Management report Field of activity The enterprise was founded in 1900, but the actual name it has got since 1970. Today, LB is a leading producer of alcoholic beverages. Totally, AS “Latvijas balzams” produces more than 130 different kinds of alcoholic beverages. AS “Latvijas balzams” major shareholder is “S.P.I. Distilleries. B. V.” which owns 6,595,745 shares or 87.98% of the company equity capital. The activity of enterprise in first nine months 2007 AS “Latvijas balzams” is the biggest producer of alcoholic beverages in Baltic States, as well as one of the largest taxpayers in Latvia. During first nine month of 2007 LB paid 31.4 millions lats to the state budget, including excise tax amounting to 26.5 millions lats. The unaudited turnover of the company in the first nine months of year 2007 was 73.8 million lats, which is by 22.6% more than during first nine months in 2006. The increase in turnover at local market is 26.3% as compared to the same period in 2006. The production of AS “Latvijas balzams” takes leader position in local market keeping market share above 40% in category of strong and low alcoholic beverages. In accordance with State Revenue Service, in first nine months of this year, mainly sold alcoholic beverages were AS “Latvijas balzams” products (cider Lucky Dog, sparkling wine Rīgas šampanietis and vodka 3 graudu) In comparison with 2006, the export market sales increased for 16.4%, or else for 3 600 thousands lats. Sales to Lithuania increased by 14% as compared to the same period in 2006. The top sales focus markets are Baltic States and Scandinavia; meanwhile new export markets are being acquired. In third quarter of year 2007, we have begun to sell AS “Latvijas balzams” products in new export markets such as Portugal and Armenia. The unaudited net profit from main business activities for the reporting period was 1 714 thousands lats, that's 56.2% more than in the first six months in 2006 (1 097 thousands lats). Future perspectives of activity Until the end of year 2007 one of the AS “Latvijas balzams” priorities is export expansion. Special emphasis is set to Scandinavian countries. AS Latvijas balzams Chairman of the Board Rolands Gulbis Riga, 30 November, 2007