LIETUVOS ENERGIJA UAB CONSOLIDATED AND COMPANY S CONDENSED INTERIM FINANCIAL INFORMATION (unaudited) for a twelve month period ended 31 december 2014

Transcription

1 2014 LIETUVOS ENERGIJA UAB CONSOLIDATED AND COMPANY S CONDENSED INTERIM FINANCIAL INFORMATION (unaudited) for a twelve month period ended 31 december 2014

2 Translation note: This condensed interim financial information is a translation from the original, which was prepared in Lithuanian. 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 this document takes precedence over this translation. TABLE OF CONTENTS 3 Condensed interim statement of financial position 5 Condensed interim statement of profit and loss and other comprehensive income 7 Condensed interim statement of cash flows 8 Condensed interim statement of changes in equity 10 Notes to the condensed interim financial information

3 Condensed interim statement of financial position (unaudited) as of 31 December 2014 All amounts in LTL thousands unless otherwise stated Notes 31 Dec Dec Dec Dec 2013 ASSETS Non-current assets Intangible assets 4 52, , Property, plant, and equipment 5 5,566,387 7,318, Prepayments for non-current assets Investment property 129, , Subsidiaries and other investments ,346,893 2,763,355 Investments in associates 5,388 28, Amounts receivable after one year 7 828, , , ,000 Long-term investments 8 16,216 57,302 16,216 57,302 Other non-current assets 26,162 17, Deferred income tax assets 32,785 1, Total non-current assets 6,657,284 8,476,474 4,188,380 3,510,761 Current assets Inventories 9 183,043 34, Prepayments 32,244 16, Trade receivables 450, , Other receivables 90,181 85,641 7,259 38,537 Other current assets 1, Prepaid income tax 25,288 10, Short-term investments , ,385 Cash and cash equivalents , , , ,974 1,511,789 1,132, , ,906 Non-current assets held for sale 1, Total current assets 1,513,777 1,132, , ,172 TOTAL ASSETS 8,171,061 9,609,274 4,304,202 3,981,933 (continued on the next page) 3

4 EQUITY AND LIABILITIES Equity Share capital 11 4,179,849 4,067,164 4,179,849 4,067,164 Reserves ,632 1,456, Retained earnings (deficit) (193,327) (87,757) 121,759 (87,060) Equity attributable to owners of the parent 4,307,154 5,435,526 4,301,863 3,980,104 Non-controlling interest 183, , Total equity 4,490,923 6,134,754 4,301,863 3,980,104 Liabilities Non-current liabilities Non-current borrowings , , Finance lease liabilities Grants and subsidies 1,051,203 1,091, Deferred income tax liability 77, , Provisions 14 29,498 4, Deferred income 186, , Other non-current amounts payable and liabilities 58,908 77, Total non-current liabilities 2,262,007 2,578, Current liabilities Current portion of long-term debts , , Current borrowings 13 46,460 71, Current portion of finance lease liabilities Trade payables 375, , Advance amounts received 138,260 69, Current income tax liabilities 41,600 7, Provisions 14 33,620 12, Other current amounts payable and liabilities 335, ,679 1,065 1,420 Total current liabilities 1,418, ,138 2,260 1,829 Total liabilities 3,680,138 3,474,520 2,339 1,829 TOTAL EQUITY AND LIABILITIES 8,171,061 9,609,274 4,304,202 3,981,933 The accompanying notes form an integral part of this condensed interim financial information. Notes 31 Dec Dec Dec Dec 2013 Dr. Dalius Misiūnas Chief Executive Officer Darius Kašauskas Director of Finance and Treasury Edita Steponavičienė UAB Verslo aptarnavimo centras operating in accordance with order No.V-002 4

5 Condensed interim statement of profit and loss and other comprehensive income (unaudited) All amounts in LTL thousands unless otherwise stated Revenue Notes 1 January 31 December September 31 December January 31 December September 31 December January 31 December September 31 December January 31 December September 31 December 2013 Sales revenue 3,183,647 1,089,977 2,787, , Other operating income 191,627 83, ,370 34, Total revenue 3,375,274 1,173,577 2,907, , Operating expenses Purchase of electricity and related services (1,336,885) (420,112) (1,410,414) (449,102) Purchase of gas and fuel oil (778,889) (127,303) (374,164) (53,533) Depreciation and amortisation (448,841) (112,005) (470,190) (110,696) (14) (3) (17) (4) Wages and salaries and related expenses (264,719) (79,396) (231,687) (64,393) (9,156) (1,893) (7,082) (1,932) Repair and maintenance expenses (103,321) (29,556) (84,194) (33,670) Other expenses 15 (1,848,136) (1,726,577) (184,884) (53,734) (202,774) (199,345) (3,593) (1,620) Total operating expenses (4,780,791) (2,494,949) (2,755,533) (765,128) (211,944) (201,241) (10,692) (3,556) Operating profit / (loss) (1,405,517) (1,321,372) 152,004 3,380 (211,936) (201,239) (10,684) (3,554) Negative goodwill on acquisition of Lietuvos Dujos AB , Share of result of investment under equity method , Re-measurement of investment under equity method 18 (97,987) Finance income 16 25,361 5,995 20,103 5, ,584 5, ,983 3,476 Finance costs 17 (27,015) (6,634) (30,219) (9,169) (413) - (4) (1) Share of results of other associates (686) 306 (358) (706) Profit / (loss) before income tax (1,202,447) (1,321,705) 141,530 (1,151) 294,235 (195,744) 113,295 (79) Current year income tax expense (52,431) (17,420) (40,044) (10,239) (547) (480) - - Deferred income tax income / (expense) 259, ,967 39,333 24, (53) (27) 603 Net profit / (loss) for the period (994,995) (1,125,158) 140,819 13, ,771 (196,277) 113, (continued on the next page) 5

6 Attributable to: Owners of the parent (966,170) (1,091,562) 129,940 12, ,771 (196,277) 113, Non-controlling interest (28,825) (33,596) 10, Other comprehensive income / (loss) Items that will not be reclassified to profit or loss Gain (loss) on revaluation of non-current assets (571,061) (571,061) (2,056) (1,991) Total items that will not be reclassified to profit or loss (571,061) (571,061) (2,056) (1,991) Items that will be reclassified to profit or loss Change in fair value of available-for-sale financial assets Total items that will be reclassified to profit or loss Total other comprehensive income / (loss) (570,806) (571,056) (2,056) (1,991) Total comprehensive income (loss) for the period (1,565,801) (1,696,214) 138,763 11, ,026 (196,272) 113, Attributable to: Owners of the parent (1,504,935) (1,630,577) 127,852 10, ,026 (196,272) 113, Non-controlling interest (60,866) (65,637) 10, The accompanying notes form an integral part of this condensed interim financial information. Dr. Dalius Misiūnas Chief Executive Officer Darius Kašauskas Director of Finance and Treasury Edita Steponavičienė UAB Verslo aptarnavimo centras operating in accordance with order No.V-002 6

7 Condensed interim statement of cash flows (unaudited) All amounts in LTL thousands unless otherwise stated Cash flows from operating activities Net profit (loss) for the period (994,995) 140, , ,268 Adjustments for non-monetary items: Depreciation and amortisation 4,5 491, , Revaluation of property, plant and equipment 5 748,876 4, Impairment of assets (reversal of impairment) 1,091,921 (4,724) - 34 The decrease in investments ,200 - Share of the results of associates and joint ventures Income tax expense (207,452) (Depreciation) of grants (42,584) (40,796) - - Increase (decrease) in provisions 50,548 (402) - - (Gain) / loss on disposal / write-off of property, plant and equipment 13,907 12, Utilization of emission allowances - 13, Elimination of results of financing and investing activities: Interest income 16 (16,205) (15,129) (16,815) (14,728) Interest expense 17 24,138 30, Other finance (income) / costs (6,279) (4,796) (489,331) (109,255) Changes in working capital: (Increase) decrease in trade receivables and other amounts receivable (87,240) 126,572 (289) 2,115 (Increase) decrease in inventories, prepayments and other current assets 121,426 24,837 (1) 118 Increase (decrease) in amounts payable, deferred income and advance amounts received (114,323) 100,843 (37) 113 Income tax (paid) (54,756) (55,765) - - Net cash generate from / (used in) operating activities 1,019, ,747 (13,623) (8,291) Cash flows from investing activities (Acquisition) of PP&E and intangible assets (431,205) (452,502) (12) (5,678) Disposal of PP&E and intangible assets 5,528 1, Loans (granted), loan repayments received (99,630) 23,632 (100,131) 25,000 Change in time deposits (997) 151, ,475 Acquisition of subsidiaries (associates) - - (69,809) (2,010) Grants received (14,250) 6, Bonds acquired - (199,583) - (199,583) Bonds disposed 162, , , ,695 Interest received 15,465 16,205 14,521 15,346 Dividends received 6, , ,255 Acquisition of LESTO AB shares from minority shareholders (117,887) - Acquisition of Lietuvos Dujos AB shares 18 (354,763) - (481,357) - Other investing cash flows (51,908) Net cash flows from / (used in) investing activities (762,535) (282,192) (102,763) 260,500 Cash flows from financing activities Proceeds from borrowings 340, ,074 50,491 - Repayments of borrowings (140,478) (191,842) (50,491) - Finance lease payments (95) (327) - - Interest paid (24,880) (30,723) (401) - Dividends paid (122,025) (18,544) (84,952) - Acquisition of LESTO AB shares from minority shareholders 6 (117,887) Increase of subsidiaries (associates) owned share - (1,272) - - Other cash flows from financing activities 4,843 (18) - - Net cash flows from / (used in) financing activities (59,872) (71,652) (85,353) - Increase (decrease) in cash and cash equivalents (including overdraft) 196, ,903 (201,739) 252,209 Cash and cash equivalents (including overdraft) at the beginning of the period 487,688 (3,215) 309,974 57,765 Cash and cash equivalents (including overdraft) at the end of the period 684, , , ,974 The accompanying notes form an integral part of this condensed interim financial information. Dr. Dalius Misiūnas Chief Executive Officer Darius Kašauskas Director of Finance and Treasury Edita Steponavičienė UAB Verslo aptarnavimo centras operating in accordance with order No.V-002 7

8 Condensed interim statement of changes in equity (unaudited) All amounts in LTL thousands unless otherwise stated Equity attributable to owners of the Notes Noncontrolling interest Share Legal Revaluation Other Retained Total Subtotal capital reserve reserve reserves earnings Balance at 1 January 2013 (restated) 4,067,164 75, , ,922 (325,520) 5,309, ,864 6,021,831 Revaluation of property, plant and equipment, net of deferred income tax effects - - (2,088) - - (2,088) 32 (2,056) Total other comprehensive income (loss) for the period - - (2,088) - - (2,088) 32 (2,056) Net profit (loss) for the period (restated) , ,940 10, ,819 Total comprehensive income (loss) for the period - - (2,088) - 129, ,852 10, ,763 Transfer of revaluation reserve to retained earnings (transfer of depreciation, net of deferred income tax) - - (73,434) - 73, Transfer to reserves and movement in reserves - 1,595 - (38,453) 36, Dividends (18,818) (18,818) Acquisition of UAB LITGAS (307) (307) 1,307 1,000 Changes in non-controlling interest on the group s restructuring (2,162) (1,986) (6,036) (8,022) Balance at 31 December ,067,164 77, , ,469 (87,757) 5,435, ,228 6,134,754 Balance at 1 January ,067,164 77, , ,469 (87,757) 5,435, ,228 6,134,754 Revaluation of property, plant, equipment and intangible assets, net of deferred income tax effects - - (539,020) - - (539,020) (32,041) (571,061) Change in fair value of available-for-sale financial assets, net of deferred income tax effects Total other comprehensive income (loss) for the period - - (539,020) (538,765) (32,041) (570,806) Net profit (loss) for the period (966,170) (966,170) (28,825) (994,995) Total comprehensive income (loss) for the period - - (539,020) 255 (966,170) (1,504,935) (60,866) (1,565,801) Transfer of revaluation reserve to retained earnings (transfer of depreciation, net of deferred income tax) - - (49,272) - 49, Transfer to reserves and movement in reserves 12-1,250 - (651,556) 650, Dividends (36,690) (36,690) Increase in share capital , , ,685 Changes due to group s restructuring 6-5,792 97,071 (7) 228, ,667 (445,665) (114,299) Changes in non-controlling interest on the group s restructuring ,762 27,762 Balance at 31 December ,179,849 84, , (193,327) 4,307, ,769 4,490,923 (continued on the next page) 8

9 Notes Share capital Legal reserve Other reserves Retained earnings Total Balance at 1 January ,067, (200,328) 3,866,836 Net profit (loss) for the period , ,268 Balance at 31 December ,067, (87,060) 3,980,104 Balance at 1 January ,067, (87,060) 3,980,104 Increase in share capital , ,685 Change in fair value of available-for-sale financial assets, net of deferred income tax effects Net profit (loss) for the period , ,771 Dividends (84,952) (84,952) Balance at 31 December ,179, ,759 4,301,863 The accompanying notes form an integral part of this condensed interim financial information. Dr. Dalius Misiūnas Chief Executive Officer Darius Kašauskas Director of Finance and Treasury Edita Steponavičienė UAB Verslo aptarnavimo centras operating in accordance with order No.V-002 9

10 Notes to condensed interim financial information (unaudited) All amounts in LTL thousands unless otherwise stated 1 General information This financial information contains unaudited condensed interim financial information of Lietuvos Energija UAB (hereinafter referred to as the ) and its subsidiaries (hereinafter collectively referred to as the ) for a twelve-month period ended 31 December 2014 (hereinafter referred to as the financial information or the interim financial information ). Lietuvos Energija UAB is a private limited liability company registered in the Republic of Lithuania. The address of the s registered office is Žvejų g. 14, LT-09310, Vilnius, Lithuania. The is a limited liability profit-seeking entity registered on 28 August 2008 with the Register of Legal Entities managed by the public institution the Centre of Registers. The s code , VAT payer s code LT The has been established for an unlimited period. Lietuvos Energija UAB is a parent company, which is responsible for the management and coordination of activities of the companies engaged in electric power and heat production and supply, electric power import and export, distribution and trade, natural gas distribution and supply, as well as in service and development of electric energy industry. The analyses the activities of the companies, represents the whole group, implements its shareholders rights and obligations, defines operation guidelines and rules, and coordinates the activities in the fields of finance, law, strategy and development, human resources, risk management, audit, technology, communication and other. Lietuvos Energija UAB seeks to ensure effective operation of the companies, implementation of goals related to the s activities set forth in the National Energetic Independence Strategy and other legal acts, ensuring that it builds a sustainable value in a socially responsible manner. The is wholly owned by the Government of the Republic of Lithuania. s shareholder Share capital 31 December December 2013 Ownership interest, % Share capital Ownership interest, % Republic of Lithuania represented by the Lithuanian Ministry of Finance 4,179, ,067,

11 The consists of Lietuvos Energija UAB and subsidiaries directly or indirectly controlled by the : name Lietuvos Energijos Gamyba AB LESTO AB Lietuvos Dujos AB NT Valdos UAB Duomenų Logistikos Centras UAB ELEKTROS TINKLO PASLAUGOS UAB Kauno Energetikos Remontas UAB LITGAS UAB Gotlitas UAB Energijos Tiekimas UAB Public Institution Centre of Training for Energy Specialists (up to October 2014, Public Institution Republican Centre of Training for Energy Specialists) Geton Energy OÜ Geton Energy SIA Technologijų ir Inovacijų Centras UAB VAE SPB UAB Verslo aptarnavimo centras UAB (up to 31 December 2014, paid-up capital 1,891 thousands LTL) Lietuvos dujų tiekimas UAB Lietuvos energijos paramos fondas Registered office address Elektrinės g. 21, Elektrėnai Žvejų g. 14, Vilnius Aguonų g. 24, Vilnius Geologų g. 16, Vilnius A. Juozapavičiaus g. 13, Vilnius Motorų g. 2, Vilnius Chemijos g. 17, Kaunas Gedimino pr. 33-2, Vilnius Chemijos g. 17, Kaunas Jeruzalės g. 21, Vilnius Jeruzalės g. 21, Vilnius Narva mnt 5, Tallinn Bezdelingu 12, LV-1048, Riga A. Juozapavičiaus g. 13, Vilnius Žvejų g. 14, Vilnius P. Lukšio g. 5 b, Vilnius Aguonų g. 24, Vilnius Žvejų g. 14, Vilnius Effective ownership interest at 31 December 2014, % Share capital ( 000 LTL) at 31 December , , , , , , , ,000 Profile of activities Electricity generation, supply, import, export and trade Electricity supply and distribution to end users Supply and distribution of natural gas to end users Operation of real estate, other related activities and provision of services Maintenance of information technologies and telecommunications Construction, repair and maintenance of grid and related equipment, connection of customers to the grid Repairs of energy equipment, production of metal structures Supply of liquid natural gas via terminal and trade in natural gas ,100 Accommodation services, trade Supply of electric power and natural gas Professional development and continuing training of energy specialists Supply of electric power Supply of electric power , , , ,000 Supply of gas Provision of IT, telecommunication and other services Business consultations and other management activities Provision of public procurement, accounting and HR services Assistance in significant to the public projects, initiatives and activities As of 31 December 2014, the had 5,602 employees (31 December 2013: 4,378) and the had 61 employees (31 December 2013: 53). The management of Lietuvos Energija UAB approved this financial information on 27 February

12 2 Summary of significant accounting policies This condensed interim financial information for a twelvemonth period ended 31 December 2014 has been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting. For a better understanding of data contained in the condensed interim financial information, this financial information should be read in conjunction with the consolidated and the s financial statements for the year ended 31 December 2013, which were prepared in accordance with International Financial Reporting Standards as adopted by the EU. The accounting policies applied in the preparation of this condensed interim financial information are consistent with those of the annual financial statements for the year ended 31 December Income tax Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss. Accounting policies applied to significant transactions within the in relation to the s restructuring are set out below (as described in Notes 6 and 19). Business combinations Subsidiaries are all entities (including structured entities) over which the has control. The controls an entity when the is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the. They are deconsolidated from the date that control ceases. IFRS 3 Business Combinations is not applied to business combinations involving entities under common control, therefore, for the purpose of this financial information business combinations involving entities under common control were accounted for using the pooling of interest method. Acquisition method is applied to account for acquisition of subsidiaries that are not part of the s group. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred in a bargain purchase, the equity interests issued, and the liabilities assumed at the bargain purchase date. Acquisition-related costs are expensed as incurred. Identifiable net assets, liabilities and contingent liabilities acquired in the acquiree, which meet IFRS 3 Business Combinations criteria, are recognised at their fair values at the acquisition date. 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 identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement. Minority interest in the acquiree is initially recognised at the minority interest s proportionate share of the recognised amounts of net assets, liabilities and contingent liabilities. Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions that is, as transactions with the owners in their capacity as owners. The difference between the fair value of 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. New standards, amendments and interpretations The newly issued standards, amendments and interpretations that are effective from 1 January 2014 have been presented in the s and the s audited financial statements for the year ended 31 December The newly issued standards, amendments and interpretations that are effective from 1 January 2014 and relevant for the s and the s condensed interim financial information for a twelve-month period ended 31 December 2014 are set out below. IFRS 10 Consolidated financial statements (issued in May 2011). IFRS 10 changes the definition of control so that the same criteria are applied to all entities to determine control. This definition is supported by extensive application guidance. This standard had no impact on the measurement of transactions and balances in the s consolidated financial information. IFRS 11 Joint arrangements (issued in May 2011). Changes in the definitions have reduced the number of types of joint arrangements to two: joint operations and joint ventures. The existing policy choice of proportionate consolidation for jointly controlled entities has been eliminated. Equity accounting is mandatory for participants in joint ventures. This standard had no 12

13 impact on the measurement of transactions and balances; the applied this standard to the transactions conducted during IFRS 12 Disclosure of interest in other entities (issued in May 2011). This standard applies to entities that have an interest in a subsidiary, a joint arrangement, an associate or an unconsolidated structured entity. IFRS 12 sets out the required disclosures for entities reporting under the two new standards: IFRS 10 Consolidated financial statements and IFRS 11 Joint arrangements. This standard had no impact on the measurement of transactions and balances; the and the considered the requirements of this standard when making disclosures in this financial information. IAS 27 Separate financial statements (revised in May 2011). Its objective is to prescribe the accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. The guidance on control and consolidated financial statements was replaced by IFRS 10 Consolidated financial statements. This standard had no impact on the measurement of transactions and balances; the and the considered the requirements of this standard when making disclosures in this financial information. IAS 28 Investments in associates and joint ventures (revised in May 2011). The amendment of IAS 28 supplemented IAS 28 with the requirement to account for joint ventures using the equity method, because this method is applicable to both, joint ventures and associates. Save for this, other guidelines remained unchanged. The / is currently assessing the impact of this standard on its financial statements. The applied this standard to the transactions conducted during Critical accounting estimates and judgements used in the preparation of the financial statements Accounting estimates and judgments are continuously reviewed and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The preparation of financial information according to International Financial Reporting Standards as adopted by the EU requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses, and disclosures of contingencies. Changes in the underlying assumptions, estimates and judgements may have a material effect on this financial information. The accounting estimates applied in preparing the condensed interim financial information are consistent with those used in preparing the annual financial statements for the year ended 31 December Revaluation and impairment of assets The accounts for property, plant and equipment (except for the assets of power plants, gas distribution pipelines and gas technological equipment) at revalued amount in accordance with International Accounting Standard 16 Property, plant and equipment. The previous version of the Lithuanian Law on Electricity effective as at 31 December 2008 stipulated that the price caps for electricity transmission services were determined based on the value of assets used in licensed activities of the service provider, with the value of such assets established with reference to data reported in the service provider s financial statements (Regulated Assets Base). According to the amendment to the above-mentioned Law effective from 1 June 2009, the price caps for electricity transmission services are to be determined based on the value of assets used in licensed activities of the service provider, with the value of such assets being estimated and approved by the National Control Commission for Prices and Energy (hereinafter referred to as NCCPE ) in accordance with the principles for determination of the value of assets used in licensed activities of the service provider that had been drafted by the Commission and approved by the Government. According to the Government s Resolution No of 24 September 2014 On approval of principles for determination of the state regulated prices in the electricity sector, were approved principles for determination of the state regulated prices in the electricity sector. In addition, in 15 January 2015 NCCPE approved new methodology of regulation (hereinafter referred to as The methodology ). The methodology was prepared in accordance with methodical guidelines for forming Longrun Average Incremental Costs (LRAIC) accounting model (NCCPE resolution no. O3-287 of 5 July 2013), guidelines for technical-technological and economical model for the grid (NCCPE resolution no.o3-755 of 27 December 2013). In accordance with The methodology, 19 January 2015 NCCPE has established the price caps for AB LESTO distribution facilities in average and low voltage grid for

14 For the above-mentioned reason and in accordance with International Accounting Standard 16 article 31 and International Accounting Standard 36 article 9 requirements, i.e. to set fair value in financial reports recorded property, plant and equipment, was carried out AB LESTO assets evaluation, as required in International Valuation and Accounting Standards. Revaluation of assets As at 31 December 2014, independent valuation of assets was performed at the in respect of NT Valdos UAB (buildings, structures and vehicles), AB LESTO and AB Lietuvos dujos (buildings, structures and vehicles). The valuation was carried out by independent valuation companies and valuation specialists of the. As at 31 December 2013, independent valuation of assets was performed at the in respect of Lietuvos Energijos Gamyba AB (assets carried at revalued amount), ELEKTROS TINKLO PASLAUGOS UAB and NT Valdos UAB (buildings and structures). The valuation was carried out by independent valuation companies. As at 31 December 2012, independent valuation of assets was performed at the in respect of NT Valdos UAB. The valuation was carried out by independent valuation company and the s internal valuation experts. As at 31 December 2011, valuation of property, plant and equipment in respect of Kauno Energetikos Remontas UAB was performed using the comparable price and income methods. In 2010, independent property valuers carried out revaluation of non-current assets transferred as in-kind contribution to the formation of the share capital of Technologijų ir Inovacijų Centras UAB, Duomenų Logistikos Centras UAB and NT Valdos UAB. In 2013, Duomenų Logistikos Centras UAB and NT Valdos UAB performed valuation of selected items of assets and determined that there was no significant difference between the carrying amount and the fair value of property, plant and equipment. Considering the date of the last revaluation of these assets and the periods of their acquisition, in the opinion of the management, the fair value of the s property, plant and equipment stated at revalued amounts as at 31 December 2014 did not differ significantly from their carrying amount. Revaluation of LESTO AB assets In accordance with valuation report of property, plants and equipment written by independent valuation company, AB LESTO performed valuation of property, plants and equipment and has established the fair value of property, plants and equipment (construction in progress included) at 31 December 2014 consisting of LTL B., in LTL B less then book value of property, plants and equipment at 31 December 2014 consisting of LTL B. Income and costs valuation methods were used valuating AB LESTO property, plant and equipment by fair value. Valuation of assets was performed in stages: (i) setting replacement cost new value, (ii) determination of physical and functional depreciation of assets, (iii) performed valuation of possibilities in recouping of assets (income method). The fair value was used as value standard / assumption in valuation, as it is established in 13 IFAS. Regulation and its effect on recouping of assets were taken into account valuating economical depreciation. The fundamental assumptions of the business plan, used in calculation of economical depreciation of assets, were: 15 January 2015 NCCPE approved new regulation methodology, which the management of the took into account while preparing business plan for 10 year period. The methodology was prepared in accordance with methodical guidelines for forming LRAIC accounting model (NCCPE resolution no. O3-287 of 5 July 2013), guidelines for technical-technological and economical model for the grid (NCCPE resolution no.o3-755 of 27 December 2013). Assumptions related with calculation of regulated assets base (RAB) were set in accordance to the Government s Resolution No of 24 September 2014 On approval of principles for determination of the state regulated prices in the electricity sector, which is not provided in new regulation methodology, but these assumptions were included in financial prognosis, with estimated 50% probability. In accordance with above mentioned Resolution, additional RAB component is calculated as a difference between assets book value and regulated assets base, appeared 30 June Additional RAB is used only in calculation of RAB return (i.e. admissible depreciation calculated from RAB without additional component) in particular period. Discount rate (WACC) was set using capital asset pricing model (CAPM). Received WACC (after taxation) amount is equal 6.38 % (or 7.5 % before taxation), which was used for discounting till current value. In forecasted period RAB will continually grow because of large capital investment in particular periods ( ) and reach LTL B. in Impairment of assets The makes an assessment, at least annually, whether there are any indications that the carrying amount of property, plant and equipment has been impaired. As of 31 December 2014 and 31 December 2013, the impairment test was performed for the property, plant and equipment of the Reserve Power Plant and Combined Cycle Block (classified in the category of assets of pow- 14

15 er plants), and it was determined that the recoverable amount of the assets of power plants exceeded their carrying amount of LTL M (31 December 2013: LTL M), and consequently, no impairment was recognised thereon. Valuation of investments in subsidiaries Although the shares of the s subsidiaries LESTO AB and Lietuvos Energijos Gamyba AB are traded on Vilnius Stock Exchange, the s management believes this market is not active enough so that the quoted stock prices could be treated as equivalent to the fair value of investments in subsidiaries at the reporting date. 31 December 2014 the performed impairment test of investment in its subsidiary LESTO AB and accounted LTL M impairment. Impairment test was performed in accordance with assumptions of long time forecasts used in note Revaluation of LESTO AB assets, in addition adjusting cash flows due to development prospects of LES- TO AB as a company (i.e. value generated not only from property, plants and equipment). Discounted cash flows were adjusted estimating net financial debt and investment in subsidiaries. As of 31 December 2013, the s management performed the impairment test and determined no impairment in respect of the investment in subsidiary Lietuvos Energijos Gamyba AB. The s management believed there were no indications of impairment of the investment in Lietuvos Energijos Gamyba AB as of 31 December As of 31 December 2014, the carried out valuation/impairment test in respect of its investment in subsidiary Lietuvos Dujos AB using the discounted cash flow method. Discounted cash flows were estimated in line with the effective legal acts and methods regulating distribution activities. Discounted cash flows were calculated using a pre-tax discount rate of 7.09 %, which is consistent with the rate of return used by NCCPE in regulation of prices. Based on the analysis, the s management determined that there was no impairment of the investment in Lietuvos Dujos AB as of 31 December Cost of LITGRID AB disposal For the purpose of implementing the provisions of the Law on Electricity, on 4 July 2012 the Lithuanian Government adopted Resolution No 826 On the establishment of a private limited liability company and investment of state-owned capital, based on which the Ministry of Energy was assigned to establish a private limited liability company and adopt all the decisions necessary for the transfer of shares of LITGRID AB owned by Lietuvos Energija UAB to the newly established private limited liability company EPSO-G UAB in return for a consideration based on the market value of shares determined by independent valuers. For the purpose of implementing the above-mentioned Resolution of the Lithuanian Government, the management initiated an independent valuation of the s shares held in LITGRID AB an electricity transmission system operator controlled by the. The independent valuers determined the market value for 97.5 % shares held in LITGRID AB using the income approach. In LITGRID AB shares purchase and sale agreement there is provided final price premium, which proportion depends from regulatory environment in future periods. 24 September 2014 Government approved principles for determination of the state regulated prices in the electricity sector, 15 January 2015 NCCPE approved new regulation methodology (LRAIC). 19 January 2015 NC- CPE approved LITGRID AB price caps for transmission services in high voltage grid for According to above-mentioned changes, the performed price premium valuation and determined that according to LITGRID AB shares purchase and sale agreement price premium value is unchanged as of 31 December Impairment of goodwill and intangible assets not subject to amortisation The consolidated financial information includes goodwill and licences with indefinite useful life that arose on acquisition of VST AB in December 2014 the performed impairment test of goodwill and intangible assets not subject to amortisation and write off whole goodwill value equal LTL178 M. In appreciation of the fact, that from 2011, AB VST licences with unlimited useful life not offered for the any economic benefits, the retrospectively write off above-mentioned licences in value of LTL 118 M. Useful lives of property, plant and equipment The estimation of the useful lives of items of property, plant and equipment is a matter of judgment based on the experience with similar assets. The economic benefits embodied in the assets are consumed principally through their use. However, other factors, such as technical or commercial obsolescence, often result in the diminution of the economic benefits embodied in the assets. Management assesses the remaining useful lives in accordance with the current technical conditions of the assets and estimated period during which the assets are expected to earn benefits for the. The following key factors are considered: (a) expected usage of the assets; (b) expected physical wear and tear, which depends on operational factors and maintenance programme; and (c) technical or commercial obsolescence arising from changes in market conditions. 15

16 Accrued revenue Revenue received from private customers is recognised based on the payments received, therefore, at the end of each reporting period the amount of revenue earned but not yet paid by private customers is estimated and accrued by the management of the. Accrued revenue is estimated as 1/3 of total payments for electricity received in the last month of the reporting period. The accrued revenue is based on past experience and average term of payment by customers for electricity. The management has estimated that the majority of private customers declare and make payment for the electricity consumed on approx. the 20th day of the month, while electricity is supplied for a full month (30 or 31 days). Consequently, the volume of electricity consumed over the remaining 10 days is estimated proportionally based on the volume of electricity provided to the electricity supply network during the whole month (the actually known variable) and the total volume of electricity declared by private customers during December, and the resulting difference multiplied by the average rate per 1 kwh. Accounting for customer connection fees Before 1 July 2009, the used to defer income received from new customer connections to the grid and recognise it as deferred income over the period of 31 years, which is the average useful life of electricity equipment constructed by the upon connection of new customers. The management of the believes that the period of provision of services to customers is indefinite, therefore, the average useful life of electricity equipment constructed by the upon connection of new customers was used as the best estimate of the period over which connection fees paid customers were recognised as income. With effect from 1 July 2009 and based on IFRIC 18 interpretation, the newly connected customers to the grid do not obtain any additional future benefits as compared to all the remaining customers, consequently, the provision of connection service is treated as completed and income from connection is recognised upon the connection of a new customer. Impairment of amounts receivable Impairment losses for amounts receivables are determined based on the management s estimates on recoverability and timing relating to the amounts that will not be collectable according to the original terms of receivables. This determination requires significant judgement. Judgement is exercised based on significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments. Current estimates of the management could change significantly as a result of change in situation in the market and the economy as a whole. Recoverability rate also highly depends on success rate and actions employed relating to recovery of significantly overdue amounts receivable. Amounts receivable are assessed to determine their value and impairment individually or collectively in a group of similar receivables. In case of individually assessed receivables for impairment, the takes into account the available or accessible data from external sources of information on market trends and forecasts, the possible credit enhancements (collateral) provided for receivables and events providing evidence of impairment of receivables such as, for example, fulfilment of contractual terms, the borrower s actual performance, etc. In case of collectively assessed receivables for impairment, the takes into account the historical statistics, and reviews annually whether the provisioning rates used for collectively assessed receivables are in line with the historical data of impairment of receivables, and that the provisioning rates used for collectively assessed receivables are approved for the upcoming year. Tax audits The tax authorities may at any time inspect the books and records within 5 years subsequent to the reported tax year, and may assess additional tax amounts and penalties. The s management is not aware of any circumstances that might result in a potential material liability in this respect. Amortisation rates of licences Indefinite useful lives were established for the licences of distribution system operator and public supply services that were acquired on a business combination in 2008, because the validity term of these licences can be extended at no significant efforts or costs. Provision for utilisation of emission allowances The estimates provision for utilisation of emission allowances based on actual emissions over the reporting period multiplied by the market price for one unit of emission allowances. Actual emissions are approved by a relevant regulating state over the period of 4 months after the year end. Based on its past experience, the s management does not expect any significant differences between the estimated provisions as at 31 December 2014 and the emissions that will be approved for Accrual of PSO service fees The variable part of PSO service fees is estimated with reference to variable costs incurred during the reporting period. The producers ensuring the security of electric power supply and reserves of energy system, submit their PSO service fee estimates to the National Commission for 16

17 Control of Prices and Energy, which include breakdown of variable electric power production costs natural gas, heavy fuel oil, emission allowance costs and costs for reagent desulphurisation. The variable part of PSO service fees for the upcoming calendar year is estimated with reference to the expected variable costs to be incurred in the production of the approved quota of electricity to be compensated. Fair value of financial assets and financial liabilities The s and the s underlying financial assets and liabilities not measured at fair value include trade and other amounts receivable, trade and other amounts payable, non-current and current borrowings. The fair value is defined as 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 fair value of financial assets and financial liabilities is not lower than the amount payable on demand, which is discounted starting from the first day on which its payment may be demanded. The carrying amount of cash and cash equivalents, current trade and other amounts receivable, current trade and other amounts payable and current borrowings approximates their fair value. The fair value of non-current borrowings is determined with reference to the market price of loans of the same or similar nature or interest rates payable at that time on similar maturity debts. The fair value of non-current borrowings with variable interest approximates their carrying amount in cases when margins payable on such loans are consistent with loan margins currently available in the market. 4 Non-current intangible assets Patents and licences Computer software Emission allowances Other intangible assets Goodwill Net book amount at 1 January ,587 55,413 2, , ,702 Additions ,221 4,954-6,559 Revaluation - - (9,994) - - (9,994) Reclassified from / to PP&E 653 3,403 - (3,333) Write-off / emission allowances utilised - (4) (13,895) (6) - (13,905) Disposals - - (4,041) - - (4,041) Amortisation charge (762) (4,148) - (68) - (4,978) Net book amount at 31 December ,205 28,704 4, , ,066 Total Net book amount at 1 January ,205 28,704 4, , ,066 Acquisition of Lietuvos Dujos AB 1,079 1, ,164 Additions 4, ,384-7,320 Reclassified from / to PP&E 101 6,796 - (5,644) - 1,253 Write-off / emission allowances utilised (1) - (10,042) - (178,103) (188,145) Disposals - (260) - (13) - (273) Revaluation of emission allowances - - 9, ,662 Emission allowances grant received - - 8, ,039 Amortisation charge (1,345) (3,692) - (102) - (5,139) Net book amount at 31 December ,681 11,052 36, ,946 17

18 5 Property, plant and equipment Land Buildings Structures and machinery Gas distribution pipelines and equipment Gas technological equipment and facilities Assets of power plants Other PP&E Motor vehicles Construction in progress Net book amount at 1 January , ,536 4,228, ,664,957 50, ,222 73,361 7,509,236 Additions , ,214 10,851 4, , ,240 Revaluation 753 3,249 (5,597) (32) - (1,046) Disposals - (43) (112) - - (166) (565) (266) - (1,152) Write-offs - (179) (12,324) - - (4,401) (1) (66) (433) (17,404) Reclassifications from / to - 4, , ,021-8,620 (313,052) - Reclassified to assets, intangible assets (723) (723) Reclassification to assets for trade - - (1) (9) - (10) Reclassified to investment property - (6,327) (34) (1,296) (7,657) Reclassified from / to inventories (6) - - 6, ,433 Impairment - (4,603) (1,025) (38) (2) (34) (5,702) Reversal of impairment , ,758 Depreciation charge - (19,663) (338,358) - - (116,763) (7,037) (24,502) - (506,323) Net book amount at 31 December , ,555 4,164, ,567,102 54,059 90,780 73,829 7,318,650 Total Net book amount at 1 January , ,555 4,164, ,567,102 54,059 90,780 73,829 7,318,650 Acquisition of Lietuvos Dujos AB 1 36,309 4, ,037 14,970-8,846 18,429 3, ,439 Additions , ,114 16,600 15, , ,133 Disposals - (1,578) (549) - (90) (477) (1,761) (869) (477) (5,324) Write-offs - (279) (13,365) (457) (27) (2) - (81) (175) (14,386) Valuation results (revaluation, impairment) - (143,167) (1,936,730) (30,203) 11 (39,571) (1,209) (32,591) - (2,183,460) Reclassifications from / to - 5, ,242 20,612 1,790 7,724-16,483 (406,737) - Reclassified to assets, intangible assets - (6,884) (1,462) (8,346) Reclassified to investment property - - (24) - - 1,170 - (7) - 1,139 Reclassified to assets for trade (1,452) - - (1,452) Depreciation charge - (21,446) (312,335) 1,720 (735) (114,887) (9,843) (26,419) - (483,945) Net book amount at 31 December , ,079 2,264, ,589 15,941 2,422,173 65,239 81, ,947 5,566,387 Other PP&E Construction in progress Total Net book amount at 1 January Additions Impairment - (34) (34) Depreciation charge (17) - (17) Net book amount at 31 December Net book amount at 1 January Additions Depreciation charge (14) - (14) Net book amount at 30 September As of 2014 and 2013, the accounted for its property, plant and equipment (except for gas distribution pipelines and equipment, assets of hydro power plant, pumped storage power plant, combined cycle block and reserve power plant) at revalued amount. 18

19 6 Subsidiaries and other investments During the first half of 2014, the acquired % shares of Lietuvos Dujos AB. These shares were acquired in three stages: On 21 February 2014, the Ministry of Finance made an in-kind contribution of state-owned 51,454,638 (17.7 %) shares of Lietuvos Dujos AB amounting to LTL 112,685,657 (Note 12) in order to increase the s share capital. On 21 May 2014, the and the German concern E.ON Ruhrgas International signed an agreement, based on which the acquired 113,118,140 (38.9 %) shares of Lietuvos Dujos AB. The acquisition cost of shares amounted to LTL 219,008,617. On 19 June 2014, in line with Article 31 of the Lithuanian Law on Securities the announced a mandatory non-competitive takeover bid to buy up the remaining shares of Lietuvos Dujos AB, and from the Russian company Gazprom and minority shareholders the acquired 116,357,288 (40.03 %) of shares. The acquisition cost of shares amounted to LTL 262,348,264. On 21 May 2014, the and the German concern E.ON Ruhrgas International signed an agreement, under which the acquired 71,040,473 (11.76 %) shares of LESTO AB. The acquisition cost of shares amounted to LTL 117,886, Carrying amount of non-controlling interest acquired 419,491 Consideration paid to non-controlling interest (117,887) Profit attributable to owners of the parent, recognised in equity 301,604 On 31 March 2014, the signed agreements for purchase / sale of shares with LESTO AB and Lietuvos Energijos Gamyba AB, under which the acquired %, i.e. 46,525,904 shares of Duomenų Logistikos Centras UAB. The acquisition cost of shares amounted to LTL 60,431,742. Following this transaction, the owns % shares of Duomenų Logistikos Centras UAB. On 17 July 2014, the share capital of Duomenų Logistikos Centras UAB was reduced to make payments to shareholders. Before reduction of share capital, the held 46,910,850 shares, and following annulment of 35,836,194 shares the held the remaining 11,074,656 shares. On 31 July 2014, Duomenų Logistikos Centras UAB paid LTL 30 million to the. The paid the remaining amount 5,836,194 LTL in August. On 10 July 2014, the share capital of Technologijų ir Inovacijų Centras UAB was increased by LTL 19,990,000. The acquired 11,105,556 shares, which were paid in May 2014 as additional cash contribution. Nominal value per share is equal to LTL 1. Payment for the shares was conducted as follows: amount of LTL 8,105,556 was paid as cash contribution, whereas amount of LTL 3,000,000 was offset against the loan repayable by Technologijų ir Inovacijų Centras UAB. On 11 July 2014, the s amounts receivable decreased, whereas investments in subsidiaries increased by LTL 11 million, respectively. Following this transaction, the owns 97,89 % shares of Technologijų ir Inovacijų Centras UAB. On 12 December 2014 in General Shareholders Meeting of Technologijų ir Inovacijų Centras UAB a decision was made to increase the share capital with ordinary registered shares in value LTL 2,200,525, nominal value per share is equal to LTL 1. Following this transaction, the owns % shares of Technologijų ir Inovacijų Centras UAB. On 21 July 2014, the and other companies signed a memorandum in the establishment of Verslo Aptarnavimo Centras UAB. The purpose of the newly established company is to provide the s shareholders the contracting authorities with the services necessary to ensure operations of the s shareholders the contracting authorities (to satisfy the needs and fulfil the functions of shareholders the contracting authorities). The newly established company was registered with the Register of Legal Entities on 30 July 2014, and its authorised share capital amounts to LTL 100,000. The acquired 50 % of its shares. 28 October 2014 in General Shareholders Meeting of Verslo Aptarnavimo Centras UAB a decision was made to increase the share capital with ordinary registered shares in value LTL 1,400,000, nominal value per share is equal to LTL 1. The acquired 700,000 of newly issued shares and after this transaction owns % shares of Verslo Aptarnavimo Centras UAB. 12 December 2014 in General Shareholders Meeting of Verslo Aptarnavimo Centras UAB a decision was made to increase the share capital with ordinary registered shares in value LTL 500,000, nominal value per share is equal to LTL 1. The acquired 270,000 newly issued shares and after this transaction owns 97 % shares of Verslo Aptarnavimo Centras UAB. During the General Shareholders Meeting of LITGAS UAB held on 27 June 2014, a decision was made to increase the share capital of LITGAS UAB by additional contributions of shareholders from LTL 3 million up to LTL 45 million, by issuing new ordinary registered shares with the nominal value of LTL 1 each and total value of LTL 42 million. On 8 July 2014, the and LITGAS UAB signed the Agreement for Purchase of Shares, under which the is to acquire newly issued shares of LITGAS UAB with the total value of LTL 28 million. Following the transaction, the s shareholding in LITGAS UAB will amount to LTL 30 million, and the owns 66.7 % shares of LITGAS UAB. 19

20 On 21 July 2014, the Board of Lietuvos Dujos AB approved the separation of the s distribution and supply activities, whereby Lietuvos Dujos AB is to sell part of its business, i.e. natural gas supply business together with the accompanying assets, rights and obligations. On 28 August 2014, the signed the memorandum in the establishment of Lietuvos dujų tiekimas UAB, as the new company, which is in charge in gas supply. The is the promoter and shareholder of Lietuvos dujų tiekimas UAB. Lietuvos dujų tiekimas UAB was registered on 2 September Lietuvos dujų tiekimas UAB authorised share capital amounts up to LTL The acquired all newly issued shares and owns 100 % shares of Lietuvos dujų tiekimas UAB. With 29 August 2014 approval of Lithuanian Ministry of Finance and 2 October 2014 decision of the Board of was established and 7 October 2014 registered Lietuvos energijos paramos fondas. The is founder of this fund. The fund s share capital is LTL 10, October 2014 the s, as the only shareholder, decision was made to increase UAB VAE SPB share capital in amount of LTL 1,000,000 with issuing 1,000,000 new ordinary registered shares with nominal value per share equal to LTL 1. UAB VAE SPB share capital increases from LTL 10,000 up to LTL 1,010, November 2014 in shareholders meeting a decision was made to increase UAB Kauno energetikos remontas share capital in amount of LTL 999,334, i.e. from LTL 14,244,778 up to LTL 15,244, November 2014 UAB Kauno energetikos remontas and Lietuvos energijos gamyba AB made an agreement of share signing contract. This contract signed 999,334 ordinary registered intangible shares of UAB Kauno energetikos remontas with nominal value per share equal to LTL 1. After UAB Kauno energetikos remontas share capital increase, Lietuvos energijos gamyba AB owned same shares part as before. 8 December 2014 the made agreement with UAB Duomenų logistikos centras on sale and purchase of shareholder s rights, after agreement acquired 100 % shares of VŠĮ Energetikų mokymo centras. The s ownership interests in the companies as of 31 December 2014 were as follows: company Acquisition cost Impairment Contribution to cover loss Carrying amount Ownership interest, % Subsidiaries: Lietuvos Energijos Gamyba AB 1,017, ,017, LESTO AB 1,860,624 (198,200) - 1,662, Lietuvos Dujos AB 594, , Duomenų Logistikos Centras UAB 25, , LITGAS UAB 30, , Technologijų ir Inovacijų Centras UAB 11, , VAE SPB UAB 1, , Verslo aptarnavimo centras UAB 1, , Lietuvos dujų tiekimas UAB 3, , VŠĮ Energetikų mokymo centras 1, , Lietuvos energijos paramos fondas ,544,978 (198,200) 15 3,346,793 Investments: NT Valdos UAB ,545,078 (198,200) 15 3,346,893 The s ownership interests in the companies as of 31 December 2013 were as follows: company Acquisition cost Contribution to cover loss Carrying amount Ownership interest, % Subsidiaries: Lietuvos Energijos Gamyba AB 1,017,998-1,017, LESTO AB 1,742,737-1,742, LITGAS UAB 2,000-2, Technologijų ir Inovacijų Centras UAB VAE SPB UAB ,762, ,762,755 Investments: Duomenų Logistikos Centras UAB NT Valdos UAB ,763, ,763,355 20

21 7 Amounts receivable after one year Amount receivable on disposal of LITGRID AB 725, , , ,000 Loan granted 100, ,131 - Other 3,130 22, Carrying amount 828, , , ,000 In the management s opinion, the carrying amount of amount receivable from EPSO-G on disposal of LITGRID AB and of the loan granted and other amounts approximated their fair value as of 31 December In May 2014, a loan was granted and amendments were made to the agreement for purchase/sale of LITGRID AB shares: considering the changes in repayment dates, the interest rates were reviewed and set anew. On 17 June 2014, a loan subordination agreement was signed between the bank, the and EPSO-G UAB, under which the subordinates a loan of LTL 179,546 thousand granted to EPSO-G UAB, in respect of the credit agreement signed between the bank and EP- SO-G UAB. 8 Investments and other financial assets Long-term investments and other financial assets comprise as follows: Available-for-sale financial assets Held-to-maturity financial assets: Lithuanian Government bonds 16,216 57,302 16,216 57,302 Carrying amount 16,216 57,302 16,216 57,302 Short-term investments comprise as follows: Held-to-maturity financial assets: Lithuanian Government bonds - 40,131-40,131 Loans and amounts receivable: Bank bonds - 81,433-81,433 Interest receivable Carrying amount , ,385 As of 31 December 2014, the s and the s available-for-sale financial assets comprised Lithuanian Government securities denominated in LTL with redemption dates maturing in The weighted average annual interest rate on securities was 1.67 % as of 31 December In 2014, the and the sold prior to maturity some of its securities that were classified as held-to-maturity financial assets as of 31 December As of 31 December 2014, the Lithuanian Government bonds were accounted for at fair value. The fair value of 21

22 debt securities was estimated with reference to the highest bid price (including accrued coupons) for relevant debt securities available from one of the three Lithuanian banks as at 31 December The nominal value of investments was multiplied by the best bid price (including accrued coupons) available as of 31 December In 2014, the sold bank bonds which were held on 31 December Inventories 31 Dec Dec 2013 Raw materials, consumables and spare parts 21,865 20,881 Goods for resale (including natural gas) 151,735 - Electricity meters 2,771 3,257 Heavy fuel oil 16,474 20,740 Other 2,825 4,222 Total 195,670 49,100 Less: write-down to net realisable value (12,627) (14,486) Carrying amount 183,043 34,614 Movement on the account of write-down of inventories to net realisable value during the period ended 31 December 2014 and 2013 was as follows: Carrying amount at 1 January ,341 Additional impairment 1,898 Reversal of impairment (4,753) Carrying amount at 31 December ,486 Carrying amount at 1 January ,486 Additional impairment 809 Reversal of impairment (2,668) Carrying amount at 31 December , Cash and cash equivalents Cash and cash equivalents and bank overdraft include the following for the purpose of the cash flow statement: Cash and cash equivalents 728, , , ,974 Bank overdraft (44,231) (70,708) - - Carrying amount 684, , , ,974 22

23 11 Share capital Based on Order No. 1K-060 of 21 February 2014 On increase of share capital of Lietuvos Energija UAB and amendment to the Finance Minister s Order No. 1K-251 of 16 July 2013 On amendments to the Articles of Association of Visagino Atominė Elektrinė UAB and formation of the Supervisory Board, the Ministry of Finance ( the Ministry ) made a decision to increase the s share capital by LTL million. On 21 February 2014, the Ministry and the signed the Agreement for Subscription of Shares, under which the assumed a commitment to provide 112,685,657 ordinary registered shares, whereas the Ministry assumed a commitment to subscribe for the shares and cover their full issue price by an in-kind contribution representing state-owned shares of Lietuvos Dujos AB. On 6 March 2014, the share capital of Lietuvos Energija UAB was increased from 4 billion 067 million to 4 billion 180 million. The nominal value and issue price of newly issued shares was equal to LTL 1. The value of the Ministry s 17.7 % shareholding in Lietuvos Dujos AB was determined with reference to the provisions of the Law on Companies, and was equal to the weighted average 6 months market price of LTL 112,685,657. As of 31 December 2014, the s share capital totalled LTL 4,179,849,289 (31 December 2013: LTL 4,067,163,632). As of 31 December 2013 and 31 December 2014, the share capital was divided into ordinary registered shares with the nominal value of LTL 1 each. All the shares have been fully paid up. 12 Reserves The movement in other reserves pertains to the transfers made by the subsidiary Lietuvos Energijos Gamyba AB from the reserve related to assets and from the reserve intended for investments. Transfers to retained earnings were made on the basis of the decision of the General Shareholders Meeting in The amount of transfers attributable to the s shareholders was equal to LTL million. 13 Borrowings Non-current Bank borrowings 865, , Current Current portion of long-term loans 447, , Other borrowings Bank overdraft 46,460 70, Interest payable Total borrowings 1,351,932 1,180, Non-current borrowings analysed by maturity: Between 1 and 2 years 275, , Between 2 and 5 years 331, , Over 5 years 251, , Total 858, ,

24 The loan agreements contain certain financial and non-financial covenants that the individual companies are obliged to comply with. In the opinion of management, as at 31 December 2013 and 31 December 2014 the complied with these covenants. As at 31 December 2014 and 31 December 2013, the fair value of borrowings approximated their carrying amount, except for Lietuvos Energijos Gamyba AB borrowings with the carrying amount of LTL million and LTL million, respectively. The fair values of these borrowings as at 31 December 2014 and 31 December 2013 were approx. LTL million and LTL million, respectively. The fair values were estimated using a discount rate of 2.46 % (31 December 2013: 2.9 %). 14 Provisions Non-current 29,498 4, Current 33,620 12, Carrying amount 63,118 17, Commitments relating to emission limits Provisions for employee benefits Provisions for onerous contracts Other provisions At 1 January ,895 3, ,427 Increase over the period 9,745 4, ,999 Utilised during the period - (486) - (20) (506) Decrease due to changes in assumptions (13,895) (13,895) At 31 December ,745 6, ,025 Total At 1 January ,745 6, ,025 Increase over the period 9,803 1, ,668 Utilised during the period (10,042) (3,567) - - (13,609) Increase (decrease) due to changes in assumptions 297 (1,425) 17,371 (101) 16,142 Acquisition of Lietuvos Dujos AB - 7,964 23,928-31,892 At 31 December ,803 11,731 41, ,118 On 7 May 2014, Lietuvos Dujos AB entered into arrangement with natural gas supplier OAO Gazprom for a significant reduction of the import price for natural gas for the period from 1 January 2013 to 31 December Based on this arrangement, gas import price calculation formula was adjusted for the on a retrospective basis for the period from 1 January 2013 to 31 March Lietuvos Dujos AB and NCCPE agreed that the tariffs of natural gas for household consumers for the period from the 2nd half of 2014 through to 2016 will be reduced by the effects of reduced gas import price, and the accounted for LTL 23.9 million provision for onerous contracts for the share of reduced price effects for

25 15 Other expenses Utility services 6,936 6, Telecommunications and IT services 12,724 12,343 1, Business trips 1,533 1, Consultation services 5,204 5, HR development 1,999 1, Expenses of small-value inventory items 2,763 2, PR and marketing 3,662 2, Lease 9,736 8, Transport 15,764 13, Customer service 9,418 8, Taxes 20,985 19, Subcontractor works and materials 10,101 34, Impairment of amounts receivable (12,206) 19, Write-off of PP&E 14,334 17, Impairment of PP&E and revaluation result 1,682,167 5, Revaluation of emission allowances and provision expenses (19,747) 14, Inventory write-down (1,270) (2,855) - - AB LESTO investment value write-down ,200 - Other expenses 84,033 13, ,848, , ,774 3, Finance income Interest income 16,205 15,129 16,851 14,728 Dividends received 6, , ,255 Income from financial derivatives - 1, Foreign exchange positive effect Other finance income 2,510 3, ,361 20, , , Finance costs Interest expenses 24,138 30, Foreign exchange negative effect Other finance costs 2, ,015 30,

26 18 Business combinations Lietuvos Energija UAB initiated expansion to gas industry sector, which was continued by the company UAB LITGAS (engaged in supply of liquefied natural gas (LNG) and trade in natural gas). This expansion was intensively pursued in the second quarter, and was supported in February 2014 with a designated supplier who is expected to ensure uninterrupted operations of LNG terminal in Lithuania. As the Ministries of Finance and Energy have implemented the Lithuanian Government Resolution No. 120 of 12 February 2014 On the investment of state-owned assets and increase of share capital of the companies, with effect from 21 February 2014 Lietuvos Energija UAB became a holder of 17.7 % shares of Lietuvos Dujos AB. Core line of business of Lietuvos Dujos AB is purchase (import) and sale of natural gas, provision of distribution services, and rational development of natural gas distribution infrastructure. In June 2014, the acquired control over Lietuvos Dujos AB. The acquisition was carried out in three stages that are described in Note 6. The shareholding of 17.7 % acquired by the in February 2014, entitled the to participate at the Board of Lietuvos Dujos AB. Accordingly, this investment was recognised as investment in associate using the equity method. Additional shareholding of 38.9 %, which was acquired in May 2014, did not vest with any additional control rights. This investment met the definition of joint venture, because significant decisions related to the activities of Lietuvos Dujos AB could be made under joint agreement with another shareholder. The investment was further accounted for using the equity method, as set out below: Acquisition cost of investment (17,7 %) 112,686 Fair value of net assets acquired 100,152 Identified goodwill 12,534 Share of results of investments under equity method for March-May ,249 Acquisition cost of investment (38,9 %) 219,009 Fair value of net assets acquired 321,795 Identified goodwill posted to share of results of investments under equity method 102,786 Share of results of investments under equity method for June Share of results of investments under equity method 149,194 Value of investment under equity method before acquisition of control 480,889 With a shareholding of 56.6 % in Lietuvos Dujos AB the announced a mandatory non-competitive takeover bid to buy up the remaining shares, which was accomplished on 16 June The acquired 107,734,925 (one hundred and seven million, seven hundred and thirty-four thousand, nine hundred and twenty-five) shares of Lietuvos Dujos AB from OAO Gazprom and 8,622,363 (eight million, six hundred and twenty-two thousand, three hundred and sixty-three) shares of Lietuvos Dujos AB from minority shareholders. Following a mandatory takeover bid, the holds 96.6 % shares of Lietuvos Dujos AB, and minority shareholders hold 3.4 % shares. Fair value of investment before acquisition of control 382,901 Consideration paid on mandatory takeover bid 262,348 Total cost of acquisition of control 645,249 The following assets and liabilities of Lietuvos Dujos AB were identified on acquisition with the following fair values at the date of acquisition: Fair value Property, plant and equipment 449,439 Intangible assets 2,164 Other non-current assets 6,180 Current assets 350,819 Cash 126,594 Grants - Deferred revenue - Other non-current liabilities (7,964) Current liabilities (100,018) Net assets acquired 827,214 Non-controlling interest (27,762) Goodwill on acquisition (154,203) Total cost of acquisition of control 645,249 The recognised LTL 97 million loss on re-measurement of investment in Lietuvos Dujos AB before acquisition of control at fair value through profit or loss. The 26

27 determined the fair value using the discounted cash flow method in respect of supply and distribution activities; valuation assumptions are described in Note 3 Valuation of investments in subsidiaries. The fair value of property, plant and equipment was determined with reference to value in use based on discounted cash flow method. Deferred revenue and grants were written off on acquisition. The fair value of current assets and current liabilities approximated their carrying amount. Non-controlling interest was estimated on a proportionate (pro rata) basis. Acquisition-related costs were insignificant and they were included in other expenses in the statement of profit and loss and other comprehensive income. The consolidated statement of profit and loss and other comprehensive income includes revenue of Lietuvos Dujos AB dating from 20 June Income tax expenses Income tax expenses comprise current income tax and deferred income tax. Income tax at a rate of 15 % is applied to profit for 2014 (the same as in 2013) in accordance with the Lithuanian regulatory legislation on taxation. 20 Dividends With 14 November 2014 order Lithuanian Ministry of Finances approved the s collection of financial reports for 6 month period and appointed to pay out dividends of 60 percent (LTL 85 M) of the s first 2014 half-year profit for State owned the s share. In 2013 the did not pay any dividends. During the General Shareholders Meeting of LESTO AB held on 30 April 2013, the decision was made to pay out dividends of LTL 102,670 thousand from profit for appropriation. The received dividends of LTL 84.8 million. During the General Shareholders Meeting of Lietuvos Energijos Gamyba AB held on 30 April 2013, the decision was made to pay out dividends of LTL 25.4 million from profit for appropriation. The received dividends of LTL 24.4 million. During the General Shareholders Meeting of LESTO AB held on 4 April 2014, the decision was made to pay out dividends of LTL million from profit for appropriation. The received dividends of LTL 94.8 million. During the General Shareholders Meeting of Lietuvos Energijos Gamyba AB held on 4 April 2014, the decision was made to pay out dividends of LTL 150 million from profit for appropriation. The received dividends of LTL million. During the General Shareholders Meeting of Duomenų Logistikos Centras UAB held on 30 April 2014, the decision was made to pay out dividends of LTL 1.9 million from profit for appropriation. The received dividends of LTL 1.5 million. During the Extraordinary General Shareholders Meeting of Lietuvos Dujos AB held on 22 July 2014, profit for appropriation for the year 2013 was approved and a decision was made to pay dividends of LTL 53.3 million. For the was allocated dividends of LTL 51.5 million. During the Extraordinary General Shareholders Meeting of LESTO AB held on 30 September 2014, the decision was made to pay out dividends of LTL 66.4 million for the period shorter than financial year. For the was allocated dividends of LTL 62.7 million. During the Extraordinary General Shareholders Meeting of Lietuvos Energijos Gamyba AB held on 30 September 2014, the decision was made to pay out dividends of LTL 69.9 million for the period shorter than financial year. For the was allocated dividends of LTL 67.2 million. During the Extraordinary General Shareholders Meeting of Lietuvos Dujos AB held on 30 September 2014, the decision was made to pay out dividends of LTL 69.8 million for the period shorter than financial year. For the was allocated dividends of LTL 67.4 million. 27

28 21 Transactions with related parties As at 31 December 2013 and 31 December 2014, the parent company was the Republic of Lithuania represented by the Lithuanian Ministry of Finance. For the purpose of disclosure of related parties, the Republic of Lithuania does not include central and local government authorities. The disclosures comprise transactions and their balances with the parent company, subsidiaries, associates and management. The following transactions were conducted with related parties: Sales of goods and services (including financial) LESTO AB Lietuvos energijos gamyba AB NT Valdos UAB UAB LITGAS - - 1,276 - Technologijų ir Inovacijų Centras UAB UAB Duomenų logistikos centras (up to 4 November 2013 was called UAB Technologijų ir Inovacijų Centras) EPSO-G UAB , s associates and joint ventures ,249 1, Purchase of goods and services LESTO AB ,199 5 Lietuvos Energijos Gamyba AB ,604 - NT Valdos UAB - - 1,097 1,049 UAB Duomenų logistikos centras (up to 4 November 2013 was called UAB Technologijų ir Inovacijų Centras) Technologijų ir Inovacijų Centras UAB - - 1,000 - UAB Verslo aptarnavimo centras Všį Energetikų mokymo centras UAB EPSO-G 43, s associates and joint ventures 10 7, ,506 7,153 62,995 1,716 Amounts receivable from related parties AB LESTO Lietuvos energijos gamyba, AB UAB LITGAS AB Lietuvos dujos UAB Duomenų logistikos centras (up to 4 November 2013 was called UAB Technologijų ir Inovacijų Centras) EPSO-G UAB 1 727, ,469 s associates and joint ventures , ,471 28

29 Amounts payable to related parties LESTO AB Lietuvos Energijos Gamyba AB NT Valdos UAB Technologijų ir Inovacijų Centras UAB UAB Verslo aptarnavimo centras Všį Energetikų mokymo centras UAB Duomenų logistikos centras (up to 4 November 2013 was called UAB Technologijų ir Inovacijų Centras) UAB EPSO-G 1, s associates and joint ventures , Salaries and other benefits to management: 11,913* 9,765 2,167 1,209 Whereof: termination benefits and payments to board members 1,432* Number of management staff Management in the table above includes heads of administration, their deputies and chief accountants. *Lietuvos Dujos AB data from 1 July Off-balance liabilities Given guarantees 3 October 2014 the made a warranty or guarantee limit agreement with UAB LITGAS, according which the gives UAB LITGAS compensable assurance in amount EUR 100 M, which can be increased by EUR 25 M. The s subsidiary UAB LITGAS for funding of implementation of appointed supply activity and purchasing testing cargo of liquefied natural gas on 17 September 2014 concluded credit agreement with Swedbank AB. The maximum amount of credit, which can be granted under this agreement is EUR 83.3 M. 14 October 2014 the published guarantee, which beneficiary is Statoil ASA. Guarantee is appointed to assure payment for UAB LITGAS purchased testing cargo of liquefied natural gas. The maximum amount of guarantee cannot exceed USD 29.3 M and ends on 15 January November 2014 the made a warranty agreement with Swedbank AB. Warranty agreement is appointed to insure part of UAB LITGAS liabilities, topping from credit agreement with Swedbank AB. The maximum amount of this warranty cannot exceed EUR 41.6 M. 23 Events after the end of the reporting period Establishment of subsidiaries 19 February 2015 were established new companies UAB Vilniaus kogeneracinė jėgainė and UAB Kauno kogeneracinė jėgainė, whose activity is oriented to modernization of heat sector in Vilnius and Kaunas by setting up a waste and biomass fired cogeneration power plants complexes. New power plants also will produce significant amount of electricity in competitive price, which will allow maintaining better prices for electricity users. Both companies share capital is EUR 2,900 each, signed shares were paid on 20 February

30 Lietuvos Energija UAB Žvejų str. 14, Vilnius