ENDORSEMENT BY THE RESPONSIBLE PERSONS

07/04/2022

Pursuing Article 22 of the Law on Securities of the Republic of Lithuania and in accordance with the

rules of preparation and submission of periodical and supplementary information, we, the

undersigned – the Chief Executive Officer Dalius Trumpa and the Chief Financial Officer Antanas

Kavaliauskas – approve that to our knowledge the audited financial statements of the year 2021 as

well as annual consolidated financial statements of Rokiskio suris AB for the year 2021, are formed

in accordance with the applicable accounting standards, they are true and show fair assets, obligations,

financial state, profit and cash flows of the Company and total consolidated group. Also, to our best

knowledge both the Company’s annual report and the consolidated annual report make fair overview

of the operations and business development, current state of the company Rokiskio suris AB and the

overall group of Rokiskio suris AB, including description of the main risks and uncertainties.

Chief Executive Officer Dalius Trumpa

Chief Financial Officer Antanas Kavaliauskas

Dokumentą elektroniniu

parašu pasirašė

ANTANAS,KAVALIAUSKA

Data: 2022-04-05 08:33:02

Dokumentą elektroniniu

parašu pasirašė

DALIUS,TRUMPA

Data: 2022-04-07 11:01:35

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE COMPANY’S

FINANCIAL STATEMENTS,

CONSOLIDATED ANNUAL REPORT AND

INDEPENDENT AUDITOR’S REPORT

31 December 2021

Translation note:

This version of the accompanying documents is a translation from the original, which was prepared in

Lithuanian language. All possible care has been taken to ensure that the translation is an accurate

representation of the original. However, in all matters of interpretation of information, views or opinions, the

original language version of the accompanying documents takes precedence over this translation.

TABLE OF CONTENTS

CONSOLIDATED AND SEPARATE THE COMPANY’S FINANCIAL STATEMENTS

Income statement

Statement of comprehensive income

Balance sheet

Statement of changes in equity

6-7

Statement of cash flows

Notes to the financial statements

9-51

CONSOLIDATED ANNUAL REPORT

52–136

INDEPENDENT AUDITOR'S REPORT

137–146

ROKIŠKIO SŪRIS AB Approved

CONSOLIDATED AND SEPARATE on _____________2022

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021 MINUTES No._____

(All tabular amounts are in EUR ’000 unless otherwise stated)

Income statement

Group

Company

Notes

2021

2020

2021

2020

Sales

253,062

210,829

233,658

189,870

Cost of sales

(234,435)

(189,441)

(219,356)

(174,799)

Gross profit

18,627

21,388

14,302

15,071

Selling and marketing expenses

6,10

(12,483)

(10,692)

(10,951)

(9,528)

General and administrative expenses

7,10

(5,609)

(6,832)

(3,654)

(4,989)

Other income

256

292

2,038

2,900

Other (losses)/gains

174

Operating profit/(loss)

965

4,171

1,909

3,467

Finance costs

(369)

(199)

(369)

(199)

Profit/(loss) before income tax

596

3,972

1,540

3,268

Income tax

(43)

Profit/(loss) for the year

553

4,061

1,558

3,329

Profit/(loss) for the year attributable to:

Owners of the Company

553

4,061

Non-controlling interest

553

4,061

Basic and diluted earnings/(deficit) per

share (in EUR per share)

0.02

0.12

0.05

0.10

The accompanying notes are an integral part of these annual financial statements.

These financial statements were authorised for issue on 7 April 2022 by the Board of Directors and signed on behalf

of the Board of Directors by the Managing Director and the Finance Director.

Dalius Trumpa Antanas Kavaliauskas

Managing Director Finance Director

ROKIŠKIO SŪRIS AB Approved

CONSOLIDATED AND SEPARATE on _____________2022

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021 MINUTES No._____

(All tabular amounts are in EUR ’000 unless otherwise stated)

Statement of comprehensive income

Group

Company

Notes

2021

2020

2021

2020

Profit/(loss) for the year

553

4,061

1,558

3,329

Other comprehensive income

Gain on revaluation of property, plant and equipment

16,453

10,131

Deferred income tax on revaluation

(2,468)

(1,519)

Other comprehensive income for the year

13,985

8,612

Total comprehensive income/(loss) for the year

553

18,046

1,558

11,941

Total comprehensive income/(loss) for the year

attributable to:

Owners of the Company

553

18,046

1,558

11,941

Non-controlling interest

553

18,046

1,558

11,941

The accompanying notes are an integral part of these annual financial statements.

ROKIŠKIO SŪRIS AB Approved

CONSOLIDATED AND SEPARATE on _____________2022

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021 MINUTES No._____

(All tabular amounts are in EUR ’000 unless otherwise stated)

Balance sheet

Group

Company

At 31 December

Notes

2021

2020

2021

2020

ASSETS

Non-current assets

Property, plant and equipment

79,056

73,862

54,809

49,259

Intangible assets

203

162

Investments in subsidiaries

169

5,154

5,054

Prepayments

910

879

910

879

Loans granted

2,627

1,654

2,585

1,608

82,965

76,646

63,620

56,837

Current assets

Inventories

59,030

69,564

55,921

66,795

Loans granted

2,984

3,642

3,266

3,901

Trade and other receivables

51,711

40,354

53,437

42,149

Prepaid income tax

548

1,030

150

Cash and cash equivalents

5,629

5,834

4,511

4,922

119,902

120,424

117,285

117,851

Total assets

202,867

197,070

180,905

174,688

EQUITY

Attributable to owners of the Company

Share capital

10,402

Share premium

18,073

Reserve for acquisition of treasury shares

10,850

Treasury shares

(2,251)

Other reserves

27,102

27,716

16,301

17,417

Retained earnings

78,304

80,638

73,605

74,432

Total equity

142,480

145,428

126,980

128,923

LIABILITIES

Non-current liabilities

Borrowings

8,050

Deferred income tax liability

3,812

3,711

2,129

2,116

Deferred income

2,190

2,601

1,487

1,705

Advance payments received

31(ii)

2,356

Non-current provisions

683

307

17,091

6,995

14,329

4,128

Current liabilities

Borrowings

19,344

26,820

19,344

26,820

Deferred income

404

420

211

213

Trade and other payables

22,864

16,723

19,437

14,000

Current provisions

684

604

43,296

44,647

39,596

41,637

Total liabilities

60,387

51,642

53,925

45,765

Total equity and liabilities

202,867

197,070

180,905

174,688

The accompanying notes are an integral part of these annual financial statements.

ROKIŠKIO SŪRIS AB Approved

CONSOLIDATED AND SEPARATE on _____________2022

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021 MINUTES No._____

(All tabular amounts are in EUR ’000 unless otherwise stated)

The Company’s statement of changes in equity

Notes

capital

premium

Reserve

for

acquisiti

on of

treasury

Treasury

Other

reserves

Retained

earnings

Total

Balance at 1 January 2020

10,402

18,073

10,850

(2,251)

10,240

73,169

120,483

Profit/(loss) for the year

3,329

Other comprehensive income for 2020

8,612

Total comprehensive income for 2020

8,612

3,329

11,941

Transfer to retained earnings (transfer of

depreciation of revalued assets and

disposals of revalued assets, net of

deferred income tax)

(1,435)

1,435

Transactions with owners

Acquisition of treasury shares

Transfer to reserves

Dividends for 2019

(3,501)

Total transactions with owners for 2020

(3,501)

Balance at 31 December 2020

10,402

18,073

10,850

(2,251)

17,417

74,432

128,923

Profit/(loss) for the year

1,558

Other comprehensive income for 2021

(1,116)

1,116

Total comprehensive income for 2021

(1,116)

2,674

1,558

Transactions with owners

Acquisition of treasury shares

Transfer to reserves

Dividends for 2020

(3,501)

Total transactions with owners for 2021

(3,501)

Balance at 31 December 2021

10,402

18,073

10,850

(2,251)

16,301

73,605

126,980

The accompanying notes are an integral part of these annual financial statements.

ROKIŠKIO SŪRIS AB Approved

CONSOLIDATED AND SEPARATE on _____________2022

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021 MINUTES No._____

(All tabular amounts are in EUR ’000 unless otherwise stated)

The Group’s statement of changes in equity

Attributable to owners of the Company

Notes

capital

premium

Reserve

for

acquisiti

on of

treasury

Treasury

Other

reserves

Retained

earnings

Total

Balance at 1 January 2020

10,402

18,073

10,850

(2,251)

15,138

78,559

130,771

Comprehensive income

Profit/(loss) for the year

4,061

Other comprehensive income for 2020

13,985

Total comprehensive income for 2020

13,985

4,061

18,046

Transfer to retained earnings (transfer of

depreciation of revalued assets and

disposals of revalued assets, net of

deferred income tax)

(1,407)

1,519

112

Transactions with owners

Acquisition of treasury shares

Transfer to reserves

Dividends relating to 2019

(3,501)

Total transactions with owners for 2020

(3,501)

Balance at 31 December 2020

10,402

18,073

10,850

(2,251)

27,716

80,638

145,428

Comprehensive income

Profit/(loss) for the year

553

Other comprehensive income for 2021

(614)

614

Total comprehensive income for 2021

(614)

1,167

553

Transactions with owners

Acquisition of treasury shares

Transfer to reserves

Dividends relating to 2020

(3,501)

Total transactions with owners for 2021

(3,501)

Balance at 31 December 2021

10,402

18,073

10,850

(2,251)

27,102

78,304

142,480

The accompanying notes are an integral part of these annual financial statements.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Statement of cash flows

Group

Company

Year ended

31 December

Year ended

31 December

Notes

2021

2020

2021

2020

Cash flows from operating activities

Cash generated from/(used in) operations

13,546

1,800

9,541

(1,140)

Interest paid

(369)

(199)

(369)

(199)

Income tax paid

(43)

Net cash generated from/(used in)

operating activities

13,134

1,601

9,172

(1,339)

Cash flows from investing activities

Purchases of property, plant and

equipment

(13,251)

(8,348)

(11,182)

(7,531)

Purchases of intangible assets

(142)

(45)

(133)

Investments in subsidiaries

(100)

Loans granted to employees

(91)

(50)

(91)

(50)

Other loans granted

(1,950)

(540)

(1,950)

(540)

Proceeds from sale of property, plant and

equipment

324

213

312

154

Government grants received

417

Other loan repayments received

1,653

1,219

1,653

1,219

Interest received

229

254

229

251

Dividends received

1,790

2,649

Net cash (used in)/generated from

investing activities

(13,228)

(6,880)

(9,472)

(3,431)

Cash flows from financing activities

Dividends paid

(3,501)

Non-current loans repaid

(350)

Loans received

3,740

11,626

3,740

11,626

Net cash (used in)/generated from

financing activities

(111)

8,125

(111)

8,125

Net (decrease)/increase in cash and

cash equivalents

(205)

2,846

(411)

3,355

Cash and cash equivalents at the

beginning of the year

5,834

2,988

4,922

1,567

Cash and cash equivalents at the end of

the year

5,629

5,834

4,511

4,922

The accompanying notes are an integral part of these annual financial statements.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Notes to the financial statements

General information

Rokiškio Sūris AB (“the Company”) is a public limited liability company based in Rokiškis. The Company’s

code is 173057512, address: Pramonės g. 3, LT-42150 Rokiškis, Lithuania.

The Company’s core line of business is the production and trade in fermented cheese, skimmed milk

powder and wide range of other dairy products.

The shares of Rokiškio Sūris AB are quoted on the Baltic Main List (ticket: RSU1L) of Nasdaq Vilnius

stock exchange.

The main shareholders of the Company are disclosed in Note 31.

The consolidated group (“the Group”) consists of the five subsidiaries (2020: four subsidiaries).

Information on the Group companies and branches is presented below:

Year of

acquisition

Main activity

Group’s ownership interest

(%) as at 31 December

Subsidiaries

2021

2020

Rokiškio Pienas UAB

2006

Distribution of dairy

products

100.00

Rokiškio Pieno Gamyba

UAB

2013

Production of dairy

products

100.00

Jekabpils Piena Kombinats

SIA

2005-2011

Raw milk collection

100.00

Kaunata SIA*

2010

Raw milk collection

60.00

DairyHub.LT UAB

2021

Production of dairy

products

100.00

* This subsidiary was not consolidated in the Group’s financial statements as it was not material (see

information below).

Kaunata SIA, company code 240300369, VAT payer’s code: LV42403003695, address: S. Rogs,

Kaunatas pag. Rezekne novads.

Results of operations for the year ended 31 December 2021 (unaudited) are as follows:

Total assets: EUR 264,456;

Property, plant and equipment: EUR 45,547;

Results of operations: EUR (33,188).

Core line of business of the subsidiary: collection and realisation of milk. The company is the main

supplier of raw milk to company Jekabpils Piena Kombinats SIA (subsidiary of Rokiškio Sūris AB).

Kaunata SIA was accounted for at cost.

All the above-listed subsidiaries have been registered in Lithuania, except for Jekabpils Piena Kombinats

SIA and Kaunata SIA which have been registered in Latvia.

The average number of the Company’s employees during the year ended 31 December 2021 was 829

(2020: 883). The average number of the Group’s employees during the year ended 31 December 2021

was 1,326 (2020: 1,386).

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Accounting policies

2.1

Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting

Standards (IFRS) as adopted by the European Union.

The financial statements have been prepared on a going concern basis and under the historical cost

convention.

Pursuant to the Law on Companies of the Republic of Lithuania, the annual financial statements

prepared by the management must be approved by the general meeting of shareholders. The

shareholders of the Company have a statutory right to approve these financial statements or not to

approve them and to require preparation of a new set of financial statements. The financial year of the

Company and other Group companies coincides with the calendar year.

These financial statements include the consolidated financial statements of the Group and the separate

financial statements of the Company.

The financial statements have been prepared under the historical cost convention, as modified for

available-for-sale financial assets measured at fair value and property, plant and equipment measured

at revalued amount.

The principal accounting policies applied in the preparation of these financial statements are set out

below. These policies have been consistently applied to all the years presented unless otherwise

stated.

The preparation of the financial statements in conformity with IFRS requires the use of estimates and

assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the financial statements and the reported amounts of revenues and

expenses during the reporting period. Although these estimates are based on management’s best

knowledge of current event and actions, actual results ultimately may differ from those estimates (Note

4).

Amendments to standards and interpretations effective in 2021

a) The following new standards, amendments to standards and interpretations are effective from 2021,

but do not have a significant impact on the Company and the Group:

Interest rate benchmark (IBOR) reform – phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and

IFRS 16 (issued on 27 August 2020 and effective for annual periods beginning on or after 1 January

2021). The Phase 2 amendments address issues that arise from the implementation of the reforms,

including the replacement of one benchmark with an alternative one. The amendments cover the

following areas:

● Accounting for changes in the basis for determining contractual cash flows as a result of

IBOR reform: For instruments to which the amortised cost measurement applies, the amendments

require entities, as a practical expedient, to account for a change in the basis for determining the

contractual cash flows as a result of IBOR reform by updating the effective interest rate using the

guidance in paragraph B5.4.5 of IFRS 9. As a result, no immediate gain or loss is recognised. This

practical expedient applies only to such a change and only to the extent it is necessary as a direct

consequence of IBOR reform, and the new basis is economically equivalent to the previous basis.

Insurers applying the temporary exemption from IFRS 9 are also required to apply the same practical

expedient. IFRS 16 was also amended to require lessees to use a similar practical expedient when

accounting for lease modifications that change the basis for determining future lease payments as a

result of IBOR reform.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

● End date for Phase 1 relief for non contractually specified risk components in hedging

relationships: The Phase 2 amendments require an entity to prospectively cease to apply the Phase 1

reliefs to a non-contractually specified risk component at the earlier of when changes are made to the

non-contractually specified risk component, or when the hedging relationship is discontinued. No end

date was provided in the Phase 1 amendments for risk components.

● Additional temporary exceptions from applying specific hedge accounting requirements:

The Phase 2 amendments provide some additional temporary reliefs from applying specific IAS 39 and

IFRS 9 hedge accounting requirements to hedging relationships directly affected by IBOR reform.

● Additional IFRS 7 disclosures related to IBOR reform: The amendments require

disclosure of: (i) how the entity is managing the transition to alternative benchmark rates, its progress

and the risks arising from the transition; (ii) quantitative information about derivatives and non-

derivatives that have yet to transition, disaggregated by significant interest rate benchmark; and (iii) a

description of any changes to the risk management strategy as a result of IBOR reform.

Amendment to IFRS 4 – deferral of IFRS 9 (issued on 25 June 2020 and effective for annual periods

beginning on or after 1 January 2023). The amendments to IFRS 4 addressed the temporary

accounting consequences of the different effective dates of IFRS 9 and the forthcoming IFRS 17. The

amendments to IFRS 4 extended the expiry date of the temporary exemption from applying IFRS 9

until 2023 in order to align the effective date of IFRS 9 with the new IFRS 17. The fixed expiry date of

the temporary exemption from applying IFRS 9 in IFRS 4 has been deferred to annual reporting periods

beginning on or after 1 January 2023.

Covid-19-Related Rent Concessions – Amendments to IFRS 16 (issued on 31 March 2021 and

effective for annual periods beginning on or after 1 April 2021). In May 2020 an amendment to IFRS

16 was issued that provided an optional practical expedient for lessees from assessing whether a rent

concession related to COVID-19, resulting in a reduction in lease payments due on or before 30 June

2021, was a lease modification. An amendment issued on 31 March 2021 extended the date of the

practical expedient from 30 June 2021 to 30 June 2022.

b) The following new standards were endorsed, but not yet effective

Proceeds before intended use, Onerous contracts – cost of fulfilling a contract, Reference to the

Conceptual Framework – narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual

Improvements to IFRSs 2018-2020 – amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 (issued on

14 May 2020 and effective for annual periods beginning on or after 1 January 2022).

The amendment to IAS 16 prohibits an entity from deducting from the cost of an item of PPE any

proceeds received from selling items produced while the entity is preparing the asset for its intended

use. The proceeds from selling such items, together with the costs of producing them, are now

recognised in profit or loss. An entity will use IAS 2 to measure the cost of those items. Cost will not

include depreciation of the asset being tested because it is not ready for its intended use. The

amendment to IAS 16 also clarifies that an entity is ‘testing whether the asset is functioning properly’

when it assesses the technical and physical performance of the asset. The financial performance of

the asset is not relevant to this assessment. An asset might therefore be capable of operating as

intended by management and subject to depreciation before it has achieved the level of operating

performance expected by management.

The amendment to IAS 37 clarifies the meaning of ‘costs to fulfil a contract’. The amendment explains

that the direct cost of fulfilling a contract comprises the incremental costs of fulfilling that contract; and

an allocation of other costs that relate directly to fulfilling. The amendment also clarifies that, before a

separate provision for an onerous contract is established, an entity recognises any impairment loss that

has occurred on assets used in fulfilling the contract, rather than on assets dedicated to that contract.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

IFRS 3 was amended to refer to the 2018 Conceptual Framework for Financial Reporting, in order to

determine what constitutes an asset or a liability in a business combination. Prior to the amendment,

IFRS 3 referred to the 2001 Conceptual Framework for Financial Reporting. In addition, a new

exception in IFRS 3 was added for liabilities and contingent liabilities. The exception specifies that, for

some types of liabilities and contingent liabilities, an entity applying IFRS 3 should instead refer to IAS

37 or IFRIC 21, rather than the 2018 Conceptual Framework. Without this new exception, an entity

would have recognised some liabilities in a business combination that it would not recognise under IAS

37. Therefore, immediately after the acquisition, the entity would have had to derecognise such

liabilities and recognise a gain that did not depict an economic gain. It was also clarified that the

acquirer should not recognise contingent assets, as defined in IAS 37, at the acquisition date.

The amendment to IFRS 9 addresses which fees should be included in the 10% test for derecognition

of financial liabilities. Costs or fees could be paid to either third parties or the lender. Under the

amendment, costs or fees paid to third parties will not be included in the 10% test.

Illustrative Example 13 that accompanies IFRS 16 was amended to remove the illustration of payments

from the lessor relating to leasehold improvements. The reason for the amendment is to remove any

potential confusion about the treatment of lease incentives.

IFRS 1 allows an exemption if a subsidiary adopts IFRS at a later date than its parent. The subsidiary

can measure its assets and liabilities at the carrying amounts that would be included in its parent’s

consolidated financial statements, based on the parent’s date of transition to IFRS, if no adjustments

were made for consolidation procedures and for the effects of the business combination in which the

parent acquired the subsidiary. IFRS 1 was amended to allow entities that have taken this IFRS 1

exemption to also measure cumulative translation differences using the amounts reported by the

parent, based on the parent’s date of transition to IFRS. The amendment to IFRS 1 extends the above

exemption to cumulative translation differences, in order to reduce costs for first-time adopters. This

amendment will also apply to associates and joint ventures that have taken the same IFRS 1 exemption.

The requirement for entities to exclude cash flows for taxation when measuring fair value under IAS 41

was removed. This amendment is intended to align with the requirement in the standard to discount

cash flows on a post-tax basis.

Amendments to IFRS 17 and an amendment to IFRS 4 (issued on 25 June 2020 and effective for

annual periods beginning on or after 1 January 2023). The amendments include a number of

clarifications intended to ease implementation of IFRS 17, simplify some requirements of the standard

and transition. The amendments relate to eight areas of IFRS 17, and they are not intended to change

the fundamental principles of the standard. The following amendments to IFRS 17 were made:

● Effective date: The effective date of IFRS 17 (incorporating the amendments) has been

deferred by two years to annual reporting periods beginning on or after 1 January 2023; and the fixed

expiry date of the temporary exemption from applying IFRS 9 in IFRS 4 has also been deferred to

annual reporting periods beginning on or after 1 January 2023.

● Expected recovery of insurance acquisition cash flows: An entity is required to allocate

part of the acquisition costs to related expected contract renewals, and to recognise those costs as an

asset until the entity recognises the contract renewals. Entities are required to assess the recoverability

of the asset at each reporting date, and to provide specific information about the asset in the notes to

the financial statements.

● Contractual service margin attributable to investment services: Coverage units should

be identified, considering the quantity of benefits and expected period of both insurance coverage and

investment services, for contracts under the variable fee approach and for other contracts with an

‘investment-return service’ under the general model. Costs related to investment activities should be

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

included as cash flows within the boundary of an insurance contract, to the extent that the entity

performs such activities to enhance benefits from insurance coverage for the policyholder.

● Reinsurance contracts held – recovery of losses: When an entity recognises a loss on

initial recognition of an onerous group of underlying insurance contracts, or on addition of onerous

underlying contracts to a group, an entity should adjust the contractual service margin of a related group

of reinsurance contracts held and recognise a gain on the reinsurance contracts held. The amount of

the loss recovered from a reinsurance contract held is determined by multiplying the loss recognised

on underlying insurance contracts and the percentage of claims on underlying insurance contracts that

the entity expects to recover from the reinsurance contract held. This requirement would apply only

when the reinsurance contract held is recognised before or at the same time as the loss is recognised

on the underlying insurance contracts.

● Other amendments: Other amendments include scope exclusions for some credit card

(or similar) contracts, and some loan contracts; presentation of insurance contract assets and liabilities

in the statement of financial position in portfolios instead of groups; applicability of the risk mitigation

option when mitigating financial risks using reinsurance contracts held and non-derivative financial

instruments at fair value through profit or loss; an accounting policy choice to change the estimates

made in previous interim financial statements when applying IFRS 17; inclusion of income tax payments

and receipts that are specifically chargeable to the policyholder under the terms of an insurance

contract in the fulfilment cash flows; and selected transition reliefs and other minor amendments.

The Company and the Group intends to adopt the above-mentioned standards and interpretations as

soon as they become effective.

The Company and the Group is currently assessing the impact of the new standards and amendments

on its financial statements.

and that have not been early adopted by the Company and the Group:

IFRS 14, Regulatory deferral accounts;

Sale or contribution of assets between an investor and its associate or joint venture - Amendments to

IFRS 10 and IAS 28;

Classification of liabilities as current or non-current – Amendments to IAS 1;

Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies;

Amendments to IAS 8: Definition of Accounting Estimates;

Deferred tax related to assets and liabilities arising from a single transaction – Amendments to IAS 12;

Transition option to insurers applying IFRS 17 – Amendments to IFRS 17.

The Company and the Group intends to adopt the above-mentioned standards and interpretations as

soon as they become effective.

The Company is currently assessing the impact of the following new standards on its financial

statements.

2.2

Consolidation

(a) Subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the group has the power to

govern the financial and operating policies generally accompanying a shareholding of more than one

half of the voting rights. The existence and effect of potential voting rights that are currently exercisable

or convertible are considered when assessing whether the group controls another entity. Subsidiaries

are fully consolidated from the date on which control is transferred to the group. They are

deconsolidated from the date that control ceases.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

The group uses the acquisition method of accounting to account for business combinations. The

consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred,

the liabilities incurred and the equity interests issued by the group. The consideration transferred

includes the fair value of any asset or liability resulting from a contingent consideration arrangement.

Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and

contingent liabilities assumed in a business combination are measured initially at their fair values at the

acquisition date. On an acquisition-by-acquisition basis, the group recognizes any non-controlling

interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the

acquiree’s net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree

and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of

the group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the

fair value of the net identifiable assets of the subsidiary acquired, the difference is recognized directly

in the income statement.

Inter-company transactions, balances and unrealized gains on transactions between group companies

are eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been

changed where necessary to ensure consistency with the policies adopted by the group.

(b) Transactions and minority interest

The group treats transactions with non-controlling interest as transactions with equity owners of the

group. For purchases from non-controlling interests, the difference between any consideration paid and

the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity.

Gains or losses on disposals to non-controlling interests are also recorded in equity.

When the group ceases to have control or significant influence, any retained interest in the entity is

remeasured to its fair value, with the change in carrying amount recognized in profit or loss. The fair

value is the initial carrying amount for the purposes of subsequently accounting for the retained interest

as an associate, joint venture or financial asset.

In addition, any amounts previously recognized in other comprehensive income in respect of that entity

are accounted for as if the group had directly disposed of the related assets or liabilities. This may

mean that amounts previously recognized in other comprehensive income are reclassified to profit or

loss.

2.3

Stand-alone financial statements

Subsidiaries in the stand-alone financial statements are accounted at cost less impairment charge –

that is the income from the investment is recognized in full where Company receives distributions from

accumulated profits of the investee. Distributions received from accumulated profits arising before the

date of acquisition are tested for impairment.

2.4

Foreign currency translation

(a) Functional and presentation currency

The items shown in the financial statements of the Company and each entity of the Group are valued

by the currency of the original economic environment wherein a specific company operates (hereinafter

the “functional currency”). These financial statements have been presented in euros (EUR), which is

the Company’s (and the Group’s each entity’s) functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates

prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the

settlement of foreign currency transactions and from the translation at year-end exchange rates of

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

monetary assets and liabilities denominated in foreign currencies are recognised in the income

statement.

2.5

Property, plant, and equipment

Property, plant and equipment is shown at revalued amount, based on periodic valuations of assets,

less subsequent accumulated depreciation and impairment.

Increases in the carrying amount arising on revaluation of property, plant and equipment are credited

to other comprehensive income and shown as revaluation reserve in shareholders’ equity (other

reserves). Decreases in the carrying amount on subsequent revaluations that offset previous increases

of the carrying amount of the same asset are charged in other comprehensive income and debited

against revaluation reserve in equity all other decreases are charged to the income statement.

Increases in the carrying amount on subsequent revaluations that offset previous decreases of the

carrying amount are recognised in the income statement; all other increases in the carrying amount on

revaluation of property, plant and equipment are recognised in other comprehensive income and added

to revaluation reserve in shareholders’ equity. Each year the difference between depreciation based on

the revalued carrying amount of the asset charged to the income statement, and depreciation based

on the asset’s original cost is transferred from revaluation reserve to retained earnings net of deferred

income tax.

Subsequent costs are included in the asset’s carrying amount or recognised as separate assets only

when it is probable that future economic benefits associated with the item will flow to the Company or

the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part

is derecognised. All other repairs and maintenance are charged to the income statement during the

financial period in which they are incurred.

Depreciation on property, plant and equipment is calculated using the straight-line method to allocate

their cost to their residual values over their estimated useful lives at the Group.

Useful lives of property, plant and equipment are given in the table below:

Buildings

7-75 years

Plant and machinery

2-25 years

Motor vehicles

2-10 years

Equipment and other property, plant and equipment

2-25 years

The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at each balance

sheet date.

Construction in progress is transferred to appropriate group of property plant and equipment when it is

completed and ready for its intended use.

When property is retired or otherwise disposed, the cost and related depreciation are removed from

the financial statements and any related gains or losses are determined by comparing proceeds with

carrying amount and are included in operating profit.

2.6

Intangible assets

(a) Computer software

Software assets expected to provide economic benefit to the Company and the Group in future periods

are valued at acquisition cost less subsequent amortisation. Software is amortised on the straight-line

basis over the useful life of 1 to 5 years.

(b) Contractual customer relationships

Contractual customer relationships recognized as intangible asset upon business acquisition are

accounted for at cost less accumulated amortization and impairment. Contractual customer

relationships are amortised on the straight-line basis over the estimated useful life of 2 years.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

2.7

Impairment of non-financial assets

Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events

or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment

loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For

the purposes of assessing impairment assets are grouped at the lowest levels for which there are

separately identifiable cash flows (cash-generating units).

2.8

Financial assets

(a) Following the adoption of IFRS 9, Financial Instruments, the Group and the Company classifies its

financial assets into the following 3 new categories:

• financial assets subsequently measured at amortised cost;

• financial assets subsequently measured at fair value through other comprehensive income;

and

• financial assets subsequently measured at fair value through profit or loss.

Subsequent to initial recognition, financial assets are classified into the aforementioned categories

based on the business model the Group and the Company apply when managing their financial assets.

The business model applied to the financial assets of the Group and the Company is determined at a

level that reflects how all financial assets of the Group and the Company are managed together to

achieve a particular business objective of the Group and the Company. The intentions of the Group

and the Company’s management regarding individual items of instruments have no effect on the

adopted business model. The Group and the Company and the Company may adopt more than one

business model to manage its financial assets.

The business model for managing of financial assets is based not merely on an assertion, but also on

facts that are observable in the activities that the Group and the Company and the Company undertakes

in order to achieve the objectives of the business model. In determining the business model applicable

for managing financial assets, the Group and the Company makes its decision in view of not individual

factors or activity, but in view of all evidence that is available in the course of the assessment.

The Group and the Company and the Company recognises a financial asset in its statement of financial

position only when the Group and the Company becomes a party to the contractual provisions of the

instrument. The purchase or sale of financial assets is recognised and derecognised, as applicable,

using trade date accounting.

At initial recognition, the Group and the Company measures financial assets at fair value, except for

trade receivables that do not have a significant financing component. Transaction costs comprise all

charges and commission that the Group and the Company would not have paid if it had not entered

into an agreement on the financial instrument.

If the fair value of the financial asset at initial recognition differs from the transaction price, the difference

is recognised in profit or loss.

In view of the business model applied for managing the Group and the Company of financial assets,

the accounting for financial assets is as follows:

Financial assets measured at amortised cost

Loans granted by the Company and the Group and the Company and amounts receivable are

accounted for under the business model the purpose of which is to hold financial assets in order to

collect contractual cash flows that can contain cash flows related to the payment of the principal amount

and interest inflows.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Loans and amounts receivable are non-derivative financial assets with fixed or determinable payments

that are not quoted in an active market. They are included in current assets, except for maturities

greater than 12 months after the end of the date of the statement of financial position. These are

classified as non-current assets.

Loans and receivables are initially recognised at cost (the fair value of consideration receivable) and

subsequently carried at amortised cost using the effective interest rate method. Gains and losses are

recognised in the statement of profit or loss and other comprehensive income when these assets are

derecognised, impaired or amortised.

Financial assets at fair value through profit or loss

The Group and the Company measures financial assets, which are stated at fair value in subsequent

periods, through profit or loss, using the business model whose objective is achieved by both collecting

contractual cash flows and selling financial assets.

The Group and the Company does not have any financial assets held for trading and acquired for the

purpose of selling in the near term and attributes to this category only financial assets arising from the

disposal of business or investments classified as non-equity contingent consideration.

(b) Effective interest method

The effective interest method is used in the calculation of the amortised cost of a financial asset and in

the allocation of the interest revenue in profit or loss over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash inflows through the

expected life of the financial asset to the gross carrying amount of the financial asset that shows the

amortised cost of the financial asset, before adjusting for any loss allowance. When calculating the

effective interest rate, the Group and the Company estimates the expected cash flows by considering

all the contractual terms of the financial instrument (for example, prepayment, extension, call and

similar options) but does not consider the expected credit losses. The calculation includes all fees and

points paid or received between parties to the contract that are an integral part of the effective interest

rate, transaction costs, and all other premiums or discounts.

There is an assumption that the cash flows and the expected life of a Group and the Company of similar

financial instruments can be estimated reliably. However, when it is not possible to reliably estimate

the cash flows or the expected life of a financial instrument (or Group and the Company of financial

instruments), the Group and the Company uses the contractual cash flows over the full contractual term

of the financial instrument (or Group and the Company of financial instruments).

Credit losses incurred by the Group and the Company are calculated as the difference between all

contractual cash flows that are due to the Group and the Company in accordance with the contract and

all the cash flows that the Group and the Company expects to receive (i.e. all cash shortfalls),

discounted at the original effective interest rate. The Group and the Company estimates cash flows by

considering all contractual terms of the financial instrument through the expected life of that financial

instrument, including cash flows from the sale of collateral held or other credit enhancements that are

integral to the contractual terms.

Expected credit losses show the weighted average of credit losses with the respective risks (probability)

of a default occurring as the weights.

Lifetime expected credit losses are the expected credit losses that result from all possible default events

over the period from the date of initial recognition of a financial asset to the subsequent date of

settlement of the financial asset or ultimate write-off of the financial asset.

The Group and the Company seeks for lifetime expected credit losses to be recognised before a

financial instrument becomes past due. Typically, credit risk increases significantly before a financial

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

instrument becomes past due or other lagging borrower-specific factors (for example, a modification or

restructuring) are observed. Consequently when reasonable and supportable information that is more

forward-looking than past due information is available without undue cost or effort, it must be used to

assess changes in credit risk.

Expected credit losses are recognised by taking into consideration individually or collectively assessed

credit risk of loans granted and trade receivables. Credit risk is assessed based on all reasonable and

verifiable information including future oriented information.

The lifetime expected credit losses of trade receivables are assessed based on both the collective and

individual assessment basis. The Group and the Company’s management decides on the performance

of the assessment on an individual basis reflecting the possibility of obtaining information on the credit

history of a particular borrower, its financial position as at the date of assessment, including forward-

looking information that would allow to timely determine whether there has been a significant increase

in the credit risk of that particular borrower, thus enabling making judgment on the recognition of lifetime

expected credit losses in respect of that particular borrower. In the absence of reliable sources of

information on the credit history of a particular borrower, its financial position as at the date of

assessment, including forward-looking information, the Group and the Company assesses the debt on

a collective basis.

The lifetime expected credit losses of trade receivables are recognised at the recognition of amounts

receivable.

When granting the loan the Group and the Company assesses and recognises 12-month expected

credit losses. In subsequent reporting periods, in case there is no significant increase in credit risk

related to the lender, the Group and the Company adjusts the balance of 12-month expected credit

losses in view of the outstanding balance of the loan at the assessment date. Having determined that

the financial position of the lender has deteriorated significantly compared to the financial position that

existed upon the issue of the loan, the Group and the Company records all lifetime expected credit

losses of the loan. The latest point at which the Group and the Company recognises all lifetime

expected credit losses of the loan granted is identified when the borrower is late to pay a periodic

amount or the total debt for more than 30 days. In case of other evidence available, the Group and the

Company accounts for all lifetime expected credit losses of the loan granted regardless of the more

than 30 days past due assumption.

Loans for which lifetime expected credit losses were calculated are considered credit-impaired financial

assets.

(d) Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the

estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is

credit-impaired include observable data about the following events:

a) significant financial difficulty of the borrower;

b) a breach of contract, such as a default or event that is past due for more than 90 days;

c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower's

financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not

otherwise consider;

d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation;

e) the disappearance of an active market for that financial asset because of financial difficulties;

f) the purchase or origination of a financial asset at a deep discount that reflects the incurred credit

losses.

The combined effect of several events that may occur simultaneously or subsequently throughout the

term of validity of the agreement on the financial assets may have caused financial assets to become

credit-impaired.

The lifetime expected credit losses of loans receivable and trade receivables is recognised in profit or

loss through the contra account of doubtful receivables.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

The Group and the Company writes off the loans receivable and trade receivables when it loses the

right to receive contractual cash flows from financial assets.

(e) Derecognition of financial assets

The Group and the Company derecognises financial assets in case of the following:

- the rights to receive cash flows from the asset have expired;

- the Group and the Company has retained the right to receive cash flows from the asset, but has

assumed an obligation to pay them in full without material delay to a third party under a “pass

through” arrangement; or

- the Group and the Company has transferred its rights to receive cash flows from the asset and

either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither

transferred nor retained substantially all the risks and rewards of the asset, but has transferred

control of the asset:

• if the Group and the Company has not retained control, it shall derecognise the financial asset

and recognise separately as assets or liabilities any rights and obligations created or retained

in the transfer;

• if the Group and the Company has retained control, it shall continue to recognise the financial

asset to the extent of its continuing involvement in the financial asset.

Whether the Group and the Company has retained control of the transferred asset depends on the

transferee's ability to sell the asset. If the transferee has the practical ability to sell the asset in its

entirety to an unrelated third party and is able to exercise that ability unilaterally and without needing to

impose additional restrictions on the transfer, the Group and the Company has not retained control. In

all other cases, the Group and the Company has retained control.

2.9

Inventories

Inventories are carried at the lower of cost and net realisable value. Cost is determined by the first-in

first-out (FIFO) method. The cost of finished goods and work in progress comprises raw materials,

direct labour, other direct costs and related indirect production overheads, but excludes borrowing

costs. Net realisable value is the estimated selling price in the ordinary course of business, less the

costs of completion and selling expenses.

2.10

Prepayments

Prepayments made are cash paid for the right to receive future good or service, not cash or a financial

asset. The Company has prepayments for the Milk supply and for property, plant and equipment. All

such items are not financial instruments under IFRS 7.

2.11

Cash and cash equivalents

Cash and cash equivalents are carried at nominal value. For the purposes of the cash flow statement,

cash and cash equivalents comprise cash on hand and at bank and bank overdrafts. Bank overdrafts

are included in borrowings in current liabilities on the balance sheet.

2.12

Share capital

(a) Ordinary shares

Cash and cash equivalents are carried at nominal value. For the purposes of the cash flow statement,

cash and cash equivalents comprise cash on hand and at bank and bank overdrafts. Bank overdrafts

are included in borrowings in current liabilities on the balance sheet.

(b) Treasury shares

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Where the Company or its subsidiaries purchase the Company’s equity share capital, the

consideration paid, including any attributed incremental external costs, is deducted from

shareholders’ equity as treasury shares until they are sold, reissued or cancelled. No gain or loss is

recognised in the income statement on the sale, issuance or cancellation of treasury shares. Where

such shares are subsequently sold or reissued, any consideration received is presented in the

consolidated financial statements as a change in shareholders’ equity.

2.13

Reserves

(a) Other reserves

Other reserves are established upon the decision of annual general meeting of shareholders on profit

appropriation. This reserve may be used only for the purposes approved by annual general meeting

of shareholders.

Legal reserve is included into other reserves. A legal reserve is a compulsory reserve under the

Lithuanian legislation. Annual transfers of 5 per cent of net profit are required until the reserve reaches

10 per cent of the share capital. The legal reserve cannot be used for payment of dividends and it is

established to cover future losses only.

Revaluation reserve is included into other reserves.

(b) Reserve for acquisition of treasury shares

This reserve is maintained as long as the Group is involved in acquisition/disposal of its treasury

shares. This reserve is compulsory under the Lithuanian regulatory legislation and should not be

lower than the acquisition cost of treasury shares acquired.

2.14

Financial liabilities

(a) Financial liabilities

Liabilities are classified as financial liabilities at fair value through profit or loss, or other financial

liabilities. The Group does not have any financial liabilities at fair value through profit or loss.

(b) Other financial liabilities

Other financial liabilities, including borrowings, are recognised at fair value, less transaction costs.

In subsequent periods, other financial liabilities are measured at amortised cost using the effective

interest rate method. Interest expenses are recognised using the effective interest rate method.

Financial liabilities are classified as current liabilities unless the Group has an unconditional right to

defer settlement of the liability for at least 12 months after the reporting date.

If a financing agreement concluded before the balance sheet date proves that the liability was non-

current by its nature as of the date of the balance sheet, that financial liability is classified as non-

current.

A financial liability is derecognised when the obligation under the liability is settled, cancelled or

expires. When an existing financial liability is replaced by another from the same lender on

substantially different terms, or the terms of an existing liability are substantially modified, such an

exchange or modification is treated as derecognition of the original liability and the recognition of a

new liability. The difference between the respective carrying amounts is recognised in the statement

of comprehensive income.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

2.15

Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognized in the income

statement, except to the extent that it relates to items recognized in other comprehensive income or

directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in

equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively

enacted at the balance sheet date in the countries where the company and its subsidiaries operate

and generate taxable income. Management periodically evaluates positions taken in tax returns with

respect to situations in which applicable tax regulation is subject to interpretation. It establishes

provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Profit is taxable at a rate of 15 per cent in accordance with the Lithuanian regulatory legislation on

taxation.

Deferred income tax is recognised using the liability method on temporary differences arising between

the tax bases of assets and liabilities and their carrying amounts in the consolidated financial

statements. Deferred tax liabilities are recognised on all temporary differences that will increase the

taxable profit in future, whereas deferred tax assets are recognised to the extent it is probable that

they will reduce the taxable profit in future. However the deferred income tax is not accounted for if it

arises from initial recognition of an asset or liability in a transaction other than a business combination

that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income

tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the

balance sheet date and are expected to apply when the related deferred income tax asset is realised

or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit

will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries

except where the timing of the reversal of the temporary difference is controlled by the Group and it

is probable that the temporary difference will not reverse in the foreseeable future.

2.16

Employee benefits

(a) Social security contributions

The Group pays social security contributions to the state Social Security Fund (the Fund) on behalf

of its employees based on the defined contribution plan in accordance with the local legal

requirements. A defined contribution plan is a plan under which the Group pays fixed contributions

into the Fund and will have no legal or constructive obligations to pay further contributions if the Fund

does not hold sufficient assets to pay all employees benefits relating to employee service in the

current and prior period. Social security contributions are recognised as expenses on an accrual

basis and are included in payroll expenses.

(b) Termination benefits

Termination benefits are payable whenever an employee’s employment is terminated before the

normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these

benefits. The Group recognizes termination benefits when it is demonstrably committed to either:

terminating the employment of current employees according to a detailed formal plan without possibility

of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary

redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to

present value.

The Group recognises a liability and an expense for bonuses and profit-sharing where contractually

obliged or where there is a past practice that has created a constructive obligation.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

2.17

Revenue recognition

The Company and the Group manufactures and sells a range of cheese and milk products in the

wholesale market. Sales are recognised when control of the products has transferred, being when

the products are delivered to the wholesaler, the wholesaler has full discretion over the channel and

price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s

acceptance of the products. Delivery occurs when the products have been shipped to the specific

location, the risks of obsolescence and loss have been transferred to the wholesaler, and either the

wholesaler has accepted the products in accordance with the sales contract, the acceptance

provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been

satisfied.

The goods are often sold with retrospective volume discounts based on aggregate sales over a 12

months period. Revenue from these sales is recognised based on the price specified in the contract,

net of the estimated volume discounts. Accumulated experience is used to estimate and provide for

the discounts, using the expected value method, and revenue is only recognised to the extent that it

is highly probable that a significant reversal will not occur. A refund liability (included in trade and

other payables) is recognised for expected volume discounts payable to customers in relation to sales

made until the end of the reporting period. No element of financing is deemed present as the sales

are made with a credit term of 30 days, which is consistent with market practice.

A receivable is recognised when the goods are delivered as this is the point in time that the

consideration is unconditional because only the passage of time is required before the payment is

due.

Revenue from transportation services is recognised in the period when services are performed.

Interest income is recognised on a time-proportion basis using the effective interest method. When a

receivable is impaired the Group reduces the carrying amount to its recoverable amount, being the

estimated future cash flow discounted at original effective interest rate of the instrument, and

continues unwinding the discount as interest income. Interest income on impaired loans is recognised

using the original effective interest rate.

2.18

Expense recognition

Expenses are recognised on an accrual basis and matching principle in the reporting period in which

they are incurred. Expenses incurred during the reporting period, which cannot be attributed directly

to specific income earned and will not generate any income in subsequent reporting periods, are

recognised as expenses during the period when incurred. Expenses are stated at fair value.

2.19

Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial

statements in the period in which the dividends are approved by the Company’s shareholders.

2.20

Earnings per share

Basic earnings per share are calculated by dividing net profit attributed to the shareholders from

average weighted number of ordinary registered shares in issue, excluding ordinary registered shares

purchased by the Company and the Group and held as treasury shares.

2.21

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the

chief operating decision-maker. The chief operating decision-maker who is responsible for allocating

resources and assessing performance of the operating segments has been identified as the Board of

Directors that makes strategic decisions.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

The Group’s management distinguished the following operating segments of the Group: hard cheese,

semi-hard cheese, butter, milk cream, sour cream, sour milk, yogurt, curd, curd cheese and other.

These segments were combined into two main reportable segments based on the similar nature of

products production process types of customers and the method of distribution.

2.22

Government grants and subsidies

Government grants are recognised at fair value where there is sufficient evidence that the grant

will be received and the Group and the Company will comply with all attached conditions.

Government grants received to finance acquisition of property plant and equipment are included

in non-current deferred income in the balance sheet. They are recognised as income on a

straight-line basis over the useful life of property plant and equipment concerned.

2.23

Provisions

Provisions for restructuring costs and legal claims are recognised when: the Group and the

Company have a present legal or constructive obligation as a result of past events; it is more

likely than not that an outflow of resources will be required to settle the obligation; and the amount

can be reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of expenditures expected to be required to settle

the obligation using pre-tax rate that reflects current market assessments of the time value of

money and the risks specified to the obligation. The increase in the provision due to passage of

time is recognised as operating expenses.

2.24

Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised

cost using effective interest method.

2.25

Derivative financial instruments

The Company uses derivative financial instruments such as interest rate swaps to hedge its cash

flow interest rate risks. Such derivative financial instruments are initially recognised at fair value

on the date on which a derivative contract is entered into and are subsequently re -measured at

fair value. Changes in the fair value of the interest rate swap are recognised immediately in profit

or loss and are included in finance cost. The full fair value of a hedging derivative is classified as

a non-current asset or liability when the remaining maturity of the hedged item is more than 12

months; it is classified as a current asset or liability when the remaining maturity of the hedged

item is less than 12 months. The fair value of currency interest rate swaps is calculated as the

present value of the estimated future cash flows based on observable yield curves. Additionally,

the instruments’ value is agreed upon with bank.

All of the resulting fair value estimates are included in level 2 in the fair value hierarchy.

2.26

Events after the reporting period

Post-balance sheet events that provide additional information about the Company’s and Group’s

position at the statement of financial position date (adjusting events) are reflected in the financial

statements. Events after the reporting period that are non-adjusting events are disclosed in the

notes when material.

2.27

Contingent assets and liabilities

Contingent liabilities are not recognised in the financial statements. They are disclosed unless

the possibility of an outflow of resources embodying economic benefits is remote.

A contingent asset is not recognised in the financial statements but disclosed when an inflow of

economic benefits is probable.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Financial risk management

3.1

Financial risk factors

The Group’s and the Company’s activities expose them to a variety of financial risks. The Group’s

overall risk management programme focuses on the unpredictability of financial markets and seeks

to minimize potential adverse effects on the financial performance of the Group.

Risk management is carried out by the Company’s management. There are no written principles for

overall risk management in place.

(a) Market risk

(i) Foreign exchange risk

The Company and the Group operate internationally, however, their exposure to foreign exchange

risk is set at minimum level, since sales outside Lithuania are performed mostly in the euros.

(ii) Cash flow and fair value interest rate risk

The Company’s and the Group’s interest rate risk arises from interest-bearing loans and borrowings.

Borrowings with variable interest rates expose the Group to cash flow interest rate risk. Borrowings

with fixed interest rates expose the Group to fair value interest rate risk. In 2021 and 2020, loans

granted by the Group at a fixed interest rate were denominated in the euros. Borrowings were

denominated in the euros.

IBOR reform had no material impact for the Company and Group, as major borrowings are either

EURIBOR linked, or have fixed interest rates, therefore there was no need to transition to alternative

benchmark interest rates. Changes in how EURIBOR is determined (determination has shifted from

a quotes-based to a transactions-based methodology) had no impact on interest rates applied, as

for all EURIBOR linked borrowings three months EURIBOR is subject to a 0% floor. Before and after

the changes in how EURIBOR is determined EURIBOR was negative, therefore 0% floor was

applicable to arrive at interest rate and therefore those changes had no impact on interest rate itself

and no effect on future cash flows. The financial liabilities denominated at EURIBOR based interest

rate are disclosed in Note 25.

Instruments used by the group (Note 25)

The Company and the Group uses Interest rate swap to minimise the risk of interest rate

fluctuations. The interest rate swap currently in place covers approximately 30% (2020 – 0%) of the

variable loan principal outstanding.

The swap contract requires settlement of net interest receivable or payable every 30 days. The

settlement dates coincide with the dates on which interest is payable on the underlying debt.

As at 31 December 2021 the Company’s and the Group’s net assets sensitive to changes in interest

rate amounted to EUR 625 thousand (2020: EUR 1,844 thousand).

(b) Credit risk

Credit risk arises from cash and cash equivalents at bank, loans granted, and outstanding trade

receivables.

Credit risk is managed on a group basis. As at 31 December 2021, the Company’s and the Group’s

all cash balances were held at banks that had external credit ratings from ‘A+’ to ‘BBB’, as set by

the rating agency Fitch Ratings (31 December 2020: from ‘A+’ to ‘BBB’).

While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the

identified impairment loss was immaterial.

i) Maximum exposure to credit risk

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

The table below summarises the Company’s and the Group’s credit risk exposures relating to on-

balance sheet items. Maximum exposure to credit risk before collateral held or other credit

enhancements as at 31 December:

Group

Company

2021

2020

2021

2020

Cash and cash equivalents at banks

5,629

5,834

4,511

4,922

Trade receivables

51,711

40,354

53,437

42,149

Loans granted

5,611

5,296

5,851

5,509

62,951

51,484

63,799

52,580

ii) Credit quality of financial assets

The Group does not classify amounts receivable and other financial assets exposed to credit risk

according to credit quality. Credit risk is managed through established credit limits for a major

customers and monitoring of overdue receivables and loans. Credit limits and overdue receivables

are continuously monitored by the Company’s and the Group’s management.

The table below presents credit limits, if management has established for the major customers and

amounts receivable from them before allowance as at 31 December 2021.

Group

Company

Credit limit

Amount

receivable

Credit limit

Amount

receivable

Customer A

5,500

5,376

5,500

5,376

Customer B

5,000

4,854

5,000

4,854

Customer C

4,345

3,024

Customer D

2,700

2,610

2,700

2,610

Customer E

2,200

2,104

2,200

2,104

Customer F

2,000

1,531

2,000

1,531

Customer G

1,500

Customer H

1,500

1,443

1,500

1,443

The table below presents credit limits established for the major customers and amounts receivable

from them as at 31 December 2020.

Group

Company

Credit limit

Amount

receivable

Credit limit

Amount

receivable

Customer C

4,345

2,954

Customer B

4,000

2,939

4,000

2,939

Customer D

3,000

2,566

3,000

2,566

Customer A

3,800

2,218

3,800

2,218

Customer F

2,000

1,743

2,000

1,743

Customer I

2,700

1,389

2,700

1,389

Customer J

1,200

828

Customer K

4,000

810

4,000

810

The table below summaries concentration of the loans granted:

Group

Company

2021

2020

2021

2020

in excess of EUR 1,000 thousand

3,187

3,481

3,187

3,481

in excess of EUR 500 thousand, but not

in excess of EUR 1,000 thousand

1,205

not in excess of EUR 500 thousand

1,220

1,816

1,459

2,029

5,612

5,297

5,851

5,510

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Loans in excess of EUR 1,000 thousand were granted to two business entities.

iii) Impairment of financial assets

The Group applies the IFRS 9 simplified approach to measuring expected credit losses (ECL) which

uses a lifetime expected loss allowance for all trade receivables.

To measure the expected credit losses, trade receivables have been grouped based on shared

credit risk characteristics and the days past due.

The expected loss rates are based on the payment profiles of sales over a period of 36 month

before 31 December 2021 or 31 December 2020 respectively and the corresponding historical

credit losses experienced within this period. The forward looking analysis lead to the conclusion

that an adjustment of historical loss rates is not necessary.

On that basis, the loss allowance as at 31 December 2021 and 31 December 2020 was determined

as follows for trade receivables grouped (collective model) based on shared characteristics:

Group

31 December

2021

Not yet

due

Less than

30 days

past due

More than

30 days

past due

More than

90 days

past due

More than

180 days

past due

More than

365 days

past due

Total

Expected loss

rate

0.10%

0.41%

1.82%

2.10%

Gross carrying

amount –

trade

receivables

31,867

9,974

1,044

42,980

Loss

allowance

Group

31 December

2020

Not yet

due

Less than

30 days

past due

More than

30 days

past due

More than

90 days

past due

More than

180 days

past due

More than

365 days

past due

Total

Expected loss

rate

0.15%

0.69%

0.92%

0.66%

Gross carrying

amount –

trade

receivables

24,739

6,043

1,629

167

32,624

Loss

allowance

Company

31 December

2021

Not yet

due

Less than

30 days

past due

More than

30 days

past due

More than

90 days

past due

More than

180 days

past due

More than

365 days

past due

Total

Expected loss

rate

0.12%

0.28%

1.72%

2.11%

Gross carrying

amount –

trade

receivables

32,587

13,436

1,044

47,161

Loss

allowance

Company

31 December

2020

Not yet

due

Less than

30 days

past due

More than

30 days

past due

More than

90 days

past due

More than

180 days

past due

More than

365 days

past due

Total

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Expected loss

rate

0.15%

0.45%

0.61%

0.65%

Gross carrying

amount –

trade

receivables

24,426

9,359

2,449

167

36,447

Loss

allowance

ECL for significant trade receivables overdue for more than 90 days is evaluated individually based on external

information from credit insurance agency, collaterals received as security of repayment and past history of

default. For such trade receivables the loss allowance as at 31 December 2021 and 31 December 2020 was

determined as follows:

Group

31 December

2021

Not yet

due

Less than

30 days

past due

More than

30 days

past due

More than

90 days

past due

More than

180 days

past due

More than

365 days

past due

Total

Gross carrying

amount –

trade

receivables

1,065

189

459

355

973

1,012

4,053

Expected loss rate

22%

Loss allowance

895

Group

31 December

2020

Not yet

due

Less than

30 days

past due

More than

30 days

past due

More than

90 days

past due

More than

180 days

past due

More than

365 days

past due

Total

Gross carrying

amount – trade

receivables

678

250

369

492

1,476

466

3,731

Expected loss rate

24%

Loss allowance

895

Company

31 December

2021

Not yet

due

Less than

30 days

past due

More than

30 days

past due

More than

90 days

past due

More than

180 days

past due

More than

365 days

past due

Total

Gross carrying

amount –

trade

receivables

1,065

189

459

355

973

1,012

4,053

Expected loss rate

22%

Loss allowance

895

Company

31 December

2020

Not yet

due

Less than

30 days

past due

More than

30 days

past due

More than

90 days

past due

More than

180 days

past due

More than

365 days

past due

Total

Gross carrying

amount – trade

receivables

678

250

369

492

1,476

466

3,731

Expected loss rate

24%

Loss allowance

895

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

The Group has followed the three-stage model for impairment of financial assets other than trade

receivables and considered all its loans granted at amortised cost to have Stage 1 (performing) credit.

The ECL model is based on the financial information of the Company’s and the Group’s debtors and

the assessment of collaterals as security of loan repayment. The Company and the Group carried out

an assessment of collaterals as security of loan repayment and determined that the credit losses

determined based on probability of default within 12 months resulted in immaterial impairment loss.

The information on loans receivable is disclosed in Note 18.

Prudent liquidity risk management allows maintaining sufficient cash and availability of funding under

committed credit facilities.

The Group had access to EUR 7,756 thousand (2020: EUR 10,896 thousand) undrawn borrowing

facilities at the end of the reporting period expiring within one year.

The table below summarises the Group’s and the Company‘s financial liabilities. The financial

liabilities are classified into relevant maturity groupings based on the remaining period at the balance

sheet to the contractual maturity date. The amounts disclosed in the table are contractual

undiscounted cash flows. Accounts payable and other financial liabilities due within 3 months or less

are equal to their carrying amounts as the impact of discounting is insignificant.

Company

At 31 December 2021

Less than 3

months

From 3 to 12

months

From 1 to 5 years

After 5 years

Borrowings from banks and

other financial liabilities

17,769

1,575

8,050

Trade payables

16,762

34,531

1,575

8,050

Company

At 31 December 2020

Less than 3

months

From 3 to 12

months

From 1 to 5 years

After 5 years

Borrowings from banks and

other financial liabilities

26,820

Trade payables

11,628

38,448

Group

At 31 December 2021

Less than 3

months

From 3 to 12

months

From 1 to 5 years

After 5 years

Borrowings from banks and

other financial liabilities

17,769

1,575

8,050

Trade payables

19,225

36,994

1,575

8,050

At 31 December 2020

Less than 3

months

From 3 to 12

months

From 1 to 5 years

After 5 years

Borrowings from banks and

other financial liabilities

26,820

Trade payables

13,465

40,285

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

3.2

Capital risk management

The Company’s and the Group’s objectives when managing capital are to safeguard the Group’s ability

to continue as a going concern in order to provide returns for shareholders and benefits for other

stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to

maintain or adjust the capital structure, the Group and Company may adjust the amount of dividends

paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Company and the Group define their capital as equity and debt, less cash and cash equivalents.

As at 31 December, the Group’s and the Company’s capital structure was as follows:

Group

Company

2021

2020

2021

2020

Borrowings (Note 25)

27,394

26,820

27,394

26,820

Less: cash and cash equivalents (Note 21)

(5,629)

(5,834)

(4,511)

(4,922)

Net debt

21,765

20,986

22,883

21,898

Shareholders’ equity

142,480

145,428

126,980

128,923

Total capital

164,245

166,414

149,863

150,821

Pursuant to the Lithuanian Law on Companies the authorised share capital of a public company must

be not less than EUR 40 thousand (the authorised share capital of a private company must not be less

than EUR 2.5 thousand) and the shareholders’ equity should not be lower than 50 per cent of the

company’s registered share capital. As at 31 December 2021 and 31 December 2020, the Company

and its subsidiaries registered in Lithuania complied with these requirements.

Under the terms of the major borrowing facilities, the Group is required to comply with the following

financial covenants:

• net Debt/EBITDA ratio no more than 2,

• equity/asset ratio more than 40%

• net working capital/sales ratio less than 40% and

• current borrowings/working capital ratio less than 70%.

The Group has complied with these covenants throughout the reporting period.

3.3

Fair value estimation

Trade payables and trade receivables accounted for in the balance sheet should be settled within a

period shorter than three months therefore it is deemed that their fair value equals to their carrying

amount less impairment. Interest rate on the borrowings received by the Company is subject to

repricing at least every six months therefore it is deemed that their fair value equals their carrying

amount. Companies and Group issued loans fair value disclosed in Note 18. Property, plant and

equipment fair value disclosed in Note 14.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an

orderly transaction between market participants at the measurement date.

The three levels of the fair value hierarchy have been defined as follows:

Level 1 includes the fair value of assets which is established based on quoted prices (unadjusted) in

active markets for identical assets.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Level 2 includes the fair value of assets which is established based on other directly or indirectly

observable inputs.

Level 3 includes the fair value of assets which is established based on unobservable inputs.

Critical accounting estimates and judgements

Impairment of financial assets

The loss allowances for financial assets are based on assumptions about risk of default and expected loss

rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment

calculation, based on the Group’s past history, existing market conditions as well as forward looking

estimates at the end of each reporting period. Details of the key assumptions and inputs used are

disclosed in Note 3.1.

Estimates of useful lives of property, plant and equipment

The Company and the Group have old buildings and machinery, where the useful lives are estimated

based on the expected product lifecycles. However, economic useful lives may differ from the currently

estimated as a result of technical innovations and actions of competitors.

Fair value of property plant and equipment

The Company and the Group accounts property plant and equipment at revalued amount based on

periodic valuations performed by independent valuators and Company’s experts. The valuation

techniques involve judgement and are subject to estimation.

At the end of each reporting period, the Company’s and Group’s management update their assessment

of the fair value of each property, taking into account the most recent independent valuations and internal

experts’ analysis.

The fair value estimation of property plant and equipment, except for motor vehicles, is based on the

comparable sales price method. The valuation of other categories of assets is based on the replacement

cost method. The fair value of motor vehicles was established using the comparable sales price method.

Inventory write-down to net realizable value

The Group and the Company recognise inventory at the lower of cost and net realizable value. The Group

and the Company assess whether the value of inventory recognised at cost is not lower that its net

realisable value based on the historical data and actual results of inventory items sold below cost after

the financial year end. If the recognised inventory write-down to net realisable value was 5 %

higher/lower, the Group’s and the Company’s profit before income tax for the year 2021 would be EUR

5 thousand lower/ higher (2020: EUR 75 thousand, respectively). See Note 19 for more details.

Segment reporting

Operating segments and reportable segments

The Group’s management has distinguished the following operating segments of the Group: hard

cheese, semi-hard cheese, butter milk, cream, sour cream, sour milk, yogurt, curd, curd cheese and

other. These segments were combined into two main reportable segments based on the similar nature

of products, production process, types of customers and the method of distribution.

The main two reportable business segments of the Group are as follows:

- Fresh milk products

- Cheese and other dairy products

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Other operations of the Group mainly comprise milk collection activity the size of which is insufficient to

be reported separately. Transactions between the operating segments are on normal commercial terms

and conditions. The segment of fresh milk products includes 2 external customers each generating 10%

of total revenue of the segment.

The table below summarizes segment information for the years ended 31 December 2021 and 2020:

Fresh milk

products

Cheese and

other dairy

products

Other

segments

(unallocated)

Group

2021

Sales

81,905

233,967

36,067

351,939

Inter-segment sales

(322)

(62,735)

(35,820)

(98,877)

Sales to external customers

81,583

171,232

247

253,062

Segment’s gross profit

9,046

9,348

233

18,627

Depreciation and amortization

2,635

5,481

8,129

Income tax expense (benefit)

(61)

(43)

Total assets

35,333

180,945

4,802

221,080

Elimination of intercompany

transactions

(18,213)

Total assets, less intercompany

transactions

202,867

Additions to non-current assets (other

than financial instruments and

deferred tax assets)

2,288

11,185

13,476

Total liabilities

24,289

53,922

3,092

81,303

Elimination of intercompany

transactions

(20,916)

Total liabilities less intercompany

transactions

60,387

Fresh milk

products

Cheese and

other dairy

products

Other

segments

(unallocated)

Group

2020

Sales

76,997

188,381

29,510

294,888

Inter-segment sales

(299)

(56,025)

(27,735)

(84,059)

Sales to external customers

76,698

132,356

1,775

210,829

Segment’s gross profit

11,067

8,852

1,469

21,388

Depreciation and amortization

3,339

5,906

9,260

Income tax expense (benefit)

Total assets

44,320

169,693

3,715

217,728

Elimination of intercompany

transactions

(20,658)

Total assets, less intercompany

transactions

197,070

Additions to non-current assets (other

than financial instruments and

deferred tax assets)

669

7,346

138

8,153

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Total liabilities

24,518

45,765

2,207

72,490

Elimination of intercompany

transactions

(20,848)

Total liabilities less intercompany

transactions

51,642

Geographical information

All assets of the Company are located in Lithuania. The Company’s sales by markets can be analysed

as follows:

Sales revenue

Total assets

Capital expenditure

2021

2020

2021

2020

2021

2020

Lithuania

89,052

69,210

180,905

174,688

11,185

7,346

Europe Union countries

114,944

74,660

Near East

3,561

19,701

North America

12,279

13,388

Far East

4,885

5,047

Other countries

8,937

7,864

233,658

189,870

180,905

174,688

11,185

7,346

The breakdown of the Group’s assets by geographical segments is presented below. The Group’s sales

by markets can be analysed as follows:

Sales revenue

Total assets

Capital expenditure

2021

2020

2021

2020

2021

2020

Lithuania

102,037

84,329

197,212

192,637

13,473

8,015

Europe Union countries

121,363

80,500

5,655

4,433

138

Near East

3,561

19,701

North America

12,279

13,388

Far East

4,885

5,047

Other countries

8,937

7,864

253,062

210,829

202,867

197,070

13,476

8,153

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

The breakdown of revenue by category:

Group

Company

2021

2020

2021

2020

Revenue from sales of goods

251,970

209,642

227,499

183,441

Revenue from other services

1,092

1,187

6,159

6,429

253,062

210,829

233,658

189,870

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Selling and marketing expenses

Group

Company

2021

2020

2021

2020

Transportation services

4,102

3,091

3,753

2,718

Wages and salaries

3,181

3,096

1,640

1,659

Intermediation services

331

407

307

407

Product image creation and advertising

expenses

440

169

130

169

Repair and maintenance

887

740

806

670

Depreciation of property, plant and equipment

612

648

548

604

Warehousing services

1,080

831

1,080

831

Customs fees

792

607

792

607

Other expenses

1,058

1,103

1,895

1,863

12,483

10,692

10,951

9,528

General and administrative expenses

Group

Company

2021

2020

2021

2020

Wages and salaries

2,978

2,908

2,066

2,018

Taxes (other than income tax)

Provisions for impairment of loans granted and

doubtful receivables and write-offs of loans

and receivables (reversals)

581

Consultations

191

257

141

212

Depreciation of property, plant and equipment

and amortisation of intangible assets

664

631

453

444

Repairs and maintenance

253

231

217

197

Telecommunications and IT maintenance

expenses

131

141

118

126

Insurance expenses

197

214

182

199

Bank charges

117

130

110

126

Business trips

Fines

Staff training

Membership fees

Charity and support

339

409

153

Other expenses

574

1,157

162

800

5,609

6,832

3,654

4,989

Other income

Group

Company

2021

2020

2021

2020

Interest income

229

254

229

251

Dividend and other income

1,809

2,649

256

292

2,038

2,900

The Company’s other income comprises dividends received from subsidiary Rokiškio Pieno Gamyba

UAB.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Other operating (loss)/profit

Group

Company

2021

2020

2021

2020

Result of disposal of property, plant and

equipment

174

10.

Expenses by nature

Group

Company

2021

2020

2021

2020

Raw materials and consumables used

168,571

147,359

160,032

142,146

Changes in inventories of finished goods and

work in progress

10,534

(10,045)

10,874

(9,856)

Wages and salaries including social security

contributions

22,176

21,948

13,984

13,792

Transportation services

11,476

8,809

11,114

8,425

Bonuses

Depreciation (Notes 14)

8,108

9,253

5,473

5,899

Amortisation of the Government grant for

property, plant and equipment (Note 26)

(418)

(476)

(221)

(265)

Intermediation services

331

407

307

407

Repairs and maintenance

6,311

5,514

4,864

4,183

Cost of finished goods resold

287

357

9,435

8,128

Provisions for impairment of loans granted and

doubtful receivables and write-offs of loans and

receivables (reversals)

581

Taxes (other than income tax)

1,031

796

1,008

779

Consultations

191

257

141

212

Telecommunication and IT maintenance

expenses

142

154

126

137

Utilities (energy)

15,581

13,211

8,519

7,248

Other

8,193

8,840

8,292

7,500

Total cost of sales, selling and marketing

expenses and general and administrative

expenses

252,527

206,965

233,961

189,316

11.

Finance costs

Group

Company

2021

2020

2021

2020

Interest expenses:

− bank borrowings

369

199

369

199

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

12.

Income tax

Group

Company

2021

2020

2021

2020

Current income tax

(71)

(193)

(183)

Prior year income tax corrections

129

Deferred income tax (Note 17)

(101)

282

244

Income tax benefit/(expenses)

(43)

The income tax on the Company’s and the Group’s profit before tax differs from the theoretical amount that

would arise when using the basic tax rate as follows:

Group

Company

2021

2020

2021

2020

(Loss)/profit before income tax

596

3,972

1,540

3,268

Tax calculated at a rate of 15% (Note 2.15)

596

231

490

Expenses not deductible for tax purposes

176

135

Income not subject to tax

(33)

(21)

(302)

(422)

Charity expenses deductible twice for tax

purposes

(69)

(195)

(46)

Other expenses deductible for tax purposes

(50)

(394)

(227)

Prior year income tax corrections and other

(251)

(1)

Income tax expense/(benefit)

(89)

(18)

(61)

Expenses not deductible for tax purposes include representation expenses, write-offs, etc. Income not

subject to tax include interest on late payment and insurance benefits received.

The Tax Authorities may at any time during 3 successive years after the end of the reporting tax year carry

out the inspection of book-keeping and accounting records and impose additional taxes or fines (for certain

transactions period is 5 years). The Company‘s management is not aware of any circumstances that might

result in a potential material liability in this respect.

13.

Earnings per share

Group

Company

2021

2020

2021

2020

Net profit/(loss) attributable to shareholders

553

4,061

1,558

3,329

Weighted average number of ordinary shares in

issue (thousand)

35,007

Weighted average number of treasury shares

held (thousand)

(861)

Basic earnings/(deficit) per share (EUR per

share)

0.02

0.12

0,05

0.10

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

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

as basic earnings per share.

14.

Property, plant, and equipment

Company

Buildings

Plant and

machinery

Motor

vehicles and

other assets

Construction

in progress

Total

At 1 January 2020

Acquisition cost and revalued amount

18,714

76,478

38,878

1,881

135,951

Accumulated depreciation

(7,242)

(60,493)

(30,392)

(98,127)

Net book amount

11,472

15,985

8,486

1,881

37,824

Year ended 31 December 2020

Opening net book amount

11,472

15,985

8,486

1,881

37,824

Revaluation

8,526

1,605

10,131

Additions

714

1,355

5,216

7,346

Disposals

(49)

(92)

(141)

Write-offs

(2)

Transfers from CIP

1,319

958

(2,277)

Depreciation charge

(579)

(2,767)

(2,553)

(5,899)

Closing net book amount

10,906

23,773

9,760

4,820

49,259

At 31 December 2020

Acquisition cost and revalued amount

18,609

86,361

42,043

4,820

151,833

Accumulated depreciation

(7,703)

(62,588)

(32,283)

(102,574)

Net book amount

10,906

23,773

9,760

4,820

49,259

Year ended 31 December 2021

Opening net book amount

10,906

23,773

9,760

4,820

49,259

Additions

102

2,026

2,035

7,022

11,185

Disposals

(40)

(15)

(83)

(138)

Write-offs

(6)

(18)

(24)

Transfers from CIP

508

8,131

603

(9,242)

Depreciation charge

(574)

(2,913)

(1,986)

(5,473)

Closing net book amount

10,902

30,996

10,311

2,600

54,809

At 31 December 2021

Acquisition cost and revalued amount

19,011

96,249

43,631

2,600

161,491

Accumulated depreciation

(8,109)

(65,253)

(33,320)

(106,682)

Net book amount

10,902

30,996

10,311

2,600

54,809

Group

Buildings

Plant and

machinery

Motor

vehicles and

other assets

Construction

in progress

Total

At 1 January 2020

Cost or revaluated amount

30,355

106,632

39,443

2,136

178,566

Accumulated depreciation

(12,321)

(76,859)

(30,636)

(119,816)

Net book amount

18,034

29,773

8,807

2,136

58,750

Year ended 31 December 2020

Opening net book amount

18,034

29,773

8,807

2,136

58,750

Revaluation

14,719

1,734

16,453

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Additions

860

1,521

5,691

8,153

Disposals

(49)

(149)

(198)

Write-offs

(2)

(41)

(43)

Transfers from CIP

395

1,602

969

(2,966)

Transfers from other groups

(182)

Depreciation charge

(936)

(5,639)

(2,678)

(9,253)

Closing net book amount

17,615

41,131

10,296

4,820

73,862

At 31 December 2020

Cost or revaluated amount

29,294

122,788

44,298

4,820

201,200

Accumulated depreciation

(11,679)

(81,657)

(34,002)

(127,338)

Net book amount

17,615

41,131

10,296

4,820

73,862

Year ended 31 December 2021

Opening net book amount

17,615

41,131

10,296

4,820

73,862

Additions

205

2,318

2,084

8,869

13,476

Disposals

(40)

(15)

(95)

(150)

Write-offs

(6)

(18)

(24)

Transfers from CIP

909

8,613

676

(10,198)

Depreciation charge

(1,035)

(4,965)

(2,108)

(8,108)

Closing net book amount

17,654

47,076

10,835

3,491

79,056

At 31 December 2021

Cost or revaluated amount

30,364

132,971

45,904

3,491

212,730

Accumulated depreciation

(12,710)

(85,895)

(35,069)

(133,674)

Net book amount

17,654

47,076

10,835

3,491

79,056

On 31 December 2020 the Group and the Company, with the help of independent experts UAB OBER HAUS

Nekilnojamasis Turtas, performed an appraisal of property, plant and equipment (excluding vehicles) in

order to determine its fair value. The Company's and the Group's property, plant and equipment was

revaluated as at 31 December 2020. The valuation of real estate was based on the comparable sales price

method by comparing sales prices in Lithuania. The valuation of other categories of assets was based on

the replacement cost method.

The valuation of motor vehicles was conducted by the Group's experts who established the fair value using

the comparable sales price method.

Gain arising on revaluation is disclosed in the tables on the movements in property, plant and equipment

and was recorded under the line item of other comprehensive income. Assets that were evaluated using the

replacement cost method were tested for impairment, as a result of which no indications for possible

impairment were identified.

Building and Motor vehicles and other assets were attributed to Level 2 of fair value hierarchy in 2020 and

2019. Property, plant and equipment within Level 2 was measured using the comparable sales price

method. This method was used for the measurement of real estate, the majority of motor vehicles and

constructions in respect of which sale transactions or offer examples were observable in the market. The

comparable real estate objects were selected due to the similarity with the object being measured with

respect to size, purpose, location, intended use, condition, engineering support and other parameters. The

valuation of real estate required adjustments to reflect differences between the objects being measured and

comparable objects. Comparable objects selected are of the closest possible similarity with the objects being

measured and differences are related only to the location and surroundings, the year of construction and

the total area of the object. The valuation of motor vehicles was based on the supply data. The value

calculated based on at least 2 or 3 comparable inputs was treated as the value of the assets. Comparable

inputs selected were similar to the assets subject to valuation.

Meanwhile Plant and Machinery was attributed to Level 3 of fair value hierarchy. Property, plant and

equipment within Level 3 was measured using the replacement cost method. This method was used for the

measurement of a part of special purpose movable property in respect of which no sale or offer market data

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

was available. When estimating the value of movable property (plant and machinery) under the cost method

the cost of replacing the item were equated to the acquisition cost of an item (replacement cost model of

the valued item). For the purpose of valuation the impairment (depreciation) was established under the

fragmentation calculation model. When establishing physical obsolescence it was assumed that the value

of property being measured is written off in proportion to the number of years. The assets subject to valuation

were classified into categories in respect of which the useful life up to 30 years depending on the group of

asset was established based on the expert opinion of the valuer. When establishing functional obsolescence

it is assumed that movable property (plant and machinery) produced and sold during the valuation is of

higher efficiency than property already produced or still in the process of production. When establishing

economic obsolescence the valuers assumed that the economic situation was rather stable, therefore it was

acceptable that economic obsolescence is equal to zero percent.

The valuation of movable property was based on the rationale that the asset cannot have no value if it was

used, irrespective of the fact that the asset is fully depreciated for accounting purposes. Therefore, a

possible net book value of the asset was obtained from market data.

As at 31 December 2021 no revaluation of assets was performed as, in management view, no significant

changes in the market and in Group’s and Company’s activities took place during the year, therefore it is

considered that the fair value of the Group‘s and the Company‘s property plant and equipment, adjusted

under the methods described above, did not differ significantly from their carrying amounts.

Revaluation reserve is disclosed in Note 24

Construction in progress items were recently purchased from third parties, therefore their fair value agrees

value in balance sheet.

As at 31 December 2021, the Company’s and the Group’s property, plant and equipment with a carrying

value of EUR 25,783 thousand and EUR 40,048 thousand, respectively (31 December 2020: EUR 23,773

thousand and EUR 35,080 thousand, respectively) was pledged as a security for credit limit agreements.

Depreciation expenses of property plant and equipment are included in selling and marketing expenses,

general and administrative expenses and cost of sales in the income statement, as well as in work in

progress and finished goods in the balance sheet.

Had no revaluation been performed for property, plant and equipment, the net book amounts of the Group’s

and the Company’s property, plant and equipment would have been as follows as of 31 December 2021

and 2020:

Company

Buildings

Plant and

machinery

Motor vehicles

and other assets

Construction in

progress

Total

At 31 December 2020

7,806

10,977

7,700

4,820

31,303

At 31 December 2021

7,907

19,314

8,343

2,600

38,164

Group

Buildings

Structures and

machinery

Motor vehicles and

other assets

Construction in

progress

Total

At 31 December 2020

14,515

22,141

8,108

4,820

49,584

At 31 December 2021

10,903

27,649

8,704

3,491

50,747

15.

Intangible assets

Company

Computer software

At 1 January 2020

Cost

761

Accumulated amortisation

(717)

Net book amount

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Year ended 31 December 2020

Opening net book amount

Additions

Amortisation charge

(7)

Closing net book amount

At 31 December 2020

Cost

761

Accumulated amortisation

(724)

Net book amount

Year ended 31 December 2021

Opening net book amount

Additions

133

Amortisation charge

(8)

Closing net book amount

162

At 31 December 2021

Cost

891

Accumulated amortisation

(729)

Net book amount

162

Group

Computer software

At 1 January 2020

Cost

761

Accumulated amortisation

(717)

Net book amount

Year ended 31 December 2020

Opening net book amount

Additions

Amortisation charge

(7)

Closing net book amount

At 31 December 2020

Cost

759

Accumulated amortisation

(677)

Net book amount

Year ended 31 December 2021

Opening net book amount

Additions

142

Amortisation charge

(21)

Closing net book amount

203

At 31 December 2021

Cost

900

Accumulated amortisation

(697)

Net book amount

203

Amortisation expenses of computer software and other intangible assets are included in general and

administrative expenses in the income statement.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

16.

Investments in subsidiaries

The Company’s investments in subsidiaries as at 31 December 2021 and 2020 are listed below:

Investment cost

Impairment loss

recognised

Investment value after

impairment

Rokiškio Pienas UAB

105

Rokiškio Pieno Gamyba UAB

4,122

Jekabpils Piena Kombinats SIA

853

(122)

731

DairyHub.LT UAB

100

Kaunata SIA

5,276

(122)

5,154

The Group’s investments in subsidiaries consist of joint investments in Kaunata SIA.

DairyHub LT UAB net assets were EUR 80 thousand as at 31 December 2021. There were no sales for

year 2021. Main activity of the subsidiary is slicing and sale of certain cheeses.

17.

Deferred income tax

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current

tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal

authority. The offset amounts are as follows:

Group

Company

2021

2020

2021

2020

Deferred income tax assets:

– to be realised after more than 12 months

– to be realised within 12 months

457

667

368

577

457

667

368

577

Deferred income tax liabilities:

– to be realised after more than 12 months

(3,969)

(3,978)

(2,297)

(2,393)

– to be realised within 12 months

(300)

(400)

(200)

(300)

(4,269)

(4,378)

(2,497)

(2,693)

Net deferred tax liability

(3,812)

(3,711)

(2,129)

(2,116)

The gross movement in deferred income tax liabilities was as follows:

Group

Company

2021

2020

2021

2020

At the beginning of the year

(3,711)

(1,525)

(2,116)

(841)

Recognised in the income statement

(101)

282

(13)

244

Recognised in other comprehensive income

(2,468)

(1,519)

At the end of the year

(3,812)

(3,711)

(2,129)

(2,116)

The movement in deferred income tax assets and liabilities during the period, without taking into consideration

the offsetting of balances within the same fiscal jurisdiction is as follows:

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Company

Deferred income tax

assets

Inventory write-down

to net realisable

value

Amortised cost

of loans granted

Impairment of

amounts

receivable

Bonuses and

vacation

reserve

Total

At 1 January 2020

233

149

148

586

Recognised in the

income statement

(9)

Recognised in other

comprehensive

income

At 31 December 2020

224

149

148

577

Recognised in the

income statement

(209)

Recognised in other

comprehensive

income

At 31 December 2021

149

148

368

Deferred income tax

liabilities

Revaluation of property,

plant and equipment

Total

At 1 January 2020

(1,427)

Recognised in the income

statement

253

Recognised in other

comprehensive income

(1,519)

At 31 December 2020

(2,693)

Recognised in the income

statement

196

Recognised in other

comprehensive income

At 31 December 2021

(2,497)

Group

Deferred income tax

assets

Inventory write-down

to net realisable

value

Amortised cost

of loans granted

Impairment of

amounts

receivable

Bonuses and

vacation

reserve

Total

At 1 January 2020

234

149

237

676

Recognised in the

income statement

(9)

Recognised in other

comprehensive

income

At 31 December 2020

225

149

237

667

Recognised in the

income statement

(210)

Recognised in other

comprehensive

income

At 31 December 2021

149

237

457

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Deferred income tax

liabilities

Accelerated tax

depreciation

Revaluation of property,

plant and equipment

Total

At 1 January 2020

(47)

(2,154)

(2,201)

Recognised in the income

statement

282

Recognised in other

comprehensive income

(2,468)

At 31 December 2020

(47)

(4,331)

(4,378)

Recognised in the income

statement

109

Recognised in other

comprehensive income

At 31 December 2021

(47)

(4,222)

(4,269)

Deferred income tax assets and deferred income tax liabilities were calculated using a tax rate of 15%

(2020: 15%) enacted by the balance sheet date and expected to apply when the related deferred income

tax asset is realised or deferred income tax liability is settled.

18.

Loans granted

Group

Company

2021

2020

2021

2020

Long-term loans to employees

249

257

207

212

Other long-term loans

2,413

1,432

2,413

1,431

Less: provision for impairment of loans

receivable

(35)

Long-term loans, net

2,627

1,654

2,585

1,608

Current portion of loans to employees

Other short-term loans granted

2,927

3,601

3,212

3,863

Less: provision for impairment of loans

receivable

Current portion of long-term loans and short-

term loans, net

2,984

3,642

3,266

3,901

Repayment terms of other long-term loans granted ranged between 1 and 5 years. The loans bear average

weighted interest rate of 3.24% (2020: 2.9%). Other loans repayments are secured with pledges of assets

or guarantees.

The fair value of borrowings is attributed to Level 2 in the fair value hierarchy.

The fair value of loans granted approximated their carrying amount.

Information on loans receivable that were past due as at 31 December is provided in the table below:

Group

Company

2021

2020

2021

2020

Loans granted not past due

5,611

5,296

5,851

5,509

Loans granted past due but not impaired

Impaired loans granted

Gross value of loans granted

5,646

5,331

5,886

5,544

Less: Provision for impairment of loans

receivable

(35)

Net amount

5,611

5,296

5,851

5,509

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

19.

Inventories

Group

Company

2021

2020

2021

2020

Raw materials

3,023

2,192

1,477

862

Work in progress

8,154

8,741

7,816

8,398

Finished products

45,940

59,118

45,044

58,442

Other inventories

2,010

1,005

1,681

585

Total inventories at cost

59,127

71,056

56,018

68,287

Less: inventory write-down to net realizable

value

(97)

(1,492)

(97)

(1,492)

Total inventories

59,030

69,564

55,921

66,795

As at 31 December 2021 and 2020 inventories were not pledged.

The Company’s inventories as at 31 December 2021: 0 tons of butter (2020: 1,683 tons) held with third

parties in Lithuania, 21 tons of hard cheese (2020: 212 tons) held in the USA, 875 tons of hard cheese

(2020:0 tons) held in Lithuania and 2,5 tons of hard cheese (2020: 697 tons) in the warehouses based in

the European Union. The total value of these inventories is EUR 3,352 thousand (2020: 9,404 thousand).

20.

Trade and other receivables

Group

Company

2021

2020

2021

2020

Non-current receivables

Prepayments for non-current assets

236

460

236

460

Prepayments for milk supply

674

419

674

419

910

879

910

879

Current receivables

Trade receivables

46,042

35,364

50,223

39,187

VAT receivable

2,916

1,824

1,457

748

Prepayments for milk supply

1,800

2,092

811

1,146

Other prepayments and deferred expenses

953

1,074

946

1,068

51,711

40,354

53,437

42,149

As at 31 December 2021 and 2020 the Group’s and the Company’s trade receivables and claim rights to

future trade receivables were pledged as collateral respectively for amount not larger than EUR 20,000

thousand and no larger than EUR 14,000 thousand.

At 31 December 2021 and 2020 prepayments for milk supply were granted with repayment terms ranging

between 1 month and 4 years. The annual interest rate ranged between 1,1 and 6%. Majority part of

prepayments for milk supply were secured with pledges of assets (land, building) of the farmers. Most of

prepayments for milk supply are repaid not in the form of money but are offset with amounts payable for

raw milk purchases from farmers, therefore they do not meet criteria for the financial assets.

In view of the deterioration of the economic situation of certain farmers, an impairment provision was

established for certain prepayments for milk supply. As at 31 December 2021 and 2020, it amounted,

respectively, to EUR 340 thousand and EUR 340 thousand.

The information on credit quality of receivables as at 31 December 2021 is provided in Note 3.1. (b).

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Movement in impairment during the financial year for trade receivables under contracts with clients:

Group

Company

2021

2020

2021

2020

In the beginning of the reporting period

991

Bad debts reversal during the year

Recognized impairment during the year

At the end of the reporting period

991

The Group received no collaterals as a security for impaired amounts receivable.

21.

Cash and cash equivalents

Group

Company

At 31 December

2021

2020

2021

2020

Cash at bank and on hand

5,629

5,834

4,511

4,922

5,629

5,834

4,511

4,922

As at 31 December 2021, cash at bank balances pledged amounted to EUR 4,054 thousand (31

December 2020: EUR 4,557 thousand).

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

Group

Company

At 31 December

2021

2020

2021

2020

Cash at bank and on hand

5,629

5,834

4,511

4,922

5,629

5,834

4,511

4,922

22.

Share capital

As at 31 December 2021, the authorized capital of the Company amounted to 35,867,970 ordinary

registered shares with a par value of EUR 0.29 per share. All shares are fully paid. The total amount of

the authorized capital is EUR 10,401,711. During 2021 there were no changes in the Company's

authorized capital.

23.

Treasury shares

2021

2020

Number

Amount

Number

Amount

At the beginning of the year

861,274

(2,251)

861,274

(2,251)

Treasury shares acquired

861,274

(2,251)

861,274

(2,251)

Treasury shares purchased through the official bidding market of Nasdaq Vilnius stock exchange.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

24.

Other reserves and reserve for acquisition of treasury shares

Reserve for acquisition of treasury shares

Total reserve for acquisition of own shares was EUR 10,850 thousand as at 31 December 2021. During

2021 the reserve for acquisition of own shares was not increased and amounted to EUR 10 850 thousand

as at 31 December 2020.

Other reserves

Non-distributable reserves (legal reserves) of Rokiškio Sūris AB, Rokiškio Pieno Gamyba UAB and

Rokiškio Pienas UAB amounting to EUR 1,113 thousand, EUR 556 thousand and EUR 305 thousand,

respectively, can only be used to cover future operating losses, if any. The remaining amount of other

reserves totaling EUR 15,189 thousand for the Company and EUR 25,128 thousand for the Group (2020:

EUR 16,304 thousand and EUR 25,741 thousand, respectively) consists of the revaluation reserve of

property, plant and equipment. (See below for the disclosure of the revaluation reserve).

Dividends

Dividends declared at the Company for the year 2020 were paid out in 2021 in the amount of EUR 0.10

per share (other than treasury shares) and in total amount of EUR 3,501 thousand (when par value of

each share equals EUR 0.29).

Revaluation reserve

Revaluation reserve represents an increase in the value of property, plant and equipment as a result of

its revaluation. This reserve may not be used to cover losses. Movements in revaluation reserve are

given in the table below:

Company

Revaluation

reserve

Deferred

income tax

Revaluation

reserve net of tax

At 1 January 2020

10,738

(1,611)

9,127

Depreciation of revalued amount of PP&E and

disposals and write-offs of revalued assets

(1,688)

253

(1,435)

Revaluation of PP&E

10,131

(1,519)

8,612

At 31 December 2020

19,181

(2,877)

16,304

Depreciation of revalued amount of PP&E and

disposals and write-offs of revalued assets

(1,313)

197

(1,116)

At 31 December 2021

17,868

(2,680)

15,188

Group

Revaluation

reserve

Deferred income

tax

Revaluation

reserve net of tax

At 1 January 2020

15,506

(2,343)

13,163

Depreciation of revalued amount of PP&E and

disposals and write-offs of revalued assets

(1,675)

268

(1,407)

Revaluation of PP&E

16,453

(2,468)

13,985

At 31 December 2020

30,284

(4,543)

25 741

Depreciation of revalued amount of PP&E and

disposals and write-offs of revalued assets

(722)

108

(614)

At 31 December 2021

29,562

(4,435)

25,127

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

25.

Borrowings

Group

Company

2021

2020

2021

2020

Non-current

Non-current borrowings

8,050

Current

Current borrowings

19,344

26,820

19,344

26,820

Finance lease liabilities

19,344

26,820

19,344

26,820

Total borrowings

27,394

26,820

27,394

26,820

The Company’s and the Group’s current borrowings overdraft granted by SEB Bankas. Interest rate for

EUR 8,050 thousand non-current borrowings is fixed, interest rate for current borrowings is Euribor plus

margin at market level.

The Group acquired IR/SWAP and fixed entire amount of non-current borrowings interest rate for entire

period of the loan. The fair value of the derivative is EUR(55) thousand as at 31 December 2021.

Under the loan agreements signed with the banks, certain property, plant and equipment (Note 14),

inventories (Note 19), trade receivables (Note 20) and cash balances in bank accounts (Note 21) were

pledged as collateral.

The carrying amounts of the Group’s and the Company’s borrowings (excluding finance lease liabilities)

are denominated in the following currencies:

Group

Company

2021

2020

2021

2020

in EUR

27,394

26,820

27,394

26,820

27,394

26,820

27,394

26,820

The fair value of borrowings does not materially differ from the carrying amount.

As at 31 December 2021, the balance not withdrawn under the committed credit line facilities with the

banks amounted to EUR 7,756 thousand (2020: EUR 10,896 thousand) for the Company and the Group.

The Group was not in breach of the set borrowing limits or financial covenants (Note 3.2).

26.

Deferred income

Group

Company

2021

2020

2021

2020

Government grants at the beginning of the year

3,021

3,081

1,918

1,766

Government grants recognised

417

Recognised in the income statement

(427)

(477)

(220)

(265)

2,594

3,021

1,698

1,918

Less: non-current portion

(2,190)

(2,601)

(1,487)

(1,705)

Current portion

404

420

211

213

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

Deferred government grant is related to acquisition of property, plant and equipment using the European

Union funds and the funds of the Lithuanian Government under the SAPARD, Rural Development

Programme and other programmes. The Company has no obligation to repay or otherwise refund the

grants received unless it breaches the contractual provisions contained in the agreements with the

grantors.

27.

Trade and other payables

Group

Company

2021

2020

2021

2020

Trade payables

19,225

13,465

16,762

11,628

Salaries, social security contributions and taxes

1,595

1,669

979

1,095

Advance amounts received and other payables

1,135

711

1,082

661

Accrued expenses

909

878

614

616

22,864

16,723

19,437

14,000

28.

Provisions

Group

Company

2021

2020

2021

2020

Non-current

Non-current provisions

683

307

Current

Current provisions

684

604

Total provisions

1,367

911

As at 31 December 2021 and 2020, the Company’s and the Group’s current and non-current provisions

consisted of provisions for pension benefits calculated in accordance with the legal acts of the Republic

of Lithuania and provisions under the collective agreement of the Company and the Group.

29.

Contingent liabilities and commitments

Contingent liabilities

As at 31 December 2021 and 2020, no guarantees were granted to third parties on behalf of the Group

and the Company.

Capital expenditure commitments

As at 31 December 2021 and 2020, there were no capital expenditure contracted for property, plant and

equipment at the balance sheet date but not recognised in the financial statements.

Assets pledged as collateral to the bank are disclosed in Notes 14, 20 and 21.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

30.

Cash flows from operating activities

Reconciliation of profit before income tax to cash generated from operating activities:

Group

Company

At 31 December

2021

2020

2021

2020

Net profit (loss) before income tax

596

3,972

1,540

3,268

Adjustments for:

-depreciation (Note 14)

8,108

9,253

5,473

5,899

-amortisation (Note 15)

-write-off of property, plant and equipment and

intangible assets (Notes 14 and 15)

-loss/(profit) on disposal of property, plant and

equipment (Note 9)

(174)

(15)

(174)

(13)

-interest expense (Note 11)

369

199

369

199

-interest income (Note 8)

(229)

(254)

(229)

(251)

-amortisation of loans

(230)

-inventory write-down to net realisable value

(reversal)

(1,395)

(61)

(1,395)

(61)

-impairment for doubtful receivables and write-

offs of bad debts

571

-accrual for vacation reserve and bonuses

-amortisation of government grants received

(Note 26)

(427)

(477)

(221)

(265)

-dividend income

(1,790)

(2,649)

Changes in working capital:

-amounts receivable and prepayments

(10,233)

(820)

(11,014)

2,957

-inventories

11,928

(9,982)

12,269

(9,795)

-prepayments for milk supply

(726)

(226)

(297)

(154)

-amounts payable

5,914

(180)

5,209

(626)

Net cash generated from/(used in) operating

activities

13,546

1,800

9,541

(1,141)

For the purpose of the cash flow statement, proceeds from disposal of property, plant and equipment

comprised as follows:

Group

Company

At 31 December

2021

2020

2021

2020

Net book amount (Note 14)

150

198

138

141

Profit/(Loss) on disposal of property, plant and

equipment (Note 9)

174

Proceeds from sale of property, plant and

equipment

324

213

312

154

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

31.

Related-party transactions

Main shareholders of the Company:

At 31 December

2021

2020

Antanas Trumpa (Chairman of the Board of the Company)

19.76%

Pieno Pramonės Investicijų Valdymas UAB (established in

Lithuania)*

27.21%

RSU Holding SIA (established in Latvia)*

24,96%

Fonterra (Europe) Coöperatie U.A.

10.00%

Other shareholders (legal entities and natural persons)

18.07%

* Pieno Pramonės Investicijų Valdymas UAB is controlled by Mr Antanas Trumpa (as a principal

shareholder holding 73.84% of the share capital and votes of Pieno Pramonės Investicijų Valdymas UAB).

RSU Holding SIA is controlled by Mr Dalius Trumpa (as a single shareholder holding 100% of the share

capital and votes of RSU Holding SIA). The group of persons acting in concert holds in total 82.17% (2020:

82.17%) of the Company’s share capital and votes.

Members of the Board of Directors of Pieno Pramonės Investicijų Valdymas UAB, RSU Holding SIA,

Fonterra (Europe) Coöperatie U.A., and Rokiškio Sūris AB and their family members are treated as related

parties. All Fonterra group companies are also treated as related parties.

Certain cooperative societies engaged in the production of milk are treated as related parties of the

Company because the Company can exercise a significant influence over daily activities of these

cooperative societies through close family members of its directors and certain employees.

(i) The following transactions were carried out with related parties:

Group

Company

At 31 December

2021

2020

2021

2020

Purchase of milk from other related parties

3,156

2,552

38,559

30,030

Purchase of non-current assets

Purchase of inventory

7,883

8,152

Purchases of services

134

1,650

1,328

Sales of transportation services to other related

parties

107

4,796

5,054

Sales of production and other inventories

15,245

11,123

71,845

60,951

Interest charges on credit facility

In order to properly indicate the internal turnover of Rokiškio Sūris AB, Rokiškio Pienas UAB, and Rokiškio

Pieno Gamyba UAB, the management of the Group has decided that raw materials used in the production

of exported products of Rokiškio Sūris UAB will be bought at a zero price, while the production generated

by Rokiškio Pienas UAB and Rokiškio Pieno Gamyba UAB will be sold as a service, i.e. excluding the

value of raw materials.

Transactions related to the purchase of milk, acquisition of non-current assets and inventories, purchase

and sale of services and goods with related parties are carried out under normal market conditions,

including Fonterra group companies.

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

(ii) Year-end balances arising from transactions with related parties:

Group

Company

At 31 December

2021

2020

2021

2020

Non-interest bearing loans granted to directors (and

their family members)

Current loan receivable from Jekabpils Piena

Kombinats SIA

284

Current loan receivable from Dzūkijos Pienas KB

298

Advance payment received from Fonterra (Europe)

Coöperatie U.A

2,586

2,815

2,586

2,815

Trade payables to other related parties

1,144

3,597

Trade receivables from other related parties

1,659

825

13,370

12,775

In 2012 the agreement was signed with Fonterra (Europe) Coöperatie U.A. for the purpose of financing the

acquisition of certain production facilities and improvement of certain production lines. Together with the

financing agreement the Company signed long term sales agreement, where the Company committed to

produce by the above mentioned production lines the agreed quantity of certain products and sell it to

Fonterra (Europe) Coöperatie U.A., while Fonterra (Europe) Coöperatie U.A. committed to purchase them.

According to the financing agreement the prepayment received is amortised in equal parts until 2033, if the

Company is fulfilling its obligations under the sales agreement.

The Company accounted both agreements as single performance obligation, since the products developed

and sold and financing services received by the purchaser are not distinct.

By the decision of the Shareholder of Rokiškio Pieno Gamyba UAB, it was decided to approve and allocate

dividends in the amount of EUR 1,790,076(2020: EUR 2,649,388). Dividends were paid out to Rokiškio

Sūris AB in May 2021 and 2020 respectively.

(iii) Compensation of key management personnel

Group

Company

At 31 December

2021

2020

2021

2020

Salaries

227

222

211

206

Bonuses/management bonuses paid

Accrual (reversal) for management bonuses

Social security contributions

231

226

215

210

Key management personnel include 9 (2020: 9) members of the Board and management officers.

32.

Services rendered by the audit firm

Presented below are all services rendered by the audit firm to the Group / the Company (in EUR

thousands):

Group

Company

At 31 December

2021

2020

2021

2020

Audit of the financial statements under the agreement

Assurance and other related services

Business consultation services

Tax consultation services

ROKIŠKIO SŪRIS AB

CONSOLIDATED AND SEPARATE THE COMPANY’S

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2021

(All tabular amounts are in EUR ’000 unless otherwise stated)

33.

Events after the reporting period

On 24 February 2022, amendments to the Credit Agreement were signed with AB SEB bankas,

increasing the credit limit to EUR 40,100 thousand and extending the final maturity of the credit limit to

28 February 2023.

The Company's assets and claims on receivables previously pledged in favour of the Bank were

extended to secure the repayment of the loan.

34.

Impact of COVID-19 virus on the Group's and company’s activities

The operations of the Group and the Company returned to the normal level of operations as it was

before the pandemic. In the opinion of the Group's management, the current restrictions do not have a

significant impact on the Group's and the Company’s sales, production volumes or financial position.

35.

Impact of war in Ukraine

On 24 February 2022 the Russian Federation started a war in eastern Ukraine, which was condemned

by the World. The economic and financial sanctions were imposed on Russian regime. Management of

the Group has assessed the possible consequences of these sanctions and the effect of the war for the

financial results to the Companies of the Group should not be significant.

During the year 2021 the Group’s and the Company’s sales of milk products to the clients in Russia,

Belarus and Ukraine totaled EUR 7,169 thousand -2,8 percent of total sales (2020: 6,498 thousand –

3,1 percent).

As at 31 December 2021 accounts receivable from companies in Russia, Belarus and Ukraine amounts

to EUR 1,531 thousand. At the date of issue of these financial statements there were no overdue unpaid

invoices relating to these markets.

At date of approval of financial statements there were no significant adverse changes in accounts

receivable balances from the above mentioned companies.

The management of the Group carefully monitors the situation in Ukraine and the sanctions imposed in

order to comply. However, based on Group’s Management evaluation, the current situation does not

affect the Group’s ability to continue as a going concern.

The management of the Group considers the war in Ukraine as non-adjusting post balance sheet event.

 ROKISKIO SURIS, AB 
 Consolidated audited annual report 2021  
   
 

 
 
 
 
TABLE OF CONTENTS 
MESSAGE FROM THE CEO .................................................................................................................................................................................................................. 55 
GENERAL INFORMATION ................................................................................................................................................................................................................... 56 
REPORTING PERIOD FOR WHICH THE ANNUAL REPORT IS PREPARED ............................................................................................................................... 56 
KEY DATA ON THE ISSUER: ........................................................................................................................................................................................................... 56 
INFORMATION ON THE COMPANY'S GROUP OF COMPANIES ................................................................................................................................................ 56 
TYPES OF MAIN ACTIVITIES OF THE COMPANY AND THE COMPANY GROUP .................................................................................................................. 57 
STRATEGY AND OBJECTIVES OF THE GROUP ........................................................................................................................................................................... 57 
KEY EVENTS IN THE REPORTING PERIOD .................................................................................................................................................................................. 58 
SIGNIFICANT EVENTS AFTER THE END OF THE FINANCIAL YEAR ...................................................................................................................................... 61 
INFORMATION ON THE ACTIVITIES OF THE COMPANY AND THE GROUP.............................................................................................................................. 61 
GROUP OPERATING ENVIRONMENT ............................................................................................................................................................................................ 61 
GROUP SALES ................................................................................................................................................................................................................................... 65 
PRODUCTS, BRANDS AND ACHIEVEMENTS ............................................................................................................................................................................. 67 
RISK FACTORS AND RISK MANAGEMENT ................................................................................................................................................................................ 70 
INFORMATION ON FINANCIAL RISK MANAGEMENT OBJECTIVES AND HEDGING INSTRUMENTS USED ................................................................. 78 
KEY FEATURES OF INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS RELEVANT TO THE PREPARATION OF THE 
CONSOLIDATED FINANCIAL STATEMENTS ................................................................................................................................................................................... 78 
FOOD SAFETY AND QUALITY ..................................................................................................................................................................................................... 79 
ENVIRONMENT PROTECTION ...................................................................................................................................................................................................... 81 
RESEARCH AND DEVELOPMENT ACTIVITIES .......................................................................................................................................................................... 83 
FINANCIAL RESULTS OF THE OPERATIONS ............................................................................................................................................................................. 84 
GROUP ACTIVITY BY SEGMENT ................................................................................................................................................................................................. 87 
INVESTMENT................................................................................................................................................................................................................................... 89 
GROUP BUSINESS PLANS AND FORECASTS ............................................................................................................................................................................. 89 
INFORMATION ON THE COMPANY'S SHAREHOLDERS AND SHARES ............................................................................................................................... 90 
INFORMATION ON THE COMPANY'S SHARE CAPITAL ........................................................................................................................................................... 90 
COMPANY CONTRACTS WITH BROKERAGE FIRMS ............................................................................................................................................................... 91 
DATA ON TRADING IN THE ISSUER'S SECURITIES ON REGULATED MARKETS ............................................................................................................... 91 
RESTRICTIONS ON TRANSFER OF SECURITIES ....................................................................................................................................................................... 93 
PROCEDURE FOR AMENDING THE COMPANY'S ARTICLES OF ASSOCIATION ................................................................................................................. 93 
INFORMATION ON THE COMPANY'S SHAREHOLDERS .......................................................................................................................................................... 94 
SHAREHOLDERS' RIGHTS ............................................................................................................................................................................................................. 95 
DETAILS OF REPURCHASES OF THE ISSUER'S OWN SHARES ............................................................................................................................................... 96 
DIVIDENDS ...................................................................................................................................................................................................................................... 96 
COMPANY MANAGEMENT ................................................................................................................................................................................................................. 98 
THE COMPANY'S GOVERNING BODIES ..................................................................................................................................................................................... 98 
CORPORATE GOVERNANCE AND ORGANISATIONAL STRUCTURE OF THE COMPANY GROUP ................................................................................... 98 
INFORMATION ON THE COMPETENCE AND PROCEDURE FOR CONVENING THE GENERAL MEETING OF SHAREHOLDERS ................................ 99 
BOARD OF DIRECTORS OF THE COMPANY ............................................................................................................................................................................ 102 
COMMITTEES WITHIN THE COMPANY .................................................................................................................................................................................... 106 
MANAGEMENT OF THE COMPANY .......................................................................................................................................................................................... 108 
EMPLOYEES .................................................................................................................................................................................................................................. 108 
INFORMATION ON AGREEMENTS BETWEEN THE COMPANY AND THE MEMBERS OF ITS ORGANS, THE MEMBERS OF THE COMMITTEES 
IT HAS SET UP, OR ITS EMPLOYEES, WHICH PROVIDE FOR COMPENSATION IN THE EVENT OF THEIR RESIGNATION OR DISMISSAL 
WITHOUT JUST CAUSE, OR IN THE EVENT OF THE TERMINATION OF THEIR EMPLOYMENT AS A RESULT OF A CHANGE OF CONTROL OF 
THE ISSUER ......................................................................................................................................................................................................................................... 112 
INFORMATION ON RELATED PARTY TRANSACTIONS AND SIGNIFICANT ARRANGEMENTS ........................................................................................... 112 
RELATED PARTIES OF AB ROKIŠKIO SŪRIS GROUP ............................................................................................................................................................. 112 

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

39. TRANSACTIONS WITH RELATED PARTIES ............................................................................................................................................................................. 113

40. INFORMATION ON HARMFUL TRANSACTIONS ENTERED INTO ON BEHALF OF THE ISSUER .................................................................................... 113

OTHER INFORMATION ...................................................................................................................................................................................................................... 113

41. INFORMATION ON THE AUDIT .................................................................................................................................................................................................. 113

42. DATA ON PUBLICLY AVAILABLE INFORMATION ................................................................................................................................................................. 114

ROKIŠKIO SŪRIS AB GOVERNANCE REPORT ............................................................................................................................................................................... 115

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

MESSAGE FROM THE CEO

Like the rest of the world, we are living in

an exceptional period, which requires us to

take on new challenges and make

courageous decisions to continue to be a

leading dairy company, with a team of

professionals and the highest standards of

performance. We can be proud of the way

we managed the impact of Covid-19,

operating at full capacity throughout the

pandemic and ensuring the health and

safety of our employees, as well as the safety and quality of our products. Today, as we live

through the instability of the war in Ukraine, our hearts go out to the innocent people who are

suffering, and we do our best to help them.

Over the past year, we have continued to successfully modernise our production processes to

increase efficiency and to make the company's operations sustainable and as environmentally

neutral as possible. Investing in improving operations, production, people and sustainability has

always been and continues to be the company's top priority.

We have formulated new sustainability ambitions and commitments to society. For the first time,

we have produced a Sustainability Report in line with GRI (Global Reporting Initiative) standards.

This report is presented alongside our consolidated annual report for 2021. Looking ahead, we

plan to develop processes to assess whether the Group's governing bodies are adequately

overseeing the organisation's impact on the economy, nature and people.

All of the company's production units have adopted the new IFS (International Food Standard)

food safety standard and are rated with the highest scores. This standard and such high rating for

our companies is an even greater guarantee of food safety and quality, ensuring a wider range of

customers for our products worldwide.

I am grateful to all the employees of AB "Rokiškio sūris" Group, raw milk suppliers, other

business partners, customers, buyers and consumers for their smooth cooperation in this difficult

period!

Dalius Trumpa

CEO

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

GENERAL INFORMATION

1. Reporting period for which the annual report is prepared

This 2021 consolidated report covers the period from 1 January 2021 to 31 December 2021.

2. Key data on the issuer:

Name of the issuer:

Joint Stock Company "Rokiškio sūris" (hereinafter referred

to as the Company)

Legal form:

Public limited company

Date and place of registration:

28 February 1992. State Enterprise Centre of Registers

Company code:

173057512

Address:

Pramonės g. 3, LT 42150 Rokiškis, Republic of Lithuania

Keeper of the register of legal

persons:

State Enterprise Centre of Registers

Telephone number:

+370 458 55200

Fax number:

+370 458 55300

Email address:

rokiskio.suris@rokiskio.com

Website address:

www.rokiskio.com

ISIN code:

LT0000100372

LEI (Legal Entity Identifier) code:

48510000PW42N5W74S87

Trading code AB Nasdaq Vilnius

RSU1L

3. Information on the Company's group of companies

31 December 2021 The Rokiškio sūris Group (the "Group") consists of the parent company

Rokiškio sūris AB and five subsidiaries. (2020: parent company and four subsidiaries).

Parent company:

Rokiškio sūris, AB (registration number 173057512, Pramonės g. 3, LT-42150 Rokiškis).

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Subsidiaries of Rokiškio sūris, AB:

Rokiškio pienas, UAB, address of the registered office Pramonės g. 8, LT-28216 Utena.

Registration number: 300561844. Rokiškio sūris, AB is the founder and the sole shareholder of

Rokiškio pienas, UAB, holding 100% of shares and votes.

Rokiškio pieno gamyba, UAB, address of the registered office Pramonės g. 8, LT-28216 Utena.

Registration number: 303055649. Rokiškio sūris, AB is the founder and the sole shareholder of

Rokiškio, UAB, pieno gamyba, holding 100% of shares and votes.

Latvian company SIA Jekabpils piena kombinats (registration number 45402008851, address of

the registered office Akmenu iela 1, Jekabpils, Latvia LV-5201). Rokiškio sūris, AB holds 100%

of shares and votes in the company.

Latvian company SIA Kaunata (registration number 240300369, address of the registered office

Rogs, Kaunata pag., Rezeknes nov., Latvia). Rokiškio sūris, AB holds 40 percent of member

shares in the company, whereas Rokiškio pienas, UAB, holds 20 percent of member shares in the

company.

DairyHub.LT, UAB (company code 305831304, registered office address Kauno str. 65, LT-

20118 Ukmergė). Rokiškio sūris, AB is the founder and sole shareholder of DairyHub.LT, UAB,

holding 100 % of shares and votes.

4. Types of main activities of the Company and the Company group

Main activities of Rokiškio sūris, AB group:

• Operation of dairies and cheese making (NACE 10.51)

Rokiškio sūris, AB:

The main activity of Rokiškio sūris, AB is production and sale of fermented cheeses, whey

products, skimmed milk powder.

Subsidiaries:

The main activity of UAB Rokiškio pienas is sale of fresh milk products and fermented cheeses.

The main activity of UAB Rokiškio pieno gamyba is production of fresh milk products (milk,

kefir, sour milk, butter, curd, curd cheese, sour cream, glazed curd cheese bars, desserts).

The activity of SIA Jekabpils piena kombinats is purchase of raw milk.

The activity of SIA Kaunata is purchase of raw milk.

UAB "DairyHub.LT" - preparation and sale of hard cheeses to the final consumer in different

parts of the world.

5. Strategy and objectives of the Group

In order to ensure that all members of the Company's governing bodies have a clear understanding

of the Company's goals, directions and objectives, the Company's strategy is being developed to

set out long-term strategic goals and objectives.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

The Rokiškio sūris Group is guided in its activities by a 3-year strategic plan approved by the

Board, the main provisions of which are set out below:

MISSION:

AB "Rokiškio sūris" = Trusted Dairy Professionals

VISION:

Sustainable processing more than 1 million tonnes of raw milk per year, as Lithuania turns into

Baltland.

GOALS:

-Leadership in the dairy sector in the region

-Flexible production of premium quality products and sales that exceed customer expectations

-To be the most attractive and reliable partner for dairy farmers

-To continuously increase value for shareholders

-Achieving sustainability objectives along the entire chain of operations

WE SEEK OUR GOALS BY:

• Increasing the volume of purchased and processed milk by 5 percent annually.

• Aiming at 3 percent annual net profit rate.

• By continuously reducing gas emissions, energy and water consumption and the use of non-

recyclable packaging in the production processed.

6. Key events in the reporting period

Ordinary General Meeting of Shareholders of AB "Rokiškio sūris" held on 30 April 2021:

1.Agreed to the Audit Committee's report;

2.Approved the audited consolidated and Company financial statements for 2020;

3.Approved the allocation of profit/loss for 2020:

Title

kEUR

Non-distributed profit (loss) at beginning of year

73 169

Approved by shareholders dividends related to the year 2018

(3 501)

Transfers from other reserves

1 435

Non-distributed profit (loss) at beginning of year after dividend

payout and transfer to reserves

71 103

Net profit (loss) of the Company of fiscal year

3 329

Distributable profit (loss) of the Company

74 432

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Profit share for mandatory reserve

Profit share for other reserves

Profit share for dividend payout *

(3 501)

10.

Profit share for annual payments (tantiemes) to the Board of

Directors, employee bonuses and other as accounted by Profit

(loss) statement

11.

Non-distributed profit (loss) at end of year transferred to the

next fiscal year

70 931

*it will be allocated 0.10 eur per ordinary registered share. In total to the dividends payout EUR 3,500,669.60.

4.Decided to acquire treasury shares in the Company:

The purpose of the acquisition of treasury shares is to maintain and increase the Company's share

price;

The maximum number of shares that may be acquired - the total nominal value of the Company's

treasury shares may not exceed 1/10 of the Company's share capital.

The period within which the Company may acquire its own shares is 18 months from the date of

adoption of this Decision;

Maximum and minimum acquisition price - the maximum acquisition price per share shall be 10%

higher than the market price of the Company's shares on the Nasdaq Vilnius Stock Exchange

when the Board of Directors decides on the purchase of treasury shares and the minimum

acquisition price per share shall be 10% lower than the market price of the Company's shares on

the Nasdaq Vilnius Stock Exchange when the Board of Directors decides on the purchase of

treasury shares.

Procedure for the sale of treasury shares and minimum sale price - Treasury shares acquired by the

Company may be cancelled by a decision of the General Meeting of Shareholders or sold by a

decision of the Management Board, provided that the minimum sale price of the shares shall be

equal to the acquisition price and that the sale procedure shall ensure equal opportunities for all

shareholders to acquire the Company's shares;

To instruct the Management Board of the Company, in accordance with the conditions set out in

this Decision and the requirements of the Law on Joint Stock Companies of the Republic of

Lithuania, to take decisions on the purchase of the Company's own shares, to organise the

purchase and sale of own shares, to determine the procedure for the purchase of the shares, the

granting of the shares and the sale of the shares, the timing, the number of the shares and the price

of the shares and to carry out any other action related to the purchase and sale of the own shares.

5.Approved the company's remuneration report;

6. Appointed the auditing firm PricewaterhouseCoopers UAB to audit the annual consolidated

financial statements of AB Rokiškio sūris Group and the Parent Company for 2021 and to

evaluate the consolidated annual report for 2021.

7.Elected new members of the Audit Committee: Kęstutis Gataveckas - Director of UAB "Perlas

Finance" (independent member); Valdas Puzeras - independent management and financial

consultant (independent member); and Rasa Žukauskaite - (employee of the Finance Department

of AB "Rokiškio sūris"). The members of the Audit Committee were elected for a 4-year term of

office.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

29 June 2021 The Board of Rokiškio sūris AB has taken a decision to establish a subsidiary UAB

DairyHub.LT, which will be 100% owned by Rokiškio sūris AB. The share capital shall be

formed by a cash contribution. The estimated amount of the authorised capital is EUR 100

thousand.

The main objective of this company will be the preparation and sale of hard cheeses to final

consumers in various countries. The separate company is being set up in order to efficiently

manage the costs of production and sales of hard cheese prepared for the final consumer and to

create an efficient sales system.

The 100 % owned companies of AB Rokiškio sūris are UAB Rokiškio pienas, UAB Rokiškio

pieno gamyba, SIA Jekabpils piena kombinats.

On 31 August 2021, the results of the Rokiškio sūris Group for the six months ended 31 August

2021 are announced:

Consolidated unaudited sales of AB Rokiškio sūris Group for January-June 2021 amounted to

EUR 107,461 thousand, i.e. 4.54% more than in the same period in 2020 (EUR 102,796

thousand).

The Rokiškio sūris Group made a net loss of EUR 989 thousand in the first 6 months of 2021. In

contrast, the Group generated a net profit of EUR 2 134 thousand in the first 6 months of 2020.

The negative result for the first half of 2021 is due to the significant increase in raw milk prices in

the first half of this year compared to the same period in 2020, which affected the profitability of

cheese and fresh dairy products.

AB Rokiškio sūris participated in the Rimi Baltic Sustainability Awards

On 25 November 2021, the finalists of the first Rimi Baltic Sustainability Awards were

announced. AB Rokiškio sūris participated in the Sustainability Innovation nomination with 104

applicants. The international jury of experts selected AB Rokiškio sūris' project "Introduction of

renewable energy capacity into the company's production process" as one of the final three. The

winners were announced on 9 December, the project of Rokiskio suris AB was awarded as a first

runner-up. More information: https://www.balticsustainabilityawards.eu/finalists

Extraordinary General Meeting of Shareholders of AB "Rokiškio sūris" held on 10

December 2021:

1.Approved the new version of the Articles of Association of AB "Rokiškio sūris".

2. Elected the new Board of Directors of AB Rokiškio sūris - Antanas Trumpas (Chairman of the

Board of Directors of the former term), Darius Norkus (Sales and Marketing Director of AB

Rokiškio sūris), Ramūnas Vanagas (Director of Raw milk purchasing for Lithuania of AB

Rokiškio sūris), Paul M Campbell (independent member), Jonas Vaičaitis (independent member)

and Thijs Bosch (Managing Director for Europe of Fonrerra Co-operative Group Limited). The

Board members were elected for a 4-year term of office.

28 December 2021 The new version of the Articles of Association of Rokiškio sūris AB was

registered in the Register of Legal Entities and the new elected members of the Board of Directors

- Thijs Bosch, Antanas Trumpa, Ramūnas Vanagas, Darius Norkus, Malcolm Paul Campbell, and

Jonas Vaičaitis - were registered for a term of four years.

Chairman of the Board Antanas Trumpa.

The Articles of Association were amended to increase the number of Board members and to bring

the company's Articles of Association in line with the relevant provisions of the Law on Joint

Stock Companies of the Republic of Lithuania.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

7. Significant events after the end of the financial year

On 24 February 2022, amendments to the Credit Agreement were signed with AB SEB bankas,

increasing the credit limit to EUR 40 100 000 and extending the final maturity of the credit limit

to 28 February 2023. The Company's assets and receivables previously pledged in favour of the

Bank were extended to secure the repayment of the loan.

Further information on significant events occurring after the end of the financial year is disclosed

in note 34 to the consolidated and parent company financial statements of AB "Rokiškio sūris" as

at 31 December 2021.

INFORMATION ON THE ACTIVITIES OF THE COMPANY AND THE

GROUP

8. Group operating environment

Basic provisions

Who we are:

- We process more than 500,000 tonnes of milk in three dairies.

- We produce and sell more than 35,000 tonnes of different cheeses.

- About two-thirds of our production is exported outside Lithuania.

- We are a responsible employer of more than 1 300 employees.

The Group's activities include the purchase of raw milk, the production of various dairy products

and their sale on the Lithuanian and export markets.

Purchase of raw milk

According to the ŽŪIKVC PAIS data, during January-

December 2021, a total of 1 333.2 thousand tonnes of milk

with an average fat content of 4.44% and a protein content

of 3.57% were purchased from 16 117 milk producers in

Lithuania, who keep 212.0 thousand cows. The average

buying-in price for natural milk in December 2021 was

427.2 €/t, 6.7% higher than in November and 35.2% higher

than in December 2020.

The milk price for large farms in December 2021 was

€466.62/t, an increase of 34% on 1 January 2022 compared

to the same period in 2020. 226.05 thousand dairy cows

were registered in Lithuania, 6.5% less than in the same

period in 2020. According to the PAIS data of the

MAICVC, the number of cows in January-December 2021

decreased by 3.3% and the number of producers by 9.9%

compared to the same period in 2020.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Here are the natural milk purchase prices of AB Rokiškio sūris group for 2019-2021, comparing

milk purchased from European-sized milk producers selling more than 40 t of milk per month:

The graph shows that this year the farm gate price for raw natural milk is significantly higher than

in previous years. While the pandemic has had a negative impact on milk procurement prices all

over the world, Lithuania has a unique situation. Prices are influenced by seasonality and

declining milk production volumes. According to the data of the Ministry of Agriculture, milk

purchases decreased by 5.9% in February this year compared to February 2021. Since August

2021, raw milk prices have started to increase, not only due to increased demand for products in

the main importing countries, but also due to rising costs (feed, energy, transport, wages, etc.).

Production of dairy products

AB Rokiškio sūris Group is the largest

Lithuanian dairy processing company,

producing and supplying more than 300

product names to consumers. These

include not only fermented cheeses, but

also various whey products such as milk

sugar, WPC (whey protein concentrate),

WPI (whey protein isolate). The group

also produces milk powder, butter,

processed cheese, curd and cottage

cheese products and other fresh dairy

products.

The Group's products have earned

consumer recognition for their

impeccable quality in both domestic and

export markets.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

The volume of milk processed in the Group in 2021 was 1.7% lower than in 2020, i.e. 461 553

tonnes.

The production of fermented cheeses is 8.4% higher compared to 2020. The volume of hard

cheeses is 41.3% lower than in 2020. The volume of semi-hard cheeses produced is 6.3% lower

and the production of fresh cheeses is 39.5% higher. The changes in the range are due to

fluctuations in market prices.

The company's priority is to increase and improve the production of GRAND hard cheese.

Therefore, in 2021, new premises will be built with the latest automated equipment for the

packaging of this cheese. The increased production of GRAND hard cheese has also created new

challenges, as the need for maturation facilities increases with the increase in production volumes.

Faced with these challenges, the production of this cheese was reduced in 2021 and investments

were planned for the construction of a new warehouse.

The technology of this cheese has been developed

by the Company's production technologists and

craftsmen in collaboration with Angelo Frosio, a

cheese master and professor from Italy.

GRAND hard cheese (GRANA type) weighs

approximately 32 kg. These hard cheeses are

characterised by their exceptional mature, rich

and savoury flavour. The production process for

this type of cheese is very complex, requiring a

great deal of investment, exceptional knowledge,

time and patience. These cheeses can only be

made by a company with a very high technical

level and a team of highly qualified specialists.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

The company's milk sugar production in 2021 is 0.3% higher than in 2020. This is due to higher

volumes of milk processed. This production technology is being further developed in 2021, using

the knowledge acquired by the craftsmen and technologists.

The company continues to cooperate with Fonterra New Zealand, one of the largest dairy

producers in the world, and has a successful track record in the production of whey products such

as WPC (Whey Protein Concentrate); WPI (Whey Protein Isolate). This technology is

continuously improved and the IBK range is expanded. In 2021, WPC production was 5.3%

higher than the previous year, 2020.

Market prices made it more profitable to sell cream rather than to produce butter or butter

products, resulting in a 36.5% decrease in the production of butter and spreadable fat blends

compared to the previous year.

As in the previous year, 2020 and 2021 saw a decrease in the consumption of fresh dairy products

in Lithuania. The production of fresh dairy products decreased by 3.1% compared to the previous

year. The production of dried milk products was also lower, by 27.1% compared to 2020.

Changes in production volumes of AB Rokiškio sūris Group in 2017-2021:

Production / Year

2017

2018

2019

2020

2021

Fermented cheeses, t

3 .463

36 214

31 745

32 617

35 357

WPC powder, t

2 857

2 635

2 384

2 484

2 615

Milk sugar, t

13 661

12 405

10 866

12 592

12 631

Butter and spreadable fat mixtures, t

7 285

7 891

8 143

8 333

5 451

Dried milk products, t

3 335

3 463

2 862

4 348

3 170

Fresh milk products, t

49 734

48 596

47 370

46 833

45 365

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

9. Group sales

As every year, most of the company's production is

exported. In 2021, Rokiškio Sūris Group will export

its production to 41 countries worldwide. (2020: 49

countries). In 2021, the Group resumed sales to

Romania and Slovenia. In 2021, sales to Singapore

were launched. Discontinued sales to countries such

as Switzerland, India, Malaysia, Peru.

In 2021, the Group's exports accounted for around

60% of total sales. This remained at the same level as

in 2020. Italy remains the main and largest buyer of

production.

A significant part of production is also exported to

the USA, the Netherlands, the Philippines.

Sold

Countries

2021

2020

Change

kEUR

Lithuania

102 037

40.32

84 329

40.00

21.00

Europe

121 363

47.96

80 500

38.18

50.76

Middle East

3 561

1.41

19 701

9.35

-81.92

Far East

4 885

1.93

5 047

2.39

-3.21

North Americas

12 279

4.85

13 388

6.35

-8.28

Other countries

8 937

3.53

7 894

3.73

13.21

Total:

253 062

100

210 829

100

20.03

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

In 2021, the Group's sales revenues amounted to EUR 253 062 thousand. Compared to 2020 (EUR

210 829 thousand), the Group's sales revenue increased by 20,03 %.

In 2021, sales to European countries increased by almost 50% compared to 2020. This is of course

influenced by the countries completely paralysed and fully closed by the 2020 Covid pandemic, in

particular Italy. At the end of spring 2021, Italy reopened to tourists and the HOREKA market

started to climb again in terms of consumption. The same happened with other European

countries. A full recovery from the pandemic was visible: the HOREKA sector was active in most

countries, although consumption was down compared to pre-pandemic levels. However, the main

reason for the increase in sales was the significant increase in product prices in early autumn,

influenced by the general increase in inflation in both Europe and the US. Together with the

increase in world energy prices, dairy prices rose for weeks, sometimes even days.

In 2021, the company's exports were, as before, mainly to Western European countries. This was

again influenced by some recovery from the pandemic, with the opening of the catering sector in

European countries, and the growing demand for all dairy products on export markets.

Compared to 2020, sales to the US fell by 8 per cent in 2021, as the HOREKA sector there had not

yet recovered at the time of contracting. At the same time, a significant amount of low-cost local

cheese was available during the pandemic, which was used by customers.

As in the past, the Group continued to sell its usual products - cream, dairy powders and the

additional products obtained in the cheese-making process, such as WPC and lactose - on export

markets. The price of lactose, like all dairy products, also increased, but not to the same extent as

whey products, where demand has far outstripped supply throughout the year and prices for these

products have reached unprecedented heights and continue to rise. There is still a significant

shortage of these products on the market and prices continue to rise.

Compared to 2020 prices, fat prices, like all dairy products, increased in the second half of the

year. However, the price of cream was lower when converted into butter per unit of fat, so the

company produced butter instead of cream.

Exports of mozzarella to South Korea decreased slightly compared to 2020. However, sales to this

country remain low in 2021 as the Koreans have an alternative market for US mozzarella, where

the price level is often more favourable for them. Hard cheese exports to Mexico and South

America also increased slightly during the year.

One of the Rokiškio sūris group's biggest goals at the moment is to penetrate the European and

American retail/HOREKA markets for hard cheeses, in particular Grand, i.e. to increase the sales

of value-added cheeses, which the company is already doing actively. The rapidly rising prices of

raw materials dictate that we sell as much value-added as possible and gradually reduce the

production and sales of raw cheese.

Sales on the local market

In 2021, Rokiškio Group's consolidated sales turnover in the local market amounted to EUR

102.037 million, or 21% more than in 2020 (2020: EUR 84.329 million).

The increase in sales is primarily attributable to the significant increase in commodity prices for

dairy products from the second half of 2021 onwards, which also triggered an increase in retail

prices. The highest annual price increase was recorded in drinking milk (+6%), but it is likely that

a significant part of the product price increase will be visible in the 2022 results.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

The total volume of production on the Lithuanian market (50.9 thousand tonnes) in 2021 was 3%

lower than in 2020 and identical to the 2019 level. The highest annual growth in 2021 was in the

categories of hard cheeses (+47%), unripened cheeses (+26%) and sour cream (+23%), but with a

12% decrease in the volume of drinkable milk (the latter has a significant impact on the total

tonnage of production).

In 2021, the share of private labels produced by the company in total domestic sales increased

(from 17% in 2020 to 20% in 2021). The latter contribute to a better use of production capacity.

The impact of Covid-19 on the dairy industry is relatively small (necessities), but by the end of

2021 the market started to see an overall decline in dairy consumption, probably due to a higher

share of the population's expenditure in the context of the sharply rising energy costs.

The share of the domestic market in Rokiškio Group's sales has remained almost unchanged in

recent years (40.2%), but has increased since 2019 (38.6%).

In most product categories, Rokiškio Group is first or second on the market, with a slightly weaker

performance in the dessert product groups. According to the Association of Lithuanian Trade

Enterprises, the most popular products on the market in their respective groups are semi-hard

fermented cheese, processed cheese, kefir, buttermilk and natural lactose-free yoghurt.

The company does not try to participate in small market segments, focusing on mass production,

which ensures low cost and consistency of quality for high quality products. The company's

preferred sales channel is retail chains. In working with them, mutual cooperation is sought, and

private labels are also produced for them.

10. Products, brands and achievements

Recognition of sustainability projects of Rokiškio sūris AB

The Sustainable Brand Index™ ranks brands annually according to sustainability.

The study is based on the opinion of Lithuanian consumers and shows how brands are perceived

in terms of environmental and social responsibility. The more brands communicate sustainability,

the higher consumers' expectations. The more companies communicate their achievements and

their approach to sustainability, the more interest and trust they receive from consumers.

A survey conducted by the creators of the ranking showed that the Lithuanian population cares

about sustainability. The majority of respondents take sustainability into account before deciding

to purchase a product or service. The survey, based on the opinion of Lithuanian consumers,

shows that brands are perceived in terms of environmental and social responsibility. The more

brands talk about sustainability, the more consumers are concerned and demand that companies

comply with these principles. It is expected that by committing to and communicating their

sustainability principles, companies will increase consumer interest and trust in these issues. As

interest increases, so does consumer knowledge of the company's standards.

Rokiškio sūris AB, which is in the top 20 of the most sustainable brands, has undoubtedly the

richest history among Lithuanian dairy companies, and over the years has built up an image of a

strong, reliable partner that does not chase short-term gains, but rather builds strong, long-term

relationships with consumers, customers, employees and business stakeholders. Here, tradition

merges with the latest world-class production technologies to bring quality, value and healthy

products to the market.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

In 2021, Rimi Baltic organised the Rimi

Baltic Sustainability Awards for the

first time. The competition was held in

3 categories: Innovation, Change and

Impact.

Three hundred and twenty-three

achievements were submitted for the

Rimi Baltic Sustainability Awards from

all Baltic countries. The entries were

judged by a jury based on a

methodology developed by Plan A, one

of Europe's leading GreenTech

companies. The jury consisted of

sustainability and innovation experts

from 12 countries, including the US,

Germany, UK, Finland, Sweden, all the

Baltic States, etc..

Our project "Incorporating renewable energy capacity into a company's production process" took

part in the Innovation nomination and came second out of 104 applicants.

Grated cheese

Rokiškio MOZZARELLA

Thanks to its excellent taste qualities and user-

friendly packaging, Rokiškio MOZZARELLA

grated cheese has been recognised as the

Lithuanian Product of the Year 2021 by the

Lithuanian Confederation of Industrialists.

The cheese is presented in a hermetically sealed

package with an optimum weight of 200 g. Italian

pizza masters emphasise that the cheese on the

pizza should be as mild and neutral as possible, so

as not to overpower the other flavours and

important ingredients of the pizza. In addition, the

shavings of this cheese can be sprinkled on hot

sandwiches, on meat roasts, on sauces, where the

cheese will be a wonderful seasoning that will add

richness.

Mozzarella cheese

family expanded

with thinly sliced

slices of Rokiškio

MOZZARELLA,

150 g.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Sour milk Rokiškio NAMINIS Šaltibarščių

NIELSEN (Market research. Retail research. Consumer surveys, quantitative and qualitative

research. Brands: INFACT, NITE, SPACEMAN. Public Opinion Research) has published the

strongest news of the year based on retail sales data:

Sour milk Rokiškis NAMINIS Šaltibarščių – in the top three Lithuanian news stories!

AB Rokiškio sūris Group also has a whole range of quality

and exclusive high added value products:

BiFi Active Plius yoghurts:

These yoghurts are lactose-free and enriched with vitamins

A (benefits for skin, eyesight, nerves) and D (immunity,

energy).

The company launches a new line of dairy products in collaboration with Gian Luca Demarco.

Gian Luca Demarco, host of the Culinary Studio, TV presenter, excellent chef and friendly

Italian who loves Lithuania as much as Lithuanians themselves, shares the recipes he has

learned from his family and the wonderful people he has met along the way. Luca, who has

been living and working in Lithuania for many years, knows the tastes of its people and has

selected dishes that are sure to find their way into the hearts of Lithuanians, are delicious and

easy to prepare.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

11. Risk factors and risk management

Risk is understood as the impediment to the achievement of objectives due to potential events and

their potential impact on the business. The Company's objectives include both long-term strategic

goals and specific actions related to operations. The Company's Board is responsible for managing

the Company's risks and assessing the adverse impact on the objectives and results. The

identification and management of specific risks is assigned to the relevant functions within the

Company. The level of risk is assessed in both strategic and operational decision-making, taking

into account the external and internal environment. Risk management is integrated into the

Company's business processes, so that potential risks are continuously monitored and analysed.

The Group's core business is milk processing. The dairy processing business is linked to raw

material suppliers, competition in the raw milk market and fluctuations in raw milk prices.

Shortages of raw milk, which lead to continuous volatility in milk prices, may affect the Issuer's

results of operations.

Specialisation in the production of fermented cheeses is the main revenue driver. The cheese

maturation process is rather long, which makes it difficult to react quickly to changes in the

market and may affect the company's results. In addition, there is strong competition for dairy

products on the domestic and export markets, cheaper Polish products and the Russian market ban

limits sales.

The Group's credit risk relates to receivables. The risk of default by partners is controlled. The

Group has credit insurance cover for its customers. For customers with higher financial risks, a

system of prepayment of goods is in place.

The Group's activities are subject to regular food safety, environmental and social responsibility

audits. Food safety systems are in place and operational in the Group.

The company (Lactose, IBK, butter, skimmed milk flour, rennet cheeses) has been granted

specific quality certificates by HALAL and KOSHER (Lactose, IBK, skimmed and whole milk

flour, buttermilk flour, butter). This ensures consumer confidence in product safety. Certified

organic products are produced and labelled with additional information.

The Group's management's objective is to produce safe and high quality dairy products with the

lowest possible environmental impact.

The Group is constantly looking for opportunities to optimise production, reduce costs and seek to

minimise and manage risk factors to the maximum extent possible.

Risk factors:

Risk factor

Risk nature

Risk management

Economic

factors:

Raw material

supply

Small farms;

Seasonality;

Competition;

Lack of a long-term public

regulatory framework.

Evolution of raw milk prices

during winter and summer

periods.

Significant milk price movements

on world markets.

To mitigate potential risks and their

impact, milk producers are paid milk

price premiums for long-term

cooperation, higher milk quality,

loyalty and balancing seasonality in

milk production.

Risks are managed by additional

imports of milk from other countries

(Estonia, Latvia) and by diversifying

the purchase of raw milk from different

sized suppliers in Lithuania.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Sales of

products

The group's principal activity is

milk processing. Its main product

is rennet cheese. Revenue from

the sale of cheese accounts for the

majority of revenue.

The Company's revenue, profit

and cash flow may be adversely

affected by changes in demand

and prices in the markets for

cheese and other products such as

milk sugar, butter, WPC.

The production of long-ripened

hard cheese is a lengthy

technological process which takes

between 9 and 24 months. This

lengthy process may have a

negative impact on the company's

cash flow and results of

operations.

Internal competition between local

producers.

Cheaper Polish production on the

Lithuanian market.

Increase in the volume and range

of cheaper products from other

EU countries.

Finding alternatives to imports.

Increasing the product range.

Finding new markets.

Cooperation with business partners.

Risk assessment of each customer.

Environmental

factors

Our activities consume large

amounts of energy and natural

resources. This poses a risk of

environmental pollution directly

and/or indirectly, as well as air

pollution from technological

installations.

Vehicle replacement, maintenance,

control of operating conditions.

Choice of suppliers of energy

resources.

Resource saving, accounting and

control measures.

Control, automation, modernisation of

technological processes.

Monitoring the use and impact of

natural resources.

Use of chemicals. This poses risks

to workers, products and the

environment.

Employee training, personal protective

equipment.

Accounting and control.

Process automation.

Physical environmental pollution:

noise, smell, light

Control measurements and assessment.

Installation of technical instruments.

Focus on design.

Treatment of industrial and

surface wastewater. Discharge of

pollutants with industrial and

surface wastewater.

Maintenance, operating conditions,

process control.

Pollutant concentration studies,

discharge accounting.

Use of the reserves of the urban waste

water treatment plant.

Cleaning and maintenance of sand oil

traps and effluent.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Improper management of waste

from operations poses a threat to

the environment

Waste sorting and accounting.

Ensuring proper storage conditions.

Process management, staff training.

Handing over to legitimate handlers.

Regulation and compliance. Risks

are manifested in the high volume

of regulation and changes in

legislation.

Certified management system

compliant with ISO 14001:2015

Environmental Management Systems.

Requirements and guidelines for use.

Continuous assessment of legislation

and developments. Reporting and

evaluation of the established reports.

Environmental concerns of

residents, neighbouring businesses

and local authorities. The

company is located in an

industrial area of the city and is

adjacent to both other businesses

and residential areas.

Disseminating information about

company news in the local press and on

the internet.

Active cooperation with local

authorities, residents and business

communities.

Assessing the impact of planned

activities in accordance with the

established procedures

Climate control systems have been

installed in the production facilities,

which not only maintain the set

temperature and humidity parameters,

but also operate in a recuperative mode.

Energy risks

We consume a lot of electricity,

heat and water in our operations.

All production and non-

production equipment relies on

electricity to operate. This poses a

risk to the uninterrupted supply of

electricity.

The supply of electricity, thermal

energy (steam) and water

influences the production and

technological processes.

Electricity is supplied by an

independent energy supplier under the

terms of a contract. Distribution is

provided by the Energy Distribution

Operator.

Medium-voltage switchgear is fed from

two independent sources, which feed

the power transformers. In the event of

a voltage failure in one substation, the

other is immediately supplied.

We have installed 90 MW of solar

power plants.

Thermal energy is supplied by

centralised urban heating networks

using biofuels (wood) in Rokiškis and

Utena. We also generate our own heat

with two boiler plants in Utena and

Ukmergė, which use natural gas.

We have strict contractual conditions

for the supply of thermal energy

(steam), defining maximum

requirements for pressure and

temperature. Installed steam heat

metering to control and ensure

consumption and needs of the

respective workshops. Boilers for hot

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

water production.

The heat pumps installed recover part

of the heat from the environment and

reduce the amount of purchased

thermal energy by 4.1%.

Rokiškio receives most of its water

supply from its own waterworks and

treats its waste water in its own plants.

The technological operation of the

wastewater treatment plant is strictly

controlled, monitoring is carried out

and reports are submitted and made

public in accordance with the

established procedures. Part of the

water is purchased from the city's

waterworks and part of the wastewater

is treated by the city's water

management company. The water

supply and wastewater treatment

services for companies in Utena and

Ukmergė are provided by the urban

water management companies.

Food safety

and quality

In order to achieve one of the

most important objectives of

Rokiškio sūris AB - to ensure food

safety and quality, to avoid

product recalls, the existing and

potentially dangerous risk factors

(biological, chemical, physical)

have been identified, and the

favourable conditions for their

occurrence and increase have been

analysed. The risk assessment

consists of an evaluation of the

likelihood of a risk factor

occurring and the severity of its

consequences.

The risk assessment covers the

entire product production chain,

from the purchase of raw

materials to the delivery to the

customer

Based on the level of risk identified

and the methodology adopted by the

Codex Alimentarius Commission,

categories of control measures are

identified and control measures are

defined.

Identification of control measures for

the main risk factors at play;

Assessment of the effectiveness of

operational controls to reduce the risk

to an acceptable level;

Establishing the necessary action plans

to improve the control system;

Regular risk management and

monitoring of objectives.

Information

security

IT risks relate to the use of illegal

software, lost and unrecoverable

data and vulnerabilities.

Only legal, licensed IT software is used

to avoid potential threats.

A configurable firewall is used to

protect against unauthorised access to

the company from outside.

Unauthorised access to data is

restricted by giving employees only the

rights and roles they need to do their

job.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

A test environment is used to test

changes to applications. Data loss is

prevented by backing up data.

Antivirus software is installed on all

company computers.

Old computer equipment is replaced by

new equipment with supported

software versions.

Occupational

risk factors:

Physical

factors

Inadequate workplace design;

Failure to comply with the general

minimum requirements for work

equipment;

Mobile self-propelled, non-self-

propelled work equipment;

Potentially hazardous equipment;

Stability and robustness of

structures;

Escape routes and exits;

Fire detection and extinguishing;

Electrical installation;

Activities of other companies in

the performance of services and

other works for the company.

Workplaces and work equipment are

maintained. Any deficiencies that may

affect workers' health and safety are

corrected.

Work equipment controls are clearly

visible, identifiable and labelled. Work

equipment is equipped with a control

system that allows it to be stopped

completely and safely. Emergency stop

devices shall be provided for this

purpose. Where there is a risk of injury

to a worker as a result of mechanical

contact with moving parts of the work

equipment, such parts shall be covered

by guards and protective devices shall

be fitted to prevent access to dangerous

areas. Work equipment shall bear the

necessary safety and health signs to

ensure the safety of workers. Workers

shall receive the necessary information

on the use of work equipment, on-the-

job training and instruction, i.e. they

shall be made aware of the hazards they

may encounter as a result of work

equipment.

Mobile work equipment shall be so

equipped and constructed as to

minimize the risks to the worker. Such

equipment is subject to regular

maintenance, training and periodic

health checks.

Potentially hazardous installations are

operated in accordance with the Law

on Maintenance of Potentially

Hazardous Installations. Potentially

hazardous installations are supervised

and potentially hazardous installation

supervisors are appointed. Employees

working with potentially hazardous

equipment are trained, periodically

checked for their knowledge, and

undergo periodic health checks.

To ensure the stability and robustness

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

of structures, maintenance is carried

out in accordance with the technical

building regulation. It includes regular

monitoring of the condition of

structures, as well as periodic and

specialised inspections.

Evacuation routes shall be maintained

and marked.

Appropriate fire extinguishing

equipment and fire safety engineering

systems are in place, taking into

account the dimensions and purpose of

the buildings, the equipment in the

buildings, the characteristics of the

materials stored in the buildings, and

the number of employees in the

workplaces. Fire extinguishers and fire

safety engineering systems are subject

to maintenance testing. The fire

reservoir has been reconstructed. It is

fully compliant with the relevant laws

as foreseen by the LR. The fire

extinguishing equipment is labelled. A

ventilation system is installed in the

workplaces. Ventilation equipment is

maintained and updated.

Fire safety training and drills are

organised for the staff.

Hazardous areas in workplaces are

marked.

Workstations have strong, stable floors.

Workers are provided with special

footwear that is slip-resistant.

Electrical wiring shall be installed in

such a way as to avoid the risk of fire

or explosion and to protect workers

from direct or indirect contact with

electrical wiring. Periodic resistance

measurements of electrical installations

shall be carried out in accordance with

the procedures laid down by law.

In order to ensure the health and safety

of workers and to avoid risks arising

from the activities of another

undertaking and risks to their workers

from the activities of the company, a

description of the procedures for

cooperation and coordination shall be

drawn up, and coordinating persons

shall be designated.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Physical:

Noise

Light

Chemical

factors

Ergonomic

factors

Work equipment

Inadequate or poorly installed or

maintained lighting in workplaces

is one of the key occupational risk

factors affecting workers'

emotional stress, reducing

productivity and increasing the

number of accidents.

Use of chemicals in laboratory

testing, cleaning of work

equipment and facilities.

Manual work exists in many

workplaces

Use of personal protective equipment,

compulsory health screening for noise,

training for workers.

Occupational risk assessments measure

lighting in workplaces. If the lighting

does not meet the hygiene standards,

the luminaires are replaced with new

LED luminaires. Their advantages are

lower energy consumption, longer

lifetime and higher efficiency.

High-pressure washing stations are

installed to fully control the doses of

chemicals needed for cleaning and

disinfecting rooms and to improve staff

conditions. Occupational risk

assessments are carried out in

workplaces where chemicals are used.

Mandatory health checks. Information

and training for workers. Use of

personal protective equipment where

hazardous chemical agents are likely.

Artificial ventilation system installed.

An occupational risk assessment is

carried out. An ergonomic risk

assessment to prevent musculoskeletal

disorders. Compulsory health

screening. Manual and electric

wheelchairs are used to reduce

ergonomic risks. Lifts are also used.

The company has introduced robotic

technology to avoid heavy lifting. Job

rotation is implemented.

In 2021, the GRAND cheese packaging

line became operational. It avoids

ergonomic factors such as lifting,

pushing, prolonged physical effort,

repetitive forceful movements.

Social factors:

Recruitment and placement of

staff.

Staff qualification and the

integration of staff into work

processes.

Search for workers at the labour

exchange.

Cooperation with educational

institutions.

Recommendations from in-house staff.

Internal company resources

(encourages employees to improve

their skills and qualifications).

The company has a system of

performance appraisal and

development of employees. Staff

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Retaining staff and reducing

turnover.

development plans are drawn up each

year. Training is organised both by

sending employees to external seminars

organised by suppliers and within the

group.

The company strives to build a stable

workforce by fostering good relations,

providing opportunities for

development, growth, participation in

decision-making, and employee

benefits under the Collective

Agreement.

These social factors are not solely

dependent on the actions of the

company. The company may have to

increase investment in robotic

production processes, i.e. replacing

manual labour with robots.

Ensuring business continuity of Rokiškio sūris AB and managing

COVID-19 risks

The COVID-19 pandemic, which has affected many industries around the world, inevitably

affected our company. Since the first quarantine was introduced in Lithuania in March 2020, the

company has taken all necessary measures to ensure that the Group's employees work in the safest

possible conditions and that the spread of the virus is prevented as much as possible. The company

has reviewed and updated its Emergency and Critical Situations Management Plan to ensure that

risks in various areas are managed quickly and effectively.

The main areas of risk are:

•Potential disruptions in the supply chain of raw materials and other materials used in

production.

The company's main raw material is milk, which is purchased domestically and in adjacent

regions, so there were no disruptions and no additional measures were needed. Stock levels of

other essential materials were reviewed and uninterrupted supply was ensured.

•Risk to workers' health, continuity of milk processing and continuity of the production chain.

In accordance with the recommendations of the Ministry of Health and the State Food and

Veterinary Service, the establishment has established procedures to prevent COVID-19:

- monitoring the health of workers,

- temperature measurement before entering the production premises,

- regulating the flow of workers, service providers and visitors,

- use of personal protective equipment,

- the use of rapid antigen testing throughout the company.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

The measures were sufficiently effective, avoiding a significant increase in the number of cases

throughout the pandemic period and ensuring uninterrupted milk processing and continuity of the

production chain.

The procedures established to prevent COVID-19 also include the safe organisation of the

collection of raw milk from dairy farms and its reception in establishments.

•Market volatility and changes in consumption patterns.

The company constantly monitors and analyses the market situation and adapts to changing

customer needs.

12. Information on financial risk management objectives and hedging

instruments used

The Company and the Group are exposed to various financial risks in the course of their business.

The Group's overall risk management programme focuses on the unpredictability of the financial

markets and seeks to mitigate any potential negative impact on the Group's financial performance.

The Group is insured against general civil liability arising from its operations and damage to the

Group's products or services. The insurance policy is valid worldwide.

Risk management is carried out by the Company's management. There are no written principles

for the management of general risks.

The Company's and the Group's financial risk factors are described in detail in note 3 to the

consolidated and parent company financial statements of AB Rokiškio sūris as at 31 December

2021.

13. Key features of internal control and risk management systems

relevant to the preparation of the consolidated financial statements

The preparation of the Company's consolidated financial statements, internal control and financial

risk management systems, and compliance with the legislation governing the preparation of the

consolidated financial statements are supervised by the Audit Committee.

The consolidated financial statements of Rokiškio sūris AB and the Company are prepared in

accordance with International Financial Reporting Standards (IFRS) as adopted for use in the

European Union.

The Audit Committee monitors the process of preparation of the Company's and Subsidiaries'

financial statements, reviews IFRS to ensure that all changes in IFRS are implemented in the

financial statements in a timely manner, analyses transactions material to the Company's and

Subsidiaries' operations, ensures the collection of information from the Group's entities and the

timely and accurate processing and preparation of that information for the purpose of the financial

statements and informs the Company's Board of Directors of material internal control weaknesses

in the financial statements identified by the external and internal audits, and makes

recommendations for their correction.

The preparation of financial statements in conformity with IFRS involves making estimates and

assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the financial statements and the reported amounts of revenues

and expenses during the reporting period. These estimates are based on management's knowledge

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

of current conditions and actions. The financial statements comprise the consolidated financial

statements of the Group and the separate financial statements of the Company.

Subsidiaries (including special purpose entities) are entities in which the Group has control over

the financial and operating policies. Such control is generally obtained by holding more than half

of the voting shares. The existence and effect of any existing or convertible potential voting shares

are taken into account in assessing whether the Group controls another entity. Subsidiaries are

fully consolidated from the date on which the Group obtains control of those entities and are

deconsolidated from the date on which control is lost.

The Audit Committee makes recommendations to the Board on the selection of the external audit

firm and monitors the external auditor's and the audit firm's compliance with the principles of

independence and objectivity.

14. Food safety and quality

The company's products are internationally recognised for their quality, with internationally

recognised food safety and environmental systems in place and validated, allowing it to provide

consumers with a wide range of products with excellent taste. The experience gained over the

years, the focus on the introduction of new technologies and the continuous investment, allow us

to remain competitive in the raw milk purchasing and sales markets.

The production of hard-ripened cheese is a lengthy process that can take from a few months to

several years. This specificity of production does not allow for a rapid response to sudden changes

in the cheese market, which may affect the results of operations.

The Company's companies pay great attention to product safety and quality, meeting customer

needs and environmental requirements. AB Rokiškio sūris was the first company in Lithuania to

certify its Food Safety System, the first dairy company to certify its Quality Management and

Environmental Management Systems in accordance with the requirements of international ISO

standards (ISO 9001, ISO 14001).

The most important aspect of the companies' activities is ensuring food safety. One of the

companies of AB ,,Rokiškio sūris", in Rokiškis, in order to achieve a higher level of efficiency in

food safety assurance, has improved the existing food safety system and in 2013 was certified

according to the FSSC 22000 Food Safety Systems Certification Scheme. This scheme includes

ISO 22000:2018 and ISO/TS 22002-1:2009. This food safety scheme is recognised by the Global

Food Safety Initiative (GFSI) as well as other food safety standards under the BRC, IFS and SQF

requirements.

In 2021, changes to the new FSSC 22000 Version 5 requirements were introduced to improve the

company's existing food safety systems. The key changes in the new version relate to

understanding the organisation and its context, taking into account positive and negative external

and internal factors; identifying stakeholder needs and requirements; and emphasising the

leadership of top management.

The FSSC 22000 Food Safety Systems

Certification Scheme demonstrates that the

Company's operations and associated resources

are a managed process. The interrelated processes

are perceived and managed as a system, which

enhances the effectiveness and efficiency of the

company. A well-functioning food safety system

allows the management of identified risks at both

control and critical control points related to

production processes, transport and consumption.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Every year, the international certification company BUREAU VERITAS Lit carries out

surveillance audits of the companies, and every 3 years the system is re-certified (recertification).

During the validity period of the certificate, one of the surveillance audits is carried out without

prior notice (unannounced audit).

The unannounced audit carried out by Rokiškio sūris AB in 2021 was assessed very favourably. In

order to meet the needs of customers, expand outlets and improve processes, it was decided to

implement the IFS food safety standard in all companies of the Rokiškio sūris Group.

The IFS - International Food Standard is developed by the

German, French and Italian retail associations and is

recognised by the Global Food Safety Initiative (GFSI) and

retail organisations.

AB Rokiškio sūris successfully certified its food safety

systems according to IFS requirements and achieved the

highest Higher Level rating (> 95%).

The requirements of the food safety standards establish

rules to ensure the production of stable, uniform, quality and safe products without deviating from

the policies of the organisation. The system covers processes from the purchase of raw materials

to the satisfaction of customer needs and is constantly reviewed and improved to maintain high

product quality. In order to produce only safe and high quality products that meet customer

expectations, the Food Safety, Quality and Safety systems are continuously reviewed and

continuously improved.

The company's management reviews and approves annually the Food Safety, Quality and

Environmental Policy, which declares continuous improvement - "It is our understanding that

'doing well' is never enough. We know that 'What we do well today, we will do even better

tomorrow!'

The company has created an atmosphere in which every employee is involved in achieving the

goals and objectives set.

The Company has developed and implemented operational essential programmes that provide

conditions, measures and rules to prevent biological, chemical, physical, allergenic and

radiological contamination and to ensure the production of safe products.

In 2007, the State Food and Veterinary Service of the Republic of Lithuania approved the

compliance of dairy production with the requirements of the new EU hygiene regulations and

issued veterinary approval numbers:

•AB ,,Rokiškio sūris“ LT 73-01 P EB;

•UAB “Rokiškio pieno gamyba“ LT 82-01 P EB;

•UAB “Rokiškio pieno gamyba” subsidiary „Ukmergės pieninė“ LT 81-01 P EB.

The laboratory of AB Rokiškio sūris is accredited according to the international standard LST EN

ISO/IES 17025 "General requirements for the competence of testing and calibration laboratories".

The laboratory shall comply with its objectives, improve the quality management of the

laboratory, the quality of the tests performed, acquire professional experience and ensure reliable

tests.

The performance of the laboratories of the Utena and Ukmergė enterprises has been assessed in

accordance with the description of the procedure for the approval of the authorisation of

laboratories of food business operators approved by the State Food and Veterinary Office.

In 2003, the State Enterprise "EKOAGROS" confirmed that AB "Rokiškio sūris" complies with

the requirements of the EU Council Regulation (EC) No 834/2007 and is certified for the

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

production of organic products. Fermented cheese BIO, Hard cheese BIO, Cagliata BIO,

Mozzarella BIO, Gouda BIO were approved in 2021.

Since 2017, Rokiškio pieno gamyba UAB and Ukmergės pieninė, a branch of Rokiškio pieno

gamyba UAB, have been certified for the production of organic products - short shelf-life dairy

products intended for the local market, such as various yoghurts, sour milk, cream, cream, kefir,

kefir, sour milk, milk, cottage cheese, curd, cottage cheese, as well as butter and skimmed milk

powder.

Annual inspections and certificates issued by the SNE ,,EKOAGROS" show the company's

compliance with the requirements set. The production of organic products is subject not only to

strict requirements in terms of production processes, but also in terms of ingredients. The main

ingredient is organic milk, which is supplied only from organic farms approved by certification

bodies. On these farms, special requirements apply to the care of the cows, the feed and the milk

production environment.

In order to find new outlets and to meet the needs of our customers, the organic skimmed milk

powder and butter have been certified in accordance with the current requirements for the

handling of organic products in China and have been issued with an Organic Product Certificate.

The certification was carried out by the China Organic Food Certification Center (COFCC), an

authorised certification centre of the PRC.

The company has granted HALAL and KOSHER specific

quality certificates (for lactose, IBK, butter, skimmed milk

flour, butter, buttermilk flour, buttermilk flour, buttermilk

flour, buttermilk flour, etc.) for a number of products

(lactose, WPC, butter, skimmed milk powder).

AB Rokiškio sūris is granted the status of approved exporter

to the Republic of South Korea.

The competent authorities of Argentina, Brazil and Colombia have extended or issued

authorisations for the export of AB Rokiškio sūris products to these countries.

AB Rokiškio sūris is listed in the Certification and Accreditation Administration of the People's

Republic of China.

For more information on the safety and quality of the products, please refer to the company's

Sustainability Report (Social area. Product safety and quality).

15. Environment protection

AB Rokiškio sūris is a leader in the region's dairy processing sector, a socially responsible and

transparent business partner, constantly striving for sustainability and continuity of its activities,

and upholding long-standing traditions. We are committed to protecting the environment and

continuously reducing the negative impact of our activities, to efficient use of resources, including

energy and natural resources, and to complying with legal and standard requirements related to

quality, food safety, environmental protection and all our activities.

Risks arising from production activities are managed in accordance with Directive 2010/75/EC of

the European Parliament and of the Council on "Industrial Emissions (Integrated Pollution

Prevention and Control - IPPC)". AB Rokiškio sūris is classified as an installation subject to an

IPPC permit. The IPPC permit was issued on 30-12-2005, renewed on 12-09-2014, revised on 10-

07-2019.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

The establishment Rokiškio pieno gamyba UAB in Utena is classified as an installation subject to

an IPPC permit. Integrated Pollution Prevention and Control permit No TU(1)-37 issued on

27.01.2006, amended on 09.08.2017 No TU(1)-37/T-U.4-5/2017. The Ukmergė branch of UAB

"Rokiškio pieno gamyba" is not required to have an IPPC permit.

The best available techniques (BAT-BREF), resource consumption and emission levels of the

plants are in line with those achieved in the European Union, IPPC Reference Document on the

Best Available techniques in the Food, Drink and Milk Industries. BAT reports are part of the

environmental IPPC permits.

Environmental monitoring programmes were carried out in 2021 to monitor environmental

impacts:

1.Monitoring programme for the wastewater discharged by AB Rokiškio sūris after treatment at

the Ruopiškis (Alseta) Lake in Rokiškis district;

2. Monitoring programme for groundwater at the water supply point of AB "Rokiškio sūris";

3. Groundwater monitoring programme for AB Rokiškio sūris petrol stations in Rokiškis and

Obeli. The above monitoring programmes are carried out by the environmental engineering

research company Geoaplinka UAB, the reports have been submitted to the Environmental

Protection Agency, and no adverse environmental effects have been identified;

4. Environmental monitoring programme for the AB Rokiškio sūris farm facilities (monitoring of

emissions/discharges from pollution sources).

5. Environmental monitoring programme of UAB Rokiškio pieno gamyba (monitoring of

emissions/releases of pollutants).

We carry out the identified analyses in the authorised companies UAB Ekometrija and UAB

Rokvesta. Reports are submitted to the Environmental Protection Agency and no adverse

environmental effects have been identified.

To improve the management of environmental risks and performance, Rokiškio sūris AB

voluntarily implemented the ISO 14001 Environmental Management System standard in 2001 and

its subsidiaries in 2002 and 2003. The ISO 14001:2015/LST EN ISO 14001:2015 certificate is

valid until 16 June 2022, and the certificate of UAB Rokiškio pieno gamyba is valid until 10

March 2024. The certificate of the Ukmergė branch of UAB Rokiškio pieno gamyba is valid until

21-10-2023, the management system is certified and independently audited by UAB Bureau

Veritas Lit. No observations or non-conformities were found during the internal and external

audits in 2021.

Rokiškio sūris AB - environmental performance in 2021:

Steam condensate return system from remote plants expanded. This reduces heat and water losses.

The volume of condensate returned increased by 8.7%.

To save fuel, fuel rates for vehicles are controlled, consumption records are kept and routes are

optimised. Overall fuel consumption increased slightly by 0.3%, but fuel consumption per volume

of raw material transported decreased by 9.8% to 5.29 l/t raw material.

Vehicle fleet. In order to reduce fuel consumption and emissions, the vehicle fleet is gradually

being renewed and old vehicles are being phased out. In 2021, 17 new vehicles were purchased

and 24 vehicles were written off or sold. Of the vehicles in use, 14 are in the end-of-life category.

(5%) with hybrid drive.

The total vehicle fleet consists of 289 vehicles: 170 trucks, of which 11 petrol-gasoline, 160

diesel, 6 tractors, 111 cars, of which 27 petrol, 84 diesel. 31.5% of the vehicles are Euro 6

compliant.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Environmentally friendly packaging: in 2021, we will use a total of 3 643.6 tonnes of packaging.

The breakdown of packaging by type is given in the table below in tonnes and percentage:

Packaging

(t)

Plastic

497.1

13.20%

Paper, cardboard

988.6

26.20%

Metal

41.2

1.10%

Combined

669

17.70%

Wooden

1 438.5

38.10%

Total:

3 634.6

The exact share of recycled packaging will not be known until next year, as the accounting of

packaging has only changed from 2022, separating recyclable packaging. But it is already clear

that the share of paper, metal and wooden packaging is 70%. It is also known that 70% of

cardboard is recycled.

We follow the news of packaging manufacturers, packaging market trends and consumer

expectations and are ready for technological innovations in packaging, especially eco-friendly

ones.

For more information on waste generation, water consumption, Greenhouse Gas Emissions

(GHG) and other environmental issues, please refer to the Sustainability Report (Environmental

area).

16. Research and development activities

AB Rokiškio sūris is constantly investing and looking for ways to ensure continuous revenue

growth and improved operational efficiency.In 2021, the Company has earmarked EUR 14.9

million for investments. It has invested EUR 1.4 million in the improvement of the Grand hard

cheese technology alone.

The focus is on improving operational efficiency and developing new technologies to reduce

production and operating costs.

The constant objective of the companies of the Rokiškio sūris Group is to ensure the production

and supply to the consumer of products which meet the highest food safety and quality standards

and which create the highest added value.

To this end, research activities are constantly carried out both within the company and in

cooperation with scientific institutions such as KTU FTMC and Vilnius University. Most of the

research is carried out by the company's production specialists together with Prof. Angelo Frosio

from Italy (collaborator and founder of Centro Latte Lodi and Scuola d'Arte Bergognone).

In collaboration with scientific institutions, new products are developed to meet the needs of

today's consumers. The products are developed with sustainable raw materials and technologies in

mind, seeking added values for the functionality of the products (products enriched with vitamins,

milk proteins). The company's specialists regularly participate in exhibitions and seminars.

By taking advantage of the fact that Fonterra, one of the world's largest dairy companies, has become

a shareholder of AB Rokiškio sūris, the company's specialists can use the company's accumulated

knowledge and research capabilities in their research activities. Research and testing with Fonterra's

specialists is carried out both in-house and in Fonterra's research laboratory located in the company's

Research and Development Centre. Laboratory testing of products is carried out both in the Group's

in-house laboratories and in other laboratories in Lithuania and abroad, such as the National Institute

of Food and Veterinary Risk Assessment, KTU MI, Eurofins Germany, Poland, China, Campden Bri

food and drink innovation (UK), Galab laboratories (Germany), Qlip quality assurance in agrofood

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

(Netherlands), Mérieux NutriSciences Italia (Italy), Nutricontrol laboratory (Netherlands). The

company's laboratory in Rokiškis is accredited, certificate No LA01.129. The aim of these activities

is to ensure the safety of the products, to improve the recipes in order to achieve product uniqueness

and a more efficient production process, as well as to develop new products. In 2020, the laboratory

of AB Rokiškio sūris was recertified according to the new standard LST EN ISO 17025:2018.

In order to manage production processes more efficiently and to improve laboratory activities, in

2019 AB Rokiškio sūris implemented the LabdataLims laboratory information system in the

company's laboratory. The laboratory information system collects all the data related to the tests:

tests, repositories, hosting files, generating reports, importing files from the analyser, and integrating

software that automatically calculates the required data.

The laboratory's information system is protected against unauthorised access, and the system is only

accessible on the internal network of AB Rokiškio sūris.

In order to better understand the needs of the market, the company constantly cooperates with the

research company NIELSEN, an expert in the field, both by purchasing its services and by

participating in seminars organised by it. Another way of conducting market research is to participate

in global exhibitions in the most important regions, working with both the expertise of the largest

customers and the representatives of the largest suppliers.

As a result of these activities, the company is constantly offering completely new or improved

products to the market, tailored both to the specific market and to the specific customer. In order to

respond to the fact that market needs are changing faster and faster, the company will continue to

strengthen its research and development departments.

17. FINANCIAL RESULTS OF THE OPERATIONS

Alternative performance results

AB Rokiškio sūris presents in its financial statements financial performance indicators prepared in

accordance with International Financial Reporting Standards (IFRS) together with non-IFRS

financial performance indicators. These alternative performance indicators are important

indicators of its performance for investors and other users of financial statements. The alternative

performance measures should be treated as supplementary information prepared in accordance

with IFRS.

The Company sets out below the alternative performance measures and the methodology for

calculating them:

Financial indices (kEUR)

2021

2020

2019

2018

2017

Sales revenue

253 062

210 829

210 423

203 675

243 566

Gross profit

18 627

21 388

21 902

19 500

28 150

EBITDA

9 094

13 431

13 834

10 865

17 042

EBIT

965

4 171

4 101

1 193

8 330

Operating profit

965

4 171

4 101

1 648

8 330

Profit before tax (EBT)

596

3 972

3 914

1 619

8 290

Net profit/loss

553

4 061

4 101

1 918

8 156

Fixed assets

82 965

76 646

62 294

64 140

74 070

Current assets

119 902

120 424

106 774

106 071

88 589

Total assets

202 867

197 070

169 068

170 211

162 659

Shareholders' equity

142 480

145 428

130 771

130 319

134 096

Profitability (%)

Return on assets [ROA]

0.28

2.22

2.42

1.15

5.35

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Return on equity [ROE]

0.38

2.94

3.14

1.45

6.37

Gross profit margin

7.36

10.14

10.41

9.57

11.56

EBITDA margin

3.59

6.37

6.57

5.33

7.00

EBIT margin

0.38

1.98

1.97

0.59

3.42

Return on constant capital employed

[ROCE]

0.53

2.45

2.67

0.76

5.18

Profitability ratio

0.24

1.88

1.86

0.79

3.40

[EBT margin]

0.22

1.93

1.95

0.94

3.35

Financial structure

Liabilities/equity ratio

0.42

0.36

0.29

0.31

0.21

Equity to assets ratio

0.70

0.74

0.77

0.82

Debt to equity ratio

0.19

0.18

0.12

0.11

0.01

Debt ratio

0.30

0.26

0.23

0.18

Gross liquidity ratio

2.77

2.70

3.18

2.92

3.56

Market value indicators

Share price to earnings per share ratio

[P/E ratio]

144

24.33

21.00

50.20

11.00

Net earnings per share

0.02

0.12

0.05

0.25

Ratio

Method of calculation

Meaning of ratio

EBITDA

Earnings before Interest, Tax,

Depretiation and Amoritization

EBITDA – Operating profit before

depreciation of fixed assets, amortization and

impairment costs helps investors to assess the

potential for profit before investing in fixed

assets.

EBITDA margin

EBITDA / Income

EBITDA - the relationship with income

shows the effectiveness of company

performance

EBIT

Profit before tax and interest, i.e. net

profit + income tax + financial activity

costs.

EBIT – operational profit. EBIT is a very

important indicator, as all liabilities to

creditors are paid from the operational profit.

This indicator well reflects the company's

ability to generate cash flow.

EBT

Profit before tax, i.e. net profit + profit

tax.

Profit before deduction of income tax and

investing and financing activities at net value

Return on assets [ROA]

The ratio of EBIT for the past 12

months to the average of the total

assets over the past 12 months.

This indicator shows how much the

company's assets are effectively managed, i.e.

share of net profit to every euro of the

company's assets, which is one of the most

popular valuation rates

Return on equity [ROE]

The ratio of the net profit of the last 12

months to the average equity of the last

12 months.

The return on equity shows how much euro s

of net profit is attributable to one euro of

equity. This indicator is important for the

shareholders, taking into account their past

return on investment.

Returned on Capital

Employed [ROCE]

The ratio of operating profit (EBIT) to

operating income over the last 12

months and the average capital

employed over the past 12 months.

The ROCE Profitability Index evaluates the

recoverability of funds required by the firm

for its regular operations. It is often compared

to the loan rates on the market of that year.

ROCE is considered to be above the cost of

borrowed capital at that time.

Liability to equity ratio

Liability/Equity capital

The ratio of liabilities to equity shows what

the total amount of long-term and short-term

liabilities of the company is per euro of

equity.

Debt-to-assets ratio

Financial debts (long-term + short-

Its a financial indicator comparing company's

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

term) / Assets

financial debts with its entire assets. The

coefficient shows what part of the company's

assets is financed by borrowed funds.

Debt-to-equity ratio

Financial debts (long-term + short-

term) / Equity

This is one of the key financial leverage

indicators. The debt-to-equity ratio shows

how many euros of short-term and long-term

debt are per euro of equity. In calculating

debts, all liabilities of the company related to

interest payment are assessed.

Debt ratio

Net Debt / Equity

The ratio of net financial debt to equity shows

how many long-term and short-term financial

debts related to interest payments minus

available cash and other highly liquid short-

term financial assets are attributable to one

equity euro

General liquidity ratio

The ratio of current assets to current

liabilities

The current liquidity ratio shows the ability of

the company to settle short-term liabilities

using its current assets.

Price/earnings ratio (P/E

ratio)

Share price at end of period / (Net

profit / Number of shares)

The share price/earnings ratio reflects how

much investor pays for one euro of net profit

earned by the company in the past period.

Net earnings per share

Net profit / Number of shares

Earnings per share show how much of the net

profit earned by the company is attributable to

one share in circulation.

Profit/(loss) statement

In 2021, the sales revenue of AB Rokiškio sūris Group amounted to EUR 253 062 thousand, an

increase of 21% compared to 2020 (in 2020, the Group's sales revenue amounted to EUR 210 829

thousand).

In 2021, revenues from sales of fermented cheeses accounted for 52.1% (2020: 45.2%). In volume

terms, sales of fermented cheeses in 2021 are 31% higher than in 2020. This is due to the recovery

of the global dairy sales markets after the pandemic, both in Europe and the US.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Whey products are also up in 2021. Compared to 2020, these products were sold at higher prices

due to increased demand.

Export sales volumes of cream remained almost at the same level as in 2020, but there was an

almost 30% increase in sales prices for this product in 2021. The focus of the market

developments has been on the production of butter or cream.

However, sales of butter decreased compared to 2020, which influenced the small residual of this

product at the beginning of 2021 compared to the beginning of 2020.

In 2021, the revenue from the sale of fresh dairy products increased by 3.4 million euro compared

to 2020. This is due to an increase in selling prices of the commodity.

Costs:

In 2021, the Rokiškio sūris Group will incur product sales costs of EUR 234 435 thousand (in

2020 they will be EUR 189 441 thousand). In 2021, cost of sales increased by 23.8% or EUR 44

994 thousand. This significant change is due to the increase in the purchase price of raw milk and

the increase in the prices of energy resources (steam, electricity, gas), fuel, packaging, auxiliary

materials, spare parts, etc. due to the pandemic.

The main cost items in 2021 (EUR 168 571 thousand) were raw materials and consumables (EUR

147 359 thousand in 2020).

Sales, marketing and general administrative costs represented 7.4% of turnover in 2021 (EUR 18

815 thousand) and 8.3% in 2020 (EUR 17 524 thousand).

In 2021, sales and marketing costs increased by 17% (EUR 12 483 thousand), while in 2020 they

amounted to (EUR 10 692 thousand).

In 2021, the increase in sales and marketing costs is due to an increase in sales volumes of cheese

and an increase in transport costs due to rising fuel prices.

Profit:

The consolidated audited net profit of AB Rokiškio sūris Group for 2021 is EUR 553 thousand,

i.e. EUR 3 508 thousand lower than in 2020 (EUR 4 061 thousand).

The calculation of net profit takes into account direct and indirect production costs and costs not

related to direct activities. The main factor contributing to the decrease in profit was the low

selling prices of products in the first half of the year due to the pandemic and the increase in the

second half of the year, which started to increase and continued until the end of the year, as well as

the increasing prices of milk purchases, basic and auxiliary materials and services. Another

important factor contributing to the increase in costs was the drastic increase in energy prices in

the fourth quarter, starting in October.

The net profit margin of the Rokiškio sūris Group decreased to 0.22% in 2021 (1.93% in 2020).

EBITDA in 2021 will amount to EUR 9 094 thousand, i.e. 32.29 % down compared to 2020 (EUR

13 431 thousand). EBITDA margin in 2021: 3.59% (2020: 6.37%).

18. Group activity by segment

AB "Rokiškio sūris" The Group's business consists of the following segments: hard cheese, semi-

hard cheese, butter, milk, cream, sour cream, sour milk, yoghurt, cottage cheese, cottage cheese

and others. These segments have been aggregated into two main segments in the financial

statements on the basis of the similar nature of the products, the production process, the customer

group and the distribution method.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

The two main segments presented in the Group's business financial statements are:

- Fresh dairy products

- Cheese and other dairy products

The Group's other activities consist mainly of the collection of raw milk and this segment is not

large enough to be disclosed separately. Transactions between the segments are conducted in the

normal course of business. The fresh dairy segment has 2 external customers, each of which

individually accounts for more than 10% of the segment's total revenue.

The following is information on the impact of each of the operating segments on the Group's

financial performance.

2021

2020

Change (%)

Total sales revenue (EUR thousand):

253 062

210 829

20.03

Fresh dairy products

81 583

76 698

6.40

Cheese and other dairy products

171 232

132 356

29.37

Other segments

247

1 775

-86.08

Total gross profit (EUR thousand):

18 627

21 388

-12.91

Fresh dairy products

9 046

11 067

-18.26

Cheese and other dairy products

9 348

8 852

5.60

Other segments

233

1 469

-84.14

Gross profit by segment (EUR thousand)

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

19. Investment

In 2021, AB Rokiškio sūris continued its investment policy to increase the company's

competitiveness, production of higher value-added products, adoption of new products and

innovative technologies. The policy of implementation of the company's strategic objectives was

continued.

As in previous years, the investments were aimed at environmental protection, rational allocation

and use of energy resources. Part of the investments were aimed at modernising existing

equipment and buildings, saving cold, heat and water resources.

The transport fleet was renewed with the purchase of trucks and vans for the transport of products.

In the financial year 2021, the value of investments made by Rokiškio sūris Group amounted to

EUR 14.9 million.

One of the largest, innovative and significant investments at Rokiškio was the project to produce a

new product (protein), which was completed in the second half of 2021. This will cost €7.7

million. In a relatively short space of time, new equipment was built, production technology was

mastered, a lot of laboratory tests were carried out, and a number of consultations and expert

opinions took place. Thanks to the efficient and professional work of the specialists, the

technological process has been speeded up and the production of the product accelerated.

One of the other major investments in Rokiškis was the construction of an innovative robotic

packaging line for hard Grand cheese. The line's work has ensured traceability of production,

preservation of information and constant product inspection. Value of €1.2 million.

The investments in cheese production, whey processing, the laboratory and the energy bar were

small but technologically and technically significant and important.

In the transport department, new trucks, milk tankers and vans were purchased for the transport of

products.

In the subsidiary in Utena, the modernisation of the dry dairy and butter workshops was carried

out in 2021, and the yoghurt process was improved in the fresh dairy workshop.

In Ukmergė, all the investments have been in the cutting and packaging processes for Grand

cheeses:

- Weighing labelling unit

- Pallet wrapping unit

- Vacuum lifters (3 pcs)

- Vacuum line for hard cheese packaging

- Metal detectors

Investments in subsidiaries amounted to EUR 1.4 million.

20. Group business plans and forecasts

The investment objective of AB Rokiškio sūris is to continue to increase the efficiency of

production, focusing on production units, modernisation, repair and renewal of their equipment, as

well as on energy resources (steam, electricity, compressed air), water distribution and preparation

for production activities.

As every year, investment is planned to address environmental issues and to implement

sustainability. Investments will also be made in works and repairs on the shop floor and in

production-related departments.

The Group expects to invest EUR 9.7 million in 2022 to achieve its objectives and to expand.

The main areas of investment in 2022 are as follows:

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

- Acquisition of new equipment for the production workshops (cheese production, curing,

ripening, milk sugar, melting), modernisation of existing equipment, renovation of workshops and

buildings;

- Equipment for control modules;

- Testing and evaluation of raw milk and product quality;

- Improving the competitiveness of the company;

- Saving, rational use and distribution of energy resources;

- Reduction of environmental impact;

- Improvement of working conditions of employees and the production environment;

- Measures to improve the level of sanitation and hygiene in production and service units;

- To meet customer needs for the products produced;

- Modernisation of waste water treatment;

- Special transport;

- Other.

In the subsidiary in Utena, it is planned to invest in the acquisition of equipment for curd

production, improvement of the quality of dairy products, and improvement of the infrastructure

servicing the production process, which is essential for the success and efficiency of other

equipment.

In Ukmergė, investments are planned for cheese-cutting equipment.

Plans for sales markets

The most important and key challenge for the Company in 2022 is to launch and expand sales of

Grand cheese in the retail and foodservice markets in the EU and the US. On the Lithuanian

market, the Company plans to maintain sales at least at the current level (market share in Lithuania

~ 22%), by purifying the most valuable segments and aiming to reduce the total number of

assortment, which is a common market trend (shelf SKUs are planned to be reduced by

supermarket chains).

One of the priority sales areas is to strengthen sales of fresh produce and fermented cheeses in the

neighbouring Baltic countries.

INFORMATION ON THE COMPANY'S SHAREHOLDERS AND SHARES

21. Information on the Company's share capital

31 December 2021 The authorised capital of Rokiškio sūris AB consisted of:

Type of shares

Quantity of

(pcs.)

Nominal

value

(EUR)

Total nominal

value (EUR)

Share of

authorised

capital (%)

Ordinary registered

35 867 970

0.29

10,401,711.30

100

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

22. Company contracts with brokerage firms

AB "Rokiškio sūris" has concluded an agreement with UAB FMĮ "Orion securities" (A.Tumėno g.

4, LT-01109 Vilnius, tel. (8-5) 231 38 33, info@orion.lt) for the management of accounting of

securities issued by the Company and provision of investment services.

23. Data on trading in the issuer's securities on regulated markets

35 867 970 ordinary registered shares of AB "Rokiškio sūris" are listed on the Nasdaq Vilnius

Baltic Official List. (symbol RSU1L). Nominal value per share EUR 0,29.

The Nasdaq Vilnius Stock Exchange is the only trading market for the Company's shares. The

Company has been listed since 25 July 1995. The Company's shares are included in the OMX

Baltic Benchmark Index.

The Company has not issued any debt securities to the public.

There are no debt securities registered and issued for non-public circulation.

There are no securities which do not represent a participation in the authorised capital but whose

circulation is regulated by the Securities Law of the Republic of Lithuania.

No trading on other stock exchanges and other organised markets

Company's share trading statistics:

2017

2018

2019

2020

2021

Opening price, EUR

1.73

2.75

2.51

2.54

Closing price, EUR

2.75

2.51

2.52

2.92

2.88

Maximum price, EUR

2.99

2.81

2.75

2.98

3.18

Minimum price, EUR

1.65

2.25

2.2

2.1

2.6

Turnover, pcs.

1 230 178

277 058

159 107

161 788

218 200

Turnover, million euro

2.75

0.73

0.4

0.65

0.63

Capitalisation, million

euro

98.64

90.03

90.39

104.73

103.3

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Dynamics of the Company's share price and turnover during the reporting period

https://nasdaqbaltic.com/statistics/en/instrument/LT0000100372/trading

Dynamics of the company's share price and turnover over 4 years

https://nasdaqbaltic.com/statistics/en/instrument/LT0000100372/trading

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Dynamics of the company's shares (RSU1L), OMX_Baltic_Benchmark_GI and

OMX_Baltic_GI

indices:

https://nasdaqbaltic.com/statistics/en/charts

24. Restrictions on transfer of securities

There are no restrictions on holdings of securities or requirements to obtain the approval of the

company or other security holders.

25. Procedure for amending the company's articles of association

The Articles of Association of the Company shall be amended in accordance with the procedure

provided for by the laws of the Republic of Lithuania and the Articles of Association of the

Company. The decision to amend the Company's Articles of Association shall be taken by the

General Meeting of Shareholders of the Company by a qualified majority of 2/3 of the votes cast

by the shareholders present at the meeting, except for the exceptions provided for in the Law on

Joint-Stock Companies of the Republic of Lithuania.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

If the General Meeting of Shareholders adopts a decision to amend the Articles of Association of

the Company, a new version of the Articles of Association shall be drawn up and signed by a

person authorised by the General Meeting of Shareholders.

All amendments and additions to the Company's Articles of Association shall enter into force only

after they have been registered in accordance with the procedure established by the laws of the

Republic of Lithuania.

The Company's Articles of Association were amended on 10 December 2021. The Articles of

Association of Rokiškio sūris AB were adopted on 20 December 2010 by the decision of the

Extraordinary General Meeting of Shareholders. The new version of the Articles of Association of

Rokiškio sūris AB was registered in the Register of Legal Entities on 28 December 2021.

The Articles of Association were amended in order to increase the number of members of the

Company's Board of Directors and to bring the Articles of Association into line with the relevant

provisions of the Law on Joint-Stock Companies of the Republic of Lithuania.

26. Information on the Company's shareholders

The total number of shareholders of AB Rokiškio sūris on 31 December 2021 was 5 485.

Shareholding held by a group of shareholders (31/12/2021):

Name, surname

Name of company

Company code

Address

Ownership of

With persons

acting jointly

Number of

ordinary

registered

Share of

capital and

votes %

Share of

capital and

votes %

Pieno pramonės investicijų

valdymas, UAB

Company code 173748857

Pramonės g. 3,

Rokiškis

Lithuania

9 758 312

27.21

82.17*

SIA RSU Holding, reg.

No. 40103739795

Elizabetes iela 45/47,

LV-1010 Riga

8 953 883

24.96

Antanas Trumpa

Company’s Board

Chairman

Sodų 41a, Rokiškis

Lithuania

7 088 663

19.76

Fonterra (Europe)

Coöperatie U.A.,

CCI 50122541

Barbara Strozzilaan

356-360, EurBld2, 3e

verdieping, 1083HN

Amsterdam,

Netherlands

3 586 797

10.00

Dalius Trumpa

Company’s Manager

Sodų g.31, Rokiškis

Lithuania

83 500

0.23

INVL Asset

Management, UAB

(investment and pension

funds)

Gynėjų g.14, Vilnius

Lithuania

1 963 973

5.48

*The group of persons acting jointly consists of UAB Pieno Industriu Invest valdymas (27.21% of the Company's

authorised capital and votes), SIA RSU Holding (24.96% of the Company's authorised capital and votes), the strategic

investor Fonterra (Europe) Coöperatie U.A. (10.00% of the Company's authorised capital and votes), Antanas Trumpa

(19.76% of the Company's authorised capital and votes), and the Company's manager Dalius Trumpa (0.23% of the

Company's authorised capital and votes).

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

Distribution of shareholders of AB "Rokiškio sūris"

31 December 2021

27. Shareholders' rights

Shareholders have the following non-proprietary rights:

1) attend general meetings of shareholders;

2) to submit to the company in advance any questions relating to the agenda of general meetings

of shareholders;

3) vote at general meetings of shareholders in accordance with the rights attached to the shares;

4) to receive the information about the company referred to in Article 18(1) of the Law on Joint

Stock Companies of the Republic of Lithuania;

5) to file a lawsuit with the court, requesting to compensate the company for damages incurred as

a result of non-performance or improper performance of the duties of the company's manager and

members of the Management Board, as set out in the Law on Companies of the Republic of

Lithuania and other laws, as well as the company's Articles of Association, and in any other cases

provided for by law;

6) to obtain the information referred to in Article 89(6) of the Law on Markets in Financial

Instruments on a public limited liability company whose shares are admitted to trading on a

regulated market;

7) other non-property rights established by the laws of the Republic of Lithuania.

Shareholders have the following property rights:

1) receive a share of the company's profits (dividend);

2) to receive company funds when the company's share capital is reduced in order to pay out

company funds to shareholders;

3) to receive shares free of charge when the authorised capital is increased from the company's

funds, except for the exception provided for in Article 42(3) of the Law on Joint Stock

Companies of the Republic of Lithuania, and in the case provided for in Article 471 of the Law

on Joint Stock Companies of the Republic of Lithuania;

4) the right of first refusal to acquire shares or convertible bonds issued by the company, except

in the event that the General Meeting of Shareholders decides to waive the right of first refusal

for all shareholders in accordance with the procedure set out in the Law on Companies of the

Republic of Lithuania;

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

5) to lend to the company in the manner prescribed by law, but the company shall not be entitled

to pledge its assets to the shareholders when borrowing from its shareholders. When a company

borrows from a shareholder, the interest shall not exceed the average interest rate of commercial

banks in the place of residence or business of the lender at the time of the conclusion of the loan

agreement. In such a case, the company and the shareholders are prohibited from agreeing on a

higher interest rate;

6) to receive a share of the assets of the company in liquidation;

7) to have other property rights provided for by the laws of the Republic of Lithuania.

The rights referred to in paragraphs 1, 2, 3 and 4 shall be vested in the persons who were

shareholders of the company at the end of the tenth business day following the date of the general

meeting which adopted the relevant resolution.

28. Details of repurchases of the issuer's own shares

During the reporting period (1 January 2021-31 December 2021) AB Rokiškio sūris did not

acquire or dispose of any of its own shares.

Based on the repurchases of treasury shares in previous years, as at 31 December 2021. Rokiškio

sūris AB held 861 274 treasury shares, representing 2.40 % of its authorised capital. The total

nominal value of the treasury shares to be acquired, together with the nominal value of the

treasury shares already held, shall not exceed 1/10 of the Company's authorised capital.

The Company has established a reserve of EUR 10,850 million for the acquisition of treasury

shares. The shares were acquired through the official offering market of the Nasdaq Vilnius Stock

Exchange. The total price of the shares acquired by AB Rokiškio sūris is EUR 2 108 397.82.

29. Dividends

The General Meeting of Shareholders decides on the allocation and payment of dividends when

distributing the company's distributable profit.

The Ordinary General Meeting of Shareholders of AB Rokiškio sūris, held on 30 April 2021,

approved the audited consolidated financial statements and the Company's financial statements

for 2020 and the distribution of the Company's 2020 profit. Dividends were distributed in the

amount of EUR 3 500 669.60 or EUR 0.10 per ordinary registered share.

Below are the details of the dividends declared and paid over the last 10 years:

Year

Dividends, EUR

Dividends per share, EUR

2011

1 015 578.08

0.029

2012

1 015 578.08

0.029

2013

1 015 578.08

0.029

2014

Dividends were not paid

2015

2 341 737.37

0.07

2016

3 228 117.30

0.10

2017

3 586 797.00

0.10

2018

3 506 165.30

0.10

2019

3 500 669.60

0.10

2020

3 500 669.60

0.10

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

AB Rokiškio sūris has a Dividend Policy approved by the General Meeting of Shareholders. In

accordance with this Dividend Policy, the Company's Board of Directors, when proposing to the

General Meeting of Shareholders to allocate dividends, will be guided by the signed Shareholders'

Agreement, according to which 100% of the Company's profit for the financial period, less the

Company's funds earmarked by the Board for CAPEX, working capital and/or other purposes, will

be allocated to the dividends. In the event that the Company's Board of Directors foresees a

significant amount of investments, which would result in the Company's profit for the financial

period being insufficient to pay dividends in accordance with the dividend provisions described

above, the Board of Directors of the Company will endeavour to maintain the continuity of the

payment of the dividends for the previous financial periods, taking into account the Company's

financial situation and the trend in the global dairy industry market.

The General Meeting of Shareholders may not resolve to declare and pay dividends if any of the

following conditions are met:

(1) the company has outstanding obligations which have fallen due before the decision is taken;

(2) the amount of the distributable profit (loss) for the financial year under review is negative

(loss);

(3) the company's equity is less than, or would become less if dividends were paid, than the sum of

the company's share capital, statutory reserve, revaluation reserve and reserve for the acquisition

of own shares.

A company that fails to pay its statutory taxes by the due dates cannot pay dividends, annual

bonuses to board members and bonuses to employees.

Dividends shall be payable to those persons who, at the close of business on the record date for the

rights of the General Meeting of Shareholders which declared the dividend (the close of business

on the tenth business day following the date of the General Meeting of Shareholders which made

the decision), were shareholders in the company or otherwise legally entitled to receive the

dividend.

The company shall pay the dividend within 1 month from the date of the decision to distribute

profits. The dividend may be in respect of a financial year or a period of less than a financial year.

Dividends for a period shorter than the financial year shall be granted by a decision of the general

meeting of shareholders. Shareholders holding at least 1/3 of the total number of votes shall have

the right of initiative in respect of dividends for periods of less than one financial year. A general

meeting of shareholders whose agenda shall include the question of the granting of dividends for a

period shorter than a financial year shall be held within 3 months of the end of the period for

which the dividends are proposed to be granted, but no earlier than the approval of the set of

annual accounts and the distribution of the company's profit (loss) for the preceding financial year,

and no later than the end of the financial year.

Dividends for periods shorter than a financial year may be granted if all the following conditions

are met:

1) the set of interim financial statements for the period of less than one financial year is approved;

2) the amount of profit or loss for the period of less than one financial year is positive (no loss);

3) the amount of the dividend payment does not exceed the amount of the profit (loss) for the

period shorter than the financial year, the amount of the retained earnings (loss) for the previous

financial year carried forward to the current financial year, less any part of the profit for the period

shorter than the financial year which is required to be allocated to the reserves in accordance with

the Law on Public Limited Companies of the Republic of Lithuania or the Articles of Association

of the Company;

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

4) the company has no outstanding obligations which have fallen due before the decision is taken

and, after payment of the dividend, would be in a position to meet its obligations in respect of the

current financial year.

After the payment of a dividend for a period shorter than a financial year, the payment of a

dividend for a period shorter than a financial year may not be made earlier than within 3 months.

COMPANY MANAGEMENT

30. The company's governing bodies

The Articles of Association of AB Rokiškio sūris, registered in the Register of Legal Entities,

provide for the following governing bodies of the Company:

- The General Meeting of Shareholders,

- The Board of Directors,

- The Chief Executive Officer of the Company (Director).

The Company does not have a Supervisory Board.

31. Corporate governance and organisational structure of the

Company Group

The management structure of the Rokiškio sūris Group (hereinafter referred to as the Group) is

organised according to the main functions, i.e. sales and marketing, production, financial

management, milk purchasing, logistics and vindication. The functional directors formulate and

develop the Group's strategy, tactics and objectives in accordance with their assigned functions.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

GENERAL MEETING OF SHAREHOLDERS

32. Information on the competence and procedure for convening the

General Meeting of Shareholders

The competence and convening procedure of the General Meeting of Shareholders shall not differ

from the competence and convening procedure of the General Meeting of Shareholders set out in

the Law on Companies of the Republic of Lithuania.

The right of initiative to convene the General Meeting of Shareholders of Rokiškio sūris AB shall

be vested in the Management Board and the shareholders whose shares carry at least 1/10 of the

total number of votes at the General Meeting of Shareholders.

The notice of the General Meeting of Shareholders of the Company to be convened shall be made

public in the Republic of Lithuania and in all other Member States of the European Union, as well

as in the countries belonging to the European Economic Area, at least 21 days before the General

Meeting of Shareholders, in accordance with the procedure established by the Securities Law. The

notice of convening the General Meeting of Shareholders shall be additionally published in the

electronic publication "Public Notices of Legal Entities" published by the State Enterprise Centre

of Registers in the source specified in the Articles of Association.

Persons who were shareholders of the company at the end of the record date of the meeting shall

be entitled to attend and vote at the General Meeting of Shareholders or at a repeated General

Meeting of Shareholders, in person, except for the exceptions provided for by law, or by proxy, or

by a person with whom a contract of assignment of voting rights has been concluded. A

shareholder's right to participate in a general meeting shall also include the right to speak and to

ask questions. The record date of a meeting of a public limited liability company shall be the fifth

business day preceding the general meeting or the fifth business day preceding a reconvened

general meeting of shareholders.

A shareholder may vote in writing by completing a general ballot paper. The form of the General

Ballot Form is available on the Company's website www.rokiskio.com in the Investors section and

is also available with the draft resolutions submitted by the Company via the Central Regulated

Information Submission Database. The completed General Ballot Form must be signed by the

shareholder or his/her authorised person. The completed and signed by the shareholder or other

person entitled to vote general ballot paper and the document confirming the right to vote shall be

submitted to the Company in writing not later than on the last business day before the meeting, by

registered mail to Pramonės g. 3, LT- 42150, Rokiškis, or by hand delivery to the Company during

business days at the Company's registered office.

The Company does not offer the possibility to attend and vote at the meeting by electronic means.

A general meeting of shareholders may pass resolutions and shall be deemed to have been held

when the shareholders holding more than ½ of the total number of votes are present. If a quorum

is established, it shall be deemed to be present for the entire meeting. If a quorum is not present,

the general meeting shall be deemed not to have been held and a reconvened general meeting shall

be convened, which shall have the right to take decisions only on the agenda of the meeting that

was not held and shall not be subject to the quorum requirement. The reconvening of the General

Meeting of Shareholders shall be convened not earlier than 14 days and not later than 21 days after

the date of the failed General Meeting of Shareholders. The shareholders shall be notified of the

reconvened general meeting in the manner provided for in Article 261(3) of the Law on

Companies no later than 14 days before the reconvened general meeting.

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100

An ordinary general meeting of shareholders must be held annually at the latest within 4 months

after the end of the financial year.

Shareholders holding shares carrying at least 1/20 of the total votes shall have the right to propose

items to be added to the agenda. The proposal shall be accompanied by draft resolutions on the

proposed items or, where no resolutions are required, explanations of each proposed item on the

agenda of the General Meeting of Shareholders. The proposal to supplement the agenda shall be

submitted in writing by registered mail to AB "Rokiškio sūris" at the address Pramonės g.3, LT-

42150 Rokiškis, or by e-mail at rokiskio.suris@rokiskio.com. The agenda shall be supplemented

if the proposal is received not later than 14 days prior to the date of the General Meeting of

Shareholders.

Shareholders holding shares representing at least 1/20 of the total votes shall have the right to

propose new draft resolutions on the issues included in the agenda of the meeting. The draft

resolutions shall be submitted in writing by registered mail to AB "Rokiškio sūris", Pramonės g.3,

LT-42150 Rokiškis, or by e-mail to rokiskio.suris@rokiskio.com. The shareholders shall also have

the right to propose draft resolutions on the items on the agenda of the Meeting in writing during

the Meeting.

Shareholders attending the General Meeting of Shareholders shall be registered in the shareholders

registration list. This list shall indicate the number of votes that each shareholder holds.

A person attending a general meeting of shareholders and entitled to vote shall produce proof of

identity. A person who is not a shareholder shall, in addition to this document, produce a

document certifying that he is entitled to vote at the General Meeting. The requirement to produce

proof of identity shall not apply to voting by written ballot in the form of a single ballot paper. The

form of the general voting form is available on the Company's website at www.rokiskio.com

under "Investors".

If a shareholder so requests, the Company shall, not later than 10 days before the General Meeting

of Shareholders, send the General Ballot Paper by registered mail free of charge, or deliver it by

hand and by signature. The completed postal ballot paper shall be signed by the shareholder or

his/her authorised representative. The completed and signed blank ballot paper and the document

confirming the right to vote shall be submitted to the company in writing not later than on the last

working day before the meeting, by registered post to Pramonės g.3, LT-42150 Rokiškis, or by

hand delivery to the company at the registered office of the company at the above address on

working days.

Only fully paid-up shares confer the right to vote at other General Meetings. Each share carries

one vote at a general meeting of shareholders.

The General Meeting of Shareholders shall have the exclusive right to:

1) amend the company's statutes;

2) change the registered office of the company;

3) elect the members of the Supervisory Board, or, in the absence of a Supervisory Board, the

members of the Management Board, or, in the absence of a Supervisory Board or a Management

Board, the Chief Executive Officer;

4) to dismiss the Supervisory Board or its members, as well as the Management Board or its

members elected by the General Meeting of Shareholders and the Chief Executive Officer;

5) to elect and dismiss the auditor or audit firm for the audit of the annual financial statements,

and to determine the terms of remuneration for audit services;

6) to decide on the approval of the remuneration policy of public limited liability companies

whose shares are admitted to trading on a regulated market;

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7) determine the class, number, nominal value and minimum issue price of the shares to be issued

by the company;

8) to decide on the conversion of shares of one class of the company into shares of another class,

and to approve the description of the procedure for the conversion of shares;

9) to decide to change the number of shares of the same class issued by the company and the

nominal value per share without changing the amount of the share capital;

10) to approve the set of annual accounts;

11) to decide on the appropriation of profits (losses);

12) to decide on the creation, use, reduction and elimination of reserves;

13) to approve the interim financial statements drawn up for the purpose of deciding on the

distribution of dividends for a period of less than a financial year;

14) to decide on the distribution of dividends for a period of less than a financial year;

15) to decide on the issue of convertible bonds;

16) to decide to revoke the pre-emptive right of all shareholders to acquire shares or convertible

bonds of a particular issue of the company;

17) to decide to increase the share capital;

18) to decide to reduce the authorised capital, except for the exceptions provided for in the

Companies Act;

19) to decide on the acquisition by the company of its own shares;

20) to decide on the allotment of Shares to employees and/or members of organs,

21) to approve the rules for the granting of Shares;

22) to decide on the reorganisation or demerger of the company and to approve the terms of the

reorganisation or demerger;

23) decide on the restructuring of the Company;

24) to decide on the restructuring of the Company in the cases provided for by the Law on

Corporate Restructuring;

25) to take a decision to liquidate a company, to cancel the liquidation of a company, except for

the exceptions provided for in the Companies Act;

26) to elect and dismiss the company's liquidator, except for the exceptions provided for in the

Companies Act.

The General Meeting of Shareholders may also decide on other matters falling within its

competence under the company's Articles of Association, provided that, in accordance with the

Companies Act, such matters do not fall within the competence of other organs of the company

and are not essentially functions of the management bodies.

A decision of the General Meeting of Shareholders shall be deemed to be adopted when more

shareholders vote in favour of it than against it, with the exception of items 1, 6, 7, 8, 9, 11, 12, 14,

15, 17, 18, 21, 22, 23, 24, 25 above, which shall be adopted by a 2/3 (two-thirds) vote of the total

number of shares of all the shareholders present at the Meeting, and for item 16, the decision shall

require 3/4 (three-quarters) of the votes of all the shares of the shareholders present at the General

Meeting of Shareholders and entitled to vote on the matter.

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102

The Company's General Meetings of Shareholders were convened in 2021:

During 2021, two General Meetings of Shareholders of AB Rokiškio sūris were convened and

held on the initiative and by the decision of the Board of the Company.

At the General Meeting of Shareholders of the Company held on 30 April 2021, the shareholders

were presented with the consolidated annual report of Rokiškio sūris AB for 2020 and the

auditor's report on the consolidated financial statements and the annual report of Rokiškio sūris

AB for 2020, and the audit committee's report was approved, and the audit committee's report on

the consolidated financial statements of Rokiškio sūris AB for 2020 was approved. The

consolidated financial statements were approved, the distribution of the Company's profit for 2020

was approved, a dividend of EUR 0.10 per ordinary registered share (total dividend of EUR

3,500,669.60) was distributed, a decision was taken to buy back up to 10% of the Company's

shares, and the Company's share capital was approved. The remuneration report of the manager

and the members of the Board of Directors of AB Rokiškio sūris was approved, new members of

the Audit Committee were elected for a four-year term - Kęstutis Gataveckas - Director of UAB

Perlas Finance (independent member); Valdas Puzeras - independent management and financial

consultant (independent member); and Rasa Žukauskaitė - (finance department of AB Rokiškio

sūris). The audit firm UAB PricewaterhouseCoopers was selected to audit the 2021 annual

consolidated financial statements of AB Rokiškio sūris Group and the Parent Company.

10 December 2021 On 20 December 2021, the Extraordinary General Meeting of Shareholders of

the Company approved the new Articles of Association of Rokiškio sūris AB and elected new

members of the Board of Directors - Antanas Trumpa (Chairman of the Board of Directors in the

previous term), Darius Norkus (Sales and Marketing Director of Rokiškio sūris AB), Ramūnas

Vanagas (Director of Preparations for Lithuania, Rokiškio sūris AB), Paul M Campbell

(independent member), Jonas Vaičaitis (independent member) and Thijs Bosch (Managing

Director Europe, Fonrerra Co-operative Group Limited). The Board members were elected for a 4-

year term of office.

All General Meetings of Shareholders of Rokiškio sūris AB held in 2021 were attended by the

CEO of the Company, the Chairman of the Board of Directors of the Company and the CFO of the

Company.

33. Board of Directors of the Company

The Board is the collegiate management body of the Company, consisting of 6 (six) members. The

members of the Board shall be elected and recalled by the General Meeting of Shareholders in

accordance with the procedure established by the Companies Law. The members of the Board

shall elect the Chairman of the Board. The number of terms of office of a member of the Board

shall be unlimited. Only a natural person may be elected as a member of the Board. A member of

the Supervisory Board of the Company (if the Company has a Supervisory Board) and a person

who is not entitled to hold such office under the law shall not be a member of the Management

Board. The powers of the members of the Management Board are defined in the Companies Act

and the Articles of Association of the Company.

If the Management Board is recalled, resigns or otherwise ceases to hold office before the expiry

of its term of office, a new Management Board shall be appointed for a new term of office. If

individual members of the Board are elected, they shall be elected only until the end of the term of

office of the existing Board.

The Board may take decisions and a meeting of the Board shall be deemed to have taken place

when 2/3 or more of the members of the Board are present. Members of the Board who have voted

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103

in advance shall be deemed to be present at the meeting. A decision of the Board shall be adopted

by a greater number of votes in favour than against.

The Board held 7 meetings during 2021. (3 Board meetings in 2020). Due to the COVID-19

pandemic, all Board meetings were held remotely. Six Board meetings were attended by all Board

members, one of which was not attended by the Chairperson due to illness, but he had given a

proxy to another Board member. Five meetings were held in accordance with the pre-arranged

schedule of Board meetings and two meetings were convened in accordance with the procedure

laid down in the Law on Public Limited Companies of the Republic of Lithuania and in the Rules

of Procedure of the Board in the event of important matters requiring a decision of the Board. The

Board approved the Company's 2020 consolidated and Company financial statements and the

annual report, proposed the 2020 profit distribution project to the General Meeting of

Shareholders for approval, proposed the project for the buy-back of treasury shares, approved the

Company's remuneration report, which was submitted to the General Meeting of Shareholders for

approval. The Board also analysed the reports of the Management and Audit Committees. 29 June

2021. The Company's Board of Directors adopted a decision to establish a subsidiary UAB

DairyHub.LT, which is 100% owned by AB Rokiškio sūris. The Board proposed candidates for

the new Board of the Company and the nomination of the Company's audit firm.

The members of the Board are paid bonuses for their work on the Board in accordance with the

procedure set out in Article 59 of the Companies Law. The amount of royalties depends on the

Company's performance. The General Meeting of Shareholders shall decide on the payment of

bonuses. In 2021 (for 2020), the Company did not grant any bonuses to the members of the

Management Board.

There are no other additional payments to the Chairman of the Board in connection with the

incentive scheme.

Board Members of Rokiškio sūris, AB:

(Elected at the Extraordinary General Meeting of the Company on 10.12.2021)

Antanas Trumpa – the Company‘s Board Chairman (as from 13.12.2017)

Work experience

AB Rokiškio sūris has been operating since 1966. 1971 -

2017 Head of the Company (Director).

Education

1966 Kaunas Polytechnic Institute, specialist in food

industry machinery and apparatus, qualified as a

mechanical engineer. In 1979, at Kaunas Polytechnic

Institute, he defended his thesis as a candidate of

technical sciences entitled "Organisation of the work of

vacuum apparatus", for which he was awarded a PhD in

mechanical engineering on 12 October 1994. The

doctorate degree was awarded by the Lithuanian Science

Council on 1994.

Shares in AB "Rokiškio sūris"

Directly owns 7 088 663 shares (19,76 % of the

authorised capital and votes) Together with related

parties 29 471 155 shares (82,17 % of the authorised

capital and votes).

Participation in the activities of other

companies

Chairman of the Board of Rokiškio pienas UAB

(company code 300561844, registered office address

Pramonės g. 8, Utena) and Rokiškio pieno gamyba UAB

(company code 303055649, registered office address

Pramonės g. 8, Utena).

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104

Darius Norkus – Member of the company's board. Deputy Chairman of the Board.

Member of the Board since 2008 (re-elected for a new 4-year term of office at the Company's

General Meeting of Shareholders on 10.12.2021).

Work experience

Since 2001 Sales and Marketing Director of AB

"Rokiškio sūris" (company code 173057512, address

Pramonės g.3, Rokiškis).

Education

Kaunas University of Technology, graduated engineer

(1993). Baltic Management Institute, Master's degree in

Business Administration (EMBA programme, 2000).

Shares in AB "Rokiškio sūris"

No shares.

Participation in the activities of other

companies

Shareholder of UAB Pieno pramonės investiciju

valdymas (company code 173748857, adr., Pramonės g.

3, Rokiškis), owns 4,07 % of the shares and votes of

UAB Pieno pramonės investiciju valdymas.

Paul M Campbell - Independent member of the Company's Board.

Work experience

Director and owner of Osmotics Consulting Ltd.

Osmotics Consulting provides dairy and other

agricultural companies with strategic, M&A,

management and financial advice. Paul has over 35

years of experience in general management, setting up

and managing international joint ventures, marketing,

engineering and finance. Worldwide, Paul has worked

in Australia, USA, Japan, Latin America, Russia, China,

India, Europe and North Africa. Paul M. Campbell

currently lives in London.

Education

University of Canterbury, New Zealand, Chemical and

Industrial Engineering. Massey University, New

Zealand, Diploma in Dairy Science and Technology.

Shares in AB "Rokiškio sūris"

No shares

Participation in the activities of other

companies

Mr Campbell is a director of a multinational joint

venture in Brazil and of the largest dairy processing

company in Chile ("Soprole").

Ramūnas Vanagas – Member of the company's board.

Member of the Board since 2006 (re-elected for a new 4-year term of office on 10.12.2021 at the

Company's Extraordinary General Meeting of Shareholders)

Work experience

Since 2005 Development Director of AB "Rokiškio

sūris" (company code 173057512, address Pramonės

g.3, Rokiškis). Since 2020 Director of Milk Purchasing

for Lithuania at AB Rokiškio sūris (company code

173057512, address Pramonės g.3, Rokiškis).

Education

Lithuanian Academy of Agriculture, specialisation in

economics and organisation.

Shares in AB "Rokiškio sūris"

No shares.

ROKISKIO SURIS, AB

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105

Participation in the activities of other

companies

Shareholder of UAB Pieno pramonės investiciju

valdymas, holds 4,07 % of shares and votes in UAB

Pieno pramonės investiciju valdymas (company code

173748857, adr., Pramonės g.3, Rokiškis); Member of

the Management Board of the Latvian company SIA

Jekabpils piena kombinats (company code

45402008851, registered office address Akmenu iela 1,

Jekabpils, Latvia), no shares.

Jonas Vaičaitis – Independent member of the Company's Board.

Work experience

1992-2018 m. Head of Branch, AB SEB Bank, Senior

Project Manager, Client Department.

Education

Higher engineering degree, Kyiv Polytechnic Institute.

Shares in AB "Rokiškio sūris"

No shares.

Participation in the activities of other

companies

Not involved in other companies.

Thijs Bosch - Member of the company's board.

Work experience

Strategy consultant at Bain & Company (2006-2010)

Sourcing director Fonterra Europe (2011-2015)

Sales director Fonterra Europe (2016-2019)

GM Fonterra Europe (2019-2021)

Managing Director Europe (2022)

Education

Msc in Finance from VU university Amsterdam

Shares in AB "Rokiškio sūris"

No shares.

Participation in the activities of other

companies

No information available on participation in other

companies.

Company manager (director):

The Company is managed by the Chief Executive Officer (Director). The Chief Executive Officer

(Director) of the Company is the Company's sole management body, which organises the day-to-

day business activities of the Company, considers and decides on the Company's long-term

strategic plan and business plan. In the Company's relations with other persons, the Director shall

act on behalf of the Company with sole authority.

The Chief Executive Officer attends all General Meetings of Shareholders, including those held

during the period under review.

The duties and powers of the Director are defined in the Law on Companies of the Republic of

Lithuania and the Articles of Association of the Company.

Details of the Company's Chief Executive Officer (Director):

Dalius Trumpa - Company's Chief Executive Officer (Director)

(Appointed by the Board of Directors of the Company as of 01.01.2018)

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106

Work experience

AB Rokiškio sūris (company code 173057512, address

Pramonės g.3, Rokiškis) has been operating since 1991.

2002-2006 Production Director of AB Rokiškio sūris.

2007-2017 Deputy Director of Rokiškio sūris AB.

Since 2018.01.01.01 Director of AB Rokiškio sūris.

Since 02.01.2007 Director of the subsidiary UAB

Rokiškio pienas (company code 300561844, registered

office address Pramonės g.8, Utena).

Since 29.04.2013 Director of the subsidiary UAB

"Rokiškio pieno gamyba" (company code 303055649,

registered office address Pramonės g.8, Utena).

Education

Kaunas University of Technology, Food Industry

Machinery and Apparatus, Mechanical Engineer.

Shares in AB "Rokiškio sūris"

Directly owns 83 500 shares (0.23 % of authorised

capital and votes). Together with related parties, holds

29 471 155 shares (82.17 % of authorised capital and

votes)

Participation in the activities of other

companies

Shareholder of UAB Rokvalda (company code

300059165, address Basanavičiaus g.16A-125,

Vilnius), holding 100% of shares and votes.

Since 2010 Chairman of the Board of the Latvian

company SIA Kaunata (company code 240300369,

registered office address Rogs, Kaunata pag., Rezeknes

nov., Latvia). He does not own shares in this company.

Since 11 December 2013 Director of SIA "RSU

Holding" (company code 40103739795, business

address Elizabetes iela 45/47, Riga). He holds 100 % of

the shares of SIA RSU Holding.

The shareholder of UAB "Pieno pramones investiciju

valdymas" (company code 173748857, address

Pramonės g.3, Rokiškis) holds 4.07 % of the shares and

votes of UAB "Pieno pramones investiciju valdymas";

34. Committees within the Company

Audit Committee of AB Rokiškio sūris:

The Company's Audit Committee is composed of 3 members, 2 of whom are independent. The

term of office of the members of the Audit Committee is 4 years. The members of the Audit

Committee shall be elected by the General Meeting of Shareholders on the recommendation of the

Board of Directors of the Company. On 30 April 2021, the General Meeting of Shareholders

elected new members of the Audit Committee:

1.Kęstutis Gataveckas - Director of UAB Perlas Finance (independent member). He is a member

of the Board of Directors of AB "Rokiškio sūris" (Member of the Board).

2.Valdas Puzeras - independent management and financial consultant (independent member).

Does not hold any shares in Rokiškio sūris AB.

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107

3. Rasa Žukauskaitė - (Employee of the Finance Department of Rokiškio sūris AB). Has 2 shares

in AB "Rokiškio sūris".

The term of office of the members of the Audit Committee expires on 30 April 2025.

The Audit Committee is a collegiate body, which takes its decisions at meetings. The Audit

Committee may take decisions and a meeting of the Audit Committee shall be deemed to have

taken place when at least two (2) members of the Committee are present. A decision shall be

adopted by the affirmative vote of at least two (2) members of the Audit Committee present at the

meeting.

The functions, rights and duties of the Audit Committee shall be regulated by the Regulations on

the Establishment and Activities of the Audit Committee of AB Rokiškio sūris, approved by the

General Meeting of Shareholders of the Company, as well as by other documents regulating the

activities of the Audit Committee.

Main functions of the Audit Committee:

1.Monitor the process of preparing the financial statements of the Company and its

Subsidiaries;

2.Monitor the effectiveness of the Company's internal control, risk management and internal

audit systems;

3. To make recommendations to the Board of Directors of the Company in relation to the

selection of the external audit firm and to monitor the audit process;

4.To monitor the independence and objectivity of the external auditor and the audit firm;

5. To inform the Board of Directors of the Company of significant deficiencies in internal

control over the financial statements identified by the external and internal auditors and to

make recommendations for their correction;

6.Act honestly and responsibly for the benefit and welfare of the Company and its

shareholders.

In 2021, the Audit Committee held 5 meetings to discuss the principles for the preparation of the

2020 consolidated financial statements and the conclusions reached, the process for the

preparation of the 2021 half-yearly consolidated financial statements, the main risks, the measures

to minimise risks, the application of the accounting principles, and the conclusions reached.

The meeting of 30 April 2021 included an assessment of the independence of the independent

members of the Audit Committee, after which it was found that the independent members fulfilled

all the requirements and the Chairman of the Audit Committee was elected.

The Audit Committee reported on the functions assigned to their activities, i.e. the preparation of

the financial statements of the Company and its subsidiaries, the functioning of the Company's

internal control risk management and internal audit systems.

During a meeting on 18 November 2021, the audit team discussed with PricewaterhouseCoopers

UAB a summarised audit plan setting out the stakeholders' and PricewaterhouseCoopers UAB's

overall understanding of the current situation, a description of the main risks, the ESEF's financial

reporting, the reporting of corporate sustainability information, the audit plan of the external

auditors, and other issues. The Audit Committee approved the draft audit engagement and had no

comments. In accordance with the requirements of the Audit Law of the Republic of Lithuania, the

Audit Firm has provided the Audit Committee with a written confirmation of the Audit Firm's

independence. The Audit Committee has not identified any instances of the provision of services

that are contrary to the laws on auditing of the Republic of Lithuania and the principles of

professional ethics of auditing and that may affect the independence of the audit firm.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

108

There are no other committees in the company.

35. Management of the company

Members of the company's management

Position

Name, surname

In office since

Director

Dalius Trumpa

2018-01-01

Director of Finance

Antanas Kavaliauskas

2002-05-01

Director of Milk Purchasing for

Lithuania

Ramūnas Vanagas

2020-01-01

Director of Vindication

Jonas Kvedaravičius

2002-05-01

Director of Logistics

Jonas Kubilius

2002-05-16

Sales and Marketing Director

Darius Norkus

2001-07-18

Management bonus system:

Members of the Company's management receive a salary and variable components depending on

the Company's performance, market conditions and other factors. The Group does not have any

management bonus schemes in place.

36. Employees

The average number of employees in the Rokiškio sūris Group in 2021 is 1,326, a decrease of

4.33% or 60 employees compared to 2020 (1,386). The decrease in the number of employees is

due to the reduction of the raw milk outlets, which resulted in a reduction in the number of milk

outlet managers and the number of employees in the logistics department. The number of staff

increases slightly during the summer season when more raw milk is purchased.

In 2021, the Company's total workforce consists of 80.4% labourers (81.5% in 2020), 19.0%

professionals (17.96% in 2020) and the number of managerial staff remains unchanged with 8

managers.

Group employees by category

Employee group

Average number of employees

Change

2021.12.31

2020.12.31

(%)

Managers*

Professionals

252

249

1.2

Workers

1066

1129

-5.58

Total:

1326

1386

-4.33

*Functional directors are assigned to the company's senior management.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

109

As at 31 December 2021, 56.5% of men and 43.5% of women were employed in the Rokiškio

sūris group. (54,8 % and 45,2 % respectively on 31 December 2020).

The average age of the Company's employees in the Group is 45 years. The same average age of

the employees was also the same in 2020.

The Company's highly qualified employees are: 11.16% (10.82% in 2020) with higher education;

50.60% (50.00% in 2020) with higher education; 38.16% (39.11% in 2020) with secondary

education; and 0.08% (0.07% in 2020) with incomplete secondary education.

Rokiškio sūris Group staff education

Education

2021.12.31

2020.12.31

Change

(%)

University degree

148

150

-1.33

Higher education

671

693

-3.17

Secondary

506

582

-6.64

Secondary incomplete

Years of service

Age of employees

Educational background of staff

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

110

Payroll system

The company has an efficient and fair remuneration system to attract, retain and motivate staff. All

employment contracts with the Company's employees, including managers, are concluded in

accordance with the requirements of the Labour Code of the Republic of Lithuania. Employees are

recruited and dismissed in accordance with the requirements of the Labour Code.

Average monthly earnings of Rokiškio sūris Group by employee group

Employee group

Average monthly salary (gross)

EUR

Change

(%)

2021.12.31

2020.12.31

Executives

2844

2780

2.30

Specialists

1495

1432

4.40

Workers

1333

1248

6.81

Group average

1372

1290

6.36

The average monthly salary is calculated in accordance with Government Resolution No 496,

21.06.2017.

The salary paid to the employees of AB "Rokiškio sūris" Group consists of:

1) fixed remuneration for the work performed - monthly salary stipulated in the contract;

2) piece rate remuneration: for employees on the production floor, for the sales department, for the

sales manager, for the sales assistant, for the sales assistant, for the sales assistant, for the sales

assistant, for the sales assistant, for the sales assistant. For production workers, the wages are

based on the quantity of actual work performed and on approved rates;

3) variable remuneration: in accordance with the provisions of the incentive fund approved in the

collective agreement.

From 2018 to the present, the Company has applied a remuneration system based on variable

remuneration components established by the Company, depending on the Company's

performance, market situation and other factors. The variable remuneration components are

allocated to each division in accordance with the approved functional management system. These

remuneration arrangements shall be approved by the Chief Executive Officer of the Company.

Each production department or division of the Company has an approved procedure for the

allocation of the incentive pool, which includes performance evaluation criteria and incentives for

all employees. Performance appraisal is one of the most important tasks of the Company in order

to organise work as efficiently as possible, to achieve the objectives set, to foster positive relations

between managers and their subordinates, and to increase the motivation of employees.

Social dialogue

As of 2018, the Company has an elected Labour Council with 11 members. The Council is

established for a three-year term of office, starting from the beginning of the Council's mandate.

At the end of the term, the Works Council was re-elected in May 2021 for another three-year term.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

111

Employees of Group companies are guaranteed the right to participate in trade union activities.

The companies have a trade union committee which defends the labour, economic and social

rights and interests of its members, defends the right to employment and social security of its

members, takes care of professional development, develops professional ethics, and seeks to

increase the wages and other incomes of workers in the food industry.

Collective agreement approved in September 2020. The purpose of this collective agreement is to

create conditions for harmonious collective activity, to guarantee the level of work, remuneration,

health and safety and other working conditions for various categories of employees, better than

those provided for by the laws of the Republic of Lithuania, governmental decrees and legal acts,

and to provide better labour and social guarantees for the company's employees. The following

additional guarantees are envisaged for employees:

- A material allowance of 1 MMA shall be paid once a year to an employee raising a disabled

child;

- A funeral allowance is paid to employees of the Company in the event of the death of a family

member (spouse, parent, child); In the event of the death of an employee of the Company, a one-

off funeral allowance is granted to the family of the employee;

- On work anniversaries (20th, 25th, 30th, 35th, 40th, 45th, 50th), an additional allowance is paid

to employees of the Company;

- Support is provided to the Company's employees with serious and prolonged illnesses and

injuries;

- Company employees, family members of employees, employees who have worked for the

Company and retired employees are granted a discount for medical treatment at the Company's

preventive health centre;

- Employees who have reached retirement age and retire from the Company are paid a severance

pay higher than the severance pay provided for in the Labour Code.

- Unpaid leave provided for in the LRC for the celebration of an employee's marriage, for the

attendance of an employee at the funeral of a deceased family member, shall be paid in accordance

with the general procedure for granting leave. In addition, leave shall be granted for the marriage

of employees to their children.

The rights and obligations of the employees of the company are laid down in their job

descriptions. There are no specific rights and obligations in the contracts of employment.

During 2021, 400 employees of the Company Group benefited from the social guarantees of the

"Procedure for granting material incentives and allowances" in force prior to the Collective

Bargaining Agreement and subsequently from the Collective Bargaining Agreement.

Developing competences

The development of Rokiškio sūris staff and the improvement of special and general skills is one

of the company's top priorities, as only educated employees with the right knowledge and

experience can create a quality product. Training plans are drawn up annually, taking into account

the Company's objectives and the adequacy of the staff's competences to achieve these objectives.

The Group's employees are provided with opportunities to improve their knowledge and skills at

various training courses, seminars and conferences, and the Company supports the acquisition of

professional education at national universities, colleges or other qualifying educational

institutions. A strong emphasis is placed on learning foreign languages.

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

112

The company continuously trains its employees internally, taking into account the nature of the

work and the requirements of the workplace and product quality. In 2021, the Group's

management team completed the Sustain Academy organisational sustainability course.

Rokiškio sūris also organises special courses and training for the country's farmers in order to

ensure that they successfully take care of the health of their herds, properly maintain their milking,

refrigeration and storage equipment, and modernise their dairy farm. A modern dairy farm, milk

quality and herd health are key to the success of a dairy business.

Ethical Employer Policy

The Company has an Ethical Employer Policy in place since 2018, under which the Company

conducts its business on the basis of internationally recognised human and workers' rights,

including the International Bill of Human Rights and the principles set out in the International

Labour Organisation's Declaration on Fundamental Principles and Rights at Work, applies the

principles of socially responsible business conduct, and operates in a manner that is transparent,

credible and fair.

For more information on social aspects, please refer to the Sustainability Report (Social area).

37. Information on agreements between the Company and the

members of its organs, the members of the committees it has set up,

or its employees, which provide for compensation in the event of their

resignation or dismissal without just cause, or in the event of the

termination of their employment as a result of a change of control of

the issuer

There are no agreements between the Company and the members of the Board of Directors or

employees providing for compensation in the event of their resignation or dismissal without just

cause, or in the event of termination of their employment as a result of a change of control of the

Company. All employment contracts with the Company's employees, including members of the

Company's management, are concluded in accordance with the requirements of the Labour Code

of the Republic of Lithuania. Nor does the Company provide for any additional share-based

payments.

INFORMATION ON RELATED PARTY TRANSACTIONS AND

SIGNIFICANT ARRANGEMENTS

38. Related parties of AB Rokiškio sūris Group

The group of persons acting in concert consists of UAB Pieno pramonės investicijų valdymas

(27.21% of the Company's share capital and votes), SIA RSU Holding (24.96% of the Company's

share capital and votes), Fonterra (Europe) Coöperatie U.A. (Netherlands) (10.00% of the

Company's share capital and votes), Antanas Trumpa (19.76% of the Company's share capital and

votes), and Dalius Trumpa (83,500 units of shares, 0.23% of the Company's share capital and

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

113

votes). The group of persons acting in concert owns 82.17% of the Company's share capital and

votes.

The remaining 17.83% of the Company's shares and votes are held by other small Lithuanian and

foreign individuals and legal entities.

Closed Joint Stock Company Pieno pramones investiciju valdymas is controlled by Antanas

Trumpa (as the major shareholder holding 73.84% of the shares and votes of UAB Pieno

pramonės investicijų valdymas). RSU Holding SIA is controlled by Dalius Trumpa (as the sole

shareholder holding 100% of the shares and votes of RSU Holding SIA).

Certain cooperative companies engaged in milk production are considered to be related parties of

the Company as the Company, through close family members of its directors and certain of its

employees, can exercise significant influence over the day-to-day operations of these companies.

39. Transactions with related parties

During 2021, the company did not have any transactions with related parties that meet the criteria

in Article 372. All related party transactions included purchases of raw milk from related parties

and sales of dairy products by related parties, see note to the Company's consolidated financial

statements "Related party transactions". The transactions were at arm's length, are in the ordinary

course of business and do not have a material impact on the Company. The Company considers

the related parties to be the Fonterra group companies - Fonterra (Europe) Coöperatie U.A.,

company reg. code 50122541, registered office at Barbara Strozzilaan 356-360, 1083 HN

Amsterdam, The Netherlands, and Fonterra Ingredients Limited, registered office at 109 Fanshawe

Street, 1010 Auckland, New Zealand (sales of dairy products), and KB Dzūkijos pienas, company

reg. code 300058288, registered office at Varanauskas km., Krokialaukis sen. (purchase of raw

milk).

Related party transactions are disclosed in note 31 to the Company's consolidated financial

statements for 2021.

40. Information on harmful transactions entered into on behalf of the

issuer

During the reporting period, there were no harmful transactions that were inconsistent with the

Company's objectives, were not in line with normal market conditions, were prejudicial to the

interests of the shareholders or other groups of persons and had or may in the future have an

adverse effect on the Company's business or results of operations. There were also no transactions

resulting from conflicts of interest between the duties of the Company's directors, controlling

shareholders or other related parties to the Company and their private interests and/or duties.

OTHER INFORMATION

41. Information on the audit

The consolidated balance sheet of AB Rokiškio sūris Group as at 31 December 2021 and the

related consolidated statements of comprehensive income, cash flows and changes in equity for

ROKISKIO SURIS, AB

Consolidated audited annual report 2021

114

the year then ended and the assessment of the annual report have been audited and the assessment

of the annual report have been carried out by the international auditing firm

PricewaterhouseCoopers UAB.

The audit firm for the audit of the annual financial statements is selected by the General Meeting

of Shareholders and the terms of remuneration for the audit are determined. As the Company is

listed and maintains its accounts in accordance with International Financial Reporting Standards,

the Company's shareholders are required to appoint an international audit firm.

PricewaterhouseCoopers International Limited (PwC) is a network of audit and tax advisory firms,

one of the members of the so-called Big Four (the others being KPMG, Ernst & Young and

Deloitte Touche Tohmatsu). PricewaterhouseCoopers Lithuania is a legally independent firm in

Lithuania and a member of the global PwC network.

PricewaterhouseCoopers provides audit, accounting, consulting, tax and legal services to

multinational companies and large Lithuanian companies.

The Rokiškio sūris Group has paid the audit firm a fee of EUR 47,100 for the audit performed in

2021.

42. Data on publicly available information

The information on the public announcement of AB Rokiškio sūris in 2021 is available on the

company's website www.rokiskio.com in the Investors > Material events section.

Summary of published information:

Date of

publication

Brief description of the report

2021.04.07

Ordinary General Meeting of Shareholders of AB "Rokiškio sūris" convened on

30 April 2021

2021.04.30

Resolutions adopted at the Ordinary General Meeting of Shareholders of

Rokiškio sūris AB held on 30 April 2021

2021.04.30

Audited Annual Information of AB Rokiškio sūris 2020

2021.05.07

AB Rokiškio sūris ex-dividend payment day for 2020

2021.05.14

Dividend payment procedure of AB "Rokiškio sūris" for 2020

2021.06.29

The Company's Board of Directors has taken a decision to establish a subsidiary

UAB "DairyHub.LT".

2021.11.18.

Extraordinary General Meeting of Shareholders of AB "Rokiškio sūris"

convened on 10 December 2021

2021.11.29

AB Rokiškio sūris participated in the Rimi Baltic Sustainability Awards

2021.12.10

Decisions adopted at the Extraordinary General Meeting of Shareholders of AB

Rokiškio sūris held on 10 December 2021

2021.12.27

Dates of publication of the AB "Rokiškio sūris" Group results for 2022

2021.12.29

New version of the Articles of Association of AB "Rokiškio sūris" registered

The Company publishes public information by uploading it to the Central Database of Regulated

Information, publishing it on the website of AB Nasdaq Vilnius http://www.nasdaqbaltic.com and

uploading it to the Company's website www.rokiskio.com

ROKIŠKIO SŪRIS, AB

Governance report 2021

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115

ROKIŠKIO SŪRIS AB Governance Report

The Corporate Governance Report of the Public limited liability company Rokiškio sūris has been

prepared in accordance with the Law on Corporate Financial Accountability of the Republic of

Lithuania.

1.Reference to the applicable corporate governance code and the place of its publication, and

(or) reference to the all necessary published information regarding management practices

of the entity

2021 Consolidated Report along with the Company's Management Report and the audited financial

statements of the Company and its Group are published on the Company's website

www.rokiskio.com and on the website of the Stock Exchange AB Nasdaq Vilnius

www.nasdaqbaltic.com

2.In case of derogation from the provisions of the applicable corporate governance code and

(or) when the provisions are not complied with, such provisions and the reasons thereof

shall be indicated

Information on compliance with and / or non-compliance with the Corporate Governance Code is

provided in a structured table (No.2).

3.Information regarding the level of risk and risk management – management of risks related

to the financial reporting, risk mitigation measures, and internal control systems

implemented at the entity shall be described

The Company provides information on the extent of risk and risk management, risk mitigation

measures and internal control system implemented by the company in 2021, see Clauses 11-12-13 of

the consolidated annual report.

4.Information regarding significant directly or indirectly managed holdings

The Company provides information regarding the significant directly or indirectly managed holdings

in Clause 26 of the consolidated annual report of 2021.

5.Information regarding transactions with related parties, according to the Law on Companies

Article 37

(by specifying the counterparty (legal form, name, code, register of the legal

entity in which the person is stored, premises (address); name, surname, address of the

natural person and the value of the transaction);

ROKIŠKIO SŪRIS, AB

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116

In 2021, the Company did not have any Transactions with Related Parties, which would be applicable

to the Law on Companies Article 37

. The more specific information is provided in Clause 39 of the

consolidated annual report of 2021.

6.Information regarding the shareholders who have special rights of control and the

description of such rights

There are no shareholders having special rights of control in the Company.

7.Information regarding all current restrictions on voting rights (such as the restrictions on

voting rights of persons having a certain percentage or number of the votes, the deadlines

by which voting rights may be exercised or systems, according to which the property rights

granted by the securities are to be separated from the holder of those securities)

No restrictions on voting rights are applied in the Company. All shareholders have equal property

and non-property rights (except for the Company's own shares that do not have voting rights).

8.Information regarding the rules governing the appointment and dismissal of board members,

as well as the amendment of the company’s articles of association

The Company has no rules regulating the amendments to the Company's Articles of Association,

election and replacement of the members of the Board of the Company. The Company operates in

accordance with the Law on Companies of the Republic of Lithuania, the Articles of Association of

the Company and other legal acts.

More detailed information is provided in Clauses 25 and 33 of the consolidated annual report of

2021.

9.Information regarding the powers of the board members

The Board members have not authorized other persons to perform the functions assigned to the

competence of the Board. The members of the Board of the Company operate in accordance with the

Law on Companies, the Articles of Association of the Company and the Rules of Procedure of the

Board.

10.Information regarding the competence of the general meeting of shareholders, the rights of

shareholders and implementation thereof, if such information is not established in the

applicable legislation

The company provides information regarding the competence of the general meeting of shareholders,

the rights of shareholders, and implementation thereof, as well as the procedure for convening the

meetings of shareholders, in Clause 32 of the consolidated annual report of 2021.

11.Information regarding the composition of the management, supervisory bodies, and the

committees thereof, as well as the fields of activity of the aforesaid bodies and the manager

of the company

Information on the management, supervisory bodies and the committees thereof is provided in

Clauses 34 and 35 of the consolidated annual report of 2021.

12.Description of diversity policy applicable in appointing the manager of the company,

management, and supervisory bodies, related to the aspects such as age, gender, education,

professional experience; objectives of such policy, methods of implementation thereof, and

ROKIŠKIO SŪRIS, AB

Governance report 2021

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117

results of the reference period. if the diversity policy is not applied, the reasons thereof shall

be indicated

The company has no policy of diversity in the selection of manager and management and supervisory

bodies. The requirements for candidates to nominate members of the Company's management bodies

do not discriminate against candidates for age, gender, education or professional experience. The

Company does not impose any restrictions on the nomination of persons for gender or age. The key

criteria for selecting members of the management bodies is the candidate's competence.

13.Information on the renumeration of each management, supervisory member (medium-term

renumeration, stating premiums, bonuses, tantjams and other benefits

Amount of money and average amounts of money allocated to one member of the management body,

assets and guarantees provided to the members of the Board, the Chief Executive Officer and Chief

Financial Officer of AB „Rokiškio sūris“ during 2021:

Governing Bodies

Number

of persons

Estimated Total

Amount, (Salaries,

and Tantjems),

kEUR**

TOTAL

average

amount per

person,

(Salaries, and

Tantjems),

kEUR

incl. average

amount of

salary

incl.

average

amount of

tantjems

incl.

average

amount of

bonuses

Board members*

107.86

21.57

The Company‘s

CEO and CFO

66.13

33.07

* Three members of the Board were employees of the Company. Estimated and paid amounts in 2021 (salaries) are

related to employment relationships.

** As the Company did not pay any tantiemes, only salaries are presented

During the reporting period, the Company did not grant any loans, or issued any guarantees or asset

assignments to the members of the Board of Directors, the Company's Chief Executive Officer and

the Chief Financial Officer.

14.Information on all agreements between shareholders (their terms and conditions)

On October 13, 2017 it was signed the Strategic Investment Agreement and Shareholders Agreement

between the Company's shareholders – UAB Pieno pramonės investicijų valdymas, SIA RSU

Holding, Antanas Trumpa and Ledina Trumpienė, Dalius Trumpa and Rasa Trumpienė, Strategic

Investor – Fonterra (Europe) Coöperatie UA and the Company – AB „Rokiškio sūris“.

The purpose of this agreement was to establish the relationship between the parties in relation to the

Company, to ensure joint action in the development of the Company and to exercise voting rights at

general meetings, to agree on specific terms and conditions of share disposal and to enable

shareholders to protect their interests in the Company.

The Company has no data on other agreements between shareholders.

ROKIŠKIO SŪRIS, AB

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118

PURSUE THE GOVERNANCE REPORT

Rokiskio suris AB, following Article 22 paragraph 3 of the Law on Securities of the Republic of

Lithuania and item 24.5 of the Listing Rules of AB NASDAQ Vilnius, discloses its compliance with

the Corporate Governance Code for the Companies, whose securities are traded on the regulated

market, as approved by the NASDAQ Vilnius AB, and its specific provisions and recommendations.

If any of the provisions or recommendations of the Codex are not respected due to any reasons, the

explicable information is provided herein.

Structured table No. 2.

PRINCIPLES/ RECOMMENDATIONS

Yes/

No/

Not

appli

cable

COMMENTARY

Principle 1: General meeting of shareholders, equitable treatment of shareholders, and shareholders’ rights

The corporate governance framework should ensure the equitable treatment of all shareholders. The

corporate governance framework should protect the rights of shareholders.

1.1. All shareholders should be provided with access

to the information and/or documents established in the

legal acts on equal terms. All shareholders should be

furnished with equal opportunity to participate in the

decision-making process where significant corporate

matters are discussed.

Yes

All shareholders have equal access to the

information and / or documents provided for in

legal acts and participate in making important

decisions for the company.

The Company provides information through the

Nasdaq Vilnius Stock Exchange Central

Regulated Information Base in Lithuanian and

English simultaneously. The information is

published immediately at once, thus ensuring

the simultaneous provision of information to all.

1.2. It is recommended that the company’s capital

should consist only of the shares that grant the same

rights to voting, ownership, dividend and other rights

to all of their holders.

Yes

The authorized capital of the Company consists

of ordinary registered shares, which grant equal

voting, ownership, dividend and other rights to

all shareholders of the Company.

1.3. It is recommended that investors should have

access to the information concerning the rights

attached to the shares of the new issue or those issued

earlier in advance, i.e. before they purchase shares.

Yes

The Company enables investors to familiarize

themselves with the rights granted by the new or

already issued shares well in advance.

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1.4. Exclusive transactions that are particularly

important to the company, such as transfer of all or

almost all assets of the company which in principle

would mean the transfer of the company, should be

subject to approval of the general meeting of

shareholders.

Yes

According to the Articles of Association of

the Company, important transactions, such as

decisions on the execution, assignment, lease,

pledge and mortgage of long-term assets the

book value of which exceeds 1/5 of the

authorized capital of the company, as well as

decisions on fulfillment of obligations of other

persons exceeding 1/5 of the authorized

capital of the company, and decisions to

purchase fixed assets at a price greater than

1/5 of the company's share capital, do not

require approbation by the Company’s

shareholders. Due to extremely important

transactions, such as the transfer of all or

almost all of the Company's assets, the

Company would be guided by the Law on

Companies of the Republic of Lithuania and

other legal acts establishing requirements for

the approval of such transactions.

1.5. Procedures for convening and conducting a

general meeting of shareholders should provide

shareholders with equal opportunities to participate in

the general meeting of shareholders and should not

prejudice the rights and interests of shareholders. The

chosen venue, date and time of the general meeting of

shareholders should not prevent active participation of

shareholders at the general meeting. In the notice of the

general meeting of shareholders being convened, the

company should specify the last day on which the

proposed draft decisions should be submitted at the

latest.

Yes

All shareholders of the Company are informed

about the date, place and time of the General

Meeting of Shareholders in accordance with

the established procedure in advance, in

accordance with the terms established by legal

acts, announcing the General Meeting of

Shareholders, agenda, and draft resolutions in

the Central Regulated Information Base of AB

Nasdaq Vilnius Stock Exchange. The

Company specifies the date of the General

Meeting of Shareholders and may propose

draft resolutions in the Notice of the General

Meeting of Shareholders to be convened on

the Company's website www.rokiskio.com

In the notice of the convention of the General

Meeting of Shareholders, the Company shall

indicate when the shareholders may

supplement the agenda of the General

Shareholders Meeting and propose draft

resolutions.

1.6. With a view to ensure the right of shareholders

living abroad to access the information, it is

recommended, where possible, that documents

prepared for the general meeting of shareholders in

advance should be announced publicly not only in

Lithuanian language but also in English and/or other

foreign languages in advance. It is recommended that

the minutes of the general meeting of shareholders

after the signing thereof and/or adopted decisions

should be made available publicly not only in

Lithuanian language but also in English and/or other

foreign languages. It is recommended that this

information should be placed on the website of the

company. Such documents may be published to the

extent that their public disclosure is not detrimental to

the company or the company’s commercial secrets are

not revealed.

Yes

The documents prepared for General meeting

of shareholders including draft resolutions of

the meeting are available not later than 21 day

prior the date of general meeting of

shareholders as required by the Law on Joint

stock companies. The documents placed on

the website of NASDAQ Vilnius security

exchange and the company website are

available in Lithuanian and English

languages.

Resolutions accepted by the general meeting

of shareholders including financial reports, the

audit report, annual report, amendments of

articles of association etc. are announce in

Lithuanian and English languages are

announced via the central base of regulated

information of NASDAQ Vilnius security

exchange and the company website

www.rokiskio.com

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1.7. Shareholders who are entitled to vote should be

furnished with the opportunity to vote at the general

meeting of shareholders both in person and in absentia.

Shareholders should not be prevented from voting in

writing in advance by completing the general voting

ballot.

Yes

Shareholders of the Company have the right to

participate in the GMS both personally and

through a representative, if the person has the

appropriate authorization or the contract of

transfer of voting rights concluded with

him/her in accordance with the procedure

established by legal acts, as well as the

conditions for the shareholders to vote by

filling in the general voting bulletin as

provided by the Law on Companies of the

Republic of Lithuania.

1.8. With a view to increasing the shareholders’

opportunities to participate effectively at general

meetings of shareholders, it is recommended that

companies should apply modern technologies on a

wider scale and thus provide shareholders with the

conditions to participate and vote in general meetings

of shareholders via electronic means of

communication. In such cases the security of

transmitted information must be ensured and it must be

possible to identify the participating and voting person.

The company does not comply with the

provisions of this recommendation as there is

no possibility to ensure the security of the

information transmitted and it is not possible

to identify the person who participated and

voted.

1.9. It is recommended that the notice on the draft

decisions of the general meeting of shareholders being

convened should specify new candidatures of members

of the collegial body, their proposed remuneration and

the proposed audit company if these issues are included

into the agenda of the general meeting of shareholders.

Where it is proposed to elect a new member of the

collegial body, it is recommended that the information

about his/her educational background, work experience

and other managerial positions held (or proposed)

should be provided.

Yes

When announcing the General Meeting of

Shareholders, and if the agenda of the General

Meeting of Shareholders includes the issue of

electing new members of the collegial body or

electing the audit firm, it shall disclose in the

draft resolutions the nominations of the

proposed new members of the collegial body

and the proposed election company.

Information about the candidates to the

members of the collegial body shall be

provided in advance by publishing this

information on the Nasdaq Vilnius Stock

Exchange website, on the website of AB

„Rokiškio sūris“ www.rokiskio.com, or by

publishing it to the shareholders participating

in the general meeting during the meeting if

the shareholders, whose shares give at least

1/20 of all votes, propose an additional

candidate during the meeting.

In its annual and six-month interim report, the

company publicly informs about the positions

held by the collegial body, work experience

and education.

1.10. Members of the company’s collegial management

body, heads of the administration

or other competent

persons related to the company who can provide

information related to the agenda of the general

meeting of shareholders should take part in the general

meeting of shareholders. Proposed candidates to

member of the collegial body should also participate in

the general meeting of shareholders in case the election

of new members is included into the agenda of the

general meeting of shareholders.

Yes

Members of the company's collegial body and

heads of administration participate in the

general meetings of shareholders. Proposed

nominees for members of the collegial body

are also present if the election of new

members is included on the agenda of the

general meeting.

For the purposes of this Code, heads of the administration are the employees of the company who hold top level management

positions.

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Principle 2: Supervisory board

2.1.Functions and liability of the supervisory board

The supervisory board of the company should ensure representation of the interests of the company and

its shareholders, accountability of this body to the shareholders and objective monitoring of the

company’s operations and its management bodies as well as constantly provide recommendations to the

management bodies of the company.

The supervisory board should ensure the integrity and transparency of the company’s financial accounting

and control system.

2.1.1. Members of the supervisory board should act in

good faith, with care and responsibility for the benefit

and in the interests of the company and its shareholders

and represent their interests, having regard to the

interests of employees and public welfare.

N/A

According to the Articles of Association of

AB „Rokiškio sūris“, only one collegial body

- the Board - has been formed in the

Company. The Supervisory Board is not

formed in the Company. The company's

shareholders decided to delegate all

management functions to the collegial body -

the Board.

2.1.2. Where decisions of the supervisory board may

have a different effect on the interests of the

company’s shareholders, the supervisory board should

treat all shareholders impartially and fairly. It should

ensure that shareholders are properly informed about

the company’s strategy, risk management and control,

and resolution of conflicts of interest.

N/A

See point 2.1.1

2.1.3. The supervisory board should be impartial in

passing decisions that are significant for the company’s

operations and strategy. Members of the supervisory

board should act and pass decisions without an external

influence from the persons who elected them.

N/A

See point 2.1.1

2.1.4. Members of the supervisory board should

clearly voice their objections in case they believe that a

decision of the supervisory board is against the

interests of the company. Independent

members of the

supervisory board should: a) maintain independence of

their analysis and decision-making; b) not seek or

accept any unjustified privileges that might

compromise their independence.

N/A

See point 2.1.1

2.1.5. The supervisory board should oversee that the

company’s tax planning strategies are designed and

implemented in accordance with the legal acts in order

to avoid faulty practice that is not related to the long-

term interests of the company and its shareholders,

which may give rise to reputational, legal or other

risks.

N/A

See point 2.1.1

For the purposes of this Code, the criteria of independence of members of the supervisory board are interpreted as the criteria of

unrelated parties defined in Article 31(7) and (8) of the Law on Companies of the Republic of Lithuania.

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2.1.6. The company should ensure that the supervisory

board is provided with sufficient resources (including

financial ones) to discharge their duties, including the

right to obtain all the necessary information or to seek

independent professional advice from external legal,

accounting or other experts on matters pertaining to the

competence of the supervisory board and its

committees.

N/A

See point 2.1.1

2.2.Formation of the supervisory board

The procedure of the formation of the supervisory board should ensure proper resolution of conflicts of

interest and effective and fair corporate governance.

2.2.1. The members of the supervisory board elected

by the general meeting of shareholders should

collectively ensure the diversity of qualifications,

professional experience and competences and seek for

gender equality. With a view to maintain a proper

balance between the qualifications of the members of

the supervisory board, it should be ensured that

members of the supervisory board, as a whole, should

have diverse knowledge, opinions and experience to

duly perform their tasks.

N/A

See point 2.1.1

2.2.2. Members of the supervisory board should be

appointed for a specific term, subject to individual re-

election for a new term in office in order to ensure

necessary development of professional experience.

N/A

See point 2.1.1

2.2.3. Chair of the supervisory board should be a

person whose current or past positions constituted no

obstacle to carry out impartial activities. A former

manager or management board member of the

company should not be immediately appointed as chair

of the supervisory board either. Where the company

decides to depart from these recommendations, it

should provide information on the measures taken to

ensure impartiality of the supervision.

N/A

See point 2.1.1

2.2.4. Each member should devote sufficient time and

attention to perform his duties as a member of the

supervisory board. Each member of the supervisory

board should undertake to limit his other professional

obligations (particularly the managing positions in

other companies) so that they would not interfere with

the proper performance of the duties of a member of

the supervisory board. Should a member of the

supervisory board attend less than a half of the

meetings of the supervisory board throughout the

financial year of the company, the shareholders of the

company should be notified thereof.

N/A

See point 2.1.1

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2.2.5. When it is proposed to appoint a member of the

supervisory board, it should be announced which

members of the supervisory board are deemed to be

independent. The supervisory board may decide that,

despite the fact that a particular member meets all the

criteria of independence, he/she cannot be considered

independent due to special personal or company-

related circumstances.

N/A

See point 2.1.1

2.2.6. The amount of remuneration to members of the

supervisory board for their activity and participation in

meetings of the supervisory board should be approved

by the general meeting of shareholders.

N/A

See point 2.1.1

2.2.7. Every year the supervisory board should carry

out an assessment of its activities. It should include

evaluation of the structure of the supervisory board, its

work organization and ability to act as a group,

evaluation of the competence and work efficiency of

each member of the supervisory board, and evaluation

whether the supervisory board has achieved its

objectives. The supervisory board should, at least once

a year, make public respective information about its

internal structure and working procedures.

N/A

See point 2.1.1

Principle 3: Management Board

3.1. Functions and liability of the management board

The management board should ensure the implementation of the company’s strategy and good corporate

governance with due regard to the interests of its shareholders, employees and other interest groups.

3.1.1. The management board should ensure the

implementation of the company’s strategy approved by

the supervisory board if the latter has been formed at

the company. In such cases where the supervisory

board is not formed, the management board is also

responsible for the approval of the company’s strategy.

Yes

Only one collegial body is formed in the

company and it is the board.

The company's shareholders decided to

delegate all management functions to the

collegial body - the board. They are confident

that one collegial body - the Board - is

sufficient to ensure effective management of

the company.

The Board of the Company is responsible for

the proper strategic management of the

Company (approves the Company's

operational strategy, approves the annual

budget and operational objectives, adopts

important decisions in the legal acts regarding

the organizational management structure of

the Company).

3.1.2. As a collegial management body of the

company, the management board performs the

functions assigned to it by the Law and in the articles

of association of the company, and in such cases where

the supervisory board is not formed in the company, it

performs inter alia the supervisory functions

established in the Law. By performing the functions

assigned to it, the management board should take into

account the needs of the company’s shareholders,

employees and other interest groups by respectively

striving to achieve sustainable business development.

Yes

The Company is guided by a corporate

strategic plan, according to which the mission

of the governing bodies of the Company is to

create and maintain a strong, competitive,

financially capable and technically advanced

company that creates and maximises

shareholder value.

According to the company's records, all

members of the Board act in good faith in the

interests of the company and its shareholders,

in the interests of the company and not in their

own interests or those of third parties, and

strive to maintain their independence in their

decision-making.

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3.1.3. The management board should ensure

compliance with the laws and the internal policy of the

company applicable to the company or a group of

companies to which this company belongs. It should

also establish the respective risk management and

control measures aimed at ensuring regular and direct

liability of managers.

Yes

The Board ensures that the laws and company

internal policies applicable to the company

and its entire group are respected. The

company also operates a risk management and

control program. Risk management is carried

out by the management of the Company.

3.1.4. Moreover, the management board should ensure

that the measures included into the OECD Good

Practice Guidance

on Internal Controls, Ethics and

Compliance are applied at the company in order to

ensure adherence to the applicable laws, rules and

standards.

Yes

The company has internal control and

business ethics policies in place. The

Company has adopted a Business Ethics

Policy which clearly and publicly declares its

negative attitude towards bribery and

corruption. The provisions of this policy apply

to all employees, agents, intermediaries,

suppliers, subcontractors of the Company.

3.1.5. When appointing the manager of the company,

the management board should take into account the

appropriate balance between the candidate’s

qualifications, experience and competence.

Yes

When appointing the Chief Executive Officer,

the Board takes into account the candidate's

qualifications, experience and competence.

3.2. Formation of the management board

3.2.1. The members of the management board elected

by the supervisory board or, if the supervisory board is

not formed, by the general meeting of shareholders

should collectively ensure the required diversity of

qualifications, professional experience and

competences and seek for gender equality. With a view

to maintain a proper balance in terms of the current

qualifications possessed by the members of the

management board, it should be ensured that the

members of the management board would have, as a

whole, diverse knowledge, opinions and experience to

duly perform their tasks.

Yes

The members of the Board of the Company

are elected by the General Meeting of

Shareholders. The members of the Board of

the Company are qualified and competent to

perform their functions, having a long

experience in management. One member of

the board is delegated by the strategic investor

(Fonterra) who has extensive experience in

developing, managing and developing

corporate strategy in international companies.

The other two independent board members

also have extensive experience in general

management, marketing, setting up and

managing international joint ventures.

3.2.2. Names and surnames of the candidates to

become members of the management board,

information on their educational background,

qualifications, professional experience, current

positions, other important professional obligations and

potential conflicts of interest should be disclosed

without violating the requirements of the legal acts

regulating the handling of personal data at the meeting

of the supervisory board in which the management

board or individual members of the management board

are elected. In the event that the supervisory board is

not formed, the information specified in this paragraph

should be submitted to the general meeting of

shareholders. The management board should, on yearly

basis, collect data provided in this paragraph on its

members and disclose it in the company’s annual

Yes

Information about candidates to the

Company’s Board of Directors is provided to

the shareholders together with the documents

of the shareholders’ meeting following the

requirements of the Law on Public Limited

Liability Companies of the Republic of

Lithuania. Shareholders may see the

documents prior the meeting. Information

about the members of the Board of Directors

(names, education, qualifications, professional

experience, participation in the activities of

other companies, other important professional

obligations) is provided in the periodical

reports.

Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oecd.org/daf/anti-

bribery/44884389.pdf

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report.

3.2.3. All new members of the management board

should be familiarized with their duties and the

structure and operations of the company.

Yes

All new members of the Board are

familiarized with their duties, company

structure and activities.

3.2.4. Members of the management board should be

appointed for a specific term, subject to individual re-

election for a new term in office in order to ensure

necessary development of professional experience and

sufficiently frequent reconfirmation of their status.

Yes

The members of the Board are elected for a 4-

year term. The number of terms is unlimited.

Members of the Board are elected by the

GMS. Shareholders who nominate and vote

for the Board of Directors follow their own

approach, which candidates are best to

represent the interests of the shareholders.

3.2.5. Chair of the management board should be a

person whose current or past positions constitute no

obstacle to carry out impartial activity. Where the

supervisory board is not formed, the former manager of

the company should not be immediately appointed as

chair of the management board. When a company

decides to depart from these recommendations, it

should furnish information on the measures it has taken

to ensure the impartiality of supervision.

Former CEO of the Company has been

appointed Chairman of the Board of the

Company. The members of the Board of

Directors, appointed the former CEO of the

Company based on his long-term management

experience and competence to take the chair

of the Board.

3.2.6. In the event that the management board is

elected in the cases established by the Law where the

supervisory board is not formed at the company, and

some of its members will be independent

, it should be

announced which members of the management board

are deemed as independent. The management board

may decide that, despite the fact that a particular

member meets all the criteria of independence

established by the Law, he/she cannot be considered

independent due to special personal or company-

related circumstances.

Yes

Each member of the collegial body fulfills his/

her functions properly: actively participates at

the meetings of collegial body, and devotes

sufficient time to perform his/ her duties as a

member of the collegial body. The quorum of

each meeting was regulated so the Board of

Directors would be enabled to accept

decisions constructively.

During 2021, the Board held 7 Board

meetings. In the context of the COVID-19

pandemic in the country, all Board meetings

were held remotely. Six Board meetings were

attended by all Board members, one of which

was not attended by the Chairperson due to

illness, but he had given a proxy to another

Board member..

3.2.7. The general meeting of shareholders of the

company should approve the amount of remuneration

to the members of the management board for their

activity and participation in the meetings of the

management board.

As the company does not have a Supervisory

Board, two independent members of the

Management Board have been elected to the

Management Board of the company and meet

the criteria of independence set out in the Law

on Public Limited Companies. The Board of

Rokiškio sūris AB consists of 6 members.

Candidates to the Board may be nominated by

shareholders whose shares carry at least 1/20

of the total votes.

3.2.8. The members of the management board should

act in good faith, with care and responsibility for the

benefit and the interests of the company and its

shareholders with due regard to other stakeholders.

When adopting decisions, they should not act in their

Yes

Remuneration (tantjems) is paid for the work

on the Board to its members, by decision of

the General Meeting of Shareholders in

accordance with the Law on Companies of the

Republic of Lithuania. The members of the

Board are not remunerated for their

For the purposes of this Code, the criteria of independence of the members of the board are interpreted as the criteria of unrelated

persons defined in Article 33(7) of the Law on Companies of the Republic of Lithuania.

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personal interest; they should be subject to no-compete

agreements and they should not use the business

information or opportunities related to the company’s

operations in violation of the company’s interests.

performance and participation in the meetings.

3.2.9. Every year the management board should carry

out an assessment of its activities. It should include

evaluation of the structure of the management board,

its work organization and ability to act as a group,

evaluation of the competence and work efficiency of

each member of the management board, and evaluation

whether the management board has achieved its

objectives. The management board should, at least

once a year, make public respective information about

its internal structure and working procedures in

observance of the legal acts regulating the processing

of personal data.

Yes

By the Company’s information, all Board

members should act in good faith, with care

and responsibility for the benefit and in the

interests of the company and its shareholders.

They are guided by the Company’s interests

but not their own or any third parties seeking

to maintain their independence in decision-

making, and they do not accept any unjustified

privileges that would compromise their

independence.

3.2.10. Each year, the Board should evaluate its

performance. It should include an assessment of the

board's structure, work organization and ability to act

as a group, as well as an assessment of the competence

and work efficiency of each board member, and an

assessment of whether the board has achieved its

operational objectives. The Board should, at least once

a year, publicly disclose relevant information about its

internal structure and operational procedures, without

prejudice to the law governing the processing of

personal data.

The Company does not have a practice of

evaluating the performance of the Board. As

the three members of the Board were part of

the Company's management (functional

directors of the Company), which has been

operating in the Company since 2001, they do

not perform an assessment of their ability to

act as a group and of their competence and

effectiveness. The other two members of the

Board are independent members.

Principle 4: Rules of procedure of the supervisory board and the management board of the company

The rules of procedure of the supervisory board, if it is formed at the company, and of the management

board should ensure efficient operation and decision-making of these bodies and promote active

cooperation between the company’s management bodies.

4.1. The management board and the supervisory

board, if the latter is formed at the company, should act

in close cooperation in order to attain benefit for the

company and its shareholders. Good corporate

governance requires an open discussion between the

management board and the supervisory board. The

management board should regularly and, where

necessary, immediately inform the supervisory board

about any matters significant for the company that are

related to planning, business development, risk

management and control, and compliance with the

obligations at the company. The management board

should inform he supervisory board about any

derogations in its business development from the

previously formulated plans and objectives by

specifying the reasons for this.

The Company does not have a Supervisory

Board. Shareholders of the company decided

to delegate all management functions to one

collegial body – the Board. They are confident

that one collegial body – the Board – is

sufficient to ensure effective management of

the Company.

4.2. It is recommended that meetings of the

company’s collegial bodies should be held at the

respective intervals, according to the pre-approved

schedule. Each company is free to decide how often

meetings of the collegial bodies should be convened

Yes

Board meetings are held according to the

schedule approved in advance by the Board's

work regulations, ie. at least once every 3

months and more often if necessary.

Along with the notice of the summoned

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but it is recommended that these meetings should be

convened at such intervals that uninterruptable

resolution of essential corporate governance issues

would be ensured. Meetings of the company’s collegial

bodies should be convened at least once per quarter.

meeting all members of the Board receive a

written agenda of the Board meeting,

indicating the issues to be discussed at the

meeting not later than 5 (five) days prior the

Board meeting. Planned Board meetings are

convened by the Board Chairman, in his

absence – the Deputy Board Chairman.

4.3. Members of a collegial body should be notified of

the meeting being convened in advance so that they

would have sufficient time for proper preparation for

the issues to be considered at the meeting and a fruitful

discussion could be held and appropriate decisions

could be adopted. Along with the notice of the meeting

being convened all materials relevant to the issues on

the agenda of the meeting should be submitted to the

members of the collegial body. The agenda of the

meeting should not be changed or supplemented during

the meeting, unless all members of the collegial body

present at the meeting agree with such change or

supplement to the agenda, or certain issues that are

important to the company require immediate

resolution.

Yes

The agenda might be supplemented only if all

members of the Board of Directors present at

the meeting, and they all agree that the item is

important enough to be put on the agenda.

4.4. In order to coordinate the activities of the

company’s collegial bodies and ensure effective

decision-making process, the chairs of the company’s

collegial supervision and management bodies should

mutually agree on the dates and agendas of the

meetings and close cooperate in resolving other matters

related to corporate governance. Meetings of the

company’s supervisory board should be open to

members of the management board, particularly in

such cases where issues concerning the removal of the

management board members, their responsibility or

remuneration are discussed.

The Company does not have a Supervisory

Board and this statement is not applied.

Principle 5: Nomination, remuneration and audit committees

5.1.Purpose and formation of committees

The committees formed at the company should increase the work efficiency of the supervisory board or,

where the supervisory board is not formed, of the management board which performs the supervisory

functions by ensuring that decisions are based on due consideration and help organise its work in such a

way that the decisions it takes would be free of material conflicts of interest.

Committees should exercise independent judgment and integrity when performing their functions and

provide the collegial body with recommendations concerning the decisions of the collegial body.

However, the final decision should be adopted by the collegial body

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5.1.1. Taking due account of the company-related

circumstances and the chosen corporate governance

structure, the supervisory board of the company or, in

cases where the supervisory board is not formed, the

management board which performs the supervisory

functions, establishes committees. It is recommended

that the collegial body should form the nomination,

remuneration and audit committees

Yes/No

The Company has established the Audit

Committee. The Committee was formed and

elected by the 24

April 2009 general meeting

of shareholders. The General Meeting of

Shareholders approved the Terms of

Reference for the Audit Committee. 30 April

2021 The Company's General Meeting of

Shareholders elected 3 new members of the

Audit Committee, 2 of whom are independent

members. The members of the Audit

Committee were elected for a term of 4 years.

The Audit Committee is an independent, and

objective committee carrying out the functions

of supervision, analyzing, evaluation and

consultation in order to improve general

organization and create value added. The main

function of the Committee is systematic and

versatile evaluation, as well as encouragement

of better risk management, and sufficient

control and maintenance procedures resulting

in submission of recommendations to the

Board of Directors and management.

The nomination and remuneration committees

are not formed at the Company.

5.1.2. Companies may decide to set up less than

three committees. In such case companies should

explain in detail why they have chosen the alternative

approach, and how the chosen approach corresponds

with the objectives set for the three different

committees.

5.1.3. In the cases established by the legal acts the

functions assigned to the committees formed at

companies may be performed by the collegial body

itself. In such case the provisions of this Code

pertaining to the committees (particularly those related

to their role, operation and transparency) should apply,

where relevant, to the collegial body as a whole.

N/A

The Board of the Company does not perform

the functions assigned to the Audit

Committee.

5.1.4. Committees established by the collegial body

should normally be composed of at least three

members. Subject to the requirements of the legal acts,

committees could be comprised only of two members

as well. Members of each committee should be

selected on the basis of their competences by giving

priority to independent members of the collegial body.

The chair of the management board should not serve as

the chair of committees.

Yes

The Audit Committee consists of 3 members,

two of whom are independent, with at least 5

years of experience in accounting, with

relevant experience in finance and accounting

in listed companies. The Chairman of the

Board is not a member of the Committee.

5.1.5. The authority of each committee formed

should be determined by the collegial body itself.

Committees should perform their duties according to

the authority delegated to them and regularly inform

Yes

The Audit Committee follows the regulations

of the Committee approved by the General

Meeting of Shareholders. These Regulations

establish the rules defining the rights and

duties of the Audit Committee, the size of the

The legal acts may provide for the obligation to form a respective committee. For example, the Law on the Audit of

Financial Statements of the Republic of Lithuania provides that public-interest entities (including but not limited to public

limited liability companies whose securities are traded on a regulated market of the Republic of Lithuania and/or of any

other Member State) are under the obligation to set up an audit committee (the legal acts provide for the exemptions

where the functions of the audit committee may be carried out by the collegial body performing the supervisory

functions).

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the collegial body about their activities and

performance on a regular basis. The authority of each

committee defining its role and specifying its rights

and duties should be made public at least once a year

(as part of the information disclosed by the company

on its governance structure and practice on an annual

basis). In compliance with the legal acts regulating the

processing of personal data, companies should also

include in their annual reports the statements of the

existing committees on their composition, the number

of meetings and attendance over the year as well as the

main directions of their activities and performance.

Audit Committee, the period of membership

of the Audit Committee, the requirements for

the education, professional experience and

independence principles of the members of

the Audit Committee.

The Audit Committee annually submits an

annual activity report to the General Meeting

of Shareholders, announcing the composition

of the Committee, the number of meetings and

the attendance of the members, describing the

work performed and presenting the results.

5.1.6. With a view to ensure the independence and

impartiality of the committees, the members of the

collegial body who are not members of the committees

should normally have a right to participate in the

meetings of the committee only if invited by the

committee. A committee may invite or request that

certain employees of the company or experts would

participate in the meeting. Chair of each committee

should have the possibility to maintain direct

communication with the shareholders. Cases where

such practice is to be applied should be specified in the

rules regulating the activities of the committee.

Yes

The members of the collegial body take

decisions at the meetings of their members,

but in certain cases the committee invites the

head of the Company and the responsible

employees of the Company to attend its

meetings, who are responsible for the areas of

activity of the issues under discussion. The

Chairman of the Audit Committee is also

provided with the opportunity to communicate

with the shareholders.

5.2.Nomination committee

5.2.1.The key functions of the nomination committee

should be the following:

1) to select candidates to fill vacancies in the

membership of supervisory and management bodies

and the administration and recommend the collegial

body to approve them. The nomination committee

should evaluate the balance of skills, knowledge and

experience in the management body, prepare a

description of the functions and capabilities required to

assume a particular position and assess the time

commitment expected;

2) assess, on a regular basis, the structure, size and

composition of the supervisory and management

bodies as well as the skills, knowledge and activity of

its members, and provide the collegial body with

recommendations on how the required changes should

be sought;

3) devote the attention necessary to ensure succession

planning.

The Nomination Committee is not formed in

the Company.

5.2.2.When dealing with issues related to members of

the collegial body who have employment relationships

with the company and the heads of the administration,

the manager of the company should be consulted by

granting him/her the right to submit proposals to the

Nomination Committee.

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5.3.Remuneration committee

The main functions of the remuneration

committee should be as follows:

1) submit to the collegial body proposals on the

remuneration policy applied to members of the

supervisory and management bodies and the heads of

the administration for approval. Such policy should

include all forms of remuneration, including the fixed-

rate remuneration, performance-based remuneration,

financial incentive schemes, pension arrangements and

termination payments as well as conditions which

would allow the company to recover the amounts or

suspend the payments by specifying the circumstances

under which it would be expedient to do so;

There is no Remuneration Committee in the

Company.

The company has implemented a

remuneration policy that includes all forms of

remuneration, including fixed salary,

performance-based benefits, pension modules

and severance payments. The Company is

approved by the Company's management in

coordination with the Trade Union Committee

operating in the Company.

2) submit to the collegial body proposals regarding

individual remuneration for members of the collegial

bodies and the heads of the administration in order to

ensure that they would be consistent with the

company’s remuneration policy and the evaluation of

the performance of the persons concerned;

3) review, on a regular basis, the remuneration policy

and its implementation.

5.4.Audit committee

5.4.1. The key functions of the audit committee are

defined in the legal acts regulating the activities of the

audit committee

Yes

The Audit Committee follows the provisions

of the Audit Committee approved by the

General Meeting of Shareholders of the

Company.

The Audit Committee carries out independent,

objective monitoring, investigation, evaluation

and advisory activities to improve the

company's performance and create added

value.

5.4.2. All members of the committee should be

provided with detailed information on specific issues

of the company’s accounting system, finances and

operations. The heads of the company’s administration

should inform the audit committee about the methods

of accounting for significant and unusual transactions

where the accounting may be subject to different

approaches.

Yes

All members of the Committee are provided

with detailed information on the specific

accounting, financial and operational

characteristics of the company and, upon

request, information on the execution of

important transactions.

Issues related to the activities of audit committees are regulated by Regulation No. 537/2014 of the European Parliament and the

Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities, the Law on the Audit of

Financial Statements of the Republic of Lithuania, and the Rules Regulating the Activities of Audit Committees approved by the Bank

of Lithuania.

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5.4.3. The audit committee should decide whether the

participation of the chair of the management board, the

manager of the company, the chief finance officer (or

senior employees responsible for finance and

accounting), the internal and external auditors in its

meetings is required (and, if required, when). The

committee should be entitled, when needed, to meet the

relevant persons without members of the management

bodies present.

Yes

The Audit Committee decides on the

participation of other persons in its meetings

and, if necessary, the Audit Committee invites

the Head of the Company and the responsible

employees of the Company to its meetings,

who are responsible for the areas of activity of

the issues under consideration. The Chairman

of the Audit Committee is also provided with

the opportunity to communicate with the

shareholders.

5.4.4. The audit committee should be informed about

the internal auditor’s work program and should be

furnished with internal audit reports or periodic

summaries. The audit committee should also be

informed about the work program of external auditors

and should receive from the audit firm a report

describing all relationships between the independent

audit firm and the company and its group.

Yes

The Audit Committee is informed about the

work performed by the Internal Auditor and

receives conclusions about the research

performed. Each year, the Audit Committee

receives reports from external auditors

describing all relationships between the

independent auditor and the Company and its

group.

5.4.5. The audit committee should examine whether

the company complies with the applicable provisions

regulating the possibility of lodging a complaint or

reporting anonymously his/her suspicions of potential

violations committed at the company and should also

ensure that there is a procedure in place for

proportionate and independent investigation of such

issues and appropriate follow-up actions.

Yes

The Company has provided employees with

the opportunity to submit complaints or

anonymous reports about violations

committed in the Company, however the

Company has not received such complaints or

reports during the reporting period.

5.4.6. The audit committee should submit to the

supervisory board or, where the supervisory board is

not formed, to the management board its activity report

at least once in every six months, at the time that

annual and half-yearly reports are approved.

Yes

The Audit Committee analyzes and evaluates

the Company's annual and semi-annual

financial statements, makes recommendations

to the Board for their approval, together with

its activity reports for that period.

Principle 6: Prevention and disclosure of conflicts of interest

The corporate governance framework should encourage members of the company’s supervisory and

management bodies to avoid conflicts of interest and ensure a transparent and effective mechanism of

disclosure of conflicts of interest related to members of the supervisory and management bodies.

Any member of the company’s supervisory and

management body should avoid a situation where

his/her personal interests are or may be in conflict with

the company’s interests. In case such a situation did

occur, a member of the company’s supervisory or

management body should, within a reasonable period

of time, notify other members of the same body or the

body of the company which elected him/her or the

company’s shareholders of such situation of a conflict

of interest, indicate the nature of interests and, where

possible, their value.

Yes

Members of the Company's management

bodies behave in such a way that there is no

conflict of interest with the Company. During

the reporting period, there is no known

conflict of interest between the Company and

the member of its management body.

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Principle 7: Remuneration policy of the company

The remuneration policy and the procedure for review and disclosure of such policy established at the

company should prevent potential conflicts of interest and abuse in determining remuneration of members

of the collegial bodies and heads of the administration, in addition it should ensure the publicity and

transparency of the company’s remuneration policy and its long-term strategy.

7.1. The company should approve and post the

remuneration policy on the website of the company;

such policy should be reviewed on a regular basis and

be consistent with the company’s long-term strategy.

Yes/

The Company has implemented and operates

a remuneration policy approved by the

Company's management, but it is not

published on the Company's website.

The Annual General Meeting of Shareholders

of 2020 approved the Remuneration Policy,

which is published on the Company's website

and regularly reviewed.

7.2. The remuneration policy should include all forms

of remuneration, including the fixed-rate remuneration,

performance-based remuneration, financial incentive

schemes, pension arrangements and termination

payments as well as the conditions specifying the cases

where the company can recover the disbursed amounts

or suspend the payments.

Yes

The Company has implemented a

remuneration policy that includes all forms of

remuneration, including fixed salary,

performance-based benefits, pension modules

and severance payments. This procedure is

approved by the management of the Company

in agreement with the Trade Union

Committee.

7.3. With a view to avoid potential conflicts of

interest, the remuneration policy should provide that

members of the collegial bodies which perform the

supervisory functions should not receive remuneration

based on the company’s performance.

Yes

See point 3.2.8

7.4. The remuneration policy should provide sufficient

information on the policy regarding termination

payments. Termination payments should not exceed a

fixed amount or a fixed number of annual wages and in

general should not be higher than the non-variable

component of remuneration for two years or the

equivalent thereof. Termination payments should not

be paid if the contract is terminated due to inadequate

performance.

Yes

Termination benefits shall be granted in

accordance with the provisions of Chapter 5

of the Labor Code of the Republic of

Lithuania and the provisions of the Material

Promotion and Allowance Procedure in the

Company.

7.5. In the event that the financial incentive scheme is

applied at the company, the remuneration policy should

contain sufficient information about the retention of

shares after the award thereof. Where remuneration is

based on the award of shares, shares should not be

vested at least for three years after the award thereof.

After vesting, members of the collegial bodies and

heads of the administration should retain a certain

number of shares until the end of their term in office,

subject to the need to compensate for any costs related

to the acquisition of shares.

The Company does not apply a system of

financial incentives.

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7.6. The company should publish information about

the implementation of the remuneration policy on its

website, with a key focus on the remuneration policy in

respect of the collegial bodies and managers in the next

and, where relevant, subsequent financial years. It

should also contain a review of how the remuneration

policy was implemented during the previous financial

year. The information of such nature should not

include any details having a commercial value.

Particular attention should be paid on the major

changes in the company’s remuneration policy,

compared to the previous financial year.

See point 7.1

7.7. It is recommended that the remuneration policy or

any major change of the policy should be included on

the agenda of the general meeting of shareholders. The

schemes under which members and employees of a

collegial body receive remuneration in shares or share

options should be approved by the general meeting of

shareholders.

See point 7.1

Principle 8: Role of stakeholders in corporate governance

The corporate governance framework should recognize the rights of stakeholders entrenched in the laws or

mutual agreements and encourage active cooperation between companies and stakeholders in creating the

company value, jobs and financial sustainability. In the context of this principle the concept

“stakeholders” includes investors, employees, creditors, suppliers, clients, local community and other

persons having certain interests in the company concerned.

8.1. The corporate governance framework should

ensure that the rights and lawful interests of

stakeholders are protected.

Yes

The corporate governance framework shall

ensure that the rights of the stakeholders

protected by law are respected. The Company

has created conditions for interest holders to

participate in the management of the

Company - participation of the Company's

employees and milk producers in the

Company's share capital. The majority of

employees are shareholders of the Company

and are therefore directly involved in the

management of the Company. The

stakeholders involved in the governance

process shall be given access to the

information required and to vote in the

relevant decisions. In addition, the Company

has provided facilities for confidential

reporting of unlawful or unethical practices.

8.2. The corporate governance framework should

create conditions for stakeholders to participate in

corporate governance in the manner prescribed by law.

Examples of participation by stakeholders in corporate

governance include the participation of employees or

their representatives in the adoption of decisions that

are important for the company, consultations with

employees or their representatives on corporate

governance and other important matters, participation

of employees in the company’s authorized capital,

involvement of creditors in corporate governance in the

cases of the company’s insolvency, etc.

8.3. Where stakeholders participate in the corporate

governance process, they should have access to

relevant information.

8.4. Stakeholders should be provided with the

possibility of reporting confidentially any illegal or

unethical practices to the collegial body performing the

supervisory function.

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Principle 9: Disclosure of information

The corporate governance framework should ensure the timely and accurate disclosure of all material

corporate issues, including the financial situation, operations and governance of the company.

9.1. In accordance with the company’s procedure on

confidential information and commercial secrets and

the legal acts regulating the processing of personal

data, the information publicly disclosed by the

company should include but not be limited to the

following:

Yes

The information contained in this

recommendation shall be disclosed in the

annual and semi-annual reports of the

Company in accordance with the requirements

of legal acts regulating data processing and

confidential information procedures. This

information is published on the website of AB

Nasdaq Vilnius Stock Exchange and on the

Company's website.

9.1.1.operating and financial results of the company;

9.1.2.objectives and non-financial information of the

company;

9.1.3.persons holding a stake in the company or

controlling it directly and/or indirectly and/or

together with related persons as well as the

structure of the group of companies and their

relationships by specifying the final beneficiary;

9.1.4.members of the company’s supervisory and

management bodies who are deemed

independent, the manager of the company, the

shares or votes held by them at the company,

participation in corporate governance of other

companies, their competence and remuneration;

9.1.5.reports of the existing committees on their

composition, number of meetings and attendance

of members during the last year as well as the

main directions and results of their activities;

9.1.6.potential key risk factors, the company’s risk

management and supervision policy;

9.1.7.the company’s transactions with related parties;

9.1.8.main issues related to employees and other

stakeholders (for instance, human resource

policy, participation of employees in corporate

governance, award of the company’s shares or

share options as incentives, relationships with

creditors, suppliers, local community, etc.);

9.1.9.structure and strategy of corporate governance;

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9.1.10.initiatives and measures of social

responsibility policy and anti-corruption fight,

significant current or planned investment

projects.

This list is deemed minimum and companies are

encouraged not to restrict themselves to the disclosure

of information included into this list. This principle of

the Code does not exempt companies from their

obligation to disclose information as provided for in

the applicable legal acts.

9.2. When disclosing the information specified in

paragraph 9.1.1 of recommendation 9.1, it is

recommended that the company which is a

parent company in respect of other companies

should disclose information about the

consolidated results of the whole group of

companies.

Yes

The Company discloses information on the

Company’s and the Group’s consolidated

results. The information is disclosed in the

consolidated annual report and consolidated

financial statements.

9.3. When disclosing the information specified in

paragraph 9.1.4 of recommendation 9.1, it is

recommended that the information on the

professional experience and qualifications of

members of the company’s supervisory and

management bodies and the manager of the

company as well as potential conflicts of interest

which could affect their decisions should be

provided. It is further recommended that the

remuneration or other income of members of the

company’s supervisory and management bodies

and the manager of the company should be

disclosed, as provided for in greater detail in

Principle 7.

Yes/

The information specified in the

recommendation is presented in the

Company's annual and semi-annual reports.

9.4. Information should be disclosed in such

manner that no shareholders or investors are

discriminated in terms of the method of receipt

and scope of information. Information should be

disclosed to all parties concerned at the same

time.

Yes

The Company discloses all regulated

information through the news distribution

system of AB Nasdaq Vilnius. This ensures

that it is accessible to the widest possible

public. The information is simultaneously

available in Lithuanian and English. In

addition, the company publishes information

before or after the Nasdaq Vilnius trading

session so that all shareholders and investors

of the company have equal access to

information and make appropriate investment

decisions. The Company shall not disclose

information that may affect the price of the

securities issued by it in the comments,

interviews or other ways until such

information is made public through the

Central Regulatory Information Base.

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Principle 10: Selection of the company’s audit firm

The company’s audit firm selection mechanism should ensure the independence of the report and opinion

of the audit firm.

10.1. With a view to obtain an objective opinion on the

company’s financial condition and financial results, the

company’s annual financial statements and the

financial information provided in its annual report

should be audited by an independent audit firm.

Yes

An independent audit company performs

auditing of the Company’s and its subsidiaries

individual and consolidated (the group) annual

financial reports in accordance with

International Accounting Standards applicable

in the EU. An independent auditing company

also evaluates conformity of annual report to

the audited financial statements.

10.2. It is recommended that the audit firm would be

proposed to the general meeting of shareholders by the

supervisory board or, if the supervisory board is not

formed at the company, by the management board of

the company.

Yes

The Board of Directors proposes an auditing

firm to the general meeting of shareholders.

10.3. In the event that the audit firm has received

remuneration from the company for the non-audit

services provided, the company should disclose this

publicly. This information should also be available to

the supervisory board or, if the supervisory board is not

formed at the company, by the management board of

the company when considering which audit firm

should be proposed to the general meeting of

shareholders.

Yes

Information on the remuneration of the audit

firm is disclosed publicly in the Company's

annual reports. The audit firm shall provide

non-audit services only with the approval of

the Audit Committee. During 2021, the Audit

Firm received a fee of EUR 20 thousand for

non-audit services provided to the Company's

Group.

PricewaterhouseCoopers UAB, J. Jasinskio str. 16B, 03163 Vilnius, Lithuania

+370 (5) 239 2300, lt_vilnius@pwc.com, www.pwc.lt

Company code 111473315, registered with the Legal Entities’ Register of the Republic of Lithuania

Independent auditor’s report

To the shareholders of Rokiškio Sūris AB

Report on the audit of the separate and consolidated financial statements

Our opinion

In our opinion, the separate and consolidated financial statements give a true and fair view of the

separate and consolidated financial position of Rokiškio Sūris AB (the “Company”) and its subsidiaries

(together - the “Group”) as at 31 December 2021 and of the Company’s and of the Group’s separate

and consolidated financial performance and their separate and consolidated cash flows for the year

then ended in accordance with International Financial Reporting Standards as adopted by the

European Union.

Our opinion is consistent with our additional report to the Audit Committee dated 6 April 2022.

What we have audited

The Company’s and the Group’s separate and consolidated financial statements comprise:

● the separate and consolidated balance sheets as at 31 December 2021;

● the separate and consolidated statements of income and comprehensive income for the year then

ended;

● the separate and consolidated statements of changes in equity for the year then ended;

● the separate and consolidated statements of cash flows for the year then ended; and

● the notes to the separate and consolidated financial statements, which include significant

accounting policies and other explanatory information.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our

responsibilities under those standards are further described in the Auditor’s responsibilities for the

audit of the financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis

for our opinion.

Independence

We are independent of the Company and the Group in accordance with the International Code of

Ethics for Professional Accountants (including International Independence Standards) issued by the

International Ethics Standards Board for Accountants (IESBA Code) and the Law of the Republic of

Lithuania on the Audit of Financial Statements that are relevant to our audit of the separate and

consolidated financial statements in the Republic of Lithuania. We have fulfilled our other ethical

responsibilities in accordance with the IESBA Code and the Law of the Republic of Lithuania on the

Audit of Financial Statements.

To the best of our knowledge and belief, we declare that non-audit services that we have provided to

the Company and the Group are in accordance with the applicable law and regulations in the Republic

of Lithuania and that we have not provided non-audit services that are prohibited under Article 5(1) of

Regulation (EU) No 537/2014 considering the exemptions of Regulation (EU) No 537/2014 endorsed

in the Law of the Republic of Lithuania on the Audit of Financial Statements.

The non-audit services that we have provided to the Company and the Group, in the period from 1

January 2021 to 31 December 2021, are disclosed in note 32 to the separate and consolidated

financial statements.

Our audit approach

Overview

● Overall Group materiality is EUR 2 million

● Overall Company materiality is EUR 1.9 million

● We tailored our audit scope based on the risk and size of entities

within the Group and performed a full scope audit of the Company

and two subsidiaries. At the Group level we tested the consolidation

process and performed selected audit procedures over the

subsidiary not covered by the above procedures to be able to report

on the consolidated financial statements as a whole.

● Revenue recognition

● Valuation of accounts receivable and loans granted

● Inventory write-down to net realisable value

As part of designing our audit, we determined materiality and assessed the risks of material

misstatement in the separate and consolidated financial statements (together “the financial

statements”). In particular, we considered where management made subjective judgements; for

example, in respect of significant accounting estimates that involved making assumptions and

considering future events that are inherently uncertain. As in all of our audits, we also addressed the

risk of management override of internal controls, including, among other matters, consideration of

whether there was evidence of bias that represented a risk of material misstatement due to fraud.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain

reasonable assurance whether the financial statements are free from material misstatement.

Misstatements may arise due to fraud or error. They are considered material if individually or in

aggregate, they could reasonably be expected to influence the economic decisions of users taken on

the basis of the financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality,

including the overall Company and Group materiality for the separate and consolidated financial

statements as a whole as set out in the table below. These, together with qualitative considerations,

helped us to determine the scope of our audit and the nature, timing and extent of our audit

procedures and to evaluate the effect of misstatements, if any, both individually and in aggregate on

the financial statements as a whole.

Overall Company materiality

EUR 1.9 million (2020: EUR 1.5 million)

Overall Group materiality

EUR 2 million (2020: EUR 1.7 million)

How we determined it

0.8% of the Group’s and Company’s revenue, respectively

Materiality

Group

scoping

Key audit

matters

Rationale for the materiality

benchmark applied

Significant fluctuations in the Company’s and the Group’s

profit depend on the prevailing trends in global dairy markets,

and therefore, the profits for the last years have been volatile.

We have, therefore, chosen revenue as a benchmark for

determining the materiality because, in our view, it provides

more consistent information year-on-year basis, reflecting the

Group’s and the Company’s size and growth, and is one of

the key measures of performance that the stakeholders

observe.

We agreed with the Audit Committee that we would report to them misstatements identified during our

audit above EUR 101 thousand as well as misstatements below that amount that, in our view,

warranted reporting for qualitative reasons.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in

our audit of the financial statements of the current period. These matters were addressed in the

context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we

do not provide a separate opinion on these matters.

Key audit matter

How our audit addressed the key audit matter

Revenue recognition

Refer to note 2.17 and note 5 ‘Segment

reporting’ in the financial statements

The Group’s and the Company’s revenue in

2021 amounted to EUR 253 million and EUR

233.7 million, respectively, and mostly

consisted of sales of goods.

The Company recognises revenues from sales

of goods based on the quantity of goods

dispatched and the agreed prices. Revenue is

recognised only at point of time, when control

of goods has been transferred to the customer

based on the agreed delivery terms. Revenue

is recognised net of discounts or other sales

incentives provided. Although revenue

recognition involves only limited judgement,

due to the size and volume of transactions it

continues to be an audit area which requires

significant time and resources and is therefore

considered to be a key audit matter.

We audited revenue recognition through a

combination of controls testing and substantive

procedures.

We evaluated the design and tested, based on a

selected sample of relevant information tested,

operating effectiveness of key controls in relation

to the recognition of revenue, with particular focus

on controls over the matching of invoices to

related shipping documents and to the agreed

prices as indicated in the sale orders or

agreements.

We read the accounting policy for revenue

recognition in respect of all material revenue

streams and assessed its compliance with the

International Financial Reporting Standards as

adopted by the European Union.

We also performed the following tests of details:

• We obtained a sample of transactions

conducted with customers during the year and

either obtained third party confirmations of the

transactions or reconciled the transactions to the

signed agreement or sale order, the shipping

documents, the invoices and subsequent receipts

of payments from the customers.

• We selected a sample of transactions

conducted before and after the year-end and

evaluated whether revenue was recognised in an

appropriate period based on the transfer of control

according to the delivery terms and shipping

documents.

• We assessed the accounting treatment

for various sales incentives paid to retail chains,

such as publication of advertisements in a

supermarket’s newspaper, listing fees etc.

• We selected a sample of credit invoices,

discounts and returns after the year-end and

checked whether they were recorded in the

appropriate period.

• Our work also included testing a sample

of revenue journal entries to identify whether they

have been recorded in the General Ledger with

any unusual corresponding entries.

Valuation of accounts receivable and loans

granted

Refer to note 2.8, note 4 ‘Critical accounting

estimates and judgments’, note 20 ‘Trade and

other receivables’, and note 18 ‘Loans granted’

in the financial statements.

As at 31 December 2021, the Group’s and the

Company’s trade receivables amounted to

EUR 47 million and EUR 51.2 million,

respectively, including the credit loss

allowance of EUR 0,991 million, and loans

granted amounted to EUR 5.6 million and EUR

5.9 million, respectively.

In accordance with IFRS 9 ‘Financial

Instruments’, the Group’s management

assesses expected credit losses in relation to

trade receivables on a forward-looking basis

and recognises an allowance for credit losses

at each reporting date. The estimate of

expected credit losses represents an unbiased

and probability weighted amount that is

determined by evaluating a range of possible

outcomes, and reflects all reasonable and

supportable information that is available at

each reporting date about past events, current

conditions and forecasts of future economic

conditions.

To measure the expected credit losses, the

management has grouped trade receivables

based on shared credit risk characteristics and

the days past due to assess them on a

collective or individual basis. The collective

assessment was based on the payment

We performed the following procedures for testing

the management’s assessment of expected credit

losses in relation to trade receivables:

• We evaluated the methodology used by

the Group's management to assess its

compliance with the requirements of IFRS 9.

• We obtained the ageing analysis of trade

receivables as at 31 December 2021 and tested

its reliability on the basis of a selected sample of

invoices.

• We examined the accuracy of

management’s classification of trade receivables

for their further assessment on a collective or

individual basis depending on the credit risk

characteristics and the ageing of receivables.

• We examined, on a sample basis the

models and calculations used for the assessment

of credit losses on a collective or individual basis.

• We analysed, on a sample basis, whether

the ratio of unpaid balances of a customer at the

year end to the annual receipts from the customer

indicates any potential impairment issues.

• For debtors with significant amounts

overdue more than 90 days, we examined their

credit ratings at a credit insurance agency and

assessed whether the probability of default

assigned by the Company aligned with these

ratings.

• For the sample of the amounts overdue

more than 90 days, we obtained the data about

profiles of sales over a period of 36 months

before 31 December 2021 and the

corresponding historical credit losses

experienced within this period. Expected credit

losses for significant trade receivables overdue

for more than 90 days were evaluated

individually based on external information from

credit insurance agency, collaterals received

as security for repayment, and past history of

default.

The degree of accuracy of the management’s

estimate will be confirmed or rebutted

depending on the future developments that are

inherently uncertain. We focused on assessing

the allowance for credit losses in relation to

trade receivables as the estimation process is

complicated and requires significant

management’s judgements, and the amount of

allowance is significant.

The expected credit losses for loans granted

were calculated in view of the fair value of the

collateral, which was not lower than the

balance of loans granted as at 31 December

2021.

payments received after the year end to

determine whether the payment patterns were

consistent with the management’s estimates as at

year end. We also enquired whether there was

any collateral received or insurance paid in

respect of the related receivables, and whether

those were appropriately reflected in the

calculation of the expected credit losses.

• We read the minutes of the Credit

Committee containing the results of regular

analysis of possible indicators of default or

increase in credit risk.

We tested the management’s estimates of

expected credit losses in relation to loans granted

to see whether the fair value of the collateral was

not lower than the balance of loans granted, by

comparing, on sample basis, the carrying amount

of the collateral as at 31 December 2021 with the

sale transactions of similar assets in the market.

Inventory write-down to net realisable value

Refer to note 2.9, note 4 ‘Critical accounting

estimates and judgments’ and note 19

‘Inventory’ in the financial statements

The Group’s and the Company’s inventory

balance amounted to EUR 59 million and EUR

56 million, respectively, as at 31 December

2021.

We focused on this area due to the size of the

inventory balance and because the

management’s assessment of the net

realisable value of finished goods involves

estimates about their potential selling price at

the balance sheet date.

The Group’s and the Company’s inventory

write-down to net realisable value amounted to

EUR 0.097 million as at 31 December 2021.

We obtained the Company’s and the Group’s

policies and methodology in respect of inventory

write-downs to net realisable value, evaluated

their compliance with the requirements of IFRSs.

We compared, on a sample basis, the cost of

finished goods with their net realisable value,

which was based on selling price in transactions

that occurred after the balance sheet date and

deducted estimated transportation costs. We

assessed whether the inventory allowance

recognised by the management was within our

internally developed estimated range.

We evaluated the balance of non-realised items of

finished goods at the end of the audit and tested it

individually to identify slow-moving inventory

items.

How we tailored our Group audit scope

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an

opinion on the consolidated the financial statements as a whole, taking into account the structure of

the Group, the accounting processes and controls, and the industry in which the Group operates.

Accordingly, based on the size and risk characteristics, we performed a full scope audit of the financial

information for the following entities within the Group: Rokiškio Pienas UAB, Rokiškio Pieno Gamyba

UAB, Rokiškio Sūris AB (parent company). At the Group level we tested the consolidation process to

be able to report on the consolidated financial statements as a whole.

Reporting on other information including the consolidated annual report

Management is responsible for the other information. The other information comprises the

consolidated annual report, including the corporate governance report and the remuneration report

(but does not include the financial statements and our auditor’s report thereon).

Our opinion on the financial statements does not cover the other information, including the

consolidated annual report.

In connection with our audit of the financial statements, our responsibility is to read the other

information identified above and, in doing so, consider whether the other information is materially

inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears

to be materially misstated.

With respect to the consolidated annual report, we considered whether the consolidated annual report

includes the disclosures required by the Law of the Republic of Lithuania on Consolidated Financial

Reporting by Groups of Undertakings, the Law of the Republic of Lithuania on Financial Reporting by

Undertakings.

Based on the work undertaken in the course of our audit, in our opinion:

● the information given in the consolidated annual report for the financial year for which the financial

statements are prepared, is consistent with the financial statements; and

● the consolidated annual report has been prepared in accordance with the Law of the Republic of

Lithuania on Consolidated Financial Reporting by Groups of Undertakings and the Law of the

Republic of Lithuania on Financial Reporting by Undertakings.

The Company and the Group has prepared the social responsibility report that was presented as a

separate report.

In addition, in light of the knowledge and understanding of the Company and the Group and their

environment obtained in the course of the audit, we are required to report if we have identified material

misstatements in the consolidated annual report which we obtained prior to the date of this auditor’s

report. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the financial

statements

Management is responsible for the preparation of the financial statements that give a true and fair

view in accordance with International Financial Reporting Standards as adopted by the European

Union, and for such internal control as management determines is necessary to enable the

preparation of financial statements that are free from material misstatement, whether due to fraud or

error.

In preparing the financial statements, management is responsible for assessing the Company’s and

the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless management either intends to

liquidate the Company and the Group or to cease operations, or has no realistic alternative but to do

so.

Those charged with governance are responsible for overseeing the Company’s and the Group’s

financial reporting process.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole

are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that

includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an

audit conducted in accordance with ISAs will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on

the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain

professional scepticism throughout the audit. We also:

● Identify and assess the risks of material misstatement of the financial statements, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit

evidence that is sufficient and appropriate to provide a basis for our opinion. 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 control.

● Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the Company’s and the Group’s internal control.

● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

● Conclude on the appropriateness of management’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to events

or conditions that may cast significant doubt on the Company’s and the Group’s ability to continue

as a going concern. If we conclude that a material uncertainty exists, we are required to draw

attention in our auditor’s report to the related disclosures in the financial statements or, if such

disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit

evidence obtained up to the date of our auditor’s report. However, future events or conditions may

cause the Company and the Group to cease to continue as a going concern.

● Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and

events in a manner that achieves fair presentation.

● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Group to express an opinion on the consolidated financial

statements. We are responsible for the direction, supervision and performance of the Group audit.

We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant deficiencies in

internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant

ethical requirements regarding independence, and have communicated with them all relationships and

other matters that may reasonably be thought to bear on our independence, and where applicable,

actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters

that were of most significance in the audit of the financial statements of the current period and are

therefore the key audit matters. We describe these matters in our auditor’s report unless law or

regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we

determine that a matter should not be communicated in our report because the adverse

consequences of doing so would reasonably be expected to outweigh the public interest benefits of

such communication.

Report on other legal and regulatory requirements

Report on the compliance of the format of the separate and consolidated financial statements

with the requirements of the European Single Electronic Reporting Format

We have been engaged based on the amendment to our audit agreement by the management of the

Company to conduct a reasonable assurance engagement for the verification of compliance with the

applicable requirements of the European single electronic reporting format of the Company’s separate

and the Group’s consolidated financial statements, including the consolidated annual report, for the

year ended 31 December 2021 (the “Single Electronic Reporting Format of the separate and

consolidated financial statements”).

Description of a subject matter and applicable criteria

The Single Electronic Reporting Format of the separate and consolidated financial statements has

been applied by the management of the Company to comply with the requirements of art. 3 and 4 of

the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive

2004/109/EC of the European Parliament and of the Council with regard to regulatory technical

standards on the specification of a single electronic reporting format (the “ESEF Regulation”). The

applicable requirements regarding the Single Electronic Reporting Format of the separate and

consolidated financial statements are contained in the ESEF Regulation.

The requirements described in the preceding sentence determine the basis for application of the

Single Electronic Reporting Format of the separate and consolidated financial statements and, in our

view, constitute appropriate criteria to form a reasonable assurance conclusion.

Responsibility of the management and those charged with governance

The management of the Company is responsible for the application of the Single Electronic Reporting

Format of the separate and consolidated financial statements that complies with the requirements of

the ESEF Regulation.

This responsibility includes the selection and application of appropriate markups in iXBRL using ESEF

taxonomy and designing, implementing and maintaining internal controls relevant for the preparation

of the Single Electronic Reporting Format of the separate and consolidated financial statements which

is free from material non-compliance with the requirements of the ESEF Regulation.

Those charged with governance are responsible for overseeing the financial reporting process, which

should also be understood as the preparation of financial statements in accordance with the format

resulting from the ESEF Regulation.

Our responsibility

Our responsibility was to express a reasonable assurance conclusion whether the Single Electronic

Reporting Format of the separate and consolidated financial statements complies, in all material

aspects, with the ESEF

Regulation.

We conducted our engagement in accordance with International Standard on Assurance

Engagements 3000 (Revised) ‘Assurance Engagements other than Audits and Reviews of Historical

Financial Information’ (“ISAE 3000 (R)”). This standard requires that we comply with ethical

requirements, plan and perform procedures to obtain reasonable assurance whether the Single

Electronic Reporting Format of the separate and consolidated financial statements complies, in all

material aspects, with the applicable requirements.

Reasonable assurance is a high level of assurance, but it does not guarantee that the service

performed in accordance ISAE 3000 (R) will always detect the existing material misstatement

(significant non-compliance with the requirements).

Summary of the work performed

Our planned and performed procedures were aimed at obtaining reasonable assurance that the

Single Electronic Reporting Format of the separate and consolidated financial statements was applied,

in all material aspects, in accordance with the applicable requirements and such application is free

from material errors or omissions. Our procedures included in particular:

• obtaining an understanding of the internal control system and processes relevant to the

application of the Single Electronic Reporting Format of the separate and consolidated financial

statements, including the preparation of the XHTML format and marking up the separate and

consolidated financial statements;

• verification whether the XHTML format was applied properly;

• evaluating the completeness of marking up the separate and consolidated financial statements

using the iXBRL markup language according to the requirements of the implementation of single

electronic format as described in the ESEF Regulation;

• evaluating the appropriateness of the Company’s and the Group’s' use of XBRL markups selected

from the ESEF taxonomy and the creation of extension markups where no suitable element in the

ESEF taxonomy has been identified; and

• evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our

conclusion.

Conclusion

In our opinion, the Single Electronic Reporting Format of the separate and consolidated financial

statements for the year ended 31 December 2021 complies, in all material aspects, with the ESEF

Regulation.

Appointment

We were first appointed as auditors of the Company and the Group in 1996. Our appointment has

been renewed annually by shareholders resolution representing a total period of uninterrupted

engagement appointment of 26 years.

The key audit partner on the audit resulting in this independent auditor’s report is Rimvydas Jogėla.

On behalf of PricewaterhouseCoopers UAB

/signed with electronic signature/

Rimvydas Jogėla

Partner

Auditor's Certificate No.000457

Vilnius, Republic of Lithuania

7 April 2022

The auditor's electronic signature is used herein to sign only the Independent Auditor's Report