Zemaitijos Pienas - Notification on material event

Regarding a decision of the Supervision Service of the Bank of Lithuania

Telsiai, Lithuania, 2017-02-10 17:00 CET (GLOBE NEWSWIRE) -- On 10 February
2017, AB ŽEMAITIJOS PIENAS (the “Company”) received Decision No. 241-17 of the
Director of the Supervision Service of the Bank of Lithuania “Regarding
imposition of a measure of impact on the company” (the “Decision”). By the
Decision the Company was, inter alia, obligated to make it public, indicating
that: 

1. By the Decision of the Director of the Supervision Service of the Bank of
Lithuania, the Company was warned about violation of Article 22 of the Law of
the Republic of Lithuania on Securities. 

2. In the opinion of the Supervision Service of the Bank of Lithuania,
financial statements of the Company for 2015 do not meet requirements of IAS 2
“Inventories”, IAS 16 “Property, Plant and Equipment” and IAS 39 “Financial
Instruments: Recognition and Measurement”. 

3. The impact of the violations on the financial statements is as follows:

3.1. As the Company did not assess, as on 31 December 2015, the current value
of amounts receivable from related persons – AB Klaipėdos Pienas and AB
Žemaitijos Pieno Investicija in the amount of EUR 3.612 million, of future cash
flows discounted at the initial actual interest rate on such financial assets,
it is impossible to establish the exact impact on the financial condition and
financial results of the Company and the group. However, taking into account
that impairment of all amounts receivable from related companies was
recognised, which was not reasonable, it should be considered that, upon
evaluation of the current value of the amounts receivable from related
companies, the assets and the net result of the Company and the group for 2015
would increase. 

3.2. As the Company did not substantiate, as on 31 December 2015, impairment of
the inventories (fermented cheese in the aging process) of the Company and the
group (EUR 4.366 million and EUR 4.676 million, respectively), it is impossible
to accurately establish the impact on the financial condition and financial
results of the Company and the group. However if, at the end of 2015, the net
realisable value of inventories (fermented cheese in the aging process) of the
Company and the group, which was not substantiated by the Company, were
established to be different from that established by the Company, then the
value of inventories of the Company and the group, as on 31 December 2015,
could be more or less than indicated in the financial statements for 2015. 

3.3. Taking into account that the period of useful life of fixed tangible
assets, which are fully depreciated, but are still used in operations, was set
shorter than usefulness of the assets for the economic entity (the Company and
the group), expenses of the Company and the group for previous periods were
increased and the value of assets was reduced. 

4. Financial statements will be corrected retrospectively and forwards,
assessed and published together with the audited financial statements of the
Company for 2016, unless the Company decided to file a complaint against the
Decision in court, as indicated below. 



The Company also notes that the Decision presents the opinion of the Bank of
Lithuania on the issues discussed above, in connection with the financial
statements of the Company for 2015, which does not necessarily coincide with
the position of the Company. After the management of the Company analyses the
Decision and in case it does not agree to the position of the Bank of Lithuania
stated therein, it will consider a possibility to complain against the Decision
in court under the procedure set by applicable legal acts. 


         Lawyer
         G. Keliauskas
         + 370 444 22208