AB Amber Grid
Laisves ave. 10
LT 04215 Vilnius
Lithuania
Tel. +370 5 236 0855
info@ambergrid.lt
www.ambergrid.lt
Company code 303090867
VAT code LT100007844017
LT71 07044 0600 0790 5969,
AB SEB bank
CONFIRMATION OF RESPONSIBLE PERSONS
18 March 2022 No.
Following the Law on Securities of the Republic of Lithuania and the Rules on Information Disclosure
of the Bank of Lithuania, we, Nemunas Biknius, Chief Executive Officer of AB Amber Grid, Gytis
Fominas, Chief Financial Officer of AB Amber Grid and Head of accounting Rasa Baltaragienė of
AB Amber Grid, hereby confirm that, to the best of our knowledge, the attached AB Amber Grid
consolidated and separate financial statements, for the period ended 31 December 2021, prepared
in accordance with International Financial Reporting Standards adopted by the European Union,
give a true and fair view of the AB Amber Grid and Group assets, liabilities, financial position, profit
and cash flows. AB Amber Grid consolidated annual report for 2021 year gives a true and fair view
of business developments and operating activities and AB Amber Grid and Group situation including
a survey report of the principal risks and uncertainties.
Chief Executive Officer
Nemunas Biknius
(The document is signed with a qualified electronic signature)
Chief Financial Officer
Gytis Fominas
(The document is signed with a qualified electronic signature)
Head of accounting
Rasa Baltaragienė
(The document is signed with a qualified electronic signature)
Amber Grid AB
consolidated
annual report
2021
Amber Grid AB consolidated and separate
financial statements, consolidated annual
report and independent auditor’s report
for the year ended 31 December 2021
2
CONSOLIDATED ANNUAL REPORT 2021
Table of contents
1. OVERVIEW 5
2. BUSINESS ENVIRONMENT 10
3. STRATEGY 13
4. OPERATIONS 21
5. FINANCIAL RESULTS 28
6. RISKS AND RISK MANAGEMENT 35
7. GOVERNANCE REPORT 38
8. PEOPLE 44
9. SUSTAINABILITY 50
10. MATERIAL EVENTS 52
11. ANNEXES 53
12 CONSOLIDATED AND SEPARATE FINANCIAL REPORT 74
3
CONSOLIDATED ANNUAL REPORT 2021
Foreword
by the Chairman
of the Board
Sincerely,
Algirdas Juozaponis
Chairman of the Board of Amber Grid
Dear All,
The first months of 2022 were extremely rich with events and
changes that we will remember for a long time ahead. The
war in Ukraine has triggered a lot of anxiety, yet at the same
time it has brought us together – each of us personally, our
teams, and organisations. In late February and early March, in
a matter of hours and days, we took decisive steps in making
and amending the decisions that have been guiding us for a
number of months and years. Moreover, during that period
it became apparent that for many years Lithuania has been
confidently and successfully moving to gain energy indepen-
dence. A consistent development of gas transmission infra-
structure towards the West, and the benefits of the regional
market integration have become more than obvious. I have
been truly moved by the togetherness, motivation, and com-
mitment of my colleagues in their efforts to overcome the
challenges that have emerged just in one night.
During 2021, Amber Grid increased the volume of its oper-
ations largely due to cold temperatures, thereby growing its
revenue by almost one-third. But most importantly, Amber
Grid invested over 45 million euros to strengthen the gas
transmission network. In December, the construction of the
GIPL pipeline between Lithuania and Poland was complet-
ed in the territory of Lithuania. The interconnection will be
launched in 2022, thereby enabling Lithuania to reject gas
from the East.
As soon as Lithuania connects its gas pipelines with the gas
market of Poland and, at the same time, of the entire Europe,
new opportunities will open for cross-border gas trade. For
that reason, Amber Grid has already started the selection of
a strategic partner for the gas exchange GET Baltic. Together
with our future partner, we will seek to tap into the potential of
the European gas market and provide the customers of GET
Baltic with the most advanced gas trading solutions.
Despite the recent significant developments in the geopolit-
ical environment, we are determined to move forward to the
green energy phase, as it is stipulated in Amber Grid’s long-
term strategy and action plans approved last year. Our com-
mitment to society is to adapt the infrastructure to green gas
and to meet our climate change targets. The symbol of that
is a refreshed logo of Amber Grid - the shape and colour of
green amber – which was introduced last year. It will accom-
pany us in our efforts to work in a more sustainable manner
and with a lower environmental impact.
I would like to express my gratitude to customers, employees
and partners of Amber Grid for staying together throughout
2021. I wish all of us to stay focused and determined. We are
moving in the right direction.
Content
4
CONSOLIDATED ANNUAL REPORT 2021
CEO’S
FOREWORD
Nemunas Biknius
Chief Executive Officer of Amber Grid
The year 2021 marks the completion of the implementation of the
recent most important, strategic project gas interconnection Poland-
Lithuania GIPL. This is a strategic project consolidating energy
freedom not only to Lithuania but also to the entire region of the Baltic
countries, this is also an energy project which is significant to Finland.
The construction of the GIPL pipeline continued for two years during
the pandemic making its implementation even more complicated.
Regardless of challenges faced, the GIPL pipeline was constructed
at the scheduled time and in line with the budget. This allowed
preparing for unpredictable aggression from the East. We have
recently announced that the GIPL pipeline will be put into operation
already on 1 May of this year. The objective of the strategic energy
infrastructure project GIPL has been achieved – a new, alternative gas
transportation source is being opened up for the region ensuring
security of gas supply.
One of the most prominent priorities of the operating activities in
2021 was active work in the area of green energy. In cooperation
with the foreign consultants, we have started the preparation of
the national guidelines for the use and development of hydrogen
that will lay the foundations for the Lithuanian hydrogen strategy.
We have commenced preparatory works related to an inventory of
greenhouse emissions, directed large attention to the drafting of
the plan for the measures of mitigation of environmental impact.
In providing assistance to businesses to achieve greater progress
towards biomethane production in Lithuania we have made stronger
relationship with the participants of this market, we take actions that
help improve our services and facilitate the process of connection to
the gas transmission system. In 2021, we installed solar power plants
in the objects of Amber Grid and started to generate our own green
electricity. Using the solar power plants, we will generate around
40 per cent of the total quantity of electricity necessary for the gas
transmission network of Lithuania.
The first project on green hydrogen production was launched in
2021. Together with other Lithuanian companies we concluded an
agreement on cooperation in the development of the hydrogen
production technology Power-to-gas (P2G). During implementation
of this project, a green hydrogen production unit will be connected
to Lithuania’s natural gas system for the first time. It is estimated that
this pilot project will be implemented and the production of green
hydrogen gas according to the P2G technology will be launched in
Lithuania in 2024.
The Amber Grid strategy 2030 was announced last year. Its priorities
include adaptation of infrastructure for green hydrogen, development
of a competitive regional gas market, reduction of the company’s
impact on the environment by two thirds. The strategy lays down
the objectives of becoming an innovative, environmentally friendly
company aiming to radically reduce the impact of its activities on the
environment that are understood by all members of the Amber Grid
team. Along with a common task known to an employee of the gas
transmission system operator, i.e. safeguarding of the security and
reliability of the operation of the natural gas system, another task
has emerged connected to coexistance with the environment, its
preservation.
In the middle of the year first alarming signs of rising prices of gas
were observed. It was noticed already in summer that the price of
gas began to rise sharply due to cold weather in the last winter,
emptied gas storage facilities and global economic recovery after
the pandemic. Although gas consumption continued to grow in
Lithuania in the middle of summer, the gas flow to the Baltic countries
declined completely. A high price of gas caused a decline in gas
volumes transported to the Baltic countries by 80 per cent compared
to 2020 when the price was very low. Despite high gas prices gas
consumption remained stable in Lithuania, 24 terawatt hours (TWh)
of gas were consumed in Lithuania in 2021. A major part of the latter
quantity, even 62 per cent, was supplied through the Klaipėda LNG
terminal. Gas import from Russia comprised only 26 per cent of
Lithuania’s gas demand.
Recent high prices of natural gas had impact on the rise in revenue
and in expenses as well. The company earned more than 68 million
euros in revenue from the provision of the system balancing services
in 2021.
In the face of the recent aggression from Russia we are prepared for
all possible challenges as we have strengthened the gas transmission
system, developed response plans in case of a state of emergency.
We aim to achieve a common goal – the creation of an independent
system that ensures security of energy supply and natural gas supply
to the State without disruptions.
Content
In summing up the year 2021, I would like to extend my gratitude
to employees, clients, partners and shareholders of Amber Grid for
focus, awareness of the seriousness of the situation, cooperation and
support. The year 2022 will be remembered as the year when we
have created access to another independent source of gas supply –
Lithuania’s first gas interconnection with the West. This will enable us
to feel more secure and to lay the foundations for the green energy
transformation.
5
OVERVIEWCONSOLIDATED ANNUAL REPORT 2021
1. Overview
The Consolidated Annual Report covers
the reporting period for the year 2021.
Basic
details
Name
Amber Grid AB (Amber Grid or the
Company)
Legal form Public limited liability company
Date of registration and
name of register
25 June 2013, Register of Legal
Entities
Legal entity code 303090867
Manager of the Register
of Legal Entities
State Enterprise Centre of Registers
Authorised share capital EUR 51,730,929.06
LEI code 097900BGMP0000061061
Registered office address
Laisvės pr. 10, LT-04215 Vilnius,
Lithuania
Phone +370 5 236 0855
Email address info@ambergrid.lt
Official website www.ambergrid.lt
Amber Grid – the gas transmission system operator in Lithuania –
ensures reliable and safe transportation of natural gas to its consumers
through high pressure gas pipelines. The Company is responsible for
the operation, maintenance and development of the Lithuanian gas
transmission infrastructure consisting of a network of nearly 2,300 km-
long gas pipelines and two gas compressor stations. A well-developed
gas transmission infrastructure in Lithuania is convenient for transportation
of large volumes of energy to the Baltic countries and Finland.
In 2021, the Company implemented a strategic energy project GIPL (Gas
Interconnection Poland-Lithuania). The international gas interconnection,
which will be put into operation in 2022, will connect the gas transmission
systems of Poland and Lithuania, as well as the gas markets of the Baltic
countries and Finland with those of other European Union countries.
As Amber Gird seeks to achieve the decarbonisation goals set for the
gas sector, it takes active measures to look into new technological and
market solutions and create conditions for adapting the Lithuanian
gas transmission system to the transportation of green gas, including
hydrogen. Amber Grid also administers the National Register of
Guarantees of Origin for gas produced from renewable energy sources
(RES).
Amber Grid is a part of the EPSO-G UAB group of companies (hereinafter
referred to as EPSO-G or EPSO-G Group). EPSO-G is a state-owned group
of energy transmission and exchange companies, and EPSO-G UAB acts
as a holding company of EPSO-G Group, with its shareholder’s rights and
obligations implemented by the Ministry of Energy of the Republic of
Lithuania. For more information about EPSO-G UAB and EPSO-G Group,
see the official website at www.epsog.lt.
Amber Grid controls 100% of the authorised share capital of GET Baltic
UAB. GET Baltic is a company holding the natural gas market operator’s
licence, organising and conducting trade on the natural gas exchange in
Lithuania, Latvia and Estonia. For more information about GET Baltic, see
the official website at www.getbaltic.com.
The Company has no branches and representative offices.
To develop the system
that enables competition
and the use of climate-
friendly energy.
AMBER GRID’S VISION
An environmentally friendly,
innovative energy company
in the integrated European
gas network.
AMBER GRID’S MISSION
Content
CONSOLIDATED ANNUAL REPORT 2021
6
OVERVIEW
Performance indicators
Table 1. The Company’s performance indicators in 2019–2021.
2021 2020 2019
Quantity of gas transported to domestic exit point, GWh
24,136 25,144 23,530
Quantity of gas transported to adjacent transmission systems
1
, GWh
28,595 32,861 31,991
Number of systems users at the end of the period
110 108 105
Length of gas transmission pipelines, km
2,285 2,115 2,115
Gas distribution stations and gas metering stations (number of units)
68 67 68
Number of employees at the end of the period
324 319 316
transit were not specified. The transit to the Kaliningrad Region was
renewed in the evening of the same day by placing an order for the gas
transportation service.
• On 25 February 2021, Amber Grid entered into the management
holding services agreement with EPSO-G UAB. The maximum price of the
agreement is EUR 425 thousand (excl. VAT), term of the execution of the
agreement – 36 months.
March
• On 3 March 2021, Amber Grid received a copy of the ruling rendered
by the Supreme Court of Lithuania in the case over decisions of the
Procurement Commission formed for the Poland-Lithuania GIPL. The
court ruled to reverse the decisions of two courts of lower instance and to
refer the case to a court of first instance for reconsideration. The Supreme
Court held that the courts of lower instances duly assessed Amber Grid’s
arguments regarding re-evaluation of tenders, assessment of natural
security and calculation of the economic efficiency score upon which the
score of the plaintiff’s tender was lowered. Relevant claims by MT Group
stated in its lawsuit were rejected. The case was referred back to the court
of first instance for reconsideration regarding a part of MT Group’s claims
within the scope of substantiation of the claim filed by the plaintiff but not
considered.
• On 23 March 2021, the Board of Gas Exchange GET Baltic – Amber Grid’s
subsidiary – appointed Jūratė Marcinkonienė, Chairwoman of the Board
of GET Baltic, as an acting Managing Director of the company.
• On 31 March 2021, Amber Grid received a confirmation from the State
Territorial Planning and Construction Inspectorate to the effect that Phase
I of the GIPL construction (equivalent to a 73 km long section of the gas
pipeline) was duly completed and the quality of the gas pipeline meets
statutory requirements.
April
• New member of the Board of Gas Exchange GET Baltic – Amber Grid’s
subsidiary – Ingrida Kudabienė, Amber Grid’s Director for Law and
Administration, and new Chairman of the Board Viktoras Baltuškonis,
Financial Manager of EPSO-G, started working in their new positions.
Significant events
January
• Amber Grid concluded agreements with the Lithuanian Business Support
Agency (LBSA) under which the Company will digitalise the control of the
Jauniūnai gas compressor station in Širvintos district and will install a new
system security element in the gas pipeline in Marijampolė district. The
gas system renovation projects will receive support from the European
Union. These projects, the value of which is almost EUR 2 million, will be
completed by spring of 2023. Support from the EU structural funds will
account for a half of the funds, i.e. approx. EUR 1 million.
February
• During the implementation of the international gas interconnection
project GIPL, contractors building the gas pipeline in Lithuania and Poland
installed a prewelded section of the pipeline. During the construction of
the GIPL pipeline, 102 km of the new gas interconnection were tested in
February. The total length of the gas pipeline is 165 km.
• On 9 February 2021, Amber Grid received a notification informing
about a temporal suspension of gas transit from Lithuanian to Kaliningrad
at Gazprom’s request. Gas is transported to this area of Russia by transit
through Lithuania from Belarus. The reasons for the suspension of gas
1
The transmission systems in the Republic of Latvia and the Kaliningrad Region of the Russian Federation
Content
CONSOLIDATED ANNUAL REPORT 2021
7
OVERVIEW
• Upon completion of three quarters of the construction works of
the Lithuania-Poland gas interconnection GIPL, the final phase of the
construction of the interconnection was started – the construction of the
Santaka gas metering and pressure regulation station.
• Amber Grid concluded an agreement with the LBSA for the
reconstruction of above-surface sections of the main gas pipelines at
various places in Lithuania that are too high above the ground surface. The
agreement also enables the Company to modernise the gas pipeline by
installing innovative infrastructure elements, i.e. corrosion speed sensors.
The project value exceeds EUR 4 million, with over EUR 2 million to be
financed by the EU structural funds. The project will be completed in the
second half of 2023.
May
• On 10 May 2021, the National Energy Regulatory Council (NERC)
approved a revenue cap for Amber Grid for 2022. The cap of EUR 40.4
million is 4 % lower compared with a revenue cap of EUR 42.4 million
approved for 2021.
• The Board of Amber Grid approved the natural gas transmission prices
for 2022. The average gas transmission price set for Lithuanian consumers
is 29% lower compared with an average gas transmission price of 1 EUR/
MWh approved for 2021.
June
• Amber Grid, Energijos Skirstymo Operatorius (ESO) and company SG
Dujos Auto concluded an agreement on cooperation in the development
of the hydrogen production technology Power-to-gas (P2G). During
implementation of this project, a green hydrogen production unit will be
connected to Lithuania’s natural gas system for the first time. It is estimated
that this pilot project will be implemented and the production of green
hydrogen gas according to P2G technology will be launched in Lithuania
and supply to the gas network will be started in 2024.
• Amber Grid conducted a survey of participants of the Lithuanian market
for renewable energy sources (biomethane) in order to determine the
current situation in the renewable sources market, to identify areas for
improvement in order to facilitate a faster and easier development of this
market in Lithuania. The summary of the survey results is available on the
Company’s website.
July
• Amber Grid announced a tender for the modernisation of the Šiauliai
and Telšiai gas distribution stations. The project is implemented after
receiving approval of the EU assistance for the modernisation of these
stations. It is expected that the project will be completed by mid-2023.
• On 8 July 2021, the NERC updated the hourly capacity product prices
for 2022 at the future Santaka (GIPL) cross-border interconnection point.
• On 14 July 2021, the Board of Amber Grid approved the new operating
strategy of the Company.
August
• The first 10 MWh of green gas were imported to Lithuania through the
origin guarantees system that were granted guarantees of origin to prove
that. The country of origin of the imported biomethane gas is Denmark,
gas was acquired by company SG Dujos. The green gas guarantee of
origin proves that gas was produced using renewable energy sources.
• The procurement of the construction works of the ELLI project was started.
The ELLI project is the second most important strategic project after
GIPL, which is expected to increase capacities of the gas interconnection
between Lithuania and Latvia.
• The Amber Grid strategy 2030 was announced. Its priorities include
adaptation of infrastructure for green hydrogen, development of a
competitive regional gas market, reduction of the company’s impact on
the environment by two thirds.
September
• Following the installation of the solar power plans, the company started
to generate its own green electricity. The solar power plants at Amber
Grid’s objects in Vilnius, Jauniūnai and Panevėžys produce around 40%
of the total quantity of electricity necessary for the transmission network.
• Together with the operators of the gas transmission systems of Latvia,
Estonia and Finland, an agreement was reached on the enhancement of
the development of the green gas market.
October
• The trademark of Amber Grid was renewed to mark a new stage of the
company’s activities which is focused on green transformation.
• The company’s registered office was relocated to a new place of business
at address: Laisvės pr. 10, Vilnius.
Content
CONSOLIDATED ANNUAL REPORT 2021
8
OVERVIEW
• Together with the operators of the gas transmission systems of the Baltic
countries and Finland, the preparation of a research and development
plan of technical capabilities of transportation of hydrogen was started.
• The golden weld of the GIPL pipeline was welded which connected the
gas transmission systems of Lithuania and Poland. This was one of the last
most important works during the construction of the gas pipeline that
connects the gas markets of the Baltic region with that of the European
Union.
• The certificate on the completion of the third stage of the construction of
the GIPL pipeline was received.
November
• With the aim to develop a common regional gas market of the Baltic
countries, the operators of the gas transmission systems of the Baltic
countries and Finland agreed to extend the currently existing Estonian-
Finnish-Latvian gas entry tariff zone. This will allow including Lithuania as
well. The joint application of the operations was submitted to the national
institution for evaluation.
December
• An innovative drone was produced and tested together with the Italian
drone manufacturer. This drone is intended to detect the leakage of
methane and supplements the arsenal of the company’s gas pipeline
maintenance equipment.
• A public tender for the contract work of the modernisation of the
Kėdainiai, Vievis and Grigiškės gas distribution stations was announced.
• After the receipt of the last certificate on the construction completion,
the GIPL construction project was completed on 31 December 2021.
Significant events after end of the
reporting period
January
• Amber Grid started to prepare the guidelines for the national
development of the hydrogen technology in Lithuania. They are prepared
together with the public tender winner Baringa Consulting Limited,
a consultancy firm from the United Kingdom, which cooperates with
international consulting management company Civitta. The guidelines for
the Lithuanian hydrogen sector development until 2050 and the action
plan to implement them until 2030 are expected to be prepared in spring
of 2022.
• The Boards of Amber Grid and EPSO-G decided to announce the
selection of a strategic partner for subsidiary Gas Exchange GET Baltic.
Strategic partner would be offered to acquire a stake in the company. A
public tender is held to select the experienced strategic partner which
could offer participants of the regional gas market a modern, advanced
solutions-based gas trading platform that would include both short-term
and long-term products and clearing services in line with the best market
practices. The start date of the tender is 1 February 2022. The winner of
the tender is planned to be selected in 2022. The participant who meets
the qualification requirements and offers the highest price for GET Baltic
shares will be able to acquire a stake of 66% in GET Baltic.
Membership
The Company has membership in the following organisations: European
Network of Transmission System Operators for Gas ENTSOG (www.
entsog.eu), Association Polish and Lithuanian Chamber of Commerce,
National Lithuanian Energy Association, Lithuanian Liquefied Natural
Gas (LNG) Platform, EASEE-gas Association, European Renewable
Gas Registry (ERGaR), European Clean Hydrogen Alliance, Lithuanian
Hydrogen Platform, Lithuanian Hydrogen Energy Association, association
INFOBALT, European Hydrogen Backbone initiative:
• ENTSOG was established in accordance with Regulation No. 715/2009
of the European Parliament and of the Council, as an organisation
facilitating cooperation between the gas transmission system operators at
the European Community level.
• Association Polish and Lithuanian Chamber of Commerce is a bilateral
organisation for economic cooperation between Lithuania and Poland.
The Association collects information for its members about the emerging
business opportunities in both countries, cooperates with organisations
and individuals ensuring business management and development, and
organises conferences and events on various subjects.
• The National Lithuanian Energy Association was set up in 2016.
The Association develops a common position of the energy sector,
represents the interests of its members with the state authorities, public
and international organisations, seeks to ensure development and
improvement of electrical energy and gas supply conditions for the
domestic consumers, and promotion of progress in the economic and
technical energy sector.
• The Lithuanian Liquefied Natural Gas (LNG) Platform was set up in 2017.
The Platform partners seek to promote the use of LNG as a new, cleaner
and less noisy fuel in the sectors of transport, industry and others, in order
to build a single information and operation platform for all potential LNG
market participants.
• EASEE-gas association was set up to develop and promote business
practices to simplify and streamline physical gas transportation and
trading across Europe.
• The main purpose of ERGaR Association is to promote, develop and
maintain a trustworthy system that meets the EU regulatory requirements
and enables cross-border trade in certificates of origin for renewable
gases via the European natural gas network while preventing double sale
and double counting of renewable gases.
Content
9
OVERVIEWCONSOLIDATED ANNUAL REPORT 2021
• Amber Grid is a member of the European Clean Hydrogen Alliance,
which aims to assist with the implementation of the goals of the EU
Hydrogen Strategy in order to support the scaling up of renewable
hydrogen value chain across Europe.
• Amber Grid is a member of the Lithuanian Hydrogen Platform set
up under the Ministry of Energy. The Platform aims to assist with the
implementation of the goals of the EU Hydrogen Strategy to support
the scaling up of renewable hydrogen value chain across Europe. It
also promotes the use of hydrogen as a clean fuel, energy source and
carrier in the sectors of transport, industry and others, as well as promotes
engagement of local businesses and organisations in the activities of the
hydrogen value chain as they develop and manufacture products and
prove services for the domestic and external needs.
• Amber Grid is a member of the Lithuanian Hydrogen Energy Association.
The Association joins the local scholars and business organisations and
participates in the formation of national, regional and EU policy and goals,
including the preparation of strategy and hydrogen development action
plan during the legislative process of legal acts regulating the hydrogen
energy sector in Lithuania; also contributes to proposition of legislative
initiatives that would promote local development of hydrogen technology,
thereby ensuring cross-sector hydrogen integration and implementation
of related technologies; and promotes joined initiatives in research &
development activities.
• Amber Grid is a member of association INFOBALT. INFOBALT is the
information, communication and technology sector association aiming
to create the best conditions for application of technologies, market
expansion and export. In cooperation with partners of this association
Amber Grid develops a think tank cooperation platform of the energy,
science and IT field EnergyTech, which brings together energy companies,
scientific community and the most advanced and experienced IT and
technology companies. The EnergyTech platform develops in three
directions: the bank of innovative ideas and the centre of exportable
competences; the area for like-minded professionals for an effective
dialogue to promote innovations in the energy sector; the leader bringing
together the local, regional and international community to ensure a
sustainable energy of the future.
• Amber Grid joined the European hydrogen development initiative
European Hydrogen Backbone. The members of the initiative devote
their efforts to the creation of the vision of the hydrogen transportation
infrastructure across Europe.
Content
10
BUSINESS ENVIRONMENTCONSOLIDATED ANNUAL REPORT 2021
2. Business
environment
Business
environment and
prospects
The start of the year 2021 marked with a high level of gas consumption due
to all cold winter months and cool spring weather, emptied gas storage
facilities and global economic recovery after the pandemic significantly
contributed to the increase of the gas price indices on the international
exchanges. Unfavourable prices caused decline in gas consumption in
Lithuania and in volumes of gas transmitted to other Baltic countries.
During 2021, 26.3 terawatt hours (TWh) of gas were supplied to Lithuania,
excluding transportation to the Kaliningrad Region. This amount
represents 78.6% of the total quantity supplied last year when 33.5 TWh
of gas were transported to Lithuania. 1.9 TWh of gas were transmitted
through the gas interconnection to Latvia for the needs of other Baltic
countries and Finland, which is a 76.1% decrease compared to 2020 when
very high volumes of gas, i.e. 8 TWh, were transported in the direction
of the Baltic countries due to record low prices on the gas market and
significant differences in prices of the warm period compared to futures
of the upcoming winter.
A lower volume of gas was consumed in Lithuania in the previous year.
During 2021, 24.1 TWh of gas were consumed in Lithuania, which is 4%
less than a year ago when a gas demand was equal to 25.1 TWh of gas.
Lower gas consumption resulted from high gas prices.
The Klaipėda LNG terminal remains the main gas supply source for
Lithuania and the Baltic countries. During 2021, 16.3 TWh of gas were
supplied from the terminal, 3.2 TWh – from Latvia and 6.8 TWh from
Belarus representing respectively 62%, 12% and 26% of the total gas
input dedicated to the consumers of Lithuania, other Baltic countries and
Finland.
In the context of fight against climate change, adoption of more stringent
requirements of the European Union environmental policy, promotion
and expansion of use of renewable energy sources, and more efficient
use of energy – all these factors will contribute to lower consumption
of natural gas for energy purposes and for the needs of the industry in
Lithuania. However, due to the limited number of alternatives in some
of the industries and segments of the transport sector, and due to
competitiveness while rendering balancing, reservation services in the
heat and electricity sectors, natural gas will play an important role as a
transitional period energy in pursuance of pan-European and national
goals to reduce greenhouse gas emissions. At the same time, gas
transported via pipelines will change with an increasing share of “green”
gas: biomethane and gas generated through the process of conversion of
green electricity – green hydrogen and synthetic methane.
In its National Energy Independence Strategy, Lithuania has set ambitious
goals that will contribute significantly to the implementation of the United
Nations’ 2030 Agenda for Sustainable Development, and implementation
of the goals set forth in the Paris Agreement, and the goals set forth in the
EU’s 2030 Climate and Energy Framework. The purpose of the above is to
increase the share of renewable energy sources (including biomethane
and other gases from RES) in the domestic gross final energy consumption:
up to 30% in 2020, up to 45% in 2030, and up to 80% as from 2020.
In March 2021, the Seimas of the Republic of Lithuania adopted the
Law on Alternative Fuels. The purpose of the Law is to develop the
infrastructure for use of alternative fuels by increasing the production and
use of advanced biofuels, transitioning to modern and efficient public
transport, and promoting the use of zero-emission vehicles in order
to achieve that the share of renewable energy sources in the sector of
transport reaches 15% by 2030. Special focus is paid to the transformation
of the freight transport sector. The goal is to achieve that biomethane
and green hydrogen consumption accounts for at least 5.2% of the final
consumption in the transport sector by 2030. In addition, the focus is paid
to the promotion of infrastructure for natural gas consumption in order to
achieve that the share of natural gas and biofuels accounts for 32% of the
total consumption of fuels in the transport sector.
The Law on Alternative Fuels established the use of origin guarantees
of gas produced from renewable energy sources together with the
certificates proving their sustainability in the transport sector seeking to
implement obligations set forth in the Law. The guarantees of origin with
the sustainability certificates used in the transport sector are converted to
units of fuel produced from renewable sources and included in the system
of renewable fuels, which is administered by the designated company
Baltpool, a company of the state-owned group of energy companies
EPSO-G. The possibility to use guarantees of origin with the sustainability
certificates in the transport sector in Lithuania will determine future
demand for such origin guarantees.
In December 2021, for the first time in Lithuania support was provided to
the biomethane production projects under the facility Investment support
for biomethane gas production and (or) for the installation of biogas
treatment facilities of the Climate Change Programme. Support allocated
to 8 companies amounted to nearly EUR 15 million. Moreover, in 2021, the
Company received 14 requests from the potential green gas producers
for the issue terms for the connection to the transmission network. The
first biomethane producers are expected to start their activities already
in 2023.
In Lithuania, similarly as in the EU, it is expected that natural gas will remain
an important energy source at the time of transition to a low-carbon
economy. The domestic natural gas demand will reach around 20 TWh in
2020-2030, of which more than 50% will represent demand for gas as a
raw material in the fertilizer production industry.
Already at the end of 2019, the European Commission presented the
European Green Deal, an ambitious project to help European citizens and
businesses benefit from the transition to sustainability and ecology. The
measures presented along with the initial outline of key policies include
large-scale emission reductions, investment in advanced research and
innovation activities, and preservation of Europe’s natural environment.
The European Commission agrees that the gas sector and networks can
make a significant contribution to the creation and development of the
European hydrogen economy. The European Commission established
two stages – a transitional period until 2030 and a period until the creation
of the hydrogen market in 2050.
On 15 December 2021, the European Commission issued a new set of the
EU draft legal acts. The Gas Package comprises the following legal acts:
1. Directive on common rules for the internal markets in renewable
and natural gases and in hydrogen;
2. Regulation on the internal markets in renewable and natural gases
and in hydrogen;
3. Regulation on methane emissions reduction in the energy sector
and amending Regulation (EU) 2019/942.
The aim of the initiative of the proposals stipulated in the Directive and
the Regulation is to facilitate the integration of renewable and low-carbon
gases, particularly hydrogen and biomethane, into the energy system. The
objective is a 55% reduction in methane emissions compared to 1990 by
2030 and the achievement of the climate-neural economy in the EU by
2050.
Content
CONSOLIDATED ANNUAL REPORT 2021
11
OVERVIEW
One of the main objectives of the Gas Package is the creation of the
hydrogen market, development of a proper environment for investments
and conditions for the development of the related infrastructure and trade
with the third parties. Firstly, the market rules will be applied to access to
the hydrogen infrastructure, separation of the hydrogen production and
transportation activities and establishment of tariffs.
High energy prices in recent months have directed attention to the
importance of energy security, particularly at the time of volatile global
markets. The European Commission has offered to increase resilience of
the gas system and strengthen the existing supply security provisions. In
case of shortage, none of the households in the European Union will be left
without help, and the international automatic solidarity will be enhanced
using new measures established in advance and revisions regarding
control and compensations in the internal energy market. The proposal
expands the current rules to ensure their application to renewable and
low-carbon gases and new provisions are stipulated to address the arising
cyber security risk.
In 2020, the European Commission introduced the EU Strategy for
Methane Emission Reduction, which, inter alia, aims to reduce the
methane emission levels in the energy sector. The European Commission
also introduced the Hydrogen Strategy. The Strategy provides for that
hydrogen generated from renewable energy sources will become of
critical importance by the year 2050, seeking to achieve climate-neutral
economy in the EU. The above document, as well as the Gas Package, are
expected to have considerable impact on gas transmission activities in
the future.
The quarantine situation, which was announced in Lithuania due
to COVID-19 pandemic in 2021, had no significant impact on the
business continuity, implementation of strategic projects, and financial
performance of Amber Grid. The Emergency Operation Centre operated
at the Company, the Emergency Management Plan was reviewed, the
following additional documentation and implementing measures were
prepared: lists of critical functions, lists of measures necessary to ensure
continuous implementation of the functions, as well as resources and
responsible individuals, etc. The business continuity measures and
the preventive measured were put into effect. All employees of the
Company were provided with personal protective equipment: face
masks, respirators, disposable gloves, disinfection liquid for hands, etc.
During the quarantine, most of the Company’s employees were working
remotely, whereas employees from the Operation Units continued
working in a normal mode due to the specific nature of their work by using
the recommended protection measures.
Regulatory
environment
As from 2019, a new five-year regulatory period has started together with
the network code on harmonised transmission tariff structures for gas
(TAR NC) established by the Commission Regulation (EU) 2017/460 of 16
March 2017, the application of which has started in 2020 for pricing of
transmission services. Changes are expected in the price structure of the
Company’s services due to application of the provisions of the TAR NC,
and due to the regional market integration (for more details see section
Regulation of Gas Transmission Prices).
The changes in the existing regulation had an impact on the Company’s
operations and results. The new regulatory period that started in 2019
resulted in a necessity for the Company to apply new NERC-approved
methodology for determining the rate of return on investments, and
the rate of return on investment was significantly reduced (from 7.09%
to 3.33%) as from the beginning of 2019. Based on the provisions of the
above methodology (amended by the NERC in 2021), the cost of debt
capital is re-calculated annually, and therefore, the rate of return on
investment is adjusted annually in the course of the regulatory period.
Accordingly, the adjusted and established rate for 2020, 2021 and 2022 is
3.38%, 3.86% and 3.94%, respectively.
Information on the
activities of Get Baltic
UAB (the subsidiary of
Amber Grid) in 2021
Amber Grid holds 100% of shares of GET Baltic UAB. GET Baltic is a licensed
natural gas market operator that has the status of a Registered Reporting
Mechanism (RRM) granted by the Agency for the Cooperation of Energy
Regulators (ACER). The company administrates the electronic trading platform
for trading short-term and long-term natural gas products in the market area
in Lithuania, the common market area of Latvia and Estonia, and the market
area in Finland. By developing the solutions suitable for trading natural gas,
GET Baltic seeks to improve the liquidity, competitiveness, and transparency
of the wholesale gas market in the Baltic countries and Finland.
The year 2021 as the previous year was a year of development for GET
Baltic. By continuously expanding the scope and quality of provided
services and developing new solutions, the company aims to contribute
to the development of the common wholesale natural gas market in the
Baltic countries and Finland, its liquidity and higher transparency as well as
formation of market prices.
Last year trade on the new secondary capacity trading platform operated by
GET Baltic, which was launched on 1 December 2020 in Finland, was very
active. Even 50 transactions were concluded on the platform in 2021. The
secondary market plays an important role in assisting the market participants
to manage and form demand for gas capacities and ensure their effective
usage.
In view of the needs of the wholesale market participants and a continuous
rise in the activity level on the exchange, the Baltic-Finnish Gas Spot Index for
Day-ahead Product (BGSI-DA) was presented. The BGSI-DA index is intended
to help market participants transparently and objectively assess the current
situation in the market and monitor short-term changes in natural gas prices in
the Baltic-Finnish countries combined and in each market area separately. The
new index has been introduced and announced publicly from 1 May 2021.
Along with a regular quality improvement of services, a new service has been
developed for the natural gas market participants which allows monitoring
data submission to ACER on the standard contracts traded on the natural
gas exchange of GET Baltic. This service enables market participants monitor
information submitted by GET Baltic to ACER on orders placed on the
exchange and transactions concluded. A new monitoring service can be
requested by the exchange participants from 1 August 2021.
Content
CONSOLIDATED ANNUAL REPORT 2021
12
OVERVIEW
Aiming to implement the client-focused strategy of the organisation,
improve the company’s performance and fulfil client expectations as well
as improve the quality of products and service, the client satisfaction survey
was conducted in September-October for the first time. The survey included
questions to the clients of GET Baltic who actively use the company’s services
on their experience and evaluation relating to the scope, quality of products,
service, and employees as a knowledge and competence centre. The client
satisfaction survey results showed that the clients of GET Baltic consider the
company to be a stable entity that complies with the standard of the market
services. The company will take into consideration the clients’ opinion and
seek to meet their needs when improving the company’s performance and
the quality of provided services.
Over the recent years particular attention has been given to the enhancement
of IT security and improvement of internal processes. Innovative solutions
have been installed in order to automate manual work, monitor trade on
the exchange more conveniently and in greater detail, operatively exchange
internal information and ensure reliability of publicly announced data.
In the upcoming year the exchange plans to continue the commenced works,
continue the introduction of smart decisions, improve the quality of service
and its products, address expectations of all market participants and the
shareholders.
Gas Exchange GET Baltic
performance in 2021:
• The total traded volume increased to 8 TWh. This was an all-time record
since the start of operations of GET Baltic. Compared to 2020, the turnover
increased 10% (2020: 7.2 TWh);
• The volume traded through the cross-border transactions totalled 1.6
TWh in 2021, i.e. 56% more than in 2020 (1 TWh);
• 54% of the total traded volume was purchased in Lithuania (4,320 GWh),
24% in Finland (1,942 GWh), and 21% in the common Latvian-Estonian
market area (1,695 GWh);
• The highest growth in the turnover was observed in the common Latvian-
Estonian market area, the volume of natural gas acquired increased twice
(2021: 1,695 GWh; 2020: 824 GWh) and the volume of gas sold increased
17% (2021: 1,926 GWh; 2020: 1,640 GWh) compared to 2020;
• In total 21,311 transactions were concluded, i.e. 4% more compared to
20,576 transactions in 2020;
• In total 52 exchange participants placed orders, whereof all of them
concluded transactions. In 2020, 56 exchange participants were active
and placed orders, whereof 55 of them concluded transactions;
• Transaction with the lowest price of 14 EUR/MWh was concluded in
March, and transaction with the highest price of 140 EUR/MWh was
concluded in December.
Fig. 1. GET Baltic performance in 2021
Market area
Number of
exchange
participants
Number of
market makers*
Buy volume
traded, GWh
Sell volume
traded, GWh
Finland
29 1 1 942 1 600
Latvia-Estonia
22 1 1 695 1 926
Lithuania
69 1 4 320 4 431
97
Exchange
participants
52
Active exchange
participants
2
Market
Makers
7 957 GWh
Traded volume
21 311
Number of
transactions
Content
13
STRATEGYCONSOLIDATED ANNUAL REPORT 2021
3. Strategy
Vision, mission,
obligations and
priorities
In mid-2021, the Board of the Company approved the new Amber Grid’s
strategy for 2021-2030.
The main objective set in the new strategy is to work together on the way
of Lithuanian energy system’s transformation towards climate neutral
economy. The natural gas transportation system - the main gas pipelines
and the gas distribution, metering and compressor stations form an
integral part of the Lithuanian energy system which plays a very important
role in creating climate neutrality and a cleaner and safer future at the
same time. Amber Grid is prepared to transform the natural gas system
in order to adapt it to the secure transportation of renewable energy
sources - biogas, methane and hydrogen mixture and pure hydrogen,
and to integrate the system into the common European market to create
an efficient and transparent platform which will enable the state to follow
the new European Green Deal, while consumers will be able to use clean
energy at best prices.
Value for stakeholders is the axis of the new strategy. Five stakeholders are
in the focus of attention: customers, producers/suppliers, shareholders,
the society and employees, and the Company is committed to create
value for each of them.
For each stakeholder, we have defined obligations and the unifying
mission thus identifying the main purpose as long-term obligations to the
stakeholders.
To develop the system which
enables competition and the use
of a climate-friendly energy
Mission
For customers
To ensure competition in the
gas market and opportunities to
purchase green gas
Visuomenei
To mitigate climate change
and improve the long-term
economic competitiveness
of Lithuania
For the shareholders
To act in an efficient manner,
consistently develop and adapt our
activities for the development of
renewable energy sources
For producers/
suppliers
To transport different gas products
in the whole region in a simple and
flexible manner
For employees
To create an immersed and
intelligent team living on
future energy
Increased competition through market
integration and transportation of new products:
biomethane, mix of hydrogen and methane and,
in some places, eventually also pure hydrogen
Decreasing the impact of
operations to the environment and
mantaining a transmission system
adapted for decarbonisation of the
energy sector
Creation of conditions favourable to
the integration of renewable energy
sources and ensuring of effective
property management
Creation of a customer-oriented
organisation for the gas market
players of the region transporting
gas in a simple and flexible manner
An engaged and progressive
team is a centre for future
energy competences
Environmentally-friendly,
innovative energy company in
the integrated European gas
network
Vision
For customers
For society
For the shareholders
For producers/
suppliers
For employees
Content
Fig. 2. Amber Grid’s commitments to stakeholders.
Priorities have been identified for all stakeholders, and common vision for a 10-year period has been formulated.
Fig. 3. Amber Grid’s strategic priorities for the period until 2030
14
STRATEGYCONSOLIDATED ANNUAL REPORT 2021
Main guidelines for the implementation of the strategy during the 10-year
period have been prepared for each stakeholder, with specific actions
planned for each year of the period.
Based on the main strategy implementation guidelines, we have
formulated objectives, measures and strategic performance indicators for
the short term (3-year period).
Table 2. Long-term strategic objectives and main performance
indicators of the Company
Amber Grid continuously evaluates the implementation and progress of
the strategy to achieve its goals.
Content
CONSUMERS PRODUCERS/SUPPLIERS FOUNDER SOCIETY TO EACH OTHER
Goals
• To adapt the transmission network to
placing of green gas on the market
• To achieve a close-to-zero price
difference in the target trade areas
of Lithuania and the neighbouring
countries (according to exchange
trading data)
• To create a customer-oriented
organisation
• To implement the strategic
projects provided for in the
National Energy Independence
Strategy in a timely manner and
within the planned scope
• To ensure a sustainable return to
the shareholder
• To ensure efficient management
of the gas system by adapting
it to integration of renewable
energy sources
• To significantly mitigate the
impact of operations on the
environment
• To enable the transformation
of the gas sector by integrating
renewable energy sources
• To create an engaged and
intelligent organisation
• To create an advanced
organisation - the future centre
of energy competence
Main
performance
indicators
• Implementation of the action plan for
the adaptation of the transmission
system for placing green gas on the
market in a timely manner and within
the planned scope
• Difference in wholesale prices,
percent
• Customer satisfaction rate, %
• Implementation of the strategic
projects provided for in the
National Energy Independence
Strategy in a timely manner and
within the planned scope
• ROE
• Earned return allowed by the
regulator (EUR million)
• Quantity of renewable energy
sources in the gas system (TWh)
• 2/3 lower impact of operations
on the environment (CO
2
, CH
4
emissions ext.) as compared
with the base year.
• Quantity of renewable energy
sources in the gas system (TWh)
• Involvement of employees
(percent)
• Recognised new gas experts
invited to deliver reports
on this topic at least in 2
conferences held in Lithuanian
and internationally on an
annual basis
Results in 2030
• Created opportunities for the
transportation of hydrogen and gas
mixture according to the new and
cross-border standards
• The price on the exchange not more
than ≤ 1 EUR/MWh higher than the
Netherlands (TTF) VTP price index for
90% of day
• Implementation of the strategic
projects provided for in the
National Energy Independence
Strategy and the National Energy
and Climate Action Plan in a timely
manner and within the planned
scope, i.e. 100 percent
• Increased regional integration
with neighbouring countries (LV,
EE, F, PL)
• ROE not lower than set by the
Government of the Republic of
Lithuania
• 100% of the earned return
allowed by the regulator
• Quantity of renewable energy
source-gas in the gas system
(with the guarantees of origin:
0.95 TWh
• 2/3 lower impact of operations
on the environment as
compared with the year 2020
• Quantity of renewable energy
source-gas in the gas system
(with the guarantees of origin:
0.95 TWh
• Involvement of employees 65
(per cent)
• Centre for competences of
new parts shaping the future
energy trends, lawmaking,
business model
15
STRATEGYCONSOLIDATED ANNUAL REPORT 2021
Operating and
financial objectives
The Board of the Company formulated and approved the annual
operating objectives of the Company for the year 2021. Both financial
and non-financial objectives set for the Company and the objectives of
the Company’s Chief Executive Officer are identical. The Chief Executive
Officer reports to the Board for the achievement of the set objectives.
The table below presents the status on the implementation of the
Company’s objectives set for the year 2021.
Table 3. Implementation of objectives for 2021
CONSUMERS
OBJECTIVES
To adapt the transmission
network to placing of green
gas on the market
We aim to create opportunities for the transportation of hydrogen and gas
mixture according to new national and cross-border standards. To achieve
this, we seek to reduce activity restrictions in site classes. In 2021, we have car-
ried out a study and drawn up an action plan on necessary changes. In prepa-
ration for the entry of green gas into the transmission system, we developed a
hydrogen testing program/methodology and started preparing procurement
documentation for a pilot P2G project.
To achieve a close-to-zero
price difference in the tar-
get trade areas of Lithuania
and neighbouring countries
(according to the exchange
data)
In 2021, aiming to create a single regional market, ongoing work was contin-
ued with regional partners. The aim is to create a single market on acceptable
terms for all the parties, including Lithuanian citizens and businesses. In 2021,
ITC Phase II study was completed, and the Baltic TSOs generally agreed on
the future ITC mechanism. The planned actions have been slightly delayed,
and the joint application of the operators has been submitted to the regulato-
ry authorities for assessment.
PRODUCERS/SUPPLIERS
OBJECTIVES
To create a customer-orient-
ed organization
In 2021, the planned works failed to be completed in full. For the cooperation
with the Polish TSO, after the construction of the gas pipeline connection
between Lithuania and Poland, the Company performed preparatory works:
an updated chart of accounts, a prepared new month-end close process, ap-
proved rules for the use of the transmission system and balancing, performed
hydraulic calculations in the direction of Poland, an installed GSA capacity
allocation system. An IT system for efficient gas flow management and in-
teractive exchange between the transmission system operator and system
users was developed. A customer satisfaction survey was conducted, and a
customer service standard was introduced. The implementation of an auto-
mated solution platform for servicing contractors and other interested parties
has been delayed in finding a suitable technical solution and negotiating the
scope of work.
To implement the strategic
projects provided for in the
National Energy Indepen-
dence Strategy in a timely
manner and within the
planned scope
To create a unified infrastructure connecting the countries of the Baltic region
with the gas transmission networks of other European Union countries, in
2021, the construction of the GIPL gas connection between Lithuania and
Poland was successfully completed. During the implementation of the ELLI
project, in 2021, all scheduled work was completed. The project is planned to
be accomplished by the end of 2023, by increasing the pipeline connection
capacity in the direction of Lithuania and Latvia.
FOUNDER
OBJECTIVES
To ensure a sustainable
return to the shareholder
A more detailed overview of the objective To ensure a sustainable return to
the shareholder is provided in section Financial results.
To ensure efficient man-
agement by adapting it to
integration of renewable
energy sources
A number of measures are foreseen to achieve this goal. In 2021, the planned
measures in technological asset management systems based on risk assess-
ment were successfully implemented, solutions for the implementation of
maintenance digitization were selected, the most suitable and unsuitable
transmission systems for connection of local biomethane producers were
announced, a study on linking the site classes to the working pressure of the
main gas pipeline was carried out, a long-term digitization strategy was ap-
proved, and guidelines with a development plan for the Lithuanian hydrogen
development were prepared. An external audit was performed which deter-
mined that the Company’s information security management system complies
with the ISO 270001 “Information Security Management System” standard.
The implementation of the integrated accounting and financial management
information system (ERP) has been encountering delays.
Content
16
STRATEGYCONSOLIDATED ANNUAL REPORT 2021
SOCIETY
OBJECTIVES
To enable the transforma-
tion of the gas sector by
integrating renewable ener-
gy sources
In 2021, the planned steps were successful in integrating the national system
of guarantees of origin for gas produced from RES (including hydrogen) into
the regional and European system under development. A decision was made
on selecting the IT solution. Opportunities for trade in biomethane guarantees
of origin across Lithuania, Latvia, Estonia and Finland have been suspended
due to amendments to the legislation initiated in Estonia and the adoption of
delayed legislation related to the operation of guarantees of origin in Latvia
and Finland.
To significantly mitigate the
impact of operations on the
environment
One of the Company’s top priorities is to significantly mitigate the impact
of operations on the environment. To achieve this goal in 2021, 10% of the
purchases carried out by the Company (by value) were green purchasing, the
procurement procedures were launched to gradually replace the Company’s
vehicles with clean ones, and an inventory of greenhouse emissions was car-
ried out. By the end of June 2022, an environmental impact assessment was
conducted. The amount of electricity intended for use in the Company’s oper-
ations, produced from RES, has not been reached, only a part of the planned
solar power plants has been installed.
EMPLOYEES
OBJECTIVES
To create an engaged orga-
nization
A major focus is on the implementation of changes in the organizational
culture. In 2021, the plan on cultural changes was successfully implemented,
employees were actively involved, and good practices were introduced to
reinforce the organizational culture. An analysis of the current situation of the
employer image was performed. A plan of measures to improve the employer
image is being prepared.
To create a progressive
organization - a centre for
future energy competencies
To create a progressive organization, internal training was implemented in
2021 - an academy of internal lecturers was established to encourage employ-
ees to share their competencies and experience, and to strengthen coopera-
tion between departments. The part of the model of general and managerial
competencies was also updated, the analysis of the current situation in the pri-
ority areas was performed, and the ways of developing/acquiring competen-
cies in these areas were provided. Aiming to create the culture of efficiency,
an operational efficiency program was developed, yet its implementation has
been encountering delays.
Strategic
infrastructure
projects
In 2021, Amber Grid continued implementation of
the strategic gas transmission infrastructure projects:
the construction of the gas interconnection Poland-
Lithuania (GIPL), and the capacity enhancement of
Latvia-Lithuania interconnection (ELLI).
Both strategic projects were included in the following:
the Ten-Year Network Development Plan (TYNDP)
of the European Network of Transmission System
Operators for Gas (ENTSOG) (2020), the Regional
Gas Investment Plan of the Baltic Energy Market
Interconnection Plan (BEMIP) announced in 2017,
the Natural Gas Transmission System Operator’s Ten-
Year (2020-2029) Network Development Plan, and
the National Plan on Implementation of Key Electricity
and Gas Transmission Infrastructure Projects approved
the Government. The Fifth List of the EU Projects of
Common Interest announced on 19 November 2021
included only one Amber Grid strategic ELLI project
currently taking place, as the GIPL project had been
already completed.
Content
17
STRATEGYCONSOLIDATED ANNUAL REPORT 2021
Gas interconnection
Poland-Lithuania
(GIPL)
The 2-year construction works of the international gas pipeline connecting
Lithuania and Poland (GIPL) that were conducted since January 2020
had been completed. This was confirmed by the final GIPL construction
completion certificate received on 31 December 2021. The GIPL pipeline
is expected to be launched in mid-2022.
The European Commission has recognised the GIPL (Gas interconnection
Poland-Lithuania) as one of the key infrastructure projects of significant
importance that ensures security of gas supply and contributes
substantially to ensuring energy security across the EU. Amber Grid
is implementing the GIPL project in cooperation with the Polish gas
transmission system operator GAZ-SYSTEM S.A.
Fig. 4. Project for the Gas Interconnection Poland-Lithuania (GIPL).
The project objectives are as
follows:
· Integration of the Baltic and Finish gas
markets into a single gas market of the
EU,
· Diversification of gas supply sources,
· Improvement of security of gas supply.
JAUNIŪNAI
HOLOWCZYCE
Pipe
diameter
700 mm
Total pipeline
length
508 km
Interconnection capacity
74
GWh per day
58
GWh per day
Lithuania Poland
27
TWh per year
21
TWh per year
Poland
343 km
Lithuania
165 km
Content
18
STRATEGYCONSOLIDATED ANNUAL REPORT 2021
The total length of the gas pipeline - 508 km, of which 165 km belongs to
the territory of Lithuania. During GIPL construction, which took place in
2020-2021, a gas pipeline was built in Lithuania across nine municipalities
from Širvintos to Lazdijai. The project contract work was implemented by a
consortium of companies consisting of Alvora UAB and Šiaulių Dujotiekio
Statyba UAB. The pipeline was laid under the largest rivers in Lithuania,
the Nemunas and the Neris, using the environmentally friendly horizontal
directional drilling (HDD) technique; mass archaeological research was
carried out; the Santaka gas metering and pressure regulation station was
installed; the pipeline constructed in Lithuania was connected to the Pol-
ish pipeline by welding a gold weld at the cross-border. On the Lithuanian
side, the starting point of the gas pipeline connection is located near the
gas compressor station in Jauniūnai, near Vilnius. The pipeline in Poland
will be connected to the gas compressor station in Holowczyce.
The capacities resulting from the construction of the gas interconnection
will allow transportation of annual gas quantity up to 27 TWh to the Baltic
countries and up to 21 TWh to Poland; and the Baltic and Finnish gas
markets will become a part of a single gas market of the EU. Investments
in the project amounted to EUR 116 million.
Benefits of the GIPL project:
• Integration of the Baltic and Finish natural gas markets into a single gas
market of the EU,
• Provision of access to alternative gas supply sources and improvement
of competitiveness,
• Improvement of security and reliability of gas supply by providing both
additional gas transmission capacity and possibility to apply the EU
solidarity measures in case of emergency,
• Provision of conditions allowing more flexible and efficient use of the
LNG terminals and transmission infrastructure in Poland and Lithuania,
• Improvement of liquidity of gas trade in the Polish and Baltic market
areas and strengthening of their role across the region.
Major achievements during the implementation of the GIPL
project in 2021:
• In February, a pre-welded section of the GIPL pipeline was installed;
later it will be connected to the sections of the new gas pipeline
constructed in Lithuania and Poland;
• In February, 102 km of the newly installed GIPL pipeline were tested
during the construction of the GIPL pipeline;
• The final phase of the GIPL construction was started in April - the
construction of the Santaka gas metering and pressure regulation
station;
• In October, after the construction of gas pipeline sections by Lithuania
and Poland to the state border, the gas transmission systems of both
countries were connected;
• In December, all GIPL works in the territory of Lithuania were
successfully completed.
The GIPL project is financed from own and borrowed funds of Amber
Grid and GAZ-SYSTEM S.A., using the EU financial assistance under the
European Commission Trans-European Networks for Energy (TEN-E)
Programme and the EU Connecting Europe Facility (CEF). In addition to
the EU financial assistance, the construction of the GIPL project will be
funded by Lithuania, Latvia and Estonia under the Cross-Border Cost
Allocation, whereby they will cover part of the GIPL project investment
costs pertaining to the territory of Poland.
More information on the GIPL project, its progress and news can be
found on the project website (www.ambergrid.lt/lt/projektai/dujotiekiu-
jungtis-tarp-lenkijos-ir-lietuvos-gipl).
Enhancement of
Latvia-Lithuania
interconnection (ELLI)
The purpose of the project is to enhance the capacity of Latvia-Lithuania
interconnection, ensure safe and reliable gas supply and achieve more
effective utilisation of the infrastructure and a better integration of the
Baltic gas markets. This will provide better conditions for the utilisation
of the Latvian Inčukalns underground gas storage facility. The project
promoters are Amber Grid and the Latvian transmission system operator
AS Conexus Baltic Grid.
Content
19
STRATEGYCONSOLIDATED ANNUAL REPORT 2021
Fig. 5. Project for the Enhancement of Latvia-Lithuania Interconnection (ELLI).
The project’s implementation in the territory of Lithuania will cover
the capacity enhancement of the Kiemėnai gas metering station and
reconstruction of the gas pipeline at the Panevėžys gas compressor
station. The project’s implementation in the territory of Latvia will cover
reconstruction of the main gas pipeline in order to increase the maximum
working pressure from 40 to 50 bar.
The investments will result in capacity enhancement to 130.5 GWh per
day towards the direction of Latvia (currently it is 67.6 GWh per day) and to
119.5 GWh per day towards the direction of Lithuania (currently it is 65.1
GWh per day). As a result of implementation of the project, the enhanced
gas transmission capacity will enable the transportation of up to 47.6
TWh of gas/year in the direction of Latvia, and up to 43.6 TWh/year in the
direction of Lithuania; the enhanced capacity will also be beneficial due
to the already existing gas interconnection between Poland and Lithuania
(GIPL).
In 2021, public procurement was carried out for construction works.
The contract is planned to be signed with a winner in early 2022 for the
commencement of works.
The ELLI project is financed by own funds of Amber Grid and AS Conexus
Baltic Grid as well as the EU financial support under the European
infrastructure network facility (CEF).
European Union’s
financial assistance
In 2021, Amber Grid implemented one of the natural gas transmission
infrastructure projects provided for in the National Plan on Implementation
of Electricity and Natural Gas Transmission Infrastructure Projects
approved by the Minister of Energy of the Republic of Lithuania. The
project was implemented under the European Union investment
operational programme for 2014-2020, with the EU funding up to 50% of
the project expenses. During the project “Implementation of a system for
remote process control and data collection from gas metering units in the
gas transmission system” period, software for the remote control of the
technological processes of appurtenance of the gas transmission system
and collection of meter readings was developed and implemented, thus
ensuring the reliability and management flexibility of the gas transmission
system. Total value of the implemented project is EUR 2 million.
Vilnius
Riga
Panevėžys
Kiemėnai
GIPL
Inčukalns
Korneti
Karksi
Kaunas
Šiauliai
Kuršėnai
Klaipėda
Jurbarkas
Šakiai
Kotlovka
LATVIA
LITHUANIA
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STRATEGYCONSOLIDATED ANNUAL REPORT 2021
In 2021, Amber Grid signed a financing agreement with the Lithuanian
Business Support Agency under 2014-2020 Operational Programme for
the European Union Funds’ Investment, where the EU financial assistance
accounts for up to 50%. During the implementation of the project
“Reconstruction of Individual Sections of the Main Gas Pipeline’ (Phase
II)”, by Q III 2023, it is planned to reconstruct 3.89 km of the main gas
pipeline, i.e. to reconstruct the overpasses of the main gas pipeline by
replacing them with underpasses of 0.285 km, to reconstruct the non-
dredged sections of the pipeline by dredging them by 3.614 km and
to install advanced infrastructure elements in all reconstructed objects
(overpasses, non-dredged sections of the pipeline) - corrosion speed
sensors. The total value of the project is EUR 4 million.
More details on Amber Grid’s infrastructure projects completed and in
progress are available on the website:
https://www.ambergrid.lt/lt/perdavimo-sistema/perdavimo-sistemos-
pletra/infrastrukturosprojektai
Regional
market
On 1 July 2017, Amber Grid started, jointly with the transmission system
operators from Latvia and Estonia, using the implicit capacity allocation
model at the Baltic cross-border interconnection points, thereby allocating
part of the day-ahead capacity via the GET Baltic gas exchange. As from 1
July 2018, the Company started using the within-day capacity allocation
model. It is a transitional instrument for the integration of the Baltic gas,
which is intended to improve competitiveness of the gas markets and
promote cross-border trade in gas. The regional gas market is expected
to develop gradually.
In 2020, a single gas market area was created by Latvia and Estonia,
which together with Finland formed a common tariff zone. As from 2020,
a zero transmission price has been introduced for the interconnection
with Finland, and the common tariff zone entry prices have been made
uniform.
In 2020, the results of the study regarding integration of the Lithuanian,
Latvian, Estonian and Finnish natural gas markets revealed the economic
benefits for each of the countries within the region, if the gas market
of Lithuania were integrated with the gas market in Latvia, Estonia and
Finland. Based on the results of the study of economic benefits for the
market in 2020, an alternative analysis was prepared in 2021 in relation to
potential Inter-TSO Compensation (ITC) mechanism. More information is
provided in section Regulation of Natural Gas Transmission Prices.
While Lithuania supports the idea of creating a single regional gas market,
the terms of such arrangement do not serve the interest of Lithuania, since
such joining would result in an ungrounded additional financial burden on
the domestic consumers. Therefore, negotiations are under way with the
Latvian, Estonian and Finnish operators on the terms of the arrangement
under which Lithuania would join the zone. The aim is to create a single
market on acceptable terms for all the parties, including Lithuanian citizens
and businesses. Lithuania expects to join the common tariff zone at a later
stage, probably in 2023-2024. At the end of 2021, the joint application
of the transmission system operators of these countries on the common
tariff zone and the introduction of an ITC mechanism was submitted to
the regulatory authorities of Finland and the Baltic States for assessment.
The Baltic countries and Finland will continue negotiating their position
on further market integration in order to develop a mutually acceptable
model of cooperation among the operators. In 2022, there are plans to
organize a public consultation on the creation of the common tariff zone
and the introduction of ITC mechanism is planned.
As the Company proceeds with the implementation of the GIPL project,
the cooperation with the Polish partners is continued as follows: Amber
Grid continues cooperation with the Polish gas transmission system
operator GAZ-SYSTEM S.A., while the gas exchange operator GET Baltic
(the subsidiary of Amber Grid) continues cooperation with the Polish
power exchange TGE (Towarowa Gielda Energii SA). In 2020, a study was
completed to look into the commercial viability and economic benefits
for the market of the GIPL project. Based on the results of the study, a
survey was prepared and distributed among the market participants.
According to the results of the study and answers provided in the survey,
and also taking into account the actual commercial use practices of GIPL
in 2022, the decision will be made in relation to further steps necessary to
harmonise the markets.
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OPERATIONSCONSOLIDATED ANNUAL REPORT 2021
4. Operations
Transmission
system
The natural gas transmission system consists of gas transmission pipelines,
gas compressor stations, gas distribution stations, gas metering stations,
anti-corrosion equipment for protection of pipelines, data transmission
and communication systems and other facilities belonging to the
transmission system. The Lithuanian gas transmission system
is connected to the gas transmission systems of the Republic of Poland,
the Republic of Latvia, the Republic of Belarus, the Kaliningrad Region of
the Russian Federation, and the Klaipėda LNG terminal.
The Company operates 64 gas distribution stations (GDS), 4 gas metering
stations (GMS) and 2 gas compressor stations (GCS). The length of the
operated pipelines is 2,285 km, and the diameter ranges between 100
and 1220mm. The design pressure in the larger part of the transmission
system is 54 bar.
Fig. 6. The gas transmission system in Lithuania.
C
C
M
M
M
M
Poland
Belarus
Latvia
Vilnius
Trakai
Ukmergė
Utena
Visaginas
Kėdainiai
Panevėžys
Radviliškis
Šiauliai
Rietavas
Telšiai
Plungė
Palanga
Klaipėda
Gargždai
Tauragė
Biržai
Naujoji Akmenė
Pakruojis
Kuršėnai
Jonava
Kaunas
Jurbarkas
Šakiai
Alytus
Šalčininkai
Elektrėnai
Vievis
Kaišiadorys
Širvintos
Jauniūnai
Prienai
Gas compressor
stations
C
Main gas
pipelines
Gas distribution
stations
Gas metering
stations
M
Liquefied natural gas
terminal (LNGT)
Content
M
M
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OPERATIONSCONSOLIDATED ANNUAL REPORT 2021
Maintenance,
reconstruction and
modernisation
The maintenance of the main pipelines is regulated under the legal acts
and is carried out strictly in compliance with the requirements set forth
therein. Maintenance and repair works are conducted continuously to
ensure a reliable and safe transmission system.
In 2021, internal diagnostics was conducted for the following main gas
pipelines: Panevėžys-Šiauliai line II (33 km), Vilnius-Kaunas (42 km),
branches to Palanga (28 km), Naujoji Akmenė (39 km) gas distribution
stations. In total, 142 km-long pipelines were inspected during 2021.
In 2021, the Company carried out the following reconstruction and
modernisation works:
• replacement of shut-off devices and connection to the remote
control system in the branch to the Vandžiogala GDS, Grigiškės
GDS, Jašiūnai GDS, Alksnupiai GDS, Gegužinė GDS, Maišiagala
GDS, Šiauliai GDS, Širvintos GDS; to the Kaliningrad Region, in the
gas pipelines Minsk-Vilnius-Vievis, in Panevėžys-Šiauliai line II, in
Panevėžys -Vilnius; in Ivacevičiai-Vilnius-Riga;
• installation of launching and receiving chambers for the monitoring
device in the gas pipeline Ivacevičiai-Vilnius-Riga and in the gas
pipelines’ connector Ivacevičiai-Vilnius-Riga with the gas pipeline
Vilnius-Kaunas, in the branch to the Biržai GDS, in the branch to
Kėdainiai GDS, in the branch to the Pajiešmeniai GDS, in the branch
to the Vandžiogala GDS, in the gas pipeline Šiauliai-Kuršėnai pipe II,
in the gas pipeline Panevėžys-Šiauliai and Panevėžys-Šiauliai line II;
• replacement of 61 pipe inserts in the main pipeline based on the
technical condition and diagnostics results of the gas pipelines;
• designing of restoration and expansion of the gas metering and gas
distribution stations;
• designing of installation of the pressure relief valve in the pipeline’s
branch to Marijampolė GDS;
• installation of the photovoltaic solar energy power plants;
• designing of reconstruction of separate sections of the main gas
pipeline Vilnius-Kaunas;
• designing of replacement of shut-off devices and connection to the
remote control system in the branch to the A. Paneriai-I GDS , in the
branch to the A. Paneriai-II GDS, in the branch to the Alytus GDS, in
the branch to the Prienai GDS, in the branch to the Birštonas GDS,
in the branch to the Vilkaviškis GDS, in the branch to the Batniava
GDS, in the branch to the Miežiškiai GDS, in the branch to the
Panevėžys GDS, in the branch to the Šiauliai GDS, in the branch to
the Pajiešmeniai GDS, in the gas pipeline Ivacevičiai-Vilnius-Riga, in
the gas pipeline Vilnius-Panevėžys-Riga, in the gas pipeline Vilnius-
Kaunas, in the gas pipeline Panevėžys-Riga, in the technological
connector to Klaipėda, in the gas pipeline Panevėžys-Šiauliai line II.
In 2021, the Company completed the following reconstruction and
modernisation works:
• replacement of shut-off devices and connection to the remote control
system in the branch to the Vandžiogala GDS, in the branch to the
Grigiškės GDS, in the branch to the Jašiūnai GDS, in the gas pipeline
Ivacevičiai-Vilnius-Riga, in the branch to the Alksnupiai GDS, in the
branch to the Gegužinė GDS, in the branch to the Maišiagala GDS,
in the branch to the Širvintos GDS, in the branch to the Kaliningrad
Region, in the gas pipeline Minskas-Vilnius-Vievis;
• renewal of video surveillance equipment of buildings;
• renewal of technological equipment of the Praviena GDS, Vilkaviškis
GDS, Švenčionėliai GDS and Gargždai GDS;
• installation of the technological assets management system based on
risk assessment;
• installation of one photovoltaic solar power plant;
• installation of software designated to ensure effective management of
gas flows by the transmission system operators and the system users
and information exchange;
• modernisation of the automated control system of the Jauniūnai gas
compressor station;
• implementation of the system for remote control of technological
processes in the gas transmission system and collection of data from
the gas metering devices.
Market of the
services
Amber Grid provides natural gas transmission services to the system users,
other operators and gas market participants in the territory of Lithuania:
it transmits gas to the domestic consumers, also transports natural gas
to Latvia and the Kaliningrad Region of the Russian Federation. Gas is
supplied to the system via the LNG terminal in Klaipėda and via the entry
points from Belarus and Latvia.
In 2021, the GIPL project was completed in Lithuania, which is being
implemented by Amber Grid in cooperation with the Polish gas
transmission system operator GAZ-SYSTEM S.A. It will connect the gas
markets in the Baltic countries and Finland with that of the EU, and will
expand access to new natural gas supply sources.
In addition, Amber Grid is responsible for balancing natural gas flows
in the transmission system and for administering the funds intended for
compensation of construction costs and fixed operating costs of the LNG
terminal, its infrastructure and the connector, as well as for compensation
of natural gas supply costs incurred by the designated supplier. The
Company actively works with its partners to create conditions for efficient
functioning of the natural gas market by increasing the competitiveness
and liquidity of the gas market and by ensuring attractive conditions for
customers to operate in the natural gas market.
Amber Grid administers the National Register of Guarantees of Origin
for gas produced from renewable energy sources, i.e. fulfils the following
functions: issuance, transfer and cancellation of the guarantees of origin,
supervision and monitoring of the use of the guarantees of origin,
and recognition of the guarantees of origin issued in other states as
acceptable in Lithuania. Green gas is produced from biomass and other
RES. The guarantee of origin is granted per unit of energy: one megawatt-
hour (MWh) supplied to the gas transmission and distribution network.
The guarantee of origin system enables identification, registration and
monitoring of the biogas produced, while the end-users of such fuel can
be assured that the gas they use is produced from renewable energy
sources.
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OPERATIONSCONSOLIDATED ANNUAL REPORT 2021
Clients
The clients of Amber Grid’s services of natural gas transmission via
gas transmission pipelines and balancing of natural gas flows in the
transmission system are large Lithuanian electricity and district heating
companies, industrial and medium-size businesses in Lithuania, energy
and natural gas supply companies in the Baltic and third countries that
receive natural gas transmission services.
The clients of the National Register of Guarantees of Origin for gas
produced from renewable energy sources: the gas producers, gas
suppliers, gas transmission system and gas distribution network operators
and other market participants intending to obtain or have already
obtained the guarantees of origin.
Description
of the services
The Company provides the system users, other operators and gas market
participants with the following services:
Natural gas transmission in the territory of Lithuania;
Balancing of natural gas flows in the transmission system;
Administration of funds intended for compensation of construction
costs and fixed operating costs of the Klaipėda LNG terminal, its
infrastructure and the connector, and for compensation of reasonable
costs of supply of the required quantity of natural gas incurred by the
designated supplier;
Managing the Register of Guarantees of Origin for gas produced
from renewable energy sources.
Gas transmission
Gas transmission quantities
In 2021, for the consumers in Lithuania and the EU Member States (Latvia,
Estonia and Finland), gas injected from the Klaipėda LNG terminal to the
gas transmission system operated by Amber Grid amounted to 16,337
GWh, gas transported from Latvia to Lithuania amounted to 3,155 GWh,
and gas transported from Belarus to Lithuania amounted to 6,843 GWh.
Gas transmission quantities from the Klaipėda LNG terminal to the
consumers in Lithuania and other EU Member States accounted for 62.0%
of the total required quantity of gas.
24,136 GWh of gas was transmitted up to the domestic exit point for the
gas consumers in Lithuania in 2021. Compared to 25,144 GWh of gas
transmitted in 2020, gas transmission quantities decreased by 4%.
1,902 GWh of gas was transmitted from the Lithuanian transmission
system to Latvia through the gas metering station in Kiemėnai in 2021, i.e.
76.1% less compared to 2020 (7,960 GWh).
26,693 GWh of gas was transported to the Kaliningrad Region of the
Russian Federation during the reporting period (2020: 24,902 GWh).
As at 1 January 2022, the Company had 110 agreements on natural gas
transmission services with the transmission system users (gas consumers,
gas distribution system operators, importers, gas suppliers supplying
gas up to the consumer systems), of which 43 system users used the
transmission capacity during the reporting period. The Company had
1 natural gas balancing agreement with the market participants trading
natural gas via the virtual trading point, but not transporting it via the
transmission system.
Structure of transmitted gas quantities at the domestic exit point by type
of transmission system users is illustrated in Fig. 7.
25 144
23 530
24 136
7 595
7 000
8 403
11 572
13 135
13 957
4 161
4 414
2 573
Energy companies
Fertilizer production
companies
Other companies Total
2019 2020 2021
Fig. 7. Transmitted gas quantities by type of transmission system users in Lithuania, GWh, 2019–2021.
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OPERATIONSCONSOLIDATED ANNUAL REPORT 2021
Regulation of GAS
transmission prices
Regulation of gas transmission prices is conducted by NERC through
setting the revenue cap, the pricing methodology, and through approval
of the specific prices set by the Company. The revenue caps for regulated
activities can be annually adjusted by the decision of NERC in accordance
with the procedure established in the Methodology for determining
revenue from and prices for regulated natural gas transmission activities.
In view of the opinion expressed by the market participants in the
course of public consultation conducted during the period between 16
December 2020 and 17 February 2021 by NERC in line with the provisions
of the European Commission Regulation establishing a network code on
harmonised transmission tariff structures for gas (TAR NC) and based on a
EUR 40.44 million revenue cap for regulated activities of Amber Grid set by
NERC on 10 May 2021 for the year 2022, which is slightly lower compared
to a EUR 42.2 million revenue cap for 2021 due to the evaluation of the
investment return non-compliance for last few years within the permitted
revenue level for 2022, at the end of May 2021 NERC approved the gas
transmission prices set by the Board of the Company for the year 2022.
More details on the gas transmission prices effective from 1 January 2022
are available on the Company’s official website at: https://www.ambergrid.
lt/lt/paslaugos/kainos-ir-mokesciai/kainos-nuo-2022-01-01.
In 2022, the average gas transmission price to meet the domestic
consumer needs in Lithuania (for short-term and long-term products)
is 1 EUR/MWh, which is about 29% lower compared to the average gas
transmission price in 2021 (1.40 EUR/MWh). On 10 May 2022, NERC
approved a EUR 40.44 million cap for revenue of Amber Grid for the year
2022. In 2022, Amber Grid and NERC established to domestic consumers
in Lithuania a significantly lower average price for gas transmission
services. The tendency of low transmission services prices resulted from
a one-off adjustment by which additionally earned revenue and expenses
saved for 2019 and 2020 were returned to consumers and from larger
expected natural gas volumes.
For the transmission system to be easily accessible and flexible and for
the promotion of regional gas market development, the gas transmission
prices at the entry points have been harmonised since 2020 with those
applicable in the adjacent tariff zone that covers Latvia, Estonia, and
Finland. In addition, for the purpose of ensuring the best possible
conditions for the market participants to benefit from the Lithuanian LNG
terminal and in order to increase the competitors’ pressure on the prices
in the gas market, a 75% discount has been applied since 2019 to the
gas transmission price at the entry point in Klaipėda. The prices approved
for 2021 and 2022 reflect harmonisation of the entry point prices with
entry point prices in the adjacent tariff zone covering Latvia, Estonia and
Finland, and application of a 75% discount.
Debates are still under way regarding Lithuania’s joining of the adjacent
tariff zone covering Latvia, Estonia and Finland (the FINESTLAT tariff zone),
and regarding the effective Baltic and Finnish gas market integration
measures. The results of the studies on integration of the Lithuanian,
Latvian, Estonian and Finnish natural gas markets (which were conducted
from April 2020 upon request of the transmission system operators from
Lithuania, Latvia, Estonia and Finland) showed that Lithuania’s joining of
the adjacent tariff zones is purposeful and beneficial for the entire region.
In cooperation with other operators, an analysis of alternatives for potential
Inter-TSO Compensation Mechanism was undertaken in Lithuania in 2021
in order to ensure that Lithuania joins the FINESLAT tariff zone on such
terms and conditions that are beneficial and balanced for all the parties.
At the end of 2021, the operators of the transmission systems of Finland
and the Baltic countries submitted to the regulatory institutions a joint
application for assessment regarding the creation of a common tariff zone
and introduction of the ITC mechanism. The Baltic countries and Finland
will continue to agree their positions on a further market integration
aiming to develop a model for cooperation between the operators which
would be acceptable to all parties. A public consultation is planned to
be announced in 2022 regarding the creation of a common tariff zone
and introduction of the ITC mechanism. If a compromise solution were
reached, Lithuania would join the FINESTLAT tariff zone as from 2023-
2024.
Close cooperation with the Polish transmission system operator Gaz-
System is becoming increasingly relevant for the purpose of creating as
much as possible favourable conditions for cross-border flows between
Lithuania and Poland from 2022 upon the start of the operation of the new
GIPL gas pipeline.
Balancing of
gas flows in the
transmission system
Amber Grid ensures the balancing of natural gas flows in the transmission
system. By following the Rules for Balancing Natural Gas Flows in the
Transmission System, the Company purchases balancing gas from a gas
market participant when there occurs gas surplus in the transmission
system, and the Company sells balancing gas to a gas market participant
when there occurs gas shortage in the transmission system.
In 2021, due to the imbalance caused by the system users, the Company
bought 98.9 GWh and sold 45.2 GWh of gas.
Transmission of gas from/to third countries causes mixing of physical
gas flows in the transmission system, which in turn results in a difference
between the gross calorific value of gas at the entry and exit points of
the gas transmission system. In 2021, transmission of gas to Kaliningrad
Region resulted in a 148.8 GWh difference at the entry and exit points
of the transmission system, which was compensated to the Company
through payment for the transmission services from/to third countries.
Apart from balancing of gas flows of the system users and other gas
market participants, the quantity of natural gas contained in the pipelines
of the Company’s transmission system fluctuates due to technical and
technological characteristics of the transmission system.
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OPERATIONSCONSOLIDATED ANNUAL REPORT 2021
Administration of
funds intended for
compensation of
construction costs and
fixed operating costs
of the LNG terminal,
its infrastructure and
the connector, and
for compensation
of reasonable costs
incurred by the
designated supplier
In order to ensure compliance with the requirements of the legal acts
(the Law on Liquified Natural Gas Terminal and the supplementing legal
acts), the Company collects, administers and pays out the LNG terminal
funds to the terminal operator (Klaipėdos Nafta AB) and to the designated
supplier (Ignitis UAB) in accordance with the procedure prescribed by
laws, and these funds are used to compensate Amber Grid for the costs of
administration of the LNG terminal funds.
On 19 November 2021, NERC approved an extra charge of 252.86 EUR/
(MWh/day/year) related to gas supply security with effect from 1 January
2022, which is 27% lower compare to an extra charge of 346.11 EUR/
(MWh/day/year) applied in 2021.
The table below presents apportionment of the LNG terminal funds
among their beneficiaries, as agreed with NERC.
Table 4. Apportionment of the LNG terminal funds among their beneficiaries in 2021-2022.
Components
Apportionment effective from
1 January 2021
Apportionment effective from
1 January 2022
Regasification of liquefied gas
43.74% 59.28%
Administration costs
0.12% 0.14%
Reasonable supply costs of the required quantity for the LNG terminal
56.14% 40.59%
Total
100% 100%
There were legal disputes with Achema AB in two civil cases in relation
to unpaid LNG terminal funds. Currently, one civil case is pending at the
court and the investigation of one civil case was completed at the Supreme
Court of Lithuania that on 29 September 2021 adopted a final ruling which
cannot be challenged in favour of Amber Grid awarding from Achema
AB the LNG terminal funds of EUR 3,188,444.81 for the
period from 1 September 2013 to 31 December 2013 and late payment
interest of EUR 544,980.33 for the period from 26 October 2013 to 26
March 2015 and the LNG terminal funds of EUR 14,720,648.52 and late
payment interest of EUR 304,823 for the period from 3 December 2014
to 30 April 2015.
The company’s
ten-year network
development plan
In accordance with the provisions of the Law on Natural Gas, Amber Grid
prepares the Ten-Year Network Development Plan of the transmission
system operator every two years. In June 2020, Amber Grid prepared the
Ten-Year Network Development Plan (2020-2029) and submitted it for the
NERC approval. The total amount of investments in the gas transmission
system development projects over the next ten years is expected to reach
EUR 229.15 million (including the GIPL project completed in the territory
of Lithuania in 2021). The gas consumption in Lithuania is expected to
increase slightly over the next ten years, as there will be a possibility to
transport gas towards new directions – through the gas interconnection
between Poland and Lithuania. The Network Development Plan also
stipulates the main transmission system development directions, including
focusing on innovations and green energy promotion.
More details about the planned investments are provided on the
Company’s official website at: https://www.ambergrid.lt/lt/perdavimo-
sistemos-pletros-planas.
The Ten-Year Network Development Plan of the transmission system
operator is planned to be updated in 2022.
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OPERATIONSCONSOLIDATED ANNUAL REPORT 2021
Green GAS activity
The Company plays an active role in the following fields related to green gas:
• Development of green gas;
• Administration of guarantees of origin.
Green GAS
development
Intensive development of the energy generation from RES and significant
increase in the portion of RES in the overall energy balance, existing and
projected challenges related to the electricity network balancing and
integration to the electricity transportation system create opportunities
for the development of one of the most promising technologies Power-
to-Gas that involves production of green hydrogen from renewable
electricity. This technology will allow accumulating high power energy
generated from RES and help manage the aforementioned challenges.
This technology will be used to transform electricity generated from
RES to energy in a gas form (hydrogen or a synthetical methane) and to
transport it through the gas transmission and distribution networks to the
energy storage and consumption locations and therefore will contribute
to the decarbonisation of the energy and transport sectors. Thus,
aiming to assess the relevance of hydrogen gas and the Power-to-Gas
technologies and their applicability in Lithuania, in 2021 the Company
continued to conduct the technical and economic feasibility study of the
applicability of these technologies in Lithuania, which is an integral part
of the joint project of the EPSO-G Group Raida 2050. The results of the
study are available at: https://innovation.epsog.lt/musu-projektai/2020-
2050-metu-lietuvos-elektros-energetikos-sistemos-raidos-scenariju-
sudarymas/
With the aim to make a more significant contribution to the development
of the hydrogen and Power-to-Gas technologies in the country and
the region, the Company takes part in the activities of the Lithuanian
Hydrogen Platform established by the Ministry of Energy and is a member
of the European Clean Hydrogen Alliance and the Lithuanian Hydrogen
Energy Association. In 2021, the Company joined the European Hydrogen
Backbone initiative that brings together 23 transmission system operators
across Europe. Its objective is to develop the hydrogen transmission
infrastructure that would connect all countries in Europe.
In cooperation with the transmission system operators of the Baltic
countries and Finland, in 2021 the Company prepared the research and
development plan to determine technical possibilities and investments
necessary for hydrogen transportation in the region. The first stage of the
research and development plan will start in 2022.
Administration of
guarantees of origin
In 2021, the Company administered the National Register of Guarantees of
Origin for gas produced from RES that was established in 2019 to fulfil the
following functions: issuance, transfer and cancellation of the guarantees
of origin, supervision and control over the use of the guarantees of origin,
and recognition of the guarantees of origin issued in other states as
acceptable in Lithuania. The system is beneficial for the energy consumers
seeking to use environmentally friendly energy produced in Lithuania or
other EU Member States. Cooperation with the designated bodies and
renewable gas organisations in other countries is continued.
In 2021, the first 10 MWh of green gas were imported to Lithuania through
the origin guarantees system that were granted guarantees of origin to
prove that.
In 2021, the Company proceeded with successful participation in the
project REGATRACE (Renewable Gas Trade Centre in Europe) funded
under the EU Research and Innovation programme Horizon 2020. The
purpose of the project is to develop a pan-European scheme for the
register of guarantees of origin for biomethane and other renewable
gases, and to promote the green gas production and market development.
In 2021, the Company was actively engaged in the working group
for the harmonisation of the activities of the registers of guarantees of
gas origin established by the Finnish, Estonian, Latvian transmission
system operators. Aiming to create conditions for regional exchange of
guarantees of origin, the draft common rules and the agreement were
prepared in 2021.
Research & development
activities
In November 2021, the Company completed its participation in a research
& development project SecureGas, where together with its international
partners it aimed at safeguarding security and resilience of the EU gas
grid against cyber-attacks and physical threats. The project was financed
under the EU Research and Innovation Programme Horizon 2020. The
purpose of the project is “to develop methodologies, measures and
Content
27
VeiklaCONSOLIDATED ANNUAL REPORT 2021
guidelines for ensuring security and resilience of the existing and
future gas transmission infrastructure facilities against cyber-attacks and
physical threats”, by taking into account the requirements set forth in the
European Energy Security Strategy, the European Programme for Critical
Infrastructure Protection, and the EU Regulation 2017/1938 concerning
measures to safeguard security of gas supply.
On the initiative of the gas transmission system operators from Lithuania
and Poland, in 2020 independent experts drafted a study, where they
investigated the possibilities of how to expand the commercial viability
of the GIPL, and what were the drivers that would increase the economic
benefits of the GIPL for the consumers and market participants in Lithuania,
Poland, and other EU Members States.
Business plans and
prospects
The regional gas market is expected to develop gradually. Agreement on
a single gas market as from 2020 has been reached only between Latvia
and Estonia, which together with Finland formed a common tariff zone as
from 2020. Lithuania continues its debates with the regional partners to
ensure that participation in a single gas market will be beneficial for all the
involved parties. If the parties of the region reach a consensus, Lithuania is
expected to join the common tariff zone as in 2023-2024.
By contributing to Lithuania’s ambitious goals for a greater share of
renewable energy in the domestic energy balance, the Company
participates in a number of initiatives and projects that enable its
specialists to develop competencies in the field of RES gas. The
Company’s participation in projects REGATRACE, its membership in
the ERGaR (European Renewable Gas Registry) association, besides the
aforementioned goals, will enable it to develop new competencies that
will contribute in future to the promotion of green gas production and
market development in Lithuania, to safeguarding the business continuity
of the Company, and to implementation of the National Energy Strategy.
It is projected that in 2022 the Company will transport about 23 TWh of
natural gas to the domestic exit point for the Lithuanian system users,
about 5 TWh – to Latvia, and around 27 TWh – to the Kaliningrad Region
of the Russian Federation. A larger share of the total quantity of natural
gas intended for the consumers in Lithuania and other Baltic countries is
projected to be transported from the Klaipėda LNG terminal. The exact
quantity of gas flows and gas supply sources will depend on the market
situation in the course of the year, as well as on climate conditions and
other circumstances.
Content
28
FINANCIAL RESULTSCONSOLIDATED ANNUAL REPORT 2021
5. Financial
results
The financial results cover the figures reflecting the consolidated financial
performance indicators of Amber Grid and its subsidiary GET Baltic UAB,
which are presented below as the Group’s results of operations.
Financial
performance
indicators
2
2
The financial indicators are presented after elimination of assets or liabilities
arising from the LNG terminal funds.
Table 5. Financial performance indicators
2021 2020 2019
Financial results (EUR ‘000)
Revenue
68,595 52,286 55,619
EBITDA
35,372 26,060 25,206
Profit (loss) before tax
22,777 14,586 14,734
Net profit (loss)
23,211 18,170 12,572
Net cash flows from operating activities
29,068 24,672 27,216
Investments
45,745 91,903 18,019
Financial debt
104,849 119,591 71,809
Profit margins (%)
EBITDA margin
51.6 49.8 45.3
Net profit (loss) margin
33.8 34.8 22.6
Average return on assets (ROA)
6.9 6.7 5.3
Average return on equity (ROE)
13.95 12.47 9.45
Liquidity ratios
Current ratio
1.04 1.16 0.64
Quick ratio
0.94 1.10 0.58
Turnover of non-current assets
0.26 0.21 0.27
Capital structure ratios
Equity-to-assets ratio
0.49 0.51 0.57
Financial debt-to-equity ratio
0.59 0.77 0.53
Financial debt-to-EBITDA ratio, times
2.96 4.59 2.85
Market value indicators
Share price/earnings per share ratio (P/E), times
9.38 9.57 13.91
Net earnings (loss) per share, EUR
0.13 0.10 0.07
Formulas used in calculations:
EBITDA = profit (loss) before tax + finance costs – finance income + depreciation
and amortisation charges + impairment charges + asset write-offs
Net financial debt = financial debt – cash and cash equivalents
EBITDA margin = EBITDA/ revenue
Net profit (loss) margin = net profit (loss) / revenue
ROA = net profit (loss) / average asset value
ROE = net profit (loss) / average equity value
Current ratio = current assets / current liabilities
Quick Ratio = (current assets – inventories) / current liabilities
Turnover of non-current assets =revenue/property, plant and equipment and
intangible assets
Equity-to-assets ratio = equity / assets
Financial debt-to-equity ratio = financial debt / equity
Financial debt-to-EBITDA ratio = financial debt / EBITDA
Share price /earnings per share ratio = share price at the end of period / (net
earnings / number of shares)
Content
29
FINANCIAL RESULTSCONSOLIDATED ANNUAL REPORT 2021
Revenue
In 2021, the Group’s revenue totalled EUR 68,595 thousand, which is
31.2% higher compared to 2020. Increase in revenue was driven by higher
natural gas prices and higher tariffs for natural gas transmission services.
There was an increase in revenue from gas transmission services at the
domestic trading point of Lithuania, as well as in revenue from balancing
services and gas transportation to Kaliningrad Region in Russia.
In 2021, revenue from gas transmission services to the domestic system
users and the Kaliningrad Region, as well as revenue from balancing
services accounted for the largest share of total revenue.
Other revenue increased by 28.1% in 2021 compared to 2020 and
amounted to EUR 2,307 thousand (Fig. 8). GET Baltic further demonstrated
its successful performance in natural gas trading operations across all its
markets with growth in total traded volume.
Revenue from balancing services includes the following:
• Balancing of gas flows for the system users and other gas market
participants involved in the balancing of the transmission system;
• Operational balancing of the transmission system determined by the
technological characteristics of the transmission system and gas flow
deviations (imbalances) occurring for technical causes.
The Company is obliged to administer the LNG terminal funds under the
law. For more details and disclosure of accounting for the LNG terminal
funds, see the financial statements for 2021.
Expenses
In 2021, the Group’s expenses totalled EUR 45,381 thousand, which
is 21.5% higher compared to 2020. Depreciation and amortisation
expenses, amounting to EUR 12,057 thousand, accounted for the largest
share (27%) of total expenses and increased by 8.4% (Fig. 9) compared to
2020 due to increased investments.
Employee benefits and social security contributions amounted to
EUR 11,348 thousand (25% of total expenses) and increased by 10.7%
compared to 2020. Repair and technical maintenance expenses
amounted to EUR 3,561 thousand (8% of total expenses) and increased
by 4.6% compared to 2020.
Natural gas costs amounted to EUR 11,268 thousand and accounted for
25% of total expenses. Natural gas costs for network needs increased
by 77.6% compared to 2020 due to higher gas prices. The Company
purchased natural gas for technological needs, for balancing gas flows of
system users and other gas market participants involved in the balancing
of transmission system, and for operational balancing.
Fig. 9. The Group’s expense structure, %, EUR million
57%; 39,3
2019 2020 2021
21%; 14,4
18%; 12,5
3%; 2,3
64%; 33,3
24%; 12,6
9%; 4,6
3%; 1,8
56%; 31,3
26%; 14,5
16%; 8,7
2%; 1,1
Other
Balancing
revenue
Transportation to Kaliningrad
Region and Latvia
Transportation to Lithuanian
consumers
Fig. 8. The Group’s revenue structure, %, EUR million
2019 2021
30%; 11,1
27%; 10,3
9%; 3,4
17%; 6,2
17%; 6,3
2020
25%; 10,2
24%; 9,8
9%; 3,6
14%; 5,7
28%; 11,3
27%; 12,1
25%; 11,3
8%; 3,6
15%; 7,1
25%; 11,3
Other
Repair and
maintenance
Employee benefits and social security
Natural gas
Depreciation and amortisation
Content
30
FINANCIAL RESULTSCONSOLIDATED ANNUAL REPORT 2021
Results of operations
In 2021, the Group’s net profit totalled EUR 23,211 thousand, i.e.
increased by 27.7% compared to EUR 18,170 thousand in 2020. In 2021,
the Group’s profit before tax amounted to EUR 22,777 thousand (2020:
EUR 14,586 thousand), while earnings before interest, tax, depreciation
and amortisation (EBITDA) amounted to EUR 35,372 thousand (2020: EUR
26,060 thousand).
A better financial performance was driven by increase in revenue due to
higher natural gas prices and tariffs for natural gas transmission services.
Fig. 10. The Group’s financial performance, EUR million
Fig. 11. The Group’s profitability, %
Investments
In 2021, the Group’s investments decreased due to completion of the GIPL
project and totalled EUR 45,745 thousand (2020: EUR 91,903 thousand)
(Fig. 12). Investments in the GIPL project accounted for 71.2% of total
investments during 2021.
Fig 12. The Group’s investment structure, EUR thousand
Assets
As at 31 December 2021, the Group’s assets totalled EUR 380,214
thousand: non-current and current assets accounted for 71.6% and 28.4%
of total assets, respectively.
In 2021, non-current assets increased by 6.4% and amounted to EUR
272,087 thousand due to investments that exceeded depreciation. At
the end of 2021, the Group’s current assets amounted to EUR 108,127
thousand, i.e. increased by 78.4% compared to 2020. Such increase was
mostly driven by increase in amounts receivable and advance amounts
received from exchange participants due to higher natural gas prices.
2019 2020 2021
Revenue
68,6
52,3
55,6
EBIDTA
35,4
26,1
25,2
Net profit
(loss)
23,2
18,2
12,6
EBIDTA margin
51,6
49,8
45,3
34,8
33,8
22,6
Net profit (loss)
margin
2019 2020 2021
17,7
0,29
13,1
32,7
14,9
77,0
2019 2020 2021
New construction
Reconstruction and modernization
Content
31
FINANCIAL RESULTSCONSOLIDATED ANNUAL REPORT 2021
Equity and liabilities
In 2021, the group’s equity increased by 15.0% and totalled EUR 178,040
thousand at the end of the reporting period. Equity accounted for 46.8%
of the Group’s total assets at the end of the reporting period.
In 2021, amounts payable and liabilities increased by 25.2% and amounted
to EUR 202.174 thousand at the end of the reporting period.
As at 31 December 2021, the financial debt amounted to EUR 104,849
thousand, i.e. decreased by EUR 14,742 thousand during the reporting
period. The financial debt-to-equity ratio was 58.9%.
Cash flows
In 2021, the Group’s cash flows from operating activities amounted to EUR
29,068 thousand (2020: EUR 24,672 thousand). The Group’s investments
into non-current assets amounted to EUR 48,488 thousand (2020: EUR
86,315 thousand). In 2021, the EU financial support obtained to finance
the investment projects amounted to EUR 35,052 thousand (2020: EUR
15,065 thousand).
References to and
additional explanations
of data reported in the
financial statements
Other information has been disclosed in the notes to the financial
statements of Amber Grid for the year 2021.
Information on significant
events after the end of
the reporting period
Significant events after the end of the reporting period have been
disclosed in the notes to the financial statements of Amber Grid for the
year 2021.
Information on any form of
financial assistance
The financial assistance (support) policy is described in the Social
Responsibility Report for the year 2021. The Company provided no other
form of financial assistance during the reporting period.
Information on related-
party transactions,
significant arrangements
and detrimental
transactions
Information on related-party transactions is presented in the financial
statements of Amber Grid for year 2021.
As at 31 December 2020, the Company was a party to the following significant
arrangements entitling the counterparties to terminate the transactions
concluded with the Company as a result of changes in the Company’s control:
1. Loan agreement of 19 August 2015 with the Nordic Investment Bank;
2. Loan agreement of 18 May 2018 with OP Corporate Bank plc. Lithuanian
branch;
3. Long-term loan agreement of 30 June 2020 with the European Investment Bank.
The terms of the loan agreements are deemed to constitute bilateral
confidential information of the parties to the respective agreements, and their
disclosure could inflict damage on the Company.
During the reporting period, the Company neither entered into any detrimental
transactions (transactions that are inconsistent with the Company’s objectives
or standard market terms, that infringe on interests of shareholders or any other
stakeholders, etc.), nor into any transactions giving rise to conflict of interests in
respect of responsibilities fulfilled by the Company’s management, controlling
shareholders or any other related parties, also in respect of the Company’s
interests and their private interest and/or other responsibilities.
The Audit Committee of EPSO-G, which operates at the group level and
performs the functions of the Audit Committee of Amber Grid, expresses
opinion on each related-party transaction of Amber Grid. The Audit Committee
assesses whether the respective related-party transaction has been concluded
in line with the market conditions and whether the transaction is fair from the
standpoint of all the shareholders.
Content
32
FINANCIAL RESULTSCONSOLIDATED ANNUAL REPORT 2021
Table 6. Amber Grid related-party transactions, 2021
Agree-ment No.
Type of rela-
tion-ship
Name of related party Details of related party
Agree-ment
effective
date
Type Subject of agreement
Estimated val-
ue, excl. VAT
Comments
6-404 SOE IGNITIS UAB
Entity code 303383884, Žvejų g.
14, LT-09310 Vilnius
01/01/2021
Other than public
procurement
contracts
Agreement on technical balancing services
for 2021 (purchase/sale of gas while oper-
ating the technical gas balance in the trans-
mission system)
N/A
1 SOE IGNITIS UAB
Entity code 303383884, Žvejų g.
14, LT-09310 Vilnius
01/012021 Purchase of goods Natural gas for 2021 1,395,000
183598/3 EPSO-G Group GET BALTIC UAB
Entity code 302861178, Geležinio
vilko g. 18A, LT-08104 Vilnius
01/012021
Purchase of ser-
vices
Amendment No. 3 to Agreement No.
183598 (implicit capacity allocation services,
Kiemėnų IP)
12,600 Amend-ment to Agreement
521927/2 SOE AB VILNIAUS METROLOGIJOS CENTRAS
Entity code 120229395, Dariaus ir
Girėno g. 23, LT-02189 Vilnius
12/01/2021
Purchase of ser-
vices
Measurement device calibration and inspec-
tion services
6,600
524788 EPSO-G Group TETAS UAB
Entity code 300513148,
Senamiesčio g. 102B, LT-35116
Panevėžys
15/01/2021
Purchase of ser-
vices
Surge protection device inspection and
testing services
7,500
528808 EPSO-G Group EPSO-G UAB
Entity code 302826889, A.
Juozapavičiaus g. 13, LT-09311
Vilnius
26/02/2021
Purchase of ser-
vices
Holding services 425,000
5-64/SUT-19-18 EPSO-G Group EPSO-G UAB
Entity code 302826889, A.
Juozapavičiaus g. 13, LT-09311
Vilnius
01/03/2021
Financial agree-
ments
Lending and borrowing
40,000,000 /
10,000,000
Maximum lending/borrow-
ing limits before interest
on actual amount of loans
granted/borrowings
528866 SOE PROJEKTŲ EKSPERTIZĖ UAB
Entity code 120091161, A.
Vienuolio g. 6-11, LT-01104
Vilnius
15/03/2021
Purchase of ser-
vices
Expert examination of projects for disman-
tling, replacement and connection of shut-
off devices of the main pipelines to remote
control Gas system SCADA
23,355
21-42058 VVĮ Energijos Skirstymo Operatorius, ESO AB
Entity code 304151376, Aguonų
g. 24, LT-03212 Vilnius
2021-04-23
Other than public
procurement
contracts
Enhancement of maximum allowed capacity
at Grigiškės gas distribution station
98
549018 SOE PROJEKTŲ EKSPERTIZĖ UAB
Entity code 120091161, A.
Vienuolio g. 6-11, LT-01104
Vilnius
09/06/2021
Purchase of ser-
vices
Expert examination of technical project for
Kiemėnai gas metering station
6,870
001091-
50420/110114
SOE Energijos Skirstymo Operatorius, ESO AB
Entity code 304151376, Aguonų
g. 24, LT-03212 Vilnius
17/06/2021
Other than public
procurement
contracts
Provision of electric power transmission
services, Gudelių g. 49, Vilnius
N/A
Content
33
FINANCIAL RESULTSCONSOLIDATED ANNUAL REPORT 2021
50220/910954 SOE Energijos Skirstymo Operatorius, ESO AB
Entity code 304151376, Aguonų
g. 24, LT-03212 Vilnius
2021-06-18
Memorandums on
cooperation
Memorandum on cooperation for feasubil-
ity study to use green hydrogen upon the
connection request
N/A
440222/TV-
SUT-19-787
SOE TRANSPORTO VALDYMAS UAB
Entity code 304766704, Kirtimų g.
47, LT-02244 Vilnius
2021-09-27
Agreements on
lease/purchase/
sale of property
Additional arrangement No. 2 on amend-
ment to the agreement on lease of motor
vehicles (additionally required number of
motor vehicle control devices - 4 units for
DE1 category motor vehicles)
1,232
2021-10-29/1 EPSO-G group TETAS UAB
Entity code 300513148,
Senamiesčio g. 102B, LT-35116
Panevėžys
2021-11-05
Agreements on
lease/purchase/
sale of property
Agreement on lease of motor vehicles (two
Mercedes Benz U4000).
15,236
CPO182016 SOE LIETUVOS PAŠTAS AB
Entity code 121215587, J.
Jasinskio g. 16, LT-03163 Vilnius
08/11/2021
Purchase of ser-
vices
Express postal delivery services 1,063
20-03680 Energijos Skirstymo Operatorius, ESO AB
Entity code 304151376, Aguonų
g. 24, LT-03212 Vilnius
16/11/2021
Other than public
procurement
contracts
Connection of solar power plant (address: 3,
Lipuvkos vs., Širvintų sen., Širvintų r. sav.) to
the grid of ESO AB
79
20-03736 SOE Energijos Skirstymo Operatorius, ESO AB
Entity code 304151376, Aguonų
g. 24, LT-03212 Vilnius
16/11/2021
Other than public
procurement
contracts
Connection of solar power plant (address:
Verslo g. 11, Maksvytiškių k., Panevėžio r.) to
the grid of ESO AB
9,188
6-367 SOE Centre
Entity code 124110246, Lvovo g.
25-101, LT-09320 Vilnius
15/12/2021
Other than public
procurement
contracts
Data provision services 15,000
VPP-2338 EPSO-G group UAB GET BALTIC
Entity code 302861178, Geležinio
vilko g. 18A, LT-08104 Vilnius
21/12/2021
Purchase of ser-
vices
Inside information provision services 5,040
21-51232 SOE AB Energijos skirstymo operatorius, ESO
Entity code 304151376, Aguonų
g. 24, LT-03212 Vilnius
22/12/2021
Other than public
procurement
contracts
Service for relocation of commercial meter-
ing switchboard at the valve site Č-1-II (ad-
dress: Punios k., Punios sen., Alytaus r. sav.)
1,700
6-377 SOE AB LTG Infra
Entity code 305202934,
Geležinkelio g. 2, LT-02100 Vilnius
27/12/2021
Memorandum on
cooperation
Memorandum on cooperation in the con-
struction of Rail Baltics railway section of
particular national significance and recon-
struction of related infrastructure (main gas
pipeline)
N/A
Content
34
FINANCIAL RESULTSCONSOLIDATED ANNUAL REPORT 2021
Information on material
ownership interests
held directly and
indirectly
As at 31 December 2021, the Company owned 100% of shares of its
subsidiary GET Baltic UAB. More details on the controlled entity are
provided in Amber Grid’s financial statements.
Content
35
RISKS AND RISK MANAGEMENTCONSOLIDATED ANNUAL REPORT 2021
6. Risks and risk
management
Risks and risk
management
Risk is understood by the Company as a probability of unforeseen events
that may have impact, negative or positive, on the Company’s ability to
achieve its strategic and business goals. The Company focuses on active
management of its risks, and by doing so, it seeks to achieve the following
goals:
• increase the probability of success in achieving the Company’s
business goals and ensuring efficiency of operations;
• proactively plan and co-ordinate implementation of measures aimed
at mitigating the negative impact of potential events and/or the
probability of their occurrence.
• improve safety of employees, third parties and environment;
• improve prevention and management of unforeseen events;
• build confidence in the Company by the general public and the State.
The risk management is understood as a structured approach towards
management of uncertainties.
Fig. 13. Key risk management processes
IV. Developing a plan on risk management measures. This process involves
elaboration and approval of the Company’s plan on risk management
measures in respect of the risks identified during the process III. The plan
also includes the resources required for management of risks, and it is
subject to approval by the Board following the recommendation of the
Audit Committee. The amount of funds required for the implementation
of the risk management measures is considered when planning the next
year budget. In case the amount budgeted for risk management differs
from the amount specified in the plan on risk management measures,
adjustments should be made to the Company’s plan on risk management
measures. The final plan on risk management measures together with
the budget are subject to approval by the Board. The goals of the plan
on risk monitoring and risk management measures are linked to the
annual performance goals of employees fulfilling the risk monitoring and
management functions.
V. Monitoring. This process involves periodic monitoring of risks and
of implementation of the risk management measures, which includes
assessment of changes in risk level, the progress achieved with the
implementation of risk management measures, and their effectiveness.
The risk owners and the employees responsible for implementation of risk
management measures regularly report the monitoring results to EPSO-
G’s the risk management and prevention unit and to the Company’s Board.
When a value greater than the risk tolerance or a critical value of the key
risk indicator (KRI) is recorded and new risks are identified, the KRI value
of which exceeds the risk appetite, the new risk management measures
are envisaged and corrections are made in the plan on risk management
measures, which are subject to approval by the Board.
VI. Sharing of information and communication. Continuous
communication within the Company between the risk owners, the risk
management unit, the risk management and prevention unit of EPSO-G,
the CEO and collegial bodies of the Company is fundamental for an
effective risk management. Effective communication requires ensuring
that the relevant information is communicated to the responsible
employees on a timely basis.
The risk management is carried out in accordance with the methodology
described in the international standard COSO ERM (Committee of
Sponsoring Organisations of the Treadway Commission, Enterprise Risk
Management). The Company is fully integrated into EPSO-G Group’s
Risk Management Policy and follows the Group’s Risk Management
Methodology. The Risk Management Policy and the Risk Management
Methodology are approved and amended by the decision of the
Company’s Board, whereas the entire process is coordinated by the Audit
Committee of EPSO-G, which also fulfils the functions of the Company’s
Audit Committee.
A group of risk management processes consists of the following
processes:
I. Business environment understanding. Each year, the risk owners
assess changes in respect of the Company’s goals, internal and external
environment, organisational structure, and identify new potential risks.
II. Risk identification and assessment. Based on historical data, expert
evaluation and the results of monitoring the risks and implementation
of risk management measures, the Company’s risks are defined, by
identifying their sources, affected areas, risk-related events, their causes,
potential impact expressed in quantifiable financial terms (EUR), and
existence of risk in a long run. The risk type is identified, and the currently
applied risk management measures are described. The Company assesses
the risk probability, impact and level values, identifies the potential risk
management measures in view of interdependencies among the risks.
The units that are responsible for the risk management carry out the risk
identification and assessment process.
III. Risk prioritisation. A session on prioritisation of risks is initiated in
order to review the list of risks drafted during the process II. The Company
identifies the top priority risks. If during this process any doubts arise in
relation to certain probabilities, impact, risks management measures or
any other aspects, a repeated analysis of those risks is initiated.
Content
36
RISKS AND RISK MANAGEMENTCONSOLIDATED ANNUAL REPORT 2021
The Company’s main risk management areas in 2021 were as follows:
Risk of not meeting the deadline for the GIPL project. In managing the
risk, the Company followed the standards of good project management
and quality management practices, monitored the progress of project
works based on the schedule (milestones) agreed with the contractors,
and exercised control on a continuous basis. The GIPL construction works
were completed in line with the agreed schedule, and the project was
implemented in due time.
Risk of shortage of properly qualified labour force, employee turnover
rate and motivation. The Company faces competition for highly qualified
specialists who could contribute to implementation of its strategic projects.
For the purpose of managing the risk, in March 2021 the Company
updated its remuneration, performance appraisal and training policy,
performed independent study of wages and market trends, elaborated
plans for succession in critical functions and took actions to mitigate the
risk, conducted employee image enhancement analysis, developed and
implemented the training programme for managers.
Risk of information security (cyber security). The Company is an object
of importance to ensuring national security, which operates facilities and
property that are important to ensuring national security. The information
and data managed by the Company are of strategic importance, and
therefore, any loss, unauthorised alteration or disclosure, damage to such
information and/or data or interruption of data flow required for secure
operation of the transmission system may cause disruptions in business
processes and damage to other natural and legal persons. In order to
manage the risk during the reporting period, the Company expanded the
critical infrastructure data network monitoring system, as well as updated
and installed the software required to ensure cyber security. In addition,
equipment vulnerability assessments were carried out, employee trainings
were organised on the subject of information security and resilience to
social engineering methods, employee training exercises were held to
assess resilience of employees to social engineering methods, and the
Company became ISO27001 certified following an external audit. The
cyber security team participated in the training exercise “Cyber Shield
2021” organised by the National Cyber Security Centre under the Ministry
of National Defence.
Technological risk. One of the most important functions and responsibilities
of the Company is to ensure secure, reliable and efficient operation of
the natural gas transmission system. For that purpose, the Company
implements and improves tailored information systems, constantly
updates the plans for elimination of accidents and technological failures,
and for management of emergency situations, and sets high requirements
for its contractors. During the reporting period, pipeline diagnostic works
were carried out and they are expected to continue throughout 2022 by
timely elimination of critical defects identified in the main gas pipeline. In
2021, as part of the international project SecureGas and in cooperation
with the partners from Italy, an innovative unmanned aerial vehicle (drone)
was developed for detecting gas leaks. The drone measures concentration
of methane gas emissions and determines the coordinates of gas leaks
by following the scheduled route above the main gas pipeline with the
help of a laser sensor. In order to manage the risk of relocation of those
sections of pipeline where the construction standards were exceeded
at the Company’s expense, a study was performed on the assessment
of restrictions in the area class unit. Based on the study, adjustments
to the rules for installation and development of the main gas pipeline
and to other related legal acts will be drafted. The results of the study
were presented to the representatives of the Ministry of Energy and the
National Energy Regulatory Council (NERC).
Risk of non-compliance with the project portfolio plan. In managing the
risk, the Company: carried out timely procurements aimed at ensuring
compliance with the deadlines and full compliance with the legal acts
regulating public procurement procedures; limited and minimised
the resulting interstage delays in works performed; implemented
recommendations of the internal project management audit that was
conducted in 2020; and regularly discussed the status of projects and
critical risks with the Group companies.
Regulatory risk. The prices for natural gas transmission services are
regulated. The NERC decides on the price and/or revenue caps, return
on investments, and investments. Those decisions directly affect the
Company’s results of operations, allocation of funds to cover the required
operating expenses, investments to maintain reliability of the transmission
network, and possibilities to finance the strategic projects from its own or
borrowed funds. During the reporting period, the legal acts elaborated
and/or amended by the NERC and other authorities in relation to the
regulated activities were monitored and the position on draft legal acts
was presented.
Risk of non-compliance with occupational safety requirements. Due to
the specific nature of its activities and the works performed, the Company
pays special attention to the occupational safety of its employees. This
risk has remained a priority for many years. Monitoring of implementation
of Covid-19 prevention measures and regulatory compliance has
contributed to the management of this risk throughout 2021 since 2020.
In order to manage the risk during the reporting period, assessment of
occupational risk was updated, and continuous structured internal control
was performed at all levels in accordance with the approved Description
of the internal control procedures in the areas of occupational safety and
Content
37
RISKS AND RISK MANAGEMENTCONSOLIDATED ANNUAL REPORT 2021
health and environment protection, which was updated in December 2021.
In addition, compliance with occupational safety and health requirements
was assessed using the control questionnaires, employees were offered
training and awareness programmes about potential risks, timely staff
health examinations were carried out, and occupational safety and health
culture was developed. In December 2021, the Company had an external
audit of the integrated environmental and occupational safety and health
management system, as a result of which no incidents of non-compliance
were identified. In December 2021, the Company joined the Group’s
occupational safety and health policy, which will be implemented in full.
During 2021, no employees experienced any fatal or serious accidents
either at the Company or its contractors.
Financial risk. As the Company carries on its activities, it is exposed to
financial risks: credit and liquidity risks. The Company follows the Treasury
and financial risk management policy, and the Share sale transaction policy
approved in November 2021. The Company applies the requirements for
credit ratings of the financial institutions stipulated in the Treasury and
financial risk management policy, regularly reviews its cash flows and
updates cash flow forecasts, as well as secures the unutilised reserve.
In February 2021, EPSO-G and the Company signed an amendment to
the cashpool agreement, based on which its validity was extended for
additional one year.
Business transparency risk. In its activities, the Company continued to
focus on the supervision of public procurement processes and prevention
of corruption.
In managing the procurement risks, the Company focused on continuous
communication regarding timely initiation of procurements, set standard
procurement durations and prepared standard procurement schedules,
sent early notifications to the market participants about the planned high
value procurements and focused on attracting new suppliers, organised
good practice sharing sessions with other Group companies, and
conducted internal audit of procurement management.
During the reporting period, the Company continued to pursue a policy
of zero tolerance for corruption, protection of family members, relatives,
friends, or any other form of trading in influence. It also implemented
consistent and systematic prevention of conflicts of interest between
the Company and private individuals. The Company encourages its
employees and other stakeholders to report directly or anonymously
any potential violations, unethical or unfair behaviour using the Trust
Hotline, or address them directly to the Special Investigation Service of
the Republic of Lithuania.
Pursuant to the Law on the Adjustment of Public and Private Interests
and based on the resolution of the Chief Official Ethics Commission, with
effect from 1 January 2021, the Company’s management members, heads
of structural divisions and functional areas, members of the procurement
commissions, low-value procurement organisers, experts involved in
procurement procedures, employees initiating procurement, and the
Company’s Board members declared their private interests on the public
information platform PINREG.
In 2021, the Company implemented the change in its gift policy
by introducing a Zero gift policy, which means that the Company’s
employees, while performing the functions assigned to them, do not have
the right to accept or provide gifts, either directly or indirectly, except for
the exceptions prescribed by legal acts.
Risk of decrease in domestic gas consumption caused by competition
with other types of fuel. During 2021, the risk management measures were
aimed at ensuring diversified gas supply and increasing the potential of
transit to other EU countries, by seeking to have a joint agreement with the
Baltic States and Finland on a regional market project, and by building a
gas interconnection pipeline with Poland (GIPL). In order to attract “green”
gas supply to the gas transmission networks, the decisions were made
regarding adaptation of the National Register of Guarantees of Origin
to international trade in the guarantees of origin. In addition, the work
was continued in relation to implementation of a demonstration project
for “green” hydrogen blending into the gas networks, and technical
conditions were issued to 9 biogas producers for their connection to the
local gas transmission networks in Lithuania.
Covid-19 risk
management
The following business continuity and preventive measures were reviewed
and implemented during 2021:
• Appointment of employees responsible for monitoring of and
reporting the situation;
• Possibility for employees returning from risk countries to work
remotely, take holiday or a temporary leave;
• Identification of business units, employees and substitute employees
undertaking the critical functions and administrating the main systems;
• Implementation of remote work organisation measures;
• Sharing of information on preventive measures with employees;
• Provision of employees with personal protection equipment;
• Disinfection of premises;
• Management of staff flows;
• Explanation of benefits of vaccination to employees;
• Provision of possibilities for employees to get vaccinated.
Internal control
system at the
company
The Company’s financial statements are prepared according to
International Financial Reporting Standards, as adopted by the EU.
The Company has adopted the Manual of Accounting Procedures and
Policies that defines the principles, methods and rules of accounting,
financial reporting and presentation. In addition, seeking to ensure
timely preparation of the financial statements, the Company follows the
internal rules that define the deadlines for the submission of accounting
documents and preparation of the financial statements.
A “four-eye” principle is followed when preparing the financial statements.
The Accounting Unit is responsible for the preparation and review of
financial statements.
Content
38
GOVERNANCE REPORTCONSOLIDATED ANNUAL REPORT 2021
7. Governance
report
Information on
compliance with
the corporate
governance code
The Company complies with the Corporate Governance Code for
Companies Listed on NASDAQ Vilnius Stock Exchange (available at www.
nasdaqbaltic.com; hereinafter referred to as “the Code”). The Code is
applicable to the extent it is consistent with the Articles of Association
of the Company. The Company has disclosed its compliance with the
requirements of the Code, and such information is available on the
Company’s official website at www.ambergrid.lt, and on the Central
Storage Facility at www.crib.lt.
Share capital
The Company’s authorised share capital amounts to EUR 51,730,929.06
It is divided into 178,382,514 ordinary registered shares with par value of
EUR 0.29 each. An ordinary registered share of EUR 0.29 par value grants
its holder one vote at the General Meeting of Shareholders. All the shares
have been fully paid.
There were no changes in the Company’s shareholder structure during
2021. EPSO-G UAB retained its 96.58% shareholding in the Company and
was the only shareholder holding more than 5% of the Company’s shares.
EPSO-G UAB has a casting vote in the decision-making process at the
General Meeting of Shareholders.
Shares and
shareholder rights
The number of the Company’s shares that entitle their holders to vote at
the General Meeting of Shareholders matches the number of shares in
issue, which is equal to 178,382,514 shares. All property and non-property
rights conferred by the shares of Amber Grid are equal, and none of
the Company’s shareholders has special control rights. In accordance
with the Company’s Articles of Association, only the General Meeting
of Shareholders can make the decisions on issuance of new shares and
acquisition of own shares.
To the knowledge of the Company, there are no mutual arrangements
between the shareholders that might result in restrictions on the transfer
of securities and/or on voting rights. There are no restrictions imposed on
the voting rights at the Company.
In 2021, the Company had no own shares and had no transactions relating
to acquisition or disposal of its own shares.
Shareholders
As at 31 December 2021, Amber Grid had over 2,300 shareholders
(Lithuanian and foreign natural and legal persons), whereof 1 (one)
shareholder held more than 5% of the Company’s shares.
Table 7. Shareholders of the Company
Shareholder
Registered office address /
legal entity code
Ownership interest,
number of shares
EPSO-G UAB
Minority shareholders
Gedimino pr. 20, Vilnius,
Lithuania/
302826889
172,279,125
EPSO-G UAB
Gedimino pr. 20, Vilnius,
Lithuania/
302826889
178,382,514
Total 6,103,389
The Company’s shareholder structure is provided in Fig. 14.
Pic. 14. Shareholder structure as at 31 December 2021
96,58%
3,42%
UAB „EPSO-G”
Minority shareholders
Details of trading
in securities on
regulated markets
Since 1 August 2013, the Company’s shares have been offered for trade
on the regulated market and quoted on the Secondary List of NASDAQ
Vilnius Stock Exchange.
Content
39
GOVERNANCE REPORTCONSOLIDATED ANNUAL REPORT 2021
Table 8. Basic details of Amber Grid’s shares
Basic details of Amber Grid’s shares
ISIN code LT0000128696
LEI code 097900BGMP0000061061
Ticker AMG1L
Shares in issue
(number of shares)
178,382,514
In 2021, the trading turnover in the Company’s shares was EUR 0.74
million (2020: EUR 0.56 million), with the total of 648,560 shares (2020:
601,703 shares) transferred under the transactions. The Company’s share
price dynamics is presented in Fig. 15, and the details of the Company’s
share price and turnover in 2021 are provided in Fig. 16.
Fig. 15. Share price dynamics at NASDAQ Vilnius, 2021
Fig. 16. Amber Grid’s share price and turnover, 2021
As at 31 December 2021, Amber Grid’s market capitalisation reached EUR
217,63 million. The quoted price per share and the market capitalisation
increased by 25.13% in 2021.
Dividends
The Group’s and the Company‘s Dividend Policy stipulates uniform rules
for estimation, payment and declaration of dividends across all companies
of EPSO-G Group.
The main purpose of the Dividend Policy
3
is to set clear guidelines
regarding the expected return on equity for the existing and potential
shareholders through sustainable corporate value growth of the Group
and its companies, and development of the strategic projects, thereby
consistently strengthening trust in the whole group of energy transmission
and exchange companies.
On 23 April 2021, the Ordinary General Meeting of Shareholders
approved the proposal of the Company’s Board not to distribute profit
for 2020.
On 20 April 2020, the Ordinary General Meeting of Shareholders
approved the proposal of the Company’s Board not to distribute profit
for 2019.
3 The Company’s and the Group’s Dividend Policy was approved by the Board of Amber Grid, with its last edited version presented
on 20 February 2020. The document is available at https://www.ambergrid.lt/lt/apie_mus/rubrika-investuotojams/dividendai
The decisions regarding the profit distribution were made at the General
Meetings of Shareholders in 2020 and 2021 in line with the provisions
of the Dividend Policy. There was an increased demand to finance the
investments, and accordingly, the profit available for distribution was left
undistributed due to the fact that the Company was engaged in a large-
scale strategic project for the construction of interconnection pipeline
with Poland (GIPL).
Agreements with
intermediaries of
public trading in
securities
Amber Grid has an agreement with SEB Bank AB for provision of
accounting and related services of the Company’s securities.
On 30 April 2021, the Company concluded an agreement with AB SEB
Bank on the payment/distribution of dividends to minority shareholders,
under which AB SEB Bank calculates and pays out dividends to all the
shareholders of the Company, except for EPSO-G UAB.
Table 8. Bank’s requisite details
AB SEB Bank‘s requisite details
Legal entity code 112021238
Registered office address Konstitucijos pr. 24, LT-08105 Vilnius, Lithuania
Phone +370 5 268 2800
Email info@seb.lt
Official website www.seb.lt
1,36
1,14
0,98
1,22
0,9
Share price, Eur Turnover, Eur
1,4
1,2
1,0
0,8
80 000
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
2021-01 2022-012021-07 2021-102021-04
Opening price, Eur
Weighted average
price per share, Eur
Highest price per share, Eur
Lowest price per share, Eur
Closing price, Eur
Content
40
GOVERNANCE REPORTCONSOLIDATED ANNUAL REPORT 2021
Management
structure
In performing its activities, the Company complies with the Law on
Companies, the Law on Securities, the Company’s Articles of Association,
and other legal acts of the Republic of Lithuania. The powers of the General
Meeting of Shareholders, the rights of shareholders and exercising of such
rights are defined in the Law on Companies and the Articles of Association
of the Company, which are available on the Company’s official website at
www.ambergrid.lt/en/about-us/investors-relations/bylaws.
It is stipulated in the Articles of Association that they can be amended by the
decision of the General Meeting of Shareholders adopted by majority vote
of 2/3 of shareholders present at the meeting.
The Articles of Association provide for the following bodies of the Company:
• The General Meeting of Shareholders,
• The Board – a collegial management body;
• The head of the Company – the CEO – a single-person management
body.
The General Meeting of
Shareholders
The Company’s procedure for convening the General Meeting of
Shareholder, decision-making process, and the powers of the General
Meeting of Shareholders are consistent with those stipulated in the Law
on Companies of the Republic of Lithuania (the Law on Companies),
except for the additional powers of the General Meeting of Shareholders
stipulated in Article 38
4
of the Company’s Articles of Association.
Article 26 of the Articles of Association stipulates that the General Meeting
of Shareholders also takes decisions regarding as follows (additional
powers of the meeting):
(I) approval of the Board’s decisions as set forth in Article 381 of the
Articles of Association. As the Meeting approves the Board’s decisions
regarding the specific transactions, the Meeting, inter alia, approves the
essential terms and conditions of such transactions;
(II) appointment and removal from office of the Board members,
determination of remuneration of Board members, determination of
annual remuneration budget for remuneration of the Board members
and compensation for costs related to fulfilment of functions at the Board,
signing of agreements with the Company’s Board members regarding
their functions at the Board, determination of standard terms of such
agreements;
(III) removal or non-removal from office of the Board members at the time
of taking the decisions that involve the conflicts of interests of the Board
members, in cases stipulated in Article 48
5
of the Articles of Association.
The Board
The Articles of Association of Amber Grid stipulate that the Board consists
of five members appointed by the General Meeting of Shareholders for
the term of office of four years, based on the recommendations provided
by the Remuneration and Nomination Committee. Two members of the
Board shall be independent members.
A continuous term of office of a Board member shall be no longer than
two consecutive terms, i.e. no more than eight consecutive years.
The Board members are selected in accordance with the Description of
selection of candidates to the board of a state or municipal enterprise and
candidates to a collegial supervisory or management body elected by the
general meeting of shareholders of an enterprise owned by the state or
municipality, as approved by Resolution No 631 of 17 June 2015 of the
Government of the Republic of Lithuania.
The powers of the Board of the Company are consistent with those
stipulated in the Law on Companies, except for the additional powers
stipulated in Articles of Association
6
.
Additional powers of the Board encompass approval of the fundamental
documents of the Company (Strategy, Action Plan, Budget, etc.),
determination of employment terms and conditions of the CEO,
determination of prices for gas transmission services and other regulated
services, approval of disposal of the Company’s assets, conclusion of
material transactions stipulated in the Articles of Association.
The Board of the Company also fulfils the following supervisory functions:
(I) with regard to the opinion of the Audit Committee, approves or
disapproves the transactions with related parties;
(II) supervises the activities of the CEO, submits comments and
suggestions to the Meeting regarding the activities of the CEO;
(III) considers whether the CEO is fit to hold the office in case the Company
is operating at a loss;
(IV) submits suggestions to the CEO on revocation of the decisions that
are in conflict with the laws and other legal acts, with the Articles of
Association, and with the decisions taken by the Meeting or the Board;
(V) decides on other matters pertaining to supervision of activities of the
Company and the CEO that are assigned to the authority of the Board
under the Articles of Association or by the decision of the Meeting.
Information about Amber Grid Board members, the CEO, and the Head of
the Accountant Department is presented in Table 10.
4
38. The following decisions of the Board shall be subject to approval by the Meeting: 38.1. on the transfer, pledge or other encumbrance of the shares (ownership interest, member contributions) held by the Company or the rights carried by
such shares (ownership interest, member contributions) or any other rights of a member of a legal entity; 38.2. on the transfer of a complex of assets or a substantial part thereof owned by the Company’s controlled entities and/or associates,
if the carrying amount of the assets transferred exceeds 1/50 of the share capital of the Company; 38.3. on the transfer, pledge, change of a legal status, any other encumbrance or disposition of the Company’s assets included in the List of
Facilities and Assets of Special Strategic Importance for Ensuring National Security, as stipulated in the Law on Protection of Objects of Importance for Ensuring National Security of the Republic of Lithuania, if the value of the above-referred
assets exceeds 1/50 of the share capital of the Company; 38.4. on the transfer, other disposition or encumbrance of the shares and the rights carried by the shares held in directly or indirectly controlled entities that are the owners of and that
develop, operate, use or otherwise have the disposition of the assets referred to herein in subparagraph (iii), on the increase, reduction of the share capital of such entities or on any other actions that may lead to changes in the share capital
structure of such entities (e.g., issuance of convertible debentures), and on the reorganisation, spinoff, restructuring, liquidation, rearrangement of the entities referred to herein, or on any other actions that lead to changes in a legal status of
the entities referred to herein; 38.5. on the investment, transfer, lease (estimated individually for each type of transaction), pledge or mortgage (estimated as a total amount of transactions) of the Company’s assets with the carrying amount
exceeding 1/5 of the share capital of the Company; 38.6. on any transactions that involve arrangements on payment of penalties with the total amount exceeding 1/5 of the share capital of the Company; 38.7. on offering of surety or guarantee
for the discharge of obligations of third parties, the amount whereof exceeds 1/5 of the share capital of the Company; 38.8. on the acquisition of assets for the price exceeding 1/5 of the share capital of the Company; 38.9. on the submission of
the Company’s projects for recognising them as the projects of special national importance and/or projects important to the State, as defined in the legal acts.
5
A member of the Board shall neither refuse to vote nor abstain, except for the cases specified by laws and these Articles of Association. If a member of the Board takes part (votes, participates in discussions, etc.) in a decision-making process,
which is (directly or indirectly) related to personal interests of the respective member of the Board, the respective member of the Board shall immediately refrain from any actions pertaining to fulfilment of his functions, and shall notify the
Board of the existing conflict of interests. The Board shall decide on the suspension of the member of the Board from voting at the time of making a decision on the specific matter, and when the Board is unable to decide as none of the Board
members are able to vote on the specific matter due to a conflict of interests, the respective decision on the suspension of Board members shall be made by the Meeting.
6
The Company’s Articles of Association are available on the official website at: https://www.ambergrid.lt/lt/apie_mus/rubrika-investuotojams/istatai
Content
41
GOVERNANCE REPORTCONSOLIDATED ANNUAL REPORT 2021
Table 10. Information about the Board members, the CEO, and the Head of Accounting Department
Full name Job position
Term of
office
Job positions held
elsewhere
Shares held in
Amber Grid
Qualification
7
Algirdas Juozaponis
Chairman of the
Board
Since
19/04/2020
CFO, EPSO-G UAB
Chairman of the
Board, LITGRID AB
None
Vilnius University,
Master in Banking; Baltic Institute of
Corporate Governance, professional Board
member
Renata Damanskytė-
Rekašienė
Board member
Since
20/04/2020
Director for Legal
and Corporate
Governance, EPSO-G
UAB
None
Vilnius University, Faculty of Law, Majoring
in commercial Law, Master of Law; Baltic
Institute of Corporate Governance,
Professional Board Member; Lawyer’s
Certificate
Ignas Degutis
Independent
Board member
Since
20/04/2020
CFO, Board member,
RB Rail AS (Rail
Baltica)
None
ISM University of Management and
Economics, Master in Economics; Baltic
Institute of Corporate Governance,
Education Programmes for Council/Board
Members and Chairs
Sigitas Žutautas
Independent
Board member
Since
20/04/2020
Chairman of
Innovation and
Development
Committee, EPSO-G
UAB
None
Vilnius University, Master in Business
Management and Administration; ESMT
European School of Management and
Technology, Berlin, post-graduate studies
Nemunas Biknius
CEO
Since
08/04/2020
None
Holds
0.001505% of
shares in Amber
Grid
Vilnius Gediminas Technical University,
Master in Energy and Thermal Engineering;
Aalborg University, Denmark, Environmental
Management Studies;
ISM MBA Management Studies
Rasa Baltaragienė
Head of
Accounting
Department
Since
02/12/2019
- None
7
Information on professional experience of the Board members is available on: https://www.ambergrid.lt/lt/apie_mus/valdymas/valdyba, and information
on professional experience of the Company’s CEO and other executive personnel on: https://www.ambergrid.lt/lt/apie_mus/valdymas/vadovybe
Content
42
GOVERNANCE REPORTCONSOLIDATED ANNUAL REPORT 2021
Overall, 16 Board meetings were held during 2021.
Table 11. Attendance at the Board meetings during 2021
31 March. Approval of the Report on Implementation of the Company’s
Strategy 2017-2022 for the year 2020. Approval of the Company’s
consolidated annual report, financial statements, proposed profit
appropriation. Approval of the amendment to the essential terms and
conditions of the procurement agreement in relation to the investment
project Installation of pig launching and acceptance chambers and
implementation of operational technological management of gas
transmission system (phase II). Initiation of Ordinary General Meeting of
Shareholders. Approval of the CEO’s goals set for 2021, weights placed
on goals, and measurement indicators. Decision on voting at the Ordinary
General Meeting of the Shareholders of GET Baltic. Proposal of Ingrida
Kudabienė, the Company’s Legal and Administration Director, as a
candidate for the position of a Board member of GET Baltic. Approval of a
new version of the Plan on risk management measures for the year 2021.
Joining of the remuneration, performance appraisal and training policy of
EPSO-G group. Approval of job position levels for top-level and middle-
level managers and the range of their remuneration.
19 April. Approval of the Action plan on implementation of
recommendations from the internal audit of personnel management.
Approval of a new organisational structure.
18 May. Setting of tariffs for natural gas transmission services for 2022.
15 June. Approval of the updated Plan on risk management measures for
2021.
29 June. Approval of the updated tariffs for natural gas transmission
services for 2022.
14 July. Approval of AmberGrid AB’s Strategy for 2021-2030 and Action
Plan for 2021-2023, and their submission to VŠĮ Valdymo Koordinavimo
Centras for assessment.
2 September. Approval of the essential terms and conditions of
the procurement agreement in relation to the investment project
Implementation of operational technical management of gas transmission
system (Replacement of shut-off devices and connection to the remote
management system SCADA). Recommendations were provided to the
subsidiary GET Baltic UAB to enter into agreement for procurement of
financial management, accounting and related services with EPSO-G
UAB, which was awarded the contract during the public procurement
procedure.
21 September. Approval of the Plan on implementation of
recommendations from the internal audit of penalties and disputes.
26 October. Approval of Amber Grid AB’s joining the Association
INFOBALT.
28 October. Approval of entering into agreement on lease of special
purpose motor vehicles with TETAS UAB.
16 November. Approval of Amber Grid AB’s Draft Strategy for 2021-2030
and Draft Action Plan for 2022-2024, and their submission to VšĮ Valdymo
Koordinavimo Centras for review. Joining the share sale transaction
policy of EPSO-G group. Joining the updated integrated planning and
monitoring policy of EPSO-G group.
14 December. Approval of Amber Grid AB’s Budget for 2022. Approval of
Amber Grid AB’s Plan on Risk Management Measures for 2022. Approval
of Amber Grid AB’s Rules for Access to the Natural Gas Transmission
System. Approval of Amber Grid AB’s Rules for Balancing of the Natural
Content
16
Algirdas Juozaponis Renata Damanskytė-Rekašienė
(Beginning of the term 20/04/2020)
16
Sigitas Žutautas
16
16
Ignas Degutis
(Beginning of the term 20/04/2020)
Decisions adopted by the Board during 2021:
14 January. Joining the updated integrated planning and monitoring
policy of EPSO-G group.
24 February. Approval of assessment of the CEO’s performance in respect
of goals set for 2020. Approval of the action plan on implementation of
recommendations from the internal audit of project management. Joining
of the updated transparency and communication policy of EPSO-G group.
Approval of the agreement on the provision of holding services.
9 March. Joining the updated project management policy of EPSO-G
group.
43
GOVERNANCE REPORTCONSOLIDATED ANNUAL REPORT 2021
Gas Transmission System. Approval of entering into agreement on
construction of gas distribution station in Šiauliai. Approval of entering
into agreements pertaining to ELLI project. Joining the environmental
policy of EPSO-G group. Joining the occupational safety and health policy
of EPSO-G group. Approval of the range of remuneration of top-level and
middle-level managers of Amber Grid AB. Approval of AmberGrid AB’s
participation in the EuropeanHydrogenBackboneinitiative. Approval of
the calendar of the Board meetings of Amber Grid AB and the Action Plan
of the Board.
29 December. Approval of entering into agreement on purchase/sale of
natural gas with Ignitis UAB.
The Remuneration and Nomination Committee discussed the self-
assessment results of the collegial bodies and identified the following
areas and directions for their improvement in 2021:
• to focus more on resolution of strategic issues in order to optimise the
organisation of work of the collegial bodies;
• to strengthen cooperation with the Board and Committees of EPSO-G
in order to ensure a more effective response to the needs and
expectations of the specific collegial body.
Based on the Company’s Articles of Association, the Audit Committee’s
functions at Amber Grid are fulfilled by the Audit Committee of the parent
company EPSO-G UAB.
Amber Grid has the following joint committees of the EPSO-G group:
• The Remuneration and Nomination Committee
• The Audit Committee
• The Innovation and Development Committee
More details about the Committees of Amber Grid are available in the
consolidated annual report of EPSO-G group.
Information on
internal and external
audits
To ensure transparency and efficiency of its operations, EPSO-G Group
has implemented a centralised internal audit system. It means that the
internal audit unit fulfils the assigned functions at the Group level, and
is directly accountable to the Board of EPSO-G UAB, the majority of
which are independent members. The auditors of EPSO-G UAB are not
subordinate to the administration personnel of the auditee.
The Company‘s financial statements were audited by the following
external audit firms:
Deloitte Lietuva UAB for the year 2019;
PricewaterhouseCoopers UAB for the year 2020;
PricewaterhouseCoopers UAB for the year 2021.
The fee for external audit services of Deloitte Lietuva UAB for the year
ended 31 December 2019 was EUR 36.0 thousand.
The fee for external audit services of PricewaterhouseCoopers UAB for the
year ended 31 December 2020 was EUR 50.5 thousand.
The fee for external audit services of PricewaterhouseCoopers UAB for the
year ended 31 December 2021 was EUR 50.5 thousand.
Content
44
PEOPLECONSOLIDATED ANNUAL REPORT 2021
8. People
The most important investment of the organisation is its people. Amber
Grid’s employees are experienced and competent professionals
implementing the projects of strategic importance to the State.
In 2021, the Company had 324 employees. Employee structure by
category is provided in Table 12 below.
Table 12. Number of employees in 2020–2021.
Categories
Number of
employees as
at 31 December
2021
Number of
employees as
at 31 December
2020
CEO
1
1
Top level managers
5
5
Middle- and firs-level
managers
37 32
Experts-specialists
194
181
Workers
191
100
TOTAL
324
319
Data on employees
As we value the contribution of each employee and we seek to retain and
attract people in a competitive market. The turnover rate of employees
has remained similar during the year. In 2019, the total turnover rate was
13.91% compared to 10.7% in 2020 and 11.21% in 2021.
In 2021, the average age of the Company’s employees was 44.7 years (Fig.
17), and the average length of service was 12.7 years (Fig. 18). Employees
with higher education background accounted for 65% of the Company’s
all employees (Fig. 19).
Fig. 17. Employee structure by age in 2021
Due to the specific nature of the activities in the energy sector, men
account for a larger part of the Company’s employees: 252 (78%) men,
compared to 72 (22%) women. (Table 13).
Table 13. Employee structure by gender in 2020-2021
Fig. 18. Employee structure by length of service in 2021
Fig. 19. Employee structure by educational background in 2021
Male
employees
Female
employees
78%
22%
80%
20%
2020 2021
40-50 years
28%
20-30 years
6%
30-40 years
31%
50-60
years
24%
> 60 years
11%
5-10 years
20%
< 30 years
8%
> 5 years
32%
10-20 years
24%
20-30 years
16%
44,8
44,7
44,7
2019 2020 2021
Average age of employees, years
13,5
12,6
12,7
2019 2020 2021
Average length of service, years
Secondary education
7%
Vocational education
13%
Higher
education
65%
Advanced vocational
education
15%
61%
63%
66%
2019 2020 2021
Has a higher education
Content
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PEOPLECONSOLIDATED ANNUAL REPORT 2021
We provide our employees with career possibilities in EPSO-G group. In
2021, 11 employees had a vertical movement in their careers.
Remuneration management
With effect from 31 March 2021, Amber Grid joined the Remuneration,
performance appraisal and training policy of EPSO-G group (the
“Remuneration Policy“) that applies to all employees of the Company
and is made available to public on the official website. The Remuneration
Policy is approved (joined) by the decision of the Company’s Board, with
reference to the recommendations brought forward by the Remuneration
and Nomination Committee of EPSO-G. The Remuneration and
Nomination Committee of EPSO-G periodically assesses the provisions
of the Remuneration Policy, its effectiveness, implementation and
application.
The purpose of the Remuneration Policy is to ensure effective, clear and
transparent management of remuneration costs and at the same time to
motivate employees with incentives encouraging them to contribute to
the implementation of the Company’s mission, vision, values and goals.
The remuneration of EPSO-G group employees consists of the following
components: fixed pay (FP); variable pay (VP); extra pay as defined in
the Labour Code of the Republic of Lithuania, the Company’s internal
regulations and the collective agreements; extra incentives for results
of special importance and implementation of innovations; additional
benefits; non-financial benefits.
Fig. 20. Remuneration components
The fix pay (FP) component is the largest and the most important part of
monetary remuneration, the amount of which depends on the level of a
certain job position, which is established for each job position using the
methodology that is applied in a global practice. The FP is established
within the range set for each level of job position, based on an employee’s
experience, competence, expertise and ability to work independently in
fulfilling their functions, as well as based on the annual budget.
The variable pay (VP) component is intended to encourage improvement
of annual performance when implementing the strategic goals. The
maximum VP for the CEO of the Company is set by the Company’s
Board, and for the rest of employees – by the CEO of the Company. The
maximum VP for the CEO of the Company, top level managers is 30%, and
the maximum VP for the middle- and first-level managers, specialists and
workers is 15 %.
The VP component is payable upon achievement of annual goals set for
the Company’s CEO by the Board, and upon achievement of individual
targets. The VP is payable to managers and specialists on a yearly basis
after the Board approves the audited financial results of the Company and
they are approved by the decision of the General Meeting of Shareholders.
The VP is payable to workers on a quarterly basis.
Amber Grid‘s average monthly pay by category of employees in 2021 is
provided in Table 14.
78%
80%
78%
2019 2020 2021
Share of men in the number of employees, %
22%
20%
22%
2019 2020 2021
Share of women in the number of employees, %
FP
VP
Extra pay for exceptional performance
and innovation-driven approach
Additional benefits
Non-financial (emotional) benefits
Work for the good of Lithuania, implementation of strategic
projects in the sector of energy, corporate culture, recognition
of contribution of employees, professional development, self-
expression and career possibilities, work environment, relations
with management members and colleagues, business stability,
remote work, flexible start and end times for workdays, etc.
Social allowances, voluntary health insurance, additional days
of leave, training, secondment abroad, vaccination, corporate
events, etc.
Extra pay incentives for exceptional performance and
innovations.
Variable pay (VP) component, which depends on achievement
of targets and on performance appraisal results.
Fixed pay (FP) component, which is set in the employment
agreement.
Content
46
PEOPLECONSOLIDATED ANNUAL REPORT 2021
Table 14. Average monthly pay by category of employees
The FP and VP components constitute the basic part of the monetary
remuneration, whereas other components of the remuneration are not less
important as they have a significant impact on an employee‘s motivation
and engagement.
Amber Grid offers its employees the following additional benefits:
Table 21. List of additional benefits
• Recreations zones (active and passive)
• Health insurance with plan options
• Seminars on the topics of health, emotional wellbeing, physical education
• Vaccination against influenza and tick-borne encephalitis
• Up to 4 working days of absence from work per year, without consulting
the medical institution
HEALTH
• Individual start and end times of the workday
• Remote work
FLEXIBLE WORKING HOURS
• Birth of a child
• 3 children or a child with disability
• Death of a close relative
• Termination of employment on retirement
• Accidents
FINANCIAL SUPPORT
• Additional 3 working days of annual holiday – in total 23 days per year
• Additional 1 working day of holiday after 5 years of service
• Additional 3 working days of leave in case of death of close relative
ADDITIONAL DAYS OF LEAVE
• Fruit days at the office
• Parking place near the office
• Drive home service in case of return from an object after business hours
• Modern office premises and ergonomic place of work
OTHER ADDITIONAL BENEFITS
• Summer event, Christmas event, presents for employees and their children
• Volleyball tournament to encourage physical activity
• Professional events and national holidays
• Teambuilding activities of subdivisions
CORPORATE EVENTS
• Incentives for innovations and exceptional performance
• Financial support for studies
• Incentives of annual performance appraisal
• Training, professional and personal development, qualification upgrading
courses, seminars, conferences, secondments in Lithuania and abroad
• Internal lecture programme and training
• Career opportunities within EPSO-G group
PROFESSIONAL AND PERSONAL DEVELOPMENT
2021 m. 2020 m.
Categories
Average relative number
of employees
Average monthly gross
pay (FP component), EUR
Paid out VP component,
as an average monthly VP
component, EUR
Average relative number
of employees
Average monthly gross
pay (FP component), EUR
Paid out VP component,
as an average monthly VP
component, EUR
CEO
1 9 520 2 770 1 9 373 382
Top-level managers
5 5 978 1 384 4 5 869 984
Middle- and first-level
managers
39 3 616 345 31 3 633 435
Experts-specialists
189 2 223 200 189 2 067 232
Workers
110 1 318 177 122 1 196 166
TOTAL
345 2 166 234 347 1 968 236
Content
47
PEOPLECONSOLIDATED ANNUAL REPORT 2021
Table 15. Average monthly pay by category of employees
Group Company
Categories
Number of employees
(at the end of the
reporting period)
Average monthly pay
(including the VP)
Number of employees
(at the end of the
reporting period)
Average monthly pay
(including the VP)
CEO
2 10,012 1 12,290
Top level managers
6 7,473 5 7,362
Middle- and first-level
managers
40 3,933 37 3,961
Experts-specialists
194 2,427 191 2,424
Workers
90 1,495 90 1,495
Total average pay
332 2,437 324 2,400
Remuneration fund, EUR thousand
10,403 9,991
Information on the Company‘s FP and VP components in 2021 is presented below in Table 16.
Remuneration policy for members
of collegial management bodies and
the CEO
On 20 April 2020, the Company‘s General Meeting of Shareholders
approved the Remuneration Policy for the CEO and Board Members of
Amber Grid
8
, the purpose of which is to determine general, clear and
transparent principles for monetary remuneration of the Company‘s
CEO and Board members for the fulfilment of their functions, and a
remuneration system based on those principles, which will allow to
manage effectively the Company‘s operating expenses and to create
motivational incentives for the Company‘s CEO and Board members
to contribute to the implementation of the Company‘s mission, vision,
values and goals.
The principles for remuneration of the members of the Company’s
management bodies are also governed by EPSO-G UAB Guidelines for
Determining the Remuneration for the Activities in the Bodies of the
Group Companies, which were approved by the decision of the sole
shareholder of EPSO-G UAB.
When determining the remuneration for the management bodies,
the Company follows a principle that the size of the remuneration and
its payment procedure should: promote creation of a long-term and
sustainable corporate value of the Company and the entire EPSO-G
Group; match the workload of individual bodies of the Company and their
individual members; reflect as much as possible the actual situation in the
market, i.e. it has to be competitive in terms of the work pay offered in the
market for the professionals in the respective fields; ensure remuneration
for responsibility undertaken by the management bodies; ensure
independence of the independent Board members; encourage attraction
of high-level professionals from the respective areas of the Company‘s
management.
The remuneration for fulfilment of functions at the Company’s Board may
be payable only to independent Board members and members who are
not civil servants or officials of an authority representing the State, and
who are not employees of the Group companies.
A fixed monthly pay (gross) payable to the Company’s Board members (a
higher amount is payable depending on the circumstances):
(I) EUR 1,750 (one thousand, seven hundred and fifty euros) is payable
to the Board members who are also the members of at least one board
committee formed within EPSO-G Group;
(II) EUR 1,400 (one thousand, four hundred euros) is payable to the Board
members who are not the members of any board committees formed
within EPSO-G Group;
8
The Policy is available on the Company‘s official website at www.ambergrid.lt
Content
48
PEOPLECONSOLIDATED ANNUAL REPORT 2021
(III) EUR 2,150 (two thousand, one hundred and fifty euros) is payable to
the chairperson of the Board in view of additional administrative functions
undertaken by the chairperson, who is also the member of at least one
board committee formed within EPSO-G Group; and to the chairperson of
the Board who is also the board member within EPSO-G Group;
(IV) EUR 1,800 (one thousand, eight hundred euros) is payable to
the chairperson of the Board for additional administrative functions
undertaken by the chairperson, who is not the member of any board
committees formed within EPSO-G Group.
Based on the decision passed by the Company‘s General Meeting of
Shareholders on 23 April 2021, the annual remuneration budget was
determined for the remuneration of the Board members and for additional
costs related to fulfilment of their functions at the Board, i.e. EUR 51,600.
Information on remuneration of the members of the management bodies,
and annual changes in the remuneration amounts are disclosed below in
Tables 15 and 16:
Table 16. Remuneration of the Company‘s CEO
Job position Full name
Date of ap-
pointment
Date of remov-
al from office
Gross work pay (EUR)
2017 2018 2019 2020 2021
CEO Saulius Bilys June 2013 October 2019 117,301 119,392 203,391 -
CEO Nemunas Biknius October 2019 - - - 20,075 117,192 148,586
Table 17. Remuneration of the Company’s Board members
Job position Full name
Work pay of Board members (EUR)
2017 2018 2019 2020 2021
Board member Renata Damanskytė - Rekašienė - - - - -
Board member Algirdas Juozaponis - - - - -
Board member Rimvydas Štilinis - - - - -
Independent Board member Ignas Degutis - - - 11,713 16,800
Independent Board member Sigitas Žutautas - 3,850 14,125 21,000 30,535
Independent Board member Nerijus Datkūnas 12,000 11,575 12,305 5,133 -
Collective agreement
The Company has an effective collective agreement, which was signed
on 10 August 2018 with the Trade Union of Amber Grid and amended in
part in 2019. The purpose of the collective agreement is to represent the
rights and legitimate interests of all employees. The agreement stipulates
additional work, remuneration, social, economic and professional
conditions and guarantees, which are not regulated by laws or other
regulatory acts.
Professional development
In view of its business objectives, training plans and other needs for
improvement, the Company focuses on the professional development of
its employees. Amber Grid encourages its employees to upgrade their
qualification and enhance their competences.
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49
PEOPLECONSOLIDATED ANNUAL REPORT 2021
The Company operates in a regulated energy industry with clearly
defined requirements for professional competence and certification of
employees necessary to perform their principal and secondary functions.
The Company organises mandatory, professional training and other
qualification upgrading, as well as certification of employees in the energy
sector in accordance with the regulatory requirements.
The Company focuses on the quality of internal training. Since 2020,
the Company has been mostly offering on-line professional and other
types of training. The Company has reviewed and updated all contents
of professional development of its employees for a modular training
programme, which is intended to employees operating the objects
and facilities of the natural gas transmission system, and agreed the
programme with the NERC.
The Company ensures timely organisation of mandatory training (fire
safety, civil protection, first aid), and that the employees attending the
training obtain both theoretical knowledge and practical skills. In 2021,
similarly as every year, defibrillator training was organised for volunteer
employees. In order to maintain a high level of readiness of employees to
respond in the event of emergency situations, the Company periodically
organises fire safety and emergency management training.
Due to the amendment to one of the major legal act (Rules for safety of
work with flammable gases) effective in 2021, all employees in the energy
sector working with flammable gases received additional training and re-
certification in accordance with the provisions of the new wording of the
legal act effective from 14 November 2021.
In addition, the Company organises training focused on general
competences, and provides its employees with a possibility to participate
in various seminars, conferences where they can improve their professional
skills, learn about the latest developments in their respective fields, and
the best practices of other companies.
Number of employees attending training during 2021
Table 19. Number of employees attending training
No. Type of training
Number of
participants
Number of employees
attending training
Training
duration, hours
Employees attending
training as a percentage
of total number of
employees*
1 Professional training
215 130 3,866 37.4
2
Certification of specialists in the
energy sector
346 199 346 62
3 Mandatory training
360 321 1,289 100
4 Technical training
206 141 577 43.9
5 General training
2,005 289 3,952 90
* Estimated as a percentage of average annual number of employees (2021: 321 employees)
Content
50
SUSTAINABILITYCONSOLIDATED ANNUAL REPORT 2021
9. Sustainability
With effect from 29 December 2021, Amber Grid joined the occupational
safety and health and environmental protection policy of EPSO-G group.
The policy defines the principles for how to achieve as much as possible
effective mitigation of any negative impact of the Company’s operations
on the environment, and for ensuring occupational safety and health
of employees. The principles for prevention, safety, environmental
sustainability must be followed by each stakeholder or groups of
stakeholders that are involved in the activities of Amber Grid.
Management system
The Company has implemented the environmental management system
compliant with international standard ISO 14001 since 2014, and the
occupational health and safety management system compliant with
OHSAS 18001 since 2016.
In 2019, the Company’s environmental management system was re-
certified according to ISO 14001, and certified according to new standard
ISO 45001 for the occupational safety and health management system.
The environmental management system and the occupational safety
and health management system have been integrated into Amber Grid’s
planning, organisation and management processes.
In 2021, no instances of non-compliance were identified during the audit
carried out by a certified attestation body.
Considering the social and economic environment and the Company’s
financial and technical possibilities, management of the Company
is committed to assure continuous improvement of environmental
and occupational safety and health management processes and their
efficiency, as well as compliance with the standards acceptable for the
management process.
Throughout 2021, the Company continued its fight against pandemic
and took all possible actions to safeguard its employees against potential
COVID-19 infection risk.
To foster social cooperation and partnership in the field of environmental
protection and occupational safety and health of employees, all employees
and stakeholders of the Company are regularly provided with information
to ensure their awareness and understanding of the emerging issues.
The Company is committed to carry out its strategy-oriented activities by
working towards the following sustainable development directions:
• in the area of environment protection – empowerment of climate-neutral
energy through mitigation of the environmental impact;
• in the area of social responsibility – seeking to build a progressive
organisation that follows the principles of sustainability;
• in the area of corporate governance and economics – seeking to ensure
transparent, efficient operation and development of the energy exchange
platform.
The principal purpose of Amber Grid‘s sustainable activities is, inter alia,
to reduce the environmental impact by 2/3 by 2030. For that purpose, the
Company has carried out an inventory of greenhouse gas emissions and is
finalising the analysis of other types of environmental impact. After having
performed a detailed analysis and having identified all significant sources
of environmental impact, during the first half of the year the Company will
elaborate the plans for mitigation of environmental impact.
The Company has the following basic sustainable development
directions and long-term goals:
The purpose of sustainable activities of Amber Grid is to transform
the energy sector by ensuring a sustainable balance between the
environmental, social and economic targets, thereby contributing to the
development of a climate-neutral economy.
Fig. 22. Sustainable development directions
ENVIRONMENT
Enable a climate-neutral energy transition,
reduce the impact of our activities
SOCIAL
Create a progressive and sustainable
organization
GOVERNANCE
Transparent, efficient management
and development of the energy
exchange platform
SDG CHALLENGES
AND OUR ACTION 2030
• Environmental impact (including
GHG emission) reduced by 2/3
(compared to 2019)
• 0 significant environmental
incidents in own operations
• Gas transmission systems
adapted to transport hydrogen
• Favorable condition for
connecting green energy
producers to the energy
infrastructure
• 0 cases of human rights violations or
discrimination
• 0 serious or fatal accidents
• Customer satisfaction – at least 70%
• No less than 70% of workers, producers,
suppliers, and customers considers the
EPSO-G group to be an open, innovative
and sustainable organization
• 0 cases of corruption
• Good governance index – A+
• 100% of public procurement – green
• Reliable and safe operation of
electricity and gas transmission system
• Sustainable criteria integrated into the
requirements for contractors
• Company structures and motivation
systems are adapted to promote
innovation
affordable and
clean energy
7
climate
action
13
decent work and
economic growth
8
industry, innovation
and infrastructure
9
responsible consumption
and production
12
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SUSTAINABILITYCONSOLIDATED ANNUAL REPORT 2021
In addition, the Company seeks to contribute directly to the
implementation of the Sustainable Development Goals of the United
Nations by the year 2030, by focusing on ensuing a possibility to use clean
and modern energy in its fight against climate change, development of
modern infrastructure and innovations, provision of safe and proper work
conditions, development of wellbeing of employees and sustainable
supply chain.
In 2021, the Board of EPSO-G approved a new sustainability policy of
the group, which replaced the former social responsibility policy applied
across the group. The newly approved sustainability policy defines
common sustainability targets and principles for all group companies,
based on which the activities of the group will be developed.
Having approved an umbrella policy regulating management of
sustainability and other areas related to sustainability (environmental
protection, occupational safety and health, equal rights of employees,
etc.), EPSO-G group is focusing on strengthening the management of
sustainability area at the strategic level. The Company will continue with
the identification of the most significant topics in the area of sustainability
through engagement of stakeholders, integration of sustainability criteria
into the supply chain, and strengthening of sustainability reporting
practices.
More details about the sustainability practices applied at the Company,
and indicators of environmental protection and occupational safety will be
disclosed in a separate Sustainability Report of Amber Grid.
Content
52
MATERIAL EVENTSCONSOLIDATED ANNUAL REPORT 2021
10. Material
events during
the reporting
period
As the Company fulfils its obligations set forth in the legal acts regulating
the securities market, it publishes notices of its material events and other
information regulated on the EU-wide basis. The information is available
on the Company’s official website (www.ambergrid.lt/en/about-us/
investors-relations/materialevents) and on the official website of NASDAQ
Vilnius stock exchange (www.nasdaqbaltic.com).
Material events during the reporting year 2021:
Table 19. Material events of Amber Grid during 2021
Date Material events during the reporting period
04/02/2021
Consolidated results of operations of Amber Grid group for the year 2020
23/02/2021
Regarding the Audit Committee’s opinion on the transaction with the related party
04/03/2021
Regarding the court judgement
09/03/2021
Amber Grid AB signed an agreement on purchase of holding services with EPSO-G UAB
15/03/2021
Correction: Amber Grid notice on announcement of interim information and investor‘s calendar for 2021
31/03/2021
Amber Grid AB announces audited consolidated and separate financial statements for 2020, consolidated annual report and pro-
posed profit appropriation
31/03/2021
Notice on convening an Ordinary General Meeting of Shareholders of Amber Grid AB
23/04/2021
Regarding the decisions made at the Ordinary General Meeting of Shareholders of Amber Grid AB
23/04/2021
Amber Grid annual information for 2020
05/05/2021
Amber Grid group‘s consolidated results of operations for Q1 2021
10/05/2021
Regarding the natural gas transmission system operator’s revenue cap from regulated activities for 2022
18/05/2021
Regarding new tariffs for natural gas transmission services
31/05/2021
Approval of new tariffs for natural gas transmission services
06/08/2021
Amber Grid group’s consolidated results of operations for H1 2021
24/08/2021
Regarding the court judgement
26/08/2021
Regarding the Audit Committee’s opinion on the transaction with the related party
27/08/2021
Amber Grid strategic priorities for 2030: infrastructure adaptation to green hydrogen and development of a competitive regional gas
market
02/09/2021
Notice on convening an Extraordinary General Meeting of Shareholders of Amber Grid AB
27/09/2021
Regarding the decisions made at the Extraordinary General Meeting of Shareholders of Amber Grid AB
26/10/2021
Regarding the Audit Committee’s opinion on the transaction with the related party
05/11/2021
Amber Grid AB signed an agreement on lease of special purpose motor vehicles with Tetas UAB
05/11/2021
Amber Grid AB group’s consolidated results of operations for a nine-month period 2021
03/12/2021
Amber Grid investor‘s calendar for 2022
All notices that are made available to public according to the procedure
defined in legal acts can be found in an electronic publication of the
Manager of the Register of Legal Entities. All notices on convening the
Company’s General Meeting of Shareholders and other material events
are announced on the Central Storage Facility at www.crib.lt and on the
Company’s official website www.ambergrid.lt in accordance with the
procedure established in the Law on Securities. The shareholders whose
shares entitle them to at least 10% of total voting rights, receive notices
on convocation of the General Meetings of Shareholders in accordance
with the procedure established in the Company’s Articles of Association.
Content
53
ANNEXESCONSOLIDATED ANNUAL REPORT 2021
Territorial Planning and
Technical Supervision
Division
Gas Metering and
Meterology Division
Investment Project
Preparation Manager
Asset Management
Department
Technical Director
Gas Compressors
Division
Asset Management
Division
Electrical and
Automation Division
Gas Distribution
Stations Division
Gas Pipelines
Division
Operating and Maintenance
Department
Health, Safety and
Environment Division
Sales
Division
Economic Analysis and
Regulation Division
Strategic Planning and
Business Development
Division
Commercial Director
Procurement
Division
Accounting
Division
Finance and Business
Controlling Division
EPSO-G Group:
Management Board
Audit Committee
Remuneration and Award Committee
Chief Financial Officer
Legal
Division
Administration
Division
Organisational Development
Division
Legal and Administration
Director
Project Management
Division
Project Portfolio
Manager
Organisation Progress
Director
Operational Efficiency
Division
Commercial Flows and
Networks Interoperability
Division
Operational Management
Division
Information Technology
Division
Innovation
Manager
Analytics
Manager
System Management
Center
Communication
Division
Prevention
Division
Chief Executive Officer
Management Board
General Meeting
of Shareholders
11. Annexes
Annex 1
Amber Grid’s organisational structure
Content
54
ANNEXESCONSOLIDATED ANNUAL REPORT 2021
Annex 2
Amber Grid AB statement of compliance with the Corporate Governance
Code for the Companies Listed on NASDAQ OMX AB
In line with Article 23(3) of the Law on Securities of the Republic of
Lithuania and paragraph 24.5 of the Listing Rules of Nasdaq Vilnius AB,
Amber Grid AB (the “Company”) has disclosed its compliance with the
Corporate Governance Code for the Companies Listed on Nasdaq Vilnius
and its specific provisions or recommendations. In case of non-compliance
with the Code or some of its provisions or recommendations, the specific
provisions or recommendations that are not complied with must be
indicated, the reasons for such non-compliance must be specified, and
other explanatory information indicated in this form must be presented.
1. Summary of the Company’s Corporate Governance Report:
Amber Grid AB is a part of the EPSO-G UAB group of companies (“the
Group”). The Company’s management structure and governance model
are determined by the Company’s Articles of Association, the Corporate
Governance Guidelines of the EPSO-G Group approved on 24 April
2018 by the Ministry of Energy (the ME), the sole shareholder of the
parent company EPSO-G UAB, and the Corporate Governance Policy of
the EPSO-G Group. All these documents are available on the Company’s
official website (www.ambergrid.lt) and the official website of EPSO-G
UAB (www.epsog.lt).
Material events of Amber Grid during 2021
Being a part of the Group does not affect the Company’s independence.
The Company operates independently as it seeks to achieve the objectives
set in the Company’s Articles of Association, and it has the obligation to
independently assess whether compliance with the Group’s corporate
governance documents does not harm the interests of the Company, its
creditors, shareholders or other stakeholders.
The Company’s management structure is as follows:
• The General Meeting of Shareholders;
• The Board (five members, two of whom are independent members, the
other three members are nominated by the shareholder EPSO-G UAB);
• The Committees operating at the Group level:
• The Remuneration and Nomination Committee (mostly independent
members);
• The Audit Committee (mostly independent members);
• The Innovation and Development Committee (mostly independent
members);
• The CEO.
The Group has a centralised internal audit function. In order to ensure
independence of the internal audit, it has been established that the
head of the internal audit function is to be appointed and dismissed
by the Board of EPSO-G UAB, which consists mostly of independent
members. The internal audit function is also accountable to the Audit
Committee, which also consists mostly of independent members. The
internal audit recommendations are analysed by the Company’s Board,
which also approves the plan of measures for implementation of audit
recommendations.
On the basis of the Risk Management Policy of EPSO-G Group, a uniform
risk management system of the Group has been implemented at the
Company according to the COSO ERM standards applicable in a global
practice, which set out the risk identification, assessment and management
principles and responsibilities. Risk management coordination is
performed at the Group level.
The purpose of the Group’s operating policies is to introduce a consistent
and effective organisation management system that helps employees
successfully implement important strategic projects and create value to
local private and business customers in a transparent and effective manner.
To ensure the effectiveness of the operating policies, the Company
annually reports on the progress achieved with the implementation of the
operating policies.
Content
Corporate
governance
principles
and documents
Fulfilment of
functions under
the regulations
of the respective
committees and
structural units
The Republic of Lithuania
(through Ministry of Energy)
Other
Shareholders
EPSO-G
Group companies
Implementation of
the shareholder’s
rights
Implementation of the
shareholder’s rights
Establishment of
principles and
approval of
documents
Operational
compliance
55
ANNEXESCONSOLIDATED ANNUAL REPORT 2021
The operating policies that are currently effective at the Company:
Policy of non-audit services
purchased from an audit
company
Sensitive information
protection policy
Interest management
policy
Personal data
protection policy
Sponsorship
policy
Corruption prevention
policy
Transperency and
communication policy
TRANSPERENCY,
RESPONSIBILITY
Transport
policy
Technological assets
development and
operation policy
Share sale
policy
Policy of transactions
with related parties
Procurement
policy
ITT management
policy
Accounting
policy
Dividend
policy
Treasury and financial
risk policy
FINANCE,
ASSETS
Sustainability
policy
Code
of ethics
Guidelines for conducting
research and experimental
development
Project management
policy
Corporate governance
policy
Risk management
policy
ACTIVITIES, GROUP’S
DEVELOPMENT
Compliance management
policy
Insurance
policy
Integrated planning and
monitoring policy
Centralized internal audit
guidelines for implementation
in the Group
SUPERVISION
OF ACTIVITIES
Recruitment
policy
Employee remuneration,
performance assessment
and training policy
Equal treatment
policy
REMUNERATION, STAFF,
MANAGEMENT
Environmental and
occupational safety and
health policy
The corporate governance report of the state-owned enterprises stipulates
that the Group has implemented and complied with the principles of good
governance. The highest rating A has been awarded to the Group. The
highest rating has been assigned to the applied transparency standards,
formation of collegial bodies and implementation of the strategy. The
Company’s corporate governance has been awarded rating A.
Content
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2. Structured table:
PRINCIPLES/RECOMMENDATIONS
YES/NO/
NOT
APPLICABLE
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 corpo-
rate matters are discussed.
YES
Pursuant to the Law on Companies of the Republic of Lithuania and Chapter IX of the Company’s Arti-
cles of Association, information on general meetings of shareholders being convened, their draft deci-
sions and decisions made is published on the Company’s website and on NASDAQ OMX Vilnius stock
exchange in the Lithuanian and English languages
The Company ensures equal possibilities for the shareholders to vote on the respective decisions made
at the general meeting of shareholders (there is a possibility to vote by ballot or to vote by proxy, etc.).
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 their holders.
YES
The Company’s share capital is divided into ordinary registered shares with the nominal value of EUR
0.29 each. All the shares grant the same rights to voting, ownership, dividend and other rights to their
holders in proportion to the number of shares held. All the shares are intangible and they are recorded
in the personal securities accounts of the shareholders managed by the securities account manager
contracted to manage the share accounting.
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 rights and obligations of the shareholders are stipulated in Chapter IV of the Company’s Articles of
Association that are made available to public.
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
Paragraph 38 of the Company’s Articles of Association specifies the cases when a transaction
requires approval of the Board or the General Meeting of Shareholders.
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 cho-
sen 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
The Company convenes the General Meeting of Shareholders and conducts other meeting
procedures in accordance with the procedure set forth in the Law on Companies of the Republic of
Lithuania.
In addition, each time the General Meeting of Shareholders is convened, the general rights of the
shareholders and the deadlines for exercising such rights are published on the Notice of Convening
the General Meeting of Shareholders and on the Company’s official website.
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1.6. With a view to ensure the right of shareholders living abroad to have access to
the information, it is recommended, where possible, that documents prepared for the
general meeting of shareholders in advance should be made available to public in
advanced not only in Lithuanian but also in English and/or other foreign languages.
It is recommended that the minutes of the general meeting of shareholders after the
signing thereof and/or the decisions adopted should be made available to public
not only in Lithuanian language but also in English and/or other foreign languages. It
is recommended that such information on the official website of the company. Such
documents may be published to the extent that their public disclosure is not detrimental
to the company or that the company’s commercial secrets are not revealed.
YES
The notices of convening the General Meetings of Shareholders, including the venue, date and time
of the meetings, the draft decisions, and information on the decisions made at the General Meetings
of Shareholders are published in the English and Lithuanian languages on the Company‘s official
website and on the official website of NASDAQ Vilnius stock exchange.
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
A notice of convening the General Meeting of Shareholders always indicates a possibility for the
shareholders to vote in writing by filling in the attached form of a voting ballot or to vote by proxy).
1.8. With a view to increase the possibilities for the shareholders to participate effectively
at the general meetings of shareholders, it is recommended that companies apply
modern technologies on a wider scale and thus provide shareholders with the conditions
to participate and vote at the 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.
NO
Given the challenges encountered while ensuring security of the transmitted information and
establishing the identity of the shareholders, such possibilities have not been provided yet to the
shareholders. However, the shareholders are provided with other possibilities to exercise their rights:
to vote in person, to vote by proxy, to vote under the contract on transfer of voting right; to vote in
advance by filling in the general voting ballot.
1.9. It is recommended that the notice on the draft decisions of the general meeting
of shareholders being convened should specify new candidates to members of the
collegial body, their proposed remuneration and the proposed audit firm 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
A notice of convening the General Meeting of Shareholders always specifies the draft decisions
containing information required by the Law on Companies of the Republic of Lithuania, including
new candidatures of members of the collegial bodies, the proposed remuneration, the proposed
audit firm and the proposed audit fee.
1.10. Members of the company’s collegial management body, heads of the
administration
9
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
NO
Relevant competent persons who can provide information related to the agenda of the General
Meeting of Shareholders always attend the General Meeting of Shareholders.
The proposed candidates to the members of the collegial bodies do not always attend the General
Meetings of Shareholders.
9
For the purposes of this Code, heads of 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.
Not
applicable
Supervisory board is not formed at the Company.
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.
Not
applicable
Supervisory board is not formed at the Company.
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.
Not
applicable
Supervisory board is not formed at the Company.
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
10
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.
Not
applicable
Supervisory board is not formed at the Company.
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.
Not
applicable
Supervisory board is not formed at the Company.
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.
Not
applicable
Supervisory board is not formed at the Company.
10
For the purposes of this Code, the criteria of independence of the mem¬bers of the supervisory board are interpreted as the
criteria of unre¬lated parties defined in Article 31(7) and (8) of the Law on Companies of the Republic of Lithuania.
PRINCIPLES/RECOMMENDATIONS
YES/NO/
NOT
APPLICABLE
COMMENTARY
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OVERVIEW
2.2. Formation of the supervisory board
The procedure of 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.
Not applicable
Supervisory board is not formed at the Company.
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.
Not applicable
Supervisory board is not formed at the Company.
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.
Not applicable
Supervisory board is not formed at the Company.
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.
Not applicable
Supervisory board is not formed at the Company.
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.
Not applicable
Supervisory board is not formed at the Company.
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.
Not applicable
Supervisory board is not formed at the Company.
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 organisation
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 operational procedures.
Not applicable
Supervisory board is not formed at the Company.
PRINCIPLES/RECOMMENDATIONS
YES/NO/
NOT
APPLICABLE
COMMENTARY
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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
Paragraph 36 of the Company‘s Articles of Association stipulates the power of the Company‘s Board to
approve the Company‘s strategy and supervise its implementation.
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
Paragraph 7.3 of the Company‘s Articles of Association stipulates that the Company‘s Board undertakes
the supervisory functions. As the Board fulfils the functions assigned to it, it takes into account the
needs of the Company, shareholders, employees and other stakeholders.
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.
TAIP
Paragraph 36(xi) of the Company’s Articles of Association stipulates that the Company’s Board
deliberates upon the Group documents (guidelines, policies, procedures, etc.) and decides on the
extent of their adoption at the Company.
The Board ensures and monitors regularly that the documents approved by it (strategy, budget,
business plans, risk management measures plan, etc.) are implemented at the Company.
3.1.4. Moreover, the management board should ensure that the measures included into
the OECD Good Practice Guidance
11
on Internal Controls, Ethics and Compliance are
applied at the company in order to ensure adherence to the applicable laws, rules and
standards.
TAIP
The Company‘s Board ensures and monitors implementation of internal controls, ethics and
compliance measures as follows:
- there is an internal audit function at the group level;
- the Audit Committee is formed at the group level, mostly consisting of independent members, with
the internal audit function accountable to it;
- The Company applies the Code of Conduct, the Corruption Prevention Policy of EPSO-G UAB Group,
the Sponsorship and Charity Policy of EPSO-G UAB Group, the Policy of Management of Interests
of EPSO-G UAB Group, the Risk Management Policy of EPSO-G UAB Group, the Transparency
and Communication Policy of EPSO-G UAB Group, the Compliance Management Policy and
Methodology of EPSO-G UAB Group, etc.
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 the Board appoints the head of the Company, it follows the procedure approved by Resolution
of the Government of the Republic of Lithuania for the selection of candidates to a collegial supervisory
or management body of a state-owned or municipal enterprise or of a company or its subsidiary
owned by a state-owned or municipal enterprise, also takes into account the recommendation of the
Remuneration and Nomination Committee, and the appropriate balance between the candidate‘s
qualification, experience and competence.
Paragraph 57 of the Company’s Articles of Association stipulates that when the Board assesses the
suitability of the candidate for the position of the General Manager, the Board shall consider the
candidate‘s compliance with the requirements specified in the Articles of Association and legal acts,
and for that purpose may require that the candidate submit documents supporting such compliance
and/or may contact competent authorities for obtaining the necessary information about the candidate.
11
Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance:
https://www.oecd.org/daf/anti-bribery/44884389.pdf
Content
PRINCIPLES/RECOMMENDATIONS
YES/NO/
NOT
APPLICABLE
COMMENTARY
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3.2. Formation of the management board
3.1.1. 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 collec-
tively ensure the required diversity of qualifications, professional experience and compe-
tences 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
Paragraph 28 of the Company’s Articles of Association stipulates that in the process of selection of the Board
members it is ensured that the Board consists of at least 2 (two) independent members. Their independence
is established in accordance with the criteria laid down in the Corporate Governance Code and the Policy for
Management of Interests of Members of Collegial Bodies, Executives and Employees of the Group, as well
as the requirements set forth in other applicable legal acts. It is ensured that at least 3 (three) members of the
Board have no employment relationship with the Company and, where possible, it is aimed that employees
of the Company are not appointed to the Board and that the Board members have competences that are
required in the areas of responsibility and functions of the Board.
The selection of the Company’s Board members is carried out by the Remuneration and Nomination Commit-
tee in accordance with the approved matrix of the Board competences.
The Board members perform self-assessment of their activities annually. In addition, the Remuneration and
Nomination Committee evaluates the performance of the Board on an annual basis and provides recommen-
dations on performance improvement.
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 person-
al 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 report.
YES
Information is announced in the interim and annual reports of the Company that are made available to
public on the official website of the Company.
3.2.3. All new members of the management board should be familiarised with their duties
and the structure and operations of the company.
YES
The Board members are introduced to their duties, the structure and activities of the Company by
sharing with them the Company‘s corporate documents – a set of such documents is sent by email to
the newly elected Board members.
3.2.4. Members of the management board should be appointed for a specific term, sub-
ject to individual re-election for a new term in office in order to ensure necessary devel-
opment of professional experience and sufficiently frequent reconfirmation of their status.
YES
Paragraph 27 of the Company’s Articles of Association stipulates that the Board is a collegial manage-
ment body of the Company consisting of 5 members. The Board members are elected for an office
term of 4 years by the General Meeting of Shareholders, to which the Board is accountable, by taking
into account recommendations of the Remuneration and Nomination Committee. The Board member
may serve the maximum period of 2 full terms of office in a row without any interruption, i.e. no longer
than 8 years in a row.
3.2.5. Chair of the management board should be a person, whose current or past posi-
tions 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 rec-
ommendations, it should furnish information on the measures it has taken to ensure the
impartiality of supervision.
YES
Paragraph 29 of the Company’s Articles of Association stipulates the criteria prohibiting a person to be
elected as a member of the Board.
One of the measures for ensuring impartiality of the chairperson of the Board is established in para-
graph 46 of the Company’s Articles of Association, which states that the chairperson of the Board
cannot be elected from among the Company’s employees who were elected to the Company’s Board.
3.2.6. Each member should devote sufficient time and attention to perform his duties as a
member of the management board. Should a member of the management board attend
less than a half of the meetings of the management board throughout the financial year
of the company, the supervisory board of the company or, if the supervisory board is not
formed at the company, the general meeting of shareholders should be notified thereof.
YES
The Board members actively attend the meetings, and the minutes of the meetings provide records of
attendance and voting by the Board members during the decision-making process. During 2021, none
of the Board members, who was elected and performing the duties, missed any of the Board meetings.
As stipulated in paragraph 52 of the Company’s Articles of Association, each year the Board members
perform a self- assessment of their activities, the results of which are submitted to the shareholders
and the Remuneration and Nomination Committee. Attendance at the Board meetings by the Board
members is disclosed in the annual report.
Content
PRINCIPLES/RECOMMENDATIONS
YES/NO/
NOT
APPLICABLE
COMMENTARY
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3.2.7. 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
12
, 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
The Company’s official website and the annual report contain information about the Company‘s Board
members, with specific indication of which members are independent.
At each Board meeting, the Board members are required to declare whether the agenda contains any
issues that might give rise to conflict of interests.
3.2.8. 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 participa-
tion in the meetings of the management board.
YES
The General Meeting of Shareholders decides on the amount and guidelines of remuneration of the
Board members. Based on the decision of the General Meeting of Shareholders, a fixed monthly pay
for service at the Board and for activities at the group’s committees has been set only for independent
Board members.
3.2.9. 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
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.
YES
Taking into account the objective to monitor the absence of conflicts of interest of the Company‘s
Board members, each year the Board members update their declarations of interests, and the inde-
pendent members are assessed for their independence.
In addition, paragraph 33 of the Company’s Articles of Association stipulates that the Board members
may be employed elsewhere or hold other job position compatible with their activities in the Board,
including but not limited to executive positions in other legal entities, a job in a state or statutory ser-
vice, duties at the Company and other legal entities (in view of the restrictions set in paragraph 29 of
the Articles of Association), as well as in legal entities where the Company or the parent company acts
as a member, only by providing a prior notice to the Company’s Board.
The Company has adopted the Policy of Management of Interests of Members of Collegial Bodies,
Executives and Employees of EPSO-G Group.
The Board members have signed non-disclosure agreements to protect confidential information.
No-compete agreements are not concluded with the Board members. The need for such agreements
was not established because the Company operates in a monopoly business.
3.2.10 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 organisation
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
The Board carries out a self-assessment of its activities annually, and on its basis prepares a perfor-
mance improvement plan.
In addition, the Remuneration and Nomination Committee and the Audit Committee, which act at
EPSO-G UAB Group level, evaluate annually the decisions made by the Board and provide recom-
mendations on performance improvement.
The results of assessment of the Board’s activities are presented in the Company’s annual report.
12
For the purposes of this Code, the criteria of independence of the members of the board are understood 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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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 the supervisory board about any derogations in its
business development from the previously formulated plans and objectives by specifying
the reasons for this.
Not applicable
The Supervisory Board is not formed at 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 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.
YES
Paragraph 45 of the Company’s Articles of Association stipulates that the Board makes its decisions
at the Board meetings that are usually convened as often as necessary for the Board to be able to
properly perform its functions and make decisions within its authority, however, not less than 12 times
during a calendar year.
At the end/beginning of each year, the Company’s Board approves the schedule and activity plan (a
preliminary agenda for the respective Board meeting) for the upcoming/current year.
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 Board‘s work is organised in line with the Board‘s Work Regulations governing the matters of
convening a meeting, communication and material sharing with the Board members, and other
procedural issues.
The Company‘s Board follows the recommendation related to changes in 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.
Not applicable
The Supervisory Board is not formed at the Company.
Content
PRINCIPLES/RECOMMENDATIONS
YES/NO/
NOT
APPLICABLE
COMMENTARY
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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.
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
13
.
YES
The Company has the Remuneration and Nomination Committee at the Group level, which is formed by the
Board of EPSO-G UAB and acts in accordance with the regulations approved by the body that forms it, and
the Audit Committee at the Group level, which is formed by the sole shareholder EPSO-G UAB and acts in
accordance with the regulations approved by the body that forms it.
Given that the matters of remuneration and nomination are closely interrelated, and that the same expert
qualification is required to address those matters, it was decided to form a single Remuneration and
Nomination Committee.
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.
YES
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.
Not applicable
See 5.1.1.
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
Paragraphs 7.8 and 7.9 of the Articles of Association of EPSO-G UAB regulate the formation of committees
at EPSO-G group level and the areas of their competence. The Articles of Association stipulate that the
Remuneration and Nomination Committee and the Audit Committee shall consist of not less than three
members.
It is ensured that at least one member from all three members of the Remuneration and Nomination Committee
are independent, and at least two members from all three members of the Audit Committee are independent.
Not all members of the Remuneration and Nomination Committee and the Audit Committee are appointed
from the Board of EPSO-G. One member to each of the Committees is appointed on the basis of competence
through an external selection procedure of an independent member to 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 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.
YES
YES
The powers of the Committees are determined in the Articles of Association of EPSO-G UAB and under
the decision of the body forming the Committee – the Regulations of the Remuneration and Nomination
Committee are approved by the decision of the Board of EPSO-G UAB, and the Regulations of the Audit
Committee are approved by the decision of the sole shareholder EPSO-G UAB, as it is permitted by the
Requirements for Members of the Audit Committee approved by the Bank of Lithuania (Article 5).
The Regulations of the Committees are available on EPSO-G UAB website. Information about the composition,
activities of the Committees and other information is presented in the Group’s consolidated annual report.
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 Regulations of the Committees provide for the right of the members of the Committees to invite, at
their discretion, to their meetings the members of the bodies of EPSO-G UAB Group companies, employees,
authorised representatives, candidates to certain positions or other persons, and to obtain from them the
necessary explanations within their competence, as well as to require for that purpose to carry out the actions
necessary to fulfil the functions of the Committees.
13
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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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.
YES
The Remuneration and Nomination Committee of EPSO-G UAB serves as an advisory body to the
Board of EPSO-G UAB and to the Company’s Board. The main functions of the Committee are as
follows:
- assistance in the selection of candidates to members of the bodies in all the group companies;
- provision of recommendations for the group companies on appointment of members to the
management bodies, conclusion of contracts with them and determination of remuneration for them;
- provision of recommendations on the policies of the group companies that govern the remuneration
policy and employee performance assessment;
- provision of recommendations on the system for succession planning in the critical job positions.
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.
YES
The Regulations stipulate that the right of initiative to convene the Remuneration and Nomination
Committee is exercised by the boards or heads of the group companies who also propose the agenda
of the meeting by submitting materials and draft resolutions related to the agenda matters.
Currently, the Company’s Board has no members who have employment relations with the Company.
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5.3. Remuneration committee.
The main functions of the remuneration committee should be the following:
1) submit to the collegial body proposals on the remuneration policy applied to mem-
bers 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 ar-
rangements and termination payments as well as conditions which would allow the com-
pany to recover the amounts or suspend the payments by specifying the circumstances
under which it would be expedient to do so;
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.
YES
The Company has a single Remuneration and Nomination Committee, with functions described in
detail in 5.2.1.
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
14
.
YES
The Audit Committee of EPSO-G UAB acts as an advisory body to the Board of EPSO-G UAB and to the
Company’s Board. The main functions of the Committee are as follows:
- supervision of preparation and audit of financial statements of the Group companies;
- responsibility for ensuring compliance by the auditors and audit firms of the Group companies with
the principles of independence and objectivity;
- responsibility for the supervision of effectiveness of internal controls, risk management and internal
audit systems of the Group companies;
- responsibility for control over provision of non-audit services by the auditor and/or audit firm of the
Group companies;
- ensuring the functioning of the complaints system and handling of complaints;
- evaluation of transactions with related parties.
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 sub-
ject to different approaches.
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 Regulations of the Audit Committee stipulate that the members of the Committee, at their own
discretion, may invite to their meetings the members of the bodies of the Group companies, their em-
ployees, authorised representatives, candidates to certain positions or other persons, and obtain from
them the necessary explanations within their competence, as well as require for that purpose to take
actions that are necessary to fulfil the functions of the Committee.
14
Matters 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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5.4.4. The audit committee should be informed about the internal auditor’s work pro-
gramme and should be furnished with internal audit reports or periodic summaries. The
audit committee should also be informed about the work programme of external audi-
tors and should receive from the audit firm a report describing all relationships between
the independent audit firm and the company and its group.
YES
See 5.4.3.
The Audit Committee organises a meeting with the auditors to discuss the audit plan.
5.4.5. The audit committee should examine whether the company complies with the ap-
plicable provisions regulating the possibility of lodging a complaint or reporting anony-
mously 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 investi-
gation of such issues and appropriate follow-up actions.
YES
The Audit Committee ensures the functioning of the complaints system and the handling of com-
plaints.
5.4.6. The audit committee should submit to the supervisory board or, where the supervi-
sory 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 Regulations of the Audit Committee stipulate that the Audit Committee submits quarterly activity
reports to the Board.
In addition, it submit a consolidated activity report to the Ordinary General Meeting of Shareholders
and to the Board of EPSO-G UAB.
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.
The corporate governance framework should recognise the rights of stakeholders established in the laws and encourage active cooperation between the company 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.
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
This obligation is set out in paragraphs 57-58 of the Company’s Articles of Association, the Regulations
of the management bodies, and the Policy of Management of Interests of Members of Collegial Bod-
ies, Executives and Employees of EPSO-G Group.
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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 applies the Guidelines for Determining the Remuneration for Service at the Bodies
of EPSO-G UAB and EPSO-G UAB Group Companies, which are approved by the sole shareholder
EPSO-G UAB and are available to public.
The Company applies in full EPSO-G Group’s Remuneration, Performance Appraisal and Training
Policy. The Remuneration Policy is available to public.
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
These forms of remuneration are defined in the Remuneration, Performance Appraisal and Training
Policy of EPSO-G Group.
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
The Company applies the Guidelines for Determining the Remuneration for Service at the Bodies of
EPSO-G UAB and EPSO-G UAB Group Companies, which define a fixed remuneration for independent
members of the collegial bodies. The members of the Board do not receive remuneration (bonuses)
based on the Company’s performance.
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 com-
ponent of remuneration for two years or the equivalent thereof. Termination payments
should not be paid if the contract is terminated due to inadequate performance.
NO
The Remuneration, Performance Appraisal and Training Policy of EPSO-G UAB Group stipulates that
the Group companies do not enter into advance agreements on the amounts of termination benefits
(except for the heads of the companies whose terms of employment are determined by the Board).
The amounts of termination benefits are determined by taking into account the mandatory minimum
amounts of such benefits established by the provisions of labour law, except for exceptional cases
when there are objective reasons for the agreement on higher amounts of benefits. The Board of the
Company shall be informed about the payment of such benefits and the grounds for their payment
during the upcoming meeting
7.5. In the event that the financial incentive scheme is applied at the company, the remu-
neration 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 colle-
gial 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.
NOT
APPLICABLE
No such schemes are applied at the Company.
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Principle 8: Role of stakeholders in corporate governance
The corporate governance framework should recognise the rights of stakeholders entrenched in the laws or mutual agreements and encourage active cooperation between the company 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 inter-
ests of stakeholders are protected.
YES
The Company applies the Transparency and Communication Policy of EPSO-G UAB Group, which
stipulates goals to increase awareness and understanding of stakeholders about the activities of EP-
SO-G UAB Group and individual Group companies; to ensure employee engagement; to create and
maintain sustainable relationship with stakeholders based on mutual trust.
8.2. The corporate governance framework should create conditions for stakeholders to
participate in corporate governance in the manner prescribed by law. Examples of partic-
ipation 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 oth-
er important matters, participation of employees in the company’s authorised capital, in-
volvement of creditors in corporate governance in the cases of the company’s insolvency,
etc.
YES
The Company, together with the representatives of the Company’s employees, conducts consulta-
tions, negotiations and briefings on the processes for improving efficiency of the Company’s opera-
tions. Under the Company’s collective agreement signed with the representatives of the Company’s
employees, the Company informs the representatives of the trade unions about the anticipated chang-
es in the Company, the Company’s financial position, etc
The stakeholders can take part in the corporate governance to the extent permitted by law.
8.3. Where stakeholders participate in the corporate governance process, they should
have access to relevant information.
YES
The stakeholders are provided with the conditions to familiarise themselves with the required infor-
mation.
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.
YES
The Company’s Trust Line contacts are available to public on the Company’s official website. The
contacts can be used by the stakeholders to report any incidents of violation of environmental, oc-
cupational health and safety requirements, unethical or inappropriate work practices, violation of
anti-corruption requirements. The stakeholders are introduced to the possibility to contact directly
the head of the Company or the chairperson of the Board.
7.6. The company should publish information about the implementation of the remu-
neration 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.
YES
General information on the implementation of the Remuneration Policy and average salary levels by
each category of employees are disclosed to public in the Company’s annual report.
According to Article 25(5) of the Law on Energy of the Republic of Lithuania, the Company discloses
remuneration of the members of the Company’s management bodies, and other benefits related to
the functions of the members of the management bodies.
Information on remuneration of employees is made available to public on the Company’s official web-
site on a quarterly basis.
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.
YES
NO
The remuneration of the members of the Company’s Board is determined by the General Meeting of
Shareholders of the Company.
When determining the remuneration, the Company follows the Guidelines for Determining the Remu-
neration for Service at the Bodies of EPSO-G UAB and EPSO-G Group Companies, which are approved
by the sole shareholder EPSO-G UAB.
No such schemes are applied at the Company.
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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 Company applies the Transparency and Communication Policy of EPSO-G UAB Group,
based on which the essential financial and non-financial information is disclosed to public in the
Company’s interim and annual report and on the Company’s official website.
9.2. operating and financial results of the company;
YES
Information is disclosed to public in the Company’s interim and annual report and on the Company’s
official website.
9.3. objectives and non-financial information of the company;
YES
Information is disclosed to public in the Company’s interim and annual report and on the Company’s
official website.
9.4. 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;
YES
Information is disclosed to public in the Company’s interim and annual report and on the Company’s
official website.
9.5. 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;
YES
Information is disclosed to public in the Company’s interim and annual report and on the Company’s
official website.
9.6. 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;
YES
Information is disclosed to public in the Company’s interim and annual report and on the Company’s
official website.
9.7. potential key risk factors, the company’s risk management and supervision policy;
YES
Information is disclosed to public in the Company’s interim and annual report and on the Company’s
official website.
9.8. the company’s transactions with related parties;
YES
Information is disclosed to public in the Company’s interim and annual report and on the Company’s
official website.
9.9. 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.);
YES
Information is disclosed to public in the Company’s interim and annual report and on the Company’s
official website.
9.10. structure and strategy of corporate governance;
YES
Information is disclosed to public in the Company’s interim and annual report and on the Company’s
official website.
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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 position and
financial performance 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
The Company‘s financial information is audited by an independent audit firm.
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 Audit Committee operating at the Group level takes part in the selection process of an auditor,
by recommending a candidate for the independent auditor to the Company’s Board. As the Board
assesses the candidate proposed by the Audit Committee, it proposes the candidate for the approval
by 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
The fee for non-audit services received by the audit firm is made available to public by the Company.
The audit firm provides non-audit services in accordance with EPSO-G UAB Group Policy for
Procurement of Non-audit Services from an Audit Firm or any Member Firm of the Network of the
Auditor, approved by the Audit Committee of EPSO-G UAB of from an audit firm or from any other
firm that is part of the audit firm network. The latter policy is approved by the Audit Committee.
The provision of non-audit services is supervised by the Audit Committee operating at the Group
level, which has in its disposal of the necessary information about the auditor as it recommends a
candidate for the independent auditor to the Board.
9.11. initiatives and measures of social responsibility and anti-corruption policy, 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.
YES
Information is disclosed to public in the Company’s interim and annual report and on the Company’s
official website.
9.12. When disclosing the information specified in Item 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
EPSO-G UAB, as a parent company, discloses consolidated information in the consolidated annual
report.
9.13. When disclosing the information specified in Item 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
Information is disclosed to public in the Company’s interim and annual report and on the Company’s
official website.
9.14. 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 provides information through the information disclosure system of NASDAQ Vilnius
Stock Exchange in Lithuanian and English languages simultaneously. The Company discloses
information prior to or after a trading session at NASDAQ Vilnius Stock Exchange and presents it
simultaneously to all the markets in which the Company’s stock is traded. The Company does not
disclose information that may affect the price of its stock in any comments, interviews or by any other
means until such information is provided through the information disclosure system of the stock
exchange.
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Annex 3
Information on compliance with the
transparency guidelines
EPSO-G UAB and its subsidiaries comply
15
with Resolution No 1052
of 14 July 2010 of the Government of the Republic of Lithuania On the
approval of the description of guidelines for ensuring the transparency
of state-owned enterprises (“the Transparency Guidelines”). The
application of the Transparency Guidelines is mandatory to EPSO-G as it
is a state-owned enterprise (“the SOE”). In order to ensure compliance
with the Transparency Guidelines across EPSO-G Group, the Business
Transparency and Communication Policy of EPSO-G Group was approved
at the Group level, which considers in detail the requirements set forth
in the Transparency Guidelines, and defines their applicability to EPSO-G
Group companies.
Implementation of the Transparency Guidelines is largely ensured by
Amber Grid AB through disclosure of information in the annual report and
on the official website of Amber Grid, where information is disclosed in
the format that is acceptable and comprehensible to the stakeholders.
Article 3 of the Transparency Guidelines stipulates that the SOE complies
with the provisions of the Corporate Governance Code for the Companies
Listed on Nasdaq Vilnius AB
16
that are related to public disclosure of
information. Information on how Amber Grid complies with the provisions
of the Code is provided in Annex 2 to Amber Grid‘s Annual Report -
Amber Grid Notice of Compliance with the Corporate Governance Code
for the Companies Listed on Nasdaq Vilnius AB :
15
Under Article 17.11 of the Transparency Guidelines, in the event of failure
to comply with the Transparency Guidelines, the reasons for such non-
compliance must be explained.
16
Corporate Governance Code for the Companies Listed on Nasdaq Vilnius
approved at the Board meeting of Nasdaq Vilnius AB on 15 January 2019,
Minutes No 19-63.
The following information must be published/other requirements must be implemented on the official website of Amber Grid (www.ambergrid.lt):
Company’s name, code, registered address, and a register in which data on the Company is compiled and stored Implemented
Legal form, in case Amber Grid is restructured, reorganised (the way of reorganisation is to be indicated), under liquidation, in the
process of bankruptcy or bankrupt
Not applicable
Information on the authority representing the State, i.e. the Ministry of Energy, and link to its official website
Implemented
Goals, vision and mission of the activities Implemented
Structure Implemented
Data on the chief executive officer* Implemented
Data on the chairperson and members of the board*
Implemented
Data on the chairperson and members of the supervisory board* Not applicable
Names of the committees, data on their chairperson and members* Not applicable
* The following data must be provided: name, surname, start date of the term of office, other executive positions in other legal entities, education, qualification,
and professional experience; indication of whether a member of a collegial body has been elected or appointed as an independent member.
Sum of the nominal values (in euros and cents) of shares and interest (in percentage) held by the State in the share capital of Amber
Grid under the title of ownership
Implemented
Implementation of special obligations established under the recommendations approved by the Minister of Economy and Innova-
tions of the Republic of Lithuania: the purpose of special obligations, budget allocations in the current calendar year for fulfilment of
special obligations, and the legal acts under which the SOE is assigned to fulfil special obligation, the terms for fulfilment of special
obligation and/or the regulated pricing
Implemented
Information on initiatives and measures of social responsibility, significant ongoing or planned investment projects Implemented
If Amber Grid is a member of other legal entities (not applicable to subsidiaries and second-tier subsidiaries), the name, code, and
register in which data on the Company is compiled and stored, registered address, and official websites of such legal entities
Not applicable
A set of Amber Grid annual financial statements, Amber Grid annual report, as well as an auditor’s report on Amber Grid annual
financial statements must be placed on Amber Grid official website within 10 working days from the date of approval of the set of
annual financial statements
Implemented
The sets of Amber Grid interim financial statements and Amber Grid interim reports must be placed on the official website not later
than within 2 months after the end of the reporting period
Implemented
Since Amber Grid is a subsidiary, the following additional information must be provided on Amber Grid official website (www.ambergrid.lt):
Amber Grid group structure Implemented
Information on subsidiaries and second-tier subsidiaries of Amber Grid:
Company’s name, code, registered address, and a register in which data on the Company is compiled and stored Implemented
Official website addresses Implemented
Amber Grid‘s interest (percentage) held in the share capital of the companies Implemented
Annual consolidated financial statements and consolidated annual reports Implemented
Content
73
ANNEXESCONSOLIDATED ANNUAL REPORT 2021
The following documents must be provided/other requirements must be implemented on Amber Grid official website (www.ambergrid.lt):
Amber Grid‘s Articles of Association Implemented
Official Letter of the Ministry of Energy on determining the State’s goals and expectations for Amber Grid Not applicable
Operational strategy or its summary in cases when operational strategy contains confidential information or information that is treated as a commercial (industrial) secret Implemented
Remuneration policy that covers determination of remuneration for CEO and members of collegial bodies and committees of Amber Grid Implemented
Amber Grid annual and interim reports Implemented
The sets of annual and interim financial statements, and auditor‘s reports thereon for at least 5 years Implemented
The above-mentioned documents must be provided in a PDF format with a technical possibility to be printed out Implemented
The following information must be provided/other requirements must be implemented in the sets of financial statements:
Amber Grid keeps its accounting records in a way that ensures preparation of the financial statements in accordance with the International Accounting Standards
Implemented
Amber Grid prepares a set of financial statements for the period of 6 months. Implemented
In addition to annual report, Amber Grid prepares an interim report for the period 6 months. Implemented
In addition to the content requirements set in the Law on Financial Reporting by Undertakings of the Republic of Lithuania, the following information must be disclosed by Amber Grid
17
:
Brief description of Amber Grid’s business model Implemented
Information on significant events occurring during the financial year and after the end of the financial year (until the date of preparation of annual report) that had material impact on the activities of Amber Grid Implemented
Results of implementation of the objectives set in the operational strategy Implemented
Profitability, liquidity, asset turnover, and debt ratios Implemented
Implementation of special obligations Implemented
Implementation of the investment policy, ongoing and planned investment projects, and investments implemented during the reporting year Implemented
Implementation of the risk management policy applied by Amber Grid Implemented
Implementation of the dividend policy Implemented
Implementation of the remuneration policy Implemented
Total annual payroll fund, average monthly salary by category of employees and/or business units Implemented
The SOEs that are not required to prepare the social responsibility report, are recommended to provide information related to environmental, social and personnel, human rights, anti-corruption and anti-bribery
matters in their annual report or annual activity report
Implemented
The consolidated annual report includes the following information: structure of the group, name, code and register in which data on the company is compiled and stored, registered address of each of the group
companies, interest (percentage) held in the share capital of a subsidiary, financial and non-financial performance during the financial year
Implemented
The interim report of Amber Grid includes the following information: a brief description of Amber Grid’s business model, analysis of financial performance during the reporting period, information on significant events
occurring during the reporting period, profitability, liquidity, asset turnover and debt ratios and changes therein compared to the respective period in the previous year
Implemented
17
When information is treated as a commercial (industrial) secret or as confidential information of the SOE, the SOE is allowed not to disclose
such information; however, in its annual report the SOE must indicate such non-disclosure and provide the reasons for non-disclosure.
Content
74
ANNEXESCONSOLIDATED ANNUAL REPORT 2021
AMBER GRID AB
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS,
CONSOLIDATED ANNUAL AND THE INDEPENDENT
AUDITOR’S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
Translation note:
This version of the accompanying documents 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 the accompanying documents takes precedence over this translation.
75
CONSOLIDATED ANNUAL REPORT 2021
Consolidated and separate statement of financial position (All amounts are in EUR ’000 unless otherwise stated)
Notes
Group Company
At 31 December At 31 December At 31 December At 31 December
2021 2020 2021 2020
ASSETS
A. Non-current assets 272,087 255,757 272,202 255,649
I. Intangible assets 5 4,742 4,833 4,210 4,189
II. Property, plant and equipment 6 255,984 241,624 255,978 241,620
II.1. Land 125 125 125 125
II.2. Buildings 6,529 5,427 6,529 5,427
II.3. Structures and equipment 199,940 146,003 199,940 146,003
II.4. Plant and machinery 37,143 34,583 37,143 34,583
II.5. Motor vehicles 373 542 373 542
II.6. Other PP&E 4,066 3,171 4,060 3,167
II.7. Construction work in progress 6 7,808 51,773 7,808 51,773
III. Right-of-use assets 8 3,849 2,335 3,737 2,204
IV. Non-current financial assets 7 4 4 769 675
IV.1. Investment in subsidiary - - 769 675
IV.2. Non-current trade receivables 10 - - - -
IV.3. Other non-current financial assets 4 4 - -
V. Deferred income tax assets 23 7,508 6,961 7,508 6,961
B. Current assets 108,127 60,614 46,318 49,144
I. Inventories and prepayments 8,818 2,626 8,801 2,611
I.1. Inventories 9 8,101 1,897 8,101 1,897
I.2. Prepayments 717 729 700 714
II. Amounts receivable 45,946 47,377 35,257 45,356
II.1. Trade receivables 10 21,424 7,870 10,736 5,851
II.2. Other amounts receivable 10 24,522 39,507 24,521 39,505
III. Prepaid income tax 943 1,171 943 1,171
IV. Other financial assets 11 51,514 8,673 1,305 3
V. Cash and cash equivalents 12 906 767 12 3
Total assets 380,214 316,371 318,520 304,793
(cont’d on the next page)
The accompanying notes form an integral part of these financial statements.
76
CONSOLIDATED ANNUAL REPORT 2021
Consolidated and separate statement of financial position (continued) (All amounts are in EUR ’000 unless otherwise stated)
Notes
Group Company
At 31 December At 31 December At 31 December
At 31 Decem-
ber
2021 2020 2021 2020
EQUITY AND LIABILITIES
C. Equity 178,040 154,830 177,573 154,410
I. Share capital 51,731 51,731 51,731 51,731
II. Reserves 13 102,715 74,638 102,678 74,638
II.1. Legal reserve 5,210 5,173 5,173 5,173
II.2. Other reserves 97,505 69,465 97,505 69,465
III. Retained earnings (deficit) 23,594 28,461 23,164 28,041
D. Amounts payable and liabilities 202,174 161,541 140,947 150,383
I. Amounts payable after one year and non-current liabilities 97,661 107,506 97,578 107,396
I.1. Non-current borrowings 14 91,391 101,565 91,391 101,565
I.2. Lease liabilities 15 3,494 1,953 3,411 1,843
I.3. Contract liabilities 16 1,305 1,337 1,305 1,337
I.4. Long-term employee benefits 17 530 509 530 509
I.5. Deferred income tax liability - - - -
I.6. Other non-current liabilities - - - -
I.7. Provisions 17 941 2,142 941 2,142
II. Amounts payable within one year and current liabilities 104,513 54,035 43,369 42,987
II.1. Current borrowings 14 3,284 7,852 3,284 7,852
II.2. Current portion of non-current borrowings 14 10,174 10,174 10,174 10,174
II.3. Current portion of lease liabilities 15 432 410 401 387
II.4. Current portion of non-current employee benefits 17 72 39 72 39
II.5. Trade payables 18 32,476 10,429 8,439 8,151
II.6. Advance amounts received and contract liabilities 19 37,284 8,558 829 312
II.7. Income tax liability 86 51 - -
II.8. Employment-related liabilities 2,943 2,140 2,826 2,054
II.9. Other amounts payable and current liabilities 20 16,546 14,345 16,128 13,981
II.10. Provisions 17 1,216 37 1,216 37
Total equity and liabilities 380,214 316,371 318,520 304,793
The accompanying notes form an integral part of these financial statements.
77
CONSOLIDATED ANNUAL REPORT 2021
Consolidated and separate statement of profit or loss (All amounts are in EUR ’000 unless otherwise stated)
Notes
Group Company
2021 2020 2021 2020
I. Revenue 4,21 68,595 52,286 66,973 50,831
II. Expenses (45,381 ) (37,337 ) (44,448 ) (36,674 )
II.1. Natural gas costs (11,268 ) (6,345 ) (11,268 ) (6,345 )
II.2. Depreciation and amortisation (12,057 ) (11,126 ) (11,882 ) (10,934 )
II.3.
Employee benefits and related social security con-
tributions
(11,387 ) (10,254 ) (10,937 ) (9,905 )
II.4. Repair and technical maintenance expenses (3,561 ) (3,405) (3,561 ) (3,405
II.5. Taxes other than income tax (2,320 ) (1,954 ) (2,318 ) (1,953 )
II.6. Telecommunications and IT system expenses (1,715 ) (1,561 ) (1,625 ) (1,483 )
II.7. Other expenses (3,073 ) (2,692 ) (2,857 ) (2,649 )
III. Operating profit (loss) 4 23,214 14,949 22,525 14,157
IV. Financing activity 22 (437 ) (363 ) 92 (360 )
IV.1. Finance income 2 3 480 3
IV.2. Finance costs (439 ) (366 ) (388 ) (363 )
V. Profit (loss) before income tax 4 22,777 14,586 22,617 13,797
VI. Income tax expenses 4,23 434 3,584 547 3,635
VI.1. Current year income tax expenses (113 ) (98 ) - (47 )
VI.2. Deferred income tax 547 3,682 547 3,682
VII. Net profit (loss) 4 23,211 18,170 23,164 17,432
Basic and diluted earnings (loss) per share (EUR) 24 0,.13 0.10 0.13 0.10
The accompanying notes form an integral part of these financial statements.
78
CONSOLIDATED ANNUAL REPORT 2021
Consolidated and separate statement of comprehensive income (All amounts are in EUR ’000 unless otherwise stated)
Notes
Group Company
2021 2020 2021 2020
I. Net profit (loss) 4 23,211 18,170 23,164 17,432
II. Other comprehensive income - - - -
II.1.
Comprehensive income that will be reclassified subse-
quently to profit or loss
II.2
Comprehensive income that will not be reclassified sub-
sequently to profit or loss
III. Total comprehensive income (loss) 23,211 18,170 23,164 17,432
The accompanying notes form an integral part of these financial statements.
79
CONSOLIDATED ANNUAL REPORT 2021
Consolidated statement of changes in equity (All amounts are in EUR ’000 unless otherwise stated)
Group Share capital Legal reserve Other reserves
Retained earn-
ings
Total
Balance at 31 December 2019 51,731 5,173 69,465 10,291 136,660
Reserves established - - - - -
Dividends approved - - - - -
Total transactions with owners - - - - -
Net profit (loss) for the period - - - 18,170 18,170
Other comprehensive income - - - - -
Total comprehensive income (loss) for the period - - - 18,170 18,170
Balance at 31 December 2020 51,731 5,173 69,465 28,461 154,830
Reserves established - 37 28,040 (28,077 ) -
Dividends approved - - - - -
Total transactions with owners - 37 28,040 (28,077 ) -
Net profit (loss) for the period - - - 23,211 23,211
Other comprehensive income - - - - -
Total comprehensive income (loss) for the period - - - 23,211 23,211
Balance at 31 December 2021 51,731 5,210 97,505 23,594 178,040
The accompanying notes form an integral part of these financial statements.
80
CONSOLIDATED ANNUAL REPORT 2021
Separate statement of changes in equity (All amounts are in EUR ’000 unless otherwise stated)
Company Share capital Legal reserve Other reserves Retained earnings Total
Balance at 31 December 2019 51,731 5,173 69,465 10,609 136,978
Reserves established - - - - -
Dividends approved - - - - -
Total transactions with owners - - - - -
Net profit (loss) for the period - - - 17,432 17,432
Other comprehensive income - - - - -
Total comprehensive income (loss) for the period - - - 17,432 17,432
Balance at 31 December 2020 51,731 5,173 69,465 28,041 154,410
Reserves established - - 28,040 (28,040 ) -
Dividends approved - - - - -
Total transactions with owners - - 28,040 (28,040 ) -
Net profit (loss) for the period - - - 23,164 23,164
Other comprehensive income - - - - -
Total comprehensive income (loss) for the period - - - 23,164 23,164
Balance at 31 December 2021 51,731 5,173 97,505 23,164 177,573
The accompanying notes form an integral part of these financial statements.
81
CONSOLIDATED ANNUAL REPORT 2021
Consolidated and separate statement of cash flows (All amounts are in EUR ’000 unless otherwise stated)
Notes
Group Company
2021 2020 2021 2020
I. Cash flows from operating activities
I.1. Net profit (loss) 4 23,211 18,170 23,164 17,432
Adjustments for non-cash items and other corrections:
I.2. Depreciation and amortisation 5,6,8 12,057 11,126 11,882 10,934
I.3. Loss (profit) on disposal and write-off of property, plant and equipment, doubtful trade receivables and inventories (115 ) (108 ) (115 ) (123 )
I.4. Impairment (reversal of impairment) of property, plant and equipment, financial assets, doubtful trade receivables and inventories 142 (39 ) 48 (39 )
I.5. Income tax expenses (benefit) 4,23 (434 ) (3,584 ) (547 ) (3,635 )
I.6. Interest (income) 22 - - - -
I.7. Interest expenses 22 437 294 386 291
I.8. Dividend income 22 - - (478 ) -
I.9. (Amortisation) of grants (deferred revenue) (144 ) - (144 ) -
I.10. Elimination of other non-cash items 2 - 2 -
Changes in working capital:
I.11. (Increase) decrease in inventories (6,047 ) 294 (6,047 ) 294
I.12. (Increase) decrease in trade receivables (13,579 ) (2,010 ) (4,910 ) 14
I.13. (Increase) decrease in other receivables and prepayments (214) 3,685 (214 3,688
I.14. (Decrease) increase in trade payables 24,682 62 2,923 560
I.15. (Decrease) increase in other payables and current liabilities 32,461 (11,286 ) 4,167 (3,952 )
I.16. (Increase) decrease in other financial assets (42,868 ) 9,974 (1,302 ) 1
I.17. Income tax (paid) (523 ) (1,906 ) (472 ) (1,906 )
Net cash flows from operating activities 29,068 24,672 28,343 23,559
II. Cash flows from investing activities
II.1. (Acquisition) of property, plant and equipment and intangible assets (48,448 ) (86,315 ) (48,410 ) (86,136 )
II.2. Proceeds from disposal of property, plant and equipment 169 173 169 173
II.3. Grants received 35,052 15,065 35,052 15,065
II.4. Loans granted (repayments received) - - - -
II.5. Interest received - - - -
II.6 Dividends received - - 478 -
Net cash flows (used in) investing activities (13,227 ) (71,077 ) (12,711 ) (70,898 )
The accompanying notes form an integral part of these financial statements.
(cont’d on the next page)
82
CONSOLIDATED ANNUAL REPORT 2021
Consolidated and separate statement of cash flows (continued) (All amounts are in EUR ’000 unless otherwise stated)
Notes
Group Company
2021 2020 2021 2020
III. Cash flows from financing activities
III.1. Dividends (paid) - (3 ) - (3 )
III.2. Proceeds from borrowings - 60,000 - 60,000
III.3. (Repayments) of borrowings (10,174 ) (13,798 ) (10,174 ) (13,618 )
III.4. Change in overdraft (4,568) 1,580 (4,568 1,580
III.5. Interest (paid) (540 ) (424 ) (489 ) (421 )
III.6. Liabilities settled in relation to right-of-use assets (420 ) (416 ) (392 ) (393 )
II.7. Other cash flows from financing activities - - - -
Net cash flows from (used in) financing activities (15,702 ) 46,939 (15,623 ) 47,145
IV. Net increase (decrease) in cash and cash equivalents 139 534 9 (194 )
V. Cash and cash equivalents at the beginning of the period 12 767 233 3 197
VI. Cash and cash equivalents at the end of the period 12 906 767 12 3
The accompanying notes form an integral part of these financial statements.
83
CONSOLIDATED ANNUAL REPORT 2021
Notes to the consolidated and separate financial statements
(All amounts are in EUR ’000 unless otherwise stated)
1 General information
Lithuania.
Its registered office address is as follows:
Amber Grid AB was registered on 25 June 2013 as a result of unbundling of natural gas transmission activity
(including assets, rights and obligations attributed thereto) from Lietuvos Dujos AB. The Company has been actively
operating since 1 August 2013. After obtaining a favourable decision from the European Commission, on 10 April
2015 the National Control Commission for Prices and Energy (the National Energy Regulatory Council (NERC) as
from 1 July 2019) granted to the Company an energy operator licence No L2-3 (GDP) to engage in natural gas
transmission activities for indefinite term in the territory of Lithuania.
The Company’s registered office address was changed on 1 October 2021. From the date specified, the registered
office address of Amber Grid AB is Laisvės pr. 10, Vilnius, Lithuania .
Acting as a natural gas transmission system operator, the Company provides the following services to the system
users, other operators and gas market participants:
The Company’s clients are large companies (operating in the sectors of electricity, district heating, and industry) and
medium-sized local businesses, as well as natural gas suppliers receiving natural gas transmission services.
All the shares of the Company are ordinary registered shares with the par value of EUR 0.29 each. As at 31 December
2021 and 2020, all the shares had been fully paid. The Company had no its own shares. Since 1 August 2013, the
Company’s shares have been traded on stock exchange and have been quoted on the Baltic Secondary List of
NASDAQ Vilnius. (ISIN – LT0000128696, LEI code 097900BGMP0000061061, ticker AMG1L).
As at 31 December 2021 and 2020, the Company’s shareholders were as follows:
Number of shares
held
Ownership interest, (%)
20, Vilnius
172.279.125 96,58
Other shareholders 6.103.389 3,42
178.382.514 100,00
EPSO-G UAB is a state-owned group of energy transmission and exchange companies (www.epsog.lt). The rights and
duties of the sole shareholder of the holding company EPSO-G UAB are exercised by the Ministry of Energy of the
The Company holds one subsidiary natural gas exchange GET Baltic UAB. The Group consists of the parent company
Amber Grid AB and its subsidiary GET Baltic UAB.
Information on the subsidiary as at 31 December 2021 and 2020 is presented below:
Subsidiary
Registered office
address
Interest held
At 31
December
2021
At 31
December
2020
Profile of activities
GET Baltic UAB
Geležinio Vilko g.
18A, LT- 08104 Vilnius,
Lithuania
100%
Licensed activities of natural gas
market operator - trading natural
gas short-term and long-term
products.
As at 31 December 2021 and 2020, the share capital of GET Baltic UAB amounted to EUR 580,450, and it was divided
into 3,055,000 shares with a par value of EUR 0.19 each.
In the Company’s financial statements for the year ended 31 December 2021, the Company’s investment in the
subsidiary was stated at cost and in the Company’s financial statements for the year ended 31 December 2020, it was
stated at cost less impairment. Considering the subsidiary’s development and continuously improving performance,
for the purpose of the financial statements for the period ended 31 December 2021, it was decided that there are no
indications of impairment of investment. Information on the investment in the subsidiary is disclosed in Note 7.
The consolidated financial statements were prepared with effect from 2019, given an each-year growing materiality
of the subsidiary’s financial data. Non-preparation of the consolidated financial statements would, in the Company’s
opinion, be material when assessing Amber Grid AB group’s assets, liabilities, results of operations and cash flows, and
for the users when making appropriate economic decisions.
As at 31 December 2021, the average number of employees at the Group was 332 (31 December 2020: 325), and the
average number of employees at the Company was 321 (31 December 2020: 318).
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of the Company’s and the Group’s financial statements for
the year ended 31 December 2021 are set out below:
2.1. Basis of preparation
The Group’s and the Company’s financial statements for the year ended 31 December 2021 have been prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.
These financial statements have been prepared on a historical cost basis, except for property, plant and equipment
which is recorded at revalued amount, less accumulated depreciation and estimated impairment loss.
Amounts in these financial statements are presented in thousands of euro (EUR), unless otherwise stated.
The Group’s and the Company’s financial year coincides with the calendar year.
The Company’s management approved these financial statements on 18th March 2022. The shareholders of
theCompany have a statutory right to approve these financial statements or not to approve those and request for a
preparation of the new financial statements.
84
CONSOLIDATED ANNUAL REPORT 2021
The accounting policies applied in the preparation of the financial statements are consistent with those of the previous
financial year except as follows:
a) Adoption of new and/or amended IFRS and interpretations of the International Financial Reporting
Interpretations Committee (IFRIC)
The following IFRSs, amendments thereto and IFRIC interpretations were adopted by the Group and the Company for
the first time in the financial year ended 31 December 2021:
1. Covid-19-related rent concessions – Amendments to IFRS 16 (issued on 28 May 2020 and effective for annual
periods beginning on or after 1 January 2020). The amendment issued on 31 March 2021 extended the expiry date of
this practical expedient (exemption) from 30 June 2021 until 30 June 2022. The amendments provided lessees (but not
lessors) with relief in the form of an optional exemption from assessing whether a rent concession related to COVID-19
is a lease modification. Lessees can elect to account for rent concessions in the same way as they would if they were
not lease modifications. In many cases, this will result in accounting for the concession as a variable lease payment. The
Group and the Company believe these amendments have no material impact on the financial statements, since neither
the Group nor the Company are subject to COVID-19-related rent concessions.
2. Interest rate benchmark reform – Amendments to IFRS 9, IAS 39 and IFRS 7 (effective for annual periods beginning
on or after 1 January 2020). The amendments were triggered by replacement of benchmark interest rates such as LIBOR
and other inter-bank offered rates (‘IBORs’). IBOR reform had no impact for the Group, as all 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 14.
b) Standards, interpretations and amendments that have been endorsed by the European Union, yet they have
not been early adopted by the Group and the Company
1. Proceeds before intended use, Onerous contracts – cost of fulfilling a contract, Reference to the Conceptual
Framework – 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 (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.
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.
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.
The Group and the Company are currently assessing the impact of these amendments on the financial statements.
c) Standards, interpretations and amendments that have not yet been endorsed by the European Union and have
not been early adopted by the Group and the Company
1. IFRS 14 Regulatory deferral accounts (effective for annual periods beginning on or after 1 January 2016). IFRS 14
permits first-time adopters to continue to recognise amounts related to rate regulation in accordance with their previous
GAAP requirements when they adopt IFRS. However, to enhance comparability with entities that already apply IFRS and
do not recognise such amounts, the standard requires that the effect of rate regulation must be presented separately
from other items. An entity that already presents IFRS financial statements is not eligible to apply the standard. The
new provisions of the standard are not relevant for the Group and the Company, since IFRS transition occurred in the
previous periods.
2. Sale or contribution of assets between an investor and its associate or joint venture – Amendments to IFRS 10
and IAS 28 (effective for the annual periods beginning on the date which will be established by the International
Accounting Standards Board (IASB) or on the later date). These amendments address an inconsistency between the
requirements in IFRS 10 and those in IAS 28 in dealing with the sale or contribution of assets between an investor and
its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognised when
a transaction involves a business. A partial gain or loss is recognised when a transaction involves assets that do not
constitute a business, even if these assets are held by a subsidiary. In the opinion of the Group and the Company, these
amendments will have no significant impact on the Group’s and the Company’s financial statements.
3. Classification of liabilities as current or non-current – Amendments to IAS 1 (effective for annual periods beginning
on or after 1 January 2022). In response to the COVID-19 pandemic, the effective date was deferred by one year to
provide companies with more time to implement classification changes resulting from the amended guidance. These
narrow scope amendments clarify that liabilities are classified as either current or non-current, depending on the rights
that exist at the end of the reporting period. Liabilities are non-current if the entity has a substantive right, at the end
of the reporting period, to defer settlement for at least twelve months. The guidance no longer requires such a right
to be unconditional. Management’s expectations whether they will subsequently exercise the right to defer settlement
do not affect classification of liabilities. The right to defer only exists if the entity complies with any relevant conditions
as of the end of the reporting period. A liability is classified as current if a condition is breached at or before the
reporting date even if a waiver of that condition is obtained from the lender after the end of the reporting period.
Conversely, a loan is classified as non-current if a loan covenant is breached only after the reporting date. In addition,
the amendments include clarifying the classification requirements for debt a company might settle by converting it
into equity. ‘Settlement’ is defined as the extinguishment of a liability with cash, other resources embodying economic
benefits or an entity’s own equity instruments.The Group and the Company are currently assessing the impact of these
amendments on the financial statements.
4. Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of accounting policies (issued on 12 February 2021
and effective for annual periods beginning on or after 1 January 2023). IAS 1 was amended to require companies to
disclose their material accounting policy information rather than their significant accounting policies. The amendment
provided the definition of material accounting policy information. The amendment provided illustrative examples
of accounting policy information that is likely to be considered material to the entity’s financial statements. The
amendment also clarified that accounting policy information is expected to be material if, without it, the users of the
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financial statements would be unable to understand other material information in the financial statements. Further,
the amendment to IAS 1 clarified that immaterial accounting policy information need not be disclosed. However, if it
is disclosed, it should not obscure material accounting policy information. To support this amendment, IFRS Practice
Statement 2, ‘Making Materiality Judgements’ was also amended to provide guidance on how to apply the concept of
materiality to accounting policy disclosures. The Group and the Company are currently assessing the impact of these
amendments on the financial statements.
5. Amendments to IAS 8: Definition of accounting estimates (issued on 12 February 2021 and effective for annual
periods beginning on or after 1 January 2023). The amendment to IAS 8 clarified how companies should distinguish
changes in accounting policies from changes in accounting estimates. The Group and the Company are currently
assessing the impact of these amendments on the financial statements.
6. Deferred tax related to assets and liabilities arising from a single transaction – Amendments to IAS 12 (issued
on 7 May 2021 and effective for annual periods beginning on or after 1 January 2023). The amendments to IAS 12
specify how to account for deferred tax on transactions such as leases and decommissioning obligations. In specified
circumstances, entities are exempt from recognising deferred tax when they recognise assets or liabilities for the first
time. The amendments clarify that the exemption does not apply and that entities are required to recognise deferred
tax on such transactions. The amendments require companies to recognise deferred tax on transactions that, on initial
recognition, give rise to equal amounts of taxable and deductible temporary differences The Group and the Company
are currently assessing the impact of these amendments on the financial statements.
2.2 Presentation currency
All amounts in these financial statements have been measured and presented in the euros (EUR), which is an official
currency of the Republic of Lithuania.
2.3 Basis of consolidation
A subsidiary is an entity directly or indirectly controlled by the Company. The Company controls an entity when it is
exposed, or has rights, to variable returns from its involvement with an investee, and has the ability to affect those
returns through its power over the investee.
The Group’s consolidated financial statements cover Amber Grid AB and its subsidiary GET Baltic UAB. The financial
statements of GET Baltic UAB have been prepared for the same reporting period and using the same accounting
policies consistent with those applied by the parent company.
A subsidiary is consolidated from the date on which effective direct or indirect control is transferred to the Company. It
is de-consolidated from the date that control ceases. All intercompany transactions, balances and unrealised gains and
losses on transactions between the Group companies are eliminated.
2.4 Investments in subsidiaries in the Company’s separate financial statements
Investments in subsidiaries are accounted for in the parent company’s balance sheet at cost less impairment loss, when
the carrying amount of investment reported in the parent company’s balance sheet exceeds the expected recoverable
amount.
2.5 Intangible assets
The Group’s and the Company’s intangible assets are recognised if it is probable that future economic benefits
associated with the asset will flow to the Group and the Company and the cost of the asset can be measured reliably.
Intangible assets are carried at cost, see Note 5.
The useful lives of intangible assets other than those with indefinite useful lives are 4 to 8 years.
After initial recognition, intangible assets are stated at cost less accumulated amortisation and impairment losses, if
any. Goodwill is measured initially as the positive difference between the acquisition cost and net assets acquired, and
subsequently is measured acquisition cost less accumulated impairment losses, if any.
Intangible assets are amortised on a straight-line basis over the estimated useful lives. The useful lives, residual
values and amortisation method are reviewed annually to ensure that they are consistent with the expected pattern
of economic benefits from items of intangible assets. Intangible assets mainly consist of software, licences and other
intangible assets used in the Group’s and the Company’s activities.
Special land use conditions (protected areas)
In its financial statements for the year ended 31 December 2020, the Company recognised as intangible assets
a commitment to register and a right to use the land parcels of third parties on the basis of the special land use
conditions. The special land use conditionsmean conditions involving certain restrictions or limitations on the activities
carried out on the land parcel, which depend on the geographic location, the principal purpose of use, the method of
use of the land parcel, and on the environmental and public health needs. The special land use conditions apply for as
long as there is an object, in respect of which the protected areas have been established, irrespective of the physical
condition of such object; or the special land use conditions may be established when there is an intention to implement
a project. The special land use conditions remain in force for indefinite period. Since the useful life of the intangible
assets is indefinite, such assets are not amortised. The useful life is not limited because the special land use conditions
are established for the land parcels for indefinite period.
A provision for non-current liabilities in relation to the commitment to register the special land use conditions (protected
areas) has been formed under IAS 37 (see Notes 3 and 17).
2.6 Property, plant and equipment
Assets with a useful life longer than one year are classified as property, plant and equipment.
The Company’s items of property, plant and equipment are stated at revalued amounts, based on periodic (at least
every 5 years) valuations performed by independent valuers, less accumulated depreciation and impairment losses
(Note 6).
Impairment of assets is allocated to all cash-generating units in proportion to their net book amounts.
Any accumulated depreciation and impairment losses at the date of revaluation are eliminated against gross carrying
amount of the asset and net amount is restated to the revalued amount of the assets.
Increases in the carrying amount arising on the first revaluation of property, plant and equipment are credited to
revaluation reserve directly in equity and decreases are recognised in the profit and loss account. Decreases in the
carrying amount arising on the subsequent revaluation of property, plant and equipment that offset previous increases
of the same asset are charged against revaluation reserve directly in equity, whereas all other decreases are charged
to the profit and loss account. Revaluation increases in property plant and equipment value that offset previous
decreases are taken to the profit and loss account. All other increases in the carrying amount arising on subsequent
revaluations of property, plant and equipment are credited to revaluation reserve. Each year the difference between
depreciation based on the revalued carrying amount of the asset charged to the statement of comprehensive income
and depreciation based on the asset’s original cost is transferred from revaluation reserve to retained earnings taking
into account the effect of deferred income tax. Upon the sale or write-off of an asset item, any balance related to these
assets is transferred from revaluation reserve to retained earnings.
Interest and other borrowing costs (the bank’s administration charges, etc.) are included in the acquisition cost of
property, plant and equipment if they are directly attributable to the acquisition of a qualifying asset. A qualifying asset
is asset that is developed on the basis of a project with the value of not less than EUR 1 million and that necessarily takes
no less than 12 months to get ready for its intended use or sale. Borrowing costs that are attributable to the acquisition
of a qualifying asset are capitalised as part of the cost of that asset. The capitalisation of borrowing costs is started when
costs related to the production or acquisition of the qualifying asset are incurred (a prepayment is made or a payment
for works is made according to the signed statement on the works carried out and their respective value) and ended
when all the activities necessary for the preparation of the qualifying asset for its intended use or sale are substantially
complete (a statement on the recognition of the construction as fit for use is signed). While determining the amount of
borrowing costs eligible for the capitalisation of costs incurred in the acquisition of qualifying assets, the capitalisation
rate is applied.
Variable considerations, which depend on future events, are excluded from the carrying amount of the asset at the
time it is ready for its intended use, and no liability is recognised in respect of those variable considerations. Variable
considerations are capitalised as part of the cost of the asset at the time they are paid.
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Property, plant and equipment also includes the minimum quantity of natural gas contained in the gas pipelines (line
pack) which is necessary to ensure a stable functioning of the transmission system (i.e. necessary to start the functioning
of the transmission system) under the base conditions (pressure of 25 bar is ensured for system users for all exit points).
This part of property, plant and equipment is not depreciated, because the Company will be able to sell such natural gas
at the end of the useful life of the gas transmission pipeline, and accordingly, the value of such natural gas represents
the residual value of the gas transmission pipeline.
Emergency reserve inventories meeting the criteria of non-current assets are classified as property, plant and equipment.
The carrying amount of inventories written off during repair, technical maintenance and emergency liquidation are
recorded in the statement of profit or loss or added to the carrying amount of assets under maintenance.
Depreciation is calculated on a straight-line basis over the following estimated useful lives:
Land -
Buildings 25 - 60 years
Other structures and engineering networks 18 – 25 years
Gas pipelines and associated equipment 55 – 70 years
Plant and machinery 5 - 25 years
Motor vehicles 7 years
Other PP&E 4 - 10 years
The useful lives, residual values and depreciation method are reviewed annually to ensure that they are consistent with
the expected pattern of economic benefits from items of property, plant and equipment.
The Company has land with indefinite useful life, which is not depreciated.
Construction work in progress includes items of property, plant and equipment that are under construction. The cost of
such assets includes designing, construction works, equipment intended for assembly and installation, and other direct
costs. Construction work in progress is not depreciated until the construction of asset is completed and the asset is put
into operation. Prepayments for non-current assets are classified as non-current assets because they are used in long-
term activities and are presented in the balance sheet under the line item ‘Construction work in progress’.
Impairment of property, plant and equipment and intangible assets
At each reporting date, the Group and the Company review the carrying amounts of their property, plant and equipment
and intangible assets to determine whether there are any indications that those assets have suffered an impairment.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any).
The recoverable value is the higher of an asset’s fair value less costs to sell and the value in use. In assessing the value
in use, the expected future cash flows are discounted to their present value using the discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the
impairment loss is treated as a decrease of revaluation reserve.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased
to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-
generating unit) in prior years A reversal of an impairment loss is recognized immediately in profit or loss, unless the
relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as an increase
in revaluation reserve (without exceeding the amount of previous impairment).
2.7 Financial assets
As from 1 January 2018, for the purposes of applying IFRS 9 Financial Instruments, the Group and the Company
classify their 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;
- financial assets subsequently measured at fair value through profit or loss.
The classification of financial assets after the initial recognition into the categories described above is based on the
business model used by the Group and the Company in managing financial assets. The business model applied to
the specific category of financial assets is determined at a level reflecting how all categories of financial assets are
jointly managed to achieve the Group’s and the Company’s specific business objectives. The business model applied
is not influenced by the intentions of the Group’s and the Company’s management regarding individual measures. The
Group and the Company can apply more than one business model for managing financial assets.
The business model applied to financial asset management is based not only on the assertion but rather on the facts
that can be seen from the activities the Group and the Company are carrying out in pursuit of the business model
objectives.
The Group and the Company recognise a financial asset in the statement of financial position only when they become
a party to the contractual provisions of the financial instrument, the purchase or sale of the financial asset is recognised
or derecognised using the accounting at the trade date.
At initial recognition, the Group and the Company measure the financial assets at fair value, except for trade receivables
that do not include a significant component of financing. Initial measurement of financial assets other than those
measured at fair value through profit or loss, includes the fair value of the instrument and transaction costs directly
attributable to the acquisition of the financial asset.
Transaction costs include all fees and commissions that the Group and the Company would not have paid if they had
not entered into a financial instrument contract.
If, at initial recognition, the fair value of the financial asset differs from the transaction price, the difference is recognised
in profit or loss.
Depending on the business model used to manage the category of financial assets, the accounting for financial assets
is as follows:
Financial assets measured at amortised cost
Receivables and loans granted by the Group and the Company are accounted for in accordance with a business model
designated to hold financial assets in order to collect the contractual cash flows that may arise from cash flows related
to payment of principal amount and interest.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are recognised as current assets, except for the loans and receivables with maturity term of more
than 12 months after the date of the statement of financial position, in which case they are recognised as non-current
assets.
Loans and receivables are initially recognised at cost (fair value of the amount receivable) and subsequently amortized
cost using the effective interest rate method. Gains and losses are recognised in the income statement when the assets
are derecognised or impaired, as well as through the amortisation process.
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Financial assets measured at fair value through profit or loss
The Group and the Company account for financial assets measured at fair value through profit or loss using a business
model, the goal of which is achieved through the collection of contractual cash flows and the sale of financial assets.
The Group and the Company do not have financial assets held for trading that are acquired for the purpose of selling
in the near future, and within such category only classify the financial asset that arises on disposal of a business or
investment and that represents a non-equity contingent consideration.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating the
interest income in the income statement over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the
expected life of the financial instrument to the gross carrying amount of the financial asset that represents the amortised
cost of the financial asset before adjustment for any loss allowances. When calculating the effective interest rate, the
Group and the Company estimate the expected cash flows considering all contractual terms of the financial instrument
contract (for example, prepayment, extension, call and similar options), but without considering future 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. When calculating the effective
interest rate, there is a presumption that the cash flows and the expected life of a group of similar financial instruments
can be estimated reliably. When it is not possible to estimate reliably the cash flows or the expected life of a financial
instrument (or group of financial instruments), the Company uses the contractual cash flows over the full contractual
term of the financial instrument (or group of financial instruments).
Expected credit losses
Credit losses incurred by the Group and the Company are calculated as the difference between the total amount
of contractual cash flows that are due to the Group and the Company under the contract and the total amount of
cash flows that the Group and the Company expect to receive (i.e. the total cash shortfall) discounted at the original
effective interest rate. The Group and the Company calculate cash flows based on all contractual terms of the financial
instrument over the expected life of that financial instrument, including cash flows from available collateral or other
credit enhancement that is inherent in the terms of the contract.
Expected credit losses represent the weighted average credit loss rate based on the relevant default risk (probability).
Lifetime expected credit losses are the expected credit losses that result from all possible default events over the
period from the initial recognition of the financial asset to the later date of subsequent settlement and ultimate write-off
of the financial asset.
The Group and the Company seek to recognise the expected credit losses for the period before the financial instrument
becomes past due. Normally, credit risk increases significantly before a financial instrument becomes past due or other
delay factors are observed from the debtor (such as restructuring, bankruptcy, other economic difficulties of a client,
etc.). Therefore, if there is a considerable amount of cost or effort to obtain reasonable and reliable information that is
more forward-looking than past due payments, it should be based on the assessment of credit risk changes.
Expected credit losses are recognised based on individually or collectively assessed credit risk of loans and trade
receivables, the assessment of which is based on all reasonable and supportable information, including forward-
looking information.
Lifetime expected credit losses of trade receivables are assessed taking into consideration the level of credit risk.
The individual assessment basis is applied to debts with a high level of credit risk concentration or when there is
a significant increase in the probability of credit losses. During the individual assessment, information on the credit
history of a particular borrower, its financial position as at the date of assessment is analysed, 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 judgement on the recognition of lifetime expected credit losses in respect
of that particular borrower.
Lifetime expected credit losses for trade receivables are recognised at the time of recognition of amounts receivable.
At the time of issuing a loan, the Group and the Company assess and account for 12-month expected credit losses.
In subsequent reporting periods, in the absence of a significant increase in the credit risk associated with the borrower,
the Group and the Company adjust the balance of twelve-month expected credit losses based on the amount of the
loan outstanding at the assessment date. If it is determined that the borrower’s financial situation has significantly
deteriorated compared to the situation at the time of issuing the loan, the Group and the Company account for all
lifetime expected credit losses. The latest moment for the Group and the Company to recognise all lifetime expected
credit losses in respect of the issued loan is identified when the debtor is late with the payment of instalments or full
amount of debt by more than 30 days. If there is other evidence, the Group and the Company account for all lifetime
expected credit losses in respect of the issued loan, without taking into account the assumed delay of payments by
more than 30 days. Loans that are subject to lifetime expected credit losses are considered as credit-impaired financial
assets.
Credit-impaired financial assets
Financial asset is considered as credit-impaired as a result of one or more events that adversely affect the estimated
future cash flows of that financial asset. Evidence of credit-impaired financial asset is based on observations of data on
the following events:
a) significant financial difficulties for the debtor;
b) breach of contract, such as late payment of instalments or full amount of debt;
c) a discount granted to the debtor which the lender would not otherwise have granted for economic or contractual
reasons related to the debtor’s financial difficulties;
d) increased likelihood of bankruptcy or other financial reorganisation of the debtor;
e) active market no longer exists for financial assets as a result of financial difficulties;
f) financial assets are purchased or granted at a significant discount, thereby showing credit losses incurred.
Impairment of financial assets due to credit risk may be determined by several events that may occur simultaneously or
sequentially during the life of the financial asset contract.
Lifetime expected credit losses for loans receivable and trade receivables are accounted for through profit or loss using
the contra account for doubtful receivables.
Loans receivable and trade receivables are written off when the Group and the Company lose the right to the contractual
cash flows from the financial assets.
Derecognition of financial assets
A financial asset is derecognised by the Group and the Company when:
- the rights to receive cash flows from the asset have expired;
- the rights to receive cash flows are retained, but there is an obligation to pay the full amount to a third party under a
‘pass-through’ agreement in a short period of time; or
- the Group and the Company have transferred their rights to receive cash flows from the asset and either (a) have
transferred substantially all the risks and rewards of the asset, or (b) have neither transferred nor retained substantially all
the risks and rewards of the asset, but have transferred control of the asset:
- if the Group and the Company fail to retain control of the financial asset, such asset is derecognised by the Group
and the Company, whereas all the established or retained rights and obligations established or retained at the time of
transfer are recognised separately as assets or liabilities.
- if the Group and the Company retain control of the financial asset, they continue recognising it for as long as they
retain control of the financial asset.
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When assessing whether the Group and the Company have retained control of the asset transferred, consideration
is given to the capacity of the recipient to sell the asset. If the recipient has in practice the capacity to sell all assets to
an unrelated third party unilaterally, and such disposal is not subject to any additional restrictions, it is considered that
the Group and the Company have not retained the control. In all other cases, the Group and the Company retain the
control.
Trade payables and other financial liabilities, borrowings
Financial liabilities, borrowings
Financial liabilities, including borrowings, are recognised initially at fair value, less transaction costs.
Subsequently, financial liabilities are carried at amortised cost using the effective interest rate method. Interest expense
is recognised using the effective interest rate method.
If a financing agreement concluded before the date of the statement of financial position proves that the liability was
non-current as of the date of the statement of financial position, such financial liability is classified as non-current.
Trade payables
Trade payables represent commitments to pay for goods and services acquired from suppliers in the ordinary course
of business. Trade payables are classified as current liabilities if the term of their settlement is no longer than one year;
otherwise, they are included in non-current liabilities.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or 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 a derecognition of
the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is
recognised in profit or loss.
2.8 Inventories
Inventories consist of spare parts, consumables, and natural gas contained in the gas pipelines used in the activities and
for provision of services. Inventories also include waste or metal scrap which is fit for use and was retrieved from written
off items of property, plant and equipment.
Inventories are initially recorded at cost. Subsequent to initial recognition, inventories are stated at the lower of cost
and net realisable value.
The cost of inventories includes acquisition price and related taxes that are not subsequently recovered from tax
administration authorities and costs associated with bringing inventory into their current condition and location. Other
costs are included in the cost of inventories to the extent they are related to bringing inventory into their current
condition and location. The cost of inventories is determined net of trade discounts.
The cost of inventories, except for natural gas, is determined using the first-in, first-out (FIFO) method, according to
which write-offs are firstly carried out in respect of the same type of inventories that were acquired first.
The cost of inventories which consist of natural gas contained in the gas pipelines is determined using the weighted
average costing method. The cost of one unit of energy of natural gas (kWh) is determined by applying the weighted
average costing method using the following formula:
The cost of one energy unit of natural gas (kWh) = (opening balance of natural gas (quantity * price) + purchases of
natural gas over the period (quantity * price)) / opening balance of natural gas + purchases of natural gas over the
period).
2.9 Cash and cash equivalents
Cash includes cash at banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to
known amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of
change in value.
If there are indications that cash and cash equivalents may not be recoverable, impairment is accounted for. Impairment
is recorded in the statement of profit or loss within operating expenses for the period during which it occurred.
2.10 Grants
Grants represent financial and material support provided by the government and the European Union for the specific
purpose. Gratuitous assets are also classified as grants.
Grants are recognised when the Group and the Company comply with all conditions attached to the grants, as set out
in the respective grant agreement, and when there is a reasonable assurance that the grant will be received.
Grants may be of two types:
- grants related to assets;
- grants related to income.
Government grants or grants received from the EU in a form of non-current assets or intended for purchase of non-
current assets are considered as grants related to assets.
At the Group and the Company grants are recognised by deducting them from the asset’s carrying amount. For the
purpose of the statement of profit or loss and other comprehensive income, grants are recognised over the useful life
of the related asset as a deduction from depreciation expenses.
Accumulated grants receivable are classified as other amounts receivable when, according to the agreement, the
European Commission undertakes a commitment to fund strategic projects and there is strong evidence that the
funding will be received.
Grants received as a compensation for the expenses or unearned income in the current or previous reporting periods,
also all grants other than grants related to assets, are considered as grants related to income. Income-related grants
are recognised as utilised to the extent of the expenses incurred during the reporting period or unearned income to
be compensated by that grant.
For the purpose of the statement of profit or loss, income-related grants are recognised when related costs are incurred,
for which the grant was intended to compensate, by adding them to other income. If no connection can be established
between the grants and incurred costs or deferred expenses, they are recognised as income during the period they are
received or when the Group and the Company comply with all the conditions attached to grants, as established in the
respective grant agreement, and there is a reasonable assurance that the grant will be received.
2.11 Lease liabilities
Initial measurement of the lease liability
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date.
The lease payments are discounted using the incremental borrowing rate. The incremental borrowing rate is determined
as the rate at which the Group and the Company would be able to borrow funds for the purpose of acquiring certain
assets for a respective period.
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At the commencement date, the lease payments included in the measurement of lease liability comprise the following
payments:
- fixed payments, less any lease incentives receivable;
- variable lease payments that depend on an index or a rate;
- amounts expected to be payable by the Group and the Company under residual value guarantees;
- the exercise price of a purchase option if the Group and the Company are reasonably certain to exercise that
option;
- payments of penalties for terminating the lease, if the lease term reflects the Group and the Company exercising
an option to terminate the lease.
Subsequent measurement of the lease liability
Subsequent to initial recognition, the Group and the Company recognise a change in the value of the lease liability by:
- increasing the carrying amount to reflect interest on the lease liability;
- reducing the carrying amount to reflect the lease payments made; and
- remeasuring the carrying amount to reflect any lease modifications or revised lease payments.
Interest on the lease liability in each period during the lease term is the amount that produces a constant periodic
rate of interest on the remaining balance of the lease liability. The periodic rate of interest is the discount rate, or if
applicable the revised discount rate.
Reassessment of the lease liability
After the commencement date, the Group and the Company remeasure the lease liability to reflect changes to the
lease payments. The Group and the Company recognise the amount of the remeasurement of the lease liability as
an adjustment to the right-of-use asset. If the carrying amount of the right-of-use asset is reduced to zero and there
is a further reduction in the measurement of the lease liability, the Group and the Company recognise any remaining
amount of the remeasurement in profit or loss.
Revised discount rate
The Group and the Company remeasure the lease liability by discounting the revised lease payments using a revised
discount rate, if there is a change in the lease term. The Group and the Company determine the revised lease
payments on the basis of the revised lease term or, when there is a change in the assessment of an option to purchase
the underlying asset, the Group and the Company assess the revised lease payments considering the events and
circumstances in the context of a purchase option.
If there is a change in the lease term or in the assessment of an option to purchase the underlying asset, the Group
and the Company determine the revised discount rate as the lessee’s incremental borrowing rate at the date of
reassessment.
Unchanged discount rate
The Group and the Company determine the revised lease payments for the remaining lease term based on the revised
contractual payments.
When discounting the revised lease payments, the Group and the Company use an unchanged discount rate, unless
the change in lease payments results from a change in variable interest rates. In that case, the Group and the Company
use a revised discount rate that reflects changes in the interest rate.
Lease modifications
The Group and the Company account for a lease modification as a separate lease if both:
- the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
- the consideration for the lease increases by an amount commensurate with the stand-alone price for the
increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the
particular contract.
For a lease modification that is not accounted for as a separate lease, at the effective date of the lease modification
the Group and the Company:
- allocate the consideration in the modified contract;
- determine the lease term of the modified lease; and
- remeasure the lease liability by discounting the revised lease payments using a revised discount rate.
For a lease modification that is not accounted for as a separate lease, the Group and the Company account for the
remeasurement of the lease liability by:
- decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for
lease modifications that decrease the scope of the lease. The Group and the Company recognise in profit or loss
any gain or loss relating to the partial or full termination of the lease;
- making a corresponding adjustment to the right-of-use asset for all other lease modifications.
The Group and the Company present its lease liabilities separately from other liabilities in the statement of financial
position. Interest expense on the lease liability is presented separately from the depreciation charge for the right-of-
use assets. The interest expense on the lease liability is a component of finance costs recognised in the statement of
comprehensive income.
2.12 Long-term employee benefits
(a) Social security contributions
The Group and the Company pay 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. The defined
contribution is a plan under which the Group and the Company pay 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 included in payroll expenses.
(b) Bonus plans
The Group and the Company recognise a liability and an expense for bonuses where contractually obliged or where
there is a past practice that has created a constructive obligation.
(c) Pension benefits to employees of retirement age
Each employee of retirement age who terminates his/her employment with the Group and the Company upon
retirement receives the payment, the amount of which is established by the Lithuanian laws. A liability for such payments
is recognised in the balance sheet and it reflects the present value of these payments at the date of the financial
statements. The non-current liability for payments to employees at the date of the financial statements is estimated
with reference to actuary valuations using the projected relative unit method. The present value of the defined non-
current liability for payments to employees is determined by discounting the estimated future cash flows using the
effective interest rates as set for government debentures denominated in a currency in which payments to employees
are expected to be made and with maturity similar to that of the related liability.
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CONSOLIDATED ANNUAL REPORT 2021
2.13 Provisions
Provisions are recognised when the Group and the Company have a legal obligation or irrevocable commitment, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the estimate
of the expenditure required to settle the obligation (the expected value). Where the effect of the time value of money
is material, the amount of a provision is discounted using a pre-tax effective interest rate that, if necessary, reflects the
risks specific to the liability. Where discounting is used, the carrying amount of a provision increases in each period to
reflect the passage of time. This increase is recognised as borrowing cost.
Provisions are reviewed at the end of each reporting periodand adjusted to reflect the changes in circumstances.
If the amount of the provision is discounted, the amount reversed at each reporting period is equal to the discounting
effect (interest expenses). If circumstance change and the provision is no longer necessary, the provision is reversed
in the statement of profit or loss and other comprehensive income through the expense line item where it has been
recorded initially at the time of establishment.
Provisions are classified as non-current liabilities, if the Group’s and the Company’s management expect to settle them
after twelve months from the date of the statement of financial position, and as current liabilities, if the Group’s and
the Company’s management expect to settle them within twelve months from the date of the statement of financial
position.
2.14 Income tax
Income tax expense for the period comprises current and deferred income tax.
Current income tax
Current income tax charges are calculated on current profit before tax, as adjusted for certain non-deductible
expenses/non-taxable income. Income tax is calculated using the tax rate effective as at the date of issue of the financial
statements. Income tax rate of 15% was used in 2021 and 2020. Current year income tax may be reduced by tax
losses carried forward. Tax losses can be carried forward for indefinite period, except for the losses incurred as a result
of disposal of securities and/or derivative financial instruments. Such carrying forward is disrupted if the Group and
the Company discontinue their activities due to which these losses were incurred, except when the Group and the
Company discontinue their activities due to the reasons that are beyond the Group’s and the Company’s control. Tax
losses carried forward can be utilised to reduce the taxable income earned during the reporting year by maximum of
70%. The losses from disposal of securities and/or derivative financial instruments can be carried forward for 5 years
and only be used to reduce the taxable income earned from the transactions of the same nature. In addition, the
Company can take over tax losses from the Group companies, provided it meets the requirements laid down in the Law
on Corporate Income Tax.
Deferred income tax
Deferred taxes are calculated using the balance sheet liability method. Deferred taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Deferred income tax liability is recognised for all temporary differences that
will increase taxable profit in the future, and deferred tax asset is recognised only to the extent it is likely to reduce the
taxable income in the future. 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.
The Group’s deferred tax asset calculation base includes the following:
- impairment of non-current assets;
- revaluation (impairment) of non-current assets;
- write-down allowance for inventories;
- impairment of amounts receivable;
- long-term employee benefits;
- vacation accruals;
- other accruals;
- income tax relief not utilised on investment projects;
- unutilised tax losses that can be utilised by the Company in the future;
- other.
The Group’s deferred income tax liabilities typically include the following:
- revaluation (increase in value) of non-current assets;
- differences in depreciation rates of non-current assets;
- interest capitalisation effects;
- other.
Deferred tax assets are reviewed at each financial reporting date, and if it is not probable that the Group and the
Company will generate sufficient taxable profit to realize these assets, they are reduced to an amount which is likely to
reduce the taxable profit in future. Deferred income tax assets and liabilities are estimated using the tax rate that has
been applied when calculating income tax for the year when the related temporary differences are to be realised or
settled.
Deferred tax assets and liabilities are offset only where they relate to income tax assessed by the same fiscal authority
or where there is a legally enforceable right to offset current tax assets and current tax liabilities.
Current and deferred income tax for the reporting period
Current income tax and deferred income tax are recognised as income or expenses and included in net profit or loss
for the reporting period, except for the cases when tax arises from a transaction or event that is recognized directly in
equity or in other comprehensive income, in which case taxes are also recorded in equity and other comprehensive
income respectively.
2.15 Revenue recognition
Recognition and measurement of the Group’s and the Company’s revenue is based the five-step revenue recognition
model which is applied to all contracts with customers. The Group’s and the Company’s revenue is recognised at a
point in time or over time, during which the performance obligation is settled, i.e. the control of services or goods is
transferred to the customer.
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CONSOLIDATED ANNUAL REPORT 2021
The Group’s revenue includes as follows:
- revenue from natural gas transmission and related services;
- revenue from administration of the LNG terminal funds;
- revenue from the activities of the natural gas exchange operator;
- other income;
- finance income.
Revenue from natural gas transmission and related services
Revenue from system users for natural gas transmission services is recognised over time with reference to the presented
data on the natural gas quantities distributed to the system users connected to the distribution system, and based on
the statements of transmitted natural gas that were signed with the system users directly connected to the transmission
system.
Revenue from balancing of natural gas transmission system and from disbalance charges is related to management of
gas flows in order to ensure operation of the natural gas transmission system in line with an acceptable pressure range.
Revenue from technological balancing of natural gas is related to changes in inventories of natural gas contained in
the pipelines. Proceeds from sale of such inventories to a buyer are recorded as revenue when the ownership of gas is
passed on to the buyer.
Revenue from administration of the LNG terminal funds
Based on the provisions of Article 5(2) of the Republic of Lithuania Law on Liquefied Natural Gas Terminal, the Company
carries out the function of administration of the LNG terminal funds. The administration of the LNG terminal funds is
performed in accordance with the Description of the procedure for the administration of funds intended to compensate
for the construction and fixed operating expenses of the liquefied natural gas terminal, its infrastructure and connector,
including subsequent amendments and supplements thereto (the title was changed on 18 December 2015 under the
Commission’s Resolution No 03-653 of 17 December 2015), as approved by the Commission’s Resolution No O3-294
of 9 October 2012. The Company collects and administers the LNG terminal funds and acts as an intermediary on
behalf of the State, and such activities do not generate any revenue/profit for the Company in the ordinary course of
business. The LNG terminal funds, which are collected from the payers of the LNG terminal funds, are transferred to
the recipients of the LNG terminal funds: the LNG terminal operator, the designated supplier, and Amber Grid AB. The
share of the LNG terminal funds intended solely to cover the administration expenses of the LNG terminal funds is
considered as the Company’s revenue (Note 21). The amount of administration of the LNG terminal funds is calculated
as the amount of costs that are expected to be incurred, by taking into account the actual costs incurred in the previous
periods, and such amount is specified in NERC’s certificate. The LNG terminal funds are not treated as the Company’s
revenue/expenses, but they are rather accounted for as other receivables/other payables and other financial assets.
Revenue from the activities of the natural gas exchange operator
The amounts collected by the exchange operator for the services provided in the course of trading are recognised as
revenue of the exchange operator, based on the following service fees agreed with NERC:
- Initial registration fee: a one-off fee payable upon becoming an exchange participant which is recognised as
revenue at a point in time when a service is rendered;
- Annual membership fee: a fixed membership fee payable annually by an exchange participant. The annual
membership fee is payable for the calendar year (adjusted in proportion to the remaining number of days in a
year in case the market participant joins the exchange at some point of time in the course of a year). This revenue
is recognised over a period of time, during which the membership right is exercised;
- Floating trading fee: a fee estimated as EUR per 1 MWh, which is payable by a participant who is a party to the
transaction for the quantity of natural gas purchased and/or sold on the exchange. It is recognised as revenue at a
point in time when a service is rendered.
Other income
Connection fees on connection of new consumers and producers to the gas transmission network
The connection “service” is considered as a single performance obligation together with the future gas transmission
services, as defined in IFRS 15 Revenue from contracts with customers, because the pricing of the connection fee
is directly linked to the pricing of the transmission services. Therefore revenue (including the compensation for the
connection to the grid) are recognised in profit or loss over time during the useful life (or lives) of the connection assets
constructed / built by Company and compensated by a consumer.
Accounting for the connection fees on connection of new producers is based on the accounting policies for grants (IAS
20 Accounting for government grants and disclosure of government assistance), and the acquisition cost of the assets
is reduced by the amount of the connection fee.
Relocation (reconstruction) of infrastructure facilities owned under the title by the Company upon a customer’s request
Upon a customer’s request, the Company carries out relocation or reconstruction of infrastructure facilities and incurs
related expenses. Such relocation work does not give rise to any economic benefits for the Company, and all expenses
related to such work are compensated in full by a customer through acquisition of energy facility relocation service
from the Company.
Based on IFRS and the Company’s accounting policies, there are two approaches for recognition of such transactions
by the Company:
1. When relocation of assets involves substantial improvement of assets. Under IAS 16 Property, plant and equipment,
the relocation expenses incurred by the Company are added to the acquisition cost of the related assets. Accounting
for the compensation (i.e. relocation fee) due from a customer is based on the accounting policies for grants (IAS 20
Government grants and disclosure of government assistance) and the acquisition cost of the assets is reduced by the
amount of the relocation fee. Since all relocation costs are compensated in full for the Company by a customer, such
transaction results in a zero impact on the Company’s profit or loss, i.e. the Company neither incurs additional expenses
nor earns additional revenue from such transaction.
When relocation of assets does not involve substantial improvement of assets. Under IFRS 15 Revenue from contracts
with customers, the Company earns revenue from relocation service (i.e. revenue is recognised at the time of rendering
the service) and incurs relocation service expenses (i.e. all costs incurred on relocation of assets are recognised as
expenses in the same period as revenue from relocation service). Since all relocation costs are covered in full for the
Company by a customer, such transaction results in a zero impact on the Company’s profit or loss, i.e. revenue earned
by the Company equals expenses incurred by the Company.
Gain from disposal of property, plant and equipment, lease income, income from sale of other goods and provision
of other services, income from default charges and fines collected from the contractors as a result of late fulfilment of
work, income-related grants are recognised by the Group as other income.
Finance income
Finance income represents income earned by the Company from financing activities, such as foreign exchange gain,
interest income on deposits, proceeds from fines and late payment interest, interest receivable on loans granted to
buyers, gain on disposal of investments, and gain from change in fair value of investments.
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CONSOLIDATED ANNUAL REPORT 2021
2.16 Foreign currencies
Foreign currency transactions are accounted for at the official exchange rates prevailing at the date of the transactions.
Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and
liabilities denominated in foreign currencies on the balance sheet date are recognised in the income statement. Such
balances are translated at the period-end exchange rates.
2.17 Fair value measurement
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 Group and the Company use valuation techniques that are
appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of
relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within
the fair value measurement hierarchy described below. The fair value measurement hierarchy is based on the lowest
level input that is significant to the fair value measurement as a whole:
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly
or indirectly observable.
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
The Group’s and the Company’s financial assets not measured at fair value include cash and cash equivalents, trade and
other receivables, trade and other payables, and loans granted and borrowings.
The fair value is defined as the price at which on a valuation date an asset would be sold, under proper transaction,
between market participants. The fair value of a financial asset is not less than the amount discounted from the first day
when its payment becomes due.
As at 31 December 2021 and 2020, the carrying amount of the financial assets approximated their fair value.
2.18 Contingencies
Contingent liabilities are not recognised, but are disclosed in the financial statements 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 or economic benefits is
probable.
2.19 Events after the end of the financial year
Events after the end of the financial year that provide additional information about the Group’s and the Company’s
position at the date of the statement of financial position (adjusting events) are reflected in the financial statements.
Events after the end of the financial year that are not adjusting events are disclosed in the notes when material.
2.20 Inter-company offsetting
When preparing the financial statements, assets and liabilities, as well as revenue and expenses are not offset, except
for those cases where a certain standard specifically permits or requires such offsetting.
3. Accounting estimates and assumptions
The preparation of financial statements in conformity with International Financial Reporting Standards requires
management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and
expenses and disclosure of contingencies. The significant areas of estimation used in the preparation of these financial
statements relate to measurement of depreciation and valuation of property, plant and equipment (Notes 3.1, 6),
deferred income tax assets (Notes 3.4 and 23) and lease contracts (Notes 3.5 and 8). Future events may occur which
may cause the assumptions used in arriving at the estimates to change. The effect of any changes in estimates will be
recorded in the financial statements, when determinable.
3.1 Analysis of the need for revaluation of property, plant and equipment and impairment as at 31 December 2021
The Company accounts for property, plant and equipment pertaining to the operating segment of the transmission
services at revalued amount. The Company assesses at least annually whether there is any indication that the value
of property, plant and equipment might differ significantly from its fair value. If such indication exists, the Company
carries out an impairment test and revaluation. As at 31 December 2021, no significant changes were identified in the
operating segment of transmission services, and accordingly, no revaluation was carried out and reported (Note 5).
3.2 Provisions for easement and special land use conditions (protected areas)
On 6 June 2019, upon adoption of the Lithuanian Law on Special Land Use Conditions effective from 1 January 2020,
the legal regulation was partially changed in respect of application of special land use conditions (including not only the
protected areas, but also the main pipeline class location areas) in the areas (land parcels) adjacent to the infrastructure
objects owned by the Company, also in respect of their establishment, registration and payment of compensations.
However, upon adoption of the Law, no implementing legal acts were adopted that would regulate the simplified
procedures for establishing the areas subject to the special land use conditions, their registration and payment of
compensations, based on which the need for resources could be estimated, including the financial commitments of the
entities. As there was no clear legal regulation, the provision for commitment to register the land use conditions was
not established upon adoption of the Law in 2019. Enforcement of the Lithuanian Law on Special Land Use Conditions
requires an amendment to the Regulations of the Real Property Cadastre, which came into force on 12 February 2020.
The amendment stipulated an alternative way for registering the protected areas (thereby avoiding the need to modify
the cadastre data and to hire the land surveyors). The newly introduced procedure under the Law for registering the
main pipeline class location areas is expected to come into force in 2023.
In the financial statements for the period ended 31 December 2020, a provision was established for non-current
liabilities in relation to the commitment to register the special land use conditions (protected areas). When assessing the
amount of the commitment, the expected term of its fulfilment is taken into account. The provision for the commitment
to register the protected areas was recognised at a present value of the expected costs of registration of the special
land use conditions (the protected areas), discounted over the term of fulfilment of the commitment. Assumptions for
the establishment of the provision were not changed as at 31 December 2021.
The Ministry of Environment of the Republic of Lithuania has prepared the Methodology for calculation and payment
of compensation on application of special land use conditions in the areas established in the public interest as set out
in the Lithuanian Law on Special Land Use Conditions. The Methodology came into force on 8 April 2020. Based on the
official letter of 18 June 2020 of the Ministry of Energy of the Republic of Lithuania, the provisions of the Methodology
are effective for both the currently existing network and the newly constructed network. Based on the provisions of the
Methodology, the compensations for the protected areas would be become payable upon registration of the protected
areas, which means that based on the simplified procedure they would be payable after 2023. Upon establishment
and/or registration of areas (the protected areas) that are subject to the special land use conditions, it will then be
possible to calculate the compensations to the owners and users of land and other real property, or individuals who are
otherwise entitled to the compensation upon submission of applications and documents supporting the losses, with
each case assessed individually. The amount of the compensation is a matter of judgement, by taking into account the
main purpose of use of the land parcel, the scope of restrictions imposed, the specific losses incurred and/or being
incurred by the landowners as indicated in the application with the supporting documents, and other circumstances.
Based on the requirements of the Methodology and the data available to the Company, the Company is not able to
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CONSOLIDATED ANNUAL REPORT 2021
estimate reliably the compensations payable in the future for registered special land use conditions (the protected
areas). Under the requirements of IAS 37, the above-mentioned commitment does not meet the recognition criteria of
a provision, and therefore, no provision has been recognised in the financial statements.
3.3 Impairment of non-financial assets
The Company’s non-financial assets are assessed for impairment whenever events and circumstances indicate that
the value of assets may not be recoverable. Where the net book amount of an asset exceeds its recoverable amount,
impairment loss is recognised in profit or loss. 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). A reversal of an impairment loss recognised in prior
periods is recorded when there is an indication that the impairment loss recognised for the asset no longer exists or has
materially decreased. Reversal is recognised in profit or loss under the same line item as impairment loss. Intangible
assets with indefinite useful life are not amortised, but tested for impairment annually on individual basis or at the level
of a cash-generating unit.
3.4 Deferred tax assets
Deferred tax assets were estimated by the Company based on long-term forecasts, when sufficient taxable profit will
be available to the Company against which the deferred tax assets can be realised. As the Company fulfils the projects
that meet the definition of an investment project, it applies income tax relief consistently. The Company’s taxable profit
is reduced during the tax period by the amount of actually incurred costs related to acquisition of a qualifying asset. If
the amount of costs exceeds the amount of taxable profit calculated for the tax period, the excess amount of such costs
can be carried forward over the next four tax periods in a row to reduce the calculated taxable profit, with such carried
forward costs reduced accordingly. In the opinion of the Company, the investment relief will be utilised in full over the
next four tax periods in a row, and sufficient taxable profit will be available to the Company against which the assets can
be realised. As at 31 December 2021, deferred tax assets in the amount of EUR 4,608 thousand (31 December 2020:
EUR 3,923 thousand) were recognised on investment relief not utilised. See Note 2.14 for the items included in the
deferred tax asset calculation base.
3.5 Lease contracts
At inception, the newly entered lease contracts are assessed whether a contract is, or contains, a lease, i.e. whether the
contract conveys the right to control the use of the identified asset for a certain period, and components of the contract.
Assessment of such newly entered lease contracts involves consideration of the following: impairment of right-of-
use assets, changes in option to purchase the underlying assets, modifications to lease contracts, other assumptions
that affect the value of lease liabilities. When assessing the lease term of office premises, the Company assessed the
probability of exercising the option to extend the contract for the lease of office premises. Due to increase in the land
lease tax, the Company reviewed payments of the land lease tax and remeasured right-of-use assets and lease liabilities
(see Note 8).
4 Segment reporting
The Group has two operating segments: 1) natural gas transmission services and 2) natural gas exchange operator’s
activities. All non-current assets of the Group are domiciled in Lithuania, where the Group operates.
In 2021, the Group generated 70% (2020: 72%) of its total revenue from the system users in Lithuania, 27% (2020: 25%)
of its total revenue from transportation of gas to the adjacent transmission systems, 2% (2020: 3%) of its total revenue
from the natural gas exchange services, and 1% of its total revenue from provision of other goods and services.
The table below contains the Group’s information on operating segments for the period ended 31 December 2021:
Gas transmission Gas exchange Total
Revenue 66,973 1,660 68,633
Revenue after elimination of inter-company revenue 66,973 1,622 68,595
Operating profit (loss) 22,469 745 23,214
Finance income (costs), net (386) (51) (437)
Profit (loss) before income tax 22,083 694 22,777
Income tax 547 (113) 434
Net profit (loss) 22,630 581 23,211
Depreciation and amortisation expenses (11,882) (175) (12,057)
Write-offs of property, plant and equipment (26) - (26)
The table below contains the Group’s information on operating segments for the period ended 31 December 2020:
Gas transmission Gas exchange Total
Revenue 50,831 1,503 52,334
Revenue after elimination of intercompany reve-
nue
50,831 1,455 52,286
Operating profit (loss) 14,157 792 14,949
Finance income (costs), net (360) (3) (363)
Profit (loss) before income tax 13,797 789 14,586
Income tax 3,635 (51) 3,584
Net profit (loss) 17,432 738 18,170
Depreciation and amortisation expenses (10,934) (192) (11,126)
Write-offs of property, plant and equipment (25) (15) (40)
As at 31 December 2021, there were three customers of the Group each generating over 10% of the Company’s total
revenue. Such revenue totalled EUR 42,452 thousand, whereof:
Customer A – EUR 18,350 thousand;
Customer B – EUR 14,177 thousand;
Customer C – EUR 9,924 thousand.
As at 31 December 2020, there were three customers of the Group each generating over 10% of the Company’s total
revenue. Such revenue totalled EUR 33,962 thousand, whereof:
Customer A – EUR 12,725 thousand;
Customer B – EUR 12,326 thousand;
Customer C – EUR 8,911 thousand.
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CONSOLIDATED ANNUAL REPORT 2021
5 Intangible assets
Movements on intangible assets account during the current and previous reporting period were as follows:
Group
Patents and
licences
Computer
software
Other
intangible
assets
Protected
areas
Total
At 31 December 2019 104 2,695 110 - 2,909
Cost (revalued amount) 279 3,688 133 - 4,100
Accumulated amortisation (175) (993) (23) - (1,191)
Net book amount at 31 December
2019
104 2,695 110 - 2,909
Additions 3 761 133 2,179 3,076
Write-offs - (15) - - (15)
Amortisation (39) (889) (33) - (961)
Offsetting of grants against non-current
assets
- (176) - - (176)
At 31 December 2020 68 2,376 210 2,179 4,833
Cost (revalued amount) 282 4,258 266 2,179 6,985
Accumulated amortisation (214) (1,882) (56) - (2,152)
Net book amount at 31 December
2020
68 2,376 210 2,179 4,833
Additions 10 822 24 - 856
Write-offs - - - - -
Reclassification - 479 - - 479
Amortisation (19) (1,030) (64) - (1,113)
Offsetting of grants against non-current
assets
- (313) - - (313)
At 31 December 2021 59 2,334 170 2,179 4,742
Cost (revalued amount) 292 5,246 290 2,179 8,007
Accumulated amortisation (233) (2,912) (120) - (3,265)
Net book amount at 31 December
2021
59 2,334 170 2,179 4,742
Company
Patents and
licences
Computer
software
Other
intangible
assets
Protected
areas
Total
At 31 December 2019 14 2,247 - - 2,261
Cost (revalued amount) 41 2,972 5 - 3,018
Accumulated amortisation (27) (725) (5) - (757)
Net book amount at 31 December
2019
14 2,247 - - 2,261
Additions - 719 - 2,179 2,898
Write-offs - - - - -
Amortisation (11) (783) - - (794)
Offsetting of grants against non-current
assets
- (176) - - (176)
At 31 December 2020 3 2,007 - 2,179 4,189
Cost (revalued amount) 41 3,515 5 2,179 5,740
Accumulated amortisation (38) (1,508) (5) - (1,551)
Net book amount at 31 December
2020
3 2,007 - 2,179 4,189
Additions 10 812 - - 822
Write-offs - - - - -
Reclassification - 479 - - 479
Amortisation (4) (963) - - (967)
Offsetting of grants against non-current
assets
- (313) - - (313)
At 31 December 2021 9 2,022 - 2,179 4,210
Cost (revalued amount) 51 4,493 5 2,179 6,728
Accumulated amortisation (42) (2,471) (5) - (2,518)
Net book amount at 31 December
2021
9 2,022 - 2,179 4,210
The Group’s part of intangible assets with the acquisition cost of EUR 14 thousand as at 31 December 2021
(31 December 2020: EUR 19 thousand) was fully amortised but still in use.
As at 31 December 2020, the Company recognised a provision of EUR 2,179 thousand and the related intangible
assets for the establishment of the special land use conditions (protected areas). The provision was established under
the amendments to the Regulations of the Real Property Cadastre, which were necessary for the establishment of a
commitment to form a register of protected areas, as set out in the Lithuanian Law on Special Land Use Conditions,
by the year 2023, and based on the Description of the procedure for preparation and approval of the protected areas,
approved under the Lithuanian Energy Minister’s Order No. 1-339 of 13 October 2020. Discounting of the provision
was based on a discount rate of 0.62%. As at 31 December 2021, EUR 22 thousand were used for the registration of
the special land use conditions (settlement of the provision’s value).
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CONSOLIDATED ANNUAL REPORT 2021
6 Property, plant and equipment
Movements on the property, plant and equipment account during the current and previous reporting period were as follows:
Group
Land Buildings
Structures and
equipment
Plant and
machinery
Motor vehicles Other PP&E
Constru-
ction work in
progress
Total
At 31 December 2019 125 5,183 147,770 37,714 773 2,637 7,160 201,362
Cost (revalued amount) 125 5,429 151,885 41,224 992 3,679 7,160 210,494
Accumulated depreciation - (246) (4,115) (3,510) (219) (1,042) - (9,132)
Net book amount at 31 December 2019 125 5,183 147,770 37,714 773 2,637 7,160 201,362
Additions - - 74 12 - 707 88,034 88,827
Disposals and write-offs - (10) (2) (5) - (9) - (26)
Disposed - - - - (24) - - (24)
Reclassification from inventories - - 130 - - - - 130
Reclassification to inventories - - (31) (1) - - - (32)
Reclassifications - 634 2,951 283 - 838 (4,706) -
Depreciation - (380) (4,734) (3,420) (207) (988) - (9,729)
Offsetting of grants against non-current assets - - (155) - - (14) (38,715) (38,884)
At 31 December 2020 125 5,427 146,003 34,583 542 3,171 51,773 241,624
Cost (revalued amount) 125 5,807 150,737 38,003 749 4,164 51,773 251,358
Accumulated depreciation - (380) (4,734) (3,420) (207) (993) - (9,734)
Net book amount at 31 December 2020 125 5,427 146,003 34,583 542 3,171 51,773 241,624
Additions - - - 31 - 603 44,255 44,889
Disposals and write-offs - - - - - (1) (43) (44)
Disposed - - - - (1) (1) - (2)
Reclassification from inventories - - 29 - - - - 29
Reclassification to inventories - - (33) - - (5) (136) (174)
Reclassification to intangible assets - - - - - (479) - (479)
Reclassifications - 1,378 59,310 5,904 - 2,266 (68,858) -
Depreciation - (276) (5,368) (3,375) (168) (1,291) - (10,478)
Offsetting of grants against non-current assets - - (1) - - (197) (19,183) (19,381)
At 31 December 2021 125 6,529 199,940 37,143 373 4,066 7,808 255,984
Cost (revalued amount) 125 6,805 205,308 40,518 541 5,363 7,808 266,468
Accumulated depreciation - (276) (5,368) (3,375) (168) (1,297) - (10,484)
Net book amount at 31 December 2021 125 6,529 199,940 37,143 373 4,066 7,808 255,984
96
CONSOLIDATED ANNUAL REPORT 2021
Company
Land Buildings
Structures and
equipment
Plant and
machinery
Motor vehicles Other PP&E
Construction
work in prog-
ress
Total
At 31 December 2019 125 5,183 147,770 37,714 773 2,634 7,160 201,359
Cost (revalued amount) 125 5,429 151,885 41,224 992 3,672 7,160 210,487
Accumulated depreciation - (246) (4,115) (3,510) (219) (1,038) - (9,128)
Net book amount at 31 December 2019 125 5,183 147,770 37,714 773 2,634 7,160 201,359
Additions - - 74 12 - 705 88,034 88,825
Disposals and write-offs - (10) (2) (5) - (8) - (25)
Disposed - - - - (24) - - (24)
Reclassification from inventories - - 130 - - - - 130
Reclassification to inventories - - (31) (1) - - - (32)
Reclassifications - 634 2,951 283 - 838 (4,706) -
Depreciation - (380) (4,734) (3,420) (207) (988) - (9,729)
Offsetting of grants against non-current assets - - (155) - - (14) (38,715) (38,884)
At 31 December 2020 125 5,427 146,003 34,583 542 3,167 51,773 241,620
Cost (revalued amount) 125 6,053 154,852 41,513 968 5,193 51,773 260,477
Accumulated depreciation - (380) (4,734) (3,420) (207) (988) - (9,729)
Net book amount at 31 December 2020 125 5,427 146,003 34,583 542 3,167 51,773 241,620
Additions - - - 31 - 599 44,255 44,885
Disposals and write-offs - - - - - (1) (43) (44)
Disposed - - - - (1) (1) - (2)
Reclassification from inventories - - 29 - - - - 29
Reclassification to inventories - - (33) - - (5) (136) (174)
Reclassification to intangible assets - - - - - (479) - (479)
Reclassifications - 1,378 59,310 5,904 - 2,266 (68,858) -
Depreciation - (276) (5,368) (3,375) (168) (1,289) - (10,476)
Offsetting of grants against non-current assets - - (1) - - (197) (19,183) (19,381)
At 31 December 2021 125 6,529 199,940 37,143 373 4,060 7,808 255,978
Cost (revalued amount) 125 6,805 205,308 40,518 541 5,349 7,808 266,454
Accumulated depreciation - (276) (5,368) (3,375) (168) (1,289) - (10,476)
Net book amount at 31 December 2021 125 6,529 199,940 37,143 373 4,060 7,808 255,978
97
CONSOLIDATED ANNUAL REPORT 2021
The Group’s part of property, plant and equipment with the revalued amount of EUR 165 thousand as at 31
December 2021 (31 December 2020: EUR 87 thousand) was fully depreciated but still in use.
In 2021, the assets ready for the intended use, which were reclassified from construction work in progress,
amounted to EUR 68,858 thousand (after elimination of grants), whereof EUR 64,862 thousand represented assets
brough into use at the time of implementation of the gas interconnection project Poland-Lithuania (GIPL), and EUR
2,680 thousand represented the outcome of replacement of shut-off devices and process automation through
implementation of remote control systems. Based on the Group’s accounting policies, the cost of property, plant and
equipment as at 31 December 2021 excluded the GIPL compensation (the “CBCA contribution”), which was based
on the cross-border cost allocation criteria. The CBCA contribution is treated as a variable contribution, and will
therefore, be recognised as part of the cost of property, plant and equipment at the time the compensation will be
paid. For more information about the CBCA contribution, see Note 29.
In 2021, the Company’s capitalised borrowing costs (interest) were added to the cost of property, plant and
equipment and amounted to EUR 140 thousand (2020: EUR 170 thousand). The annual interest capitalisation rate in
2021 was 0.352% (2020: 0.443%).
Testing of property, plant and equipment in 2021
The Company assesses, at least annually, whether there is any indication that the value of property, plant and
equipment, which is carried at revalued amount, may be significantly different from its fair value, and conducts an
impairment test. The last revaluation of the Company’s property, plant and equipment was carried out in 2018, and
impairment of EUR 37,686 thousand was recognised by allocating it to assets of gas pipelines and technological
equipment.
The carrying amount of property, property, plant and equipment without revaluation as at 31 December 2020 and
2021 would be amounted to:
Land
Build-
ings
Structures
and
equip-
ment
Plant and
machin-
ery
Motor
vehicles
Other PP&E
Con-
struction
work in
progress
Total
At 31 December
2020
125 6,015 156,867 40,866 542 3,167 51,773 259,355
At 31 December
2021
125 7,101 210,627 42,579 373 4,061 7,808 272,674
The Company’s property, plant and equipment as at 31 December 2021 amounted to EUR 255,978 thousand, and the
value of property, plant and equipment tested for impairment (excluding the value of the project on the expansion
of the Kiemėnai gas metering station) was EUR 255,830 thousand. The fair value of those assets was tested by using
the discounted income approach by making cash flow projections until 2026 and by adding the discounted terminal
value beyond 2026.
The Company’s natural gas transmission activities are regulated by the State, and the regulatory decisions have
significant impact on the fair value of the assets. The gas transmission prices are regulated by NERC. The revenue
caps for regulated activities can be annually adjusted by the decision of NERC in accordance with the procedure
established in the Methodology for determining revenue from and prices for regulated natural gas transmission
activities. The ROI rate is set for the Company based on the Methodology for determining the rate of return on
investment (the WACC Methodology) as approved by NERC. According to the provisions of the WACC Methodology,
the ROI rate applicable to the Company is updated annually by NERC. The ROI rate set for the Company by NERC for
2021 is equal to 3.94% (3.86% for 2020). In the opinion of the management, there were no significant changes in the
regulatory environment during 2021.
Key assumptions used in the fair value testing as at 31 December 2021 were as follows:
a) a 3.42% discount rate was used for discounting cash flows;
b) a 3.94% ROI rate as set by NERC was used for 2022-2023, and a 4.12% ROI rate was used for 2024-2025 based on
the NERC’s WACC Methodology updated in 2020;
c) the terminal value of cash flows was determined by comparing the ROI rate (pre-tax rate of 4.02%) with the
discount rate;
d) the Company’s surplus earnings from regulated activities in excess of the established ROI rate arising from
increased gas transmission quantities (higher capacities and quantities actually ordered by the system users) and
incurred expenditure, after taking into account the operational efficiency achieved during 2019-2021, will reverse in
future by cutting the transmission prices for the system users (one-off effect);
e) annual growth rate for indefinite period is not applicable (equals 0).
Considering that the regulatory environment did not experience significant changes during 2021, and taking into
account all of the above assumptions, the Company concluded as a result the fair value testing that there were no
indications of significant change in the carrying amount of property, plant and equipment as at 31 December 2021
and that the carrying amount approximated the fair value. In the opinion of the Company’s management, one-off
fluctuations in the Company’s surplus earnings from regulated activities in excess of the ROI rate set by NERC have no
impact on the value of property, plant and equipment, and accordingly, no adjustments for changes in the value are
necessary for the accounting purposes.
The major construction work in progress items of the Group as at 31 December 2021 and 2020 were as follows:
Items
At 31 At 31
December 2021 December 2020
Implementation of gas interconnection Poland-Lithuania project in the territory of
Lithuania
- 83,799
Installation of pig launchers/receivers 10,364 4,446
Implementation of operative technological control of gas transmission system 1,487 2,781
Construction of the main gas pipeline Vilnius-Kaunas and interconnection Kaunas-
Šakiai
551 551
Reconstruction of gas distribution stations (5) and gas metering station (1) 407 98
Capacity enhancement for the gas interconnection between Lithuania and Latvia
(ELLI) (expansion of the Kiemėnai gas metering station)
148 49
Modernisation of gas compressor stations 798 214
Installation of solar power plant modules 41 9
Other 1,215 1,316
Grants recognised (offsetting against non-current assets) (6,606) (40,910)
1)
Less: impairment of construction work in progress (597) (580)
7,808 51,773
1)
Impairment of EUR 551 thousand was established for the project ‘Construction of the main gas pipeline Vilnius-
Kaunas and interconnection Kaunas-Šakiai’ (territory planning and engineering design services) because the
construction of the gas pipeline was postponed for later periods and uncertainties arose regarding the project
funding and further development issues. Impairment of EUR 29 thousand was established for the postponed
reconstruction works of a building with a system control centre.
98
CONSOLIDATED ANNUAL REPORT 2021
7 Investments in subsidiary
As at 31 December 2021 and 2020, the Company’s investments were as follows:
Subsidiary Cost Impairment
Carrying
amount
Ownership
interest, %
At 31 December 2021
GET Baltic UAB 769 - 769 100
Total 769 - 769
At 31 December 2020
GET Baltic UAB
769 (94) 675 100
Total 769 (94) 675
In preparing the financial statements for the period ended 31 December 2020 and 2021, the Company performed
an impairment test and did not identify any indications of impairment of investment in the subsidiary. As at 31
December 2021, the previously recognised impairment was reversed.
8 Right-of-use assets
As described below, the Group and the Company have taken on lease office premises, motor vehicles, and land.
Lease periods for premises, motor vehicles and land are 5-10 years, 4 years, and 99 years, respectively. The Group
and the Company assessed the probability of exercising the lease extension option when recognising right-of-use
assets and lease liabilities, and when determining the lease periods. From 1 October 2021, the Company leases
new office premises located at address: Laisvės pr. 10, Vilnius. Having assessed the lease extension option, which is
intended to be exercised, the lease term is 10 years. Due to increase in the land lease tax over the period of 2019-
2021, the Company remeasured right-of-use assets and lease liabilities. The value of land, which is held on the lease
basis and recognised as an asset, and the lease liabilities increased by EUR 257 thousand.
Group
Buildings Land Motor vehicles Total
Initial cost of recognised assets at
31 December 2019
723 1,265 13 2,001
Additions 4 - 1,119 1,123
Write-offs (354) - - (354)
Depreciation (152) (13) (270) (435)
Net book amount at 31 December
2020
221 1,252 862 2,335
Net book amount of recognised
assets at 31 December 2020
221 1,252 862 2,335
Additions 1,716 257 8 1,981
Write-offs - - - -
Depreciation (162) (16) (289) (467)
Net book amount at 31 December
2021
1,775 1,493 581 3,849
Initial cost 1,880 1,534 1,149 4,563
Accumulated depreciation (105) (41) (568) (714)
Net book amount at 31 December
2021
1,775 1,493 581 3,849
Company
Buildings Land Motor vehicles Total
Initial cost of recognised assets at
31 December 2019
585 1,265 - 1,850
Additions - - 1,119 1,119
Write-offs (354) - - (354)
Depreciation (132) (13) (266) (411)
Net book amount at 31 December
2020
99 1,252 853 2,204
Net book amount of recognised
assets at 31 December 2020
99 1,252 853 2,204
Additions 1,716 257 - 1,973
Write-offs - - - -
Depreciation (143) (16) (281) (440)
Net book amount at 31 December
2021
1,672 1,493 572 3,737
Initial cost 1,716 1,534 1,119 4,369
Accumulated depreciation (44) (41) (547) (632)
Net book amount at 31 December
2021
1,672 1,493 572 3,737
As the useful life of the right-of-use assets is longer than the lease term, depreciation is calculated from the
commencement date of the lease till the end of the lease term.
9 Inventories
Company
At 31 December 2021 At 31 December 2020
Raw materials, spare parts and other inventories 1,212 734
Natural gas 7,289 1,443
Assets held for resale 5 -
Inventories, gross 8,506 2,177
Less: write-down allowance (405) (280)
8,101 1,897
Changes in prices of natural gas had a major impact on changes in inventories of natural gas during 2020-2021.
The acquisition cost of the Company’s inventories stated at net realisable value as at 31 December 2021 amounted to EUR
1,212 thousand (31 December 2020: EUR 734 thousand). Inventory write-down allowance was included in other expenses.
The value of inventories recognised as expenses of the reporting period was equal to EUR 12,208 thousand as at 31
December 2021 (31 December 2020: EUR 7,020 thousand).
99
CONSOLIDATED ANNUAL REPORT 2021
10 Amounts receivable
Group Company
At 31 At 31 At 31 At 31
December
2021
December
2020
December
2021
December
2020
Non-current trade receivables - - - -
Other trade receivables - - - -
Current trade receivables and other amounts receivable
Amounts receivable for transmission of natural gas 9,424 5,745 9,574 5,799
Amounts receivable for natural gas 10,838 2,073 - -
Amounts receivable for balancing of transmission system
1,222 115 1,222 115
Other trade receivables 7 7 7 7
Less: impairment of amounts receivable (67) (70) (67) (70)
Total trade receivables 21,424 7,870 10,736 5,851
Group Company
At 31 At 31 At 31 At 31
December
2021
December
2020
December
2021
December
2020
Other amounts receivable
Receivable and accrued LNG terminal funds
under administration
13,385 12,834 13,385 12,834
Grants receivable 10,330 25,628 10,330 25,628
Contract assets 766 965 766 965
Other amounts receivable 41 80 40 78
Total other amounts receivable 24,522 39,507 24,521 39,505
Trade receivables and other amounts receivable
45,946 47,377 35,257 45,356
Current trade receivables are interest free and their settlement term is typically between 9 and 30 calendar days.
Impairment allowance of EUR 67 thousand was established for trade receivables as at 31 December 2021.
As at 31 December 2021, the total overdue amount in the balance of receivable LNG terminal funds under
administration was EUR 4,912 thousand (31 December 2020: EUR 5,253 thousand), whereof the overdue amounts of
Achema AB and Geoterma UAB were EUR 4,847 thousand and EUR 65 thousand, respectively.
The Group does not recognise impairment for the LNG terminal receivables, since the LNG terminal funds are not
treated as assets of the administrator of the LNG terminal funds based on the Description of the procedure for
administration of the LNG terminal funds, and therefore, they cannot be subject to debt recovery procedures under the
obligations of the administrator of the LNG terminal funds that are not related to the administration of the LNG terminal
funds.
Grants receivable include support from the EU structural funds to finance the projects implemented by the Company.
Support receivable from the EU structural funds to finance the project on the construction of the gas interconnection
between Poland and Lithuania amounted to EUR 8,840 thousand as at 31 December 2021 (31 December 2020: EUR
24,934 thousand).
Contract assets include as follows:
Company
At 31 At 31
December 2021 December 2020
Current contract assets related to transmission of
natural gas
766 965
Total contract assets 766 965
The Company applies a simplified credit risk assessment approach as required by IFRS 9 and accounts for loss
allowances for lifetime credit losses from initial recognition of amounts receivable.
To determine credit losses of amounts receivable the Company applies the individual assessment and a loss
coefficient matrix. The loss coefficient matrix is based on historical data for a period exceeding 36 months on
settlements of debts by customers. The loss coefficients may be adjusted in view of macroeconomic forecasts.
The loss coefficients are classified into separate groups of receivables on the basis of credit risk characteristics and
overdue period.
Trade receivables and other
amounts receivable
Not past due
Trade receivables past due Total
1-30 days
31-90
days
91-180
days
181 and
more
days
At 31 December 2021
Trade receivables assessed
individually
- 5,117 - - - - 5,117
Impairment - 22 - - - - 22
Trade receivables assessed collectively,
whereof:
2,355 3,203 87 - - 41 5,686
State-owned enterprises 2,355 - - - - - 2.355
Expected credit losses 0,00% 0,00% 0,00% 0,00% 0,00% 0,00%
Other customers - 3.204 86 - - - 3,290
Expected credit losses 0,00% 0,04% 2,99% 5,83% 17,55% 100,00%
Customers undergoing or in
bankruptcy/liquidation
- - - - - 41 41
Expected credit losses 100,00% 100,00% 100,00% 100,00% 100,00% 100,00%
Other amounts receivable 23,755 - - - - - 23,755
Expected credit losses 0,00% 0,00% 0,00% 0,00% 0,00% 0,00%
Contract assets 766 - - - - - 766
Expected credit losses 0,00% 0,00% 0,00% 0,00% 0,00% 0,00%
Impairment - 1 3 - - 41 45
Total impairment - 23 3 - - 41 67
Impairment allowance for the Group’s other amounts receivable and contract assets is not established.
100
CONSOLIDATED ANNUAL REPORT 2021
Change in impairment allowance recognised for the Group’s trade receivables:
Trade receivables
assessed collectively
Trade receivables
assessed individually
Total impairment
Balance at 31 December 2021 45 22 67
Balance at 31 December 2020 - 70 70
The maturity analysis of the Group’s trade and other receivables that have not been identified as impaired at 31
December 2021 and 31 December 2020:
Trade receivables
and other amounts
receivable not past
due
Trade receivables and other amounts receivable past due
Less than 30
days
31-90
days
91-180
days
181-360
days
More
than 360
days
Total
At 31 December 2021 40,949 1,552 2,931 449 - 65 45,946
At 31 December 2020 41,797 1,725 2,758 - - 1,097 47,377
The maturity analysis of the Company’s trade and other receivables that have not been identified as impaired at 31
December 2021 and 31 December 2020:
Trade receivables
and other amounts
receivable not past
due
Trade receivables and other amounts receivable past due
Less than
30 days
31-90
days
91-180
days
181-360
days
More
than
360
days
Total
At 31 December 2021 30,260 1,552 2,931 449 - 65 35,257
At 31 December 2020 40,038 1,463 2,758 - - 1,097 45,356
11 Other financial assets
The Group’s other financial assets as at 31 December 2021 consisted of monetary funds collected from extra charge
on natural gas transmission price related to natural gas supply security, referred to as the LNG terminal funds, and the
funds transferred by the exchange participants.
Those funds are collected from the system users, kept on separate bank accounts for LNG terminal funds in compliance
with the legal requirements, and are intended for payment to the recipients of the LNG terminal funds: the LNG terminal
operator (Klaipėdos Nafta AB), the designated supplier (Ignitis UAB), and the Company to cover the administration
costs of the LNG terminal funds. Based on Resolution No. O3E-1265 of 30 November 2020 adopted by NERC, an
extra charge related to natural gas supply security was set to be effective during the period from 1 January 2021 to 31
December 2021.
The funds of the gas exchange participants consist of funds transferred by the clients of GET Baltic UAB under the
provisions of the Regulation of trading on the natural gas exchange approved by the Board of GET Baltic UAB and
agreed with NERC. In order to submit the purchase orders for natural gas, the exchange participants are required to
make an advance payment (alternatively submit a bank guarantee) on the gas exchange operated by GET Baltic UAB,
for the amount no less than the value of the expected purchase orders. After trading is closed, the advance payment is
treated as a settlement for the natural gas purchased.
Group Company
At 31 December At 31 December At 31 December At 31 December
2021 2020 2021 2020
LNG terminal funds 1,305 3 1,305 3
Funds transferred by gas
exchange participants
50,209 8,670 - -
Total other financial assets 51,514 8,673 1,305 3
12 Cash and cash equivalents
Group Company
At 31 December At 31 December At 31 December At 31 December
2021 2020 2021 2020
Cash at bank 906 767 12 3
906 767 12 3
The Company and the Group keep their cash balances on bank accounts. As at 31 December 2021, the balance
of cash was not material due to the Company’s and the Group’s treasury management policy aimed at maintaining
minimum cash balances. As at 31 December 2021, the Company and the Group had no contracts on deposits.
The table below presents the long-term foreign currency credit ratings of the banks in which the Group kept its cash
balances as at 31 December 2021:
Bank
Cash at bank
at 31 December 2021
Rating agency
Moody’s Standard&Poor‘s Fitch Ratings
SEB Bankas AB
1)
899 Aa3 A+ AA-
Swedbank AB
1)
7 Aa3 A+ A+
1)
The ratings assigned to the parent banks as at 31 December 2021.
13Reserves
Legal reserve
A legal reserve is a compulsory reserve under the legislation of the Republic of Lithuania. Annual transfers of not less
than 5% of net profit are compulsory until the reserve reaches 10% of the authorised share capital.
The Company’s legal reserve amounts to EUR 5,173 thousand and represents 10% of its authorised share capital.
Other reserves
Other reserves are formed by the decision of the annual General Shareholders’ Meeting regarding the appropriation
of profit. In approving the appropriation of profit for 2020, the total amount of profit to be appropriated of EUR
28,040 thousand was transferred to other reserves under the decision of the General Meeting of Shareholders.
101
CONSOLIDATED ANNUAL REPORT 2021
14 Borrowings
In May 2018, the Company and OP Corporate Bank pic Lithuanian branch signed an agreement on a long-term loan
for amount of EUR 30,000 thousand. As at 31 December 2019, the withdrawn amount of the loan was EUR 30,000
thousand. In June 2020, the Company and the European Investment Bank signed an agreement on a long-term loan
to finance the construction of the gas interconnection between Poland and Lithuania in the territory of Lithuania. As at
31 December 2021, the withdrawn amount of the loan was EUR 60,000 thousand.
To balance the liquid funds, on 27 February 2019 the Company and EPSO-G UAB entered into a cash pool contract,
based on which the maximum borrowing limit from EPSO-G UAB was set in amount of EUR 15,000 thousand. On 31
March 2020 and 29 June 202, additional arrangements were signed, based on which the maximum borrowing limit
was increased up to EUR 35,000 thousand and EUR 40,000 thousand, respectively. As at 31 December 2021, the
Company’s borrowings under this arrangement amounted to EUR 3,284 thousand (31 December 2020: EUR 7,852
thousand).
Group Company
At 31
December
At 31
December
At 31
December
At 31
December
2021 2020 2021 2020
Non-current borrowings
Borrowings from local credit institutions 14,000 22,000 14,000 22,000
Borrowings from international financial
institutions
77,391 79,565 77,391 79,565
Current borrowings
Borrowings from local credit institutions - - - -
Current borrowings (EPSO-G UAB) 3,284 7,852 3,284 7,852
Current portion of non-current borrowings 10,174 10,174 10,174 10,174
104,849 119,591 104,849 119,591
As at 31 December 2021, the weighted average interest rate on the Group’s and the Company’s borrowings was 0.34%
(31 December 2020: 0.39%). The interest rate is linked to variable part of 3-6-month EURIBOR.
The balance of borrowings from Nordic Investment Bank, less the current portion of non-current borrowings, amounted
to EUR 17,391 thousand as at 31 December 2021 (31 December 2020: EUR 19,565 thousand).
The balance of the borrowing from OP Corporate Bank PLC Lithuania branch, less the current portion of the non-current
borrowing, amounted to EUR 14,000 thousand as at 31 December 2021 (31 December 2020: EUR 22,000 thousand).
The balance of borrowings from European Investment Bank, less the current portion of non-current borrowings,
amounted to EUR 60,000 thousand as at 31 December 2021.
As at 31 December 2021 and 2020, the Company complied with the covenants set forth in the loan agreements with the
above-mentioned banks.
Contractual maturity dates:
Group
At 31 December
2021
At 31 December
2020
At 31 December
2021
At 31 December
2020
Borrowings with a
fixed interest rate
Borrowings with a
fixed interest rate
Borrowings with a
variable interest rate
Borrowings with a
variable interest rate
2021 - - - 10,174
2022 - - 10,174 10,174
2023 1,475 1,475 16,420 16,420
2024 2,951 2,951 3,158 3,158
2025 2,951 2,951 3,158 3,158
2026 2,951 2,951 3,158 3,158
2027 2,951 2,951 3,158 3,158
2028 2,951 2,951 3,158 3,158
2029 2,951 2,951 3,158 3,158
2030 2,951 2,951 3,158 3,158
2031 2,951 2,951 984 984
2032 2,951 2,951 983 983
2033 2,951 2,951 983 983
2034 2,951 2,951 983 983
2035 2,951 2,951 983 983
2036 2,951 2,951 983 983
2037 2,951 2,951 983 983
2038 2,211 2,211 983 983
45,000 45,000 56,565 66,739
The maturity dates of the Group’s borrowings match those of the Company’s borrowings.
All borrowings of the Group have been obtained in the euros, and therefore, the outstanding balances of borrowings
are denominated in the euros between 31 December 2020 and 31 December 2021, thereby resulting in no foreign
exchange effect.
There are no third-party guarantees or assets pledged by the Company as a collateral for bank borrowings.
Reconciliation of net debt to cash flows from financing activities between 2020 and 2021:
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CONSOLIDATED ANNUAL REPORT 2021
Group
Cash Borrowings Lease liabilities Total
Net debt at 31 December
2019
233 (71,809) (2,008) (73,584)
Change in cash and cash
equivalents
534 - - 534
(Proceeds) from borrowings - (60,000) - (60,000)
Repayments of borrowings - 13,798 - 13,798
Change in overdraft - (1,580) - (1,580)
Lease payments - - 414 414
Other non-cash movements
Newly entered lease con-
tracts
- - (1,123) (1,123)
Lease modifications 354 354
Other non-cash movements - - - -
Net debt at 31 December
2020
767 (119,591) (2,363) (121,187)
Change in cash and cash
equivalents
139 - - 139
(Proceeds) from borrowings - - - -
Repayments of borrowings - 10,174 - 10,174
Change in overdraft - 4,568 - 4,568
Lease payments - - 418 418
Other non-cash movements - - - -
Newly entered lease con-
tracts
- - (1,724) (1,724)
Lease modifications - - (257) (257)
Other non-cash movements - - - -
Net debt at 31 December
2021
906 (104,849) (3,926) (107,869)
Company
Cash Borrowings Lease liabilities Total
Net debt at 31 December
2019
197 (71,629) (1,857) (73,289)
Change in cash and cash
equivalents
(194) - - (194)
Proceeds from borrowings - (60,000) - (60,000)
Repayments of borrowings - 13,618 - 13,618
Change in overdraft - (1,580) - (1,580)
Lease payments - - 392 392
Other non-cash movements
Newly entered lease con-
tracts
- - (1,119) (1,119)
Lease modifications - - 354 354
Other non-cash movements - - - -
Net debt at 31 December
2020
3 (119,591) (2,230) (121,818)
Change in cash and cash
equivalents
9 - - 9
Proceeds from borrowings - - - -
Repayments of borrowings - 10,174 - 10,174
Change in overdraft - 4,568 - 4,568
Lease payments - - 391 391
Other non-cash movements - - - -
Newly entered lease con-
tracts
- - (1,716) (1,716)
Lease modifications - - (257) (257)
Other non-cash movements - - -
Net debt at 31 December
2021
12 (104,849) (3,812) (108,649)
103
CONSOLIDATED ANNUAL REPORT 2021
15 Lease liabilities
Lease liabilities and their movement were as follows:
Group
At 31 At 31
December 2021 December 2020
Carrying amount of lease liabilities at the beginning of the
period
2,363 2,009
Recognition of lease liabilities under IFRS 16 257 4
Newly entered lease contracts 1,724 1,119
Lease terminations (write-off of debt and accrued interest) - (354)
Expenses of interest charged 28 26
Lease payments (principal and interest) (446) (441)
Carrying amount at 31 December 3,926 2,363
Non-current lease liabilities 3,494 1,953
Current lease liabilities 432 410
Company
At 31 At 31
December 2021 December 2020
Carrying amount of lease liabilities at the beginning of the
period
2,230 1,857
Recognition of lease liabilities under IFRS 16 257 -
Newly entered lease contracts 1,716 1,119
Lease terminations (write-off of debt and accrued interest) - (354)
Expenses of interest charged 26 24
Lease payments (principal and interest) (417) (416)
Carrying amount at 31 December 3,812 2,230
Non-current lease liabilities 3,411 1,843
Current lease liabilities 401 387
Group
Lease liabilities
At 31 At 31
December 2021 December 2020
Current portion 432 410
Maturity of non-current liabilities: 3,494 1,953
Between 1 and 2 years 505 310
Between 2 and 3 years 243 312
Between 3 and 5 years 421 84
After 5 years 2,325 1,247
Company
Lease liabilities
At 31 At 31
December 2021 December 2020
Current portion 401 387
Maturity of non-current liabilities: 3,411 1,843
Between 1 and 2 years 476 287
Between 2 and 3 years 221 289
Between 3 and 5 years 389 46
After 5 years 2,325 1,221
Interest calculated on lease liabilities and included in the Group’s finance costs amounted to EUR 28 thousand as at
31 December 2021 (31 December 2020: EUR 26 thousand).
The Group and the Company had no leases with variable payments not included in the value of lease liabilities.
The Group’s lease payments made (capital value paid) in 2021 amounted to EUR 418 thousand (2020: EUR 414
thousand).
16 Contract liabilities
Funds from connection of new system users to the gas transmission system and prepayments received from the
system users for transmission services are recognised as liabilities under contracts with customers.
Liabilities under contracts with customers:
Company
At 31 At 31
December 2021 December 2020
Non-current portion of contract liabilities under connection
contracts
1,305 1,337
Total non-current liabilities under contracts with customers 1,305 1,337
Current portion of contract liabilities under connection contracts
33 34
Payments received in advance for transmission services 23 34
Total current liabilities under contracts with customers 56 68
Total contract liabilities 1,361 1,405
Contract liabilities under contracts for the connection of new consumers
Funds from connection of new consumers to the gas transmission system recognised as contract liabilities amounted
to EUR 1,338 thousand as at 31 December 2021 (31 December 2020: EUR 1,337 thousand), of which non-current
liabilities under contracts for the connection of new consumers to the transmission system amounted to EUR 1,305
thousand (31 December 2020: EUR 1,337 thousand). The contract liabilities to be recognised as revenue within one
year are reported as current contract liabilities.
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CONSOLIDATED ANNUAL REPORT 2021
Company
Non-current liabilities
under connection
contracts
Current liabilities under
connection contracts
Total
Closing balance at 31 December 2019 1,371 34 1,405
Received/receivable - - -
Recognised as revenue - (34) (34)
Reclassification (34) 34 -
Closing balance at 31 December 2020 1,337 34 1,371
Received/receivable - - -
Recognised as revenue - (33) (33)
Reclassification (32) 32 -
Closing balance at 31 December 2021 1,305 33 1,338
17 Provisions
Company
At 31 December 2021 At 31 December 2020
Provisions for employee pension obligations 602 548
Provisions for registration of special land use conditions
(protected areas)
2,157 2,179
Carrying amount 2,759 2,727
Non-current provisions 1,471 2,651
Current provisions 1,288 76
As at 31 December 2021, the Company’s and the Group’s employee benefit obligations related to payment of
one-off benefits to employees leaving the Company at their retirement age amounted to EUR 602 thousand
(31 December 2020: EUR 562 thousand). There were no other long-term employee benefits under long-term service
obligations as per the collective agreement.
Key assumptions used in assessing the Company’s and the Group’s long-term employee benefit obligations are given
below:
At 31 December 2021 At 31 December 2020
Discount rate 0,37% 0,37%
Annual employee turnover rate 6,62% 5,99%
Annual salary growth 4,00% 3,30%
Average time to retirement (years) 19,96 19,80
As at 31 December 2020, the Company recognised a provision of EUR 2,179 thousand and the related intangible
assets for the establishment of the special land use conditions (protected areas). The provision was established under
the amendments to the Regulations of the Real Property Cadastre, which were necessary for the establishment of a
commitment to form a register of protected areas, as set out in the Lithuanian Law on Special Land Use Conditions,
by the year 2023, and based on the Description of the procedure for preparation and approval of the protected areas,
approved under the Lithuanian Energy Minister’s Order No. 1-339 of 13 October 2020. Discounting of the provision
was based on a discount rate of 0.62%. Assumptions for the establishment of the provision were not changed as at 31
December 2021. As at 31 December 2021, the amount of EUR 1,201 thousand was reclassified to current liabilities for
the formation of special land use conditions.
18 Trade payables
Group Company
At 31 At 31 At 31 At 31
December 2021 December 2020 December 2021 December 2020
Payables to suppliers under the investment
programme (reconstruction)
2,141 4,810 2,141 4,810
Payables to service providers 1,457 2,106 1,438 2,007
Payables to repair service providers for non-
current assets
358 265 358 265
Payables to natural gas suppliers 28,520 3,248 4,502 1,069
32,476 10,429 8,439 8,151
Trade payables are interest free and their settlement term is typically between 30 and 60 days.
19 Advance amounts received
Group Company
At 31 At 31 At 31 At 31
December 2021 December 2020 December 2021 December 2020
Current contract liabilities 56 68 56 68
Grants received in advance 151 236 151 236
Advance amounts received from gas
exchange participants
36,455 8,246 - -
Other advance amounts received 622 8 622 8
Total advance amounts received and
contract liabilities
37,284 8,558 829 312
The Group’s advance amounts received amounted to EUR 37,284 thousand as at 31 December 2021 (31 December
2020: EUR 8,558 thousand), whereof advance amounts received from the gas exchange participants amounted to
EUR 36,455 thousand as at 31 December 2021 (31 December 2020: EUR 8,246 thousand).
The advance amounts received from gas exchange participants are used on the date of settlement of the exchange
participants, unless there is a request of a participant not to use the advance amount, thereby reducing the amount
105
CONSOLIDATED ANNUAL REPORT 2021
payable for gas and exchange services. The advance amount not used in full or in part remains for other settlements
of an exchange participant. If an advance amount has not been used by an exchange participant for over 1 year, such
amount is refunded to the exchange participant.
20 Other amounts payable and current liabilities
Group Company
At 31 At 31 At 31 At 31
December 2021 December 2020 December 2021 December 2020
Payable LNG terminal funds under
administration
12,259 10,670 12,259 10,670
Accrued LNG terminal funds under
administration
1)
2,406 2,175 2,406 2,175
Payable real estate tax 838 453 838 453
Payable value added tax 637 582 235 278
Other amounts payable 406 465 390 405
Total other amounts payable 16,546 14,345 16,128 13,981
1)
Accrued LNG terminal funds under administration are accounted for upon issuing a VAT invoice to the natural gas
system users. Accrued LNG terminal funds under administration are allocated to the account of payable LNG terminal
funds when Klaipėdos Nafta AB and Ignitis UAB issue a VAT invoice to the Company for the extra charge on the
natural gas transmission price related to natural gas supply security.
21 Revenue
The Group’s and the Company’s revenue consists of as follows:
Group Company
2021 2020 2021 2020
Revenue from natural gas transmission in the
territory of Lithuania
53,748 45,897 53,748 45,897
Revenue from transmission system balancing
services
12,540 4,588 12,540 4,588
Revenue from trading on the exchange 1,486 1,356 - -
Grants recognised as revenue 144 37 144 37
Revenue from administration of the LNG
terminal funds
73 65 73 65
Revenue from connection of new consumers
(deferred revenue)
34 34 34 34
Other income 570 309 434 210
68,595 52,286 66,973 50,831
Revenue from contracts with customers includes as follows:
Group Company
2021 2020 2021 2020
Revenue recognised over time
Revenue from natural gas transmission in the territory
of Lithuania
53,748 45,897 53,748 45,897
Revenue from transmission system balancing ser-
vices
12,540 4,588 12,540 4,588
Revenue from membership fees 70 55 - -
Other income 174 133 33 34
Total revenue recognised over time 66,532 50,673 66,321 50,519
Revenue recognised at a point in time upon provision
of services
Revenue from trading on the exchange 1,411 1,301 - -
Total revenue recognised at a point in time upon
provision of services
1,411 1,301 - -
Total revenue from contracts with customers 67,943 51,974 66,321 50,519
22 Financing activities
Group Company
2021 2020 2021 2020
Interest income - - - -
Interest on late payment - 3 - 3
Dividend income - - 478 -
Other 2 - 2 -
Total income from financing activity 2 3 480 3
Interest expenses on borrowings (486) (464) (486) (461)
Capitalised borrowing costs* 140 170 140 170
Other finance costs (93) (72) (42) (72)
Total finance costs (439) (366) (388) (363)
Result of financing activities, net (437) (363) 92 (360)
* Capitalised borrowing rate is calculated as a weighted average interest rate on the Company’s non-current
borrowings from finance institutions and other borrowings costs.
Dividends received by the Company from subsidiary GET Baltic UAB in 2021 amounted to EUR 478 thousand.
106
CONSOLIDATED ANNUAL REPORT 2021
23 Current and deferred income tax
Income tax expenses include as follows:
Group Company
2021 2020 2021 2020
Current income tax expenses (113) (98) - (47)
Deferred income tax benefit 547
3,682
547 3,682
Current income tax benefit 434 3,584 547 3,635
Movements in deferred income tax assets and liabilities (before offsetting the amounts relating to the same tax
administration authority) were as follows:
Deferred income tax assets
PP&E
impairment
Fees on
connection
of new
consumers
Impairment
allowance for
receivables
and write-
down of
inventories
Accruals
Investment
relief not
utilised
Total
At 31 December 2019 2,811 211 58 200 - 3,280
Recognised in profit or loss (165) (5) (6) 38 3,923 3,785
Recognised in other
comprehensive income
- - - - - -
At 31 December 2020 2,646 206 52 238 3,923 7,065
Recognised in profit or loss (156) (5) 19 23 685 566
Recognised in other
comprehensive income
- - - - - -
At 31 December 2021 2,490 201 71 261 4,608 7,631
Deferred income tax liabilities
Effect of capitalised
borrowings costs
Total
At 31 December 2019 - -
Recognised in profit or loss 104 104
Recognised in other comprehensive income - -
At 31 December 2020 104 104
Recognised in profit or loss 19 19
Recognised in other comprehensive income - -
At 31 December 2021 123 123
Deferred income tax, net as at 31 December 2019 3,280
Deferred income tax, net as at 31 December 2020 6,961
Deferred income tax, net as at 31 December 2021 7,508
Group
At 31 December
2021
At 31 December
2020
Deferred income tax assets:
Loss on revaluation and impairment of PP&E 2,490 2,646
Accrued vacation reserve 167 154
Accrual for long-term employee benefits 90 82
Impairment allowance for doubtful trade receivables and write-down of
inventories
71 52
Investment relief not utilised 4,608 3,923
Tax losses - -
Contract liabilities 201 206
Other 4 2
Deferred income tax assets before valuation allowance 7,631 7,065
Less: valuation allowance - -
Less: deferred income tax assets offset against deferred income tax liabil-
ities
123 104
Deferred income tax assets, net 7,508 6,961
According to the provisions of the Law on Corporate Income Tax, income tax relief may be applied to investments in
fixed assets which meet the criteria set out in the Law on Corporate Income Tax. When calculating income tax for the
year 2021, the Company and the Group utilised the income tax relief and reduced the income tax expenses for the
year 2021 by the total amount of EUR 3,878 thousand (2020: EUR 5,888 thousand).
Deferred income tax assets and deferred income tax liabilities were offset in the Group’s and the Company’s
statement of financial position as they were related to the same tax administration authority.
When estimating the components of deferred income assets and liabilities in 2021 and 2020, the Group and the
Company applied income tax rate of 15%.
The reported amount of current income tax expenses can be reconciled to the income tax expenses that would result
from applying a standard income tax rate of 15% to profit before tax:
Group
2021 2020
Profit (loss) before income tax
23,349 14,586
Income tax (expenses) at the effective income tax rate (3,503) (2,187)
Non-deductible expenses, non-taxable income
72 (27)
Investment relief utilised during the reporting period 3,180 1,965
Other - (42)
Additional investment relief not utilised 685 3,922
Adjustments to previous year income tax
- (47)
434 3,584
107
CONSOLIDATED ANNUAL REPORT 2021
Company
2021 2020
Profit (loss) before income tax
22,617 13,797
Income tax (expenses) at the effective income tax rate (3,393) (2,069)
Non-deductible expenses, non-taxable income
75 (32)
Investment relief utilised during the reporting period 3,180 1,965
Other - (104)
Additional investment relief not utilised
685 3,922
Adjustments to previous year income tax
- (47)
547 3,635
24 Basic and diluted earnings per share
Basic and diluted earnings (loss) per share reflect net profit (loss) divided by the weighted average number of shares.
There are no diluting instruments, therefore, the basic and diluted earnings (loss) per share are the same. Calculation
of basic and diluted earnings (loss) per share is presented below:
Group
2021 2020
Net profit attributable to equity holders of the Group
(EUR ’000)
23,211 18,170
Weighted average number of shares (’000 units) 178,383 178,383
Basic and diluted earnings (loss) per share (EUR) 0,13 0,10
25 Cash flows from investing and financing activities
When calculating cash flows from investing activities in 2021, the Company took into consideration the following:
movement in the Company’s amounts payable for non-current assets of EUR 2,669 thousand, payments made
to form special land use conditions of EUR 36 thousand, and capitalised borrowings costs of EUR 140 thousand.
Reclassification from non-current assets (including construction work in progress) to inventories and assets held for
resale amounted to EUR 283 thousand.
When calculating cash flows from investing activities in 2020, the Company took into consideration the following:
movement in the Company’s amounts payable for non-current assets of EUR 3,369 thousand, capitalised borrowings
costs of EUR 170 thousand, reclassification of emergency reserve inventories from non-current assets to current
assets in amount of EUR 32 thousand.
When calculating grants received, for the purpose of cash flows from investing activities in 2022, the Company took
into consideration the movement in grants receivable of EUR 15,357 thousand (2020: EUR 23,998 thousand).
26 Financial assets and liabilities and risk management
As the Company carries out its operations, it is exposed to financial risks. By managing the risks, the Group and the
Company seek to mitigate the impact of factors that might have an adverse effect on the financial performance. The
Company follows the Treasury and Financial Risk Management Policy approved by the Board of Directors.
Group Company
Financial assets
At 31 December
2021
At 31
December
2020
At 31 December
2021
At 31
December
2020
Trade receivables 21,424 7,870 10,736 5,851
Other amounts receivable 20 67 19 67
Cash and cash equivalents 906 753 12 3
Financial assets measured at amortised cost 22,350 8,690 10,767 5,921
Other financial assets
Financial assets measured at amortised cost 51,514 8,687 1,305 3
Total financial assets 73,864 17,377 12,072 5,924
Grupė Bendrovė
Financial liabilities
At 31
December
2021
At 31
December
2020
At 31
December
2021
At 31
December
2020
Borrowings 104,849 119,591 104,849 119,591
Lease liabilities
3,926 2,363 3,812 2,230
Trade payables 32,476 10,429 8,439 8,151
Other amounts payable and liabilities 37,218 8,584 763 338
Total 178,469 140,967 117,863 130,310
Liquidity risk
Liquidity risk is managed constantly by making short-term and long-term cash flow forecasts of the Group. Where
necessary, the Group relies on the forecasts to make decisions aimed at ensuring its solvency, i.e. uses the credit limit
on the parent company’s cash pool account to balance its liquid funds.
The Group’s liquidity ratios (after elimination of effects of the LNG terminal funds under administration) were as
follows as at 31 December 2021 and 2020:
At 31 December 2021 At 31 December 2020
Current ratio 1,04 1,16
Quick ratio 0,94 1,10
The table below contains a breakdown of the Group’s financial liabilities by maturity as at 31 December 2021 and 31
December 2020 based on the undiscounted contractual payments (payments per schedule including interest):
108
CONSOLIDATED ANNUAL REPORT 2021
On demand
Up to 3
months
Between
3 and 12
months
Between
1 and 5
years
After 5
years
Total
Interest-bearing borrowings and liabilities - 4,472 9,327 37,135 56,169 107,103
Lease liabilities - 73 359 1,169 2,325 3,926
Other liabilities 36,455 59 704 - - 37,218
Trade payables - 32,476 - - - 32,476
Balance at 31 December 2021 36,455 37,080 10,390 38,304 58,494 180,723
Interest-bearing borrowings and liabilities - 9,066 9,376 41,409 62,513 122,364
Lease liabilities - 75 335 706 1,247 2,363
Other liabilities 8,246 60 278 - - 8,584
Trade payables - 10,429 - - - 10,429
Balance at 31 December 2020 8,246 19,630 9,989 42,115 63,760 143,740
The table below contains a breakdown of the Company’s financial liabilities by maturity as at 31 December 2021 and
31 December 2020 based on the undiscounted contractual payments (payments per schedule including interest):
Up to 3
months
Between 3
and 12
months
Between 1
and 5 years
After 5
years
Total
Interest-bearing borrowings and liabilities 4,472 9,327 37,135 56,169 107,103
Lease liabilities 73 328 1,086 2,325 3,812
Other liabilities 59 704 - - 763
Trade payables 8,439 - - - 8,439
Balance at 31 December 2021 13,043 10,359 38,221 58,494 120,117
Interest-bearing borrowings and liabilities 9,066 9,376 41,409 62,513 122,364
Lease liabilities 69 318 622 1,221 2,230
Other current liabilities 60 278 - - 338
Trade payables 8,151 - - - 8,151
Balance at 31 December 2020 17,346 9,972 42,031 63,734 133,083
Credit risk
The maximum exposure to credit risk is equal to the amount of trade receivables (except for receivable LNG terminal
funds), other amounts receivable, cash, other financial assets, grants receivable and funds transferred by gas exchange
participants, less recognised impairment losses. Delays in settlement of significant amounts of trade receivables may
affect the Company’s ordinary course of business and lead to search of additional financing sources. Credit risk is
managed through regular monitoring procedures (individual supervision of debtors, monitoring and analysis of
customers in order to identify potential solvency issues that may arise in the future, etc.). The Company has approved
the Description of administration of payments for the transmission services, which stipulates the specific actions and
deadlines to be followed in order to reduce the outstanding balance of trade receivables. Creditworthiness of all
customers is assessed, and in case of any deviations from the criteria set out in the Description of administration of
payments for the transmission services, the risk is assessed individually in respect of creditworthiness of each customer,
and, if necessary, additional credit enhancements are ensured to eliminate such risk. The Company is exposed to
significant concentration of credit risk. The credit risk exposure is distributed among the Company’s 10 major customers
with trade receivables from them representing 91% of the Company’s total trade receivables as at 31 December 2021
(31 December 2020: 92%).
The Group’s exposure to credit risk arises from cash at bank. The level of exposure depends on the credibility of the
selected bank (Note 12). The Group has an effective treasury and financial risk management policy in place.
The policy establishes the credibility level of the banks selected for partnership; the diversification limits for funds kept
as deposits or invested in the investment products of banks or their subsidiaries, other securities, etc.
The credibility of the selected partners is assessed according to the procedure established at the Company. The system
users assigned with the highest risk level are assessed by engaging an entity that provides specialised creditworthiness
assessment services, and an exchange participant willing to make a purchase order is required to provide a credit
enhancement (advance payment or bank guarantee).
The Group does not issue guarantees to secure the fulfilment of obligations of other parties.
Interest rate risk
As at 31 December 2021 and 2020, the Group had borrowings with variable interest rates. Exposure to interest rate
risk arises from variable interest rates that are linked to EURIBOR. Given the current situation in the market of inter-bank
offered rates, the Group did not enter into any transactions on financial instruments intended to manage the interest
rate risk during 2021 and 2020.
The table below demonstrates the sensitivity of the Company’s profit before tax to theoretically possible changes in
EURIBOR interest rates, with all other variables held constant. The Company estimates sensitivity using 100 basis points,
which make 1%.
There is no impact on the Company’s equity, other than that on current year profit.
Increase in EURIBOR, b.p. Impact on profit before tax, EUR ’000
At 31 December 2021 +100 (415)
Natural gas price risk
The Group is exposed to a risk arising from changes in the natural gas purchase price. Changes are caused by various
fluctuations in global markets. In 2021, the Group did not take any measures to mitigate the natural gas price risk.
Fair value of financial assets and liabilities
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 Group’s major financial assets and liabilities not carried at fair value are trade and other receivables, trade and
other payables, current and non-current loans granted and borrowings, and finance lease.
The following methods and assumptions are used by the Group and the Company to estimate the fair value of each
class of financial instruments:
(a) The carrying amount of current trade and other amounts receivable, current trade and other amounts payables
approximates their fair value (level 3);
(b) The fair value of non-current loans granted and borrowings is measured using the interest rate that is currently
available for borrowings with the same maturity profile and similar credit risk. The Group determined that the fair value
of interest-bearing non-current borrowing approximated their carrying amount (level 3).
27 COVID-19 impact on key accounting estimates, assumptions and estimation uncertainties
Below is a summary of key areas considered by the Company during the assessment of COVID-19 impact:
Going concern
During the pandemic period the impact of factors related to coronavirus COVID-19 on the Group’s and the Company’s
performance and results of operations was assessed on a continuous basis. The assessment is focused on potential
disruptions or impact on: (I) cash flows, (II) provision and demand for transmission services, (III) availability of funding,
(IV) possible COVID-19 infection of employees fulfilling critical functions, (V) late fulfilment of projects.
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CONSOLIDATED ANNUAL REPORT 2021
When analysing information available as at the reporting date about COVID-19-related future threats, the Group and
the Company did not identify any material circumstances that might cast doubt upon the Group’s and the Company’s
ability to continue on a going concern basis. It is practically impossible to assess reasonably the assumptions used in
the scenario of long-term negative impact as at the reporting date.
Net book amount and useful life: property, plant and equipment and intangible assets
The management reviewed the useful lives of non-current assets to make sure they reflect the expected nature and
purpose of use of those assets, in view of potential COVID-19 impact on those assets. Such review was based on the
expected economic events and circumstances that might potentially be caused by COVID-19 pandemic in the future.
As a result of the review, the management did not identify any material disruptions in the usage of property, plant and
equipment neither in the short-term nor in the long-term perspective. In the opinion of the Company’s management,
no negative impact of coronavirus COVID-19 has been identified on the results of operations and cash flows, therefore
there are no indications of impairment of property, plant and equipment. Even an adverse change in the results of
operations or cash flows in a short term would not cause negative impact on the cash flows and impairment of property,
plant and equipment in a long-term perspective due to the regulatory mechanism in place.
Expected credit losses: financial assets
When determining the expected credit losses resulting from COVID-19 impact, the Company’s management took into
account the past events, the present and future economic conditions that were known as at the reporting date.
Monitoring of the Company’s key customers has not resulted in identification of any material negative impact of
COVID-19. The Company projects no liquidity or credit risk issues.
Determining the fair value and recoverable amount of property, plant and equipment: property, plant and
equipment
The management reviewed the key assumptions used in determining the fair value and recoverable amount of
property, plant and equipment and did not identify any circumstances that as result of COVID-19 would require
significant adjustments to the management’s forecasts for the period 2022-2026, and to the discount rate. In addition,
in view of the relevant information and long-term forecasts, no significant change is expected in the rate of return
on investment. No significant change is expected due to COVID-19 in the regulatory environment and the scope of
services rendered. The management did not identify any circumstances related to COVID-19 pandemic that might
result in material change in the value of property, plant and equipment measured at revalued amount.
28 Consideration of climate change impact
According to the Company’s management, more stringent EU environmental policy requirements introduced in the
context of combating climate change, promotion and development of renewable energy sources and more efficient
use of energy will reduce the use of natural gas for both energy and industrial domestic needs. However, natural gas
will play an important role as a transition energy in achieving European and national targets of reducing greenhouse
gas emissions. The share of “green” is expected to increase: biomethane and gases produced by conversion of green
electricity into green hydrogen and synthetic methane. One of the main targets of sustainable operations of Amber
Grid AB is to mitigate the environmental impact of its operations by two thirds by the year 2030. To achieve this goal,
the Company plans to implement the following measures:
· greenhouse gas inventory;
· analysis of other sources of environmental impact arising from operations, planning of measures for mitigation of
impact of pollution sources;
· replacement of the vehicle fleet with zero-emission vehicles;
· use of renewable energy sources and solar power plants in order to mitigate the environmental impact of the
Company’s infrastructure;
· integration of hydrogen and biomethane into the energy system;
· priority to green procurement of goods, works and services.
The current impact of climate change is not expected to have a significant impact on the consolidated financial
statements, and the future impact of climate change on the Group’s operations is difficult to project.
29 Off-balance sheet commitments and contingencies
Litigations
Currently, the Company has one active civil case regarding the award of extra charge on the natural gas transmission
price related to natural gas supply security (the LNG terminal funds) from Achema AB. The Company acts solely as an
administrator of the LNG terminal funds and transfers the LNG terminal funds to their recipients only after collecting
them from the buyers, and accordingly, the Company does not incur credit risk arising from the disputed amount. The
hearing of the above civil case is still pending at the first instance, the Kaunas Regional Court. On 11 January 2022,
Achema AB fulfilled the court’s obligation and applied for the elimination of deficiencies and submitted a revised
counterclaim within the set term. The date for the substantive proceedings has not yet been set by the court.
Commitments to purchase non-current assets
As at 31 December 2021, the Group and the Company had off-balance sheet contractual commitments to purchase
non-current assets for the amount of EUR 3.3 million (31 December 2020: EUR 44.9 million). In 2020, amount of EUR
32.5 million from the total amount of commitments to purchase non-current assets represented commitments to the
contractors and equipment suppliers for the gas interconnection Lithuania-Poland (GIPL) project. In the framework
of the common interest project (GIPL), in accordance with the criteria for cross-border cost allocation, the Company
has a commitment to pay a compensation (CBCA contribution) to GAZ-SYSTEM S.A. The CBCA contribution must be
paid upon the completion of the construction works in the territory of Poland and Lithuania. The construction works
in the territory of the Republic of Lithuania were completed in 2021. The construction works in the Polish territory are
scheduled for completion in 2022. According to preliminary estimates, the Company’s share of the CBCA contribution
amounts to EUR 54.9 million. 50% of the CBCA contribution, which will not be financed from the EU structural funds
under the CEF (Connecting Europe Facility) contract, shall be paid to GAZ-SYSTEM S.A Under the decision of NERC,
the CBCA contribution is included in the prices of transmission services from 2022. Based on the Group’s accounting
policy, the CBCA contribution is treated as a variable contribution, which depends on future events and is excluded
from the value of the asset at the time it is ready for its intended use, and accordingly, no liability has been recognised
in respect of that contribution.
30 Related-party transactions
Disclosure includes transactions and their balances with the EPSO-G group companies, subsidiary GET Baltic UAB, all
state-owned enterprises or entities under significant influence of the State (transactions with such entities are disclosed
separately only if the amount of the transactions exceeds EUR 100,000 per calendar year), management and their
close family members. A list of state-owned enterprises or entities under significant influence, for which a disclosure of
transactions is required, is available at: Visos VVĮ - VKC | Valdymo koordinavimo centras (governance.lt).
The Group’s and the Company’s related parties as at 31 December 2021 and 2020 were as follows:
- the Company’s parent company EPSO-G UAB, which is wholly owned by the Lithuanian Ministry of Energy;
EPSO-G UAB group companies:
- Litgrid AB (common shareholders);
- TETAS UAB (common shareholders);
- Baltpool UAB (common shareholders).
- The Company’s subsidiary GET Baltic UAB;
Ignitis Grupė UAB group companies:
- Energijos Skirstymo Operatorius AB;
- Ignitis UAB;
- Ignitis Gamyba UAB;
- Transporto Valdymas UAB;
- Energetikos Paslaugų ir Rangos Organizacija UAB.
Other state-owned enterprises:
- Klaipėdos Nafta AB;
- State Enterprise Ignalina Nuclear Power Plant;
- Geoterma UAB;
- Other state-owned enterprises or entities under significant influence;
- Management.
110
CONSOLIDATED ANNUAL REPORT 2021
The tables below present the Company’s related-party transactions and their balances as at 31 December 2021 and 2020:
At 31 December 2021 Group
Purchases
LNG terminal
funds
(purchases)
Sales LNG terminal funds (sales)
Amounts
receivable
Receivable LNG terminal
funds
Borrowings
Amounts
payable
Payable
LNG
terminal
funds
Divi-
dends
received
Finance
costs
UAB EPSO-G 110 - - - - - 3,284 36 - - 99
UAB TETAS 3 - 7 - 5 - - - - - -
AB Ignitis Gamyba 72
-
62,887 14,409 444 1.453 - 4,927 - - -
AB Energijos Skirstymo Operatorius 197 - 245 264 42 27 - - - - -
UAB Ignitis 37,082 35,607 14.317 13.233 1.728 1.318 - 5,522 4,939 - -
UAB Transporto Valdymas 405 - - - - - - 44 - -
AB Klaipėdos Nafta
-
27,732 4 -
-
- - 7,005 - -
State Enterprise
Ignalina Nuclear Power Plant
- - 61 110 5 11 - - - - -
UAB Geoterma - - - - 45 65 - - - - -
Other state-owned enterprises 59 - - - - - - 6 - - -
37,928 63,339 79,885 37,156 2.269 2.874 3,284 10,535 11,944 - 99
At 31 December 2020
Purchases
LNG terminal
funds
(purchases)
Sales LNG terminal funds (sales) Amounts receivable
Receivable
LNG
terminal
funds
Borrowings
Amounts
payable
Payable
LNG
terminal
funds
Divi-
dends
received
Finance
costs
UAB EPSO-G 130 - - - - - 7,852 18 - - 69
UAB TETAS 16 - 1 - - - - - - - -
AB Ignitis gamyba
7 -
24,417 14,309 625 1.443 - 2,365 - - -
AB Energijos skirstymo operatorius 188 - 191 277 21 28 - - - - -
UAB Ignitis 27,057 27,400 23,127 12,721 1.674 1.424 - 1,263 3,430 - -
UAB Transporto Valdymas 358 - - - - - - 41 - -
AB Klaipėdos Nafta - 35,729 2 -
-
- - - 7,240 - -
State Enterprise Ignalina Nuclear Power
Plant
- - 51 109 9 11 - - - - -
UAB Geoterma - - - - 45 65 - - - - -
Other state-owned enterprises 73 - - - - - - 6 - - -
27,829 63,129 47,789 27,416 2.374 2.971 7,852 3,693 10,670 - 69
111
CONSOLIDATED ANNUAL REPORT 2021
At 31 December 2021 Company
Purchases
LNG terminal
funds (pur-
chases)
Sales LNG terminal funds (sales) Amounts receivable
Receiv-
able LNG
terminal
funds
Borrowings
Amounts
payable
Payable
LNG
terminal
funds
Divi-
dends
received
Finance
costs
UAB GET Baltic 6,319 - 2,790 150 - - 1,036 478 -
UAB EPSO-G 110 - - - - - 3,284 34 - - 99
UAB TETAS 3 - 7 - 5 - - - - - -
AB Ignitis Gamyba 9 - 5,018 14,409 444 1.453 - - - - -
AB Energijos Skirstymo Operatorius 197 - 244 264 42 27 - - - - -
UAB Ignitis 6,474 35,607 5,177 22,373 1.728 1.318 - 3,146 4,939 - -
UAB Transporto Valdymas 399 - - - - - - 43 - -
AB Klaipėdos nafta - 27,732 - -
-
- - - 7,005 -
State Enterprise
Ignalina Nuclear Power Plant
- - 61 110 5 11 - - - - -
UAB Geoterma - - - - 45 65 - - - - -
Other state-owned enterprises 59 - - - - - - 6 - - -
13,570 63,339 13,297 37,156 2.419 2.874 3,284 4,265 11,944 478 99
At 31 December 2020
Purchases
LNG terminal
funds
(purchases)
Sales
LNG
terminal
funds
(sales)
Amounts receivable
Receivable
LNG
terminal
funds
Borrow-
ings
Amounts
payable
Payable
LNG
terminal
funds
Divi-
dends
received
Finance
costs
UAB GET Baltic 3,870 - 109 - 54 - - 312 - - -
UAB EPSO-G 130 - - - - - 7,852 18 - - 69
UAB TETAS 16 - 1 - - - - - - - -
AB Ignitis Gamyba 2 - 4,754 14,309 625 1.443 - 1 - - -
AB Energijos Skirstymo Operatorius 188 - 190 277 21 28 - - - - -
UAB Ignitis 2,201 27,400 14,283 12,721 1.673 1.424 - 725 3,430 - -
UAB Transporto Valdymas 352 - - - - - - 40 - - -
AB Klaipėdos nafta - 35,729 - - - - - - 7,240 - -
State Enterprise
Ignalina Nuclear Power Plant
- - 51 109 9 11 - - - - -
UAB Geoterma - - - - 45 65 - - - - -
Other state-owned enterprises 67 - - - - - - 6 - - -
6,826 63,129 19,388 27,416 2.427 2.971 7,852 1,102 10,670 - 69
112
CONSOLIDATED ANNUAL REPORT 2021
There were no guarantees issued or received for payables to/receivables from related parties, the settlement term
was between 15 and 30 days. As at 31 December 2021, the Company neither formed nor recognised any impairment
provisions for amounts receivable from related parties.
Compensation to management
Group Company
2021 2020 2021 2020
Employment-related payments 685 525 593 441
Payments to Board members 47 38 47 38
732 563 640 479
The management of the Group and the Company is deemed to include the CEO, the Technical Director, the Legal and
Administration Director, the Commerce Director, the Organisational Progress Director, and the Finance Director. No
loans, guarantees were issued nor were any assets transferred to the management of the Group and the Company.
31 Non-audit services
In 2021, the audit firm of the financial statements provided other services to the Group and the Company for the
amount of EUR 1 thousand. In 2020, the audit firm of the financial statements provided tax and accounting consultation
services for the amount of EUR 3 thousand.
32 Capital management
Under the Lithuanian Law on Companies, the Company is required to maintain its equity at no less than 50% of its
authorised share capital. In 202ą and 2020, the Company and its subsidiary complied with this requirement. There were
no other external or intra-group imposed capital requirements on the Company.
33 Events after the end of the financial year
To realise the potential of the opening European gas market and enable the customers of regional gas exchange
GET Baltic UAB to offer the most advanced gas trading solutions, on 1 February 2022, the Company announced the
selection of a strategic partner for the exchange. The planned sale of shares of GET Baltic UAB was approved on 28
January 2022 by the Boards of the Company and parent company EPSO-G UAB. A participant meeting the qualification
requirements and offering the highest price for the shares of GET Baltic UAB will be eligible to acquire a 66% stake in
GET Baltic UAB.
As a result of military actions started by the Russian Federation in Ukraine on 24 February 2022, the Group will apply all
sanctions, business restrictions, etc. initiated and introduced by the local and foreign authorities, and will take measures
in one way or another related to the activities of Russian and Belarusian legal entities or individuals, its shareholders,
members of its management bodies, and will disclose information that has significant impact on the Group’s and the
Company’s operations and investors in accordance with the procedure prescribed by the legal acts.
It is important to note that the procedure for the implementation of international sanctions and restrictive measures in
the Republic of Lithuania is regulated by the Lithuanian Law on the Implementation of Economic and Other International
Sanctions (hereinafter - the Law) and other related legal acts. The natural gas transmission system operated by the
Company has a physical connection with the Belarusian gas transmission system and through this connection gas is
transported to the territory of Lithuania and by transit to Karaliaučius region in Russia. The Company’s gas transmission
revenue generated from the transit services accounts for up to 20% of the Company’s total revenue. The Company,
together with the Polish transmission system operator Gaz-System, announced that with effect from 1 May 2022, the
gas market participants will start using the GIPL gas interconnection, which will result in commercial gas flows between
Lithuania and Poland. The Group expects that this interconnection will become of regional importance and will have a
greater-than-expected impact on revenue growth.
In the event of temporary restriction of transit services in case of insolvency of the system user, revenue from gas transit
services would decrease and remain lower for some time. However, an increased use of the transmission system due
to the gas flows through the GIPL connection would lead to higher costs allocated to gas flows to other EU countries
in proportion to their capacities, and inclusion of the costs related these services in the gas transmission prices to the
EU customers. In addition, the existing and future/planned transactions for purchases of goods (excluding natural gas
and other forms of energy), services, works will be reviewed, and all the required sanctions will be applied in respect
of those transactions. Significant impact on the Company’s and the Group’s operations is generally not expected. On
3 March 2022, the Company’s CEO issued an order on refusal of goods and services of Russian and Belarusian origin
(except for natural gas and other types of energy).
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 Amber Grid 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 Amber Grid AB (the “Company”) and its subsidiaries
(together - the “Group”) as at 31 December 2021 , and of Company’s and 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 18 March 2022.
What we have audited
The Company’s and the Group’s separate and consolidated financial statements comprise:
● the separate and consolidated statements of financial position as at 31 December 2021;
● the separate and consolidated statements of profit or loss 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 31 to the separate and consolidated
financial statements.
Our audit approach
Overview
● Overall Group and Company materiality is Euro 1,131 thousand
Euro and 1,139 thousand, respectively.
● We performed a full scope audit of the Company. At the Group level
we tested the consolidation process and performed audit procedures
over the selected financial statement line items, material at Group
level, to be able to report on the consolidated financial statements as
a whole. Our full scope audit addressed 84% of group assets and
98% of revenue.
● Value of Property, plant and equipment
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 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
Euro 1,131 thousand
Overall Group materiality
Euro 1,139 thousand
How we determined it
5% of profit before tax
Rationale for the materiality
benchmark applied
We chose profit before tax as the benchmark for the
Company and the Group because, in our view, it is the
Materiality
Group
scoping
Key audit
matters
measure against which the performance of the Company and
the Group is assessed.
We chose 5%, which is within the range of acceptable
quantitative materiality thresholds.
We agreed with the Audit Committee that we would report to them misstatements identified during our
audit above Euro 113 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
Value of Property, plant and equipment
(refer to notes 2.6 and 6)
The Company and the Group apply the
revaluation model for subsequent recognition
of property, plant and equipment (‘PPE’). As at
31 December 2021 the carrying value of PPE
of the Company and the Group amounted to
Euro 255,978 thousand and Euro 255,984
thousand respectively, being its fair value at
the date of the revaluation, less subsequent
accumulated depreciation and less subsequent
accumulated impairment losses.
The management has assessed whether the
carrying value of PPE does not materially differ
from that which would be determined using fair
value at the end of the reporting period. The
Company and the Group used the income
approach using the discounted cash flows
technique and concluded that carrying amount
of the PPE is the reasonable approximation of
the fair value and therefore no valuation
adjustments have been recognised as at 31
December 2021.
We focused on this area due to significance of
the PPE balance for the statement of financial
position of the Company and the Group and
because the management’s assessment of
values of PPE is an area of significant
management judgements.
We understood and evaluated management’s
policies, processes and controls in determination
of fair value of PPE.
We have examined management’s valuation
methodology and their assessment of expected
changes in tariff setting regulations.
We obtained the cash flow models used by the
management to assess the value of assets. We
checked the models and tested that they are
mathematically accurate and that the results are
accurately compared to the carrying values of
assets. We examined the management’s
assumptions which have material impacts on
valuation results: rate of return on regulated
assets and discount rate, expected capital
expenditures, values of regulated assets and
operating expenses. As appropriate, we traced
them to Company’s internal budgets and
investment plans, or market information.
We involved our internal valuation specialists to
assist us in discount rate and terminal value
assessment and in an overall assessment of
model’s methodology.
Also, we assessed sensitivity of the cash flow
model to changes in the rate of return, discount
rate and accumulated regulatory over-profits.
We considered whether the overall estimate is
reasonable and whether the management
judgement that no valuation adjustments are
needed is appropriate to the circumstances.
We have considered the adequacy of disclosures
in Notes 2.6 and 6.
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, we performed a full scope audit of the Company and, based on the size and risk
characteristics, we tested the consolidation process and performed audit procedures over the selected
financial statement line items of the Company’s subsidiary Get Baltic UAB 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.
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 on 23 April 2015 and had an
uninterrupted engagement appointment of 3 years. After a 2-year break our appointment was renewed
on 18 September 2020, representing a total period of engagement appointment of 5 years.
The key audit partner on the audit resulting in this independent auditor’s report is Rasa Radzevičienė.
On behalf of PricewaterhouseCoopers UAB
/signed with electronic signature/
Rasa Radzevičienė
Partner
Auditor's Certificate No.000377
Vilnius, Republic of Lithuania
18 March 2022
The auditor's electronic signature is used herein to sign only the Independent Auditor's Report