (18.952) | (12.215) | |
| Proceeds on sale of property, plant and equipment | 397 | 604 | 389 | 100 | |
| Acquisition of right-of-use assets | (239) | (219) | (239) | (219) | |
| Repayment of loans granted | 1.370 | 2.484 | 1.369 | 2.484 | |
| Loans granted | (1.335) | (1.267) | (1.335) | (1.267) | |
| Interest received | 785 | 210 | 785 | 210 | |
| Net cash flows (to) investing activities | (18.827) | (11.670) | (17.983) | (10.907) | |
| Cash flows from (to) financing activities | |||||
| Dividends paid | (1.975) | - | (1.975) | - | |
| (Acquisition) of own shares | - | - | - | - | |
| Grants received | 654 | 93 | 725 | 56 | |
| Financial lease payments | (641) | (786) | (641) | (786) | |
| Loan received | 5.476 | 3.724 | 5.476 | 3.724 | |
| Loan (payments) | (2.933) | (20.235) | (2.933) | (20.235) | |
| Other financial (income) and expenses | (490) | 44 | (490) | 44 | |
| Interest (payments) | (662) | (745) | (662) | (745) | |
| Net cash flows from (to) financial activities | (571) | (17.905) | (500) | (17.942) | |
| Net increase (decrease) in cash and cash equivalents | 13.746 | 16.521 | 10.389 | 14.841 | |
| Cash and cash equivalents at the beginning of the year | 18.246 | 1.725 | 15.905 | 1.064 | |
| Cash and cash equivalents at the end of the year | 31.992 | 18.246 | 26.294 | 15.905 |
The accompanying explanatory notes are an integral part of these consolidated and Company financial statements.
ŽEMAITIJOS PIENAS AB
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS
EXPLANATORY NOTES
FOR THE YEAR ENDED 31 DECEMBER 2024
(All amounts in EUR thousands unless otherwise stated)
8
Reporting entity
AB “Žemaitijos Pienas” (hereinafter – the Company) is a public limited liability company registered in the Republic of Lithuania. The address of the Company’s registered office is as follows: Sedos Str. 35, Telšiai, Lithuania.
The Company produces dairy products and sells them in the Lithuanian and foreign markets. The Company has a number of wholesale departments with storage facilities and transport means in major Lithuanian towns.
The Company started its operations in 1984. AB “Žemaitijos Pienas” is a Lithuanian public listed company with shares traded on AB NASDAQ OMX Vilnius. The nominal value of one share is 0,29 EUR.
As at 31 December 2024 and 2023, its shares are held by the following shareholders:
| Shareholder | Number of shares | Ownership % | Number of shares | Ownership % |
|---|---|---|---|---|
| Pažemeckas Algirdas | 14.063.152 | 33,69% | 14.063.152 | 33,69% |
| Pažemeckienė Danutė | 14.014.581 | 33,58% | 14.014.581 | 33,58% |
| AB Klaipėdos pienas, code 240026930, Šilutės pl. 33, 91107 Klaipėda | 2.901.844 | 6,95% | 2.901.844 | 6,95% |
| UAB Baltic Holding, code 302688114. Vilhelmo Berbomo g. 9-4, Klaipėda | 4.530.380 | 10,86% | 4.530.380 | 10,86% |
| Other shareholders | 6.005.523 | 14,39% | 6.005.523 | 14,39% |
| “Žemaitijos pienas” AB | 222.020 | 0,53% | 222.020 | 0,53% |
| Total share capital, shares units | 41.737.500 | 100,00% | 41.737.500 | 100,00% |
The management report provides detailed information about the main shareholders, see p.36 All shares are issued, subscribed and paid for. The Company has not acquired any treasury shares during the period 2023-2024.
As at 31 December 2024 and 2023 the Group consisted of AB “Žemaitijos Pienas” and the subsidiary of the Company ABF Šilutės Rambynas:
| Subsidiary | Registration Number | Main address | Ownership Percentage of Group | Cost of investment as of 31 December 2024 | Cost of investment as of 31 December 2023 | Net assets 2024 |
|---|---|---|---|---|---|---|
| ABF Šilutės Rambynas | Šilutės g. 3, Šilutė, Lietuva | 87,82% | 3.150 | 3.150 | 15.779 |
activities: Cheese production and selling
The subsidiary ABF Šilutės Rambynas does not hold any shares of AB “Žemaitijos Pienas” as at 31 December 2023 and 2024.
The Company employed 1.316 employees as at 31 December 2024 (1.288 employees as at 31 December 2023). The Group employed 1.481 employees as at 31 December 2024 (1.445 employees as at 31 December 2023).
The Management of the Company has approved these financial statements as at 3 April 2025. The shareholders of the Company have a statutory right to either approve these financial statements or not approve them and require the management to prepare a new set of financial statements.
ŽEMAITIJOS PIENAS AB
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS
EXPLANATORY NOTES
FOR THE YEAR ENDED 31 DECEMBER 2024
(All amounts in EUR thousands unless otherwise stated)
9
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union (EU).
Basis of preparation of the financial statements
ESEF reporting
The Group is required to present its annual accounts in Electronic Single Electronic Format (ESEF) using XHTML format and to label the consolidated financial statements, including the notes, using Inline eXtensible Business Reporting Language (iXBRL). The annual financial statements prepared comply with the 2022 taxonomy. If a line or block of text in the financial statements is not defined in the ESEF taxonomy, a taxonomy extension is created.
The amounts in these financial statements are presented in EUR, rounded to thousands. Due to rounding errors, the numbers in the statements may not match.
The financial statements are prepared on the historical cost basis. The financial year of the Company and other Group companies coincides with the calendar year.
When preparing financial statements in accordance with IFRS adopted for EU application, management is required to make calculations and estimates on the basis of certain assumptions that influence the choice of accounting principles and the amounts of Assets, Liabilities, Income and Costs. Estimates and related assumptions are based on historical experience and factors reflecting current conditions. On the basis of the above assumptions and estimates, the residual values of assets and liabilities are deduced from other sources. Actual results may differ from estimates. The estimates and their assumptions are reviewed on an ongoing basis. The effect of a change in an accounting estimate is recognized in the period in which the estimate is revised if it only affects that period, or in the period of the revision and subsequent periods if the estimate affects both the revision and future periods (Note 4).
The accounting policies set out below have been consistently applied and are in line with those applied last year.
Principles of consolidation and investments in subsidiaries and associates
The consolidated financial statements of the Group include AB Žemaitijos Pienas and its subsidiary and associate. The financial statements of the subsidiary and the associate are prepared for the same reporting period and use the same accounting principles. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date on which control is transferred outside the Group. All intercompany transactions, balances and unrealized profit and losses on transactions between Group companies have been eliminated. Equity and net income attributable to a minority of shareholders, if any, are disclosed separately in the statement of financial position and comprehensive income.
Control is achieved when the Group determines whether it is entitled to variable returns from its involvement in the investment and has the ability to affect that return through its influence on the investment. The Group controls an investment when, and only when, the Group has:
- Impact on the investment (i.e. rights exist that allow the management of the investment activity in question);
- The right to variable returns from its participation in the investment;
- The ability to use its influence on the investment to influence returns.
It is commonly assumed that most voting rights confer control. The net result of a subsidiary is attributable to a minority of shareholders even if the result is negative. Acquisitions and disposals of minority interest in the Group are accounted for as an equity transaction: the difference between the net assets acquired/transferred to the minority in the Group's financial statements and the purchase/sale price of the shares is recognized directly in equity.
ŽEMAITIJOS PIENAS AB
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS
EXPLANATORY NOTES
FOR THE YEAR ENDED 31 DECEMBER 2024
(All amounts in EUR thousands unless otherwise stated)
10
Investment in an associate
An associate is an entity over which the Company has significant influence, but does not control the financial and operating policies. Significant influence is presumed to exist when the Company holds between 20 and 50 percent of the voting power of another company. The Group accounts for investments in associates using the equity method. Under the equity method, an investment in an associate is carried in the statement of financial position at cost adjusted for the change in the net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is not subject to depreciation or individual impairment. The result of the associate is recognized in the statement of comprehensive income.
Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is determined by adding the fair value of the consideration transferred at the acquisition date to the amount of the minority interest in the acquire, if any. For each business combination, the acquirer shall measure the minority interest in the acquire either at fair value or at the proportionate share of the acquire identifiable net assets.# Acquisition costs incurred are written off and included in administrative expenses.
If the business combination is achieved in stages, the acquirer's previously owned interest in the acquire is measured at fair value at the acquisition date through the statement of comprehensive income. A contingent consideration to be paid by the buyer is recognized at fair value at the acquisition date. Subsequent estimates of the contingent consideration that is considered an asset or liability are recognized at fair value through profit or loss or as a change in other comprehensive income. If the contingent consideration is classified as equity, it is not remeasured and its subsequent payment is recognized in equity. Goodwill is recognized at cost and is the amount by which the full amount of the consideration transferred, including the amount recognized as a minority interest, exceeds the net amount of the assets acquired and liabilities recognized. If this consideration is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized in the statement of comprehensive income. Subsequent to initial recognition, goodwill is stated at cost less any accumulated impairment losses. For the purpose of assessing impairment, goodwill acquired in a business combination from the acquisition date is allocated to those cash generating units of the Group that are expected to benefit from the combination, whether or not the acquire other assets or liabilities are classified as such. When goodwill forms part of a cash-generating unit and part of the activities of that unit is sold, the goodwill relating to the sale is included in the carrying amount of the sale of the business for the purpose of determining profit or loss on disposal. In this case, the goodwill sold is measured by the relative value of the activity sold relative to the rest of the cash-generating unit.
The Company accounts for its investments in subsidiaries using the acquisition cost method. The Company determines at the end of each period whether there are objective reasons that could determine the value of an investment in a subsidiary.
In the statement of financial position of the Company, investments in subsidiaries are accounted for at cost less impairment. Accordingly, at initial recognition, the investment is carried at cost, being the fair value of the consideration paid, less any impairment loss. The carrying amount of an investment is measured when events or changes in circumstances indicate that the investment's carrying amount may exceed its recoverable amount (higher
ŽEMAITIJOS PIENAS AB
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS
EXPLANATORY NOTES FOR THE YEAR ENDED 31 DECEMBER 2024
(All amounts in EUR thousands unless otherwise stated)
11
of fair value less costs to sell or value in use). In case of such circumstances, the Company makes an assessment of the recoverable amount of the investment. If the carrying amount of an investment exceeds its recoverable amount , the investment is written down to its recoverable amount. Impairment is recognized in the statement of comprehensive income, under general and administrative expenses.
In the current year, the Company and Group has adopted all of the new and revised Standards and Interpretations that are relevant to its operations and effective for accounting periods beginning on 1 January 2024
The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position debt and other liabilities with an uncertain settlement date should be classified as current or non-current. The amendments affect the presentation of liabilities in the statement of financial position and do not change existing requirements around measurement or timing of recognition of any asset, liability, income or expenses, nor the information that entities disclose about those items. Also, the amendments clarify the classification requirements for debt which may be settled by the company issuing own equity instruments.
Modify the requirements introduced by Classification of Liabilities as Current or Non-current on how an entity clas- sifies debt and other financial liabilities as current or non-current in particular circumstances: only covenants with which an entity is required to comply on or before the reporting date affect the classification of a liability as current or non-current. In addition, an entity has to disclose information in the notes that enables users of financial statements to understand the risk that non-current liabilities with covenants could become repayable within twelve months. The amendments are applied retrospectively in accordance with IAS 8 and earlier application is permitted. The amendments do not have a material impact on the Group's/Company's financial statements
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) requires a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognize any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from recognizing in profit or loss any gain or loss relating to the partial or full termination of a lease. A seller-lessee applies the amendments retrospec- tively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to sale and leaseback transactions entered into after the date of initial application. The amendments do not have a material impact on the Group's/Company's financial statements
Supplier Finance Arrangements amends IAS 7 Statement of Cash Flows to require an entity to provide additional disclosures about its supplier finance arrangements. The amendments also add supplier finance arrangements as an
ŽEMAITIJOS PIENAS AB
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS
EXPLANATORY NOTES FOR THE YEAR ENDED 31 DECEMBER 2024
(All amounts in EUR thousands unless otherwise stated)
12
example within the liquidity risk disclosure requirements of IFRS 7 Financial Instruments: Disclosures. The amendments do not have a material impact on the Group's/Company's financial statements
Lack of Exchangeability amends IAS 21 The Effects of Changes in Foreign Exchange Rates to require an entity to apply a consistent approach to assessing whether a currency is exchangeable into another currency and, when it is not, to determining the exchange rate to use and the disclosures to provide. The Company has not yet evaluated the impact of the implementation of these amendments.
The amendments are to the own-use requirements, and hedge accounting requirements, together with related disclosures. The scope of the amendments is narrow, and only if contracts meet the specified scoping characteristics will they be in the scope of the amendments. The amendments include - clarifying the application of the ‘own-use’ requirements; permitting hedge accounting if these contracts are used as hedging instruments; and adding new disclosure requirements to enable investors to understand the effect of these contracts on a company’s financial performance and cash flows.
The IASB amends IFRS 7 and IFRS 19 to introduce disclosure requirements about contracts for nature-dependent electricity with specified characteristics
The amendments are effective for annual reporting periods beginning on or after 1 January 2026. Early application is permitted.# ŽEMAITIJOS PIENAS AB
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
(All amounts in EUR thousands unless otherwise stated)
The amendments shall be applied retrospectively; prior periods need not be restated to reflect the application of the amendments. The Company has not yet evaluated the impact of the implementation of these amendments.
These amendments include clarifications, simplifications, corrections and changes aimed at improving the consistency of several IFRS Accounting Standards. The amendments contained in the Annual Improvements relate to:
These amendments are mandatory for financial years beginning on or after 1 January 2026; earlier application is permitted. The Company has not yet evaluated the impact of the implementation of these amendments.
Clarifying the classification of financial assets with environmental, social and corporate governance (ESG) and similar features—ESG-linked features in loans could affect whether the loans are measured at amortized cost or fair value. Stakeholders asked how to determine how such loans should be measured based on the characteristics of the contractual cash flows. To resolve any potential diversity in practice, the amendments clarify how the contractual cash flows on such loans should be assessed.
Settlement of liabilities through electronic payment systems—stakeholders highlighted challenges in applying the derecognition requirements in IFRS 9 to the settlement of a financial asset or a financial liability via electronic cash transfers. The amendments clarify the date on which a financial asset or financial liability is derecognized. The IASB also decided to develop an accounting policy option to allow a company to derecognize a financial liability before it delivers cash on the settlement date if specified criteria are met.
With these amendments, the IASB has also introduced additional disclosure requirements to enhance transparency for investors regarding investments in equity instruments designated at fair value through other comprehensive income and financial instruments with contingent features, for example features tied to ESG-linked targets.
The amendments are effective for annual reporting periods beginning on or after 1 January 2026. Earlier application of either all the amendments at the same time or only the amendments to the classification of financial assets is permitted. An entity is required to apply the amendments retrospectively. An entity is not required to restate prior periods to reflect the application of the amendments, but may do so if, and only if, it is possible to do so without the use of hindsight. The Company has not yet evaluated the impact of the implementation of these amendments.
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
(All amounts in EUR thousands unless otherwise stated)
IFRS 18 introduces new requirements on presentation within the statement of profit or loss, including specified totals and subtotals. It also requires disclosure of management-defined performance measures and includes new requirements for aggregation and disaggregation of financial information based on the identified ‘roles’ of the primary financial statements and the notes. The Company has not yet evaluated the impact of the implementation of this standard.
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. The cost of acquisition of an asset of the Company/Group consists of the costs directly attributable to the acquisition of the asset. The cost of an item of property, plant and equipment includes the cost of materials, direct labour, and other costs incurred in producing the asset before it is used, dismantling, removing, and reconditioning the asset. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
Subsequent to initial recognition, any costs incurred in replacing a component of property, plant and equipment or related to its reconstruction are capitalized only to the extent that it is probable that future economic benefits will flow to the asset and the cost of the new component can be measured reliably. All other costs are recognized as an expense when they are incurred.
Depreciation (amortization) starts on the month following the commencement date of the respective unit of plant, property and equipment. The commencement date is the date when the asset is actually ready for use. The transfer of non-current assets for use is formalized by the transfer and acceptance of non-current assets. Depreciation (amortization) is no longer calculated from the following month when the non-current asset is classified as held for sale or is written off, sold or otherwise disposed of.
Depreciation (amortization) on property, plant and equipment and intangible assets is calculated using the proportional (straight-line) method of depreciation (amortization) over the estimated useful life of the asset. The amount of depreciation (amortization) accrued during the period is recorded in the depreciation (amortization) expense accounts.
If, after the repair of an item of property, plant and equipment or after an impairment assessment, an asset changes its useful life, the carrying amount of the asset, beginning at the date of adjusting its useful life, shall be depreciated over the restated useful life.
The useful lives of the Company's/Group's property, plant and equipment and intangible assets are determined separately for each asset, taking into account future economic benefits as well as the expected period of use in the Company/Group, the intensity of use, the environment in which the asset is used, changes in its useful life, technological and economic progress, morally aging assets, legal and other factors limiting the useful life of property, plant and equipment.
Based on the resolution of the Company/Group Management Board, as at 1 January 2017, the useful life of newly acquired production lines accounted for in “Machinery and equipment” is 10-15 years. In 2018, the Company and the Group restated the carrying amounts and useful lives of property, plant and equipment as defined in IAS 16 Property, Plant and Equipment and decided to adjust the carrying amounts and useful lives of those items that were not fully depreciated as at 1 January 2018, prospectively. Based on the assessment made, the amendments became effective on 1 January 2018 (Note 5). As at 1 January 2019, new non-current assets useful lives/depreciation/amortization rates have been approved.
Below are the average useful lives of the Company's/Group's property, plant and equipment by asset class:
| Asset Class | Useful Life |
|---|---|
| Buildings and structures | 20-40 years |
| Machinery and equipment | 5-15 years |
| Production lines | 10-15 years |
| Software, licenses, acquired rights | 3 years |
Construction in progress is stated at cost less impairment losses. Cost includes design, construction, plant and equipment outsourced and other direct costs. Depreciation on unfinished construction is not calculated. Construction in progress is transferred to the appropriate groups of property, plant and equipment when it is completed and the asset is ready for its intended use.
When property, plant and equipment is derecognised or otherwise disposed of, its cost and related depreciation are no longer recognized in the financial statements and the related profit or loss, calculated as the difference between the proceeds and the carrying amount of the non-current tangible asset disposed of.
Investment property of the Company/Group includes land and buildings that are leased and earns lease income and are not used for the Group's and the Company's operating activities. Investment property is stated at cost less Depreciation is calculated on a straight-line basis over the estimated useful life of 20 to 40 years. Investment property is written off only when the property is sold or permanently discontinued and no economic benefits are expected from its sale.# ŽEMAITIJOS PIENAS AB
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
(All amounts in EUR thousands unless otherwise stated)
Any profit or loss on disposal or sale of an investment property is recognized in the statement of comprehensive income in the period in which the asset is sold or otherwise disposed of. Transfers to investment property are made when, and only when, there is a change in use, when the owner discontinues the use of the property for its own use or when the operating lease begins. Transfers from investment property are made when, and only when, there is a change in use through the use of the property by the owner or the beginning of reconstruction with a view to sale.
Intangible assets with finite useful lives that are comprised of purchased computer software and licenses and trademarks. Amortization is charged to the statement of comprehensive income on a straight-line basis over its estimated useful life. The useful lives of intangible assets are as follows: years 15. Subsequent expenditure on an intangible asset is capitalized only when it increases the future economic benefits of the asset to which it relates. All other costs are expensed as incurred. Construction in progress (non-current assets prepared for use) are stated at cost less accumulated amortization and impairment. Vehicles and other assets. Investment assets 3-10 accumulated depreciation and impairment losses.
The useful lives, residual values and amortization method are reviewed annually to ensure that they are consistent with the expected pattern of use of the intangible asset. The Company/Group has no intangible assets with indefinite useful lives.
Leases where the Company/Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Assets acquired under finance leases are recognized as assets of the Company/Group at the commencement date of the lease term and are stated at the lower of fair value of the asset and the present value of the minimum lease payments, less depreciation and impairment losses. All other leases are treated as operating leases. Assets treated as leases shall be depreciated over the expected useful life on the same basis as the property. A decision or agreement is a lease based on the substance of the agreement, at the time the agreement is made, to determine whether performance of the agreement is dependent on the use of the particular asset or on whether the agreement grants the right to use the asset.
Stocks, including in-progress and finished production, shall be accounted for in the financial statements as the lower of the values (cost or net realised value), after the valuation of impairment for slow-moving and obsolete stocks. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The write-down of stocks to net realizable value below their cost is made when the cost of inventories may not be recoverable through their sale or use. Unrealisable stocks are written off completely. The cost of stocks is calculated using the FIFO method. Where stocks are produced and in the case of unfinished production, the cost price shall also include an appropriate proportion of the indirect cost of production, allocated at rates calculated on the basis of the utilisation of production capacity. Auxiliary materials and stocks are accounted for as costs when they are put into use or included in the price of finished goods if they are used in production.
Cash consists of cash on hand and in bank accounts. Cash equivalents are current, highly liquid investments that are easily converted into a known amount of money. Such investments have a maturity of less than 3 months at the date of the contract and the risk of a change in value is negligible. Bank accounts held for automated payment of taxes and repurchase of overpayments are also considered cash equivalents. For the purposes of the cash flow statement, cash and cash equivalents include cash on hand and in bank current accounts, deposits with maturity equal to or less than 3 months at the date of the agreement and tax accounts with the bank.
Grants are accounted for on an accrual basis, i.e. grants received or parts of grants are recognized as being used in the periods in which they are incurred.
Grants related to assets include grants received in the form of non-current assets or intended for the acquisition of non-current assets. Grants are recognized as deferred income at the fair value of the non-current assets received or acquired and subsequently recognized as income. Amortization of a grant reduces the depreciation expense of the related non-current assets over the useful life of those non-current assets.
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
(All amounts in EUR thousands unless otherwise stated)
The carrying amounts of the Company's/Group's non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. The recoverable amount of intangible assets with indefinite useful lives and intangible assets not yet available for use is estimated at the reporting date. An impairment loss is recognized when the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest group of cash-generating assets that generates cash flows that are independent of other assets or groups of assets. Any impairment loss is recognized in the statement of comprehensive income.
The recoverable amount of a non-financial asset is the greater of its fair value less costs to sell and value in use. The value in use of an asset is calculated by discounting the future cash flows from the use of the asset to its present value using a tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
If there is any change in the events or circumstances that led to the measurement of the recoverable amount of the non-financial asset that indicate that the carrying amount of the non-financial asset may be recovered, an impairment loss is reversed. An impairment loss is reversed so that the carrying amount of the asset does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
Dividends are recognized as a liability in the period in which they are declared (i.e. approved by the general meeting of shareholders).
Foreign currency transactions are translated into euro at the official exchange rate between the euro and the foreign currency (hereinafter referred to as the official exchange rate) published by the Bank of Lithuania on the day of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to the euro at the official exchange rate ruling at the date of the statement of financial position. Exchange differences arising on the settlement of these transactions are recognized in the statement of comprehensive income.
The following exchange rates were used for the preparation of the financial statements as at 31 December 2023 and 2024:
| 2024 | 2023 | |
|---|---|---|
| USD | 0,957488 | 0,904977 |
| 1 EUR | = | = |
A financial instrument is any contract that gives rise to a financial asset between one entity and a financial liability or equity instrument.
Financial assets at initial recognition are classified as subsequently measured at amortized cost, fair value through other comprehensive income, or fair value through profit or loss.
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
(All amounts in EUR thousands unless otherwise stated)
The designation of financial assets at initial recognition depends on the contractual cash flow characteristics of the financial assets and the business model of the Group/Company that governs the management of the financial assets. Except for trade receivables and contract assets (if any) that do not have a significant financing component, the Group/Company measures at initial recognition financial assets at fair value plus, when financial assets are not carried at fair value through profit or loss, transaction costs. Trade receivables and contract assets (if any) that do not include a significant financing component are measured at the transaction price in IFRS 15. For a financial asset to be designated and measured at amortized cost or fair value through other comprehensive income, the cash flows arising from a financial asset need only be the principal and the interest payable (SPPI) on the uncovered principal. This assessment is called the SPPI test and is performed for each financial instrument. The Group/Company's financial asset management model describes how the Group/Company manages its financial assets to generate cash flows.# Financial Assets and Liabilities
The business model determines whether the cash flows will be generated by collecting the contractual cash flows, selling the financial asset, or both. A regular way purchase or sale of a financial asset is recognized on the trade date, i.e. the date on which the Group/Company commits to purchase or sell financial assets.
After initial recognition, the Company evaluates financial assets:
a) Amortized cost (debt instruments);
b) At fair value through other comprehensive income, when the profit or loss on derecognition is transferred to profit or loss (debt instruments). As at 31 December 2024 and 2023, the Group/Company did not have such measures;
c) At fair value through other comprehensive income, when the gain or loss is derecognised, it is not transferred to profit or loss (equity instruments). As at 31 December 2024 and 2023, the Group/Company did not have such measures;
d) At fair value through profit or loss. As at 31 December 2024 and 2023, the Group/Company did not have such measures;
The Group/Company measures financial assets at amortized cost if both of the following conditions are met:
i) Financials assets are held in accordance with a business model that seeks to hold financial assets for the purpose of collecting contractual cash flows; and
ii) The contractual terms of financial assets may give rise to cash flows at specified dates that are only interest payments on the principal and the principal outstanding.
Financial assets carried at amortized cost are subsequently measured using the effective interest rate method (EIR), less impairment losses. Gains and losses are recognized in the statement of comprehensive income when the asset is derecognised, replaced or impaired. The Group's/Company's financial assets at amortized cost include trade receivables, other current and non-current receivables, loans issued.
In accordance with IFRS 9, the Group/Company generally recognizes an expected credit loss (ECL) for all debt instruments that are not measured at fair value through profit or loss. The ECL is based on the difference between the contractual receivable cash flows and the cash flows the Group/Company expects to receive, discounted at the approximate effective initial interest rate.
ECLs are recognized in two stages. For credit exposures where the credit risk has not materially increased since initial recognition, the ECL shall be calculated for the credit losses arising from default events occurring within the next 12 months (12-month ECL). For those credit exposures with a significant increase in credit risk since initial recognition, the impairment loss is formed by the amount of credit loss expected to be incurred during the remaining life of the credit exposure, regardless of the default maturity (ECL).
For trade receivables and assets arising from customer contracts (if any), the Group/Company applies a simplified method of calculating ECL. Therefore, the Group/Company does not monitor changes in credit risk, but recognizes impairment at each reporting date based on the effective ECL. The Group/Company has constructed a matrix of expected loss rates based on historical credit loss analysis and adjusted to reflect future factors specific to borrowers and the economic environment (market macroeconomic factors, employment rate, consumer price index, etc.).
The Company estimates and records the expected credit loss for 12 months when issuing a loan. In subsequent reporting periods, in the absence of a significant increase in the credit risk associated with the borrower, the Company adjusts the expected credit loss balance for the 12 months against the outstanding loan amount at the measurement date. If the borrower's financial position is determined to have materially deteriorated compared to the condition prevailing at the time of the loan issuance, the Company accounts for all expected credit losses over the life of the loan. Loans with expected credit losses during the life of the loan are considered to be credit impaired financial assets.
The Group/Company considers that a debtor has defaulted on a financial asset if the contractual payments are overdue by more than 90 days, or where there are indications that the debtor or group of debtors is in serious financial difficulties, defaulting on payments or interest, it is probable that they will enter bankruptcy or reorganization proceedings, and where observable data indicate that future cash flows are expected, such as changes in debt arrears or changes in economic conditions that correlate with defaults. The total amount of expected credit losses on trade receivables and trade receivables is recognized through profit or loss using a counterpart receivable account. Financial assets are derecognised when there is no reasonable expectation of recovering the contractual cash flows.
Financial liabilities at initial recognition are classified as financial liabilities at fair value through profit or loss, loans and receivables. All financial liabilities are initially recognized at fair value and, in the case of loans and receivables, less any directly attributable transaction costs. Financial liabilities of the Group/Company include trade and other payables, loans received and finance lease liabilities.
The assessment of financial liabilities depends on their classification as described below.
Subsequent to initial recognition, loans and receivables are carried at amortized cost using the effective interest rate method (EIR). Gains and losses are recognized in the statement of comprehensive income when the liabilities are derecognised or amortized. Amortized cost is calculated by taking into consideration the discount or premium on the acquisition as well as the taxes or expenses that are an integral part of the EIR. Amortization of an EIR is included in financial expenses in the statement of comprehensive income.
Financial assets and financial liabilities are offset and the net amount is recognized in the statement of financial position if there is an enforceable right to clear recognized amounts and it is intended to be settled on a net basis, i.e. realize assets and fulfil liabilities at the same time.
The Company and the Group pay social security contributions to the State Social Insurance Fund (hereinafter referred to as the Fund) for their employees in accordance with a defined contribution plan and in accordance with the laws of the country. A defined contribution plan is a plan under which the Company and the Group make a defined contribution and will have no future legal or constructive obligation to continue to pay such contributions if the Fund does not have sufficient assets to pay all employees related benefits in the current or prior periods. Social security contributions are recognized as an expense on an accrual basis and classified as an expense for employees.
The Company and the Group recognizes a liability and an expense for additional benefits based on the Company's and the Group's additional benefit policy, the amount of which depends on the length of service completed in the Company and the Group under 5, 10, 15, 20, 25, etc. years of service. Such changes to the Order came into effect in 2017. The liability under the entity's employee benefit orders is calculated on the basis of actuarial estimates using the projected unit credit method. Reassessments of actuarial profits and losses are recognized immediately in the statement of financial position with an appropriate debit or credit in retained earnings in other comprehensive income in the period in which they are incurred. Reassessments are not carried forward to profit or loss in subsequent periods. The liability is recognized in the statement of financial position and reflects the present value of those benefits at the statement of financial position date. The present value of the employee benefit obligation is determined by discounting the estimated future cash flows based on the interest rate on government securities denominated in the same currency as the benefits and having a payout period similar to the expected payout period.
In accordance with the requirements of the Labour Code of the Republic of Lithuania, every employee leaving the Company/Group at the age of retirement is entitled to a lump sum of 2 months' salary. Liabilities to employees are recognized as an expense in the current year in the statement of comprehensive income. Past costs are recognized as an expense on an equal basis over the average period until the benefits become vested. Any gain or loss resulting from a change (decrease or increase) in the benefit terms is recognized immediately in the statement of comprehensive income. The retirement benefit obligation is calculated on the basis of actuarial assumptions using the projected unit credit method.# Reassessments of actuarial profits and losses are recognized immediately in the statement of financial position with an appropriate debit or credit in retained earnings in other comprehensive income in the period in which they are incurred. Reassessments are not carried forward to profit or loss in subsequent periods. The liability is recognized in the statement of financial position and reflects the present value of those benefits at the statement of financial position date. The present value of the employee benefit obligation is determined by discounting the estimated future cash flows based on the interest rate on government securities denominated in the same currency as the benefits and having a payout period similar to the expected payout period.
The Company and the Group are engaged in the production, sale and distribution of dairy products. Revenue from contracts with customers is recognized when the control of goods or services passes to the customer, the amount the Group/Company expects to receive in exchange for the goods or services. The Company/Group estimates that the contracts have only one operating obligation. Revenue from contracts with customers is recognized net of value added tax, excise duties and discounts directly attributable to the sale (usually at the time of sale).
Management considers the impact of other items on revenue recognition, such as:
The Company sells to its subsidiary raw material (i.e. milk) which is purchased from milk suppliers. The raw material is used by the subsidiary for the production of cheese, which is subsequently purchased by the Company and sold to third parties. Because these raw materials are the major ingredient used in cheese production, the income and expense of such transactions are recorded net in the Company's separate financial statements to avoid artificially inflating revenue as customer contracts are made with the Company and the subsidiary operates as a production unit.
When the Company sells goods purchased from its subsidiary to third parties (retail entities), the Company assumes all risks associated with these transactions, so that income is not offset as stated in IFRIC 15 relating to the assessment of whether the Company is acting on its own account or as an agent.
Due to the Group's/Company's business model, management has not made any significant accounting judgments, estimates or assumptions related to the recognition of contract revenue with customers other than those disclosed in Note 4.
Revenue from the rendering of services is recognized in the statement of comprehensive income on the basis of the level of performance of the services over the period. Revenue is recognized net of value added tax and discounts.
Lease income is recognized in the statement of comprehensive income on a straight-line basis over the lease term.
Revenue from disposal of assets is recognized in the statement of comprehensive income when the control of goods or services is transferred to the customer, in the amount that the Group/Company expects to receive in exchange for the goods or services. Revenue is not recognized if there are significant doubts about the recovery of the revenue or the incurrence of the expense associated with the revenue, or when the expected return of the goods or the probable significant risk and the goods cannot be considered as passed on to the buyer.
Interest income is recognized in the statement of comprehensive income as it accrues, using the effective interest method. The interest expense component of finance lease payments is recognized in the statement of comprehensive income using the effective interest method.
Costs are recognized on an accrual basis as incurred.
Operating lease payments under operating leases are recognized in the statement of comprehensive income on a systematic basis over the lease term.
Minimum lease payments are apportioned between the finance charge and the outstanding liability, using the effective interest method. Finance charges are spread over the term of the finance lease at a constant periodic rate of interest on the outstanding balance of the liability.
Net financing costs include interest expense, calculated using the effective interest rate method, interest income on invested funds and the effect of changes in foreign exchange rates.
Borrowing costs that are directly attributable to the acquisition, construction or production of assets that take time to be prepared for their intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed as incurred. The Group capitalizes borrowing costs on assets whose construction commenced after 1 January 2009.
Debts are initially recognized at the fair value of the proceeds received, less the transaction costs. They are subsequently carried at amortized cost (using the effective interest rate method) and the difference between the proceeds and the amount that will be payable on the debt (excluding the capitalized portion) is included in profit or loss for the period.
A segment is a significant part of the Company's/Group's operations, distinguished by the products or services being supplied (business segment) or by the provision of products or services in a particular economic environment with specific risks and economic benefits (geographical segment). For the purposes of this financial statements, a business segment is a distinguishable component of the Group's and the Company's operations that are involved in the production of a single product or service or a group of related products or services with different risk and returns.
Current and prior tax assets and liabilities are measured at the amount expected to be recovered or paid to the tax authorities, including adjustments for prior years. The tax rates used to calculate this amount are those that are (in principle) applicable before the date of the statement of financial position. The calculation of the income tax is based on the annual profit, taking into account the calculation of the deferred income tax. Income tax is calculated according to the requirements of Lithuanian tax laws. In 2024, the corporate tax rate in the Republic of Lithuania is 15 percent (in 2023 – 15 percent).
Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred income taxes are calculated using the liability method. Deferred tax assets and liabilities are calculated using tax rates that are expected to apply to taxable profit in the year in which the temporary differences are realized, taking into account the tax rates enacted or substantively enacted at the reporting date.
Deferred tax assets are recognized in the statement of financial position to the extent that the management of the Company/Group expects it to be realized in the foreseeable future, based on taxable profit forecasts. If part of the deferred tax is not expected to be realized, this part of the deferred tax is not recognized in the financial statements.
From 1 January 2014 the amount of deductible tax losses carried forward cannot exceed 70 percent of the taxable profit for the current year. Tax losses may be carried forward for an indefinite period, except for losses arising from the disposal of securities and/or derivatives. Such a transfer is terminated if the Company/Group discontinues operations that caused the loss, unless the Company/Group discontinues operations for reasons beyond its control. Losses arising from the disposal of securities and/or derivative financial instruments may be carried forward for 5 years and only be offset against profits from transactions of the same nature.
Deferred tax assets and liabilities are offset to the extent that the laws permit the offsetting of the income tax expense and the deferred tax assets of the same enterprise and the same tax authority.
In accordance with applicable tax laws, the tax office may at any time during the 5 consecutive years following the reported tax year carry out a tax audit of the Company and the Group and recalculate additional taxes and fines. The management of the Group believes that all taxes have been correctly calculated and paid in accordance with applicable law and are not aware of any circumstances that could give rise to a potential material liability for unpaid taxes.
The Company/Group reports basic earnings (losses) per share and diluted earnings (losses) per share.# ŽEMAITIJOS PIENAS AB
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
(All amounts in EUR thousands unless otherwise stated)
Earnings per share is calculated by dividing the profit/loss attributable to shareholders of the Company/Group by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share are calculated by adjusting the profit (loss) attributable to shareholders and the weighted average number of ordinary shares outstanding during the period by all potential ordinary shares. During the reporting period, the Company/Group had not issued any potential ordinary shares.
Subsequent events that provide additional information about the financial position of the Group and the Company at the balance sheet dates (adjusting events) are reflected in the financial statements. Subsequent events that are not adjusting events are disclosed in the notes when material.
Estimates and assumptions are reviewed on an ongoing basis and are based on historical experience and other factors, which reflect the current situation and the reasonably foreseeable future events. The management of the Company/Group, having regard to forecasts and budget, borrowing requirements, performance of its obligations, products and markets, financial risk management, after conducting business continuity assessment, believes that there are no uncertainties and uncertainties regarding the Company's/Group's business continuity.
The Company/Group makes estimates and assumptions about future events, so accounting estimates by definition will not always be consistent with actual results. The preparation of the financial statements of the Group and the Company requires management to make judgments, estimates and assumptions that affect the reported amounts of income, expenses, assets and liabilities and contingencies at the reporting date. However, the uncertainty about these assumptions and estimates may affect results, which may require a significant adjustment to the carrying amounts of assets or liabilities in the future. As of the date of these financial statements, there was no material risk that the carrying amounts of assets and liabilities would be materially adjusted in the next reporting year due to changes in the related estimates in the following financial years.
The management of the Group and the Company has adopted a significant accounting valuation assumption relating to accounting for marketing services (purchased from customers) (whether considered as consideration payable to the customer or purchase from the customer as noted above). Based on management's assessment, marketing services acquired from customers (retail entities) are treated as a separate service related to various advertising and marketing services provided to the Group, therefore all advertising and marketing expenses incurred during the financial year are accounted as operating expenses in the consolidated and separate reports.
The Company/Group regularly reviews receivables for impairment. As described in the accounting policy, the Company/Group uses the ECL provisioning matrix defined in IFRS 9 for the measurement of impairment, in addition to which individual debtors are individually assessed. The Company/Group has determined that credit losses are less than 1% of total receivables, and, considering the effect of future factors, they have been determined to have no impact on the level of losses.
The Company/Group used a matrix of expected credit loss provisions for most receivables, and individual estimates were used for a few individuals, non-homogeneous cases as described below. In assessing whether an impairment loss should be recognized in the statement of comprehensive income, the Company/Group adopts an estimate of whether there is an indication of a material decrease in expected cash flows from the receivables portfolio and whether the decrease can be related to a separate receivable in that portfolio. Such evidence may include data showing the existence of adverse changes in borrowers' payments or in national or local economic conditions that are directly correlated with the class of receivables. Impairment losses on receivables are usually recognized in the event of late payment by the debtor by 90 days or more depending on the payment terms that have been set. Management estimates the expected cash flows from borrowers based on the historical loss experience of borrowers with similar credit risk. The methods and assumptions used to estimate the amount and timing of cash flows are reviewed regularly to reduce any difference between loss estimates and actual loss experience.
Loans granted by management are rated as having low credit risk. Such an assessment is based on an assessment of the structure of debtors and their ability to repay debt, including historical (very low) default rates and the projected impact of the economic environment. In addition, it is noted that loan repayment is secured by a pledge of assets with a high loan-to-value ratio (LTV). Therefore, the expected credit losses are considered to be insignificant. An estimate of the impairment of receivables from related parties is disclosed in Note 29.
Inventories represent a significant proportion of the assets of the Group and the Company. As at 31 December 2024 and 2023, the management of the Group and the Company had assessed whether the carrying amounts of inventories was greater than their net realizable value (summarized in Note 9). Management has also assessed the value of obsolete inventories by applying depreciation rates (based on historical data and projected sales) and assessing whether the amount of depreciation of obsolete inventories was sufficient.
As at 31 December 2024, Impairment losses recognized by the Group and the Company were EUR 1.658 thousand and EUR 1.286 thousand, respectively (as at 31 December 2023: EUR 1.877 thousand and EUR 1.351 thousand, respectively). The impairment was based on information such as the date of manufacture, product quality specifications and management's sales forecast calculations. The summarized information related to impairment of stocks is disclosed in Note 9.
The Company and the Group conducts business with related parties in the ordinary course of business. These transactions are mainly aimed at market prices. In the absence of an active market for these transactions, the valuation is used to determine whether the transactions correspond to market prices or not. The basis for measurement is pricing for similar transactions with unrelated parties, if such information is available to the Company or the Group.
As disclosed in Note 3 to the financial statements, the Company and the Group has accounted for non-current liabilities to the employees in accordance with the Labour Code of the Republic of Lithuania and the applicable Company/Group employee benefits policy. As disclosed in Note 15, the present value of the liabilities includes a range of significant estimates for the assumptions used regarding the level of inflation, the employee turnover rate, the discount rate, etc.
The Company and the Group pay various bonuses to milk suppliers, which are calculated on the basis of the quantity and quality of milk delivered, with regular payments. In addition, the Company/Group may pay additional bonuses to suppliers based on market conditions, annual results of the Company/Group, etc. The decision as to the fact and the amount of the additional payments to the milk suppliers is a matter of significant appreciation.
31 December 2023, the Company and the Group did not recognize any liabilities relating to the payment of additional bonuses as the Company and the Group had no contractual obligation to the suppliers for these benefits. These benefits are a unilateral decision by the Company and the Group.
31 December 2024, the Company and the Group have estimated the future obligations to dairy builders as at 29 January 2025. The new Regulations for the payment of Partnership Premiums, approved by the Board of Directors, amount to EUR 1.4 million. About the annual bonuses assigned and accumulated as at 31 December 2023 and 2024 by the Company to raw material suppliers are disclosed in Note 20.
As disclosed in Note 28 to these financial statements, the Company and the Group have been involved in a number of ongoing legal disputes whose outcome and potential economic loss or gain could not be measured reliably to date. Management estimates that the Company and the Group does not expect to incur material losses in the future due to legal disputes. The effect of legal disputes on financial statements for the purpose of measuring the amount of a potential liability and its recognition in balance sheet items, and the appropriate disclosure of such disputes in the notes to the financial statements, is within the scope of significant measurement.# Valuation of deferred tax assets and liabilities
Deferred tax assets and liabilities are recognized at the balance sheet date, taking into account temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Significant amounts of deferred tax assets are recognized based on the Company's and the Group's management's estimates, taking into account the expected periods and amounts of future taxable profits and the Company's/Group's tax planning strategies.
Change in accounting estimate is an adjustment to the carrying amount of an asset or liability or the amount of a periodic disposal of an asset by measuring the present condition of the asset or liability, its expected future benefits and future liabilities. Changes in accounting estimates result from new information or new circumstances and are not considered as corrections to errors. The accounting estimate shall be revised if the circumstances on which it was based change or if new information or experience becomes available. Revisions to the estimate, by their nature, are not related to prior reporting periods and are not a correction of an error. The result of a change in an accounting estimate is recognized prospectively. In 2018, the Company and the Group reviewed the applicable rates of depreciation of property, plant and equipment for certain classes of property, plant and equipment as disclosed in Note 5. To the extent that a change in an accounting estimate changes an asset or a liability or relates to an equity item, the result of that change is the adjustment to the carrying amount of the related asset, liability or equity item during the period.
Omission or misstatement of the data in the prior period financial statements due to failure to use or misuse reliable information available for the reporting periods for which the financial statements were requested to be published; and could have been received and used properly (and could reasonably have been expected) in the preparation and presentation of the financial statements for that reporting period. Such errors include the consequences of inaccurate mathematical calculations, misapplication of accounting policies, errors, misinterpretation of facts in the recognition, measurement or presentation of financial statements.
| Rights and patents | Computer software | Licenses | Total | |
|---|---|---|---|---|
| Acquisition cost | ||||
| As of 31 December 2022 | 355 | 142 | 634 | 1,131 |
| -acquisition | 74 | 31 | 6 | 111 |
| -reclassification | - | - | - | - |
| -sold or written-off assets | (0) | (8) | (300) | (308) |
| As of 31 December 2023 | 429 | 165 | 340 | 934 |
| -acquisition | 70 | 46 | 55 | 171 |
| -reclassification | - | - | - | - |
| -sold or written-off assets | - | - | - | - |
| As of 31 December 2024 | 499 | 211 | 395 | 1,105 |
| Accumulated amortisation | ||||
| As of 31 December 2022 | 248 | 137 | 615 | 1,000 |
| -amortization | 69 | 11 | 17 | 97 |
| --reclassification | - | - | - | - |
| -amortization of sold and written-off assets | (0) | (8) | (299) | (307) |
| As of 31 December 2023 | 317 | 140 | 333 | 790 |
| -amortization | 69 | 16 | 12 | 97 |
| -reclassification | - | - | - | - |
| -amortization of sold and written-off assets | - | - | - | - |
| As of 31 December 2024 | 386 | 156 | 345 | 887 |
| Net Book Value | ||||
| As of 31 December 2022 | 107 | 5 | 19 | 131 |
| As of 31 December 2023 | 112 | 25 | 7 | 144 |
| As of 31 December 2024 | 113 | 55 | 50 | 218 |
| Rights and patents | Computer software | Licenses | Total | |
|---|---|---|---|---|
| Acquisition cost | ||||
| As of 31 December 2022 | 355 | 121 | 634 | 1,110 |
| -acquisition | 74 | 31 | 6 | 111 |
| -reclassification | - | - | - | - |
| -sold or written-off assets | (0) | (8) | (300) | (308) |
| As of 31 December 2023 | 429 | 144 | 340 | 913 |
| -acquisition | 70 | 46 | 55 | 171 |
| -reclassification | - | - | - | - |
| -sold or written-off assets | - | - | - | - |
| As of 31 December 2024 | 499 | 190 | 395 | 1,084 |
| Accumulated amortisation | ||||
| As of 31 December 2022 | 248 | 116 | 615 | 979 |
| -amortization | 69 | 11 | 17 | 97 |
| - reclassification | - | - | - | - |
| -amortization of sold and written-off assets | (0) | (8) | (299) | (307) |
| As of 31 December 2023 | 317 | 119 | 333 | 769 |
| -amortization | 69 | 16 | 12 | 97 |
| - reclassification | - | - | - | - |
| -amortization of sold and written-off assets | - | - | - | - |
| As of 31 December 2024 | 386 | 135 | 345 | 866 |
| Net Book Value | ||||
| As of 31 December 2022 | 107 | 5 | 19 | 131 |
| As of 31 December 2023 | 112 | 25 | 7 | 144 |
| As of 31 December 2024 | 113 | 55 | 50 | 218 |
In 2024 amortization of non-current intangible assets of the Group and the Company amounts to EUR 97 thousand and EUR 97 thousand respectively (In 2023 – EUR 97 thousand and EUR 97 thousand, respectively). Amortization expenses of intangible assets are recognized as Operating expenses in the statement of comprehensive income (Note 23). Investments in the purchase of non-current intangible assets made by the Group and the Company in 2024 amount to EUR 171 thousand and EUR 171 thousand, respectively (in 2023 - EUR 111 thousand and EUR 111 thousand).
As at 31 December 2024, the Company and the Group have EUR 724 thousand and EUR 747 thousand (EUR 606 thousand and EUR 629 thousand as at 31 December 2023, respectively) of fully amortized non-current intangible assets that are still in use.
| Land, buildings and constructions | Machinery and equipment | Other property, plant and equipment | Construction in progress | Vehicles | Total | |
|---|---|---|---|---|---|---|
| Acquisition cost | ||||||
| As of 31 December 2022 | 27,661 | 95,538 | 12,821 | 5,438 | 3,465 | 144,923 |
| -acquisition | 129 | 1,788 | 732 | 174 | 10,548 | 13,371 |
| -sold or written-off assets | (505) | (62) | (406) | (284) | - | (1,257) |
| -reclassification | 524 | 982 | 1 | 2 | (1,509) | - |
| -transfers to investment property | - | - | - | - | - | - |
| -transfers from investment property | - | - | - | - | - | - |
| As of 31 December 2023 | 27,809 | 98,246 | 13,148 | 5,330 | 12,504 | 157,037 |
| -acquisition | - | 2,743 | 1,015 | 410 | 15,466 | 19,634 |
| -sold or written-off assets | (180) | (3,471) | (770) | (132) | - | (4,553) |
| -reclassification | 305 | 6,315 | 95 | 10 | (6,725) | - |
| -transfers to investment property | - | - | - | - | - | - |
| -transfers from investment property | 707 | - | - | - | - | 707 |
| As of 31 December 2024 | 28,641 | 103,833 | 13,488 | 5,618 | 21,245 | 172,825 |
| Accumulated depreciation | ||||||
| As of 31 December 2022 | 10,384 | 62,098 | 9,272 | 3,649 | - | 85,403 |
| -depreciation | 635 | 3,995 | 703 | 395 | - | 5,728 |
| -depreciation of written-off and sold assets | (9) | (56) | (320) | (268) | - | (653) |
| -reclassification ( subsidiary) | - | - | - | - | - | - |
| -transfers to investment property | - | - | - | - | - | - |
| -transfers from investment property | - | - | - | - | - | - |
| As of 31 December 2023 | 11,010 | 66,037 | 9,655 | 3,776 | - | 90,478 |
| -depreciation | 594 | 4,270 | 672 | 391 | - | 5,927 |
| -depreciation of written-off and sold assets | (77) | (3,451) | (684) | (129) | - | (4,341) |
| -reclassification (subsidiary) | - | - | - | - | - | - |
| -transfers to investment property | - | - | - | - | - | - |
| -transfers from investment property | 642 | - | - | - | - | 642 |
| As of 31 December 2024 | 12,169 | 66,856 | 9,643 | 4,038 | - | 92,706 |
| Impairment | ||||||
| As of 31 December 2022 | - | - | - | - | - | - |
| -impairment losses | - | - | - | - | - | - |
| -transfers to investment property | - | - | - | - | - | - |
| -reversal of impairment | - | - | - | - | - | - |
| As of 31 December 2023 | - | - | - | - | - | - |
| -impairment losses | - | - | - | - | - | - |
| -transfers to investment property | - | - | - | - | - | - |
| -reversal of impairment | - | - | - | - | - | - |
| As of 31 December 2024 | - | - | - | - | - | - |
| Net book value | ||||||
| As of 31 December 2022 | 17,277 | 33,440 | 3,549 | 1,789 | 3,465 | 59,520 |
| As of 31 December 2023 | 16,799 | 32,209 | 3,493 | 1,554 | 12,504 | 66,559 |
| As of 31 December 2024 | 16,472 | 36,977 | 3,845 | 1,580 | 21,245 | 80,119 |
| Land, buildings and constructions | Machinery and equipment | Other property, plant and equipment | Construction in progress | Vehicles | Total | |
|---|---|---|---|---|---|---|
| Acquisition cost | ||||||
| As of 31 Decmber 2022 | 24,169 | 85,372 | 11,430 | 4,840 | 2,433 | 128,244 |
| -acquisition | 128 | 1,714 | 714 | 159 | 9,389 | 12,104 |
| -sold or written-off assets | - | (61) | (406) | (224) | - | (691) |
| -adding value | - | - | - | - | - | - |
| -reclassification | - | 982 | - | 2 | (984) | - |
| -transfers to investment property | - | - | - | - | - | - |
| -transfers from investment property | - | - | - | - | - | - |
| As of 31 December 2023 | 24,297 | 88,007 | 11,738 | 4,777 | 10,838 | 139,657 |
| -acquisition | - | 2,739 | 1,003 | 354 | 14,686 | 18,782 |
| -sold or written-off assets | (181) | (3,472) | (618) | (133) | - | (4,404) |
| -adding value | - | - | - | - | - | - |
| -reclassification | - | 5,195 | 95 | 10 | (5,300) | - |
| -transfers to investment property | - | - | - | - | - | - |
| -transfers from investment property | - | - | - | - | - | - |
| As of 31 December 2024 | 24,116 | 92,469 | 12,218 | 5,008 | 20,224 | 154,035 |
| Accumulated depreciation | ||||||
| As of 31 December 2022 | 9,125 | 55,886 | 7,859 | 3,261 | - | 76,131 |
| -depreciation | 585 | 3,578 | 728 | 355 | - | 5,246 |
| -reclassification | 1 | - | - | - | - | 1 |
| -depreciation of written-off and sold assets | - | (55) | (320) | (214) | - | (589) |
| - transfers to investment property | - | - | - | - | - | - |
| -transfers from investment property | - | - | - | - | - | - |
| As of 31 December 2023 | 9,711 | 59,409 | 8,267 | 3,402 | - | 80,789 |
| -depreciation | 543 | 3,821 | 703 | 345 | - | 5,412 |
| -reclassification | - | - | - | - | - | - |
| -depreciation of written-off and sold assets | (78) | (3,451) | (537) | (130) | - | (4,196) |
| -transfers to investment property | - | - | - | - | - | - |
| -transfers from investment property | - | - | - | - | - | - |
| As of 31 December 2024 | 10,176 | 59,779 | 8,433 | 3,617 | - | 82,005 |
| Impairment | ||||||
| As of 31 December 2022 | - | - | - | - | - | - |
| - impairment losses | - | - | - | - | - | - |
| -reversal of impairment | - | - | - | - | - | - |
| As of 31 December 2023 | - | - | - | - | - | - |
| - impairment losses | - | - | - | - | - | - |
| - reversal of impairment | - | - | - | - | - | - |
| As of 31 December 2024 | - | - | - | - | - | - |
| Net book value | ||||||
| As of 31 December 2022 | 15,044 | |||||
| Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania | ||||||
| ## CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS | ||||||
| ### EXPLANATORY NOTES FOR THE YEAR ENDED 31 DECEMBER 2024 | ||||||
| (All amounts in EUR thousands unless otherwise stated) |
The Company started the implementation of the wind power plant construction project in 2022 in order to make energy resources cheaper, increase competitiveness and achieve sustainability. In 2024, EUR 6.9 million has been allocated for these investments, respectively – in 2023 – EUR 7.2 million, in 2022 – EUR 0.7 million. Expected start of operation of wind power plants – the first-second quarter of 2025.
For the year ending at 31 December 2024 the depreciation costs of the Group’s and the Company’s property, plant and equipment amount to EUR 5,927 thousand and EUR 5,412 thousand, respectively (2023 – EUR 5,728 thousand and EUR 5,246 thousand). The amount of depreciation accounted under the caption ‘Cost of Sales’ for the financial years 2024 and 2023 amounts to EUR 3,892 thousand and EUR 3,997 thousand by the Company, respectively. By the Group, EUR 4,482 thousand and 4,649 thousand, respectively. The rest of the Company and the Group depreciation is accounted under the ‘Operating expenses’ caption. Part of the depreciation amount is also accounted under the ‘Inventory’ caption in the value of unsold Inventories as of 31 December 2023 and 2024. Part of property, plant and equipment of the Company and the Group with the acquisition cost amounting to EUR 39,322 thousand and EUR 46,736 thousand, respectively, was fully depreciated as at 31 December 2024 (EUR 41,722 thousand and EUR 49,338 thousand as at 31 December 2023), but was still in use.
| Acquisition cost | The Group | The Company |
|---|---|---|
| As of 31 December 2022 | 4,636 | 3,899 |
| - acquisition | - | - |
| - transfers from property, plant and equipment | - | - |
| - reversals (subsidiary) | - | - |
| - sold or written-off investment property | - | - |
| - transfers to property, plant and equipment | - | - |
| As of 31 December 2023 | 4,636 | 3,899 |
| - acquisition | - | - |
| - transfers from property, plant and equipment | - | - |
| - reversals (subsidiary) | - | - |
| - sold or written-off investment property | - | - |
| - transfers to property, plant and equipment | (707) | - |
| As of 31 December 2024 | 3,929 | 3,899 |
| Accumulated depreciation | As of 31 December 2022 | As of 31 December 2023 | As of 31 December 2024 |
|---|---|---|---|
| The Group | The Company | The Group | |
| - depreciation | 203 | 202 | 249 |
| - transfers to property, plant and equipment | - | - | (642) |
| - reversals (subsidiary) | - | - | - |
| - sold or written-off investment property | - | - | - |
| - transfers from property, plant and equipment | - | - | - |
| Total | 1,882 | 1,229 | 2,085 |
| Impairment | As of 31 December 2022 | As of 31 December 2023 | As of 31 December 2024 |
|---|---|---|---|
| The Group | The Company | The Group | |
| - impairment losses | - | - | - |
| - reversal of impairment | - | - | - |
| - transfers from property, plant and equipment | - | - | - |
| Total | - | - | - |
Net book value, Eur thousand:
| As of 31 December 2022 | As of 31 December 2023 | As of 31 December 2024 | |
|---|---|---|---|
| The Group | 2,754 | 2,551 | 2,237 |
| The Company | 2,670 | 2,468 | 2,219 |
The Company's investment property was leased to a related party, UAB Čia Market, as well as to other unrelated parties and natural persons. The investment property was valued by independent valuers as at 20 April 2018. The valuation was carried out using the comparative price and cost techniques to determine fair value, classified as level 3 in the fair value hierarchy. Information used to determine fair value, e.g. price per square metre or per acre. Fair value would increase if the price per square metre/acre were higher and decrease if the price per square metre/acre were lower. Based on the valuation conclusions, and management's estimates, the fair value of the investment property as at 31 December 2023 and 31 December 2024 is not materially different from the carrying amount. At the moment of acquisition, the Company and the Group use independent valuator valuations in case the assets are bought/sold within related parties. In other case assets are purchased in competitive market at the market price. For the year ending at 31 December 2024 the depreciation costs of the Company’s investment property amount to EUR 249 thousand (2023 – EUR 202 thousand). Rental income and related costs are disclosed in Notes 23,24. All rent contracts are easily cancellable with a few months prior notice made by the lessee or the lessor. There was no investment property under construction in 2024 and 2023. Depreciation of investment property is included in the ‘Operating expenses’ caption.
According to IFRS 16 “Leases” the right-of use asset account to the following:
| Acquisition cost | Land, buildings and constructions | Movable property | Vehicles | Total |
|---|---|---|---|---|
| As of 31 December 2022 | 2,494 | 600 | - | 3,094 |
| - acquisition | 52 | 236 | - | 288 |
| - reclassification | - | - | - | - |
| - the end of the contract | (600) | - | - | (600) |
| As of 31 December 2023 | 2,546 | 236 | - | 2,782 |
| - acquisition | 283 | - | - | 283 |
| - reclassification | - | - | - | - |
| - the end of the contract | (259) | - | - | (259) |
| As of 31 December 2024 | 2,570 | 236 | - | 2,806 |
| Accumulated depreciation | Land, buildings and constructions | Movable property | Vehicles | Total |
|---|---|---|---|---|
| As of 31 December 2022 | 538 | 508 | - | 1,046 |
| - depreciation | 623 | 82 | - | 705 |
| - reclassification | - | - | - | - |
| - the end of the contract | (531) | - | - | (531) |
| As of 31 December 2023 | 1,161 | 59 | - | 1,220 |
| - depreciation | 625 | 79 | - | 704 |
| - reclassification | - | - | - | - |
| - the end of the contract | (216) | - | - | (216) |
| As of 31 December 2024 | 1,570 | 138 | - | 1,708 |
| Impairment | Land, buildings and constructions | Movable property | Vehicles | Total |
|---|---|---|---|---|
| As of 31 December 2022 | (204) | - | - | (204) |
| Impairment losses | 23 | (14) | - | 9 |
| As of 31 December 2023 | (181) | (14) | - | (195) |
| Impairment losses | (18) | 9 | - | (9) |
| As of 31 December 2024 | (199) | (5) | - | (204) |
Net book value, Eur thousand:
| As of 31 December 2022 | As of 31 December 2023 | As of 31 December 2024 | |
|---|---|---|---|
| Land, buildings and constructions | 1,752 | 1,204 | 801 |
| Movable property | 92 | 163 | 93 |
| Vehicles | - | - | - |
| Total | 1,844 | 1,367 | 894 |
| Acquisition cost | Land, buildings and Movable constructions property | Vehicles | Total |
|---|---|---|---|
| As of 31 December 2022 | 2,494 | 600 | - |
| - acquisition | 52 | 236 | - |
| - reclassification | - | - | - |
| - the end of the contract | (600) | - | - |
| As of 31 December 2023 | 2,546 | 236 | - |
| - acquisition | 283 | - | - |
| - reclassification | - | - | - |
| - the end of the contract | (259) | - | - |
| As of 31 December 2024 | 2,570 | 236 | - |
| Accumulated depreciation | Land, buildings and constructions | Movable property | Vehicles | Total |
|---|---|---|---|---|
| As of 31 December 2022 | 538 | 508 | - | 1,046 |
| - depreciation | 623 | 82 | - | 705 |
| - reclassification | - | - | - | - |
| - the end of contract | (531) | - | - | (531) |
| As of 31 December 2023 | 1,161 | 59 | - | 1,220 |
| - depreciation | 625 | 79 | - | 704 |
| - reclassification | - | - | - | - |
| - the end of the contract | (216) | - | - | (216) |
| As of 31 December 2024 | 1,570 | 138 | - | 1,708 |
| Impairment | Land, buildings and constructions | Movable property | Vehicles | Total |
|---|---|---|---|---|
| As of 31 December 2022 | (204) | - | - | (204) |
| Impairment loses | 23 | (14) | - | 9 |
| As of 31 December 2023 | (181) | (14) | - | (195) |
| Impairment loses | (18) | 9 | - | (9) |
| As of 31 December 2024 | (199) | (5) | - | (204) |
Net book value, Eur thousand:
| As of 31 December 2022 | As of 31 December 2023 | As of 31 December 2024 | |
|---|---|---|---|
| Land, buildings and constructions | 1,752 | 1,204 | 801 |
| Movable property | 92 | 163 | 93 |
| Vehicles | - | - | - |
| Total | 1,844 | 1,367 | 894 |
The Company and the Group have granted loans to 24 Company employees as at 31 December 2024 (20 as at 31 December 2023). The average annual loan interest rate: about 5%. Loans have been granted to the employees as a motivating tool based on the Regulations for Provision of Loans to employees. The maximum limit of the fund intended for these loans granted makes up EUR 231,696. On all occasions loans are being granted to a borrower after he/she undertakes to secure repayment of a loan by pledging his/her or another person’s real estate property or using other means of security of repayment of a loan acceptable to the company (a credit institution guarantee or other). Upon assessment of a possible risk, liquidity of property being pledged and etc. a fair value of the property being pledged makes up from 100% to 200% of an amount being borrowed.
The Company and the Group have also granted loans to 65 farmers (milk-suppliers) as at 31 December 2024 (67 as at 31 December 2023). Loans in the amount of EUR 1,226.2 thousand had been granted to farmers within the period from 01/01/2024 to 31/12/2024. The average interest rate on loans granted: until 5%. All long-term loans have been granted with collateral (land have been pledged at market prices). The related party Klaipėdos pienas AB owed EUR 192 thousand to the Company as at 31 December 2024 (as at 31 December 2023 – EUR 300 thousand). The loan has been granted on 29 12 2014 with a variable/floating annual average 2.6% interest rate a loan repayment period – the year 2029; pledged shares.## 9. INVENTORIES
| The Group | 31 Dec 2024 | 31 Dec 2023 | The Company | 31 Dec 2024 | 31 Dec 2023 |
|---|---|---|---|---|---|
| Raw materials | 6.794 | 6.743 | 5.998 | 5.957 | |
| Finished goods and work in progress | 46.143 | 45.225 | 44.381 | 43.130 | |
| Goods for resale | 399 | 489 | 399 | 489 | |
| 53.336 | 52.457 | 50.778 | 49.576 | ||
| Less: Allowance for inventories | (1.658) | (1.877) | (1.286) | (1.351) | |
| Total | 51.678 | 50.580 | 49.492 | 48.225 |
Changes in the allowance for impairment of inventories (EUR thousand):
| The Group | The Company | |||
|---|---|---|---|---|
| 31 Dec 2024 | 31 Dec 2023 | 31 Dec 2024 | 31 Dec 2023 | |
| Balance at beginning of year | 1.877 | 4.198 | 1.351 | 3.792 |
| Additional allowance made | - | - | - | - |
| Reversals of allowance made | (219) | (2.321) | (65) | (2.441) |
| Write-off | - | - | - | - |
| Balance at end of year | 1.658 | 1.877 | 1.286 | 1.351 |
The acquisition cost of the Group’s and the Company’s inventories accounted at net realizable value as at 31 December 2024 amounted to EUR 50.799 thousand and EUR 49.345 thousand, respectively (as at 31 December 2023, EUR 15.299 thousand and EUR 13.482 thousand, respectively).
Changes in impairment allowance for inventories during 2024 and 2023 were recorded within the Group’s and the Company’s operating expenses (Note 23).
As at 31 December of 2024 the Company held a stock of EUR 156,4 thousand at the third parties (as at 31 December 2023 EUR 244,5 thousand, respectively).
The allowance formed by the Company for the inventories as at 31 December 2024 and 2023 (EUR 1.286 thousand and EUR 1.351 thousand, respectively) was formed for illiquid –stationary material and amounts of inventories was greater than their net realizable value, also included a depreciation of inventories based on ageing for long-ripened cheeses.
The amount of inventory used (written-off) by the Group and the Company in production of goods for the financial year 2024 accounted under the caption ‘Cost of Sales’ amounts to EUR 210.223 thousand and EUR 177.981 thousand, respectively (EUR 185.324 thousand and EUR 161.938 thousand in 2023, respectively).
| The Group | 31 Dec 2024 | 31 Dec 2023 | The Company | 31 Dec 2024 | 31 Dec 2023 |
|---|---|---|---|---|---|
| Trade accounts receivable | 24.189 | 22.087 | 24.154 | 22.068 | |
| Accounts receivable from related parties | 2.740 | 1.270 | 2.719 | 1.251 | |
| Total accounts receivable: | 26.929 | 23.357 | 26.873 | 23.319 | |
| Allowance for bad debts | (76) | (84) | (76) | (84) | |
| Allowance for bad debts of related parties | - | - | - | - | |
| Net trade receivables: | 26.853 | 23.273 | 26.797 | 23.235 |
Changes in the allowance for impairment of trade accounts receivable (EUR thousand):
| The Group | The Company | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Balance at beginning of year | 84 | 193 | 84 | 193 |
| Additional allowance made | - | - | - | - |
| Reversals of allowance made | (8) | (109) | (8) | (109) |
| Write-off | - | - | - | - |
| Balance at end of year | 76 | 84 | 76 | 84 |
Analysis of trade receivables based on the terms of payment on the 31 December, 2024 (EUR thousand):
| Less than 60 days | 60-120 days | More than 120 days | past due | not past due | Total (EUR thousand) | |
|---|---|---|---|---|---|---|
| The Group | ||||||
| Trade account receivables | 20.353 | 3.732 | 29 | 75 | 24.189 | |
| Allowance formed | - | - | (1) | (75) | (76) | |
| Trade accounts receivables from related parties | 1.478 | 599 | 446 | 217 | 2.740 | |
| Allowance formed | - | - | - | - | - | |
| The Company | ||||||
| Trade account receivables | 20.318 | 3.732 | 29 | 75 | 24.154 | |
| Allowance formed | - | - | (1) | (75) | (76) | |
| Trade accounts receivables from related parties | 1.457 | 599 | 446 | 217 | 2.719 | |
| Allowance formed | - | - | - | - | - |
Analysis of trade receivables based on the terms of payment on the 31 December, 2023 (EUR thousand):
| Less than 60 days | 60-120 days | More than 120 days | past due | not past due | Total (EUR thousand) | |
|---|---|---|---|---|---|---|
| The Group | ||||||
| Trade account receivables | 18.703 | 3.265 | 36 | 83 | 22.087 | |
| Allowance formed | - | - | (1) | (83) | (84) | |
| Trade accounts receivables from related parties | 1.060 | 209 | 1 | - | 1.270 | |
| Allowance formed | - | - | - | - | - | |
| The Company | ||||||
| Trade account receivables | 18.685 | 3.264 | 36 | 83 | 22.068 | |
| Allowance formed | - | - | (1) | (83) | (84) | |
| Trade accounts receivables from related parties | 1.046 | 204 | 1 | - | 1.251 | |
| Allowance formed | - | - | - | - | - |
For the assessment of allowance on intercompany trade receivables, please refer to Note 29.
| The Group | 31 Dec 2024 | 31 Dec 2023 | The Company | 31 Dec 2024 | 31 Dec 2023 |
|---|---|---|---|---|---|
| Prepaid income tax | - | - | - | - | |
| Current portion of long-term loans granted (Note 8) | 1.080 | 1.021 | 1.080 | 1.021 | |
| VAT receivable | 2.302 | 520 | 2.302 | 520 | |
| Other receivables | 1.201 | 747 | 1.201 | 747 | |
| 4.583 | 2.288 | 4.583 | 2.288 | ||
| Other receivables allowance formed* | (652) | (652) | (652) | (652) | |
| Total: | 3.931 | 1.636 | 3.931 | 1.636 |
* 652 thousand Eur - ADT Sp.Z.o.o. debt with interest – in 2023 from customers’ debts to other receivables. See more 27.2 COMMITMENTS AND CONTINGENCIES
| The Group | 31 Dec 2024 | 31 Dec 2023 | The Company | 31 Dec 2024 | 31 Dec 2023 |
|---|---|---|---|---|---|
| Cash at bank | 31.690 | 18.092 | 25.992 | 15.751 | |
| Cash on hand | 50 | 26 | 50 | 26 | |
| Provided guarantees* | 252 | 128 | 252 | 128 | |
| Total: | 31.992 | 18.246 | 26.294 | 15.905 |
* Securities are short-term frozen funds kept at SEB bank, the value of which on 31-12-2024 amounted to EUR 252 thousand and 31-12-2023 amounted to EUR 128 thousand.
The share capital is fully paid. Only fully paid ordinary share entitles its owner to one vote at a meeting of shareholders. Shareholders have the right to receive dividends when they are announced, to withdraw part of the capital in the event of a reduction of the share capital, and other property and non-property rights established in the Law on Joint-Stock Companies of Republic of Lithuania and other laws and legal acts.
Between 2023 and 2024 the Company authorized capital consisted of 41,737,500 ordinary registered shares for the amount of 12,103,875 EUR. The nominal value of the share is 0.29 EUR.
Between 2023 and 2024 the Company had acquired 222,020 units of its own shares for EUR 389 thousand. The reason and purpose of acquiring own shares is to maintain and increase the share price in the market. There have been no changes in the share capital or in the acquisition of treasury shares during the period 2023-24.
Legal reserve is compulsory reserve under Lithuanian legislation. Annual contributions of at least 5% of the annual profit are required until legal reserve reaches 10% of the authorised capital. This reserve cannot be distributed. It can be used only for covering accumulated losses. Legal reserve of the Company wasn’t fully formed.
Other reserves are formed on basis of a decision of the General Shareholders’ Meeting on appropriation of distributable profit. These reserves can be used only for the purposes approved by the General Shareholders’ Meeting. According to the Law of Stock Companies, the reserves formed by the Company other than the legal reserve if not used or not planned to be used should be restored to retained earnings and redistributed.
The Company's shareholders, when distributing the distributable profit in 2021, created a reserve of EUR 10.000 thousand for the acquisition of treasury shares, which was redistributed in the same amount in 2022-2024. In addition, EUR 200 thousand has been reallocated to employee bonuses by decision of the Ordinary General Meetings of Shareholders in 2023-24.
Changes in the grants received by the Group and the Company (EUR thousand):
| The Group | The Company | |||
|---|---|---|---|---|
| As of 31 Dec 2022 (balance) | ||||
| Grants received | 11.101 | 8.651 | - | - |
| received | - | - | - | |
| As of 31 Dec 2023 (balance) | ||||
| Grants received | 11.101 | 8.651 | - | - |
| received | 654 | 725 | ||
| As of 31 Dec 2024 (balance) | ||||
| 11.755 | 9.376 | |||
| Accumulated amortisation | As of 31 Dec 2022 (balance) | |||
| 8.365 | 6.223 | |||
| amortization | 291 | 253 | ||
| As of 31 Dec 2023 (balance) | ||||
| 8.656 | 6.476 | |||
| amortization | 263 | 228 | ||
| As of 31 Dec 2024 (balance) | ||||
| 8.919 | 6.704 | |||
| Net book value (EUR thousand) | As of 31 Dec 2022 | 2.736 | 2.428 | |
| As of 31 Dec 2023 | 2.445 | 2.175 | ||
| As of 31 Dec 2024 | 2.836 | 2.672 |
The amounts of the grant received are amortized in equal parts within the respective useful service life of the asset acquired from these funds.# Grant amortization is included in the statement of comprehensive income, under the caption ‘Cost of Sales’ and reduces depreciation costs of non-current assets. As according to the grant agreement, the Company and the Group is obligated to fulfil the requirements related to Company and Group revenue and net profit. In 2024, the Company and the Group was in compliance with the grant agreement requirements. In 2022, the Company signed a support agreement with the National Paying Agency under the Ministry of Agriculture for the implementation of the Rules on Support for Investments in the Processing, Marketing and/or Development of Agricultural Products, applicable from 2019. Under this agreement, the Company has been granted support of EUR 725 thousand in 2024 to compensate for the purchase of a microfiltration unit - milk purification system. On 21 December 2016 ABF Šilutės Rambynas signed a support contract for the project "Support for investments in processing, marketing and/or development of agricultural products" under the measure "Investments in tangible assets" of the Lithuanian Rural Development Programme 2014-2020, according to which ABF Šilutės Rambynas was granted support of EUR 700,810 for the project "Increasing the efficiency of milk processing by modernising the material base". For non-achievement of the project's monitoring indicators, ABF Šilutės Rambynas had to reimburse to the National Paying Agency in 2024 EUR 71 thousand of the support received (EUR 31 thousand for the year 2021 and EUR 40 thousand for the year 2022 for the non-achievement of the project's indicators).
The Company has accounted for long-term defined benefit obligations for its employees based on requirements of the Lithuanian Labour Code and also based on additional contractual obligations concluded in the Company’s employee additional rewards policy.
| 31 Dec 2024 | 31 Dec 2023 | |
|---|---|---|
| Long term liability of post retirements employee benefits | 1.368 | 691 |
| Short term liability of post retirements employee benefits | 314 | 214 |
| (Note 21) | ||
| Long term liability under additional rewards policy | 5.294 | 2.978 |
| Short term liability under additional rewards policy | 612 | 440 |
| (Note 21) | ||
| Total: | 7.588 | 4.323 |
| 31 Dec 2024 | 31 Dec 2023 | |
|---|---|---|
| Long term liability of post retirements employee benefits | 1.403 | 727 |
| Short term liability of post retirements employee benefits | 367 | 277 |
| (Note 21) | ||
| Long term liability under additional rewards policy | 5.467 | 3.135 |
| Short term liability under additional rewards policy | 667 | 485 |
| (Note 21) | ||
| Total: | 7.904 | 4.624 |
36 ŽEMAITIJOS PIENAS AB
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS EXPLANATORY NOTES
FOR THE YEAR ENDED 31 DECEMBER 2024
(All amounts in EUR thousands unless otherwise stated)
| The Group | The Company | |
|---|---|---|
| Post retirement employee benefits and long terms employee benefits (Premium based on additional rewards policy) | Post retirement employee benefits and long terms employee benefits (Premium based on additional rewards policy) | |
| Balance as at 31 December 2022 | 4.726 | 4.435 |
| Change accounted in the statements of comprehensive income | 97 | 87 |
| Actuarial (gain) loss | (199) | (199) |
| Balance as at 31 December 2023 | 4.624 | 4.323 |
| Change accounted in the statements of comprehensive income | 222 | 207 |
| Actuarial (gain) loss | 3.058 | 3.058 |
| Balance as at 31 December 2024 | 7.904 | 7.588 |
The main assumptions used in assessing the liability of the Company's long-term employee benefits are presented below:
| 31 Dec 2024 | 31 Dec 2023 | |
|---|---|---|
| Discount rate | 4,5% | 3,78-5,55% |
| Inflation rate | 6,45% | 4,16% |
| Turnover rate | 20%-24% | 20%-24% |
Financial information of subsidiaries that have material non-controlling interests is provided below. Summarised financial information of the subsidiary is as follows (in EUR thousand):
| 31 Dec 2024 | 31 Dec 2023 | |
|---|---|---|
| Current assets | 9.013 | 6.433 |
| Non-current assets | 9.391 | 9.233 |
| Current liabilities | 2.002 | 2.087 |
| Non-current liabilities | 458 | 295 |
| Revenue | 44.583 | 33.339 |
| Profit | 2.765 | 1.611 |
| Total comprehensive income | 2.765 | 1.611 |
The subsidiary paid no dividends neither in year 2024 no in year 2023.
Basic earnings (loss) per share are calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary circulations shares in issue during the year.
| 31 Dec 2024 | 31 Dec 2023 | |
|---|---|---|
| Net profit (loss) attributable to the equity shareholders in EUR thousand | 26.959 | 21.253 |
| Weighted average number of circulation shares (units) | 41.515.480 | 41.515.480 |
| Basic earnings (loss) per share in EUR | 0.65 | 0.51 |
| 31 Dec 2024 | 31 Dec 2023 | |
|---|---|---|
| Net profit (loss) attributable to the equity shareholders in EUR thousand | 24.357 | 19.668 |
| Weighted average number of circulation shares (units) | 41.515.480 | 41.515.480 |
| Basic earnings (loss) per share in EUR | 0.59 | 0.47 |
37 ŽEMAITIJOS PIENAS AB
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS EXPLANATORY NOTES
FOR THE YEAR ENDED 31 DECEMBER 2024
(All amounts in EUR thousands unless otherwise stated)
The Company has not issued any other securities convertible to shares. Therefore, the diluted earnings per share are equal to basic earnings per share.
| 31 Dec 2024 | 31 Dec 2023 | 31 Dec 2024 | 31 Dec 2023 | |
|---|---|---|---|---|
| Dividends declared | 2.076 | - | 2.076 | - |
| Weighted average number of circulation shares (units) | 41.515.480 | 41.515.480 | 41.515.480 | 41.515.480 |
| Dividends declared per share in EUR | 0.05 | - | 0.05 | - |
As at 31 December 2024, finance lease liabilities of the Group and the Company included liabilities from lease contracts concluded with the leasing companies and liabilities for the right-of-use assets. Future financial lease payments according to the signed financial lease contracts and liabilities for the right-of-use assets are as follows (EUR thousand):
| 2024 12 31 | 2023 12 31 | |
|---|---|---|
| Minimal financial lease payments | Present value of minimal payments | |
| Less than 1 year | 780 | 766 |
| 2 – 5 years | 526 | 515 |
| Minimal financial lease payments, EUR thousand | 1.306 | 1.281 |
| Less: future interest | (25) | - |
| Present value of minimal financial lease payments, EUR thousand | 1.281 | 1.281 |
| 2024 12 31 | 2023 12 31 | |
|---|---|---|
| Minimal financial lease payments | Present value of minimal payments | |
| Less than 1 year | 780 | 766 |
| 2 – 5 years | 526 | 515 |
| Minimal financial lease payments, EUR thousand | 1.306 | 1.281 |
| Less: future interest | (25) | - |
| Present value of minimal financial lease payments, EUR thousand | 1.281 | 1.281 |
As at 31st December 2024, 2023 the financial lease contracts of the Company and the Group are signed in EUR. The terms and conditions of the contract with all later additions do not provide any restrictions on the Company’s and Group’s activities, associated with dividends, additional borrowings or additional long-term rent.
The loans of the Company and the Group as at 31 December 2024 (EUR thousand):
| Date of agreement | maturity date | Creditor | Currency | 2024.12.31 | 2023.12.31 | |
|---|---|---|---|---|---|---|
| 2018-06-11/ 2019-07-16 | AB SEB bank | EUR | - | 1.000 | ||
| 2018-06-11/2022-06 | 2027-05-23 | AB SEB bank | EUR | 3.750 | 5.250 | |
| 2018-06-11/2023 -06 | 2028-06-07 | AB SEB bank | EUR | 8.767 | 3.724 | |
| 2028-06-07 | AB SEB bank | EUR | - | - | ||
| Total: thousand EUR | 12.517 | 9.974 |
38 ŽEMAITIJOS PIENAS AB
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS EXPLANATORY NOTES
FOR THE YEAR ENDED 31 DECEMBER 2024
(All amounts in EUR thousands unless otherwise stated)
1) In July 2019, the Company and AB SEB bank signed an amendment to the credit contract of June 2018, based on which the Company was granted a new business credit of 6 million EUR. The credit was granted with variable annual interest until March 2024. The production building in Telšiai together with the equipment therein were additionally pledged. In 2024, this credit is fully covered.
2) In accordance with the additional amendments to this credit contract, SEB bank granted the Company a credit of 7.5 million EUR (Business Credit I) in June 2022. The credit is granted until the 23rd of May 2027. The purpose of the loan is to refinance the investments of AB Žemaitijos pienas and ABF Šilutės Rambynas. EUR 1,5 million of this credit facility is repaid in 2024.
3) In accordance with the additional amendments to this credit contract, SEB bank granted the Company a credit of EUR 12,135 million in June 2023 (Business Credit III). The last day for granting this credit is 31 December 2024. Additional security for the obligations under this contract is the construction of a wind farm with all its appurtenances and equipment. Under this agreement, the Company has been granted a credit facility of EUR 3,724 thousand in 2023 and an additional EUR 5,476 thousand in 2024, and EUR 433 thousand has been repaid during 2024.
4) In August 2022, an addendum was signed under the same credit agreement for an increased "overdraft limit I" in the amount of EUR 18 million. On 25 June 2024 this overdraft limit was reduced to EUR 12 million. The collateral used to secure the fulfilment of the obligations under the credit agreement is the Company's current account with AB SEB Bank and its immovable and movable property. In addition to the credit contract, the Company has signed a contract with AB SEB bank on financial indicators and other obligations. The financial indicators and non-financial obligations specified in the contract are being implemented. The total repayment of the loans is EUR 2 933 thousand in 2024 and EUR 20 235 thousand in 2023. As at 31 December 2024 the balance of loans received by the Group and the Company amounted to EUR 12.517 thousand.
20.## TRADE PAYABLES
| The Group | The Company | |||
|---|---|---|---|---|
| 31st Dec 2024 | 31st Dec 2023 | 31st Dec 2024 | 31st Dec 2023 | |
| Payables to suppliers | 18,286 | 14,471 | 17,306 | 13,273 |
| Annual bonuses to the suppliers of raw material* | 1,400 | - | 1,400 | - |
| Payables to related parties | 845 | 184 | 1,849 | 1,816 |
| Advances received | 967 | 734 | 943 | 662 |
| Total: | 21,498 | 15,389 | 21,498 | 15,751 |
Trade payables are non-interest bearing and are normally settled on 30-day terms.
| The Group | The Company | |||
|---|---|---|---|---|
| 31st Dec 2024 | 31st Dec 2023 | 31st Dec 2024 | 31st Dec 2023 | |
| Vacation reserve | 1,693 | 1,464 | 1,464 | 1,269 |
| Bonuses for employees | - | - | - | - |
| Wages and salaries payable | 1,783 | 1,607 | 1,588 | 1,447 |
| Social security payable | 1,264 | 1,113 | 1,139 | 1,004 |
| Dividends payable | 858 | 772 | 858 | 772 |
| Payables based on defined obligations to employees (Note 15) | 1,033 | 762 | 925 | 654 |
| Management Bonus | - | - | - | - |
| Accrued expenses | 500 | 288 | 500 | 288 |
| Taxes payable, other than income tax | 920 | 753 | 817 | 662 |
| Other short-term liabilities | 55 | 85 | 19 | 31 |
| Total: | 8,106 | 6,844 | 7,310 | 6,127 |
Other payables are non-interest bearing and have an average term of one month.
For management purposes the Group‘s and the Company‘s business activity is organized as one main segment – dairy products production and trading:
| Sales, EUR thousand | Variation in % | As comparing 2024 with 2023 |
|---|---|---|
| 2024 | ||
| Fermented cheese | 16.45% | 137,958 |
| Fresh dairy products | 2,36% | 97,842 |
| Butter and spreadable fat mixes | 25,75% | 34,936 |
| Dry dairy products | (9,93)% | 22,381 |
| Other | 28,29% | 14,526 |
| Total: | 10,66% | 307,643 |
| Sales, EUR thousand | Variation in % | As comparing 2024 with 2023 |
|---|---|---|
| 2024 | ||
| Fermented cheese | 15,84% | 135,767 |
| Fresh dairy products | 2,31% | 97,299 |
| Butter and spreadable fat mixes | 25,75% | 34,936 |
| Dry dairy products | (9,93)% | 22,381 |
| Other | 31,55% | 16,270 |
| Total: | 10,58% | 306,653 |
In order to better plan, organise and control sales, employees of the Marketing and Sales Division are assigned different geographic regions according to the location of final market of the products‘ sale.
Information on revenue made in different geographical markets is provided below:
| Sales, EUR thousand: | The Group | The Company | ||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Lithuania | 147,317 | 139,220 | 147,852 | 140,049 |
| EU countries | 110,238 | 97,931 | 109,357 | 97,068 |
| Other countries | 50,088 | 40,853 | 49,444 | 40,188 |
| Total, EUR thousand: | 307,643 | 278,004 | 306,653 | 277,305 |
Other non-core activities are considered to be not significant, therefore such information is not provided separately to the decision makers. For the disclosure on the revenues from transactions with a single external customer that amount to 10% or more of the entty's revenues, please refer to Note 28.
| The Group | The Company | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Wages, salaries and social security** | 20,928 | 18,553 | 20,507 | 18,144 |
| Marketing expenses | 7,692 | 7,652 | 7,692 | 7,650 |
| Rent and insurance | 1,011 | 827 | 982 | 802 |
| Logistic services | 2,748 | 1,564 | 2,517 | 1,375 |
| Repairs | 924 | 280 | 915 | 275 |
| Materials | 1,476 | 1,225 | 1,424 | 1,176 |
| IT consulting | 432 | 424 | 413 | 413 |
| Taxes, other than income tax | 1,209 | 867 | 1,082 | 756 |
| Consulting* | 234 | 283 | 183 | 243 |
| Depreciation or amortisation | 1,108 | 1,159 | 1,071 | 1,123 |
| Business trips | 67 | 213 | 66 | 213 |
| Trade accounts receivable impairment (reversal) | (8) | 532 | (8) | 532 |
| Utilities | 428 | 403 | 245 | 293 |
| Production for advertising purposes | 129 | 114 | 128 | 113 |
| Telecommunication | 60 | 55 | 56 | 51 |
| Pension reserve and other employee related accruals | 222 | 50 | 207 | 41 |
| Employee bonuses | 2,164 | 2,011 | 2,164 | 2,011 |
| Other expenses | 2,410 | 1,459 | 2,363 | 1,350 |
| Inventory allowance (reversal)* | 307 | (1,914) | (64) | (2,441) |
| Total: | 43,541 | 35,757 | 41,943 | 34,120 |
*Consultancy costs include quality, certification, customs, annual financial and sustainability reporting audits.
** A part of salary and social security expenses and employee bonuses is accounted under Cost of Sales (the Company during 2024 and 2023 accounted EUR 16,318 and 15,512 thousand respectively, the Group accounted EUR 19,506 and EUR 18,069 thousand respectively)
| The Group | The Company | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Other operating income | ||||
| Goods for resale sales income | 507 | 277 | 535 | 263 |
| Gain on disposal of property, plant and equipment | 223 | 22 | 219 | 19 |
| Rental income | 491 | 469 | 476 | 471 |
| Other | 117 | 147 | 135 | 109 |
| 1,338 | 915 | 1,365 | 862 | |
| Other operating expenses | ||||
| Cost of goods for resale sold | (288) | (205) | (306) | (210) |
| Rental expenses | (283) | (320) | (276) | (318) |
| Other | (179) | (137) | (218) | (125) |
| (750) | (662) | (800) | (653) | |
| Net income and expenses of other activities: | 588 | 253 | 565 | 209 |
Future rent income according to the signed rent agreements are as follows (EUR thousand):
| The Group | The Company | |||
|---|---|---|---|---|
| 31st Dec 2024 | 31st Dec 2023 | 31st Dec 2024 | 31st Dec 2023 | |
| Less than 1 year | 445 | 657 | 443 | 658 |
| 2 – 5 years | 1,384 | 1,109 | 1,328 | 1,109 |
| Over 5 years | 1,388 | 709 | 1,388 | 709 |
| Total: | 3,217 | 2,475 | 3,159 | 2,476 |
In the year 2024 and 2023 the currency of the rent income agreements was EUR.
| The Group | The Company | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Income from financial and investment activities | ||||
| Interest income | 785 | 210 | 785 | 210 |
| Foreign currency exchange gain | 499 | - | 499 | - |
| Other financial income | 117 | 190 | 117 | 190 |
| Goodwill/merger result | - | - | - | - |
| 1,401 | 400 | 1,401 | 400 | |
| Expenses from financial and investment activities | ||||
| Foreign currency exchange (loss) | - | (53) | - | (53) |
| Interest expense | (662) | (745) | (662) | (745) |
| Other financial expenses | 15 | (3) | 15 | (3) |
| (647) | (801) | (647) | (801) | |
| Total: | 754 | (401) | 754 | (401) |
| The Group | The Company | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Current income tax expenses | 4,027 | 3,307 | 3,859 | 3,238 |
| Change in deferred income tax asset | (870) | 307 | (1,019) | 100 |
| Change in deferred income tax accounted through OCI | - | - | - | - |
| The correction of prior year income tax | - | - | - | - |
| Income tax expenses (income) recognised in the statement of comprehensive income | 3,157 | 3,614 | 2,840 | 3,338 |
| The Group | The Company | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Profit before tax | 30,453 | 25,063 | 27,197 | 23,006 |
| Income tax, applying valid tax rate (15%) | 4,542 | 3,521 | 4,080 | 3,451 |
| Permanent differences | (625) | 375 | (464) | 169 |
| Investment incentive utilization | (901) | (282) | (901) | (282) |
| Change in deferred tax allowance | - | - | - | - |
| Deffered tax recognition from investment incentive that was not previously recognised | - | - | - | - |
| Impact of the change in the deferred corporate tax rate from 2025 | 141 | - | 125 | - |
| Income tax expenses (income) reported in the statement of comprehensive income | 3,157 | 3,614 | 2,840 | 3,338 |
| The correction of prior year income tax | - | - | - | - |
| Income tax expenses (income) reported in the statement of comprehensive income | 3,157 | 3,614 | 2,840 | 3,338 |
| The Group | The Company | |||
|---|---|---|---|---|
| 31 Dec 2024 | 31 Dec 2023 | 31 Dec 2024 | 31 Dec 2023 | |
| Deferred income tax asset | ||||
| Accounts receivable | 117 | 110 | 117 | 110 |
| Inventory allowance | 265 | 282 | 206 | 203 |
| Accrued vacation reserve | 235 | 191 | 234 | 190 |
| Other accrued expenses | 1,491 | 698 | 1,440 | 654 |
| Tax loss | - | 93 | - | - |
| Investment incentive | - | - | - | - |
| Total deferred income tax asset | 2,108 | 1,374 | 1,997 | 1,157 |
| Deferred income tax asset realization allowance* (-) | (-) | (-) | (-) | (-) |
| Deferred income tax asset (after realization allowance) | 2,108 | 1,374 | 1,997 | 1,157 |
| Deferred income tax liability | ||||
| Change in depreciation rates of tangible assets | (945) | (1,081) | (583) | (762) |
| Total deferred income tax liability, in total | (945) | (1,081) | (583) | (762) |
| Deferred income tax asset, net | 1,163 | 293 | 1,414 | 395 |
The list of important decisions of judicial, enforcement cases, administrative processes that have been or are being carried out by state institutions and that have been examined and are being examined in 2024:
1) The Company has filed a lawsuit seeking a compensation payment of EUR 248,028.62 from the insurance company "Compensa Vienna Insurance Group." On July 1, 2021, due to heavy precipitation, the roof of one of the Company's buildings was completely damaged and collapsed, affecting the building's supporting structures and roofing. As a result of this insured event, the Company incurred damages amounting to EUR 303,993.42 (excluding VAT). The insurance company only partially fulfilled the Company's claim, paying an insurance compensation of EUR 55,964.80, while refusing to cover the remaining damage.# 28. FINANCIAL RISK MANAGEMENT
In the course of using financial instruments, the Company and the Group face the following risks:
✓ Credit risk;
✓ Liquidity risk;
✓ Market risk.
The present note provides information on each of the aforementioned risks the Company/Group faces, the Company’s/Group’s risk evaluation goals, policy and risk valuation and management processes, as well as the Company’s/Group’s capital management. The Company’s management is completely responsible for development and supervision of the Company’s/Group’s risk management structure. The Company’s/Group’s risk management policy is devoted to identification and analysis of the risks the Company faces, determination of respective risk limits and controls, and monitoring of the observance of risks and limits. Risk management policy and risk management system are regularly revised to match the changes of market conditions and the Company’s/Group’s activities. With the help of trainings, procedures of management standards, the Company/Group aims to develop a disciplined and constructive management environment, where every employee knows his/her functions and duties.
Credit risk is the risk that the Company will suffer financial losses in case if a customer or another party fails to fulfil their respective obligations, and in most cases such risk is related with amounts receivable from the Company’s customers. The Company’s and the Group’s credit risk consisted of the following:
| \multicolumn{2}{c | }{The Group} | \multicolumn{2}{c | }{The Company} | |
|---|---|---|---|---|
| 31 12 2024 | 31 12 2023 | 31 12 2024 | 31 12 2023 | |
| Cash and cash equivalents | 31.992 | 18.246 | 26.294 | 15.905 |
| Loans granted | 1.307 | 1.400 | 1.307 | 1.400 |
| Trade accounts receivable | 26.853 | 23.273 | 26.797 | 23.235 |
| Other accounts receivable | 3.931 | 1.636 | 3.931 | 1.636 |
| Other | - | - | - | - |
| Total financial assets | 64.083 | 44.555 | 58.329 | 42.176 |
The Group and the Company have no significant concentration of trading counterparties, which is related with one partner or group of partners with similar characteristics. The Company and the Group had two customers in 2024 and 2023, Customer 1 and Customer 2, whose debts exceeded 10% of total receivables before impairment. The composition of trade receivables is presented in the table below. Moreover, Client No. 1 generated more than 10% of total Company’s revenue during 2023 and 2024.
| \multicolumn{2}{c | }{The Group} | \multicolumn{2}{c | }{The Company} | |
|---|---|---|---|---|
| 2024 12 31 | 2023 12 31 | 2024 12 31 | 2023 12 31 | |
| Customer No. 1 | 16% | 17% | 16% | 17% |
| Customer No. 2 | 10,3% | 11% | 10,3% | 11% |
| Customer No. 3 (related party) | 1% | 3% | 1% | 3% |
Customers’ credit risk, or the risk, that the partners will not keep to their obligations, is managed by approving credit terms and procedures of control. The Group’s procedures are in force to ensure on a permanent basis that sales are made to customers with an appropriate credit history and do not exceed an acceptable credit exposure limit. An impairment analysis is performed at each reporting date using a provision matrix and individual assessment to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Based on the analysis performed, the Company/Group concluded that its customers fall under the low-credit risk category. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, if any, in the statement of financial position. Consequently, the Group considers that its maximum exposure is reflected by the amount of financial assets presented above. With respect to loans granted, trade receivables that are neither impaired nor past due, there are no indications as of the reporting date that the debtors will not meet their payment obligations since the Company trades only with recognized, creditworthy third parties. The credit risk on liquid funds is limited because the counterparties of the Group and the Company are banks belonging to international financial groups with high credit ratings assigned by international credit-rating agencies.
Liquidity risk is the risk that, upon maturity, the Company and the Group will be unable to fulfil its financial liabilities. The Group’s liquidity management objective is to maximally secure sufficient liquidity of the Group, which enables the Group to fulfil its obligations under both, normal and complicated circumstances, without suffering unacceptable losses and being exposed to the risk of losing its good reputation. The Group’s policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate amount of committed credit facilities, bank overdrafts and credit lines to meet its commitments at a given date in accordance with its strategic plans.
The tables below summarise the maturity profile of the Group’s and the Company’s financial liabilities to banks and suppliers based on contractual undiscounted payments:
The Group
| On demand | Up to 3 months | From 3 months to 1 year | From 1 to 5 years | More than 5 years | Total | |
|---|---|---|---|---|---|---|
| Balance as of 31 December 2023 | ||||||
| Trade payables | - | 15.204 | - | - | - | 15.204 |
| Trade payables to related parties | - | 185 | - | - | - | 185 |
| Loans received | - | 1.375 | 1.558 | 7.041 | - | 9.974 |
| Financial lease | - | 228 | 568 | 1.126 | - | 1.922 |
| Other financial debts | - | - | - | - | - | - |
| Balance as of 31 December 2023 | - | 16.992 | 2.126 | 8.167 | - | 27.285 |
| Balance as of 31 December 2024 | ||||||
| Trade payables | - | 20.654 | - | - | - | 20.654 |
| Trade payables to related parties | - | 845 | - | - | - | 845 |
| Loans received | - | 808 | 2.426 | 9.284 | - | 12.518 |
| Financial lease | - | 208 | 558 | 15 | - | 1.281 |
| Other financial debts | - | - | - | - | - | - |
| Balance as of 31 December 2024 | - | 22.515 | 2.984 | 9.799 | - | 35.298 |
The Company
| On demand | Up to 3 months | From 3 months to 1 year | From 1 to 5 years | More than 5 years | Total | |
|---|---|---|---|---|---|---|
| Balance as of 31 December 2023 | ||||||
| Trade payables | - | 13.935 | - | - | - | 13.935 |
| Trade payables to related parties | - | 1.816 | - | - | - | 1.816 |
| Loans received | - | 1.375 | 1.558 | 7.041 | - | 9.974 |
| Financial lease | - | 228 | 568 | 1.126 | - | 1.922 |
| Other financial debts | - | - | - | - | - | - |
| Balance as of 31 December 2023 | - | 17.354 | 2.126 | 8.167 | - | 27.647 |
| Balance as of 31 December 2024 | ||||||
| Trade payables | - | 19.649 | - | - | - | 19.649 |
| Trade payables to related parties | - | 1.849 | - | - | - | 1.849 |
| Loans received | - | 808 | 2.426 | 9.284 | - | 12.518 |
| Financial lease | - | 208 | 558 | 515 | - | 1.281 |
| Other financial debts | - | - | - | - | - | - |
| Balance as of 31 December 2024 | - | 22.514 | 2.984 | 9.799 | - | 35.297 |
Market risk is the risk that market price changes, e.g. raw materials (i.e. milk), foreign exchange rates or interest rates, will affect the Company’s income or the value of financial instruments. The objective of market risk management is to manage and control the market risk, considering certain limits, through optimization of the return.
Major currency risks of the Group and Company occur due to the fact that the Group and Company is involved in imports and exports. The Group’s policy is to match cash flows arising from highly probable future sales and purchases in each foreign currency. The Group does not use any financial instruments to manage its exposure to foreign exchange risk other than aiming to borrow in EUR. The monetary assets and liabilities stated in various currencies were as follows (EUR thousand):
| \multicolumn{2}{c | }{The Group} | \multicolumn{2}{c | }{The Company} | |
|---|---|---|---|---|
| 31 12 2024 | 31 12 2024 | 31 12 2024 | 31 12 2024 | |
| Assets | Liabilities | Assets | Liabilities | |
| EUR | 50.689 | 51.949 | 38.257 | 50.776 |
| USD | 12.728 | 30 | 12.727 | 30 |
| PLN | 264 | 2 | 264 | 2 |
(All amounts in EUR thousands unless otherwise stated)
The fair value of the Group’s and the Company’s investment property was estimated based on the third level of fair value hierarchy (Note 6). The fair value of financial assets and liabilities provided in the statement of financial position as at the 31 December 2024 does not significantly differ from their carrying amounts. Trade payables and receivables accounted for in the Group’s and the Company’s statement of financial position should be settled within a period shorter than three months, therefore, it is deemed that their fair value equals their carrying amount as at 31 December 2024 and 2023 (third level of fair value hierarchy). The fair value of non-current borrowings is based on the similar non-current borrowings available in the market or on the current rates available for borrowings with the same maturity and risk profile. The fair value of non-current borrowings with variable interest rates approximates their carrying amounts (third level of fair value hierarchy).
The objective of the Group‘s and the Company’s management policy is to maintain a significant level of owner’s equity compared to borrowed funds to avoid discrediting investors, creditors and market trust, as well as maintain development of activities in the future. The management observes the return on capital and presents offers on payment of dividends to owners of ordinary shares, considering the Company’s financial results and strategic plans. The primary objectives of the capital management are to ensure that the Group and the Company comply with externally imposed capital requirements and that the Group and the Company maintains healthy capital ratios in order to support its business and to maximise shareholders’ value.
As of 31 December 2024 The Group‘s and Company’s capital consists of share capital in the amount of EUR 12,104 million, own shares (-) EUR 389 million, retained earnings, other reserves and legal reserve. Under the Lithuanian laws a company has to maintain its equity at no less than ½ of its share capital, the Company was in compliance with this requirement as of 31 December 2024 and 2023. No changes were made to the objectives, policies or processes of the Group’s and Company’s capital management during the year ending as of 31 December 2024. The Group and the Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its activities. The Group and the Company monitor capital using debt to equity ratio. There is no specific target for debt to equity ratio set out by the Group’s and the Company’s management, however the management strives for maintaining the balance between higher return, which could be achieved through a higher level of liabilities, and safety, which is provided by a higher level of owner’s equity.
Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania
Related parties of the Group and the Company are:
* the parties that control, are controlled by or are under common control with the Company;
* the parties that have significant influence over the Company;
* the parties that are management members of the Company or its parent company;
* close members of the family of the aforesaid persons;
* the companies that are under control or significant influence of the aforesaid persons.
The main related parties of the Group and the Company are:
| No. | Item | Company Name | Company Details | Nature of Main Activities |
|---|---|---|---|---|
| 1. | Šilutės Rambynas, ABF | Company code: 277141670; address: Klaipėdos g. 3, Šilutė, LT-99115 | Dairy activities and cheese making | |
| 2. | Žemaitijos pieno investicija, AB | Company code: 300041701; address: Sedos g. 35, Telšiai, LT-87101 | Renting and operating own and rented real estate | |
| 3. | Klaipėdos pienas, AB | Company code: 240026930; address: Šilutės pl. 33, Klaipėda, LT-91107 | Ice-cream production | |
| 4. | Čia Market, UAB | Company code: 141354683, address: Sedos g. 35A, Telšiai LT-87101 | Retail trade in non-specialized stores. | |
| 5. | Muižas piens, SIA | Company code: 40003786632, address: Bauskas iela 58a-8, 5stavs room 507, Riga, LV-1004, Latvia | Wholesale trade in food products, marketing | |
| 6. | Samogitija, UAB | Company code: 302501454, address: Narutavičių g. 4, Telšiai, LT-87101 | Production, transportation, storage, distribution, etc. of dairy and other food products. | |
| 7. | S.A.R. Dziugas France | Company code: 75186066 9, address: 10 Rue de Penthievre 75008, Paris | Production and sale of dairy products | |
| 8. | Dziugas USA L.L.C. | Company code: 0400754292, address: Five greentree centre, ste. 104, 525 Route 73 North Marlon, NJ08053, | Wholesale import, marketing of dairy products | |
| 9. | Dziugas Eesti OU | Company code: 14324189, address: Punane 56, Tallinn, Estonia | Wholesale import, sales and marketing of dairy products | |
| 10. | Dziugas Poland | Company code: 368496450, address: ul. Luki Wielke 5, Warsaw, Poland | Agents trading in food and beverages | |
| 11. | Baltic Holding, UAB | Company code: 302688114, address: Įgulos g. 18B -4, Klaipėda | IT services | |
| 12. | Nepriklausoma tyrimų laboratorija, UAB | Company code: 110824551, address: Narutavičių g. 4, Telšiai | Laboratory and other tests of materials and analysis services | |
| 13. | Dziugas Deutschland GmbH | Company code: HRB 154342, address: Neuer Wall 41, 20354 Hamburg , Germany | Marketing and product sales | |
| 14. | Dziugas Hungary Kft | Company code: 01-09-325932, address: Podmaniczky u. 57.2 emelet 14, 1064 Budapest, Hungary | Wholesale import, sales and marketing of dairy products | |
| 15. | Dziugas UK Ltd | Company code 11405400, address: 124 City Road , London EC1V, Great Britain | Agents trading in food and beverages | |
| 16. | Danutė Pažemeckienė | Virvytės 36, Telšiai | Rent of premises | |
| 17. | Monika Jasiulionienė | Beržų g. 2-52, Telšiai | Loan granted |
Milk purchase/sales, acquisition/sales of fixed assets and inventory, purchase/sales of services and other transactions between associated parties are carried out under normal/usual market conditions.
| The Group | The Company | The Group | The Company | |
|---|---|---|---|---|
| 31 12 2024 | 31 12 2023 | 31 12 2024 | 31 12 2023 | |
| 1) Sales | ||||
| Sales of goods | ||||
| To the subsidiary Šilutės Rambynas ABF | - | - | 1,887 | 1,132 |
| To other related parties | ||||
| Klaipėdos pienas AB | 1,758 | 1,454 | 1,701 | 1,403 |
| Žemaitijos pieno investicija AB | 0 | 496 | 0 | - |
| Čia Market UAB | 5,615 | 5,490 | 5,615 | 5,491 |
| Dziugas USA LLC | - | - | - | - |
| Dziugas UK Ltd | 4,733 | 898 | 4,733 | 898 |
| S.A.R.Dziugas France | - | - | - | - |
| Dziugas Deutschland GmbH | 0 | 0 | 0 | 0 |
| Dziuugas Hungary Kft | 773 | 430 | 773 | 430 |
| Dziugas Eesti OU | 0 | 0 | 0 | 0 |
| Dziugas Poland | 2,022 | 1,553 | 2,022 | 1,553 |
| Nepriklausoma tyrimų laboratorija UAB | 32 | 21 | 30 | 19 |
| Muizas piens SIA | 645 | 756 | 645 | 756 |
| Sales of inventory and services | 15,578 | 11,098 | 15,519 | 10,550 |
| To the subsidiary Šilutės Rambynas ABF | - | - | 54 | 30 |
| To other related parties | ||||
| Klaipėdos pienas AB | 650 | 651 | 650 | 649 |
| Žemaitijos pieno investicija AB | 62 | 67 | 62 | 67 |
| Samogitija UAB | 1 | 0 | 1 | 0 |
| Čia Market UAB | 420 | 395 | 409 | 386 |
| Muizas piens SIA | 5 | 4 | 5 | 4 |
| Nepriklausoma tyrimų laboratorija UAB | 84 | 101 | 60 | 62 |
| S.A.R.Dziugas France | - | 1 | - | 1 |
| Dziugas UK Ltd | 1 | 2 | 1 | 2 |
| Dziugas Deutschland GmbH | 1 | 1 | 1 | 1 |
| Dziugas Hungary Kft | 12 | 10 | 12 | 10 |
| Dziugas Eesti OU | 5 | 8 | 5 | 8 |
| Dziugas USA LLC | - | - | - | - |
| Dziugas Poland | 52 | 35 | 52 | 35 |
| 1,293 | 1,275 | 1,258 | 1,225 | |
| Total Sales: | 16,871 | 12,373 | 18,718 | 12,937 |
| The Group | The Company | The Group | The Company | |
|---|---|---|---|---|
| 31 12 2024 | 31 12 2023 | 31 12 2024 | 31 12 2023 | |
| 2) Purchases | ||||
| From the subsidiary | ||||
| Šilutės Rambynas ABF | - | - | 15,142 | 12,717 |
| From other related parties | ||||
| Samogitija UAB | 9 | 19 | 9 | 19 |
| Čia Market UAB | 1,697 | 1,535 | 1,696 | 1,533 |
| Klaipėdos pienas AB | 88 | 86 | 88 | 86 |
| Žemaitijos pieno investicija AB | 914 | 914 | 914 | 913 |
| Muizas piens SIA | 393 | 449 | 389 | 449 |
| Nepriklausoma tyrimų laboratorija UAB | 1,594 | 1,521 | 1,223 | 1,195 |
| Dziugas Poland | 715 | 819 | 715 | 819 |
| Dziugas UK Ltd | - | 280 | - | 280 |
| Dziugas Hungary Kft | 280 | 393 | 280 | 393 |
| Dziugas Deutschland GmbH | 43 | 101 | 43 | 101 |
| S.A.R.Dziugas France | - | 85 | - | 85 |
| Dziugas USA LLC | - | - | - | - |
| Dziugas Eesti OU | 440 | 346 | 440 | 346 |
| Danutė Pažemeckienė | 114 | 114 | 114 | 114 |
| 6,287 | 6,662 | 5,911 | 6,333 | |
| Total Purchases: | 6,287 | 6,662 | 21,053 | 19,050 |
| The Group | The Company | The Group | The Company | |
|---|---|---|---|---|
| 31 12 2024 | 31 12 2023 | 31 12 2024 | 31 12 2023 | |
| 3) Accounts receivable and financial debts | ||||
| Subsidiary Šilutės Rambynas ABF | - | - | - | - |
| Other related parties | ||||
| Samogitija UAB | 0 | - | 0 | - |
| Čia Market UAB | 297 | 709 | 296 | 707 |
| Klaipėdos pienas AB (including loan) | 1,210 | 477 | 1,190 | 461 |
| Žemaitijos pieno investicija UAB | - | - | - | - |
| Muizas piens SIA | 52 | 128 | 52 | 128 |
| Dziugas Hungary Kft | 120 | 30 | 120 | 30 |
| Dziugas Deutschland GmbH | - | 1 | - | 0 |
| S.A.R.Dziugas France | - | 8 | - | 8 |
| Dziugas Eesti Ou | - | - | - | - |
| Dziugas Poland | 191 | 81 | 191 | 81 |
| Dziugas UK Ltd | 1,062 | 136 | 1,062 | 136 |
| Dziugas USA LLC | - | - | - | - |
| 2,932 | 1,570 | 2,911 | 1,551 | |
| Total balances of receivables: | 2,932 | 1,570 | 2,911 | 1,551 |
| The Group | The Company | The Group | The Company | |
|---|---|---|---|---|
| 31 12 2024 | 31 12 2023 | 31 12 2024 | 31 12 2023 | |
| 4) Balances of payables | ||||
| Other related parties | ||||
| Žemaitijos pieno investicija UAB 427 16 427 16 | ||||
| Klaipėdos pienas AB - - - - | ||||
| Čia Market UAB - - - - | ||||
| Muizas piens SIA 0 - - - | ||||
| Samogitija UAB - 11 - 11 | ||||
| Nepriklausoma tyrimų laboratorija UAB 372 126 339 96 | ||||
| Dziugas Poland - - - - | ||||
| Dziugas UK Ltd - - - - | ||||
| S.A.R.Dziugas France - - - - | ||||
| Dziugas USA LLC - - - - | ||||
| Dziugas Deutschland GmbH - - - - | ||||
| Dziugas Hungary Kft - - - - | ||||
| Dziugas Eesti OU 47 32 46 32 | ||||
| 846 185 812 155 | ||||
| Total balances of payables: 846 185 1.849 1.816 |
In 2024-2023, the Company did not account for the impairment of debts related to amounts that belong to related parties. The assessment of these doubtful debts is reviewed each financial year by examining the related party's financial position, the market in which the related party operates and future factors as described in Note 3 (Impairment of Financial Assets). The main assumptions used by the Company's management in assessing the value of doubtful ŽEMAITIJOS PIENAS AB Company’s code 180240752, Sedos str. 35, Telšiai, Lithuania CONSOLIDATED AND COMPANY’S FINANCIAL STATEMENTS EXPLANATORY NOTES FOR THE YEAR ENDED 31 DECEMBER 2024 (All amounts in EUR thousands unless otherwise stated) 51 debts were as follows: (a) the period during which it is expected to recover the existing debt balance. As at 31 December 2024, the debts were due for repayment (as at 31 December 2023, it was one year). As at 31 December 2024 and 31 December 2023, there were no indications of applying related party impairment to receivables. The Company and the Group have concluded a number of transactions with related parties (AB “Žemaitijos pieno investicija” group companies) and the Group's profit and sales are significantly affected by transactions with AB “Žemaitijos pieno investicija” group. Transactions include the leasing of fixed assets, the sale of raw materials and the purchase of manufactured products (cheese) from ABF “Šilutės Rambynas”, the sale of the finished products to UAB “Čia Market”, and the sale of raw materials, production and services to AB "Klaipėdos Pienas".
There were no significant events after the balance sheet date that could significantly affect the financial reporting of the Company and the Group as at 31 December 2024.
52
....................................................................................... 6
BP-1 – General basis for preparation of sustainability statements ........................................................... 6
BP-2 Disclosures in relation to specific circumstances .............................................................................. 6
........................................................ 7
GOV-1 – The role of the administrative, management, and supervisory bodies ................................... 7
GOV-1 – The role of the administrative, management and supervisory bodies .................................... 9
GOV-2 Information provided to and sustainability issues addressed by the Group's administrative, management and supervisory bodies ... 9
GOV-3, E1 GOV-3 Integration of sustainability-related performance in incentive schemes .............. 9
GOV-4 – Statement on due diligence .......................................................................................................... 9
GOV-5 – Risk management and internal controls over sustainability reporting .................................. 10
..................................... 11
SBM–1 Strategy, business model, and value chain .................................................................................. 11
SBM-2 - Stakeholder interests and views .................................................................................................. 14
........................................................... 18
SBM-3 – Material impacts, risks, opportunities, and their interaction with the strategy and business model ... 18
Climate risk assessment and management .............................................................................................. 22
IRO-1 - Description of the process to identify and assess material impacts, risks, and opportunities ... 24
IRO-2 – Disclosure Requirements in ESRS covered by the undertaking’s sustainability statement .. 27
................................................................................... 28
................................................................................... 29
SBM-3 - Material impacts, risks, opportunities, and their interaction with the strategy and business model ... 29
E1-1 - Transition plan for climate change mitigation .............................................................................. 30
E1-2 – Policies related to climate change mitigation and adaptation ................................................... 30
E1-3 – Actions and resources in relation to climate change policies .................................................... 30
E1-4 - Targets related to climate change mitigation and adaptation ................................................... 31
E1-6 - Gross Scopes 1, 2, 3 and Total GHG emissions ............................................................................ 34
E1-7 - GHG removals and GHG mitigation projects financed through carbon credits ...................... 38
.......................................................... 40
SBM-3 – Material impacts, risks, opportunities, and their interaction with the strategy and business model ... 40
E3-1 – Policies related to water and marine resources ........................................................................... 40
E3-2 – Actions and resources related to water and marine resources .................................................. 41
E3-3 – Targets related to water and marine resources ............................................................................ 41
E3-4 – Water consumption .......................................................................................................................... 42
.......................................................... 44
SBM 3 – Material impacts, risks, opportunities, and their interaction with the strategy and business model ... 44
E4-1 – Transition plan and consideration of biodiversity and ecosystems in the strategy and business model ... 44
E4-2 – Policies related to biodiversity and ecosystems ........................................................................... 45
E4-3 – Actions and resources related to biodiversity and ecosystems ................................................. 45
E4-4 – Targets related to biodiversity and ecosystems ........................................................................... 45
............................................. 47
SBM-3 - Material impacts, risks, opportunities, and their interaction with strategy and the business model ... 47
E5-1 - Policies related to resource use and circular economy. MDR-P. Policies adopted to manage material sustainability matters. ... 48
E5-2 - Actions and resources related to resource use and circular economy. MDR-A. Actions and resources in relation to material sustainability matters. ... 49
E5-3 - Targets related to resource use and circular economy ............................................................... 50
E5-4 - Resource inflows ............................................................................................................................... 52
E5-5 - Resource outflows ............................................................................................................................. 52
.............................................................. 55
Other Taxonomy-eligible Activities ...........................................................................................................# 57 Calculation of Taxonomy Indicators
6 ABOUT THIS REPORT
This section presents the consolidated information on sustainability matters of AB ŽEMAITIJOS PIENAS (operating at Sedos g. 35, LT-87101 Telšiai, hereinafter referred to as ‘Žemaitijos pienas’, the Company) and its subsidiary ABF Šilutės Rambynas (operating at Klaipėdos g. 3, Šilutė, hereinafter referred to as ‘Šilutės rambynas’ or the Subsidiary Company), and its subsidiaries (together referred to as the Group) (hereinafter referred to as ‘the sustainability report or statement’).
The report has been prepared in accordance with the European Sustainability Reporting Standards (ESRS).
The sustainability information in this report has been prepared on consolidated basis. The scope of consolidation of sustainability information is the same as that of financial statements, thus ensuring consistency and coherence between financial and sustainability data. This Sustainability Report provides an overview of the Group's achievements and targets in environmental, social, and governance (ESG) areas. External sustainability experts were consulted in the preparation of the report. The Sustainability Report covers the Group's direct activities and the upstream and downstream elements of its value chain as defined in section 5.1 of ESRS 1. The Group has not exercised the option to withhold certain information on intellectual property, know-how or innovation results, as set out in Section 7.7 of ESRS 1, ‘Classified and sensitive information and information on intellectual property, know-how, or results of innovation’. The Group has not used the option not to disclose information on future business developments or matters relating to ongoing negotiations as set out in Articles 19a(3) and 29a(3) of Directive 2013/34/EC.
For this report, the Group follows the short, medium, and long-term definitions as set out in ESRS 1 section 6.4 ‘Definition of short-, medium- and long-term for reporting purposes.’ Value chain estimates were not used and no material errors were identified in prior periods. There were also no changes in the preparation and presentation of sustainability information that affect the comparability of data. In addition to the information required to be provided under the ESRS, the Company includes in its Sustainability Report the disclosures required under Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council (EU Taxonomy Regulation) and the Commission Delegated Regulations setting out the content, including how the disclosures shall be provided.
The following information is incorporated by reference to the other parts of the Management Report:
7 MANAGING SUSTAINABILITY MATTERS
The Group's governing bodies with the highest decision-making powers are the Boards of Žemaitijos pienas and Šilutės Rambynas. They act as collegial management bodies, representing the shareholders between their meetings and making decisions on the most critical issues of the Group's business activities. The group also has a supervisory board that elects the management board members. The governing bodies are composed of 5 members, 40% of whom are females and 60% males; the gender balance on the board is 2:3, with no independent members. Information on the composition and number of members of the Group's administrative, management and supervisory bodies is broken down into executive and non-executive members, as well as experience in relation to the Group's sectors, products, and geographic locations is provided in the Management Report (reference: Consolidated Management Report, Corporate Governance Information - pages 37-40).
There are no employee representatives on the administrative, management, and supervisory bodies. However, the Group has a Works Council composed of 11 members nominated and elected by the Group's employees. This Council represents the interests of the employees and participates in the discussion of matters relating to the employment relationship.# Governance
The Group's Boards of Directors consider and approve the operational and management structure, determine employee positions, and establish regulations for branches and representative offices. Each month, it also approves the range and quantity of products to be made available for free tastings for market research or development purposes. In addition, the Board decides on the posts to be filled by competitive recruitment and establishes the manager's job description and remuneration. There is no specific member assigned to oversee impacts, risks, and opportunities, but it is envisaged that specific individuals from the Board will be appointed. Thus, at present, the Group's regulations, the mandate of the Board or other relevant policy documents do not define the responsibility of administrative, management, and supervisory bodies for managing impacts, risks, and opportunities in the area of sustainability. To date, Board members have been involved in sustainability issues at the project level, i.e. through concrete actions related to sustainability issues. They receive information on the implementation of related projects, projects planned and under implementation, and the progress made by the initiatives. Progress towards the targets is discussed in the monthly Board reports, which assess results and inputs.
During the reporting period, the Group's sustainability issues and sustainability reporting were handled by a Sustainability Group, approved by order of the Chief Executive Officer. The Sustainability Group consists of specialists from different areas of the Group. The Sustainability Group is made up of the Group's Heads of Departments, who are responsible for the involvement of their departments in sustainability initiatives and tasks. The Group's main objective is to coordinate and promote sustainability initiatives across all Group processes. The Sustainability Group coordinates and monitors the implementation of the objectives set and reports on progress to the Boards. The Group does not yet have specific controls to manage impacts, risks, and opportunities – sustainability issues are addressed through the application of general management principles. Decision-making on sustainability issues is embedded in day-to-day business processes. The Supervisory Board carries out a quarterly assessment of the members of the Management Board to determine whether the bodies have the right skills and expertise to manage the relevant issues. During the reporting period, in order to ensure competent oversight and management of sustainability issues, the Group engaged external experts and consultants to fill the knowledge gaps in certain sustainability areas. The Group used sustainability consultants to ensure the quality of the double materiality assessment, climate risk assessment, GHG emissions calculation, and sustainability reporting.
The role of the Group's administrative, management and supervisory bodies in relation to business ethics is governed by the Rules of Procedure of the Management Board and the Rules of Procedure of the Supervisory Board. The Group encourages the members of its administrative, management and supervisory bodies to develop their expertise in business ethics by actively participating in business ethics conferences and training.
In the first year of the report, as part of the double materiality assessment, the Sustainability Group assessed all the themes on the ESRS list and other sustainability themes of interest to the Group. As this is the first time that double materiality has been assessed during the reporting period, the Group does not yet have regular procedures in place for communicating significant impacts, risks, and opportunities to its administrative, management, and supervisory bodies.
The Group does not currently have an incentive scheme or a wage policy related to sustainability issues, including climate-related aspects.
Although the Group does not have a formalised due diligence system in place, certain elements of it are applied in the Group's operations. The key elements and steps listed in Chapter 4 "Due Diligence" of ESRS 1 relate to several horizontal and thematic disclosure requirements under ESRS. In the table below, the Group indicates how and where the key aspects and steps of the due diligence process are reflected in its sustainability report.
Table 1. Core elements of due diligence
| CORE ELEMENTS OF DUE DILIGENCE | PARTS OF THE SUSTAINABILITY STATEMENT |
|---|---|
| a) Integrating due diligence into the governance, strategy, and business model | GOV-1, GOV-2, GOV-3, SBM-3 |
| (b) Involvement of affected stakeholders in all key stages of due diligence | GOV-2, SBM-2, IRO-1, MDR-P, S1-2 |
| (c) Identification and assessment of negative impacts | IRO-1, SBM-3 |
| d) Taking action to address these negative impacts | MDR-A, E1-3 , E3-2, E4-3, E5-2, S1-4, G1 |
| e) Monitoring and communicating the effectiveness of these efforts | MDR-M, MDR-T, E1-4, E1-5, E1-6, E3-3, E3-4, E4- 4, E5-3, E5-5, S1-5,S1-6, S1-7, S1-8, S1-9, S1-10, S1-11, S1-13, S1-16, S1-17, G1-6 |
During the reporting period, the Group did not have a specific formalised risk assessment and control framework for sustainability reporting risks. The Group has not yet formally identified specific risks related to sustainability reporting. The Group's internal control processes for sustainability reporting are based on common business procedures that include data collection, analysis, and reporting. These processes apply to all of the Group's key activities, including disclosures relating to material sustainability issues. To ensure the completeness and accuracy of the data in the sustainability report, a control measure is to involve a large number of employees responsible for data submission and report preparation. The data collection process is organised by the Sustainability Group, which allocates responsibilities among the heads of the different units, who in turn allocate responsibilities to relevant employees. As sustainability reporting risks have not yet been identified, risk assessment and internal control findings have not yet been prepared and presented to administrative, management, and supervisory bodies.
Žemaitijos pienas, together with its Subsidiary Company are engaged in the production and marketing of dairy products. Its products include cheese and cheese products, pre-packaged cheese, processed cheese, processed spreadable cheese, cream, buttermilk blends, milk fat, pasteurised cream, dried dairy products, and fresh dairy products. The Group sells its products under the brand names 'Džiugas', 'Germantas', 'Žemaitijos', 'Magija', 'Pik-Nik', 'Rambyno', 'Dobilas', 'Gaja', and 'TICHĖ', etc. The main activities of Šilutės rambynas are the production and sale of fermented cheeses and cheese products, unripened cheeses, and the production and sale of pasteurised cream and pasteurised whey. It also provides rental, transport, warehousing, milk collection point services, and other services. During the reporting period, the following changes occurred in the product groups: 27 new product launches and 12 product discontinuations or replacements. The Group's products are marketed in 49 countries. Sales are made through retailers, distributors, and other partners. There have been no changes in markets or customers. The search for new markets is ongoing and the product range is being expanded in individual markets with a focus on shelf products. The Group employs a total of 1,480 salaried employees, including:
* 108 employees in Vilnius
* 94 employees in Kaunas
* 86 employees in Panevėžys
* 2,342 employees in Telšiai
* 330 employees in Šilutė
The Group has no products that are banned in certain markets. The Group is not active in the sectors identified in paragraph 40(d) of ESRS 2 SBM-1. The Group is developing a sustainability strategy that will outline key objectives and aims to have it in place by 2026. The development of the sustainability strategy is planned to commence in May 2025.
Table 2. Value chain description
| Part of the value chain | Group activities | Downstream (after the Group's direct operations) |
|---|---|---|
| Upstream (before the Group's direct operations) | ● Cow rearing, care, forage quality, milking, raw milk indicators, and milk transport. ● Raw milk suppliers – Lithuanian dairy farms. ● Suppliers of additional raw materials (enzymes, sugar, salt, flavourings, and other components used in production processes). ● Suppliers of equipment, repair, and maintenance services. |
● Checking milk quality. ● Pasteurisation and processing of milk. ● Production of dairy products (cheese, cream, pasteurised products, buttermilk, milk fat, fresh dairy products). ● Product packaging, storage, and logistics. ● The main production processes take place in Telšiai and Šilutė. |
| ## Raw materials and natural resources | ||
| ## Fixed assets | ||
| ## Human resources | ||
| ## IT and technological resources | ||
| ## Financial resources | ||
| ## Services and intellectual property | ||
| ## Energy |
The Group's business model focuses on the production and sale of dairy products. The key inputs required for the production process and the Group's operations are:
The Group's main products are dairy products: cheese (fermented, processed, processed, spreadable), cream, pasteurised products, buttermilk, dairy fats, and fresh dairy products.
The Group's activities create benefits for stakeholders. Customers are assured of high-quality dairy products that meet international safety and quality standards. Investors are assured of a consistently growing export market and stable financial performance, while suppliers are assured of long-term cooperation with one of the largest dairy producers in Lithuania.
The Company's objectives include organising and carrying out the activities set out in its Articles of Association with a view to generating revenue and profit while ensuring the satisfaction of the shareholders' proprietary interests and the well-being of employees.
Current benefits:
Anticipated future benefits:
The Group identifies and assesses the interests of its stakeholders in the dairy sector to ensure its success. The table below shows how the Group's strategy and business model takes into account the interests and views of stakeholders.
| Key stakeholders | Categories of covered entities | How you are involved and the purpose of involvement | How the Group takes into account the results of the engagement
| Key stakeholders | Categories of covered entities | How you are involved and the purpose of involvement # Internal seminars and training on sustainability policies and their implementation within the Group.
The table below summarises the results of the double materiality assessment - the material impacts, risks, and opportunities identified. All significant impacts, risks, and opportunities under SBM-3 and other thematic requirements of the ESRS are detailed later in this report under the relevant sustainability themes.
Meanings of symbols:
* + Positive impact (F)
* ⚫ Actual impact
* 🟡 - Opportunities
* - Negative impact (G)
* ⚪ Potential impact
* ❗ - Risks
* sh - short
* m - medium
* l - long
| ESRS/ Sustainability topic | Material sub-topic | Material impacts | Material risks and (or) opportunities | Value chain | Upstream | Group activities | Downstream |
| :---# IRO-1 - Description of the process to identify and assess material impacts, risks, and opportunities
The assessment was carried out in accordance with the TCFD guidelines, examining the TCFD classification of climate-related transistional events. The main assumptions considered and the identified transformation risks are summarised in Table 5.
Table 5. Material climate-related transitional risks
| Risk assessment | Transformation events (TCFD) | Potential financial impact |
|---|---|---|
| Policy and legal and market | Increased pricing of GHG emissions | The EU may introduce higher emissions taxes or other regulatory measures which would increase the Group's costs |
| Exposure to litigation | Penalties for non-compliance with climate change regulation. | |
| Increased cost of raw materials | Increased input costs due to the requirements of adaptation to climate mitigation in agriculture and dairy farming. |
Planned Risk Management - developing strategies to adapt to potential tax and regulatory changes to minimise financial impact and ensure sustainable business development; education, learning initiatives. Shifting to less polluting alternatives and green energy can help to differentiate Group in the marketplace, enhance its reputation, attract consumers who value sustainability, take advantage of government incentives, and, in the long term, optimize costs and increase resilience to the impacts of climate change.
The enactment of the Corporate Sustainability Reporting Directive (EU) 2022/2464 (CSRD) and the European Sustainability Reporting Standards (ESRS) established double materiality as the basis for disclosing sustainability information. At the end of 2024, the Group carried out its first assessment of double materiality in light of the new sustainability reporting requirements. The purpose of this analysis is to identify the environmental, social, and governance sustainability issues that are most important to the Group. These will inform the scope of sustainability disclosures and shape the Group's future strategy.
The Group's process for assessing double materiality has been designed in accordance with the requirements of ESRS. The materiality assessment was carried out in consultation with external and internal experts, taking into account the best information available at the time of the assessment. ESRS does not prescribe a specific methodology for how the Group should plan or conduct a double materiality assessment. Therefore, the Group has developed a process that is consistent with the requirements and criteria set out in the ESRS. This takes into account the nature and circumstances of its operations as well as the best practices that have been applied to date. The Group has considered both impact and financial materiality along with their interrelationships in its materiality analysis.
The process of identifying and assessing significant impacts, risks, and opportunities involved the heads of departments and specialists responsible for activities related to the Group's significant sustainability matters. The assessment also considered the list of sustainability matters to be included in the materiality assessment provided by ESRS (ESRS 1, AR 16). The Group has assessed the significance of each sustainability matter individually, based on the ESRS criteria, taking into account the specificities and circumstances of its own operations. The assessment of materiality was based, to the extent possible, on objective information, expert insights, and generally accepted scientific advice. Impacts, risks, and opportunities have been assessed in the short, medium, and long term, which are consistent with the definitions of the time periods set out by ESRS.
Key steps for assessing the Group's double materiality:
The Group's other due diligence processes to identify, assess and monitor the Group's current and potential positive and negative impacts across the value chain and the use of stakeholder consultation are summarised together with the information disclosed in accordance with the disclosure requirements of GOV-4. All significant impacts, risks, and opportunities, including factors that increase the risk of adverse impacts, are detailed in accordance with the requirements of the standard later in this report - together with the information disclosed under the relevant topical ESRS.
In the materiality analysis, the Group considered the impacts, risks, and opportunities associated with the Group through its own operations or as a result of its business relationships. The double materiality assessment process was developed and based on the Group's risk management methodology as well as the Group's previous materiality assessment. The materiality matrix was updated in early 2024. The previous materiality assessment was based on the Global Reporting Initiative (GRI) methodology with stakeholder engagement (through a survey). The results of the double materiality assessment are planned to be reviewed annually.
A sustainability issue is significant in terms of impact when it relates to the Group's significant actual or potential, positive or negative impacts on people or the environment in the short, medium and long term: an inside-out perspective. In assessing the materiality of the impacts, the Group has followed the general criteria of the ESRS (Section 3.2 ‘Significant Issues and Materiality of Information’ of ESRS 1) and the European Financial Reporting Advisory Group (EFRAG) practical Implementation Guidance. The Group assessed the materiality of actual negative effects based on the severity of the effect and the materiality of potential adverse effects based on the severity and likelihood. The assessment of the severity of the impact is based on the scale, scope, and irreversible nature of the impact. In assessing potential negative impacts on human rights, the strength of the impact is more important than the likelihood. The Group has therefore applied the appropriate weighting to increase the strength of the impact, relative to the likelihood when assessing human rights-related issues. The Group assessed the significance of positive impacts in terms of scaleand scope for actual impacts and acle, scope, and likelihood for potential impacts.
In assessing the risks and opportunities that have or may have a financial impact, the Group has considered the linkages between its impact and dependences, as well as the risks and opportunities that may arise from that impact and dependences. To determine financial materiality, the Group assessed risks and opportunities based on the likelihood, magnitude, and nature of the impact using quantitative and qualitative thresholds. Probability was assessed on a scale of 1 to 5, where 1 is a very low probability (less than 20%), 5 is a very high probability (more than 80%). The financial impact was assessed on the basis of the following thresholds: very low (Up to 5% of EBITDA), low (5%-15% of EBITDA), medium (15%-30% of EBITDA), high (30%-50% of EBITDA), very high (>50% of EBITDA).
For the double materiality assessment, the Group only assessed risks related to sustainability. The decision on the assessment of impacts and risk were discussed in Group’s working sessions to which those responsible in the relevant fields were invited. The assessment was then reviewed and approved by the Group's responsible persons. The double materiality assessment process has been developed based on the Group's risk management methodology but is not currently integrated into the Group's overall risk assessment and management process. The process for identifying, assessing, and managing sustainability- related opportunities is also not integrated into the Group's overall governance process. The need to integrate these processes will be considered within the Group in light of best practices emerging and prevailing in the market.
The Group has analysed its assets and activities to identify actual and potential water-related impact, risks and opportunities in its operations and value chain. The Group has identified that significant impacts relate to water used in the Group's production activity. In Telšiai, the Company uses fresh water for its operations, which is extracted from its own boreholes at a waterworks for production purposes. The Group also has a mineral water borehole, TICHĖ, from which high quality mineral water is extracted. It is bottled using advanced production technology, equipment compliant with EU standards and a quality and food safety management system to ensure a high quality product. The Group did not identify any significant impacts, risks or opportunities related to these activities this year. However, as part of the double materiality assessment next year, the Group intends to increase its focus on these activities in order to further assess the potential long term impacts and ensure sustainable development of the activities. Consultations with affected communities on this issue have been carried out to the extent described in SBM-2.
The Group conducted the assessment of significant impacts, risks, dependencies and opportunities following the process described in the IRO-1 methodology.
Physical risks identified: The Group may be exposed to declining raw material quality/declining volumes/volatility in price due to environmental factors and deteriorating ecosystems, spreading diseases.# IRO-1 E5 Description of the processes to identify and assess material resource use and circular economy-related impacts, risks and opportunities
The Group has carried out the assessment of significant impacts, risks, dependencies and opportunities according to the process described in the IRO-1 methodology. The Group has analysed its assets and activities to determine its actual and potential impacts, risks and opportunities in its operations and upstream and downstream parts of the value chain. Consultations with affected communities on this issue were carried out to the extent described in SBM-2.
A list of the disclosure requirements complied with in the preparation of the Sustainability Report, taking into account the outcome of the materiality assessment, is provided in the section of this report 'ESRS content index.' A table of all the datapoints that derive from other EU legislation as listed in Appendix B of the ESRS, is provided in the section 'List of datapoints in cross-cutting and topical standards that derive from other EU legislation'. The material information to be disclosed has been identified through a double materiality assessment following the criteria set out in Section 3.2 'Material issues and materiality of information' of ESRS 1.
The group discloses information in accordance with the minimum disclosure requirements regarding policies (MDR-P), actions (MDR-A), metrics (MDR-M), and targets (MDR-T), along with the relevant disclosure requirements set out in the thematic ESRS, as presented in this sustainability report.
The Double Materiality Assessment ("DMA") identified material impacts and risks, which are summarised in the table in ESRS Chapter 2 SBM-3 - Material impacts, risks, opportunities, and their interaction with the strategy and business model. No material opportunities were identified. This section provides additional information based on SBM-3 and other applicable requirements.
During the reporting period, the Group performed its first DMA assessment, which included an assessment of the impacts and risks associated with its operations and business model. The Group has already started to review and update its business model and strategy in light of these factors. The main objectives are to reduce environmental impacts and increase sustainability performance by incorporating renewable energy sources and reducing CO₂ emissions, both in the Group's operations and by supporting dairy farmers in the process. Customers are increasingly expressing a need for data regarding the Group's sustainability performance, which poses a risk of losing or not attracting customers if the sustainability expectations of customers are not met. This could lead the Group to reputational damage.
Material impacts and risks have a direct impact on the organisation of the Group's operations.
Greenhouse gas (GHG) generated by the Group's dairy processing activities and value chain have a negative impact on the environment and people. These emissions contribute to climate change, which amplifies the greenhouse effect and can lead to extreme weather events, as well as harming human health.
Impacts arise directly from the Group's choice of business model. By integrating sustainability principles into its operations, the Group is better positioned to reduce negative impacts on the environment and people and to create positive impacts in the long term. The Group's impacts on people and the environment also arise both through its direct activities and through its business relationships. Responsible management of these relationships and reduction of impacts requires both optimisation of internal processes and careful selection of partners and cooperation with sustainable suppliers and partners.
The current quantitative financial impact has not yet been determined, but the Group's material risks may have an impact on its financial position, results of operations, and cash flows. In the short term, the focus should be on regulatory developments, the implementation of sustainability initiatives, and the strategic management of resources and investments. This is in order to avoid material adjustments to the number of assets and liabilities in future reporting periods.
The Group does not disclose detailed information about the overall expected financial impact and the financial sources of the strategy when exercising the option of transitional provisions. To date, the Group has only carried out an initial analysis of the resilience of the strategy and business model through a climate risk assessment, which has been carried out using a qualitative approach. This assessment identified material transition risks and determined how they are managed.
The Group does not have a transition plan related to its efforts to mitigate climate change. The plan is expected to be developed and approved by the end of 2026. The Group does not currently have a plan in place to ensure that its economic activities comply with the criteria set out in Commission Delegated Regulation EU 2021/2139.
The Group does not currently have a policy on material sustainability matters. A policy is expected to be adopted and approved by the end of 2026.
Undertakings of the Group are taking action to manage key climate change issues without a specific policy. Information on actions taken during the reporting period and those planned for the future is presented below. The Group establishes annual investment, as well as operational and savings plans to meet its sustainability objectives and to reduce negative environmental impacts. The main mitigation actions can be categorised by decarbonisation levers into renewable energy consumption and fuel switching for a more sustainable transport fleet. The following key actions were implemented in the reporting year:
Planned actions:
The Group's target of 70% of its electricity needs being met by renewable generation does not currently have a clearly defined timeframe. However, taking into account current investments and realistic opportunities, the Group plans to reach a 50% share of renewable energy by 31 December 2025.
The Group has used sustainable financial instruments to implement the actions. A bank has also provided a green loan for the purchase of wind turbines. The capital expenditure for wind turbines in 2024, according to the relevant part of the financial statements, amounted to EUR 6,872,399. These costs are directly related to the Group's investments in renewable energy generation and the achievement of its long-term sustainability objectives. The Group has not currently determined the amount of future financial resources. This information will be determined for the next reporting period.
Information on the key performance indicators required under Commission Delegated Regulation (EU) 2021/2178 is provided in the EU Taxonomy Alignment Overview section. A capital expenditure plan, in accordance with Commission Delegated Regulation (EU) 2021/2178, has not been foreseen for this reporting period.
The Group does not have set measurable and result-oriented targets to manage material sustainability issues within the topic of climate change, including GHG emission reduction targets. Targets are planned to be set by the end of 2026. There is also no formal monitoring process to track the effectiveness of the mitigation actions envisaged to date. The Group's main objective is to comply with the requirements of the European Union and the commitments of the Republic of Lithuania to achieve zero emissions balance by 2050.# E1-5 – Energy consumption and mix
This part of the report discloses information on energy consumption related to the Group's operations. The data is presented in Tables 6, 7.
| Energy consumption and mix | 2023 | 2024 | |||||
|---|---|---|---|---|---|---|---|
| Žemaitijos pienas | Šilutės rambynas | Group | Žemaitijos pienas | Šilutės rambynas | Group | ||
| (1) Fuel consumption from coal and coal products (MWh) | 0 | 0 | 0 | 0 | 0 | 0 | |
| (2) Fuel consumption from crude oil and petroleum products (MWh) | 25,968 | 19,918 | 45,886 | 25,868 | 16,879 | 42,747 | |
| (3) Fuel consumption from natural gas (MWh) | 11,719 | 0 | 11,719 | 15,063 | 2,436 | 17,499 | |
| (4) Fuel consumption from other fossil sources (MWh) | 0 | 0 | 0 | 0 | 0 | 0 | |
| (5) Consumption of purchased or acquired electricity, heat, steam, and cooling from fossil sources (MWh) | 25,393 | 4,433 | 29,825 | 15,597 | 2,880 | 18,477 | |
| (6) Total fossil energy consumption (MWh) (calculated as the sum of lines 1 to 5) | 63,079 | 24,351 | 87,430 | 56,527 | 22,195 | 78,722 | |
| Share of fossil sources in total energy consumption (%) | 52.05% | 100.00% | 60.07% | 44.86% | 90.61% | 52.31% | |
| (7) Consumption from nuclear sources (MWh) | 0 | 0 | 0 | 0 | 0 | 0 | |
| Share of consumption from nuclear sources in total energy consumption (%) | 0 | 0 | 0 | 0 | 0 | 0 | |
| (8) Fuel consumption for renewable sources, including biomass (also comprising industrial and municipal waste of biologic origin, biogas, renewable hydrogen, etc.) (MWh) | 58,121 | 0 | 58,121 | 58,399 | 0 | 58,399 | |
| (9) Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources (MWh) | 0 | 0 | 0 | 11,078 | 2,299 | 13,377 | |
| (10) The consumption of self-generated non-fuel renewable energy (MWh) | 0 | 0 | 0 | 0 | 0 | 0 | |
| (11) Total renewable energy consumption (MWh) (calculated as the sum of lines 8 to 10) | 58,121 | 0 | 58,121 | 69,476 | 2,299 | 71,776 | |
| Share of renewable sources in total energy consumption (%) | 47.95% | 0.00% | 39.93% | 55.14% | 9.39% | 47.69% | |
| Total energy consumption (MWh) (calculated as the sum of lines 6, and 11) | 121,200 | 24,351 | 145,551 | 126,004 | 24,494 | 150,498 |
Both Žemaitijos pienas and Šilutės rambynas did not generate electricity in the reporting year. Žemaitijos pienas's activities produced heat energy (steam) at the boiler house at Sedos str. 35: 54,404 MWh from biofuel chips (SM2); 4214.521 MWh from natural gas. The following energy was consumed directly for production purposes: natural gas - 9, 995.988 MWh, liquid petroleum gas - 1, 013.048 MWh.
| Energy intensity per net revenue | 2023 | 2024 | % N/N-1 |
|---|---|---|---|
| Total energy consumption from activities in high climate impact sectors per net revenue from activities in high climate impact sectors (MWh / EUR) | 0.0005236 | 0.0004891973981 | -6.56% |
Note. Based on data from the manufacturing sector with high climate impact (CEA 105100).
| Details of net income | 2023 | 2024 |
|---|---|---|
| Net revenue from activities in high climate impact sectors used to calculate energy intensity | 278,003,792 | 307,640,000 |
| Total net revenue (Financial statements) | 278,003,792 | 307,640,000 |
Note. Reference to the revenue line in the financial statements: company and consolidated financial statements, Revenue from contracts with customers - 307,643.
In Table 9, Group discloses the amount of GHG emissions.
| Emission type | Retrospective data | Base year | 2023 | 2024 | Comparison with base year | Comparison with previous year (% N / N-1) |
|---|---|---|---|---|---|---|
| Scope 1 GHG emissions | ||||||
| Gross Scope 1 GHG emissions (tCO2eq) | 15,180 | 15,288 | 0.7% | |||
| Percentage of Scope 1 GHG emissions from regulated emission trading schemes (%) | 0 | 0 | ||||
| Scope 2 GHG emissions | ||||||
| Gross location-based Scope 2 GHG emissions (tCO2eq) | 17,353 | 10,738 | -38.1% | |||
| Gross market-based Scope 2 GHG emissions (tCO2eq) | 4,507 | 4,814 | 6.8% | |||
| Significant scope 3 GHG emissions | ||||||
| Total Gross indirect (Scope 3) GHG emissions (tCO2eq) | 552,622 | 596,162 | 7.9% | |||
| 1 Purchased goods and services | 535,641 | 576,919 | 7.7% | |||
| 2. Capital goods | 3,362 | 4,634 | 37.8% | |||
| 3 Fuel and energy-related Activities (not included in Scope1 or Scope 2) | 4,438 | 4,558 | 2.7% | |||
| 4 Upstream transportation and distribution | 1,389 | 1,761 | 26.8% | |||
| 5 Waste generated in opera%tions | 147 | 107 | -27.2% | |||
| 6. Business travelling | 27 | 54 | 99.3% | |||
| 7. Employee commuting | 587 | 622 | 6.0% | |||
| 8. Upstream leased assets | 0 | 0 | ||||
| 9 Downstream transportation | 7,032 | 7,507 | 6.8% | |||
| 10 Processing of sold products | 0 | 0 | - | |||
| 11. Use of sold products | 0 | 0 | - | |||
| 12 End-of-life treatment of sold products | 0 | 0 | - | |||
| 13 Downstream leased assets | 0 | 0 | ||||
| 14. Franchises | 0 | 0 | ||||
| 15. Investments | 0 | 0 | ||||
| Total GHG emissions | ||||||
| Total GHG emissions (location- based) (tCO2eq) | 585,155 | 622,187 | 6.3% | |||
| Total GHG emissions (market- based) (tCO2eq) | 572,309 | 616,264 | 7.7% |
In addition, in 2024, the activities generated 38,014t of CO2 of biological origin, which was emitted from the combustion of biofuels. These emissions were from activities at the Žemaitijos pienas boiler house and the Vilnius branch due to the consumption of central heating. In 2023, the activity generated 37,836 t of biogenic CO2.
| GHG intensity per net revenue | Base year | 2023 | 2024 | Comparison with base year | Comparison with previous year (% N / N-1) |
|---|---|---|---|---|---|
| Total GHG emissions (location- based) per net revenue (tCO2eq/EUR) | 0.00206 | 0.00200 | -2.7% | ||
| Total GHG emissions (market- based) per net revenue (tCO2eq/EUR) | 0.00210 | 0.00202 | -3.9% |
Note: Cross-referenced to the net income line or disclosure in the business’ financial statements: the line item in the consolidated financial statements is revenue from contracts with customers.
The calculations are based on the Greenhouse Gas Protocol (GHG) and IPCC guidelines. The assessment includes all emissions-conforming activities within the Group's undertakings that comply with the operational control principles, and an assessment of the three GHG scopes. The calculation of emissions includes not only CO₂, but also other greenhouse gases (CH₄, N₂O, HFCs) produced in the activity by converting them to CO₂-eq. according to the standard coefficients (IPCC AR5), and denoting the final total number CO₂-eq. Sources of emission factors used:
- IPCC
- IPCC AR5 for refrigerants
- European Environment Agency guidelines for air pollution inventories
- Association of Issuing Bodies (AIB, residual mix and production mix) for electricity
- DEFRA
- IEA for energy losses
- Cornell Hotel Sustainability Benchmarking (CHSB) Index 2021
- PROBAS database
- AGRIBALYSE, 2023
- Journal of Dairy Science Volume 105, Issue 12, December 2022, pages 9713-9725
In 2024, 100% of Scope 3 emissions are estimated based on activity-specific data. The assumptions and assessment thresholds for scope 3 emissions are set out below:
The Group has not implemented or contributed to projects to absorb or store GHG emissions. The Group has not financed any mitigation projects through the purchase of carbon credits.
The Group does not apply carbon pricing systems.
The Group, taking advantage of the option to gradually disclose information, does not indicate the financial impact of climate-related physical and transition risks and potential opportunities.
The significant impacts identified in the Double Materiality Assessment (DMA) are summarised in a table in ETAS Chapter 2 SBM-3 – Material impacts, risks, opportunities and their interaction with the business model section. No risks and opportunities have been identified; therefore, no information is available on the associated financial impacts. This section provides additional information based on SBM-3 and other applicable requirements. The Group continuously assesses the opportunities for water savings and more efficient wastewater management. This is done to measure the impact on the Group’s business model, value chain, and strategic decisions. The Group sets specific targets for reducing wastewater pollution, which are stricter than those set out in the contracts with wastewater operators or in the IPPC permits.# E. Environmental, Social, and Governance ("ESG") Matters
There are also targets to reduce water and wastewater consumption per unit of product produced. Production optimisation and polluting wastewater collection solutions, including the use of wastewater for animal feeding and biogas production, have helped to reduce the BOD7 thresholds for wastewater pollution. Developing innovative and sustainable practices is expected to help the Group gain a competitive advantage and strengthen its relationship with conscious consumers and partners. By transferring polluted wastewater to biogas production, the Group helps reduce environmental emissions and protect soil and water bodies from contamination. In addition, one of the Group's activities is producing mineral water, so sustainable water use is essential both for the business model and the long-term strategy. The impact arises directly from the Group's choice of business model. By integrating sustainability principles into its operations, the Group is better positioned to reduce negative environmental impacts and create positive impacts for both the present and long-term future. . The Group did not carry out a resilience analysis of its strategy and business model during the reporting period, except for these areas which were analysed as part of the double materiality assessment.
The Group has no policy on significant sustainability issues related to water consumption. A policy is planned to be adopted and approved by the end of 2026. The policy will set out clear principles for sustainability management at the Group level, along with responsibilities and guidelines for action. The policy will address the use and extraction of water and marine resources in its operations and the prevention and reduction of water pollution and wastewater treatment.
Key actions to reduce wastewater volume and pollution (BOD) are implemented without a specific policy. It is not the first year that the Group has implemented actions to optimise production and capture polluted wastewater for use in animal feeding and biogas production, thus reducing the BOD7 limits for wastewater pollution. In addition, water consumption is being reduced to improve resource efficiency and water collected is being reused where possible. There are no time limits for completing these actions as they are ongoing. Progress achieved in previous reporting periods includes a reduction in BOD7 levels from 1,280 mg/L to 1,100 mg/L, in accordance with the contractual agreement with the wastewater manager and the requirements of the IPPC. The Group does not expect to incur significant operating and capital costs to implement the actions presented during the reporting period. The Group plans to conduct a detailed assessment in 2025 to determine the significance of these costs for future financial performance. The Group does not categorise the actions in the hierarchy of mitigation measures as specified in the ETAS, using the voluntary disclosure exemption.
The Company has set a measurable and results-oriented objective for this topic. Achieving this objective contributes to the sustainable use of water and the strengthening of environmental responsibility.
Objective: Reduce the BOD7 indicator for wastewater pollution from 1,280 mg/l to 800 mg/l by 2030.
The target for wastewater pollution is more ambitious than the targets set in the contracts with wastewater operators or in the IPPC requirements. This target is linked to the strategic objective of saving water and reducing wastewater pollution, thereby optimising operating costs, reducing water supply and wastewater management costs, and making better use of resources. The objective covers the activities of Žemaitijos pienas at the Sedos str. 35, Telšiai plant. Progress has been measured since 2018, when the baseline value for the BOD7 effluent pollution indicator was 1,720 mg/l. During 2018-2023, the indicator value was reduced to 1,280 mg/l through various measures. In 2024, the indicator value was already down to 1,100 mg/l. Tests performed by an accredited laboratory shall determine the BOD7 effluent pollution indicator. The effluent pollution indicator has been coordinated with the wastewater manager. Following a change in the agreed BOD7 indicator with the wastewater manager, the IPPC was updated. The data collection and calculation processes remained unchanged. The meterOn system is used to monitor and analyse wastewater pollution indicators.
Information on the Group's water consumption during the reporting period is presented in Table 11. Data relating to wastewater pollution is determined by an accredited laboratory in accordance with certified standards.
| Total Water Consumption (m³) | Total Water Recycled and Reused (m³) | Water intensity: total water consumption in its own operations in m3 per million EUR net revenue | |
|---|---|---|---|
| Total | 1,234,512 | 3,383,630 | 4,013 |
| Žemaitijos pienas | |||
| Freshwater boreholes | 994,660 | 3,383,630 | |
| Mineral water borehole | 16,037 | 0 | |
| Municipal water | 131 | 0 | |
| Šilutės Rambynas | |||
| Municipal water | 98,830 | 0 | |
| Borehole water | 124,854 | 0 |
Note: All data presented here is collected by direct measurement.
Remark. The Iamus system monitors and analyses water consumption, while wastewater pollution indicators are monitored via the meterOn system. Also, wastewater pollution (BOD) data is visualised on a screen in the production corridor so all employees can see the last 10 days of wastewater pollution indicators. The amount of circulating water and reused water consists of the amount of chilled water circulated (water is cooled to +2C in the compressor room and fed into production as a refrigerant for production processes, then returned and cooled again - circulation in the system) and the water/condensate from the products that has been used for the initial rinsing/cooling process - instead of being discharged to the sewerage.
Double Materiality Assessment (DMA) has identified significant risks, which are summarised in the table in ETAS 2. SBM 3 – Material impacts, risks, opportunities, and their interaction with the strategy and business model. This section provides additional information based on SBM-3 and other applicable requirements. The Group assesses the impact of changes in the environment and ecosystems on its business model, supply chain, and strategy. The main risks identified are that the Group may face future deterioration in milk quality, declining raw material volumes (milk scarcity), and volatile raw material prices. This can be due to environmental factors, changing ecosystems, and the spread of diseases. The specific strategies and plans to respond to these risks will be more clearly defined once the sustainability strategy has been approved in 2026. Risks arising from increased environmental regulations or disruptions in the supply of raw materials may lead to increased costs and reduce the Group's profitability and cash flow - for example, if the Group's supply chain cannot adapt to climate change or environmental requirements. In that example, it may be necessary to make significant adjustments to asset values, by reducing the value of long-lived assets or changing inventory values due to production constraints. The current financial impact has not yet been identified, nor is it expected that the effect on the Group will occur in the next financial year (the risk is assessed to be in the long term). The Group did not analyse the resilience of its strategy and business model during the period under review, except for the areas that were carried out as part of the double materiality assessment. This risk was not addressed in the previous year's Sustainability Report, which was prepared in accordance with GRI requirements. No significant impacts have been identified for this topic. The Group's activities also do not directly impact land degradation, desertification, or soil sealing. No significant direct impacts on threatened species have been identified. The Group's activities are also not directly related to impacts on sensitive biodiversity areas. However, if there are farmers in the supply chain whose activities could impact such sites, the Group would inform the responsible authorities, such as the Environmental Protection Agency or the Ministry of Agriculture.
The Group plans to adopt a sustainability strategy in 2026, followed by a biodiversity and ecosystem resilience analysis. The assessment will cover the physical, transformational, and systemic risks associated with these areas. This will also cover the Group's operations as well as both the upstream and downstream elements of the value chain.
The Group does not currently have an adopted Biodiversity and Ecosystems Policy but plans to adopt one in 2026. The Group does not currently have a policy on sustainable land use, sustainable ocean use, or reducing deforestation. In the future, the Group plans to assess both the need and the feasibility for adopting these policies, considering the specificities of its operations, legislative requirements, and stakeholder expectations.
Following the adoption of the policy, the objectives will be set out and the main actions taken or planned will be disclosed. The Group does not have an action plan requiring significant operating or capital expenditure. There are currently no financial instruments or resources available to implement such actions.# E4-4 – Targets related to biodiversity and ecosystems
The Group does not currently have measurable, results-oriented targets, but plans to define them once the policy is adopted. The Group does not monitor their effectiveness further as no specific actions are underway or foreseen regarding this area. The Group generally monitors the impact of its sustainability-related actions, risks, and opportunities, assessing their effectiveness through regular internal audits and external evaluations. Based on these observations, the Group updates its action plans as necessary to ensure that it meets its sustainability objectives and that its activities are compatible with environmental requirements. The Group has not identified any significant effects on biodiversity under the ETAS assessment of significance, and the associated ecological thresholds do not apply. However, the Group monitors certain ecological thresholds that may impact its future activities, taking into account potential risks.
Currently, the Group does not specify targets based on the Kunming and Montreal Global Biodiversity Strategy and aspects of the 2030 EU Biodiversity Strategy.
Material impacts and risks identified in the Double Materiality Assessment (DMA) are summarised in a table in ESRS 2, section SBM-3 - Material impacts, risks, opportunities, and their interaction with the strategy and business model. This section provides additional information based on SBM-3 and other applicable requirements.
The materiality assessment identifies that the main material impacts and risks arise in the Company's operations and throughout the value chain. Negative impacts relate to the generation of packaging and other waste both within the Group and downstream value chain. This includes both waste generated during the production process and packaging of final products. Packaging waste, if not properly recycled or recovered, can contribute to plastic pollution, while waste generated within the Group can contribute to pollution from organic waste and other production residues. Packaging is subject to increasingly stringent EU requirements on sustainability. These requirements, combined with increasing consumer expectations for environmentally friendly solutions, pose a risk to the Group's ability to ensure the availability of sustainable and recycled materials, including the appropriate aesthetic quality of products.
In addition, there are material risks due to the possible declining availability of raw milk and fluctuations in farm- gate prices caused by various factors such as climate change (e.g. droughts), livestock diseases, or increasingly stringent environmental requirements. This can have a direct impact on production costs.
The Group's material impact and risks have a direct impact on the Group's business model, value chain, strategy, and decision-making. In light of these factors, the Group has already started to review and update its business strategy to mitigate environmental impacts and manage risks:
Waste generation is directly linked to the Group's business model, which focuses on the production and distribution of dairy products. The dairy processing processes require a certain amount of materials, which results in the generation of waste plastics and other materials. In addition, the production process inevitably generates waste related to the processing of raw materials. The business model, based on production and distribution, also relies on standardised, single-use packaging, which is essential to ensure food safety.
The materiality assessment has identified that the Group's impacts arise directly from its activities, in particular from the waste it generates. Waste falls into several categories:
There has been no material financial impact on the Group's financial position, results of operations, or cash flows at this time. There is also no risk that the number of assets and liabilities will need to be materially adjusted in the next annual reporting period. However, if the Group fails to comply with EU requirements, certain financial penalties are possible, the exact amounts of which have not been determined. In addition, non-compliance with EU regulations may lead to reputational risks related to negative public perception of the Group's performance. The Group may also be subject to higher fees in order to maintain product quality and meet consumer expectations.
The Group did not carry out an analysis of the resilience of its strategy and business model during the period under review, outside of the areas listed above, which was carried out as part of the double materiality assessment. The Group recognises the importance of sustainability issues in its operations and is actively working to integrate sustainability principles into its strategic decisions. Integrating sustainability into strategy is essential for long- term resilience and success, while efforts are made to ensure that decisions taken are consistent with long-term sustainability principles. Actions related to building resilience are described in more detail in section E5-2 - Actions and resources related to resource use and circular economy.
No material changes in impacts, risks, or opportunities were identified during the reporting period. However, we continuously monitor the business environment and analyse trends in the supply chain, regulatory environment, and market, in order to identify potential material changes in a timely manner.
The Group does not currently have a policy adopted to address all the material impacts and risks but plans to have a sustainability policy adopted by the end of 2026. However, some of the material sustainability issues are already included in existing policies:
There is no single person within the Group responsible for the implementation of these policies, but responsibility is divided among several individuals by function, based on internal orders. The implementation of the "Quality and Food Safety Policy" is based on the requirements of the BRCGS, IFS, FSSC food safety standards (the certificates held by Žemaitijos pienas are listed, while Šilutė s rambynas has only FSSC and BRCGS). In setting the policies, the expectations of customers, consumers, and clients are taken into account, as expressed through the questionnaires and through the opinions of the Quality Line. The principles of the circular economy are also applied. Only Group employees are made aware of the existing policies that must be followed.
The Group does not currently have a specific policy to reduce the use of primary resources or to increase the use of secondary (recycled) resources, nor does it have a strategy in place for the sustainable sourcing of renewable resources.
The Group's actions implemented during the year under review, future plans, and their expected results are set out below. To achieve the '’Quality and Food Safety Policy’' objective of protecting the environment by reducing material and energy consumption at all stages of production, processes and the selection of packing and packaging materials are continuously reviewed. In 2024, the Group continued to strengthen its sustainability initiatives, building on the achievements of 2023, but focusing on new solutions and improvements.In 2024, the waste management system was improved and built on the waste segregation process previously initiated. This allows the Group to increase the amount of recycled materials and further reduce the volume of waste generated, which directly contributes to the circular economy. The implementation of an annual savings plan, which is continuously monitored, optimises the use of resources, reduces costs, and improves overall business efficiency. In addition, the Undertaking continues to innovate in packaging. Building on previous trials, such as the PurePak project, new packaging solutions are being introduced to reduce the use of both plastic and cardboard. This increases the recycling potential of packaging and contributes to stimulating innovation, which is important when reducing the negative impact on the environment. 50 The use of reusable containers is being developed for the movement of products between production units and to the market, thereby reducing corrugated cardboard consumption. The choice of raw material suppliers and the cost of their purchases are assessed in the context of the use of sustainable packaging. In addition, projects are being developed to use 100% recycled packaging materials and to improve packaging design, with the aim of reducing cost of packaging materials and improving recycling rates. The use of a recycled cap (a flexible plastic overlay designed to protect the product packaging from the effects of inclination) has already been implemented in the milk production unit, saving both packaging weight and financial resources. The suitability of the packaging for the product is balanced with the maximum shelf life and packaging pollution taxes. Future plans include the introduction of a sustainable supply chain management system and staff training on the practical application of sustainability and circular economy principles, which will increase workers competencies and improve the implementation of sustainability initiatives. A savings plan is drawn up annually and monitored on an ongoing basis (interim reports are made to ensure that the savings plan is implemented). Savings measures are identified for individual items rather than for the category as a whole in order to better manage resources and optimise costs. Key actions cover production and supply chain areas and waste management in the Group's operating geography, which includes production sites and the supply chain. Involvement of Stakeholder Groups, including employees and suppliers, is a priority. The specific timeframes for the completion of key actions will be determined according to their nature and the Group's strategic priorities. Currently, the main financial resources allocated to the Action Plan are based on cost-saving principles, which are achieved through the review and optimisation of processes, without additional investments. This means that the focus is on analysing existing processes and improving their efficiency in order to reduce costs and achieve better results without significant additional costs. The amount of financial resources allocated to this plan is in line with the underlying financial statements, as most of the costs relate to better management of existing resources rather than new investments.
E5-3 - Targets related to resource use and circular economy
The Group does not currently have a formally adopted Sustainability Policy addressing circular economy challenges but plans to develop one by the end of 2026. Nevertheless, the Group is committed to reducing the environmental impact of its activities and to achieving a positive impact. For 2025, the production divisions have set the following targets: 51
The scope of the targets covers the Group's activities and the upstream and downstream parts of the value chain. Specific actions and targets are set out in internal documents and apply to individual items rather than in aggregate. Increasing the use of recycled packaging materials (secondary and tertiary corrugated cardboard and plastic containers) is an ongoing task with a gradual implementation. Specific milestones and deadlines are set in internal documents. Packaging optimisation targets (in terms of composition, types, and weight) are based on internal methodologies and take into account EU sustainability requirements. Stakeholders have not been specifically involved in setting targets for each of the material sustainability issues. However, the Group takes their expectations and regulatory requirements into account when assessing sustainability priorities and formulating strategic objectives. There were no changes to the targets, indicators, measurement methodologies, assumptions, constraints, or data collection processes during the reporting period. The Group does not intend to set additional measurable targets as the main objective is to meet the requirements of EU legislation without compromising product quality. The Group monitors and measures the effectiveness of its policies and actions related to material sustainability impacts, risks, and opportunities.
These results demonstrate the Group's consistent commitment to reducing its environmental impact and optimising the use of packaging. The Group's objective is to meet the requirements of EU legislation without compromising product quality. As the policy only provides for savings, without specific percentage or quantitative indicators set, it is the savings themselves that are currently being assessed. The initial savings estimate is based on the previous year's sales data, while the actual savings are calculated on the basis of real-time data. All changes made are backed up by tests, test reports and, where necessary, product compliance studies. Savings plans shall not only show the monetary value of the savings, but also the amount of raw materials saved, such as cardboard and plastic. The targets relate to packaging recyclability and packaging reduction. The Group's target of 25% recycled PET raw material in PET packaging (on a mass balance basis) is mandatory in order to meet the requirements of the circular economy.
E5-4 - Resource inflows
The risks identified in relation to resource inflows relate to raw milk. This resource is further described in ETAS 2 SBM-1 - Strategy, Business Model, and Value Chain.
E5-5 - Resource outflows
The Group's main products and materials that are the result of the Group's production process are described in more detail in ETAS 2 SBM-1 - Strategy, Business Model, and Value Chain. Product logistics tables have been developed detailing the material, category, and weight of the packaging used to package the product. For each material used, a separate package description is assigned. This details the compatibility of the package with the product to be packaged, as well as the components and properties of its constituents. 53
| Category | Share of recycled materials |
|---|---|
| Packaging | 51.27 % |
Note: Percentage derived from total non-hazardous waste when considering non-hazardous recyclables (i.e. corrugated cardboard, mono containers, metals).
| Category | 2024 Total quantity (tonnes) | 2024 Hazardous waste (tonnes) | 2024 Non-hazardous waste (tonnes) |
|---|---|---|---|
| Waste generated | 1,283.251 | 103.277 | 1,179.974 |
Note: No radioactive waste is generated during the activity.
| Type of processing operation | 2024 Total quantity (tonnes) | 2024 Hazardous waste (tonnes) | 2024 Non-hazardous waste (tonnes) |
|---|---|---|---|
| Diverted to secondary use | 331.808 | 0 | 331.808 |
| Diverted for recycling | 657.9 | 0 | 657.9 |
| Other recovery operations | 161.22 | 103.277 | 57.943 |
54
| Type of disposal | 2024 Total quantity (tonnes) | 2024 Hazardous waste (tonnes) | 2024 Non-hazardous waste (tonnes) |
|---|---|---|---|
| Combustion | 132.319 | 0 | 132.319 |
| Disposal in landfill | 0 | 0 | 0 |
| Other disposal operations | 0 | 0 | 0 |
Notes: The waste manager carries out the disposal procedure, but the waste is not sent to landfill.
Table 16.# Non-recycled waste
| Category | Total quantity (tonnes) | Percentage (%) |
|---|---|---|
| Non-Recycled Waste | 132.319 | 10.31 |
Notes: Non-recycled waste is the sum of waste sent for disposal. The waste generated by the Group's activities is directly related to the dairy sector. The composition of waste includes both product packaging released on the market and waste generated within the Group during the production process. These values are recorded in the GPAIS system. A specific feature of the sector is the waste that becomes contaminated after coming into contact with dairy products and needs to be handled separately due to the fermentation process. The Group uses several methodologies to calculate the data, depending on the nature and origin of the waste streams. Waste management is carried out in accordance with contracts with waste handlers. The waste streams generated, depend on the nature of the products produced and the packaging used. In addition, part of the waste is related to the handling of incoming packaging for the transport of ingredients.
The European Union’s (EU) Taxonomy (Taxonomy Regulation, 2020/852, and related delegated acts) is a classification system for economic activities designed to direct private investments toward environmentally sustainable activities that contribute to the environmental objectives of the European Green Deal. The Taxonomy defines the following environmental objectives:
The Taxonomy establishes science-based criteria to assess the sustainability of activities. Business activities that fall within the scope of the Taxonomy and meet its defined criteria can be classified as sustainable and attract green investments. A taxonomy-eligible activity is defined as an activity described in the relevant delegated acts of the Taxonomy Regulation, i.e., it is included in the Taxonomy. Companies that have determined that their economic activity revenues (Turnover), capital expenditures (CapEx), and/or operating expenses (OpEx) are related to activities described in the delegated acts must conduct an analysis and disclose to what extent their activities meet the Taxonomy criteria according to these indicators. A taxonomy-aligned activity is defined as a taxonomy-eligible activity that meets the Taxonomy's technical screening criteria, i.e., makes a substantial contribution to at least one of the six environmental objectives, does not cause significant harm (DNSH) to the remaining five, and meets the requirements for the minimum safeguards.
This report, in accordance with the provisions of the Taxonomy Regulation and related delegated acts, presents the key performance indicators of the Group (Žemaitijos pienas together with its subsidiary) and information on the alignment of its activities with Taxonomy criteria. ir žmogaus teisių pagrindinių principų. Atitiktį būtiniausių apsaugos priemonių sąlygai grupė patikrino pagal Europos Komisijos Tvaraus finansavimo platformos (angl. Platform on Sustainable Finance) ataskaitą „Final Report on Minimum Safeguards” (2022 m.).
The Group engages in taxonomy-eligible activities and/or invests in taxonomy-eligible measures that can contribute to climate change mitigation. The Group does not carry out activities that contribute to other environmental objectives of the Taxonomy.
In 2024, a comprehensive climate risk assessment was conducted to determine whether the activity does not cause significant harm to climate change adaptation. No significant physical risks that could impact operations or assets were identified, therefore the activity is considered to meet the DNSH criterion for climate change adaptation. It is important to emphasize that the Group meets the minimum safeguards requirement: it has implemented recommended socially responsible and ethical business measures as set out in the OECD Guidelines for Multinational Enterprises and adheres to the UN Guiding Principles on Business and Human Rights. The group's compliance with the minimum safeguards requirement was verified based on the European Commission’s Platform on Sustainable Finance report, “Final Report on Minimum Safeguards” (2022).
In 2024, the Group reviewed its list of taxonomy-eligible activities – compared to 2023, additional applicable Taxonomy activities were identified, while some activities were no longer included. Following the climate risk assessment, it was determined that no CCA (Climate Change Adaptation) activities apply to the Group; therefore, this report does not include activities that make a substantial contribution to this objective. In addition, the acquisition of wind turbines was reassigned to a different activity based on the applicable Taxonomy activity definition. While in 2023 they were classified under CCM 7.6, in 2024 they were reclassified under CCM 4.3, as this classification more accurately reflects the definition of the Taxonomy activity. Furthermore, only revenues and expenditures that precisely align with the definitions of Taxonomy activities were included in the Taxonomy activity indicators. Specifically, transportation vehicles classified under CCM 6.5 and CCM 6.6 were reviewed to ensure compliance with the required standards, namely EURO 5 and EURO 6 for light-duty vehicles and EURO 6e for heavy-duty vehicles. When calculating the OpEx indicator, compared to 2023, operating expenses related to production and raw material collection costs that meet the Taxonomy definition were included. The calculated indicators are available in Tables 1B, 2B, and 3B.
Installation, maintenance and repair of energy efficiency equipment
This activity applies to the replacement of ventilation systems (air handling units) carried out by the Group's companies in 2024. It is one of the listed measures that significantly contribute to climate change mitigation, as the equipment belongs to energy efficiency class A or B—the two highest commonly used energy efficiency classes. The activity was assessed against the DNSH criteria for the remaining environmental objectives, and it was determined that it does not cause any harm.
Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings)
The Group acquired an electric vehicle charging station, which is classified as an activity that significantly contributes to climate change mitigation. The activity was assessed against the DNSH criteria for the remaining environmental objectives, and it was determined that it does not cause any harm.
Transport by motorbikes, passenger cars and light commercial vehicles
The Group acquired passenger cars that meet the low-emission vehicle criteria (CO₂ <50 g/km until 31-12-2025) and an electric vehicle (0 g CO₂e/km). The activity was assessed against the DNSH criteria for the remaining environmental objectives, and it was determined that it does not cause any harm.
Electricity generation from wind power
The Group installed two wind turbines that will generate electricity from wind energy, which is considered an activity that significantly contributes to climate change mitigation. The activity was assessed against the DNSH criteria for the remaining environmental objectives, and it was determined that it does not cause any harm.
Production of heat/cool from bioenergy
The Group operates heat and steam generation equipment that uses biofuel, which aligns with the objectives of significantly contributing to climate change mitigation. The activity was assessed against the DNSH criteria for the remaining environmental objectives, and it was determined that it does not cause any harm.
Currently, other taxonomy-eligible activities identified within the Group’s companies are classified as taxonomy- not-aligned, as they do not yet meet one or more technical screening criteria or lack the necessary information or evidence for a complete assessment. Detailed information and related indicators are provided below in the Taxonomy table templates. In the future, the Group plans to systematically strive for greater alignment with the Taxonomy requirements.
The following information presents the calculated Taxonomy indicators. All disclosed indicators related to taxonomy-eligible activities avoid double counting, as specific expenditure amounts are assigned to only one taxonomy-eligible activity. The Group does not have a capital expenditure plan aimed at expanding taxonomy- aligned economic activities or enabling taxonomy-eligible economic activities to become aligned.
The Group's core activities are not currently included in the Taxonomy; therefore, the Taxonomy criteria do not apply to them. However, the fact that an activity is not included in the Taxonomy does not mean that it cannot be conducted in an environmentally sustainable manner. The Group's companies generate revenue from other additional activities that are included in the Taxonomy. A portion of the revenue received by the Company and its subsidiary in 2024 corresponds to the following activities defined in the Taxonomy:
| Proportion of turnover / Total turnover | Taxonomy-aligned per objective | Taxonomy-eligible per objective | |
|---|---|---|---|
| CCM | 0% | 0.12% | |
| CCA | 0% | 0% | |
| WTR | 0% | 0% | |
| CE | 0% | 0% | |
| PPC | 0% | 0% | |
| BIO | 0% | 0% |
A portion of the Group's long-term asset investments in 2024 aligns with the following activities defined in the Taxonomy:
The capital expenditures (CapEx) for taxonomy-aligned activities were calculated by dividing the investments related to taxonomy-eligible activities defined in the Taxonomy by the total capital expenditures under the Taxonomy (see Tables 2A and 2B). The CapEx under the Taxonomy includes only those acquisitions required under the EU Taxonomy Regulation. The financial statement line that best corresponds to the CapEx indicator under the Taxonomy is the line "5. Intangible and tangible fixed assets; Total asset acquisitions" in the Company and Consolidated Financial Statements Explanatory Notes, with a total amount of 19,634 thousand EUR.
| Proportion of CapEx / Total CapEx | Taxonomy-aligned per objective | Taxonomy-eligible per objective | |
|---|---|---|---|
| CCM | 38.25% | 44.77% | |
| CCA | 0% | 0% | |
| WTR | 0% | 0% | |
| CE | 0% | 0% | |
| PPC | 0% | 0% | |
| BIO | 0% | 0% |
A portion of the Group's operating expenses in 2024 aligns with the following activities defined in the Taxonomy:
The definition of operating expenses (OpEx) in the Taxonomy differs from the commonly used definition in financial accounting and covers a much smaller portion of expenses. Under the Taxonomy definition, only asset maintenance and repair costs, as well as short-term rental expenses, are included in the OpEx denominator. The operating expenses indicator was calculated by dividing the operating expenses related to activities defined in the Taxonomy by the total operating expenses under the Taxonomy (see Tables 3A and 3B).
| Proportion of OpEx / Total OpEx | Taxonomy-aligned per objective | Taxonomy-eligible per objective | |
|---|---|---|---|
| CCM | 3.48% | 66.34% | |
| CCA | 0% | 0% | |
| WTR | 0% | 0% | |
| CE | 0% | 0% | |
| PPC | 0% | 0% | |
| BIO | 0% | 0% |
| | | | | | | | |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| | | | 2024 Financial year 2024 | | | | |
| Economic activities | Code(s) | Absolute turnover | Proportion of turnover year 2024 | Climate change mitigation | Climate change adaptation | Water Pollution | Circular economy |
| | | | | Biodiversity | Climate change mitigation | Climate change adaptation | Water Pollution |
| | | | | Circular economy | Biodiversity | Minimum safeguards | Proportion of Taxonomy - aligned (A.1.) or - eligible (A.2.) turnover year 2023 |
| | | | | Category (enabling activity) | Category (transitional activity) | Y; N; N/EL | Y/N |
| | | | | Y; N; N/EL | Y;N; N/EL | Y; N; N/EL | Y/N |
| | | | | Y; N; N/EL | Y; N; N/EL | Y; N; N/EL | Y/N |
| | | | | Y; N; N/EL | Y; N; N/EL | Y; N; N/EL | Y/N |
| | | | | Y; N; N/EL | Y; N; N/EL | Y; N; N/EL | Y/N |
| | | | | Y/N | Y/N | Y/N | Y/N |
| | | | | Y/N | Y/N | Y/N | Y/N |
| Text | Thousa nd EUR | % | Y; N; N/EL | Y;N; N/EL | Y; N; N/EL | Y; N; N/EL | Y; N; N/EL |
| A. TAXONOMY ELIGIBLE ACTIVITIES | | | | | | | |
| A.1. Environmental sustainable activities (Taxonomy-aligned) | | | | | | | |
| None | - | 0 | 0% | - | - | - | - |
| Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) | 0% | 0% | 0% | 0% | 0% | 0% | 0% |
| Of which enabling | 0% | 0% | 0% | 0% | 0% | 0% | 0% |
| Of which transitional | 0 | 0% | - | - | - | - | - |
| A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) | | | EL; N/EL | EL; N/EL | EL; N/EL | EL; N/EL | EL; N/EL |
| Acquisition and ownership of buildings | CCM 7.7 | 380 | 0.12% | EL | N/EL | N/EL | N/EL |
| Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) | 0.12% | EL | N/EL | N/EL | N/EL | N/EL |
| Turnover of Taxonomy-eligible activities (A.1+A.2) | 0.12% | EL | N/EL | N/EL | N/EL | N/EL |
| B. TAXONOMY-NON-ELIGIBLE ACTIVITIES | | | | | | | |
| Turnover of Taxonomy-non-eligible activities | 307 262 | 99.88% | | | | | |
| TOTAL (A+B) | 307 643 | 100% | | | | | |
| Explanation of Abbreviations: Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective; N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective. N/EL – Not eligible, Taxonomy-non-eligible activity for the relevant environmental objective; EL – Taxonomy-eligible activity for the relevant objective; | | | | | | | |
| # Environmental, Social, and Governance (ESG) Disclosures
| Category | Code | Amount (thousand Eur) | Percentage |
|---|---|---|---|
| Installation, maintenance and repair of energy efficiency equipment | CCM7.3 | 1 | 0.05% |
| Production of heat/cool from bioenergy | CCM4.24 | 95 | 4.01% |
| OpEx of environmentally sustainable activities (Taxonomy- aligned) (A.1) | 4.07% | ||
| Of which enabling | 0.05% | ||
| Of which transitional | 0% |
| Category | Code | Amount (thousand Eur) | Percentage |
|---|---|---|---|
| Acquisition and ownership of buildings | CCM | 7.7 | 147 |
| Installation, maintenance and repair of energy efficiency equipment | CCM | 7.3 | 20 |
| Freight transport services by road | CCM | 6.6 | 253 |
| Transport by motorbikes, passenger cars and light commercial vehicles | CCM | 6.5 | 61 |
| OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) | 62.85% | ||
| OpEx of Taxonomy-eligible activities (A.1+A.2) | 66.92% |
| Category | Amount (thousand Eur) | Percentage |
|---|---|---|
| OpEx of Taxonomy-non-eligible activities | 780 | 33.08% |
| Total Amount (thousand Eur) | Total Percentage |
|---|---|
| 2,357 | 100.00% |
Explanation of Abbreviations:
The group does not engage in taxonomy-eligible activities related to nuclear energy and fossil gas; however, it does conduct taxonomy-non-eligible activities related to fossil gas, specifically the maintenance and repair expenses of its own gas boilers. The following information is disclosed in accordance with Annex XII, templates 1 and 5, which apply to the disclosure of information about this activity. Templates 2–4 are not applicable.
| Row | Nuclear energy related activities | Response |
|---|---|---|
| 1 | The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. | NO |
| 2 | The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. | NO |
| 3 | The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. | NO |
| Fossil gas related activities | ||
| 4 | The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. | NO |
| 5 | The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels. | NO |
| 6 | The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels. | YES |
| Row | Economic activities | Amount, thousand Eur | Percentage |
|---|---|---|---|
| 1 | Amount and proportion of economic activity referred to in row 1 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | Not applicable | |
| 2 | Amount and proportion of economic activity referred to in row 2 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | Not applicable | |
| 3 | Amount and proportion of economic activity referred to in row 3 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | Not applicable | |
| 4 | Amount and proportion of economic activity referred to in row 4 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | Not applicable | |
| 5 | Amount and proportion of economic activity referred to in row 5 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | Not applicable | |
| 6 | Amount and proportion of economic activity referred to in row 6 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 2,02 | 0.26% |
| 7 | Amount and proportion of other taxonomy-non-eligible economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI | 791,30 | 99.74% |
| 8 | Total amount and proportion of taxonomy-non-eligible economic activities in the denominator of the applicable KPI | 793,32 | 100% |
The material impacts and opportunities identified in the Double Materiality Assessment (DMA) are summarised in the table in ETAS Chapter 2 SBM-3 – Material impacts, risks, opportunities, and their interaction with the strategy and business model. No risks were identified. This section provides additional information based on SBM-3 and other applicable requirements.
The Group’s activity contributes to positive and negative actual and potential impacts on employees. The Group strategically pursues diversity beyond legal requirements, including disability inclusion and gender quotas, thereby positively impacting employees. Additional training is provided to enhance competence and motivation, based on the needs of employees and managers. Occupational safety incidents are possible – workers could suffer both physical and psychological negative effects if injured. The Group is exposed to the identified significant impacts through its operations. The Group's significant impacts are also directly linked to its business model and operational strategy, which includes policies to promote diversity, inclusion of people with disabilities and gender quotas, as well as employee development through training and competence building. These factors are integrated into the organisation's operating principles and are considered part of the Group's long- term success.
The Group's strategy and business model are closely linked to the significant opportunities arising from exposure to and dependence on its workforce. As a result of the opportunities identified, the Group does not foresee any material financial impact in 2024 or in the near term that would require a material adjustment to the number of assets and liabilities in the Group’s financial statements. The Group does not provide detailed information on the strategy's overall financial impact and financial sources due to the phased disclosure option. The Group did not perform a resilience analysis of its strategy and business model during the reporting period, except for the analysis conducted as part of the double materiality assessment.
Significant impacts cover all employees, all of whom work in Lithuania. The Group's DMA showed that workers in production, support and service departments, and transport, have the highest risk of injury. Significant negative impacts are associated with isolated potential incidents. In the case of a significant positive impact, everyone is allowed to participate in training, raising competences and qualifications, thus contributing to their professional development, regardless of the location or nature of the employee's job. The positive impacts also create additional opportunities for the Group in terms of its workforce. Trained employees are upskilled, the Group's performance improves, and its credibility as a supplier improves. All the significant opportunities arising from the impact and dependence on the workforce relate to all employees within the Group.
The Group has no significant impact on its workforce related to transition plans to reduce negative environmental impacts and ensure climate neutral operations. In addition, the Group has not identified any operations that could pose a significant risk of forced or compulsory labour and child labour, either by type of operation or by country of operation. The Group found that migrants from foreign countries who have residence permits in Lithuania, but do not understand the language in which the work rules and instructions are written, may be at greater risk of harm. This can hinder adaptation to the workplace, achieving agreed work results, and pose a higher risk of workplace safety.
The Group has a number of policies relating to the significant sustainability issues related to its own workforce and their management. The policies referred to apply to all employees of the Group. The CEO is responsible for the implementation of all the following policies.# S1-1 – Principles and practices for engaging with own workforce
The policy is available to stakeholders through the internal document management system, at meetings or upon request to the line manager or the HR department.
The main objective of the policy is 0 (zero) accidents at work and continuous improvement of working conditions. All of the Group's structural units and divisions have a designated trained health and safety employee or divisional employee responsible for the safety, health, and fire safety of the employees in the division. They carry out regular risk assessments, control violation checks, instruction of workers, while performing other functions to ensure the safety and health of workers. The Group also has an Occupational Accident Prevention Policy.
The policy covers aspects such as prohibiting child labour, preventing forced labour, and equal opportunities. In developing and implementing this policy, the Group is committed to complying with the provisions of the legislation in force within the Republic of Lithuania, the International Bill of Human Rights, and the requirements of its suppliers and/or clients. The Group's policy towards its workforce is in line with internationally recognised instruments, including the UN Guiding Principles on Business and Human Rights. The policy is based on the key provisions of these principles. The Group ensures the involvement of employees through the election of employee representatives (Works Council), allowing them to express their views on a wide range of issues relating to the working environment and conditions. The Group uses various tools to monitor, prevent, or remedy human rights violations. This includes the use of a Labour Council, microclimate surveys, and the establishment of requirements and recommendations. The implementation of these initiatives helps to ensure workers' rights and well-being.
This policy aims to eliminate discrimination, including harassment, while promoting equal opportunities, and increasing diversity and inclusion. The Group's policy covers all the grounds of discrimination listed: racial and ethnic origin, sexual orientation, gender identity, disability, age, religion, political opinion, nationality, social origin, and other forms of discrimination covered by European Union and national legislation. The Group has no specific policy commitments regarding inclusion, or affirmative action, towards groups with exceptionally high vulnerability risks. The Group implements policies to prevent and reduce discrimination and to address identified cases. Employees can anonymously inform the Human Resources Department of a possible incident of discrimination, thus ensuring transparency and an adequate response.
Most employees participate in these processes through their representatives. Representatives are considered to be line managers. In addition, worker representatives are elected to the Occupational Safety and Health Committee, which contributes to inclusiveness. Involvement is also carried out through workers' participation in microclimate surveys or other surveys as well as through information and communication. There is no regular involvement - it occurs on an as-needed or situation-specific basis. Involvement occurs at certain stages of a project, for example, during an apprenticeship or mentoring project, through participation, and outreach. Such processes can only take place with the approval of the Director-General. The Group assesses the effectiveness of its own workforce engagement based on various indicators, such as the results of microclimate surveys. These surveys allow the progress of employee engagement to be monitored and areas for improvement to be identified. They also seek to learn about the views of particularly vulnerable or marginalised groups within the workforce, such as women, migrants, or people with disabilities. These tools help to assess their experiences and identify potential areas for improvement. The Group has processes in place for engaging its own workforce but does not currently have formal procedures in place to implement them.
The Group's overall approach is to seek to ensure an effective response to potential and actual impacts on its own employees to whom it has contributed or with whom it is associated. To this end, processes have been established to manage significant sustainability issues, which all employees are required to follow. For example, the standard of procedures - Personnel Management (PR-03), defines the processes by which the Company invests in the development and competences of its employees in various areas in order to increase their motivation and empower them to do their job even better.
Feedback boxes have been introduced internally. They provide a direct channel for the workforce to express concerns or needs. The purpose of these boxes is communicated to the workforce during induction training on the first day of employment. The Group has a grievance mechanism for reporting and dealing with employee issues. The internal document management system, notice boards, displays in public areas, and managerial communication to employees, are used to ensure that these channels are available to employees. Employees are also informed during induction training on their first day of employment. Although there is no separate policy on protection from retaliation, this is partly covered by the Violence and Harassment Prevention Policy, which guarantees the complainants’ anonymity. Issues raised and resolved are monitored through dialogue with complainants, maintaining anonymity where necessary, and aligning with existing internal policies. This process helps to ensure the effectiveness of communication channels.
The Group uses various tools to manage material sustainability issues without specific policies, except for human rights issues.
The Group has preventive measures, including systematic risk assessment, employee training, and strengthening of control mechanisms. This ensures the safety of the working environment and the well-being of employees while improving the organisation's resilience to risks. The Group has established an Occupational Safety and Health Service consisting of occupational safety and health specialists to implement key measures. To prevent injuries and adverse physical effects, the Group conducts regular occupational risk assessments of its workplaces, while organising employee briefings and training, as well as carrying out internal controls. Psychosocial risk assessments help to prevent psychological adverse effects. All employees are covered by accident insurance, providing financial protection and support in the event of an accident.
All Group employees can improve their knowledge and skills in person or remotely through internal and external training, courses, seminars, conferences or exhibitions. In 2024, training was organised on time planning and management, the art of negotiation, development of the managerial reserve, training for mentors and coaches, as well as delegation and enforcement training.
The Group implements a Human Equal Rights Policy and anti-discrimination measures to ensure equal opportunities for all employees. During the reporting year, the following key actions were implemented:
All of the above actions apply to all employees of the Group, regardless of their job title or work location. These measures are implemented in all the Group's areas of activity and in the geographical areas in which it operates. Training on violence and harassment prevention will be implemented in 2025. Other key actions, such as fair selection, a transparent pay system, and monitoring of gender distribution are ongoing processes with no fixed end date. The Group pursues these objectives and implements related actions:
No actual negative impacts were recorded during the reporting period. As this is the first time reporting under ETAS, there is no information on the progress of implementation of actions disclosed in previous reporting periods. Internal resources are currently being used to implement the actions and no additional financial resources are foreseen in 2025 for the implementation of the disclosed actions. The Group monitors and evaluates the effectiveness of actions and initiatives on the basis of the following indicators:
These indicators help to quantify the impact of the measures and ensure that they effectively contribute to a positive working environment.# S1 HUMAN CAPITAL MANAGEMENT
The Group determines what action to take in response to actual or potential negative impacts on its workforce, based on the complaints received, if any, the issues raised and changes in the legislation of the Republic of Lithuania. The Group ensures that its practices do not have an material negative impacts on its own workforce. One of the measures is the strict adherence to working hours in order to avoid employee fatigue, which can lead to mistakes or accidents. The Group allocates different resources to managing significant impacts, involving different levels of management. Top management develops strategies related to working conditions and employee well-being, while department heads are responsible for communication and employee development. The Works Council assesses the impact of change across the business.
In terms of the impacts and opportunities identified, the Group's main qualitative goal today is to increase the dissemination and access to information among its employees. The Group does not have measurable results-oriented targets but plans to set them during 2025. The Group monitors the effectiveness of its policies and actions in relation to significant sustainability-related impacts, risks, and opportunities. This is done through employee job satisfaction surveys and questionnaires. The aim is to increase the job satisfaction rate by 5-10%. Progress will be measured between May 2024 and May 2025. The survey will cover 500 employees. As a general procedure, the Group's own workforce and employee representatives are involved in the target-setting process. Employee representatives are involved in agreeing the strategy or objectives, and employees can express their views on a range of issues through surveys, including anonymous responses. The Group monitors its performance against the targets set. The Group's half-year and annual results are publicly available.
Information on the Group's employees is presented in Tables 17, 18, 19, 20.
| Gender | Number of employees |
|---|---|
| Male | 804 |
| Female | 676 |
| Other | N/A |
| Not reported | N/A |
| Total Employees | 1,480 |
Note. The actual total number of employees of the Group at the end of the reporting period (31.12.2024), without considering the full-time equivalent worked, is presented. Information on the gender breakdown of the number of employees is also disclosed in the Company's financial statements on page 23 of the Annual Report.
| Category | Number of employees (by gender) | TOTAL | |||
|---|---|---|---|---|---|
| FEMALE | MALE | OTHER (*) | NOT DISCLOSED | ||
| Number of employees | 676 | 804 | N/A | N/A | 1,480 |
| Number of permanent employees | 630 | 755 | N/A | N/A | 1,385 |
| Number of temporary employees | 46 | 49 | N/A | N/A | 95 |
| Number of non-guaranteed hours employees | 0 | 0 | N/A | N/A | 0 |
Notes:
* Gender as self-reported by employees.
** The actual total number of employees in the Group at the end of the reporting period (31.12.2024), without considering the full-time equivalent worked, is shown. During the reporting period, only Žemaitijos pienas had temporary employees.
| Category | Number of employees (by region) | TOTAL | ||||
|---|---|---|---|---|---|---|
| Vilnius | Kaunas | Panevėžys | Telšiai | Šilutė | ||
| Number of employees | 54 | 47 | 43 | 1,171 | 165 | 1,480 |
| Number of permanent employees | 54 | 46 | 43 | 1,077 | 165 | 1,385 |
| Number of temporary employees | 0 | 1 | 0 | 94 | 0 | 95 |
| Number of non-guaranteed hours employees | 0 | 0 | 0 | 0 | 0 | 0 |
Notes: based on end-of-period data (31.12.2024)
| Group company | Employees who left or were made redundant* | Rate of employee turnover** |
|---|---|---|
| Žemaitijos pienas | 146 | 11% |
| Šilutė rambynas | 38 | 23% |
| Total | 184 | 12% |
Note:
* The aggregate of the number of employees who left voluntarily or due to dismissal, retirement, or death in service.
** Number of resignations or redundancies (by number of employees) divided by total number of employees (by number of employees).
The employee turnover rate has remained stable for several years and is considered positive. By analysing the causes of turnover and comparing it with the performance of similar companies in similar activities or geographical locations, the company provides favourable working conditions that encourage employees to stay with the organisation and reduce turnover.
In 2024, the Group did not have any non-employees classified as its own workforce. In determining the disclosure, the definition of non-employees is that non-employees are either self-employed persons who have entered into service contracts with the Group's entities, or persons who are provided by entities principally engaged in recruitment activities.
The Group does not have by a collective agreement and therefore the percentage of salaried employees covered by a collective agreement is 0%.
| Category | Gender distribution at top management level | Percentage |
|---|---|---|
| Male | 7 | 50 |
| Female | 7 | 50 |
| Total | 14 | 100 |
Note: The definition of top management used is the one used in the Group’s internal documents, i.e. the highest level of management, including the members of the Board.
| Age Group | Number of employees | Percentage of total employees |
|---|---|---|
| Under 30 Years Old | 183 | 12 |
| 30-50 Years Old | 719 | 49 |
| Over 50 Years Old | 578 | 39 |
| Total | 1,480 | 100 |
All employees within the Group are paid a fair wage in accordance with their contractual obligations and existing laws.
All employees in the Group are covered by social protection against loss of income in the event of sickness, either through public programmes or through benefits offered by the company. The Company complies with the requirements of the Labour Code of the Republic of Lithuania and other legal acts regarding the social security coverage of employees.
| Category | Percentage of employees that participated in regular performance and career development reviews |
|---|---|
| Total, out of which: | 91 |
| Male | 85 |
| Female | 97 |
| Kategorija | Average number of training hours per employee |
|---|---|
| Total, out of which: | 3.65 |
| Male | 3.06 |
| Female | 4.38 |
All employees are covered by the Group's health and safety management system based on national legal requirements. Information on incidents related to the health of the Group's employees is presented in Table 25.
| Employees of the Group: | |
| Number of deaths due to work-related injuries and work-related ill health | 0 |
| Number of work-related accidents to be recorded | 8 |
| Total annual hours worked by all employees | 508,199 |
| Recordable work-related accident rate | 15.74 |
| Number of recordable work-related health problems | 0 |
| Number of working days lost due to work-related injuries and deaths due to accidents at work, work-related health disorders, and deaths due to health disorders | 602 |
| Non-employees classified as own labour: | |
| Number of working days lost due to work-related injuries and deaths due to accidents at work, work-related health disorders, and deaths due to health disorders |
| Year | Gender pay gap for all employees, %* |
|---|---|
| 2024 | 14 |
*Formula used to calculate the gender pay gap: (Average hourly earnings before tax of male employees - Average hourly earnings before tax of female employees) / Average hourly earnings before tax of male employees 𝑥 100
| Year | Ratio of total annual remuneration for the highest paid person to the average total annual remuneration for all employees (excluding the highest paid person)* |
|---|---|
| 2024 | 3/1 |
*Formula used to calculate the total remuneration ratio: Annual total remuneration of the highest paid person in the company / Average annual total remuneration of salaried employees (excluding the highest paid person)
During the reporting period, there were no incidents of discrimination, including harassment, recorded within the Group. Also, there were no complaints received through established channels. No fines, penalties, or compensation for damages were imposed as a result. In the area of human rights, no significant incidents involving the Group's workforce have been identified and no fines, penalties, or compensation have been applied.
The Double Materiality Assessment (DMA) has identified significant risks, which are summarised in the Double Materiality Assessment Table in ETAS 2 SBM-3 – Material impacts, risks, opportunities, and their interaction with the strategy and business model. No impacts and opportunities were identified. The DMA was carried out for the first time and is therefore not comparable to the previous period. This section provides additional information based on SBM-3 and other applicable requirements. The Group's risks related to suppliers' non-compliance with environmental and social criteria can adversely affect its business model, value chain and decision-making. This can lead to reputational, financial and legal losses, supply disruptions and higher costs if a switch to more sustainable suppliers is required.# G1-1 – Business conduct policies and corporate culture
The Group has adopted the following documents and measures to manage significant business ethics issues and to promote the Group's corporate culture, which include:
The implementation of these documents and measures is continuously monitored to ensure their effectiveness and compliance with the Group's values and legal requirements. The Group ensures whistleblower protection through an approved reporting channel and clearly defined whistleblowing and complaint handling procedures. In addition, internal whistleblowing systems for whistleblowers are in place across the Group and are publicly available. All employees are made aware of the reporting procedures during their initial induction training. The Group guarantees the protection of whistleblowers from retaliation by ensuring their anonymity in accordance with the applicable legislation, implementing Directive (EU) 2019/1937 of the European Parliament and the Council. The Group has an approved whistleblower protection policy and has established procedures for the prompt, independent and objective handling of business ethics incidents, which includes corruption and bribery. Business ethics training is available on request. The Group does not have an animal welfare policy.
The Group has no specific policy to prevent late payments, particularly for SMEs. However, the Group adheres to fair business practices and ensures timely supplier payments. The Group has a coherent supplier management strategy to minimise supply chain risks and ensure compliance with sustainability principles.
This strategy enables the Group to manage its supply chain efficiently, ensure quality, and minimise supply risks. The Group considers social and environmental criteria when selecting suppliers. Preference is given to suppliers that ensure a sustainable supply chain and meet social responsibility standards.
The Group has adopted a Corruption Prevention Policy, which sets out procedures to prevent, detect, and respond to allegations or incidents of corruption and bribery. Investigators or the Investigation Committee are separated from the various levels of management involved in the area in question. The Group's job roles which carry the highest risk of corruption and bribery are: purchasing manager, finance director, as well as the sales and marketing director. Reporting results to administrative, management, and supervisory bodies is carried out in accordance with established internal procedures through minutes and internal orders. The Group shall ensure its policies are accessible and understandable to all stakeholders. Employees are informed of the company's policy through internal processes, while social partners are informed through contracts. The Group does not provide anti-corruption and anti-bribery training. During the reporting period, the Group did not receive any convictions for breaches of anti-corruption and anti-bribery laws, nor were any fines imposed.
In 2024, there were no convictions against the Group for breaches of anti-corruption and anti-bribery laws. No fines have been imposed on the Group for such offences. As a result, no anti-corruption and anti-bribery actions have been taken to address the breaches. In 2024, the Group was not found guilty of any breaches of anti-corruption and anti-bribery legislation. The Group has also not been found guilty of bribery of foreign officials in international business transactions.
The Group pays invoices over different periods depending on the nature of the supply. The payment period for the main raw material, milk, is 15 days. The average time to pay other invoices (excluding raw milk) is 35.5 days. The Group's standard payment terms vary depending on the supplier category. Raw milk is subject to a standard payment term of 15 days. For the other main categories of suppliers, which account for 18% of total invoices (excluding raw milk), the payment term is 54 days. The remaining 80% of invoices (excluding raw milk) are settled within 31 days. There are no exclusions or other conditions related to SMEs. The Group currently has no pending legal proceedings for late payments. To calculate the average time to pay invoices, invoices for the most important categories received during the reference period (excluding raw milk invoices) were analysed.# The methodology applied is based on the summation of the total days of payment and dividing by the total number of invoices (excluding raw milk).
The double materiality assessment has identified food safety as the primary risk in the Group's operations. A key concern is the potential introduction of foreign matter into products, including wood, plastic, metal, or glass fragments, each of which poses a significant threat to consumer health and carries reputational and financial risks for the Group. Additionally, failure to ensure proper pasteurization of the primary raw material could compromise product safety, adversely affecting consumer health and leading to reputational and financial repercussions. Furthermore, the presence of undeclared allergens, particularly peanuts, poses a serious health risk to consumers with allergies, with potential economic and reputational consequences for the Group. Accordingly, the Group has identified opportunities to strengthen product safety and quality by acquiring new equipment in production units and, accordingly, by informing consumers about allergens and traces of allergens in products. This is also relevant to potential customer product safety and compliance complaints. Particular attention is paid to the accuracy of labelling information, particularly the explicit declaration of allergens and possible traces of allergens, to ensure consumer safety and compliance with legislation. All identified risks are summarised in table 3 Material impacts, risks and opportunities; no significant impacts were identified. This section provides additional information based on SBM-3 and other applicable requirements. The DRV was carried out for the first time and is therefore not comparable to the previous period. This section provides additional information based on SBM-3 and other applicable requirements. Product safety and quality issues can significantly impact the Group's business model, leading to loss of customer confidence, reputational damage, and financial losses. The primary raw material, milk, is pasteurised to ensure product safety and the final products are subjected to safety testing. In addition, allergenic ingredients are used in the production process, and all potential allergens are declared on the label to ensure consumer awareness and safety. Risk management measures must be considered to ensure that products meet the highest safety standards. In response to these risks, the Group continuously improves product safety and quality by investing in new production equipment and implementing preventive measures. Metal detectors and X-Ray equipment detect possible foreign bodies in products. Allergens are related to the Group's core business as milk is classified as an allergenic or intolerant food. In addition, the Group has implemented and approved an add-on to its HACCP programme, Allergen Management. This action helps to accurately identify and control the presence of allergens in products, ensuring that they are declared in labelling information. Priority is given to ingredients with no traces of allergens. However, if the ingredient is an allergen, all the necessary information is provided in the product's labelling to ensure consumer awareness and safety.
The assessment has not identified any material risks and opportunities that already have a material financial impact on the Company's financial position, results of operations, or cash flows. Significant risks and opportunities that could result in a material adjustment to assets and liabilities in the financial statements for the next annual reporting period have not been identified. Compared to the previous reporting period, in 2023-2024, the Group did not receive any substantiated claims for customer health problems related to foreign objects (wood, glass, plastic, metal) or allergens in food products. There have also been no substantiated product safety complaints from customers or regulatory authorities and no product recalls. From the financial perspective, the main risk when a foreign body is detected in food is reputational damage, which can lead to a loss of consumer confidence and have a negative impact on sales and overall financial results. In addition, product quality problems or undeclared allergens could lead to consumer complaints, which would further affect the Group's image and market position. These risks can affect both short- term sales and long-term brand perception at the consumer level. The Group's strategy and business model are resilient in the face of significant impacts and risks. Each year, "Food Safety and Quality Targets" are adopted, with a target of 0 substantiated consumer complaints. The achievement of the targets is assessed quarterly and reports are produced. In addition, an annual assessment is carried out to determine whether the corrective measures taken have been effective, i.e. whether claims have been repeated. The "Food Safety and Quality Objectives" also include investments to improve product safety and quality - the implementation of which is monitored quarterly.
The Group has an approved and regularly updated "Company Policy on Glass, Plastic, Metal, Wood, " ensuring that production processes meet the highest safety standards. The Group has developed and adopted other documents/policies to manage significant sustainability issues related to food safety and quality:
The aforementioned policies outline the use of equipment and tools made from relevant materials in production. Each policy will specify management and control measures to maintain the current standards while also committing to replacing such materials, where feasible, with alternatives less likely to become foreign bodies. Policy reviews are conducted annually or more frequently if changes occur.
There are also control schemes for products and ingredients, which set out the testing frequency. Tests are carried out on both intermediate and final products, as well as the production environment (surfaces, effluents, water, etc.). This ensures the ultimate effectiveness for contamination control. Group policies apply without exception. The safety and quality of products comply with the criteria set out in the legislation. In the event of any non-compliance, the actions set out in the procedures are applied to ensure compliance and the safety of consumers. The General Director is responsible for implementing the policies at the highest level. The Group adheres to the following third country standards and initiatives to ensure food safety and quality:
Šilutės Rambynas additionally complies with:
Policy-making considers all consumers' interests to ensure food safety, quality, and compliance with EU and individual market legislation. All new employees are made aware of the policy by signing it. In addition, annual training sessions are organised for staff to remind them of key aspects of the policies, including:
In pursuing its policy objectives, the Group takes the following actions:
The scope of the key actions covers the entire production process, ensuring product safety and quality:
Control activities are carried out continuously to ensure the highest food safety and quality standards. To meet food safety and quality objectives, investments are approved annually and evaluated quarterly. HACCP (Hazard Analysis and Critical Control Point) actions are continuously carried out to avoid potential product non-compliance and to reduce the risk of consumers falling into the affected group. The tests provided in the control schemes are also regularly carried out, monitored, and evaluated to ensure food safety and quality.The implementation of food safety and quality objectives is continuously evaluated and analyzed. Environmental and product safety test results are regularly monitored to ensure ongoing oversight, identify necessary improvements, and enhance overall food safety performance. Food safety and quality objectives are developed in the context of the investments planned for the period concerned. Implementing the investments and the Food Safety and Quality Objectives is evaluated quarterly, ensuring continuous monitoring. Examining and evaluating product and environmental test results is also done to maintain high food safety standards. The approved Investment Plan identifies the amount allocated to each planned activity and relates it to the investments in food safety and quality reported in the financial statements.
The Group has set the following food safety and quality objectives:
* 0 substantiated claims per month - all claims that are captured from different delivery channels are to be analysed.
* 0 product recalls - if any such recalls occur, they would be recorded in the RASFF system.
* Meet the requirements of international GFSI-recognised standards and trade networks - certification processes are continuously aligned with vendors to meet market needs.
* Improving the production process and technology, saving costs - periodic monitoring and evaluation of the test results is carried out and the data is recorded in a quarterly monitoring table.
* Monitoring and evaluation of the results of periodic tests.
These targets are evaluated monthly, quarterly and annually to ensure continuous process improvement and compliance with the highest standards. The significant issues identified are directly related to the Group's core dairy product production business. The scope of the objectives covers all the products the Group puts out and their value chain. Geographical coverage - all locations and markets where the Group's products are distributed. Consumer complaints have been recorded for over 15 years, allowing them to speak directly to an employee. Consumer feedback is constantly evaluated and considered in decisions on product improvements.
The objectives are based on:
* Consumer and customer surveys - to continuously monitor their views on product quality and safety.
* Evaluation of certification processes - capturing the number of observations identified during certification, as well as the changes in those observations.
* Quarterly monitoring of cost savings implementation - analysing the savings achieved by optimising production processes.
These approaches are aligned with national, EU, and international requirements, considering the principles of sustainable development and the specificities of the local market. The high certification rating (IFS 99.09% top level / BRC AA+) confirms an adequate food safety and quality system that ensures consumer confidence in the company's products. Process optimisation and cost savings are measured both in monetary terms and raw material savings compared to previous periods. As one of the key stakeholders, consumers provide continuous feedback on the quality of the company's products. This feedback helps shape the company's objectives, including targets of 0 monthly substantiated complaints and 0 product recalls. An analysis of the significant environmental risk factors regarding food safety and quality has resulted in control charts with planned tests and their periodicity. The results of the investigations are continuously monitored, analysed, and evaluated to ensure the effectiveness of policies and actions.
All indicators used to assess performance and effectiveness in relation to significant impacts, risks, or opportunities, and the methodologies for measuring them, are described in MDR-T. External bodies have validated the indicators: the State Food and Veterinary Office (SVVT) and the certification agencies that issue the relevant certificates. The indicators are not measured in monetary terms.
| Applicable ESRS | Sector | Not available |
|---|---|---|
| ESRS 2 General Disclosures | ||
| Disclosure Requirement | Page | |
| 1. Basis for preparation | ||
| BP-1 General basis for preparation of sustainability statements | xx | |
| BP-2 Entities included in the organisation's sustainability reporting | xx | |
| 2. Governance | ||
| GOV-1 The role of the administrative, management and supervisory bodies | xx | |
| GOV-2 Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies | xx | |
| GOV-3 Integration of sustainability-related performance in incentive schemes | xx | |
| GOV-4 Statement on due diligence | xx | |
| GOV-5 Risk management and internal controls over sustainability reporting | xx | |
| 3. Strategija | ||
| SBM-1 Strategy, business model and value chain | xx | |
| SBM-2 Interests and views of stakeholders | xx | |
| SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model | xx | |
| 4. Impact, risk and opportunity management | ||
| 4.1 Disclosures on the materiality assessment process | ||
| IRO-1 Description of the process to identify and assess material impacts, risks and opportunities | xx | |
| IRO-2 Disclosure Requirements in ESRS covered by the undertaking’s sustainability statement | xx | |
| 4.2 Minimum disclosure requirement on policies and actions | ||
| MDR-P Policies adopted to manage material sustainability matters | xx | |
| MDR-A Actions and resources in relation to material sustainability matters | xx | |
| 5. Metrics and targets | ||
| MDR-M Metrics in relation to material sustainability matters | xx | |
| MDR-T Tracking effectiveness of policies and actions through targets | xx | |
| Environmental topics | ||
| ESRS E1 Climate Change | ||
| Governance | ||
| E1 GOV-3 Integration of sustainability-related performance in incentive schemes | xx | |
| Strategy | ||
| E1-1 Transition plan for climate change mitigation | xx | |
| E1 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model | xx | |
| Impact, risk and opportunity management | ||
| E1 IRO-1 Description of the processes to identify and assess material climate-related impacts, risks and opportunities | xx | |
| E1-2 Policies related to climate change mitigation and adaptation | xx | |
| E1-3 Actions and resources in relation to climate change policies | xx | |
| Metrics and targets | ||
| E1-4 Targets related to climate change mitigation and adaptation | xx | |
| E1-5 Energy consumption and mix | xx | |
| E1-6 Gross Scopes 1, 2, 3 and Total GHG emissions | xx | |
| E1-7 GHG removals and GHG mitigation projects financed through carbon credits | xx | |
| E1-8 Internal carbon pricing | xx | |
| E1-9 Anticipated financial effects from material physical and transition risks and potential climate-related opportunities | xx | |
| ESRS E3 Water and marine resources | ||
| Impact, risk and opportunity management | ||
| E3 IRO-1 Description of the processes to identify and assess material pollution-related impacts, risks and opportunities | XX | |
| E3-1 Policies related to water and marine resources | xx | |
| E3-2 Actions and resources related to water and marine resources policies | xx | |
| E3-3 Targets related to water and marine resources | xx | |
| E3-4 Water consumption | xx | |
| ESRS E4 Biodiversity and ecosystems | ||
| Strategy | ||
| E4-1 Transition plan and consideration of biodiversity and ecosystems in strategy and business model | xx | |
| E4 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model | xx | |
| Impact, risk and opportunity management | ||
| E4 IRO-1 Description of processes to identify and assess material biodiversity and ecosystem-related impacts, risks and opportunities | xx | |
| E4-2 Policies related to biodiversity and ecosystems | xx | |
| E4-3 Actions and resources related to biodiversity and ecosystems | xx | |
| Metrics and targets | ||
| E4-4 Targets related to biodiversity and ecosystems | xx | |
| E4-6 Anticipated financial effects from biodiversity and ecosystem-related impacts, risks and opportunities | The information is not disclosed, utilizing the option for phase-in disclosure. | |
| ESRS E5 Resource use and circular economy | ||
| Impact, risk and opportunity management | ||
| E5 IRO-1 Description of the processes to identify and assess material resource use and circular economy-related impacts, risks and opportunities | xx | |
| E5-1 Policies related to resource use and circular economy | xx | |
| E5-2 Actions and resources related to resource use and circular economy | xx | |
| Metrics and targets | ||
| E5-3 Targets related to resource use and circular economy | xx | |
| E5-4 Resource inflows | xx | |
| E5-5 Resource outflows | xx | |
| E5-6 Anticipated financial effects from resource use and circular economy-related impacts, risks and opportunities | The information is not disclosed, utilizing the option for phase-in disclosure. | |
| Social topics | ||
| ESRS S1 Own workforce | ||
| Strategy | ||
| S1 SBM-2 Interests and views of stakeholders | xx | |
| S1 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model | xx | |
| Impact, risk and opportunity management | ||
| S1-1 Policies related to own workforce | xx | |
| S1-2 Processes for engaging with own workers and workers’ representatives about impacts | xx | |
| S1-3 Processes to remediate negative impacts and channels for own workers to raise concerns | xx | |
| S1-4 Taking action on material impacts on own workforce, and approaches to mitigating material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions | xx | |
| Metrics and targets | ||
| S1-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities | xx | |
| S1-6 Characteristics of the undertaking’s employees | xx | |
| S1-7 Characteristics of non-employee workers in the undertaking’s own workforce | xx | |
| S1-8 Collective bargaining coverage and social dialogue | xx | |
| S1-9 Diversity metrics | xx | |
| ## ESRS G1 Business Conduct | ||
| ### Governance | ||
| #### G1 GOV-1 The role of the administrative, supervisory and management bodies | ||
| ### Impact, risk and opportunity management | ||
| #### G1 IRO-1 Description of the processes to identify and assess material impacts, risks and opportunities | ||
| ### G1-1 Corporate culture and Business conduct policies and corporate culture | ||
| ### G1-2 Management of relationships with suppliers | ||
| ### G1-3 Prevention and detection of corruption and bribery | ||
| ### Metrics and targets | ||
| #### G1-4 Confirmed incidents of corruption or bribery | ||
| #### G1-6 Payment practices |
This appendix is an integral part of the ESRS 2. The table below illustrates the datapoints in ESRS 2 and topical ESRS that derive from other EU legislation.
| Requirement and related datapoint | SFDR reference | Pillar 3 reference | Benchmark Regulation25 reference | EU Climate Law26 reference | Page |
|---|---|---|---|---|---|
| ESRS 2 GOV-1 Board's gender diversity | paragraph 21 (d) | Indicator number 13 of Table #1 of Annex 1 | Commission Delegated Regulation (EU) 2020/181627, Annex II | xx | 100 |
| ESRS 2 GOV-1 Percentage of board members who are independent | paragraph 21 (e) | Delegated Regulation (EU) 2020/1816, Annex II | xx | ||
| ESRS 2 GOV-4 Statement on due diligence | paragraph 30 | Indicator number 10 Table #3 of Annex 1 | xx | ||
| ESRS 2 SBM-1 Involvement in activities related to fossil fuel activities | paragraph 40 (d) i | Indicators number 4 Table #1 of Annex 1 | Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Table 1: Qualitative information on Environmental risk and Table 2: Qualitative information on Social risk |
Delegated Regulation (EU) 2020/1816, Annex II | |
| ESRS 2 SBM-1 Involvement in activities related to chemical production | paragraph 40 (d) ii | Indicator number 9 Table #2 of Annex 1 | Delegated Regulation (EU) 2020/1816, Annex II | xx | |
| ESRS 2 SBM-1 Involvement in activities related to controversial weapons | paragraph 40 (d) iii | Indicator number 14 Table #1 of Annex 1 | Delegated Regulation (EU) 2020/181829, Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II |
xx | |
| ESRS 2 SBM-1 Involvement in activities related to cultivation and production of tobacco | paragraph 40 (d) iv | Delegated Regulation (EU) 2020/1818, Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II |
xx | 102 | |
| ESRS E1-1 Transition plan to reach climate neutrality by 2050 | paragraph 14 | Regulation (EU) 2021/1119, Article 2(1) | xx | ||
| ESRS E1-1 Undertakings excluded from Paris-aligned Benchmarks | paragraph 16 (g) | Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 1: Banking book-Climate Change transition risk: Credit quality of exposures by sector, emissions and residual maturity |
Article12.1 (d) to (g), and Article 12.2 | xx | 103 |
| ESRS E1-4 GHG emission reduction targets | paragraph 34 | Indicator number 4 Table #2 of Annex 1 | Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book – Climate change transition risk: alignment metrics |
Delegated Regulation (EU) 2020/1818, Article 6 | |
| ESRS E1-5 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) | paragraph 38 | Indicator number 5 Table #1 and Indicator n. 5 Table #2 of Annex 1 | xx | 104 | |
| ESRS E1-5 Energy consumption and mix | paragraph 37 | Indicator number 5 Table #1 of Annex 1 | xx | ||
| ESRS E1-5 Energy intensity associated with activities in high climate impact sectors | paragraphs 40 to 43 | Indicator number 6 Table #1 of Annex 1 | xx | 105 | |
| ESRS E1-6 Gross Scope 1, 2, 3 and Total GHG emissions | paragraph 44 | Indicators number 1 and 2 Table #1 of Annex 1 | Article 449a; Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 1: Banking book – Climate change transition risk: Credit quality of exposures by sector, emissions and residual maturity |
Delegated Regulation (EU) 2020/1818, Article 5(1), 6 and 8(1) | |
| ESRS E1-6 Gross GHG emissions intensity | paragraphs 53 to 55 | Indicators number 3 Table #1 of Annex 1 | Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book – Climate change transition risk: alignment metrics |
Delegated Regulation (EU) 2020/1818, Article 8(1) | |
| ESRS E1-7 GHG removals and carbon credits | paragraph 56 | Regulation (EU) 2021/1119, Article 2(1) | xx | 107 | |
| ESRS E1-9 Exposure of the benchmark portfolio to climate-related physical risks | paragraph 66 | Delegated Regulation (EU) 2020/1818, Annex II | Delegated Regulation (EU) 2020/1816, Annex II | xx | |
| ESRS E1-9 Disaggregation of monetary amounts by acute and chronic physical risk | paragraph 66 (a) | Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraphs 46 and 47; Template 5: Banking book - Climate change physical risk: Exposures subject to physical risk. |
xx | ||
| ESRS E1-9 Location of significant assets at material physical risk | paragraph 66 (c). | Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraphs 46 and 47; Template 5: Banking book - Climate change physical risk: Exposures subject to physical risk. |
xx | 108 | |
| ESRS E1-9 Breakdown of the carrying value of its real estate assets by energy-efficiency classes | paragraph 67 (c). | Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraph 34;Template 2:Banking book -Climate change transition risk: Loans collateralised by immovable property - Energy efficiency of the collateral |
xx | 109 | |
| ESRS E1-9 Degree of exposure of the portfolio to climate- related opportunities | paragraph 69 | Delegated Regulation (EU) 2020/1818, Annex II | Delegated Regulation (EU) 2020/1816, Annex II | xx | |
| ESRS E2-4 Amount of each pollutant listed in Annex II of the E-PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil, | paragraph 28 | Indicator number 8 Table #1 of Annex 1 Indicator number 2 Table #2 of Annex 1 Indicator number 1 Table #2 of Annex 1 Indicator number 3 Table #2 of Annex 1 |
Not material | 110 | |
| ESRS E3-1 Water and marine resources | paragraph 9 | Indicator number 7 Table #2 of Annex 1 | xx | ||
| ESRS E3-1 Dedicated policy | paragraph 13 | Indicator number 8 Table 2 of Annex 1 | xx | ||
| ESRS E3-1 Sustainable oceans and seas | paragraph 14 | Indicator number 12 Table #2 of Annex 1 | xx | ||
| ESRS E3-4 Total water recycled and reused | paragraph 28 (c) | Indicator number 6.2 Table #2 of Annex 1 | xx | 111 | |
| ESRS E3-4 Total water consumption in m3 per net revenue on own operations | paragraph 29 | Indicator number 6.1 Table #2 of Annex 1 | xx | ||
| ESRS 2- IRO 1 - E4 | paragraph 16 (a) i | Indicator number 7 Table #1 of Annex 1 | xx | ||
| ESRS 2- IRO 1 - E4 | paragraph 16 (b) | Indicator number 10 Table #2 of Annex 1 | xx | ||
| ESRS 2- IRO 1 - E4 | paragraph 16 (c) | Indicator number 14 Table #2 of Annex 1 | xx | 112 | |
| ESRS E4-2 Sustainable land / agriculture practices or policies | paragraph 24 (b) | Indicator number 11 Table #2 of Annex 1 | xx | ||
| ESRS E4-2 Sustainable oceans / seas practices or policies | paragraph 24 (c) | Indicator number 12 Table #2 of Annex 1 | xx | ||
| ESRS E4-2 Policies to address deforestation | paragraph 24 (d) | Indicator number 15 Table #2 of Annex 1 | xx | 113 | |
| ESRS E5-5 Non-recycled waste | paragraph 37 (d) | Indicator number 13 Table #2 of Annex 1 | XX | ||
| ESRS E5-5 Hazardous waste and radioactive waste | paragraph 39 | Indicator number 9 Table #1 of Annex 1 | XX | ||
| ESRS 2- SBM3 - S1 Risk of incidents of forced labour | paragraph 14 (f) | Indicator number 13 Table #3 of Annex I | XX | 114 | |
| ESRS 2- SBM3 - S1 Risk of incidents of child labour | paragraph 14 (g) | Indicator number 12 Table #3 of Annex I | XX | ||
| ESRS S1-1 Human rights policy commitments | paragraph 20 | Indicator number 9 Table #3 and Indicator number 11 Table #1 of Annex I | XX | ||
| ESRS S1-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, | paragraph 21 | Delegated Regulation (EU) 2020/1816, Annex II | XX | 115 | |
| ESRS S1-1 processes and measures for preventing trafficking in human beings | paragraph 22 | Indicator number 11 Table #3 of Annex I | XX | ||
| ESRS S1-1 workplace accident prevention policy or management system | paragraph 23 | Indicator number 1 Table #3 of Annex I | XX | ||
| ESRS S1-3 grievance/complaints handling mechanisms | paragraph 32 (c) | Indicator number 5 Table #3 of Annex I | XX | 116 | |
| ESRS S1-14 Number of fatalities and number and rate of work-related accidents | paragraph 88 (b) and (c) | Indicator number 2 Table #3 of Annex I | Delegated Regulation (EU) 2020/1816, Annex II | XX | |
| ESRS S1-14 Number of days lost to injuries, accidents, fatalities or illness | paragraph 88 (e) | Indicator number 3 Table #3 of Annex I | XX | ||
| ESRS S1-16 Unadjusted gender pay gap | paragraph 97 (a) | Indicator number 12 Table #1 of Annex I | Delegated Regulation (EU) 2020/1816, Annex II | XX | 117 |
| ESRS S1-16 Excessive CEO pay ratio | paragraph 97 (b) | Indicator number 8 Table #3 of Annex I | XX | ||
| ESRS S1-17 Incidents of discrimination | paragraph 103 (a) | Indicator number 7 Table #3 of Annex I | XX | ||
| ESRS S1-17 Non-respect of UNGPs on Business and Human Rights and OECD | paragraph 104 (a) | Indicator number 10 Table #1 and Indicator n. 14 Table #3 of Annex I | Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818 Art 12 (1) |
XX | |
| ESRS 2- SBM3 – S2 Significant risk of child labour or forced labour in the value chain | paragraph 11 (b) | Indicators number 12 and n. 13 Table #3 of Annex I | Not material | 118 | |
| ESRS S2-1 Human rights policy commitments | paragraph 17 | Indicator number 9 Table #3 and Indicator n. 11 Table #1 of Annex 1 | Not material | ||
| ESRS S2-1 Policies related to value chain workers | paragraph 18 | Indicator number 11 and n. |
To: the Management of AB Žemaitijos pienas
We have performed a limited assurance engagement on the consolidated sustainability information of AB Žemaitijos pienas Group (hereinafter – the Group) as at and for the year ended 31 December 2024, presented in the section “Information on Sustainability Matters” the Consolidated Management Report (hereinafter – the Sustainability Statement), in order to determine whether it has been prepared in accordance with the Law on Reporting by Undertakings and Groups of Undertakings of the Republic of Lithuania and the European Sustainability Reporting Standards (ESRS).
Based on the procedures performed and the evidence obtained, nothing has come to our attention that causes us to believe that the Group’s Sustainability Statement as at and for the year ended 31 December 2024 is not, in all material respects, prepared in accordance with the Law on Reporting by Undertakings and Groups of Undertakings of the Republic of Lithuania, including:
Our conclusion on the Sustainability Statement does not cover any other information presented together with the Sustainability Statement, including the Consolidated and Separate Financial Statements and the Consolidated Management Report for the year ended 31 December 2024.
We performed our limited assurance engagement on the Sustainability Statement in accordance with International Standard on Assurance Engagements (ISAE) 3000 (Revised) “Assurance Engagements Other than Audits or Reviews of Historical Financial Information”, issued by the International Auditing and Assurance Standards Board (IAASB). Our responsibilities under this standard are further described in the section “Our Responsibility” of our conclusion.
We complied with the independence and other ethical requirements set out in the International Code of Ethics for Professional Accountants (including International Independence Standards), issued by the International Ethics Standards Board for Accountants (IESBA). Our firm applies International Standard on Quality Management 1 (ISQM 1), “Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements”, issued by the IAASB. Under this standard, the firm is required to design, implement, and operate a system of quality management, including policies and procedures related to compliance with ethical requirements, professional standards, and applicable legal and regulatory requirements.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
The subject matter information for the year ended 31 December 2023 was not part of our limited assurance engagement; therefore, we do not express a conclusion or any assurance on this information.
When providing forward-looking information in accordance with ESRS, the Group's management is required to prepare such information based on disclosed assumptions about potential future events and possible future actions of the Group. It is likely that actual results will differ, as anticipated events often do not occur as expected. In determining the disclosures in the Sustainability Report, the Group's management interprets undefined legal and other concepts. These undefined legal and other concepts may be subject to varying interpretations, including in terms of legal compliance, and are therefore inherently uncertain.
The Group’s management is responsible for designing, implementing, and maintaining a process to identify the information reported in the Sustainability Statement in accordance with the ESRS, and for disclosing this process in the Double materiality assessment subsection “Description of the Process for Identifying and Assessing Material Impacts, Risks and Opportunities (IRO-1)” of the Sustainability Statement. This responsibility includes:
In addition the Group’s management is responsible for the preparation of the Sustainability Statement in accordance with the Law on Reporting by Undertakings and Groups of Undertakings of the Republic of Lithuania, including:
Reg. Code 300056169 | VAT Code LT100001220914 | Register of Legal Entities of the Republic of Lithuania | Member of Grant Thornton International Ltd
Grant Thornton Baltic UAB
Vilnius | Upės g. 21-1 | 08128 Vilnius | Lietuva | [email protected]
Kaunas | Jonavos g. 60C | 44192 Kaunas | Lietuva | [email protected]
Klaipėda | Taikos pr. 52c | 91184 Klaipėda | Lietuva | [email protected]
T +370 5 212 7856 | www.grantthornton.lt
Reg. Code 300056169 | VAT Code LT100001220914 | Register of Legal Entities of the Republic of Lithuania | Member of Grant Thornton International Ltd
Grant Thornton Baltic UAB
Vilnius | Upės st. 21-1 | 08128 Vilnius | Lithuania | [email protected]
Kaunas | Jonavos st. 60C | 44192 Kaunas | Lithuania | [email protected]
Klaipėda | Taikos av. 52C | 91184 Klaipėda | Lithuania | [email protected]
T +370 5 212 7856 | www.grantthornton.ltCode 300056169 | VAT Code LT100001220914 | Register of Legal Entities of the Republic of Lithuania | Member of Grant Thornton International Ltd Grant Thornton Baltic UAB Vilnius | Upės st. 21-1 | 08128 Vilnius | Lithuania | [email protected] Kaunas | Jonavos st. 60C | 44192 Kaunas | Lithuania | [email protected] Klaipėda | Taikos av. 52C | 91184 Klaipėda | Lithuania | [email protected] T +370 5 212 7856 | www.grantthornton.lt
Those charged with governance are responsible for overseeing the process of preparing the Group's Sustainability Statement.
Our responsibilities
Our engagement is to plan and perform the assurance engagement to obtain limited assurance on whether the Sustainability Statement is free from material misstatement, whether due to fraud or error, and to issue our limited assurance conclusion to the Group’s management. Misstatements, whether due to fraud or error, are considered material if it is reasonable to expect that, individually or in aggregate, they could influence the decisions of users taken based on the Sustainability Statement as a whole.
Our responsibility related to the Process applied to the Sustainability Statement:
Our other responsibilities related to the Sustainability Statement include:
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
Summary of the work we performed as the basis for our conclusion
The limited assurance engagement involves performing procedures to obtain evidence regarding the compliance of the Sustainability Statement. We designed and performed our procedures to obtain sufficient and appropriate evidence to provide a basis for our conclusion on the Sustainability Statement. The nature, timing, and extent of the procedures depended on our understanding of the Sustainability Statement and other engagement circumstances, including the identification of disclosures where material misstatements may arise due to fraud or error. Throughout the engagement, we exercised professional judgment and maintained professional skepticism.
In performing the limited assurance procedures related to the Process, we:
Reg. Code 300056169 | VAT Code LT100001220914 | Register of Legal Entities of the Republic of Lithuania | Member of Grant Thornton International Ltd Grant Thornton Baltic UAB Vilnius | Upės st. 21-1 | 08128 Vilnius | Lithuania | [email protected] Kaunas | Jonavos st. 60C | 44192 Kaunas | Lithuania | [email protected] Klaipėda | Taikos av. 52C | 91184 Klaipėda | Lithuania | [email protected] T +370 5 212 7856 | www.grantthornton.lt
In performing the limited assurance procedures related to the Sustainability Statement, we:
The nature, timing, and extent of the procedures performed in a limited assurance engagement are different from, and less extensive than, those required in a reasonable assurance engagement. As a result, the level of assurance obtained in a limited assurance engagement is substantially lower than the level that would have been obtained had a reasonable assurance engagement been performed.
Auditor
Jurgita Matulaitienė
Auditor’s certification No. 000469
April 3, 2025
Jonavos str. 60C, Kaunas
Grant Thornton Baltic UAB
Audit company’s certification No. 001513
CONFIRMATION BY RESPONSIBLE PERSONS
April 2025
Telšiai
We, Robertas Pažemeckas, Director General of Žemaitijos pienas, AB, and Dalia Gecienė, senior accountant, hereby confirm that to our knowledge the attached 2024 audited consolidated statements of Žemaitijos pienas, AB and the Company’s financial statements drawn up according to the International Financial Reporting Standards adopted for application in the European Union correspond to reality and fairly reflect the assets, liabilities, financial situation, profit or loss and cash flow of the Company and the Group of Companies, and the consolidated report of the Management provides a fair overview of business development and performance, the state of the of the Company and the Group of Companies with key risks and uncertainties faced, with a description as well as information on sustainability issues prepared in accordance with the European Sustainability Reporting Standards and provisions implementing the provisions of Part 4 of Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment and amending Regulation (EU) 2019/2088.
General director
Robertas Pažemeckas
Senior accountant
Dalia Gecienė
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