Joint Stock Company “TALSU MEZRUPNIECIBA” No. of reg. 40003113243 Not audited Financial report 2006, on 31.03. Talsu district, Stende TABLE OF CONTENTS FINANCIAL REPORT .....................................................................................................................3 BALANCE SHEET ON 31 MARCH 2006.........................................................................................3 PROFIT OR LOSS ACCOUNT ......................................................................................................5 CASH FLOW STATEMENT..........................................................................................................6 STATEMENT OF CHANGES IN OWN CAPITAL ......................................................................7 ANNEX............................................................................................................................................8 INFORMATION ABOUT STOCK COMAPANY .........................................................................8 INFORMATION FOR THE “BALANCE SHEET ON 31 March 2006”....................................10 INFORMATION FOR “PROFIT OR LOSS ACCOUNT” .........................................................12 GUIDANCE REPORT ..................................................................................................................13 2 JSC ”TALSU MEŽRŪPNIECĪBA” Not audited Financial report – 2005 on 31.03. FINANCIAL REPORT BALANCE SHEET on 31 March 2006 ASSETS Annex 31.03. 31.03. 31.03. 31.03. No 2006. 2005. 2006. 2005. LVL LVL EUR EUR 1. 2. 3. 4. 5. 6. 1. Long-term investments I Intangible assets: 1. Concessions, patents, licences and similar rights 950 865 1352 1230 I Total 1. 950 865 1352 1230 II Fixed assets: 1. Land, buildings, perennial plantations 39505 43844 56210 62384 2. Non-current investments in leasehold improvements - - - - 3. Equipment and machinery 307599 256863 437674 365483 4. Other fixtures, fittings and equipment 2294 3494 3263 4971 5. Costs of up-building of fixed assets and unfinished buildings 57211 - 81403 - 6. Advance payment for fixed assets -- - - II Total 2. 406609 304201 578550 432838 III Non-current financial investments - - - - 1. Other securities - - - - III Total - - - -- Total of paragraph 1 391643 305066 579902 434068 2. Current assets I Inventories: 1. Raw materials and auxiliary materials 7703 14014 10960 19940 2. Finished goods and goods for sale 143370 55032 203998 78303 3. Prepayments for goods 5063 5063 7204 7204 I Total 156136 74109 222162 105447 II Receivables: 1. Trade receivables 244437 190962 347802 271572 2. Other receivables 3. 11607 17678 16515 25153 3. Prepaid expense 6530 27288 9291 38827 II Total 262574 235828 373608 335552 Pašu akcijas un daļas 766 1089 III Cash 425 193 605 275 Total of paragraph 1 419135 310896 596375 442363 BALANCE 826694 615962 1176277 876431 3 JSC ”TALSU MEŽRŪPNIECĪBA” Not audited Financial report – 2005 on 31.03. EQUITY AND LIABILITIES Annex 30.03. 31.03. 30.03. 31.03. No 2006. 2005. 2006. 2005. LVL LVL EUR EUR 1. 2. 3. 4. 5. 6. 1. Capital and Reserves 1. Share capital 495699 495699 705316 705316 2. Retained earnings: a) brought forward -56183 -108986 -79941 -155073 b) for the period 21875 -5188 31125 -7382 Total of paragraph 1 461391 381525 656500 542861 Uzkrājumi 43047 61249 2. Liabilities I Long-term liabilities: 4. 143785 118776 204587 169003 1. Other liabilities I Total 143785 118776 204587 169003 II Current liabilities: 1. Other liabilities 5. 51018 68147 72593 96963 2. Prepayments received from costumers 297 - 422 - 3. Trade payables 86488 30458 123061 43338 4. Taxes payable 6. 20126 2783 28636 3958 5. Other liabilities 7. 20542 14273 29229 20308 II Total 178471 115661 253941 164567 Total of paragraph 2 322256 234437 458528 333571 BALANCE 826694 615962 1176277 876431 4 JSC ”TALSU MEŽRŪPNIECĪBA” Not audited Financial report – 2005 on 31.03. PROFIT OR LOSS ACCOUNT (according to the method of turnover costs) Annex For the For the For the For the No. Indication No year 2006 year 2005 year 2006 year 2005 3 month 3 month 3 month 3 month LVL LVL EUR EUR 1. Net turnover 8. 492720 303141 701077 431331 2. Inventory changes of finished goods and 9. unfinished production -- - - 3. Other revenues from economic activity 10. -- - - 4. Material costs 11. 427255 240212 607928 341790 a) raw material and auxiliary material costs 356426 195605 507148 278320 b) other costs 70829 44607 100780 63470 5. Staff costs 10050 9431 14299 13419 a) wages and salaries 10050 9431 14299 13419 b) other social security expense 6. Value and asset write-off - a) depreciation write-off of fixed assets b) residual value of excluded tangible fixed assets -- - - b) write-off of current assts 12. 7. Other expense of economic activity 13. 31842 53199 45308 75695 8. Other interest receivable and similar income 14. 9. Interest payable and similar expense 15. 1366 1980 1944 2818 10. Profit /Loss before taxes 22207 -1681 31598 -2391 11. Other taxes 16. 332 3507 473 4991 12. Profit/Loss for the reporting year 21875 -5188 31125 -7382 Profit on stock 0.044 -0.010 0.044 -0.010 5 JSC ”TALSU MEŽRŪPNIECĪBA” Not audited Financial report – 2005 on 31.03. CASH FLOW STATEMENT (indirect method) For the For the For the For the No. Income and expense positions 31.03.2006 31.03.2005 31.03.2006 31.03.2005 LVL LVL EUR EUR I Cash flow of basic activity 1. Taxable sales revenue 21875 -5188 31125 -7382 adjusting ever(enterprise income-tax) 2. Wear and tear 3. Result from sale 4. Wariations of stocks 2313 3292 5. Wariations of debts -28595 25033 -40688 35619 6. Wariations of payable 20297 15770 28880 22439 7. Deferred outcome -36 -16742 -51 -23822 8. Paid-up income tax of enterprise Net cash of basic activity 15854 18873 22558 26854 II Cash flow of investment 1. Purchase of tangible fixed and intangible fixed assets -15916 -18996 -22646 -27029 2 Paid-up investments - 3. Prepayment for fixed assets - Net cash of basic activity -15916 -18996 -22646 -27029 III Cash flow of financing 1. Entered cash from joint-stock emission - - 2. Entered cash from loan - - - - 3. Paid cash loan repayment 4. Paid cash loan about leasing Net cash flow of financing IV Net increase/decrease of cash -62 -123 -88 -175 V Cash balance at the beginning of 487 316 693 449 reporting year VI Cash balance at the end of reporting year 425 193 605 274 6 JSC ”TALSU MEŽRŪPNIECĪBA” Not audited Financial report – 2005 on 31.03. STATEMENT OF CHANGES IN OWN CAPITAL Share Retained Share Retained Indication capital earning Total capital earning Total LVL LVL LVL EUR EUR EUR Balance at 31 December 2004 495699 -123385 372314 705316 -175561 529755 Earning of 3 month 2005 - -5188 -5188 - -7328 -7328 Balance at at 31.03. 2005 495699 -128573 381525 705316 -182943 542861 Balance at 31 December 2005 495699 -56183 439516 705316 -79941 627375 Dividends calculated for the year 2005 - - - - - - Earning of 3 month 2005 - 21875 21875 - 31125 31125 Balance at at 31.03. 2006 495699 -34308 461391 705316 -48816 656500 7 JSC ”TALSU MEŽRŪPNIECĪBA” Not audited Financial report – 2005 on 31.03. ANNEX INFORMATION ABOUT STOCK COMAPANY The financial report has been prepared according to law „On Accountancy”, “On the Annual Accounts of Undertaking”, “Latvian Accountancy Standards” and other normative documents. Profit or loss account has been prepared according to scheme of vertical outline and classification by method of turnover costs. The accounting and appreciation methods used are the same that were used in the preceding year of account. Non-current investments have been appreciated according to their acquisition cost. The cadastre value of the land in Talsi district, Stende, Dumpīšu 3 has been assessed at Ls 1500.- The write-off of the value of such non-current intangible assets as software is done on a straight- line basis annually for equal amount. The stated depreciation of fixed intangible assets is calculated on a straight-line basis using the norms of amortisation defined by the stock company. The norms of amortisation of specific investment categories are following: Technological equipment and machinery 5; 10 years Other fixtures and fittings 5 years Computing and similar devices 3 years The valuation of inventories in financial accountancy is being done using continuous inventory method. The inventories have been evaluated at their purchase or production cost price using weighted average price method. The measure of value and currency used in the financial report is lats - official currency of the Republic of Latvia. All monetary positions of assets, equities and liabilities have been converted into lats according to the currency exchange rate by Bank of Latvia on the last day of accounting year 31.03.2005. For the informative purpose the, above stated positions have been converted to EUR according to the exchange rate of Bank of Latvia on 31.03.2005 0,702804 LVL/ EUR Balances of receivables stated in the balance sheet are at their net values. The provisions are to be established for the debts that are recognised as doubtful and the evaluation of which has been done individually, and analyzing the repayment of debts in the preceding years. At the end of the accounting year the non-collectable receivables are written off from the formerly established provisions, when their recovery is deemed impossible. All receivable amounts stated in the balance sheet are to be received in the coming year after the date of balance sheet. All liabilities are to be settled within the period of year except the ones stated in the interpretation of the balance sheet. As the prepaid expenses